Green Management
Green Management
Green Management
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Y. Loknath
[email protected]
B. Abdul Azeem
Annamacharya Institute of Technology and Sciences
There are far reaching repercussions of human industrial activities resulting in the extinction
and endangering of many life forms. Upon realisation of this alarmingly increasing threat on
its own survival, the human industrial activities have started to transform itself which has led
to discussions on newer concepts like green management. Hence, this paper attempts to
provide a basic overview of the concept of green management at the introductory level and
discuss different types of green management strategies adopted by organisations. The paper
attempts to contribute to the emerging field of green management and the stakeholders of
sustainable development.
Keywords: Green Management, Green Business, Sustainable Development, Triple Bottom
Line
1. Introduction
Since the industrial revolution some 250 years ago, we (humans) have been acting in ways
and multiplying at rates which affect the balance of life on the surface of the Earth as whole.
Before the industrial revolution some 250 years ago, the effects of human activity were local,
or at most regional, rather than global. Now the impact is indeed global. The idea may be
hard to accept, but in its long history with all its variations the Earth has never been in this
situation before. Business has always depended on – and had an impact on – the natural
world. But the development of the relationship between business and the environment – from
the extraction of raw materials to the management of resources to the generation of waste –
has long been neglected by business historians. In business, when we use these natural
resources without any limit, natural environment changes. Global warming, floods, famines,
tsunami and earth quake are its result.
Environmental degradation has been a part of human history forever specifically from
business operations. The Industrial Revolution of the 18th and 19th centuries, however,
brought with it the ability to degrade the natural environment to a greater extent and at a
faster rate than ever before. Each of these monumental environmental events is largely due to
human activity, and specifically to our present arrangements of modern industrial society.
Simply put, the way we have done business over the last two centuries has brought us up
against the biophysical limits of the earth‘s capacity to support human life, and it has already
crossed those limits in the case of countless other forms of life.
At its broadest, the term is used to capture the whole set of values, issues and processes that
companies must address in order to maximise the positive impacts of their activities and
generate added economic, social and environmental value. At its narrowest, the term is used
to refer to a framework for measuring and reporting corporate performance against economic,
Social and environmental parameters (UNIDO). The TBL approach is grounded in the
simple realisation that corporations can add value and should publicly account along three
drivers, namely the economic, the environmental and the social drivers. Traditional economic
indicators have persisted including typical performance measures such as net profit, gross
margin and return on average capital employed. Much progress has been made in recent years
in evolving high quality global environmental standards (e.g. quantity of main pollutants to
air, land and water, management systems and eco-labels) but social reporting is still in its
infancy with a range of diverse indicators grouped under the social dimension (e.g. health and
safety, wages, training, discrimination, freedom of association and gender equality). The TBL
approach therefore looks at how corporations manage all three responsibilities and attempts
to account for these inter-related spheres of activity for a more balanced view of overall
corporate performance.
With being blamed for much of the environmental ills plaguing the world, as well as being
held responsible for finding solutions to these problems, organizations had little choice but to
attempt to incorporate green management initiatives into all of their business functions.
Nattrass and Alto mare (1999) discussed the development of industrial sustainability, or what
may be considered green management, and maintained that organizations encountered a steep
learning curve process when adopting green management practices. Specifically, they
constructed a model of organizational adoption of green management practices by which
organizations obtained knowledge, responded to environmental issues, and set goals for
environmental protection and restoration. This paper attempts to identify such knowledge for
the purpose of providing basic understanding in more cohesive form for the readers.
Specifically, objective is to identify literature which builds an understanding of what the
concept of green management stands for. Subsequently, it is objected to identify literature
which has brought forward green management strategies. The first part of the paper provides
a definition of green management and compares with that of green business. The second part
provides a discussion of what encapsulates green management and finally, types of green
management strategies were discussed.
environmentalism: the construct and its measurement, 2002). While this definition stresses
the importance of environmental issues and the need to integrate these issues into the strategy
of the organization, some factors that we believe are critical to the practice of green
management seem to be missing or need to be specified; factors such as continuous
improvement, sustainability, and innovation.
Environmental management and corporate sustainability are also terms that have been used
in close conjunction with or as a substitute for green management. Both concepts seem to
extend beyond simply reducing waste, and therefore more accurately embrace the ideal of
green management than the description of corporate environmentalism offered by Costello
(2008). Environmental management focuses on continuous improvement and environmental
management systems have been looked upon with much favour by large organizations, policy
makers, consultants, and researchers as an effective approach for proactively dealing with
environmental issues (Kautto, 2006). However, we should note that some have defined
environmental management simply in terms of economic profit (e.g. (Denton, 1994)).
Corporate sustainability also stretches beyond waste reduction and requires continuous
improvements to achieve its challenging objectives. In order for sustainability to be possible,
according to Daly (1996), our economy must radically shift from a focus on growth to a
steady-state economy, which requires that rates of consumption do not exceed rates of
regeneration, rates of non-renewable resources do not exceed the rate at which sustainable
renewable substitutes are developed, and the rates of pollution emissions do not exceed the
assimilative capacity of the environment (Daly, 1991). Hawke (1993)
Applies an economic golden rule to define what it means to be sustainable when he advises
everyone to ―leave the world better than you found it, take no more than you need, try not to
harm life or the environment, [and] make amends if you do.‖ Borrowing from the basic
premises of these terms, we feel the need to incorporate ideas such as continuous
improvement and sustainable processes into the definition of green management.
Following careful examination of the preceding review and the additional historically-based,
practitioner-based, and theoretically-based literatures concerning green management, several
recurring concepts were identified. The recurrence of similar concepts across three different
perspectives solidified the importance of their inclusion in the following definition of green
management (Haden, Oyler, & Humphreys, 2009): Green management is the organization-
wide process of applying innovation to achieve sustainability, waste reduction, social
responsibility, and a competitive advantage via Continuous learning and development and by
embracing environmental goals and strategies that are fully integrated with the goals and
strategies of the organization.
3. Green Business
Green businesses adopt green management principles, policies, and practices that improve the
quality of life for their customers, their employees, the communities in which they operate,
and the environment. Many green businesses begin with a desire to resolve the impacts of
climate change and other environmental problems. Green businesses must follow a green
approach and green standards in their operational management and in the output of products.
Green business can be derived from two perspectives related to the output in the form of
green products (goods and services) as well as the process (or production) of an economic
activity. Entrepreneurs can enter into an overtly ‗green‘ business sector, providing green and
environmentally friendly products (e.g. waste management, renewable energy among others).
Alternately, green business can provide their goods or services through an environmentally
friendly process or with the help of clean technologies (e.g. ecotourism).
Irrespective of the two perspectives upon which green businesses are operated, following
definition embodies the true nature of green businesses: Green business is an organization
that is committed to the principles of environmental sustainability in its operations, strives to
use renewable resources, and tries to minimize the negative environmental impact of its
activities.
In this perception, ―greening‖ of business is part of a long-term strategy of becoming
sustainable, i.e. being able to achieve business tasks in the way that does not develop any
threat – economic, social or environmental – for both current and future generations.
Similarly, Steger's conceptual model (Roome, Business Strategy, R & D Management and
Environmental Imperatives, 1994) categorizes corporate strategies into four categories;
indifference, offensive, defensive and innovative. Indifferent companies are those that have
low environmental risk and even less environmentally-based opportunities for growth.
Offensive companies are those that have considerable potential for exploiting
environmentally-related market opportunities, and include companies that manufacture
pollution control equipment etc. Those adopting a defensive strategy are companies like the
chemical companies, which have high environmental risk and cannot afford to ignore
environmental issues, or their very survival could be at stake. The innovators are those that
have high environmental risk and also a lot of environmentally-based opportunities for
growth.
In Roome's Strategic Options Model (1992), there are five environmental strategies for
companies, namely; non-compliance, compliance, compliance-plus, commercial and
environmental excellence, and leading edge. These are referred to as; stable, reactive,
anticipatory, entrepreneurial and creative in Ansoff‘s Strategic Posture Analysis (Ketola,
1993). The first three strategies are related to compliance with the environmental standards,
as the name suggests. Compliance-plus implies looking beyond the existing standards and
norms. It involves integration of the environmental management techniques with the entire
management system of the company. Excellence and leading-edge approaches view
environmental management as good management, recognize the opportunities that have
arisen as a result of the environmental revolution and strive towards state-of-the-art
environmental management. Hence, it is through the adoption of excellence and leading-edge
strategies that a company can gain competitive advantage.
The difference between Steger's and Roome's models is that while Steger perceives
corporate response to the environment as based on environmental risks and market-based
opportunities, Roome argues that environmental pressures like legislation, constraints within
the firm, and the ability of managers to bring about an organizational change in order to
incorporate environmental issues, are equally important. James’ framework (1992) is similar
to that of Roome‘s. He believes that there are four categories into which companies can be
divided, in accordance with the environmental strategy adopted by them. The first category is
similar to Steger‘s indifference and Roome‘s non-compliance, where all environmental issues
are simply ignored. Companies that do the minimum that is required by law fall in the second
category. In the third category are companies that move beyond legislation and the last group
consist of companies that use the environment as a tool for gaining competitive advantage.
Welford’s (1994) categorization of the SME (small- and medium-sized enterprises) sector
into four main groups is slightly different. The first group is referred to as the ‗ostriches‘.
Companies that fall in this category not only assume that concern for the environment is a
passing phase and that their impact on the environment is negligible, but also assume that
their competitors feel the same and hence do nothing to conserve the environment. Then there
are the ‗laggards‘, companies that are aware of the environmental challenges facing them, but
are unable to combat those challenges because of cost constraints, lack of trained manpower,
lack of knowledge etc. The third group consists of the ‗thinkers‘, companies that know that
something should be done, but are still waiting for others to show the way forward. The
‗doers‘ are the ones that have proceeded to put their thoughts into action.
Topfer (Bostrum & Poysti, 1992)also divides companies into four categories, namely;
resistant, passive, reactive and innovative. Companies that fall in the first category are the
ones that view concern for the environment as a hindrance to their growth and do their level
best to hinder the passing of environmental laws. Passive companies are like Steger's
indifferent companies, who ignore the issue altogether. Roome argues that action taken by
reactive companies has been triggered off by legislation, whereas Topfer sees it as a
defensive move to catch up with the competitors. The last category, the innovators, are the
same as Steger‘s innovators and Simpson‘s enthusiasts.
Beaumont, Pedersen and Whitaker (1993) perceive corporations at six different levels, in
accordance to their response to the environment. The first two levels are similar to Roome‘s
non-compliance and compliance. The third level is referred to as ‗corporate action‘, where
management begins to regard environmental matters as important and takes a broader and a
more long-term perspective of the environment. At the fourth level changes take place in the
organization in response to environmental issues. The fifth level is ‗supply chain action‘,
where environmental matters become an integral part of the entire industry's supply chain. At
the final level of ‗business scope action‘, an organization expands its activities, using
environmental issues to get ahead in business.
Dodge and Welford have developed an environmental performance scale which has
become known as the ROAST scale (Welford, 1995) and is now being used by others to
identify aspects of corporate environmental performance. In order to measure improving
environmental performance, Dodge and Welford argue that we need to define an ultimate
goal towards which the organization must move. This goal may not be achievable, but it will
serve as an upper boundary of sustainable performance on a five-point scale. This utopian
form of organization is referred to as the ‗transcendent firm‘. As a lower boundary, the least
environmentally sensitive measure on the ROAST scale is represented by the ‗resistant
organization‘. Table 1 compares the extremes on the performance scale
deep ecology. The voluntary environmental actions of the organization represented by Stages
III and IV can be compared to the ideals of a shallower ecology often typified by traditional
approaches to environmental management. The organization displays a proactive and
responsive attitude and stance as it moves from accommodating the greening agenda to
seizing and pre-empting it. At Stage V the firm transcends traditional commercial
performance measures and adopts strategies consistent with ecological management and
sustainable development. It becomes almost evangelical in its green marketing strategy and
considers very carefully whether it is operating at an appropriate scale.
In summary we would suggest that while the frameworks developed by Steger, Roome,
Topfer etc. speak about competitive advantage, they do not specify the various strategies a
company should adopt in order to become greener or to gain competitive advantage.
Pietilainen, Vandermerwe and Oliff, Barisal and Beaumont, Pedersen and Whitaker have
attempted to do this. Their frameworks, however, fail to indicate how competitive advantage
and sustainability can be measured in the way which Dodge and Welford have described. We
can, however, synthesize much of this discussion into a list of the various environmental
strategies adopted by companies.
Table 3 therefore expands much of the literature referenced above into a ten-point strategy
classification. We should note that all these theoretical frameworks have been developed only
during the past couple of years. Although passing references to the environment have been
made by Ansoff (1979) and Porter (1991), earlier strategic management literature has
otherwise been devoid of any mention of the ‗natural‘ environment.
4. Conclusions
This monograph has provided a background, overview, and discussion on the basics of green
management practices. The presentation of this material was at the introductory level and
only providing a thin overview of each topic. The complexity and issues facing managers and
engineers when faced with GSCM topics continues to increase. The growth of this field is
necessary as environmental burdens from industrial and supply chain operations continue.
There are still substantial gaps and future directions for which managers and engineers need
to be made aware.
Greening of the economy not only seeks to produce goods in a more resource efficient way
but also to produce goods and services that support greener outcomes such as recycled paper
and solar water heaters. The greener production methods are, the greater the availability of
green goods and services. Therefore, the easier it is to practice greening principles until it
becomes a standard practice and not an add-on or unique feature. This requires a strategic
transformation of management practices to next level of green management practices as
discussed above.
However, since the environment is a complex, variable and extensive system, protecting the
environment is a hard and enduring task. It is impossible that all the existing pollution
problems in the environmental can completely be resolved in the next decade. A wonderful
and quality environment must be achieved by continuous planning, governmental policies,
efforts of the enterprises and public participation.
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