How should we incorporate the cost of Environmental Destruction into the costs of doing Business?

Question for Discussion: According to Hawken, how
should we incorporate the costs of environmental
destruction into the costs of doing Business?

Readings: Hawken, pp. 57-90; Assadourian, "When
Good Corporations Go Bad"

Video: The Corporation DVD-- Chapters 21, 3, & 4 , Moyers NOW Programs DVD: Pesticide Poisoning

Making Pollution Profitable?

Hawken, Parking Lots and Potato Heads (in-class)
Hawken, Pigou's Solution (in-class)
The Goals of Commercial Ecology (in-class)
Lewis, Will the Future take Care of Itself? (in-class)
Greenwood, "Enronitis: Why
Good Corporations Go Bad"
Sustainable Economics Principles
Industrial Ecology and Restorative Economies
(in-class)
Intelligent Product System (in-class)
The Factor Ten Principles (in-class)
Green Taxes (in-class)
The Boulder Centerline Pollution Case (in-class)
The Ceres Principles for Sustainable Business
(in-class)

Hawken's Writing

Daly on Sustainable Economics

Rocky Mountain Institute

Sustainable Economic Principles

The Natural Step and Factor Four

Natural Capitalism Consulting

The Natural Capitalism Group: Consulting
Natural Capitalism Explained
Global Reporting Initiative
The Earth Policy Institute
Eco-Economy Indicators
Sustainable Development International

Making Pollution Profitable?

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U.S. power, influence will decline in future,
report says
NIC: Global Trends 2025: Study of U.S. power
Assadourian, "When Good Corporations Go Bad"
(in-class)
Challenging the Rights of Global Corporations
The Toxic Waste Business Creates (in-class)
Hawken, Parking Lots and Potato Heads (in-class)
Hawken, Pigou's Solution (in-class)
The Goals of Commercial Ecology (in-class)
Lewis, Will the Future take Care of Itself? (in-class)
Greenwood, "Enronitis: Why Good Corporations
Go Bad"
Sustainable Economic Principles
The Ceres Principles for Sustainable Business
(in-class)
Industrial Ecology and Restorative Economies
(in-class)
Intelligent Product System (in-class)
The Factor Ten Principles (in-class)
Green Taxes (in-class)
The Boulder Centerline Pollution Case
as a model for needed reforms (in-class)

Hawken Parking Lots and Potato Heads

"But sooner or later, we must recognize that despite the protestations of industry, it is completely lacking in ecological principles, and that what is good for business is almost always bad for nature." (57)

"We have received a nearly unpayable bill from the industrial world for its past and ongoing excesses. But economy as we know it is not an inevitable form, growth does not necessarily mean more waste, prosperity does not have to be described by kilowatts used, autos produced, hamburgers flipped and consumed. Value is what we ascribe. Prosperity is what we make it to be. So what will it be?" (59-60)

"To move ahead to a restorative economy, the industrial corporations of the world must change to meet the world's needs, not the other way around. In this chapter and one that follows, I address specific means of restoration to large corporations, but small businesses are not exempted from responsibility or change. Small companies must pay careful attention to larger corporations, if for no other reason than that, they often tend to become their homunculi, parroting and striving to take on the behavior of their larger cousins as soon as they can afford it." (60)

"One of the most comprehensive proposals toward sustainable industrial methods is being called "industrial ecology." The term was first coined by Robert Frosch and Nicholas Gallopoulos in 1989 in a Scientific American piece entitled "Strategies for Manufacturing. " Recognizing that industrial processes that harm and waste are, by definition, less economic and therefore more costly in the long run, companies and industries are trying to dovetail their material and waste flows, attempting to eliminate pollution by tailoring manufacturing by-products so that they become the raw materials of subsequent processes. This philosophy goes well beyond the hygiene of curtailing waste; it entails using waste so that it is no longer waste at all. Not only does this prevent material from entering the wastestream, it garners sales and therefore income for what was once an expense." (60)

"A prototype of industrial ecology and cooperation is in place right now in Kalundborg, Denmark. In Kalundborg, a coal-fired power plant, an oil refinery, a pharmaceutical company specializing in biotechnology; a sheetrock plant, concrete producers, a producer of sulfuric acid, the municipal heating authority, a fish farm, some greenhouses, local farms, and other enterprises work cooperatively together. The Asnaes Power Plant started this process off in the 1980s by recycling its waste heat in the form of steam. It had formerly condensed the steam and retuned it as water to a nearby fjord; now it sends the steam directly to the Statoil refinery and the Novo Nordisk pharmaceutical company. It also provides surplus heat to greenhouses, a fish farm owned by the utility, and the residents of the local town, allowing 3,500 oil-burning heating systems to be shut off." (62)

"Tibbs 's view of industrial ecology, however, goes far beyond the mere complementary siting and interaction of industrial processes. Besides adjusting the internal metabolism of industry to minimize the input of energy and the output of waste, Tibbs proposes that industrial ecology recalibrate its inputs and outputs to adapt to the carrying capacity of the environment, the first time in the history of industrialism that such a sensible and reasonable recommendation has been made. To accomplish this, industrial design would emphasize "dematerialization," using less material per unit of output; improving industrial processes and materials employed to minimize inputs; and a large-scale shift away from carbon-based fuels to hydrogen fuel, an evolution already under way that is referred to as "decarbonization." " (64)

"At this writing, the United States is just reaching the twentieth anniversary of the "energy crisis " of 1973-1974. It was abundantly evident then and in the two decades since that the industrial world needed to thoroughly reexamine its dependence on energy; imported oil particularly, and that we in America required a national energy policy that had, at the very minimum, a vision of future energy strategies. During those twenty years, other economies, most notably the Japanese, radically redesigned their industrial systems to reduce their need for energy; while in the United States, although some progress was made, proposals to establish energy self-sufficiency and conservation were derided, opposed, fought, and derailed by industry, at nearly every opportunity." (66)

"A fundamental proposal for industrial reorganization and waste management comes from Dr. Michael Braungart and Justus Englefried of the Environmental Protection Encouragement Agency (EPEA) in Hamburg, Germany. By proposing an "intelligent product system," Braungart and Englefried propose bypassing waste management altogether by fixing the source of the problem. Their concept of a completely cyclical economy goes further than industrial ecology in that it eliminates waste altogether. Braungart and Englefried divide products into three categories: consumables, products of service, and unsaleables." (67)

"Consumables are products that are used and consumed, usually only once, and then become waste of one sort or another. In order for a product to qualify, as a consumptive product, its waste must be wholly biodegradable, capable of transforming itself into food for another organism with no toxic residue that would cause harm or be accumulative. In essence, it would have to be capable of turning back into dirt, with no harmful intermediary process inherent in its decomposition." (67)

"Products of service are primarily what we call durables, although they also include non-durables such as packaging. What we want from these products is not ownership per se, but the service the product provides: transportation from our car, cold beer from the refrigerator, news or entertainment from the television. Under the intelligent product system, these products would not be sold, but would be licensed to the purchaser, with ownership retained by the manufacturer. When you bought a refrigerator, a VCR, or car, you would buy the license to use and operate it. The license would be transferable, so that if you wanted to give or sell it to a friend, you could. But the product could not be thrown away or disposed of. It must be returned by the final user, or in the case of large appliances, picked up by the manufacturer or retailer. Retailers of consumer products would become "de-shopping" centers where we would drop off the products we no longer needed and obtain newer ones." (68)

"Under the "products of service " concept, manufacturers would view both the materials and the methods of production in an entirely new way, since they would always have to imagine how they would reuse and reclaim the product upon its return. This calls for entirely novel principles of design that mimic what nature tells us: waste equals food. Instead of thinking of the value of the product only as it goes out the door, the manufacturer has to consider its value when it comes back in the door." (68)

"Finally, there are what Braungart and Englefried call unsaleable products: toxic chemicals, radiation, PCBs, heavy metals, and the like. There is no "cycle " to these products within the environment, no continuous or cyclical process into which they can be integrated that will not cause harm. An intelligent product system works toward. designing unsaleables out of consumables (i.e., using mercury fungicides on seeds), and, eventually, from all products of service. In the meantime, unsaleables must be gradually phased out and replaced, which means that safe and effective storage methods must be sought out and created. Braungart and Englefried propose that unsaleables be stored in what they call "parking lots," sites that are owned by the state or other public authorities but that are then rented to the polluter." (69)

"Under the parking lot concept, storage charges would be the responsibility of the manufacturer of the toxin, who would pay for the service in perpetuity, or until the industry or some other agency devised a safe method of detoxification. As a result, local communities would only have to deal with organic waste in their landfills. But the chief advantage of the parking lot is that it ties the manufacturer to the waste." (70)

"Today, when many people 's bodies in industrial nations are, technically speaking, too toxic to be placed in landfills, it is time to establish a pathway to eliminate the poisons, a chain of actions and consequences that energizes business, that stimulates innovation, that preserves employment, and restores the environment. A cyclical, restorative economy thinks cradle-to-cradle, so that every product or by-product is imagined in its subsequent forms even before it is made. Designers must factor in the future utility of a product, and the avoidance of waste, from its inception." (71)

"The United States proposal is based on a concept that is already having a big impact in Germany. By mandating percentages of packaging that had to be reused and recycled by producers of consumer products, Germany placed the problem of a throw-away society. squarely on the shoulders of the creators of package waste. When industry insisted that legislation requiring 80 percent recycling of all materials was' unworkable and impossible, the government gave companies the choice of compliance or a 30-cent surtax on all packages. With their options clearly delineated, 600 German companies formed Duales System Deutschland, a private corporation that will ultimately serve 90 percent of the German market." (72)

"In Japan, legislation requires that eventually all manufacturers or durable goods label parts as to their recyclability, while newly passed legislation in 1992 requires manufacturers to establish resource recovery centers. Now that the responsibility to reuse and reprocess materials is reverting to the manufacturer, Japanese companies are scrambling to redesign their products, building in recycled materials, changing product and material composition, and designing for disassembly. Matsushita's new washing machines can be completely disassembled with a single screwdriver." (73)

"In a restorative economy, the least expensive means of manufacturing a product should also be the most environmentally benign and constructive means. Until this is so, there is an inherent design flaw in business: being "economic " and being sustainable remain in conflict and at odds."(74)

Hawken, Pigou's Solution

"The answer is simple: Markets are superb at setting prices, but incapable of recognizing costs. Today we have free markets that cause harm and suffering to both natural and human communities because the market does not reflect the true costs of products and services."
(75)

"Gasoline is cheap in the United States because its price does not reflect the cost of smog, acid rain, and their subsequent effects on health and the environment. Likewise, American food is the cheapest in the world, but the price does not reflect the fact that we have depleted the soil, reducing average topsoil from a depth of twenty-one to six inches over the past hundred years, contaminated our ground-water (farmers do not drink from wells in Iowa), and poisoned wildlife through the use of pesticides. When prices drop, effectively raising real income, people don't need to think about waste, frugality, product life cycles, or product substitution. When prices rise, people have to reconsider usage patterns. This may be painful at first, but it generally results in innovation and creativity." (76)

"Theory has a great appeal to business, especially when that theory enforces its own primacy. Free-market economists read the prices on the commodity exchanges and pronounce the patient well, ecologists read the deterioration of living systems and warn of perils ahead. In order for any type of commercial ecology based on market principles to function, it will require that resources be available on a sustainable basis, that is, using the resources to supply the needs of one generation in a manner that does not compromise the ability of future generations to fulfill those same needs. What does it matter if an industrial system is operating "optimally" if the forests, soil, and water around it are deteriorating?" (80-81)

"If industrial methods of extraction and production under a free-market corporate system are destroying life around us-and there is no credible evidence to suggest otherwise-then the question is this: Can we imagine a market system that achieves exactly the opposite result, that creates, increases, nourishes and enhances life on earth? Can we imagine competition between businesses that improves living and cultural systems? Can we construct a public-private partnership in the economy that reverses the incentives so that economic success is tantamount to biological success? I believe we can." (81)

The Goals of Commerical Ecology

"One of the most effective ways for government to accomplish that task is with cost/price integration. The pioneer for this idea was Nicolas Pigou, an English economist who published The Economics of Welfare in 1920. Pigou argued that competitive marketplaces would not work if producers did not bear the full costs of production, including whatever pollution, sickness, or environmental damage they caused. Pigou's solution was to impose a "tax to correct maladjustments" on producers, a tax that would be comparable to the avoided cost or unborne expense." (82)

"There are two types of costs that need to be internalized. The first is the actual damage caused by one production system to another system, person, or place. It is what economist Herman Daly calls the "spillover effect," perhaps unintended but harmful nevertheless. For example, effluents from a chemical plant kill or poison fish down-stream from the plant's discharge pipe, causing loss of income to those who harvest the fish and sickness to those who eat them. The second type of cost, harder to measure but equally important, is the cost to future generations, as in the case of global warming, deforestation, erosion, and depletion of groundwater. Not surprisingly, most environmental harm--such as the harm caused by radiation, persistent pesticides, and clear-cutting--cuts across the two categories. " (82-83)

"The purpose of integrating cost into pricing is not to provide a toll road for polluters, but a pathway to innovation. The incentive to lower costs is the same one that presently operates in all businesses, but in this case the producer's most efficient means to lower them is not externalizing these costs onto society; but implementing better design." (83)

"So, as we were asking before: How much does it really cost to burn coal? It may be an incalculable cost, but it is certainly greater than the 3 to 4 cents per kilowatt hour utilities presently charge. Perhaps we will never be able to accurately predict the external costs of any one process, but we can at the very least assign a cost to inaction. Not doing anything will only accelerate global warming and potential environmental destruction. It is reasonable to assert that coal is more "expensive" than a competing and clean technology that does not cause global warming, acid rain, leaching, and black lung disease." (87)

"A restorative economy tries to achieve a market in which every transaction provides constructive feedback into the commons, as opposed to what we know today, when virtually every act of consumption causes degradation and harm. And businesses must --must-- be able to make money sustaining living systems, or global restoration will never happen." (89)

"Competition in the marketplace should not be between a company wasting the environment versus one that is trying to save it. Competition should be between companies which can do the best job in restoring and preserving the environment, thereby reversing historical price and cost incentives of the industrial system that essentially send the wrong signals to consumers. The ultimate point of cost/price integration is to fully enfranchise all businesses into the process of environmental restoration. It shouldn't be so hard to do the right thing." (90)

Will the Future take Care of Itself?

Thomas Friedman and others tend to argue that the
future will take care of itself. For Friedman, markets
and the growth of affluence will fix the larger causes
of the environmental crisis. One of my students argues
that in 20 years we will stop using fossil fuels, because
of declining supplies and increasing costs, which is
also a market-based argument. But Hawken argues that
we can't trust current markets to adjust consumer
demand to protect the environment. If we let the
future take care of itself, there is no guarantee that
our present and future choices will be good for the
environment. In our current global economy, what is good for global corporations and the market is not necessarily good for the human future. What Hawken wants to do is to re-design our economic system so that what is good for business is good for the global environment and the human future. If we want a decent future, we must make choices in the present to protect the future, both for ourselves, our children, and the larger global environment.

Our present national and global economic institutions allow corporations to profit by "externalizing" their costs onto the environment, the consumer, the government, or the larger society. By not paying for the costs of their destruction of non-renewable resources, destroying ecosystems, polluting the environment, and the health costs of dangerous products, business is able to increase its profits at the expense of environment and society. Currently, businesses find that there are incentives to cheat, to violate environmental and public health laws, because if they don't and other competing businesses do then they won't be as competitive or profitable as those who cheat and externalize their costs. Hawken's larger argument is that we must re-design our economic institutions to provide incentives for businesses not to cheat and externalize their costs, but to preserve, protect, and restore the environment. This is the larger challenge environmentalists now face.
..............Chris Lewis

The Ceres Principles for Sustainable Business

Let's look for a moment at some of the principles that some businesses ) now adopting in order to protect the environment and profit from doing so.

These are the Ceres principles:

1. Protection of the Biosphere

We will reduce and make continual progress toward eliminating the release of any substance that may cause environmental damage to the air, water, or the earth or its inhabitants. We will safeguard all habitats affected by our operations and will protect open spaces and wilderness, while preserving biodiversity.

2. Sustainable Use of Natural Resources

We will make sustainable use of renewable natural resources, such as water, soils and forests. We will conserve nonrenewable natural resources through efficient use and careful planning.

3. Reduction and Disposal of Wastes

We will reduce and where possible eliminate waste through source reduction and recycling. All waste will be handled and disposed of through safe and responsible methods.

4. Energy Conservation

We will conserve energy and improve the energy efficiency of our internal operations and of the goods and services we sell. We will make every effort to use environmentally safe and sustainable energy sources.

5. Risk Reduction

We will strive to minimize the environmental, health and safety risks to our employees and the communities in which we operate through safe technologies, facilities and operating procedures, and by being prepared for emergencies.

6. Safe Products and Services

We will reduce and where possible eliminate the use, manufacture or sale of products and services that cause environmental damage or health or safety hazards. We will inform our customers of the environmental impacts of our products or services and try to correct unsafe use.

7. Environmental Restoration

We will promptly and responsibly correct conditions we have caused that endanger health, safety or the environment. To the extent feasible, we will redress injuries we have caused to persons or damage we have caused to the environment and will restore the environment.

8. Informing the Public

We will inform in a timely manner everyone who may be affected by conditions caused by our company that might endanger health, safety or the environment. We will regularly seek advice and counsel through dialogue with persons in communities near our facilities. We will not take any action against employees for reporting dangerous incidents or conditions to management or to appropriate authorities.

9. Management Commitment

We will implement these Principles and sustain a process that ensures that the Board of Directors and Chief Executive Officer are fully informed about pertinent environmental issues and are fully responsible for environmental policy. In selecting our Board of Directors, we will consider demonstrated environmental commitment as a factor.

10. Audits and Reports

We will conduct an annual self-evaluation of our progress in implementing these Principles. We will support the timely creation of generally accepted environmental audit procedures. We will annually complete the CERES Report, which will be made available to the public.

Industrial Ecology and Restorative Economies

Defining Industrial Ecology (in-class)

Industrial Ecology: An Introduction

Kalundborg, Denmark: Industrial Ecology (in-class)

I now want to look at some of the reform proposals Hawken suggests for redesigning our economic institutions. The larger goal of a restorative economy is to make it profitable for businesses to compete to "conserve and increase resources rather than deplete them." In order to understand some of the reforms Hawken proposes let's look at a local case of a business being charged with polluting the environment and damaging people's health.

The Boulder Centerline Pollution Case

In 1995 a former Boulder computer company, Centerline, was charged with polluting the ground water of a North Boulder residential community. Between 1968 and 1978, Centerline flushed down its sewers dangerous toxic chemicals, TEA and DCE. The residents of the North Boulder community charged that these chemicals leached out of Centerline's septic tank system and contaminated the underground aquifer that fed drinking water wells in the Crestview neighborhood downstream from the plant. Responding to the charges, Centerline argued that it was not violating the law by flushing these chemicals down the sewer because when they did it the law did not recognize them as hazardous waste. Centerline dismissed claims that the residents of Crestview were damaged by these chemicals. Moreover, Centerline had now agreed to buy bottled water for all the residents of the community. This was as far as Centerline was willing to go.

Centerline's defense at their trial was that the Crestview residents were just suffering from stress from worrying about the unknown chemicals in their water. One of their lawyers said: "After the chemicals were identified and after the residents began using bottled water, the stress was just like any other stress that affects us all on any given day." But the residents charged that they were exposed to these dangerous chemicals in their drinking water from 1968 to 1995, and this exposure put them at risk for cancer and other medical problems. In addition, they charged that by contaminating their land with these dangerous chemicals, Centerline had destroyed the value of their property. The residents demanded that Centerline pay damages and pay for all their medical expenses related to these health problems.

In May 1995, a Boulder jury awarded the Crestview residents 4.1 million dollars and ordered Centerline to pay for their medical expenses. Centerline was forced to pay for the creation of waterlines into the North Boulder neighborhood from the main Boulder water supply. But despite their monetary victory, the residents of Crestview still have to live the serious medical problems that exposure to such toxic chemicals can cause. In many ways these people still feel as if their rights and health were violated by a corporation in the name of profits.

Looking at the Centerline case, Hawken would argue that it illustrates the need for the "polluter pays principle." Businesses that create, use, and dispose of dangerous toxic wastes must be made financially and legally responsible for them. If businesses are responsible for safely disposing and storing these wastes, then they will reduce their use and dependence on such chemicals in order to cut costs and increase profits. In addition, governments would charge businesses to store these wastes in "parking lots" for as long as they remain a threat to public health and the environment. In order to assess whether businesses were responsible for these pollution problems, governments would "tag" the toxic chemicals that different companies use and create, so that if they were later found in the environment the government and society could assess financial liability on the company responsible for them. Hawken argues that business must face a "lifelong" responsibility for creating and storing these toxic wastes.

Now many current businesses would charge that such additional costs to manage and dispose of their wastes would cost them too much money and hurt the consumer in the form of higher prices. But Hawken would respond that these new taxes and regulations on toxic wastes would reduce their corporate taxes. Instead of taxing a company on the value of the products it creates, the government should tax them on how much costs these products impose on the environment and the larger society. So these tax changes would be revenue neutral; they would impose no new additional tax revenues on business. In fact, by reducing its production of toxic wastes, its pollution of the air and water, and its use of non-renewable resources, a business could actually reduce its tax liability and increase its profits.

Hawken's larger argument is that the market include all the costs of producing, using, and disposing of goods in the price of the product. He calls this "cost/price integration." By doing this, businesses would no longer be able to externalize their costs in producing and selling products to the environment and the larger society. By having to pay these higher costs, consumers would be forced to pay for the larger costs of using these products. By increasing prices for dangerous products and lowering prices for environmentally-friendly products, consumers would have a real choice. Faced with these increasing costs, businesses would be forced to reduce the environmental impact of their products in order to maintain and increase their profits. Because consumers will buy those cheaper products made by companies that have been able to reduce their costs by lowering the environmental impact of their products. In this way companies would be competing with each other to reduce the environmental and social costs of their products.

One of the ways Hawken suggests business can use "industrial ecology" to increase their profits its through recognizing and planning for synergy. Synergy results when the whole or the total result is greater than the sum of its parts. Hawken suggests that many different companies could locate next to each other and actually use each other's waste products such as industrial chemicals, hot water, hot exhaust, and industrial byproducts as resources in their own production process. In this way these businesses would not be financially liable for disposing of these wastes and could actually profit by selling their waste products to neighboring businesses.

At the heart of Hawken's larger reform proposal is his belief that businesses must be made financially responsible for every aspect of the making, selling, using, and disposing of their products.
.........................................................................................
Intelligent Product System

Intelligent Product System (in-class)
Cradle to Cradlie Design (in-class)
The Basics of Eco-Effectiveness:
Eco-Efficiency vs. Eco-Effectiveness (in-class)
Making Eco-Effective Products

He suggests that we can do this through an "Intelligent Product System." In an intelligent product system there are three types of products: 1) consumables, 2) products of service, and 3) unsaleables. In such a system, consumers would not be buying the products such as cars or computers, but leasing the right to use them. When they are done using such a product, the company must be prepared to take the product back and either renew it or properly dispose of it. An intelligent product system would encourage companies to design products to be easily renewed and upgraded. By doing so, companies could save on material costs for creating new products, especially if they were taxed on the amount of non-renewable resources they used to make their products. This system would support the growing trend toward modular design, in which products are built using modules that can be easily pulled out and replaced and upgraded.

Companies that make consumables would not be taxed or forced to be responsible for their products because their products by definition will naturally break-down and are biodegradable. Unsaleables are toxic wastes that the government would tax companies for making and charge them for life-time storage of. An intelligent product system would reward companies for making consumeable and tax them for producing toxic wastes and environmentally-harmful pollution. In addition, it would encourage companies to make and support products of service, which might also help companies build long-term relationships with their loyal customers.

Green Taxes

Hawken argues that the market can support companies whose products and manufacturing process protect and even restore the environment. The market can do this by changing the market incentives and taxes companies and consumers have to pay. Now many companies would charge that they can't afford to pay these taxes and be competitive in the global economy. But Hawken would argue that by supporting companies that protecrt the environment, businesses are protecting the "natural capital" and the valuable environmental services and resources that a healthy environment provides for businesses and consumers. By rewarding companies for protecting and restoring the environment, we not only protect the environment we increase its ability to support business and economic growth.

Many critics of pollution and environmental taxes would argue that science cannot really determine the true short- and long- term costs of destroying the environment, using non-renewable resources, and polluting the environment. In many ways, this is the larger lesson of Jurassic park that society cannot fully understand the risks of new technologies and new products. Hawken argues that it is precisely for this reason that governments, societies, and businesses should operate on the "precautionary principle," we should base our actions on our understanding of the real limits of our knowledge and understanding. Hawken refers to this as "ignorance-based thinking." We must prevent rapid change and technological development because we do not fully understand the environmental consequences of such change. Hawken concludes that our tax system and economic incentives for business should be based on this "precautionary principle." Businesses should be penalized and taxed for introducing new technologies and products whose affects we cannot predict and don't fully understand.

In conclusion, Hawken argues that by fully integrating the costs of making, selling, and using products businesses and consumers will have incentives to make and purchase environmentally-friendly products. In this way, the real costs and the real prices will allow the market to protect the environment. By integrating the costs of a product fully into its price, companies can compete with each other to protect and restore the environment. Protecting the environment would be profitable. This is the larger goal of what Hawken calls a "restorative economy."

Green Taxes and Charges: Reducing impact on
Low-income households

Assadourian, "When Good Corporations Go Bad"

"The modern corporation is the dominant form of business organization in the world today. Corporations' reach, however, is not limited to the business world. As they have multiplied in number, size, and power, corporations have also begun to exert extraordinary influence over the civic, economic, and cultural life of the human societies which host them. Although corporations are effective mechanisms for generating certain kinds of wealth, much of their influence can rightly be regarded as pernicious and even dangerous."

"In 2002, over 61,000 transnational corporations (TNCs) with over 900,000 foreign affiliates conducted
operations around the world. According to the UN Conference on Trade and Development, just the foreign affiliates of these TNCs produced $17.6 trillion in sales and employed 54 million people. The largest 100 TNCs accounted for 14 percent of the sales and 13 percent of the employment.

"The wealth of the largest corporations rivals or exceeds that of many national governments. One comparison measures the revenues of corporations against national output expressed as gross domestic product. Of the 100 largest economies in 2002, 50 were corporations. But much of the wealth measured by GDP is produced by private interests. Perhaps a better relationship is the one between corporate revenues and government expenditures. By this measure the discrepancies are even starker. Of the world's largest 100 national governments and corporations in 2002, 76 were corporations. The largest, Wal-Mart, had revenues higher than the expenditures of all but six national governments."

"Second, while corporations and governments may have similar amounts of power, the latter are designed--at least nominally--to serve the public interest, and many are accountable to these publics. Because of
shareholder pressures and other demands, most corporations today focus almost entirely on maximizing profits for their shareholders--and they do so primarily by externalizing as many of their social and environmental costs as possible.

"In his book Tyranny of the Bottom Line, Ralph Estes examined the extent of this cost externalization in the case of U.S. corporations. Factoring in workplace injuries, medical care required by the failure of unsafe products, health costs from pollution, and many others, Estes found that external costs to U.S. taxpayers totaled $3.5 trillion in 1995, four times higher than the profits of U.S. corporations that year ($822 billion). This sort of externalization toll is routinely evident in hazy skies, injured consumers, and impoverished workers in the United States and elsewhere."

"Corporations have achieved considerable freedom to act in ways that harm the host on which they depend. They have done so primarily by means of regulatory
capture, the redesign of societal laws by vested interests for their preferential benefit. This is not new; corporations have always sought to influence lawmakers. TNCs' current levels of power, money, and freedom are unprecedented, however, and regulatory capture has become widespread. The results can be seen in the scores of laws and court rulings that now protect corporations' right to profit, right to pollute, right to patent intellectual property--at the expense of citizens, farmers, workers, consumers, communities, and indigenous peoples. As U.S. President Rutherford B. Hayes once remarked, "This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations." That was in 1884; it's truer now than ever."

"In his first annual message to Congress in 1901,
President Teddy Roosevelt explained that "great corporations exist only because they are created and safeguarded by our institutions; and it is therefore our right and our duty to see that they work in harmony with those institutions." Today a wide range of societal actors is using a variety of strategies to reshape the current corporate/societal relationship to be a healthy and harmonious one.

"One strategy is to recapture the regulatory machinery. Many policymakers and activists are fighting to strengthen environmental and labor legislation, reform campaign finance laws, and even in some cases revise corporate charters by means of changes in state laws. Robert Hinkley, a leading advocate of charter reform in the United States , is trying to implement a simple change in state corporate charter laws that could radically transform the role of the corporation. This
simple clause would alter the corporate mandate from the unqualified pursuit of profit to its tempered pursuit: "...not at the expense of the environment, human rights, public health and safety, dignity of employees and the welfare of the communities in which the company operates."