Creating Sustainable Value - Assignment Example

Creating Sustainable Value 1. Failing a radical change in our technology of production and the value system that underlies the growth mentality, we must conclude that few business activities can be truly sustainable--only less unsustainable (Nemetz, 2002). At present trend it is not possible attain global sustainability. The reasons are pretty clear, global sustainability is not possible due to the following factors (1) continued population growth or population burst, (2) degree of the present technology, (3) overall structure of the industrial production, (4) present market trends encourage market driven incentives that result in more consumption than investments and (5) more importantly keeping the social values and attitudes in tact. It is difficult to overcome the above-mentioned problems to attain sustainability completely in the near future. Failing in attaining sustainability would result in having adverse effects on overall ecosystem. The current path of non-sustainability would also invite other disasters such as environmental degradation, irreversible ecological crisis and it forecloses ecological options. To achieve sustainability if not in near future but some day we have to work now on certain factors. Industrial organizations should be more responsible and incorporate corporate social responsibilities (CSR). Thus any product manufactured would be under strict environmental laws. Industrial organizations should participate in charities and other social activities. Natural resources should be used in such a way that it should help in raising our living standards without increase in throughput or resources. Steps should be taken to cope the problem of poverty. In overall, progress has been made, we passed through many technological milestones but still achieving sustainable development remains eluded. 2. Whether the ecological problems of modernity can be resolved by solely focusing on issues of production. Development in different sectors like Information Technology, Steel industry, etc., has resulted a sharp rise in the usage of harmful substances. Problem of over consumption becomes irrelevant when super- (eco) efficiencies are achieved under a production sphere. Super- (eco) efficiencies Though some mathematical projections may address future ecological scenarios but they are just predictions and may vary with the real scenario. Consumption is bound to increase and conservation and efficiency may not be enough to handle the situation. It has been found that mathematical projections always vary with the real scenarios and therefore production efficiencies should also be increased to delay the complete resource depletion. To explain the above let’s see the following example of population burst. Not only due to steady increase in population but also due to over consumption the demand for food products may increase sharply and might slowly replenish. More Production According to ecological modernization the solution to ecological crisis can be found in more production, more modernity and more industrialization. Global ecosystem is a closed system whereas economic subsystems are not. Rather than more production ecological modernization purports on different industrialization and production. This is termed as more –as-different approach. Dematerialization Thesis In digital market the production more that result in the increase in economy and thus maintaining overall consumption low and sustainable. Thus we could say that consumption is dematerialized. Though the present world is turning towards e shopping still some of us like to prefer the old ways of purchasing things like jewelry, cars, etc. Spaargaren’s Theory of Consumption The theory of Spaargaren had greater impact in correcting the production in ecological modernization by working out on production-consumption cycles. Using the process of co-structuring a producer and consumer can exchange information that might help in increasing the production-consumption efficiency. The production remains out of problems as long as consumption is free of problems. 3. Four sets of drivers were described and are related to global sustainability by Hart and Milstein. The first is concerned with increasing industrialization and consumption of the products. It also deals with the environmental problems such as pollution and waste generation caused by the industrialization. Due to increasing industrialization the environmental problems are also increasing, it is affecting the climate, bio-diversity and the ecosystem of the planet. Therefore there is an immediate need of ecological modernization for sustainable development. If it’s not achieved then it might have adverse effects on shareholders values because firm’s neglecting pollution rules may be closed or fined severely. In the study by Hart and Milstein (2003) second set of drivers relates to the proliferation and interconnection of civil society stakeholders. Non-governmental organizations (NGOs) have taken up the role of monitoring of the government activities. Since the shareholders were well informed the firms had to be transparent and responsive. Creative inclusion of shareholder’s interests would have a positive effect on company’s reputation and legitimacy control that would result in the growth of shareholder value. The third set relates to the affects of emerging technologies that may have disruptive solutions. Sectors like Genomics, nanotechnology, information technology and renewable energy has the potential to decrease the problems in the modern industrialization. Not only should companies perform efficiently but also should be able manufacture products for the future service. The company should be ready for the future prospects thus creation of shareholder value depends on a firm’s capability and innovative ideas that lead them into the future. The fourth set relates to population and poverty. One of the important problems of every government is to control population burst. Increase in population means increase in unemployment and inequity. Social development and wealth creation on a larger scale is the need of the hour to achieve sustainable development. Large population means more requirements needed that means there will be more consumption. Thus firm’s can increase their productivity rate and can tap previously un-served markets. Thus having a positive effect on the creation of shareholder values. 4. Deep ecology means a relationship between human and nonhuman life on earth that can flourish and have values in themselves. Because of the human interference the ecosystem is increasing day-by-day pollution, deforestation, etc., are on rise. At all times ecological balance should be maintained. The balance is maintained by the interdependency of living being on one another. It’s like a food chain that has to be controlled and maintain the balance of the ecosystem. Deer depends on grass and other food products available in the forests and wolves hunt deer and other animals for food. Thus it is forming food chain where one living being is dependent on another. If this ecological balance is disturbed every living being have to face drastic problems. Therefore consumption should be according to need and should not kill or destroy just for fun. Reference Stuart L. Hurt and Mark B. Milstein. (2003) Creating Sustainable Value. Academy of Management Review Vol. 17 No. 2. Read More