Challenges and benefits of companies being environmentally conscious
Introduction
Environmentalism is a phenomenon that has been on the rise in recent years. This has been exacerbated by increased incidences of the negative effects global warming such as floods, hurricanes, tsunamis, drought, famines and heat waves in many parts of the world. Governments, scientists and also the general public in many countries of the world blame increased global warming on chlorofluorocarbons (CFCs) which are produced and released into the environment by companies as they undertake their daily business activities (Sónia Maria da & Beatriz, 2009).
Governments have responded by putting in place a raft of regulations that companies are required to comply with. In many parts of the world companies are required to take into account the impact of their activities on the environment. Companies that blatantly flout environmental regulations are slapped with fines and other forms of sanctions which impact their financial health negatively. The public is known to react towards such companies by boycotting their products, piling pressure on the company or lobbying the authorities to prevail on such companies to abandon the operations that harm the environment (Sónia Maria da & Beatriz, 2009).
Benefits of companies being environmentally conscious
Companies that are environmentally conscious are not sanctioned or fined by their host governments. They save on litigation costs that they could incur if they are taken to court for flouting environmental laws. They also avoid huge fines that are slapped on companies that flout environmental regulations (McKay, 2010). An example of a company that was forced to pay a huge fine for degrading the environment is Wal-Mart Stores Inc. Wal-Mart Stores Inc was forced to pay $27.6 million to settle a case in which it was accused of dumping hazardous waste at stores across California in USA. Another company is Unilever which was fined $1 million for violating the Clean Water Act in USA when it discharged industrial waste from its Clinton factory into the environment. In addition the company also committed to contribute $ 3.5 million to state and other local environmental programs (Sónia Maria da & Beatriz, 2009)
. Companies that go green are able to achieve competitive advantage in that consumers buy more of their products. Companies that embrace green technology get public support and are able to attract equity funds from investors and also win lucrative government contracts (McKay, 2010).
Challenge of companies being environmentally conscious
The challenge of companies being environmentally conscious is the challenge of achieving stakeholder objectives which at the same time financing and undertaking environmentally friendly programs. Company shareholders are basically concerned with maximizing their returns and any activity that compromises that objective is not supported (Sónia Maria da & Beatriz, 2009). Companies find it difficult to raise funds to finance green activities as a result. Sometime companies managers are faced with the challenge of convincing shareholders to authorize them to phase out cheaper technology which is environmentally unfriendly and replace it with at times more expensive environmentally friendly technology. Shareholders resist such moves since they impact on their returns negatively. Getting funding to implement environmentally friendly programs is a challenge as getting shareholder support to implement costly green projects which impact on profit maximization motive is also a challenge (Burnson, 2009).
References
Burnson, P. (2009). Straight talk on GREEN.Logistics Management (2002), 48(8), 49. Retrieved
from http://search.proquest.com/docview/197222532?accountid=45049
McKay, L. (2010, 04).GOING GREEN, SAVING GREEN. Customer Relationship
Management, 14, 19-23. Retrieved from http://search.proquest.com/docview/222767265?accountid=45049
Sónia Maria da, S. M., & Beatriz, A. G. (2009). Determining factors of environmental strategic
positioning adopted by portuguese large companies. Social Responsibility Journal, 5(4), 478-498. doi:http://dx.doi.org/10.1108/17471110910995348
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