Employment Law
Dr. Tuck
GBUS 4953
Final Paper
Matt Stambaugh

Business of the modern world has changed. There has been a shift in the way businesses conduct their business. In the past, the business mentality used to be focused only on profits. As long as profits were increasing and money was coming in, things were going well. Whenever profits were falling, something was wrong and had to be changed. Of course, companies still need to turn a profit to keep their doors open, but the way in which they have changed is that many of the businesses out there realize that there are other aspects to success than higher profits. Things are not solely about the traditional “bottom line” any more. What has sparked this change in thinking? If companies have done the same thing for hundreds of years then why change now? The answer to these questions is the environment. People are now more aware of the impact that businesses are having on the environment. Businesses are aware that the business they are conducting is not done in a vacuum. All of their decisions affect the planet as a whole. The impact can range from pollution, deforestation, depletion of natural resources, and everything else in between. The environment has also caused businesses to change in not just trying to pollute less, but it has also been the catalyst for changes in things such as new legislation, innovation, and even the development of underdeveloped countries. Before these topics can be discussed it is important to understand how companies got to this situation in the first place. The answer to this is self-interest and growth. Growth from companies and growth from the population as well.
There seems to be a correlation between the growth of companies and the economy and the growth of that population. This could be due to the fact that when the economy grows the standard of living becomes higher. Higher living standards means things like cleaner water to drink, better health care, and a longer life span. The bad part about all of these higher living standards means that more energy and resources are needed to keep up with the increased demand. When companies work only in their self-interest then everyone pays the price. William Hardin explains this with the “Tragedy of the Commons.”
The tragedy of the commons is a term that was used illustrate the idea that the world cannot keep supporting businesses with the current way companies are running their businesses. That is, for the soul purpose of making a profit. For example, picture a field that is public land. There are groups of shepherds that tend flocks of sheep on this field. These shepherds represent the world’s business population. The shepherds want to keep as many sheep as they can in order to maximize profits. A natural balance is set in place between the available resources and the number of shepherds that coexist. The shepherds are able to raise their sheep and the land is able to sustain the number of sheep that the shepherds have. Problems will begin to occur if there is no regulation and the shepherds have free reign and no limits on the number of sheep they raise. The problem is that, like the earth, the field that they raise their sheep in is finite. Since each shepherd wants to maximize their own well-being they increase the number of sheep. When the shepherd increases his flock of sheep by even just one animal the shepherd receives 100% of all the additional revenue created from that one sheep. On the flip side of that, the negative of over grazing that would be caused by adding another sheep to his herd is spread out evenly over all shepherds since they share the same field, but not the sheep. Since the shepherd makes 100% of the revenue by adding sheep to his flock and only receives a fraction of the negative consequences any rational shepherd in the commons would increase the size of his flock to as many as possible. Here is where the tragedy lies. Each shepherd will increase their stock for their own benefit until the number of sheep becomes too much for the commons to handle. Even when some of the shepherds start to realize that once the balance is upset and they need to raise less sheep it will be too late. Just as how adding one sheep gains a single shepherd 100% revenue and only a fraction of the liability, culling their herd will hurt them 100% and only help the commons by that same fraction. So what can be done to protect the commons? Hardin said that the best way to protect the commons was privatization. By privatizing land it makes the owners of that land more environmentally conscious because now it is solely up to them for the welfare of their land. Over the centuries land has become privatized by different countries. Each one can, for the most part, do with it as they please. Now others cannot simply destroy the environment at everyone else’s expense. They can only do that to the land that is theirs and the destruction can be contained to that area.
The logic of privatization only goes so far. What Hardin did not account for was that some resources cannot be privatized. As mentioned earlier business is not conducted in a vacuum and cannot be thought of in that way. Land may be privatized, but resources such as air and water quality cannot. For example, China is greatly increasing their manufacturing output. They are dumping huge amounts of carbon dioxide and other harmful pollutants in to the air. This pollution can have a negative effect on all surrounding countries. The same can be said with our oceans. One country may be dumping chemicals and polluting the ocean and all the others will suffer from it. It can have an impact on all of the nations’ ocean fishing and other businesses that rely on clean and healthy oceans to make a profit. Companies have been innovating and developing new technology to help slow down the deterioration of the planet. As technology increases so does our capacity to help offset all of the pollution and waste that is being done to the planet. There has been a boom in the area of green energy. In 2008, The University of Oklahoma entered in to an agreement with OG&E. As part of this agreement the university has agreed to purchase all of the electricity and energy that it uses from OG&E. With that, OG&E agreed to build a windfarm that is over 10,000 acres in size. The OU Spirit Wind Farm now can generate 101 megawatts of power. The OU campus is now run off 100% renewable energy.1
Wind energy has had a big impact on the local economy within the last few decades. With oil barrel prices plummeting there has been a spike in the development of new wind farms all across western Oklahoma. According to the U.S Energy Information Administration the amount of power produced in Oklahoma from wind power increased from 2,700 GWh in 2009, to 8,200 in 2012.2 That is an increase of over 300% in just three years. Not to mention all of the jobs that the construction and maintaining of these windfarms have created in an area that has been so adversely affected by the fall of oil prices. Chesapeake Energy alone has laid off around 800 employees because of the oil prices.3 This shows how steps taken in the direction of helping the environment not only benefit the environment, but can help businesses and the local economy as well. An example of this is OG&E’s “smart hours” plan. It is a new plan that the company has come up with to save money as well as be greener and more environmentally conscious.
How ‘smart hours” works is when customers sign up for it they send the customers a new thermostat. After it is installed the new thermostat helps them keep track of when they are using most of their energy. This is important because electricity costs more at certain times of the day when it is more expensive to make. The thermostat shows when these peak hours are and allows people to know when to use more electricity when it is at its cheapest.4 Customers are then able to not do things like run the air conditioner or the dishwasher when demand for the energy is at its highest for the day. This saves customers and the company money, while at the same time cutting down on energy usage and helping the environment.
New technology is vitally important to the sustainability of the environment and business. However, technology alone will not be enough. The business world needs to realize that they need to incorporate environmental thinking in to every aspect of their business, not just rely on technology so they can continue on with the same mind set. Companies can be categorized in to three different areas of environmental consciousness. They can have no integration of the environment in their business culture, have some integration, or have thoughts on protecting the environment fully integrated in to every aspect of their business. For the world to become fully sustainable, businesses will have to fully integrate the environment in to all of their business decisions.
The first type of business thinking is no integration of the environment in the company’s business decisions. This is the lowest form of integration out of the three. Companies that are in this category put the bottom line and profits above any type of environmental protection. They only do the minimum of what is required by the law and will even try to find ways to work around the law.
One way that companies work around the law when it comes to the environment is that they will actually move their manufacturing plants and other high polluting jobs overseas where there is less regulation by the other country’s government. The businesses in these countries have no environmental consideration in their decision making and are destroying their environment at an alarming rate. Moving certain aspects like one’s manufacturing plants overseas makes it look like other developing countries are to blame for all of the pollution that is happening in our world. Developed countries do pollute less than developing countries. This can be attributed to many different factors. It is easier for developed countries to develop and implement the new technology that will have less of an impact on the surrounding environment. Environmental standards are usually more relaxed in developing countries. It is more important to the governing officials that they make money for their economy than to preserve the environment. They do this in hopes that helping their economy will put more money in circulation so their standard of living can be raised. Clearing out a section of rainforest for farmland so there can be more food for a starving population seems like an easy choice. It is up to the developed countries of the world to help developing countries with the growing pains of development. Since developed countries have already gone through the change they can help the developing countries. With their help they can still advance without hurting the environment so much. Countries like the United States can share technology with the developing countries and help them make feasible and obtainable goals that allows for growth and sustainability. Many of the things that are manufactured and produced in developing countries are made so they can be shipped and used by consumers in the developed world. It can be hard for governments of developed countries to regulate the environmental practices of developing countries since they do not have much authority. What developed countries can do is monitor how developed countries are manufacturing and producing their products. Since developing countries manufacture products to sell to the developed world that gives power to the developed countries. They are able to pick and choose who they import from and can only buy from the ones that are up to a certain environmental standard. The second type of business is when companies have an environmental plan integrated in their overall business plan. These companies see the benefits of saving energy and want use greener technology and processes to help cut their costs. There are many advantages for companies to go green for their business. While switching over to new technology and manufacturing process can have a large startup cost there can be tremendous benefit whenever the changes are complete. The companies will see the obvious cost savings of things such as lower utilities. By switching to more efficient manufacturing techniques they will save on materials as well. Companies that have a large delivery fleet such as FedEx would see the cost benefits of using more efficient vehicles for their deliveries and streamlining their routes so the trucks can get to their destinations more efficiently. This will save money and improve delivery times and performance. Doing more than the minimum when it comes to environmental regulation benefits companies in ways that are harder to measure and account for, but still help the company none the less. In today’s market green technology is very marketable. If a company starts a trend in their particular market they will receive the benefits of customer recognition for what they are doing.
Take Toyota for example. They came out with the Prius and marketed it as being environmentally friendly and great on gas mileage. Once gas prices were on the rise they already had the car developed and ready for purchase while many of the other big named car companies like Ford and Chevrolet had to play catch up. Even though the other companies now all have their own version of hybrid and electric cars most people will still think of the Prius when they are asked to think of the most environmentally friendly car.
The third and final category of businesses is the fully integrated. These are the businesses that understand that the environment affects every aspect of their business so they must have the environment in mind on all business decisions, not just being green to cut costs. For example, recent climate change has led to some of the most powerful storms and natural disasters in recorded history. On October 23, 2015 hurricane Patricia “became the most powerful tropical cyclone ever measured in the Western Hemisphere as its maximum sustained winds reached an unprecedented 200 mph (320 kph) and its central pressure fell to 879 ars (25.96 inches of mercury).”5
In order for these companies to fully integrate the environment in to their business decisions it is important for them to look past the traditional bottom line. They need to also take in to account things other than economic profit. To do this and get a more comprehensive view of their company many have adopted the triple bottom line.
The triple bottom line takes the normal economic bottom line and expands on it. It adds in a social bottom line and an environmental bottom line. The companies try and balance all three to make sustainable choices. In order to have the triple bottom line it is important for the companies to find ways to account for the three different aspects of it.
The first aspect is the economic bottom line. This is what most companies are used to having as their only bottom line. When profits are all that they are focused on then the other parts of the triple bottom line become blurred. Doing this will cause many environmental and social problems.
The second aspect of the triple bottom line is the environmental factor. Companies now realize the benefits of taking in to account their impact on the environment. They are aware of the consequences they face when it comes to how they run their businesses. As stated earlier there are many benefits to putting the environment on par with profits in the triple bottom line. They get the advantages of cutting costs and energy uses. They get the added marketability of their green techniques. Many customers are willing to pay more in price for products that are made with sound ethical and environmental practices. Ethical and environmental practices can be seen by the boom in areas like the food industry. Now more than every when you walk in to a store you will see entire sections dedicated to organic foods. One reason people are turning to organic foods is a result from companies only thinking about their profit bottom line. They will add harmful additives and chemicals to their products in order to cut costs and help the foods last longer so they have less spoilage and lost revenue. The population has become aware of this and the harmful effects these chemicals can have on the body.
People are also now more conscious about not only the health factor of their food and other products, but the ethical factor as well. There has also been a rise in things like free range meat products. People are tired of seeing animals like chickens and cows be treated horribly their entire lives and then being slaughtered unethically. KFC came under fire recently because of the way they were housing their chickens in cages that makes it unable for the chicken to ever walk or ever feel what it’s like to touch grass through their entire lives. Customer’s response to these kind of situations shows the importance of businesses to be aware of the third aspect of the triple bottom line, the social factor.
The social factor of the triple bottom line is used so companies can keep with the evolving mind set of the population and target markets. Even though it can cost more for a company like KFC to completely redesign how they raise their chickens the consequences of them ignoring social changes on the treatment of animals can harm their business much more in the long run. As demand for these categories grow more and more companies will learn to see the benefits they are missing out on by only focusing on profits. The triple bottom line is the new era of how business will be conducted. From the beginning of business up until recently business has had an enormous impact on the environment. We have just entered the age where that can no longer be. The days of business practices affecting the environment are gone. The environment is now affecting businesses.
The change of the environment affecting businesses is happening very slowly, but nevertheless, very surely. If a business wants to stay competitive it must find a way to integrate these new ways of thinking. If they continue to only have profits in mind they will fall victim to the new wave of customers who demand more from companies, or will fall prey to ever increasing rules and regulations that are being set forth from country’s governments who are listening to their people’s cries for change.

References

1. “Green Pricing.” Green Power Network: : OG&E Electric Services. N.p., n.d.
Web. 01 Nov. 2015 http://www.wholetruth.net/history.htm. 2. “Electric Power Montly.”(1995): n. pag. US Energy Information
Administration, Nov. 2015. Web. 25 Nov. 2015 http://www.eia.gov/electricity/monthly/pdf/epm.pdf 3. Fraklin, Dallas. “Chesapeake Energy Lays off Hundreds of Employees.”
KFORcom. N.P., 29 Sept. 2015. Web. 04 Nov. 2015 http://kfor.com/2015/09/29/chesapeake-announces-layoffs 4. "The SmartHours Price Plan." OG&E. N.p., n.d. Web. 17 Nov. 2015. https://oge.com/wps/portal/oge/save-energy/smarthours/!ut/p/a1/lZBND4IwDIZ_DVdWBhr0NsAo4yCEEHAXA2YOEmAEUP6-yEkS_OqpbZ4neVvEUIJYnd4LkfaFrNPyObP12cRgg2tgesShDgRTjeAQYwBjBE6vANCxJbbpeMHG0uFg_OnvPbwD4jlOsPIdzbV-9OFNEfjmx4jNkYUL5sBCxAn4kIEiJkqZTf88kTrTTYFYy6-85a16a8d13vdNt1VAgWEYVCGlKLl6kZUCS0ouux4lcxI1VRQlUPhVbHYPsBwKgw!!/dl5/d5/L2dBISEvZ0FBIS9nQSEh/ 5. "Hurricane Patricia Recap: Strongest Landfalling Pacific Hurricane on
Record." The Weather Channel. N.p., 3 Nov. 15. Web. 20 Nov. 2015
http://www.weather.com/storms/hurricane/news/hurricane-patricia-mexico-coast