Aug 15 2017 How to leverage alliances for environmental change? It’s about whom you target
Business leaders increasingly recognize that our system is rapidly approaching its environmental limits. As Paul Polman, CEO of Unilever, stressed: “It’s clear to many of us that the system is broken, and … we grapple with how to affect tipping points both within, and outside, our business.”
Environmental alliances can play an important role in addressing environmental concerns and triggering environmental change. Examples of such alliances between firms, NGOs, and governmental organizations are manifold — Think about the Corporate Advisory Council of the BlueGreen Alliance, a diverse coalition of business leaders, environmental organizations, and labor unions committed to jointly advance policies that will help create a cleaner and more competitive American economy. Or, in a smaller constellation, consider the Global Rivers Environmental Education Network (GREEN), which General Motors and Earth Force founded in 1989 to create opportunities for young people to learn more about their local watersheds and to enable lasting solutions for pressing water quality issues.
Attracted by these alliances’ interesting melding of market, nonmarket, and environmental strategies, scholars have just started to explore the particularities involved. Much attention has been drawn to the partners’ motivations and governance mechanisms, as greatly summarized in Gray and Stites’ 110-page report. But how do such environmental alliances work when it comes to triggering environmental change?
This and other questions are at the center of our research project “Cross-Sector Solutions to Environmental Challenges,” led by Haiying Lin of the University of Waterloo and funded by the Social Sciences and Humanities Research Council of Canada. In the following, I will highlight some of our key findings about alliances and their environmental activities, the core of which is that there are important differences in how firms use alliances to trigger environmental change — depending on which stakeholder group they target.
Environmental change is no easy endeavor: It requires altering mindsets, actions, and established structures and, thus, encounters multiple barriers.
Specifically, companies use alliances within and also across their organizational boundaries to seek environmental improvement. Yet, environmental change is no easy endeavor: It requires altering mindsets, actions, and established structures and, thus, encounters multiple barriers. As we highlight in the Journal of Business Ethics, key barriers to environmental change vary depending on where change is targeted; that is, whether the partners mainly target stakeholders at the firm (e.g., employees and managers), the industry (e.g., competitors and business clients), the supply chain (e.g., suppliers and distributors), or society more broadly (e.g., community and individual consumers).
Consequently, the target has implications for the way the partners should leverage their combined resources and capabilities — more precisely, which mechanism (e.g., awareness campaigns, policy work, process improvement, or products) they use to overcome these barriers when diffusing an environmental solution among a specific target group. Alliances may not be the best option for every stakeholder-mechanism combination. With the complexities involved in alliances, firms may prefer to leverage some mechanisms unilaterally, for example awareness campaigns, processes, or policies. Alternatively, they may use broader network approaches if the solution requires the resource mobilization of not only a few, but many partners.
We hence built a framework to explain which mechanisms firms use in their environmental alliances to target stakeholders at different levels. We tested the framework on a sample of 566 environmental alliances formed in the United States between 1985 and 2013. What did we find? Our data indicate that nearly half of the investigated alliances target the industry level (46 percent), and 38 percent focus on business products. This means that more than half of investigated alliances target a different level (i.e., firm-level stakeholders, supply-chain stakeholders, or society more broadly) and/or use a different mechanism (e.g., awareness campaigns, policy work, process improvement), thus calling for exploring the nuances of configurations.
There are no one-size-fits-all approaches in environmental alliances. Rather, it’s about acknowledging how partners may best overcome barriers when targeting stakeholders at the firm, industry, supply-chain, or societal level.
Specifically, we found that alliances targeting firm-level stakeholders tend to focus on technology, thereby addressing critical process-related technical and environmental knowledge barriers. Environmental alliances targeting competitors and other industry actors tend to overcome related barriers by leveraging services and business products. To spread the solutions, they make use of market-based diffusion channels. In turn, alliances targeting supply-chain stakeholders tend to focus on processes as the main alliance mechanism. Finally, seeking to overcome environmental barriers and target stakeholders at the societal level, alliance partners tend to focus on awareness and policy work, as well as on environmental products.
Hence, there are no one-size-fits-all approaches in environmental alliances. Rather, it’s about acknowledging how partners may best overcome barriers when targeting stakeholders at the firm, industry, supply-chain, or societal level. This finer-grained picture of the alliance landscape shows what the partners actually do. More importantly, it may prompt practitioners to deepen their reflection when forming and configuring environmental alliances in line with the main targeted stakeholder group. While alliances seem promising for some leveraging mechanisms, they are just one, albeit important, option besides unilateral and network approaches to trigger environmental change.
As a research group, we are fascinated by the benefits, challenges, and constraints of alliances as a vehicle for environmental change. Besides looking at what such alliances actually do, there are many other questions that call for further research. For example, there are critical differences in how ambitious the environmental change initiatives are. Hence, what enables firms to move from less to more ambitious environmental goals in their alliance engagement? As we show in our recent Business Strategy and the Environment contribution, this is not just a question of firms’ motivations, but also of their awareness and capabilities.
With the implementation of the Climate Protocol still at stake and the role of non-state actors gaining in importance, questions related to environmental alliances have become even more topical. We thus hope to see more research for practitioner and scholars to better understand how engagement in environmental alliances may help affect tipping points both within and outside business — to create more climate-resilient, sustainable societies.
Lea Stadtler is Associate Professor at the Grenoble Ecole de Management, France. In her recent research, Lea explores cross-sector partnerships in the light of coopetition and paradox management and, as part of a larger research project with the University of Waterloo, examines configuration patterns in environmental partnerships. Lea also works as Senior Editor of the Annual Review of Social Partnerships.