MB212 Managing for Sustainability - ASSESSMENT 1

Instructions:

1. Read each of the case studies and choose TWO to answer.

2. Answer the individual questions and write 750 words for each case study:

Define relevant terms from Topic materials and your own research.

Present an overview of the events and identify possible unethical behaviours.

Answer the questions with your observations and insights.

3. Provide one Reference list for the sources you use in both case studies at the end of the report. Refer to the WIN Academic and Writing Guide; refer to APA Referencing.

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MB212 Managing for Sustainability - ASSESSMENT 1

Case Study 1: Wind Turbines in Finland: Pricing Sustainability and Economic Incentives

Tuulivoimala Finland LTD is one of several major corporations devoted to sustainable energy. The company wishes to provide electricity to neighbourhoods using methods other than the national power grid, such as wind turbines. This case study examines the advantages and challenges of neighbourhood associations owning their own turbines, as presented by a group of Finnish scholars.

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During the second half of the 20th century, Finland, sharing a major boundary with Russia, transformed from a farm and forest economy to a diversified modern industrial economy. The country's per capita income ranks as one of the highest in Western Europe. Finland became a member of the European Union in 1995 and was the only Nordic state to join the euro system at the time.

Currently, the key features of Finland's economy include a high standard of education, equality promotion, and a national social security system. Its challenges include an aging population and the fluctuations of an export-driven economy. The nation has an extensive shoreline with a cold climate featuring long days of sunlight in the summer and long, dark nights in the winter. In 2010, the estimated population of the country was more than five million citizens, with more than two thirds of the population living in urban areas. Persons living in Finland can expect to reach the age of 80. Nearly the entire population is literate.

Finland is home to Tuulivoimala Finland LTD, one of several major corporations devoted to sustainable energy. These efforts address the threats of air pollution, acid rain, and water pollution from power plants and agricultural waste. The company also reaches a lucrative market consisting of neighbourhoods wishing to base electric systems on methods other than the national power grid. There are advantages and challenges associated with setting up neighbourhood associations owning their own wind turbines.

The advantages included improved property values, because any buyer would know he or she would not have an electric bill to pay each month along with feelings of satisfaction knowing one's home was more environmentally friendly.

One of the primary challenges was pricing. Each turbine costs in excess of US$1 million and would serve approximately 50 homes. While a household would not have to pay an electric bill, it would be required to pay for the system itself, normally financed with a 30-year bond, plus its share of maintenance and operational costs. Each household would take about twenty years in terms of savings on electric bills to recover the purchase price of the system. Then, however, the household would only pay maintenance costs, with all other electricity being free, and at times would receive a stream of revenue from excess electricity sold back to the nation's power grid.

An additional pricing challenge came from negotiating with the government. On the one hand, Finland's government benefits from reduced pollution and not being forced to create

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MB212 Managing for Sustainability - ASSESSMENT 1

additional power supplies for the population and local industries. On the other, revenues from the electricity being sold and taxes on that electricity would be reduced. The question arose as to whether the government of Finland should help subsidize purchases of the wind turbines with tax incentives, since doing so was, at least in some ways, in the nation's interests.

The final complication arose from making price decisions for homes that were already built versus new construction. How much should the neighbourhood association charge existing homes, which required some adaptation to become part of the self-contained grid, as compared to those built with the features included?

It is acknowledged that pricing issues are complex and require careful calculations incorporating the life of the wind turbine and the houses. Yet resolving the issues is well worth the effort, for both home buyers and the larger country (Central Intelligence Agency, 2011; Momentum Technologies (n.d.); www.Tuulivoimala.com).

Questions:

1. What should the government of Finland doprovide tax incentives for energy reduction or leave the system as it is?

2. How do energy savings increase the sale price of a house?

3. Is energy a fixed cost or a variable cost in a household's budget?

4. Should the price differ for existing homes compared to new building construction?

Adapted from Sage Business Cases. 2020 SAGE Publications, Ltd. All Rights Reserved

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MB212 Managing for Sustainability - ASSESSMENT 1

Case Study 2: Jib Ellison (Environmentalist) and Lee Scott (Former CEO, Wal- Mart): Sustainability Saves Money and the Environment

This case study explores the collaboration between Jib Ellison, an environmentalist, and Lee Scott, a former CEO of Wal-Mart, to develop successful environmentally-friendly business practices. Readers are asked to assess the effectiveness of Jib Ellison as a leader, outside of Wal-Mart's organizational boundaries.

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Pulitzer Prize winner Edward Humes's book on Wal-Mart is called Force of Nature: The Unlikely Story of Wal-Mart's Green Revolution (2011). As the title suggests, many environmentalists thought it would be unlikely that Wal-Mart would support the green revolution. At one time, environmentalists would be more likely to protest Wal-Mart with picket signs rather than praise Wal-Mart.

But environmental advocate Jib Ellison took another route. He invited Wal-Mart executives and environmental activists to take a white-water rafting trip. They would have to paddle together or sink. The trip also let the Wal-Mart executives see what the environmentalists were trying to savethe beauty and majesty of nature. The team-building experience worked and the two groups began engaging in earnest conversations about how Wal-Mart could go green. Lee Scott worked with Jib Ellison to find a quick and easy ecological and cost saving project that would demonstrate that going green is good for both customers and Wal-Mart.

They started with a toy: a car and truck set for toddlers. The truck set came in display boxes that were several inches larger than necessary. A simple change, shrinking the box size, produced big dividends. Smaller boxes meant more boxes per shipping container, more boxes per foot of store shelf (a huge factor in retail), and less cardboard packaging that had to be paid for. The results: Wal-Mart saved US$2.4 million per year, 4,000 fewer trees were used for cardboard, and roughly a million gallons of fuel oil was saved. Going green was a win all the way around. And this was just for a single productthe potential savings across the hundreds of thousands of items Wal-Mart sold were huge.

Soon, Wal-Mart was requiring its suppliers to reduce waste in packaging for a large number of products. Wal-Mart is the world's largest retailer by a large margin. When Wal-Mart speaks, other companies listen. Wal-Mart's sustainability requirements hit the world's manufacturers like a force of naturean irresistible wave promoting efficiency in packaging and shipping.

Scott allocated a half-billion dollar annual budget to researching ways Wal-Mart could become more sustainablean unparalleled budget for going green. Scott also devoted a considerable amount of his own time to the green initiatives. Sustainability became a part of every employee's missionit was not something relegated to an obscure and unimportant department. Because of Wal-Mart's size, even small changes could produce big savings.

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MB212 Managing for Sustainability - ASSESSMENT 1

Vending machines are often lit up like Las Vegasafter all, the vending machine companies do not pay for the electricity they use. Just turning off the lights in the vending machines in employee break rooms saved Wal-Mart US$1.5 million in electricity costs. Wal-Mart also discovered that many store counter display lights stayed on regardless of whether customers were nearbyinstalling motion detectors that activated the lights saved Wal- Mart money.

More accomplishments listed in the text included Wal-Mart having an overall 16% decrease in carbon emissions per US$1 million in sales (compared to 2008); increasing the efficiency of its trucks by 60% in terms of miles per case delivered - it delivered 77 million more cases, yet drove 100 million fewer miles compared to 2005; and increasing its recycling rate to 64% of its garbage.

Questions

1. Why do you think Jib was successful in motivating Wal-Mart to become more sustainable when many other environmental activists were unsuccessful?

2. Which works better: protests or cooperation?

3. Manufacturers saved money by using smaller packages for their products. How

important do you think Lee Scott and Wal-Mart's leadership was in motivating the

manufacturers to save money while supporting the environment?

4. Jib started exerting leadership over Wal-Mart while he was still an outsider, and Lee

Scott exerted leadership over many companies besides Wal-Mart. How often does leadership take place outside of organizational boundaries?

Reference

Humes, E. (2011). Force of nature: The unlikely story of Wal-Mart's green revolution. New York, NY: HarperCollins.

Adapted from Sage Business Cases. 2020 SAGE Publications, Ltd. All Rights Reserved

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MB212 Managing for Sustainability - ASSESSMENT 1

Case Study 3: Analysing Unilever's Pledge to Cut Back on Plastics

Abstract

This short case asks students to consider Unilever's 2019 pledge to dramatically cut its use of virgin plastic at a time when other companies are making similar choices to signal their eco-friendliness. What are the costs and benefits of the choice to reduce plastic use, and what forces may be motivating Unilever's decision?

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Unilever, the consumer goods company that owns brands including Dove and Lipton, announced recently that it will aim to halve its use of "virgin" (non-recycled) plastic by 2025a move that, whatever its moral and material outcomes, seems also rooted in savvy public relations. Unilever's CEO, Alan Jope, said that millennial and Generation Z consumers care about "purpose and sustainability" and the values of the brands they use. Jope also stated that ultimately sustainability would be good for the company's bottom line.

Source: NOEL CELIS/AFP via Getty Images

Unilever is just the latest corporation to make sweeping pledges to become greener. Amidst public pressures to ally themselves with environmental causes, big companies are pivoting to eco-friendliness. Burger King and McDonald's both announced recently that they would be cutting back on their use of plastic toys in kids' meals. Burger King UK has removed already all plastic toys from its children's meals. McDonalds said in a separate announcement that it would give customers the option of swapping out the Happy Meal toy for a book or a bag of fruit. The changes follow a popular online petition urging the fast food giants to reduce plastic waste.

Coca-Cola and PepsiCo have severed ties with a plastics lobbying group.

companies are trying to increase the amount of recycled plastic they use in bottles. They

want to improve recycling infrastructure and ensure their packages are recyclable.

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Both soft drink

MB212 Managing for Sustainability - ASSESSMENT 1

Nestle has pledged to make all of its plastics recycled or reusable by 2025. '

determined to reduce our use of single-use plastics, by introducing reusable packaging, new

We are

delivery systems and innovative business models everywhere we operate and sell our

products. Building on our commitment, we will reduce the use of virgin plastics by one third

by 2025.'

These initiatives have followed public shaming from groups like Greenpeace, which blasted Nestle for its plastic pollution. Jennifer Morgan, executive director at Greenpeace International, said the world's biggest food group should set a target for reducing single-use packaging and invest in alternatives focusing on refill and reuse.

"Nestle is a major contributor to the plastic crisis and environmental problem that we have right now," Morgan told Reuters on the sidelines of the company's annual general meeting in Lausanne, where Greenpeace activists intervened shaking banners.

Coca-Cola was recently found to be the most polluting brand in a plastic waste audit. The organisation was found for the second year in a row to be the most polluting brand in

a global audit of plastic trash conducted by the Break Free From Plastic global movement. The giant soda company was responsible for more plastic litter than the next top three polluters combined. Yet these companies will also suffer a blow to profits as a result of their pivotsCoca-Cola has confirmed the change will increase costs, and it's safe to assume this may also be the case for Unilever given the volume of plastic it uses.

This impact on profits means Unilever may have to adjust strategy to satisfy both its shareholders (i.e., company owners who have interest in profitability) and stakeholders (i.e., those either within or outside the company who are bound to it, such as suppliers/vendors and customers). Will the move toward environmental responsibility and the benefits for public relations and branding ultimately outweigh the increased production costs?

Questions

1. What's the difference between a shareholder and stakeholder? Who are Unilever's shareholders and stakeholders, and how might they each be affected by the reduction in plastics?

2. Analyse how Unilever's decision might alter its supply chain costs and retail prices. What are some of the opportunities and costs of such a massive shift?

3. Do you think Unilever is taking a principled stand, making a calculated business decision, or both?

4. In terms of the balance between shareholder interest, stakeholder interest, and

environmental responsibility, where do you think a company's priorities should lie?

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Adapted from Sage Business Cases. 2020 SAGE Publications, Ltd. All Rights Reserved

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