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Acknowledgement

Foremost, the composition of this paper would not have been possible without the help and
kindness of my friends and family. Their utmost support has enabled me to complete this paper
in due time. Secondly, I would like to express my sincere gratitude to my esteemed faculty for
giving me the privilege and scope of writing this report. This has been a great learning
experience for me, which will help me to understand the far-reaching impact of this course. I
sincerely hope that I was able to fulfill the course requirements effectively through the
submission of this report. I hope that you will accept our report and that it will reach your level
of expectations.

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 Table of Contents

Part- 1 Introduction

1.1 The Rise of Corporations.....................................................................................5

1.2 Globalization and Environmentally Sustainable Business Model.......................5
1.3 Importance of Triple bottom line and CSR.........................................................6
Part-2 Industry Analysis
2.1 The Tobacco Industry and its Environmental Impact.........................................8
2.2 Relevant Environmental Policies of Philip Morris International (PMI).............8
2.3 Environmental management of British American Tobacco (BAT)....................9
Part 3 Yes, they should be held responsible
3.1 Key findings from part-2...................................................................................11
3.2 Reasons why Corporations should be held responsible....................................11
3.2 Conclusion.........................................................................................................12
References..............................................................................................................13

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Part-1. Introduction

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1.1 The Rise of Corporations

The holistic impact of artificial legal entities known as corporations are prevalent in our
everyday life. The direct and indirect effects of said corporations in our economic and social life
is extremely important to maintain a quality standard of living. It is astounding to note that,
among the top 100 economies in the world 51 are corporations whereas only 49 are countries
(Shah, 2021). This simple statistic goes on to show the tremendous amount of financial
capability and influence that these corporations possess. It is no secret that the main purpose of
any business is to turn a profit as Noble winning economist Milton Friedman perfectly stated, the
social responsibility of business is to increase its profit (2). Now, during the twentieth century,
the sole mission of most of the businesses was to make profit no matter the collateral damage.
That is, almost little to no attention was paid on the environmental, social and political impact
that these corporations were having. The damage to environment was especially rampant as
deforestation, pollution, mining was increasing at an alarming rate.

1.2 Globalization and Environmentally Sustainable Business Model

With the upsurge of globalization, consumers everywhere became increasingly aware of some of
the devastating impacts the corporations were having on the environment. Consumers want to
know where their products are coming from and how they are made. It is key to note that,
research has found that more than 75% of the grocery shoppers in UK have switched or
boycotted brands because of environmental policies (Wells, 2019). Also, in 2010, Nestle had to
abide by a zero-deforestation policy for their palm oil supply chain because of widespread
consumer outrage and pressure from Greenpeace (History of successful boycotts, 2019). People
have raised their voices over unethical business practices such overuse of plastic and excess
packaging which have serious impact on the environment. Thus, from onset of the twenty first
century, corporations have restructured their business models to become more environmentally
sustainable. That is, their mission statement and subsequent policies, operations and entire
supply chain must be carried out in such a way so that it does not harm the environment. The rise

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of such eco-friendly business models has been possible only due to globalization and consumer
awareness.

1.3 Importance of Triple bottom line and CSR

The concept of Triple bottom line is extremely relevant and important for the modern-day
corporations. The main idea is that along with adding financial value, sustainability in terms of
economy, economy and society must be a long-term goal of any company. (Crane & Matten,
2004) This simply means that corporation have a responsibility greater than simply turning in a
profit. Operating in a environmentally responsible manner is advantageous for the company for
multitude of reason. Firstly, it increases the potential life of a business by minimizing damage to
the natural resources. Due to globalization, customers are very well informed and aware. So, any
kind of unethical environmental policies will have serious backlashes.

Corporate Social Responsibility (CSR) was defined by Archie Carroll as a four layered concept
where legal responsibilities are required and ethical responsibilities are expected by the
community. It is extremely important to note that, in most places in the world there are
environmental legislations that must be followed by the companies. This prevents the big
corporations from engaging in such activities. Potential nature damaging decisions are simply
unethical which are not expected by corporations these days and will ultimately will lead to the
boycott of the company. (Crane & Matten, 2004)

However, there are governments that for many reasons are not able to address the environmental
requirements. Even though there is no overseeing, it is the moral duty of the corporation to not
exploit the natural resources or engage in environmentally hazardous activities.

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Part-2. Industry Analysis

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2.1 The Tobacco Industry and its Environmental Impact

According to me, the tobacco industry is by far the most unethical business that is currently
operating in the world. The sale of cigarettes to minors, air pollution from the smoke, severe
damage to the soil where tobacco is cultivated are the prime reasons why I find it unethical. The
farming of the tobacco plant causes the soil to lose its fertility and also damage groundwater
resources. Severe air pollution is caused due to smoking as it releases harmful toxins in the air.
The littering of the cigarette butts is also very harmful for the environment. The toxins from the
butt are slowly released and in turn pollutes the soil and waterways (13 serious effects, 2020).

Nevertheless, the tobacco industry is one of the most economically important industries which
pays the highest amount of tax and is responsible for millions of jobs. In 2019, $818 billion
dollars’ worth of tobacco product was sold worldwide which in itself is a ridiculous amount
(British American Tobacco, 2021). There are mainly 5 corporations which dominate the tobacco
industry which are China National Tobacco, Philip Morris International, British American
Tobacco, Imperial Tobacco and Japan Tobacco (Wikipedia Contributors, 2021).

2.2 Relevant Environmental Policies of Philip Morris International (PMI)

The tobacco fields of Philip Morris International are located throughout 6 continents. The
executives and shareholders of this company are well aware of the aforementioned
environmental hazards created by their product. They are very much concerned about lowering
the negative environmental impact of their product to safeguard future generations. It is safe to
say that Philip Morris has been the pioneer in creating an eco-friendly value chain process in the
tobacco industry. Reducing the carbon footprint and creating smoke free products has been the
buzzword of this company for a while now. Five eco-design practices have been adopted which
are sustainable materials, minimize carbon footprint from energy and transport, lifetime
optimization, meaningful recycling and social responsibility in production. The core reason for
adapting these principles was simply to lessen the damage done to the environment and move
towards a sustainable future. The R&D team is trained in eco-design and they have converted

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entire packaging materials of the product to 100% recyclable. Though it is a tobacco company,
Philip Morris believes that smoke free products are the future. That is why, from 2025 they will
be focusing on products like e-cigarettes. Now, the problem with such a product is that it has a
higher carbon footprint as opposed to combustible cigarettes. Simply speaking, the batteries used
to power such products have a serious impact on the environment as it contains traces of lithium
and uses electricity. To combat this specific problem Philip Morris has invested considerable
amount in R&D to increase durability and efficiency of said product. Their aim for the future is
to create products with minimal to zero negative impact on the environment and their policies
attest to this statement (Product eco design, n.d.).

2.3 Environmental management of British American Tobacco (BAT)

BAT is one of the biggest and most famous tobacco company in the world operating in more
than 190 countries. In their updated sustainable agenda, excellence in environmental
management has been given maximum priority. That is, the stakeholders of this company are
extremely cautious about unethical environmental practices. The main strategy followed by BAT
to minimize negative environmental effect is “assess and adapt”. That is, they take into account
the environmental capacity and legislation of the site they are operating in and other relevant
factors like availability of renewable resources, water level and its quality etc. Considering these
crucial factors, they will decide how to operate in that specific region so as to not destroy the
natural resource and balance. Sustainable agriculture is another big part of their environmental
policy. They work hand in hand with the farmers and soil scientists to ensure sustainable land
irrigation. The farming of tobacco causes considerable harm to the fertility of the land which is a
big concern for the company. The R&D team of BAT has come up with innovative ways and
products to combat this problem. Now, the production of tobacco leaf is totally sustainable. The
establishment of circular area as a new priority area has been extremely useful to counter plastic
and post-consumption waste. BAT has also taken steps to go carbon neutral by 2030 and is
implementing policies to reduce the carbon emissions. In the factories, the use of pure water has
been steadily decreasing and water recycling has been increasing. There are certain factories in
water scarce regions that are totally dependent on water recycling which is extremely beneficial
for the environment. The company has grown leaps and bounds in terms of waste management as
well and plans on recycling at least 95% of the waste. The company has big goals for

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afforestation and improving aquatic biodiversity by minimizing the dumping of toxic waste
(British American Tobacco, n.d.).

Part-3
Yes, corporations should be held responsible

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3.1 Key findings from part-2

PMI and BAT are the leaders of the multibillion-dollar tobacco industry. From the
aforementioned analysis, it is abundantly clear that these companies are proactively and
ferociously trying to build an eco-friendly business model. Both their mission statements have
the word sustainability in it and it is also reflected in their activities. A huge amount of
investment has gone in R&D to come up with ways of minimizing environmental damage. The
use of biodegradable materials, recycling, controlling post-consumption pollution are some of
the examples. It is important to note that the environmental regulations do not compel these
companies to take such drastic and over the top actions. But the corporations realize that in order
for them to survive the environment must survive as well. The unethical practices that had been
going on for so long was destroying the future scopes of the company.

3.2 Reasons why Corporations should be held responsible

It is no secret that everybody will look after their own self-interest before anything else and the
most important thing for a corporation is its survival. In order for it to survive, it must carry on in
its respective business. Any kind of business requires the use of natural resources. Thus, at a
rudimentary level the corporations must take care of the environment for their own survival.

The rise of globalization has given birth a new generation of well informed and ethically astute
consumer base. There are multiple examples of customers boycotting a brand because of
environmental malpractices. Customers are extremely important for any business and upsetting
them will result in decreased brand value.

The environmental legislations have been strengthened throughout the last few decades and
violations result in severe punishments. The law basically forces the corporations to act in a
environmentally friendly manner. There have been cases in the past where corporation simply
did not care about the laws as they were not strong enough or implemented properly. However,
that is not the case these days.

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Lastly, taking responsibility for protecting the environment and leaving enough resources for the
next generation is the morally right thing to do.

3.2 Conclusion

As the industry progresses and is faced with a multitude of challenges in a progressive society,
companies like Philip Morris International and British American Tobacco are taking ethical
measures to own up to their accountability for the environment. I believe these two companies
are the representative of the big corporations who have updated their environmentally sustainable
model. Furthermore, their CSR activities may become a source of sustained success and allow
them to benefit and grow within their local communities

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 References

Shah, A. (n.d.). The rise of corporations. Retrieved April 06, 2021, from
https://www.globalissues.org/article/234/the-rise-of-corporations

Crane, A., & Matten, D. (2004). Business ethics, a European perspective: Managing corporate
citizenship and sustainability in the age of globalization. Oxford: Oxford University Press.

History of successful boycotts. (2019, September 30). Retrieved April 06, 2021, from
https://www.ethicalconsumer.org/ethicalcampaigns/boycotts/history-successful-boycotts

British American tobacco - the global market. (n.d.). Retrieved April 06, 2021, from
https://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DO9DCKFM

Wikipedia contributors. (2021, March 21). Tobacco industry. Wikipedia.

https://en.wikipedia.org/wiki/Tobacco_industry

R., & R. (2020, August 1). 13 Serious Effects of Cigarette Smoking on Environment and Human

Health. Conserve Energy Future. https://www.conserve-energy-future.com/serious-

effects-cigarette-smoking-environment-and-human-health.php

Product eco-design and circularity. (n.d.). Retrieved April 06, 2021, from
https://www.pmi.com/integrated-report-2019/protecting-the-environment/product-eco-
design-and-circularity

British American tobacco - environmental management. (n.d.). Retrieved April 06, 2021, from
https://www.bat.com/environment

Wells, L. (2019, December 4). Consumers boycotting brands over environmental policies,

Kantar reveals. Talking Retail. https://www.talkingretail.com/news/industry-
news/consumers-boycotting-brands-environmental-policies-kantar-reveals-04-12-2019/

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