Shell as a Example of Environmentally Sustainable Business - Research Paper Example

 INTRODUCTION To build a sustainable organization, should be the task of all the multi-national multi-billion dollar companies today. There are alarming signs of climatic shifts and changes that may hamper the ability of future generations to produce and earn the way we have done. Sustainability in business has been long debated; experts are now advocating the development of sustainable organizations, which have their work processes working in such a way that they don’t hamper the future generations’ ability to meet their needs. Sustainable development is the talk of the town. Environmental sustainability is a type of sustainable development that focuses entirely on green development. Environmental stability holds prime importance as there are depleting natural resources everywhere around us. In order for future generations to successful operate and live on this planet, these rare natural resources are needed to be taken care of and shielded from harm by us. This paper talks about environmental stability and environmental management systems and apply them on the organization Shell to see how successfully they are integrating sustainability in their strategy and work processes. In particular, the supply chain, marketing and HR is being evaluated for resource savings. Evaluation will be done by comparing the strategies of this organization with other organizations of its industry. Sustainable Development- a need: Sustainable development refers to using resources in such a way that fulfill our human needs today as well as save the environment from detrimental impacts caused by our actions. This is done to ensure that the future generations also have to privilege of using those resources. Corporate sustainability is a term coined to highlight a firm’s responsibility to efficiently use its ecological capital. It also includes measures that should be taken to replenish some of the ecological capital that is being utilized by the organization in order to benefit the environment and future generations. (Young, 2000) If a company is degrading natural resources without replenishing or with wastage, it is hampering the chance of the future generation of using that natural resource. Natural resources all over the world are limited and their stock is depleting. Hence, it is the prime responsibility of organizations today to practice corporate sustainability in order to benefit themselves and their future generations (Lester, 1992). Environment Management Systems: An environmental management system is a tool that helps to understand and increase the awareness of a business and the control it may have over the environmental impacts that the business has. Simply put, environment management systems are systems in an organization that make sure that the organization is following its environmental programs in an efficient and effective manner. Proper documentation of its work processes, planned and systematic work systems that are comprehensively spread across all functions of the organization are the prime management areas in EMS. (Lovins, 1999) Some of the key elements of an environmental management system include a policy statement outlining the dedication of the organization to the environment and then outlining the various areas of environment affected significantly. After identification comes development of sound objectives and policies that serve as the environmental goals; training of the concerned personnel and staff, and finally a review to access the success of the system completes the cycle. (Rugman, 2001) ISO 14001 is the first voluntary standards that have been dedicated to provide guidance and documentation for organizations to help address environmental issues. It is a voluntary organization. There are a number of tools and standards included in this package; typically the environmental management systems, EMS auditing, performance evaluation etc. Environmentally Sustainable – Shell: The organization that has been chosen for this research is Shell, which has been known for their ecologically safe image and practices all over the world. It is a multinational petroleum company operating since 1907. It has its major headquarters The Hague, Netherlands and London, the United Kingdom. The major products that this organization sells are petroleum, natural gas and diverse portfolio of petrochemicals. The organization has a well-diversified portfolio and has also moved in electricity generation and nuclear power and believes in sustainable development of resources. Therefore, they now focus on solar, wind power etc. The latest news related to shell is its soaring profits that have been reported in the first quarter amidst high oil prices. According to Reuters, Shell has announced a 49% increase in the profits of the first quarter due to production growth as well as high oil prices (Reuters, 2010). They seem to be on the road of success for quite some time and their strategy to include environmental sustainability in their agenda seems to be paying off. Shell’s Strategy in light of performance measures and environmental management systems: The Overall Strategy: Shell boasts of being environmentally sustainable throughout the processes that take place in its organization. They believe in a positive contribution towards environment and society, which are two major elements of the sustainable development system. According the global website, they have also won the 2009 Business Week Greener China Award that was presented to them in light of their environmentally friendly practices in China. There are major elements of environment and society on which Shell is focusing. Their major emphasis is on environment, Climatic change, Biodiversity, Product Stewardship, cleaner Air and reducing water usage. Most of these elements are directly contributing to conservative usage of basic natural resources that are consumed by that organization. According to the corporate website, the organization has been contributing to sustainable development and considers it an important part of its business philosophy. They believe that their core values inculcate sustainable development throughout the work processes, its people and its organization. Their aim is to provide to the growing needs of energy with the help of local communicates, making sure that the negative impact of their operations is minimized as much as possible. There has been adequate disclosure regarding their environmental friendly practices; with the help of performance measure indicators, sustainability reports etc. (Martin, 2000) They also measure their efforts against various indicators and benchmarks which have been set by the industry. Work safety for their employees is also their top priority. Their aim is to develop a safe working environment where there are zero fatalities and minimum number of incidents as they value their human resources more than anything. This overall strategy has been employed by Shell throughout the world. EPMs the company employs: In order to understand the success of the implementation of their strategies, one needs to identify first what systems they have employed to environmentally sustain their business over time. Shell employs basic health, safety and environment standards throughout its operations in the world, called the HSE Management system. It has been developed to provide a systematic approach to ensure that the organization complies with the time various laws and regulations of the countries it operates in, to demonstrate that all the hazards that have been outlined by the managers and reports are adequately managed and any issues relating to them are timely solved. It also ensures that they are continuously monitoring the environment and their work processes to achieve continuous improvement in their HSE Performance. A snippet of this tool that they employed in the Shell Canada Limited, document for approval is provided below; outlining the complete framework. 1 This management structure that the company follows is based on the ISO structured framework of planning, doing, checking and providing feedback to the concerned personnel for continuous improvement. Performance measures against their environmental sustainability standards are also monitored. Shell is successfully employing the environmental management framework in all its operations. When it comes to greenhouse gas emissions, the company is continuously re-visiting their current strategies and improving on older ones. There has been a significant decline in the green house gas emissions from 2004 to 2009. When it comes to spills, there are systems that have been put into place that are decreasing their spill with each passing year. When it comes to Shell, they are working in public-private partnerships to decrease the emissions and carbon dioxide emissions from their emissions. Shell, basically being a producer of petroleum, is continuously striving through research and development to improve efficiencies and mitigate carbon dioxide emissions from their operations (Petroleum Review, 2008). Water is an important natural asset for organizations. Shell is currently employing water renewal activities by providing the used water for other industries that may be able to use it for their operations rather than disposing them off. Their success comparison to other companies: Being a multi-national or global giant, Shell has a number of direct competitors. Exxon Mobil, BP and Total are considered the top three. Shell’s environmental performance, when compared to its nearest competitor, is far better (Corporate Website, Shell). The number of time there has been a public accolade for Shell for its strategy are much higher when compared to the other competitors in the market; this shows that Shell has been number one when it comes to employing performance management systems in their organization. (Hoover, 2010) All in all, the organization is successfully following all the standards which have been benchmarked by the ISO 14001 for an organization to be certified as environmentally sustaining. They have a proper plan out strategy where they have identified the various key areas through which they can act as responsible citizens of the corporate world and reduce emissions and increase efficiencies, saving natural resources and decreasing incidents wherever possible. Through continuous improvement and management review, the organization has been able to employ environmentally sustainable systems throughout their organization and follow the strategy throughout its operations (Porter, 2007). Resource Savings and Shell: Resource savings basically means the development of efficient systems in such a way that the output doesn’t decrease, however, the number of resources that are being put into a system are decreased in order to conserve those precious resources from depleting. In the petroleum industry, resource savings is of instrumental importance and the petroleum reserves all over the world are being used reverently for our energy needs and requirements. If they are used in such a fashion for another decade we would be facing severe issues related to petroleum reserves depletion. Shell has been the pioneer in starting the movement of resource conservation in the petroleum industry and including it in their core strategy. When it comes to resource savings, there are a number of initiatives that they have taken, throughout their systems, to monitor and review the techniques that they are using, and the ways and means through which they can create energy efficient systems that helps them to conserve the resources that they are using for production (Shell, 2010). The 5 R’s of resource savings for a greener world are Reduce, Reuse, Recycle, Renew and Respect. These R’s need to be diligently followed in order for organizations to develop a greener world tomorrow for our generations to live in. in broader terms, it would mean that the organization is following an environmentally stable strategy. 5Rs and supply chain: The supply chain of Shell is implementing various strategies to reduce the emissions of carbon dioxide in the air. Although the crude oil that they are provided with to process and supply, they have no control over its quality, however, with their efficient systems and plants in process they make sure that they are decreasing CO2 emissions in the air by many folds. A clear advocate of this would be the Key performance indicator of CO2 emissions by Shell have decreased by more than 10% in the last three years or so, showing great improvement in the kind of processes they employ. They have made sure that they reduce spills that are in their control due to corrosion or any other default in their systems by continuously monitoring their equipment. Forces they cannot control, such as the Nigerian corrosive action on oil fields, may have increased oil spills which were not under their control. 5Rs and marketing: When it comes to marketing, Shell uses green marketing techniques in order to market its product and its brand name to the people. Their brand is long known to protect the heritage and natural resources of the world in such a way that conserves and replenishes the resources that they use. This technique helps them to position themselves as the top of the mind brand in the minds of their consumers. They have continuously positioned themselves as a socially and environmentally conscious brand towards the society and hence have been able to reap profits and a greater market share. All throughout their corporate website, one can see the highlights of the various initiatives that they have taken for a healthier and a greener tomorrow. This message is embedded in all its communications to its stakeholders. Shell actively portrays itself as the conscious individual the corporate world; hence has been able to earn Respect for its brand. Their motto for a cleaner tomorrow makes us realize that consider the importance of reducing the depleting of natural resources as it is not their earth, but our earth. 5Rs and Operations: Shell uses the Reuse strategy in its operations, by reusing any sort of wastage material in their systems, either after treating it. For example, the water that they previously disposed off, they are now re-directing it to organizations such as metal cleaning and livestock, where that water can be re-used. They are also working on the reduction in emissions that happen due to their processes all over the world. When compared to their other competitors, they emerge as winners as none of their competitors use environmental sustainability as their competitive advantage and they don’t used EMS systems for resource savings in their operations, supply chain and other areas. Shell’s Operations in Canada- Against the overall Strategy: Shell is one of the few companies which is currently working in the Canadian Sand oil fields for the extraction of oil in that area. The extraction of oil through this method is said to release four times the carbon dioxide in the atmosphere when compared to the conventional method. This is considered as harmful for the people living around the places and overall detrimental for the world’s ecological system. Increasing carbon dioxide emissions are de-stabilizing the system, causing global warming and melting ice caps. The major critics of Shell have highlighted this issue, which is strictly against their overall strategy of contributing towards the environment and society. Conclusion: In the light of the thorough discussion and evaluation, Shell is seen to be successfully implementing the strategies of sustainable development through the major processes of its organization. However, some of its efforts, which have been highlighted by critics, go against its overall strategy for being environmentally sustainable in the world, for a better world for the future generations (Young, 2000). However, one can argue that to counter its various non-environmental friendly acts, the organization is contributing more to the society and environment when compared to any other organization in the world or in their industry. They, by their core activities, are fore-runners in depleting natural resources; however, by taking efforts to diversify their products towards sustainable energy and replenishing the depleting natural resources, they are doing their part. A proper analysis of their environment management systems and performance management systems reveal that they are following the guidelines set by the ISO 14001 and the frameworks provided by the EMS throughout their organization. The resource techniques that they are employing in their three major areas of marketing, supply chain and operations are fruitful. References 1. Porter, ME and Reinhardt, FL (2007) “A Strategic Approach to Climate “ Harvard Business Review October 2007. 2. Young, R. R. (2000). “Managing residual disposition: Achieving economy, environmental responsibility, and competitive advantage using the supply chain framework.” Journal of Supply Chain Management: Winter 3. Revell, A and Blackburn, R (2007) The Business Case for Sustainability? An Examination of Small firms in the UK’s Construction and Restaurant Sectors Corporate Social Responsibility and Environmental Management  4. Martin, M. (2001). Implementing the Industrial Ecology Approach with Reverse Logistics. Greener Manufacturing and Operations. Sheffield, Greenleaf Publishing Limited 5. Brown, L., Flavin, C., Postel, S. (1992) Saving the planet: how to shape an environmentally sustainable global economy. Earthscan. 6. Rugman, A. (2000). The End of Globalisation. London, Random House. 338.88 RUG. A penetrating critique of "green" strategy in chapter on social actors. Contrasts well with Korten's work. 7. Lovins, A. B., L. H. Lovins, et al. (1999). “A Road Map For Natural Capitalism.” Harvard Business Review: May-June. 8. BSDGlobal.com. (2010) Environmental Management Systems. Available from http://www.bsdglobal.com/tools/systems_ems.asp [ 27 April 2010] 9. Shell.com (2010). Environment and Society. Available from http://www.shell.com/home/content/environment_society/ 10. Shell.com (2010). Shell Sustainability Report 2008. Available from http://sustainabilityreport.shell.com/2008/servicepages/downloads/files/entire_shell_ssr_08.pdf 11. Reuters (2010). Shell Q1 profits soars on oil price, output growth. Available from http://uk.reuters.com/article/idUKTRE63R0JY20100428 12. Hoovers (2010) Shell’s major competitors. Available from http://www.hoovers.com/free/co/burn.xhtml?ID=50019 Bibliography 1. Fussler, C. and P. James (1996). Driving Eco-Innovation: A Breakthrough Discipline for innovation and sustainability. London, Pitman. 2. Roberts, P (1995). Environmentally Sustainable Business: A local and regional perspective. P Chapman. 3. Welford, R. et al (1996) Corporate Environment Management. University Press India. 4. Shell.com. (2010) Corporate Website. Available from www.shell.com Read More