What Helps Ecover to Remain a Sustainable Organization - Case Study Example

Ecover Sustainable Management Drs. Beatriz Acevado & Rob Willis Sustainable Management Futures Word Count: 3,061 Company Ecover is a global organisation that manufactures a variety of detergent and cleaning products made from natural plant and mineral based ingredients. It uses no phosphates in the making of its products, which allows them to biodegrade quickly in the environment. The organisation began making and selling its products in 1980. Currently, Ecover operates manufacturing plants in Malle, Belgium and Boulogne-sur-mer, France. Ecover is an organization that appears to focus on the environment in much of its operation. The production plants are both covered in green roofs, which reduce noise, help to maintain stable temperatures inside and eliminate use of fossil fuels for heating and cooling. The mission of Ecover is to ‘offer efficient and sustainable solutions for the hygienic needs of people today and future Generations’ (Ecover about page). The organization has won many awards, in Belgium, France, the U.K., Spain, Netherlands and the U.S. Perhaps the most meaningful achievements to the organization are being named to the Global 500 Roll of Honour of the United Nations Environment Program, in 1993 and its ISO 14001 certification in Belgium. Context Analysis Legal Environment Ecover competes in a global marketplace, with environmentally friendly cleaning and hygiene products. Part of the organisation’s mission is to bring sustainable products to consumers. To bring the desired products to consumers, the organization must consider the legal requirements of doing so. For products with a patent, such as Ecover cleaning products, the organization must consider the balance between product patents and providing consumers with detailed information on the natural ingredients used. It must also comply with labeling standards for each country in which products are sold. Companies that show a legitimate reason for not providing detailed product labeling have been able to avoid providing detailed labeling information in many countries, according to the USDA Advisory Committee (p. 7). European Union countries employ stringent labeling requirements and the United States has established protocols for labeling of food and household products. Porter & Kramer (2006, p. 78) suggest that companies have not been nearly as successful in areas of sustainability, due to the conflict between business interest and those of society. Ecover provides ingredient lists on all its products, which makes patent protection more difficult. Social Environment The decision to use sustainable ingredients or raw supplies has an impact on the types of consumers and target markets Ecover must aim its promotions efforts toward. Many consumers say they want green or sustainable products, but on a few are dedicated to such an effort and make a commitment to buy products from sustainable companies. Ecover may gain familiarity with many more consumers, as the trend toward purchasing sustainable products increases. Companies are increasingly concerned with corporate image for good reason. Making decisions about strategy or corporate behavior, that have severe negative consequences for various stakeholder groups, can lead to a highly negative corporate image. While a negative image influences consumer behavior, it also influences the behavior of business partners, such as suppliers and corporate consumers. Companies today do not want to tarnish their own images by being associated with those who have made unethical choices. As a market leader in healthy juice products, Innocent has recently become the target of rage by consumers, over its partnering with McDonald’s (Simmons). While this partnership might tarnish Innocent’s image, it could help McDonald’s image at the same time. Porter and Kramer (2006, p. 80) point out that many activist and social groups have put increasing pressure on corporations, to behave responsibly and ethically. Ecover CEO Mark Bremans has voiced his support for San Francisco residents and environmental groups, who oppose the bleaching of the city sewer system to remove odors. Political Environment Often the decisions made by a country’s political leaders can affect the demand for sustainable products. In regions where a governmental commitment to green practices and sustainability is supported and funding is set aside for such requirements, there will be a greater demand for sustainable products. While this can influence the potential size of the market for Ecover products, it can also lead to increased competition within the industry. Raw materials for Ecover products come from different regions of the world. In order to establish efficient supply chains, Ecover managers must maintain positive working relationships with members of communities in authorities, in regions where supplies are harvested and shipped. CEO Mark Bremans has publicly taken a stand, against the decision to use bleach in San Francisco sewers. Such actions can have a negative impact on an organization’s relationships with a particular government or region. Ecover must have a strategy for addressing the effects of such actions. Economic Environment Today’s economic environment is very tough in many countries. Citizens and corporations have become more conscious of spending and have made cuts in budgets wherever possible. ‘A majority of respondents in all countries also expressed a willingness to pay a premium of 5% or more for green products, especially those in the food and electronics and appliances categories’ (Krupp, 2009). Therefore, pricing of Recover products must consider the pricing strategies used by companies that offer less sustainable products. Ecover must consider the economic benefit it can offer stakeholders. While consumers may benefit in improved health and lower health care costs, many will not realize the potential health benefits of using sustainable products. They must be educated about those benefits and must have at least some basic understanding of how less sustainable products interact in the environment, to product negative health effects. Those who work in sustainable manufacturing or product must not face negative economic consequences for their efforts. Fair trade practices, which require participating companies to pay minimum to cover sustainable costs, unless the market price is higher, help ensure well being of producers (Fairtrade Foundation). When governments assist private businesses in making their organizations sustainable, small enterprises should be given the same opportunity for profitability. Technological Environment Producing sustainable products requires a high degree of technical knowledge in areas of study such as Chemistry, Biology and Ecology. ‘Corporate environmentalism is the organization wide recognition of the legitimacy and importance of the biophysical environment in the formulation of environmental strategy’ (Banerjee, 2004, p. 157). Ecover has made choices in raw materials, based on their ability to degrade quickly in the environment. Products are not entirely free of inorganic chemicals. They are simply made in such a way that chemicals used cause less harm to the environment. Technology influences most corporations today, in the way they operate. Automated supply chain and logistics applications allow for greater efficiency in supply chain management. Technology also allows for reduction of waste in the manufacturing process. This is important to all stakeholders. Reduction of waste leads to increased profitability for the organization and investors. Reduction of waste also influences the cost of production passed on to consumers. Corporate Sustainability Marketing and Branding Consumers want environmentally friendly cleaning products. However, they also want products that are effective. Ecover was established to meet both consumer needs. For many organizations, identifying consumer preferences and meeting consumer needs are not mutually successful strategies. Many of the preferred brands are not necessarily successful because they actually perform better. Brands are successful because consumers believe the brands offer what they want and need. “A genuine brand delivers superior value for consumers at every stage of the customer life-cycle; from the time they first become aware of the brand, through purchase and post purchase” (Brinton, 2010). The value to the consumer is often perceived, rather than actual. The challenge for Ecover, is to bring perceived value to consumers. As awareness of environmental issues increases, consumers are increasingly demanding environmentally friendly products. However, as stakeholders, if the cost of switching to an environmentally friendly brand is too high, they are not willing to make the change. Costs of switching to alternatives include taking risks, as well as paying a higher price. Brands that compete with products which are not environmentally friendly, are faced with the challenge of creating brand awareness and maintaining customer loyalty. Ecover has established itself as an environmentally friendly product brand, from the beginning. In the 1980’s there was much less awareness and demand for environmentally sustainable products. Rather than attempt to compete with major brands in the detergent and cleanining agent industries, Ecover has chosen to focus on a global niche market of consumers, who want environmentally friendly cleaning and hygiene products. While the segment of the population wanting such products is growing, Ecover has taken a risk with its initial strategy, relying on those consumers who have made a commitment to sustainability. Increasing awareness of environmental issues has helped increase demand for sustainable products. The perceived value is beginning to shift. ‘Forty percent of citizens worldwide have at least thought about punishing a specific company over the past year they viewed as not behaving responsibly,’ according to Klein, Smith & John (2002, p.1). Ecover has an opportunity to become respected brand and increase global market shares, by improving in it responsibly toward consumers, society and the environment. Management Strategy Sustainable hiring practice Sustainability means considering the effects of business decisions on all stakeholders. Hiring practices and strategies are as much a part of sustainability as using the right materials and considering environmental impact. People work to meet their own personal needs and those of their families, as well as for personal satisfaction. Women are an essential part of the workforce, but face many challenges in gaining opportunities for advancement and in earning salaries comparable to men. According to the Institute of Leadership Management (2011, p. 3) ‘in 2009-2010, women made up 57% of first degree graduates from higher education institutions’ and ‘nearly half (49.4%) of the workforce is made up of women.’ The statistics imply that a greater responsibility for financial support of the households falls on the women. Therefore, it is important for the economic well being of society, that women are paid an equal wage and given the same opportunities. Women often face barriers to career advancement that men will never face, such as balancing the care of children with work. The ILM suggests that women do not aspire to the same levels of management from the start of their careers. Perhaps this is due to factors such as how women are socialized. They do not believe they will be able to balance all their roles equally. Sustainability includes consideration of human rights and the notion that women have a right to make the same wages and have the same opportunities, regardless of their roles as caretakers in the family. What this means for organisations such as Ecover, is that opportunities for advancement into higher levels of management and in earning the same wages as men should be a priority. Global sustainable management Global management for sustainable organizations considers cultural and social influences. The economic value of natural ingredients in cleaning products includes the value that production of cleaning solutions brings to those supply Ecover with raw materials. Their lives are impacted by the recognition that a global organization has, regarding social beliefs or cultural values. While offering a fair price is part of that recognition, respect for the environment and the importance of sustainable growing practices for raw plant materials ins another aspect of recognition. Ecover has an opportunity to help suppliers of raw materials achieve particular standards. ‘Any Ecover supplier must agree to comply with a 17 page stakeholder engagement contract before getting business with Ecover’ (Boynton, 2009). However, the organisation must ensure that suppliers are able to comply with those standards. The company that supplies the plastic bottles to Ecover initially sent supplies in cardboard boxes. When Ecover sent the boxes back for reuse, the company began sending products in boxes designed for reuse. Global management strategies also consider the value of supply chain management. Each country in which Ecover operates may have different technology tools available, for the use of supply chain management and activities. The choices in supply chain software applications, such as those that offer automated ordering and inventory management, must be compatible with the technologies available in the various countries in which it operates. In addition, the organisation must ensure that each location has the technical expertise available to integrate and manage automated supply chain applications Benchmarks and Good Practices Sustainability Standards and Comparisons Ecover is ISO 14001 certified. This is an International standard for environmental management systems and is subject to audit from outside experts. A global competitor, Clover Chemicals, also does not use phosphates and adheres to strict European Standard, for biodegradability. Like Ecover, Clover Chemicals is ISO 14000 certified. Clover Chemicals also practices recycling of its packaging (Clover Chemicals, Ltd). Ecover practices life cycle sustainability, which goes beyond ingredients and packaging. Plastic containers are now made from beet sugar, rather than from fossil fuels. By using the green roofing concept, the organisation is able to eliminate use of electricity to heat and cool its production facilities. Organisations that use such methods set a standard for other companies to follow. Clover Chemicals has an environmental policy, which focuses on avoiding the use of ‘chlorinated solvents, formaldehyde, volatile organic chemicals and nonylphenolethoxylates (NPEs)’ (Clover Chemicals, Ltd.). The company offers an explanation of harmful chemicals in its policy statement. It also offers a chart for training individuals and companies on the application of its cleaners. Clover Chemicals provides greater knowledge about harmful and environmentally chemicals, to its consumers. Employment Practices While Ecover does not provide a published set of hiring standards, it limits production to day and evening shifts. It believes that night shifts are detrimental to employee health and tries to avoid them as much as possible (Boynton, 2009). Natural wood floors are utilized to reduce the impact of standing for workers. All employees in Belgium ride their bicycles to work, though they live within close proximity. The company provides a monetary allowance for each kilometer in which such travel is used. Clover Chemicals is accredited by Trecos, an organization that has developed a set of 10 ecological standards (Clover Chemicals, Ltd). While Trecos standards include product ingredients, methods of production and packaging criteria; there are no standards for a more ergonomic workplace or for additional employee involvement in sustainability. Ecover provides monetary credits to workers, for using sustainable methods of transportation or for using alternative energy vehicles. Analysis Ecover has taken many measures to become a sustainable organization. Its production processes and selection of sustainable raw materials shows a commitment to having a positive impact on the environment and reducing its carbon footprint. Using the AUDIO analysis (based on Etsy & Winston, 2006, pp. 262-263), Ecover’s efforts affect biodiversity upstream, by selecting sustainable raw materials that have less negative impact on surrounding environments. The downstream biodiversity is affected by reduced levels of chemicals and the use of ingredients that biodegrade quickly. This allows natural environments to maintain their balance, within ecosystems. Research shows that green consumers ‘look for companies that incorporate green practices,’ yet often ‘lack knowledge about environmental issues, but are willing to learn’ (Ryan, 2006, p. 1). Consumers are also distrustful of companies who make claims of sustainability. In order to encourage consumers to embrace sustainable practices, Ecover must consider the message about its processes and products that it provides to consumers. In the area of waste management, upstream efforts include re-usable shipping boxes. Downstream efforts include sending recycled shipping boxes back to suppliers. Efforts should also include emphasis on waste reduction, by educating consumers, on the importance of recycling product containers. Ecover has recently adopted a program to reduce water usage in manufacturing products. This upstream activity helps to preserve the availability of water, as a natural resource. In addition, the strict requirements the company places on suppliers, requiring production through sustainable methods, helps to reduce contamination of water sources, by harmful chemicals. Downstream, the quick biodegrading of products reduces the likelihood that products will pollute rivers, streams and other water sources, through leaching or run-off. .Recommendations While Ecover has taken many measures to become a sustainable organization, some areas of sustainability can be improved. Many policies for sustainable practice are in place, to address environmental concerns, reduce use of fossil fuels, reduce the carbon footprint and generally make the world a healthier place to live. However, the organization is in need of a hiring practice policy, which encourages women to seek employment with Ecover and to aspire to management positions. Such a policy should also include target numbers, to ensure that the organization is taking appropriate measures to include capable women in its management training or tracking programs. Setting targets now can help companies avoid legislation that forces specific numbers of women to be hired in the future (Institute of Leadership Management, 2011, p. 9). Setting targets also helps draw attention those women who are currently in leadership positions, to encourage others. Developing a policy for flexible work scheduling will help many women who believe that child care and other responsibilities prevent them from advancing. Ecover provides plenty of information to consumers who visit the company website. However, many consumers are inherently distrustful of companies that claim to be sustainable. As indicated by Ryan (2006, p.1), green consumers need more information about environmental issues and sustainable practices. Ecover has an opportunity to educate consumers and give them the knowledge they need to make choices about sustainable practices and gain consumer trust at the same time. The company should be utilized to its fullest advantage, to educate consumers about sustainable practices. Conclusion Ecover is a sustainable organisation that considers many aspects of sustainability, but is still making strides to improve its sustainable practices. It can make an even larger impact on society, by developing and publishing sustainable hiring practices, such as new hiring initiatives for women. Such a policy will improve the economic status of working women, while helping the company improve its public image. Women make most of the decisions about household spending on cleaning products. A policy of sustainability that includes their well being will have an impact on overall acceptance of the company. Transparency in financial accounting is important for organizations who want to gain Public trust. However, transparency is also essential in gaining public trust in other areas, such as claims of sustainability. Ecover has the opportunity to gain public trust in its sustainability efforts, by making company sustainability policies and processes accessible to the public in ways that are meaningful to consumers. Reference List Banerjee, B. 2004. Managing Sustainability. Book chapter in Eds (Linstead, Fulop and Lilley) Management and Organization, A Critical Text. Boynton, J. 2009. Ecover Cleaning products: So over waste in the manufacturing process. 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