DECISION 491 - Decision Tools for Environmental Sustainability

Introduction
In 1987, the World Commission in the Environment and Development, also known as the “Brundtland Commission,” defined sustainable development as “…development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Although there are many ways in which this basic statement has been elaborated, it remains the fundamental concept underlying the entire sustainability movement among firms, governments, NGOs, and individuals today.

Many firms are beginning to look for ways to do business in a more sustainable way, whether that means reducing their use of fossil fuels for energy, extracting resources in a way that does not threaten the future supply of those resources, or finding ways to manage their waste streams to reduce pollution and even to capture value from what is currently discarded. Governments are struggling with carbon policies, and firms are beginning to request regulation in an effort to resolve the current uncertainty about what those regulations will look like. NGOs are involved in sustainability efforts around the globe, partnering with governments and firms, and in many cases providing vehicles for stakeholders to get involved in the push toward sustainable economic development.

Course Outline
The course has three parts, each one corresponding to about two weeks in our six-week schedule:

• “What size?” When a business begins to look at itself through a sustainability lens, a natural first question is, “How big is our footprint?” In the first two weeks, we will take a look at the process of calculating a firm’s carbon footprint. We will also examine other footprint issues, such as resource use and toxic releases.
• Defining the boundaries and scope for the greenhouse gas (GHG) inventory
• What data to gather and how to store it. Database management tools
• GHG calculations
• Toxic releases
• Ecological footprints

• “Are you sure?” The second part of the course takes us into the realm of risk and uncertainty. The advent of global warming and the possibility of a carbon tax or a carbon emission cap-and-trade system suggest a number of uncertainties that firms face now that they did not face earlier. We will cover ways a firm can identify and quantify those uncertainties
• A catalog of risks: Climate change, regulations and policy, future emissions, water, natural resources, technology, reputation, stakeholders
• Risk assessment tools:
• Emission and resource risk analysis
• Long term forecasting and scenario analysis
• Subjective probability assessment

• “So now what do we do?”  With a carbon footprint established and an understanding of the risks and uncertainties you face, it is time to think about what to do. We will work though the decision making issues that firms face in a carbon-constrained world, what kinds of things they can do, and methods for analyzing those alternatives.
• Alternatives: Information acquisition, influencing environmental policy, voluntary offsets, emission allowance trading, certification
• Strategic initiatives
• Efficiency. Energy saving and waste reduction. Design for environment, take-back programs, cradle-to-cradle. Emission reduction: reduced fuel use or alternative fuels, pollution control.
• Innovation. New technology (alternative energy or energy efficiency technology for customers). Certification and scorecard programs. Biomimicry.
• Other strategies. Alliances (companies, NGOs, stakeholder groups, other)
• Analytical tools for evaluating environmental initiatives

Throughout the course we will be looking at specific companies as examples in class and in case study assignments. Some examples: Apple, Akso-Nobel, BP, Dell, Duke Energy, Dupont, Exxon Mobil, GE, Herman Miller, Ikea, John Deere, Rio Tinto, SAS, Sony, Timberland, Wal-Mart, and of course Duke University.

Course Format and Deliverables:

• Lectures, guest speakers, and class discussions on concepts and tools. Students will prepare by reading background material, analyzing business cases, or completing exercises when appropriate. (Deliverables: 3-4 individual exercises)

• Case analyses. Working in teams of 3-4, students will analyze three cases. For each case. a team may be asked to present its results to the class or may be called upon to answer specific questions. (Deliverables: 3 case analyses)

• Project. This project may be done by 1-3 students (with scope expectations adjusted accordingly). (Deliverable: The paper or project will be due no later than the last day of final exams.)
  
  The project will be to analyze a specific company. The analysis will include an estimate of the company’s footprint, an assessment of the risks it faces, an analysis of its current strategy and other options it may have. Because the phases of the project follow the basic structure of the course, each team will be working on its project throughout the term, providing progress updates at assigned intervals.