6EC513

GLOBAL
BUSINESS
AND
STRATEGY

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Week 11: Green Management Strategy

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 Learning Outcomes

 Understand how the ecological problem is related to the ‘Tragedy of

the Commons’
 Be aware of the range of perspectives on the ecological problem
 Understand what is meant by ‘sustainable’ business activity the
range of possible responses.
 Appreciate the extension of the ecological problem beyond a firm’s
boundaries to its global supply chain.
 Understand what Multi-Stakeholder Initiatives are & their limitations.

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What is Green Management strategy?

Green management is a paradigm that includes improving environmental

awareness, using energy resources and eco-friendly technologies, reuse of
wastes, and recycling activities starting from production activities of businesses
to packaging and delivering to consumers (KPMG, 2022).

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Background: COP26 Aspirations: Glasgow

 Legally binding Paris Agreement (Dec 2015). Signed by191

parties + EU region, to:
 substantially reduce global greenhouse gas emissions & limit global
temperature increases in this century to 2 degrees Celsius while
pursuing efforts to limit the increase even further to 1.5c degrees;
 review countries’ commitments every five years;
 provide financing to developing countries to mitigate climate change,
strengthen resilience and enhance abilities to adapt to climate impacts.

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 The Ecological Problem

The Problem:
Organisations are over-exploiting finite resources with negative
consequences to the environment. (‘Environmental costs’ arising from
extraction, production and consumption of goods and services).

The Cause:
Human activity (anthropogenic) causing damage to eco-systems by depleting
sources faster than their ability to be replaced and undermining the sinks that
can absorb pollutants (e.g. the Amazon Rain Forest, Peat Bogs etc)

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Global Human Response to the
Ecological Problem

Various actions

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United Nations: Paris Agreement

 A legally binding international treaty on climate change.

 Adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and
entered into force on 4 November 2016.

 Its goal is to limit global warming to well below 2, preferably to 1.5 degrees
Celsius, compared to pre-industrial levels.

 Countries commit to reach global peaking of greenhouse gas emissions as

soon as possible to achieve a climate neutral world by mid-century.

 For the first time, a binding agreement brings all nations into a common
cause to undertake ambitious efforts to combat climate change and adapt to
its effects.
United Nations

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Intergovernmental action: CORP26

Principles agreed, but HOW

to achieve targets is highly
contested
https://www.bbc.co.uk/news/science-envir
onment-58982445
 Tragedy of the Global Commons
 Conflict between private desire to maximise resource use and
social desire to maintain viability of resources

Who should
be responsible
 Property rights not clearly defined. for the ozone
layer?

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 Tragedy of the Global Commons
Range of global commons problems:
 Global Climate Change
 Desertification
 Protection of Oceans
 Loss of Diversity
 Deforestation
 Acid Rain
 Thinning of Ozone Layer
 Whaling

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 View from the Right: Liberal, Neoclassical,
anthropogenic view*
 Economic progress driven by firms operating in markets free from
state regulation
 Trade off between economic growth and environmental damage
(necessary & inevitable)
 Business an important developer of environmentally friendly
technologies
 Business can be charged for social costs – “polluter pays principle”
 *Stubbs & Cocklin (2007) give a summary of the Liberal, ecocentric and ecological
modernization views)…

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Views from the Left: Green, ecocentric view
continued.

 Rich countries more responsible for

environmental damage than poor countries
 There is conflict between pursuit of private profit
and the need to pay for, and minimise, the social
costs of economic activity.
 Need for greater international regulation of big
business.

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derby.ac.uk
Views from the Left: Green, ecocentric view
continued.

 Rich countries more responsible for environmental damage than

poor countries

 There is conflict between pursuit of private profit and the need to

pay for, and minimise, the social costs of economic activity.

 Need for greater international regulation of big business.

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 Mid-ground: Green, Ecological modernization
(EM) view

• The planet not there solely to be exploited by the human race.

• Humans need to recognise interdependence with nature.

• Current economic model’s emphasis on increasing production and

consumption must change  consideration of SUSTAINABILITY

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Sustainability as Management Strategy

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 Sustainability & Business

 Sustainability is a normative view of how Triple

we interact with nature, others and future Bottom
generations in our efforts to endure Line
(Landrum & Ohsowski, 2016. p 386)

 sustainable business is the pursuit of

economic, environmental and social justice
and equity while providing value, balance
and accountability (op cit, p387)

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 Sustainability Spectrum & Business
engagement
Landrum (2018)
Very Strong Strong Very Weak
Weak
sustainability sustainability sustainability
sustainability

Coevolutionary Systemic Compliance

Regenerative Business
centred

(Landrum & Ohsowski, 2016) derby.ac.uk

Combinations of top down and bottom up
approaches (e.g. Information Labelling)

Bowen et al (2020)
Moving responsibilities beyond the
single firm…

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Sustainable Global Supply Chains

https://www.mckinsey.com/bus
iness-functions/sustainability/o
ur-insights/starting-at-the-sourc
e-sustainability-in-supply-chains
accessed 03/10/21

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Sustainability and Global Supply Chains

 Multinational corporations are held responsible not only

for their operations within their own territories

 Even if they are not linked together on the basis of

shared ownership.

More@ (Villena & Gioia, 2020) https://hbr.org/2020/03/a-more-

sustainable-supply-chain

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derby.ac.uk
 Supply Chain Governance:
Two Theoretical Perspectives

Supply chain governance is typically viewed through two

theoretical perspectives…..

A) Contractual governance: Characterised by individual organisation action,

adversarial/disparate pursuits, a blame culture and short-term focus.
B) Relational governance: Characterised by integrated stakeholder
actions, Joint Risk Management (JRM), sustainable relationships and a
longer-term focus on sustainability and ecological balance.

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 How to achieve Sustainable Global Supply Chains?
*Organisational level
Codes of Conduct (CoCs):   - ‘‘written documents which attempt to
state the major philosophical principles and articulate the values
embraced by organisations’’ (Stevens 2008 , p. 601).

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 Types of MSIs

Instruction-Oriented: offer general instructions or guidance on

acceptable business conduct.

Examples: the United Nations (UN) Global Compact, the Global

Reporting Initiative (GRI), the Sustainable Stock Exchange Initiative
(SSE), and the Organisation for Economic Co-operation and
Development (OECD) guidelines for Multinational Enterprises.
• Human Rights
• Labour
• Environment
• Anti-corruption

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 Arbitration and monitoring: Multi-stateholder
Initiatives (MSI)

Multi-stakeholder initiatives (MSIs) are frameworks for engagement

between businesses, civil society and other stakeholders such as
governments.

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 Types of MSIs

Enforcement-Oriented: monitor, verify, and certify production facilities or

supplier factories for their social and environmental performances against a
pre-established set of benchmarks.

Examples:
 Marine Stewardship Council (MSC).
 World Banana Forum (WBF).
 Forest Stewardship Council (FSC).
 Social Accountability International (SAI)
 Rainforest Alliance (RA)].

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 How to Enable Sustainable Supply Chains?

Multi-Stakeholder Initiatives (MSIs)

 Set up private, quasi-voluntary governance mechanism.
 Bring together different stakeholders—including companies,
civil society actors, trade associations, academics, and
governments from across the globe—to solve complex social
and environmental issues.
 Set up governance mechanisms, international accountability
standards, social standards, transnational governance
mechanisms, or private regulations.

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 Limitations of Current Green Management
strategies and enforcement Mechanisms
Power Asymmetry:  Some stakeholders in the networks are often more
resourceful and powerful than others.
Business types: Some businesses are more vulnerable.
National or business interests: Some governments are reticent, while smaller
businesses and groups tend to be voiceless and marginalized.

Exclusion: The inclusion of any representative stakeholders who may be

affected by the decision-making process is important to create a system that is
constructive and that gains legitimacy among stakeholders. But, reality is
different.
Example – exclusion of African nations and businesses in global decisions on
climate consequences
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 Limitations of Current Measures

Cost: The inclusion of diverse stakeholders is expensive and

difficult, as it may increase governance complexities and
operational costs.

Auditing Incapability: Research shows that many ethical auditors

lack the capabilities necessary to collect and assess data and to
generate meaningful reports. 

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 Limitations of Current Measures
Issue Reductionism: Overseeing the complexities
underpinning the issues at hand.

Evasion: Engagement in activities aimed at producing

false evidence of compliance.

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 Seminar week 11

Watch video and read article on green management and develop arguments for and

against the application of green management strategies in organisations.

 State and elaborate on the business case for green management adoption.

 Outline possible consequences for organisations that ignore environmental issues.

 Can profit increase result from environmental awareness and sustainable

practices? If so how and if not, why not?

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Next week 12: Decision making strategy

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University of Derby, Kedleston Road, Derby, DE22 1GB
T +44 (0)1332 591044 E opendays@derby.ac.uk

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