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The G-word: Do Businesses Touting Green Really Practice What They Preach?

Written By: Paloma Somohano
Published On: March 30 2009

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Originally published – December 1, 2008

For many years, management theory and practice had not taken into account the environmental impact that businesses' activities may have. This was first captured by Paul Shrivastava, professor of management at Bucknell University, with the metaphor of "castration[1] ." His theory supports the fact that organizational theories should be forced to look at the environment and nature as a requirement for the development of organizational activities.

Indeed, Galdwin mentions many examples of management theory that lack environmental concerns (of a non-human nature): strategic management literature (Hosmer; Pauchant and Fortier; Throop, Starik, and Rands), stakeholder theory (Starik), and business ethics (Hoffman)[2] . This calls for a review of existing business practices.

And yet today, environmental concerns are everywhere. Everyone seems to be going green—especially businesses. However, how are we to know if these environmental concerns are in fact what really moves businesses towards lowering their environmental impact? Furthermore, are these so called "green practices" actually legitimate and focused truly towards the protection of the environment, or are they just profit-driven and for image perception? Is society being green-washed?

Irresponsible Purchasing

Offer responds to demand. The more the general population is sensitive to and informed about offer, the more products will be available to meet its needs. In fact, consumers play a big role in lowering production's environmental impact. This is one of the main reasons why it's important to know what impact our consumption habits have on the environment and on society.

Unfortunately, the price we usually pay for goods and services does not reflect the overall cost that these products represent (mainly the ecological impact costs which will be paid by future generations). We know our planet has scarce resources. According to the Footprint Network, our current consumption rhythm and waste production needs a total of 1.3 planet Earths in order to work. This is completely unachievable. The study estimates that if consumption continues as it is now, by 2030 we'll need two planets in order to satisfy our consumption needs.

Organizations' Need to Be Responsive

In order to slow the deterioration of our ecosystems, essential changes need to be made to our consumption habits, our values, the prices of products we buy, and the technologies used to produce them. Even though the main consumption trend is quite strong, its shocking results should force society into action. And without a doubt, the environmental crises we're currently going through are accelerating these attitudinal changes. Undeniably, "green" goals cannot be achieved without mobilizing key sectors such as public administrations, non-governmental organizations (NGOs), and industries. At the end of the day, however, it's the end consumer that is still the decisive stakeholder for profound transformation.

According to a survey conducted by McKinsey consultants in 2007, 87 percent of consumers say they are concerned by the social and environmental products they buy[3] . In addition, one third of the surveyed population state they are willing to buy more environmentally friendly products—yet they don't know how to translate these motivations into concrete consumption habits. For example, when it comes to actually buying "greener" products, no more than 33 percent of all the people surveyed actually buy low-environmental-impact products. The same study found several barriers to the consumption of environmentally-friendly products, such as lack of awareness, negative perceptions, high costs, and poor availability. In order to better market greener products, companies need to find a way to overcome these obstacles.

Here are just a few questions that consumers can ask themselves when purchasing products[4] that can help to lower their environmental impacts.

  • Does it contain recycled materials?

  • Can it be recycled?

  • Does it have excessive wrapping?

  • Is it toxic?

  • Is it biodegradable?

  • Is it of good quality and is it long lasting?

  • Does it reduce the consumption of other materials?

  • Does it reduce the consumption of water or energy?

  • Is it made with and through resources and jobs from the same region?

  • Is it produced in a fair manner?

  • Does it contain organic products?

  • Does it have environmental certifications (eco-labelling)?

While these are just a few simple questions that can be asked when purchasing products, what really needs to change is the mindset we have about the impacts our daily actions have on our planet. Without a doubt, great efforts need to be made in order to change our perception of life, of our planet, and society's failure to account for its actions. Companies ought to be aware of consumer concerns in order to better place their environmentally friendly products. Without a doubt, sustainable development should be recognized by companies as a catalyst for the development of new business opportunities[5].

Stakeholders' Roles

On the other hand, companies alone cannot handle the burden of educating consumers and societies on more responsible consumption habits. Indeed, governments and NGOs play an equally important role—if not more important—on the protection of the environment.

An interesting example of cooperation—engaging producers' and consumers' concerns toward more responsible practices—is the United Nations Global Compact. This project's main stakeholders include governments, NGOs, and the private sector, and focuses on informing them about available greener initiatives, technologies, and practices. It seeks for an engagement of society and governments to move environmental protection principles ahead towards a more sustainable economy. In fact, it has become the largest corporate engagement initiative to date. It was initially proposed by Kofi Annan in 1999 during the World Economic Forum at Davos (Switzerland). At that time, companies from more than 80 countries—as well as NGOs—developed the main principles of the project, which included protection of the environment.

The Global Compact office itself, by its voluntary nature, does not regulate companies' activities. Essentially, what it does is support the sharing of information about environmental actions undertaken by companies. The network then facilitates the implementation of these principles through sharing case studies, examples, and relevant training for precise activities.

When it comes to environmental performance, there is still a long way to go. Consumers still play a decisive role on what concerns the protection of the environment. Many efficient initiatives have already been implemented worldwide. Responsible production, responsible consumption, and awareness of our actions will carry societies towards a more conscious lifestyle and, ultimately, to a healthier environment.

Economic Advantages of Green Initiatives for Businesses

For businesses all over the world, the environment has become a major worry. Since the 1980s, more stringent legislations towards greener practices have led to a growth of concerns as well as environmental initiatives in the industrialized world. The 1990s, for many companies, was a turning point which turned the hassles and higher costs of green initiatives into competitive advantages through win-win approaches—giving them the tools needed to differentiate themselves from others.

Nonetheless, while implementing green initiatives in organizations, many obstacles arose, especially socio-economic ones. And these barriers were usually a response to pressures from society. Companies often decided to implement ecological initiatives following societal pressures, since failing to do so might compromise the legitimacy of the companies' activities and could even put their future at risk. This degree of adjustment between societal pressures and companies' responses is what is commonly known as societal performance[6]. As such, companies have two main response strategies for improving their environmental performance evaluation[7]:

  • stimulate external motivations
  • minimize obstacles (control of external environment)

From a more positive viewpoint, there are many reasons for implementing green strategies, such as compliance with regulations, environmental impact, the quest for more efficient (leaner) production practices, image, and marketing—to name a few. The main motivators for moving organizations toward greener initiatives are

  • economic

  • marketing and image

  • strategic competitive advantages (difficult to imitate)

  • profitability (greener = leaner = cheaper)

  • external pressures

  • anticipate regulations

  • societal pressures (public opinion)

  • ethics and corporate social responsibility (hard to evaluate, yet often present)

  • culture, mission statement (stimulate and motivate employees)

And Yet, Most Undertaken Strategies Are Still Reactive. Is It Really That Bad?

A crisis is usually defined as the accumulation of serious incidents that represent major risks and that demand crucial decisions in an uncertain context and can usually lead to catastrophe. Nonetheless, for companies, major risks are difficult to anticipate and are rarely frequent. In an industrial context, major risks become crises (e.g., Bhopal, Exxon Valdez). These risks are often characterized by being systemic—given the difficulty of identifying the one soul responsible. Moreover, the main components of crises are human mistakes, incongruous decisions, unconsciousness, apathy (or lack of action), and lack of time for prevention practices.

In his book Crisis Management, Planning for the Inevitable, Steven Fink expands on the Webster's Dictionary definition of a crisis as a "turning point for better or worse"; as a "decisive moment" or "crucial time"[8]. Fink further explains crisis management as "the art of removing much of the risk and uncertainty to allow you to achieve more control over your own destiny" . Thus, the importance of crisis management in establishing preventive actions in companies. These can be carried out through the alignment of environmental concerns on a company's culture, values, products, technologies, and most of all, strategies.

Standards Integration

Although they are crucial factors for change, physical and financial investments alone are not enough to assure pro-environmental changes in organizations. Contrary to popular belief, workers' and managers' knowledge play crucial roles in green initiatives, since they are the ones who know their companies' business processes the best.

Strategic planning in organizations demands deep changes that can often be seen as negative to existing business practices. However, these practices can help companies differentiate themselves from others by better placing themselves in highly competitive markets. Undeniably, these winning practices—along with companies' learning capacities (learning organizations), become imperatives for the development of their adaptation abilities and survival assurance.

The main framework for the integration of greener actions with a long-term impact should begin with the following points among its main components[10]:

  • implement top-down integrative approach of environmental concerns

  • foresee necessary human and financial resources

  • involve personnel in the implementation process of green policies (through training, conferences, etc.)

  • involve personnel's daily activities in the strategy

  • define control measures (evaluate)

  • profit from green initiatives

  • define a crisis management plan (if necessary)

Furthermore, these strategic initiatives have higher chances of success through the daily commitment of employees and other qualitative changes[11], like organizational culture.

Conclusion

As a society, we are clearly in front of an enormous challenge. For businesses, the framework for future change should include the ecological impacts of their activities in its daily actions. Due to the fact that technology has been evolving rapidly to minimize the environmental impact of industrial activities, companies now have a larger choice of means and tools that can be used to control pollution in order to find the needed equilibrium for sustainable development.

Thus, in order to achieve truly sustainable environmental solutions, managers must concentrate on finding smarter and finer tradeoffs between business and environmental concerns, while acknowledging the fact that in most cases, it is impossible to get something for nothing[12]. By working with the stakeholders, it can be possible to find a way to merge all economic, social, and ecological challenges into concrete strategies.

When referring to green initiatives, we could think about responsible production as an example of organizations' engagement towards the protection of the environment. Even if corporations are not meant to save the world from environmental catastrophes, they should indeed be taken as agents of change and report on the impact of their activities. In fact, many of them have already started to do so (through International Organization for Standardization [ISO] standards, for example) and have included many pro-environment values into their activities.

 

 
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