When the first Earth Day celebration was held in 1970, most managers con- sidered environmentalists to be an ex- tremist fringe group and felt little need to respond to environmental concerns.39
Today environmental issues have be- come a hot topic among business leaders, and managers and organizations in all industries are jumping on the environ- mental bandwagon.
One model uses the phrase shades of green to evaluate a company’s commit- ment to environmental responsibility.The various shades, which represent a company’s approach to addressing envi- ronmental concerns, are illustrated in Exhibit 4.6. With a legal approach, the organization does just what is necessary to satisfy legal requirements. In general, managers and the company show little concern for environmental issues.
For example, Willamette Industries of Portland, Oregon, agreed to install $7.4 million worth of pollution control equipment in its 13 factories to comply with Environmental Protection Agency requirements. The move came only after Willamette was fined a whopping $11.2 million for violating emissions standards.41
The next shade, the market approach, represents a growing awareness of and sensitivity to environmental concerns, primarily to satisfy customers. A company might provide envi- ronmentally friendly products because customers want them, for instance, not necessarily because of strong management commitment to the environment.
A further step is to respond to multiple demands from the environment. The stakeholder approach means that companies attempt to answer the environmental concerns of various stakeholder groups, such as customers, the local community, business partners, and special interest groups. Ontario Power Generation, Shell, and Alcan Aluminum are among the large companies that are partnering with Environmental Defense to reduce greenhouse gases.42 The move comes in response to growing concerns among customers, communities where the companies operate, and environmental groups, as well as recognition that emis- sions are likely to be regulated by government actions.
Finally, at the highest level of green, organizations take an activist approach to environmen- tal issues by actively searching for ways to conserve the Earth’s resources. A growing number of companies around the world are embracing a revolutionary idea called sustainability or sustainable development. Sustainability refers to economic development that generates wealth and meets the needs of the current generation while saving the environment so future genera- tions can meet their needs as well.43 With a philosophy of sustainability, managers weave en- vironmental and social concerns into every strategic decision, revise policies and procedures to support sustainability efforts, and measure their progress toward sustainability goals.
The mission of New Leaf Paper Company, for example, is to inspire the paper industry to move toward sustainability. New Leaf developed a paper called EcoBook 100, made from 100 percent post-consumer waste processed without chlorine, which was used for the Canadian printing of Harry Potter and the Order of the Phoenix. The small San Francisco- based company is having a big impact on the industry by tying its success closely to its environmental goals. Part of managers’ time is devoted to educating printers, designers, paper merchants, and even competing companies on the uses and benefits of environmen- tally responsible paper. New Leaf generated $4 million in sales in its first year (1999) and expected revenues in 2005 of more than $18 million. Rather than being worried about in- creased competition from other firms’ jumping on the green bandwagon, New Leaf man- agers are delighted because it means the industry is shifting toward sustainability.44
Even large U.S. organizations as diverse as DuPont, McDonald’s, and UPS are grappling with issues related to sustainability. McDonald’s, for example, buys some of its energy from renewable sources, has stopped buying poultry treated with antibiotics, and offers incentives to suppliers that support sustainable practices.45 The UPS fleet now includes about 2,000 alternative-fuel vehicles, which emit 35 percent less pollution than standard diesel engines.46
DuPont developed biodegradable materials for plastic silverware, a stretchable fabric called Sorona made partially from corn, and a housing insulation wrap that saves far more energy than is required to produce it. The company’s new vision is to eventually manage a collection of businesses that can go on forever without depleting any natural resources.47
Despite these impressive advances, few U.S. firms have fully embraced the principles of sustainability, as reflected in a resistance to adopting ISO 14001 standards.48 ISO 14001 is an international environmental management system that aims to boost the sustainability agenda. To become ISO 14001-compliant, firms develop policies, procedures, and systems that will continually reduce the organization’s impact on the natural environment. Sustainability argues that organizations can find innovative ways to create wealth at the same time they are preserving natural resources. ZipCar, for example, rents cars by the hour, 24 hours a day, with no paperwork. By reducing private car usage, ZipCar contrib- utes to reduced emissions and reduced load on the nation’s transit infrastructure.
Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.