Executive Summary
This paper is a submission by Mitsubishi to the Local Network. It contains recommendations about the implementation of two of the ten United Nations Global Compact principles. The eighth and ninth principles have been chosen. Risks, benefits, and lessons learned during implementation are also included. The Local Network should be able to use these recommendations in implementing its strategy. Mitsubishi found that the implementation of these principles brought benefits to the company. These ranged from intangible ones like improved reputation to tangible ones like cost saving. However, some costs were also incurred. Nevertheless, the company recommends the adoption of these principles to all the member companies of the Local Network.
Main Text
Dear Sir,
Mitsubishi is proud to be associated with the Local Network. In light of the new development in which all members have become signatories to the United Nation’s Global Compact, we would like to make some recommendations regarding the adoption of the ten principles. This submission focuses on two principles that we have implemented at Mitsubishi and with which we are most conversant. These are principles eight and nine which deal with the environment (United Nations, 2010).
Principle eight is concerned with business initiatives to promote environmental responsibility. Companies that adopt this voluntary Global Compact should engage in all possible business initiatives to make a positive impact on the environment and reduce their negative impact. Some of these practises would include modification of company visions and missions to include environmental goals, conducting periodic assessments of their environmental impact, setting environment-related goals, and adopting other voluntary codes of conduct.
Principle nine encourages businesses to develop and spread the use of environmentally friendly technology. This involves a lot of research and development. Such technology would encourage recycling, better disposal of non-organic trash, and more sustainable use of all resources. Companies that embrace this principle are also likely to experience cost-saving. In some industries, this technology has become a core competence as consumers move towards a trend of buying from environmentally friendly companies.
Incorporation of these principles into company operations would bring with it several changes. Staff would have to be educated on the importance of the program in order to secure their cooperation. Some companies may have to alter their organizational culture to suit the application of these principles. This is especially in solely profit-driven companies. Top management would have to be informed about the importance of leading by example. They should show their contribution towards compliance with the two principles. Companies that choose to adopt these principles should also be ready to incur a financial cost. This can be classified as expenditure on Corporate Social Responsibility. However, the views of major stakeholders need to be considered (Mackenthun, 1999).
Lessons Learnt in the Implementation of principles eight and nine of the Global Compact
Initial environmental reviews are essential to the success of the implementation project. They enable the company to determine the extent of its interactions with the environment and their impact. This is important in the planning stage as it determines the environmental solutions the company creates. An environmental policy also assists in compliance with these principles. This policy will set out the company’s stand about environmental matters. It will clarify the objectives of these principles and what actions the company intends to take to comply with them. Responsibility and authority for the achievement of the set-out objectives will also be allocated within the policy (Cramer, Claude, and Sebastian 2004).
This implementation program is bound to fail if top management support is not secured. At Mitsubishi, we had to learn this the hard way. Some of the initial initiatives to develop environmentally friendly technology failed miserably due to a lack of top management support. Management did not see the importance of these initiatives thus inadequate resources were allocated to them during planning. Honda, a company operating in the automobile industry also faced similar challenges in implementing the two mentioned principles. It also found it difficult to prioritize the implementation since a lot of resources were required immediately. Honda solved this problem by hiring a consultancy firm in environmental matters to help them run the implementation project (Rasche, Georg, and Ban Ki-Moon. 2010).
Benefits
Environmental friendly technology enables a company to save on the use of raw materials thus increasing efficiency. This will result in cost-saving, which in turn, increases profitability. Developing and using environmentally friendly technology can also give a company a competitive advantage over its rivals. Environmental responsibility, which is proposed by principle eight, creates a positive image of the company and may attract prospective investors.
The positive image generated by environmentally friendly initiatives will attract prospective employees and customers. Government legislation may also be reduced if an industry is seen to be self-regulating. Employee morale may also be boosted as they believe they are helping to conserve nature (Theodore and Louis, 2009).
Risks
The implementation cost of these principles is bound to reduce the profit margins. Shareholders may not take this positively. Some may view this as a diversion of their funds. The company may also need a change in the machinery and raw material used. These are likely to be more expensive because of their long-term cost savings and minimal environmental impact. Research and development costs may also increase with the implementation of principle nine (Buchholz, 1998).
Some suppliers may have to be dropped if their products are not environmentally friendly. This may strain trading relations. New, reliable suppliers whose products meet the current specifications would have to be found.
Recommendations
Emphasis on Proper Planning
Companies in the Local Network that seek to adopt principles eight and nine of the Global Compact should be advised to take the time to plan carefully. They should establish the manpower and resource requirements of the project beforehand. If an environmental department needs to be set up, qualified personnel should be sought. The Local Network can help by seeking consultants to help companies in doing this (Russo, 2008).
Emphasis on Securing Top Management Support
Top management determines the strategic direction of the company. They have the power to sabotage a project or support it through completion. Workshops to educate them should be held. They could be encouraged to sign commitment sheets as physical evidence of their involvement in the initiative. After their commitment is secured, they could be asked to rally for major stakeholders’ support.
Reviews and Audits
Accountability helps to check that companies are still pursuing the vision. Environmental audits should be carried out periodically and the outcome reviewed. This way, companies ought to be able to tell if they are making progress or not. They could be encouraged to publish the results of these audits and reviews in the Financial Statements as voluntary information. This will enable stakeholders to keep track of management’s environmental efforts (Barrow, 2006).
Reference List
Barrow, Christopher J. 2006. Environmental Management for Sustainable Development (Routledge Environmental Management). Toronto: Routledge.
Buchholz, Rogene. 1998.Principles of Environmental Management: The Greening of Business. Chicago: Prentice Hall.
Cramer, Aron, Claude Fussler, and Sebastian van der Veqt. 2004.Raising The Bar: Creating Value with the United Nations Global Compact. Chicago: Greenleaf Pubns.
Mackenthun, Kenneth M. 1999. Basic Concepts in Environmental Management. London: CRC Press.
Rasche, Andreas, Georg Kell, and Ban Ki- Moon. 2010. The United Nations Global Compact: Achievements, Trends and Challenges. Philadelphia: Cambridge University Press.
Russo, Michael V. 2008. Environmental Management: Readings and Cases. New York: Sage Publications.
Theodore, Mary K, and Louis Theodore. 2009. Introduction to Environmental Management. London: CRC Press.
United Nations. 2010.Global Compact International Yearbook 2010 (United Nations Global Compact Office). Nairobi: United Nations.