The Era Of Green Retailing Has Come Management Essay
Many noticeable retailers are under tremendous pressure to Go Green and reduce their carbon-foot print Percept ant, 2010. Retailers are extensively claiming ‘Green’ initiatives, where they have reduced the CO2 emissions in their supply chain (Ad week, 2009). For example, Tesco plc. (2011) claims that “It has been making efforts to cut its carbon emissions since, 2007, as part of its climate change strategy”. It also ambitiously estimates to reduce its GHG (Green-house Gas) emissions by 30% in 2020 and to become zero carbon business by 2050(Tesco plc., 2012).
In present era, retailers are expected to play a vital role in value chain, for example, by offering a wide range of services and products to the customers, ethical behavior in-terms of their suppliers and efficient response to consumer demand (Nordas, 2008). They are now being compelled to mitigate their environmental damage and are forced by regulatory authorities, suppliers, customers, as well as, communities to adopt environmentally friendly practices for improving their supply chain. In the meantime, strict environmental regulations are exercising greater pressure to stress on carbon footprint in their operations (Lai, Cheng & Tang, 2010).
Parry, Martha & Grenon (2007), state that for a business to take interest in energy-efficient (sustainable) supply chain, they must be influenced by four primary factors:
Need to reduce cost of energy in their operations
Concerns about environmental regulations, put in place by either Governmental or Non-Governmental bodies
Customer bias in favour of firms that exhibit reduction in their carbon emissions
Lastly, the need to increase productivity. Companies such as ‘Wal-Mart’ and ‘Tesco’ strive to reduce emissions because it reduces their operational cost and improves productivity.
From the work of Johan & Anne-Marie (2009), let us identify various sources of pressure faced by firms such as, Tesco to reduce their environmental footprint, under the framework called, ‘Identification of stakeholders’.
4.1. Identification of stakeholders
The influencing sources of pressure under this framework are stated as ‘stakeholders’. “Stakeholders are defined as, individuals and groups that can affect company’s performance or that are affected by its actions” (Freeman cited in Johan & Anne-Marie, 2009). Various categories of stakeholders exist in this framework, for example, customers, suppliers and regulators are distinguished as primary stakeholders (who are deemed absolutely necessary for the survival of the business), while, media and NGOs are considered as secondary stakeholders( Clarkson cited in Johan & Anne-Marie, 2009).
The key stakeholders are divided into two categories. Such as, ‘External stakeholders’ outside the supply chain and stakeholders with in the supply chain are defined as ‘Internal’.
4.1.1. External stakeholders
How company performs environmentally is strongly influenced by external stakeholders. According to Johan & Anne-Marie (2009), these stakeholders include:
According to Economist Intelligence Unit (2008) report, “the most important source of external pressure affecting organization’s carbon reduction initiative is either the local or national government”. Governmental bodies exert a great pressure on to big multi-national companies such as, Tesco, by imposing laws, by issuing or revoking operation permits and by financial incentives/disincentives. Some of the examples from European government policies are:
RoHC- Restriction of Hazardous Substances(EC, 2009)
EUP- Energy Using product directive (EC, 2005)
WBCSD- World Business Council for Sustainable Development, CHG-Green House Gas protocol, DEFRA and DEC are some of the internationally recognized standards for corporate carbon reporting( Tesco plc., 2012).
Media, NGOs and Public (Community)
NGOs and media can play a vital role in changing the public opinion towards a certain product, substances, companies and firms. They influence people by producing influential documentaries and campaigns. For example, Al-Gore (Vice-President of America) played a pivotal role in raising awareness on climatic change in the world (Johan & Anne-Marie, 2009).
Owners and investors
Investors and shareholders, now-a-days are very keen in knowing company’s environmental performance, alongside its financial performance. The growing interest in this sector is likely because of the increased ‘Ethical Unit Trusts’ and ‘Sustainability Ranking Schemes’ (Flening B., 2005).
Competitors and Industry Associations
Competitors and industry associations can become both the source of pressure and hurdle. A firm can learn environmental initiatives of its competitors, under pressure to perform better. A company can also not choose to disclose its environmental protection data, to keep competitiveness in the industry or join lobbies to act against certain legislation. Example is of ‘Plastic Producers in Europe’ (Johan & Anne-Marie, 2009).
Standardisation Organisation & Certification Bodies
Standardisation organisations can have a very strong influence on to a business, through its certification systems and development of standards. For example, ‘International Organisation of Standardisation (ISO)’ was formed by national standardization organisations and has strong connection to the government. Other actors in the field are:
Global Reporting Initiative (GRI),which is an external environmental reporting body(GRI, 2012)
Fair-trade- Ensures preservation of local eco-system(FLO,2011)
GAP- Global Good Agriculture Practice, Ensures basic environmental responsibility( Global GAP, 2012)
Rainforest Alliance- Avoids loss of high conservation value and drives eco-efficiency improvement(SAN, 2012)
Universities, Research institutes & environmental consultants
Universities, research institutes and environmental consultants can also pressurise companies to reduce their environmental footprint by increased exchange of knowledge and practices (Johan & Anne-Marie, 2009). For example, in Sweden there is University-Business cooperation for ‘Environmental Assessment of products’ (CPM, 2012).
4.1.2. Internal stakeholders
According to Johan & Anne-Marie (2009), those actors, which influence the company’s environmental strategy with in the product/supply chain (Customers & suppliers), are known as ‘Internal stakeholders’. They are both ‘Upstream’ and ‘downstream’ in the chain and constitute significant driving force.
If a company wants to asses an in-depth scrutiny of its environmental footprint, it should know as to what is happening inside various stages of product/supply chain. Starting ‘upstream’, it needs to examine the carbon footprint of its suppliers. The accurate way of doing so is to collect information from its suppliers directly (Johan & Anne-Marie, 2009). For example, Tesco has a very powerful relationship with its suppliers and much of their activities are influenced by firm’s climate-change/carbon footprint policies (Reynolds, 2009).
Customers are becoming increasingly aware of environmental damage caused by the use of various products in their daily lives (David et al, 2012). They now demand environmental information from companies and base their purchasing decisions on that information. This stimulates the companies to review their environmental strategies because they have business case of doing so (Johan & Anne-Marie, 2009). For example, Tesco regularly updates its customers through its website http://www.tescoplc.com, advertising through print and media, about their CSR (Corporate Social Responsibilities), environmental reduction initiatives, as well as, objectives set in this regard.
4.1.3. Additional factors
At the organizational level, the additional driving forces include features such as:
Use of resources( Raw Materials), for example, amount of waste and pollution generated in the process
High-cost activities such as, costly water purification and energy usage
Geographical location of the company, for example, Euro zone has tough environmental legislations and awareness.
Product mix, for example, Tesco provides all information on the product packaging from its production, distribution, environmental impact, price and health & safety standards.
Size & Profitability of a company are also driving force in environmental sustainability. For example, a smaller and less profitable company may not be able to meet high costs of carbon foot printing. As compared to retailing giants such as, Tesco, Asda, Sainsburys and Wal-Mart, who are under constant scrutiny from all sectors of society (González‐Benito & González‐Benito, 2006).
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