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Environmental management in product chains 9 The role of the size of the companies
This chapter focuses on the role of company size in the shaping and implementation of environmental initiatives in product chains. The aim is to see whether there is a need for recommendations developed according to the different size of companies. The basis has been the case studies and data about the size of the initiating companies. The companies represented by the case studies are relative big, compared to the Danish business structure[1]. This implies that there is a bias in the analyses towards the initiatives of medium-sized and big companies, while initiatives by small companies (below 50 employees only is covered by the cases to a limited extent). The material covers one company with less than 10 employees, maximum three companies with less than 50 employees, while the remaining initiating companies are medium-sized (50 – 250 employees) or big (more than 250 employees. The distribution of companies is seen in Table 9.1.
Table 9.1: The size of the companies, which initiated the different types of environmental initiatives in product chains 9.1 LCALCA is referred in the cases as a relative comprehensive effort, which may include training and technical knowledge about the methodology and the organisation of the activities. Furthermore, LCA is described as a relatively new tool, where not much experience has been obtained, compared to other environmental management tools. The expectation is therefore that rather big companies, which have the knowledge and the economic resources to conduct a LCA, will initiate the use of LCA. The table shows, however, that not only bigger companies have applied LCA, since also a micro company and a small company are among the companies, who has initiated a LCA. The cases show that all the LCA’s, except one conducted by a big company, were based on public funding of the activity. The cases show that the companies see themselves as more innovative and focused on environmental concerns than, what they consider, the average than their competitors. Furthermore, that their customers also are more environmentally concerned. The environmental concerns together with the possibilities for public funding, seems to explain the interest in LCA. The cases also show that in big as well as in smaller companies, LCA often is applied together with other initiatives, especially in connection with documentation of a certain environmental performance or the practice around certain chemical substances. 9.2 Customer informationInformation to customers about environmental aspects of production or processes is here understood as information, which is given directly to the customers through business-to-business dialogue or through written information about the company. Eco-labelling is discussed in paragraph 9.7. A number of the medium-sized and big companies refer to customer information as an element in their environmental management. These companies also produce or sell products, which are seen as having certain environmental advantages, compared to the products of the competitors. It seems like a characteristic of the companies that they are selling to professional customers. 9.3 Green procurementGreen procurement has as point of departure that the same product or the same service can be purchased in versions, which include different levels of environmental concerns. Two of the companies among the cases, have a green procurement policy, which have been the background for other initiatives like supplier assessments and LCA. Green procurement is a concept, which has been developed as part of the environmental management in governmental companies and institutions. The only public company among the case companies are together with a private company the two companies with a green procurement policy among the cases. According to the other cases, the implementation of public green procurement policies in governmental companies and institutions is limited, since the cases within green product development all show lack of success, because the governmental institutions do not buy the greener products. Size may influence the use of green procurement. Smaller companies may find it difficult to make the necessary information or doubt whether they can influence the practice of bigger suppliers. According to Stranddorf et al (2002) it is, however, possible for smaller companies to make bigger suppliers interested in co-operation around their environmental demands; for example if the supplier sees the demands as a possibility to get access to a certain customer segment.. 9.4 Recovery of materials and productsThe cases include two cases where companies initiate the development of recycling schemes, one focused on plasterboard and one focused on plastic. Both schemes start out as internal schemes, which should enable internal recycling of production waste. Later on, the schemes were developed to have a broader basis. The scheme for plastic is developed to include plastic waste from other companies and the scheme for plasterboard is developed to include waste plasterboard from construction sites as raw material for new plasterboard. In the plasterboard case the development of the scheme into a more national scheme and the dialogue with competitors etc. about quality demands has probably only been possible because the company is a substantial actor on the market and also has organisational resources to devote to this task. This perspective is mentioned in the cases, but it seems to be a reliable conclusion that establishing such schemes is only possible in companies with an important role within the area in focus. 9.5 Supplier assessment and -dialogueSupplier assessments have primarily been used when companies based on information from suppliers make an assessment of their environmental performance. Supplier dialogues have been organised when a company enter into dialogue with existing and potential suppliers about changes in the supplied products or services. When a company is conducting supplier assessment or entering into dialogue with existing and potential suppliers the outcome is not necessarily a change in the practice of the supplier. Small, medium-sized and big companies from the cases have conducted supplier assessment or supplier dialogue. Based on the cases it is not possible to conclude whether the size of the company is important in relation to this environmental initiative. The cases seem to show that companies with many suppliers assess their suppliers (Skanska, HCI Nordis A/S), while companies with fewer or very specialised suppliers tend to enter into dialogue with the suppliers (Novotex, Bdr. Hartmann, Kompan). 9.6 Green product developmentAs earlier mentioned, green product development may have an economic focus, where the new product is supposed to enable cost reductions due to reduced resource consumption, or may have a focus, where the product itself has less environmental impact and maybe at the same time is a more expensive product. The reason why green product development with focus on resource savings are not more widespread may be that the company lacks knowledge about its current resource consumption or about alternative materials or methods and lacks the organisational capacity to conduct this kind of assessments and surveys. The barriers to the development of products, which have less environmental impacts, seem to be lack of demand or the need to engage in development of this kind of demand. This may also introduce uncertainty whether it is possible to develop this kind of demand. With respect to both types of green product development, it could be expected that bigger companies would have better possibilities to devote organisational resources for this kind of activities. The cases include four big companies and one medium-sized company, which have been able to develop greener products and develop demand for these products. The cases seem to show that the companies need a certain size to devote the necessary resources and furthermore that the companies need to have a certain position on the market to establish demand for the product. The cases where the product development takes place based on expectations to future public green procurement, seem to show that economic considerations among the public institutions, as mentioned earlier, are a barrier to development of demand for this kind of products (Bambo, Phønix, ISS Danmark). 9.7 Eco-labellingDifferent types of eco-labels have been in focus in the cases, including public initiated and controlled eco-labelling schemes and eco-labels based on private organisations. The aim of eco-labels are to document that the products fulfil certain requirements to the product itself, to the manufacturing of the product and maybe also to the waste management of the products. Since eco-labels are based on specific demands they are more based on societal expectations to environmental documentation, compared to supplier assessments and LCA’s where the customer may have to develop the criteria for the assessments. This may enable smaller companies to use eco-labelling as a tool, since the assessments are based on a limited number of already known criteria. The company Technos A/S changed its environmental management from LCA to eco-labelling because (some of) its suppliers were not willing to provide the necessary information for a LCA; apparently because Technos was a customer of limited importance compared to the amount of work that the development of the LCA data would demand. Furthermore, the eco-labelling only implied a limited scrutiny of the practice of the supplier, which may have made it more acceptable to the supplier to engage in dialogue about it. Maybe the type of customer also influences the choice of eco-labelling as tool, since it may be seen as easier for smaller or less advanced customers to handle this kind of information. However, the cases do not make it possible to draw a conclusion in relation to this hypothesis. 9.8 Strategic co-operationThe cases with focus on strategic co-operation include two big companies and one medium-sized company. The cases have focus on development of the environmental competence of the companies and development of a stronger market position through development of new products or services. The cases show development of more committed co-operation between customer and supplier. One case shows development of co-operation between two companies of the same size. In another case, the customer makes an agreement with a smaller company, which probably is more depending on the customer than vice versa. Fodnoter [1] 213.149 of the 229.976 companies in Denmark (excluding agriculture and fishery) had in 2001 less than 50 employees. The total number of employees in this 93% if the companies had around 50% of the total number of employees (Statistical Yearbook 2003)
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