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Environmental Management Systems Making Firms More Competitive Essay Sample

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  • Category: sustainability

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Introduction of TOPIC

In the rat race for more power and money, a lot of organizations forget about the negative impact they have on the environment. The concept of ‘environmental sustainability’ was conceived over a general consensus and need to protect the environment. This has led to a never-ending debate between the financial viability for an organization to adopt Environmental Management Systems (EMS) and the “pays to be green” notion. In most cases of effective environmental management systems, the organization adopts the right policy depending on the circumstances confronting the company and adopts a sophisticated strategic planning technique that has full potential to enhance competitiveness. This report will try to answer the question posed above by explaining the meaning of EMS and its types and giving examples of various firms that have adopted EMS.

Definition- An environmental management system (EMS) refers to the practices of an organization that enable it to systematically manage, evaluate, correct and enhance its operations resulting in a more eco-friendly or environmentally safe approach to business. It basically follows a four-step model: The Plan-Do-Check-Act methodology, which aims at continuous improvement. Types of EMS: ISO 14001, EMAS and BS 8555 are among the various types of EMS Observation: In the past, before the concept of environment management came into existence, firms usually used strategies such as cost leadership, product differentiation, innovation, customer satisfaction etc. to win a competitive advantage over its rivals. However, with increasing competition and the enhancing ability of firms to compete with one other, these dimensions seem to offer only momentary advantages. What could be the next source of competitive advantage for firms? Could firms invest in something that gave them an edge without compromising on the company’s business goals? The solution to these questions is Environment Management Systems.

Question: How do Environmental Management Systems make firms more competitive? Answer: Firms usually view EMS as an additional cost of doing business. However, quite to the contrary, if applied in accordance with the firms business and integrated into the business thinking, this sophisticated strategy can actually ensure long-term prosperity. ‘There seems to exist a positive correlation between environmental and corporate performance.’ (Tibor and Feldman 1996) The right kind of environmental regulation can enhance competitive advantage in th

e following ways: 1)Cost Savings: Resulting from more efficient environmentally conscious approaches

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to their operations, a firm’s saved costs can be used in R&D thus offering it a competitive advantage. For eg- using energy-efficient lighting systems, reducing and recycling waste, eliminating extra packaging could all serve to cut costs and at the same time, make a major contribution to sustainability. 2)Meet legal obligations: By adopting an EMS, a firm will easily meet most of its legal environmental requirements thus avoiding the risk of getting fined.

Thus Proactive environmental management can reduce potential legal liability. 3)Product Differentiation: Business activity is highly influenced by consumers since they always have the option of purchasing from another company. Creating a reputation of being an eco-friendly company not only attracts environmentally conscious customers but also sets a benchmark for other companies. This sets firms aside from the rest giving them the competitive advantage of product differentiation. 4)Stakeholder Trust: Environmental criteria are increasingly becoming a decisive factor in purchasing decisions. All stakeholders want to invest in products that are trustworthy and sustainable in the long run. For Example: many stockholders might prefer to invest in companies that conform with the ISO 14001 scheme. Aware customers now prefer buying products that have been certified as ‘environmentally safe’. 5)Long Run sustainability: Here is where the IRON LAW OF RESPONSIBILITY comes into action. “Those who do not use power in ways that society considers responsible will tend to lose it”. Environmental irresponsibility is not profitable in the long run. FIRMS ADOPTING EMS:

Wal-Mart- The world’s largest retailer has faced criticism in the past and has earned a bad reputation for not having taken responsibility for its impact on the environment. They are ready to now shed this image away by adopting EMS and remaining competitive in the global markets. The company recently pledged that it would aim to be fully powered by renewable sources. They have made large windows in their walls so as to allow maximum natural light which provide 70% of the store’s lighting in the day. By using solar panels, the company has managed to save $1 million from its electricity bill. “By using one of California’s greatest resources – sunshine – and employing renewable technology with our California-based partners, we will continue developing solutions that are both good for the environment and good for business.” said Kimberly Sentovich, Senior Vice President of the Pacific Division for Walmart.[ ] ➢General Electric Company- Among the many environmental initiatives taken by GE, the most famous is the ‘Ecomagination’ scheme launched in 2005, which emphasized the use of ‘clean technology’. By the end of 2011, the ecomagination line of products had generated 21 billion in revenues and invested 2 billion in research and development. [ ]

IMB Corp- Ranked number 1 in environmentalism among hundred other companies (according to Corporate Responsibility Magazine), IBM Corporation has had a global environmental management system integrated in its business program since a long time. Ever since it implemented its first environmental policy in 1971, it has been successful in maintaining its position among the top few “green” companies. [ ] IBM’s Chief Executive Samuel J. Palmisano also mentioned in a speech that adopting EMS has not only demonstrated a corporate virtue and given IBM a good reputation but it has also proven to be a good growth strategy. One if the major achievements of IMB, giving it competitive advantage, has been of saving more than $370 million from energy conservation in a span of nineteen years.

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