Asian Business & Management, 2007, 6, (123–142) r 2007 Palgrave Macmillan Ltd 1472-4782/07 $30.00 www.palgrave-journals.com/abm

Environmental Issues and Theory of Management Takao Nuki Faculty of Social-Human Environmentology, Daito Bunka University, 1-9-1 Takashimadaira, Itabashi-ku, Tokyo 175-8571, Japan. E-mail: [email protected]

In environmental economics, activities aimed at reducing environmental pressure are covered by the expression ‘Internalization of external diseconomies’. However, management studies has no defined terminology for corporate activities tackling environmental problems. This paper therefore introduces new terminology — ‘the greening of management’ and ‘spontaneization’, meaning the self-generated and spontaneous involvement of companies with environmental issues — and discusses them in a contemporary context. The paper further notes five changes in social awareness of environmental problems that have accompanied the increasing gravity of environmental problems from pollution to potential breakdown, and explores the roles and limits of technological and economic countermeasures. Corporate activity is seen as requiring evolution towards environmentally conscious management, comprising measures such as corporate social responsibility, higher product durability and eco-business, and realizing the importance of longer perspectives and plurality in decision-making principles. It notes in conclusion that, in spite of the high competitive power of productive or ‘artery’ industries, supportive or ‘vein’ industries are not sufficiently developed in Japan’s industrial structure; as a result, the possibility is raised that global economic growth led by Asian interests will cause a worldwide environmental crisis that is Asian in origin. Asian Business & Management (2007) 6, 123–142. doi:10.1057/palgrave.abm.9200217 Keywords: environmental management; CSR; global warming; greening of management; eco-business

Introduction — Awareness of Environmental Threats to Human Survival Since the Club of Rome’s report, The limits to growth, was published in 1972 (Meadows et al, 1972), people’s awareness of environmental issues has been transformed, and environmental issues are now associated as issues connected with humanity’s ‘limits to survival’, as in this scenario offered by Junichi Nishizawa and Isuke Ueno (2000): (1) Oceans are a carbon dioxide (CO2) reservoir, holding 128 trillion tonnes, over 50 times that contained in the atmosphere. Received 6 April 2006; revised 15 May 2006; accepted 17 September 2006

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(2) However, if the temperature of the ocean rises by 11C, it will release over 10 billion tonnes of CO2. (3) The released CO2 will raise air temperatures, further accelerating oceanic CO2 emissions — the ‘Greenhouse Effect’. (4) As this cycle repeats, ocean-bottom methane hydrate, worth 10 trillion tonnes in carbon conversion, will be destroyed, releasing considerable methane gas into the atmosphere. (5) This methane will be hydrolysed into CO2 and water. (6) CO2 in the atmosphere will rise from its current level of 0.036 per cent to over 3 per cent — at which point, all animals, including humans, will suffocate. (7) On current trends, it will take approximately 150 years to reach 3 per cent concentration, but even if action is taken now to curb the trends, there is a deadline for them to take effect — 80 years from now. Wallace Brocker, the ex-president of America’s Geochemistry Society, has studied global ocean current circulation, revealing the presence of ‘Brocker’s conveyor belts’, and also another problematic scenario: (1) As Arctic ice caps melt across Greenland, the fresh water entering the North Atlantic lowers ocean salinity. (2) Between Iceland and Greenland, an upper current sinks into deep water, effectively the ‘pump engine’ of the Gulf Stream. However, the lighter specific gravity of sea water in the area will weaken the energy of this mechanism, eventually tending towards shut-down in the whole process. (3) This ‘invisible waterfall’ in the ocean, previously 3,000 m from the sea surface into deep water, has already shortened by several hundred metres, implying the real danger of the warm current circulation collapsing. Should this happen, the climate of Western Europe and the east coasts of America and Canada could resemble that of Siberia, causing extremely severe world food shortage (Mita, 2004: 1–2). In our context here, however, rather than consider the probabilities for environmental destruction, we must consider the sense of crisis that has emerged among most top scientists. Their perception of environmental issues goes beyond pollution, and as we can see envisages something like an ‘endof-the-world’ scenario — but does social awareness actually correspond to or follow their perception? Our planetary ecological systems have a certain resilience maintained over its long history, so some have argued that the fear of environmental destruction is similar to the ‘powerless anxieties’ articulated by Japanese aristocrats in the Heian period. We know, however, that despite the Kyoto Protocol, there has been little reduction of greenhouse gases, and indeed total gas emissions have Asian Business & Management 2007 6

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been allowed to grow, fomenting the above scenarios, while seeming to reflect an optimistic and irresponsible attitude in wider society, assuming ‘We’ll get through somehow, or at least we will during our lifetime’. Whether the possibility of environmental destruction has sunk into general social consciousness or not, the fact that there are limits to global and regional environmental capacities and the need to alleviate our environmental impact has surely been established. Japan itself has been making progress in implementing environmental laws and regulations, such as recycling laws. Many companies now acknowledge that their sustainability cannot be guaranteed unless environmental issues are tackled, initiating various programmes for reducing environmental impact, under the guise of ‘environmental management’. In this paper, we look at business management and its approach to environmental issues, and discuss how business management studies, the science of company management, can become more involved in environmental issues. A first step in clarifying the situation facing business management involves reviewing changes in the social perception of environmental issues, in which we can identify five ‘expansions’ of awareness.

Five Expansions in the Social Awareness of Environmental Issues Statistics show increases in an overall environmental impact, but no indication of improvements in environmental issues. However, the social perception of environmental issues today has developed considerably from that extant in previous occurrences of environmental pollution; this has already significantly influenced business management. (1) Previous cases of environmental pollution, or ‘public hazard’, included Ashio Copper Mine poisoning or Minamata Disease. Identification of the contaminants revealed these cases to be, actually, ‘private hazards’, caused by specific corporate behaviours — classing them as ‘public hazards’ referred only to local victims in general, that is, an unspecific mass of people. But today, we can see environmental issues as problems not just resultant from corporate fault, ignorance or negligence, but from the environmental impact of business activities themselves, including emission of ‘greenhouse effect’ substances like CO2. Even if a company takes advanced environmental measures, their activities still have environmental impact. In this sense, there is no escape from environmental responsibility. Thus, the awareness of issues with an environmental implication has expanded from those caused by specific companies to those implicating all businesses. This is the first expansion. Asian Business & Management 2007 6

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(2) Minamata Disease, Yokkaichi Air Pollution and Kawasaki Asthma were region-specific problems, and even today cases like waste disposal treatment are regional issues. On the other hand, global warming and ozone depletion, which are implicated in widespread environmental degradation, are global issues, affecting people at local and worldwide levels, even to human survival itself. Although the cause-and-effect relationship with environmental destruction is not fully comprehended, many people share a sense of crisis. Sadly, regional and global issues sometimes conflict; for example, Tokyo and other Japanese local authorities often reduce waste volume through incineration to extend space availability in landfills — a good solution regionally, but one with negative effects on a wider scale due to the CO2 created from combustion. From regional to global — this is the second expansion in environmental awareness. (3) When environmental problems were seen as ‘public hazard’, the villains were companies, and consumers and citizens the victims. The organic mercury behind Minamata Disease was waste-in-process, but the CO2 and methane behind global warming or the ozone-depleting CFCs are emitted not just through production processes but also by consumers’ use or disposal of the products. Therefore, responsibility also lies with the consumers who benefit from the products. As part of a re-examination of modern lifestyles, based as they are on mass production, mass consumption and mass disposal, those responsible for environmental issues are now understood to include not just producers but consumers and citizens too. This is the third expansion. (4) Even consumers must take responsibility for environmental issues. Highly developed work division makes today’s consumers reliant on producers for most everyday commodities. When it comes to technical information on alleviating environmental impact through waste reduction and material reuse and recycling (eg making durable products or easy-to-disassemble goods, or selecting hazard-free materials), producers are naturally more informed than consumers. Hence, incentives to reduce environmental impact must be created for producers, which means that if costs and responsibility for waste are imposed on producers, improvements will follow. Such principles of extended producer responsibility have been applied to environmental policies in Europe, but in Japan, they have yet to be fully adopted, due to concerns about ‘excessive burdens on industry’. Nonetheless, the move towards expanding producers’ responsibilities beyond manufacturing and consumer satisfaction, including waste collection and aftercare, is a development unseen in ‘public hazard’ days. With the scope of producer responsibility extended to disposal, we have a fourth expansion. Asian Business & Management 2007 6

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(5) Left-wing discourse once claimed that environmental degradation was part and parcel of capitalism, with the quest for profit maximization leading to dangerous cost-cutting measures; it was believed that environmental problems of this sort could not exist under a socialist economy free from the profitability ethos. However, the Soviet Union’s collapse revealed severe environmental problems. Plant and business managers had been blamed if they failed to achieve their production quotas, leading to false reports and the discharge of pollutants. This indicates that changing economic systems does not necessarily guarantee a resolution of environmental problems, which can no longer be considered specific to capitalism, but as universal issues liable to occur under any regime. This is the fifth expansion in the social awareness of environmental issues.

Environmental Technologies and Economy As described above, environmental issues are neither specific to capitalism, nor simply a corporate responsibility. We should take note of two formulas: Total human energy consumption ¼ populationenergy consumption per person Total environmental impact ¼ total energy consumption environmental impact per energy unit consumed We face swelling global population, rising per-capita energy consumption in line with increasing conveniences in living conditions, and thus an increasing overall environmental impact through rising energy consumption. Perhaps such energy and environment problems are inevitable: world population is ‘exploding’, and people’s desires, fuelled by the lavish lifestyles of advanced countries or wealthy sections of society, and their media portrayal, are ‘inflating’. If so, the root causes of environmental problems are the growth of population and people’s desire, and leaving these unchanged while altering the economic system or business behaviour would avail nothing. It would be like trying to cure liver disease while allowing the patient to continue drinking — and it becomes hard to resist pessimism. Influenced by such Malthusian gloom, neo-conservative tendencies become more evident, anticipating energy procurement wars and the rejection of environmental refugees. However, new dynamics can also be seen — populations are falling in advanced nations, modern lifestyles are being revised, and attention to environmental issues has become active at various levels, from multinational companies to national and local governments, from businesses and organizations to individuals. Asian Business & Management 2007 6

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Technologies Controlling population growth is hard, even through authoritarian state initiatives like China’s ‘one child policy’. Restraining people’s desires for a higher quality of life is even harder, unless it is forced on them by necessity. Most changes in people’s behaviour are no more than small adjustments, like ‘emphasizing inner satisfaction rather than goods’. Considering the trends of population explosion and ‘desire inflation’ as premises, the best way to handle the finiteness of energy and environmental capacities would be to encourage technological developments that might overcome environmental constraints, such as might be achieved in energy production should nuclear fusion energy or power distribution with cold superconductors be successfully developed. Other technological innovations might include: low-impact production processes; production processes facilitating decomposition or removal of hazardous waste; zero-emission industrial structures where waste from one industry becomes raw material for another;1 product designs permitting ‘reduce, reuse and recycle’; and durable products doing away with the need to recycle. Should these be realized through technological ingenuity, environmental impact levels could be kept within natural restorative capacities. Industrial society, which has developed on the assumption that energy resources and environmental capacity are infinite, is currently finding itself at a standstill, but high technological expectation indicates an eagerness to seek out further potential discoveries. In this sense, the best way to tackle environmental issues while avoiding sacrifices and the pain of reform might well be an intensive deployment of technological skills. However, the fact that total greenhouse gas emissions have not decreased despite huge progress in energysaving measures means that we might be expecting too much from technological solutions, without equal efforts to positively reduce environmental impact (see Table 1). Without doubt, technological development must be pursued, but what other measures are available?

Economy Contemporary society is a market economy where demand and supply are adjusted according to market prices. The creation and alleviation of environmental impacts — such as carbon emission and tree-planting — fall outside the scope of market trading. There are several reasons why ‘environment’, though the foundation for human existence, has slipped under market radar. Firstly, recognition that environmental capacity is finite — and therefore marketable — has been absent. Even had its finiteness been recognized, it takes extremely irregular forms of operation to treat immaterial common property as a tradable item, as seen with ‘emission allowances’. Asian Business & Management 2007 6

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129 Table 1 Carbon dioxide emission rates in Japan Year

1990

1995

2000

2001

2002

2003

1239.0 1213.8 1247.6 1259.4 Total CO2 emissions (million tonnes) 1122.3 1213.1 (Increase on 1990 figure) 8.1% 10.4% 8.2% 11.2% 12.2% Source: Kankyosho Sogo Kankyo Seisakukyoku [General Environmental Policy Agency, Ministry of Environment] ed. (2006), Heisei 18nenban Kankyo Tokeishu [2006 Environment Statistics], p. 37.

Furthermore, such irregular forms of trading would require extensive political agreements within the international community. However, now that planetary capacity is self-evident, the environment has to be brought into the economic framework in some way. In economics, this is called ‘internalization of external diseconomies’ — by using economic ‘carrot-and-stick’ penalties, subsidies, taxes and awards, schemes for lowering environmental impact through economic incentive could be planned. Economic studies relating to the environment have been formulated as environmental economics, mainly focussing on measuring and assessing economic losses created by environmental factors, or drawing up appropriate guidelines for environmental regulations and taxation, and designing a suitable charging system for waste disposal with consideration to balancing economic growth and financial burden. The production and consumption of goods and services are the economic activities that impact most on the environment; to change these to more environmentally appropriate practices, it is important to manipulate economic incentives according to environmental effect — in other words, manipulating company and consumer behaviour through economic means. In addition, for the environmental technologies described above, if development and implementation do not guarantee financial benefits, technological innovations will not progress. Nevertheless, as in the case of technological solutions, we should not raise our expectations too high on economic measures as solutions. Introduction of carbon taxes, emissions trading, or whatever diversifying forms the ‘internalization of external diseconomies’ may develop in the future, they are only meant to complement the limitations of spontaneous market mechanisms, with enforcement by state authorities as a backdrop. For instance, if carbon taxes are raised in one location to enhance emission curbs, a competitiveness issue will be created with lower rate areas, compromising markets and employment. Therefore, economic measures or legal regulation may be effective to some extent in stabilizing a situation, but would not necessarily guarantee a solution. Attempts to internalize external diseconomies are important to pursue wherever possible, but at the same time reform is also needed on the side of companies, which comprise the macrocosm of the economy. Asian Business & Management 2007 6

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The Greening of Business Management Companies, along with governments and households (consumers), are major players in economic activities and because they provide most consumer goods and services, environmental issues are crucially affected by how environmentally responsible a company’s activities are. In a macro-economy, the fundamental prescription for lowering environmental impact is by internalizing external diseconomies, and appropriate measures are economic incentives, like carbon taxes and public subsidies. What, then, are the prescriptions for lowering environmental impact at the microcosmic level of a company? We have yet to see in business management theories any standard terms expressing a fundamental management orientation in contrast to ‘internalization’, so we will use the expression ‘the greening of management’. Environmental management aims at an environmental approach or green policy in company behaviour, and the types of measures in practice vary according to business processes and functions, from research and development at the ‘upstream’ level to sales at ‘downstream’ level, or from personnel to finance. The implementation of these measures is an evolutionary move from passive environmental awareness following environmental regulation towards more active environmental responsibility, as in internalization in the economy — in other words, a development from reactionary awareness prompted by the external pressure of legal regulation to a more spontaneous awareness based on environmental ethics. Furthermore, environment-related elements, previously absent from decision-making processes, will enter company discussions.2 However, while internalization in economy accompanies economic incentives for environmental measures by means of taxes or subsidies, the greening of business management is not necessarily simply a response to economic incentives. It can be possible for a company to take environmental measures even if they gain no economic/financial benefits, or even make losses. On the one hand, for instance, lowering environmental impact through energy-saving can simultaneously reduce costs, so environmental measures may not disagree with profitability; but where switching to, say, lower-impact but higher-cost raw materials, if the cost increase from the switch cannot be reflected in the product price, there will be deviation from the profitability principle. In such a case, if a company opts for environmental measures despite them reducing company profits, it would generally be explained as a strategy of short-term sacrifice for long-term prospects. But even if maximizing long-term profits is planned, the management’s final decisions will vary depending on their strategies or forecasts for the future. In contrast with internalization in economy, which is applied universally across industry or in an industrial segment, an environmental approach of business management presents a variety of activities and criteria according to company vision and management Asian Business & Management 2007 6

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strategies. Therefore, using the term ‘greening of management’ or ‘spontaneization of environmental concerns’ (ie the spontaneous behaviour of management over environmental issues) would be a useful distinction from internalization based on economic incentive. Contemporary business management could be based on the integration of three principles: the profitability principle, to secure profits through efficient performance; the ecology principle, to reduce environmental impact and implement appropriate environmental measures; and the social principle, to pursue social good, such as equal opportunities for women and disadvantaged people. The transition from absolute monarchies became an indicator for transformation into modern societies; likewise, a departure from the absolute sovereignty of the profitability principle and adding the ecology and social principles might, according to the degree of realization of the three separate principles in business management, be seen as a momentous step in the evolution of capitalism. Three major objectives for business management used to be cost reduction, quality improvement and short lead-time, known as CQD (cost, quality and delivery). Recently, environment is often included, making four major objectives, or CQDE. CQD directly relates to the profitability principle, and it may be possible to establish objectives in CQD terms for the ecology principle, such as (1) cost (cost-saving in environmental impact reduction), (2) quality (improvement in performance levels for environmental impact reduction), (3) time (time-saving in processes for environmental impact reduction); or ecological objectives may be limited to CQD in disposal processes. However, as three major ecology principle objectives, the following may be more suitable and practical in assessing a company’s green credentials: (i) reduction in waste quantity (particularly solid waste), or reduction in endwaste quantity, (ii) reduction of hazardous waste and (iii) reduction of ‘greenhouse’ emissions, including CO2. Examples of the greening of management in company activities (including development, procurement, manufacturing and sales) are: (1) Research and Development (R&D): Product development based on energysaving during usage; product design allowing easy disassembly and recycling; improving product durability. (2) Procurement/Logistics: Priority purchasing of raw materials, etc, with lower environmental impact (green procurement); requiring ISO14000 certification from suppliers; improving logistics efficiencies through packaging design review or mixed loading transportation; use of lowemission vehicles. (3) Manufacturing: Energy-saving in manufacturing processes; hazard removal treatments on waste-in-process. Asian Business & Management 2007 6

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(4) Sales: Marketing emphasis on environment-friendly features; energy-saving at sales outlets. (5) Disposal: Increasing recycling rates; adoption of manifest for waste disposal. If environmental measures corresponding to the ecology principle are split into the previous categories (i)–(iii), the following items can be ascribed (see Table 2): (ia) Selection of highly recyclable materials at the design stage of R&D to reduce end-waste for disposal. (ib) In selecting suppliers, priority must be given to parts manufacturers using highly recyclable materials. (ic) Full-scale sorting by material type for waste-in-process generated from manufacturing. (id) Implementing made-to-order production to reduce unsold stock. (ie) Establishing recycling routes for wastes after disposal (see below for (ii) and (iii)). Greening of management may also be established according to management functions, including strategy planning and organizational structuring: see examples below. Greening of management (environmental measures by function) (1) Environmental strategy: Identifying environmental objectives and setting targets; defining managerial resources towards environmental impact reduction. (2) Environmental information system and information disclosure: Database on environmental impact by material to be used; defining responsibilities for producing environmental information; establishing information routes; making environmental reports. (3) Environmental training for employees: Development of environmental training; inclusion of environmental training participation in promotion qualifications. (4) Toxic substance control: Pollutant release and transfer register (PRTR). (5) Investment: Priority on equipment with lower environmental impact; financial support for environment-conscious companies. (6) Organizational structure: Setting up an Environment Department; assignment of environment personnel.

Environmental Issues and Business Management Studies — Roles and Tasks As the weight of environmental issues increases in business management, their importance naturally becomes greater for business management studies, in its Asian Business & Management 2007 6

Table 2 Greening of management (environmental measures by process) R&D

Procurement/ logistics

Manufacturing

Profitability principle K Cost reduction (C) K Quality improvement (Q) K Short lead time (D)

Hazard criteria (ii)

K

Effects on global warming (iii)

(1) (2) (3) a Adoption of recyclable materials

Designs avoiding toxic substances

b Priority purchasing of recyclable parts

Priority on parts free from toxic substances Development of Priority on parts low-emission vehicles eliminating incineration for disposal

c Full-scale sorting of waste-in-process Hazard removal treatments on waste-in-process Use of non-fossil fuels

d e Stock reduction Establishing through recycling routes made-to-order production Disclosure of Prevention of information on hazardous waste hazardous risks discharge Energy saving on Utilization of shop lighting nonincinerated waste

(Produced by the author).

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K

Disposal

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Ecology principle (E) K End-waste for disposal (i)

Sales

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role as the science of company management. Knowledge and techniques stored in various areas of business management studies, including theories on organization, strategies, labour, finance, R&D management, production control, sales management (or marketing) and management ethics, should be able to provide a wide range of intellectual tools to management issues relating to environmental impact reduction (Tokoro, 2003). Post-waste recycling processes are, in Japan, often called ‘vein’ processes (meaning a support/distributive network relating to waste and by-products of productive, or ‘artery’ industries), but there are common activities in making and implementing plans based on the integration of people, material, money and information. Above all, management principles, which aim to spiral up target levels through the repetition of the management cycle of ‘plan–do– check–act’, remain the same in ‘vein’ processes and environmental management. This is shown in the way targets in the environment reports of many companies are raised every year, and management studies can make a contribution here from its bank of research findings, regarding standards used as a basis for planning. Progressive case studies allow business management research to clarify theoretical accordance and universality, and to transfer the fruits of this process to other companies or industries. In this way, management studies give an impression of the following business practice, but in many cases, managers executing management practices, whether business management graduates or not, lay the basis of their behaviour on knowledge acquired from management studies (including ‘learning by ear’) as well as hands-on experience. This means business practices are actually carried out through the medium of management studies; hence, the significant role of business management studies, including environment-awareness management education run mainly by colleges, should be acknowledged. In fact, just as the accumulated outcomes from the theories of management ethics and management strategies are used as baseline concepts for setting management visions or decision-making, business management studies have played a major role in determining fundamental directions in environmental management. Thus, business management research must aim at establishing a scientific ethos underpinning such a role, and among environmental issues offering potential for future research, corporate social responsibility (CSR), goods durability and eco-business are here discussed as examples. CSR In the past, against a background of public pollution and fuel anxieties, companies’ social responsibility began to be seriously discussed, and this trend has carried over into the current CSR debate. CSR emphasizes that a company Asian Business & Management 2007 6

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will not be sustainable in itself unless it contributes to sustainability in society and nature by addressing environmental issues and the social good, including human rights and fairness. CSR reflects growing concerns about the likelihood of further damage to the natural environment and social justice, if market mechanisms and national legal systems are the only controlling factors on business behaviour.3 Not only multinationals, but companies in general are increasing their impact on the environment, and without the emergence of a spontaneous sense of responsibility and consequence, there can be little optimism under current circumstances, lacking as they do any options except market economy practices. Taking management decision-making on company behaviour beyond Friedman-style profit maximization, a major task for business management studies, will be to establish a relationship between active environmental approaches and business competitiveness. Successful cases of companies voluntarily setting tougher environmental targets, in advance of legislation, and achieving competitiveness through technological development must be theoretically established.4 Many companies are cautious of stricter environmental regulation, fearing it would be costly and weaken their competitiveness against emerging industrial countries with weaker legislation; this clash with short-termism has been a particular issue following the ratification difficulties faced by the Kyoto Protocol. There is also a sceptical view on the cause-andeffect relationship between tightened controls and higher competitiveness through technological innovations, assuming that only companies that are already competitive are improving environmental management prior to regulation, thanks to their existing financial surplus. That is why caution has been expressed from Japanese industries regarding the introduction of environmental taxes. For management officials responsible for profitability, both cautious and sceptical views on environmental management are understandable, and it is necessary for business management studies to establish generalized factors in positive results, through the analysis of successful cases, and present models of environmental management that do not contradict the profitability principle. In environmental management, for instance, reducing energy consumption leads to decreased emissions, environmental impact and energy costs, and this measure presents no conflict between profitability and ecology. Such ‘profitable environmental measures’ can expect a positive response. However, with measures like switching from fossil fuels to renewable energy, a company’s expenditure will increase unless the alternative equals or is cheaper than existing practice. So the decision is often reliant on national or local government subsidy schemes, or a company’s financial surplus or futureoriented management strategies. ‘Future’ here contains several elements in our energy example, including trends in technological advancement for clean Asian Business & Management 2007 6

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energy, stricter regulations on the use of fossil fuels, grant prospects for clean energy, and anticipated client/customer support for an active environmental stance; it will be another major task for business management studies to theorize how to integrate these factors. Product durability To develop a circulatory society, the three Rs (reduce, reuse, recycle) are essential, and it is now well known that reducing waste production is particularly vital. The philosophical basis for waste reduction is the pursuit of a simple lifestyle, emphasizing spiritual enrichment, but since we need various kinds of goods for modern lifestyles, it is very important to re-examine production and consumption with a view to reducing waste. One most effective way of reducing waste is to improve product durability. To extend longevity, products should not only be physically resilient, but also, if they are to be used for a long time, designed imaginatively, to counter consumer boredom, and encourage appreciation of character or authenticity. Nonetheless, even physically and psychologically durable goods sometimes lose functionality due to changes in personal tastes or family structures; at this stage, not being disposable items, they should be made available for reuse by someone else, so increasing the vitality of second-hand markets or charity bazaars. For goods like personal computers or mobile phones, in thrall to rapidly evolving technologies, product design must allow for easy upgrade, or if that is unfeasible, features to facilitate recycling. In fact, however, there are very few things whose lifespan is affected by rapid technology turnover — for most everyday goods, including clothing, furniture and household items, extending product longevity will contribute to the ‘reduce’ concept. From an environmental point of view, improvement of durability is generally desirable. For instance, if the lifespan of houses should double, the amount of building debris generated from demolition would be halved. However, manufacturers might fear that longer life products will reduce demand for replacement purchases, so unless compensatory price rises or market share increases can be anticipated, there is no economic incentive. To solve this problem, leasing instead of selling goods may be an option, developing a business model that generates income from lease charges even after the products have depreciated. An experimental model of this sort was carried out by the Swedish home appliance manufacturer, Electrolux (although their lease project on washing machines has been discontinued, due to timeconsuming arrangements with users regarding locations for installing usage meters). This will be another future task for business management studies, to collaborate with industries to establish business models where product durability can coexist with the profitability principle (Nuki et al., 2003). Asian Business & Management 2007 6

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Eco-business As discussed above, business management studies deal with management for environmental impact reduction as an object of research, while eco-business deals with environmental impact reduction as an object of business. Ecobusiness includes the manufacture and sale of environment-related equipment, recycling, contaminated soil reclamation and environment consultation. Environmental management refers to an attitude and approach in management applying to all trades, but eco-business (or environment industry/business) is an industrial sector, or an environment-related company engaged in ecobusiness. Business management studies are able to contribute to the management of businesses in post-process supportive or ‘vein industries’, through the results of research into management in productive industries, such as work standardization or stock control techniques. Business management studies can also develop and provide management theories and techniques in line with the lifecycle of environment-related businesses, from the initial stages of planning and launch to the stages of growth, maturity and even closure. However, vein industry operations have some different features from artery (productive) industries. Reverse payment trading occurs in cases like eco-cement, manufactured from ashes derived from waste incineration, where the party receiving raw materials takes a handling fee. Or, there is a great variation in material type and shape when waste is the raw material, and the major processes are not machining or assembly, but breaking down the raw material. Therefore, new theories and techniques are required, which differ from the knowledge gained from researches in core industry management. Also, while production and logistics for raw materials, parts and products are globalized in ‘artery’ industries, international trade in waste material is restricted under the Basel Treaty, which prohibits waste export. Nonetheless, the international transfer of waste material (and items such as used cars) has increased, so internationalization in recycling may be expected to develop further in future. Business management studies, primarily based on core or artery industries, have achieved much in the analysis of artery-type multinational companies, but internationalization among ‘vein’-type companies remains unexamined, and is therefore a suitable topic for future investigation. For instance, the growing use of automobiles even in poor economies is causing an increase in used car imports, and a follow-up accumulation of scrap cars in places like the Pacific islands of Palau, Tonga and Samoa, creating an environmental blight through dumping, which in turn generates a need for dismantling and recycling. However, the market is too small yet for such recycling businesses to be viable, but rather than asking the Overseas Development Assistance (ODA) for solutions, measures linking international support industry networks could be explored — which is also one Asian Business & Management 2007 6

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of the subjects for research in eco-businesses related to internationalization (Kawamura, 2003).

Conclusion — Environmental Issues and Critical Business Management Studies Historically, business management studies are characterized as a cognitive and theoretical field, with features of practical and technological science, and thus can present three kinds of approach to environmental issues: (1) Establishing and collating facts related to environmental management, and through understanding relationships between them, establishing principles or theories for environmental management. (2) Studying measures to enhance the effects of environmental management, including organizational structures and decision-making processes. (3) Identifying limitations to and problems with current environmental management and exploring solutions. A similar practical scientific approach can be applied to (2) and (3), but from different perspectives — environmental management can be examined from a management point of view in (2), or from a social or citizen’s point of view in (3). Environmental management considered from the latter perspective will turn up viewpoints differing from those of shareholders, whose interests lie in maximizing stock dividends or profits from selling shares, and research will be based on the logic of people living everyday lives, or the logic of livelihood sustainability. Therefore, it will likely be a viewpoint critical of pure capitalistic company management, where management officials are only answerable to shareholders; in Japan, indeed, business management studies based on critical viewpoints are called critical business management studies. In these studies, Marxist economics is not necessarily the basis, but rather an attitude of dialectical research, positing the logic of labour or society as a countervailing power against the logic of capital or company. To look at perceptions of business spontaneity in environmental awareness, let us turn to how Marx and Engels perceived the relations between the environment and business management. Marx and Engels saw human history as the history of development in material production; and it is clear from the early stages of their work that they had a clear perception of the threats to nature posed by capitalistic industrial production. To give some examples: As soon as the river is made subject to industry, it will be polluted with dyes and other wastes, and as soon as the steamship goes on the river y the water will no longer be the natural environment of fish but become a means of existence unsuitable for fish.5 Asian Business & Management 2007 6

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Capitalist production, therefore, only develops the techniques and the degree of combination of social process of production by simultaneously undermining the original sources of all wealth — the soil and the worker.6 Moreover, ‘disturbance to permanent natural conditions for continuous land fertility’ was pointed out as well: ‘In this way, it produces conditions that provoke an irreparable rift in the interdependent process of social metabolism, a metabolism prescribed by the natural laws of life itself’.7 Recognition of the ‘finiteness of resources’, such as arable land, can be found in the trends of modern economics, including Smith, Mill and Ricardo, but an anti-capitalist aspect in an awareness of the ‘destruction of nature’ was more apparent in Marxist economics. Building on such Marxist viewpoints, critical business management studies have analysed capitalistic business management in respect of work and natural environments, but the proposed solutions have mainly relied on ‘democratic regulations’. This corresponds to Marx’s remarks, expressing the perception that nothing other than external pressure by regulation can change companies’ actions: ‘Apre´s moi le deluge! Is the watchword of every capitalist and of every capitalist nation. Capital therefore takes no account of the health and length of life of the worker, unless society forces it to do so’.8 Thus, even then there was a consciousness that company behaviour should be deterred from driving nature towards destruction through regulation by democratic process, while the ownership of the means of production should be changed from private to social, alongside the creation of self-regulating and spontaneous corporate motivation towards sustainable environmental activities. Yet in today’s world, the reality is a growing global market economy (or capitalization) and privatization, following the disintegration of most of the socialist bloc. However, we also have North European models of social democracy, China’s ‘socialistic market economy’, non-profit organizations and workers’ collectives in advanced capitalist nations, and the prevalence of regional currencies, so the indications are not just those of advancing capitalization. In the current situation, therefore, we would propose the following solutions towards some resolution of current environmental concerns. First, restrictions on business behaviour should be toughened, through economic measures like environmental taxes, along with legal regulations — the ‘internalization’ of external diseconomies. Environmental management strategies, environmental ethics and environmental education should be emphasized, in the expectation that companies will voluntarily take environmentally conscious action beyond regulatory levels or without economic incentives — the ‘spontaneization’ of environment measures. The role expected, then, for business management studies will be to concentrate on the following two points: Asian Business & Management 2007 6

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(1) Steering company activities from the simple pursuit of short-term profit maximization to a long-term and sustainable profit perspective. (2) Clarifying the point that sustainable profits can only be achieved on the basis of ensuring sustainability in nature and society (ie social fairness). In other words, in order to encourage management officials, shareholders, workers and other stakeholders to make environmentally conscious decisions spontaneously, it will be necessary to extend time scopes and diversify the criteria used in decision-making. This is the only way to secure both economic systems and company sustainability, and is something that must be delivered theoretically, rather than presented just as a prescribed norm. Environmental issues are also affected by factors like population increase and the pursuit of life convenience, which are not directly connected with corporate profitability principles. However, environmental problems have arisen as a result of industrialization, so if culprits are to be sought, then the principal offenders, inevitably, are industries, and the companies comprising them. Therefore, any attempt to solve problems by modifying company behaviour through ‘internalization’ of external diseconomies or ‘spontaneization’ may meet criticism, or the allegation that it is like trying to restore a failing business without replacing personnel responsible for the poor performance. This is true; after all, no real improvements have been seen in the global environmental index, including greenhouse substance emissions, despite active promotion of environmental management. More and more large companies are becoming multinationals, and new production transfers into China and other Asian countries are everyday news, hyped to people as ‘the era of Asia’. Yet most of these reports concern manufacturing operations of artery-type industries; reports on vein-type industries for waste collection and recycling are only about the export and return of waste materials, such as scrap paper, metal and plastic, mainly operated by small or medium-sized businesses. It is therefore rather in doubt that the so-called artery and vein operations are well balanced. Careless planning is often likened to ‘building houses before roads’ — a relevant point when looking at the way production facilities are being built without a local support network of material recycling systems that would facilitate hazard removal and effective waste utilization, and it raises the concern that this could bring Asia, not just the much-vaunted increased production capability, but also increased environmental degradation capacity. The current predicament of widespread illegal fly-tipping in Japan (and elsewhere) shows that the government, regulatory authorities and companies still have many issues to resolve on waste treatment. For Japanese industries moving production facilities overseas, it should be a duty to set a good example to the world, especially Asia, for the formation of a circulatory society. As far as the global issue of the earth’s environment goes, the main bodies charged Asian Business & Management 2007 6

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with managing the issue have been conceptually hamstrung by state sovereignty and can only construct in concert systems with limited authority, such as the United Nations or the Intergovernmental Panel on Climate Change (IPCC). Under such circumstances, it is natural to doubt whether we might ever expect brighter prospects for environment sustainability through economic incentives and environmental management. Recent trends in emphasizing CSR also lead us to suspect that ‘because the reality is contrary, the slogan is shouted loud’. The present economic system has no alternative that might replace private companies, and alternative company-free economic systems are rather unrealistic. We can only see some hope of a solution through establishing theoretical and institutional structures encouraging the evolution of businesses playing a leading role in counteracting the threats to our natural environment posed by industrial activity, supported by management theory and other academic and political resources. Financial panic at outbreaks of contradiction in cash circulation are familiar from economic history, but environmental destruction as an outbreak of contradiction in material metabolism is a matter of human survival, and new; we cannot seek lessons from previous occurrences. All we can do is to read the symptoms, work towards agreement and take action — and it is in this respect that the pressing environmental issues of today are challenging the character of human societies most fundamentally and globally. Notes 1 Zero-emission industrial structures are based on the ‘Zero-Emission’ Research Initiative put forward by the United Nations University, led by Gunther Pauli in the early 1990s. The idea is that waste discharged from one industry should be utilized by other industries, reducing overall waste towards zero. 2 However, this suggests that the implementation of environmental management can be regarded as ‘internalization’ at business management level, and thus some may question the usefulness of the new term, ‘greening’, instead of ‘internalization’. 3 Regulatory levels vary from country to country, and some developing countries have no such legal regulations. 4 See, for example, Porter (1991), Porter and van der Linde (1995), Hamamoto (1997), Itoh (2001) and Amano (2003) regarding relationships between environmental regulations and technological innovations. 5 These quotations were discovered in a Marx manuscript by S. Bahne (1962), but do not appear in the Works, Vol. 3. The New Mega — the new collaborative compilation of Marx and Engels’ work — contains Marx’s complete manuscripts, but Vol. 5, covering ‘German Ideology’, has yet to be published. Japanese translations are included in Marx and Engels, German Ideology, Hattori (trans.) (1996). See also Notes 6 and 7. 6 K. Marx, Das Kapital, Erster Band; Karl Marx–Friedrich Engels (1969) Works, Band23, Berlin: Dietz Verlag, pp. 529–530; English version (1976) trans. Ben Fowkes (trans.), Capital, Vol. I, Harmondsworth: Penguin, p. 638; Japanese version (1997) Committee for Translation of Das Kapital (trans.), Tokyo: Shinnihon Shuppansha, Part Ia, p. 864. Asian Business & Management 2007 6

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