Friday, October 2, 2020

The New Social Contract for Green Business

 The New Social Contract for Green Business

 INTERNATIONAL JOURNAL OF RESEARCH IN COMPUTER APPLICATION & MANAGEMENT

A Monthly Double-Blind Peer Reviewed (Refereed/Juried) Open Access International e-Journal - Included in the International Serial Directories

http://ijrcm.org.in/

VOLUME NO. 5 (2015), ISSUE NO. 06 (JUNE) ISSN 2231-1009

Page 46

THE NEW SOCIAL CONTRACT FOR GREEN BUSINESS

RAJEEV GUPTA

ASST. PROFESSOR

MANGALMAY INSTITUTE OF MANAGEMENT TECHNOLOGY

GREATER NOIDA

 


 The New Social Contract for Green Business

Abstract: Over the past few decades, concepts that focus on environmental stewardship have gripped the collective intellect of humankind, and established a common global imperative to respond to critical issues that arise from world- wide climate change and natural resources conservation.  The article explores, the way events occurring in the business environment has generated public awareness and reactions towards sustainability. The changed attitude of people finds resonance in the voice of various public action groups. It is further reflected in the government’s actions which are sometimes in the form of legislations. Simultaneously, certain leading businesses and brands start initiating changes to fulfill ‘the new social contract’ for green business as a response to the environment

Key Words: Social contract, Sustainability, Green business

Introduction

There are unwritten social contracts that have to be fulfilled if organization need to earn the trust and the moral right needed to operate in the society. This is the only way they can create sustained stakeholder value.  Organizations are among the highest consumers of resources and also among the largest contributors of emissions. Hence, they have a significant role to play in how they carry the sustainability mandate forward. More importantly, given the influence that organizations have on the society, they should be able to leverage it to bring forth social change. They not only play a prominent role in the creation and distribution of wealth and improving the general standard of living but, also fulfilling the aspirations of society.

We're in an interesting period in history when the relationship businesses have with society is undergoing a fundamental, permanent change. And sustainability, if not the epicenter of that change, certainly exemplifies it. We look at the name of few visionary organizations and brands that took the lead.  These are the firms that anticipated and understood the range of likely policy scenarios, and build defensive and offensive strategies to address the environmental concerns of the general public and the government.


Findings and Discussions

Table 1 Environmental Events and reactions during the 1980s and the response of business and brands.

Environmental Events & Reactions

Governmental Actions & Reactions

Brands  & Business Response

Union Carbide leaks Methyl iso-cyanide in Bhopal.

 

Chernobyl disaster takes place in a reactor in Ukraine.

 

Exxon Valdez spills 11 million gallons of crude oil in Alaska.

US Congress creates superfund to clean up hazardous waste sites.

 

Moratorium on radio-active waste dumping at sea.

 

US Congress enacts laws for safe disposal of nuclear waste.

 

Vienna Convention for the protection of the ozone layer.

 

‘Our Common Future’ published.

 

Montreal Protocol

 

US Congress bans ocean dumping of sewage and industrial water.

Volkswagen begins testing of solar powered cars.

 

ARDO Solar produces more than one megawatt of photovoltaic modules.

 

DuPont begins selling substitutes for CFC Refrigerants.

 

Organic Valley coop of organic farmers formed.

 

Table 2 Environmental events and reactions from 1990 to 1995 and the response of business and brands.

Environmental Events & Reactions

Governmental Actions & Reactions

Brands  & Business Response

Supertanker Braer spills 26 million gallons of crude oil of the cost of Hebrides.

 

Contaminated water in Milwaukees sickens 400,000 and kills more than 100.

 

Russian ship TNT27 dumps 900 tons of low level radioactive waste in Sea of Japan.

 

20th anniversary of ‘Earth Day’.

 

London Protocol: Clean Air Act Amendment passed.

 

76% of Americans call themselves ‘Environmentalists’.

 

Federal Organic Foods Production Act passed.

 

‘Earth Submit’ held in Rio.

 

Pollution Prevention Act and National Environmental Education Act passed in US.

 

Environment Justice Act of 1992 passed.

 

EPA launches Energy Star Program and ‘Brownfields Program’

‘Apple’ introduces first environmental policy.

 

ISO 14000 standards established.

 

Clorox makes ‘Fortune’ list of top 10 companies in Environ Management.

 

Nike launches ‘Reuse-A-Shoe’ program.

 

 

Table 3 Environmental events and reactions from 1995 to 1999 and the response of business and brands.

Environmental Events & Reactions

Governmental Actions & Reactions

Brands  & Business Response

Greenpeace activities occupy Shell company’s North Sea offshore rig.

 

‘Act Now, Apologize Later’ by Adam Werbach is published

 

EPA requires that home buyers and renters be informed about lead-based paint hazards.

 

Kyoto Protocol adapted by US and 121 nations.

 

New emissions standards for automobiles introduced.

Clorox honored as EPA’s  Waste Wise Program Champion.

 

Honda Insight and Toyota Pirus introduced.

 

 

 

 

Table 4 Environmental events and reactions from 2000 to 2003 and the response of business and brands.

Environmental Events & Reactions

Governmental Actions & Reactions

Brands  & Business Response

Over 300 million gallons of coal sludge is released when a Massey Energy Co. impoundment dam collapses in the Mississippi River.

 

‘Science’ publishes NASA survey of over 2000 glaciers shrinking

 

Jury rules that Monsanto Chemical Company is responsible for polluting Anniston, Al with tons of toxic PCBs.

 

Invasion of Iraq leads to widespread oilfield burning and other environmental problems.

E U bans leaded Gasoline

 

World Summit on Sustainable Development in Johannesburg.

 

USDA certified organic labeling introduced.

 

Sharp Corporation established a system to develop environmentally sustainable ‘green factories’ to improve its environmental performance

 

Table 5 Environmental events and reactions from 2004 to 2006 and the response of business and brands.

Environmental Events & Reactions

Governmental Actions & Reactions

Brands  & Business Response

An 8.9 magnitude quake under the Indian Ocean triggers massive tsunamis that destroy villages and kills more than 140,000 people in a dozen countries

 

Hurricane Katrina makes landfall in Louisiana.

 

Earths overall temperature has reached its highest level in 12.000 years according to research by NASA.

 

World population reaches 6.5 billion.

 

Former US vice president Al Gore releases “An Inconvenient Truth”

EPA requires cleaner fuels and engines for off-road diesel machinery.

 

EPA launches CARE program to reduce toxic pollutants

 

Kyoto Protocol officially goes into force with a majority of worlds nations ratifying.

GE launched its ‘ecomagination’ division to develop green technologies using the catch phrase ‘green is green’.

 

 

Table 6 Environmental events and reactions from 2007 to 2010 and the response of business and brands.

Environmental Events & Reactions

Governmental Actions & Reactions

Brands  & Business Response

Cosco Busan a container ship spills 58,500 gallons of bunker fuel into the San Francisco Bay.

 

UN Intergovernmental Panel on Climate Change (IPCC) releases report that estimated the cost of reversing the emissions of green house gases.

 

Live Earth concerts around the world raise awareness of climate change.

 

Al Gore and the IPCC win the Noble Peace Prize.

 

Over a billion gallons of coal sludge spill out of a holding dam near Kinsport.

E.U. agrees to cut CO2 emissions by 20% by 2020.

 

Barack Obama wins US presidential race with promises to reform governmental misconduct particularly with respect to environmental laws.

 

Group of Eight (G-8) industrialized nations agree to cut greenhouse gas emissions by 2050.  

 

US Climate Action Partnership presents plan to reduce US greenhouse gas emissions to 20% of 2005 levels by 2050 through cap and trading system.

Richard Branson sets a $25 million prize for anyone able to devise a way to reduce the amount of greenhouse gases from the Earth’s atmosphere by one billion tons per year.

 

Clorox Green Works products launched.

 

Dell becomes a carbon neutral company by using offsets and other methods.

 

Wal-Mart institutes sustainability labeling system.

 

 

The consumer franchise: The most powerful force that brings about a dimensional change in societal value creation is the power of consumer franchise. The word ‘consumer’ may include all market participants such as the customers, investors, employees, job seekers and the civil society. Strong multipliers emerge when enlightened consumers exercise a preference in favor of business that contributes significantly to environmental and social sustainability. Buy expressing a direct and distinct choice for the products and services of such enterprises, consumers unleash a multitude of positive actions and innovations. Sustainable business practices emerge as a definitive market differentiator given the large market gains accruing to such companies.

NGOs as the watchdogs: Another, perhaps more important reason has been the rise of non governmental organizations (NGOs) that are devoted to challenging and changing businesses practices with respect to the environment, and have the charters and the resources to persist in their mission over decades. For much of the past century, issue-oriented groups tended to be temporary, arising around a single piece of legislation, or correction of a particularly pressing social ill. Today, many NGOs are long-lived, robust, ever-active watchdogs and actors. They consistently step in, pressing business to change, even when current laws are being met and government's attention is on other issues.

NGOs have pressed government and business to elevate their commitment to sustainability. Taken as a planet, our economies have a long way to go before we change our behaviors, before society and businesses have sustainable practices that make little or no impact on the global ecosystem. This quest will go on for many years — and it will influence the relationship enterprises have with government, NGOs and society at large. It will require more from businesses to meet these challenges though most companies are not ready at present to deal with this reality.

Government as the regulator: Sometimes, the social license to operate or 'contract' has been an agreement between companies and government, the latter acting on behalf of the public. Some of these social contracts, such as those in highly regulated sectors like utilities or pharmaceuticals, are explicit, active, and central to the strategy and operation of the business. In these situations government is an essential actor, conducting a constant conversation with businesses about prices, product features or service terms, costs and the like; in turn, senior executives in these sectors devote considerable attention to embedding regulatory considerations into their business strategies, and managing their relationship with government agencies.

Suggestions

 Many companies are unprepared and ill-equipped.  Their corporate cultures, organizational capabilities and processes are not ready to support sustainability as central to their business. If firms don't change, they will stumble into what will seem to them like unanticipated crises, episodes where they get into trouble time and again. It's time to recognize the shift, make changes and deliver on both the responsibilities and opportunities that sustainable business practices represent.

Why are they so ill-equipped? Over the last 20 or 30 years, firms have, for the most part, put sustainability issues into "the compliance bucket." They decided there was no advantage to be had from doing better on environmental issues than what the law required. Many corporations set up compliance organizations to meet established rules, and then went back to business as usual.

For the vast majority of firms, however, the social contract is implicit and inactive. Businesses do their best to follow the various rules set up by government regulators for everything from worker safety to payroll deductions. Senior management in these sectors does not look to have an active conversation with government; rather, their approach is simply that of static compliance — defined as meeting the requirements of these rules. Once new rules have been understood, and their costs and consequences established, they push responsibility for these activities down in the organization.

This all has to change for both types of firms — and sustainability will have to be at the center of the shift. To overcome this challenge, business leaders will need to treat sustainability as a new dimension of their operating strategy — and not as a drag on their effectiveness. And they will have to end their fragmented treatment of sustainability issues, creating a high-level, centralized view of green business practices with associated responsibility and accountability to making measurable progress on articulated goals.

Because the nature of sustainability is never-ending, those goals will be a moving target. And because firms pursuing these goals will do so under a new social contract, they will be continuously monitored by people who are outside government, with motivation to inspect every aspect of your company's green record.

For example, when Apple unveiled its MacBook computer notebooks, it took pains to shout they were green (“The world's greenest family of notebooks"). A website helpfully explains what they mean by this in terms of packaging, materials and energy use and includes a statement about Apple's commitment to sustainability. That all sounds wonderfully responsible, but it could also be seen as a response in an ongoing dialogue with groups like Greenpeace, which had ranked Apple below average in its guide to green electronics.

Conclusion

There is a new social contract which brings new relationships and new demands and for business leaders to navigate around issues of sustainability and environmental resources. Thus organizations, being one of the most significant institutions beyond governments that can drive economic progress and social change, must be seen to be performing in this direction. One reason is the steady increase in the public's interest in, and willingness to act on, sustainability, both as citizens and as consumers. The other reasons are the initiatives by various public action groups and the government. We are entering a time when the question will be not whether you are pursuing such programs, but ‘how much’ you are doing for your business and the planet. Firms may be surprised by the new demands. Business leaders today must recognize that being in compliance is simply not enough. Until leaders of a firm can say they are engaged in a process of continuous sustainability improvement — akin to continuous improvement and investments in other parts of their business — they are out of step with our changing world.  Such an integration of sustainability into business strategy will become compelling to more executives. Certain business leaders have shown the way.

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