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Sustainable Approach To Management Add in library

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Question:

You are to demonstrate your understanding and application of a sustainable approach to business management, including strategic planning, the value chain and CSR?

 

 

Answer:

Introduction

Sustainable approach to business which is often referred to as Corporate sustainability is defined as an approach for creating a long term consumer as well as employee value through creation of green strategy which is aimed towards natural environment and considering each and every dimension related to the ways in which business operates in the social, cultural and economic environment. These strategies formulate the approach for the company to foster its longevity by way of transparency as well as proper employee development. The sustainable approaches towards business management has been termed as an evolution over the traditional phrases which describes the ethical corporate practices (Cran Field 2009). Phrases like CSR or Corporate Social Responsibility is continuously been used but has been superseded by a broader term of corporate sustainability. The two important principles on which sustainable approaches for the business has been based upon are.

1. It is a critical aspect for creating a long-term shareholder value in the increasingly resource constrained global environment.

2. These factors are associated with opportunities as well as risks which are very important for companies to address in the coming times.

The megatrends pertaining to sustainability is changing the way in which business is being done and it is something which is having a measurable impact over the entire business structures. The long term challenges concerning the companies is in regards with the resource scarcity, demographic shifts as well as the climatic changes which are redefining several elements. These include the expectations of citizens, public policies, regulatory frameworks and largely the environment in which the business operates. To the positive side, these challenges are creating newer opportunities and creating newer risks which needs to be addressed in order to remain competitive in the coming decades. It is believed that the companies which are quick to anticipate and hence manage the current as well as future economic, environmental, as well as social opportunities are more likely emerge winners with competitive advantage over its competitors (Leuphana 2002).

Thus the quality of company’s strategy and management along with its performance in dealing with opportunities as well as risks derived our of economic, environmental as well as social developments could be quantified and hence used for identifying as well as selecting the leading companies for investment purposes.

 

Sustainability approach and strategic planning

Sustainability approach to business becomes strategic when it gets integrated with the fabric of organizational planning as well as the management process. The two areas where sustainability needs to be highlighted is organizational high level strategic themes and the strategic objectives which are strategic building blocks of the strategy. The strategic theme is referred to as the pillar of strategy which directly supports the achievements of mission and vision of any organization. A good strategic theme is not only a particular objective but is a linked set of objectives which touch each areas of the management. The entire set of linked objectives tell a story of the strategy and forms the basis of communicating the entire story to everyone in a consistent manner (UNEP n.d.). Most of the organizations today have a set of common strategic themes or focus areas which comprise of:

  1. Operational Excellence
  2. Product Innovation
  3. Strategic Partnering

Sustainability is also a part of the entire theme which comes with 4 perspectives towards strategic planning:

1. As a part of financial standpoint, sustainability refers to being in the business and creating a good return for the investors

2. For customers and stakeholders, sustainability refers to the goal of satisfying as well as providing value for the increasing number of safety and the sustainability conscious customers.

3. As far as the process is concerned, sustainability refers to management of materials, energy, and waste in the best eco-efficient manner possible (CEDC 2013).

4. Lastly, for organizational capacity, sustainability is referred to as creation of culture which values sustainability and is reflected over the choices employees have to make each day.

The second pillar i.e. Strategic Objectives are referred to as the building blocks of strategic themes which help in making strategy actionable for the employees. These objectives are expressed in a continuous set of improvement activities which are unique to each and every perspective as well as the strategic attitudes. All the strategic objectives are linked in a collective manner for forming a strategy map which shows how the objectives work together in an integrated manner, and cause as well as effect the fashion for achieving best strategic results related to the strategic themes (NBS n.d.).

Sustainability and relation to the corporate culture

Creation of strong focus on sustainability with corporate culture is believed to align the employees within an organization for developing eco-efficient products. It also facilitates making more partners with regulators and reducing the life cycle impact of the operations. Further, organizations are aided to build newer information technologies which help in tracking life cycle impacts in a far more effective manner. If companies are able to produce eco-efficient products, they would be able to provide value to increase the number of green customers in their markets which eventually would lead to increase in sales. This capability of partnering would enable the organizations to communicate in a proactive manner with the regulatory community and thus allow them to be an active player instead of responding in a reactive manner to directives. It would hence reduce the risks associated with the business to a considerable level (IISD n.d.).

Additionally, ecologically safe products are expected to reduce the potential product liability risk which would have a positive impact over the cost of capital for any company. Hence, a reduced life cycle would mean that there is a substantial cost savings in terms of fuel, water, electricity and the waste disposal. Therefore, when the aspect of sustainability gets integrated in the corporate culture a firm would be able to increase its revenues, reduce the risks and further reduce the costs which eventually would lead towards profitability. Moreover, a company which is more conscious and shows efforts of creating as sustainable environment is more likely to attract its employees and meet their desired expectations. It helps in reduction of employee turnover and hence the costs involved in recruitment & selection and training and development for the organization.

 

Sustainability and its contribution to value chain of an organization

Value Chain Sustainability is simply defined as environmental, social as well as economic impacts which encourages good governance practices in the entire life cycle of goods and services. The primary objective of creating this approach is to protect and grow a long term environmental, social and economic value for the stakeholders who are involved to bring products as well as services in the market. Today organizations are less known to undertake sustainability measures as a cost center. MNCs across the world are more inclined to take actions for improving the social as well as environmental impacts by their value chain (Air CCSE n.d.). It is expected that immense business value could be added as well as shared by comprehensive and integrated approaches for sustainable value chain. Some of the very important reasons which is usually common across organizations are:

1. Cost efficiencies: To work with suppliers and contractors both up and downstream for improving efficiencies in resource consumption. Further it requires them to drive out process inefficiencies which are a result to cost savings and helps to improve performance of the operations of the business.

2. Opening to new markets: The result of cost efficiencies offers the opportunity for growing to both the company and its suppliers.

3. Managing Risks: With creation of a clean and green value chain, regulatory, operational and reputational risks are easier to manage.

4. Sustainable Brand Equity: Both demands as well as expectations of external stakeholders including the regulators, investors, customers as well as civil societies has increased as they are expecting a much more responsible conduct and transparency from the organizations. Any kind of questionable act from the organizations in any of their life cycles could adversely impact the growth in sales, legal tangles and primarily the image of the organization (BSR 2013).

Keeping in mind the above reasons, organizations need to develop and evolve in the direction to creating a better environment, better products and services. A socially conscious organization is more prone to get attracted by customers if it shows the amount of care they have for the societies, environment and needs.

Sustainable Approach to Management and Corporate Social Responsibility

At most of the bigger organizations, CSR forms an integral element for their reputation and a means to show their concerns towards the societies they cater to. However, for micro and small organizations, it is emerging as a key element of success where Corporate Social Responsibility is referred to as a pillar to Corporate Sustainability. It is believed that CSR as a social strand in tri-dimensional model of Corporate Sustainability. As put forward by Ebner and Baumgartner (2006), they recommend Sustainable Development at macro level while at micro level Corporate Sustainability encompasses the economic, ecological and social pillars. As per their research, CSR was modelled as a social pillar to Corporate Sustainability. Another research by Sharma and Rudd (2003) has pointed out that academicians who are studying Corporate Sustainability usually focus on environmental issues while the ones who study CSR focus on social and ethical issues. However, their theory argues around the point that Corporate Sustainability is a broader concept and the social aspects are incorporate within it. This reflects that it encompasses CSR as the social dimension of sustainable framework (SHRM n.d.).

There is a division of study which has also presented some contrary arguments which has resulted in confusion at different levels. For instance, Gallego (2006) had explained CSR to be a tool for measuring Sustainable Development with respect to economic, social and environmental aspects. He had added that Corporate Sustainability gets measured by reporting of these aspects. However, on most occasions Sustainability has been used as a synonym for other concepts like Sustainable Developments and Corporate Social Responsibility (Upenn 2011). We can consider Sustainable approach to business management as a redefined version of Corporate Sustainability. However, as discussed above, there are certain differences among the two concepts. But in present environments where the business has gone dynamic to get the competitive edge, it seems evident that sustainable approach to management needs to be integrated with Corporate Social Responsibility. We could conclude and say that although, CSR and sustainable approach to business management have been coined based on different philosophies at the early stages, they come with their own set of common issues. Both of them cover the social, economic and the environmental divisions (Harshakumari Sarvaiya & Minyu Wu 2014).

Conclusion

After understanding the importance of sustainable approach to business management and its links with key dimensions of the growing processes and activities within the organization it is clear that corporate sustainability would be an integral part of company policies and strategies in the coming years. The relevance is pretty similar in the environment where business are growing more global than ever before. SMEs, micro sector companies or MNCs, each of them are preparing a separate set of policies to adhere by the increasing demands of sustainable operations within the business. A key stress has been laid upon implementing such strategies which are not against the sustainability dimension. The reason for such change in planning and importance is due to the fact that global customers have become more aware and competition has increased drastically. In order to survive each and every company has to ensure that it does not do any damage to the basic elements of the society, environment and the sentiments of its customers.

 

References

  1. Cran Field 2009, Measuring Business Valueand Sustainability Performance, accessed on 22nd January 2015,
  2. Leuphana 2002, Concepts and Instruments for Sustainable Organisation Development, accessed on 22nd January 2015,
  3. UNEP A Life Cycle Approach: How Business uses it, accessed on 22nd January 2015, 
  4. CEDC 2013, Advantages and disadvantages of the strategic management in the current economic context, accessed on 22nd January 2015, 
  5. NBS, Embedding Sustainability in organizational Culture, accessed on 22nd January 2015, 
  6. IISD, Business strategies for sustainable development, accessed on 22nd January 2015, 
  7. Air CCSE, Supply Chain Sustainability, accessed on 22nd January 2015, 
  8. BSR 2013, Achieving Sustainable Development through Value Chain, accessed on 22nd January 2015, 
  9. SHRM, HRM’s Role in Corporate Social and Environmental Sustainability, accessed on 22nd January 2015, 
  10. Upenn 2011, Defining Corporate Social Responsibility: A Systems Approach For Socially Responsible Capitalism, accessed on 22nd January 2015, 
  11. Harshakumari Sarvaiya & Minyu Wu (2014), An integrated Approach for Corporate Social responsibility and Corporate Sustainability, Asian Social Science; Vol. 10, No. 17; 2014
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