Will corporations act to lessen environmental issues in response to market forces and consumer behaviour alone
The debate over global warming
The debate over global warming is one that has continued to hit the news media as well as scholarly articles over time due to its devastating impacts. Businesses alone, play a huge role in environmental pollution through the whole supply chain process from planting to sourcing of raw materials, to manufacture and transportation. There is no disputing that different governments have also come with laws to encourage companies to reduce the impact on the environment.
On the same note, there has also been consensus among consumers some of whom wish to be associated with organizations that are socially responsible. Similarly, the forces in the market, such as competitors taking up action to lessen their environmental impact have also come in handy. However, the main question is as to whether organizations can reduce the environmental impact based on consumer behavior and market forces alone. The paper argues that market forces and consumer behavior alone cannot make organizations to act to lessen environmental issues. The essay will address the role of businesses in environmental degradation then offer discussion as to why government interventions may be better than depending on consumer behavior and market forces. A conclusion on the summary of the key points is offered.
The governments have the role of enacting laws so that organizations not only produce respectfully, but also acknowledge the negative externalities. It is not possible to rely on market forces and consumer behaviour because most consumers are not even aware of the existing negative externalities. According to ACCIONA (2022), in the distribution and production of products, there is the problem whereby the price of the products fails to reflect the real environmental and social cost of producing them. The exclusion of pollution effects for means that the environmental costs, which comprise the negative externalities, are not booked. As a result, products end up having shorter useful lives and consumers continue to purchase them even more. At the end, most are thrown as waste or burned further exacerbating the pollution problem (ACCIONA, 2022). Therefore, it is not possible to rely on such market forces that are more focused on the profits as opposed to admitting the environmental costs. On the same note, since consumers have no knowledge of the existence of such externalities, they cannot be relied on to champion for greener companies.
Capitalism thrives on competition, acquisition and rationality, as such, it is hard for capitalists to adhere to market forces on environment. Sombart (1930) contends that the main aim of economic activity under capitalism is for acquisition of money. However, the attitudes that are displayed in the acquisition process are the ones that form the idea of competition. In relation to the issue of environmental pollution, capitalists will use the best means possible to be competitive and make profit, even if it means damaging the environment. It is for this reason that market forces alone may not be so helpful in helping the corporations to reduce their impact.
The capitalist goals of consumption and economic growth will continue to fuel environmental degradation because they are profit oriented. Furthermore, Sombart (1930) also believes that the market mechanisms under capitalism also fail to offer incentives to preserve the environment. This is evident in the fact that organizations are in a continuous threat by market competition to cut costs and optimize profits. In this way, it is clear that the environment is a pray to the compulsive market forces that govern the capitalist mode of production.
Environmental regulations impose costs on firms and as such, can help them to act to lessen environmental issues. Regulations by the government are significant as they help to impose costs on organization and as such, affect productivity, which can lead to loss. Sombart (1930) in his discussion on capitalism argues that organizations want to reduce all costs as much as possible and make profits. Therefore, they will be more inclined to follow the rules if there are fines imposed. Consumer behavior alone may not offer punishment for organizations that fail to follow suit because such laws attract fines to companies that fail to comply. This is also the same for market forces because they keep changing and tend to favor the businesses. Therefore, government intervention is the best way to encourage businesses to act because capitalists will be forced to follow as a way to reduce the costs and the negative externalities.
Consumer behavior may only be practical at the global level but fail to show greater impacts at the national level. The article by Kinver (2021) shows that the issue of deforestation has been in existence for decades and it is only now that most governments have started to note the complexity of the issue. In the recant years, the loss of tree cover across the globe has been linked to the increasing changes in climate. Organizations are the ones responsible for cutting trees to get raw materials or land for construction.
It is only the global campaigns on the importance of protecting forests that have shown some impact. It is worth noting that while this issue is taken seriously at the global level, the implementation of strategies lie in the hands of the national government. Therefore, this shows that consumer behavior may not be effective on the issue unless it causes a global attention that attracts backup from consumers all over and forces firms to comply or risk losing customers.
Humanity causes an immense impact on the climate of earth. Humans now have power over earth and this is based on the increased release of carbon dioxide and other greenhouse gases from factories and its impact on the future of millennia (Delcan, 2020). Organizations have interfered with the equilibrium of the carbon cycle and the results are an impact on the environment. The results of these have been seen in the rise in sea level. Increased air pollution, garbage disposal as well as the contamination of the sea. Therefore, this is an issue of concern since if no action is taken, then the future generations will suffer from an environment that is not human and that does not support life. Businesses alone, have been identified as great contributors to the environmental issues faced on earth now and while the carbon cycle cannot be reversed to the original level before pollution, steps can be taken to reduce and completely eliminate pollution.
The strategy by the Spanish government on desertification is an example of the effectiveness of regulations other than relying on market forces and consumer behavior. The poor land management practices, caused by organization activities in Spanish resulted in increased desertification in a nation that is considered a top olive oil producing country in the world. In response, the Spanish government came up with a multi-year action plan to help combat this issue (DeAndreis, 2022).
The law required the local and national authorities, as well as farmers and non-governmental organizations alike to take part in the battle. It is worth noting that the use of a government intervention helped to increase adherence to the issue in that organizations were afraid of facing charges by going against the law (DeAndreis, 2022). Furthermore, it is a prompt way to deal with the issue and give it the urgency that it requires. Consumer behavior and market response may not be the most immediate course of action in this case. Instead, a government approach followed by a public informational platform on the same may be effective.
Each organization should be managed, owned and governed with a coherent sense of purpose. According to Mayer (2018), organizations in a market economy create wealth, which is a source of environmental degradation. As such, it is important that businesses are harnessed as a source of societal benefits in order to reduce their impact on the environment. Therefore, Mayer is trying to show that organizations need to act responsibility and promote corporate social responsibilities. However, governments are also key stakeholders in organizations and as such, they can help in formulation of policies that will help to encourage adherence to environmental conservation. The purpose of a firm and the business in general should be to make profit but not at the expense of society. That being said, relying on market forces alone may not be enough to push companies to make the right choice.
In conclusion, market forces and consumer behavior alone may not encourage firms to lessen their impact on environment. The currents state of the environment requires an immediate action. Depending on market forces may not be the solution because capitalists are focused on making profits at any cost without considering the impact on society. On the other hand, the effectiveness of consume behavior relies on a global strategy that can help to push firms to change. It is therefore argued that the use of government interventions may be the best solution for organizations as capitalists will follow regulations if it means evading high costs. A combination of consumer behavior, market forces and government interventions may be the best solution.
ACCIONA. (2022). Consumer society and the environmental impact on the planet. [online] Available at: https://www.activesustainability.com/sustainable-development/consumer-society-environmental-impact-planet/?_adin=1981793814.
DeAndreis, P. (2022). Spain Launches a New Strategy Against Desertification. [online] Available at: https://www.oliveoiltimes.com/business/spain-launches-a-new-strategy-against-desertification/110554.
Delcan, P. (2020). Humanity’s immense impact on Earth’s climate and carbon cycle. [online] Available at: https://www.economist.com/schools-brief/2020/05/09/humanitys-immense-impact-on-earths-climate-and-carbon-cycle.
Kinver, M. (2021). Then and now: Why deforestation is such a hot topic. BBC News. [online] 4 Sep. Available at: https://www.bbc.com/news/science-environment-58399809.
Mayer, C., 2018. Prosperity: Better business makes the greater good. Oxford University Press.
Sombart. (1930). Capitalism. Rise 360. [online] Available at: https://rise.articulate.com/share/-aQJ1ULaImaofP7qCPAsJm1xG8cr0TJh#/lessons/VzviXITYUuHeRQQEmugao4sTy87ZJNKz.