Business Essays – Sustainability Business Corporate
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Published: Tue, 08 Mar 2016
Sustainability Business Corporate
Nowadays, the idea of sustainability has gained wider recognition by most corporates. And business operations are conducted mostly under the guidance of it, that is, satisfying our own needs without diminishing the chances of future generations. There is no denying that the term “sustainability poses new challenges for business activities.
Actually, any corporate expecting for long-term benefits must be responsible for environment and ecosystems and function in a ethical way. In the new sustainable era, more and more corporates have realized the importance of environmental policies and practices towards sustainability, expecting to reduce their footprints on environment.
In order to better understand corporates’ sustainable development, the report will choose Nestle and Coca-Cola as study objects, both of which are famous food and beverage enterprises in the same industry. Through appropriate analysis and comparation in terms of their environmental policies and non-financial practices, the report is intent to achieve some conclusions summarizing their overall differences in the way they approach sustainability issues and provide certain kind of recommodations to improve their future sustainability performance.
Business sustainability is a pro-active approach to ensure business long-term viability and integrity by optimizing resources, reducing environmental impacts while not compromising product quality, competitiveness and profitability. With the rapid development of business economy, environmental concerns have become of paramount urgency for all corporates, who are responsible a great deal for environmental problems.
Quite simply, there are still many business having not taken ethics and social responsibility into consideration, thus destroying environment and their long-term benefits. Therefore, one of the greatest challenges today is to advocate sustainable forms of business and encourage all business assume social responsibility
(Barry, N. P. 2000)
Fortunately, when environmental crisis begin to affect business activities, when unethical behavirors begin to bring about side effects to business development, more and more corporates have realized the necessity to perform in a sustainable and ethical way, not only for its stakeholders but also for whole society, as well as for a sound future development space.
And a series of polices and practices have been applied by corporates to thoroughly commit to doing more for society. Even though, it is not uncommon to see some corporates sacrificing potential of future generations , only to meet their present needs. Exactly, beyond meeting needs of customers and shareholders, corporates should function according to requirements of societal responsibility. Besides, business should acknowledge its societal role and can lead sustainability for both itself and society.
Firstly, the report will review Nestle and Coca-Cola’s distinct environmental and ethical policies. Secondly, the report will analyze and compare the two corporates’ different sustainability practices. Then select another topic—waste disposal issues to futher discuss their special attention on corporate social responsibility and sustainable development.
In the discussion, academic concepts, frameworks, industry standards will be used to support the views. Lastly, the report will give some suggestions and recommendations to Nestle and Coca-cola’s next-step sustainable development.
Discussion and Analysis
(1) Environmental and ethical policies
Generally speaking, corporate environmental policies arise from urgent need of environment protection and improvement in social responsibility sense. Recently, most corporates have come to realize the importance of environmental and ethical issues in sustainable development. (Donaldson, T, Werhane, P.H. and Cording, M, 2002) Nestle and Coca-cola are two worldwide famous beverage corporates in food and agriculture industry. Though both of them set sustainability as one of development goals, either of them has distinct environmental policies.
As the world’s largest food and beverage manufacturer, Nestle published ‘Nestle Policy on the Environment’ in 1991 to state its long-lasting commitment on environmental issues for sound business practices. In business activies, Nestle complies with environmental businesss and regulations, participates in legislative and regulatory discussions, and fosters rational environmental businesss.
On the basis of applicable legislation, Nestle’s internal rules are applied for the purpose of reducing environmental footprints and costs, for example, reduced energy consumption, fewer greenhouse gas emission and less water usage. To sum it up, basic principles in Nestle are in favor of long-term development commitments over short-term profits; respecting of diverse cultures; management based on ethical values and information recognition of consumers’ brand preferences and products requirements.
And strict auditing and assurance standards are available to ensure ethical policies smooth application, with Corporate Business Principles, certified standards of ISO 14001, OHSAS
18001 and ISO 22000. For competitive advantages, policy priorities have been given to environmental issues concerning natural resources preserve ,waste minimisation and recovery.
In a word, Nestle’s sustainability policies designs are environmental and sustainable ,which are fit for all its business activities, ranging from research and development, supply chain, information, communication and training.
Chart one: Nestle’s environmental performance indicators in Latin America
As for Coca-cola enterprise(CCE), the world’s largest marketer, producer and distributor Coca-cola products, in 2007, CCE formally established CRS as a pillar of Global Operating Framework, intergrating it into everyday business operations. And this framework outlines srategic priorities to guide vision achievement. Besides, CCE also sticks to external standards, such as 10 priciples of the United Nations Global Compact, international management systems standards for quality (ISO 9001), environment (ISO 14001), and health and safety (OHSAS 18001). (Environmental Sustainabilty Index.2001)
Its ultimate objective is to achieved full certiication of quality, environment, health, and safety by the end of 2010. Meanwhile, in July 2008, it published its third company-wide Corporate Responsibility and Sustainability (CRS) Report, announcing commitments in water stewardship, sustainable packaging/recycling, energy conservation, product portfolio/well-being, and diverse and inclusive culture. Water, solid waste and packaging, and energy are its environmental priorities. In order to better implement environmental policies, CCE also cooperates with suppliers, customers, consumers, community leaders and employees widely.
And Environmental Management System (EMS) has been implemented and maintained to fulfill environmental commitment. Other than adhereing to applicable local environmental businesss and regulations, CCE environmental policies put emphasis on establishing objectives to measure environmental impacts, pollution prevention, and efficient use of resources. Furthermore, environmental projects and initiatives with local communities have been consolidated as one of the sustainable development policies.
(2) Non-financial reporting practices
Environmental protection is an integral part of business strategy. (Esty, Daniel C., Marc Levy, Tanja Srebotnjak, and Alexander de Sherbinin.2005)To fullfill its commitiments, Nestle firstly integrates environmental principles and policies across whole business. Then Nestle Environmental Management System has been applied for continuous improvement of environmental performance. Compared with ten years ago, in 2007, Nestle reduced direct greenhouse gas emissions by 16% and overall water withdrawal by 28% and invested about 100 million in environment-related industries and 170 million in new sustainable production facilities.
Secondly, a great number of water conservation methods and water treatment plants have been implemented. And top priorities have been given to water consumption toreduce the amount of water used per kilo of food and beverage, because maintaining good water quality is vital to business interests. Thirdly, along its life cycle, Nestle aims to source sustainableraw materials, reduce energy consumption and minimise air emissions. Its sustainableproduct life cycleensures eco-efficiency, especially in by-products and waste management.
For example, innovative packaging materials such as Plantic—– a biodegradable alternative to plastic , have been developed to reduce volum of packaging material used in bottled water. In additon, Nestle provides thousands of farmers with free technical assistance and infrastructure for greater yields of higher quality crops with fewer resources. About half of factories in rural third world have a profound impact on family income and life quality. Supply of safe raw materials and better end products is undoubtedly to gain consumers’ credit and preference. Brand value forms.
Anyway, Nestle helps numbers of consumers for easy access to a safe, healthy and enjoyable diet through a sustainable way to eliminate dangerous trends and is committed to environmentally business practices. Sustainability is central to Nestle strategies and corporate social responsibility is reflected perfectly, added up with vested interests of shareholders. Nestle’s stainable environmental practices and shared values benefit not only its shareholders but also society.
When it comes to non-financial practices in Coca-cola Enterprise(CCE), firstly, around CRS efforts, stakeholder engagement is strengthened to help ascertain key targets and chanllenges. It is stakeholders that urge us to pay special attention to sustainability issues. Customers expect CCE to manage social and environmental matters. Through collaborating with suppliers, CCE develops technology to reduce environmental impacts in supply chain, while at the same time persuades them to perform in responsible practices.
Employees are educated for CRS goals. In addition, faculty,specialists and students in universities are involved to deepen sustainability considerations in theory. Secondly, good governance is fundenmental to make sustainable development come true. Corporate responsibility and sustainability committee is an organization responsible for significant social, ethical, and environmental concerns. Confronted with sustainability chanllenges, policymakers are sensitive to changes and new development area.
For example, durning 2007,CCE chaired British Food Industry Sustainability Strategy Champion’s Groups on Water, which gave suggestions for Sustainable Food and Farming strategies. And Social, ethical, and environmental risks can be managed and evaluated in time. Thirdly, in the fields where business has greatest impacts, to minimize environmental footprint is stressed. In view of finite water resource, it is necessary to protect water source, watersheds and to improve water efficiency.
By 2001,CCE will reduce plant water usage ratio by 10%. Beverage packaging consisted of alunimum, glass and PET is reduced and recycled to realize sustainability. In munufacturing, fleet, sales, marketing facilities, CCE makes endeavors to reduce carbon emmisions, improve energy efficiency and explore renewable energy , such as electricity and natural gas.
Last but not least, a highly talented and diverse workforce is essential to sustainable development. A variety of training and earning opportunities and programs are provided to develop employees’ sustainable performance skills. Besides, healthy lifestyles, fair workplace, and appropriate rewarding are available here.
For a long time, Nestle has worked with FareShare community food network and Ron Hull—a waste managementcompany and FareShare1st has been created to dispose of surplus foodin a environmentally friendly way, through which remaining waste is reused or recycled for good quality food redistribution.
As for CCE’s wastewater , disposal process is operating according to applicable businesss and regulations. In 2007,CCE discharged 20 gigaliters of wastewater into municipal treatment plant. When municipal treatment facilities are not available, internal on-site treatment systems function under guidance of stringent wastewater standards.
Just as Cola describes, 98% of solid wastes source from bottling process. Production waste includes empty ingredient containers, secondary packaging, film, glass, plastic, etc. Statistics show that in 2004, 76% of solid waste were recycled and reused, compared with 74% in 2003.
Improved solid waste ratio and improved recycling ability suggest that various recycling programs have been applied to reduce waste. For example, Latin A mercian’s first PET recycling plant operated in 2005, with 25000 tons of PET recycling ability.
In all, apart from economic profits, both of them work to conserve natural resources and protect environment through appropriate strategies concerning waste issues. As for manufacturing waste in bottling plants, raw materials reduction, solid waste minimization, and recycling increasement are best chioces. As for packaging waste in the marketplace, waste collection, recycling and recovery mechanism has been established to deal with them generated in production.
In conclusion, Nestle and Coca-cola are in the same food and beverage manufacture industry, although both of them begin to put sustainability development on the agenda, and plan to reduce production impacts on environment, their attitudes towards dealing with sustainability issues are different from each other.
On a large scale, the reasons why differences appear lie in their distinguished customers and
target groups. When Nestle coffee aims to create a kind of comfortable mood for those who want to taste, Coca-cola plans to satisfy almost all people’s basic needs for Coca.
After all, as a f
beverage, coffee is not likely to adapt to domestic tastes. In this sense, different consumer groups determine different business policies, including choices in environmental policies.
In the vision of sustainable development, Nestle sees it a comprenhensive concept, and defines it as the process of increasing access to higher quality products, while contributing to long-term economic and social development for not only recent generation but also future generations.
A healthy profit is no longer at the expense of long-term business development. In Coca-cola, on the other hand, commitment to good citizenship is part of its business practices. And sustainable growth depends on the success in areas of profit, planet, people, partners and protfolio, of which being a responsible citizen makes a difference.
In the way how to perform sustainable practices and business strategies, there is a framework for Creating Shared Value in Nestle , which embraces societal value and Nestl’s shareholder value. While Coca-cola provides a citizenship framework to guide its business in areas of marketplace, workplace, environment and community.( Whetten et al. 2002)
In focus of sustainability chanllenges, water, health and wellness, and HIV/AIDS in Africa demand Coca-cola heightest attention. While Nestle believes nutrition, health and wellness as key issues, added up with human rights,sustainable production and community support. (Friedman M. 1970) Certainly, both of them give special attention to water usage.
In the field of environmental management, in 1996 Nestle Environmental Management Syste (NEMS) was created and implemented throughout whole company to manage all environmental activities with good results. And Coca-cola follows The Coca-Cola Management System (TCCMS) externally benchmarked against ISO 14001, whose environment portion is called eKOsystem. The function of this system ensures environmental concerns are incorporated into everyday performances for efficiency improvement and costs reduction.
Hence, Nestle and Coca-cola’s successful business tells the inspiring experience of their efforts towards limited growth, reduced environmental impacts and support of social and ecological goals positively.
As a result of different brands and products, there indeed exists a great many differences between Nestle and Coca-cola in concrete environmental practices. As long as they are fit for their sustainable policies and business strategies, it is no necessity to assess wether their practices are good or not.
However, in some developing countries, Nestle’s business practices have been controversial and thought as unethical, in particular baby formula marketing, which led to widespread boycott since the 1970s. The boycott could be attributed to 1.5 million babies death each year on account of contaminated water mixed with milk.
And the same thing is not uncommon in Coca-cola. In 2003, its soft drink was found by Centre for Science and Environment to have 30 times the permitted amount of pesticide residues. In India, Coca-Cola has also been accused of excessive water usage.
Nutritionists even argue excessive consumption of soft drinks is harmful to young children because they have a lower intake of calcium, magnesium, ascorbic acid, and vitamin. Although Coca-cola has responded that its products meet minimum health standards and are strictly tested to remove potential contaminants before distribution, criticism or controversy ultimately result to sales decline to some extent.
The year 2003 witnessed Nestle’s transgenic storm, which explained its indifference of public health safety and lack of basic social responsibility. In 2005, Nestle’s excessive-iodine incident marked its failure in public relations crisis, because the case took place after colloboration with Coca-cola, it would reduce confidence of dealers and consumers towards their co-production of liquid coffee.
It is obvious that both Nestle and Coca-cola has not fully perform in accordance with sustainable principles. As for corporates in pursuit of profits, accecptance of environmental protection sense and sustainability idea is no easy task. (Werhane, P. H. and Freeman, R. E. 1999)
Above all, in future development process, for sustained competitive advantages, their attentions should also be addressed on sustainability performance improvement. It is of great necessity for both corporates to make efforts to improve environmental performance facing up with emerging environmental challenges. The followings are recommodations for both corporates concerning future sustainability development.
For one thing, needless to say, sustainability is still a basic principle, in other words, all business activities should aim to minimise negative effects on environment and keep a balance between economic interests and social and environmental concerns.
For another, along supply chain of raw materials sourcing, manufacturing , packaging, distribution, marketing , to meet environmental commitment should always be kept in mind. For example, they should encourages suppliers to adopt most efficient and appropriate packaging materials to satisfy consumer requirements without jeopardising products’ quality.
What’s more, sustainability and environmental management system (EMS) must be implemented and strengthened throughout entire business operation to ensure effectiveness of environmental policies and programmes, and to achieve compatibility with international environmental management standards, such as ISO 14001, the European Union Eco-Management and Audit,etc.
In the future, their attention should be paid on environmental management structure enhancement, key sustainability activities measurement, ongoing performance reports, manage and forecast, and reliable environmental information communication. Besides, practical, aspirational environmental goals must be established annually.
In addition, responsible leadership is inevitable to coordinate economic, social, and environmental goals,which means integrating ethical considerations into decision-making process . From the perspective of good governance , enterprise risk management (ERM) approach should be intergrated for a scientific sustainability-oriented decision-making process.
Then, a skilled and responsible workforce is vital to realize sustainable objectives. Only if employees perform to their full potential, it is possible to attain superior development and future sustainable growth. Training and education should be provided for them to adjust to new sustainable expectations. And a safe fair workplace where they are respected and valued is another way for a empowered, well-trained and professionally team.
Besides, in brands collaboration, in order to avoid
similar incidents(Nestle’s unethical behviors bring disaster to Cola)
, brand values and performance research before
cooperation is i
Finally, to be successful, both Nestle and Coca-cola must understand clearly stakeholders’ concerns. In CSR efforts, stakeholder engagement and coorporation mechanism should be strengthened, including suppliers, employees, NGOs, consumers, customers, investers, governments and local communities.
Through engagement , valuable feedback can be received to help us better understand their requirements and how we can perform. For example, most consumers prefer to environmental healthy products. And through collaboration with suppliers, corporations can ensure them understand sustainable development expectations and engage them into environmental performances in supply chain.
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