Sustainability management

Numerous literature and public discussion are presenting why companies should high-light environmental issues on their strategic decisions but still there are very few straightforward guidelines nor standards to explain how. This might be the root cause of the survey results, where 93 % of CEOs think that sustainability has a substantial im-pact to future success but only 38 % state that the sustainability goals and targets are accurately measurable. Same survey revealed that 84 % of CEOs feels that companies should lead the way in sustainability matters, but from where only 33 % felt their busi-ness are actually investing enough to sustainable challenges. Clearly the majority is understanding sustainable development (SD) but minority are conducting actual steps towards this (Maas, et al., 2016).

First of all, sustainability is development to meet the present needs without harming fu-ture generations to accomplish their needs. In business world, this means to reach eco-nomical goals in environmentally healthy way. SD is fragmented model and several dif-ferent approaches has been conducted on operational level and even more on theoreti-cal level. In addition to economic and environmentally success, third concentration is Corporate Social Responsibility (CSR) (Madu & Kuei, 2012). This approach is called Triple Bottom Line (TBL) and it focuses to economic development, environmental pro-tection, and social responsibility, shortly called profit, people and planet. TBL accent

companies’ responsibility to focus environmental and social aspects as much as to profit side. Even the first two aspects have been the talking point mainly in last decade, TBL has been introduced first time in 1994 by management and sustainability guru John Elkington. Challenges of this method has been the measurability of social and en-vironmental aspects and what are the correct indicators (W.Kenton, 2020). Carbon footprint is one potential indicator but calculating it for the whole company is difficult and time-consuming. For the CSR, Global Reporting Initiatives have developed guide-line for companies to measure and report it (Chamberlain, 2011). Second challenge is the balance between the three bottoms and corporates ability to assign enough re-sources to all without cannibalizing the other. Third challenge is the unfortunate truth that profit line is considered more important than other two, which usually lead environ-mental issues or social neglects (W.Kenton, 2020). The three pillars of TBL are also seen as individual management systems (MS) that does not communicate at all. Be-sides its weaknesses, it is a good tool for companies to wider their understanding of position and competences in future (Chamberlain, 2011).

Other approaches are also in use in large companies, such as Balance Score Card, which is utilized by General Electric, Coca-Cola, and Shell. This has been criticized by its static and shareholder-orientated manner and it does not focus on the whole pro-cess. Management systems offers several models and techniques for SM depending what is the nature of the organization, but the problem lies on the achieved goals and received value. There are still problems to develop sustainable management system, which is dynamic and systematic. If all managements systems are considered individu-ally (environment, profit etc.) there are always gaps between. Daily operations between departments and management levels are advised to be more integrated in practice, if possible. The interplay between these have not received enough attention by research-ers even the suggestions points to this kind of direction. Companies shall start to evalu-ate how the sustainability information is collected, analyzed, and reported internally. In addition, to investigate which tools are used and how (Madu & Kuei, 2012).

Lo and Sheu determines the sustainability management as “a business value that cre-ates long-term shareholder value by embracing opportunities and managing risks from three dimensions: economic, social and environmental dimensions”. This highlights that business activities are partly volunteer to achieve sustainable future. Different

re-searchers are also pointing out the importance of acclimation by creating new business model, more sustainable products and seeing regulations as opportunity. Focusing only on value chain may reach significant results in terms of sustainability as the whole

value chain need to be achieve sustainable growth. These views are in line with funda-mental of the competitiveness that the most innovative companies will be most proba-bly ahead of their competitors (Madu & Kuei, 2012).

The need of environmental management in organizations has been realized only few decades ago and it is evolving due to a fast-changing business environment. Ormaza-bal and Co. have studied the different steps in environmental management in UK and how to move forward with it. The concept is based on 6 different levels called maturity stages of environmental management, where company moves forward by learning new activities or comply operational practices towards more sustainable direction. Once moving to next level, company will own the acquirements of the previous level and sim-ultaneously adapting new ones. Sometimes it is possible that company jumps over one step or fulfills the requirements of another stage but not the requirements of the previ-ous stage (Ormazabal, et al., 2015).

Figure 4. Maturity stages of environmental management (Ormazabal, et al., 2015) On Level 1 company is able to fulfill the legislation and environmental regulations.

Level 2 represents the stage where company fulfills all regulations which has been set and it is ready to fulfill upcoming ones by creating measurement systems and training employees. Having systematic approach to environmental management on Level 3,

management up to the top are commitment to the system. Stage is highly market driven, when new requirements have been set by customers and other stakeholders.

Level 4 as called ECO² –stage is where company receive economic benefits of envi-ronmental thinking and designing. Envienvi-ronmental impact is lower, and employees are courage to participate innovations. Followed by this, Level 5 will be reached when company develop eco-innovative products such as carbon-neutral or even carbon-neg-ative products and services. The final step is Level 6 where company is considered as a leading green company. Company itself is a reference for other organization in terms of environmental management. Marketing and communication are highlighted at this level and company receives positive publicity due to its superior environmental perfor-mance (Ormazabal, et al., 2015).

In addition to maturity stages, Ormazabal introduce several different Environmental management tools in her dissertation in 2013. Environmental Impact Assessment (EIA) is related to decision making process from environmental perspective. EIA can be used as a preventive tool to analyze decision’s consequences and alternative options in a systematic way. ISO 14000 –standard is implemented around this concept and Strate-gic Environmental Assessment (SEA) is basically extension from previous concept wid-ening the environmental assessment to all levels. SEA has been recognized to be suc-cessful tool integrating social, economic and environmental aspects to program- and policy decision processes. Eco labelling instead is a good informative tool to express the environmental performance of the company besides sustainability reports and web pages (Ormazabal, 2013).

In addition to previously mentioned, Ormazabal bring up the LCA and Carbon Footprint Analysis as an effective tool for Environmental Management on a product and service level. Similar emphasis has been done by Muralikrishna & Manickam in 2017, applying Life Cycle Energy Analysis alongside the original LCA. This stems from the reason that indirect energy consumption and more importantly its source must be considered (Muralikrishna & Manickam, 2017).