Topics: Environmental responsibility vs Refinery profitability?
on General Discussion
Environmental responsibility vs Refinery profitability?
Environmental responsibility vs Refinery profitability?
03-26-2014 08:14 AM
Interesting piece. I see your situation between a rock and a hard place. I was wondering though...regarding maximizing profit at the cost of environmental degradation, to these companies take into account the healthcare costs associated with such pollution? Do they take into account the amount of money it will take to get the environment back to 'almost' new?
I think that when looking at long term profitability, these also should be addressed. Yes, you might maximize your profit for 5-10 years, but at what point does this begin taking an even more expensive toll on healthcare costs or environmental costs? At some point this is going to be an inverse calculation. The more you maximize profit, the more pollution in the environment, the higher healthcare costs...thus your 'maximized' profit isn't really maximized. it just appears that way to the small group of individuals who are gaining this profit. I think you must find a happy medium.
On a more global note: corporate social responsibility and social entrepreneurship is growing; individuals focused on solving problems and not on maximizing profit is a growing trend. This will be seen (eventually) in the energy/industrial sector. This is going to drastically change maximizing profit, because maximizing profit isn't going to be the bottom line, we will see a triple bottom line emerge. Granted, this is some years, if not decades away, but my idea of long-term isn't 10-15 years, but 30-40+ years. I think embracing these changes is crucial for survival, as we see in adaptation everywhere. What if your company was the first to embrace such low sulfur content? Think about the marketing opportunities of being a company that sets trends and not follows them....think about what that could do for long-term business...
03-26-2014 10:59 AM
What very good points you bring to the table. I suspect that the difficulty in quantifying and directly connecting these costs to the actions of energy companies makes people just want to overlook these factors for the time being.
03-26-2014 01:05 PM
I can agree with your point that people possibly just want to overlook the these factors, but I don't think it is always a conscious oversight. I think the culture of business and enterprise just hasn't been exposed enough to such ideas...I believe that if more individuals in these situations were educated on such topics, large shifts would occur and different trends would emerge addressing business, profit, and environment, creating a holistic enterprise in and of itself...
03-26-2014 04:00 PM
The core of the referred paradox relies in one thing: environment regulation is not dynamic in the sense it deals with fines rather than with taxes. If taxes were proportional to environmental impact, the author of the article and his componay (like all companies in general) would reinvent their strategies.
If I don't recall it wrongly, in the book "Natural Capitalism: Creating the Next Industrial Revolution" this very interesting idea concerning taxes is fully presented and dicussed.
In a tax-based system focused on environmental issues, the more you pollute the more your industry is taxed. New trade-off situations would arise in refineries (and other industries) concerning being friendly to environment.
(In such systems, emerging green technologies would find their economical margin to further develop and be implemented without the problems of lacking an economy of scale to be competitive. They would simply imply lower taxes, being this their competitive factor)
03-26-2014 06:49 PM
Marcelo, I see your point. But I think that taxing pollution, while it would help, is merely like sticking a band-aid over a stab wound.
If we don't begin allowing companies to organically chose to be more pro-environmental, there is only going to be push back when they are forced. Taxing would incentivize polluting less, but it was also mean more regulation (making it a political issue), it could create a 'don't ask, don't tell' corruptive culture around polluting---believe me, I have seen this happen all too often in the state of Indiana, where those who would be responsible for providing permits, checking environmental regulations, and fining industrial companies who do not comply are 'friends' with the plant owner and those fines never happen. One example: the Bear Run Coal mine in southern Indiana hasn't had an environmental regulatory inspection in 7+ years because the IDEM lawyer was the lawyer for Peabody Energy (who owns the mine) for 25 years...yes, a conflict of interest, yes, that gentleman shouldn't have been given a job at IDEM, but welcome to the world of cronyism. This is how things are done in Indiana...
You could argue that this system could provide emerging green technologies with more economical margin, but what if that economical margin was provided by the private sector because individuals intrinsically chose to invest in such technologies due to their understanding of how valuable it is to human livelihood? Not because they would be taxed less.
As someone with a formal education in psychology and who has studied, extensively, motivation toward behaviors...extrinsic motivation, the form of motivation you are proposing, isn't as long lasting or due diligent as intrinsic motivation. Intrinsic motivation is required to get our society to see the value in pro-environmental behaviors...and to make large scale cultural changes.
Yes, a tax-based system may work for a small amount of time, but as with all situations where humans are forced to something they do not want to do by the government, they will find a way out of it...
03-26-2014 09:39 PM
Lauren, your answer covers too many issues at the same time. I see your point, but I prefer to keep this discussion as general and broader as possible.
One of the main ideas/conclusions raised by the article in question is that we need to increase the trade-off situation so that the decrease in company profits (caused by a more environmentally friendly operation) is compensated by a decrease in taxes that compensates it. It would turn this a money vs money situation, rather than a money vs ethics situation. In money vs money you can still optimize towards green issues.
My comment does not provide the perfect solution, only a solution. This solution is inspired by a book that I very much recommend. ;)
03-27-2014 12:00 AM
I think that you are right regarding Money vs Money and it's ability to make a difference. And would be a good general place to possibly start.
For me, after reading the article, I was under the impression that the gentleman who wrote the article was having an ethical issue. He states that he is an environmentally aware person, partaking in pro-environmental behaviors when possible, yet he must focus his job on maximizing profit...to me this is a money vs ethics issue.
Your inspired solution from this book is great. My inspired solution comes from years of quantitative and qualitative human behavior research....we are all inspired by different things.
You seem to see things from a corporate/working environment, I tend to see things from a human/individual behavioral environment.
And in the realm of sustainability, you cannot have too many issues, because all issues are connected: hence the people, planet, profit definition. You focus on profit, I will focus on people and maybe together we can better the planet. But arguing that there are too many issues is a moot point in and of itself when discussing sustainability.
03-27-2014 02:43 AM
Lauren, I'm deeply touched with your feelings. Just imagine, what a wonderful world it would be if only there were no humankind! There would be neither polluting industry, nor evil corporations, and the wolf will live with the lamb, the leopard will lie down with the goat, the calf and the lion and the yearling together... However, the infant will not play near the cobra’s den, and the young child will not put its hand into the viper’s nest, for humans are the present and immanent danger to the self-sustaining Earth.
03-27-2014 04:54 AM
How humbling it is to know how easily I can access your feelings Alexey.
While you may believe that in order for us to have a pollution free environment and a world free of evil corporations humankind must not exist, I have to politely disagree with you.
I hold humans to a higher expectation than that..
After all, it was Gandhi who said "If we could change ourselves, the tendencies in the world would also change. As a man changes his own nature, so does the attitude of the world change towards him. ... We need not wait to see what others do.”