Business Impacts on the Environment (Cambridge (CIE) IGCSE Business): Revision Note

Pollution

• Some industrial processes generate pollutants, including air and water emissions, hazardous waste and chemical byproducts

  • The disposal of these pollutants can harm ecosystems, wildlife and human health

  • For example, the burning of fossil fuels releases large amounts of greenhouse gases into the atmosphere 

• Food and consumer goods manufacturers account for 60% of worldwide greenhouse gas emissions

• Single-use plastics are also a huge concern

  • They produce toxic chemicals when they break apart

  • This causes pollution and harms animals, such as marine turtles, who become entangled in plastic found in the sea

Depletion of resources

• Natural resources, such as water, energy and raw materials, are used in business operations

  • Excessive consumption of these resources can lead to their depletion 

• Materials and products may be sourced from environmentally sensitive areas 

  • Industries like logging, agriculture, and construction contribute to deforestation in locations such as South America

  • This has a significant impact on biodiversity and contributes to global warming

Why businesses respond to environmental issues

• More businesses are taking action to reduce their environmental impact

• This is partly due to growing public concern

  • According to a 2023 UK survey, over 80% of consumers said they were more likely to buy from a company that takes sustainability seriously

• Governments are also introducing stricter environmental laws, and pressure from stakeholders like customers, employees and investors is increasing

Reasons to respond to environmental issues

How businesses respond to environmental issues

• With growing concern about climate change, pollution and resource use, many businesses are taking action to reduce their environmental impact

• These actions can help businesses save money, follow the law and build customer trust

Business responses to environmental issues

Reducing waste

• Businesses can reduce, reuse and recycle materials to cut down on landfill waste and pollution

Improving energy efficiency

• Installing energy-saving equipment, such as LED lighting or solar panels, helps reduce electricity use and lower carbon emissions

Using sustainable materials

• Switching to recycled or eco-friendly materials can reduce environmental damage and appeal to green customers

Changing production methods

• Businesses may invest in cleaner technology or reduce harmful emissions during manufacturing to lower their overall environmental footprint

Eco-friendly packaging

• Using biodegradable or recyclable packaging helps reduce plastic waste and limits environmental harm

Encouraging green behaviour

• Businesses can promote eco-friendly habits, such as offering discounts for reusable bags or encouraging employees to cycle or walk to work

Effects of legal controls on business activity and the environment

• Governments pass environmental laws to reduce damage caused by business activity. These laws affect:

  • How businesses produce

  • What they produce

  • Where they produce or sell

  • The costs of doing business

1. How businesses produce

• Legal controls may ban or restrict harmful production methods (e.g., limits on factory emissions, rules on waste disposal)

• Businesses may need to invest in cleaner technology, filters, or recycling systems

• Impact: Higher production costs, but safer working and living environments

2. What businesses produce

• Certain products may be banned if they harm the environment (e.g., plastic bags, toxic chemicals)

• Businesses may be forced to redesign or switch to sustainable alternatives

• Impact: Higher R&D costs, but opportunities to innovate and appeal to eco-conscious consumers

3. Where businesses produce or sell

• Firms may be prevented from locating near protected areas (e.g., national parks, residential zones)

• Laws may restrict selling in markets where environmental standards are not met (e.g., exporting to the EU with strict rules)

• Impact: Limits expansion but protects communities and ecosystems

4. Influence on costs