They further suggests that external communication can create transparency about the firms sustainability related visions and goals and the means by which it can be achieved. This aids in creating acceptance and trust for corporate strategies and the products with the firms stakeholders. It is always desirable to maintain a friendly dialogue with the stakeholders, especially the customers. Moreover, it is very important to get inputs regarding customer preferences as it helps in developing new and value added products. The firms that needs to generate awareness campaigns among consumers regarding how they influenced the positive development of the energy system. An example is purchasing renewable electricity, switching to district heating. Creating a dialogue with the consumers is one of the big challenges as the common knowledge and awareness regarding issues of energy is perceived very low. The remote meter reading system that was current installed is a successful tool to intensify the talks with consumers.
Hart and Milstein (2003) further identifies that a good environmental performance is considered to be a hygiene factor for energy companies. This means that firms which do not engage in sustainability will lose their business. So, external communication about the activities of the firms regarding sustainable development is very important. The environmental communication to public through reports, websites and media can create a huge impact on sustainable development by demonstrating good examples which can inspire others. Hence communication plays a vital role in strengthening the relationship with stakeholders, particularly the customers, which will produce huge opportunities to develop the firm in a sustainable direction. Learning is the instrument that speeds up change and drives the agenda of sustainability forward. Communication and learning should be priority areas for firms, not only to foster the transition towards sustainable business practices internally but on the other hand to create good awareness about the inevitability of behavioural changes regarding energy consumption among the major stakeholders.
Innovation
Hart and Milstein (2003) argue that innovation at operational and strategic level is vital to secure the company’s position to stay competitive. It is also a must to improve and enhance the environmental sustainability of a firm’s processes and products. Majority of the firms point out that the identifying the threats and opportunities at the right time from the environment are very important to direct the innovation processes. Internal innovation is most commonly found at both centralized level and within the individual business units. In the centralized level, a wide view of innovation is implemented and issues of strategic type such as portfolio of products and potential cooperation are the great areas of interest. Most commonly observed areas of innovation are carbon neutral district heating, energy services, wind farm products etc. At the business level, innovation activities aim on operational issues. For example, the production business unit attempts to find a better technical solution to effectively utilize the energy system or to test different types of energy crops. The market of business unit elaborates on models of pricing that gives incentives to customers to save energy. An open and good environment within the firm facilitates involvement of employees and makes it easier to look at innovative ideas for other business units or management. Another source of innovation is external stakeholders. Customers, owners and cooperation can help in generating new ideas that the firm can integrate and develop in its business. In connection to the interest to innovate, it is necessary to take huge risks. The willingness to take certain level of risk can be considered as a property of energy companies. It is very crucial to understand and analyse the innovative solutions as they need many levels to cope with the experiments to make the energy system more sustainable.
Organizational Integration
According to Hart and Milstein (2003) the fifth area that is crucial for firms which take active endeavours in sustainable development is their strong ability to integrate the respect for environment and sustainability thinking into various business processes and areas. The capability to add sustainability rapidly is only possible in a well establish and competent environmental organization. Adoption of ISO 14001 norms for management of environment appears to be a decisive factor in attaining good environmental standard. It is required to acknowledge that an efficient environmental management is highly complex social process with great deal of competence being accumulated over a considerable period of time. The attention on incremental improvements is one of the best features of environmental management systems, whereas continuity and stability are seen as a guarantee for sound and good environment management. To have continuous progress, constant the follow up of environmental goals is a point on meeting agenda of the management team who is responsible for power and heat production, which gives issues of environment due vitality.
It has been found out that environmental aspects have been integrated widely in steering management tools and documents. For example, goals of environment is incorporated in business plans, whereas environmental performance plays a vital role in the process dimension of balanced score card, a commonly used performance measurement tool. According to Sharma (2000) when sustainable practices are integrated to production system of heat and power, the presence of flexibility has been considered as an important point. A rigid well laid production system makes the financial and environmental optimization of energy systems more tedious, conceding sustainability goals. Integration is further attributed to the activity framework for sustainability of environment. The emphasis on environmental sustainability should not only be seen as reducing emission level but infuses product development, clean technology and more widely sustainable development considerations.
The emission reduction stage has got internal focus, where great attention is given to existing production systems and to reduce the firm’s impact on the environment from its business activities, in certain operations. All the improvements are of path dependent and incremental nature and they are significant over the time. The next stage Product Stewardship has external focus. It follows the market logic to create sustainable products that meet potential and existing customer needs. The apprehension of changes in customer preference due to the debate on climate change is very crucial at this stage. In the Clean Technology stage, the internal focus dominates more. The firm needs to be repositioned in secure position to access cost efficient and environment friendly production resources. In the Sustainable Development stage, great focus is given on stakeholders and external context. The firm is driven by sustainability vision that goes beyond its scope of activities and corporate boundaries. So, these are the four areas that follow widely different logics and clearly make it really challenging for firms to achieve balanced strategies for environmental sustainability. The consequences of this great diversity is realy an interesting fact.
3.2. Sustainable Development Strategies
Hart (1997) suggests the following ways to achieve environmental sustainability.
Reducing carbon emissions: This can be achieved by reducing the carbon emissions from the firm which can be achieved through a three prolonged approach:
- Reducing the demand for energy.
- Using low carbon technologies for efficient energy supply.
- Using renewable sources of energy for supplying energy.
According to Hart (1997) the usage of materials and methods of transportation are also key aspects to lower the carbon emissions.
- Reducing the demand: This can be done by designing the buildings according to the current Building Research Establishment Eco homes Excellent Standard (BRE). The demand for the energy from buildings can be minimized by following innovative designs by incorporating the following methods.
- Buildings should be constructed to utilize the maximum benefits of natural sun light and ventilation stabilizing the needs for cooling and heating.
- The thermal mass and building structure can be used to minimize cooling, heating and electricity demand.
- Designing lightings to optimally utilize the energy, subject to aesthetics, security and way finding methods through timed and dimmed systems.
- Installing energy monitoring and controlling equipment’s which includes smart metering. This can use automatic controls like motion, temperature sensors or daylight, manual overrides.
- Targeting and monitoring can be helpful in facilitating systems optimisation.
- Efficient supply of energy
Combined cooling, heating and power plants (CCHP) can recover the heat which is a by-product of electricity generation. It can be distributed along with electricity in the form of hot water that can be used for domestic use and space heating. The heat can also be used to generate cooling through absorption chillers. However the use of CCHP allows efficient generation of energy, as it is using the heat that is lost by centralized power generation distributed to all firms. CCHP can be efficient to up to ninety percent and central generation can be efficient to thirty seven percent. The CCHP helps in reducing the carbon emission to twenty five percent over current industry standards and building regulations.
- Usage of Renewable sources of energy
New renewable energy infrastructure can meet the energy demand using the renewable sources of energy. The usage of wind turbine and biomass boilers to supply heat can provide tremendous advantages.
3.2.1. Water
Hart (1997) suggests that the firm must look out for opportunities to efficient use water, recycle and reuse.
A practical and proactive approach to managing water can be taken to achieve this. The demand for potable water can be reduced by:
- Lowering the demand through techniques of management and motivating behavioural change.
- Using water saving technologies to reduce demand.
- Efficiently utilizing alternative sources of non-potable water, like rain water, grey water etc. where ever it is cost effective and feasible to do so.
Managing and looking out to minimize the demand for water during construction is another important strategy.
Reducing Demand of water
The construction teams can be asked to reduce the demand for potable water by incorporating water saving technologies like aerating flow restrictor taps with automatic shut off, low flush toilets, leak detection systems, low flow shower, proximity shut off valves and metering all uses attributed to the building management system. Educating and training the managers and building users is very vital to maximise the reduction in demand. Metering will also give substantial information to assist in the management process.
Supply of Water
New infrastructures for water supply can greatly reduce the loss of water into the ground from the old pipes. Rain water harvesting from buildings around the site and reusing grey water on a life cycle cost basis is an efficient way to ensure supply of water every time. Moreover, using new technologies that is cost effective should be always thought of.
Construction works
The efficiency and availability of water is key during construction works. There are a lot of opportunities to reduce the demand of water and use non-potable resources during construction.
Water efficiency and Management
Approaches reduce the demand for water are:
Wheel washing equipment: Self-contained vehicle and wheel washing systems can reuse and re circulate water through integral settlement tanks.
Treatment of Ground water: contaminated ground water that requires treatment can be treated and managed in an onsite treatment tank before discharging to a sewer.
Dust suppression: The ground water that is uncontaminated from grey water or excavations can be collected from rain water can be used for supressing dust.
Facilities for Welfare: The feasibility of portable building and welfare units that follows conservation of water like using sensor taps and dual flush wash room should also be taken into consideration.
- Waste
According to Gago and Antolin (2004) firms must look out for opportunities to design out waste and to efficiently reuse and recycle materials that are arising during remediation, demolition and construction.
According to Hart (1997) the major approaches to waste management can be linked to the approach of using materials. The major approaches are:
Reduce
Eliminate
Recycle
Reuse
Dispose of Waste and
Recover
According to Gago and Antolin (2004) almost ninety percent of the materials from demolition sites can be recycled or reused. Waste management and minimisation begins with design. The designs should look out for practical ways to deal with the production of waste during operation and construction of facilities. All the buildings and structures should be designed with recycling and reuse in mind. While designing buildings, selecting materials and structure minimisation of waste should be always thought of. Resource efficiency should be a key objective, along with putting maximum usage of secondary materials. This can be done by designing structures around standard sizes by avoiding cutting down and creating waste.
3.3.3. Materials
Firms should look for materials that are socially and environmentally responsible.
Hart (1997) suggests that the materials that are used for construction of building or manufacturing products should support sustainability. There are four major sustainable considerations that are to be kept in mind while sourcing materials:
Sourcing responsibly
Usage of secondary materials
Reducing embodied impacts
Healthy materials
- Sourcing responsibly: Suppliers should be asked to demonstrate the sourcing of materials by giving proof to the existence of legal sourcing, environmental management systems or using chain of custody schemes.
- Secondary materials
The reuse of materials arising by demolishing existing buildings and using materials from sites of close proximity as well as from other post-consumer waste systems are good thoughts of sustainable development.
- Embodied impacts of materials: All the major building specifications are expected to achieve an average area weighted rating of A or B as it is defined in the green guide for building specification. The supply chain must be able to demonstrate how the impacts of these specifications have been missed.
- Using Healthy Materials: The health of construction workforce and the future occupants of the building are very important. Where ever possible the materials used should not create health risk to the occupants in future. This contains, and is not limited to the prohibition of substances that contain organic volatile compounds and respirable materials and formaldehyde, fibres and other similar substances. These healthy material requirements can be found in the construction health and safety standard.
Actions
- Identify tools and methods that can reduce embodied impacts of materials including the usage of green guide specifications.
- Establish sound monitoring, management and reporting programmes to verify and support the material strategy.
- The timber used for construction should be from legal sources with clear evidence of supply chain.
- Use the construction materials from recycled or reused source.
3.3.4. Ecology and Biodiversity
This aims to enhance and protect the ecology and biodiversity of the manufacturing area.
Retention of habitat
According to Hart (1997) Recontouring and remediating the site means that the current vegetation cannot be retained. Moreover, there are a number of high value sites like waterside and woodland areas, which can be retained and can be identified as refuges that can be safeguarded during the construction works. To provide wildlife continuity during manufacturing and to provide alternative sites for protected species, a number of permanent and temporary habitat creation projects should be undertaken. Ecological management plans can be set up for each stage of manufacturing which will identify the risks on site that includes ecological issues like the presence of protected wildlife species and preservation of tree orders.
Actions
- The design of structures should give proper concern to protect and enhance the key species, habitats and ecology of the site.
- Location specific ecological management plans helps in translating the biodiversity action plan into specific actions.
- Enhancing the ecological value of the firm through integrating landscape design and habitat creation.
3.3.5. Land, Noise, Water and Air
Hart (1997) confirms that the company should aim to optimize positive and reduce the adverse effects on water, land, air quality and noise.
Firms should work proactively so as to maximise environmental protection and to reduce both harm to environment and disturbances to businesses and local communities. The firm should have an environment management system and environment management plan prior to start of work. However, it is essential to identify the risk associated with management measures and mitigation within the environment management plans. These environment management systems can be integrated or separated with the health and safety or quality systems.
According to Abreu (2011) it is quite necessary for a firm to have a code of practice. This code should address how the activities are delivered on site so as to minimize the risk to the environment and disturbances to the local communities. Some of the measures can include: managing and limiting emissions to water, air and land, schedules of operation to avoid risks of noise impacts, enhancement and protection of biodiversity and an easy link and access to biodiversity action plans. For instance, planting to provide screens to safeguard against visual and noise impacts.
Waterways
Wetland features and water courses should be added to the firm’s landscape. It provides an opportunity for commercial transport and leisure. Moreover, it will help in environmental enhancement and amenity and public access.
Sustainable Drainage Systems
Sustainable drainage systems should be used throughout the sites of the firm where underlying geology and contamination is allowed. Foul drainage systems and surface water will help in minimising the risk of pollution of water associated with sewage networks that are combined and lowers the flow to sewage treatment works.
Risk of Flood
The infrastructure and landform of the firm should be established to manage and control flood. This will help in legacy uses of the buildings and surrounding neighbourhood.
Internal Quality of Air
Abreu (2011) suggests that the internal air quality is very crucial aspect during the design of the buildings. It is of great concern for groups like elderly and children or those with specific susceptibilities. There are number of steps that can be taken during design phase to maximize the air quality. All the air intakes should be situated from sources of external pollution. Natural ventilation should be maximised as much as possible. While constructing new warehouses and buildings it should be aimed to lower materials that would create negative impact on quality of air. This may include organic volatile compounds (VOCs) or materials that may contain formaldehyde. The firm should also aim to design buildings in a way that it facilitates effective movement of air as well as cleaning and maintenance. In this way, the build-up of dust, mould or some other contaminants can be easily minimised.
External Quality of air
One of the most important aspects of environmental management approach is monitoring air quality on site. There are number of issues that are to managed and controlled like dust, air emissions and construction activities.
3.3.6. Supporting the Community
This should be aimed to create new safe housing and facilities, mixed use public spaces that are appropriate to the demographics and adaptable to future climates.
To accomplish this task the firm should work together with its strategic partners to achieve economic, social and environmental regeneration. However, there should be public parks serving sub regional and local sub communities. This will create an attachment between the urban neighbourhoods and company. This can also create good relationships between previously divided communities. Overall, it aims to enhance and support the communities portraying the local culture, history and diversity. Moreover, these kinds of endeavours can help in acting as a catalyst for reinvigorating the ecological and recreational role of the firm. This can combine active recreational uses and sports with more educational values and leisures like bird watching, outdoor classrooms and meadow walks.
Adaptation to Climatic Changes
According to Hart (1997) the firm should take creative measures to make sure that its developments are adapting to the changes in climate. Some of the measures are proactive flood risk management, lowering the demand for potable water, evaluating the potential for use of water and incorporation of sustainable drainage systems. However, in addition to all this the summers might get dry through climatic change and as a result subsidence might become a big issue especially in areas with clay soils. These risks should be calculated and added into the foundation designs so as to cope with stress. The landscaping of parks and surroundings of the firm is a requirement to cope with future climatic changes. Permeable materials will aid in reducing run off during high rainfalls and the shade can be used by the visitors of park. The foul drainage and surface water should be kept separated so as to reduce unnecessary demand on facilities of sewage treatment during high rainfalls and to prevent pollution of ground water or surface water. The planting choices should portray the chances of low rainfall in summer and lower the demand for water for irrigation. Al the buildings should be designed in a practical manner to adapt to the changes in climate.
Actions
- Enhance and protect a sense of ownership and sense of place.
- Retain original structures wherever possible
- The buildings should be designed in accordance with the code for sustainability.
- Moreover, the buildings should be designed to adapt to future changes in climate.
3.3.7. Mobility and Transport
The firm should aim to prioritize cycling, walking and use of public transport to the firm. This can be done by setting up buildings as compact as possible to minimise travelling distances and to increase the advantages of facilities of co-locating. Moreover, the company should also try to enhance efficiencies and reduce emissions linked with transportation of raw materials and finished goods.
Actions
- Implementation of a transport plan.
- Logistic plan for material and labour transportation.
Business and employment
According to Hart (1997) one of the most important sustainability strategies for the firm is to create new business and employment opportunities regionally, locally and nationally.
The firm should attempt to provide new employment and business opportunities right from the beginning of operations. This can be done by working with close partners to create new business and employment opportunities especially for the local community around the factory, to foster the achievement of regeneration aspirations.
The assist advancement of employment and business the firm needs to work with contractors and partner and aim to:
- Assure that all processes that are used to manage and recruit employees to build infrastructure, transport etc. should give fair opportunities to all.
- Even within the constraints of budget and time, the firm should ensure where ever possible to give communities an easy access to work placements and training so as to prepare them for opportunities of sustainable environment.
- Finally, ensure that the goods and services are procured from diverse suppliers and the firm is open, transparent and fair to all.
3.3.8. Business
Abreu (2011) suggests that for the purpose of achieving the firm’s aim of procuring all goods and services from diverse suppliers transparently, the contracting opportunities should be publicly advertised. This gives a fair and open chance to diverse suppliers and even to small and medium sized enterprises. Moreover, the firm should also inform the market about its forthcoming programmes by participating regularly in business events.
Training and employment
One of the most vital things for the firm is to forecast the forthcoming demand for labour, skills, and procurements. This can be done through mechanisms of key partners who can help in funding and providing training to meet the requirements of the supply chain. By all means the firm should promote measures to encourage all types of people irrespective of caste, creed, gender or nationality to apply and train for any jobs.
Actions
- Employment creation should be set as a primary objective.
- Set up a good supply chain management programme for suppliers.
- Publicly advertise direct contracting opportunities.
- Monitor and promote the diversity in supply chain.
- Forecast forthcoming procurement and labour demands.
Well Being and Health
According to Hass (1996) the company should support healthy opportunities of life style during the development stages of the firm.
It is very important that the firm should look to design out safety and health risks associated with day to day working and maintenance. This can provide long term benefits for well-being and health of all those who are involved in the operations of the firm. A health and safety standard should be set up and should be strictly followed at all levels. The design teams should exploit and identify opportunities to lower risk for those workers who operate, construct and use machineries. Hazards and the usage of hazardous materials should be reviewed and identified through the process of design and should be minimized or eliminated.
Healthy Communities
Hart (1997) suggests the development of new parks, sporting and recreational facilities will provide good opportunities for lasting benefits of good mental and physical health and finally, the well-being of the local communities. Access for schools and advanced education should also be considered as a key priority. Screening and planting around the roads and rails can help in reducing air and noise pollution to a great extent. It is always a must to maintain safe systems of work at the sites all the times. The company can also provide occupational health support to their suppliers and employees. So, an occupational health strategy can help in maintaining the safety and health of those who involve in day to day operations. The overall aims are:
- Providing high quality occupational health service.
- Enhance productivity reduce ill health.
- Promote the well-being of staff and operatives.
Actions
- Design and application of a good health and safety standard.
- Developing and delivery a good occupational health strategy.
- Providing good welfare facilities for the diverse work force. This can be given by on the site induction that covers safety, health, diversity and environmental issues.
- Providing permanent leisure facilities to have an everlasting health and well-being gains to the local community.
3.3.9. Inclusion
According to Abreu (2011) the firm should communicate, involve and consult the stakeholders and the communities living nearby it. This activity can help in providing timely and accurate information about what is happening and how they are going to get affected. Moreover, it will help to encourage the residents and the businesses to develop a sense of ownership. The related programmes can include:
- Frequent communication with the local community by means of conducting exhibitions, articles and events in newspapers and local magazine.
- Developing a database of organizations that are interested I the firm.
- Keeping the company website updated about the latest activity.
- Providing a hotline for the neighbouring residents to inform any concerns they might have.
- Conduct frequent public events to give information on what is going on.
Actions
- Creating opportunities for community engagement using a proper community relations strategy.
- Setting up opportunities to inform the community about the firm’s activities through newsletter, dedicated helpline and visitor centre.
3.4. Environmental Strategies
According to Orsato (2008) the answer to the question “When does it pay to be green?” requires the differentiation of investments related to environment based on their potential to provide competitive advantage for the firm. The figure below shoes the components that are involved in competitive environmental strategies. This helps in easily identifying the environmental strategies that may improve the competitiveness of the company. The figure shows the various environmental strategies the companies can adopt. The industrial structure in which the firm operates, the firms position in that industry, the market type the firm serves and its capacity will suggest an appropriate competitive strategy and the source of competitive edge for the company. The differentiation between services/products and organizational process is done because the above four strategies work independently. For example, being the firm to get certified for environmental management systems, a company can differentiate itself from its rivals in market even though its services or products do not show any environmental features. On the other way round a company can sell products with eco-labels but not explore more into the green features of different organizational processes.
Orsato (2008) suggests that the organizational processes are all interlinked and are very difficult to separate in actual practice. But it is quite easy to identify and isolate a service or product. It is very easy to define a strategy for a single product or service. However, in the same way it is possible do define strategy with a set of organizational process like a specialized product line or even a manufacturing facility.
The differences between the four generic strategies are not so rigid. They represent a topology that makes its quite easy to identify where the competitive focus on environmental strategies are hidden. Most of the managers pursue more than one environmental strategy simultaneously even though there exist a clear difference between competitive strategy based on products, services and processes. At the same time, if the environmental strategies are not well aligned with the business strategy the firms may be wasting vital resources.
Figure 2: Competitive Environmental Strategies
3.4.1. Strategy 1: Eco-Efficiency
In the 1990’s Porter emphasized that productivity is a vital component for firms to gain competitive advantage. Orsato (2008) emphasizes that firms must be in a position to transforms costs into profits by finding out the hidden opportunities for innovation thereby leading more efficient organizational systems. Firms should also promote resource productivity in the form of increased process yield, material savings and effective use of by products as waste consists basically an inefficient usage of resources. So, firms need to find concealed opportunities to get profit from environmental investments and transforming such investments into efficient sources of competitive advantage.
The usage of eco-design and eco-efficiency measures can provide a new set of business practices to improve productivity of resources and generation of a new economic system. The corporations that are increasing the productivity of natural resources are now shifting to biologically inspired models of production, moving to a solution based model and reinvesting more in natural capital. These practices would promote Natural Capitalism. In such situations the market and regulatory mechanisms will help in making the firms to internalize environmental expenses.
Companies that are aiming to reduce the cost and environmental impact organizational processes should focus more on the strategy of Eco-Efficiency. As cost reduction is very vital, most firms working on this strategy do without much fanfare. As an example most of the medium and small enterprises may not have resources to pay for EMS certification. But the financial constraints may not undermine them from implementing a simpler and less bureaucratic EMS than the ones specified in the guidelines for ISO 14001. Firms that supply to very little number of other firms may wish to avoid the cost of EMS certification and in lieu ask their clients to audit the system. The companies that are focussing on strategy 1 will enhance the ability to continuously increase the efficiency and productivity of their business functions and processes while reducing the impacts on environment and the costs associated with it. By reconfiguring the industrial systems such practices and strategies can be moved beyond the borders of the company. According to the perspective of industrial ecology, every manufacturing process is seen as a part of big industrial systems, which can be optimized based on the ecological principles of efficiency. In other words, the by-products, waste and energy from one company can feed the processes of another firm, thus developing a closed loop systems. the implementation of industrial ecology requires both interdependent flow of processes, materials, and energy within the industrial cluster and establishing new forms of cooperation’s between member firms. There are lots of complexities involved in implementation and design of closed loop systems which limit their diffusion. However, the collaborative schemes in many countries like Netherlands, USA, UK, Sweden and Australia are giving good results.
According to Orsato (2008) Eco-Efficiency practices can help in generating certain level of savings virtually in every company. Some circumstances and events will lead some getting rewarded more than the rest. This strategy particularly have the great potential to generate competitive edge for firms that supply industrial markets, generates by-products/waste and face huge levels of processing costs. Companies in the beverage and food industry fall into this category. Under such situations, even though the customers may not pay for environmental protection, the attention on the strategy of eco-efficiency makes sense in business. Hence, by working towards eco-efficiency within the company and beyond its boundaries, the firm will be saving money and reducing the impact of their business processes on their environment.
3.4.2. Strategy 2: Beyond Compliance Leadership
According to Orsato (2008) most of the firms want to increase the efficiency of their organizational processes and also want the general public and customers to acknowledge their actions and efforts. The firms are willing to spend money for EMS certification, subscribe to business codes of managing environment and make investments in environmental improvements that are unprofitable. However, they are also willing to pay to publicize their every effort. By adopting schemes like CERES principles, the Global Reporting Initiative, Global Compact the firms can differentiate themselves from their competitors and generate more positive outcomes for the firm. The corporate image can be increased thereby influencing a public views about the practices of the firm.
Firms that are supplying services or products to other firms beyond practices of compliance like certified EMS generate a good value for client company. When the firms like General Motors, Ford and Toyota announced in 1999 that they would need supplier to certify EMS according to ISO 14001, the first suppliers to obtain the certification had an advantage. Now EMS certification has become a mere licence to operate in the industry. As the firms in the industry adopt ambitious practices, the compliance boundary moves forward and the previous differentiating factor becomes a normal and non-competitive practice. For example, in Scandinavia all the diary producers hold the ISO 14001 certification. The beyond compliance is moving towards more demands like voluntary standards for animal rights. So here the beyond compliance leadership requires the company to develop competency standards in animal welfare and ethics.
Orsato (2008) suggests that processes of the firm that goes beyond compliance might induce indirect influence on the firm’s image and might eventually impact the shopping behaviour of consumers. The decision take by Shell to dump the Brent Spar oilrig in the North Sea affected their image and resulting in European customers boycotting their products. This clearly shows that the environmental performance of affirm is very vital to stakeholders. However, the above incident forced Shell to change their rig disposal policy as well a communication strategy. Pursuing strategies that are based on voluntary standards of environmental excellence, Shell has now demonstrated good leadership among firms that have vitally enhanced the image shareholders and customers have about their operations.
The Brent Spar incident showed that the consumer’s responses on the practices of an organization are more prone to happen around a particular concern. So as to respond to an environmental matter relating to production, the needs of the public have to be sensitized. Along with large number of variables that influence consumer behaviour, environmental factors have also become vital to customers when a controversial event or charismatic leader mobilizes the public opinion.
3.4.3. Strategy 3: Eco-Branding
According to Orsato (2008) differentiation in marketing based on the environmental attributes of products constitutes the strategy of four as in the figure. The ecology oriented services and products portray a defined market niche explored by companies worldwide. In Sweden, where the environmental awareness of the consumer is high, one of the biggest food and domestic product retailer developed a creative way of differentiating the portfolio of eco-products. Firms like Coop Sverige created an ecological brand called Anglamark to communicate an image of environmental responsibility of food and domestic products. As a result the sales of Anglamark increased from 43.3 million to $49 million in 2009.
A firm differentiates from its rivals when it gives something unique that is valuable to customers beyond simply offering low price. Environmental differentiation cannot be made by all firms. Firms which desire to generate competitive advantage from strategies related to eco-branding need to follow three pre-requisites namely: the customers should be willing to pay for the ecological differentiation costs, reliable information on the firm’s environmental performance should be available for the customers and the differentiation should not be easily imitated by the rivals.
Orsato (2008) further states that the customers need to feel that there exists good benefit for their purchase. In industrial markets, the benefits are converted to costs savings, good performance of product and reducing cost of risk management. Machinery and equipment’s that utilizes less energy and reprocess waste and by-products might reduce the operational costs for the client. The vendors can easily identify these ecological features commercially and it will result in gains during the usage of products. If the firm is not working in a price sensitive market, the price premium can be obtained. In consumer markets, attributes linked with products and services allow firms to charge quite higher for eco-labelled or eco-branded products. So, in both consumer and industrial markets it is vital that the consumer is always willing to pay for ecological differentiation.
Credible information is another pre-requisite for product differentiation based on environment. Scandinavian countries demonstrate the importance of eco-labelling. In Norway, more than 3500 products use the “KRAV” eco-label for food that is grown organically as a way to differentiate from their rivals. Big firms charge between 10% to 100% higher prices than same type of products that are not certified by KRAV. The final pre-requisite for environmental product differentiation includes barriers to limitation. If the environmental differentiation of the product needs to be successful the environmental innovation should not be easily copied by the competitors. The innovative strategy of marketing followed by the Swedish supermarkets symbolizes this point. Many of the firms can easily copy the products sold through Anglamark, but copying the eco-brand is practically difficult.
3.4.4. Strategy 4: Environmental Cost Leadership
According to Orsato (2008) gaining a price premium for products that are ecologically oriented is a natural solution for many of the firms. If “being green” costs more for the firm, then differentiation strategy is the one of the way out for the firm to pay for ecological investments. This can be done when niche markets are available for firms to gain price premiums. Taking the packaging industry is a best example. Even though there is some scope and space for differentiation, the competition is totally based on price. Regulatory measures like post-consumer tax is on the rise in developed nations and are expected to remain higher for the next few years. As a result, the packaging material will have to be competitive on environmental performance and price. The combination of very low margins with the saturated nature of mature market in many of the industrialized nations increases the rivalry and sets the packaging makers under great pressure to lower down costs. The demanding customers and tightened environmental regulations will add more pressure to the reality of reducing the costs. Companies that are operating in such a situation focusing on radical product innovation like dematerialization and substitution of materials, makes higher business sense rather than focussing on incremental innovation of process. One of such cases can be found in Ecolean, a young packaging manufacturing company. It started its operations in 1997 in south Sweden. Their main products are stand up pouches for liquid materials, filling systems etc. that are mainly sold to developing nations. Ecolean has made an impressive growth in its business since it started in 1997. One of the major reasons for this faster growth is their clear and impressive environmental cost strategy. The packaging of Ecolean costs only 25% less than its competitors and also makes only low impact to the environment. This is because they have adopted fundamentally a new proposal for packaging. About 40 to 60% percent of the traditional plastic that is used for packaging was replaced by calcium carbonate as raw material. Even though calcium carbonate is the most abundant mineral on earth’s crust, it doesn’t pose any toxicity. The environmental advantages of replacing polyocfins with chalk are many. Moreover, studies have found that the environmental impact of Ecolean products is lower than the impact caused by the competitor’s materials. Even though clients consider the environmental features of Ecolean products as a good thing, the product has to fulfil the functional requirement at a competitive price. This kind of narrow view has caused great change in oil prices and has made post- consumer regulations for waste more demanding. Ecolean has installed a new factory in China in 2001 and the government representatives of the country are extremely happy because the firm depends very low in petro chemicals and uses more of calcium carbonate which is abundant in Chinese soil. These environmental features of Ecolean are gradually giving them more advantages. The competitors can copy this innovation in material replacement. But, since Ecolean manufactures and sell filling machines for its own stand up, the firm has got substantial competences in the use of raw materials.
According to Walley and Whitehead (1994) ecolean is a good example of environmental cost leadership strategy. It justifies the need for radical innovations in the design of the product and partially explains the relative scarcity of the firms. When innovation is broadly carried over to the revenue basis of the firm, there exist a large number of under development which has the potential not only to become a source of competitive edge but at the same time revolutionize the industries. They fall under the subset of product service systems. By shifting from product selling to service or function selling, firms can reduce both environmental impacts and economic costs.
Another case of Chemical Management service is also valid stating here. CMS had the inevitability that the factory plants need to manage large volume of chemicals used for manufacturing, cleaning and maintenance of the equipment’s as well the environmental impact associated with that. Reducing the usage of chemicals can help the factories to reduce costs, emissions and the high exposure to liability. Another example worth mentioning is the pay as painted contract between PPG a supplier of chemical services and Chrysler the automaker. PPG gives the services for treatment, body surface preparation coating materials and it owns the chemicals till they are used. As PPG is not paid until the car is manufactured, they have got inherent interest in reducing the volume of paint used for each car. This partnership has helped Chrysler to save $ one million in the first year and the emission of volatile organic compounds. Moreover, since PPG is paid by the painted automobile instead of gallon of paint, the firm is interested in the overall efficiency of the process. To sum up the reduction of chemical consumption is good for both the supplier (PPG) and the client (Chrysler). This has indeed helped in reducing the costs the product manufactures and its impact on the environment.
3.5. Strategic Choices
Orsato (2008) finally explains that the boundaries between the above four strategies are theoretical. In reality, there exists an undeniable and interlinked relationship between the products and the organizational processes. The distinction between strategy 1 and 2 can help in optimization of industrial processes and contribute in reducing the price of the product and increase the scope to compete in market place. The eco-efficiencies in processes are good enough to make the product an environmental cost leader. To achieve this, the firm needs to satisfy two things namely lowering the cost and reducing the impact on the environment. Even though Ecolean have good environmental practices of manufacturing products, it does not have an ISO 14001 certification because the clients do not prefer to pay extra money for such a certification. In most of the cases, the reduction of the final costs of products and its impact on environment is as a result of substitution of products rather than the eco-efficiency of the process. To be more precise, the competitive focus is always on the product. The economies in scale in manufacturing have forced many firms to optimize their production system and use same type of processes for a wide range of products.
CHAPTER-4
Conclusions and Recommendations
4.1. Conclusion
The study and analysis conducted on various sustainable strategies throws light on the fact that, sustainability is not solely concerned with environment, but is also concerned with many factors like social responsibility, clean technology and corporate governance. Firms should focus on many areas to develop sustainability in the long term. These areas include water, waste, materials, transport and key focus on biological habitat. Moreover, companies can aim in reducing the impacts to the environment through reducing different ways of pollution.
An initial study on sustainability was conducted in groups so as to understand the key aspects behind this. Everybody in the group came up with different definitions based on the research data. This in fact helped us a lot in understanding the exact meaning of sustainability and the strategies companies adopt to reach a sustainable stage. The above studies clearly show that the major cause of all problems is the increase in population and rapid economic development. Rapid industrialization in developing countries focuses less on environmental strategies due to lower initial investment. However, industrialization can help in boosting the economic growth in developing nations at the cost of the environment. One of the most important considerations that firms must keep in mind is the fact that future generations need resources to survive. So the best policy would be recycling and reusing the existing resources in the best way possible. The firms should adopt strategies that use clean technology and support the community in all possible ways to gain their confidence in the firm.
Environmental certifications like ISO14001 can help a lot in increasing a firm’s brand name among the customers. Especially, majority of the people in developed countries look forth for the company’s social responsibility before purchasing their products. This can be justified through many of the examples stated in the research and analysis section. However, the entire duration of this thesis work was a good learning experience wherein many new strategies for sustainability and environment were learned. The group dynamics helped a lot in easing the stumbling blocks that came across while researching and writing the thesis.
4.2. Recommendations
The major recommendations are as follows. These recommendations can be taken into consideration while developing new sustainable and environmental strategies for the firm.
- Reduce the carbon emissions: This can be done by using renewable sources of energy like water, wind and thermal. However, the usage of fossil fuels should be reduce to a greater extend as possible. Fossil fuels can generate more carbon emissions and cause global warming and alarming effects to the ozone layer. Newer technologies that reduce carbon emissions should also be thought of as the replacement of usage of fossil fuels takes a long time.
- Recycling water: Firms should lookout for all kind of possible opportunities to reuse and recycle water. Other methods of rain water harvesting can help a lot during the summer when there is scarcity of water. Water treatment plants can be setup within the factory to recycle the waste water generated through the manufacturing process.
- Recycling wastes: The wastes that are generated through the manufacturing process can serve as a raw material for some other firms. This can help out in establishing a close tie up with such firms and can help greatly in reusing the waste for some other products rather than dumping it and causing environmental problems. All the firms must try to eliminate waste and at the same time reuse or recycle the wastes that are generated. If the wastes cannot be recycled or reused it should be disposed safe to avoid any future hazards. Some companies effective utilize the wastes by generating by products that are of good value and quality.
- Sourcing of raw materials: The raw materials should be sourced only from a supplier who takes great care for environmental protection. This can help the firm in gaining goodwill in the market and attract more customers. However, secondary raw materials can be sourced from firms where they come out as wastes. It can help in establishing good tie ups with firms who generate such type of wastes. This would greatly help in recycling and reusing waste materials.
- Focus on Biodiversity: Firms should focus on the biodiversity and cause least trouble to the environment while building up new plants and warehouses. The construction works and movements should cause only minimal impacts on bio species and human life. An environment friendly firm should take all this into consideration while going forth with new development plans.
- Reduction of air, noise and land pollution: It is possible for firms to reduce the pollution by taking certain precautionary measures. This can be done by following ways. To reduce air pollution, firms should have its own policy of reducing carbon emissions and treating waste gases before they are left out of the plants. Treatment of poisonous gases before emitting outside can save environment. Noise pollution can be reduced to a greater extend by manufacturing in a closed environment. Emissions from the firm, which are in the form of liquid like water, acids etc. should be properly treated before leaving the firm. Otherwise, this can cause harms to environment and human life. A firm with a good sustainable policy need to consider all these factors.
- Supporting the community: The firm should take great efforts and attempts to support the community. This can be done by building up recreational places, parks and other amusement facilities near by the factory establishments. This can help a lot in gaining the confidence of the people around. This clearly shows the social responsibility of the firm on a large scale. Other methods of gaining social support include conducting charity events and raising money for the needed ones in the society. All the above measures can raise the goodwill of the firm and sets up a path for sustainable growth.
- Inclusion of stakeholders: All the stakeholders must be included in all the social activities of the firm. This can be the shareholders, the local community people, politicians and social workers. This can help in gaining a good name for the firm in the public. The returns of this can be expected in terms of high profitability and goodwill.
The recommendations discussed above helps the firm in establishing a steady path towards sustainable growth.
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Reflective Report
Introduction
The entire process of writing this thesis report was extremely helpful in understanding the key concepts of environmental and sustainability strategies that the firms around the globe adopt. Research materials were collected from diverse sources like the internet, the university digital library, newspapers, international journals and articles. The secondary research methodology was adopted in collecting vital information related to sustainability. In secondary research the information is collected from various sources mentioned above which are written by various authors beforehand. This information are then further analysed and studied to know the importance to the topic of study. Further, it is based on this information the discussions and recommendations were made. While in primary research the information is directly obtained from the users or customers through a questionnaire or face to face interview. The collected primary research information is then analysed to draw conclusions.
The allotment of task to different groups was really helpful in this matter to a greater extend. In the first group meeting we set up a task plan for the entire duration of the thesis. This laid down a structure towards our work which made the process quite easy and simple. The next group meeting discussed about the various research materials we collected regarding the subject. A discussion was conducted in this meeting which helped all of us understand basically what sustainability is and what are the strategies that are normally adopted by firms towards achieving that. Many new ideas and coverage areas evolved from this discussion, which formed the foundation stone of this research work. We carried on collecting research materials from various sources and analysed them across different group meetings. This helped a lot in getting an in depth knowledge regarding the subject. We could identify new strategies towards attaining sustainability and how natural resources should be used to achieve that. Most of the strategies were focussing more on environmental protection as it is an easy way to gain the goodwill among the customers. Using clean technology, corporate governance and showing the social responsibilities were some key strategies we could identify. However, huge investments are required to attain sustainability and it can only be afforded by big corporations. Small enterprises and firms can adopt strategies that need fewer investments to implement sustainability strategies.
Experience Recollection
A systematic approach was followed in collecting research materials and analysing them. Almost all the team members actively contributed to this with great enthusiasm and vigour. We discussed new strategies in every meeting and everyone could gain an insight to those discussed strategies. This was extremely helpful in formulating the thesis write up. A log book was maintained by all the team members to keep track how their thesis work is proceeding. In fact it was the best method to identify the areas we have covered and the areas we haven’t. The log book contained the date of activity and the activity undertaken towards the thesis write up. All the names of the researched articles are mentioned in the activity. This was useful when we framed up the reference list for the work.
At the same time I personally recorded the minutes of all the group meetings and circulated it among all the members through emails. Specific research areas were allotted to each member during each team meetings. These activities were recorded in the minutes to ensure that the person returns up with results on the specific task. In totality, all these small activities helped us in tracking the progress of our work and completing it well within the specified time. While researching for new articles on sustainability we faced many stumbling blocks like lack of sufficient and relevant research materials. This was overcomed with the assistance of the university library staff. They helped us a lot in identifying new ways of searching for research materials. The digital library was effectively used for this purpose. Articles and journals were downloaded from the business journal library. Several relevant journals were received from the library and were effectively used for study, discussion and analysis. The collected articles formed the central core of discussions of every team meeting. We used to analyse both sides of the article while discussing them and draw conclusions based on the analysis. We were all satisfied with this process as this helped us to go through a proactive thinking stage to generate new ideas and draw conclusions swiftly. More precisely this activity could be seen as a brain storming session wherein the existing facts are analysed and more room was given to idea generation. All he team members were extremely joyous and delighted with the results and conclusions we have drawn at the end of each meeting. In nut shell this team activity helped us to establish a good relationship with all the members in the group.
Personal Feelings and Learning from Experience
Speaking up on personal feelings I’m extremely satisfied with the way I have worked towards the group oriented activities and my thesis write up. An organized and systematic approach was followed by me to finish the work in time. Maintenance of the log book helped in keeping track of activities and exploring new areas of study. I could collect research materials from diverse sources. This information collected were analysed and discussed among the members in the group. Everybody was extremely happy to discuss the articles and generate new ideas. In fact this process helped us to understand the articles well and generate good conclusions from them. On the other hand, the lack of supervision for the group activity created immense problems and tensions in the group. Few of the group members became inactive after the first group meeting. Efforts to bring them back to group activities went in vain. But towards the last one or two members came back for name sake. This situation greatly affected the performance and morale of the hard working members. As a result nothing was there motivating in the group meetings. However, in spite of all these pitfalls, few group of students including me proceeded well with the thesis write up and this helped us in completing the work in time.
Another experience that I have learned from an unsupervised group activity is that, it is always better to form a core group with hard working guys. This helped me in understanding the articles correctly and drawing conclusions well without any hassle. It is extremely pity to state that the inactivity of few members was a great demotivating factor us. But with our high spirits and enthusiasm we went forward with all our activities and completed it well within the time frame allotted to us. At the same time, our group lacked a good leader. In fact all of us acted well in our roles and did our best to group activities. But we lacked a good leader, as everybody was ready to take up roles and coordinate group events. There were instances of ego clashes within our core group itself. However, the organized group meetings and the patience of some members saved us from all such issues. We all were greatly keen in managing the time efficiently and wished to finish the work in time. This keenness helped us a lot in organizing and tracking activities efficiently and effectively. The group interaction process was a good experience to all of us as we could learn how to deal with people with typical characters.
Group Dynamics and Learning from Experience
Group dynamics played a good role in analysing, formulating and understanding the research materials we have collected. The core group members were greatly keen in collecting articles from different sources. Further we used to analyse it by ourselves. In the next meeting, where we discuss those articles and draws conclusions. Both positive and negative aspects of the articles were discussed. Analysis of both sides of the coin helped us to understand the articles well. We all went for innovative thoughts to generate new ideas that were well beyond the prospects of the articles. After the first meeting itself, the contact details of all the team members were shared with each other. Further communications were established over phones and through emails. Group meeting were coordinated by me and I used to prepare the minutes of every meeting. At the end of every meeting, the minutes were circulated to all the group members. This helped a lot in organizing the meetings and discussions effectively. We had many time constraints with respect to group meetings. Fixing a meeting at everyone’s feasible time was bit difficult, but somehow we managed that good every time. Emails were basically used for communicating the meeting agendas and schedules. All the members were satisfied with this kind of approach.
At the same time a Gantt chart was prepared to keep track of everyone’s activity. It was so useful that everyone was monitored using the chart. The tasks and allotted times are clearly mentioned in a Gantt chart, which is really useful in identifying the person who is allotted with the task and his progress with the task. The Gantt chart was updated after every team meetings, as new and new task were allotted to team members after each team meetings. Gantt chart was useful in efficiently managing the time both as a group as well as individually. As mentioned before, the inactivity of some members caused big troubles for the rest. This was overcomed by putting extra efforts by the rest group of members. We all had to work hard to produce good discussions in the team meetings. The brain storming sessions was extremely useful in generating new ideas and presenting them to a group of efficient analysers. Articles were discussed from different perspectives to gain an in depth knowledge and insight. Few articles were of irrelevant in nature and this could be easily identified through the group activity. Working in a group was a good experience, even though there were several drawbacks for that.
Thinking on one point of view, the group activity is extremely good if the entire team members cooperate and contribute well. But on the other hand if the contribution is only from a few persons, it will create a burden on them. This can create difficulty in managing time and tasks efficiently. We faced a similar issue in our group. The hardworking nature of few members saved us from big issues. One important thing I would like to point out is that a group oriented dissertation should be always guided by a supervisor. Otherwise there are chances that few persons may take it lightly and cause troubles for the rest. In fact we faced many difficulties to tide over unhappy group situations.
Lessons Learned
- Group Interaction- One of the most important lessons I have learned from this thesis work is group interaction. I could learn how to interact in a group, how to handle difficult people, how get results from team members etc. It was a tremendous experience, working in a group of seven members coming from diverse backgrounds. Even though we had many initial starting problems, everything went well till the end through effective communication and coordination. As I coordinated a part of the group activities I could learn from the process, how to effectively organize team meetings and make members participate in them. Setting up meetings at a time feasible for all the team members was very crucial.
- Solving Problems- In the group activities, many problems arose due to inactivity of some members. This placed a lot of pressure on the heads of other team members. We could overcome those pressures through continuous and constant hard work. At the same time, we had many ego clashes between the core team members while the discussions were going on. However, through a collective effort we could sooth and solve all the problems without affecting our thesis. The issues were heightened during the brain storming sessions, as only few members participated in them. I could sooth the environment and calm down the situation by persuading every member to contribute the best and leave the rest on their own way. I could improve and develop the group problem solving skills to a greater extent.
- Communication- I could gain good communication skills through this group work- both written and oral. Emails were written to all the members of the group by me to coordinate various group activities. Moreover, I could exhibit and develop good oral communication skills during the brain storming sessions. The discussions were really lively and helped all of us in understanding the concepts of sustainability and the strategies followed by the firms to adopt it. At times we had small debates on various sustainability issues. I could effectively contribute to that and raise queries on various issues. Friendly style of communication was adopted both written and oral methods. This in fact attracted many members and they contributed well to the process without any murmering.
- Management of Time- Time management was very crucial for the work as we had a long distance to cover before the deadline. We therefore adopted a phase by phase approach to reach the target. The Gantt charts and the minutes of the meeting were really effective in coordinating and tracking the activities in time without any flaws or problems. Each task was allotted a specific time to complete. If the allotted time is overflown we try our best to limit the scope of the task within reachable limits. The inactivity of some team members really affected the group tasks and management of time. However, in spite of all these problems we could finish the work within the deadline.
- Contingency Management- The core team members including me could learn the ways to adopt to contingencies that arise. When few team members were inactive, in fact we had lots of pressure and we all were overloaded with task. We effectively managed the situation by dividing the task equally and helping each other. Helping hands were offered when one person get stuck with anything. The research materials were shared to generate a common understanding about the topic before discussion. All these activities helped us a lot in reacting proactively towards contingencies. This aided us a lot in finishing the tasks well within the time schedule.
The above ones were the major lessons I have learned from the thesis work. They were so good that I could effectively implement them while undertaking other projects further in my career.
Conclusion
To sum up all the activities, it was a good learning period during the whole course of thesis write up. Good cooperation and coordination among few team member paved way for the success of this work. The attitude of sharing the task and resources equally were the prominent features I could from this work. The core team members were always willing to offer helping hands to sinking team members whenever needed. This helped us a lot in establishing a good friendly relationship with each other. Perhaps, one of the reasons why the discussions were lively was because of this. Many new things and aspects of effective managing time and contingencies were learned during the process.
We could effectively use the latest technologies like Gantt chart to effectively schedule and keep track of activities. The minutes of the meeting was good in identifying the key milestones of the work, which indeed helped a lot in writing this reflective report. At the same time sustainability and the key strategies to adopt it in firm were learned through this process. This in fact will help us in changing our mind set towards the environment. Protecting and saving the environment for the future generation is very vital. The resources should be made available to future generations. This can be done by effectively reusing and recycling the existing resources. Strategies like using clean technology, showing corporate responsibility, implementing corporate governance were learned during the process of thesis write up.
I could learn effective ways of communicating within a group and managing difficult people, which was indeed a fabulous experience. New ways of researching for articles were learned during the process. In fact we have effectively utilized the digital library to the fullest extent. Our focus was more on secondary research materials that were available in the university library and over the internet. Our group lacked a good leadership but the entire members were keen in coordinating the activities without much problems altogether. I basically coordinated and arranged the team meetings every week. The areas and scope of the discussions were fixed by me initially before the meeting and was mailed to all the team members. Everyone was pretty happy with this effort.
To summarize, the entire process of this thesis report write up was a good experience for all of us. New concepts were learned and new lessons of working in group were studied. In fact we all would love to cherish the happy days we spent together doing this fabulous work ever in life. The key features from this project can be used in any projects that we are going to handle in our future career projects.