Qn: In today’s global environment, why are eco-efficiency and eco-effectiveness important to organizations In recent years, much emphasis has been put on the importance of eco-efficiency and eco-effectiveness due to raising concern of global warming and the environment in general. Basically, eco-efficiency means reducing the environmental impacts of goods and resource intensity throughout the entire life cycle to a level at least in line with the Earth’s estimated carrying capacity; while at the same time satisfying human needs in short reducing the environment impact of products and resource used for human needs. Eco-effectiveness on the other hand means doing it right, instead of reducing the harm of wrong things. This essay will discuss in detail the benefits and reasons why eco-efficiency and eco-effectiveness is important to organizations and the concept of sustainable development with examples from some companies in the world today. There are many benefits of eco-efficiency and eco-effectiveness to firms. One of the benefits is economic benefits. Companies have long been thought of as profit-maximizing entities which are expected to engage in activities that meet the financial responsibility of the firm. In recent years, the concept of corporate social responsibility is more highly regarded. Hence, fund managers are more inclined to investing in companies that are deemed environmentally responsible; due to the fact that companies that are not environmentally responsible might end up with the wrong side of the law. For example, King and Lennox (2002) suggests that an increase in environment performance translates into improvement of reputation, an increase in investor’s trust and a decrease of investor’s risk. Therefore, with the importance of attracting investors and strengthening business ties, it is important for organizations to sustain eco-efficiency and eco-effectiveness (Hay et al. 2005). Eco-efficiency benefits can also be reaped nation-wide. As De Simmone and Popoff (2000) suggests, eco efficiency can help developed countries improve their resource productivity and encourage developing countries to reach their full potential. By becoming eco-efficient and eco-effective, the cost of manufacturing a certain product or providing a certain service will be reduced as well. A fine example is 3M – through pollution-prevention projects, the company has saved over 750 million dollars (McDonough and Braungart 2001). Additionally, it is essential to the government to enable the society to be sustainable. Developing countries – giving back to the locals. Finding work for them to do instead of replacing them with eco-unfriendly machinery. In developed countries, some people are willing to pay more for “green” products as their physiological needs are already satisfied, and hence move up the Maslow hierarchy of needs, seeking esteem and self-actualization instead.
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