Identifying the business value of superior environmental performance: Current deliberations from the aspen institute

The growing connection between the environment and economic growth has created many challenges for business. In response, a set of recent dialogues, convened by the Aspen Institute, focused on the business opportunities inherent in environmental leadership. The conclusion? In a nutshell, businesses that integrate their environmental planning with their strategic business planning can improve their corporate performance and gain a competitive edge. Investors and analysts who understand these connections will be better positioned to identify companies with superior stock appreciation in the newly emerging sustainability-driven marketplace of the 21st century.     

Identification and selection of environmental performance indicators: Application of the balanced scorecard approach

The popular “balanced scorecard” system can be applied in the selection and development of environmental performance indicators. As presented, the balanced scorecard integrates environmental performance within the context of corporate strategic objectives. The basic premise of the balanced scorecard is that the ultimate corporate objectives commonly targeted by senior management such as economic value-added, net income, return, on equity, and return on assets are of little use in day-to-day dicision-making or in the motivation of employeesRather than look ahead, these measures reflect the past and, therefore, are not closely linked with the immediate actions which might be expected to be associated with future performance improvements. To create incentives for future improvement in these long-term measures, we must develop “leading” measures, which can be easily monitored in the short term. Such an approach lends itself to the selection of environmental performance indicators which are most clearly associated with the firm's strategic goals.     

Strategic planning in a turbulent international environment

What we have argued in this paper is that fundamental changes in the multinational corporate environment are taking place raising proaches to multinational environmental surveillance and multinational strategic management. We arenot offering this as a forecast of what the future will bring. Instead, we are proposing this framework to point to the need for greater environmental orientation and adaptation. MNCs are now in a double squeeze and managers must unlearn past models and criteria to understand problem. But the challenge is more than conventional corporate planning. The problematique can be decribed as one of multinational strategic management. In the area of environment we need research and learning to address three basic questions:What is the MCE? What concepts of the environment should be considered for strategic management? What parameters should be monitored? What are some consequences of the concept of interdependence and turbulence?What multinational environmental surveillance should be done? What methodologies are needed? How can these be made operational? How can the corporation be educated to behave in the new mode required in view of these changes?What new strategic issues and challenges lenges emerges from the MCE? What new demands must be factored into the multinational corporate planning processes? What new content does the changing environment procedure? How can the broadening field of opportunities and threats be systematically mapped and understood?     

Leadership for the Sustainability Transition

Society is looking to business to help solve our most complex environmental and social challenges as we transition to a more sustainable economic model. However, without a fundamental shift in the dominant virtues that have influenced business decision making for the past 150 years to a new set of dominant virtues that better fit today's environment, it will be more natural for companies to resist the necessary changes than to find the opportunities within them. We use the term “virtues” quite broadly to describe dispositions to think, feel and act in skillful ways that promote the aims of a practice. Addressing this deeper level of cultural change is essential to cultivating new instinctive behavior in business decision making. In this article, we describe five clusters of virtues that facilitate effective response to the transition challenges—adaptive, collaborative, frugality, humility, and systems virtues. To illustrate the application of these virtues, we present a detailed case study of Green Mountain Power, a Vermont electric utility that has embraced the shift to renewable energy and smart‐grid technology, and is creating an innovative business model that is disrupting the industry. After distilling key findings from the case, we outline an approach to leadership development that can help accelerate the infusion of transitional virtues across an organization.     

Towards better strategic management

Strategic management is concerned with determining the long-term goals on an enterprise and deciding on the most appropriate course of action to achieve them, considering changing environmental conditions, resources available and risk attitudes.

The deliberate practice of strategic management is still regrettably rare and rudimentary despite wide recognition of the threats to corporate survival under conditions of rapid change. Better use must be made of the tools of business planning and many more managers skilled in strategy development will be required.

The purpose of this article is to discuss some of the difficulties in inculcating a strategic climate within an organization and to propose some approaches for improvement.     

Characterizing Environmental Harm: Developments in an Approach to Strategic Risk Assessment and Risk Management

Environmental policymakers and regulators are often in the position of having to prioritize their actions across a diverse range of environmental pressures to secure environmental protection and improvements. Information on environmental issues to inform this type of strategic analysis can be disparate; it may be too voluminous or even absent. Data on a range of issues are rarely presented in a common format that allows easy analysis and comparison. Nevertheless, judgments are required on the significance of various environmental pressures and on the inherent uncertainties to inform strategic assessments such as “state of the environment” reports. How can decisionmakers go about this type of strategic and comparative risk analysis? In an attempt to provide practical tools for the analysis of environmental risks at a strategic level, the Environment Agency of England and Wales has conducted a program of developmental research on strategic risk assessment since 1996. The tools developed under this program use the concept of “environmental harm” as a common metric, viewed from technical, social, and economic perspectives, to analyze impacts from a range of environmental pressures. Critical to an informed debate on the relative importance of these perspectives is an understanding and analysis of the various characteristics of harm (spatial and temporal extent, reversibility, latency, etc.) and of the social response to actual or potential environmental harm from a range of hazards. Recent developments in our approach, described herein, allow a presentation of the analysis in a structured fashion so as to better inform risk‐management decisions.     

Strategy and the “business portfolio”

In this article the author goes on to develop the conclusion reached in his previous article which appeared in the December edition of Long Range Planning. These conclusions concerned the requirements for strategic success for an individual business, here they are developed into their implications for strategy development in the typical multibusiness company.It is argued that relative competitive position and growth are the two fundamental parameters which must be considered in determining the strategy that an individual business should follow when viewed within the context of the company's overall ‘business portfolio’. The likely patterns of business strategy which will lead to overall corporate success are discussed and contrasted with those which can lead to disaster.The key is that strategies should be made to differ widely from business to business, as a function of the growth and relative competitive position of each business and the company's overall resource position particularly with respect to cash. The ‘across the board’ defensive measures which many companies have adopted in recent years as their response to the pressures of inflation and recession are therefore argued to be singularly inappropriate for the long term. The ‘business portfolio’ concept provides a superior approach for developing the differentiated strategic business objectives which are necessary for any company to make the most of its opportunities.     

An integrated micro- and macrolevel discussion of global green issues: “It isn't easy being green”

Two key issues arising from globalization of world markets are the impact of business activities on the environment and threats to sustainable development. These issues are usually referred to as “green” issues. This paper presents a detailed discussion of global green issues in the context of a number of environments that include the socioeconomic, political, technological, and competitive arenas. The discussion is based on an attempt to integrate two conceptual models by Maslow (Maslow, A., 1954. Motivation and Personality. Harper & Row, New York) and Cateora (Cateora, P.R., 1983. International Marketing, 4th. ed. Irwin, Chicago, IL). The goal is to bring together both a microlevel perspective of the individual consumer and a macrolevel perspective of business through analysis in multiple environments that are affected by green issues. This integration is viewed conceptually as a recursive system of mutually reinforcing causes and effects at the micro- and macrolevels.The leitmotiv throughout the paper is that “it isn't easy being green,” either for consumers, activists, corporate leaders and managers, or public policymakers. Practical examples are presented to support and illustrate the discussion. The main finding is that a new approach is needed to business in general through a new dominant social paradigm (DSP) and to international business in particular in order to achieve both sustainable development and sustainable consumption. In conclusion, the importance of individual responsibility and action by consumers and managers alike is underlined.     

A Model for Managing Corporate Sustainability

The world is faced with unprecedented global economic, environmental, and social challenges. Sustainable development has emerged as an organizing principle for addressing these issues. Corporate social responsibility (CSR) is seen as the business contribution to sustainable development. The article defines CSR as an organization's efforts to secure resources and legitimacy for survival or competitive advantage by managing nonmarket and nonregulated issues arising from complex social and environmental problems. Supporting this definition, the “sustainability issue management” (SIM) model is presented to help managers and researchers assess and manage CSR issues. Based on ecological economics, the tool originated from a larger study. The model is used to explain and discuss how the UK Government's National Indicator 185 (requiring carbon reporting from Local Authorities) shaped the action of a supplier to Local Authorities. The case illustrates how the SIM model can help both managers and researchers understand and manage CSR issues.     

Jesus Centered Leadership and Business Applications: An Alternative Approach

In this article we evaluate Jesus Centered Leadership (JCL), a new concept that has emerged in the realm of spirituality and business management. JCL questions the “Christianity” of Christian business leadership, and proposes principles for ethical leadership that provide a truer representation of the teachings and traits of Jesus. We consider these principles and contribute principles of our own, thereby providing an alternative approach to JCL that remains consistent with the JCL message of morality but addresses issues that offer greater opportunities for adoption within existing business and institutional models.     

Managing stakeholder pressures: Toward a typology of corporate social performance profiles

Why do some firms ignore some stakeholders while courting others? We propose two key drivers of firms' social postures and derive from this analysis a novel typology of corporate social performance (CSP) profiles. Although we expect that other drivers exist, we argue that a useful starting point for understanding any given CSP profile is to consider the pressure exerted on an organization by its stakeholders in conjunction with its level of resource endowment. Our preliminary typology identifies six distinct CSP profiles that reflect different opportunities and risks for stakeholder management: the CSP Vanguard, Opportunist, Generalist, Minimalist, Specialist, and Laggard. All else equal, the first two CSP profiles imply more nonmarket opportunities than risk, whereas we expect Laggards and Specialists to face greater risk in their responses to social and environmental issues. According to our framework, Generalists and Minimalists probably operate between these two extremes of business risk. Our conceptual analysis seeks to advance research and practice for more strategic stakeholder management.     

From primacy to purpose commitment: How emerging profit-with-purpose corporations open new corporate governance avenues

This paper aims at contributing to corporate governance theory by developing a model of governance that takes into account a recent legal innovation: the introduction of purpose-driven legal business forms in the corporate law of several countries. Current debates in such theory oppose models that grant “primacy” (i.e., ultimate control rights) to different constituencies. The resulting uncertainty proves problematic in the face of new, urgent social and environmental stakes that are difficult to represent in traditional governance bodies. Newly adopted profit-with-purpose corporate forms' introduction of a “purpose” in corporate contracts renews these debates. We show that through the “purpose commitment” model it enables, the distribution of control rights in the governance system is decoupled from the objectives assigned to the corporation. This new approach renews the formal role of management, and corporations’ accountability to society. We explore the theoretical, practical, and political consequences of this new model.     

Strategies for Environmentally Sustainable Products and Services

Industry leaders are setting the goal of sustainable products and services. The question is how this necessary but ambitious goal can be met. The author focuses on the environmental aspect of the expression “sustainable”. Strategies like eco-innovation, re-designs, and product improvements are discussed using examples such as the development of fuel cell vehicles, and the use of renewable and recycled materials. Major single actions (e.g. the development of new propulsion systems) as well as small improvements create a significant environmental benefit in total if “environmental economies of scale” are reached through mass production. Life cycle strategies, service instead of product strategies, as well as the link between “old” and “new” economy are described. The opportunities and challenges of these strategies for sustainable products are discussed. The author believes that it is necessary to look at a combination of all these strategies in order to reach the goal of sustainable products and services. In future, increasing numbers of life cycle stakeholders may have to be involved in these efforts, as their involvement is key to providing very efficient and effective additional positive effects.     

Sustainability in the Construction Business — A Case Study

Skanska is among the world's five largest construction companies, with construction-related activities and project development operations in some 60 countries. A strategic approach to environment was adopted in 1995. In 1998 a decision was made to introduce certified environmental management systems. The drivers behind these steps were pressures from the market, future legislation and public opinion.By the end of 2000, all business units of Skanska had environmental management systems certified according to ISO 14001. Newly acquired companies are required to have certified systems within two years after acquisition. While environmental management systems provide the necessary framework, more technical tools are also needed. Some examples of such tools are presented in this article.ISO 14001 is an important element in focusing the attention of the organization on environmental issues, but for leadership in environment, a number of guiding principles are also presented and discussed.Finally, corporate social responsibility (CSR) can be seen as a framework for all types of issues where a company is regarded as having certain obligations toward society at large, because of direct or indirect effects from its business operations. It is only logical that Skanska, following its work with ISO 14001 and the move toward leadership in environment, now has decided to develop a CSR platform.     

Stakeholder Theory: The State of the Art

Abstract

For the last 30 years a growing number of scholars and practitioners have been experimenting with concepts and models that facilitate our understanding of the complexities of today’s business challenges. Among these, “stakeholder theory” or “stakeholder thinking” has emerged as a new narrative to understand and remedy three interconnected business problems—the problem of understanding how value is created and traded, the problem of connecting ethics and capitalism, and the problem of helping managers think about management such that the first two problems are addressed. In this article, we review the major uses and adaptations of stakeholder theory across a broad array of disciplines such as business ethics, corporate strategy, finance, accounting, management, and marketing. We also evaluate and suggest future directions in which research on stakeholder theory can continue to provide useful insights into the practice of sustainable and ethical value creation.     

Environmental issues: the challenge for the chief executive

Businesses are under pressure to adopt environmental policies and incorporate them into their strategic business planning as a matter of routine. These pressures are coming from at least five sources--stricter legislation, consumer demand, competitive advantage, staff concerns and community pressure. The challenge is enormous but there is growing evidence that sound environmental management provides pay-off in bottom line results. Business organizations have a vital role to play and its good for them. There are opportunities for new business as well as threats to those organizations which continue to ignore the trends.     

Conjoint effects of interacting strategy-making processes and lines of defense practices in strategic Risk Management: An empirical study

The ability to contain adverse effects of major risks under turbulent conditions and exploit the opportunities they present are fundamental concerns in strategic management and various institutions promote enterprise risk management (ERM) to deal with these challenges. Yet, our knowledge about how ERM affects performance and interacts with corporate strategy-making processes is limited. The ERM frameworks impose first and second lines of defense practices to integrate business operations and corporate risk oversight. Emergent strategies generate responsive initiatives and strategic planning coordinates updated actions. Hence, this study analyzes the conjoint effects of these ERM practices and strategy-making processes based on a large corporate sample and finds that ERM practices depend on strategy-making to attain effective risk outcomes. The application of ERM frameworks can, therefore, not be assessed in isolation, but must consider corporate strategy-making. This has implications for the way we conduct research on strategic risk management, how executives approach risk oversight and policy-makers impose formal risk governance requirements.     

Beyond the “silo view” of strategic management and corporate governance: evidence from Fiat,Telecom Italia and Unicredit

While corporate governance and strategic management have for a long time suffered from artificial separation and, therefore, generally been tackled in a secluded manner, their combined organizational impact makes them stringently related to one another in the firms’ evolution. In this paper, we argue that, transcending the “silo view” of corporate governance and strategic management, time has come to acknowledge that, depending on circumstances and time periods, within a firm is possible to detect the relative dominance of corporate governance over strategic management, rather than the leadership of strategic management over corporate governance. Drawing on a contingency approach, we dissect the relationships (and the mechanisms that control it) between the strategic function (i.e., which defines the firms’ strategy and supervisions its implementation) and the governance function (i.e., the congruence assessment between the firm strategy selected and the interests of the ownership and of other relevant stakeholders represented in the board of directors and the effectiveness appraisal of the entrepreneurial action). Then, by performing a thorough retrospective qualitative analysis of three relevant case-histories of Italian firms (Fiat, Telecom Italia and Unicredit) operating in three different industries (automobile, banking and telecommunications), we surmise that, either in corporate governance (board) oriented or in strategic management (CEO) oriented companies, the ‘real’ problems arise when the quality of corporate governance or strategic management is poor. Interestingly, we eventually suggest to adopt a value-based approach to the relationship between corporate governance and strategy that may fruitfully complement the contingency perspective taken at the onset of the work.     

Shared Services Transformation: Conceptualization and Valuation from the Perspective of Real Options

In today's volatile global economy, where many organizations face severe pressure to downsize, the “shared services” model, in which a firm merges common functions performed by multiple units into a single service delivery organization, provides an innovative approach to make business more efficient and effective. To successfully implement shared services, firms need to strategically decide whether and how to pursue various service transformation alternatives such as simplification, standardization, consolidation, insourcing, or outsourcing. In this study, we develop the notion of real options into a unique theoretical lens for conceptualizing service organizations and their transformation in an uncertain business environment. Specifically, we view service organization as a set of strategic options that give the firm preferential access to future transformation opportunities. We create a taxonomy of these options, and introduce a decision methodology for valuing alternative shared services transformation approaches. We illustrate this methodology by applying it in a real business case to justify a global firm's decision regarding the transformation of its finance organization.     

Compliance and ethics programs: competitive advantage through the law

This paper aims to address whether deploying compliance and ethics programs will assist US organizations in implementing the internal mechanisms necessary to achieve a competitive advantage from the law. My focus will be on the US legal system, as the corporate compliance and ethics programs examined are based on mitigation provisions contained in the US Federal Sentencing Guidelines. In particular, I propose that organizations can attain a sustainable competitive advantage from the law by considering the following questions: Do compliance and ethics programs assist organizations in achieving a better understanding of the law? Are compliance and ethics programs a cost-effective approach for coping with an organization’s legal issues? Can compliance and ethics programs aid organizations by preventing these legal issues from occurring in the future? Will compliance and ethics programs support organizations in reframing legal issues as business opportunities?