¶ … Environmental sustainability has been increasingly embraced as an important agenda by government agencies worldwide. Environmental sustainability and sustainable development have become a component of government planning and policymaking. At the international level, the United Nations and the World Bank have adopted environmental sustainability goals in large scale development and training. Sustainable development is being applied in both urban and rural and in both technologically advanced and technologically underdeveloped nations. Pressure is increasing on a wide range of organizations to use environmentally sustainable practices in producing their products and services. Nevertheless, there are few easily accessible tools to help managers make decisions that will have the desired environmental outcome -- without compromising other crucial goals. Following the global economic downturn that was caused by the Great Recession of 2008, many organizational leaders may view environmental programs as being so much fluff, particularly when profit margins are already razor thin and the future is uncertain. In sum, the solutions to improved corporate approaches to environmental sustainability are both simple, in that many of the options available are inexpensive, easily adopted and administered and complex, in that developing an integrated network in which these organization-wide solutions can be aligned with corporate goals is a challenging undertaking by any measure. It is certainly one thing to advocate "green" corporate policies and take action in a piecemeal and knee-jerk reaction fashion, but it is quite another to formulate truly responsive and effective environmentally sustainable corporate practices that achieve the dual goal of reducing a company's carbon footprint while contributing to its bottom line in the process. Multinational corporations must find ways to protect the environments of emerging markets if they hope to maintain sustainable economic development. Dumping refuse and products that will generate or become solid waste in these developing countries may produce unintended consequences by causing damage to the environment, network image, and business-to-business relationships. The aftermath of this potential conflict will eventually motivate emerging markets not only to increase the level of environmentally-related laws and regulations but also to stimulate the enforcement of existing legislation. It is clear that although an individual firm's environmental footprint can be small, collectively they contribute substantially to environmental damage globally. The negative environmental impact of business needs to be addressed and the volume of research that provides innovative and practical solutions to drive changes in behaviour and practice does not reflect its significance. This paucity of research perpetuates policy-makers and businesses poor attitude to the issue and allows them to continue to ignore the environmental damage caused by multinational enterprises. Given the long-term implications, the primary objective of multinational corporations should be to meet the current economic needs of the local environment without triggering potentially catastrophic environmental events. Paramount among other considerations is the need to ensure that emerging market initiatives should pursue economic, environmental, and social goals that are aligned with developing sustainable emerging markets. These initiatives necessarily require structural transformation and effective governance, since sustainable development must meet the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable development strategic capabilities constitute the highest level of environmental responsibility, where the firm's overall strategy is driven by a strong sense of social-environmental purpose, calling for other firms (even competitors), governments (international, national, state, and local levels), environmentalists, academics, and others to work toward solving global climate change problems. Because such firms recognize the magnitude of the problems in the biosphere and their own internal limitations, they proactively organize research and technology consortiums to draw on the collective resources, skills, knowledge, and insights among multiple participants in deriving broad-based climate change solutions. Researchers have investigated the effects of various strategies for preserving the environment that are contingent on the behavior of consumers and business partners. Top management teams, including supply chain managers, are encouraged to promote product stewardship throughout their product's lifecycle, develop clean technology, and create strategic plans for promoting sustainability in emerging markets. Moreover, the research will show that environmental sustainability can be a path to improved performance and profitability for companies of all sizes and types, but particularly larger multinational corporations. Indeed, environmental sustainability is already a pressing issue ripe with problems, rich in learning possibilities, and potentially fruitful in respect of innovatory products, processes, new markets, and new regional opportunities. A number of large multinational corporations have already succeeded in translating their environmental sustainability initiatives into profits by aligning them with their overall corporate goals. As a result, these types of studies can help to fill in this gap in the current body of knowledge. Therefore, the overarching aim of this study was to develop timely and salient recommendation for the chief executive officer (CEO) of a large global company concerning a viable environmental and sustainability strategy. In furtherance of this primary aim, the objective of the study was to provide an outline and overview of the critical sustainability areas which should be included in the company's worldwide sustainability strategy. This aim is achieved through a review of the relevant peer-reviewed and scholarly literature, together with a critical analysis followed by a discussion of the findings that emerged from the research. This analysis is followed by a summary of the research in the conclusions, with a series of recommendations based on the primary themes that emerged from the research, designed for a CEO of a large global company seeking environmentally responsible and sustainable initiatives to help it achieve its organizational goals and develop a competitive advantage in the process. Finally, a reflective section presents the author's personal perspectives and insights that developed over the course of the research.
Table of Contents
Aims and Objectives
Literature Review, Analysis and Discussion
Conclusions
Recommendations
Reflective Assessment
Recommendations to a CEO of a Large Global Company for an Environmental and Sustainability Strategy
Environmental and economic priorities have too often been considered to be mutually exclusive -- that we can either have economic growth or environmental care at the expense of growth and prosperity. But environmental sustainability isn't an option, it's a necessity. -- Charlie Furniss, 2006
Aims and Objectives 500 words
In an increasingly globalized marketplace, identifying opportunities to achieve a competitive advantage represents a timely and valuable enterprise. In recent years, a growing number of companies of all sizes and types have realized a competitive advantage by implementing corporate strategies that are aligned with its goals while incorporating environmental sustainability initiatives. Many of these companies have managed to achieve a significant return on their investments in these environmental and sustainability initiatives, while others have fallen by the wayside of commerce despite their best efforts, making the study of the successful approaches a valuable enterprise as well. As Walker and his colleagues point out, though, this area remains better described than understood and there is a paucity of timely and relevant research available concerning these specific issues. For instance, Walker et al. emphasize that, "These issues go to the central challenge of environmental sustainability and business, for most businesses it is simply not core business. Standing on the periphery of the key tasks of business, to survive, grow, compete in a global world and make money for the owners and shareholders, environmental sustainability has yet to reach the psyche of many business leaders" (2010, p. 2). Further exacerbating the problem is a dearth of best industry practices, guidelines and other tools that managers need to implement and administer effective environmentally focused sustainability initiatives. For instance, Rusinko (2005) emphasizes that, "Pressure is increasing on a wide range of organizations to use environmentally sustainable practices in producing their products and services. Nevertheless, there are few easily accessible tools to help managers make decisions that will have the desired environmental outcome -- without compromising other crucial goals" (p. 54). Following the global economic downturn that was caused by the Great Recession of 2008, many organizational leaders may view environmental programs as being so much fluff, particularly when profit margins are already razor thin and the future is uncertain.
Consequently, studies such as this can help to fill in this gap in the current body of knowledge. Therefore, the overarching aim of this study was to develop timely and salient recommendation for the chief executive officer (CEO) of a large global company concerning a viable environmental and sustainability strategy. In furtherance of this primary aim, the objective of the study was to provide an outline and overview of the critical sustainability areas which should be included in the company's worldwide sustainability strategy. This aim is achieved through a review of the relevant peer-reviewed and scholarly literature, together with a critical analysis followed by a discussion of the findings that emerged from the research. This analysis is followed by a summary of the research in the conclusions, with a series of recommendations based on the primary themes that emerged from the research, designed for a CEO of a large global company seeking environmentally responsible and sustainable initiatives to help it achieve its organizational goals and develop a competitive advantage in the process. Finally, a reflective section presents the author's personal perspectives and insights that developed over the course of the research.
Literature Review, Analysis and Discussion 7,500 words
This section presents a review of the recent relevant peer-reviewed and scholarly literature concerning environmental sustainability in general and how environmental sustainability initiatives can help multinational corporations of different sizes and types achieve a competitive advantage in particular.
Literature Review. According to Michalisin and Stinchfield (2010), "There is widespread consensus that human activity has had a significant impact on global climatic patterns which will have important consequences for much of society. Although there has been much research on the relationship between corporate environmental performance and corporate financial performance, empirical testing of the association between proactive corporate climate-change strategies and financial (or accounting) performance is still in its infancy" (p. 123). Despite this dearth of research, these authorities speculate that firms that successfully implement strategies to lessen their effect on climate change should outperform competitors who are less proactive in such efforts (Michalsin & Stinchfield, 2010). Richey Jr., Mert Tokman, Robert E. Wright, Michael G. Harvey
Multinational corporations (MNCs) must find ways to protect the environments of emerging markets if they hope to maintain sustainable economic development (Ojah & Han 1997). Dumping refuse and products that will generate or become solid waste in these developing countries may produce unintended consequences by causing damage to the environment, network image, and business-to-business relationships (Lipman 2002). The aftermath of this potential conflict will eventually motivate emerging markets not only to increase the level of environmentally-related laws and regulations but also to stimulate the enforcement of existing legislation (Rugman & Verbeke 1998). Given the long-term implications, the goal of MNCs should be to meet the current economic needs of the local environment without triggering potentially catastrophic environmental events (World Resources Institute 1996). Above all, emerging market initiatives should pursue economic, environmental, and social goals (Dover et al. 1997; Khanna, Palepu, & Sinha 2005) which are in line with developing sustainable emerging markets. These initiatives necessarily require structural transformation and effective governance (Gautam, Bansal, & Pandey 2005; Weaver, Rock, & Kusterer 1997), since sustainable development must "[meet] the needs of the present without compromising the ability of future generations to meet their own needs" (World Commission on Economic Development 1987: 45).
Researchers have investigated the effects of various strategies for preserving the environment that are contingent on the behavior of consumers and business partners. Top management teams, including supply chain managers, are encouraged to promote product stewardship throughout their product's lifecycle, develop clean technology, and create strategic plans for promoting sustainability in emerging markets (Richey, Tokman, Wright & Harvey, 2005).
Environmental sustainability has been increasingly embraced as an important agenda by government agencies worldwide, but the first challenge in measuring environmental sustainability is to define the scope in conceptual terms (Cui, Hens, Zhu & Zhao, 2004). This point is also made by Lo and Marcotullio (2001) who report, "Despite the current focus on sustainable development, there is yet no agreement upon its definition. Inherently, there is a problem with the concept since it will differ with community perception. Despite the lack of rigor concerning the term, the important point to consider is that it is closely related to "environmentally friendly" development" (pp. 157-158).
Likewise, York (2009) emphasizes that, "Environmental sustainability is a vital goal, and we cannot get there if we do not think carefully about what it entails" (p. 206). In reality, economic and environmental sustainability are two inextricably interrelated features of business systems. In this regard, Lo and Marcotullio (2001) report that, "Economic sustainability, in a normative sense, supports a level of environmental sustainability chosen by society. The condition of the human-made environment, such as urban infrastructure, requires massive capital investment financed by either domestic or foreign sources and makes up an important aspect of a sustainable economy. On the other hand, economic sustainability, to a large degree, is also determined by environmental sustainability. Clean water and air are the prerequisites for efficient industrial development. In addition, the anthropomorphic environment is an important determinant in attracting foreign capital inflows. As Lo and Marcotullio (2001) point out, "Environmental quality is a pull factor for foreign capital. Therefore, environmental sustainability is an important part of the foundation of economic sustainability, and vice versa" (p. 68).
A useful framework for understanding the interrelationships between these issues is provided by Bhan (2010) who reports that the content dimension of the framework refers to the economic, social and environmental impacts (both positive and negative) of current multinational corporation practices and operations. The process dimension refers to how change within an multinational corporations is achieved over time. The adoption of environmental management changes can also be understood in terms of the interrelated dimensions of context, content, and process as illustrated in Figure __ below.
Figure __. The Environmental Management Nexus of Multinational Corporations
Source: Bhan, 2010
At the most basic level, it is suggested that environmental sustainability can be presented as a function of the following five phenomena:
1. State of environmental systems, such as air, soil, ecosystems and water;
2. Stresses on such systems in the form of pollution and exploitation levels;
3. Human vulnerability to environmental changes in the form of loss of food resources or exposure to environmental diseases;
4. Social and institutional capacity to cope with environmental challenges; and,
5. Ability to respond to the demands of global stewardship by cooperating in collective efforts to conserve international environment resources such as the atmosphere (Cui et al., 2004, p. 229).
For multinational corporations faced with dwindling revenues and a shrinking customer base, environmental sustainability may not be considered important enough to warrant attention from organizational leaders because of a lack of resources. Nevertheless, a growing body of research suggests that to the extent that multinational corporations achieve success in each of the foregoing functions will be the extent to which it also achieves a competitive advantage. For instance, Michalisin and Stinchfield report that the strategic capabilities underlying a sustainable development strategy strengthens a firm's strategic competitiveness in four fundamental ways as follows:
1. As the firm becomes recognized as a leader in working to solve the planet's climate change problems, its reputation may help the firm attract and retain highly talented employees that share similar values and convictions about corporate environmental responsibility
2. The leading-edge competencies and insights on business and environmental sustainability gained from working collaboratively with multiple constituencies is a socially-complex and partly tacit in nature, making it difficult for competitors to easily replicate.
3. The relationships developed in these collaborative efforts may give the firm exclusive access to critical suppliers of finite natural resources, provide access to countries that allow few if any foreign competitors, help the firm increase its market share of "green" customers, and allow the firm to gain the political acumen needed to be at the forefront in crafting new environmental legislation
Sustainable development strategic capabilities constitute the highest level of environmental responsibility, where the firm's overall strategy is driven by a strong sense of social-environmental purpose, calling for other firms (even competitors), governments (international, national, state, and local levels), environmentalists, academics, and others to work toward solving our global climate change problems. Because such firms recognize the magnitude of the problems in the biosphere and their own internal limitations, they proactively organize research and technology consortiums to draw on the collective resources, skills, knowledge, and insights among multiple participants in deriving broad-based climate change solutions (Michalisin & Stinchfield, 2011). Moreover, there are even signs that minimal environmental sustainability practices are going to be demanded of multinational corporations by consumer groups as evinced by the Consumer Charter for Global Business that stipulates, in relevant part that:
Consumers have the right to expect that all goods produced, distributed and marketed by the corporation are:
1. Produced in such a manner that causes as little damage as possible to the environment, both directly and indirectly;
2. Distributed in such a manner as to minimise damage to the environment, both directly and indirectly;
3. Transported in such a manner that minimises damage to the environment, both directly and indirectly;
4. Corporations will, insofar as it is reasonable, ensure that their products are disposed of in a manner that is consistent with the principle of environmental sustainability (Consumer charter for global business, 1999).
Companies that achieve a high degree of return on investment in these areas are typically characterized by:
1. Assisting countries where they operate in addressing environmental problems associated with greenhouse gas emissions,
2. Working with government officials toward stricter policies on air standards; and,
3. Providing support to regions impacted by natural disasters (Michalisin & Stinchfield, 2011).
In sum, these multinational organizational leaders assume a long-term view about the future state of the planet in which they operate and the role they play in promoting societal well-being (Michalisin & Stinchfield, 2011).
Environmental sustainability is defined as the ability to produce high levels of performance in each of the foregoing five dimensions in a lasting manner and refers to these dimensions as core 'components'. Scientific knowledge does not permit specify precisely what levels of performance are sufficiently high to be truly sustainable, especially on a worldwide scale. Nor are developers expected to identify in advance whether any given level of performance is capable of being sustainable. Establishing the thresholds of sustainability remains an important endeavor, albeit one that is complicated by the dynamic nature of economic factors such as changes in technology over time (Cui et al., 2004).
Environmental sustainability and sustainable development have become a component of government planning and policymaking. At the international level, the United Nations and the World Bank have adopted environmental sustainability goals in large scale development and training. Sustainable development is being applied in both urban and rural and in both technologically advanced and technologically under-developed nations (Leuenberger, 2007). Although environmental sustainability is not a new concept, of course, the recent increased focus on it warrants discussion. Concerned with environmental health, systems integration, and intergenerational equity, environmental sustainability offers an opportunity to move beyond market-based decision making mechanisms toward plans that allow long-term and concurrent benefits for multiple stakeholders (Leuenberger, 2007).
A recent study by Walker, Redmond and Giles (2010) found that environmental sustainability is a critical issue, yet global research suggests that positive changes in business practices that would help achieve this are limited, especially in small and medium enterprises (SMEs). It is clear that although an individual firm's environmental footprint can be small, collectively they contribute substantially to environmental damage globally. The negative environmental impact of business needs to be addressed and the volume of research that provides innovative and practical solutions to drive changes in behaviour and practice does not reflect its significance. This paucity of research perpetuates policy-makers and businesses poor attitude to the issue and allows them to continue to ignore the environmental damage caused by businesses, especially those in SMEs, as SMEs are less visible than their large business counterparts (Walker et al. 2010).
Engaging in environmental management is frequently seen as core business for large business but less so for small business. However, this view is misleading for at least two reasons. First, not all large businesses have a substantial environmental impact while some small businesses do. Second, the collective impact of small and medium enterprises is estimated to be higher than that of large businesses and households. In Australia, the definition of small, medium and large business is under 20 employees, under 200 employees and 200 or over employees respectively. These businesses cover every industry, are led by both male and female owners of every nationality, education and age. To consider their response to environmental sustainability as one group or to look at them in isolation could be detrimental to economic, environmental and social outcomes. For example, tools used in larger firms to manage their environmental impact may not apply or be replicable in smaller firms. Engaging with the small business community to bring about the required change is a significant challenge to policy-makers, as this business cohort is yet to be convinced of the business case to change their environmentally unsustainable behaviour.
For some time the environment has suffered in favor of economic rationalism (Walker et al. 2010). However, smart business leaders are beginning to see that sustainable business requires a direct link to be made between economic outcomes and environmental concerns. That is, they are seeing that a more efficient business not only contributes to being an economically successful business, but that sustainability in the 21st Century will require environmentally conscious management. There is however some confusion about the role that business has, and the day-to-day work that needs to be completed, to manage the environment. For example, small business owners have questioned their role and how they are to acquire the resources to play any role in environmental management, without compromising their core business activities (Walker et al. 2010).
These issues go to the central challenge of environmental sustainability and business, for most businesses it is simply not core business. Standing on the periphery of the key tasks of business, to survive, grow, compete in a global world and make money for the owners and shareholders, environmental sustainability has yet to reach the psyche of many business leaders. This is a key role for academics and stakeholders, to raise the importance of this issue so that it becomes core business for every business leader (Walker et al. 2010).
According to Buckingham and Theobold, a growing body of research suggests that environmental sustainability and sustainable development are increasingly viewed as desirable outcomes but the concepts remain misunderstood by many observers. In this regard, Buckingham and Theobold report that, "The term environmental sustainability is used to signify a particular aspect of the broader sustainable development debate, where the former refers specifically to measures to ensure that the environment is not depleted or damaged further than it has already been, and the latter encompasses a broader range of social economic and environmental goals" (2003, p. 1).
The basic meaning of sustainability is the capacity for continuance more or less indefinitely into the future. The past twenty years have seen a substantial accumulation of evidence that, in aggregate, current human ways of life do not possess that capacity, either because they are destroying the environmental conditions necessary for their continuance, or because their environmental effects will cause unacceptable social disruption and damage to human health. The environmental effects in question include climate change, ozone depletion, acidification, toxic pollution, the depletion of renewable resources (e.g. forests, soils, fisheries, water) and of non-renewable resources (e.g. fossil fuels) and the extinction of species (Ekins 2000, p. 70).
In their study, "Political and Social Foundations for Environmental Sustainability," Whitford and Wong (2009) report that numerous recent studies have offered solutions to the problem of achieving environmental sustainability -- the long-term preservation of our environment for the future. Scholars have offered any number of principles for development, design approaches, leadership lessons, measurement strategies, production ethics, and change strategies to guide societies away from older forms of engagement with the environment to new (and presumably better) ways of doing things. Many policy analysts see technological change and development as spurring the search for growth patterns that balance the economy and quality of life while maintaining the environment. Of course, it is difficult to find a conclusive combination of factors that describe a country's level of sustainability. Moreover, there is no clear understanding of what factors underpin sustainability (Whitford & Wong 2009).
Analysis. For instance, Ekins notes that, "A way of life is a complex bundle of values, objectives, institutions and activities, with ethical, environmental, economic and social dimensions. While current concern about unsustainability largely has an ecological basis, it is clear that human situations or ways of life can be unsustainable for social, economic and ethical reasons as well. The pertinent questions are: for the environment, can its contribution to human welfare and to the human economy be sustained? For the economy, can today's level of wealth-creation be sustained? For society, can social cohesion and important social institutions be sustained? And ethically, influencing all the other three dimensions, do people alive today value other people and other life forms, now and in the future, sufficiently highly?
Provided that the interrelatedness of the different dimensions is borne in mind, it can be useful to distinguish between the implications for sustainability of human mores, relationships and institutions (the social dimension); of the allocation and distribution of scarce resources (the economic dimension); and of the contribution to both of these from, and their effects on, the environment and its resources (the ecological dimension). Clearly human relationships may be socially unsustainable (for example, those leading to civil war) independently of economic or ecological factors; and a particular allocation of resources may be economically unsustainable (leading, for example, to growing budget deficits) independently of social or ecological factors. Similarly, a given level of economic growth may be unsustainable for purely economic reasons, insofar as it is leading to increased inflation or balance of payments deficits; on the other hand, it may be socially unsustainable insofar as it is increasing income inequalities or undermining structures of social cohesion such as the family or community; or it may be environmentally unsustainable insofar as it is depleting resources on which the economic growth itself depends (Ekins 2000).
One way of illustrating the complexities involved is through the matrix shown in Table __ below where the rows show the types of sustainability, and the columns the influences on those types, across the same dimensions. In the example above, the sustainability of economic growth would be considered across the second row, with environmental influences (e.g. resource depletion) in box A, economic influences (e.g. inflation, balance of payments) in box B, and social influences (e.g. social cohesion) in box C. Possible ethical influences on the different dimensions of sustainability would be placed in box D (for example, concern for future generations or non-human forms of life), box E (for example, attitudes to poverty and income distribution) and box F (for example, attitudes to the family or the legal system). With regard to environmental sustainability, this may be influenced by purely environmental factors (box G, e.g. earthquakes, volcanic eruptions), by economic impacts (box H, e.g. pollution), or by social arrangements (box I, e.g. systems of property rights) (Ekins 2000).
Table
Types of sustainability and their interactions
Types of sustainability
Influences on sustainability
Ethical
Environmental
Economic
Social
Environmental
D
G
H
I
Economic
E
A
B
C
Social
F
Environmental sustainability may always be considered a desirable characteristic of a human situation, though some states of such sustainability may be better than others. In contrast, economic and social sustainability have no such happy connotation. When judged by the length of time for which they were sustained, some of the most successful societies were also among the most exploitative, where the abuse of human rights was greatest. Also, poverty and the evils which go with it may be all too sustainable. Similarly, in many countries structural unemployment is showing worrying signs of long-term sustainability (Ekins 2000).
Today, companies continue to struggle to regain lost trust of customers, employees, shareholders, governments, and communities. In response, a growing number of enlightened companies have begun contributing to sustainable development goals by adopting corporate responsibility strategies aimed at aligning the self-interest of the corporation with the greater public good in ways that add to the value of the firm and society. Over the years, the business case for sustainable development has continued to grow, although not as fast as many hoped. Business leaders have begun to see the connection between sustaining the planet and sustaining the business enterprise. Both require balancing acts between long and short-term and among influential stakeholders. Too much either way means disaster. The futures perspective resonates because companies that live only in the present are less likely to innovate or notice disruptive technologies coming their way. However, banking on future needs (e.g., dotcoms) can be equally disastrous. With the rapid pace of technology advances, uncertain and changing political landscapes, globalization, and instantaneous communications, business leaders are recognizing that strategies as usual carry more risk and less reward than at any time over the past thirty years (Holliday et al. 2002). Sustainable development is one way to think about new ways to grow and prosper.
The critical question today is how to build sustainable development processes into the overall strategy of the firm in order to create real firm value. Corporate responsibility represents a way for the firm to engage the process of sustainable development that aligns the self-interest of the firm with the greater public good. This concept has evolved over the past twenty years under a variety of names-philanthropy, enlightened self-interest, social responsiveness, corporate social responsibility, strategic investment, corporate citizenship. While the concept still lacks a universal definition, most explicitly or implicitly connect the goals of enterprise success with ethical behavior and respect for people, communities, and the natural environment. Carroll (1981) captures the essence of such definitions in four dimensions. The foundation of a responsible company is to be profitable, but not at any cost. Society also demands the company obey the law, expects it to act in an ethical manner toward all stakeholders and to be a good corporate citizen in the communities in which it lives and operates. As with sustainable development the growth of strategic corporate responsibility is most directly linked to its impact on financial performance. The evidence of the linkage continues to grow, although results are not conclusive, primarily because of issues of measurement and lack of developed theory (Hutton et al., 2007, p. 90).
To date, one could argue that the conceptual failings of the sustainable development paradigm-chiefly its vagueness and inability to guide concrete policy choices-have been driven by the reluctance of sustainability proponents to admit the full extent of incompatibility between their paradigm and that of the market-liberal order. On the other hand, much of the sustainable development paradigm's international salience is no doubt attributable to its underdetermined nature: Amorphous and ill-specified, the concept allows various parties with potentially conflicting agendas to coexist under the same big tent" (Kysar, 2005, p. 2110).
Discussion. In recent years, the controversial and undesirable practices of multinational corporations (MNCs) have become easily or increasingly known across cultures at a much faster pace through the Internet and global media, and they create negative images instantly. These images of MNCs, in turn, may impact negatively on the corporate goodwill and equity. The controversial practices of multinational firms also lead to protests by activists against a wide range of issues including job losses in industries under attack from foreign competitors, downward pressure on the wage rates of local unskilled workers, environmental degradation, and cultural imperialism resulting from MNCs' activities, especially those in entertainment business. MNCs that are in the process of containing this negative impact have actively engaged in social responsibility programs, and paying attention to their ethical and moral obligations (Batra, 2007, p. 306).
For instance, Park, Russell and Lee (2007) suggest that the emergence of debate on the environment has attracted attention regarding a possible contradiction between promoting free markets and meeting domestic environmental objectives. In particular, there has been a concern for environmental degradation in the process of growth and globalization, since damage to the environment is thought by some to be linked to increased economic activity. Given the interdependent and trans-boundary nature of collective exhaustible and renewable natural resources, environmental issues are more subtle. The popular view among the environmental NGOs based on the pollution-haven hypothesis posits that trade liberalization, open markets, increased foreign direct investment and multinational corporations (MNCs, hereafter) will encourage the flow of low-technology and polluting industries to developing countries and trigger a 'race to the bottom' in environmental standards. The other view, the pollution-halo hypothesis, suggests that trade liberalization or foreign direct investment encouraged by the MNCs may actually help elevate worldwide environmental standards through the transfer of efficient technology and established management practices (Park et al. 2007).
The dimensions of culture identified by Hofstede can be briefly described as follows:
1. Risk- Avoidance, varying from high to low, represents the degree to which the people in a society consider themselves threatened by the risks posed by natural and human forces. A high value implies that the society puts greater effort into trying to reduce these risks than does a society low on this dimension.
2. Individualism vs. Collectivism is an attempt to capture the relative importance that people of a society place on individual as opposed to shared interests. Being on the individualistic end of this scale implies a reduced tendency to form cooperative ventures within the society.
3. Power Distance, varying from high to low, is designed to measure how equally or unequally power is distributed within a society and how readily inequality is accepted. In high Power-Distance cultures, power is more concentrated and the powerless tend to accept this as a fact of life.
4. Masculine vs. Feminine represents the social manifestation of the elements of individual personality and behavior frequently associated with human gender. In particular, Hofstede associates the feminine end of the scale with caring for others and for quality of life. He associates the masculine end with assertiveness in the pursuit of material goals.
Managing the environment for sustainability is almost always a collective enterprise. Truly, the task is a collective enterprise in which small benefits accruing to many individuals are implicitly or explicitly found to outweigh the costs to a small number of polluters or exploiters, in which arguments about future uncertain outcomes are often used to justify the acceptance of present sacrifices, and in which the goal is often described as quality of life. The outcome is expected to be governed by cultural factors that suggest the following eventualities in the cross-cultural context as they apply to environmental sustainability initiatives among multinational corporations:
1.
Higher risk-avoidance cultures will exhibit higher levels of environmental sustainability.
2.
Highly collectivist cultures will exhibit higher levels of environmental sustainability.
3.
Low power-distance cultures will exhibit higher levels of environmental sustainability.
4.
More feminine cultures will exhibit higher levels of environmental sustainability.
Two subsidiary and unsurprising hypotheses are offered concerning the roles of the socioeconomic variables per capita income, and educational attainment. The former is measured as per capita gross national product (GNP), the latter by the percentage of the population aged 20-24 that is enrolled in post-secondary schools and universities. The hypotheses are:
5.
Higher income, with cultural variation controlled for, will be associated with higher levels of environmental sustainability.
6.
Higher education levels, with cultural variation controlled for, will be associated with higher levels of environmental sustainability.
The overall level of the ESI in a feminine culture is predicted to be higher than in a masculine culture, for equivalent income, education, etc. As Hofstede (1980) indicates, since feminine cultures emphasizes such values as being more attentive to the needs of others and pursuing the quality of life, it can be more conducive to a high level of environmental consciousness and sensitivity, which can eventually lead to higher levels of ESI. When people in masculine cultures reach the crossroads of a decision, their mental programming provides pressure to favor achieving goals or obtaining material gains, even at the sacrifice of others well being. This goal oriented masculine culture tends to ignore the environmental risks and judge them as less problematic. This increases their tendency to negotiate environmental concerns for more swift achievement of their goals by bypassing the law or cutting corners. Even if we have to exercise every caution not to confuse this cultural dimension with the characteristics of the gender, since the profile of feminine culture seems to encompass values that are more typical of women than of men, eco-feminism can lend us some insight as to how a feminine culture can be more inclined to be pro-environmental than a masculine culture. Eco-feminism basically claims that women are closer to nature than men because both eco and feminism sustain life, and both are colonized and exploited within the male-dominant society. Thus, women can develop more of a sense of solidarity with nature. Since people in feminine cultures emphasize values as typical female members do, such as caring for others, interdependence and quality of life, as compared to goal achievement, they tend to care more about public goods including the environment, which is so vital to the well-being of other members in the society. This kind of cultural orientation will be undoubtedly more conducive to enhance environmental sensitivities and help people maintain a higher level of ESI (Park et al., 2007).
The significant positive coefficient on EDU supports our hypothesis #6. The positive relation between the level of education and the degree of natural environmental consciousness has been already corroborated by previous research. This result seems quite sensible because people who have a higher level of education are more likely to be aware of the complex relationships between mankind and environment, and understand the long-term consequences of environmental actions. This intellectual capability acquired through education, can lead to a higher level of environmental sensitivity. The study by Park et al. identified a statistical link, at least for the sample of 43 countries, between two dimensions of national culture and environmental sustainability measured at the national level by the ESI. Specifically, these researchers found that both power distance and masculinity are significantly negatively related to the ESI, while education is positively related (Park et al. 2007). These findings suggest that multinational corporations seeking to formulate strategies that promote environmentally sustainable practices among their far-flung subsidiaries must take these types of cross-cultural differences into account when implementing and administering these types of programs in other countries, particularly in developing nations where the emphasis on environmental sustainability may be weak compared to the host country.
Conclusions 2,000 words
The research showed that environmental sustainability can be a path to improved performance and profitability for companies of all sizes and types, but particularly larger multinational corporations. As Cook and Morgan (2000) emphasize, environmental sustainability "is already a pressing issue ripe with problems, rich in learning possibilities, and potentially fruitful in respect of innovatory products, processes, new markets, and new regional opportunities" (p. 220). A number of large multinational corporations have already succeeded in translating their environmental sustainability initiatives into profits by aligning them with their overall corporate goals. For instance, Smoucha (2011) recently reported that GE sustainability strategy saved the company £81 million since implementing a comprehensive sustainability strategy five years ago. The global infrastructure, finance and media company launched its Ecoimagination strategy in 2005. GE president and ceo of UK, Benelux and Ireland Mark Elborne, said it "underpins everything we do."
Likewise, Ecoimagination is a business initiative aimed at building innovative solutions to meet GE's customer's demand for more energy efficient products. In 2005, GE committed to doubling its investment in innovation and technology to £94 million annually by 2010. It reached that target a year ahead of plan. Now the company says it is more competitive in the markets it serves and has saved itself and its customers millions of pounds. "Clean solutions can and should drive profitability and growth while also making the planet a better place," Elborne said. Elbourne was speaking at the BASE (Business and A Sustainable Environment) 2011 conference today, where he and other business leaders shared their sustainable business strategies with other businesses, large and small.
Cleantech products GE has launched in recent years include the GEnx aircraft engine, which has a 15 per cent lower fuel burn during cruise than the platform it replaces, and a 2.5-megawatt wind turbine, which is more reliable, produces better performance and is better value than earlier versions. Investing in Ecoimagination, enabled GE to generate $70 billion in sales in the first five years. Across its operations, meanwhile, the company has been reducing its environmental footprint too; greenhouse gas emissions across GE's operations were down 22 per cent in 2009 compared to 2004. The company is now committed to making its operations twice as energy efficient by 2015.
GE was not the only company at BASE proving that creating sustainable business strategies that encompass entire operations bring financial as well as environmental benefits. For instance, CISCO has developed a four-part strategy to achieve its environmental aims: establishing an eco board, executing a vision strategy, having greener operations and having greener solutions. The IT sector makes up around two per cent of global carbon emissions, but it also offers options for reducing carbon emissions in other sectors, said CISCO ceo UK and Ireland Phil Smith. Using technology creatively and effectively can help businesses cut their costs and their carbon emissions. Doing so has allowed CISCO to cut its carbon emissions by 27 per cent since 2007. Smith sees the possibility of more video conferencing to cut down on business travel as one way technology will help reduce emissions in the future. However, he does not believe this will completely remove human interactions as a form of communication. "Technology shouldn't become the thing that controls you," Smith said. "But it certainly should be something that you use to a hugely positive advantage, and I think there are great opportunities to do that." (Smoucha, 2011, para. 4).
A recent analysis by Fariborz Ghadar, the Director of the Center for Global Business Studies at Penn State, found that CEOs need to ready their industry for global tectonics, the underlying trends that, while gradual and often below the radar screen of business executives, have a significant impact on corporate strategy and managers' ability to implement them over the next two decades. Like the movement of tectonics, these trends, while slow, will eventually cause major quakes, with turbulent and dramatic results on the business environment of the future. Corporate sustainability over the next 25 years will depend on three major trends in the field of governance over the next twenty-five years: the spread of democracy; corporate governance; and the influence of non-governmental organizations on multi-national corporations. Multi-national companies that fail to do so will jeopardize their futures. Democracy will continue to spread in the world and create long-term improved conditions for market-based economies. The spread of democratic societies tend to create for multinational companies a clean, fair and efficient governance environment, which is structured and strengthened by each government's commitment to, and practice of, a series of international rules in political, economic and societal areas. In 1950, only 22 out of the 154 countries (14.3%) were defined as democracies by Free World. In 2000, the same number has grown to 119 out of 192 (62%) countries and this trend is expected to continue in the next twenty-five years (Ghadar, 2011).
The spread of democratic societies tend to create for multinational companies a clean, fair and efficient governance environment, which is structured and strengthened by each government's commitment to and practice of a series of international rules in political, economic and societal areas. Between 1990 and 2001, the number of counties that ratified the six major human rights conventions and covenants has gown from 10% to 50% of all countries. As of Jan. 1, 2002, 144 countries have gained their membership of the World Trade Organization, the only global international organization dealing with the rules of trade between nations.
More and more countries adopting international rules will present a larger and better arena for multinational companies to run and grow at home and abroad, an environment where capital, labor, commodities, technology, and information can flow more freely across the borders of nation states. No single business can afford to ignore or lose this kind of opportunity. Beyond that, multinational companies should work actively to promote legal and judicial reform and challenge governments to become more transparent and predictable.
Excessive business regulation and complex procedural systems usually result in the abuse of power and the slowdown of business activities. The quick expansion of the global market put enormous power in the hands of multinational companies. In 1999, among the top 100 economies of the world, 46 were corporations instead of nation states. Nonetheless, in the wake of the scandals of Enron and WorldCom, people realized that the accountability and transparency of corporate governance could never be over-emphasized. Corporate governance will be more accountable and transparent in the next twenty-five years. My research in the past has shown that the higher the perception of corruption, the lower a country's economic development level. Business leaders of the multinational companies should once again focus on the fundamentals of their businesses, such as personnel, systems, and sound investment, rather than make reckless moves or resort to questionable business models, like Enron changing from a solid utilities company to a dangerous energy trading company.
Multinational companies need to update their risk management systems, dealing with not only the financial risks, but also the commercial, policy, safety, and ethical risks. Additionally, they ought to hire and promote more employees that are willing to tell the truth, challenge the decisions and put their credibility and career on the line in the interest of their companies, just like the three courageous women who were honored by Time as People of the Year 2002. More accountable and more transparent corporate governance will create a new set of business values. Business leaders will not just make money for their stockholders; they are expected to work for the interests of all of their stakeholders-employees, customers, suppliers and communities in which they operate. Failure to address the concerns of any of the stakeholders would be costly, if not disastrous. To settle the Exxon Valdez oil spill, Exxon Mobile has paid $300 million to the affected residents and businesses, $2.2 billion for the cleanup of the seashore, $1.0 billion for environmental studies and conservation programs, and finally $5.0 billion as punitive fines.
On the other hand, a company's social consciousness can also be a boost of an its image and business. For example, the number of socially screened mutual funds in the United States increased from 168 funds in 1999 to 230 funds in 2001; the total of United States managed investment assets grew only 22% from 1999 to 2001, but socially screened assets under professional management increased by 36% in the same period.
The third trend of governance is that non-governmental organizations (NGO), such as Green Peace, will play increasingly important roles and impose greater influence on government and multinational corporations. There are 2091 NGOs that hold consultative status at the United Nations, compared to 928 in 1991, and 41 in 1948. These NGOs contribute information and expertise, advocate policies on behalf of their interests and help implement those policies through various international institutions. Estimates show that NGOs channel over 15% of total overseas development aid.
Over the next twenty-five years, Ghadar predicts that these NGOs will have more resources to expand their activities and will become more confident of their power and more confrontational. They will be better organized, more media savvy, more active as stakeholders and more connected by the Internet and telecommunication technologies. Meanwhile, government and corporations will expect non-governmental organizations to meet the similar accountability and transparency standards. NGOs themselves need to keep the balance between volunteerism, which is the defining character of NGOs, and the professionalism, which is necessary for NGOs to operate competitively in the non-profit environment.
To set up constructive relationship with NGOs, Ghadar recommends that multinational corporations report to the public their environmental and social performance on a regular basis, design, manufacture and distribute products that address public concerns about environment, resources use and health. More importantly, they must learn how to work with NGOs to promote internal reforms, improve profitability, enhance reputation and, in many cases, earn their tickets to the emerging markets.
Global strategy or management teams must prepare for these tectonic shifts. While it is impossible to make an exact prediction, firms should develop two or scenarios of what their business environment is likely to look like in a few years. After developing the scenarios, firms need to determine strategies to be successful in each of their predictions for the upcoming environment. Once the strategies are in place, management teams must devise metrics or indicators to follow to decide which of the scenarios is becoming reality and how the firms need to reorient their strategy implementation. Whether and how well multi-national corporations can grasp the opportunities and avoid the risks relating to these trends will determine their fate in the first quarter of the twenty-first century (Ghadar, 2011, para. 3).
Recommendations 1,000 words
Although every organization is unique in some ways, it is possible to follow some well established steps to implementing and administering environmental sustainability in organizations of all types of sizes using the steps set forth in Table __ below.
Table
The Expanding Deming Cycle for Implementing and Managing Environmentally Sustainable Practices in Organizations
Stage
Actions
Comments
The Plan Stage
1. Perform an audit of environmentally sustainable practices.
2. Determine what practices are currently being used.
3. Determine if practices are consistent with government and industry regulation.
4. Identify what mandates exist for future regulation.
5. Examine what practices are stakeholders requesting/requiring.
6. Determine what practices are competitors and others using (industry and generic benchmarking).
7. Use audit to identify and evaluate environmentally sustainable practices that can/must be implemented in the short, intermediate, and longer runs.
8. Set goals and identify outcomes measures -- also identify potential competitive outcomes (e.g., waste reduction can reduce manufacturing cost, etc.)
9. Develop action plan.
10. Identify a trial/limited plan -- e.g., piecemeal practices that can be implemented in shorter run, and/or practices that are easier to implement (e.g., reduce manufacturing waste; reduce energy consumption, etc.), and/or practices in one department, division, etc.
11. Identify goals and outcomes measures.
12. Communicate plan and goals.
13. Provide education and training about environmental sustainability and the action plan.
14. Ensure broader-based organizational participation to increase probability of acceptance and success.
1. In the plan stage, the current situation is studied, data is gathered, and a plan is developed for action.
2. The plan stage can start with an audit of current environmentally sustainable practices, including their compatibility with current and future regulation. Managers should also evaluate requests and demands for environmental sustainability by stakeholders. In addition, managers can use competitive or generic benchmarking to investigate sustainable practices used by competitors and others. Competitive benchmarking evaluates the organization's sustainable practices relative to those of competitors. Generic benchmarking evaluates the organization's sustainable practices relative to organizations that are best in their class with respect to sustainable practices, irrespective of the industry that is involved.
3. Finally, managers can develop an action plan, which would identify a trial or limited plan to implement sustainable practices, including goals and outcomes measures. This trial plan would limit implementation to one department, section, or area, and would specify environmental practices that are relatively quick and easy to implement, so that organization members could experience positive outcomes.
The Do Stage
1. Implement trial plan.
2. Celebrate goal achievements -- even small victories.
1. The do stage consists of implementing the plan on a trial or limited basis.
2. In the do stage, the trial plan is implemented and goal achievements are celebrated. In the study stage, the trial plan and goal achievements are evaluated. Participants ask whether additional problems or opportunities from the trial plan can be addressed. If the trial plan was limited to one department or sub-section, perhaps it could be expanded to other subsections or departments.
The Study Stage
1. Evaluate trial plan and goal achievements.
2. Determine if additional problems or opportunities be addressed (e.g., change to recyclable packaging to further reduce waste; investigate/use renewable energy sources).
3. Expand trial plan to a broader plan (e.g., expand to larger portion of organization, and/or increase number of practices).
4. Identify goals and outcomes measures.
The study stage determines whether the trial plan is working and investigates any additional problems or opportunities with the trial plan.
The Act Stage
1. Implement broader plan, including revisions from Study stage.
2. Evaluate goal achievements and outcomes -- celebrate goal achievements.
3. Determine if further problems or opportunities be addressed? Review what was learned for the next round of the cycle.
1. In the act stage, the final plan (as tweaked in the study stage) is implemented.
2. In the act stage, the broader plan -- a revised and expanded version of the trial plan -- is implemented, and goals and outcomes are evaluated. Participants ask what further problems or opportunities can be addressed, and what has been learned that can be incorporated into the next iteration -- which is a return to the plan stage.
Return to Plan Stage
1. Incorporate learning from Act stage.
2. Identify and evaluate next sustainable practices to be implemented.
3. Target more challenging practices (e.g., environmental redesign of a product or process).
The improvements that result from the final plan inspire further improvements and a return to the plan stage -- and the rest of the cycle.
Return to Study Stage
Develop a trial plan for this stage of the cycle.
Source: Rusinko 2005, p. 56
The framework set forth in Table __ above is highly flexible and managers can and should adapt it in a way that complements their own organizational culture and their organization's or department's progress with respect to environmentally sustainable practices. Organizations that are farther along in implementing sustainable practices would implement the stages in Figure 3 at a different pace and to a different degree than those that are just beginning to investigate sustainable practices. (Rusinko, 2005, p. 56
Managers can use the information from the audit and benchmarking to identify and evaluate a set of sustainable practices that must or can be implemented in the short, intermediate, and longer runs, including goals and outcomes measures. (Since the development of goals and outcomes measures varies greatly depending upon organizational audits, resources, and environments (Rusinko, 2005, p. 57).
Managers should be sure to include potential competitive outcomes of sustainable practices. For example, energy and waste reduction can reduce manufacturing cost, and companies can increase revenues through sale of waste products, sale of environmental expertise, etc. Since this framework focuses on continuous improvement, the iterations through the cycle are continuous. Hence, this framework can allow managers to steadily advance their organization's degree of environmental sustainability and to progress at a pace appropriate for them. As with QM and any type of organizational change, top management support is the key to successful environmental initiatives (Rusinko, 2005, p. 57).
Reflective Section 3000-word
"Sustainability" has come to have many different meanings. It's the latest buzzword among business, government, and nonprofit entities. Business leaders must be wondering if it's just the latest management fad of a concept that will fundamentally change how businesses are managed and measured. Sustainability, though, is more than a fad, but rather is creating a permanent shift in the very nature of business. Since the advent of the paradigm of sustainable development in the 1980s, the private sector has been shifting from a narrow economic conception of responsibility toward a comprehensive approach that attempts to balance economic objectives with environmental pressures and changing societal expectations (Crews, 2007). Sustainability as a concept is based on the integration of three historically separate communities: those primarily interested in profits, the planet, or people. How can business leaders manage this juggling act? Should the strategy be to treat them as separate communities as an emerging coalition? There is a tendency to view the three communities as contradictory, with competing interests. This results in a balancing act, in which the emphasis is on trade-offs among the three communities rather than on a synergistic approach seeking mutual gain. The problem is exacerbated by separate training of experts in the three fields, the collection of data in each category, and the frequent division of government mandates into separate economic, social, and ecological bodies (Crews, 2007).
As Baram emphasizes, "Policies for sustainable development must be brought to bear on the major proponents of developmental activities: private multinational firms and public agencies. Multinational corporations (MNCs) are aggressively seeking new resources, markets, joint ventures, and facility sites. Recent studies show that such global expansion is growing significantly because 'it pays'" (1999, p. 65).
For instance, Michalisin and Stinchfield emphasize that, "As the earth's natural capital diminishes and the earth's ecosystems change in ways that negatively affect society, firms need to examine the natural resources they use and how they use them for their own continued viability. Otherwise, valuable and unique environmental resources and ecological services, most lacking strategically equivalent substitutes, will become scarcer. As firms recognize the constraints imposed by the natural environment, environmental sustainability will become an important part of the strategic management process in sustaining their resource-based advantage(s)" (2011, p. 125). This point is also made by Hawser (2007) who reports, "Multinational corporations are waking up to the fact that being "green" is not just for environmentalists. A number of factors have convinced big business to go green, including the need to reduce the risk to business from the rising cost of oil and other energy prices" (p. 6).
The intensive internal and collaborative effort to produce environmentally-friendly products encompasses the philosophies underlying both pollution prevention and product stewardship strategies. (Michalisin & Stinchfield, 2011).
While multinational corporations contribute a relatively small amount to the global economy, they have large local economic, social, and environmental impacts in developing countries. In the late 1990s, the direct investment of multinationals emerged as the primary source of capital for developing countries, far outstripping public sources such as the World Bank and foreign aid. The social and environmental regulation of industry is vastly different in different parts of the world. Even in such similar industrialized countries as Canada, the United States, and Germany, there are different social norms and expectations for industry. The gaps are largest, however, between the 30 rich, developed member countries of the Organization for Economic Co-operation and Development (OECD) as a whole and the remaining 170 or so developing and transition economies of the world.
In general, OECD countries have primarily democratic forms of government, which strongly embrace civil and political rights and the rule of law. These countries have a large, generally affluent middle class. Many developing countries, on the other hand, are either fledgling democracies or are ruled by authoritarian elites. Civil society is often weak or repressed, and ordinary people are poor. In the United States, per capita income in 2000 was $25,379. In Mexico, it was $4,400, and in Vietnam, $370. The global reach of investment and production thus poses a dilemma for western multinational corporations and their stakeholders. The crux of the dilemma is that markets are global, while regulation and ethics are not. In the absence of either global or national norms, multinational corporations are often left to self-regulate -- that is, to set their own standards or to simply follow local practice in the different countries in which they operate. Local practice, however, can often involve a lackadaisical attitude to industrial pollution, a free-for-all attitude to resource exploitation, and widespread corruption in the interface with foreign companies, as well as the violation of internationally accepted human rights.
With its practice of forced labor, forcible relocation, and uncompensated expropriation, the government of Burma offers an egregious example. The widespread, devastating pollution in the Amazon at the hands of foreign oil exploration and drilling operations is another example. In short, the global environmental and human rights dilemmas faced by multinational corporations stem fundamentally from regulatory failures. Markets, investment, and incentives span borders while the environmental and social regulation of industry remains national. Many host countries in the developing world, however, lack the technical capacities, physical and institutional infrastructures, and the political will to provide environmental and social oversight of business. Faced with a central ethical dilemma of globalization, western multinational corporations have adopted one of three broad strategies to deal with environmental and social practices in developing countries.
Table
Broad Strategies used to Deal with Environmental and Social Practices in Developing Countries
Strategy
Description
The "duck and cover" strategy
This strategy follows local standards and practice. This approach allows companies to capture the competitive opportunities offered by lower local standards and wages, while ducking ethical criticism under the cover of compliance with national law or custom. Companies that adopt "duck and cover" strategies are often bottom feeders in the industry, taking market positions and opportunities left by larger, leading edge companies.
The "no regrets" strategy
This strategy allows multinational corporations to adopt universal, company-wide standards, including the management of environment, health, and safety, in all overseas subsidiaries. The logic for companywide standards is two-fold as follows:
a. It is more efficient for a company to manage one set of standards than a patchwork of dozens of different national standards.
b. It reduces various corporate risks, including the risk associated with product defects. With integrated production and supply chains, companies need assurance of quality control and of on-time production -- accidents and strikes and the like delay production schedules.
Other risks reduced by global standards include environmental and on-the-job accident and injury risks, with concomitant down time, and legal liability for accidents, either in host-or home-country courts. The "no regrets" strategy has limitations, however. Standards might be the same in different countries, but different political, cultural, and socioeconomic contexts will determine just how effective they are. Company-wide environmental, health, and safety standards, for example, do not take into account the limited administrative capacities of many developing countries for disaster planning or for providing waste management infrastructures
Corporate social responsibility
In broad terms, corporate social responsibility requires a company to redefine its mission to include social purposes, and to develop appropriate management and reporting systems to put the new mission into operation.
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