Question

The health of our national environment has been in the news lately with some daunting and dire predictions.

Does “trading” emissions support Porter’s way of viewing the competitiveness-environment link? Would it be enough to stop climate change?

Porter suggests countries with tougher environmental laws like Germany should become the more competitive. Is the U.S. destined to lose competitiveness if it fails to adopt tougher standards (or has this happened already)? You may wish to research this question.

Did you find Porter's ideas compelling?

Answer 1

Part 1:

Emissions trading concept provides financial incentives to firms to reduce pollution. By trading emissions firms can benefit economically. According to Porter's theory, pollution is considered as a bi-product of production process, reducing which we can reduce our losses in production. Both the theories suggest that reducing pollution can increase economic profits in some way or the other. Trading emissions theory supports Porter's theory as both suggest that economic profits can be gained by reducing pollution which will indirectly improve the competetiveness of the firm.

Part 2:

The environment protection laws in US are already properly in place. Sometimes US government is also addressed as wasting money on regulatory actions. But little do people know, that this money that US spends is keeping it ahead of its biggest competitor China. The effects of strict regulatory standards can not be directly measured but are surely present in the way US is keeping ahead from the competition. So, answering to the above question US has already adopted tough standards to achieve competitiveness.

Part 3:

According to me, Porter's theory is really compelling. If we recall basic science that we studied in the elementary grades, energy can neither be created nor destroyed. So, this brings out the fact that, the waste material that comes out in a production process is in some way the loss of our raw materials and energy used in the production. So, if the companies start taking efforts to reduce the pollutants they will obviously consume lesser raw materials and reduce the process loss in production. This will in turn increase the profits of the company.