Environmental strategy is a firm’s long-term orientation about how to manage the environmental practices to gain a good fit with its stakeholders’ expectations. Proactive environmental strategies are those that involve anticipation of future regulations to voluntarily prevent negative environmental impacts.
What is Environment Strategy?
Strategy is the most powerful tool a company has to allocate resources to success. This is of course true in business as it is in life. Environment strategy though, has a specific meaning to it. Environment strategy is the long-term management plan and decision-making process that involves an assessment of environmental risks and opportunities and the determination of a strategy based on the entire organization’s objectives.
Environmental issues have recently gained a dominant place in the public sphere. It has become an issue of utmost importance and every organization has to be fully aware of environmental impacts.
Thinking that they could get away with it, many companies tried to ignore environmental issues for a long period of time. As public debate got louder and more visible, companies had to contemplate the issue. Thinking that they could get away with it, many companies tried to ignore environmental issues for a long period of time. As public debate got louder and more visible, companies had to contemplate the issue. Bhopal disasterand Exxon Valdezoil spill are examples of the disasters that created the awareness for companies to go green and start adopting green practices.
A proactive environmental strategy is one that effectively reduces an organization’s environmental impacts while producing high levels of economic output and creating high-quality jobs. Proactive environmental strategies involve anticipating future regulations and environmental impacts so as to gain a “fit” with environmental expectations of stakeholders, customers, community members, and investors.
As proactive environmental strategies involve anticipating future regulations and environmental impacts, the challenge is to find a balance between environmental intentions and economic productivity. For example in 2002 the governor of Colorado, Bill Owens, passed a law “SB 06-252 Greenhouse Gas Emissions Reporting” requiring energy companies to reduce their greenhouse gas emissions. This law would help to “stem global warming and protect the environment.” The aim was to reduce greenhouse emissions by 3.5% by the year 2007. This was a proactive legislation as it involved anticipation of future regulations and negative environmental impacts. It was a good way to avert emission and dispose of wastes (U.S Environmental Protection Agency). This law was the first of its kind in the United States. Environmental protection and social security are highest priorities of the Governor Owens.
Even if such laws exist, companies thinking that they could get away with greenwashing (selective green marketing that is often misleading), still managed to disregard. Environmental regulatory changes are not simple. In the US, for example, if the government loosened environmental regulation, companies could end up being taken to court for damages and fines for producing or emitting too much air and water pollution as well as for violating labour legislation. In EU, being an open economy, companies depend on trade and good relations with international investors more than any other place. Back in 1970s, the formation of the European Union was just a dream. As the EU became a reality and thus an important trade sphere, companies had to be careful when deciding the quantity of environmental impact they leave behind.
Environmental strategy is a firm’s long-term orientation about how to manage environmental practices to gain a good fit with its stakeholders’ expectations. Proactive environmental strategies are those that involve anticipation of future regulations to voluntarily prevent negative environmental impacts. The proactive environmental strategies are for organizations that see environmental management as a strategic advantage. The proactive environmental strategy is forward looking and the document is a roadmap of the future.
Activities of the environmental strategy document include:
• Risk assessment
• Economic evaluation
• Prediction of environmental regulations
• Proactive recommendations on environmental strategy
• Identification of the best environmental strategies
• Development of a corporate environmental strategy
A pro-active environmental strategy is not limited to the above points. It identifies a good fit between economic goals and environmental opportunities and challenges. A proactive environmental strategy is also not a straight “one-way road”; as environment is complex, and risks, opportunities and regulations also fluctuate, environmental strategies have to change as the environment changes. One of the biggest challenges of proactive environmental strategies is to strike a balance between business models and the environmental milieu. Many companies are still not so sure what comes first, profit or environmental attitude. Some even think that environmental attitude can be built only on a firm’s financial success.
Another challenge of environmental strategy is making the long-term strategy acceptable to the employees of the company. Short-term focus can be more powerful in an organization, it is seen in projects that are directed at quarterly results. It is therefore important to have a long-term strategy and support it with short-term projects that can reinforce the long-term strategy.
Importance of Environmental Strategy
The importance of environment strategy in decision making cannot be over-emphasised. A good environment strategy is an essential ingredient for success for any organisation. An environmental strategy is not something to be done only and always to avoid further problems. It is way to be proactive and to try to shape the future according to the needs of the organization. It is important for an organization to know what it wants to achieve, how it is going to achieve them, and what the environment can support. What is the level of reduction that can be achieved etc.
Environmental regulations have increased and the penalties for not putting a firm’s house in order are severe, including fines and legal actions. Lack of a proper environmental strategy can be a time-bomb, in the event of a new environmental regulation.
Environmental strategy is a necessary ingredient for survival in the long-run. To adopt a proactive environmental-friendly strategy will help the organization to thrive, instead of just survive.
Some examples of environmental strategies are:
• Waste reduction
• Conservation of natural resources
• PPP (Public Private Partnerships) for infrastructure
• Recycling energy
• Improving efficiency and flexibility of operations
• Internal cost reduction
• Reduction of chemical and other pollutants
• Water reduction
• Motor vehicle emissions control
• Air pollution control
Guidelines for Developing A Proactive Environmental Strategy
• Decide the ways to save on energy and reduce waste
• Plan for good management
• Adapt to the changing world
• Read and understand the environmental regulations
• Managing for long term
• Be good to the environment
• Lead by example
• Use experts to help in setting up your environmental strategy
Leverage Required to Adopt Proactive Environmental Strategies
As proactive strategies identify the best steps an organization can take to reduce the environmental impact and protect the environment, the strategy requires extra care in the steps it takes. The environmental strategy should be able to convince an organization’s employees at all levels, stakeholders, and investors that the steps and precautionary measures are good, or better to say, positive for the firm.
As owners and top management of the firm are the main drivers of the environmental strategy, they should be able to convince all stakeholders. The top management should develop a vision of the firm for the long-run, the vision should address the problems that the firm will face, and how it will be able to meet them from an environmental perspective.
To build a vision, the management should study the environment in which the organization operates and review its policies and operations. The monitoring of environment policies and monitoring of operations are major components of the vision for an environmental strategy.
To succeed, the drivers of the environmental strategy have to be able to communicate within the organization and interact well with other stakeholders.
The size of the organization is a significant factor in the ability to adopt a proactive environmental strategy. An organization operating in the top five leading industries is more likely to have a better future. The number of employees in the firm also influences the environmental strategy.
Environmental strategy is of paramount importance to the organization. If the strategy is not prepared, then the goals of the organization and the environment are at stake. Consequently, the organization faces serious business problems.
However that does not mean that proactive environmental strategies are not riskier than reactive strategies. As more businesses set up encouraging environmental approaches and policies, organizations that fail to adapt to the new trend may lose market share. On the other hand, the current trend, in favour of proactive environmental strategies, has its share of problems. There is an interesting book, Strategic Self-Evaluation: Risks and Opportunities in the Environmental Strategy.
In this article, I have tried to inform about what is a proactive environmental strategy, the benefits and challenges of a proactive strategy. I have also tried to guide on how to develop a proactive strategy and finally I have highlighted a process that organizations can follow to develop a proactive strategy.
I hope all the above information is useful to you and you will find it easy to adopt the proactive environmental strategy.