Analysis of Corporate Sustainability Policies

Question: Discuss about the Analysis of Corporate Sustainability Policies. Answer: Introduction As the third largest craft brewer in the United States of America, New Belgium Brewing Company (NBB) has made a name for itself as the epitome of social and environmental responsibility in the corporate world (B Corporations, n.d.). Established in 1991 as a result of an inspiring bicycle trip in Belgium, NBB has made sustainability an integral part of its mission and vision over the years (Ferrell, et al., 2015). As part of its core values, the company has committed to environmental stewardship by; reducing its use of natural resources, increasing energy efficiency and also recycling (B Corporations, n.d.). In 2015 it was added to B Corporation's list of Best for the Environment as an appreciation of its overall positive environmental impact(Craft Beer, 2015). The company also strives to uplift the community through philanthropic activities, sponsoring events as well as corporate giving (Ferrell, et al., 2015). Some of these activities include; donating sales, encouraging employees to volunteer and partnering other like-minded organisations (Ferrell, et al., 2015). NBB also supports various non-profit organisations through sponsorship events like the Tour de Fat which encourages individuals to promote sustainable transportation by exchanging cars for bicycles (Ferrell, et al., 2015). It is driven by the hope to set the stage for other companies to consider people and the environment and not just profits when strategizing (B Corporations, n.d.). The following report aims to identify NBBs sustainability policies with regard to the environment and society as a whole. In doing this, it seeks to determine whether NBBs policies qualify it as a socially responsible corporation and whether it has gained any a competitive advantage in the industry from them. In order to complete the analysis, the study will discuss three primary areas. Firstly, the report will identify the emerging issues under environmental sustainability and outline the strategies employed to combat them. Secondly, the study will also analyse the concept of social responsibility and its effect on a corporations competitive advantage. Lastly, the study is tasked with analysing the ethical dilemma that is social responsibility in the Alcohol Industry. Environmental Sustainability In simple terms, sustainability can be defined as the commitment to maintain systems in correspondence with environmental, social and economic considerations for as long as possible (Crane Matten, 2016). This includes assessing and improving corporate strategies, economic sectors, workplace customs, lifestyles and technology without depleting the natural environment (Ferrell, et al., 2012). Morelli (2011) defines sustainability as meeting the required resources of current and future generations without compromising the health of the environment that provides them. It is the expected balance and interrelation of the human society with its environment in order to sate its needs but with care not to surpass the capacity of the environment to reproduce the services (Morelli, 2011). Emerging Issues under Environmental Sustainability With the turn of the 20th Century, various issues emerged as environmental threats as a result of man straining the long-term sustainability of natural resources(Ferrell, et al., 2012). These issues include the protection of water, air, land and renewable natural energy(Ferrell, et al., 2012). With regard to air, as a result of industrialisation air pollution has become a detrimental issue to the environment(Ferrell, et al., 2016). It occurs as a result of stationary, mobile and natural sources which include factories, cars and volcanic eruptions respectively(Ferrell, et al., 2016). The emission of carbon dioxide and some other greenhouse gases is causing depletion to the ozone layer (Ferrell, et al., 2012). Water pollution as a result of dumping untreated waste materials into the natural resources is another challenge facing environmental conservation today (Ferrell, et al., 2012). Additionally, overuse of water in production and manufacturing is also contributing to the depletion o f this natural resource. The third emerging issue that is relevant to this report is energy conservation. The main sources of energy are electricity and fossil fuel both of which, when utilised, contribute to pollution through high levels of emission (Ferrell, et al., 2012). Various strategies have been outlined in an effort to address and control these emerging issues. On the threat to air, concerned countries have embarked on policies to monitor and control emissions of gases that contribute to air pollution. An example of such a policy is the Kyoto Protocol committed to reduced carbon emissions among signatories(Ferrell, et al., 2012). Corporations have also undertaken to adopt Sustainability Management Systems; these not only monitor air pollution but the use of water and other resources as well (United Nations Global Compact, 2014). In a bid to control waste management, a recycling and reuse campaign had been undertaken by many environmentally concerned corporations(Ferrell, et al., 2012). Alternative energy is another important strategy to ensuring environmental sustainability by reducing emissions thus reducing the environmental threat (Ferrell, et al., 2012). The sources of alternative energy include solar power, wind power, geothermal power amon g others(Ferrell, et al., 2012). NBBs Environmental Sustainability Policies NBB has made a niche for itself as an environmentally conscious corporation. It has concerned itself greatly with the impact it has on the environment on issues such as water use and waste management, air pollution and energy conservation(Ferrell, et al., 2015). It is always on the lookout for ways to maximise its raw materials, decrease energy use and reduce waste(Andreas, et al., 2011). In 1999, with employee support, NBB became the first wind-powered brewery in the country(Huffman Klein, 2013). This move allowed it to purchase an equivalent of 100 percent of its electricity from wind power (Andreas, et al., 2011). In 2002, NBB invested in an on-site water treatment plant to produce energy and clean production wastewater. (Andreas, et al., 2011). Methane, which is a by-product of the process, is used to run the brewery equipment(Pride, et al., 2009). Skylights and sun tubes have also been installed to reduce the need for electricity use during the day (Andreas, et al., 2011). A so lar array was also implemented in 2009 in an effort to reduce electricity use (Andreas, et al., 2011). NBB promotes cycling as an alternative mode of transportation and strives to reduce waste through recycling, incentive reuse strategies and responsible purchasing (Andreas, et al., 2011). In order to address the underlying environmental issues mentioned above, NBB has employed various strategies in its business model. Firstly, in order to monitor energy use and carbon emission, the company conducts energy audits. The first energy audit was in 1998 which revealed electricity as the largest carbon emitter thus leading to the adoption of wind power(Andreas, et al., 2011). Secondly, the company also partners with organisations that strive to meet the same objectives. In 2002, it partnered with Green Building Council to incorporate new green building technologies in its facilities(Andreas, et al., 2011). Thirdly, the company also conducts Life Cycle Analysis (LCA) to research how its environmental footprint would fare under different proposed scenarios(Andreas, et al., 2011). Additionally, between 2006 and 2007, the company developed a Sustainability Management System to estimate its carbon footprint(Andreas, et al., 2011). The system focuses on carbon footprint reduction, water conservation and strategic planning(Andreas, et al., 2011). Corporate Social Responsibility In a broad sense, Corporate Social Responsibility (CSR) is a type of management characterised by the openness and ethics of a company with respect to all its stakeholders as well as the formulation of goals that correspond with sustainability and an aim to reduce societal problems (Sousa, et al., 2010). Simply put, CSR concerns itself with the relationship between the entity and the community in which it operates (Crowther Aras, 2010). It is a commitment to uplift a communitys welfare through the appropriate and elective business methods as well as philanthropic activities (Kotler Lee, 2011). In order to fulfil these commitments, a company undertakes various social initiatives which can be classified as cause-promotion activities, cause-related marketing activities, socially responsible business practices among others (Kotler Lee, 2011). The Impact of CSR on Competitive Advantage Over the years, the debate around CSR has gained great momentum from a simple affirmation of duties to the examination of a possible connection between CSR and a companys performance (Calabrese, et al., 2013). It is expected that in the near future, only corporations that commit to sustainability will gain competitive advantage (Nidumolu, et al., 2009). This is because CSR encourages innovation and differentiation both of which are contributing elements for competitive advantage (Calabrese, et al., 2013). Many large corporations are engaging in CSR activities, a fact that serves to prove that it is more than a mere cost-reduction, restriction or compliance strategy but rather a contribution to competitive advantage (El-Garahiy, et al., 2014). However, it is important to note that there is no clear indication that CSR is a useful tool to gaining competitive advantage (Calabrese, et al., 2013). As a competitive advantage tool, CSR can be used to differentiate a firms products from those of its competitors (Idowu Filho, 2008). Innovation has led to great strides in social responsibility for example; organic foods, recycled furniture, energy-efficient lighting and Leadership in Energy and Environmental Design (LEED) buildings among others (Idowu Filho, 2008). Companies such as Interface carpets, Ben Jerrys, Whole Foods among others are relying on CSR as a competitive advantage(Idowu Filho, 2008). In the case of Interface Carpets, after more than two decades of economic growth, the company decided to overhaul its business ecosystem in 1994 so as to alter its environmental damage(Rangan, et al., 2012). Since the transformation, the companies sales increased by 65 percent, while its profits more than doubled to 200 percent(Rangan, et al., 2012). With regard to the environment, Interface reduced its gas emissions and water usage by 92 percent and 75 percent respectively(Ranga n, et al., 2012). CSR affirms that competitive advantage can only be achieved by economically efficient, socially responsible and environmentally aware corporations ((Idowu Filho, 2008). NBBs CSR Policy and Competitive Advantage According to Ferrell et al. (2016), NBBs strides in sustainability, both socially and environmentally, have borne fruit by earning them a loyal following that has led to increased interest in their operations. The company has also received various awards including the Business Ethics Award from Business Ethics Magazine, Best mid-sized Brewmaster, among others(Ferrell, et al., 2015). However, when asked about the effect of the companys sustainability initiatives on its sales and customer base, Jenn Vervier, the Director of Strategy Sustainability at NBB, stated that initiatives seemed to have a very shallow effect on the product sales as a vast majority of consumers were more interested in the product than the other activities the company was involved in (Withall, 2014). From this, we can deduce that NBBs social responsibility does not provide a key competitive advantage for the company in the alcohol industry. However, its initiatives have led to global recognition and appreciation creating a very loyal following for the company. Social Responsibility and the Alcohol Industry The role and application of CSR in the Alcohol Industry is a debate that is growing rapidly (Banco, 2011). This is because the industrys product and its direct impact on society create a unique and complex approach to social responsibility (Banco, 2011). Critics believe that CSR campaigns by alcohol producing companies as an advertisement strategy to propagate a positive image of the products without addressing the harms of alcohol consumption(Vimont, 2013). With the increase in campaigns on the awareness of the harmful effects of alcohol products, many corporations in the industry are in competition to adopt CSR strategies to build their image (Yoon Lam, 2013). In order to promote their CSR strategies, alcohol producing companies have adopted various social initiatives such as personal responsibility, voluntarism and corporate philanthropy. Some of these companies include Pernod Ricard, SABMiller and Anheuser-Busch. With regard to personal responsibility, companies in this industry tend to propagate the narrative that the harmful consequences of alcohol consumption are as a result of irresponsibility among individuals as stated in Pernod Ricards CSR document (Yoon Lam, 2013). Anheuser-Busch, in 2010, launched Global Be(e)r Responsible Day where its employees are encouraged to engage retailers and consumers in discussions on responsible drinking; this is in line with voluntarism (Yoon Lam, 2013). Finally, on corporate philanthropy, in 2012 SABMiller is said to have pledged $34 Million to Uganda, Tanzania, and Zambia in a bid to create sustainable economic opportunities for small business owners in these countries (Yoon Lam, 2013). However, it is believed that these initiatives are aimed at economic and public relations agendas and not necessarily social welfare. NBB as a Socially Responsible Alcohol Producing Corporation Some society members find it hard to believe that an alcohol producing company can be socially responsible(Ferrell, et al., 2015). As the discussion above shows, the industry is not short on critics of its social responsibility endeavours. When compared with the companies aforementioned, the social initiatives previously identified are evident in NBBs case. With regard to personal responsibility, the company embodies the notion that drinking responsibly is an individual choice (Ferrell, et al., 2015). Additionally, on the voluntarism initiative, NBBs employees are in a partnership with Habitat for Humanity to build homes for those who lose them to fires (Ferrell, et al., 2016). Employees are also encouraged to participate in volunteer work through reimbursements with paid time off (Ferrell, et al., 2015). Finally, NBB has invested a lot of time and resources into their philanthropic activities. It has set up a Philanthropic Committee that makes funding decisions guided by the diverse , creative and innovative qualities of an organisation's mission and objectives(Ferrell, et al., 2015). NBBs actions indicate a socially responsible corporation to the extent that it is focused on sustaining the environment and encouraging like-minded individuals to do the same and join in their cause. However, the company falls short in that it does not seem to have any initiatives towards dealing with responsible alcohol consumption and the harms that come with irresponsible drinking. As a company in the industry, its CSR mandate is slightly more complicated and demanding than of any other company and as such, it should make an effort to engage in these issues(Banco, 2011). Conclusions As a company, NBB has taken a strong stance on sustainability over the years. This is evidenced by its investments in innovation to ensure energy efficiency and minimise its environmental footprint. Its strategic approach through Sustainability Management Systems, Energy Audits, alternative transportation and packaging solutions among other initiatives has earned it worldwide acclaim as an environmentally conscious corporation. It is evident that this strong stance is as a result of the founders passion for the cause which was passed on to the company and engraved in its values and objectives. There are numerous arguments proposing and opposing the link between corporate social responsibility and competitive advantage. Some companies such as Interface Carpets have been identified to be using CSR are a competitive advantage tool. However, although NBB has mastered quite the following as a result of these initiatives, its Director of Strategy and Sustainability, Jenn Vervier, has confirmed that the impact of its social initiatives has been very minimal to actual consumers of their products. As such the report concludes that NBBs focus on social responsibility does not provide a key competitive advantage for the organisation. Finally, with regard to NBBs social initiatives being an indicator of a socially responsible corporation as an alcohol producing company, the study has revealed that sustainability has been a component of NBBs DNA since its inception(Ferrell, et al., 2015). It was a personal interest of the companys founders which has since manifested into its defining feature. However, despite its vast achievements in environmental sustainability, NBB falls short in that it does not have sufficient initiatives to deal with responsible alcohol consumption and the harms that come with irresponsible drinking such as drunk driving, domestic abuse, vandalism among others(Banco, 2011). The company, therefore, needs to expand its reach under its corporate social responsibility policy to address issues directly related to its corporate activities. 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