Collaboration between NGOs and Business in the Green Product Market - Literature review Example

 The effectiveness of the collaboration between environmental groups and business in the green product market NGOs and businesses have different agenda; the first is geared towards encouraging environmental management while the second is focused n making money. How they work together in a partnership mode is the topic of the review of literature. This research review will take its point in the emerging literatures about NGO-business partnerships particularly in delivering programs on environmental issues. This will be done by first defining the green product market, the term partnerships and the NGO; secondly, by assessing the empirical literatures on NGO-business partnership and thirdly, by reviewing the literatures that describes effectiveness of this arrangement. Definitions Allison Gaynor (2010) and Susan Ward (2010) describe the green market as a product or service that is environment friendly or packaged in an environmentally friendly way. It can be anything from vegetables to cars as long as it produces limited carbon footprints, require fewer resources to produce, consume less energy, or emit fewer hazardous emissions. For example, in food, Susan Ward (2010) explains that green food is not necessarily green like string beans, but she refers to the organically produced foods that use fewer chemicals and pesticides in their production. Other examples are household appliances and electronics, household cleaners and cars that fall in the green product category if they comply with the environmental requirements set by the government such as the U.S. Environmental Protection Agency (EPA). Several literatures have defined NGO-business partnerships in many ways, however what is common is that it is a partnership that creates societal and/or environmental values as well as pooling their talents and resources in achieving their goal. In general terms, Schiller (2005) defines NGO-business partnership as “is one wherein both parties contribute skills, expertise and resources, and where, crucially, both sides share the risks. It should achieve something that the business otherwise could not achieve, and it should allow the NGO to challenge, or change, some business practice, that is, not simply, receive funding”. A more definite definition on partnership is given by Jamali and Tamar (2008 p.279) saying “a sort of collaboration to pursue common goals, while leveraging joint resources and capitalizing on respective competencies and strengths of both partners”. In the discussions of environmental groups, a distinction is made with non-governmental organizations such that it is generally referred to a non-profit organization, legally constituted, independent of the government, and aims to pursue wider social objectives. Specifically, UNESCO Encyclopedia of Life Support System refers to the NGO as “an independent voluntary association of people acting together on a continuous basis, for some common purpose other than achieving government office, making money or illegal activities” (Willets,2006) By type, NGO can be categorized by its orientation or level of cooperation. Sushant (2010) grouped NGO by orientation into charitable, service, participatory and empowering. By level of cooperation, NGOs are grouped into community-based organization, city-wide organization, national NGOs and international NGOs. Empirical evidences on NGO-business partnerships NGOs and business partnership is a new opportunity for both parties since according to Schiller (2005, p.3), this venture did not exist in 1990s. Today, according to the survey done by Sustainable Asset Management done in 2004, cited in Schiller (2005, p.3) report, there were about 45 percent from among the 554 companies that developed “on going partnerships” on the environmental level. The role of environment groups/NGOs in tackling environmental issues has been recognized by international organizations like the World Bank. Dr. Julia Panourgia-Clones (n.d.), Economic Adviser of World Bank said that NGOs have become formative power in shaping socio-economic development partly because of its development fund aid funding that has reached $5.5 billion in 1992. As such, the government is now looking for the NGOs as an emerging partner in the World Bank’s efforts for sustainable development and environmental issues. Towards this, Clones (n.d.) identified three areas within which NGOs and other participating groups could be effective partners in the international economic system. These are the push towards privatization, enhanced environmental stewardship and the emerging role of the NGOs and other civic sector groups. Along these areas, four focal points have been recognized as possible partnering agenda for NGOs and businesses. For instance, in technology, strategic alliance between pubic-private entities with NGOs is needed “to identify, develop and market new technology options and to facilitate technology transfer” (Clones, n.d.) Next is capital that is vital in environmental sustainable development. For example, capital is needed by NGOs in inventions. Another point is the collaborative management options wherein there is an innovative partnership in resource management such as conservation of watersheds, commercial waste management, and leasing of protected areas to trusted organizations and management of wildlife. Last is the market and consumers choice wherein environmental-friendly products are developed. The role of the NGOs in the 21st century has been further given importance by the United Nations in its report about the sustainability in partnership with the global compact and the United Nations environment Programme (Anup Shah, 2005) Accordingly, the UN Report recognized NGOs to be an important factor in the future in both determining the roles of states as well as operating as business themselves The roles to be played by NGOs in this respect are in developing and deploying solutions resulting to a new market focused opportunity and partnership. Foreseen problems along this line are the dwindling of NGO funding and a need to review the NGO business models (Anup Shah, 2005). On the political scene, partnerships have emerged as an area of focus. For instance, the World Economic Forum have presented innovative approaches that companies could use in their partnerships with private enterprises, civil society groups and government bodies in addressing key international development challenges (Samans, 2005 p.3). Survey findings of Samans’ study showed many companies are interested in China and other emerging countries like India, Russia, Brazil, Southern Africa, South-East Asia and the Middle East. Both Samans (2005 p.3) and GreenBiz Staff (2010) recognized that the key challenges to partnerships are along the following areas: “promoting good governance and tackling corruption, alleviating poverty, education, achieving sustained economic growth, peace and security, energy, HIV/Aids, Water and human rights. The research suggested that these challenges can only be achieved by partnering with civic society groups. Framework for efficiency analysis The dimensions on the effective implementation of business and NGO partnerships are difficult to measure because of its magnitude in global concerns. However, the USAID, in its study about NGO empowerment, provided some indicators to measure the vitality of the local NGO community (NPI Core Report 2000) that includes annual growth of membership, the ability to influence government policies, its relationship to the private sector. It can also be measured thru the number of linkages between private business and the NGOs working in the service delivery, public advocacy or direct economic production. Effectiveness of the NGO is further illustrated into independence, degree of participation and responsiveness to member needs, sustainability, communication capacity and access to information and innovativeness. Accordingly, the size of local NGO community as measured by its annual growth is an indicator of effectiveness. For example, there is a strong environmental group membership in the U.S. that started in 1960s to the late 1990s. It boasts of 800,000 members in 1995 and rose to 1.2 million by 1998. Recent estimates of U.S. environmental group are 14 million people with a combined budget of $600 million a year (MIT Press, 2001). Another validity indication as suggested by the NPI Core Report is the ability of the NGO to influence government policies and programs which could be measured by the number of significant government policies and regulations as a result of the NGO effort. In this respect, the achievements of Green Peace Australia Pacific are viewed. From 1989 to 2009, this organization is able to persuade the Australian government and corporations to stop deforestation, work towards peace, prevent climate change, reduce overfishing, and to keep genetically engineered food out of Australia. For instance, Green Peace is able to convince Mitsubishi Paper to stop buying woodchips sourced from Tasmania’s ancient forest. In 2000, Sydney Olympics became the first ever green games. NGOs in India were able to persuade the government to set aside a certain portion of its budget for the innovative schemes of NGOs (NPI Core Report) According to NPI Core Report, effectiveness of NGOs is also measured by its relationship to the private sector thru the number of private businesses making contribution to the NGOs and the value of its contribution. In this respect, the World Business Council for Sustainable Development cited the estimate done Center for Civil Society Study of John Hopkins University that NGOs have $1trillion in assets, employing over 19 million people and making it as the world’s eighth largest economy. Majority of NGO’s funding comes from government grants, businesses and donations from private individuals. (WBCSD, n.d.) In the Asian scenario, successful partnerships were measured by the degree of participation of its players. For instance, in the Asian Perspectives Seminar, a successful partnership was formed between management and trade unions in the Philippines; in Nepal, partnership was between car owners and a small car garage and the mechanics. Experiences shared in this seminar showed, as stated by Suba Rao (2000 p.10) illustrates participation and responsiveness, such that…”a partnership requires sharing, responsibility, and ultimately trust at the micro level right on up to the global level. This is the key in today’s global relationship and globalizing world”. Another measure of success is by the method of evaluation. Often enough, evaluation is needed to obtain concrete result and to make decisions whether the partnership has to be modified, cancelled or renewed. ORSE (2006) suggested evaluation at constant interval and at the end of the project. Specifically, the evaluation of the partnership should cover the impact of the project on the society, and the target group in particular; the value of the partnerships for each of the organizations involved, and the true costs of the partnerships involved. In sum, all these measures could be gathered in the cost-benefit analysis that organize and evaluate information about development efforts in monetary terms. The cost benefit analysis should answer the basic questions as typified in the Non-Profit Consortium (NPC) * What events, actions or things will change as a result of the introduction and operation of a proposed action* What is the estimated value of the benefits that will accrue as a result of that action? *Who will be receiving these benefits? *What is the estimated cost of the proposed action? *Why will pay for the cost? *What are net benefits or costs of the proposed action? * Based on the net benefit or cost, should the proposed action be taken? Under these perspectives, answers to the questions of cost and benefit analysis are defined in case study examples. Example 1. Events, actions or things that will change as a result of NGO partnership Businesses, according to Jowitt (2010), in a report, said that the world’s top firm caused $2.2tn estimated environmental damage. An estimated loss of 20,000 jobs and $1bn loss agricultural loss because of water shortage in California further illustrated example of damage. Estimated value of the benefits. If firms would be held liable for this environmental damage, it would wipe out 6-7% of the companies' combined turnover, or an average of one-third of their profits, though some businesses would be much harder hit than others. This represents the percentage of benefits to corporations if a solution is adopted. Who will be receiving the benefits? Beneficiaries are the top corporations who are responsible in the emissions of environmental damage who will make a saving from possible taxes and fines imposed on them. It will also create spiraling effects to economy in various ways. Who will pay for the cost? NGOs receive donations from pubic and private corporations as partnership agreement. Proposed Action: Acting on the report, Jowitt (2010) said heads of corporation agreed to find solutions before they are taxed and made liable by the government for the environmental damages. Example 2. The partnership of the UNICEF-NGO Assessment Partnership Program (2010) in Mozambique where there are about 87,000 to 12,000 children (0-14 years) living with HIV showed positive results as follows: Benefits. NGOs have supported 60,000 children in accessing six basic services NGOs have strengthened the technical and financial capacities of community based organizations. The program has managed to foster the creation of provincial level coordination mechanisms through the provision of technical assistance. Costs. The original budget of this program was US$9.9 million. Average budget for each NGO was approximately US$822.000. The estimates showed that with an average of USD16.37, NGO partners should have provided 409,000 children with basic services over the last 3 years. On the basis of the data, it has an average cost of US$49.11 to provide one child with three basic services. Example 3 In a separate scenario, Suryodiporo (n.d.) illustrated the case of waste management in Bali wherein a partnership was entered into between Bali Hotels, waste haulers, swine producers and Bali Foundation, a local NGOs. Benefits. Return of investment of 5-7%. beaches and other areas free from mounds of wastes; environmental pollution of rivers, beaches and other areas free from mounds of wastes; environmental pollution of rivers, beaches, groundwater reduced; sustainable tourism enhanced, employment creation; resource depletion is reduced; green image projection Costs: No data on total costs of the program. Funding came from soft loans as start up cost, asset donation and tax incentives. The cases of successful partnerships drawn from the study of Tuner (2010) include the following: Traffic Hong Kong Monitors wildlife trade globally Partnered with Cathay Pacific Airways Ltd. to improve the airlines ability to stop smuggling of rare plants and species on its planes. Result: Halting illegal shipments helped Cathay Pacific avoid fines and strengthened the airlines environmental reputation Environmental Defense A leading US-based environmental NGO Working with CitiGroup to increase the recycled content in copy paper used by Citigroup, reduce the company’s paper use and develop environmental evaluation criteria for its paper suppliers. British Foundation A British NGO Launched a pilot project in 1977 to work with companies in UK to develop codes of conduct for purchasing from suppliers from developing countries World Wide Fund for Nature Helped set up a new global system for endorsing products from properly managed forests – the Forest Stewardship Certification Coalition of NGOS and corporations spearheaded the FSC which has helped the timber industry to move into more sustainable forestry practices. Source: Turner (2010) In order to be viable, partnerships must show arrangements that should be compatible with shared expertise and resources and a common goal of sustainable development. Turner (2010) in her study, published in Chinese Business Review, stated that collaborations between NGOs are fragile because corporations will sustain the partnership only if it is profitable or if it improves their credibility in environmental stewardship. NGOs on the other hand, can improve the business by transforming them into cost-effective, environmental practices. recognition. On the benefit side, the study of Murphy and Griss (2007), stated that business side takes advantage of the influence, trust and reputation, expertise on sustainable development and environmental issues and networks of NGOs. The business sector benefits from the increased level of trust, development of new products or services and avoided confrontation. Schiller (2005) accounts for the opportunities of the business sector that lie in breaking into emerging markets, improving community relations and enhancing reputation. NGOs on the other hand, gain from the increased resources and understanding of the drivers of business because of resources and management expertise it brings in. Both take advantage of the wider pool of expertise and experience that enables them to become innovative and creative. The negative aspect of partnership has been noted, on the part of NGOs as losing their credibility, losing support from traditional funders, compromising its reputation and being ostracized by its peers (Murphy & Griss, 2007) Perspectives on NGO-Business partnership for environmental protection Partnerships between NGOs and business are among the advocacies being pursued by international organizations to tackle environmental problems and issues. For instance, The World Economic Forum (WEF) urges more NGOs and business partnerships be formed to meet the development challenge in the emerging markets. The WEF report implied that there is an immense wealth creation, technological innovation and political emancipation still untapped in the developing market ( WEF Partnering for Success). As a result of these advisories, more and more companies have moved into partnering and have incorporated environmental issues into their core values and strategies. An illustrative point is the Nordic Partnership, a coalition of NGOs and business in Northern Europe that helps project owners reduce costs and maximize project returns. Rabin (2004) said that the Nordic Partnership is composed of Scandinavian companies, WWF and the Danish think tank Mandaz Morgan. Other participants in this coalition are Novo Nordisk and Volvo Car Corporation as sponsors, Procter & Gamble, consultancy firms ERM and Cowi, ITT Flygt, an engineering group , and food manufacturer, Danisco. Important aspect noted from this partnership is the report that progress has been slow, and the practice of partnering is still in a very infant stage. In this report, shared lobbying was one of the ambitious targets of the coalition, however, the problem of arriving at a common lobbying ground was found to be difficult. In the World Economic Forum’s GCCI, 40 companies signed in to invest in the communities wherein they operate as part of company strategy; Coca-Cola, Diageo and Rio Tinto to mention some. In the same way, Philipps Van Heusen, an apparel firm from US, said that their responsibility does not stop at their doors and they do not merely operate for profit. As NGOs expand their roles in bringing in environmental solutions, their impact has been felt in China and the Asian region. Partnership in China is a new phenomenon that has emerged only in 1990s after the central government granted social groups a legal status. It has been a difficult task for the environmental groups to register and work under the China setting. NGOs, according to Turner (2010) relied on funding from international sources such as Blue Moon Funds, Rockefeller Brothers Foundation, Global Green Grants Funds, and many others. They also depended on the government for media support and coverage and had focused on educational campaign and followed closely the government’s agenda on environment. However, in spite of the set up difficulty, few NGOs have managed to become partners in some areas. An example is the Yunnan Entomological Society that advised tea plantations in Yunan on developing non-toxic pest control methods that resulted to a gain in entry of Chinese tea to the European market. Turner (2010) said that collaborations between NGOs and businesses in China are often done thru bilateral agreements and thru international NGO initiatives. For instance, the Natural Resources Defense Council of the United States brings together NGOs and business corporations in China to work together in energy efficiency improvement program. The insights from the study of Yamamoto reviewed on the NGO-business partnerships in Asia Pacific showed that the number of corporate-NGO partnerships is still limited but there are indications of its growing importance. His findings recognized the dramatic emergence of civil society in Asian countries, and the need for the NGOs to play an active role under the pressures of the economic crisis that plagued them. Also, study stated that corporations also need to “contribute more positively to the overall interests of the community where they operate and also to improve corporate governance, the shortcomings of which have been regarded as one of the causes of the financial crisis” (Yamamoto. 1999, p. 27). Further, Yamomoto paid attention to the synergy brought by the NGOs and business together, such that NGOs bring in their talents while business contributes resources in the partnership. As a general observation, Yamomoto (1999) said that the changing dynamic surrounding NGOs and corporations need much greater partnerships in the divergent members of the society in order to cope up with the requirements of globalization”. Towards this end, the author advanced the theory of a need for multi-sectoral partnership with the governments, intellectual and academic leaders, members of the community and media. Finally, the author believed that the partnerships of any kind will only work sustainably depending on the people who see its importance and find joy of working together. References Anup Shah, 2005) Non-governmental organizations on development issues. Global Issues:Social, Political, Economic and Environmental Issues that Affect us all http://www.globalissues.org/article/25/non-governmental-organizations-on-development-issues# Clones –Panourgia, Clones (n.d.), Greening of the Private Sector and Partnerships with NGOs: The Social Dimension of Business Strategies. World Bank, Washington, D.d. http://users.hol.gr/~bio/HTML/PUBS/EVEA/english/clones.htm Gaynor, Alison, (2010) Examples of Green Product. Article in Livestrong. Viewed 04 January, 2011 GreenBiz Staff (2005), World Economic Forum Urges More Business/NGO Partnerships viewed 04 January 2010 Green Peace (2007), 30 Years of Environmental Activism. GreenPeace Australia Pacific, viewed 04 January 2011http://www.greenpeace.org/australia/news-and-events/news/general/we-are-30) Jamali, Dima and Keshishian, Tamar (2008), Uneasy Alliances: Lessons Learned from Partnerships Between Businesss and NGOs in the context of CSR. Journal of Business Ethics, Vol. 84, No. 2, pp. 277-295. Jowitt, Juliet. (2010).World’s Top Firms cause $2.2tn of environmental damage, report estimates. Guardian. co. UK. Viewed 03 January 2011 http://www.guardian.co.uk/environment/2010/feb/18/worlds-top-firms-environmental-damage> MIT Press,(2001), The Role of Environmental NGOs-Russian Challenges,American Lesson: Proceedings of a Workshop 2001. Office of International Affairs, National Academic Press. viewed 04 January 2011 Read More