How Can Sustainable Management Be Leveraged for Corporate Social Responsibility - Coursework Example

How can Sustainable Management be leveraged for Corporate Social Responsibility? Student name University Date of Submission How can Sustainable Management be leveraged for Corporate Social Responsibility? Introduction Sustainability is one of the most crucial issues facing many businesses today. In the last two decades, consumer organisations, particularly, have shaped public perceptions regarding social and environmental impacts of businesses[Pir11]. Thus, corporations have been under pressure to take greater responsibilities for the environmental and social impacts of their activities (Cohen, Taylor, & Muller-Camen, 2013). This means that alongside profit and growth, businesses need to be held accountable for their impacts on the environment and society. Similarly, they should assess all ecological and social opportunities and risks when making business decisions. This approach that leads to the synchronised delivery of positive results for profit, people, and planet is known as the “the triple bottom-line” (Cohen, Taylor, & Muller-Camen, 2013). This guarantees that organisations adhere to the aspects of sustainability such as good corporate citizenship, human rights protection, workplace responsibility, and environmental stewardship. Sustainability management refers to the strategies and practices of a corporation that are aimed at meeting the current needs of stakeholders while at the same time protecting, supporting, and enhancing the economic, social, and natural resources of the future [Pir11]. Thus, sustainability management encompasses both institutional and functional approaches. From the functional approach, sustainability management is designed to drive economic, social, and ecological effects of business engagements in such a way that the development of the corporation is anchored on sustainability [Sch02]. The aim of sustainability management, therefore, is to enhance systematic management of ecological and social impacts of business activities using economic methods as well as to integrate these impacts in the conservative business management process. When viewed from an institutional perspective, sustainability management refers to the pool of personnel and organisational structures that a business enterprise has dedicated to dealing with the social and environmental aspects of the business and integrate them with the conventional operational management activities of the enterprise (Pirnea, et al., 2011). Overall, sustainability management is the utilisation of management tools to help entrench sustainability goals in a corporation and to help create a system that drives sustainable performance. Sustainability management, thus, creates the values, trust, skills, and motivation to achieve a triple bottom line while at the same time ensuring that long-term sustainability and health of stakeholders, both internal and external, reflect environmentally friendly practices, equity, and social wellbeing. As companies strive to achieve sustainability, they must also remain competitive. However, sustaining a competitive advantage in the modern world is increasingly becoming a challenge. Competitive advantage is one of the most crucial factors in the success of an organisation. This ability to outperform others, however, may be temporal; hence companies need to implement a sustainable competitive advantage because it does not have a temporal limit (Dess, Lumpkin, & Eisner, 2010). Barney and Hesterly (2010) argue that the resource-based view can help organisations achieve a sustainable competitive advantage. This theory posits that organisations should seek to best utilise their internal resources to establish a competitive advantage as opposed to looking for competitive environments. Thus, resources should take the central role in providing a company’s competitive advantage and provide higher organisational performance. The resource-based view, in this case, elaborates what constitutes strategic resources and the impacts of their utilisation on the environment. When using the resource-based view, the management should carefully evaluate the type of resources that are at the company’s disposal and how they equate to the strategic processes of sustainability. A resource that provides a sustainable competitive advantage must be valuable, rare, inimitable, and non-substitutable. The Role of Environmental Sustainability in CSR The main objective of any business is to maximise profits for its stakeholders. However, today’s business environment demands more from businesses. This introduces the concept of corporate social responsibility (CSR). Some authors have defined CSR as the set of operations aimed at furthering some social good which does not lie directly within the economic interests of the business and neither is required by law (McWilliams & Siegel, 2000). This means that companies do not have any legal obligation to engage in CSR activities. However, CSR activities are capable of benefitting society and improving workplace performance. Because the concept of CSR is wide and varies from firm to firm, the benchmark is that businesses have a responsibility to society rather than just to their stakeholders. This view is derived from the fact that the activities of any business normally affect other stakeholders other than its own. This view is consistent with the argument that CSR includes economic, philanthropic, legal, and ethical, expectations that society places upon a business. These responsibilities are highlighted by the stakeholder theory (Figure 1) brought forward by Carroll (1991). Figure 1: Carrol’s CSR Pyramid Source: Carroll (1991). This pyramid (Figure 1) tries to focus on the relative importance of the various areas of CSR despite the contentious debate surrounding the classification of CSR activities. Thus, CSR is aimed at improving environmental sustainability through discretionary business practices. Environmental sustainability management is often incorporated into a business strategy for reasons other than to make money, but to benefit society, making it a fundamental component of CSR. However, studies have shown that implementing environmental sustainability management can sometimes lead to economic benefits for businesses. These strategies can also reduce risk, drive market opportunities, and improve reputation. A company with a good environmental sustainability strategy can effectively reduce its ecological footprint while positively impacting the environmental component of the bottom line[Gra15]. The concept of sustainability has economic, social, and environmental concerns, making the natural environment an important pillar of CSR. Modern organisations seek to establish an ecocentric approach to management, which focuses on increased ecological sustainability. This approach seeks to methodically minimise pollution and waste, while at the same time renewing natural resources. Various variables can be used to determine and evaluate environmental sustainability, such as the implementation of pollution abatement programmes, eco-design practices, undertaking voluntary environmental restoration, the systematic lessening of waste and environmental degradation from business activities, and the extent to which a corporate entity conserves ecological resources (Montiel, 2008). All these activities are components of CSR because they are not necessarily intended to increase the profit margins of the business, but rather to benefit the social environment in which the company operates. Being a good corporate citizen is central to the operations of most businesses and this falls under CSR philosophy, which encourages corporate entities to give back to the communities in which they operate. The CSR philosophy encourages companies to establish environmental initiatives and to develop associated policies pertinent not only to the company’s economic goals, but also to downstream stakeholders (Grayson & Kjelleren, 2015). When linked back to the definition of CSR, it becomes evident that companies that integrate environmental protection in their corporate strategy and stakeholder relationship are clearly meeting a critical part of the CSR strategy. When a company engages in environmental sustainability, it is perceived as an advocate of public interests, which in turn leads to log term success of the business[Pir11]. Companies can leverage environmental sustainability to enhance CSR by looking at environmental issues from a business perspective so that they can not only see the need to address them from a CSR perspective, but also as impactful to their business activities[Bab11]. For example, a company should look at how its activities drive climate change as well as the impact of climate change on its operations. An oil company, for example, would need to consider the impact of oil extraction on the land, the pollution from the transportation process, and how restoration of the land will be done once the oilfields are exhausted. However, enhancing CSR through sustainable management would require a company to identify suitable Sustainability Management models. Sustainability Management Models There are two main ways in which corporate entities can measure their contributions to sustainability: relative and absolute measures[Mal08]. Using the relative measure, companies can evaluate how efficient they are in using environmental resources. A corporation can then compare the value it has created from the resources at its disposal versus the harms it has caused to the environment. The goal is to consume lesser environmental inputs with time while producing the same number of goods or services. In the absolute use approach, companies can measure their effectiveness by evaluating the value the company adds to the environment, which is attained by calculating the benefits accrued minus internal and external costs (Malovics, Csigene, & Kraus, 2008). Achieving effectiveness and efficiency requires a company to have a strategic sustainability management model. These models include Integrated Chain Management, Green Supply Chain Management, Sustainability Management Maturity Model, and the Sustainable Management Model. Natural Step Concept The Natural Step Concept is a sustainability management model designed upon four natural systems principles: it posits that vital resources must not steadily increase in nature; resources produced by the society cannot increase systematically in nature; the natural system’s productivity and diversity cannot be allowed to deteriorate systematically; and for resources to meet human needs, there must be fair and efficient usage (Malovics, Csigene, & Kraus, 2008). This system was developed by Karl-Henrik Robert, a Swedish scientist, and encourages businesses to look at the planet as a complex interrelated system. Companies that implement the Natural Step Model will ensure that they do not allow materials, such as lead and mercury, which they have extracted from the earth to accumulate on the surface. They will also ensure that materials from their manufacturing processes do not accumulate faster than the natural environment can break them down. The model also calls for companies to ensure that they do not interfere with the earth’s capacity to provide natural resources. Lastly, companies must ensure that they use resources equitably and efficiently. The Natural Step promotes sustainability by ensuring that companies develop a framework to guide sustainable development. The Natural Step concept has been used effectively by Stena Metall AB in the pursuit of its vision of becoming deposit free. The model has helped the company implement systems and design products aimed at achieving zero waste. Its customers lease, instead of purchasing metal and its other products, and when they are done with them, the company takes the products and reintroduces them into the system[Dop09]. Through this model, the company is able to meet its environmental responsibility and achieve its CSR goals. Ecological Footprint Model The Ecological Footprint Model was developed in 1990 by Mathis Wackernagel and William Rees[Gui14]. This concept examines the value of human consumption and the impacts it leaves on the environment. This concept makes the concept of sustainability more understandable and it provides companies with a policy framework for evaluating projects and their business activities. With this model, a business can estimate the resource consumption and waste generation dynamics of its customers to the equivalent useful land and water areas (Hayward, 2012). The ecological footprint model is based on the premise that every resource material or energy consumed needs a definite amount of land to be produced (Guiliano, 2014). Thus, for a company to determine its ecological footprint, it needs to estimate the amount of land every important consumption category would require. The advantage of this model is that it offers businesses an equitable, economically sensible, and ecologically sound sustainable development concept. It provides indicators that can help companies evaluate their practices and determine whether their sustainable development practices capture economic, environmental and social aspects [Mof00]. A company that has benefitted from the application of this model is Go Lite, a Boulder based outdoor clothing and equipment company. The company uses Environmentally Preferred Materials to reduce its ecological footprint and aims to achieve a zero-waste environment in its headquarters. Currently, 67% of the company’s raw materials are from Environmentally Preferred Materials and it aims to meet a 100% target. These materials include recycled polyester and nylon, saving the company from using newly-produced petro-chemical-based materials[GoL10]. Cradle-to-cradle Production Model Cradle-to-cradle (C2C) is an extreme recycling model advocates for the use of safer and fewer resources right from the point of extraction. The design encourages businesses to learn from nature’s effectiveness so that they can also be safe, enriching, delightful, and effective. Thus, the model takes nature’s processes as prototype of human industry whereby natural resources are viewed as nutrients that circulate in a healthy, safe metabolic system. Consequently, the human industry must enrich and safeguard ecosystems, which is nature’s ‘biological metabolism’, but also at the same time, maintain a harmless, fruitful ‘technical metabolism’ that ensures high-quality circulation and use of both natural and synthetic resources. Thus, companies that implement this model would have to develop a sustainability strategy whereby all products are produced for a closed-loop system so that every output ingredient is beneficial and safe. The products or byproducts of business activities would therefore biodegrade naturally and contribute to soil restoration or have the ability to be recycled completely into high-quality materials that would be used for the subsequent generation of product. Cradle-to-cradle model ensures that problems are eliminated at the source in an eco-effective manner. As such, bioaccumulative substances and toxins are eliminated from the onset as opposed to filtering them from the ecological system at the end of the production process. The principle that follows is that when companies use or generate fewer harmful substances, there would less need regulate environmental degradation[Ran16]. The Carlsberg Group has successfully integrated the cradle-to-cradle model in its sustainability strategy and produced the world’s first biodegradable beer bottle made from wood-fibre. All materials are developed from bio-based and biodegradable materials[Car16]. Integrated Chain Management Integrated Chain Management (ICM) is a tool for reducing the environmental impact of product chains[Mal08]. Thus, it incorporates environmental thinking into the entire process from extraction, to production, to consumption and finally, to waste disposal. The overall goal is to minimize the environmental load or eradicate wastages including solid waste, emissions, energy and hazardous chemical throughout the chain. Integrated Chain Management can help companies enhance sustainable development and at the same time increase profits. The model can help companies come up with strategies to improve product performance and process based on mandatory environmental regulation[Chi15]. As a tool for organisational sustainability, ICM also can help organisations achieve both environmental and financial benefits, making a competitive model for driving corporate sustainability management. The criteria for ICM include incentive to use sustainable energy, consumption of non-renewable resources, ensuring that there is a balance between consumption and production of renewable resources, and ensuring that both renewable and non-renewable resources stay within the material cycles for the longest time possible, unless such a process would lead to undesirable environmental outcomes (Malovics, Csigene, & Kraus, 2008). For ICM to be effective, there must be supportive policies within the organisation. International Business Machines Corporation (IBM) is an example of a market player that has incorporated integration in its supply chain management and become successful. Using this mode, the company has been able to implement supply chain strategies to improve effectiveness and efficiency[Coo16]. In the process, it has reduced wastage in the value chain process. Conclusion Corporate social responsibility is an important element in today’s business environment. Many corporations are compelled, not by law, but by social pressures too act responsibly and be accountable for their business operations. This inclination is derived from the fact that any business, whether involved in goods or services, derives certain resources from the environment. As such, they must carry out their business activities in an equitable and just manner that seeks to preserve or prevent the destruction of natural resources. Therefore, environmental responsibility is a critical pillar of corporate social responsibility. To meet their CSR obligations, most corporations have come up with sustainability strategies that aim at meeting their CSR goals. One of the most obvious ways in which corporations can engage in CSR is through environmental responsibility. In this way, they can meet their corporate interest, which is to make profit but also serve the interests of the community and the environments in which they operate, commonly referred to as the triple bottom line. There are various models such as Cradle-to-cradle Production Model and Ecological Footprint Model that such companies can use to help them come up with policies and implement their CSR goals. Each business is unique, and therefore, the management should find a model that suits its business operations. List of References Pir11: , (Pirnea, et al., 2011), Pir11: , (Pirnea, et al., 2011), Sch02: , (Schaltegger, et al., 2002), Gra15: , (Grayson & Kjelleren, 2015), Bab11: , (Babiak & Trendafilova, 2011), Mal08: , (Malovics, et al., 2008), Dop09: , (Doppelt, 2009), Gui14: , (Guiliano, 2014), Mof00: , (Moffatt, 2000), GoL10: , (GoLite, 2010), Ran16: , (Ranallo, 2016), Car16: , (Carlsberg Group, 2016), Chi15: , (China, et al., 2015), Coo16: , (Cooke, 2016), Read More