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Ethics March 14th
 Economics   The Dismal
 Population growth is
 Resource growth is
   linear at best,
   diminishing or finite at
                       The Natural Step
Sustainable (Business) Systems:
 Keep the earth’s natural resources in the
  earth as long as possible.
 Manage the production of toxic
 Not displace, over harvest or otherwise
  degrade our natural ecosystem.
 Use the earth’s resources fairly and
  efficiently to meet basic human needs
References: Robèrt Karl-Henrik. 2002. The Natural Step Story: Seeding a Quiet Revolution
    (Gabriola Island, BC: New Society Publishers) (2002), available at; The
    Natural Step, at (Natural Step system conditions, also called principles of
    sustainability, define basic conditions that need to be met in a sustainable society).
 ―As we endeavor to become a
 leading contributor to a more
 sustainable world, corporate
 citizenship has become an
 integral part of every decision
 and action we take.‖

 ―Yes,McDonald's is committed to
 social responsibility. We are
 committed to doing the right thing.
 We want to make a positive
 difference to the world.‖ - Jack
 Greenburg, Chairman and CEO,

 ―Asa citizen of the world , Nike
 must Do the Right Thing - try to be
 transparent about what we are
 doing right, and about what we are
 doing wrong; embrace diversity;
 drive sustainability.‖ - Phil Knight -
 Chairman and CEO, Nike.
     The Macroenvironment

   The Natural Environment
                Concern for the natural
                 environment has grown
                 steadily, increasing the
                 importance of these trends:
                   Shortage of raw materials
                   Increased pollution
                   Increased governmental
          China Looming
 China   second largest consumer of
  oil (after the U.S.) Currently at 8%
 China has been responsible for
  nearly two-fifths of the increase in
  global consumption since 2000.
 China's surge in energy demand is
  also the main reason for the
  doubling in the world price of coal
  over the past year. Last year China
  consumed 40% of all the coal and
  30% of all the steel in the world.
    The Macroenvironment

Many companies use recycling to help protect
            natural resources
      The Political Environment
    EPA
    ―This growing, changing product stream
     presents new challenges and responsibilities in
     designing and managing electronic products to
     reduce their life-cycle environmental impacts.
     By applying the principles of product
     stewardship, electronic equipment can be made
     with fewer toxic constituents and designed with
     upgradeability, durability, and recyclability in
     mind, making these product systems more
   . ―The disposal issues surrounding used
    carpet are of concern because of carpet's
    relatively significant contribution to the
    nation's waste stream and the inherent
    difficulties with its recycling. According to
    carpet industry estimates, approximately 4.7
    billion pounds of carpet were discarded in the
    United States in 2002. Most years, carpet
    accounts for over 1 percent of all municipal
    solid waste by weight or about 2 percent by
   ―Only 3.8 percent of total carpet discards
    were recycled in the United States in
    2002. Under the National Carpet
    Recycling Agreement, industry has set a
    goal of achieving a 20 to 25 percent
    recycling rate by 2012.‖
            Packaging Laws
   ―In most parts of the developed world,
    packaging constitutes as much as one-
    third of the non-industrial solid waste
    stream. At least 28 countries currently
    have laws designed to encourage
    reduced packaging and greater recycling
    of packaging discards. Many of these
    countries require manufacturers to take
    back packaging discards or pay for their
   In green packaging, corn replaces
   Organic farming is practiced in approximately 100
    countries throughout the world, with more than 24
    million hectares (59 million acres) now under
    organic management. Australia leads with
    approximately 10 million hectares (24.6 million
    acres), followed by Argentina, with approximately 3
    million hectares (7.4 million acres); both have
    extensive grazing land. Latin America has
    approximately 5.8 million hectares (14.3 million
    acres) under organic management, Europe has more
    than 5.5 million hectares (13.5 million acres), and
    North America has nearly 1.5 million hectares (3.7
    million acres).
    —The World of Organic Agriculture 2004-Statistics
    and Future Prospects, February 2004.
   "Organic is a niche, but a very profitable niche. Give
    consumers what they truly want/need and they will dig
    deeply into their pockets. Organic dairy is mainstream.
    Two-thirds of the organic milk and cream is delivered to
    consumers via conventional supermarkets, not the 'health
    food stores' frequently associated with the organic of
    days gone by. Half of the organic cheese and yogurt sold
    in this country passes through a conventional
    supermarket. Organic is here to stay, not a fad marching
    by in the night. Several dairy companies have their arms
    around the organic segment of the business. Others will
    likely get involved. Whether you opt in or not, it certainly
    is a category worth watching. It gives us one more
    window into the minds of consumers."
    —Jerry Dryer, J/D/G Consulting, in "Organic Lessons,"
    Prepared Foods, January 2003
          Consumer Behavior
   Here's a pop quiz: Two products are
    sitting next to each other in a store.
    They're practically identical, but one is
    environmentally better -- let’s say it's
    recycled, recyclable, biodegradable, less
    toxic, or contains less packaging. Both
    are priced about the same.
   So, given that public-opinion surveys
    report that roughly three Americans in
    four call themselves "environmentalists,"
    and that marketing studies tell us that
    roughly 7 in 10 consumers would gladly
    choose the greener product over its less-
    green counterpart, why has green
    consumerism remained a largely
    marginal aspect of shopping?
    According to the Business for
        Social responsibility
 1. There's no mandate.
 2. The public is dazed and confused.
 3. People lack perspective.
 4. Companies making greener products
  are afraid to speak up.
 5. Green benefits aren't always evident.
          Some more sources
Segmenting, Targeting,
                    The Green Team
   Measure for measure Starbucks philosophy is to continuously
    seek ways to reduce waste from our system in the first place,
    whenever possible.
   Waste Audit Results from the study indicated that five
    materials dominate Starbucks retail waste by volume:
    cardboard, milk jugs, paper cups, pastry boxes and milk
    cartons. Based on the findings, Starbucks is exploring additional
    ways to divert waste through packaging reduction, reuse and
   Commuter Mug Discount One way Starbucks reduces waste
    is by encouraging customers and partners (employees) to use
    reusable mugs. Customers who use their own mugs receive a
    $0.10 discount. In 2003, customers used commuter mugs more
    than 13.5 million times, keeping an estimated 586,800 pounds
    of paper from landfills.
   Grounds for Your Garden Coffee grounds make up the
    heaviest portion of the waste stream in Starbucks stores.
    Through the Grounds for Your Garden program, Starbucks
    encourages reuse of spent coffee grounds by giving them to
    customers and parks as nitrogen-rich soil amendment.
   In 2003, Starbucks managed the waste
    and recycling at 1,544 of our stores, of
    which 61% have a recycling program.
   Environmental impact Starbucks measures
    the environmental performance of our store
    design and operations by the amount of
    electricity, gas and water consumption per
    square foot of retail space. Additionally,
    Starbucks looks at recycling rates and our
    customers’ use of commuter mugs as indicators
    of environmental performance. Information
    about these areas for a sample of stores where
    data is available is represented in the
    accompanying graphs. Starbucks is exploring
    innovative solutions to improve performance in
    all of these areas.
    NIKE’S Corporate Responsibility
 Nike’s corporate responsibility (CR) mission is simple
  and straightforward. It is clear acknowledgement that
  CR work should not be separate from the business –
  but should instead be fully integrated into it.
CR mission:
 We must help the company achieve profitable and
  sustainable growth.
 We must protect and enhance the brand and
 ―Sustainable‖ can have many meanings, all of which
  apply here. Sustainable growth suggests that Nike will
  be around for generations, that Nike is planning for
  the long haul. Sustainable growth also requires us to
  find ways of generating profit while minimizing our
  potentially negative impact on communities or nature.
Sustainable Product Innovation
   Nike’s two environmental long-term
    aspirations: eliminating waste and eliminating

   Nike’s footwear teams use a Sustainability
    Index to assess each footwear category’s
    progress toward reaching their sustainability
    goals. They currently use the Index to
    measure the five best-selling shoes per
    category, as a way of focusing on where we
    might have the greatest impact.
      Nike’s Top Sellers of 2000
   The top-selling shoes, based on units sold, for
    the week ending Sept. 3, 2000, are as follows:

    1. Nike Jr. Tiempo youth soccer cleat
    2. Nike Land Shark 3/4 football cleat
    3. Nike Twitch Shark 3/4 high football cleat
    4. Nike Air Jordan Retro 6 basketball shoe
    5. Nike Air Amenity cross trainer
        What is the real reason??
   The real reason why the famous shoe
    company is so sustainable and doing so
    well is not only because of its great sales
    in apparel and shoes and not because of
    the different product designs to fit the
    needs of the consumers, but its employee
    benefits and diversity programs and
    environmental initiatives and community
         Those Key Elements
*Employee benefits
*Diversity programs
*Environmental initiatives and
community investment
    Those key elements are how companies of today
     are growing and can remain in today’s markets.
     Nike has done a wonderful job of growing into a
     successful business and remains a sustainable and
     profitable company that it is.
Treat Your Employees Right!!!
   In recent years, Nike has focused on refining our skills
   (a) identifying risk of code compliance
   (b) uncovering issues
   (c) implementing strategies that can be used to drive
    performance and enable change within Nike internally
    and on a broader level.
   Nike has evolved from a focus on a Code of Conduct
    to advocating common standards across the industry.
    We’ve evolved from outsourcing labor monitoring to
    relying on a trained team of internal monitors and
    support for common monitoring platforms such as the
    Fair Labor Association.
    Employees Make a Difference
   If a U.S. based employee contributes to a qualified
    non-profit organization, we match the contribution,
    dollar-for-dollar, up to $5,000 per employee per year.
    When a U.S. based employee volunteers for a qualified
    non-profit organization, we donate $10 for every
    qualifying hour of volunteer work.

   In Europe, employee activism is encouraged through
    our Sport4ACause Fund. When employees engage in
    charitable sporting events, Nike matches the funds
    they raise. In the UK, our ―EXTRA TIME‖ program
    gives employees six days per year for volunteer
                 Nike is Diverse
   In 2004, for the third year in a row, Nike received a
    perfect score on the Human Rights Campaign
    Foundation’s Corporate Equality Index. The Index
    rates corporate America’s treatment of gay, lesbian,
    bisexual and transgender employees.

   Nike established its Global Women’s Leadership
    Council (GWLC) to promote and support the career
    advancement of women within the company; it is
    focused on advocacy, building connections, catalyzing
    action, and measuring results. Advisory Teams,
    involving 155 men and women from across Nike, were
    created to support the Council.
               Reuse- A-Shoe
   Reuse-A-Shoe is a key component of Nike's
    long-term commitment to waste elimination by
    helping to close the loop on the life cycle of
    literally millions of pairs of old, worn-out or
    otherwise unusable athletic shoe material.
    Reuse-A-Shoe also plays an important role in
    Nike's long-term commitment to help increase
    the physical activity of young people to
    improve their lives by reusing this old athletic
    shoe material in new places for kids to play
    and be active.
   Nike is donating half of its proceeds to
    various Tsunami Aid Relief organizations
    from sales in all of its stores nation wide.

   Nike also has a foundation in which it
    helps less fortunate children get an
    education in public schools.
Product Development
Branding Oregon Forest Products
   The lumber industry in Oregon is in
    desperate need of change. Hundreds of
    lumber mills have closed and over
    20,000 jobs have been lost since 1990 in
    spite of a decade with the highest
    number of housing starts and lumber
    consumption on record. One of the
    major reasons for the decline in demand
    of Oregon lumber has been an increase
    in imported lumber.
   Because Oregon lumber companies
    cannot compete with the imported
    lumber on price and still maintain a
    profit, they have to find new ways to
    differentiate themselves from their
    competitors. One of the main strengths,
    according to the Oregon Department of
    Forestry, is the environmental
    friendliness of the harvesting techniques
    and the sustainability of Oregon forests.
    According to Rick Fletcher, an Oregon
    State University extension forester, ―It’s
    not being driven by regulation; it’s being
    driven by the marketplace‖ (KOIN 6)
   Companies such as Timber Pro UV have
    had a great deal of success in recent
    years because of their environmentally
    safe wood stains. Consumers are willing
    to pay a premium price for
    environmentally friendly products
   It shouldn’t be hard to receive the
    environmental approval seal since Oregon
    already has strict laws governing harvest
    practices. Most Oregon businesses’ lumber
    already follows the reforestation provisions of
    the Oregon Forest Practices Act since it has
    99 percent compliance according to the
    Oregon Department of Forestry.
   In 2003, Home Depot experienced a sixty-
    five percent growth in the sales of FCS
    wood. Home Depot is one of the 500 U.S.
    retailers who participate in the chain-of-
    custody certification—lumber that is
    guaranteed to have come from an FSC
    certified forest
 Will Oregon be able to brand its forests?
 Does branding a commodity work?
     Sunkist oranges
     California Cheese
     Got milk

   Will it provide a strategic competitive to
   Brand Oregon. April 30, 2004.
   Geist, Wendy. Telling their Oregon stories. Gazette-Times.
    January 31, 2005.
   Milstein, Michael. Oregon might brand lumber with green seal of
    approval. The
   Oregonian. April 25, 2005.
   Oregon Considers Branding 'Green' Lumber. KOIN 6 News. April
    26, 2005.
             Quick Facts
 Started in November of 1993
 Milk Sales for the previous 15 years had
  been going down; and at an increasing
 $2 billion annually spent to advertise
  beverages (had to do something
  different to stand out)
 $23 million budget for milk
        Results of Campaign

 Exceeded expectations
 60% ad recall awareness in 3 months,
  70% in 6
 Improved consumption in California from
  an $18 million decline the previous year to
  a $13 million increase
 Became part of the pop culture landscape
   Jury still out on the cheese campaign