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2010

Sustainability inBusiness

Timur Dikmen

[PORTFOLIO ] A compilation of 5 current business cases documenting how sustainability has successfully been introduced, implemented and proven to be a win-win situation. The portfolio exploresthe definition of sustainability. A history of developments of and relations to sustainability isprovided. For each company a brief history and actions have been acknowledged illustratingthe three above components. Further research is carried out on each sector and country of origin also.



PORTFOLIO March 3, 2010 STM 5100

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TABLE OF CONTENTS:

Purpose ....................................................................................................................................................3

Definitions ...............................................................................................................................................4

Personal Interpretation .........................................................................................................................5

History .....................................................................................................................................................8

Company Selection ...............................................................................................................................11

The Coca-Cola Company ....................................................................................................................12

Beverage Industry: United States of America........................................................................14

United States ............................................................................................................................15

Bayerische Motoren Werken AG .......................................................................................................17

Autmobile Industry: Germany ..............................................................................................18

Germany ..................................................................................................................................19

Petroleo Brasileiro S.A. .......................................................................................................................21

Petroleum Industry .................................................................................................................23

Brazil ........................................................................................................................................24

Conclusion ............................................................................................................................................26

Bibliography .........................................................................................................................................27

Appendix ...............................................................................................................................................32




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PURPOSE:

This portfolio was compiled for the purpose of understanding Sustainability in Business through theuse of case studies, general research, that is to say the means through which organisations, whetherthey are companies, committees or the United Nations, are working towards achieving SustainableDevelopment , and the historical progresses of sustainability. The portfolio will also suggest towardsan accurate contemporary definition of the term „sustainability ‟ and its connotations when put intopractice. Focussing specifically on five different companies, each from different countries and fourdifferent sectors of industry this portfolio will analyse their actions taken towards achievingsustainability issues. The portfolio does not only focus on the companies however, but also takes intoaccount the overall stance of each separate industry and country and their measures taken towardsbuilding up sustainable development.

Each area covered in the portfolio will illustrate whether or not the introduction, implementation andconsequence of sustainability was successful and headed for a win-win situation. Specifically theportfolio will evaluate the initial drivers of sustainability in business including the pressures for whythe area focused on chose to integrate it. The portfolio will identify the main challenges and barriersin doing so, as well as the final benefits arisen in economical, social and environmental aspects.

To fully understand the definition of Sustainability we must first discuss the purpose thereof. In recentdecades the love for our planet and telescoping to recent years the fear that the consequences of our

industrial actions are both destroying the planet and depleting resources has been developing amongmore and more people. Sustainability thus deals with taking as many actions now to provide thebackbone for future generations. Sustainability deals with minimizing harm towards the planet inorder to prevent depletion. It deals with maintaining Human Rights and social responsibilities. Lastbut certainly not least, sustainability deals with economic stability as well as economic prosperity.




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DEFINITIONS:

Webster Dictionary:

(Sustainable: noun)

1. “Of, rela ting to, or being a method of harvesting or using a resource so that the resource is notdepleted or permanently damaged”

<Sustainable Technique> <Sustainable Agriculture>

2. “Of or relating to a lifestyle involving the use of sustainable methods”

<Sustainable society>

Cambridge Dictionary:

(Sustainable: noun)

1. “Able to continue over a period of time” 2. “Causing little or no damage to the environment and therefore able to continue for a long time”

Sustainability Dictionary:

1. “Development that meets the needs of the present without compromising the ability of future

gene rations to meet their own needs”




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PERSONAL INTERPRETATION:

Where the dictionary definitions refer specifically to the continuation of resources and theenvironment, I feel there is an aspect of the term that is missing. The dictionaries lean towardscreating a synonym to “maintain” in respect to the environment an d the people‟s actions towards theenvironment. The dictionary also does not mention economic and social responsibilities that arecrucial features of sustainability. There is also no hinting of progress and expansion by means of sustainable methods within the definitions provided by the dictionaries, but only the maintenance andcontinuation of resources. In my opinion sustainability does not only maintain environmentalresources and determine a lifestyle around doing so; however, initially provides stability continued bythe aforementioned maintaining of resources but goes further in depth by expanding whilst remainingunder the confines of sustainability. This is where the greatest challenge lies as further seenthroughout this portfolio.

Sustainability consists of three main factors - environmental, economic and social responsibilities – all of which should not be considered without mention of the others. Although they are different intheir aims and objectives, changing one will affect the other. One common illustration of this is whenenvironment is ruined for both economic and social benefits – such as deforestation for factorieswhich financially benefits the manufacturer and improves the some aspects of the social factor due toprovision of jobs. It is not sufficient to consider living in the premise of sustainable methods to betouching on social aspects. The impact on society through the implementation of said methods, suchas protecting child labour, is just one of the three main factors of sustainability. On occasion abusiness will choose this path though in the meanwhile instead of carrying out social responsibilities,their actions cause harm to society – such as exploitation of cheap labour and other violations of human rights .

In my research I came across a report I felt illustrated and explained Sustainability accurately. Theauthor, P. Bansal, affirms the three different areas that make up sustainability but gives greater depthinto what each area consists of. Firstly, rather than thinking of it in terms of factors, Bansal refers tothem as principles. These principles are as follows: Environmental Integrity, Economic Prosperity andSocial Equity. According to Bansal, these are only the building blocks of sustainability, in other wordsthe theory thereof. Later Bansal describes the practices of sustainability through CorporateSustainable Development which I will outline in the following.

Environmental Integrity

Bansal suggests that this deals with protecting the environment from human actions that erode theland, air and water resources. He further explains that if the environment is compromised throughhuman actions the resources will become compromised as a consequence too. Bansal believes that aspopulations grow and steps are taken to provide for this there are many negative externalities incurredon the environment yet again doing harm. Bansal provides a number of harmful activities within hisreport (see Appendix: Evolving Sustainability ).




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Economic Prosperity

Economic prosperity promotes the quality of life through utilization of maximum potential fromcompanies and individuals. Bansal believes that this can be achieved through goods and services thatraise the standard of living. Outlining the benefits in his report, Bansal states that through the openingand access of international markets economic prosperity can be achieved (see Appendix: EvolvingSustainability ). Moreover, Bansal implies that without economic prosperity health and well being willbe compromised. Economic prosperity cannotbe achieved from focussing on it withoutmeeting the requirements of bothenvironmental integrity and social equity.

Social Equity

This principle ensures that all members of society have equal access to resources andopportunities removing gender, racial andsocial discrimination. Bansal continues furtherwith this to say that people in 3 rd worldcountries are entitled to the same level of resources as those more privileged in more developed countries. For the success of social equity it isnot only vital to focus on meeting the present needs, but future needs must also be accounted for.Bansal specifically mentions that this not only include the basic needs such as air, water and shelterbut also infrastructural needs such as health systems and education.

Once all three of these principles are in equilibrium Corporate Sustainable Development can beachieved. Personally the above mentioned principles are only the theory of sustainability and thepractice of these principles are carried out and achieved through measures under Corporate

Sustainable Development as mentioned below.

Environmental Integrity through Corporate Environmental Management

- Reduction of „ecological footprint‟ - Efficiency, innovation, technology = means to prevent pollution

o Motive for companies to achieve pollution prevention

Environmental EconomicIntegrity Prosperity

Sustainability

Social Equity




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Economic Prosperity through Value Creation

- Goods & Services = value => increased value through increased efficiency + effectivenesso Value created through realization of production efficiencies => Low input costs

- Cooperatives create value for their members

- When value creation „captured‟, firm distributes vale to;o Consumers: Goods + serviceso Shareholders: Dividends + equityo Employees: Salaries

Social Equity through Corporate Social Responsibility

- Embrace economic, legal, ethical and discretionary expectations of all stakeholders- 3 processes:

o Environmental Assessment

o Stakeholder managemento Social issues management

- Means to get rid of corruption, child labour etc.- High Corporate Social Responsibility = High Corporate Social Performance

See Appendix: Evolving Sustainability for further information regarding principles and measures tocarry them out.




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HISTORY:

Sustainability has only recently been looked at as a separate responsibility and need for companies.Sustainability issues have been around since ancient civilizations throughout the course of our historyto contemporary day. It has only been since the past few decades known as sustainability however.Previously the magnitude and specifics of such issues were perhaps more minor compared to theissues we face today, nevertheless have been a burden on peoples‟ minds.

Pollution in ancient civilizations primarily came from dust, wood smoke, tanneries and manure not toforget other pollutants that were less common. Timbering especially has been an issue of sustainability in cultures and areas such as Babylon, Greece, Phoenicia (now known as Lebanon) andcommonly in other locations surrounding the Mediterranean. Though we, today, do not combine

ancient civilizations with energy the Greeks used passive solar energy – means of getting heat throughfacing houses towards the sun. The Romans similarly positioned their houses to get as much solarenergy as possible during the day. The Romans were generally perhaps slightly more advanced asthey imported timber and fuel from around the black sea in attempt to minimize usage of localresources. Both the Romans and the Greeks had “sacred” groves of trees that they would no cut downfor the purpose of preservation. Soil erosion was another pollutant to be wary of; however, more so incultures towards the east, such as China and India down to Peru.

See “Sustainability Timeline ” for further information and developments of sustainability in the past 5

decades until 1990.

During the decade of the 1990‟s, there were two major developments in setting goals and regulationsgiving direction towards sustainable development and responsibilities. The Rio Declaration and theStockholm Declaration both set out to bring awareness of sustainability issues. For full declaration seeAppendix: The Rio Declaration and The Stockholm Declaration .




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COMPANY SELECTION:

The Coca Cola Company:

The Coca Cola Company in recent years has been having a lot of press revolving around theirinvolvement in the sustainability debate and their actions taken. This makes Coca Cola a usefulillustration of the introduction and implementation of sustainability leading to a win-win situation.Another reason for choosing Coca Cola, over Pepsi for example, is the greater amount of informationavailable and thus allowing for greater analysis of implementation of sustainability to be a win-winsituation. Moreover, Coca Cola has the largest global recognition. Any examples they set aresignificant to the general uptake of sustainability.

BMW:

For as long as I can remember BMW have been looking into sustainability issues and have constantlybeen trying to improve methods in order to reduce negative externalities. Through promotion of suchefforts I had prior knowledge of their interest in sustainable technology and engine systems for theircars, including some innovative designs for future vehicles. These designs are oriented to bringingenvironmentally friendly and even cheaper cars. Finally, the automobile industry is a big contributorfor the need of sustainability and I wanted to analyse their progress and actions taken to achieve it.

Shell + Petrobras:

The reason for choosing both of these companies is because petrol and oil are big factors of and at theheart of sustainability issues in respect to the protection of the environment. As this industry ingeneral is focussed on in terms of sustainability, I chose to look two different countries and culturesand see how leading companies in their geographical locations act towards sustainability and theirpriorities. In order to achieve this I chose Shell, a Dutch company representing European culture andPetrobras, a Brazilian company based on Latin American culture.




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THE COCA COLA COMPANY:

The Coca Cola Company (TCCC) has its main headquarters located in Atlanta, Georgia, UnitedStates. TCCC is the market leading manufacturer, distributor and marketer of non-alcoholic beverageconcentrates and syrups. The company is producer of the world‟s most globally recognized brand,Coca Cola, operating in over 200 countries and further holds licences to approximately 500 otherbrands acquired over the past century of its existence. The company employs a total of 92,400 peopleworldwide as of the financial year ending 31 st December, 2008 (FY2008). TCCC held revenues of $3,194 million in FY2008. This was a 10.7% increase compared to the previous year FY2007. Thecompany‟s net profits reached $5,807 million in FY2008, recording a 2.9% increase over FY2007.TCCC works in coalition with a number of subsidiaries such as independent bottling companies andregional Coca Cola distributors 1.

Briefly focussing the history of both the company and its actions towards sustainability issues, it isevident that the company has specifically aimed towards Economic Prosperity; however have notforgotten about the importance of social equity and environmental integrity. Evidence of their interestin economic prosperity can be seen as early as 1986, when the company sold 51% of Coca ColaEnterprise shares to the public in order to increase finances and capital 2. In addition, TCCC ownedColumbia Pictures which they had sold in 1989 to Sony in order to quickly raise funds similarly tooffering shares to the public. In order to achieve economic prosperity, TCCC has constantly beenlooking for ways in which to expand their control and reach into the non-alcoholic beverage markets.Further expansion can be seen through the diversification of theirproduct range, such as expanding into teas, juices, waters and regionalproducts.

Product expansion also has suggestion of TCCC‟s interest in SocialEquity. Providing a vast range of products and specifically targetedproducts for regions, ethnicities and occasions allows for all consumers‟ needs and wants to besatisfied. TCCC has a strong belief that everyone “deserves” the right to have access to Coca Cola. Examples of this can be seen through their agreement with Arizona University to supply beverages atall campus locations. Moreover, evidence of social equity can be seen through the vast number of

employees that TCCC is responsible for and provides for.

Contemporary measures regarding economic prosperity include long-term growth aims, furtherexpansion in global beverage leadership, and enhancing both efficiency and product lines. Long-termgrowth has been successfully met and/or exceeded in the past three years. The expansion of theirleadership position in the market can be seen through their intentions of further investing in their ownand other brands and their portfolio. Specifically in the category of economic prosperity still, TCCC‟smain objective appears to be the enhancing of efficiency. Measures to achieve this are such asreorganizing their operations in order to reduce time, money and resources spent through innovations

1All figures from The Coca-Cola Company: Company Profile2 Ibid

“ We have a long history of emerging from EconomicDownturns as a strongercompany”

- Muhtar Kent, CEO and President of the Coca Cola Corporation.




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along the supply chain. In addition, improving the company‟s route to market capabilities willincrease efficiency and thus achieve economic prosperity. Another form of improving efficiency isenhancing communications to both customers and consumers. Moreover, TCCC‟s portfolio growth of still beverages shows development and improvement in product lines.

TCCC‟s interest in economic prosperity is further evident in their participation and collabo ration withthe United Nations Development Programme (UNDP). TCCC also contributes to the US Agency forInternational Development (cleverly given the acronym: USAID) which depicts the company‟sactions taken to social equity.

USAID currently helps approximately 250,000 people gain access to fresh and drinkable watersupplies in 20 countries 3, which TCCC has been a part of. Social equity in TCCC is manifested intheir actions to improve lifestyle, rather than perhaps actions concerning safety issues. The companyis constantly aware of the changes occurring in social tastes, trends and needs. The most applicable

example of TCCC adhering to these changes is their development of their new ready-to-drink productwhich is targeted at consumers that do not have the time to make their own beverages such asbusinesspeople that from the point of waking up are racing towards locations or deadlines 4.

Furthermore, TCCC has opened new manual distribution centres that exist to provide training forAfrican entrepreneurs specifically. These centres have generated over 7,500 jobs 5.

Though focus is primarily based on economic prosperity, whichcould be argued includes achievements in social equity – astheir actions have or can contribute to enhancing prosperity – TCCC is not a stranger to working towards environmentalintegrity. Being aware of the damages that their industry cancause on the environment through post-consumer products andtheir production processes, TCCC has worked towardsenhancing productivity and efficiency 6. This can be seen through their aims to improve water andenergy usage. Energy usage can be reduced with proper management. This includes improvingcooling efficiency in cold-drink equipment leading the reduced Greenhouse Gas (GHG) emissions.Further energy efficiency improvements in facilities and bottling plants both increase productivity andaid towards the reduction of GHG emissions. Lastly, transportation improvements are being looked atthrough the use of more fuel-efficient modes.

In addition to improved energy management, sustainable packaging is one of the company‟s mostvalued environmental aspects towards achieving integrity 7. The use of recyclable and recycled

3 Sustainability Review: The Coca Cola Company4 The Coca Cola Company: Company Profile5 Ibid6

Ibid7 COCA-COLA SETS GOAL TO RECYCLE OR REUSE 100 PERCENT OF ITS PLASTIC BOTTLES INTHE U.S.




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materials aims towards reducing harm caused from their products and general waste released. TCCCis implementing a 3 step plan to accomplish sustainable packaging: Reduce, where the aim is to usethe least amount of resources for packaging; Recover, which entails the collection of post-consumerproducts; and Reuse, a means of using the collected post-consumer resources in the production of newpackaging.

Recently the company has implemented the use of renewable energy in their printers, preventingapproximately 31,777 pounds of GHGs from emission into the atmosphere. Furthermore, the use of 100% post-consumer waste paper will save an anticipated number of 373 trees. These actionsillustrate TCCC‟s awareness of harms caused by them and the importance of working towardsreducing harmful effects. Finally TCCC is in the process of building a recycling plant with prospectsof building more in the future.

The introduction of sustainability measures is perhaps still a recent development within the companyalthough implementation has already been carried out and even proven to be a win-win situation. Aswith any company in contemporary period taking actions towards sustainable development has apositive effect on consumer perceptions of the company. Working towards economic prosperityprovides shareholders with returns on their investments, consequently allowing for a growingportfolio. Social equity illustrates the company‟s deep sensitivity towards employees and customers .Their generation of jobs for African entrepreneurs shows the company‟s ability to do more thanprovide beverages again increasing popularity amongst consumers. And finally their improvements inefficiency to ensure environmental integrity allows for fewer expenses. TCCC is well on their way toproving that the carrying out of sustainable development leads to win-win situation for the companyand areas affected.

BEVERAGE INDUSTRY: United States of America

Based on the research conducted it is apparent that the industry is fully aware of the harms they causeto the environment. These harms range from the emissions of GHGs and pollution caused by theusage of non-biodegradable materials in bottling production and other packaging where a distinct

need for recovery is recognized.

Referring mainly to a report submitted by As You Sow ( See Appendix: Waste & Opportunity forfurther details) the industry must put their attention to recycling and realize the benefits thereof.Increasing recycling and the use of recyclable resources will minimize and potentially prevent certainGHG emissions. This is because the lessened need for new production which in the process is thecause of the majority of GHGs. Using recyclable and recycled resources conserves natural resourcesallowing them for future generation use, one of the key elements in any aspect of sustainability.Another benefit stemming from recycling is the result of energy saving. The energy required to




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produce a new beverage container is significantly larger – 95% more energy 8 - than creating acontainer made out of recycled materials. One major benefit from the use of recyclable and recycledresources is the reduction of waste landfills that occurs, minimizing harm to the environment. Withinthe industry, Nestle was the first to take initiative in implementing recycling policies.

The beverage industry in the US in particular has adapted a zero-waste policy. The policy wasimplemented in 2006 aiming to reach successful completion by 2020 onwards. This policy demandsthat companies in the industry increase their use of recyclable and recycled materials so that nomaterial is gone to waste. Following the reduced waste, companies will benefit in terms of costsavings and an improved flow of materials. By 2008, the aim is to have reduced waste by 25%continuing deadlines every 4 years, decreasing waste at each interval by an addition 25% resulting inzero waste by 2020.

UNITED STATES:

The United States has held the status as one of the world‟s superpowers over the past century andappears as though it will continue to do so in the foreseeable future. This has however made it one of the top global targets for terrorist attacks. As a result of its superpower status and opportunisticterrorist targets, economic prosperity and social equity are top priorities in terms of sustainabilityissues. Fortunately for the country, its exports remained high throughout the recent economicdownturn started in 2008. This has led to a reduction in the current account deficit, a factor critical to

economic prosperity.

On the other hand, there has been an increasing rise of unemployment, which could cause a loss of productivity and efficiency in the work force, potentially stunning economic growth. In addition, theageing population will lead to potential causes of slower economic growth, labour shortages andrising tax rates.

In a more positive light, the United States is in a leadership position regarding technologicalinnovations. The research and development expenditure consists of approximately 45% of all OECD(Organisation for Economic Corporation Development) countries. The leadership position does notonly consist of national innovators but also attracts and welcome foreign innovators. This has alsocaused the United States to be a hotspot for Multinational Corporations (MNCs). Moreover,expenditure in educational institutions has been increasing as it is currently less that othertechnologically advanced countries.

The transparency offered by the country, as a result of financial regulations, allows for more foreigndirect investment. This is helpful to achieving economic prosperity as it increases the Gross Domestic

8 Waste & Opportunity




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Product (GDP) of the country. Among the states within the country there are no uniform businesslaws however, which can prove to be both advantageous and disadvantageous for companies as theycan choose accordingly which state to base operations in; however, at the same time for largercompanies proves to be difficult to conform to and meet the requirements of each state.

The country‟s focus regarding sustainability is high on economic prosperity, evident on social equitybut rather miniscule in terms of environmental integrity. Evidence of this is the refusal to ratify theKyoto Protocol even though they have signed it. A reason to suggest why is the awareness that theUnited States is producing too many GHGs and would require too much efforts and financing for thecountry to handle. Additionally, the United States is involved with high levels of deleterious dumpingpractices and is unwilling to remove these practices. On the other hand, the United States does have awell developed environmental technology industry, though willingness for further action is stilllacking.

Through a PESTEL analysis found on a United States country report submitted by Datamonitor,implications of sustainable development can be seen. In relation to economic prosperity the US hashigh level of exports which shows their current position in reaching economic prosperity. Actions tobe taken in the future will involve a plan known as the Financial Stability Plan (FSP). This plan is arenewal of its predecessor Troubled Asset Relief Program (TARP). There are three main aspects of the pan to be implemented: 1) Private-Public fund to increase to $1 trillion; 2) if private funds areinsufficient, $350 billion from TARP given to improve banks capital reserves; and 3) Term Asset-Backed Securities Loan Facility fund to increase to $1 trillion.

Focus on improving social equity consists of service sectors such as the healthcare and food sectorstaking in employment to battle the rising unemployment rate after the economic downturn. Thecurrent government is looking into making healthcare reforms to improve it technologically and makeit more available to the majority of the public. Reforms to increase availability include 1.5% pointannual cuts from funding for 10 years which aims to save approximately $2 trillion. Furthermore,under social welfare improvements, there have been reduced taxes effective since the past 5 yearsalready which also helps to create strong economic growth.

In terms of environmental integrity the US has invested in technologies that control air, water and soilpollution, manage solid and toxic waste, increases resource recovery, remediates sites, monitorsenvironment and recycling, and water treatment for industrial and municipal water use. Since the1970‟s the Environment Protection Agency (EPA) has been working towards removing lead fromgasoline in an attempt to reduce GHG emissions. The EPA put in place a clean air interstate rule aswell as non-road diesel rule, cutting more harmful emission where it is not necessary.

For further information and details see Appendix: USA: In-depth PESTLE Insights




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BAYERISCHE MOTOREN WERKE AG:

Bayerische Motoren Werke AG (BMW) houses its headquarters in Munich, Germany. The companyoriginated as a German firm in 1917 and remains so even after having put BMW up for sale in the late1950‟s when nearing bankruptcy. Fortunately for the company the shareholders and dealers managedto continue BMW operations through a new capital structure. The company employs a total of 100,041 people globally, including those working in subsidiaries and the financial and motorcycledepartments. In the Financial Year ended December 31st of 2008 (FY2008) the company heldrevenues of €53,197 million ($78,270.9 million). Currently there are 24 BMW production sites spreadacross 13 countries with sales of BMW products in over 150 countries globally.

BMW has been an accomplice to sustainability principles and goals for the past three decades. BMW

had begun research and development for hydrogen based engines in 1979, an issue that is currently onthe forefront of automobile companies. In 1990 BMW set up a research & innovation centre inMunich, where development of environmentally and economically friendly products are beingdesigned with benefits for passengers integrated equally. As a means of reducing costs for thecompany, in 2003 BMW created a new parts division in Malaysia to serve the Asia-Pacific andOceana regions. By doing this BMW is also reducing harm to the environment through minimizingtransport, thus reducing emissions and excess money spent. By 2009 BMW‟s team had been awardedfor their cost-effective use of high-strength steel illustrating further economic sustainableresponsibilities.

Furthermore over the years BMW has taken responsibility for the re-sellingof their cars reducing environmental harm whilst increasing their economicprosperity. Particularly in Oman, the BMW Group Middle East opened asales centre for premium pre-owned cars in 2008.

In regards to environmental impacts, BMW conforms to EU regulations for reduced emissions fromtheir products. The EURO 4 stage from the European Emission Standards requires automobilecompanies to further reduce (since the EURO 3 levels) four main pollutants: Nitrogen oxides (NO x),

Total hydrocarbon (THC), Non-methane hydrocarbons (NMHC), and Carbon monoxide (CO). Inaddition BMW has adopted the End-of-Life Vehicles (ELV) directive that states manufacturers areresponsible for the dismantling and recycling of any car sold after 2002.

One of BMW greatest innovations towards creating sustainable products is their implementation of EfficientDynamics (see Appendix: EfficientDynamics ). This deals with reducing emissions andwasted energy usage. Features of this include; an Auto Start-Stop system that shuts down the enginewhen car is stationary or in neutral, Brake Energy Regeneration that provides energy for the car whenthe brake is pressed on when the car is in motion without pressing the accelerator, Electric PowerSteering which only uses power when the steering wheel is being used, Optimum Shift Indicator thatallows the driver to know when most efficient moment to change gears is, Lightweight Engineering to

“ Sustainable management is

synonymous with management’sability to achieve economicsuccess while placing equalemphasis on environmentalprotection and socialresponsibility.”

-Dr. Norbert Reithofer, Member of the Board of Management of BMW AG, Production




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reduce gas emissions from requiring less throttle, Reduced Resistance (in the tires) and Low FrictionFuels for the same purpose and Active Aerodynamics to reduce energy usage on cooling the enginehence again reducing emissions.

BMW has won the Fleet News Environment Award and other awards such as the Green SteeringWheel award for their actions towards environmental sustainability.

Undoubtedly the BMW Group are very aware of sustainability issues and are evidently workingtowards reducing harmful factors to the environment and their economic well-being. BMW is alsoconcerned with the social principles that come with achieving sustainability. Taken from their Value-Oriented Human Resources Policy, BMW outlines eight guidelines of their personnel policy:

1. Mutual respect - a positive culture of conflict.2. Thinking beyond national and cultural boundaries.3. The performance of our employees is the basis for remuneration.4. Team performance is more than the sum of individuals' performance.5. Secure and attractive jobs for committed and responsible employees.6. Respect for human rights is a given.7. Social standards for suppliers and business partners are a basis for doing business.8. Outstanding benefits for employees and a strong commitment to society.

Overall BMW has managed to introduce and implement sustainability issues throughout theiroperations within the company successfully whether in relation to the environment, economy orsociety. Protection of environmental integrity has led for the company to achieve economic prosperityas well as through outsourcing and spreading out production sites to cover specific areas of globalmarkets. Considerations and means to uphold social equity are in place within the structure of thecompany. In particular to BMW sustainability has and will continue to prove to be a win-win situationas products are improved, costs are reduced and social equity upheld.

Further information available in the Appendix: BMW Sustainability Value Report 2008 , Sustainability

by design, Vehicle Recycling and BMW Clean Energy

AUTOMOBILE INDUSTRY: Germany

The automobile industry in Germany is one of the most successful and leading in the world. They arespecifically recognized for the level of strength in the industry and their innovative designs andideologies. They are the leading position in producing and implementing environmental technologies.Simultaneously they are the leaders in the development of renewable energies.




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Germany embodies 16 federal states. In each these states the rules regarding environmental laws varycausing disagreements between them. Thus, the failure to unify said laws is currently an area of mainconcern for Germany hoping to exceed in other aspects of environmental sustainability.

Through a PESTEL analysis found on a country analysis report provided by Datamonitor we can seesome other areas actions taken towards sustainability. In social aspects, Germany is holder of the mostadvanced Health System in the European Union (EU). Along with health comes education, which ishigh when looking at Germany‟s literacy rate. On the other hand there appears to be a shortage of skilled workers in the country. Technological factors that depict sustainability appear in the form of increased Research and Development and high success rates in information and communicativetechnologies. Further evidence of environmental sustainability is illustrated through the abovementioned ratification of the Kyoto Protocol and overseas action taken. Germany is cooperating in theprotection attempts of the environment in 3 rd World countries. Finally, Germany has also set upprotection and cleansing programmes in the coastal regions of Vietnam.

For further information and details see Appendix: Germany: In-depth PESTLE Insights




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PETROLEO BRASILEIRO S.A.:

Petroleo Brasileiro (Petrobras) is a Brazilian originated company that has its headquarters in Rio deJaneiro. The company is involved the exploration, production, refining, transportation and distributionof oils gasses and related products. Until regulations came into place, Petrobras held monopoly powerover the industry within the country, and is currently still one of the leading companies worldwide.The company is employer to 74,300 people recorded at financial year ending 31 st of December(FY2008). In that year their revenues reached $146,529 million, showing an increase of 30.3% incomparison with FY2007. Net operating profits reached $118,257 million, an increase of 34.8%. Netprofits totalled $18,879 million, which was an increase of 43.7% since FY2007.

Petrobras has been taking a lot of actions towards sustainability throughout its history and their

business strategy even depends on it. The strategy of the company is to facilitate access to crude oilsuppliers and end-users. This strategy helps to reduce damage risk by having refineries close to crudeoil pipelines, storage facilities, refined product pipelines, and the key petrochemical facilities.Petrobras has continuously aimed to produce biodiesel, illustrated by their ownership of 3 plants.Petrobras also aims to increase the ethanol usage, mainly in areas of transportation and internationalexportation. Expansion will be done through partnerships as Petrobras does not produce. Thecompany further owns a wind energy plant which has the capacity to produce 1.8MW.

The aforementioned revenue increases illustrate that Petrobras is

also keen and able on economic prosperity. Through theirpartnerships in areas that Petrobras does not produce, they are

establishing international operations. The company is separated into 5 different business segments.This helps the company expand into different areas removing dependency on one specific market. In2008 Petrobras incorporated a wholly-owned subsidiary, Petrobras Biocombustivel, furtherstrengthening their biofuels segment. Petrobras operates guided by principles of transparency andsocial and environmental responsibilities incorporating it in every area of the business.

Following a SWOT analysis, it can be seen that Petrobras matches each of the three factors of

sustainability equally. Economic prosperity mainly consists of expansion methods and enhancingprofitability methods. Their downstream refining and marketing division business owns and operates11 refineries that hold together a distillation capacity of 1,942 thousand barrels per day (mbbl/d).Petrobras‟ steady financial performance allows them financial flexibility , leaving room for potentialresearch and development, investments and another number of sustainable actions. Petrobras isimplementing a business plan for the years 2009 to 2013 which will incorporate the pillars of profitability, social and environmental responsibility, integrated growth, and $2.8 billion for biofuelsdevelopment. In reference to their expansion strategies, Petrobras is looking to expand into Chile andstrengthen its place in Latin American. The other form of expansion Petrobras will be looking into isthe biodiesel industry in order to reduce import needs.

“ ...our fundamental commitment tosustainable development...”

-Jose Sergio Gabrielli De Azevedo

CEO Petroleo Brasileiro




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Social equity is perhaps smaller in detail; however, equal in levels of attention from the company.Petrobras operates under guided rules and regulations by the highest standards for health, safety andthe environment. Throughout my research I found little information regarding any changes that wereneeded to better their efforts at achieving social equity. Petrobras is employing a Vision 2020programme, in which an area is dedicated to achieving social responsibility 9. Another part of Vision2020 is to produce cleaner energies and biofuels.

Environmental integrity could be considered their most focussed on area of sustainability as segmentsof their business revolves around the use of cleaner energies and biofuels. Petrobras aims to achieveproduction levels totalling of 706,000 cubic metres of biodiesel by 2013. Simultaneously Petrobras isaiming for 1.25 million cubic metres of ethanol by the same year. Out of the aforementioned $2.8billion, $400 million will be allocated to develop infrastructure specifically construction of ethanolpipelines. Petrobras also houses two experimental plants where they develop technology used for in-house biodiesel production, illustrating their willingness to create biofuels more efficiently and oversmaller lengths of time. Furthermore, Petrobras spends R$1.7 billion on research and development in2008. Other additional investments made by Petrobras in the same year prevented approximately680,000 tons of CO 2 emissions.

Even though the company is already functioning in a highly sustainable manner, their future visionsshow their determination to improve further. Petrobras wishes to be prominent in a world scalebiodiesel market illustrating their belief in the need for cleaner and more environmentally friendlyfuels. For full details refer to Appendix: Petrobras Strategic Plan , Petrobras is aiming to achieveoperational excellence in management, technology and human resources. Their commitment tosustainable development is implied by their goal of becoming a benchmark of social andenvironmental responsibility for their respective industry.

9 For further details see: Petrobras: Strategic Plan




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The human resource department of Petrobras claims that their “employees are our most valuableasset”. 10 In environmental terms Petrobras is looking to reduce Greenhouse Gas (GHG) emissions tolevels of excellence. Becoming a world class distributor of technology will direct towards sustainablegrowth of oil, natural gas, petrochemical and biodiesel, providing cleaner energies and fuels and beingprovided economic prosperity in return.

Since the introduction of sustainab le methods in the company‟s strategies and productions Petrobrashas been aiming to become one of the leading companies in achieving and maintaining sustainabledevelopment. The implementation of these methods and policies have resulted in the company beingcredited for its actions and proven to be profitable for the company. Their environmental worries are acause of their constant economic growth, and their actions regarding social equity allow the businessto run smoothly and effectively. Implementation has definitely brought a win-win situation for thecompany and is using it further to win more.

PETROLEUM INDUSTRY:

Firstly, during my research it proved difficult to find substantial information regarding the industryspecific to Brazil. General information such as previous forecasts of production levels were found,which can be used to analyse their quantitative harm or protection they cause for the environment andhow well they operated financially. The industry is expected to raise production to 8.24 million tonnesof Liquid Petroleum Gas, seeing an increase of 10.4% over the 5 years from 2001. This shows that

economic prosperity is expected to increase as more will be able to be extracted, produced and sold;however, it also shows that the industry will be creating more damage in the environment. Theindustry is comprised of 17 distributors and 26,000 retailers including multinational companies.

The industry on a global scale is allocates high levels of focus on biofuels production anddevelopment. One of the top priorities of the industry appears to be reducing harm done throughtransportation. In addition to this, the industry is trying to implement biofuels to cars. As a means of staying aware of the amount of GHGs released into the atmosphere the industry is strict on thereporting of all emissions. This illustrates that the industry is determined to know what damage they

do, providing awareness; however, appear to be lacking proper action plans into reducing emissions.The main source regarding their involvement in the reduction of GHG emissions is biomassproduction. Barriers to this are Biofuel Certificates 11 which the industry is currently in negotiations forand working towards.

10 Ibid11 Biofuels, sustainability and the petroleum industry




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BRAZIL:

Brazil has been taking sustainable actions in recent history and is aiming to better and enhance theiractions further. In the past few years Brazil has allocated 1 million hectares for conservation toprevent it being cut down due to deforestation. Between 2004 and 2007 Brazil had cut down theirdeforestation by 59%. If deforestation continues without proper control and regulations, the WorldWide Fund predicts that 55% of the rainforest will be lost by 2030. Further measures towardsenvironmental integrity are Brazil‟s aim to accelerate ethanol production cheaply through apartnership with the US.

In other areas of sustainability, Brazil was one of the first countries to implement Value Added Tax(VAT), with rates of 17% nationwide with the exception of Sao Paulo and Minas Gerais with 18%

VAT. Brazil has also allocated 1% of GDP on research and development as recorded in 2005, whichis suggested to be too low. On a more positive note, Brazil has increased spending on health,education and social programs by 17% to about R$72.9 billion ($37.6 billion).

A final past step towards overall sustainability is focussed on reaching social equity. An organisationcalled Programma de Aceleracao do Crescimento (PAC) has been put in place to improve thecountry‟s infrastructure. From 2007-2010 PAC had a budget of $250 billion and has so far completed335 projects with more on the way.

Following a PESTEL report provided by Datamonitor, we can see more specific details in areas of allthree economic, social and environmental protection and enhancement. Economic prosperity isevident through the economic reforms taken since 2002 – 2006 to stabilize macroeconomic policies.These policies included stable inflation rates and higher levels of trade and investment with foreigncountries. Brazil uses foreign investment as a means of achieving and increasing economic growth.Liberalization has allowed the public sector to participate in the activities of the private sector,allowing for greater efficiency.

In respect to social equity, there have been increases in the expenditure on health and education.President Lula has provided free elementary school and increased the number and quality of healthcare facilities. Furthermore, the government is encouraging private sector investment ininfrastructure, in order to speed up the improvement process and for the government to allocate someof its funding elsewhere. President Lula and the government are also working towards equal and fairrepresentation of women in a workplace, which is almost fully implemented. Finally, in terms of social benefits the government provides R$95 for families that earn less than RR$120 per head permonth. There are conditions of the benefit which state that the children go to school and vaccinationprogrammes.




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Finally, in regards to environmental integrity Brazil has signed and ratified Kyoto Protocol andreceived funding from the other signatories to help support ecological conservation. Further benefitsthat the country has been receiving to carry out sustainable actions come from the Clean DevelopmentMechanism. Additionally the government is looking at means of reducing the financing provided tocompanies producing harmful materials and resources to the environment.




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CONCLUSION:

To conclude the portfolio, from the above case studies we can see how sustainability plays a part incaring for current conditions of profits, the people and the planet. Having chosen companies fromgenerally unrelated markets, further analysis by looking at the respective industry and countryperspectives of sustainability, we can see that these worries and theories apply in the majority, if notall, aspects of business. I looked at the past efforts made by each company, industry and country,current actions and future plans for sustainability. This allowed me to review when, how and whymeasures were being introduced towards achieving sustainability, how they developed and workedthroughout their existence, and finally imply whether or not the application of these measures prove tolead to a win-win situation for the company.

The most common link between the three companies and how sustainability benefited them was thateach aspect of sustainability would either help, improve or generate sustainable development in otheraspects. For example, Petrobras‟ aim for cleaner energies and fuels protects the environment but isalso being used for the economic prosperity. Other successors were expansion into other marketsincreasing their economic sustainability as well as efficiency.

In common day usage, sustainability is generally thought of as only regarding the environment;however the social and economic point of view should not be disregarded. In the case seen with theUnited States, it was evident their environmental worries were less compared to the others but were

still operating sustainably through their economy and social aspects.

Finally, I would like to remind the reader of the history of sustainability as displayed in the report.Sustainability has been among humans since ancient civilizations and tribes across the globe. It isonly recently that the concept has been labelled “sustainability”, but the principles remain the same.As we progress in terms of development, technology, exploration, expansion and many otherimprovements, the issues regarding sustainability increase. Businesses must be aware of the growingissues and harm we create within each sustainability factor and work to battle and protect futureharms; including, depletion of resources. As seen through the case studies above, introduction and

implementation of sustainability methods will receive benefits to play to a win-win situation.




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Appendix:

The following pages of Appendices will include:

- Evolving sustainability: A longitudinal study of corporate sustainable development- The Stockholm Declaration- The Rio Declaration- 2007/2008 Sustainability Review: A letter from our president and CEO- The Coca-Cola Company News Release- EfficientDynamics- Petrobras Strategic plan [selected pages only]

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