1. LEGAL IMPACT ON SUSTAINABLE VALUE CHAINS
Wende Huehn-Brown, St. Petersburg College, St. Petersburg FL USA
Deborah Cerminaro Eldridge, St. Petersburg College, St. Petersburg FL USA
Abstract: Evolving international regulations are attempting to drive sustainability innovation
and improvement in many value chains. Additionally business-to-business relationships are
further creating voluntary self-regulatory influences. This is impacting and complicating supply
chain decisions from relationships with suppliers and customers, to strategic and operating
decisions needed to comply with growing regulatory and stakeholder demands for more
sustainable value chains. Broader supply chain network decisions are putting pressure on
corporate strategies to not only enhance value to the customer, but also address social and
environmental conditions in order to capture opportunities to further improve profit and market
growth. This paper examines research in this field and highlights a case study on one
organization’s journey to illustrate how diverse regulations and business-to-business
relationships with Wal-Mart have reshaped their strategic and operating decisions in their pursuit
for sustainability.
Keywords: regulation, legislation, self-regulation, sustainability, value chain, supply chain,
strategy, assessment, audit, sustainability balanced scorecard, life-cycle management, Wal-Mart
1. Introduction
Today’s value chains are increasingly facing regulatory impact both domestically and abroad.
Additionally customers are increasing demands for sustainable products and services which is
reshaping strategic and operating decisions requiring more systematic thinking and
interdisciplinary actions. In order for value chains to remain competitive, not only must they
differentiate themselves from their competitors, but they must reevaluate their value creation
processes to better align and often surpass regulatory needs to meet global marketplace
expectations.
Many strategic and operational decisions are being affected by regulations that trickle down
and up the supply chain. U.S. history demonstrates how these regulations have evolved from
traditional labor practices and hazardous waste management to much broader sustainability
regulations today. These evolving regulations changed not only the activities needed to deliver
value, but have added further emphasis to economic needs to also include society and
environmental requirements. Additionally the broad community of stakeholders across the
global marketplace has brought more diverse customer expectations and self-regulatory business-
to-business influences that are adding further challenges beyond regulatory compliance.
Today’s organization’s may be seeing pressure from their immediate customers to provide
information on their operating practices relative to sustainability, however many organizations
have not necessarily matured to proactively address potential sustainability issues in their value
chains. Additionally, sifting through the array of regulatory requirements for international
products and services has become a complicated endeavor. An ongoing effort to innovate and
improve staying ahead of competitors is like a never-ending race, especially with today’s short
product and service life cycles in this complex global marketplace.

2. As Porter and Reinhardt (2007) stated in A Strategic Approach to Climate, organizations
“that persist in treating climate change solely as a corporate social responsibility issue, rather
than a business problem, will risk the greatest consequences”. They further illustrate how
expanding stakeholder expectations and evolving standards are effecting operations with
requiring a strategic approach to address risks relative to sustainability practices. This paper will
summarize research and a case study on one organization’s journey to not only improve their
operating decisions complying with various regulatory and self-regulatory requirements, but to
strategically evolve and extend these decisions reshaping their strategic goals and objectives to
pursue sustainability.
2. Literature Review
As World Wildlife Fund (WWF, 2002) stated, “to be sustainable, humanity’s consumption of
renewable natural resources must stay within the limits of Earth’s biological capacity over the
long term … for non-renewable resources (i.e. petroleum), consumption must stay within the
limits of the rate and level of replacement with alternatives”. As organizations take on this
challenge to achieve their strategic goals across their value creation activities, they quickly
realize their individual contribution is connected to more organizations than their own.
“Sustainability no longer targets an ultimate sustainable state but instead becomes a process of
constant improvement of the sustainability of artifacts – one deals with changes in the world”
(Faber et al., 2005).
Growing environmental pressures and standards have both direct and indirect impact on
supply chain management and the competitiveness of organizations (Lee and Kim, 2009).
Today’s consumers and other stakeholders are more environmentally conscious and are showing
increased interest toward environmental issues (Anderson and Skjoett-Larsen, 2009). A major
concern today is that organizations are trapped in rather outdated value creation activities,
continuing to view value by short-term financial performance ignoring current customer needs
and broader influences that determine longer-term success (Porter and Kramer, 2011). As Porter
and Kramer (2011) further discussed, a “principle of shared value, which involves creating
economic value in a way that also creates value for society by addressing its needs and
challenges” is required. Recognize environmental and social aspects can be considered strategic
if customers see them of value and are willing to pay more, costs are reduced (i.e. reduction of
inputs for materials, energy, pollution prevention, etc.), business risks are better managed ,
markets are redefined, or competition is evolving new standards (Reinhardt, 1999).
Today’s supply chains also span the globe and different regulations have to be met (some
may even be in conflict or not feasible). Attempts to nationally regulate against non-sustainable
business practices have even resulted in World Trade Organization (WTO) action against
improper trade barriers (de Man and Burns, 2006). As de Man and Burns (2006) further noted,
in locations with weak government controls, “supply chain partnerships often try to establish
their own “license to operate” through voluntary self-regulation in the supply chain, seeking at
the same time endorsement from respectable stakeholders”. The Forest Stewardship Council
(FSC) illustrates a successful industry partnership with external stakeholders to create an
international system of self-regulation using international principles and standards without direct
government involvement. “Corporate codes of conduct, product certifications, process standards,
and other voluntary, non-governmental forms of private governance have proliferated in the last
two decades” (Mayer and Gereffi, 2010). Not only due to weak government controls regarding

3. social and environmental impact, but also in response to pressure from globalization (Mayer and
Gereffi, 2010).
Legislation regulates, authorizes, sanctions, and restricts specific requirements on supply
chains tending to leave organizations required to more or less comply or leave that market.
Legislation may be in the form of general environmental laws (Fleischmann et al., 1997;
Georgiadis and Vlachos, 2004; and Van Nunen and Zuidwijk, 2004), or it may be specific, for
example mandating a given recycled content in new products (Krikke et al., 2004) or pinpointing
end-of-life (EOL) take-back responsibility (Krikke et al., 2004). Legislation in turn may be
driven by issues like government’s concern for environmental degradation, public opinion or
pressure, lobbying by interest groups, shortage of resources, preferred modalities of a nation’s
development, which may also, in turn, act directly as drivers for a business (Mann et al., 2010).
The right kind of government regulation can encourage organizations to pursue shared value; the
wrong kind works against it and even makes trade-offs between economic and social goals
inevitable (Porter and Kramer, 2011).
Additionally supply chains have begun to internalize externalities from issues like pollution
through regulations, taxes, penalties, fines, etc. in which the government has played a key role
influencing policy decisions. While there are also costs on organizations outside regulatory
requirements considering energy and resource use, location and facility operations, procurement
and distribution, employee productivity, etc. Value chains are affected by numerous economic,
social, and environmental issues that make up the concept of sustainability. According to Faber
et al. (2005), there are about 50 definitions of sustainability and many cannot easily be
compared. As organizations look at add value with sustainability, they often find themselves
sifting through these definitions to define their own strategic and operating needs systematically
to improve and innovate their value creation activities.
Sustainability audits or assessments focus on “a range of processes that all have as their
broad aim the integration of sustainability concepts into decision-making” (Pope, 2006). Often
developing and implementing sustainability programs begins with some kind of audit or
assessment that periodically reviews “how are we doing?” and “where do we need to make
improvements?” (Coyne, 2006). These audits or assessments identify a variety of artifacts or
criteria, including regulatory requirements, diverse stakeholder interests, evolving innovation and
technology, governance policies, etc. The selection of criteria can however be biased and driven
by time, data, budget, qualifications, access, and other constraints (De Ridder et al., 2007). As
De Ridder et al. (2007) further examined in the European Commissions Integrated Assessment
(IA) procedure, they found them rarely fully applied and seldom objective. There is no single
and commonly accepted approach, but fundamentally audits or assessments are used to aid
decision making by framing a problem (i.e. understand it and define its boundaries) and later
compare impacts of policy or improvement proposals which can be further used to monitor
implementation and reflect on the decision making process (De Ridder et al., 2007). Different
artifacts or indicators have different implications for communications about the state of
sustainability and may address different target groups in different ways (Wibeck, 2009).
As organizations evolve in sustainability initiatives, so does their management systems with
using audits or assessments to evaluate performance relative to operations or value creation
activities. This process typically includes data collection, measurement, analysis, comparison of
results with predefined goals, and revision of the total process decisions to better meet
expectations (e.g., Bennett, James, & Klinkers, 1999; International Organization for
Standardization, 1999; Mauser, 2001). Overlapping and conflicting priorities however in the

4. artifacts or criteria impact objectives for value creation systems, as well as add complexities to
interlined systems and sectors making planning and analysis for more sustainable policies a
difficult and complex issue (Gibson, 2006). Organizations also report on their sustainability
performance, many using the Global Reporting Initiative (GRI) framework
(www.globalreporting.org) which focuses more on lagging (not leading) indicators (Pojasek,
2009). Business excellence frameworks (i.e. Baldridge National Quality Program) focus more on
“how information gathering (i.e. audits or assessments) through the reporting process can help an
organization achieve its strategic business objectives, which are carefully aligned with the
expectations of its varied collection of stakeholders” (Pojasek, 2009).
As initially examined, the pursuit for sustainability is a process of constant innovation and
improvement of processes across the value chain. According to Sharma (2001), having a culture
of continuous improvement means doing more (i.e. customer focus, employee motivation,
constant innovation, etc.) with less by eliminating waste and reducing lead time (i.e. synchronize
value chain, build agility, etc. to support market growth and reduced capital requirements). As
Eurostat (2001) discusses, using only local knowledge in relation to sustainability is a limiting
view and a global perspective is needed with national and local dimensions when it comes to
actions aimed at sustainability. Not only are definitions and indicators used in sustainability
broad, but global perspectives on regulation and their interpretation can be fuzzy with
implementation often incomplete and contradictory. As organizations continue to learn from
their sustainability improvement and innovation initiatives, they will continue to evolve markets,
strategies, operations, regulations, and other developmental needs to transform and further build
best practices in this field of sustainability. The following case study will share one
organization’s lessons learned on their journey for sustainability.
3. Case Study
It’s a jungle out there … A jungle of directives, acts, and regulations that would make any
entity trying to conduct business in the global marketplace squirm and contemplate the value of a
proposed international expansion. This case focuses on a medium sized organization that
supplies products to Wal-Mart in which there is inherent shared value to being sustainable,
particularly when examining the supply chain from its inception with concept design to
understanding the plethora of laws with which the organization must comply. To begin this
journey, the organization in this case worked to understand this environment that is shaping their
strategic and operating decisions to be more sustainable.
In the past decade, Wal-Mart created 14 Sustainable Value Networks or teams that are
responsible for managing various sustainability aspects (Wal-Mart's Sustainability Network
Focuses on the Supply Chain, 2006). According to Wal-Mart’s 2011 Global Responsibility
Report, they have worked with “more than 70 organizations, including non-governmental
agencies (NGOs), governmental agencies, academic institutions, suppliers, retailers, and food
service companies to conduct research and develop data, tools, and protocols for a product
sustainability measurement and reporting system (SMRS)”. The focus of this system is to drive
product innovation and the implementation of best practices with more transparent supply
chains. They further illustrate that their first phase included a Supplier Sustainability Assessment
which was provided to more than 100,000 global suppliers to evaluate their own sustainability.
The organization in this case study was involved in this phase. Additionally as Wal-Mart’s 2011
Global Responsibility Report further highlights, the next phase is a life cycle analysis database.

5. In that life cycle analysis phase, Wal-Mart is “working with The Sustainability Consortium to
conduct research and develop data and tools that will enable research-driven product
sustainability measurement and reporting” (Wal-Mart, 2011). The Home and Personal Care
category is influencing the organization in this case study that is a part of Wal-Mart’s Chemical
Intensive Products Sustainable Value Network requiring sustainability to be integrated into the
core business of their suppliers.
In addition to this business-to-business relationship, the organization in this case needs to
further examine the laws pertaining to environmental and sustainability initiatives. This case
will cover just a small sampling of laws to help one begin to see a pattern on how each law
affects the value chain, beginning with sustainable design as 80% of the environmental burden
and cost of a product is fixed during this phase (Rebitzer, 2002). First this medium sized
organization that supplies a product to Wal-Mart for end-use by the consumer, must consider, at
the very least, The Waste Electrical and Electronic Equipment Directive; The Restriction of
Hazardous Substances Directive; The Packaging and Packaging Waste Directive; The Batteries
and Accumulators Directive; The Energy Using Products Directive; Registration, Evaluation
and Authorization of Chemicals; The Landfill Directive; The Energy Efficiency in Buildings
Directive; International Climate Action Project as well as the Reduction of Hazardous
Substances in Electronics Directive.
Furthermore for this organization to operate in the European Union, they must support the
European Union’s attempt to address its carbon reduction goals by addressing their sustainable
design overall which the European Union is doing on an industry by industry basis. This is
occurring at two levels, the legislative level and the regulatory level. Thus, as if the task weren’t
daunting enough, the well-informed multi-national must understand the broad legislation
including the regulations that serve to implement and enforce the legislation. Each of the
referenced laws requires organizations to consider the initial product life, meaning the design,
and as a result the suppliers needed to create the product at its inception must be considered in
the legal supply chain or life cycle analysis as well. As the organization in this case is
experiencing, during their short history of initiating sustainability (in 2008), Design for the
Environment(DfE), procurement practices with suppliers, and packing design to be more
sustainable is evolving more structured processes to better focus on long-term life cycle views.
For example, taking The Waste Electrical and Electronic Equipment Directive (WEEE), a
multi-national must be aware that there are disposal requirements for certain electrical and
electronic equipment and that WEEE applies to biphenyls (PBB) and polybrominated diphenyl
ethers (PBDE) (Europa, 2010b). Any entity producing electrical or electronic equipment or
using PBB or PBDE in its manufacturing or processing must have a financing scheme in place
for the items end of life disposal (Europa, 2010b). This financing condition applies not only to
new products but products placed on the market prior to August 13, 2005, requiring that the
disposal costs for older products be added into the production costs of new products and borne
either by the producer or end user other than households (Europa, 2010b). The question then
becomes whether this cost should be borne by the producer, end user or whether under a theory
of shared value, more creative alternatives can be reached.
Using as another example, the Registration, Evaluation Authorization and Restriction of
Chemicals (REACH) was enacted in June 2007 and its purpose is five-fold including
environmental and human health protection, accountability, as well as innovation and
competition (Health and Safety Executive, 2011). It applies to domestic as well as imported
chemicals of one or more tons annually and while certain substances are excluded, such as

6. radioactive waste because they are covered by complementing laws, others have tailored
provisions because they too are also covered by complementing laws and include human and
veterinary medicines, while still others have tailored provisions to the extent they are used in
specific situations (HSA). Our medium sized organization as well as Wal-Mart must also comply
with REACH and in doing so must commit both hours and manpower to registering and ensuring
proper labeling of their products as is also mandated by REACH (HSA). According to REACH
it assists suppliers and manufacturers up and down the supply chain by providing needed
information regarding risks and use of registered chemicals and as REACH states, if the
chemical isn’t registered, it isn’t legal to produce or supply and therefore there’s no market for it.
The Landfill Directive is another European Union law pertaining primarily to biodegradable
municipal waste (BMW) sent to landfills. While this law went into effect in 1993 it was
amended to its current format in 1999 with the objective of decreasing BMW amounts from 1995
rates by 75% as of last year and then additional percentages in increments of 50% by 2013 and
35% by 2020 (Europa, 2010a). Although The Landfill Directive only indirectly affects the
sustainability supply chain, it must be considered as a cost associated with sustainable design,
due in part to the 1999 changes that now define BMW to include certain commercial and
industrial generated waste, as well as dividing waste by categorized landfill as hazardous, non-
hazardous, and inert waste (Europa, 2010a). Under this law the costs of setting up and
operating the site shall be borne by the price charged by the landfill operator for disposal
(Europa, 2010a). While addressing the costs generically, no specific requirements on customer
charging are found in the directive. However, research of private waste removal entities in
Europe found The All Clear Company, which is a waste clearance and removal service that
incorporates into its fees the landfill fees associated with disposal (The All Clear Company,
2010). Its basic charge for business waste removal ranges from £62.50 ¼ truck load to £220.84
for a full truck load (The All Clear Company, 2010). Further pricing is available for labor
intensive or heavy weighted material removal. In addition to the private company services
available, many European Union countries now charge a landfill tax, with Ireland, France, Czech
Republic, Italy, and Cataluna charging a mere 7-15 euros per tonne while Denmark and the
Netherlands charge 86 euros per tonne for low density waste and 14 euros per tonne for non-
combustible high density waste (Economic Instruments in Environmental Policy, 2010). An
unlikely coincidence can be found in the relationship of the high tax rate to the low landfill use in
the Netherlands. Apparently high costs do drive down usage
A complimentary law to The Landfill Directive can be found with the European Union’s
Department of the Environment Food and Rural Affairs (DEFRA) which has created a structural
reform plan to reduce waste to zero within the proceeding 3 to 7 years (European Union
Department of the Environment Food and Rural Affairs, 2011). Noting that the task may be
daunting, DEFRA understands that “transition to a green economy is essential for delivering
sustainable development and long term growth” (2011). DEFRA further recognizes that it cannot
achieve its goal without the assistance of legislative changes in cooperation with the business
community. As seen within this medium size company, this further affects sustainable
procurement and packaging design practices when providing products to this market.
While DEFRA’s plan is considered ambitious by all accounts it is strongly supported and
looks at paying for compliant action rather than penalizing non-compliance, considering as well
repealing the UK’s Climate Change Act concerning household charging and supporting
anaerobic digestion energy creation projects (European Union Department of the Environment
Food and Rural Affairs, 2011). In line with this initiative the UK proposed updated regulations

7. entitled The Controlled Waste (England & Wales) Regulation 2011. This new law became
effective April 6, 2011 and replaced the outdated The Controlled Waste Regulation 1992. The
new regulation attempts to address a disposal issue present in the 1992 regulation that had a
chilling effect on ‘household’ waste collection because of the cost to the local authorities and
waste contractors for disposal of the collected waste (European Union Department of the
Environment Food and Rural Affairs, 2011). While this regulation addresses household waste
resulting from consumer products, recognize businesses are again left out of the cost incentive
loop to create initiatives with partners in order to comply with the government’s sustainability
laws to reduce their own costs. DEFRA, as a government entity is seeking to embrace
sustainability itself, partnered with businesses to address cost reduction in several key areas of
the supply chain; design, materials use, packaging, delivery, marketing, disposal and reuse.
These actions while leading to a more sustainable government are an example of shared value
that can be applied to the private sector as well (European Union Department of the Environment
Food and Rural Affairs, 2011).
The examples provided here for our medium sized organization are just a small sampling of
the laws that affect a domestic or multi-national sustainable organization doing business in the
European Union. This article hasn’t discussed industry specific regulations for home and
personal care product manufacturers nor has it addressed green marketing laws, cap and trade,
hazardous waste disposal, food and drug, water conservation, labor practices, and more. Since
the organization highlighted in this case study wants to do business in Europe and continue to
supply to Wal-Mart, it will have to not only be aware of all these laws, but further look at various
and creative alternatives to meet the increased costs associated with being a sustainable multi-
national enterprise, including value chain considerations that upstream to their suppliers for more
sustainable design.
4. Results and Discussion
These evolving legal requirements are adding further complexities to value chain activities,
as well as they are impacting competitive scenarios along with business-to-business influences
for sustainability. According to a February 2010 story in The Journal of Commerce Online,
Wal-Mart “wants suppliers to cut emissions by 20 million metric tons by 2015” and has said that
this would include continued efforts to reduce packaging as well as in transportation and
sourcing of goods (Wal-Mart Continues To Set Sustainability Mandates, 2011). As well as Wal-
Mart executives have indicated that all vendors or suppliers must complete their Supplier
Sustainability Assessment and Wal-Mart buyers will use this score (in addition to price) in their
selection process for goods and items they will purchase (McTigue, 2007). When the world’s
largest retailer pushes this sustainability assessment as one of their requirements, one can clearly
see the impact of this business-to-business ‘voluntary’ self-regulation endeavor and how it will
significantly impact value chains. Furthermore the knowledge and skills needed in today’s
organizations includes understanding these growing regulations and standards to support
incorporating sustainability. This includes embedding sustainability artifacts or criteria in audits
and assessments that include environmental needs regarding product design, material sourcing,
manufacturing, packaging, end-of-life, emissions, energy efficiency, waste reduction, and other
regulations (Scoll, 2011). Furthermore legal advice, engineering, manufacturing, and other
expertise have become a critical aspect to enable sound strategic and operating decisions (Scoll,
2011).

8. Additionally as traditional organizations like the one in this case study confront these
evolving demands, so too must they address the status quo or complacent mindsets in their
legacy systems. Take for example the organization in the case that actually began to pursue
several sustainability initiatives prior regulatory and Wal-Mart developments. They have a long
history illustrating improvements in energy and water use, employee health and safety, as well as
hazardous waste management. While they met past legal requirements handling their hazardous
waste, today those past standards are proving to not have been robust enough to reduce today’s
risks as this organization is now remediating implications of pollution from those prior practices
(in addition to impact from a neighboring organization that contaminated their location). Since
sustainability initiatives are focused on future generational needs with the triple bottom line of
people, planet, and profit, we will continue to experience in the future the consequences of
today’s decisions and actions that were not robust enough either.
Due to the intense pressure of key stakeholders like Wal-Mart on organization as in this case,
one can understand how sustainability requires a strategic evolution in which change is not an
option but a requirement for survival and growth. Organizations will continue to learn from their
innovation and improvement efforts, often identifying further problems requiring additional
considerations and attributes that need to be addressed. This is when interdisciplinary teams
often use sustainability audits or assessments systematically to frame their needs for
improvement and gauge how they are doing at meeting those needs with periodic reviews. Wal-
Mart’s Supplier Sustainability Assessment has done this prioritizing a variety of artifacts or
criteria that their suppliers, like the organization in this case, have endorsed for further strategic
decisions. As Daniel C. Esty said in Bloomberg Businessweek (2011), he “thinks sustainability
will become as transformative for business as the earlier quality and information technology
revolutions, once more top executives recognize the huge potential to trim costs” (Stanford,
2011). He further uses Wal-Mart’s savings in their Seiyu chain in Japan (2009) as an example in
which a new packaging design just for their private-label fresh-cut fruit and salads from oil to
corn based plastic cut weight 25% and its costs 13% saving more than $195,000 annually
(Stanford, 2011). The organization in this case has experienced cost savings also of
approximately $1M annually since initiating their sustainability program in 2008. As Robin
Sherk stated, Wal-Mart also realizes “that public relations matter”, and if Wal-Mart wants to
address one of their weaknesses with their urban markets, they “have to appeal to that audience
and connect with that community … creating a proposition that goes beyond ‘always low
prices’” (Wells, 2011). While the organization in this case has not yet experienced a
measureable effect regarding market share, they have begun to see positive effects on their
business-to-business contracts. Large retail customers, group purchasing organizations, and
government contracts have shown excellent outcomes when they held Corporate Social
Responsibility (CSR) audits at this organization.
For an organization to gain a competitive advantage from sustainability, they need to
reconfigure their value chain, or set of activities involved in creating, producing, selling,
delivering, and supporting its products and services (Porter and Kramer, 2011). To begin to
tackle the complexities of the influences regarding sustainability, one must re-evaluate these
decisions and embrace sustainability as a strategic endeavor. As the organization in this case
found, this meant adding sustainability to their mission on why the organization exists. As well
as placing the focus of sustainability into ones core values to guide further decisions and
operating practices to move beyond compliance. Furthermore due to the complexities as to what
is sustainability, the organization in the case prioritized and clustered artifacts or criteria from

9. sustainability audits or assessments into their goals and objectives to manage innovation and
improvement decisions for more sustainable design. At this point, the organization in the case
has developed a new more sustainable product that has been introduced in some markets which
has provided positive market growth and revenue, which in turn may redefine this market with a
new standard. By creating a strategy with a unique competitive position and a distinct value
chain, not only can organizations create a competitive advantage in the global marketplace, but
they can reduce their impact the environment and society by better connecting to the
communities they operate in with the products they provide. As Wal-Mart creates and evolves
their sustainability measurement and reporting system (SMRS), this pushes upstream to suppliers
who in turn look at their suppliers moving sustainability strategies and operating decisions
upstream in the value chain.
Traditionally the Balanced Scorecard (BSC) provided a “multidimensional framework for
describing, implementing, and managing strategy at all levels of an enterprise by linking
objectives, initiatives, and measures to an organization’s strategy” (Kaplan and Norton, 1996).
Additionally this “management tool provides an enterprise view of an organization’s
performance by integrating financial measures with other key performance indicators related to
customer preferences; internal business processes; and organizational growth, learning, and
innovation” (Kaplan and Norton, 1996). Strategy maps are then used to indicate relationships
among critical elements in the BSC and show the perspectives used. Today organizations, like
the one in this case, have evolved also Sustainability Balanced Scorecards (SBSC) that
incorporate the triple bottom line (financial, social, and environmental) value creation activities,
stakeholders (internal and external) processes, products, learning, and innovation perspectives
(Dias-Sardinha et al., 2002). By clustering sustainability artifacts or criteria from audits or
assessments into broader objectives that are measureable, organizations can better track how they
are doing to not just comply with regulations and stakeholder expectations, but measure progress
strategically with sustainability innovations and improvements.
It is more than just redesigning and integrating activities, but also focusing on the
opportunity to meet fundamental societal needs (Porter and Kramer, 2011). For the organization
in this case, sustainability efforts that have been communicated to the public are starting to
influence perceptions about this organization being a “good place to work”. Recruitment of
candidates for research and development, quality, and manufacturing competencies in particular
are showing increased awareness, skills, and knowledge of sustainable business practices to
support further innovations and improvements. Even in the absence of regulation or taxes,
organizations have to meet further needs to really extend sustainability at the enterprise or supply
chain level to further excel in strategic and operating performance. As Porter and Kramer (2011)
further explain, “creating shared value presumes compliance with law and ethical standards, as
well as mitigating any harm caused by the business, but goes far beyond that”. Understanding
and meeting new customer needs in new ways across the value chain requires new configurations
that further focus on economic, social, and environmental aspects moving beyond regulation.
Not only must organizations continue to improve, but so must the regulators in how they
measure environmental performance and introduce standards (Porter and Kramer, 2011). As the
case illustrated, this competitive environment is complicated globally and often sustainability
solutions to meet all stakeholder demands require innovation and improvement that may be quite
costly. Thus Porter and Kramer (2011) recommend “phase-in periods and support for
technology that would promote innovation, improve the environment, and increase
competitiveness simultaneously” without causing “exploitative, unfair, or deceptive practices in

10. which companies benefit at the expense of society”. Regulatory and legislative practices need to
embrace continuous improvement as much as our organizations need to for strategic success in
the global marketplace.
Organizations also have integrated chain management needs to include life cycle analysis and
management to better assess the environmental impact of the product at each stage of the
product’s life cycle. As Hunkeler et al. (2003) defined, “life cycle management is an integrated
framework of concepts and techniques to address environmental, economic, technological and
social aspects of products, services, and organizations”. As Wal-Mart pursues the next life cycle
analysis phase further, organizations will begin to further shape strategic and operating decisions
integrating sustainability artifacts and indicators into the way they do business. As Porter and
Kramer (2011) illustrated, many international organizations have moved their various activities
to more global locations, losing touch with the community with any one location to recognize it
as ‘home’. Further they expressed that the competitiveness and health of the organization is
intertwined with the community around it for demand, public assets, employees, and other
supporting needs. “The concept of shared value can be defined as policies and operating
practices that enhance competitiveness of a company while simultaneously advancing the
economic and social conditions in the communities in which it operates” (Porter and Kramer,
2011). This pursuit for sustainability combines much more than environmental regulations, but
also social expectations in a manner that makes sustainability innovation and improvement
strategic supporting market and profit growth.
5. Conclusion and Further Research
Clearly this journey to pursue sustainability has only just begun and no one model as evolved
yet to illustrate the integration of various best practices. Due to the competitive influence
sustainability is having, we are just beginning to see the evolution of markets and the momentum
of innovations and improvements across value chains that are pursing sustainability. As in the
organization of this case, they have only pursued redeveloping one product or one new brand that
is more sustainable. Additionally the organization continues to learn from their stakeholders on
gaps in their definition or artifacts and indicators as to what sustainability needs to focus on in
their organization. These gaps have exposed this organization to further criticism (i.e. green
washing) and are driving additional innovations and improvements into the organization’s
approach for sustainability as they learn through these initial efforts. As Faber et al. (2005)
expressed, sustainability is an ongoing journey of constant improvement.
Many legislative and regulatory actions, certifications, standards, and business-to-business
influences are sharing best practices to begin collaboration needs across value chains. As with
past continuous improvement initiatives such as lean, six sigma, information technology, etc., we
are at a relatively immature yet growing position regarding sustainability initiatives. While
many organizations have embraced the need to reduce impact on the environment, they have not
yet embraced some of the social criteria that are embedded in sustainability. Look at Wal-Mart’s
initiatives which are transforming organizations like in this case, yet Wal-Mart is facing several
charges and law suits associated with labor relations (Datamonitor, 2010). This has tarnished
their reputation and diverted large amounts of money towards other activities (Datamonitor,
2010). Due to the broad nature of sustainability, as well as the evolving nature of legislative and
stakeholder influences, organizations need to evaluate bias and conflicts in their goals and
objectives to achieve the strategic effect desired. In turn reshape how they gather information in

11. their sustainability audits or assessments to align with these broad sustainability objectives in
order to rebuild their business excellence framework. As Porter and Kramer (2011) explained in
concept of shared value, it “is not just social responsibility, philanthropy, or even sustainability,
but a new way to achieve economic success” which requires further strategic and operating
initiatives relative to society to avoid or reduce these kind of risks also.
Furthermore not all externalities (i.e. carbon dioxide emissions) have reached a point
internally in organizations to influence strategic and operating decisions. As these kinds of
regulations and stakeholder expectations continue to evolve, so will the strategic and operating
decisions in our organizations and value chains. Further research as to how to potentially embed
sustainability and move towards shared value in the way our organizations and value chains
operate needs to evolve. The sustainability artifacts or criterion that are often identified as
problems and openly criticized in today’s global and Internet connected society are reshaping
many traditional business and management practices. This is impacting brands and reputations
requiring further strategic enhancements to embed shared value and sustainability into the way
our organizations and economies operate around the world. This is a collaborative venture that
has only just begun and will require a whole shift in thinking.
Author Information
Wende Huehn-Brown is a full-time professor in the College of Business at St. Petersburg
College. Dr. Brown received her Ph.D. from the University of Missouri - Rolla in Engineering
Management. She holds M.E. and B.S. degrees in Industrial Engineering from the State
University of New York (SUNY) at Buffalo. Dr. Brown joined St. Petersburg College in March
2007 and is academically and professionally qualified. Her research interests include
implementation of continuous improvement systems, associated with lean, six sigma,
sustainability, and supply chain management. She has worked in these fields for almost 20 years
with a variety of both manufacturing and service industries.
Deborah Cerminaro Eldridge, J.D. is a Law Professor for the College of Public Policy and Law
at St. Petersburg College. Dr. Eldridge has played a critical role in developing the College of
Business Sustainability Management Degree, including creation of the core sustainability law
class. Dr. Eldridge received her B.A. in International Affairs from Florida State University and
went on to receive her Juris Doctor Degree from Samford University, Cumberland School of
Law. She has over 15 years of experience as a trial attorney and has been teaching with St.
Petersburg College since 2006 joining the College as a full-time professor in December 2007.
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