Environmental Management and Strategic Planning in Business Management

Abstract

The natural environment is one of the key elements and determinants of the life of a business. The aim of this study is to investigate how businesses, that is, business owners and managers account for environmental issues, their sensitivity to them, the impact of these issues on decision making in business and the effectiveness of environmental strategies implemented by firms. The world today necessitates businesses to operate sustainably in order to protect nature, while still maintaining efficiency in order to secure the future. Corporate environmentalism is beneficial to firms as it helps acquire and maintain customers who support and appreciate the action, increasing their sales. The image of a firm is significant for its success and is not only highly dependent on the quality of goods and services but also on a firm’s social responsibility activities that determine the demand and the preferences of customers. Good environmental action that is geared towards adherence to rules of related law allows firms to establish good relations with governments. Environmental policies are a key part of a firm’s strategy. With increasing concerns on the effect of firms on the environment and the subsequent adherence put in place by-laws to protect the environment, there are concerns over the actual purpose of environmental strategies employed by these firms. Through a qualitative cross-sectional research design of prevalent literature, this study ascertained that there is no relation between managerial strategy-making and the implementation of environmental policies. Additionally, the study showed that firms managers are mainly revenue and profit-oriented and observe minimal if at all adherence to environmental policies as their implementation have no direct benefits to business stakeholders.

Introduction

Problem

Environmental issues have a significant impact on decision making in business and are the cause of debate in the business world today, especially in recent years. Sustainability has increasingly become a challenge as there has been a shift in societal values necessitating the restructuring of firms and innovations around production and a firm’s consumption patterns ((Vergragt & Cohen, 2013; Brown et al., 2013). Many researchers have expressed concerns over the effectiveness of environmental action by firms in safeguarding and improving the environment (Newton & Harte, 1997). Several scholars have established that some managers and business owners use the natural environment for their own benefit over sustainability or ethical reasons (Cordano & Frieze, 2000). Firms’ environmental action and management most times has been based on the manager’s perception on the significance accorded to the environment and the numerous restrictions that are normally imposed (Coyle et al., 2015). Environmental management forms the basis of the implementation of strategic environmental policies effectuated by firms.

These practices and policies are usually implemented to actually improve the environment bringing back the issue of the action and thought separation. Concerns still remain on the effectiveness of the environmental management systems and policies put in place by firms regardless of the firms’ voicing their consideration on the construction and maintenance of cleaner and more environmentally friendly systems. This study aims to answer the question: are the environmental management systems adopted by firms effective in safeguarding and improving the environment, or are they simply self-serving practices?

Significance of the Study

The significance of this study is to provide a review into environmental management systems implemented by firms, their effectiveness or their lack thereof. It also provides a context of whether these policies and practices are for the benefit of the environment or for the strategic advantage of the firms themselves. The justification of this study is in the gaps and disparities in previous studies on the implementation of environmental action by firms as corporate strategy and the lack of sufficient studies on the adherence of rules of law regarding the environment, by both governments and firms.

Literature Review

The unfortunate truth is that industrial development and human civilization have contributed significantly to climate change. Within the past few centuries of human development, the chemistry of the atmosphere and the oceans have been vastly altered with potentially devastating consequences (Wright & Nyberg, 2017). Given that climatic change is such a considerable challenge, and concerted efforts from various stakeholders are consistently implemented to manage environmental degradation, it is essential to review the policies and practices implemented by organizational managers to this end as well.

‘Business as usual’ within Organizational Management

Wright and Nyberg (2017) assert that business organizations contribute significantly to climatic change as they inherently support the production of pollutants, such as greenhouse gas emissions. However, they also provided that, if incentivized, corporations could also offer innovative and efficient ways to decarbonize economies, and consequently reduce pollution. They sought to examine how businesses responded to climate change by conducting a case study review of major Australian business organizations over a 10-year time window. They, however, found that the challenge of climate change was often trivialized by organizations, normalized and converted into the mundane to allow the resumption of ‘business as usual’. This study outlines a significant and contextual consideration of businesses, whereby environmentally-conscious alternatives may not be ideal from a business perspective. Therefore, organizational managers are often required to balance their business imperatives with environmental initiatives.

The urgency of viable climate change policies is reiterated in a review by Nyberg and Wright (2020). They posit that the effects of climate change are evident in the increasing number of floods, droughts and famines, hurricanes and firestorms in the world. However, the acknowledgement of the catastrophic climate crisis is absent in various discussions in organizational management, as many corporations support the continuation of business as usual through a literal denial of the climate change phenomenon (Nyberg & Wright, 2020). This study sought to provide alternative approaches to the ‘business as usual’ outlook, but one that would re-imagine environmental initiatives to make a firm relevant in the near future. Rather than a literal denial of climate change, the authors suggested implication and interpretative denial, which would promote a continuation of a firm’s economic growth, but rather fit the issue of climate change within the dominant paradigm of corporate capitalism (Nyberg & Wright, 2020). This suggests that, even in the face of pending doomsday scenarios brought about by climatic change, organizational managers are contextually concerned with the firm’s bottom line. Therefore, any implemented environmental initiatives may be more concerned with a self-serving capitalistic agenda, than the mitigation and rehabilitation of the environment.

Responses to Environmental Issues and Climate Change

The impact of the private sector in addressing and mitigating climate change cannot be underestimated. Damert and Baumgartner (2018) emphasize this by stating that it is vital to involve the private sector in mitigation efforts of climate change repercussions. This study aimed to address the determinant of corporate action and ascertain if it was driven by external institutional pressures or intra-organizational governance. Using a quantitative approach and multiple regression analysis, the researchers found that the integration of climate change into risk management of an organization had the most influence on environmental initiatives implemented. Furthermore, companies that had a business to consumer model, and that necessitated increased interaction with consumers were more active in environmental initiatives (Damert & Baumgartner, 2018). These results suggest that a corporation is more likely to adopt environmental initiatives if doing so improves public perception of its activities. Furthermore, these climate change mitigation efforts are more likely to be adopted if they have a direct correlation to risk management within the firm itself. Therefore, organizational managers will be more likely to implement environmental initiatives if they align with the overarching business goals.

Lee and Klassen (2016) mirror these findings by stating that an organization will adopt climate change mitigation policies if the adoption of these practices will significantly reduce business uncertainty. Their study aimed to clarify why firms employed different approaches and policies in addressing global warming. The two particular factors in the review were external business uncertainty and internal organizational capability (Lee & Klassen, 2016). These results, however, indicate that an organization, despite its internal capability, will be more likely to adopt environmentally-conscious policies if there is the likelihood to improve its business outlook in the future.

Despite extensive research having been conducted in the effects of environmental issues to businesses, the efficacy of the resultant initiatives adopted by firms on the environment, and the strategic outlook of a company are largely ignored. Specifically, most studies have sought to assess the motivations of firms to adopting environmental initiatives, and tied in these motivations with either concern on the environment, or improvement of overarching business goals. However, little has been done to assess the potency and causative relationship of the adopted policies to the strategic positioning of a firm.

Research Question and Hypotheses

The primary research question was: Is there a relationship between environmental management and strategic practices adopted by firms?

Therefore, the following specific questions were derived for the research:

  1. Are environmental management policies adopted by firms effective to the conservation and improvement of the environment?
  2. Is there a relationship between a firm’s environmental policy and its strategic practices?

To address the research questions, two hypotheses were formulated as follows:

  • H0: Environmental management policies adopted by firms are effective in conservation efforts.
  • H0: Strategic practices will influence a firm’s environmental policy.

The Toulmin Conceptual Model

The Toulmin method provides a style of argumentation that outlines an argument into six constituent components, including the grounds, the claim, warrant, qualifier, backing, and rebuttal. The argument begins with three fundamental components, being the claim, warrant, and grounds. The Toulmin model for this particular study is as follows:

Toulmin model
Figure 1: Toulmin model

Method

Description of the Data

This study will use a retrospective qualitative review as its primary methodology. Valid environmental concerns have been raised and more so in the contemporary society, flagging the adherence, the lack thereof and the actual purpose of the implementation of the environmental management system by firms. Researchers and the contemporary media have covered the issue of environment and its sustainability extensively giving sufficient qualitative data for review in this study. This data will be triangulated with prevalent literature into how organizations have implemented environmental management policies and practices and their true purpose.

Procedures

To examine the adherence to environmental laws and implementation of environmental management systems by firms and their impact on the environment and the firms themselves, secondary qualitative data will be collected. Secondary data, by definition is the data collected and analyzed by another party (Creswell & Creswell, 2017). There are extensive research and media coverage done into how firms implement environmental laws, initiatives and their efficacy in the short term, which will be sourced and reviewed from journals and other scholarly publications.

Research Design

A cross-sectional study is appropriate for this research as it involves subjects- which are firms- which are similar in all variables except in the variable in question which is, their motivation behind their implementation of environmental management policies and practices. Secondary data will be obtained on available literature on the impact of environmental policy on the environment and the firms.

Results

Strategic practices are a result of analysis, planning and goal-oriented action by strategic decision-makers (Chia & Rasche, 2010). Although strategic practices are actually made up of managers’ decisions and rationale in business, these practices are often weak to implement due to the complexity of environmental management systems. A firm’s major concern is dividends and profits for their shareholders over the integration of environmental issues in their strategies (Brown et al., 2013). This means that a firm may only invest in environmental management systems or the green design after having achieved their main goals which translate to the fact that, most firms are self-serving over environmental conservation.

Following much institutional pressure in regards to negative environmental impact, some firms have developed environmental management practices that have ended up being adopted by other companies (Christmann, 2000). According to Kang (2011), governments and social institutions have continued to impose regulatory restrictions and offering normative guidelines which, as a consequence have led to more awareness and adherence to environmental management policies. Further, according to Adams et al. (2011), there is a weak relationship between strategic practices and policies put in place by firms. This could be due to the manager’s personal values and the lack of the implementation of these strategic practices in day to day decision making.

Discussion

These results show that environmental management policies integrated with strategic practices lean more towards the monitoring and evaluation of risks, profitability and analysis systems and less focused on environmental sustainability. This shows a separation between discourse and actual action. There appears to be a weak correlation of strategic practices and environmental policies to mean that firms do not use environmental management as a strategy in this study. This does not necessarily mean that there is zero action taken, but there is a huge gap between policies put in place and the actual action taken. There is a gap separating strategic intentions and the subsequent operational actions leading to poor performance by firms in regards to environmental conservation. Additionally, when firms are pushed to implement environmental conservation policies, they adopt reactive practices that do not necessarily translate to the improvement of products and processes. This lack of benefits from the implementation of the policies makes firms adhere only to the basic minimum requirements or ignore them altogether. This minimal implementation of policies or the total avoidance of them leads to the detriment of the environment at the expense of the profits earned by firms. The adherence to environmental policies by leading firms and the subsequent taking up of these policies by other firms leads to environmental awareness which is beneficial to the conservation of the environment.

This study contributes to the discussion in that it provides an analysis of the relationship between strategic practices and environmental management, the analysis of environmental conservation and its improvement from a view of strategy and the analysis into the effectiveness of the implementation of environmental policies to the environment. It is clear that not enough research has been done regarding the theme of effectiveness of environmental policies on the actual environment and that most firms are selfish and more profit oriented without any real concerns about the environment. More studies should be done and governments should be firmer in the imposition of rules and policies concerning the environment as continued neglect and disobedience of rules will lead to more environmental destruction.

References

Adams, R. B., Licht, A. N., & Sagiv, L. (2011). Shareholders and Stakeholders: How Do Directors Decide? Strategic Management Journal, 32(12), 1331-1355. Web.

Brown, H. S., Vergragt, P. J., & Cohen, M. J. (2013). Societal Innovation in a Constrained World: Theoretical and Empirical Perspectives. In M. J. Cohen, H. S Brown, & P. J. Vergragt (Eds.). Innovations in Sustainable Consumption. Edward Elgar Publishing.

Chia, R., & Rasche, A. (2010). Epistemological Alternatives for Researching Strategy as Practice: Building and Dwelling Worldviews. In D. Golsorkhi, L. Rouleau, D. Seidl, & E. Vaara (Eds.), The Cambridge handbook on strategy as practice, 23-33. Cambridge University Press.

Christmann, P. (2000). Effects of Best Practices of Environmental Management on Cost Advantage: The Role of Complementary Assets. Academy of Management Journal, 43(4), 663-680.

Cordano, M., & Frieze, I. H. (2000). Pollution Reduction Preferences of U.S. Environmental Managers: Applying Ajzen’s Theory of Planned Behavior. Academy of Management Journal, 43(4), 627-641.

Coyle, J. J., Thomchick, E. A., & Ruamsook, K. (2015). Environmentally Sustainable Supply Chain Management: An Evolutionary Framework. In L. Robinson Jr. (Ed.), Marketing Dynamism & Sustainability: Things Change, Things Stay the Same… (pp. 365-374). New York: Springer International Publishing.

Damert, M., & Baumgartner, R. J. (2018). External Pressures or Internal Governance–What Determines the Extent of Corporate Responses to Climate Change?. Corporate Social Responsibility and Environmental Management, 25(4), 473-488. Web.

Kang, Y. (2011). Adoption of Environmental Management Strategy for Manufacturing: An Integration of Institutional Forces and Strategic Behavior Approach. International Journal of Business Research, 11(4), 74-88.

Lee, S. Y., & Klassen, R. D. (2016). Firms’ Response to Climate Change: The Interplay of Business Uncertainty and Organizational Capabilities. Business Strategy and the Environment, 25(8), 577-592. Web.

Newton, T., & Harte, G. (1997). Green Business: Technicist Kitsch? Journal of Management Studies, 34(1), 75-98.

Nyberg, D., & Wright, C. (2020). Climate-Proofing Management Research. Academy of Management Perspectives, (ja). Web.

Wright, C., & Nyberg, D. (2017). An Inconvenient Truth: How Organizations Translate Climate Change Into Business as Usual. Academy of Management Journal, 60(5), 1633-1661. Web.

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