Business Strategy and the Environment

Ecological business strategies consist on the firm’s position vis- à-vis the natural environment; they define the firm’s relationship with nature. They describe strategies for use of environmental resources and acceptable environmental impacts of the company’s activities. Ecological strategies try to minimize long-term environmental damages by managing the company’s inputs, throughput’s, and outputs. Just as “Total Quality Management” in corporation demands attention to each stage of the design and production process, a “Total Environmental Management” perspective can optimize the performance of the total system.

Every organization requires materials and energy as inputs to its production process. Primary industries such as mining, forest products, pulp and paper, and oil and gas are particularly oriented toward extraction and utilization of raw materials. Secondary (manufacturing) industries such as steel, construction, automobiles, and petrochemicals are important users of materials and energy. Service industries (e.g. health care, education, legal, consulting, etc.) maker fewer demands for materials but use significant amounts of energy.

Environmental concerns about depletion of forests and other natural resources, loss of biodiversity, and pollution created by mining and use to fossil fuels suggest the guiding principle of sustainable resource use. The basis for this principle is recognition that the earth’s resources are finite and that economic growth based on material consumption is limited by this fact. Organizations cannot continue indefinitely to use natural resources without providing for their renewal. Corporations should seek to minimize the use of virgin materials and non-renewable forms of energy. This goal can be achieved by reducing the use of energy and materials through conservation measures, making greater use of recycled or renewable materials and energy, and offsetting consumption with replenishment.

Throughput’s, the production processes of goods and services often create emissions and effluents that have undesirable environmental and health consequences. In other cases, poor reliability or system malfunctions lead to spills, accidents, and or unintended consequences. Poorly designed throughput processes lead to occupational and public health risks as well as inefficient use of materiel and human resources.

Ecological business strategies seek to eliminate emissions, effluents, and accidents. Through preventive action and continuous improvement at every step of the production process, Companies can aim for zero discharge and zero risk. This preventive approach is more efficient than controlling discharges at the “End of the pipe”. For example, Dow chemical’s ethylene plant in Fort Saskatchewan, Canada, has been designed to minimize discharges. It will release only 10gallons of waste water per minute, compared with 360 gallons for traditional plants.

Credit: Advanced Strategic Management-MGU

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