Previously

• Foundations of SSM

• Formulation of SSM– Environmental Analysis of SSM– Sustainable Strategic Management Analysis

SSM Strategies

Hierarchy of SSM

Functional Level SSM

• Establish and exploit core competencies• LCA vital, provides cradle-to-grave appraisal of the

ecological impacts of a firm’s product or service across the firm’s value chain (type II)

• Strategic Environment Management strategies like DFE, TQEM, Environmental audit and reporting

• SEM + social performance -> SSM (Type III closed loop value chain)– DFE -> DFS, TQEM -> TQSM, etc.– Sustainable Marketing, SMIS, SHRS, Full cost accounting

Competitive Level SSM strategies

• Focus on how to compete in an industry or product/market segment

• SEM strategies are classified according to the nature of competitive advantage provided:– Cost Leadership – Pollution Prevention strategies– Market Differentiation – Product Stewardship

Cost Leadership strategiesPollution Prevention Strategies

• Cost advantages through improved eco-efficiency• Core competencies in operations and logistics

basis for competitive advantages exploited • Pioneer: 3M– Pollution Prevention Pays (3P) program– 3500 projects => saving $ 550mn

• Big benefits for companies– Recruit and retain best talent– Impress stakeholders

Market Differentiation StrategiesProduct Stewardship

• Competitive advantage through superior products and services

• Expansion in focus from materials, energy and process efficiency to a focus on complete life-cycle impacts of products and processes

• Core competencies must in marketing and product/service development

• Effective environmental differentiation through competitive product positioning

• Continuous Innovation to create first-mover advantage and sustain it (avoid imitation)

• e.g. Electrolux – Green Range line of appliances

SEM -> SSM

• SEM = Economic + Environmental performance • SSM = SEM + Socio-efficiency• Strategic Managers• e.g. SC Johnson -> Sustainable Racine– Core value: “Every place should be a better place because

we are there”• Firm’s reputation good corporate citizen– Perceived differentiation in products and services– Social labeling

Corporate level SSM

• Corporate level SSM strategies• SSM Corporate Portfolio• Emerging markets – BOP– eg HUL, Grameen Bank

Strategic Decision-Making

• Strategic decision-making process:– Data gathering phase– Matching external opportunities and threats with

strengths and weaknesses: TOWS matrix– Strategic choice

Implementing and Evaluating SSM

Implementation

• Organizational Objectives– Action plans– Policies– Procedures

• Reward systems, performance tracking systems and controls

Sustainable R&D System

• Focus on traits like dematerialization, resource intensity, recycled content, non-toxic content, durability, social impacts.

• Nature as a model for R&D system – closed loopTools:Life Cycle Analysis (LCA)Design for Sustainability (DFS)Information Substitution for Energy and Materials

Sustainable Procurement Systems

• Socially and environmentally sensitive products need socially and environmentally sensitive inputs.

• SPS – Provide usable tangible and intangible sustainable inputs to the organization– Sustainable Purchasing

• Sustainability-based supplier relationships– Sustainable Consumption

• Educating employees about sustainability– Purchasing Services rather than things

• SPS supports both low cost and differentiation strategies

Sustainable Operations System

• Necessary core competence for Low-Cost SSM strategies

• Vital to improve eco-efficiency in organizations – Approaches:– Pollution Prevention– Energy Efficiency– Reverse Distribution– Industrial Ecology

• Supports both low-cost as well as differentiation SSM strategies

Sustainable Infrastructure Systems

• Avoid ‘Sick building syndrome’• Design buildings to mimic natural processes– Eg Ford Motor Company’s Rouge plant (renovated)– Benefits: Energy and water cost savings, lower waste

disposal costs, improved heating and cooling systems, and improved employee health and productivity

• Timely Replacement of Energy Inefficient Equipment• Optimal location of plant and office sites• Reduction of toxic, hazardous waste and adequate

waste management practices

Sustainable Marketing Systems

• Necessary core competency for SSM competitive strategies focusing on social and environmental differentiation

• Requirements to achieve this differentiation:– Top management commitment to sustainability– Designing ecologically and socially products and

packaging– Sustainable pricing strategies using full cost accounting– Promotional strategies– Marketing channels are sustainable

Evaluating SSM

• Begins with generative evaluation of fundamental assumptions

• Measure sustainability performance• Perform Gap Analysis with sustainable based goals• Occurs organisation wide, regardless of level• 3 Value chain support activities– Sustainable Accounting and Finance– Sustainable Management Information Systems– Sustainable Strategic Management Reporting

Sustainable Accounting and Finance

• Traditional financial systems fail when applied to SSM as lot of issues cannot be accounted for

• Full-cost accounting• Cost of externalities – LCA, ecobalances,

ecological footprints

Sustainable Management Information Systems

• MIS designed to identify, collect, process and transmit environmental and social information from throughout the organization

• Key for effective SMIS:– Prioritization of data gathering, processing and

analysis

SSM Reporting

• Sustainability reports – comprehensive, ensuring continuity and comparability of data over time, presenting overview of firm’s SSM policies

• GRI, SustanAbility• Sustainable sustainability reports• Seventh Generation Inc.

Towards SSM

•Bill Ford

Bill Ford and Ford Motor Company

• Participation in SUV market – Ethical implications• Five corporate level SSM priorities– Strong commitment to human rights– Focus on sustainable mobility– Develop a comprehensive climate change strategy– Establish business principles to provide an underlying

value system– Seek new solution through technology and

partnership

• Products– Vehicles that use alternative fuels like hydrogen

fuel cells, hybrid electric power, natural gas, ethanol

– Development of Model U concept car

• Manufacturing– Renovation of Rouge plant in Dearborn, Michigan

Thank You