Management Essays on Stakeholders in Sustainable Business Transformation

Part A

Question 1

The widespread adoption of clean cookstoves will significantly address global environmental issues discussed in Chapter 9, namely deforestation, loss of biodiversity, and watershed degradation. These factors will be addressed owing to the fact that homesteads will stop relying on charcoal and firewood, which leads to the cutting down of trees. Replacing primitive cooking methods with clean cookstoves will also reduce the emission of black carbon (soot), which environmental experts have suggested is the second greatest contributor to global warming (Lawrence & Weber, 2014). It has also been argued that soot washes down with a matter of days or weeks and reducing it would have an immediate impact on global warming. Clean cookstoves will offer an alternative for charcoal and firewood, helping poor communities to reduce reliance on firewood and avoid the risk associated faced by women and children as they fetch and use the firewood (Lawrence & Weber, 2014).

Question 2

The general adoption of cookstoves will also address issues of economic development and poverty. Clean cookstoves reduce the amount of charcoal required for cooking purposes by up to 50% (Lawrence & Weber, 2014). Considering that 30% of households in Ghana rely on charcoal for cooking, the widespread adoption of clean cookstoves will improve energy efficiency significantly (Lawrence & Weber, 2014). Other than reducing the cost of fuel, the extensive adoption of clean cookstoves will also provide employment opportunities for many African households because of the emergence of employment opportunities from companies involved in the construction of the cookstoves.

 

 

Part B

Section 1. External forces or influences

Interface Inc. is a globally renowned manufacturer flooring material and carpet tiles. The enterprise mainly targets corporate clientele and has a rich reputation for being for sustainable business processes, having commenced sustainable business practices in the mid-1990s. Various external factors have challenged Interface, Inc. to shift to more environmentally and socially responsible business management practices, including difficult economic conditions; sudden changes in technology, and climate change and its impact on life on the planet among others.

Difficult economic conditions were brought about by the dotcom bubble burst that occurred at the turn of the millennium. Although the burst mainly affected tech companies like Amazon, Worldcom, Global Crossing, and Qualcomm, most of which failed and shut down, it had ripple effects on the economy at large (Morris &Alam, 2012; Goodnight& Green, 2010). The job market suffered significantly, university enrolment for tech-related courses declined, and companies that had thrived from supplying and partnering with tech companies during the dotcom boom were hit hard by the economic downturn. Interface Inc. was among the companies that were significantly impacted by the dotcom bubble burst, with sales of corporate office interiors falling by 35% (Interface Inc., 2003). Thus, the incident reduced profits making it hard for the business to operate.

In response to these unprecedented changes in the market, the company came up with a strategy for engaging prioritized spending. The strategy was made possible by reducing stock keeping units (SKUs) by 40% and the workforce by 30% and closing 10 plants in the period between 2000 and 2002 (Interface Inc., 2003). The company also diversified beyond the production of office equipment, engaged in new product development, and most importantly improved the efficiency of its manufacturing operations to accompany the mentioned changes. Improving manufacturing operations was made possible by the make-to-order strategy. Through this strategy, the company sought to manufacture what had already been sold, rather than selling what had already been made. Additionally, the firm was able to create custom-made products quickly and efficiently while meeting customers’ on-time delivery needs, using a mass-customization technique. The result was improved streamlining, cost reductions, and improved inventory turns for both raw materials and finished products. Improved efficiency in the production process has led to cost saving and improved inventory turns has resulted in environmental sustainability. The company no longer needs to manufacture equipment that may never be sold as it manufactures products on demand.

The shift to more sustainable environmentally and socially sustainable practices is also necessitated by environmental factors, specifically climate change. The realization that the company’s practices contributed to a large carbon footprint led Interface to shift to sustainable practices in the early 1990s. The company set the objective to be sustainable by 2020, by which time the enterprise prospected to have zero net reduction in the earth’s resources. Based on the progress that the company has realized over the years, it has emerged that doing business in a sustainable manner is not only good for the environment and the communities affected but also good for business.

Changes in technology have also influenced Interface’s shift into environmentally sustainable practices. New technology led the company to the realization that it could reduce the amount of backing material used on carpets without reducing the quality and usability of their flooring products. Reducing backing material would lead to cost savings, facilitate a faster running of machines, and most importantly, reduce waste derived from old and worn carpets. The move to reduce backing material has effectively helped the company in its effort to realize its 2020 agenda. Going forward, the company will benefit from the widespread usage of 3D printing technology in its manufacturing processes. This technology expands the potential for the faster production of high quality carpets with lessened carbon footprint (Cerdas et al., 2017).

Section 2.Internal forces or influences

The shift to more sustainable environmental and social practices was also necessitated by internal factors, especially the prospect of growth and diversification and the need to sustain a strong corporate culture. In the early days, Interface had envisioned that it would achieve growth in the international market. However, the company was not seemingly prepared for this growth as its practices (reflected by the range of materials and processes used) did not reflect it commitment to sustainable growth. However, with the popularity of its core product, carpet tiles, growing exponentially in the 1980s, the firm enjoyed unprecedented growth so that by mid 1990s, it was essentially a multinational corporation. Interface Inc. founder, Ray Anderson, would be challenged by a customer who led him to realize that the company did not have an environmental stance. Consequently, he came up with the vision to lead Interface Inc. to become the first environmentally sustainable and ultimately the first environmentally restorative company. Going forward, the company had to diversify beyond manufacturing carpet tiles as uncertain economic conditions threatened its primary core clientele (corporate offices). To do so, the organization had to differentiate from competitors and being environmentally sustainable proved to be beneficial in the company’s prospect for growth in alternative markets.

The company’s corporate culture was the other motivating factor in its shift to socially/environmentally sustainable practices. The company needed to have a sound corporate culture to realize the vision that would see the company emitting zero emissions and instead playing a restorative role to the environment. Such a culture would not only require the enterprise to engage in environmentally sound manufacturing processes but also to collaborate with stakeholders who understood the significance of sustainability. Additionally, it would necessitate collaborating with suppliers who engaged in proper labor practices and who had sound environmental practices. Interface would also need to impact the communities with which it has worked positively. Its corporate culture would also make it a good place for its employees and its products ideal for customers who understood the importance of social and environmental sustainability. Implementing a good corporate culture was made possible by having responsible individual within the ranks of the organization. Ray Anderson, Interface Inc. founder, was the right person to lead the company in its pursuit of a good corporate culture as he understood the importance of committing to socially and environmentally sustainable goals. Anderson was responsible for setting the vision of the company, which entailed harvesting used carpets and other petrochemical products and making new materials out of them (Interface Inc., 2019). He also voiced the vision of harvesting sunlight and converting it into energy, all while ensuring that no scrap went into landfills (Interface Inc., 2019). He suggested that by acting sustainably, the company would be able to perform well in the market (Interface Inc., 2019). Indeed, sustainability enables an organization to be competitive in the long and short term.

Section 3. Global impacts of sustainable development initiatives

The company’s agenda to be among the first restorative corporations in the world has attracted attention for the right reasons. Among other projects, energy capture initiatives have had the most significant impact in improving the quality of the environment. These include the introduction of solar photovoltaic power plants and the conversion of naturally occurring methane from landfills into energy. These initiatives have helped the company to use 96% renewable energy in its American operations (Interface Inc., 2016). Globally, the company’s renewable energy use stood at 84% in 2016 (Interface Inc., 2016). At this time, directed biogas accounted for 54% of its renewable energy profile, 4% propane, and 1% landfill gas (Interface Inc., 2016). In this section, the potential global impact of the landfill energy initiative will be seen.

In 2003, Interface Inc. entered a collaboration with the city of LaGrange, Georgia, and the Environment Protection Agency (EPA) that would see the three parties convert methane from local landfills to green energy (Power Engineering, 2003). The energy would, in turn, be used to power two heaters and a boiler at the company’s plant at Kyle. This opportunity came at a time when organizations across the country were debating the feasibility of using coal energy to power industrial operations. Nevertheless, it is worth noting that, as recently as 2017, the EPA, under the leadership of Scott Pruitt, adopted a pro-business stance, abandoned the Paris Agreement and advocated for reopening of coal plants that had been closed during the Obama-era (Friedman & Plumer, 2017). Indeed, these changes impacted efforts to promote environmental sustainability.

Recycling of methane is greatly beneficial to the environment. Compared to carbon dioxide, methane, in an unburned state, is 21 times greater potential to contribute to global warming (Howard et al., 2011). The gas is produced following the decomposition of organic materials in landfills. Other than the noteworthy potential to contribute to global warming, methane also produces strong odorsthat undermine the comfort of humans and creates smog. Smog has been known to accelerate health problems, such as asthma, chronic bronchitis, eye problems, and reduced resistance to lung infections, among other conditions (Yang, Hoffmann & Scheffran, 2017). By tapping the methane produced in landfills and converting it into energy, the company reduces its energy needs by up to 20 per cent, but impacts on the environments are more significant and viable in the long-term (Blackford, 2013). When the project commenced, the company managed to offset its greenhouse emissions, thus making its processes climate neutral. As it gears up to its 2020 agenda, this and similar processes will serve a restorative role in the environment.

At the moment, Interface Inc. may only be exercising its energy restoration projects in a single region in America. These efforts are, however, impactful on a global scale. The company not only protects the health of millions of people in America and beyond, but has also inspired other companies to emulate its example. In the coming decades, other companies, including Columbia Engineering and Covanta would emulate Interface Inc.’s practices and tap methane from landfills to be used for as an energy source (Blackford, 2013). Additionally, this practice does not promote excavation practices that leave bare landfills. Even after tapping of methane, landfills continue to be a health hazard for communities and Interface Inc.’s practices should not be interpreted as an initiative to pave way for excavation efforts throughout the country. The idea is to take advantage of existing landfills and to reduce their contribution to global warming as much as possible. By replicating this practice in different regions around the world, with the permission of local governments, the company will be well-equipped to achieve its restorative mandate. If more corporations seek to have a restorative contribution to the environment, it may be possible to reverse the effect of climate change and global warming altogether.

Section 4. Harnessing technology for sustainable development

The company uses modern technology and has adopted CircuitBac Green in its effort preserve the environment. In 1996, 2 years after the company came up with its 2020 environmental initiative, the company’s carpet tiles constituted 99% petroleum-based raw materials (Blackford, 2013). As of 2012, however, the company had managed to fit 49% of bio-based products into its carpet tiles (Blackford, 2013). The company had also acquired FLOR, a company that had succeeded to use 100% recycled nylon in the range of products it manufactured (Blackford, 2013). As mentioned, another initiative that has helped the company to achieve this agenda is the introduction of CircuitBac Green. The company defines the concept as its first carbon-negative tile backing technology. To achieve this, the company uses a backing compound made from 97% non-virgin petrochemical content; 80% recycled limestone filler; and 17% bio-plastics (Blackford, 2013). The resulting compound has up to 87% recycled continent (Blackford, 2013). Being carbon-negative, the product absorbs more carbon that it emits in the production process. This product is backed with fiberglass to sustain its durability and stability. Creating a carbon-negative product is a significant step in the company’s effort to serve a restorative to the environment.

These initiatives have played an important role in helping the company to reduce reliance on virgin raw materials, in turn, reducing its carbon footprint, and at the same time, achieving significant cost-savings. Based on the company’s estimates, the company saved close to $500 million in the period 1995 and 2010 by avoiding landfills and by cutting down on material waste (Blackford, 2013). As such, by emulating the company’s example, corporations have the potential to make significant cost savings, to reduce their carbon footprints, avoiding landfills, and generally contributing positively to the environment. It is also worth acknowledging that the company has succeeded at impacting local communities positively, not only by collecting old carpets for recycling, thus avoiding waste, but also by tapping methane from landfills, thus reducing the negative impact of the gas on human health.

In spite of these developments, the company has still struggled to eliminate its reliance on nonrenewable energy sources and raw materials. For a company of its size and scope, the company needs more power than can possibly be produced from tapping methane from landfills in a single region. At the same time, the company’s global success has led to a great demand for its products. The fact that the products become obsolete at a slower rate than the demand for new ones means that the company can hardly keep obtain enough recyclable materials to produce new ones. As such, the company needs to use a significant percentage of non-biodegradable content in its products. Nonetheless, the company is doing enough to meet its goal of being energy restorative in future.

 

 

References

Blackford, B. (2013). Counting to zero: Interface Inc. Gears up for 2020. Retrieved from https://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/6917/Blakely%20Blackford.pdf%3Bsequence=1

Cerdas, F., Juraschek, M., Thiede, S., & Herrmann, C. (2017). Life cycle assessment of 3D printed products in a distributed manufacturing system. Journal of Industrial Ecology21(S1), S80-S93.

Friedman L. &Plumer, B. (2017). E.P.A. Announces repeal of major Obama-Era carbon emissions rule. Retrieved from https://www.nytimes.com/2017/10/09/climate/clean-power-plan.html

Goodnight, G. T., & Green, S. (2010). Rhetoric, risk, and markets: The dot-com bubble. Quarterly Journal of Speech96(2), 115-140.

Howarth, R. W., Santoro, R., &Ingraffea, A. (2011). Methane and the greenhouse-gas footprint of natural gas from shale formations. Climatic Change106(4), 679.

Interface Inc. (2016). Interface Americas Now Operating On 96% Renewable Energy. PR News Wire. Available at: https://www.prnewswire.com/news-releases/interface-americas-now-operating-on-96-renewable-energy-300261523.html

Interface Inc. (2019). About – mission. Retrieved from https://www.interface.com/IN/en-IN/about/mission/ReEntry-en_IN

Interface, Inc. (2003). 2002 annual report. Business in Motion. Retrieved from http://www.annualreports.com/HostedData/AnnualReportArchive/i/NASDAQ_IFSIA_2002.pdf

Lawrence, A. T., & Weber, J. (2014). Business and Society: Stakeholders, Ethics, Public Policy (Fifteenth ed.). New York, NY: McGraw‐Hill Education.

Makower, J. (June 6, 2016). Inside Interface’s bold new mission to achieve ‘Climate Take Back’. Green Biz. Retrieved from https://www.greenbiz.com/article/inside-interfaces-bold-new-mission-achieve-climate-take-back

Morris, J. J., &Alam, P. (2012). Value relevance and the dot-com bubble of the 1990s. The Quarterly Review of Economics and Finance52(2), 243-255.

Power Engineering. (2003). Interface Flooring Systems uses landfill emissions to power plant. Retrieved from https://www.power-eng.com/2003/09/09/interface-flooring-systems-uses-landfill-emissions-to-power-plant/#gref

Yang, L. E., Hoffmann, P., &Scheffran, J. (2017). Health impacts of smog pollution: The human dimensions of exposure. The Lancet Planetary Health1(4), e132-e133.