A Thousand Shades of Green

Sustainable Strategies for Competitive Advantage

Peter Winsemius, Ulrich Guntram

• Publisher: Routledge
• Year: 2013
• Topic: Business
• eBook ISBN:
  9781136572746
• Subtopic: Management
• Index: Business

'What does it mean for the environment?' is a strategic corollary of almost any significant business decision today, and companies must take seriously their responsibilities to regulators, customers, employees and the wider society. A Thousand Shades of Green is aimed at business leaders in need of a clear understanding of the key corporate environmental challenges and the insight and vision to meet them - imperatives such as engaging stakeholders and developing partnerships, understanding the policy-making process, forming corporate responses and drafting environmental management strategies - with the promise of genuine competitive advantage for their companies. Drawing on their extensive consultancy experience with some of the most progressive companies around the world, the authors examine why and how businesses must confront the rapidly developing agenda set by environmental constraints and social and regulatory pressure. They identify the corporate environmental challenge with that of change management and advocate a recognition that there is no single strategy or endgame applicable to all companies - there are a thousand shades of green. Only by pursuing thorough, reflective, consistent, competitive and proactive strategies will businesses be able to avoid being embroiled in costly and complex reactive approaches.

PART I

THE CHALLENGE

1

THE ENVIRONMENTAL MANAGEMENT CHALLENGE

Thirty years ago the very idea of a ‘Minister of the Environment’ was unknown in most countries. Ten years ago, the prospect of environmental activists walking the corridors of world power would have seemed impossible to many. However, today both are a reality, and the former is taken for granted. Non-governmental organizations (NGOs) such as Greenpeace and the World Wide Fund for Nature (WWF) have become household names with huge global followings. Media companies like CNN, together with specialized television channels such as Discovery and National Geographic, give ample coverage to environmental mishaps and successes. Most importantly, ‘normal’ people, who don't necessarily consider themselves activists, are changing their ways; they separate their household waste, seek out environmentally friendly products and even vote for green political parties. The environment has become part of everyday life in many societies.

What lies behind such changes? What was it that allowed attitudes, actions and even lifestyles promoted by small groups to enter mainstream consciousness? More concretely, why did so many wake up to the threat that their modern, industrial societies posed to the environment, and begin to take actions to thwart it?

We feel that knowing the answers to such questions is an important step in meeting the environmental management challenge faced by corporations. The failure of many well-intentioned, and often very ambitious, environmental management initiatives can be attributed to companies misreading the environmental needs and expectations of their stakeholders – whether internal (coworkers) or external (shareholders and host communities) – as well as of external parties such as consumers, governments or NGOs.

Monsanto's much-discussed and unfortunate introduction of genetically modified soy beans into the European market is a case in point. The action led to furious consumer and, subsequently, political reactions, which eventually had repercussions for the company's North American and Asian markets. A decade earlier, the German packaging industry was also unpleasantly surprised by its government's introduction of a take-back obligation. This resulted in serious consequences for companies’ competitive positions and the establishment of a notoriously inefficient packaging recovery system.

A better grasp of such varied, evolving needs and expectations is also of special importance in an increasingly globalized economy. Companies operating on the international stage need to have a good understanding of environmental needs and aspirations at home and abroad. This is a complex matter, since not all societies share the same attitude – not to mention the fact that stakeholders in one country often have expectations about a business's environmental management in another. There are many such examples, such as Shell's activities in Nigeria, that could be added to the Monsanto case above. In sum, an understanding of stakeholder needs is necessary to grasp the dimensions of the differentiation space, both nationally and internationally.

In this chapter we first examine changing stakeholder needs, and then look at how corporations have so far responded to changes in environmental attitudes.

CHANGING STAKEHOLDER NEEDS

In our view, the familiar ‘hierarchy of needs’ concept of Abraham Maslow, the US psychologist, provides a useful framework for understanding our evolving environmental needs.¹ Maslow argued that people have a hierarchy of needs that they satisfy sequentially. He suggested that in an ideal world, each individual would progress from the satisfaction of very basic needs to ever-higher ones. At the bottom of the ‘staircase’, the first priorities in life are food, clothing and shelter. When these are satisfied, our priorities on the second level are safety and security; family and neighbourhood play a major role in this respect. Next, on the third step, follows the need to ‘belong’ to a relevant group – a job, a religion or a sports team can all contribute to this. On the fourth step, we want to gain the respect of our peers and seniors, and eventually of ourselves. We want to be recognized as excelling at something, whether at school, in sports, in arts or in work. Having established this stable platform at Maslow's fourth step, we are now ready for the ultimate climb towards the fifth level of self-actualization, when we are in harmony with ourselves – ie we are everything we want to be.

Although Maslow's approach is often criticized for being too deterministic, most psychologists agree that people's needs are organized in this kind of hierarchical manner.² For our purposes, it is important that the hierarchy of needs seems to apply to the average individual. Similarly, the evolving needs can also be seen to be generally reflected in the behaviour of more or less homogenous groups of individuals, from clubs to corporations to nation-states. This is particularly the case in institutions that embody democratic representation to some degree or other – that is, situations in which the group members’ needs can be reflected in the concerns and objectives of the group and its leaders.

We therefore believe that, in broad terms, Maslow's individual framework can be adapted to describe the needs of a collective. It is also clear that among the wide variety of needs applicable to each stage – for example, material, social or psychological – one set of needs, whether individual or collective, is related to the environment. There thus exists what one might call an ‘environmental hierarchy of needs’. An understanding of this hierarchy of stakeholder needs provides a particularly useful foundation for corporate leadership in determining environmental management.

The environmental hierarchy of needs

In building an environmental hierarchy of human needs that accompanies the evolution of our general needs, we have found it appropriate to make a distinction between three different aspects of the environment. The environment is, first of all, something we as individuals and as societies have an impact upon – we use its resources and discharge our waste into it, for example. Secondly, the environment is a source of threats to human life. Sometimes these threats arise independently in nature – for instance, in the case of diseases and natural calamities – and sometimes they are, as in the case of global warming, a result of our own behaviour. The third aspect relates to the environment as something that we value for non-economic reasons, for example, as a source of recreation, aesthetic pleasure or inspiration. These three aspects are present in each of the steps of the environmental hierarchy of needs, to which we now turn.³

1 Food, clothing and shelter

Our most basic needs are physiological: full stomachs and warmth. Agriculture, flora, animals, minerals and forests all contribute in different ways to meeting these needs. Access to such resources and an adequate physical environment are therefore essential. Satisfying such needs involves environmental management to ensure resource sustainability – eg measures, which are often formalized in traditional taboos and customs, to avoid over-hunting or over-cultivation.⁴ In many hunter-gathering and simple agricultural communities this is frequently the case, and the impact of such societies on the environment is minimal: they can, as it were, live off the land and the water.

However, in a number of poor areas of the world today – where millions still struggle to meet these basic physiological needs – this is often not the case. Deforestation, desertification, erosion of marginal agricultural land and recurring delta flooding all provide evidence of the limits of environmental capacity under conditions of sustained population pressure.

People also take measures to protect themselves against the threats presented by the environment. Frequently, instructions or commands relating to various sanitary practices are part and parcel of prevailing religions, promoted by religious leaders and laid down in the canon – for example, the Koran and the Old Testament contain explicit rules for personal hygiene and food consumption. Communities also take initiatives to control animal plagues in order to prevent the spread of contagious diseases. In many parts they raise their buildings on poles or knolls to limit the threat of floods.

An appreciation of the beauty of nature – often a part of religious tradition – is also common. From the elegant animal cave paintings of our distant ancestors and the artful pottery of the Ancient Greeks and Etruscans to the decorative woodwork of today's hunter-gatherer societies, there is ample evidence that, even in difficult material situations, humans have celebrated their physical surroundings.

2 Safety and security

Once our basic needs are met, we focus on safety and security. The impact on the environment at this point is essentially associated with population growth and concentration and, eventually, with industrialization. The development of cities and industry is accompanied by the positive and negative consequences of our ‘harvesting’ of the environment. The greater scale and specialization of human activities, which take place in more diverse and less coherent societies, often lead to a localized over-burdening of the physical environment – for example, oxygen shortage in surface waters or air pollution – or to the depletion of jointly-exploited resources, as in the case of over-fishing. Indeed, the risk of the depletion or destruction of resources that are jointly exploited but not owned or controlled – the so-called ‘tragedy of the commons’ – becomes very real at this stage.

Although it is an engine for growth, the environment also becomes the source of threats associated with the concentration of people, namely disease and poor sanitation. Contagious diseases that result from over-crowding, inadequate personal hygiene, poor nutrition and contaminated water spread like wildfire: tuberculosis and cholera are examples. Animal plagues that result from polluted and stagnant waters can threaten the very existence of entire human populations (eg the bubonic plague) or inflict severe physical damage. One example of this in parts of West Africa is river blindness, which is caused by an excessive number of infected black flies (a type of aphid).

Societies can respond to such threats. In a variety of guises, environmental management focuses on the prevention of contagious diseases through, for example, better housing, safe drinking water, sanitary facilities and sewage systems. Other threats to human health and safety that are directly associated with specific economic activities, such as industry and mining, are also regulated.

People at this secondary stage also begin to value the quality of their living environment as a source of inspiration and recreation. Various art forms, ranging from painting to music, glorify nature in a way that perhaps reflects nostalgia for a (sometimes romanticized) rural existence. Government schemes are undertaken alongside private initiatives in housing, nature conservation and the construction of urban and regional green spaces for recreational purposes.

3 Quality surroundings

When environmental and other safety needs are satisfied, people are free to move up to the third step in the hierarchy of needs. In Maslow's terms this is the need to belong to a relevant community, which implies acceptance and affection. From an environmental perspective, this is expressed in a desire for better-quality surroundings. Ironically, the same processes of industrialization that lifted most of the population to this higher aspiration level also tend to undermine the development of such communities, as they often pose indirect threats to human health. The spreading of toxic substances in water or air, for instance, does not necessarily cause death directly, but can lower people's resistance to deadly disease and famine.

The greater scale of economic activities leads to a shift in the nature of the issues. Whereas previously these were primarily local, they have now become regional or even international, and thus more difficult to tackle; river-basin pollution and acidification in Europe are examples. Moreover, economic expansion and greater wealth give rise to new spatial issues, ranging from the loss of habitat to traffic jams and urban sprawl.

This is the hierarchical step reached by many countries in the West in the last quarter of the 20th century. The debate surrounding environmental management has been thrown wide open. Scientific findings play an important role in alerting the public and, after some delay, political decision-makers.

The greater value that we attach to the quality of our physical environment is reflected in our growing support for NGOs. International institutions such as WWF or Birdlife International, as well as more aggressive groups such as Greenpeace and Friends of the Earth, attract greater levels of support. National organizations like the National Trust (UK), the Audubon Society and the Sierra Club (US) and Natuurmonumenten (The Netherlands) have also gained prominence. Playing an increasingly active role, these NGOs add to the increasing pressure on politicians to protect the environment.

Government regulation to counteract threats in the sphere of public health tends to be sector-focused: improving the quality of water, air and (later) soil, controlling noise nuisance and managing solid-waste streams are examples. In a sense, the primary goal is to clean up the mess created by the errors, ignorance and negligence associated with industrialization.

The growing awareness of the damaging environmental impacts of unbridled growth leads to increased questioning of the absolute primacy of economic imperatives. The clear spatial division of competing societal functions becomes a central objective: land-use planning and zoning are hotly disputed issues. Nature conservation efforts are broadened to encompass systems of national and international significance.

As we'll see in our corporate response discussion below (see p11), increased external pressure forces corporations to place the environment on their agendas. Following an initial reactive response, companies gain experience and become more comfortable with their new environmental responsibilities, and approach them in a more functional manner.

4 Quality ecosystems

On Maslow's fourth step, the emphasis shifts to the satisfaction of the need for approval, recognition and, eventually, self-respect. The environmental counterpart is an enhanced need to create one's own environment, as well as the realization that resolving environmental issues requires everyone to assume much higher levels of self-responsibility.

The continued viability of ecosystems becomes a principal objective. As organisms are weakened by the excessive presence of foreign substances, and natural habitats are diminished or unbalanced by human activities, entire regions or bodies of water become unable to sustain the life-support systems necessary to the survival of various species. Although direct threats to human health and safety are reduced, we become concerned about the long-term impact of our combined activities. We recognize that we are part of our ecosystems and, moreover, that we have a direct ethical responsibility for the environmental legacy that we will leave for future generations.

People also strive for greater individual wellbeing. As a result, the quality of our rural and urban environment is assessed according to new measures – for example, inner-city renewal plans and suburban housing developments are judged ...

Table of contents

• Front Cover
• Half Title
• Title Page
• Copyright
• Contents
• List of Illustrations
• About the Authors
• Acronyms and Abbreviations
• Introduction
• Part I The Challenge
• Part II Integrated Response
• Part III Proactive Response
• Epilogue
• Notes
• References
• Index