Corporate Environmental Management Issues - Assignment Example

?Part A Xerox Case Study How did Xerox reach this objective? Xerox leadership committed to creating an environmentally sound company. Traditionally, in business, pollution was a free option for waste disposal. Dumping contaminants into a stream or belching smoke into the atmosphere was considered costless to the company, an economic “free rider problem”. Xerox contaminated a groundwater supply in Webster, New York, and decided to become excellent corporate citizens. Public pressure for good environmental governance had increased at the time of the leaky tank incident, driving such initiatives as resource management and contamination controls. Xerox was fortunate to have many of these business ethics in place in the European operations already, and leadership with the vision to capture the competitive advantage that good environmental stewardship might provide. Besides, it was the right thing to do. Because Xerox had earned a large share of the copier market, the Federal Trade Commission required Xerox to abandon its patent to allow more competition. Xerox lost market share and was forced to reorganize to liven the company. Nine divisions were created which largely acted as separate companies. But each specialized company became closer to their customers and could respond to the market more quickly. Through the years, Xerox became more involved in local environmental issues and supportive of environmental health for their communities. From the total quality management (TQM) program established in the early 1980s, Xerox moved to a TQM for environmental issues. Now, the employees would be involved in stewardship of the system. Five programs were initiated: cartridge recycling; supplies; asset management; waste reduction and recycling; and employee involvement. The big idea involved minimizing the environmental impacts of the supply chain through the life cycle of the products. This implementation required each machine, part or shipping material to have a secondary purpose or a recycling design use. The company adapted the Environmental Protection Administration program to reuse, repair/reprocess recycle or dispose of properly, in that order. Asset Recycle Management (ARM) policies were adopted to organize the effort to reuse and recycle. Machines were handled in house while cartridges and parts were remanufactured by suppliers. The next evolution of the process was Design-For-Environment (DFE) which involved engineering each component with the lifecycle in mind. Each component’s raw materials and design would involve the choice of recyclable materials or reusable parts. The stated goal was 0% waste in the manufacturing processes for any new product by 1997. Obviously, a very lofty goal even today. The measurement of this goal involved a minimum 90% reduction in waste. The evolution of this business ethic required only 30 years. Xerox accepted a leadership role in environmental stewardship. Is this an appropriate goal? Xerox followed proper management techniques to reduce regulatory impacts and market its leadership of environmental citizenship. Considering the increased demand for government intervention in environmental stewardship regulations and the personal tragedy of contaminating their neighbor’s groundwater, Xerox acted responsibly to take a leadership role and mitigate any potential damages. Then, one step further, tried to eliminate future risks. Looking at environmental stewardship as a risk management tool, simple compliance, due diligence and integrated risk management are the options offered to corporate management. Simple compliance implies a change in process each time a new level of compliance is mandated. Due diligence implies staying one step ahead of new compliance levels. Risk management suggests retooling operations to eliminate as much environmental risk as possible to reduce the regulatory risk. Risk management is a sound business strategy; environmental stewardship is a sound ethic which can be exploited in marketing. Where on the matrix of strategies does Xerox belong? Xerox’s strategic orientation is sustainability. The recycling of raw materials, remanufacturing machines, organizing and convincing suppliers to adopt the environmental ethic of Xerox and generally only using materials required for company operations without undue waste is an ethic of sustainability. And the effort to generate no waste clearly puts the Xerox focus on changing its behavior rather than the market behavior. Although, Xerox does want to influence the market through competitive demands for environmental citizenship. Through public awareness and civic leadership, Xerox motivates competitors to match some level of sustainability. If the matrix were to consider competitive advantage as due diligence and sustainability as risk management, Xerox would again be involved in the risk management level of environmental management. Xerox product delivery system changes Xerox must re-engineer its manufacturing operations to maximize use and reuse of raw materials. One of the first tools involved a relativity scale for the reusability and recycle-ability of raw materials. A conscious effort began to choose raw materials conducive to the goals of the program. This appropriateness index required other logical steps to ensure down stream usefulness; for example, the material needed to be stamped to assure proper recycling, especially the correct plastic species. This down stream use implied fewer species of plastics for manufacturing so the ease of recycling was served. A life cycle cost tool developed the present value of all costs for components including future recycling, remanufacturing or deposition. This management tool allowed the comparison of real costs for the length of service, and pointed to the correct subparts to utilize. The cost of that free rider pollution problem was now being counted. Next, Xerox created an infrastructure for recycling and remanufacturing parts. In the early development stage, the infrastructure did not exist, so the designers built parts that could be recycled if an infrastructure became feasible. Actually, this maneuver was clever. The transportation issue would be resolved in time, and the machines were ready when the infrastructure existed. If the nine divisions waited for a 100% launch, the delay would defeat the time goal. This way the goal was ever closer. Toner cartridges were designed for reuse, and a plastics recycling program initiated. Xerox was well on its way to achieving successful waste reduction. Changes in goals and incentives Xerox reduced the species of plastic from 500 to 50. The fifty were marked so each part could be recycled specifically with its own species. The plastic chemists input into this decision the plastics which could be recycled and the amount of recycled material used with new processes which would not affect quality. By simplifying the range of species and the formula for reuse, plastics could be 50% recycled by 2000. Suppliers were encouraged to embrace the same recycling ethic. Xerox insisted the recycled plastic content of contract parts increase. Although there was some resistance, ultimately, the plastic suppliers joined the team effort. Xerox initiated talks with plastics industry groups and competitors to standardize the formulation of plastics to facilitate recycling among the competitors products. Xerox wanted to demonstrate the importance the electronics industry was placing on resolving sustainability issues. Environmental risk management at the leadership level reveals the company ethic to suppliers, customers and regulators. Xerox decided to benchmark competition to measure and maintain the desired leadership. First, Xerox benchmarked only with its direct competitors. Later, suppliers and indirect competitors were followed closely. Xerox determined to remain the leader in environmental corporate citizenship. Xerox needs to incentivize all stakeholders to truly become sustainable. Each participant must commit to the overall concept and work towards the goal. Xerox leadership has the responsibility to engage all stakeholders. Legislative initiatives Domestically, Xerox challenged the first Bush administration to become a model customer and purchase remanufactured, recycled products. The US government answered the challenge with an executive order allowing cost effective purchases of environmentally friendly products. European challenges are more difficult. The demand is good and the ethic is in place; however, the infrastructure and market development lag. Both domestic and abroad, consumers desire limiting waste from manufacturing operations; however, government regulation is often mentioned as the first form of relief. Xerox, and other companies, needs to inform the public of its efforts to be good citizens. With the industry leaders managing environmental risks expertly, government intervention is only a negative, a disincentive to excel. This is true in the U.S. or Europe. Is the goal achievable? The short answer is certainly. The leadership demands success and urges all employees to participate in the process. Suppliers, competitors and customers work toward the same goal. Competitors have an interest in reducing waste, and standardizing plastic species is in every company’s interest. Customers can become more sustainable, and market industry leadership. Suppliers must either evolve into the program or be replaced. Waste reduction is an ethic. The employees of Xerox bought into the program. According to exhibit 7, the increase in savings on reuse and recycling is increasing every year. That is incentive for management, employees, suppliers and customers. The leadership will stay the course. How to price products Xerox should engineer a quality product which can be guaranteed as new equipment. Price sensitivity and the notion remanufactured equipment is “used” requires some marketing prowess. Environmentally friendly copiers or printers sell to the markets that value sustainability. New office buildings with LEEDS certifications, green companies and environmental firms may lead the way to accepting these remanufactured products. With reduced demand when companies go paperless, these smaller copiers may become obsolete. Market sustainability may trump product manufacturing sustainability. Xerox should maintain price structure on the green copiers and the sales force needs to add sustainability onto its list of features. Perhaps the marketing edge would be a lifetime cost analysis. The customer can buy the remanufactured copier for the same price as the new one, same guarantee; however, the new one requires a recycling deposit to assure its return. Part B Is sustainable development the answer? Under the terms and conditions of Agenda 21 and the other readings, practical sustainable development is not the current answer. Sustainability, conceptually, is a good start towards a more environmentally balanced world. However, several practical problems retard the development of the concept. Human population growth is not sustainable. Chronic poverty is a health issue that defies sustainability. Unifying 178 countries to properly execute sustainability protocols under varying circumstances is unlikely at best. No central agreement or leadership is in place. In short, this ad hoc effort is doomed to fail unless the underlying problems are resolved. According to the Hilary French (176), 160 countries endorsed a plan to keep population growth to 9.8 billion people by 2050. And, this goal will be achieved on a budget of $1.50 per person. The goal is outrageous, 9.8 billion! That represents 50% greater population than today, and we cannot feed, shelter, provide medicine or sustain this population. The poorest countries contribute the largest populations with the exception of the United States, and arguably, the U.S. is bankrupt and unsustainable. The subject of world population is largely minimized in these papers. The root problem for sustainability is population growth. Chronic poverty is a health issue that defies sustainability. According to these papers, 25% of the people in the world today are hungry and poor. Desertification due to global warming is mentioned many more times than population control. Desertification reduces arable land and reduces food stocks. Farming and food production cannot feed another four billion people. Trainer invokes class envy to rationalize wealthy nations to cut back on consumption. Nowhere in his article does he admonish poor countries for having a greater population than can be sustained within the limits of their output. Chronic poverty, though, is a disease of the economy. It is an indicator that an insufficient amount of goods are available in the market, and insufficient employment exists. Chronic poverty leads to greater health issues, such as malnutrition, vitamin deficiencies and early childhood development retardation. Population control reminds of eugenics and ethnic cleansing, certainly those tragedies are not endorsed here. But, birth control education is desperately needed across the globe. Unifying 178 countries to properly execute sustainability protocols under varying circumstances is unlikely at best. The documents demonstrate an uneven distribution of wealth and blame. Evidently, wealthy countries, the ones that can afford sustainability initiatives, consume more than their share of energy and goods. Although this statistic is true, it is also true that the wealthier countries are more apt to live within their means in terms of population. No central agreement or leadership is in place. These committees and assemblies pontificate endlessly about high minded ideals; however, no one comes forward to organize this massive undertaking. Passing a resolution to become more sustainable on a worldwide basis does not really accomplish very much; demonstrating sustainability through action and ethic would. Perhaps the United Nations could become sustainable and green. Rather than flying private jets half way around the world, the United Nations delegates could meet on Skype. Practical solutions must start with reduced population. This subject is always a little queasy because historically, population control was defined as elimination of a certain group. But, if the world wants to get serious about sustainability, population must be controlled at lower than current levels. World leadership must emerge which will demonstrate useful sustainability for the poorest countries. Trainer implies the wealthy are the cause of environmental sustainability issues. The wealthy do sustain themselves. Rampant poverty as a result of overpopulation taxes the natural resources of that country. The wealthier countries foolishly supply goods and services to maintain this stressed condition. Infant mortality rates rise; disease spread horribly through these populations; potable water and sanitation is at a premium. Without the support of the wealthier countries, these conditions would not be sustainable. But, the goal should not be to sustain mere subsistence. In order to support the spirit of Agenda 21, the United Nations must stop supporting overpopulation and allowing more people to live at subsistence level. Either an initiative to find meaningful and gainful employment, to provide food and shelter education or to reduce the birth rate is required to move forward. In this sense, sustainability can work, but the volume of sustainability must decrease. References French, HF 1995, ‘Forging a new global partnership’, in L Brown et al. (ed.), State of the World 1995: a Worldwatch Institute report on progress towards a sustainable society, NY Worldwatch Institute, NY, pp. 170–89. Reinhardt & Victor 1996, ‘Xerox: design for the environment’, Business management and the natural environment: cases & text, pp. 3–124–3–147. Reinhardt, F & Victor, R 1996, Business management and the natural environment, South-Western College Publishing, Cincinnati, Ohio, pp. 1.53–1.69. Trainer, T 1990, ‘A rejection of the Brundtland Report’, IFDA Dossier, vol. 77, May/June, pp. 71–84. United Nations Department for Policy Coordination and Sustainable Development (DPCSD) 1997, Programme for the further implementation of Agenda 21 – adopted by the special session of the General Assembly 23–27 June 1997, viewed 20 August 1997, . United Nations Department for Policy Coordination and Sustainable Development (DPCSD) 1997, Overall review and appraisal of the implementation of Agenda 21, viewed 12 August 2004, . Reading 6.2 Read More