Sustainability in Business
Chose 3 to max 5 international companies. (for exsample
nokia, apple, ikea, nestle) Identify the initial drivers, pressures for
why/how the organisation decide to incorporate sustainability in their
business strategy, identify the main challenges and barriers to the new
strategy, describe how the business benefits from incorporating
sustainabiliy in financial, social and environmental terms.
Compare/contrast the companies.
Sustainability in business: a study on nokia, ikea and nestle strategies
Sustainability in Business
Modern businesses operate in an environment where stiff competition, extremely diverse consumer taste, rapidly changing technology, and high consumer awareness, and the need to be environment-conscious among others characterize the operations in any given industry. Furthermore, the survival of the planet is threatened by environmental issues such as global warming. An urgent call is therefore created for action and it is for this reason that businesses find it necessary to incorporate sustainability at the core of their operation strategies. Most global business leaders have in fact already done this incorporation in their business operations (Williard, 2002, pp.42).
A new sustainability business paradigm that aims at creating a better balance between economical, social and environmental factors for both long-term as well as short-term performance is increasingly being pursued by businesses around the world. As a result, businesses are adopting sustainability-related strategies, practices, values and principles (Reilly, Wirtenberg, and Jamrog, 2007, p.1).
NOKIA and sustainability;
Nokia is a Finnish manufacturer of mobile phone devices and is a world leader in the manufacture of a wide range of devices for all major consumer segments in addition to offering internet services that enable users to experience media, messaging, maps, music and games.
Nokia Corporation has adopted sustainability in its operations and has commendable strategies in place pursuant to this agenda. The company in recognition of the environmental hazards posed by its products, established a climate strategy in 2006 and revised it in 2008. The core areas of focus of this strategy are; substance management, energy efficiency, take back and recycling, and promoting sustainability through software and service. Policies on recycling include activities such as educating consumers on the need for environmental sensitivity and usefulness of recycling rather than dumping unusable devices. In this regard, it has established recycling points near consumers. In addition, NOKIA creates mobile devices, services and accessories that are aimed at reducing the impact on the environment.
The company is also actively engaging in energy management whereby it seeks to use new energy sources that have less impact on the environment, in addition to developing and adopting new technology that promotes efficient consumption of energy. Although the telecommunication industry accounts for only one per cent of the world’s total carbon dioxide emission, Nokia seeks to cut its own carbon footprint and in extension educate the consumers of its products on ways that they can contribute in helping the corporation reduce its carbon print. The company also creates energy efficient devices, especially chargers.
The company works actively with other environment- friendly organisations in developing policies that aim at reducing carbon emissions. In this respect, it works closely with such organisations as World Business Council for Sustainable Development and European Information Communication and Consumer Electronics Technology Industry Association among many others. In recognition of Nokia’s efforts in promoting sustainability, Corporate Knights 2010 edition ranked Nokia 5th among the world’s100 most sustainable companies (Coster, 2010).
Nestle and sustainability;
Nestle is one of the world’s leading Nutrition, health and Wellness products manufacturing company. The company is focuses on increasing the nutritional value of its products and at the same time improve the taste of its products. In the front of incorporating sustainability in business strategy, the company has identified Sustainable Development as the major area to focus on, it being referred to as the process of increasing access to food of higher quality by the world’s populations, while contributing to long-term economic as well as social development, together with involvement in environmental preservation efforts for the benefits of future generations (Nestle Sustainability Review, 2008, pp.2).
In pursuit of its environmental strategy Nestle takes into account environmental considerations through out the supply chain. For instance, to ensure long-term quality of its natural mineral water sources, in Contrexeville, France the company advocates for zero use of chemical fertilizers and pesticides by farmers who are involved in cultivation of land above the sources. The company in addition has established a separate organization called Agrivair mandated to manage the preservation of cultivation practices as well as natural ecosystems that are positive to the environment.
IKEA and Sustainability;
IKEA is a world leading furniture manufacturing and selling Swede company that has major operations in Europe, North America and parts ofAsia. The company consumes a huge amount of timber in the line of its business activities and in the process causes huge impacts on the environment through deforestation. In recognition of this environmental impact, the company set up an environmental strategy that seeks to reduce the impacts of its business operations on the environment. The strategy focuses on issues such as economizing of resources, preferred sources, minimum forest requirements, and cooperation with others (IKEA, 2009, pp.1).
With regards to economising of resources, IKEA sustainability strategy is centered on combination of good product design and high quality with cost consciousness. Efficient use of resources in sourcing, product design and the actual production is to be pursued. The company is also actively and continuously searching for new technologies and techniques that would enable the best possible returns to be achieved from every tree trunk.
In sourcing wood, IKEA strategy stipulates that the wood sourced for the purpose of use in production must come from a forest that is managed in a responsible manner from an environmental point of view. Thus, the forests must receive certification as being responsibly managed. A balance of cooperation between environmental, social, and economic stakeholders must be ensured by the certification system. The certification system of Forest Stewardship Council is preferred, according to The IKEA Position on Forestry Report (2009, pp.1).
Comparison and contrast of the three companies’ sustainability strategies;
The sustainability strategies of all the three companies are very much similar in that they all have the same objectives that are desired to be achieved, that is, use of natural resources in a manner that would not be harmful to the environment which would not only be beneficial to the companies but to the populations and future generations. Though the corporations are sampled from different industries, it is clear that all face a real and huge hazard from destruction of the environment, irrespective of the kind of operations they are involved in.
The only difference in the strategies of the three companies stems from the scope of the strategy of each. For instance, Nokia’s strategy is very comprehensive and covers many aspects while the other two seem to cover a relatively smaller scope, presumably due to the perception of their operations’ impact on the environment
Challenges to the Sustainability agenda;
Sustainability as a business agenda, though widely practiced by many companies around the world still faces considerable amount of challenges in the sense of adoption by reluctant businesses. The major reason for this resistance is the perception that the sustainability agenda is incompatible with business agenda and if adopted, proponents of this viewpoint argue, companies would face difficulties in achieving their goals of profitability and hence creating good value for the interests of their stakeholders (Welbach, 2009, pp.18). In addition, the index of environmental and social performance is not well defined thus hindering appropriate measurement of sustainability and quantifying its benefits in financial terms.
The sustainability issue is also threatened by lack of strong will among the managers given the task of implementing it because the financial and economic benefits are difficult to quantify in monitory terms. This may happen even within the organisations with strong strategy policy, making it remain on paper.
It appears that some executives in some corporations that do not follow a strategy of sustainability are either of the view that their operations do not interfere with the environment, or that the level of the impact is negligible. The most unfortunate scenario would be the management, despite of being fully aware of the impacts, simply choosing to ignore and initiate no actions to help reduce the impacts. An argument that the companies’ operations have no impacts on the environment would be void because in the process of manufacturing products in factories, the companies surely emits significant amounts of wastes, like carbon dioxide gas, which have environmental hazards. In addition, shoving off the environmental issue would be an ignorant move ignorant, for environment is an externality and the consequences of its destruction would directly affect the survival of every company.
Welbach, A., 2009. Strategy for Sustainability: A Business Manifesto. MS: Harvard Business Press
Reilly, E, et al., 2007. Sustainability: An Evolving Business Paradigm. American Management Association,[Online].
Available at www.amanet.org/training/webcasts/Sustainability-An-Evolving-Business-Paradigm.aspx. [Accessed 28 April 2010].
Coster, H., 2010. Ranking the World’s Most Sustainable Companies, Forbes,[Online].
Available at www.forbes.com/2010/01/26/most-sustainable-companies-leadership-citizenship-100.html. [Accessed 28 April 2010].
Global100, 2010. 2010 Global 100; the definitive corporate sustainability benchmark. Global 100: most sustainable corporations in the world, [online]. Available at wwww.global100.org/annual-reviews/2010-global-100-list.html?sort=rank [Accessed 28 April 2010]
IKEA, 2010.The IKEA Position on Forestry.Stockholm: IKEA, [Online].
Available at http://ethicalperformance.com/reports/links/IKEA [Accessed 28 April 2010]
Nestle, 2008.Quality food products and sustainable development. Nestle Sustainability Review, [Online].
Available at www.nestle.com/Resource.axd?Id=3510946B-2D94-4348-8AB1. [Accessed 28 April 2010].
Williard, B., 2002. The sustainability advantage: seven business case benefits of a triple bottom line. NJ: New society publishers.