Business Ethics and Climate Change - Deforestation 14/SOCS2003/04/A DBA (AF) 3/14 [Comments] Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 1 1. Introduction ------------------------------------------------------------------------------------------ 2 2. Importance of Issue ------------------------------------------------------------------------------- 2 2.1 Palm Oil Plantation -------------------------------------------------------------------------- 2 2.2 Demand for Timber -------------------------------------------------------------------------- 3 2.3 Climate Changes in Indonesia ----------------------------------------------------------- 4 3. Impact on Society ------------------------------------------- Error! Bookmark not defined. 3.1 Haze ---------------------------------------------------------------------------------------------- 4 3.2 Loss of Endangered Animals and Natural Herbs --------------------------------- 5 3.3 Landslides and Natural Disasters ------------------------------------------------------ 5 3.4 Economic Inflations and Health Risks ------------------------------------------------ 5 3.5 Contaminated Water and the growing threat of Famine ----------------------- 5 4. Ethical Dilemma ------------------------------------------------------------------------------------ 6 4.1 Kantian’s Theory ------------------------------------------------------------------------------ 6 4.2 Utilitarianism ----------------------------------------------------------------------------------- 6 5. Recommendations -------------------------------------------------------------------------------- 7 6. Conclusion ------------------------------------------------------------------------------------------- 7 7. References------------------------------------------------------------------------------------------- 9 Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 2 1. Introduction Deforestation has contributed to the world’s extreme weather conditions and impacted many lives, communities and properties. Indonesia has in recent decades undergone severe deforestation and destruction through illegal logging which have led to significant social problems. Furthermore, by resorting to the convenience of the slash and burn method for clearing agricultural land, the country has become plagued with bush fires leading to serious pollution and increasing global warming. The human race is threatened with the potential extinction of particular species of plant life, reduced food sources, diminishing fresh water supplies, reduced clean air and also faces natural as well as man-made disasters as a result of such wanton action and irresponsible behaviour. In the light of business ethics, Kant’s theory of ‘humanity as an end’ is being confronted in the dilemma of the rights and wrongs of deforestation. 2. Importance of the Issue In a recent report by Whittington (2015) “2014 was cited as the hottest year ever in recorded history”. Earth’s increasing temperature has led to accelerated polar cap melting, the level of ocean water rising worldwide, reductions in arable land and more frequent drought and flood problems. It has also contributed to more prolonged extreme weather conditions such as stronger more devastating storms, hurricanes and other natural catastrophes. These have led to loss of lives, devastation of agricultural land and wrecked havoc on property prices and adversely impacted the world economy. There are many factors that have contributed to global warming; over-population, loss of biodiversity, poverty, greenhouse gases and deforestation Arga (2007) to name but a few. The impact of global warming is visible around the Asia-Pacific region with Indonesia reflecting the most striking and obvious evidence. Other Southeast Asian countries like Malaysia, Singapore, Brunei, Thailand, Vietnam and to a lesser extent, the Philippines, are affected by an annual severe haze pollution between June and September caused primarily by the burning of large forestlands in Indonesia (Koh & Ho, 2013). 2.1 Palm Oil Plantation Farmers in the Indonesia isles have traditionally cleared land to make way for palm oil plantations as their livelihoods as millions of fishermen have been hit by unstable weather changes, erratic droughts and rainfall which resulted in crop failures as well as diminishing fish populations due to arduous weather conditions and difficult sea currents. As a result, some 40 million impoverished Indonesians now are on the verge of poverty and facing increased food insecurity. In response to changing market conditions, Indonesia farmers began to develop palm oil plantations on a large scale to meet burgeoning market demand for palm oil (refer to Table 1). Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 3 Table 1: Indonesian palm Oil Production and Export Source extracted from the website http://www.indonesia-investments.com/news/news-columns/palm-oil-update-indonesiaindonesian-cpo-reserves-and-biodiesel/item2622 on 6 February 2015 The above table by Palm Oil Update Indonesia (2014) lists the increased demand for palm oil production from 2007 to 2014. The export profit earned rose from U$15.6 Billion in 2008 to U$18.9 Billion in 2014. It depicts the stable economic development of Indonesia from palm oil production alone. Obidzinski (2013) reports that Palm Oil plantations covered 7.8 million hectares in Indonesia in 2011 and 6.1 million of it was under harvested. The Sumatra and Kalimantan areas have 75 percent of the plantation estates with a long history of cultivation. According to the Indonesia Palm Oil Association, this industry employs in excess of 4.9 million people (Kurniawati, 2013). The high demand in palm oil has helped push up prices and subsequently led to an increase in the number of Palm Oil plantations in Indonesia. 2.2 Demand for Timber The low lying land and peat forests of Sumatra and Kalimantan are the natural habitats for Sumatran tigers, Asian elephants, rhinoceroses and orang utans. Regrettably, the highest destruction arising from logging occurs in both these areas. It is alarming to note that Indonesia allowed the demolition of 6.02 million hectares of their primary forest lands between 2000 and 2012, which is four times the land size of Brazil (Bachelard, 2014). Due to its increasing population numbers and a rise in the global demand for timber, pulp for paper and palm oil, the study says that illegal clearing of conservation and protected forests is up 40 per cent. In addition to this disaster, national and local governments are unable to manage corruption as there has been little if any effort in attempting to enforce existing laws. Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 4 As the lowland forests are rapidly vanishing, the clearing of land has begun to shift to mountainous regions as companies gradually turn towards these carbon-rich peat lands. As such, it is clear that human activities are responsible for as much as 98 per cent of the total forest damage. Table 2 : Production capacity of major timber industries in Indonesia Source extracted from the website http://www.cifor.org/ard/documents/results/Day5_Krystof%20Obidzinski.pdf on 7 February 2015 Obidzinski & Dermawan (2012) outline the different types of timber production in the above table. The major timber industries in Indonesia are logging the forest and peat lands to acquire plywood, sawn wood, veneer, woodchips, integrated mills, pulp and paper. 2.3 Climate Changes in Indonesia Indonesia has become a substantial emitter of greenhouse gases and this is due largely to deforestation and changes in land-use from agriculture to manufacture and industrial usage. Overlogging on such a massive scale is also responsible for the Earth’s inability to absorb carbon dioxide at the rates possible in the past. Consequently, indiscriminate logging has impacted the environment greatly leading to changes in weather patterns and the pace and extent of seasonal change. As a result, the world’s annual rainfall is seen to have decreased by some 2 to 3 per cent. The Indonesia government, by granting concessionaires to companies to log forests, has inadvertently paved the way for plantation owners and farmers to burn land as a means of land clearing. Burning land is a cheaper and faster way to clear the brush to grow palm oil and other crops. These fires cause serious pollution annually not only in Indonesia but around the region. 2.4 Haze The annual raging bush fires in Indonesia blankets neighboring countries like Singapore, Malaysia, Brunei, Philippines and Thailand in a choking haze. Singapore suffered its most serious haze Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 5 outbreak in 2013 with historical PSI readings of 401 on 21 June 2013 (Koh & Ho, 2013). The public was advised to minimize outdoor activities and to wear N95 masks during the peak of the outbreak. The SG government offered Haze Assistance Packages to Indonesia and Malaysia but the offers were not accepted by Indonesia and episodes of the annual haze persist (News Press Release, 2014). The harmful fumes carrying carcinogen particulates, has lead to thousands of people succumbing to asthma, bronchitis, lung diseases and potentially long-term cancer and even potentially premature death. The thick, choking smog has also adversely affected air and sea traffic in the Southeast Asia Region. In Malaysia, the air pollutant index rose to 839, in 2013 which is considered ‘extremely dangerous’. Due to the El Nino Phenomenon, famine-like conditions left the nation’s forests tinder-dry for several months, and dry winds delay the rains and the normal yearly monsoon rains. 2.5 Loss of Endangered Animals and Natural Herbs Forest produces oxygen and providea food, clean air, fresh water, clothing, medicine and shelter for people and wildlife. However massive deforestation has jeopardized these advantages, damaging wildlife and a long term hazard to the planet. The deforested Sumatran and Kalimantan regions threaten the habitat of elephants, tigers, rhinos and orangutans. Deforestation has also depleted natural sources of herbs leading to the inadvertent loss of lives because of lack of access to even basic medical care let alone the inevitable expensive drugs and the unaffordable expenses of medical care. 2.6 Landslides and Natural Disasters Whist urban trees help to trap sunlight and create vital oases of shade on the ground, while large forests promote regular rainfall and regulate regional temperatures against global warming (Mclendon, 2014). The side effect of deforestation has led to an ever increasing number of land-slides, soil erosion, more frequent instances of flooding, stronger winds and sturdier, more dust carrying storms. 2.7 Economic Inflations and Health Risks Our food and clothing come from products made from trees, but the recent massive deforestation has triggered economic inflation of world food supplies. This is due to manufacturers resorting to modern technologies to create and plant new crops to sustain the ever increasing demand. The Chemicals that are used to intervene in the lack of supply carry many harmful side effects for everyone; farmer, producer and consumer. 2.8 Contaminated Water and The growing threat of Famine Deforestation has increased the level of air pollution to rise to such levels that it has caused water pollution by polluting water surfaces with harmful particles, toxins and chemicals. It has also led to permanent drying of land areas, contributing to extreme drought and escalating earth temperature. Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 6 3. Ethical Dilemma Indonesia, despite achieving the status of a middle-income country with 70 per cent of its population living in rural areas where agriculture is the main source of income, poverty is on the increase. In these areas, millions of small farmers, farm workers and fisherman are financially underprivileged and lack access to arable land and other productive resources. Plantations have been destroyed due to extreme weather conditions and many indigenous peoples have been displaced from their land, lost their farm tools and fishing equipment. Timber companies which contribute a significant proportion to Indonesia’s economy would suffer major losses if deforestation was slowed down or stopped. It would in turn increase unemployment among the poor farmers and workers. Eventually such an upsurge of poverty could lead to starvation, death, health issues, social problems and ultimately create an ethical dilemma. As such, Kant’s ethics of ‘humanity as an end’ is not upheld. 3.1 Kantian Theory Kant’s ethics is about doing the right thing for the right reason with respect to humanity and emphasizes on the categorical imperative of a universally acceptable action (Velasque, 2006). The interest of human beings commands top priority and should not be the means to an end when applied to the environment. Humanity is part of the environment and it seems illogical to destroy the things that are essential to our flourishing and to the continuity of the human race. It is immoral to damage the environment because in doing so we are damaging the very survival of the human race. Conversely, millions of poor farmers in Indonesia have become economic victims as their major sources of income from palm oil production will be affected when the production is controlled. Kant believed that the right intention would result in right consequences. However, the Indonesia government has allowed illegal logging and burning of its forests to continue unfettered for its immediate, short-term benefit and has steadfastly refused to work towards a meaningful or sustainable compromise so as to keep air pollution to a minimum and contribute to a better environment not for her people but for her neighbours as well. The massive levels of deforestation are adversely affecting global climates and the changes that have wrought about are causing neighbouring countries to suffer severe air pollution and its accompanying health hazards. Hence, their actions may be deemed unethical as well as not being accepted universally. 3.2 Utilitarianism Utilitarianism is a consequentialist ethical theory that looks at the purpose and end result of an action (Velasquez, 2006). The end result of deforestation in Indonesia is to create employment, provide substantial profits to the companies, bring income to land owners and farmers and boost the country’s economic growth. Therefore according to utilitarianism, deforestation is ethical because it considers happiness and great pleasure to those who gain from it. Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 7 In order to meet the world’s insatiable demand for palm oil, Indonesia farmers and landowners burn the forests to create more land and space to grow plantations. As these plantations will usher in increased national development which they believe will benefit the country. Land owners as such believe that the inevitable haze and air pollution affecting villagers and fisherman living in the affected surroundings is an unavoidable situation and that their discomfort will be necessary to sustain economic growth for the country. However, it is a mistake to consider only the happiness of the current minority (farmers, land owners, timber firms and palm oil organizations) who gain from the deforestation and the burning of the pet lands. They have chosen the most convenient, cheapest and fastest way to burn large tracts of land for a better living standard for themselves. They have neglected the greater pleasure gained from preserving the forest and for future generations. Instead, such future generations have to pick up the pieces and suffer the consequences of widespread and indiscriminate deforestation. Deforestation has contributed to global warming and climate change, but is the Indonesia government and her people ready to pay the cost? If Malaysia creates extreme thick smog that covers Indonesia land, would it be acceptable to Indonesians? Thus, it is logical to select a more viable ethical theory to deal with deforestation and its consequences. 4. Recommendations Brazil has reduced and controlled deforestation successfully from 2005 to 2010, thus underlining the huge possibility of reducing hazardous emission from deforestation (Fearnside, 2014). The achievement has allowed Brazil to increase agricultural production and reduce hunger and poverty significantly. The Indonesia government could learn from the Brazilian experience in saving forests by implementing the following. It will take concerted effort from both the public and government sectors to expand its network of local reserves and protected areas. First, the official laws to stop illegal encroachment and illegal seizure of timber need to be reinforced. Second, Indonesians must join in the effort in exerting pressure for change on businesses that are the main agents of deforestation. Third, natural resources and agriculture such as coffee, tea, tin, nickel, copper and fish must be further developed. Fourth, give education opportunities to all the poor and encourage skill training. Last but not least, accept advice from the surrounding countries in developing agriculture and increasing export and tourism. 5. Conclusion Deforestation for palm oil production and timber supply has lifted Indonesia’s economy temporarily but it does not reduce the poverty of the majority effectively. On the contrary, it has jeopardized the global eco system and brought about increased and long-term harm and damage to the rest of the world as well. The poorest and most impoverished people living in the most marginalized areas suffer these effects most acutely. These disasters can be avoided in Indonesia as Brazil has set a significant Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 8 example in stopping deforestation that could have uncontrolled have further harmed the earth’s ozone levels. As such guidance and help have been extended to Indonesia, it is imperative that they make wiser choices, make the most correct long-term decisions and plan for economic development which benefits future generations without the current spate of issues and environmental damage. Business Ethics Project - 14/SOCS2003/04/A Business Ethics and Climate Change – Deforestation 9 References Adhityani, A. (2007). Indonesia Losing Crops, Fish Stocks to Global Warming. Retrieved from http://www.planetark.com/dailynewsstory.cfm/newsid/45581/story.htm on 05/02/15 Bachelard, M. (2014). World's worst illegal logging in Indonesia. Retrieved from http://www.theage.com.au/victoria/worlds-worst-illegal-logging-in-indonesia-20140630-zsq5j.html on 06/02/15. Fearnside, P. (2014) Controlling Brazil's Amazonian Deforestation. Retrieved from http://www.themarknews.com/2014/10/20/controlling-brazils-amazonian-deforestation/ 09/02/15. Indonesia-investments.com (2014) Palm Oil Update Indonesia: Indonesian CPO Reserves and Biodiesel. Retrieved from http://www.indonesia-investments.com/news/news-columns/palm-oil-update-indonesiaindonesian-cpo-reserves-and-biodiesel/item2622 on 06/02/15. Koh, J., & Ho, S. (2013) Haze pollution. Retrieved from http://eresources.nlb.gov.sg/infopedia/articles/SIP_2013-08-30_185150.html on 05/02/15. Kurniawati, D (2013) Palm Oil Industry in Indonesia: A Blessing or a Curse? Retrieved from http://www.establishmentpost.com/palm-oil-industry-indonesia-blessing-curse/ on 06/02/15. Mclendon, R (2014) 21 reasons why forests are important. Retrieved from http://www.mnn.com/earthmatters/wilderness-resources/blogs/21-reasons-why-forests-are-important on 08/02/15. Ministry of Environment and Water Resource (2014) Singapore’s Offer of Haze Assistance Packages to Indonesia and Malaysia. Retrieved from http://mewr.gov.sg/web/contents/contents.aspx?contid=1990 on 08/02/15. Obidzinski, K (2013). FACT FILE – Indonesia world leader in palm oil production. Retrieved from http://blog.cifor.org/17798/fact-file-indonesia-world-leader-in-palm-oil-production#.VNTRYcL9ldg on 06/05/15. Obidzinski, K., & Dermawan A. (2012). Pulp & paper and timber plantation sector in Indonesia: Current State & Future Outlook. Retrieved from http://www.cifor.org/ard/documents/results/Day5_Krystof Obidzinski.pdf on 07/02/15. Skinner, E. (2013) Indonesia's Palm Oil Industry Rife With Human-Rights Abuses. Retrieved from http://www.bloomberg.com/bw/articles/2013-07-18/indonesias-palm-oil-industry-rife-with-human-rightsabuses on 06/02/15. Velasquez, M. (2006) Business ethics: Concepts and Cases (6th ed.). New Jersey: Prentice-Hall. Whittington, M. (2015). NASA, NOAA claim 2014 was hottest year on record disputed by climate scientists. Retrieved from http://www.examiner.com/article/nasa-noaa-claim-2014-was-hotest-year-on-recorddisputed-by-climate-scientists on 05/02/15