Globalization—defined in the online course Global Business as the increased flow of goods, services, capital, people, and ideas across international boundaries—has brought many changes in its wake.
Some have been positive, such as increased international cooperation and less international aggression. Others have been negative, such as increased income inequality and substandard working conditions in developing countries that produce goods for wealthier nations.
One consideration that isn’t often discussed about globalization is how it affects the environment. One thing, however, is clear: Globalization does impact the environment, and typically not in a positive way.
Globalization and the Environment
1. Increased Transport of Goods
One of the primary results of globalization is that it opens businesses up to new markets in which they can sell goods and source labor, raw materials, and components.
Both of these realities mean finished products travel farther now than ever before—potentially halfway around the globe. In the past, products were more likely to be produced, sold, and consumed more locally. This increased transport of goods can impact the environment in several ways, including:
- Increased emissions: The farther a product travels, the more fuel is consumed, and a greater level of greenhouse gas emissions is produced. These emissions contribute to pollution, climate change, and ocean acidification around the world and have been shown to significantly impact biodiversity.
- Habitat destruction: Transportation—especially when land-based—requires infrastructure like roads and bridges. The development of such infrastructure can lead to issues including habitat loss and pollution. It’s worth noting that approximately 70 percent of all freight is transported by ship, according to a report by the International Transport Forum. The more ships that travel by sea, the greater the chances for major oil spills or leaks that damage the delicate marine environment.
- Invasive species: Every shipping container and vessel presents an opportunity for a living organism—from plants to animals to fungus—to hitch a ride to a new location where it can become invasive and grow without checks and balances that might be present in its natural environment.
2. Economic Specialization
One oft-overlooked side effect of globalization is that it allows nations and geographical regions to focus on their economic strengths, content in knowing they can turn to trading partners for goods they don’t produce themselves. This economic specialization often boosts productivity and efficiency.
Unfortunately, overspecialization can lead to serious environmental issues, often in the form of habitat loss, deforestation, or natural resource overuse. A few examples include:
- Illegal deforestation in Brazil due to an increase in the country’s cattle ranching operations, which requires significant land for grazing
- Overfishing in coastal areas that include Southeast Asia, which has significantly contributed to reduced fish populations and oceanic pollution
- Overdependence on cash crops, such as coffee, cacao, and various fruits, which has contributed to habitat loss, especially in tropical climates
It’s worth considering that globalization has allowed some nations to specialize in producing various energy commodities, such as oil, natural gas, and timber. Nations that depend on energy sales to fund a large portion of their national budgets, along with those that note “energy security” as a priority, are more likely to take intervening actions in the market in the form of subsidies or laws that make transitioning to renewable energy more difficult.
The main byproduct of these energy sources comes in the form of greenhouse gas emissions, which significantly contribute to global warming and climate change.
3. Decreased Biodiversity
Increased greenhouse gas emissions, ocean acidification, deforestation (and other forms of habitat loss or destruction), climate change, and the introduction of invasive species all work to reduce biodiversity around the globe.
According to the World Wildlife Fund’s recent Living Planet Report, the population sizes of all organisms—including mammals, birds, fish, amphibians, and reptiles—have decreased 68 percent since 1970. Latin America and Africa—two rapidly developing regions important to global trade—have seen disproportionate levels of biodiversity loss, especially among environmentally sensitive fish, reptiles, and amphibians.
While this decrease in biodiversity has many causes, it’s widely believed that the issues listed above have contributed in part.
4. Increased Awareness
While many of globalization’s environmental effects have been negative, its increase has heightened environmental awareness worldwide.
Greater connectivity and higher rates of international travel have made it easier than ever for individuals to see the effects of deforestation, habitat loss, and climate change on the environment. This, in turn, has contributed to new laws, regulations, and processes that limit negative effects.
The Role of Business
Globalization has allowed society to enjoy many benefits, including increased global cooperation, reduced risk of global conflict, and lower prices for goods and commodities. Unfortunately, it’s also led to serious negative effects on the environment.
Because it isn’t feasible for globalization to end or reverse, it’s likely the situation will worsen until nations, governing bodies, and other organizations are compelled to implement laws and regulations that limit negative effects.
Businesses and industries that operate globally have an incentive to take whatever voluntary actions they can to reduce the potential for negative consequences. Doing so can not only give an organization greater control over its initiatives, but also be a powerful marketing and communication tool.
Investing in renewable energy and packaging, embracing responsible land-use management, and shifting goods production to be closer to the end customer are all viable options businesses can and should consider. The challenge lies in balancing a desire to embrace corporate social responsibility with the need to turn a profit and run a successful business.
Are you interested in breaking into a global market? Sharpen your knowledge of the international business world with our four-week Global Business course, and explore our other online courses related to business in society.
