STRATEGIC MANAGEMENT FOR A BETTER ENVIRONMENT 2
Strategic Management for a Better Environment
Following the American Psychological Association Style Guide
Name
Professor
Introduction
This essay focuses on my thoughts of effective strategic management.
Environmental Issues/Eco-Efficiency
Eco-efficiency is a good example of a practice that tackles both environmental and economic issues in a sustainable society. Eco-efficiency refers to a company's efforts to increase the value of its products and services while simultaneously reducing the impact on the environment through pollution and the release of hazardous wastes. Aaron Brody discusses the concept, practice, and benefits of sustainable packaging as an eco-efficient strategy. He describes the "cradle-to-cradle lifecycle" of sustainable packaging as meeting current and future needs by using renewable and recyclable materials and encouraging waste reduction and resource conservation (Brody, 2007).
Examples of Companies that Embrace Sustainable Society Issues
Two global companies — Scandinavian Airlines and Gap Inc. — have embraced sustainable society issues and incorporated them into their management strategies. Here are descriptions of how they have made sustainable society actions an integral part of strategic management; the techniques they used; and the benefits of their programs.
Example 1: Scandinavian Airlines — Committed to Eco-efficiency
Airlines are major contributors to environmental issues through air emissions, noise emissions, air traffic congestions, and hazardous waste disposal. Scandinavian Airlines (SAS) however, is considered a leader in environmental management. The leadership of SAS incorporated environmental management into strategic management. In 1995, SAS published the first of its annual, award-winning environmental performance reports. Because of its commitment to environmental management and willingness to discuss it, Lynes & Dredge studied SAS to identify its tools and determine its motivations.
They found that SAS utilizes four main tools or mechanisms to manage its environmental program:
· Publication of a public environmental report annually
· Utilization of an eco-efficiency index to measure the economic efficiencies derived from implementing environmental measures
· Utilization of an emissions calculator to determine destination-specific calculations of carbon dioxide generated
· Institution of a corporate management policy that requires all managers to complete environmental reports for their divisions and also to purchase from suppliers who practice environmental management.
· Lynes & Dredge identified five factors that are motivating factors in SAS' environmental management program:
· Financial cost-benefit: SAS saves money by employing energy and water-saving techniques.
· The regulatory setting: SAS accepts regulations and anticipates future legislation.
· The desire to be a good corporate citizen: SAS presents a positive image of airlines within the transport industry and embodies the "Scandinavian spirit."
· SAS desires a positive image as an airline within the marketplace, with suppliers, and with regulatory agencies.
· SAS fosters positive relationships with stakeholders within the aviation community: corporate customers, the government, and unions.
· Interestingly, SAS interviewees indicated that its environmental management program was not influenced by pressure from passengers as that did not seem to affect passengers' choice of airlines. Nor, was SAS inspired to promote environmental management as a marketing technique; the interviewees indicated that such marketing would be dishonest because airlines consume so much fossil fuel that none can really call themselves "green" yet. Lynes & Dredge concluded that a major element for the success of SAS to incorporate environmental management into its management strategy is the active and continuing role and commitment of top management to the program and its promotion as part of SAS corporate culture to employee at all levels within the organization (Lynes & Dredge, 2006).
Example 2: Gap Inc. — Committed to the Community
In 2004, Gap Inc., parent company of Gap, Banana Republic, Old Navy, and Forth & Towne, was the first retailer to publish a social responsibility report. Gap Inc. has incorporated social responsibility into four areas of its strategic management by:
· Instilling sustainable solutions in its supply chain by improving working conditions, monitoring factories, enforcing labor standards, and collaborating for industry-wide change.
· Ensuring a positive work environment for employees.
· Contributing to the community through charitable contributions and volunteer work.
· Assuming responsibility for environmental management practices in the operation of stores, distribution centers, and offices worldwide, by monitoring energy and supply consumption, safety rates, and the environmental management policies of external vendors.
· According to Eva Sage-Gavin, Executive Vice President, Human Resources and Communications for Gap Inc., the company's social responsibility commitment dates back to its beginnings in 1977, when the founders established the Gap Foundation. Additional motivating factors include Gap Inc.'s efforts to meet global compliance standards for labor and the desire to improve even further upon the practices presented in Gap Inc.'s first formal social responsibility report in 2004. Sage-Gavin describes three major benefits resulting from Gap Inc.'s social responsibility program:
o Gap Inc. is better able to attract and retain employees.
o The supply chain has improved due to better working conditions for employees.
o The impact on the environment is more positive — reduced energy use equals reduced cost (Wright, 2007).
Discourse/Sustainability is a Global Issue
Here are two examples of global initiatives designed to influence companies to incorporate sustainable society factors into their management strategies:
o In 2006, the United Nations introduced Principles for Responsible Investment to promote socially-responsible investing on a global basis. The Principles are voluntary guidelines that provide institutional investors and asset managers with a framework that helps them to avoid investing in companies with poor records on issues such as human rights, pollution, and corporate governance. So far, the United Nations has garnered 170 signatories to the Principles from around the world (Green, 2007).
o Ford Motor Company and Conservation International established The Center for Environmental Leadership in Business (CELB) to help companies avoid harming the environment and instead integrate ecological practices into their business strategies in order to create solutions to global environmental problems (Business & the Environment with ISO 14000 Updates, 2007).
Benefits of Incorporating Sustainable Society Factors into Strategic Management
It's hard to dispute that there are definite benefits to the environment and local, national, and global communities from incorporating sustainable society factors into corporate management strategies. In fact, measurement tools do exist for calculating the benefits of a company's actions on society; the Center for Sustainable Innovation (http://www.sustainableinnovation.org) created a non-financial, mathematical tool called the Social Footprint, which is both a corporate sustainability measurement and a reporting method (Business Credit, 2006).
But what about the benefits to the company?
Benefits to the company — beyond political correctness — of positively contributing to a sustainable society include: the fostering of a positive public image; the attraction of investors and customers to a "socially responsible" company; and corporate satisfaction.
Conclusion
A company that aims to contribute to a sustainable society must of course, balances its actions and decisions against safety and cost. For example, a company that uses recycled materials to make a product must not compromise the safety of the product to the user or environment, and must be able to price the product so that the cost is not prohibitive in the marketplace. In another example, a company that decides to invest in socially-responsible funds will expect to reap financial, as well as social value from the investment.
Multiple strategies exist for a company to incorporate strategies into its strategic management that positively contribute to a sustainable society. But does the contribution to a sustainable society equal more monetary profit for the company? As companies weigh the effects of their strategic management actions and decisions on a sustainable society and on their profits, they must seek out innovative strategies to increase the value to all stakeholders now and in the future.
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