The present turmoil over climate change is evident about the pathetic situation mankind has ever witnessed in history. This climate change can be attributed to man's quest for economic development which cannot be achieved without industrial operations. Limitless growth in industrial operations has further increased pollution levels through combustion of fossil fuel catalyzed by population explosion. Several strategies had been formulated by various governments on international and national platforms to out beat the effects of environmental degradation. It has become imperative to design business strategies at local, national and international level that help in sustainable development. An attempt has been made to understand the various challenges while designing strategies for sustainable development. This paper aims to highlight the importance of business strategies in mitigating the effects of climate change and thus achieving sustainable development.
Sustainable Development, Business Strategy, Climate Change.
The terminology ‘Strategy' has been absorbed form military operations and used very often in business dealings. This can be in the context of various plans and programs that a business organization designs in order to counteract what the opponents has been doing or a way to grab a major market share or to expand the business. In military operations, strategies were being used to engage the enemy and now-a-days business strategies are being used in different context. Strategy has always been successful in bridging the gap between policy and tactics. There have been many contributions from noted management gurus in the area of strategy and strategic management. Some of the definitions and meanings of strategy are as follows.
Strategy According to George Steiner
George Steinerin his book ‘Strategic Planning' notes that strategy entered the management literature as a way of referring to what one did to counter a competitor's actual or predicted moves. Steiner also points out in his notes that there is very little agreement as to the meaning of strategy in the business world. Some of the definitions that he points out include the following:
1. Strategy is that which top management does that is of great importance to the organization.
2. Strategy refers to basic directional decisions, that is, to purposes and missions.
3. Strategy consists of the important actions necessary to realize these directions.
4. Strategy answers the question: What should the organization be doing?
5. Strategy answers the question: What are the ends we seek and how should we achieve them.
Strategy According to Henry Mintzberg
Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning , points out that people use "strategy" in several different ways, the most common being these four:
1. Strategy is a plan, a "how," a means of getting from here to there.
2. Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy.
3. Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets.
4. Strategy is perspective, that is, vision and direction.
Mintzberg argues that strategy emerges over time as intentions collide with and accommodate a changing reality. Thus, one might start with a perspective and conclude that it calls for a certain position, which is to be achieved by way of a carefully crafted plan, with the eventual outcome and strategy reflected in a pattern evident in decisions and actions over time. This pattern in decisions and actions defines what Mintzberg called "realized" or emergent strategy.
Strategy According to Kenneth Andrews
Kenneth Andrews(1980) in his book, The Concept of Corporate Strategy quotes that “ Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities.
Business Strategy defers from corporate strategy. Business strategy defines the basis for competition, while a corporate strategy determines the businesses in which a company will compete.
Strategy According to Michael Porter
Michael Porter in his book, Competitive Strategy argues that a strategy is being different than the competition. It is to deliberately choose a different set of activities to deliver a nuique mix of value. Strategies are being used by organizations so as to keep themselves distinguished in the eyes of customer. Porter defines competitive strategy as "a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there." Thus, Porter seems to embrace strategy as both plan and position.
In all out of the various contributions done by various authors in the field of strategy, it is evident that strategy gives a competitive advantage to organizations by helping in creating a distinguished image than the competition. Strategy can be in any discipline of an organization. It ranges from marketing to finance to operations to research and to many more. The question arises how organizations can use a mix of various strategies to create sustainability in the future.
The concept of sustainable development is gaining more momentum and is nomore a new theoretical and abstract for business executives. New courses are being started by various institutes on sustainability development. Organizations keep on trying hard to protect its capital base. But there has always been a challenge of extending this notion to natural and human resources. If organizations want to achieve sustainable development it has to incorporate the potential of sustainable development into strategic planning, measurement system and development. And in order to affect its implementation by the top management, it must be articulated in terms that are familiar to the top management.
Sustainable Development can defined as an ongoing process in which an organization engages itself in activities to meet the needs and demands of various stakeholders and simultaneously enhancing its abilities and capabilities with respect to its natural and human resources so as to keep meeting various challenges in the future. Sustainable development emphasizes that organizations should plan their activities without degrading its human, financial and most importantly its natural environment.
Organizations should be very serious with respect to sustainable development, but it is very important to note that it cannot be achieved by any organization irrespective of its strength in isolation with its environment. Sustainable developmenthas to be a pervasive philosophy for every participant of the global economy. Sustainable development helps the future generations to meets their needs and demands in a new and different environment without degrading the nature.
History of Sustainable Development
Businesses have been always criticized for the impact they exert on environment. The world has witnessed many man-made catastrophes in this context such as the Seveso in 1976, the Amoco Cadiz in 1979, the Bhopal gas disaster in 1984, the Chernobyl nuclear disaster in 1986, the Exxon Valdez in 1989, the forest fires of Indonesia during the late 1990s etc. These international disasters have always put a question mark on the nature of conduct of business activities and the environmental degradation.
According to Fisher and Schot (1997) there has been a progressive change in the responses of corporates towards environmental issues. During the period from 1975 to 1985 there has been some corporate resistance to regulation and a begrudging acceptance towards cost increasing and regulatory requirements. This response form the corporates can be attributed to the command and control mechanisms of various regulatory bodies which mandate pre-specified levels of industrial emissions. After 1985, according to some authors there has been a slow emergence of strategic moves towards environmental issues. Corporates started accepting the challenges on various environmental issues as a strategy for competitive advantage at every stage of the value chain. There are many actors responsible for changes in corporate responses towards business practices. These are in the form of scientific community which came up with strong evidences of environmental degradation due to unrestricted business practices violating environmental boundaries, the media which highlighted the consequences, the Non-governmental bodies, the government resulting in the form of international agreements on environment protection.
With the expansion of traditional concern over environmental degradation, there have been different challenges to business practices all over the world to cover up the ecological, social and economic issues under the preview of sustainable development. Environmental and business sustainability can only be achieved if there is a clear understanding of the fundamental scientific, social, political and economic issues.
The following figure represents various challenges posed by different forces to traditional business practices in the environment.
At the 1992 UN Conference on Environment and Development held in Rio, various countries were committed to developing and adopting strategies for sustainable development and harmonize the various sectorial, social and environmental plans and policies. The objective was to provide economic sustainable development for the future generations. Similarly in 1996,the OECD's “Shaping the 21st Century” strategic objective was to formulate and implement sustainable development strategy in every country by 2005.In 1997, the Special Session of the UN General Assembly progress review led to adopting a target for introducing national sustainable development strategies by 2002 as a dead line.
Despite of so many developments and agreements between various nations on the international level a very little guidance was available as to how these commitments may be fulfilled. It has been experienced that many countries have shown their commitments to sustainable development in a technocratic way through comprehensive national plans in various sectors with accompanying projects to be implemented. Many of these were often required or inspired by some external agency and connected to financial conditions. One such example is that of National Conservation Strategies and Environmental Action Plans. Such plans have a long term vision and priorities. New strategies for sustainable development sometimes undermine existing processes and also waste scarce resources. It has also been observed that many strategies fail to address the social, economic and organizational changes required for sustainability. For sustainable development to be successful a project must have co-ordination and integration among its various components. Lack of co-ordination and integration between various components lessens the chances of throughout success even in case of promising projects.
Designing Strategies for Sustainable Development
According to Development Assistance Committee (DAC) a strategy for sustainable development may be defined as “A co-ordinated set of participatory and continuously improving processes of analysis, debate, capacity-strengthening, planning and investment, which integrates the economic, social and environmental objectives of society, seeking tradeoffs where this is not possible”.
The DAC has also given a set of principles which considers desirable processes and outcomes that signifies and assures the successful implementation of strategies for sustainable development. Accordingly if strategies are executed with ownership and commitment at local level along with participation from various local and governmental bodies the likelihood of success increases. This success can be attributed to significant convergence and coherence between different planning frameworks, integrated analysis, and capacity development. Strategies for sustainable development should be designed by considering and incorporating the efficiencies and capacities of government, the society and the private sector so as to provide a consolidated framework for achieving the vision for future generation. This framework has to be designed rationally thinking what is practically possible and what is not at every level of its design. Strategies for sustainable development will include several initiatives like free education for all, poverty eradication programs, green development plans in every sector of the society, decentralized planning and consultation practices, population control awareness programs, stringent actions against fraudulent practices and terrorism and most importantly preserving the environment for future sustainability. Strategies for sustainable development may be designed by re-structuring some of the existing processes, institutional arrangements policies and procedures according to individual countries' or organizations' own needs, priorities and resources. Sustainable development strategies cannot have discrete starts or ends but they are iterative and constantly evolving in nature. Organizations and countries may start up with some established strategies in the beginning, understand the relevance, need and restructure the strategy accordingly without straining the environmental resources instead of coming up with some new and innovative strategy. Innovative strategy may not be completely ruled out but may not be relevant to the context, may require some time frame and may get obsolete in the long run.
The success of an individual strategy can be described in terms of:
1. Enhanced understanding and clarity of sustainable development issues both within and between interest groups.
2. Improved communication within and between interest groups.
3. Consensus on various issues of sustainable development.
4. Networks of committed individuals organizations and institutions.
5. Agreements on newly assigned roles and responsibilities within various groups.
6. Commitment to action for sustainable development.
7. Expertise within committed groups.
8. Joint actions taken by different groups for sustainable development.
The Strategy Cycle
Source: Carew-Reid et al. (1994)
Challenges to Sustainable Development
The past three decades has shown unprecedented changes. The level of food production and consumption has risen, life expectancy in the developing countries has increased due to various medical provisions, and infant mortality rates have come down very sharply. Families have started migrating from rural to urban areas thereby improving the urban infrastructure further resulting in improvements in income levels along with health and education levels in the growing economies. Simultaneously this industrialization and urbanization has gifted some challenges to mankind. Following are some of the challenges to sustainable development.
1. Poverty: Extreme poverty is still one of the greatest challenges to sustainability which has affected one out of every five people in the developing countries. Poverty has also been found to be associated with some social ills like crime, diseases, family breakdown and use of narcotics to name a few.
2. Population explosion: Despite of many challenges to quality living of human kind, population growth has been a greatest challenge to sustainable development. The population of world is expected to grow exponentially in the developing world. This may be attributed to low level of awareness among the masses and some of the policies of government like the recent change in family planning policy of China to have two children which was initially a one child policy.
3. HIV Aids and some life threatening diseases: HIV-AIDS, malaria, typhoid with other epidemics are supposed to worsen the productivity and social framework of the developing world. Among the worst affected nations HIV has a significant impact on existing rates of infant, child and maternal mortality. Malaria has been identified to be the second killer in the developing world affecting around millions of people.
4. Political Instability: Political instability brings violence in the society, affects the socio-economic growth and also divides the society on account of inequality of income. The major reason for political instability in some of the middle-eastern countries is fundamentalism, poverty and race for geographical expansion.
5. Environmental Deterioration: Environmental deterioration has been attributed to rapid industrialization, globalization, and inefficiency in providing alternative to fossil fuels to name a few. This has resulted in depletion of natural resources (soil erosion, deforestation, depletion in livestock etc.) and air pollution has been found to be the most significant source to environmental depletion further leading to global warming thereby questioning the earth's continued capacity to sustain the resulting stress arising out of population explosion. Recent studies reveal that the earth's ecosystem and natural resources have declined by over 30% in the last 30 years.
To be successful it is imperative for business organizations to design strategies that will not only assure success and profit but also help in sustainability. And hence in accordance businesses should whole heartedly participate and cooperate with the government on different platforms in designing strategies for sustainable development. CEOs need to adopt a cohesive approach and should try to integrate the efforts of government along with various stakeholders and then try to win over customers. Stakeholder analysis is very significant for designing business strategies as it helps in saving time and money for organizations in prioritizing issues that need foremost attention. It is very important for business organizations to continuously keep on evolving different frameworks and policy architecture to advocate smart regulation and economic policies on sustainability reporting.
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