MichaelLyonsProfit+Motive

=__The Profit Motive__:= ="How sustainable is sustainability in a for-profit organization?(1)"=



= = - A society based upon profit motive must out of necessity be a society of perpetual economic growth and we have seen over and over that sustainability inevitably requires us to limit and reduce the growth of our society to reduce the impact it has on the environment (9) - Today’s products, manufacturing processes and supply chains are not designed with sustainability in mind but with a profit motive (1), although there is an increasing consumer awareness and associated pressure on companies to reduce their impact on the environment they will continue to get the most they can out of what they have already invested in - There is no common vision of where we need to go as a society and no currently viable way of getting there(1), many products brought into the market under sustainability due to profit motive are not real solutions - Profit timing is simply not the same as environment timing; preemptive measures aren’t profitable - Ecological change brought about by profit motive relies heavily on consumer input to create the market or demand for research and development in that area(8) - Consumer input can often be slow in development or even nonexistent, with profit motive problems won’t be addressed until the market has developed the incentive for solving the problem (8) - Small start up firms selling things like composters or a larger company selling energy efficient appliances may have a profit motive to do so due to increased consumer desire for ecologically friendly products but larger corporations like many industrial firms that inherently unsustainable will inevitably face profit losses - Profit motive encourages sustainable elements to the market and within businesses but not a truly sustainable market or a sustainable culture (9) - See Harvard Business School article: []
 * The Problem with Profit**


 * Profit Motive vs. Sustainability Examples**

Kyoto Protocol:

- Protocol of the United Nations Framework Convention on Climate Change (UNFCCC) which is an international environmental treaty with the goal of achieving “stabilization of greenhouse gas concentrations in the atmosphere” (6) - Called for CO2 pollution equivalents reductions of 8% in the European Union, 7% in the U.S., 6% in Japan and a 0% change in Russia as well as increases limited to 8% and 10% for Australia and Iceland (6), the protocol also establishes a greenhouse gas emission "cap and trade" type system between industrialized nations(6) - U.S. is the only country in the world with no intention to ratify the agreement as of 2009 (6) - As the economies of India and China are growing stronger and are posing increasingly serious competition to the U.S. economy, binding emissions targets for those countries would “sweeten the pill of participation” for the United States, US could much cheaper cut emissions in these countries and buy their surpluses than to fix their own problems(8) - Cited reason as not signing as it “would result in serious harm to the economy of the US” (7) and that the U.S. relies heavily on coal and we can’t afford to jeopardize this business - Felt china shouldn’t be exempt….don’t want undeveloped countries benefiting in terms of profit from this protocol (6) - 61% Americans supported the ratification of this in 2001 (7) - For a look into the differences in adaptation of this protocol between Canada and the United States: http://web.ebscohost.com.libproxy.rpi.edu/ehost/pdf?vid=2&hid=7&sid=33d9386f-ee79-44cc-9c18-acd466cf6ab0%40sessionmgr4

Montreal Protocol:

- Montreal Protocol developed during the 1990s banned numerous atmospheric ozone depleting substances from production including chlorofluorocarbons (CFCs) which are used as refrigerants and propellants (3) - DuPont Corporation was a major global CFC manufacturer and had a patent on some of the more widely used CFC products - DuPont initially fiercely fought the phase out of this product but later backed down after they had secured a patent on a CFC substitute. Their opinion on the topic was only altered once their billion dollar industry and associated profit was re-secured (3)

- more information regarding the success and/or failure of these international protocols: http://www.allacademic.commeta/p_mla_apa_research_citation/0/9/9/4/3/pages99430/p99430-8.php

//Other examples:

- A country appears to in general only participate in an international environmental agreement when cooperation is associated with a net gain to that country and the current primary measurement of gain is profit and economic growth (8) - When profit motive is associated with natural resources it becomes very apparent that if the company has only profit motive in mind then their outputs won’t be sustainably limited but rather technologically or demand limited, as seen in// Water Wars// documentary - Shortly after Wal-Mart (huge profit motivated engine) realized that money could be made through greening their industry they quickly stated that they expect to reduce their solid waste up to 25% in the proceeding 3 years and their chief executive pledged $500 million in spending to reduce the retailer’s “carbon footprint” (5) - What will happen when the company’s sustainability efforts become profit neutral or threaten to cost them profit and their low priced product bottom line products? (5) - Google leads way in identifying sustainability as an important business initiative but many investment analysts ask what sustainability has to do with Google’s core business. They worry Google will sacrifice some focus and profitability in the name of sustainability (1)


 * Conclusions and solutions:**

- Much controversy surround the impact of environmental regulations on the economic performance of firms but some believe this is the solution to achieving sustainability while maintaining the profit motive economy (2) - ‘Porter Hypothesis’ suggests that properly designed and enforced regulations that actually mitigate environmental harm could trigger innovative responses that would not only fully offset compliance costs but also result in additional profits or so called “win-win” innovations (2) - Many pro-profit motive economists believe companies are beginning to realize that their profit can be at risk due to uncertainty caused by sustainable and environmental issues, sustainable businesses have fewer risks in future earnings(1) - Some believe environmental regulation alongside profit motive and subsidies could induce innovative behavior and increase profit incentives of environmental initiatives(2) - What happens when government has profit motive on their minds as well though? How truly sustainable will the change be that is brought about by this regulation? - One source calls profit motive an experiment because with its development roughly 300 years ago it was the first time in history that a society attempted to live without motives and principles that were higher than physical entities(9) - Some people believe profit motive can be manipulated into meeting the needs of sustainability but in reality a change in human nature needs to occur; people need to have a concern for the common good and not just profit in order to bring about true revolutionary change that is needed in a timely fashion (9) - The average life expectancy of a multinational corporation-Fortune 500 is between 40 and 50 years and many companies operate on quarterly earning goals (4), how can these largely short term entities be truly accountable for the environment with such a short lifespan? - More information on problems with profit motive and possible solutions: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VDY-47RBKSP-5&_user=10&_coverDate=02%2F28%2F2003&_rdoc=1&_fmt=high&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=1260337279&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=5cbeda8392086ddd4d2c584f207277f8

= = References:

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3. Dyke, D. S. (2010, February 4). The CFC Ban: Global Warming's Pilot Episode. Retrieved March 21, 2010, from Skeptic's Corner: http://jer-skepticscorner.blogspot.com/2010/02/cfc-ban-global-warmings-pilot-episode.html=====

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5. Wal-Mart's Green Profit Motive in the Wall Street Journal. (2006, August 22). Retrieved March 21, 2010, from Wal-Mart Watch: http://walmartwatch.com/blog/archives/wal_marts_green_profit_motive_in_the_wall_street_journal/=====

6. Kyoto Protocol. (n.d.). Retrieved March 21, 2010, from Wikipedia: http://en.wikipedia.org/wiki/Kyoto_Protocol#United_States
7. Harrison, Kathryn. The Road not Taken: Climate Change Policy in Canada and the United States. Environmental Politics. 1-27.

8. Bang, G. (2007). The United States and international climate cooperation: International "pull" versus domestic "push". Energy Policy, 1-10.
9. Lux, K. (2003). The failure of the profit motive. Ecological Economics, 1-9.