Business Strategy nnd the Environment, Vol. 5, 127-136 (1996) SUSTAINABLE

INDUSTRIES FOR SUSTAINABLE -~ SOCIETIES

David P. Angel, Clark , Worcester, MA, USA and Joseph Huber, Martin-Luther- Universitat Halle-Wittenberg, Germany

The greening of is a strategic The 1995 conference was co-ordinated by research area where many paradigms con- Professor Nigel Roome of the Erivan K. verge, not a new field or discipline, nor a Haub Program in Business and the specialty of an existing disapline. These paradigms all share the assumption that Environment at York University, Canada. industrial firms wiU play a vital role in the needed transition to a sustainable society. And they share the view that the transition will change firms in a profound way, influencing their strategies and instru- INTRODUCTION ments, identities, and relationships with their stakeholders (Groenewegen et al., erhaps the most striking conclusion to be 1995: 1) drawn from the 1995 Greening of Industry PNetwork Conference is the different pace at The results of the Fourth Greening of which various aspects of the industry-environment relation are evolving during the 1990s. Within Industry Network Conference, Research North America and Europe there is a palpable and Practice: Learning to Build Sustainable sense of progress among firms in environmental Societies, held in Toronto, Canada, 12-14 . The diffusion of environmental man- November 1995, are summarized. The agement practices is occurring less rapidly else- Greening of Industry Network is where in the world and industry is only beginning concerned with the role of firms and to confront the difficult challenge of management industries in the transition to a sustainable for . At least among the largely self-selected group of society. The Network conferences, held firms participating in the 1995 Network conference, annually at different locations around the environmental management is becoming part of world, promote this goal by bringing accepted business practice. Within North America together diverse participants from industry, and Europe, knowledge of the basic tools of government, academia and various non- environmental management is diffusing among firms and within industries. Clear models of governmental . The confer- management strategy are emerging. There are, of ences are venues for information exchange, course, leaders and laggards in industry, areas in learning and dialogue about diverse which the pace of progress is slow, and disputes aspects of the greening of industry and over the best regulatory approach towards greening. possible pathways to a sustainable society. However, improvements in environmental perfor- mance are underway. The first section of this report reviews the wealth of case study material presented CCC 0964-4733/96/030127-10 at the conference on emerging best practice in 01996 by John Wiley & Sons, Ltd and ERP Environment. environmental management.

BUSINESS STRATEGY AND THE ENVIRONMENT SUSTAINABLE INDUSTRIES FOR SUSTAINABLE SOCIETIES

On an international and global scale, and espe- conference about the role of firms in the sustain- cially in the developing and newly industrializing ability transition. economies, the pattern of greening is more frag- mented and far less evident, and is moving at a slower pace. The challenge of adopting an ethic of ENVIRONMENTAL MANAGEMENT greening for industry world-wide still looms large. 1 he instituhonal ana organizational mecPlamsmrsof Byfartl&arptpropurtiun+pperqzweset+kth-- greening are unclear. The role of international the conference dealt with issues of environmental ~ organizations, such as the World and management. This emphasis on environmental __ UNDP, remains in dispute, as does the possibility management reflects the current state of the 'greening of more localized initiatives at the regional and local of industry' within North America and Europe. scale. It is unclear whether environmental manage- Industry's attention remains focused on the evalua- ment practices developed in a North American and tion of different forms of environmental manage- European context are transferable to the range of ment, and only secondarily on management for development conditions that comprise the interna- sustainability. Within the domain of environmental tional economy, from the so-called 'societies in management, two broad issues receive attention, transition' of Eastern Europe to the rapidly expand- namely, the role of internal and external forces in ing economies of the Pacific Rim. The second initiating and sustaining a programme of environ- segment of our report reviews the results of various mental management, and the utility of different case studies of the greening of industry on an management tools for improving environmental international scale. performance (eg. environmental policy statements, The growing confidence exhibited by North environmental , environmental standards and American and European firms in the area of voluntary codes of management practice). We environmental management stands in contrast review ideas and information presented at the with a shortage of ideas and initiatives regarding conference on these two themes and highlight three the role of industry in the sustainability transition. areas of emerging research in environmental man- As Hall and Roome (1996 9) suggest 'although agement finance, supply chains and performance current thinking provides us with some valuable indicators. pointers, there still exists a vacuum surrounding Identification of the mix of internal and external what comprises "sustainable strategies" - in terms forces, and economic, political and cultural pro- of definition and process.' Plenary presentations by cesses, that best promote the adoption and ongoing Alicia Barcena of the Earth Council and Jacqueline implementation of environmental management Aloisi de Laderel of UNEP reinforced the point that programmes is a high priority for researchers and environmental management and the attendant policy-makers. Although the firms in attendance at improvements in environmental performance by the conference have generally adopted environ- industry are only one part of the move towards mental management strategies of one kind or sustainability. Fundamental issues of another, they are not representative of industry in growth, economic development, equity and justice general, many segments of which have yet must also be addressed. Although there is a to implement environmental management pro- growing acceptance that (i) greening is compatible grammes. Further, there is considerable variation with the pursuit of profit and other business goals across countries in the extent to which environ- and (ii) firms themselves will be the central agent of mental management practices have been adopted change, it is far from clear whether these principles by firms. Research by Polonsky et al. (1995) is hold true for sustainability. In the twin issues of illustrative in this regard. In a survey of large and growth, for example, both the Australian and British firms, these authors found responsibility and the capacity of firms to respond significantly higher levels of environmental man- ___ are in doubt. agement activity (e.g. environmental audits) on the In the absence of clear management strategies for part of British firms. sustainability it is not surprising that the pace of The reasons behind this variation in the level of change is slow. And yet the participants in the adoption of environmental management pro- ~ conference remain centrally concerned with ways to grammes are not fully understood. In general harness the skills and resources of firms towards terms, researchers distinguish between a set of the goal of sustainability. There are now a growing external driving forces (eg. environmentalregulation number of projects attempting to define creative and pressure from environmental groups) and a set first steps for firms interested in the issue of of forces that are primarily internal to a firm (e.g. sustainability. The third segment of our report employee participation in quality management highlights ideas and information put forward at the programmes or corporate culture). One question of

128 BUSINESS STRATEGY AND THE ENVIRONMENT D.P. ANGEL AND J. HUBER

interest to policy-makers is the relative importance of environmental improvement on the part of most these extemal and intemal processes in promoting of the participating firms. the adoption of environmental management prac- If external forces often trigger a movement tices. Although the answers to this question remain towards environmental management, what sus- ~ preliminary, research presented at the conference tains the management initiative over time and, in suggests that whereas extemal forces are usually the particular, how durable are firms' commitments to enwonmental manap- management plan, the ongoing implementation of the tives and drivers are removed? As many in industry plan is crucially dependent on the emergence of a set have noted, having a plan does not guarantee ~ of intemal supportive forces and the creation of a implementation. Several papers at the conference clear and organized constituency whose responsi- emphasized the importance of processes internal to bility it is to address environmental issues. Research the firm in achieving a self-reinforcing dynamic of presented by Henriques and Sadorsky (1995) is environmental management. Among the issues important in this regard. Using data collected researchers have examined are the background through a questionnaire survey of Canada's largest and professional experience of the chief executive firms, these workers examine why firms adopt officer (Stanwick and Stanwick 1995) and the role environmental management plans. Pressure from of a vanguard of highly motivated key employees extemal environmental groups and from environ- (Meima, 1995). The latter paper, based on case mental regulation is found to be of greater impor- study research in Sweden, forcefully demonstrates tance than processes intemal to the firm, such as that the motivation for change can come from the pressure from employees and from shareholders. bottom up, as well as from corporate leadership. In Extemal drivers range from the growth of the Swedish case, an employee vanguard of highly environmental movements to the implementation motivated workers provided momentum for the of new environmental regulations that require firm. In other instances, environmental manage- changes in management practice. One interesting ment is driven from the top by a visionary leader. category of driver that in some ways the Perhaps the most frequently cited example of this internal/external divide is the emergence of volun- top-down leadership is Anita Roddick and the tary codes of conduct on the part of firms and Body Shop, a company that has been described as industry groups. Often developed as a way of the inventor of 'sustainable retailing'. deflecting proposed involuntary legislation, industry It is often presumed that the greening of the Body codes of conduct are growing in importance at Shop is unproblematically connected with top- regional, national and international scales. How do down leadership. Case study analysis by Jones these voluntary initiatives fare as instigators of (1995) demonstrates the need for a more complex change in management practice? Nash and account of management practices at this and other Howard (1995) examine the influence of one firms. The analysis of the Body Shop reveals the illustrative programme, namely, the Responsible limits to a strong culture approach to management Care initiative in the US . These and the emergence at the Body Shop of a mixed authors report a modest, but uneven, response on model that combines both unitarist and pluralist the part of chemical firms who are signatories to the management cultures. principles and codes of practice of the initiative. In Achieving a sustained and virtuous circle of the absence of strong intemal drivers for environ- environmental management remains an elusive mental management, Nash and Howard (1995) goal for firms. Sharma (1995) argues, based on case suggest that voluntary external standards are rarely study research in the North American oil and gas a powerful independent force towards the greening industry, that firms taking a proactive stance of industry. towards the environment trigger a process of The role of voluntary external drivers is further organizational learning and capacity building explored by Saether and Amundsen (1996) in a that serves as a platform for future improvements study of the impacts of a voluntary and . Of particular importance are prevention assessment programme on environmen- positive trust based relations established with tal performance in Norway. Participants in the external stakeholders. This theme is also sup- programme achieved both environmental and ported by the study of Halme et al. (1995) of economic benefit from pollution prevention, a changing management paradigms in the Finnish finding generally in line with the results of similar paper industry. Here changes in external con- programmes in the USA and European countries. ditions (European packaging regulations) trig- The disturbing conclusion of the research, however, gered a process of internal learning and is that the voluntary programme in Norway has not organizational change. These papers suggest, in led to a self-sustaining dynamic of continuous short, an interaction between internal and external

BUSINESS STRATEGY AND THE ENVIRONMENT 179 SUSTAINABLE INDUSTRIES FOR SUSTAINABLE SOCIETIES

LYYI-. LYYI-. forces in maintaining a dynamic of continuous management activities of ATT, Hewlett l'ackard improvement. Both papers highlight the value of a and other dynamic high hs.Dambach particular set of external relations, namely, those and Allenby (1995) describe the application of a based on trust and co-operation. Total Quality Management approach to environ- ~ The notion that sustained improvement in envir- mental issues at ATT. These workers document onmental management requires a more consensual significant improvements in environmental perfor- L.. . approach towards environmental policy-making, mance rinked to the apphcation or a aesign tor fie and in particular to co-operative, consensus building environment management strategy and the creation ~~

relations among industry, environmentalists and of an independent for the environment ~ government regulators, is central to the current organizational unit at the company. Dambach and policy debate around industry-environmental Allenby report, for example, the total elimination of issues in the USA and other countries. This theme CFCs from ATT's operations in 1993 of collaboration is examined by Lober (1995) in a case and a 96% decrease in toxic air emissions over the study of a co-operative paper task force set up by a period 1987-1994. The strategies used by ATT have group of US corporations, regulators and environ- become a blueprint to be adopted by other firms. mental groups. Lober argues that a confluence of Academic researchers and policy-makers on their circumstances, ranging from the public's evaluation part are interested in consistent and systematic data of the seriousness of environmental problems to the on environmental manufacturing practices and availability of various innovative , have environmental performance. As there are few opened a 'window for collaboration' among indus- large-scale published data sets that deal with try, environmental groups and regulators during the environmental management practices, many 1990s. researchers have resorted to collecting their own Industry, of course, has shown a strong pre- survey data. Although these surveys provide useful ference for voluntary approaches to environmental insights, they often suffer from a lack of systematic management. De Clercq et al. (1996) show that even information on environmental performance. The for regulatory approaches that firms resist (e.g. value of larger scale databases is demonstrated by ecotaxes), there is a large benefit to including research using the US toxic release inventory. A industry in co-operative consultations over the paper by Ruiz-Quintanilla et al. (1996) is illustrative design of regulatory programmes. Programmes of the use of these data. These workers demonstrate imposed without consultation beg a conflictual a link between the level and type of employee response and often fail to meet their intended goals. participation in pollution prevention and reduction If researchers and policy-makers are most inter- in industrial toxic emissions. Other sources of ested in the drivers of environmental management, information, such as voluntary disclosures in the firms attending this conference were most annual reports for US firms examined by Buhr interested in evaluating the different tools available and Freedman (1995), and by Halme et al. (1995) in a for environmental management. These firms were study of the and paper industry, apparently already involved in environmental management yield only a small amount of useful data. and sought information on the merits or otherwise As our understanding of environmental manage- of specific tools and instruments, as well as different ment evolves, different themes emerge as priorities organizational strategies. It is important in this for further research. We highlight three areas that regard to highlight the kind of information that is are likely to be of particular importance based on valued most by firms. Although researchers often information presented at the conference. The first look for systematic cross-sectional data, the firms in area concerns the role of finance and financial attendance placed particular value on specific institutions in the greening of industry. White examples of successful environmental management (1996) provides an overview of some of the direct (what one participant referred to as an inventory of ways in which finance is involved in greening, __ success stories). Moreover, information provided including green investing, green mutual funds and by firms that are judged to be successful by other eco-banking. White also discusses the growing performance standards (e.g. high growth in interest in hazard risk assessment by and profits) is judged to be particularly companies. Beyond particular financial instru- - valuable. Presumably, the rationale here is based ments, the character of the financial system itself on the premise that a firm with successful man- requires analysis. One feature of finance that agement strategies in general is also likely to distinguishes it from manufacturing and other develop effective approaches to environmental industrial sectors is the fluidity and mobility of management. capital. To what extent do these characteristics One of the clearest illustration of this phenom- in favour or against greening and the enon is the level of interest in the environmental sustainability transition? More generally, is finance

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capital likely to be a leader or a laggard relative to although serious structural obstacles remain to be greening and sustaining? addressed. In addition, experience in implementing A second area of interest is supply chain manage- environmental management systems outside North ment and the role that manufacturer-supplier America and Europe (eg. in East Asia) remains ____ relations might have in environmental manage- poorly documented. ment. Green et al. (1996) argue that green supply, Saeed (1995) provides a good case study of

to be a greater force than green consumerism in environmental management strategies by firms in ~~ improving the environmental performance of developing economies. The focus of the case study ~ industry. Analysis of supply chains from an is the planning process for the port of Qasim in environmental perspective is a complex task. Thus Pakistan. The municipality of Qasim in 1992 carried Bouman et aI. (1995) note 'environmental actions out an environmental of the port facility, taken by single elements of a supply chain - or even focusing on water pollution attendant on oil by one and its suppliers - can be transfer and industrial activities. The port was the environmentally suboptimal'. These workers argue first government agency in Pakistan to conduct that in the long term internalization of environ- such an audit. Despite the success of the audit, mental costs will probably lead to the development Saeed raises numerous concerns about the ongoing of integrated management of supply chains. In the implementation of the plan. short and medium term, an important role is Policy-makers promoting the application of identified for government in promoting supply environmental management strategies in developing chain management through the provision of infor- countries face a multitude of challenges. For exam- mation, as a participant in supply chains, and as a ple, the level of compliance with environmental laws regulator. is often very poor. Many of these difficulties are The final area of research regarding environ- highlighted in the case study of pollution prevention mental management that we would highlight is activities in the city of Amritsar in India reported by the growing interest in environmental indicators. Cheema and Sidhu (1995). In this instance, compli- Several papers presented at the conference dealt ance is undermined by the large numbers of small with the development of a robust set of indicators firms and factories that make up the industrial base of environmental management and performance. of the region and by the limited resources available Bartolomeo (1995) provides a general introduction to the government to implement environmental to the issue of environmental indicators, reviewing laws. Cheema and Sidhu's analysis highlights the the range of performance, process and system difficulty of pursuing a primarily statutory approach features that might be measured. Of particular to environmental management in India. In the interest are indicators of the movement towards absence of a civic infrastructure and sufficient sustainability.In this regard, Rennings and Wiggering resources for monitoring environmental perfor- (1995) distinguish between indicators of weak and mance (eg. through environmental pressure strong sustainability. Measures of weak sustainabil- groups and other constituencies), the enfomement ity are generally based on neo-classical economic of laws is weak. theory and assume that manufactured capital (eg. Cebon and Sastry (1995) provide further insight income) and natural capital (e.g. environmental into the challenges facing the greening of industry deterioration) are close substitutes. A second in India. This case study is interesting in that it approach, premised on a concept of strong sustain- focuses on an example of policy failure, namely, the ability, measures the growth/decline of natural collapse of an programme in capital directly, rejecting the appropriateness of Bombay. The case involves an international partner- substitution. There is as yet little agreement as to ship to increase the use of energy efficient lighting what an operational measure of strong sustainability in Bombay. Cebon and Sastry argue that the might involve. programme failed because of the limited range of choice of partners available in India (exchange thickness) and the limited choice in institutional GREENING OF INDUSTRY ON AN options available to the programme (institutional INTERNATIONAL SCALE thickness). It is widely acknowledged that the pace of The adoption of environmental management sys- industrial growth in many developing countries tems by firms outside North America and Europe, makes the greening of industry a particular priority. and more generally the greening of industry on an In the absence of greener manufacturing, the international scale, are slow and highly fragmented impacts of industrial growth on air and water processes. There are, however, examples of success, pollution, energy consumption and attendant

BUSINESS STRATEGY AND THE ENVIRONMENT 131 SUSTAINABLE INDUSTRIES FOR SUSTAINABLE SOCIETIES greenhouse gas emissions will be dramatic, poten- the relative significance of domestic and interna- tially offsetting gains achieved in North America tional interests in determining the path of technology and Europe. Several researchers at the conference change in the Mexican electric power sector. Nor-

chose, however, to treat the anticipated growth of berg-Bohm concludes that, although international ~ newly industrializing economies as an opportunity efforts can sometimes be directly influential - for for, rather than an obstacle to, greening. In general example, by structuring trade agreements to favour - shape industrial development from the ’bottom up’. useful strategy is to use development aid to

Wallace (1995) sees in newly industrializing strengthen the political capital of domestic actors ~ economies the opportunity to harness industrializa- who favour green technologies, i.e. to act indirectly tion as an agent of greening and possibly of through domestic interests. sustainability. His research stresses that it is the responsibility of multinational corporations to build environmental concerns into their foreign direct FIRMS, INDUSTRIES AND investment projects in developing countries. SUSTAINABILITY Because such a high proportion of the infrastructure and industrial capital of newly industrializing What will be the contribution of firms and economies has yet to be built, there exists the industries to the sustainability transition? Firms opportunity to build in, rather than retrofit, best are clearly the key agents in environmental man- available technologies. agement and in the greening of industry. But are the Trends in environmental performance in newly needs of the sustainability transition such that firms industrializing economies cast doubt, however, on will be able to transform themselves in ways that such optimistic scenarios. Experience suggests that allow an effective response to the challenge? developing countries tend to adopt mature tech- Attempts to address these questions typically nologies rather than the more costly best available begin by distinguishing between environmental technologies promoted in advanced industrial management and management for sustainability. economies. The typical pattern is that described in Clarke (1995) sums up the difference as follows: Lee’s (1995) paper on environmental policy and industry in South Korea. In this country, the Conventionally, environmental manage- environment emerged as a key issue for industry ment appears to refer to all those policies only in the late 1980s, i.e. only after the major phase and practices, largely within a utilitarian of rapid industrialization had taken place. In ethical frame of reference, which direct an general terms, environmental policy and regulation organization’s activities towards product in South Korea is still focused on ’command and , bring economic values into control’ approaches and suffers from the many economic analysis and allow for new weaknesses identified in Europe and North Amer- relationships across the supply chain. ica a decade or more ago, such as the lack of Management for sustainability, however, enforcement attention for small and medium-sized reflects policies and practices, underpinned firms. by principles of justice, respect, equity, One area of environmental management in which stewardship, precaution and futurity, progress is being made is in the adoption of IS0 which fundamentally question and reshape 14,000 and other international standards. Most of environmental, social, economic and poli- the major South Korean multinationals are now tical relationships and which enable the participating in these initiatives. Researchers have equitable redistribution of wealth and long argued that international standards, even of a opportunity within and between genera- modest level, are an important for diffusing tions and societies. __ environmental management systems. As IS0 14,000 and other programmes establish procedural rather The implication is that management for sustain- than performance standards, questions have been ability requires the incorporation of additional raised as to the actual impact on environmental values and interests beyond those historically - performance. recognized by firms and industries. As policy-makers seek to promote the greening of Roome (1995) argues that a commitment to industry on an international scale, it is vital that we sustainability does not mean that economic deci- understand the extent to which intemational sions and profit seeking are to be rejected, but it agencies can be influential in facilitating and promot- does require that other values such as justice and ing the process. Norberg-Bohm (1995) provides an futurity enter into the management process (for an insight into this issue through an analysis of alternative view, see Welford, 1995). From the

132 BUSINESS STRATEGY AND THE ENVIRONMENT D.P. ANGEL AND J. HUBER

perspective of industry, the principal challenge is to development. Although issues of population and find ways that firms can leverage their existing consumption also need to be addressed, most economic interests in support of sustainability. This researchers agree that the development and wide-

perspective is illustrated by comments made at the spread adoption of greener technologies, such as ~ conference by John Brady of the Northumbrian and biodegradable materials, will Water Group. be central to the world‘s ability to meet environ- F4t.p.. tion of sustainability for firms: ‘Within legal, explores the extent to which firms have begun to ~~

customer and other stakeholder boundaries, an consider the management of technology in the ~ environmentally sustainable policy would mean sustainability transition. Among the sample of year on year reductions in , businesses studied in the UK and Canada, she wastes and emissions. In essence this approach calls finds no clearly articulated vision of what the for a dematerialization of a business’s activities’. He concept and practice of sustainable technology then goes on to say, however: ’Sustainability needs management might entail. The research stresses to be reformatted to deliver tangible benefits, instead the degree to which firms experience a preferably measured in pound notes (or dollars) process of lock-in, or path dependency, both as a for it to find suitable points of entry into busi- strictly technological phenomenon and also as a nesses’. Although some may dispute the feasibility socio-cultural phenomenon. This theme of path of accommodating these different values - profits, dependency also emerges in a case study of justice, equity and futurity - it is clear that one of technological change in the zinc production indus- the key challenges ahead is to harness the capacities try by Moors et al. (1995). In this industry, R&D of firms and industries towards the goal of is currently focused on the near term and on sustainability. incremental . Inter-firm and interna- The ambiguity and uncertainty concerning the tional co-operation are seen as central to supporting role of firms in sustainability is also manifest in a longer term technological innovation. continuing debate over the potential for an incre- mental, step by step approach to the sustainability transition. Is environmental management, for CONCLUSIONS example, a precursor and foundation for sustain- able management, or does Participants came to the 1995 Greening of Industry require a radical break with existing management Network conference with a variety of goals, inter- systems and forms of economic decision-making? ests and experiences. Many in industry sought to Jorgensen and Remmen (1995) use case studies of provide and to receive information on best practice Danish industry to argue that the answer to this environmental management tools and strategies, question depends on whether or not firms are able including life cycle analysis, supply chain manage- to create and sustain an internal ethic and dynamic ment and green accounting. One contribution of the of continuous environmental improvement. Hoffman conference and of the Network is to serve as a kind and Ehrenfeld (1995) suggest, by contrast, that a of clearing house for information. The number of revolutionary shift in management paradigms will venues for such information exchange are now be required. These workers argue that progress to increasing rapidly in the form of trade shows, date in corporate has been largely management seminars and the like, many of which evolutionary; it has not included a transformative operate on a far larger scale than that of the shift in ethics and values and will not be sufficient to Greening of Industry Network Conference, It is meet the challenge of sustainability. important in this regard to highlight the distinctive Belz and Schneidewind (1995) suggest that one of features of the conference, namely, the range of the steps firms engaged with the sustainability participants - from industry, government, acade- transition must take is to go beyond a decision- mia and elsewhere - and the modest size of,the frame based primarily on efficiency to a considera- event that allows a higher level of engagement tion of issues of need. On one level this involves the among the participants. These characteristics are trade-off between ‘efficiency’ and ‘sufficiency’. It likely to be of particular importance as the discussion also involves building into management systems shifts from topics of environmental management to not just a consideration of the best way to make a questions of sustainability. If progress is to be made particular product, but how to meet a particular on the issue of industrial growth and sustainability, need in an environmentally benign way. space must be created for firms to take risks and Nowhere are both the obstacles and the oppor- explore possibilities outside the normal, highly tunities for firms to contribute to the sustainability constrained, scope of business decisions. Thus a transition clearer than in the domain of technology second contribution of the conference is to build up

BUSINESS STRATEGY AND THE ENVIRONMENT 133 SUSTAINABLE INDUSTRIES FOR SUSTAINABLE SOCIETIES the stock of social capital among network partici- Regional Industrial Ecologies pants, facilitating greater experimentation on the One of the exciting lines of analysis in sustainability part of firms, in co-operation with academic research today is the development of regional researchers and policy-makers. ~ industrial ecologies, i.e. the analysis of the capacity We share a sense that the growing confidence of response at the local and regional level to the expressed by industry at the 1995 conference within challenge of sustainability. Related to concepts tne aomain oi E- E- of bioregionalism, regional industrial ecologies an opportunity to move forward more rapidly on explore opportunities for reconfiguring industrial issues of sustainability. The general agenda of ~ environmental systems at the local level. Heller and priority issues has been well summarized else- Nelson (1995) discuss a pilot project in north- where (see, for example, Fischer and Schot, 1993; eastern New Jersey that entails a detailed inventory Clarke and Georg, 1995). We suggest here instead of environmental/ economic conditions within the three areas in which network participants and region and promotes bottom-up solutions to environ- others might explore further the role of firms in mental problems through co-operative consensus the transition to sustainability. building among firms, environmental groups and other constituenaes. Another example of such a regional is the ECOFROFIT Life Cycle Analysis programme in Graz, Austria, which is described by Grabher and Schnitzer (1995). In this case, the It is widely agreed that life cycle analysis is one of regional government has become extensively the most useful management tools available for involved in promoting training and education in promoting broader considerations of environmen- environmental management. An important aspect of tal performance. And yet as Berkhout (1996) the Austrian programme is the search for intra- suggests, the systematic application of life cycle regional linkages that reduce environmental load. As analysis in business decisions is still in its infancy. discussed by Wallner and Fresner (1995), these Berkhout provides an overview of existing applica- linkages vary from a focus on technology to tions of life cycle analysis in manufacturing information exchange and add up to a multi-layered industries. Some of the provocative results that regional network. Industry working in often emerge from the use of this technique are with local environmental groups and regulators illustrated by the analysis of Gabel et al. (1996) of the represents the leading edge of a new emergent . Here they conclude, for paradigm of environmental policy. These partner- example, that the current public policy emphasis on ships are thus a key priority for firms and policy- may be short-sighted if it undermines makers interested in additional pathways to R&D investment towards longer term alternatives: sustainability. ’If this investment is discouraged, the continual short run advantage of recycling will be a self- fulfilling prophecy’. Technology Assessments There is clearly a general need for the more extensive use of life cycle analysis and a broader The last area we would highlight is technology dissemination of the results of these studies. One of assessment. We use this term to refer to the process the major opportunities today, however, is for by which industry and public policy-makers assess industry and policy-makers to add value to life technology options for the future. We believe that of cycle analysis by examining the institutional con- the range of capacities of firms and industries that straints to pursuing different options. Much of the might be harnessed towards the goal of sustain- current work on life cycle analysis tends to an ability, it is the domain of technology development under-socialized understanding of the challenge of that is most likely to yield positive results in the __ the sustainability transition. This point is empha- short and medium term. As discussed earlier, the sized by Groenewegen (1995), who warns against problems to be overcome here are the tendency the biologism inherent in concepts such as towards technological and organizational lock-in. industrial metabolism and life cycle analysis (see Various approaches have been developed to ~ also Ayres and Simonis, 1994). It is unclear address problems of path dependency and the whether the optimum path from the materials/ tendency to short-term analysis in technology technology perspective (identified by life cycle development, including constructive technology analysis) will coincide with strategies that are assessment and back casting (Rip et al., 1995). optimum from an institutional perspective. Joint Vergragt and Noort (1996) illustrate the use of optimization may favour a third alternative these concepts in exploring possible pathways technology strategy. towards the of a ship fuelled by

134 BUSINESS STRATEGY AND THE ENVIRONMENT D.P. ANGEL AND J. HUBER

P hydrogen using a polymer fuel cell. Other possibi- Summary Report of the Third International Conferenceof the lities include 'technology mapping', a process in Greening of Industry Network, Technical University of which a wide range of constituencies examines the Denmark, Copenhagen. Dambach, 8. and Allenby, B. (1995) Implementing design technology selection process and attempts to (re)- for the environment at AT&T, paper presented at the ~ open technology pathways that are not recognized Fourth Greening of Industry Network Conference, Toronto, .~ or are prematurely closed. Canada, 12-14 November 1995. The

introduction of ecotaxes in Belgium, Business Strategy ~~ ~ ~~~ Summary and the Environment, 5(3). Fischer, K. and Schot, J. (1993) Environmental Strategies for ~ Based on ideas and information presented at the Industry, Island Press, Washington. 1995 Greening of Industry Conference, we believe Gabel, H., Weaver, P., Bloemhof-Ruwaai-d, J. and Van that a window of opportunity is now opening that Wassenhove, L. (1995) Life cycle analysis and policy will allow creative new dialogue and experimenta- options: the European pulp and paper industry, Business Strategy and the Environment, 5(3). tion around the role of industry in the sustainability Grabher, A. and Schnitzer, H. (1995) Ecoprofit: step by transition. The aggressive promotion of bold step towards sustainability, paper presented at the experimentation must be a high priority for the Fourth Greening of Industry Network Conference, Toronto, Network. There are clearly costs and risks to firms Canada, 12-14 November 1995. engaged in backcasting, life cycle assessment and Green, K., Morton, 8. and New, S. (1996) Purchasing policy as an interactive part of environmental manage- other first steps in management for sustainability. ment, Business Strategy and the Environment, 5(3). These obstacles can be alleviated through innova- Groenewegen, P. (1995) Substance flows and life cycle tive new among firms, policy-makers management, paper presented at the Fourth Greening of and the research . Industry Network Conference, Toronto, Canada, 12-14 November 1995. Groenewegen, P., Fischer, K., Jenkins, E. and Schot, J. (1996) The Greening of Industry Resource Guide and REFERENCES Bibliography, Island Press, Washington. Hall, S. and Roome, N. (1996) Strategic choices and Ayres, R. and Simonis, U. (1994) Industrial Metabolism, sustainable strategies. In: The Greening of Industry United Nations University Press, Tokyo. 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BUSINESS STRATEGY AND THE ENVIRONMENT 135 SUSTAINABLE INDUSTRIES FOR SUSTAINABLE SOCIETIES

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