Evaluation of the Business Case for Sustainability and Assessment of Deena Marstrengs Strategy
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This paper is divided into two parts. In the first part this paper will give an explanation of the concept of sustainable development and how it has developed over time within the context of the debate about the extent of corporate social responsibility. Furthermore will the first part give an evaluation of the impact on businesses in terms of the changing external business environment and the resultant implications for corporate strategies.
The second part of this paper relies heavily on the case study of “Deenas company” and evaluates the reconfiguration process of Deenas companys. The second part starts out by explaining the sustainable value framework and the Eight Disciplines. Those two frameworks will be used to look at how Deena analysed the social and environmental impact of her company, her formulation of sustainable strategies and the evaluation of Deenas implementation of sustainable strategies.
In the conclusion the evaluation of the business case for sustainability will be carried out and the core essence of establishing a sustainable strategy will be captured.
Many definitions have been delivered over the years to explain sustainable development. The most accepted definition by nowadays academics remains to be the Brundtland Commission which states:
“Sustainable development is that which meets the needs of the present without compromising the ability of future generations to meet their own needs” (Bruntsfield Commission).
Sustainable development was however not always been perceived as it is today. The perception of todays sustainable development was a process that can be traced back to forestry in the 18th century.
The principle of sustainable development was first mentioned by the German aristocrat Hans Carl von Carlowitz in 1713. Carlowitz describes in “Sylvicultura oeconomica” that only so much timber should be cut as through reforestation would grow back (NOP Online, 2008 & Lexikon der Nachhaltigkeit, 2010).
The first phase of modern environmentalism is marked by the conservative movement of the late 19th century which emphasised “a more restrained and prudent approach to the natural world” (Hartman & Desjardins, Chapter 9).
The next big impact in the perception of sustainable development was seen in the 1970s protest in the USA which resolved into widespread calls for business to accept a wider range of social and environmental responsibilities (Ian Smith, Lecture 2).
The respond to this up rise was seen in the US academic Friedman who made the point that business only social responsibility is to maximise profit (Ian Smith, Lecture 2). Friedmans emphasised shareholder view, considered companies expenditures on social or environmental actions as a reduction of profit and therefore not beneficial for shareholders. As a result Friedman theory can be linked to the ethical theory of Utilitarianism which also emphasises profit maximization.
Recent writers, Daly, Freeman, Elkington, Carroll, Crane and Matten, have emphasised a wider perspective on business responsibility which not only takes company shareholders into account but also company stakeholders issues. Elkington developed the concept of the triple bottom line, which called for business to include an extended set of goals in which not just economic but also environmental and social goals would be included. If all those three goals of the triple bottom line were met sustainable value was achieved. Therefore CSR could be seen as a triple bottom line strategy in action (Ian Smith, Lecture 2).
Corporate social responsibility is built on the premise that a positive stakeholder engagement will enhance shareholder value (Ian Smith, Lecture 2). Therefore are Elkingtons and Carrolls two models providing a counter-argument to Friedmans theory. Furthermore the two models by Elkington and Carroll can be linked to the ethical theory of the Deontological view, due to the management duty in those models to interact with stakeholders.
The paper will now have a look at how this all has an impact on business in terms of the changing external business environment. To understand what changed in the business environment in regards to sustainable development, it is vital to understand why sustainable development is needed.
DesJardin gave a very compelling argument in which he refers to the world population of 6 billion which is still growing fast. He makes the point that if for instant Chinas 1.3 billion people “used as many resources and created as much wastes as the 300m of the USA…China (alone) would then consume more oil than todays total production and would produce double the present worldwide CO² emissions” (Ian Smith, Lecture 2). DesJardins point is also shown in the funnel model and is referred to by Dalys as “…biophysical limits to growth” (Hartman & Desjardins, Chapter 9). Resources of the world are decreasing and the demand is increasing. Therefore to sustain human life as we know it, it is inevitable to make our daily processes of companies and ordinary people more sustainable. The inevitable need for sustainability and the risen awareness of CSR both lead to a changing business environment to which businesses have to respond.
Due to this inevitability of sustainable processes, governments launch initiatives that effect todays business. The most common areas of national intervention are legal controls on emissions, provision of legal means for civil claims, systems for control of waste disposal and planning systems which asses the environmental impacts of new industrial and transport infrastructure (Morrison, p.485).
The issue with such governmental legislation is that the enforcement is often times problematic if dealing with such issues on a global scale. An example for this issue is the polluter pays principle in which companies are responsible in any given country for pollution that they caused. The enforcement however proves to be extremely difficult in cases poor countries vs. MNCs. Due is this to the better legal resource base of MNCs and the often times dependence of poor countries on MNCs. Through the UN which is concerned with this issue, it is to expect that enforcement will become more effective (Morrison, p.487).
An example for governmental intervention in a developed country would be the EU Commission announcement, which calls to legislate for reduction in CO² emissions from new cars by 2012 in the EU. Also if such reductions of CO² emission might not be applied in other nations at the same point in time, the EU might be a pioneer on this emission law which other countries might apply soon.
Therefore are the implications for corporate strategy in this section not to only enforce