Corporate Strategies in Environmental Management

Article excerpt

A study of U.S. and German chemical firms reveals four different strategies for responding to environmental concerns. Are you a defender or escapist, a dormant or activist?

OVERVIEW: Environmental management has become an issue of substantial concern, particularly in the chemical industry. A comparative study of U.S. and German chemical companies shows that they adopt substantially different strategies to express this concern. Four different strategies have been identified, and the characteristics that indicate responses to environmental factors are substantially different among the clusters. It is suggested that regulatory agencies should take these differences into account, and that companies that have adopted a particular strategy should be aware of alternative approaches by their competitors. The choice of new technology and the R&D portfolio will be affected by the strategies chosen.

More and more firms are recognizing environmental concerns as major factors in strategic change (1). Some even adopt the term "eco-leadership" to define an excellence strategy that needs support primarily from R&D. However, the basic idea of sustainable development that lies at the heart of the concern for the environment has remained fuzzy, elusive, contestable, and ideologically controversial (2).

In R&D, where environmental issues were formulated explicitly some 25 years ago (3), it is apparent that there are two aspects: (1) R&D as part of an ecological system, which needs to be considered in its performance; (2) R&D that impacts the environment.

Further complicating the matter is the fact that support for environmentally relevant R&D may come from public or from private sources, (4) thereby creating conflict within a firm. (Our study involved only the private sources.) Responding to environmental concerns has considerable financial implications. It can lead to rapid change in the driving forces of competitiveness, involving a broad range of technologies, and may impact the entire organization, even if initiated in only one of its departments (5).

Three Levels of Response

Because ecological needs can change the competitive context of firms, they demand a strategic response from individual firms (6). Three levels of response seem plausible: passive or defensive strategies concentrating on compliance with standards and end-of-pipe technologies; reactive strategies aimed at developing recycling models and considering the lifelong environmental impact of new products; and active strategies seeking integrated protective concepts and taking account of those effects that result from product use ().

Similarly, a study of British firms identified three basic strategic responses to environmental concerns: compliance, compliance plus, and excellence (8). Compliance is the minimalist approach to observing legal requirements. Compliance plus goes beyond the minimum legal requirements and strives to integrate environmental management into business structures and systems. Excellence involves striving for both environmental and business excellence.

There have been four different routes to achieving these strategic responses: 1) The quality route involves achieving environmental goals through a zero-defect philosophy; 2) companies such as ICI focus on the health and safety of their personnel to achieve environmental goals; 3) emphasizing the "green attributes" of products is another means of promoting environmental concern; 4) some companies incorporate environmental values in their overall value system.

A four-stage scheme of responses includes indifferent strategy, defensive strategy with end-of-pipe technologies, offensive strategy with modification of new products, and innovative strategy that actively seeks major changes in products and processes (9).

Corporate strategies for enviromental management have evolved from pollution control to pollution prevention, which means minimizing waste before it happens. …

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