The Canadian International Institute for Sustainable Development (IISD) identified the following factors as being critical for the introduction of an environmental strategy into a business:
Traditionally, businesses have only been accountable to their owners and shareholders. Provided they kept within the law, their aim was to promote the prosperity of these groups. Recently, it has been recognised that there are other stakeholders to consider: these include suppliers, customers, employees and local residents. As these groups have become more vocal and demanding, businesses have been forced to take their concerns into account. In a survey of businesses conducted by the IISD, more than half the respondents said that community and interest groups were important in getting them to undertake environmental improvements.
Lack of money or financial security can prevent a company from investing in environmental improvements. Almost half of those surveyed said cost was an obstacle.
Suppliers are increasingly required to change production processes, products and transportation systems to meet customer demand. (Green consumerism will be discussed in the next chapter.)
Competitive opportunities or threats
Environmental strategies are sometimes employed to gain a competitive advantage over other companies, which are then forced to do the same to regain their market share.
Public policy and regulatory prospects
Companies may want to comply with or even stay ahead of regulatory requirements. The IISD survey found that government regulation was considered essential to improved environmental performance by sixteen out of seventeen respondents. There was much more disagreement over the extent of government regulation and the relative importance of other factors, such as the state of the economy and economic and political philosophies.
Companies that are directly dependent on supplies of natural resources may find it is in their own self-interest to protect those resources. Examples include those dependent on fish, timber, agricultural products and even pharmaceutical products.
The degree to which managers are aware of and understand environmental issues will influence their strategies. Competing priorities may mean that environmental concerns have low priority.
Generally, companies adopt various types of strategies towards the environment. The most common involve either fixing existing or potential problem areas, or merely complying with laws and regulations. Another less common approach is to adopt an active environmental management strategy to improve competitiveness, reduce costs and gain market share. A fourth strategy, advocated by the IISD, is for managers to incorporate sustainable development considerations into their business strategies and ensure that the need for profits is balanced against the needs of the environment and the various stakeholders.
It is unlikely that businesses will adopt such a strategy without pressure from outside; after all most haven't done so as yet.