Globalization and Sustainable Development
Over the past few decades there have been discourses both in favor and against Globalization’s capacity to guarantee a sustainable future. Authors attest societies and businesses’ inability to account for ecological and environmental limits when dealing with economic growth, examples of this are some of the traditional business metrics used by most global companies, and nations’ measure of wealth (GDP); both sides heavily resting on economic factors, fail to account for societal and environmental concerns (Byrnea & Gloverb, 2002). Other researchers point at the intensive use of resources, especially by global corporations; such as the increasing and careless consumption of fossil fuels, water, precious metals, etc. leading to a rise in GHG (Starke, 2002) (United Nations Development Program (UNDP), 2000). Most fervent opponents go as far as to call ‘sustainable development’ an oxymoron (Ayres, 1995). On the other side, many analysts and economists suggest that Globalization has proven to improve society’s overall wealth (Bryan & Farrell, 1996) and that it will continue to do so in the future. Others also affirm that Globalization will improve people’s well being, encourage cultural exchange and promote democratization (Wildavsky, 1995) (Friedman, 2000) (Byrnea & Gloverb, 2002). Ayres (2008) advances the concept of ‘sustainability economics’, which deals with the issue of maintaining economic growth while paying special attention to environmental concerns of energy utilization and resource exhaustion, especially carbon fuel consumption and its relation to climate change. Because of the afore mentioned, apparent social and economic benefits of Globalization there are forces which simultaneously ask for both the protection of the environment and for continued economic growth and/or expansion resulting in a complex set of interrelationships. These interrelationships are especially volatile in business settings (Toscano, 2003) This paper will deal with Globalization’s environmental, social and economic implications, (with a focus on global sourcing, supply chains and CSR) for business managers and will identify and evaluate company specific best practices.
The issue of Globalization and sustainable development brings to the table a whole new set of business risks. Managers of global enterprises need to be able to fully understand and cope with these risks. According to Christopher et. al (2011) paper, organizations with global supply chains must deal with 5 different categories of risk: supply risk, process risk, demand risk, control risk and environmental risk (see Exhibit 1) other similar categorization further develops the environmental risk into: policy risk, resource risk, macro risk (Manuj & Mentzer, 2008). Failing to appropriately manage these risks may lead to: a loss in firm’s credibility and legitimacy, discords between the firm and its stakeholders and others (Cousins, Lamming, & Bowen, 2004) Due to the nature of this paper we will only concern ourselves with the fifth and last risk; environmental risk i.e. cultural differences, negative impact on sustainability and CSR and increase in policies and regulations. Examples of these maybe: quota restrictions, cap and trade, unanticipated resource requirements, tax penalizations among others. (Christopher, Mena, Khan, & Yurt, 2011) A comparative study, of 15 different companies by Christopher et. al (2011) identified specific environmental and sustainability risks in 7 different industries; retail, consumer products, oil, etc. (see Exhibit 2) these ranged from: factories being highly dependent on supplier ethical business practices, use of dangerous chemicals in manufacturing processes, rising transportation related emissions, changes in tax and environmental policies, cultural differences among others. Literature suggests different methods for managers to tackle these...
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