Drivers Of Environmental Leadership In Corporate Organizations

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“Climate change is no longer a far-off problem; it is happening here, it is happening now” (Barack Obama). The world has finally woken up to address the disastrous consequences of mankind’s activities. Measures are being taken all around the world to reduce the impact of climate change and prevent further harm. Industries have played a key role in contributing to global warming along with many other sources. Majority of them have also voluntarily shouldered the responsibility of taking steps towards a sustainable future.

Environmental leadership can be defined as ‘‘the ability to influence individuals and mobilize organizations to realize a vision of long-term ecological sustainability’’ (Egri and Herman 2000, p. 2). The role of environmental leadership has gained prominence over the years due to increasing awareness about sustainable practices. The responsibilities of an environmental leader have been associated with the implementation of various environmental practices. The successful implementation of environmental practices presumes an active commitment from top managers (Kearins and Collins 2012; Revell and Blackburn 2007; Revell et al. 2010) without which it is impossible to carry out the humongous task.

This paper attempts to discuss the drivers of Environmental leadership and a few case studies in which organizations have been successful in being sustainable without impeding growth and development with the help of these drivers.

Purchasing and supply management sustainability: Drivers

This research paper attempts to identify the drivers to supply management’s implementation of sustainable purchasing practices and shows how these drivers are associated with different corporate initiatives. Purchasing and supply chain managers have the ability to establish and maintain a competitive advantage through environmental-friendly practices (EFP).

The drivers are listed as follows:

1. Involvement of top management.

Members of top management play a crucial part in encouraging firms to evaluate their role in society with and are responsible for the firms’ environmental management(Anderson and Bateman, 2000, Lawrence and Morell, 1995, Winn, 1995). They also set the rhythm of the company by determining the company values and hence, its actions.

2. Government regulation.

Recent studies have shown that escalating penalties, and legal costs have underlined the importance of complying with environmental legislation (Cordano, 1993). Preuss (2001) found the motivation for environmental initiatives in manufacturing companies to date, centers around regulatory compliance for the most part.

Firms tend to avoid expensive capital refit costs by trying to keep ahead of legislation. They conduct extensive research and implement new technology. This has proven to be more economical than reacting to the government’s changing compliance requirements.

Many companies proactively reduce their ecological footprint to establish their credibility with the aim of gaining a position at the negotiating table.

3. Financial cost benefits.

Waddock and Graves (1997) concluded that corporate social performance and profitability are significantly and positively related. This relationship can be associated with three motivations-

Competitiveness
Legitimization
Ecological responsibility that induce responsiveness from the customers.

Intensifying the production process has been the most used approach to reduce environmental impact while lowering the costs of input materials and waste disposal. More companies have shown an interest in lean manufacturing as it helps them reduce the direct costs associated with manufacturing along with producing in accordance with the demand(rather than in excess).

4. Competitive advantage.

An increasing number of firms are engaging in “green marketing” to gain or maintain a competitive advantage. Consumers are becoming aware of their ecological footprint and expect the products they use, to have minimum adverse effects on the environment.

Eco-efficiency, beyond compliance leadership, eco-branding, and environmental cost leadership are the strategies that can be used while determining optimum return on eco investments.

5. ISO certification.

The release of the ISO 14001 standard there has been an additional pressure on industries to address environmental performance through the use of environmental management systems (Zuckerman, 2000, Gordon, 2001). Though the whole process of implementation of ISO 14001 seems tiresome and unnecessary at the time, it has long lasting benefits to the environment and organization. Since the requirements of the ISO are greater than that of any state or federal agency, the organization will not have to change its policies and technology to comply with the ever-changing governmental regulations.

6. Customer demand.

Stakeholders have played a key role in making corporate organizations more responsible towards the environment. Customers, local communities, and environmental interest groups have held companies accountable with regard to environmental impacts of their operations. Hence, organizations are more conscious about including Environment in their decision-making process. (Giunipero, Hooker, Denslow, 2002).

CASE STUDIES

1. Going Green: Motivations for Environmental Commitment in the Airline Industry. A Case Study of Scandinavian Airlines.

Air travel is known to be one of the fastest growing, most dynamic and volatile sectors in tourism. It is associated with excessive fuel consumption, noise pollution and waste production which are known to have significant impacts on the environment.(Air Transport Action Group, 2002; Becken, 2002;Clancy, 2001; Middleton & Hawkins, 1999; Penner et al., 1999).This paper focuses on the drivers, motives and factors that affect environmental policy making in the Airline industry.

Recent studies have shown that, no single agency or actor has complete knowledge of the issues and alternative solutions or can predict with certainty what the implications of certain policies might be. The most effective practices can be determined only by trial and error method. There is no panacea for all the environmental problems. The solutions have to be adopted based on the nature of the problem, the drivers and other external conditions.

Scandinavians consider the environment as an important aspect of their culture and therefore, try to maintain and preserve their environment. They also keep themselves updated about the environmental issues (personal communication, Director, Corporate Purchasing, SAS, 11 June 2002).

Scandinavian Airlines (SAS) is the largest airline in Scandinavia and has its base in Stockholm as well. In 1995, SAS became one of the first airlines to publish an Environmental Report. It has won numerous awards for its annual environmental reports (SAS, 1996, 2001, 2002) and is emerging as a leader in environmental management (Diamantis, 1999; personal communication, Environmental Manager, LSG Sky Chef, 30 June 2002). In 2002, the airlines brought into effect an environmental management system which consisted of various tools and mechanisms to evaluate, report and rectify environmental performances. Some of them are listed below:

Annual public environmental reporting
Adopted an environmental index that was used to determine the efficiency of implementing various environmental measures.
Enforced a corporate environment policy obligating all managers to conduct an environmental assessment as part of their decision-making documentation (SAS, 1998).
An emissions calculator that provides a destination specific calculation of CO2 generated.
Supporting product stewardship programmes
Require all suppliers to have appropriate environmental policies and management systems in place (personal communication, Vice-President Corporate Purchasing,SAS, 11 June 2002);
Reducing its costs by employing energy and water saving techniques such as improving fuel efficiency and decreasing the amount of waste going to landfill (Lynes & Dredge, 2006).

2. IBM Supply Chain.

Founded in 1911 and one of the largest global tech companies, IBM has been a pioneer in corporate responsibility for over four decades, publishing its first Corporate Environmental Policy in 1971 and subsequent annual corporate environmental performance reports since 1990.

In 2004, IBM helped found the Electronic Industry Citizenship Coalition, now called the Responsible Business Alliance, to extend the commitments of individual companies to environmental and social responsibility leadership across the electronics industry’s suppliers by establishing an industry-wide Code of Conduct.

In 2010, IBM expanded its supply chain environmental management program to require all suppliers to establish a management system that addresses their social and environmental responsibilities.

Suppliers are required to establish goals, measure their environmental performance, and publicly disclose their performance against those goals.

IBM uses the RBA’s Supplier Code of Conduct in its supplier selection process. Suppliers are required to sign a legal document agreeing to comply with the RBA Code of Conduct. They undergo an initial audit and, if not compliant, are given 6 months to carry out corrective actions such that upon a re-audit they are expected to be compliant. Noncompliance may lead to a business being removed. IBM facilitates capability building among suppliers by working closely with them.

3. Ford

Ford’s supply chain is one of the largest among auto manufacturers and it largely influences its environmental and social impacts and values. Ford’s Code of Conduct Handbook asked suppliers to adopt the same environmental and sustainability policies as those Ford applied to its own operations.

Ford adopted three frameworks:

Carbon Disclosure Project’s Supply Chain Program;

its own Partnership for A Cleaner Environment (PACE) Program; and

the Responsible Business Alliance’s (RBA) third-party,

To determine whether a supplier has a large environmental footprint, Ford examines its GHG and water intensity as well as the facilities’ location. This is important for water-stressed regions.

Ford often faces challenges with engaging indirect suppliers in meaningful environmental and social initiatives and in reporting on these efforts. Therefore, it requests that its suppliers report through the CDP’s Supply Chain program. Doing so helped Ford set a uniform reporting framework that suppliers could use to provide environmental performance information and allows Ford to determine more accurately how each supplier contributes to its environmental impact. This information was also made available to customers to improve credibility and goodwill.

CONCLUSION

For any organization (private or public) to thrive, environmental considerations are crucial. The short-term benefits may not be significant, but the sustainable growth in the long-term is worth the setbacks. Leaders have to acknowledge this reality and encourage the employees and the top management to persevere. Not engaging in sustainable practices could result in the loss of a longer competitive advantage. Both individual and organizational environmental leaders will have to take upon themselves the responsibility of educating and encouraging their employees to advance their efforts towards creating a sustainable environment. (Brown, 2019)

REFERENCES

Giunipero, L. C., Hooker, R. E., & Denslow, D. (2012). Purchasing and supply management sustainability: Drivers and barriers. Journal of Purchasing and Supply Management, 18(4), 258-269.
Lynes, J. K., & Dredge, D. (2006). Going green: Motivations for environmental commitment in the airline industry. A case study of Scandinavian Airlines. Journal of sustainable tourism, 14(2), 116-138.
Egri, Carolyn P., and Susan Herman. ‘Leadership in the North American environmental sector: Values, leadership styles, and contexts of environmental leaders and their organizations.’ Academy of Management journal 43.4 (2000): 571-604.
Presentation on Introduction to Environmental Leadership by Albert Brown at Arizona State University, August 22, 2019.
https://www.epa.gov/sites/production/files/2018-10/documents/ibm_case_study_draft_10012018_ibmeditsincorporated_epafinaledit_compliant.pdf
Remarks by the President at the GLACIER Conference — Anchorage, AK. (n.d.). Retrieved from https://obamawhitehouse.archives.gov/the-press-office/2015/09/01/remarks-president-glacier-conference-anchorage-ak.
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