This paper discusses the organisational changes which are necessary for companies to become more sustainable. Corporations being the cell of modern economic development and major contributor to the present environmental crisis need to play an active role by developing sustainably. Sustainable development is the form of development that requires organisation to change from their traditional values and approach to doing business which is driven solely by the maximization of shareholders returns to a more eco-friendly approach that meets the present needs, at the same time not jeopardizing the needs of the future generation. For these changes to be effective it has to start from the boardroom down to the bottom line affecting all the employees while not leaving out the supply chains. It is also shown that organizations pass through various phases in their quest to attain this changes and that these phases help organization to determine where they are at the present while charting a partway for corporate sustainability.
The different stakeholders affected by an organization were identified and the various actions they take in different situations were also discussed. It was shown that stakeholders can either be primary or secondary based on their dependence on resources and that they can take direct or subtle action depending on the resource dependency between the firm and the stakeholders. The drivers of organizational change are element within or outside the organization that can influence the organization to make necessary changes towards sustainability. Also discussed are some barriers that tend to hinders organizations from making these necessary changes and finally, the benefits derived by organization and the environment when they eventually undergo these changes was highlighted.
There is no gainsaying that the continuous exploitation of the world natural resources by humans and more so corporations have led to their depletion and hence resulted in environmental degradation, pollution, change in the composition of earth’s ecosystem and biodiversity, and climate change. Foremost culprit of the exploitation of the world natural resources are the various corporations who exploit these resources to develop one form of product or the other for the sole aim of making profit. Traditionally, companies are in business solely for the maximization of shareholders returns and while this business model has been highly successful, driving businesses by shareholders value alone has become highly unsustainable (Grayson et al, 2008).
This traditional approach to business is no longer tenable in today’s modern world. This is because business practices that involve the release of huge amount of non-decomposable waste into the environment, that consume huge amount of energy, that contaminate the environment and that undermines local communities are viewed as unfriendly to the environment and can no longer be justified solely by shareholders return. While recognizing the importance of corporate growth and profitability, corporate sustainability requires that organisation pursues societal goals, such as environmental protection, social justice and equity (Mel, 2003).
This paper will discuss in detail what corporate sustainability entails, while corporations need to change from their traditional values to a more sustainable one, the drivers of organisational change, the condition under which the change will occur, the factors militating against organisational change, and the various stakeholders affected by organisational change and the benefits these changes portend to the environment and various species in general. Interestingly, organisational change is already underway, these changes are driven by modern environment reality, visionary leaders within and outside the organisation and by various change agents.
Sustainable Development – what is it?
The Brundtland Commission to UN defined sustainable development as “Meeting the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). Sustainable development is a very broad concept that encompasses economics, social justice, business management, environmental science and management, politics and law (Mel, 2003). The WCED report “Our Common World” argues that sustainable development cannot and should not be left to government policy makers and regulators alone, but that corporations being an engine of economic growth have a major role to play in sustainable development. In the same report, WCED noted that “What is needed now is a new era of economic growth – growth that is forceful and at the same time socially and environmentally sustainable” that means that corporations should make progress in business development without depleting natural resources or harming the environment (Shepard & Donlon, 2007).
Corporate Sustainability – Why?
Corporations are the fundamental cell of modern economic life, and their success in transforming earth’s natural resources into various economic goods has shaped the social and physical world in which we live (Dunphy et al, 2003). Godfrey et al (2009) argues that traditional organisational values are not sustainable and they need to be significantly reshaped continuously else these values will continue to undermine or harm the drive for sustainability. Corporations have contributed significantly to the numerous problems affecting the earth’s environment and therefore should at least take an active part in finding solution to these problems (Godfrey et al, 2009). Fortunately, many organisations are leaning towards sustainability and are making needed changes towards corporate sustainability. This organisational change is led in part by the changing demand of modern society and by far-sighted leaders within and outside the organisation. However, in other for this organisational transformation to be successful, more change agents are needed. Organisation need to move away from their traditional values towards corporate sustainability by generating new models of organisational action that support social responsibility and our natural world (Dunphy et al, 2003).
Corporations that continue to engage in business practices that involve the release of huge amount of non-decomposable waste into the environment, that consume huge amount of energy, that contaminate the environment and that undermines local communities will become more and more irrelevant and will eventually lost out as people generally patronise only those corporations that pursues societal goals, such as environmental protection, social justice and equity (Mel, 2003).
Corporations are changing their course of action from the goal of just pursuing investor’s returns to becoming more sustainable and investors and customers are increasingly rewarding them with superior sales. A recent study shows that corporate sustainability does not inhibit growth and profit but rather that companies that pursue corporate responsibilities make good investment (Grayson et al, 2008). Grayson et al (2008) argues that “This close connection between investment potential and responsibility has led to the emergence of several investor-led sustainability initiatives, including the Carbon Disclosure Project (CDP) and the Dow Jones Sustainability Index (DJSI)” (Grayson & Hodges, 2004). For instance the Carbon Disclosure Project an independent not-for-profit organisation is made up over 4, 500 companies globally with a combined assets of about US $64 trillion under management as well as through corporate and public sector supply chains. The CDP’s aim is to “assembled the largest database of corporate greenhouse gas emissions and climate change information in the world and facilitates the collection of climate change data within investment portfolios” (Lee, 2010). The CDP is an investors led pressure group on sustainability that investigate the emission levels of industries leading to different cost of capital depending on the emission level (Grayson et al, 2008).
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- Christian Uwagwuna (Author), 2011, Will the organisational changes which are necessary for companies to become more sustainable actually happen and will they benefit the environment?, Munich, GRIN Verlag, https://www.grin.com/document/166241