Corporate Sustainability Management: A Shift from Green-Washing to Proactive Strategies

Abstract

Washing to Proactive Strategies 1. Introduction Sustainability has become a fundamental concept in strategic management practice. Over the decade, an increasing number of managers are voluntarily incorporating sustainability initiatives and practices into their strategy, business models, organizational processes and structures as they realize its importance for the survival of their companies in the face of fierce global competition (Eweje, 2011; Eccles, Ioannou & Serafeim, 2014). Sustainability practices have a considerable effect on a company's relationships with its stakeholders such as shareholders, customers, employees, and investors (Ioannou & Serafeim, 2015.To achieve long-term objectives of stakeholders, managers need to consider integrating corporate sustainability into their strategic decision-making processes including strategy formulation, implementation, and evaluation (Baumgartner, 2009; Bonn & Fisher, 2011; Hahn, 2013). Thus, a firm's commitment to achieve corporate sustainability requires a strategic approach that ensures that corporate sustainability becomes an integral part of the firm's strategy and processes. In other words, if a corporate sustainability strategy is to be successful, it must develop from and be embedded into the business vision and strategy. In addition to the efforts by NGOs, international organizations, and governments, some researchers have concluded that several organizations seemto be demonstrating a commitment to sustainable behavior; but characterized with rhetoric and green-washing (e.g., Ramus & Montiel, 2005). Among the reasons for such green-washing is the fact that, formulating and implementing sustainability strategies remain a challenge: since achieving sustainability is fundamentally different than implementing another strategy in the organization (Epstein, 2008). Further, either many managers are uninformed or lack a strategic approach of how to incorporate sustainability concepts into their business strategies and practices, or they rarely consider it in strategic management (Kiron et al., 2013; Hahn, 2013). In such cases, sustainability issues are pursued more coincidentally than with a clear, integrated strategy (Baumgartner & Ebner, 2010). Besides the green-washing, some managers have failed to develop any comprehensive sustainability strategy or any systematic way of managing their social and environmental impacts (Epstein, 2008). Following the increasing call on managers to make significant changes to more effectively manage the social, economic, and environmental impacts of their business activities (Epstein, 2008), there is the need for managers to shift from green-washing to proactively incorporate sustainability into the firm's strategic actions. This paper analyses previous studies on the drive for corporate suitability, how managers integrate sustainability practices into their business strategies and review factors that hinder the integration of sustainability into strategic management. Proactively integrating corporate sustainability into strategi...