HOW COULD BUSINESSES PROMOTE ENVIRONMENTAL RESPONSIBILITY?

1.1: Introduction-

Despite extensive economic growth and increases in the quality of life over the last century, concern remains that the era of industrialization has had substantial negative effects on the natural environment and that these effects diminish the vitality and sustainability of our economic systems[i]. In addition to the localized problems pollution, recent scientific discoveries have revealed global scale effects such as ozone depletion and climate change[ii]. The long-term economic impacts of these effects may be quite substantial as a large portion of the world’s economic output is dependent upon the viability of natural systems.

Environmental sustainability and fight against climate change is a long-term strategic issue for the modern world within the broader context of sustainable development. It is an established fact now that climate change has the potential to alter the ability of the earth’s physical and biological systems. It impacts different regions and sectors differently based on their sensitivity and adaptive capacity, and therefore, vulnerability.

The role of businesses in resolving such environmental challenges is emerging as a subject of high importance. Businesses are considered as a central force of economic development, as it generates growth and serves as a vehicle for innovation and change. For businesses, this is more important to consider as there is high level of socio-economical and political accountability under the widely accepted domain of green assets management. Businesses have huge social and environmental responsibilities. These responsibilities should be fulfilled while venturing for profits in the business. This philosophy of environmental accountability helps companies in two ways, viz., establishing businesses as ethical brand and secondly developing a market niche in the present competitive market. Companies understand these concerns and therefore, to a great extent many businesses have been adopting ‘green marketing policies’ and ‘Energy Efficient Technologies’. Remarkably, this trend has affected both the forward and backward linkages of product life cycle.

Of late, businesses have been attempting to interlink with other companies with similar vision and mandate to create a true international business domain, which is environmentally responsive. This is possible through transfer of efficient technologies from technologically sound entities to businesses, which implies that there should also be an appropriate symbiosis between Research & development entities and businesses with basic motive to propagate efficient –affordable and commercial profitable innovations. In another word, businesses do not need merely businessmen, rather need ecological entrepreneurs, who will have charisma and power to modulate negative environmental changes and capabilities to create new opportunities.

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1.2: Motives of environmental responsibility-

Historically, much of big business has pursued investment, production and marketing strategies that have resulted directly in extensive waste and degradation of natural resources or encouraged consumption patterns that do the same. Logging and mining enterprises, pulp and paper mills, agribusiness, oil, chemical, cement, iron and steel companies, as well as many other enterprises, have degraded  natural resources as well as global climate.

Now, there are signs that businesses are on the verge of recasting their relationship to both the environment and their stakeholders. Many companies are adopting a discourse and policies that suggest that businesses can simultaneously make profits and be good citizens. There appears to be a growing recognition that the increasing freedom enjoyed by business during the era of the so-called Washington Consensus[1]needs to be complemented by increased responsibility[iii].

There could be two basic motives, for which businesses implement and practice environmentally responsive behaviors, Viz., (i). Existing environmental law and regulations compel businesses to execute certain mandatory practices and therefore, companies adopt environmental measures as per statutory norms and guidelines and (ii). Businesses indentify a profit motive in the negative externalities of environment degradation and attempt to capitalize on the market failures, conceded from the exploitation of environment.

Indeed, pressures from stakeholders have also acted as catalyst for this transition.  Companies respond to the numerous pressures[2] that exist in their external and internal environments today, from a wide range of stakeholders that are pushing for greater environmental and social responsibility[iv]. A third source of pressures can be termed institutional and includes a proliferation of “best of” rankings, the steady emergence of global principles and standards that raise public expectations about  these responsibilities, and new reporting initiatives emphasizing the triple bottom lines of economic, social, and environmental performance. 

This necessitates a new relationship for businesses with the environment and society. It is as much an approach to promote economic growth and competitive advantage as it is to encourage environmental responsibility.

 

1.3: Environmental Sustainability in Businesses-

However as debriefed above, true environmentally responsible businesses should have action plan for creating environmental sustainability which could perform beyond mandatory and standard legislation related to environmental and social protection. The environmental sustainability of businesses should not be a ‘Greenwash[3][v]’ but it should actually reduce negative environmental impact and develop an ecologically resilient society, which should meet the needs and requirements of the present without compromising the ability of future generations to meet their own needs. The planet Earth needs to be capable of supporting ongoing and future business practices if they are to be considered genuinely sustainable from both an ecological and an economic perspective. There is no simple solution to this situation, but different perspectives may contribute to create conditions and models of sustainable business practices, which are ethical demands of environmental sustainability. It is visualized that businesses can fulfill the ethical demands of environmental sustainability through two major approaches, Viz., Internally-oriented Environmental Responsibility Practices and externally-oriented Green Management Practices.   A few specific measures under these two approaches have been explained below.

1.3.1: Internally-oriented Environmental Responsibility Practices-

 

It is felt that businesses should focus on the internal management of materials, products, and processes that have potentially negative environmental impacts and that add costs to and reduce efficiency in their operations. Businesses must recognize that proactive environmental management can also be good business, leading to more efficient, cost-effective and profitable results. Therefore, internally-oriented practices that contribute to sustainable development include: 1) enhanced regulatory compliance to reduce the Business’s negative environmental impacts of hazardous emissions in communities in which they are located; 2) adoption of pollution prevention and clean manufacturing practices that eliminate pollution before it occurs; 3) redesign of products and processes to achieve more beneficial environmental impacts for customers and communities; 4) materials reduction, recycling and reuse; and resource conservation.

  1. 1.      Enhanced Regulatory Compliance-

Businesses should adopt voluntary proactive environmental management systems that go well beyond what local or national regulations require. Notably, businesses like Kodak, SmithKlein have created their own corporate environmental and safety standards that meet international guidelines[4]. These corporate standards are often more stringent than the requirements adopted by governments and are usually applied by all of their facilities worldwide[vi],[vii],[viii].

 

 

  1. 2.      Pollution Prevention and Clean Manufacturing Practices-

Businesses should adopt clean manufacturing practices that prevent pollution before it occurs not only in their own operations but also among their suppliers, vendors and contractors. There should be a company mandate for making substantial investments in cleaner manufacturing technology[5] to improve supply chain performance which will ensure to introduce pollution-prevention measures in production and distribution system[ix].

At the same length, it is found that clean manufacturing system is possible through technology u innovation, upgradation and retrofit.

  1. a.      Technology Innovation, upgradation and retrofit-

Continuous efforts for technology innovation and scaling up those technologies commercially should also considered by businesses.[6] Similarly, businesses should remove obsolete and inefficient technologies and adopt efficient technologies which could produce more outputs with less energy consumption. For example, companies, which has needs of steam and power, could installed high pressure boilers to fulfill the steam requirement as well as produce power through installing efficient turbines. In a similar fashion companies should also try to adopt waste heat recovery, which could have otherwise vented to the atmosphere and could pollute the environment[7].  

 

  1. 3.      Improving Process and Product Efficiency-

In continuation of the previous two measures, businesses should also have internal policies for improving processes, involved in the backward and forward linkages of any production process. This measure should aim to produce efficient products, which are environment friendly, recyclable, non-toxic and sustainable[8]. Therefore, process optimization is the thumb role for this measure, which also includes use of renewable source of energy for production processes[x],[xi].

 

  1. a.      Paradigm shift in Energy Source-

Businesses should use feedstock of renewable origin to meet the energy demand in their production and distribution or marketing mechanisms. Those feedstocks should less carbon intensive, having ZERO probability to emit Green House Gases [GHGs] and which could fulfill all the process requirement of the business operations[9].

  1. 4.         Waste Treatment and Management-

Companies should also take due care to produce least possible ‘‘effluents and hazardous byproducts, and that least volume should also be treated and managed to convert to energy [Waste to Energy] so that it could be reused in the production processes[10]. Existing waste-management practices can provide effective mitigation of GHG emissions[xii]. A wide range of mature, environmentally-effective technologies are available to mitigate emissions and provide public health, environmental protection, and sustainable development co-benefits. Collectively, these technologies can directly reduce GHG emissions or avoid significant GHG generation[11]

1.3.2: Externally-oriented Green Management Practices-

It is a widely accepted fact that businesses should develop a symbiosis with stakeholders, environmental interest groups, and communities to address important environmental problems and it could be practiced in three ways:

1) Incentives for companies’ employees and managers to collaborate with external stakeholders on environmental improvement projects[12];

2) Philanthropic activities that support community, national, and international efforts to improve environmental conditions[13]; and

 3) Strategic alliances between businesses and environmental and public interest groups to solve crucial environmental problems[14].

In addition to the aforesaid two broad categories, it is felt that business should also adopt green marketing practices, along with capacity development of its human resources and other timely measures. A brief description of a few strategies is given below.

  1. A.     Green Labeling:

It is felt that going green for the sake of being different is not enough. Aside from differentiating oneself, going green has to be relevant to his target customers. It has to mean something to them[15]. Passing this message to consumer is also very important. Based on the recent trends, it could be recommended that blogs or social networking sites are extremely effective to promote green products.

  1. B.     Human Resource Development:

Developing skills of human recourse of businesses is also an important strategy for environmental sustainability.  Both the frontline workers and middle and senior level managers should be trained on ‘green technology’. The human resources of businesses should be change agents for transforming the businesses and its operations. Companies could arrange periodic training and capacity development programs and can ensure appropriate adoption of efficient and timely green initiatives in the companies.

  1. Mandatory Carbon Disclosure:

As a precautionary and proactive approach businesses should practice a detail accounting of their carbon footprint in a defined time frame. This accounting should illustrate the strategy, targets, performance, and benchmarking of how the companies are working to reduce its impact on and adapt to changing environment and climate[16]. This will benefit businesses in two ways; viz., in managing the emissions, if there is any and enhancing efficiencies of the different process with appropriate adoption of new technologies.

  1. GHGs mechanisms of environmental markets:

Indeed, companies could also take help of the current market mechanisms of environmental domain, such as Clean Development Mechanism [CDM], Joint Implementation [JI] and emission trading. These measures are in place under Kyoto Protocol could also ensure efficient technology transfer and enable businesses under the recently concluded COP-15’s mandate on ‘Technology Innovation’.

1.4: Conclusion-

Therefore, to conclude, it could be reiterated that businesses should emerge with proactive company policies, highlighting a mandate to fulfill socio-economic and environmental ethics as well as percolating the co-benefits of those measures to the masses. Businesses must represent a desire to integrate the economic, environmental and societal aspects of its business to achieve sustained financial success, safeguard the environment and develop the company’s reputation as a respected corporate citizen. In order to make alliances and partnerships between businesses and external stakeholders work, the World Business Council for Sustainable Development points out those businesses must develop an integrated approach to environmental management, have committed top management leadership, see employees as partners, and continuously pursue positive actions[xiii]. However, for this approach, businesses must develop a management culture that explicitly recognizes the importance of social and environmental responsibility. Openness and accountability are essential to earn the trust. 

 

It is believed that if businesses realistically and carefully make attempts for sustainable development, it can reduce the adverse environmental impacts of business operations on local communities, develop clean manufacturing and pollution prevention processes and technologies, explore environmentally neutral or beneficial products and services, and help conserve natural resources and improve environmental conditions around the world. And, indeed, businesses will need to integrate this sustainable development policy, and associated programs and standards fully in all activities and all functions as an essential element of management.

 


[1] The term refers to the common approach towards the debt crisis adopted by Washington-based institutions such as the World Bank, the IMF and the US government in the late 1980s. An approach that emphasized the need for structural reforms in developing countries associated with more open economies, privatization of state-owned enterprises, deregulation and the down-sizing of the state.  

[2] This pressure for greater responsibility comes from primary stakeholders, such as owners, employees and customers, who can be viewed as being on the ‘inside’ of the businesses.  Secondary stakeholders including non-governmental organizations (NGOs), activists, and governments are also seeking greater environmental responsibility. 

[3] Greenwash: .Disinformation disseminated by an organization so as to present an environmentally responsible public image. (The Concise Oxford English Dictionary, 1999), or the attempt by corporations to hide the unpleasant environmental facts of their activities by adopting an environmental discourse or specific policies and practices that appear to be environment-friendly but do little, if anything, to change the relationship of business to the environment.

 

[4] Kodak uses a “Business Unit Evaluation Guide” to measure how well business unit managers integrate environmental responsibility into business plans and track progress in environmental performance semi-annually. The Sony Corporation plans to have all of its production and non-manufacturing facilities in Japan certified with ISO 14001 standards.

 

[5] The 3M Corporation carries out pollution prevention programs within its own plants and designs products that prevent pollution for its customers. General Motors is adapting its materials accounting systems, its material safety data sheet management systems, and its materials inventory control systems to generate environmental regulatory reports and to support pollution prevention initiatives.

 

Through a process known as “Design Manufacturing Waste Out” (DMWO), Proctor & Gamble is finding ways of reducing or eliminating manufacturing wastes. Bristol-Myers Squibb conducts product life cycle (PLC) reviews to identify and reduce potentially negative environmental impacts at all stages of a product’s life from raw material acquisition, design, marketing, manufacturing and packaging, to distribution, customer use, and ultimate disposal.

 

[6] It could be recommended that each business should have a division for monitoring the efficacy of the currently practiced technologies in the company and a mandate should be in place to enhance the productivity of these current technologies with a focus on sustainable development. A classical example in this front could be the development of amorphous based solar technology, which has higher efficiency and applicability in different geographical areas.

[7] Businesses should also focus on developing green assets, whether that is building or other infrastructure. Buildings, which account for approximately half of all annual energy and greenhouse gas emissions, are an important target area for any strategy addressing climate change and environmental sustainability. Whilst new commercial buildings increasingly address sustainability considerations, incorporating green technology in the refurbishment process of older buildings presents many technical, financial and social challenges. Therefore, companies should also practice and take care of this aspect by adopting current green building policies.

 

[8] Monsanto is developing biotechnology-improved higher-yielding seeds for agriculture that reduce the need for externally applied insecticides, and that reduces the raw materials, fuel and associated manufacturing and transportation inputs associated with insecticides. Monsanto seeks to develop a line of agricultural products that lead to higher productivity, soil conservation, less insecticide and energy use, and better habitat protection.

Intel seeks to reduce the power consumption of personal computers and is designing computer subsystems that use advanced power management techniques during operation and when in standby mode. Dell Corporation is producing personal computer chassis that are recyclable and upgradeable, extending their life cycle and reducing disposal problems.

 

[9] Indeed, a typical example in this front in the contemporary time is the innovation and adopting the ‘Green Coal’ technology, which is in the process of replacing of ‘fossils based coal’ in near future. At the same length, adopting green technologies for energy sources, like wind, solar, biomass based fuel as well as biofuel could be another few avenues, which could be ventured by businesses.

[10] Waste reduction, recycling, or reuse not only relieves pressures on natural resources and virgin materials, but also helps solve waste disposal and treatment problems for customers and communities. Ford Motor Company’s worldwide stamping, casting and forging operations use more than 2 million tons of recycled metals a year. Proctor & Gamble eliminated 30 million pounds of waste materials in 2008 alone by reducing packaging for its laundry, cleaning and household products. In addition it used 979 million pounds of post consumer recycled materials in its packages.

 

[11] PepsiCo, for example, initiated energy conservation programs that have saved more than 4.6 million kilowatts of electricity since the programs’ inception, preventing the emission of 1.5 pounds of carbon dioxide, 5.8 grams of sulfur dioxide and 2.5 grams of nitrogen oxide for every kilowatt hour saved.

Weyerhaeuser invested $240 million to improve productivity and environmental performance at its paper mill in Saskatchewan, Canada, that reduced natural gas use by 80 percent, increase energy self-sufficiency and reduce air emissions by as much as 90 percent. It reduced wastewater discharges by 90 percent and water usage by recycling 35 million gallons of effluent and storm water runoff into its Arkansas paper mill’s process water.

[12] Alcoa offers awards and incentives to its employees in plants around the world to work with community groups on innovative ways of preserving the natural environment and cleaning up environmental problems.

[13] Businesses also provide financial support or use their corporate resources to develop educational programs for environmental protection and sustainable development. Compaq Computer Corporation donates equipment for use in wildlife refuges, parks, and research facilities that benefit the environment and provide environmental training programs. It sponsors middle school teachers to attend environmental training programs that help them develop the knowledge and skills to strengthen environmental courses in their schools.

[14] Chevron, for example, sees its alliance with the World Wildlife Fund, the national government, local communities, and joint venture partners in Papua New Guinea to protect Lake Katubu from accidental releases and contamination and to promote nature based tourism as an important contribution to sustainable development.

 

[15] The majority of consumers today are not yet prepared to pay a premium or to sacrifice product performance to buy green products. Environmentally-conscious consumers are not a homogeneous group. According to J. Ottoman, author of the Green Marketing Book, traditional demographics are not enough to determine the intent to purchase green products. What really entice green purchases are consumers’ feelings of being able to act on these issues, or empowerment. In other words, if consumers believe that they can make a difference, they will be more inclined to buy green products.

[16] The Carbon Disclosure Project launched in 2000 to collect and distribute high quality information that motivates investors, corporations and governments to take action to prevent dangerous climate change. 2,500 organizations in some 60 countries around the world now measure and disclose their greenhouse gas emissions and climate change strategies through CDP, in order that they can set reduction targets and make performance improvement

 


[i] World Resources Institute, 2004. World Resources 2002–2004. World Resources Institute, Washington, D.C.

[ii] United Nations, 1999. UNEP Global Environmental Outlook 2000 and United Nations, 2004. UNEP 2004 Annual Report.

[iii] UNRISD, States of Disarray: The Social Effects of Globalization, UNRISD, Geneva, distributed by Earthscan, London, 1995.

[iv] The classic reference is R. Edward Freeman’s Strategic Management:  A Stakeholder  Approach.  Boston:  Pitman, 1984. 

[v] Greer, J. and K. Bruno  Greenwash: The Reality Behind Corporate Environmentalism, Third World Network, Penang, 1996.

[vi] Eastman Kodak Corporation, Health, Safety and Environment 1996 Report, Rochester,

NY: Eastman Kodak Corporation, 1998.

[vii] Sony, Environmental Report 1997, Tokyo, Japan: Sony Corporation, 1998.

[viii] BP Amoco, Environmental and Social Report 1998, London: BPAmoco, 1999.

[ix] Proctor & Gamble, 1998 Environmental Progress Update, Cincinnati, OH: Proctor & Gamble, 1999.

[x] Monsanto Company, Sustainable Development, St. Louis, MO: Monsanto, 2005.

[xi] Cooper Industries, 1996 Environmental Report, Houston, TX: Cooper Industries, 2002.

[xii] Weyerhaeuser Corporation, 2000 Annual Environmental Performance Report, Tacoma, WA: Weyerhaeuser, 2000.

[xiii] World Business Council for Sustainable Development, “Meeting Changing Expectations:

Corporate Social Responsibility,” Geneva, Switzerland: WBCSD, 2008.

 

Keshav C Das

Advisor, Climate Change, Sustainability 

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