Global Logistics by Rinsler Stephen. Waters C. D. J

Author:Rinsler, Stephen.,Waters, C. D. J.
Language: eng
Format: epub
ISBN: 10aa48e1-3fde-4a66-ab76-61c034088ea3
Publisher: Kogan Page

Managerial and financial sustainability

What about all the support structures around supply chains, such as financial decisions, management systems and governance? Certain preconditions are necessary before an environmentally oriented value chain can be created. These include an environmentally oriented system of corporate management, a culture that allows learning, and a top-down principle with bottom-up support. Development and change aimed at the target audience are more likely to result in the environment (or sustainability) being considered from the beginning of the process (Steger, 1996).

Much of the influence on sustainability comes from outside the firm. Many in the fund management community probably think that sustainable development has little relevance to their decision making – but what about the energy company that is ignoring the rising tide of pollution legislation, or an automotive stockist that has not considered the implications of forthcoming vehicle recycling directives (Belsom, 2001)? When the cost of emitting climate-change gases is incorporated into the tax regime through the UK climate change levy, then the economics of doing business will change. The Society of Motor Manufacturers and Traders estimates that the extra cost for each new UK car after the implementation of the End of Life Vehicle Directive will be between £115 and £300. These uncertainties reduce the earnings from companies’ stock and so their performance on the stock market.

Socially responsible investment aims to influence companies to adopt policies that benefit the environment and society at large. As investors, socially responsible investment funds have a great deal of influence over the way in which a company conducts business (CIS, 2002). An EIRiS/NOP (1999) survey found that over 75 per cent of UK adults think their pension scheme should operate an ethical policy, if it can do so without reducing the level of financial return. Of these, 39 per cent said their pension should operate an ethical policy even when it might reduce the size of their final pension. The growing prominence of ethical issues is also reflected in the spectacular growth in numbers and size of available funds that apply ethical criteria. Research by the Social Investment Forum indicates that, in 1999, more than $2 trillion was invested in ethical funds in the United States, up 82 per cent from 1997 levels.

Socially responsible investment is a growing trend and there are a large number of rating organizations that assess and screen companies to provide information on their operations. These rating organizations scrutinize factors such as environmental impacts and solutions, sustainability issues, management and external focus – and companies will need to consider the strategic responses in these areas (Walker and Farnworth, 2001).

Reputation and governance of a company and its supply chain are also key issues. Shell appeared very badly when it decided to sink an ageing oil platform, Brent Spar, even though it transpired that its solution for disposal was well researched and advised. Shell was unable to recover its corporate reputation and has since attracted more unwanted attention over its operations in Nigeria. Public and pressure group perception of a product is also important in laundry detergents.

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