Environmental Engineering Reference
In-Depth Information
2. New decision variables, such as marketing effort for communicating the
environmentally positive elements of products, must enter the objective
function.
3. The SCO approach must be capable of capturing the dynamism inherent
in customer segments. For instance, the assortment (consisting of a mix
of standard and green products) must change with changes in customer
utilities for green products.
4
SOCIAL FACTORS
Coupled with the recent growth of green consumer segments described in Section
3.3 is an increased societal awareness of the life-cycle impacts of products span-
ning various steps of value addition. Various stakeholders such as customers,
employees, shareholders, communities, lobbyists, and local organizations increas-
ingly demand more than just regulatory compliance and instead expect businesses
to proactively undertake environmental initiatives despite the expense. Increased
media attention to environmental issues has further reinforced these expectations.
Proactive environmental initiatives may not have immediate pay-offs but could
serve to minimize a firm's liability risks (Snir 2001). Avoidance of such risk
could also be treated as an economic factor.
A major challenge in responding to social pressures is identifying the con-
stituencies that a business must respond to. In other words, it is unclear whom the
firm should negotiate with or whom the firm should accommodate. For example,
while clean air is good for communities in the vicinity of manufacturing loca-
tions, shareholders might be less demanding with respect to air quality if related
efforts erode stock value. Consumers themselves are heterogeneous in their atten-
tion to the different environmental dimensions of products. Gallup's “Health of
the Planet Survey” conducted in 1992 across 22 countries (Institute 1992) showed
that consumers in industrialized countries tended to avoid environmentally harm-
ful products; the percentages of respondents indicating such avoidance ranged
from 40 percent in Japan to 81 percent in Germany; the United States came in
at 57 percent. However, the same survey also showed that Germans were much
more concerned about the loss of rainforests than Americans (80 percent vs.
63 percent), while respondents from both the countries were equally concerned
about air pollution (60 percent and 61 percent).
In absence of directives limiting environmental impacts, third-party certifica-
tions (by consumer groups, the government, or other independent organizations)
and advertising emerge as alternatives for businesses to signal their positive envi-
ronmental intent. Examples of third-party certifications include “Green Seal” and
the U.S. EPA's “Energy Star.” The not-for-profit organization Green Seal con-
siders environmental impacts across the firm's supply chain in certifying its
product(s). For example, one of the requirements in the “Printing and Writing
Paper” category is that the product must meet either specified recycled content
 
 
Search WWH ::




Custom Search