Ecological Concern in International Business

6824 Words Nov 26th, 2010 28 Pages
In this globalization era many industries seek expansion not just limited to their own nation but to go international and seek new market for their products and services. The environmental standards and norms play a significant role in determining the competitiveness of products and goods on the international market.
Environmental responsibility is a vital component of a business strategy as it not only helps the environment, but it wins the trust of communities and gains the respect of the governments of the countries in which the business operates. All businesses impact on the environment: they emit pollution, they produce waste and use resources. Businesses, however, are continually being encouraged to improve their approach to
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1. The ‘polluter pays’ principle (PPP) stipulates that the polluters should pay the full cost of environmental damage they cause. Environmental costs are often referred to as ‘externalities’ (for example, damage to health, rivers, the air etc. arising from economic activity) that are not incorporated into the costs of a product but are borne by society as a whole. By making the polluter pay the full cost of its activities, including externalities, the PPP provides an incentive to make products less polluting and/ or to reduce the consumption of polluting goods. The internalization of external costs can be met through the use of market-based, policy instruments.
2. The prevention principle involves changes to products and processes to prevent environmental damage occurring rather than relying on remedial action to repair the damage after it has taken place. This implies the development of ‘clean technologies’; minimal use of natural resources; minimal releases into the atmosphere, water and soil; and maximization of the recyclability and lifespan of products.
3. The precautionary principle acknowledges that our understanding of the ecology and environmental processes is, at best, incomplete and constantly evolving. Policy is therefore formulated against
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