The Business Link to Sustainable Development - Term Paper Example

Benchmark Progress towards Sustainability of the of the Contents Overview 3 Brief Overview of the two companies 3 Sony 3 Samsung 4 Sustainability at Sony 4 Sustainability at Samsung 5 Theory and analysis 5 Analysis 8 Stakeholder’s Analysis 9 Conclusion 10 Recommendation 10 References 11 Appendices 13 Overview The growing importance of sustainability can be attributed to the expectations and demand for social as well as environmental performance from various stakeholders. Global sustainability can be defined as “the ability to meet the needs of the present without compromising the ability of future generations to meet their needs” (Hart, 1997). In a similar way, sustainable development can be defined as the process of improving human development in a connected, inclusive, prudent, equitable as well as secure manner (Hockerts, 1999). The vision for sustainability has become essential not only for corporate, but for society as a whole. It also implies involving as many individuals from the society as possible. For a corporate, a sustainable vision means monitoring the impact of its production, manufacturing and other operations on society and environment. Considering the future as well as molding the business strategy for greater good of the society can be regarded as an ideal sustainable stance (DeSimone & Popoff, 2000). With increasing globalization and urbanization, the environment is affected adversely and depletion of natural resources is beyond measures. Harmful carbon emissions, global warming and pollution are only few of the adversities. It is also known that if these environmental hazards are not taken care off now, then it will prove detrimental to our future generations, making their life more difficult compared to the present scenario. Brief Overview of the two companies Sony Sony is a multinational corporation headquartered in Tokyo, Japan. The company was founded in the year 1946 (Sony, 2014a). Sony deals with products such as, consumer electronics, video games, entertainment and media, semiconductors, telecom equipments and computer hardware. Apart from these, the company is also involved in financial services, credit finance, banking and insurance. The company even has an advertising agency under its umbrella. At present, the company is on the ninth position with Panasonic in the “Greenpeace Guide to Greener Electronics.” (Greenpeace, 2012). According to this guide, electronics companies are graded on the basis of their efforts towards preserving environment. Samsung Samsung is a multinational conglomerate headquartered in Seoul, South Korea. The company was founded in the year 1938 (Samsung, 2014a). After starting off as a trading firm, Samsung diversified into numerous areas such as, textiles, food processing, retail, securities and insurance. Late 1960s saw Samsung’s entry into electronics (Samsung, 2014b). Presently, the company is into chemicals, apparels, electronic components, consumer equipments, telecommunications equipments, precision equipments and semiconductors. The company is also involved in financial, hospitality, medical and advertising. Sustainability at Sony Sustainability at Sony is achieved through activities such as, corporate governance; implementing strict guidelines while production, manufacturing and distribution; community involvement worldwide; and various environmental campaigns. The company is focused on building technology, which will lead to high power saving capacities. For instance, the new mobile handset by Sony, Xperia Z, is equipped with remarkable battery backup. The company has partnered with IDEO and WWF in order to introduce an innovation community (Sony, 2014c). The objective of the community is to harness creativity and ideas of individuals across the globe for tackling social and environmental challenges and better utilization of technologies. The campaign was a huge success involving more than 170 countries and finally, generated 400 extraordinary ideas and concepts, which could be implemented for producing a sustainable product, service or application (Sony, 2014e). Manufacturing process in various Sony facilities begins with the raw materials purchase. Sony strictly complies with global environmental standards and ensures that its partners obtain the ISO 14001 certification in all of their purchases, which promises environmental friendliness of the products, thereby promoting sustainable and green purchasing (Esty & Winston, 2006). In the year 2012, Sony established a campaign for ecological innovations. The objective of the campaign was to introduce products that use lesser energy compared to other contemporary products. For example, television and cameras produced by the company claimed to utilize up to 30 percent lesser energy. Apart from abovementioned sustainable activities, Sony also made a mark by introducing plastic products made only from recycled materials. Even the manufacturing process generated almost 80 percent lesser carbon dioxide compared to normal emissions (Sony, 2014e). The company has planned for a sustainable future with two campaigns, scheduled to be completed by 2020. Sustainability at Samsung Sustainability at Samsung is achieved through various activities including building long-term and successful partnerships with NGOs, contributing and participating in global issues, enhancing values by innovation and education, contributing to societies and local communities for continuity of business and reputation management as well as corporate governance activities. According to the company, climate change is one of the most dangerous environmental threats. As a result, the company has incorporated various goals and policies regarding climate change protection. In order to monitor greenhouse gas emission, Samsung electronics follows a strict regulatory system. The energy management campaign of Samsung ensures that the company is working with 100 percent capacity utilization and minimum wastes of energy. Most of the facilities and production sites of Samsung are ISO 50001 certified, ensuring compliance with international standards. In order to reduce activities requiring large amount of energy, the company has a strict monitoring system (Samsung, 2014c). Samsung has also introduced highly efficient equipments and advanced manufacturing facilities for optimization of manufacturing activities as well as reducing waste products. The electronics giant also supports numerous clean energy initiatives such as, KBCSD and WBCCSD, both of which involve in improving clean energy as well as alleviation of global greenhouse gas emissions. In the year 2011, the company initiated a campaign for underprivileged children across the globe. The objective was to provide better educational and health opportunities for them and ensure their future through educational funds and social support (Samsung, 2014c). Theory and analysis According to the famous article, Beyond Greening by Hart (1997), the present world will have to create a long-term and sustainable global economy, which is capable of supporting human race indefinitely. The framework reveals the most important challenges that are faced in the path of creating a sustainable environment. However, it also shows how these challenges, if addressed and understood properly, will help in formulating strategies and approaches that are most likely to be successful in future. The four fundamental sustainability strategy dimensions can be described as follows; Pollution prevention Pollution prevention includes minimization of emissions and wastes from current operations and facilities. While implementing pollution prevention activities, organizations will have to look into factors such as, major streams for waste emissions in current operations. Understanding the above will help in evaluating the best strategy to lower risks as well as costs. Also, recognizing major waste sources will also be helpful as this can be used as an input for further strategy implementation. Sony has been involved in various pollution control measures. The company has planned to remove every substance from their product portfolio, which can cause substantial damage to humans and environment in future. Besides that, the company has planned to establish fully atomized chemical inventories. Sony claims that its products are 99.9 percent free of toxic chemicals (Sony, 2014f). The company has also promised that most of its products will be manufactured from biodegradable recycles wastes in near future. According to the annual report of Sony, the company maintains a strict monitoring policy for all waste products production as well as burial. In order to check and curb pollution, Samsung has employed management of air emissions. The production and release of air pollutants is constantly monitored. The company claims to reduce almost 40 percent of air emissions compared to that in 2001 (Samsung, 2014d). Under strict guidelines of international committees for pollution control, Samsung has barred itself from using harmful substances. In terms of controlling water pollution, the company uses wastewater and sewage treatment plants. The company has introduced eco-friendly products, lowered chemical usage, promoted recycling as well as increased reuse of water in its various treatment processes (Samsung, 2014). Product Stewardship The second core dimension of the model is product stewardship. It involves stakeholder engagement as well as management of entire life cycle of the organization’s current product portfolio. The objective of product stewardship is basically enhancing legitimacy and reputation of the firm. In order to enhance product stewardship, a company needs to understand various product and design implications as well as overall usage of a developed product over its entire life cycle. This will help in realizing opportunities where a broader set of stakeholder engagement can be achieved, besides the current target customers or users; during the product life cycle. In order to maintain product stewardship, Samsung ensures that its entire product portfolio is environmental friendly. The entire operational process of Samsung from raw material extraction to production, usage and disposal are monitored through product lifecycle analysis as well as recycle evaluation technologies. Products from Samsung such as, PDP TV, are built to offer a packaging system, which is eco-friendly as well as sustainable. Even the packaging materials such as, corrugated cardboard and cushion volumes, have been strategically altered and reduced in order to minimize wastes and facilitate enhanced product delivery and usage (Samsung, 2014d). For delivering a competitive and sustainable product stewardship, Sony relies on conservation of energy. The company’s conservation tactics include minimization of power consumption during operation as well as standby. Sony also follows assessment of life cycle (LCA) as well as evaluation of biodegradable and recycling properties of its products (Sony, 2014f). Sony products are known for their low energy consumption as well as enhanced life cycle compared to major competitors. Clean technology Clean technology involves development and deployment of technical knowledge for a better future. The objective of implementing clean technologies is to accelerate repositioning as well as innovation. While implementing clean technology, companies need to look into various factors such as, understanding the level of sustainability of a company’s products as well as associated competencies (Junglas & Watson, 2006). It is essentially a future strategy, where management realizes levels of improvement that can be achieved through disruptive technology. It can be easily said that Sony’s clean technology strategies fare better compared to that of Samsung. Sony’s clean technology products include bio-batteries using enzymes for producing energy. Research and development of Sony were able to change carbohydrates into glucose, which subsequently is converted into electrical energy. According to analysts, this new technology will revolutionize the basic mode of powering personal equipments, entertainment devices as well as other electrical equipments (Sony, 2007). Compared to Sony, clean technology strategies and campaigns of Samsung involve chemical management, supply chain management as well as recycling and take back strategies. The chemicals used for production are sourced from trusted third party sources, only after evaluating their reliability and validity. Pyramid Base Pyramid base is the fourth core dimension, which is involved in co-creation of new businesses in order to serve needs of the underprivileged. The objective of this dimension is to crystallize the trajectory and base of the pyramid. In order to achieve this dimension for sustainable future, organizations will have to determine direction of their corporate vision as well as ability to solve environmental and social problems. In terms of building sustainable vision for future, activities of Sony has fared much better compared to the rival, Samsung. This can be inferred from the fact that Sony is among top known environmental friendly electronic goods company; whereas, Samsung has been suffering from multiple allegations and lawsuits concerning environmental hazards and ecological degradation. Analysis As a result of increasing environmental concerns, more and more guidelines are being introduced every day to reduce environmental hazards for a sustainable future. In case of global companies, these rules and guidelines are even stricter owing to wide involvement of various stakeholders as well as higher intake of natural resources for manufacturing, production and operations. The above analysis from Hart’s framework reveals that programs in product stewardship and pollution framework have been well-institutionalized by the two companies. Nonetheless, most of the credit can be given to rigid government rules as well as increasing competition that force these companies to enhance their technology and operations. Though Samsung and Sony have both improved in terms of their sustainable vision practices and clean technology, research suggests that they still have a long way to go before accomplishing success in this field. It can be seen that Sony here is the ultimate leader in terms of innovative green and sustainable practices. The solar energy utilities as well as use of enzymes for production of electrical energy are few of the breakthrough clean energy concepts, which others are increasingly trying to duplicate and implement. For better involvement in sustainable activities, both companies have been involved in strategic planning. For instance, Sony has planned for curbing changes in climate through effective reduction of greenhouse gases and carbon dioxide emission, during product distribution (Sony, 2014b). Similarly, resource conservation targets include 10 percent reduction in the weight of every product, 5 percent reduction in oil based and plastic products, 50 percent reduction in total waste generation in all Sony facilities and 30 percent reduction in water consumption; all by 2015 (Sony, 2014d). Stakeholder’s Analysis The economy of United States is in major dilemma. Though the markets are showing positive sentiments, it has been on the cost of numerous retrenchments, pay cuts as closure of non-profitable businesses. Number of new jobs, especially middle class jobs, has declined to a considerable amount and at the same time but at the same time unemployment is increasing at an alarming rate. Middle class jobs are increasingly being replaced by low salary jobs, forcing millions of fresh college graduates to take up jobs profiles much lower than their educational background (Stibel, 2011). Both Samsung and Sony have been cutting jobs as well as lowering their paychecks. This has negatively affected relationship with their stakeholders such as employees, customers and investors. Maintaining a positive relationship with stakeholders is important for long term success of any company. Both Sony and Samsung are multinational firms and it is their responsibility to establish a balance between their organizational goals and objectives and stakeholder’s value. The various stakeholders include customers, employees, investors, management, government bodies, community, suppliers and trade unions. Every stakeholder is critical for the proper functioning of an organization. For instance, employees are one of the most crucial assets of organizations. When Samsung started closing its non-profitable business, it absorbed its senior management to other departments (NDTV, 2011). However, Sony retrenched more than 5000 middle management and workers jobs (Hindustan Times, 2014). This created a dampening image of Sony among its stakeholders. In order to revive their image as well as relationship, Sony and Samsung should modify their compensation structure and include benefits and bonus to enhance stakeholder confidence as well as increase the overall quality to average employees working in the two multinationals. Conclusion A comparative analysis of Sony and Samsung clearly states that Sony has been strictly following the standard international codes and guidelines. Compared to Sony, monitoring and regulations procedures of Samsung were found to be somewhat lenient, leading to various patent issues and unlawful practices. Most companies focus their attention and time towards achieving short-term solutions. As a result, majority of the emphasis is put on stakeholders and products; such is the case of above two companies. Though giving importance to short-term improvements in existing business is critical, it is also necessary to realize the vast opportunities related with prospective markets in terms of economic pyramid as well as clean technology. Recommendation Economic activities are going to increase ten folds in near future, with rising population as well as technology usage. That means that current technology will have to enhance itself to twenty folds in order to satisfy the growing demands of the future. Considering the present level of ecological devastation, it can be clearly said that sustainable development is going to be one of the largest opportunities in commerce. A clear and fully integrated strategy for environment and society should be the first step towards fulfilling sustainable vision. Companies can transform the perception of customers regarding services and products. This can be done by creating preferences for services and products, which are consistent and complementary with sustainability. Companies should also become willing educators by involving themselves in more community and social activities as well as increasing their participation in global campaigns for the underprivileged. It is essential for executives to understand that a sustainable vision is difficult to achieve and results might not be visible during early stages. Even so, the major responsibility of a sustainable world rests on global enterprises. As these are the companies responsible for highest usage of natural resources, it is their duty to make sure that the future generation is not devoid of energy and sources for survival and further growth. References DeSimone, L. D. & Popoff, F. (2000). Eco-Efficiency: The Business Link to Sustainable Development. Cambridge: MIT Press. Esty, D. C. & Winston, A. S. (2006). Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage. Yale: Yale University Press. Greenpeace. (2012). Greenpeace guide to better electronics. Retrieved from http://www.greenpeace.org/international/en/campaigns/climate-change/cool-it/Campaign-analysis/Guide-to-Greener-Electronics/ Hart, S. L. (1997). Beyond greening: Strategies for a sustainable world. Harvard Business Review, 75(1), 66- 76. Hindustan Times. (2014). Sony in sorry state: Cuts 5,000 jobs, quits PC business, tips $1 bn loss. Retrieved from http://www.hindustantimes.com/business-news/sony-to-cut-5-000-jobs-as-part-of-restructuring/article1-1181037.aspx Hockerts, K. (1999). Sustainability radar. Greener Management International, 25–35. Junglas, I. A. & Watson, R. T. (2006). The U-Constructs: Four Information Drives. Communications of AIS, 17, 569-92. NDTV. (2011). Samsung cuts jobs in loss-making LCD business. Retrieved from http://gadgets.ndtv.com/tv/news/samsung-cuts-jobs-in-loss-making-lcd-business-225448 Samsung. (2013). Samsung Sustainability report. Retrieved from http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2013/2013_Sustainability_Report.pdf Samsung. (2014a). About Us. Retrieved from http://www.samsung.com/us/aboutsamsung/ Samsung. (2014b). Our History. Retrieved from http://www.samsung.com/us/aboutsamsung/samsung_group/history/ Samsung. (2014c). Cleaner production. Retrieved from http://www.samsungsdi.com/sustain/s3_4_6t.jsp Samsung. (2014d). Pollution control. Retrieved from http://www.samsung.com/global/business/semiconductor/aboutus/global-citizenship/green-operation/pollutant-control/air-pollutants Sony. (2007). Sony Develops "Bio Battery" Generating Electricity from Sugar. Retrieved from http://www.sony.net/SonyInfo/News/Press/200708/07-074E/index.html Sony. (2013). Annual Report. Retrieved from http://www.sony.net/SonyInfo/IR/financial/ar/2013/shr/pdf/AnnualReport_E.pdf Sony. (2014a). Overview. Retrieved from http://www.sony.com/SCA/company-news/overview.shtml Sony. (2014b). Curbing Climate Change. Retrieved from http://www.sony.net/SonyInfo/csr/SonyEnvironment/vision/climate.html#Detail Sony. (2014c). Sustainability. Retrieved from http://www.sony.net/SonyInfo/csr_report/report/sustainability/index.html Sony. (2014d). Conserving resources. Retrieved from http://www.sony.net/SonyInfo/csr/SonyEnvironment/vision/resources.html#Detail Sony. (2014e). Future eco innovation. Retrieved from http://www.sony.co.uk/hub/eco/future-innovation Sony. (2014f). Product Responsibility. Retrieved from http://www.sony.net/SonyInfo/csr/responsibility/ Stibel, J. (2011). Americas Vanishing Middle Class: A Tale of Two Economies. Retrieved from http://blogs.hbr.org/2011/05/americas-vanishing-middle-clas/ Appendices Figure 1 Community engagement by Sony (Source: Sony, 2013) Figure 2 Annual wastages at Sony manufacturing and production sites (Source: Sony, 2013) Figure 3 Annual emission of greenhouse gas (Source: Sony, 2013) Figure 4 Sony Green Management and Sustainability target (Source: Sony, 2013) Figure 5 Technology development at Samsung (Source: Samsung, 2013) Figure 6 Annual Greenhouse Emissions at Samsung Facilities and Sites (Source: Samsung, 2013) Figure 7 Recycling activities at Samsung (Source: Samsung, 2013) Read More