how to set sustainable development policies and objectives?
The next objective is to articulate the basic values that the enterprise expects its employees to follow with respect to sustainable development, and to set targets for operating performance.
Senior management is responsible for formulating a sustainable development policy for its organization, and for establishing specific objectives. Sustainable development means more than just ‘the environment’. It has social elements as well, such as the alleviation of poverty and distributional equity.
It also takes into account economic considerations that may be absent from a strictly ‘environmental’ viewpoint. In particular, it emphasizes maintaining or enhancing the world’s capital endowment, and highlights limits to society’s ability to substitute manmade capital for natural capital.
Nevertheless, a policy on environmental responsibility is a good first step towards the broader concerns of sustainable development.
Management should incorporate stakeholder expectations into a broad policy statement that sets out the organization’s mission with respect to sustainable development. This policy statement would guide the planning process and put forward values towards which management, employees and other groups such as suppliers are expected to strive.
Drafting a policy statement that is both inspirational and capable of influencing behaviour is a challenging task. However, the benefits justify the effort. The following policy statement was developed by the Dow Chemical Company:
The operating units of the Dow Chemical Company are committed to continued excellence, leadership and stewardship in protecting and conserving the environment for future generations. This is a primary management responsibility as well as the responsibility of every employee worldwide. We are sensitive to the concerns of the
public and accountable to them for our decisions and actions. We believe in the responsible integration of environmental and economic considerations in all decisions affecting our operations. We are continuously reducing our emissions to protect human health and the environment. Our goal is the elimination of wastes and emissions.
Policy statements like this one should be developed and implemented in a way that visibly involves directors and senior management.
A survey by DRT International of European companies found that half of the respondents have board members who are responsible for environmental issues. The report adds:
The amount of time spent on environmental issues at board level varies greatly between countries and sectors. The greatest involvement is found in the chemical and pharmaceutical industries and in utilities. These sectors devote significant resources to planning green strategies and establishing sophisticated environmental management
systems. The lowest involvement is in tourism and financial services, where none of the companies surveyed had board-level appointments.
There are many benefits in actively involving the board of directors in the development of a sustainable development policy. It is the board of directors that determines overall priorities and sets the tone for management and employees. By itself, the board’s commitment will not guarantee that a sustainable development policy will be effectively implemented. However, the absence of that commitment will certainly make it difficult to implement the policy.
While statements of broad policy on sustainable development are important, senior management and directors should supplement their policy statement with a series of specific objectives. For example, the following statement of policy and objectives, developed by Northern Telecom, illustrates the desirable scope and level of specificity:
Recognizing the critical link between a healthy environment and sustained economic growth, we are committed to leading the telecommunications industry in protecting and enhancing the environment. Such stewardship is indispensable to our continued business success. Therefore, wherever we do business, we will take the initiative in developing innovative solutions to those environmental issues that affect our business.
• Integrate environmental considerations into our business planning and decisionmaking processes, including product research and development, new manufacturing methods and acquisitions/divestitures;
• Identify, assess and manage environmental risks associated with our operations and products throughout their life cycle, to reduce or eliminate the likelihood of adverse consequences;
• Comply with all applicable legal and regulatory requirements and, to the extent we determine it appropriate, adopt more stringent standards for the protection of our employees and the communities in which we operate; • Establish a formal Environmental Protection Program, and set specific, measurable goals;
• Establish assurance programs, including regular audits, to assess the success of the Environmental Protection Program in meeting regulatory requirements, program goals and good practices;
• To the extent that proven technology will allow, eliminate or reduce harmful discharges, hazardous materials and waste;
• Make reduction, reuse and recycling the guiding principles and means by which we achieve our goals;
• Prepare and make public an annual report summarizing our environmental activities;
• Work as advocates with our suppliers, customers and business partners to jointly achieve the highest possible environmental standards;
• Build relationships with other environmental stakeholders – including governments, the scientific community, educational institutions, public interest groups and the general public – to promote the development and communication of innovative solutions to industry environmental problems;
• Provide regular communications to, and training for, employees to heighten awareness of, and pride in, environmental issues.
It is important that sustainable development objectives be clear, concise and, wherever possible, expressed in measurable terms. Establishing measurable objectives is essential if management and others are to be able to assess whether their business activities have met the established objectives.
In setting these objectives, management will need to determine the appropriate level of aggregation. For example, one objective might be to set measurable performance targets for waste reduction at all operating locations. This goal would then be supported by more detailed objectives for each operating location.
After the sustainable development objectives have been established, management should compare its competitive and financial strategies against these targets. In some areas, business strategies will be consistent with the sustainable development objectives. In others, existing strategies may be incomplete or in conflict with them. Consequently, strategies may have to be modified.
It is important to ensure that the sustainable development objectives that are established complement the enterprise’s existing competitive strategies. In other words, sustainable development should provide an additional dimension to business strategy. It provides senior management with an additional benchmark against which business strategies and performance should be assessed.
An effective external monitoring system is necessary for directors and senior management, in order to ensure that sustainable development policies, objectives and management systems are appropriate for the complex and rapidly changing world in which their business operates.
Information should be gathered on key subjects, including:
• New and proposed legislation;
• Industry practices and standards;
• Competitors’ strategies;
• Community and special interest group policies and activities;
• Trade union concerns;
• Technical developments, such as new process technologies.
For many enterprises, monitoring and influencing external developments means becoming more actively involved in the public policy process. A commitment to sustainable development involves helping to formulate policies that shape external developments, so that industry-wide sustainable development objectives are achieved. To this end, responsible business enterprises are taking leadership roles in industry associations, working with government and special interest groups to achieve positive results for both the enterprise and the stakeholders.
The monitoring of external developments is particularly complex for companies selling to export markets, and even more so for those with production facilities in several countries. Many multinational corporations subscribe to the International Chamber of Commerce principles on environmental management. These include adherence to international environmental performance standards. However, monitoring all the relevant international
developments can be a daunting task.
This external monitoring can be integrated into a firm’s strategic management process, or else carried out as a separate exercise. Some corporations have social policy committees whose scope covers sustainable development issues. Others have environmental committees with a narrower focus.