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Essential Matter: Corporate Environmental Management Means Business as Usual

1 Sep 1998

  • Author(s): Richard Welford


Damage to the environment of the planet over the last few decades has reached the point of causing untold suffering for human beings and other species. Just as business has to accept a large share of the responsibility for this devastation, it must also play a central role in reversing it. To date most businesses which have begun to respond to environmental issues have done so in quite marginal ways. Periodic environmental audits will not protect an indigenous population; green marketing will not replace slashed rainforests; and printing glossy environmental reports on recycled paper will not rehabilitate thousands of square miles of dangerously contaminated land. Change has to be much more radical.

While there are many opportunities for improving corporate environmental management (CEM) in developing countries, there are also barriers to business strategies that would be consistent with sustainable development. We are in the hands of large corporations which must be persuaded, cajoled or even forced to change. Few of them have recognized the crisis and are committed to change. The reality is that corporations duck and dive, invest in smoke screens, hide behind science and technology, espouse gradualist solutions, and attempt to derive maximum publicity from piecemeal changes in environmental management systems.

Dominant approaches to CEM enshrined in what we might call eco-modernism or eco-efficiency are not providing the types of reforms in business strategy that would be consistent with sustainable development. In fact, to the extent that eco-modernism simply adds an environmental dimension to the mainstream development path and reinforces the growth paradigm, it represents another variant of "business as usual". As business comes to control both the environmental agenda and the greening of development through technology transfer via private capital, more radical visions of social and environmental change have been diluted or silenced. Business has consistently ignored the root causes of the environmental crisis, which have to do with consumption patterns, materialism and growth.

Large corporations often claim to be contributing to sustainable development, but they place little emphasis on crucial social and ethical dimensions inherent in the concept. While firms increasingly acknowledge the need for a stakeholder approach, and include it in their environmental planning, many consistently fail to address the negative social impacts of their activities, pay only lip-service to improving their internal employment conditions, and lack openness and transparency in decision-making processes and the disclosure of information.

If companies are serious about putting in place sustainable production systems and procedures for social and environmental accountability, they must embark on comprehensive reform. One key aspect of this process involves the development of sustainable production systems that make fewer "throw-away" goods, produce more products of quality that last longer and create less waste, promote reuse and recycling, and increase levels of employment. Another is the development of a broad-based strategy that addresses not only environmental and economic concerns but also social, political and ethical dimensions of sustainable development. Business should have a clear policy in six areas, which can be called the six "Es": environment, empowerment, economics, ethics, equity and education. Then the firm must operationalize its policies by using specific tools, report on progress and demonstrate continuous improvement.

Clearly, maintaining or gaining competitive advantage is key to the success of business and needs to be part of a corporate strategy for sustainable development. Although it is sometimes assumed that strategies and tools associated with environmental protection and sustainable development will be costly and may reduce competitiveness, there is evidence that environmental management can add to competitive advantage in the new framework for competition that is emerging with globalization. Such a framework is imposing a need for a strategic reorientation of companies — with firms having to reduce costs by using fewer inputs, and to produce and market envrionmentally friendly goods and services in order to differentiate their products and thereby enhance corporate image.

Progress towards corporate environmental and social responsibility can be greatly accelerated through governmental and civil society actions that create an appropriate policy framework. Particularly important in this regard is the introduction of environmental taxes that would both reduce the use of non-renewable resources through proper valuation and discourage the practice of replacing labour with (subsidized) capital. Other policies include the development of a framework for social accounting and consumer information to monitor and report on corporate achievements and failures; and protectionist measures that target the markets of unscrupulous companies that consistently degrade the environment and threaten people's livelihoods.

Richard Welford is Professor of Business Economics and Director of the Centre for Corporate Environmental Management at the Huddersfield University Business School, and Professor of Sustainable Management at the Norwegian School of Management. The arguments highlighted in this article are developed in Hijacking Environmentalism: Corporate Responses to Sustainable Development, by Richard Welford, with contributions from Eloy Casagrande Jr., David Jones, Tarja Ketola, Nick Mayhew and Pall Rikhardsson, published in 1997 by Earthscan (London).