Business and the environment
Contents: 7 sections
The damage business activity does
Producing anything uses resources and leaves something behind. 0264 names pollution and depletion of resources, and both split into forms that give you different marks.
| Damage | What it looks like | Who feels it |
|---|---|---|
| Air pollution | Smoke and fumes from factories, power use and delivery vehicles | Local residents, whose health suffers, and everyone through climate change |
| Water pollution | Chemicals, waste or waste water discharged into a river or the sea | Fishing businesses, farmers downstream, anyone using the water |
| Noise pollution | Machinery, night shifts, deliveries, construction | Households near the site, who cannot sleep or sell their houses easily |
| Visual pollution | Spoil heaps, advertising hoardings, large buildings in open country | The local community and any tourism business nearby |
| Depletion of natural resources | Minerals, timber, fish or oil used up faster than they can be replaced | Future producers and future generations, who no longer have them |
| Traffic congestion | Lorries and staff cars travelling to and from a site | Other businesses, whose deliveries and staff are delayed |
| Waste and loss of habitat | Landfill, packaging, clearing land to build | The local community, and the plants and animals that lived there |
Depletion is not the same as pollution, and questions asking for two ways a business damages the environment are usually looking for one of each. Pollution adds something harmful. Depletion takes something away that cannot be put back.
The three-step chain, which is where the marks are
The 0264 specimen Paper 1 asks candidates to explain two ways a mining company's activities might negatively affect the environment, for 6 marks. That is three marks for each way, and the mark scheme shows exactly how they are built: the point, then something from the stem, then a consequence.
Mining causes pollution. [k] It is a primary sector business extracting gold, so dust and chemicals are released near the site. [app] That damages the health of the local community, who may then campaign against the mine. [an]
Mining depletes natural resources. [k] The gold it removes cannot be replaced. [app] Once the seam is worked out it is not available for future generations, and the company itself has to find a new site. [an]
The specimen mark scheme also credits traffic congestion, applied to the vehicles travelling to and from the mines and developed to delays for other businesses in the area. Three points, three chains, all built the same way.
Two habits protect these marks. Name the damage in business terms, not in general ones. "It is bad for the environment" is not a point. Then stay on the same chain. Adding "it also causes noise" where the third mark should be is a second knowledge point, and the examiner has already given you the mark for knowledge.
Why a business responds
A business is not required to care, so a question asking why it responds wants reasons that show up in its accounts.
- Improved reputation. Customers, employees and investors judge a business partly on how it behaves, and a business known for damaging its area finds it harder to win contracts and to recruit.
- Increased sales. Some customers will choose, and pay more for, a product from a business seen as responsible, which is why the claim is put on the packaging.
- Avoiding fines and legal costs. Breaking environmental law is expensive and public.
- Keeping the licence to operate. A business that upsets a community may be refused planning permission for its next site.
- Lower costs. Using less energy, less water and less material cuts the bill as well as the damage.
- Pressure from stakeholders. Large customers increasingly ask their suppliers what their environmental record is before signing.
How a business responds
The responses that belong here deal with the damage itself.
| Response | What it does |
|---|---|
| Fitting filters and treating waste water | Removes pollutants before they leave the site, at a capital cost |
| Rescheduling deliveries away from peak hours | Cuts congestion and noise for the community without changing output |
| Carrying out an environmental impact assessment | Finds the damage a new site would cause before committing money to it |
| Restoring the site afterwards | Replanting a quarry or mine, which costs money but protects future planning applications |
| Auditing and changing suppliers | Moves the problem out of the supply chain rather than out of sight |
| Publishing an environmental report | Makes the record visible, which builds trust but also invites scrutiny |
| Doing only what the law demands | Cheapest in the short run, and the option a business under cost pressure often takes |
Changing how it produces, by using renewable energy, cutting waste, reusing and recycling, or switching to environmentally friendly packaging, is sustainable production, and that is 4.3. A business overstating what it has done also risks more damage to its reputation than doing nothing, because the claim is easy to check.
Legal controls and what they do to a business
Governments do not rely on businesses choosing to act. 0264 asks for the effects of legal controls under four headings, and answering under those headings is the quickest way to a full mark.
| Legal control affects | What changes for the business | Example |
|---|---|---|
| How to produce | The method or equipment has to change | Filters must be fitted to chimneys, waste must be treated before discharge, emission limits cap output per machine |
| What to produce or sell | Some products can no longer be made or sold in that form | Single-use plastic bags banned, minimum efficiency standards, materials prohibited |
| Where to produce or sell | Sites are restricted | Planning permission refused near housing or protected land, so the business locates further out and pays more to transport goods in |
| Costs | Nearly always up, at least at first | Equipment to buy, licences and permits, higher disposal charges, taxes on emissions, fines if the rules are broken, and staff time spent proving compliance |
The cost effect is worth handling carefully, because the obvious answer is only half of it. Higher costs mean higher prices or a smaller margin, and a small business can be hit harder than a large one because the equipment costs the same whatever the output. Set against that, the controls apply to every competitor in the country at once, so nobody is undercut by ignoring them, and a business that has already invested may gain when the law catches up with its rivals. That trade-off, not the list of costs, is what earns the evaluation marks on an 8-mark part.
Common mistakes
- Writing "it damages the environment" as a point. Name the damage: air pollution, water pollution, depletion of resources, congestion.
- Using pollution twice when a question asks for two different ways.
- Answering with what the business could do instead of the damage it causes, when the question asked for the damage.
- Stopping after the application. The third mark in a 6-mark part is for the consequence, such as harm to health, loss of resources for the future, or delays for other businesses.
- Adding a second type of damage where the development should go.
- Answering "how may the business respond" with recycling and renewable energy, which is the sustainable production content in 4.3, when the question was about controlling the damage it causes.
- Saying legal controls only raise costs, without mentioning the effect on how, what and where the business produces.
- Assuming legal controls always ruin a business. They apply to competitors too.
- Confusing an ethical issue such as child labour with an environmental one. Ethics is 6.4.
What the syllabus asks for on this topicSyllabus points
Syllabus points
- Explain how business activity can negatively affect the environment, including pollution and depletion of resources.
- Explain why businesses may respond to environmental issues, including improved reputation and increased sales.
- Explain how businesses may respond to environmental issues.
- Explain the effects of legal controls over business activity affecting the environment on how, what and where to produce or sell.
- Explain the influence of those legal controls on a business's costs.
Related CIE 0264 Business topics
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