Sustainability in Business: Dutch Shell Plc - Case Study Example

Sustainability in Business - Dutch Shell Plc One of the most important issues in regard to the development of business activities worldwidehas been the alignment of the firms’ operational practices with the standards of sustainability – as set by relevant organizations and authorities. Usually, the necessity of the promotion of sustainability is recognized by entrepreneurs as a key priority in regard to their firms’ daily operations; for this reason, appropriate policies are introduced and measures are taken ensuring that the business activities do not cause damage to the natural environment. The level at which firms follow the standards of sustainability is measured through appropriately indexes – the Dow Jones Sustainability Global Index and the FTSE4 Good Index are common examples of indexes of this type. Current paper focuses on the identification and the evaluation of the sustainability practices used by Dutch Shell plc; sustainability is among the firm’s aims; however, additional measures would be required in order for the firm’s operations to meet fully the standards of sustainability. 1. Introduction Through the years, the failure of firms to introduce appropriate sustainability practices in their daily operations has led to severe environmental damages; the development of standards and principles that are obligated for all firms worldwide has helped to reduce the effects of business activities on the environment; however, still efforts need to be made towards the increase of the involvement of sustainability in business. Dutch Shell Plc is a firm operating in the oil and petrochemical industry; the firm emphasizes on the use of sustainability in the planning and the development of its activities (see corporate website); the examination of the literature and the firm’s current operational practices leads to the assumption that the firm’s initiatives in regard to the promotion of sustainability are important; however, there are still issues that need to be addressed in order for sustainability to have a higher role in the firm’s daily operations; the alteration of certain of the firm’s existing policies would be necessary towards the achievement of the above target – relevant suggestions of sustainability practices that could be followed by the firm are made at the level that they are feasible taking into consideration the firm’s available resources and the global market conditions. 2. Overview Dutch Shell Plc is a firm operating in the oil and petrochemical industry; the firm is considered to be among the most powerful competitors in the specific sector; because of the nature of its activities the firm has been often accused as of its failure to meet the terms of sustainability; however, the examination of the firm’s aims and corporate strategies has led to the assumption that the firm has introduced policies promoting the sustainability; it’s just the fact that this policies are not always applied; moreover, because of the volume of the firm’s activities there are cases that damages are caused to the environment even if measures have been taken by the firm for the avoidance of such outcome. The firm has already developed a series of plans for the protection of the environment – see the corporate website – environment related section; the corporate schemes related to sustainability refer to ‘biodiversity, preventing spills, reducing water waste, product stewardship’ (Dutch Shell Plc, 2010); because of its efforts towards the protection of the environment the firm has achieved to get a high mark in Dow Jones Sustainability and Global Index; the firm ranked high in the above index in relation to a series of business sectors; ‘biodiversity, corporate governance, environmental policy and management systems, social impacts on communities, social reporting, stakeholder engagement, and transparency’ (Dutch Shell Plc, 2010); moreover, the firm ranked at a high place in the FTSE4Good Index in 2009 (Dutch Shell Plc, 2010). 3. Literature Review In order for a firm to participate actively in the promotion of sustainability it would be necessary to introduce and integrated scheme based on the standards of sustainability; in other words, the introduction of certain sustainability practices would not be particularly helpful towards the protection of the environment from this firm’s activities; the promotion of sustainability needs to be active and initiated through all business plans; otherwise, a firm cannot be considered as promoting the sustainability. This issue is highlighted in the study of Willard (2002); in the above study it is noted that ‘a commitment to sustainability will only reap maximum benefits when it is fully incorporated in a company’s core business models, strategies and processes’ (Willard, 2002, p.9); the level at which a firm achieves the above target, i.e. a full alignment of its practices with sustainability is not easy to be located and evaluated; however, indications of the relationship between the sustainability and a firm’s practices can be identified by examining the firm’s daily operations, its participation on sustainability schemes and projects and its rating on indexes that measure the level of a firm’s ability to align its strategies with the principles of sustainability. In accordance with Dernbach (2002) a plan that would promote sustainability would include the following phases: a) identification and definition of the ‘reasonable target ranges for factors related to the sustainability of materials’ (Dernbach et al., 2002, p.74), b) identification of the time required for the development of the relevant plan and c) development of strategies that could help to the achievement of the above target (Dernbach et al., 2002, p.74). On the other hand, Kotler et al. (2009, 77) focus on the importance of the time period available for the development of effective projects that promote the sustainability; more specifically, it is made clear that long – term sustainable projects would be preferred instead of the short – term projects of such time – the importance of time on the success of sustainability projects is therefore considered to be high. Capra et al. (1995, 60) note that the incorporation of sustainability in all business activities would be a requirement for the successful promotion of sustainability through a particular firm; the partial reference to the sustainability would not be of a particular importance for the actual promotion of sustainability by a specific firm. Towards this direction, Doppelt (2003, 210) refer to the internal organizational factors that can cause delays to the promotion of sustainability by a specific organization; for this reason it is made clear that ‘structures, systems, policies and procedures’ (Doppelt, 2003, 210) that are opposite to sustainability need to be reviewed and alternated – or eliminated if required. Of course, it is necessary that the firm has the necessary resources in order to proceed to the changes required in order to align its operational practices with the principles of sustainability; the importance of funds available for the promotion of sustainability is highlighted in the study of Blackburn (2007, p.1). In order to understand the influences of sustainability on a firm’s activities it would be necessary to refer to the definition of sustainability – through this definition the characteristics and the role of sustainability in the activities of modern businesses can be identified. In accordance with Loucks (1999) sustainability can be characterized as ‘the indefinite survival of the human species through the maintenance of basic life support systems and the existence of infrastructure and institutions which distribute and protect the components of these systems’ (Liverman et al. in Loucks, 1999, p.12); through another definition, sustainability is considered to be ‘a pattern of social and structural economic transformations (i.e. development) which optimizes the economic and societal benefits available in the present’ (Goodland and Ledec in Loucks, 1999, p.12); the above definitions set the margins in which sustainability is developed; through the years the methods used for meeting the terms of sustainability can be changed – in accordance with the resources available, the differentiation of business practices and the level of intervention of human activities in the environment; however, the nature and the characteristics of sustainability cannot be changed. In accordance with the above, it would be necessary for the firm to increase the level at which sustainability is applied on its plans and its activities; a series of measures would be taken for the achievement of the above task as analyzed below; the success of these efforts would be evaluated within a specific period of time – i.e. the results may not be visible immediately after the introduction of the relevant measures. 4. Critical Analysis and Recommendations The views developed in the literature in regard to the sustainability are indicative of the current status of the specific concept; sustainability is highly promoted in most human activities; in the business sector specific methods are likely to be used for the alignment of business practices with the principles of sustainability. The critical analysis of the issues highlighted in the literature could lead to a series of suggestions for the increase of the level at which sustainability influences the strategies and the activities of the specific organization: a) Dutch Shell has already developed sustainable schemes; however, the parts of these activities are not standardized; also, their monitoring is not adequately explained; the fact that sustainable practices have been introduced in the firm’s daily operations cannot lead to the assumption that the firm has managed to fully align its activities with the principles of sustainability (see also Willard, 2002, above); more practical methods should be incorporated; complexity or general reference in regard to the sustainability would be avoided; also, the monitoring of these practices should be delegated to a specific team – employees with necessary expertise- that would have the power to suggest any appropriate initiative in case that a failure in the relevant projects would be identified, b) the level at which sustainability is promoted across the organization is rather limited; Dutch Shell is a firm that operated worldwide; their activities are critical for the environment – the firm, as noted, operates in the oil and petrochemical industry; for this reason, existing measures for the promotion of sustainability across the firm can be characterized as inadequate; additional sustainable practices should be included in the firm’s daily operations, for example: regular examination of the firm’s listing in regard to sustainability, training of employees on sustainable practices, development of meetings with firms that operate in the same industry and arrangement of common plans of action towards the protection of the environment, change of the place of operational activities if it is proved that damage is caused to the environment, regular meetings of the employees and development of reports on the failures of business processes – referring to those failures that had impact on the environment; in this way measures would be taken for the avoidance of similar failures in the future; the regular examination of the firm’s facilities would ensure that all activities are performed within the margins set by the sustainability standards applied worldwide – see the relevant indexes mentioned above. In any case, it would be required that appropriate time schedule should be developed for the completion of the suggested sustainable projects – as highlighted by Kotler et al. (2009) the long term sustainable projects have more chances to succeed compared to the short term projects of this type. 5. Conclusion The promotion of sustainability has been proved to be a challenge for most businesses worldwide; on the major difficulties in regard to the introduction of sustainable practices in the business sectors is the cover of the relevant cost – at least this is a fact proved through the examination of literature. The lack of appropriate skills/ expertise of employees is another factor prohibiting the successful application of sustainable practices in firms operating in various industrial sectors. Dutch Shell plc is a firm that it is well established in the global market; the activities of the firm are closely related with the environment – in fact, a failure in developing the firm’s operations could lead to severe environmental damages. The examination of the firm’s current practices has lead to the assumption that efforts have been already made by the firm to introduce sustainability in its strategic plans; however, when these plans are developed a failure in meeting all standards of sustainability has been identified. Of course, the full alignment of the firm’s practices with the principles of sustainability is not an easy task – taking into consideration the nature and the extension of the firm’s activities and the environmental conditions worldwide. The application of the measures suggested in this paper could help to the improvement of the firm’s performance in regard to the sustainability; in any case, the chances for the success of such project are many but time would be required for the full incorporation of sustainability in business activities. 6. Bibliography and References Blackburn, W., 2007. The sustainability handbook: the complete management guide to achieving social, economic and environmental responsibility. Earthscan Capra, F. Pauli, G., 1995. Steering business toward sustainability. United Nations University Press Dernbach, J., 2002. Stumbling toward sustainability. Environmental Law Institute Doppelt, B., 2003. Leading change towards sustainability: a change-management guide for business, government and civil society. Greenleaf Publishing Kotler, P., Caslione, J., 2009. Chaotics: the business of managing and marketing in the age of turbulence. AMACOM Division of American Management Association Loucks, O., 1999. Sustainability perspectives for resources and business. CRC Press Nattrass, B., Altomare, M., 1999. The natural step for business: wealth, ecology and the evolutionary corporation. New Society Publishers Willard, B., 2002. The sustainability advantage: seven business case benefits of a triple bottom line. New Society Publishers Online sources Dutch Shell Plc, 2010, available at http://www.shell.com/ & http://www.shell.com/home/content/environment_society/environment/ Read More