Why and how green management matters

Why and how green management matters

Article Type: Guest editorial From: Management Decision, Volume 47, Issue 7

Welcome to this the third in the ongoing series of special issues of Management Decision devoted to matters of ethics, sustainability and corporate social responsibility (CSR), woven in with the organising theme of the Academy of Management annual meetings. After special issues that explored alleviating poverty through trade (“Doing well by doing good”) and questions we ask about ethics in a global marketplace (“Questions we ask”), we turn to the theme of the Academy’s 2009 conference “Green Management Matters”. In doing so, the ten papers brought together in this special issue consider first, what is green management (Pane Haden et al., 2009). The next matter for consideration is why green management matters – what are some of the imperatives to consider in taking a “green” approach to business and management, including financial (Yu et al., 2009; Molina-Azorín et al., 2009) and moral (Agatiello, 2009) considerations. The next set of papers then looks to examine how green management matters, with research from Germany (Wittneben and Kiyar, 2009), Korea (Lee, 2009) and Slovenia (Biloslavo and Trnavcevic, 2009), along with an international study by Prado-Lorenzo et al. (2009). The issue concludes with consideration of some of the potential challenges faced by multinational companies (MNCs) managing CSR strategies (Barin-Cruz and Pedrozo, 2009) and a practical focussed rules approach to guide strategic processes, that may assist in meeting some of those challenges (Dwyer, 2009).

We begin our consideration with award-winning scientist, environmentalist and broadcaster, Dr David Suzuki PhD, who proffers to us his Reflections from an Environmental Perspective, which rehearses a number of the insights of the subsequent articles and provides us a broader context within which to explore the issues associated with green management. David Suzuki is renowned for his television and radio series, such as The Nature of Things, A Planet for the Taking (which won an award from the United Nations), and, of course, his documentary series on the environment, From Naked Ape to Superspecies and It’s a Matter of Survival. We’re naturally delighted that he would see fit to support our efforts to bring these green management matters to attention with his thoughts, and thank him for doing so.

And so to the special issue proper.

While the environmental impact of the industrial revolution of the 1700s aroused little comment at the time, the more recent industrial revolutions taking place in developing countries such as China and India are taking place at a time of increasing concern about responsible stewardship of the natural environment. The documentary film, An Inconvenient Truth, telling the story of former US Vice President, Al Gore, and his efforts to educate the public about the severity of the climate crisis is one of the more recent, and perhaps the most well celebrated, of the efforts over the last four decades to sound the alert concerning the impact of social and economic activity on the globe we inhabit. This concern is reflected in the theme of the Academy of Management’s 2009 annual meeting (see http://meeting.aomonline.org/2009/). As we begin to explore why and how business might respond to these concerns by, for example, adopting a green approach to management, a good place to start is with a clear understanding of what green management is.

Pane Haden et al. (2009) investigate the green management literature from three different perspectives – outlining how this concept emerged over time; detailing the practices in which green organizations actually engage; and evaluating the concept through the lens provided by critical theory. The result is a comprehensive definition as a basis for studying or practising green management. As well as providing a context within which the subsequent papers in this special issue can be considered, the article presents a basis for future research efforts in the area.

Echoing the words of St Augustine, the title of Agatiello’s (2009) paper, “The world is one and all things are in it”, quickly alerts the reader to his purpose – to suggest a more ambitious ethical approach for environmental decision-making. Agatiello (2009) argues that getting the science, politics and economics right is a necessary but not sufficient condition when addressing environmental concerns. Rather the ethical dimension is critical to the development of an appropriate global response to the environmental challenges we face. In this regard, Agatiello concludes that global society must reach a practical agreement on a common system of justice, if it is to be characterised as a civilised international community. This agreement, Agatiello (2009) asserts, must be informed by the notion with which he begins – the world is one and all things are in it.

I have commented previously on an ethics informed approach to the regulation of business (Lamond, 2008), in light of Milton Friedman’s (1970) view that the only social responsibility of firms is to maximise profits without fraud or deception. This latter view is reflected in the notion that there is a fundamental conflict between concern for the environment and business performance, such that the cost burden of protecting the environment reduces productive capacity, with a consequent reduction in market competitiveness (see Palmer et al., 1995). The next two papers provide some interesting results in this regard.

Utilising a sample of 51 European companies from 14 industries in 15 countries, Yu et al. (2009) take a novel approach to measuring firm environmental performance, incorporating the efficiency of resource use by the firm. At the same time, they are unable to establish a relationship between environmental effort exerted by the companies and their financial performance. The results indicate, Yu and colleagues (2009) maintain, that the group he refers to as the “corporate good guys in Europe” don’t benefit from their efforts to be green. On the other hand, in light of the concerns expressed by those such as Palmer et al. (1995), it is equally the case that there appears not to be a cost burden on the firms of their efforts, as reflected in their respective financial performances. Recognising the limited sample in the study, however, Yu and colleagues (2009) call for further research on the relationship between firm environmental efforts and financial performance in industries with different technologies and product life cycles. This call has been answered, although not directly, by the work of Molina-Azorín et al. (2009).

The literature review by Molina-Azorín et al. (2009) of the influence of environmental management on financial performance includes an examination of 32 quantitative studies using variables such as profits, share price, ROI, market share, and sales growth. While the results of the 32 studies were mixed, the predominant findings reflected a positive influence on firm financial performance. Molina-Azorín et al. (2009) conclude with a call for further research involving a meta-analysis to provide a statistical integration of the accumulated research on the relationship between environmental management and financial performance.

When Scottish polymath Patrick Geddes (sociologist, biologist and urban planner), coined the phrase “think global, act local”, in 1905 (Stephen, 2004), it would not have occurred to him that it would be adopted nearly 70 years later as a rallying cry for the environmental movement. It is also a phrase that provides a shift of emphasis to the next set of papers in the issue, providing as they do a series of country specific examples of how green management matters.

The first of these is proffered by Lee (2009), who examines the adoption of green management practices in two manufacturing SMEs in Korea. By making a series of strategic and organisational changes, in terms of structure, capability and people processes, these companies were able to successfully transform themselves to green practice. In the same vein, Wittneben and Kiyar (2009) explore the general issue of how companies in general can mitigate and adapt to climate change, in terms of what a company can do, why it is necessary, and how it can be operationalised. A case study of the efforts of German Electricity Company RWE AG, identified as by far the largest emitter of CO2 in Europe, to reduce its impact on the environment is then presented.

Reputation enhancement is one of the benefits that accrue to companies that have gone down the green path (see, for example, Collison et al., 2008). Biloslavo and Trnavevi (2009) looked at the green reputation 20 Slovenian companies, drawn from a various of industry sectors, including pharmaceutical, chemical, energy, food production, retailing, automotive, construction, logistics, and domestic appliance, by way of content and discourse analysis of their websites. Biloslavo and Trnavevi (2009) found that, while the companies present their values about environment protection and social responsibility, they do not represent these as a feature differentiating them from their competitors to the marketplace, so missing an opportunity to gain a competitive advantage.

Still on the issue of corporate communication and websites, Prado-Lorenzo et al. (2009) report on an examination of the different factors influencing the disclosure of corporate information on issues related to greenhouse gas emissions and climate change worldwide, via analysis of the websites of 101 companies operating in industries related to greenhouse gas emissions. Prado-Lorenzo et al., 2009 find, inter alia, a direct relationship between corporate size, market capitalization and the disclosure of information on greenhouse gas emissions. Of particular interest, in light of the Slovenian findings from Biloslavo and Trnavevi (2009), is the trend for the Fortune 500 companies that were the subjects of Prado-Lorenzo et al. (2009) to utilize information on greenhouse gas emissions as a mechanism allowing them to legitimise themselves with those groups that can benefit them by way of, for example, compliance with current legal requirements on environmental issues, decreasing capital costs or the attraction of new investors.

Returning to the bigger picture, Barin-Cruz and Pedrozo (2009) examine the potential challenges faced by MNCs trying to manage their CSR strategies, especially in relation to their subsidiaries. Data collected from two French MNCs in the retail sector, both with subsidiaries in Brazil, provides Barin-Cruz and Pedrozo with the material to be able to answer questions like “How does the company integrate CSR and green management practices between the headquarters and the subsidiary?” and to identify a series of tests as the company seeks to develop a CSR structure that covers departments at both local and global levels; develop a consistent dialogue with stakeholders at these different levels; define environmental, social and economical objectives and indicators at these different levels; assume a consistent proactive CSR posture at these different levels; and raise awareness of CSR issues amongst employees at these different levels. These challenges have important implications for governance structures, corporate ethical practice and organisational learning (Barin-Cruz and Pedrozo, 2009).

Dwyer’s (2009) is the final paper, and he offers some broad strategies, not only for dealing with the challenges to which Barin-Cruz and Pedrozo (2009) allude, but for companies generally seeking to integrate strategic processes to enhance competitiveness and growth, while improving their performance measurement and accountability as they implement their green organization initiatives. He does so by way of the examination of a “focussed rules” approach and its applicability for private, public and not-for-profit organizations and their decisions regarding green strategy.

Taken together, these papers provide a sound introduction to, and exploration of, why and how green management matters. My thanks once again go to fellow editor, Rocky Dwyer, for his continuing commitment to the matters of ethics, sustainability and corporate social responsibility that we have explored, and his good humour and friendship as we have undertaken the associated tasks.

David LamondNottingham Business School, Nottingham Trent University, Nottingham, UK