Integrating Environmental Sustainability into the Company's strategy

A study of contributing factors to overcome barriers between sustainability and shareholder demands

Thèse de Master , 2009 , 131 Pages , Note: 1,3

Gestion d'entreprise - Ethique commerciale, Ethique économique

The findings of this research are most useful for those (e.g. executives,
environmental managers) who view environmental sustainability as a vital issue for business and intend to develop a corporate strategy that responds to stakeholder’s expectations while ensuring long-term performance.
The aim of this research is to verify that shareholder is exactly the right focus for pursuing an environmental related strategy, and that key stakeholders are expecting firms are taking ownership on environmental issues.
Central to the research question are identified barriers preventing companies from pursuing an environmental strategy. According to various surveys among
executives, they regard environmental issues as strategically important, however
relatively few companies appear to be translating the importance they place on
these constraints into corporate action.
The methodology of this study is to test hypotheses during an explanatory case
study. Before testing the hypotheses, a descriptive literature research provides
basic information, describing the topic as well as common practices and results
from empiric studies. Then a case study serves as a research strategy to collect
and analyze data for testing the constructed hypotheses. It explains the relationship between variables within the arguments which are environmental initiatives and the financial performance, reporting standards and effectiveness of communication to stakeholders, and meeting stakeholder’s expectations with corporate practices.
The findings from the second research phase, the real-life case study, are basically supporting the findings from the literature research. By expressing eco-efficient practices in financial terms, a significant impact to the estimated cash flow and return rate (ROI) generated by opportunity benefits was identified.
Various practices were discovered to prove that smart companies focusing on the
right accounting and reporting tools seize competitive advantage through strategic management of environmental challenges.

Table of Contents

• Executive Summary
• Table of Contents
• 1. Introduction
• 1.1 Problem description: Situation of competing strategic priorities
• 1.1.1 Relevance of sustainability issues
• 1.1.2 Current implementation rate for sustainability practices
• 1.1.3 Barriers for an engagement in sustainability issues
• 1.2 Objectives of the research
• 1.2.1 Measures and guidelines linking environmental issues with financial performance
• 1.2.2 Sustainability practices and reporting standards meeting stakeholder's expectations
• 1.3 Research hypotheses
• 1.4 Research methodology
• 2. Sustainability strategies and standards
• 2.1 Sustainability perspectives
• 2.1.1 Corporate Sustainability
• 2.1.2 Sustainability indicators
• 2.1.3 Environmental sustainability as a risk management perspective
• 2.1.3.1 Physical risks
• 2.1.3.2 Regulatory and liability risks
• 2.1.3.3 Competitive risks
• 2.1.4 Business opportunities resulting from environmental changes
• 2.1.5 Business strategies and environmental strategy
• 2.2 Environmental accounting and reporting
• 2.2.1 Triple bottom line of sustainability
• 2.2.2 Accounting frameworks
• 2.2.2.1 Approach of shareholder value concept
• 2.2.2.2 Models for the financial analysis of environmental issues
• 2.2.2.3 Methods of measuring environmental benefits and costs
• 2.2.2.4 Relationship between environmental and economic performance
• 2.2.3 Reporting frameworks
• 2.2.3.1 Linking environmental accounting and reporting
• 2.2.3.2 Reporting categories and characteristics
• 2.2.3.3 Current reporting guidelines and standards
• 2.2.4 External stakeholders' perspectives
• 2.2.4.1 Growing interest on sustainability reporting
• 2.2.4.2 Sustainability research and rating organizations
• 2.2.4.3 The impact on investment decisions
• 3. Theoretical Framework and Hypotheses
• 3.1 Research design
• 3.2 Testing hypotheses with initiatives from a case study company
• 3.2.1 Environmental accounting practices
• 3.2.1.1 Methods for evaluating economic performance
• 3.2.1.2 Accounting costs and benefits
• 3.2.1.3 Factors for the discount rate
• 3.2.2 Reporting standards
• 3.2.3 Stakeholder's perception
• 3.3 Method of collecting data
• 3.4 Analyzing the Hypotheses statements
• 4. Developing the Business Case
• 4.1 Situation of sustainability implementation
• 4.2.1 Environmental Management Programs
• 4.2.2 Corporate Sustainability Reporting
• 4.2.3 Management of Stakeholder's demands
• 5. Testing hypotheses for integrating sustainability into business strategies
• 5.1 Hypothesis I: Environmental and financial performance are generally positively related to meet shareholder value demands
• 5.1.1 Environmental initiatives have a significant impact on company's value
• 5.1.2 Cost avoidance arise from environmental practices which are not capital-intensive
• 5.1.3 The cost of equity is decreasing with the improvements in environmental performance

Objectives and Key Themes

This research aims to investigate the integration of environmental sustainability into a company's strategy by examining the factors that contribute to overcoming barriers between sustainability and shareholder demands. The study specifically focuses on verifying whether shareholder value is the appropriate focus for pursuing an environmental strategy and whether key stakeholders expect companies to take ownership of environmental issues. The research explores the positive relationship between an organization and its stakeholders, leading to increased company value through environmental sustainability integration. The key themes explored in this study include:
• Overcoming barriers between environmental sustainability and shareholder demands
• The role of stakeholder expectations in driving environmental strategy
• The positive relationship between environmental sustainability and company value
• Environmental accounting and reporting practices for communicating environmental performance to stakeholders
• The impact of environmental initiatives on financial performance and shareholder value

Chapter Summaries

The first chapter introduces the problem of competing strategic priorities, particularly the relevance of sustainability issues and their current implementation rate. It outlines the barriers to engaging in sustainability initiatives and defines the research objectives, hypotheses, and methodology. Chapter two delves into sustainability strategies and standards, exploring various perspectives on corporate sustainability, sustainability indicators, and environmental sustainability as a risk management perspective. The chapter also examines business opportunities arising from environmental changes and the relationship between business strategies and environmental strategy. Chapter three establishes the theoretical framework for the research and outlines the hypotheses to be tested. It focuses on the research design, data collection methods, and analysis of the hypotheses statements. Chapter four develops the business case by examining the current situation of sustainability implementation within a case study company. It focuses on environmental management programs, corporate sustainability reporting, and managing stakeholder demands. Chapter five tests the hypotheses related to integrating sustainability into business strategies. The focus is on exploring the relationship between environmental and financial performance and its impact on shareholder value.

Keywords

This research focuses on environmental sustainability, shareholder demands, corporate strategy, stakeholder expectations, environmental accounting, sustainability reporting, and financial performance. The study explores the integration of environmental sustainability into business practices, the influence of stakeholder perspectives on corporate decisions, and the relationship between environmental initiatives and company value.

• Université: University of Applied Sciences Essen
• Note: 1,3
• Auteur: Arend Grünewälder (Auteur)
• Année de publication: 2009
• Pages: 131
• N° de catalogue: V124314
• ISBN (ebook): 9783640296651
• ISBN (Livre): 9783640302178
• Langue: anglais
• mots-clé: Integrating, Environmental, Sustainability, Company