However, environmental strategies require some special considerations not found in traditional strategic planning processes. Effective environmental strategy implementation requires the definition of proactive stakeholder management processes, which support sustainable development and provide for reconciliation of differing and somewhat conflicting stakeholder interests.
Balanced Environmental Scorecard
Therefore, it is imperative that you understand the different groups of stakeholders involved in the environmental management of your organization. The Balanced Environmental Scorecard is an approach to describing and communicating strategies. The scorecard is derived from the work of Robert Kaplan and David Norton at Harvard Business School—“The Balanced Scorecard: Translating Strategy into Action.”
According to the conceptual framework of the balanced scorecard, there are five distinct groups who are concerned with how any organization manages its environmental impacts:
- Financial stakeholders
- Internal stakeholders
- Communities and public policy
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The balanced scorecard represents a way to integrate stakeholder management, corporate strategy and vision, and the environmental management system (EMS). Its construction emphasizes the management of business activities that correlate to external and internal drivers of environmental performance excellence.
The groups of stakeholders defined in a balanced scorecard represent the basic driving forces for any organization. Each group poses special challenges for management, but also provides unique opportunities to obtain competitive advantage.
This group has a primary interest in the financial performance of the organization and includes shareholders, lenders, and insurers. They are concerned that your organization provide adequate financial returns and that it maintain a positive cash flow to service current obligations, and of course, provide adequate dividends.
To manage toward the interests of financial stakeholders, you should plan to:
- Focus on growing sales and increasing profitability.
- Focus on reducing costs and improving productivity.
- Focus on keeping asset utilization as high as possible.
Management and employees make up the internal stakeholders. The environmental focus of this group is on the processes that create value for customers, produce acceptable financial results, and integrate the organization with the community, public policy-making entities, and ecosystems with which it interacts. Internal stakeholders not only need to have a say in the development and implementation of the EMS, but the overall results of their efforts need to be measured and communicated across your organization.
To manage toward the interests of the internal stakeholders, your organization should:
- Reduce the amount of resources used in making a unit of product.
- Reduce the amount of wastes generated.
- Encourage product and process innovation.
- Measure and communicate the results of these efforts.
- Provide adequate training.
- Encourage professional development.
Customers are an essential component of your business and are especially important in ensuring the ultimate success of your environmental strategy.
Market research has shown that to the customer, environmental properties of products and services mean much less than price, quality, convenience, style, and ease of use. As such, the challenge becomes to develop products with environmental qualities that matter a lot to a few, but just a little to most others.
There are three basic principles that you should apply to manage toward the interests of customers:
- Develop products that are environmentally benign while maintaining competitive cost, function, style, ease of use, and performance.
- Minimize the environmental impacts of product use and disposal.
- Educate the customer about the minimized environmental impacts and, if applicable, the environmental benefits of products.
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Communities and Public Policy
These stakeholders are local and global communities; local, state, and federal regulatory agencies; and competing firms. The key question you and management must answer with regard to these stakeholders is: Is my organization an environmentally responsible member of the communities in which it operates?
You must develop relationships with this group in an open and appropriate manner. With competing firms, you can look for opportunities for joint ventures, share technology, or develop partnerships.
There are five basic principles to manage toward the interests of the community and public policy stakeholders:
- Establish an open communications policy as the foundation of trust.
- Use a varied array of communication methods—fact-finding, mediation, arbitration, participatory planning, focus groups, and strategic alliances.
- Establish a proactive and participatory role with the community and with regulatory rulemakers.
- Establish a process for self-audit and disclosure of environmental aspects and impacts.
- Ensure accurate perceptions of environmental risks posed by your activities.
This group not only includes human beings but also all wildlife, the earth, and the natural habitats that provide for their food and shelter.
These stakeholders pose a dually difficult challenge. Not only are they external, but it is also difficult and expensive to measure the environmental impacts your company may have on them.
Managing toward the interests of the biosphere stakeholders requires:
- Using land in a sustainable manner that preserves naturally occurring ecosystems
- Promoting ecosystem integrity, including maintaining biodiversity, preserving habitats, and optimizing plant and animal health
- Maintaining water quality for drinking, recreational, and wildlife use
- Maintaining air quality
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