Current planetary context

Chapter 1: Current planetary context

To fully understand the environmental issues which companies face, we must, first, be aware of the current state of the world in economic and environmental terms and how they are connected.

Currently, the global economy consists of three overlapping economic markets (Hart, 1997). The first economy is the market economy. It includes the economies of developed nations and the economies of emerging nations. It is characterized by the traditional trade and by the people who live in cities and it is based on the consumption of products. The second economy is the survival economy. It includes the rest of the population that is not part of the market economy. It is characterized by people who live in villages far from civilization. It represents more than 3 trillion of the world's population, it is mainly composed of African, Indians and Chinese (Hart, 1997). The subsistence of its people is directly related to nature. They do not use an intermediary, instead of consuming products, they satisfy their needs by consuming directly at the source, in other words, they consume the nature directly they do not buy product. Moreover, the rapid expansion of the market economy threatens the survival economy, because the market economy is causing a degradation of the ecosystems on which the survival economy depends (Hart, 1997). The market economy is causing environmental degradation through the choice of companies to relocate their production, their choice of location of their factories, the extraction companies and the development of infrastructure necessary for their operations (Hart, 1997). In addition, this results in competition for scarce resources such as water, which makes people who are part of the survival economy even poorer (Hart, 1997). This pressure exerted by the players in the market economy leads people who are part of the survival economy to opt for short-term actions and behaviours, that in the long term are very damaging to their ecosystem. For example, when the wood becomes scarce, the locals burn the manure instead. Manure is one of the most damaging substances for the environment when burned (Hart, 1997). They therefore contribute greatly to the degradation of their environment. This creates a vicious circle (Hart, 1997). When the geographical area exploited by people who are part of the survival economy is no longer habitable due to scarcity of resources and environmental conditions, people migrate to "environmental refuges" which are overloaded large cities (Hart, 1997). The last economy is the nature's economy". It corresponds to all the resources and ecosystems that support the market and survival economy. It includes non-renewable resources and renewable resources. Paradoxically, today, renewable resources are the most at risk of exhaustion due to their overconsumption (Hart, 1997). On the other hand, a series of three books called the limits to growth confirm the risk of depletion of the earth's resources. This series analyzes the interaction between the earth and the human system. Since the second published in 1992, the authors have concluded that resource consumption exceeds the capacity of the planet (Meadows et al., 2004). Several other studies point in the same direction. For example, according to the Observatory of raw materials, at the current rate of consumption, there would be only 40 years of cooper, 28 years of lead and only 17 years of tin (Brabec, 2010)In short, according to Stuart L. Hart, the current interaction between the three economic spheres is at the root of the world's major social and environmental challenges: climate change, pollution, resource depletion and Inequality (Hart, 1997).

In one article, one of the authors was inspired by one of the articles published Michael Porter in 1980 and wrote: “the interaction with external factors has influenced in action mode of organization. Each organization will present a specific performance, according to their ability to deal with externalities and their capacity to adapt” (Salvador et al., 2014). Moreover, nowadays, although this has not always been the case, it has become clear that companies depend on their environment in the broad sense and that should influence their action mode. Global challenges therefore include issues for companies as well. One of the books of Maximilien Brabec describes very well global issues (Brabec, 2010). It divides them into 12 environmental challenges and for each challenge it lists several consequences for businesses. The consequences can be summarized as follows: “social and ecological responsibility of the manager, end of life of the business model producing more and consuming more, breaking down the double-edged costs of companies, accelerating the pace of prohibition promoting the pace of Innovation and regulatory pre-programming becoming a lever of success, new substitute solutions, many booming business related to the new challenges of the planet, time bomb of public opinion, change of consumer buying behaviour, transfer of  the global economic map and the business location policy” (Brabec, 2010). For many companies, all their consequences give rise to strategic issues in their business model. This may call into question the core of added value, the core business, the cost structure of the business, the revenue structure of the business, its key activities, its key resources, its value proposition, its chain supply, etc. It also highlights many external issues, such as increased pressure from external factors. There are also issues at the level of the structure of the industry, or even of the industry itself. One of the best examples is the asbestos industry that has completely extinguished due to the discovery of the toxicity of asbestos and this is not likely to be the last (Brabec, 2010). In short, challenges can lead to a change in the strategic field of a company and to organizational changes, and according to a Hart article the constraints and challenges posed by the natural (physical) environment will be one of the most important factors in the development of new resources and capacities for enterprises (Hart, 1995).

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