The idea of sustainability initiated from the United Nations Stockholm Conference on the Environment in 1972. The concept of sustainable development was primarily introduced in 1980 in the World Conservation Strategy by IUCN, UNEP and WWF (IUCN et al., 1980). The concept gained enormous momentum by the World Commission on Environment and Development (known as the ?Brundtland Commission?) in 1987. Its report ?Our Common Future? (WCED, 1987), also called the Brundtland report defined sustainable development as "a development that meets the needs of the present without compromising the ability of future generations to meet their own needs" (WCED, 1987).Subsequent to Brundtland Report, there is an emphasis on integration of economic, environment and social aspects. Even though, many regard the definition as vague and ambiguous (Brandon, 2000; Dovers and Handmer, 1993), the Brundtland report has led to development of Agenda 21: the main outcome of the Rio earth summit (UNCED, 1992). The 2nd World Summit of the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro in 1992 declared sustainability as the international goal for all future development. Agenda 21 is a program of action for sustainable development worldwide and calls upon engagement at all levels of society from international organisations to the general public. Agenda 21 suggests that ?Indicators of sustainable development need to be developed to provide solid bases for decision-making at all levels and to contribute to the self regulating sustainability of integrated environment and development systems? (Chapter 40.4 of Agenda 21, United Nations, 1992).
Simultaneously, group of companies globally established the Business Council for Sustainable Development (BCSD). Today, the World Business Council for Sustainable Development (WBCSD) includes more than 150 global players, who developed the concept of eco-efficiency to combine ecology and economy in a bid to increase profit while benefiting the environment. The WBCSD identified seven areas for its members to take into consideration viz. reduce material intensity, reduce energy intensity, reduce dispersion of toxic substances, enhance recyclability, maximize use of renewables, extend product life, and increase service intensity.
Sustainable development aims to balance among economic, environmental and social values, which are also referred to as the ?three pillar? approach or ?triple bottom line? (Lundin, 2003; Palme, 2003; Lundqvist, 2001; Diesendorf, 2000 and Callens, 1999). Sustainable development must link ?local to global concerns? (Warhurst, 2002). That means that beyond reaching individual interests in future development, the global concerns and regional needs have to be taken into account. Sustainable development is a dynamic process. As societies and their environments change, technologies and cultures change, values and aspirations change, the concept of sustainable development must allow and sustain such change. It must allow continuous, viable and vigorous development (Warhurst, 2002; Bossel, 1999; and Callens, 1999).
Within the society, there is growing conviction that a sea change is needed in corporate values and how most corporations perceive their role in the society. In the past, corporations have primarily focused on economic responsibility that is, maximizing shareholder value (Elkington, 2002). It is a general consensus that businesses, as the main consumers of natural resources and the major cause of most of these challenges, must take the lead in achieving a sustainable society (Dunphy, 2000). Hence, at corporate level, the notion of corporate sustainability is taking hold and sustainability issues are becoming one of the main driving forces in running a successful business. Corporate sustainability is about addressing economic, environmental and society impacts and managing them accordingly towards the attainment of a desired sustainability performance. The path to corporate sustainability requires that firms look for and work out strategies that guarantee financial success and at the same time managing its environmental and social impacts (Elkington, 2002).
Research has shown that a few leading edge organisations are increasingly adopting proactive strategies and being transformed into sustainable organisations, capable of meeting the needs of the sustainable society. However, only a very few have successfully made such difficult transition (Doppelt, 2003). The problem here is that there is neither a clear-cut nor straightforward approach to achieving corporate sustainability.
Steel is crucial to the development of any modern economy and is considered to be the backbone of the human civilization. The level of per capita consumption of steel is treated as one of the important indicators of socio-economic development and living standard of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flow and income generation. All major industrial economies are characterized by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development.
Steel is the world?s third largest commodity market with a dollar value in excess of $700 billion. In recent years, the industry has undergone radical restructuring and has become more global, more efficient and more financially viable. Growth in steel demand is highest in the developing world. China has increased its domestic consumption from 53 million tonnes in 1990 to nearly 500.5 million tonnes in 2008. Economic growth in the developing world tends to be more steel intensive than growth in developed nations. As a result, steel plays a vital role in these new economies.
World steel trade has expanded as global consumption has increased. In 1990, international steel trade was 167 million tonnes and is forecasted to grow to 353 million in 2015. Global steel production has continued to increase but, at a lesser rate to previous years.? In 2007, total world crude steel production was 1,351.3 million metric tonnes (mmt). The biggest steel producing country is currently China, which accounted for 36.6% of world steel production in 2007.? This growth is estimated to continue until 2015 at a rate of approximately 4% per year. Previously from 1990 to 2000, the growth rate was only 1.6% per year.
Despite significant progress, steel related environmental issues may continue to be the focus of policy debates, legislation and regulation. However, the vision of the industry should be to achieve further reduction in air and water emissions and discharges and generation of hazardous wastes as well as to develop/adopt designs and processes to avoid pollution rather than control and its treatment.
In 2002, together with UNEP, the International Iron and Steel Institute (IISI) produced a report on the iron and steel sector in the series Industry as a partner for sustainable development for the World Summit on Sustainable Development held in South Africa. Following on from the policy statement on sustainable development issued by the IISI, criteria have been established for IISI?s members to measure their sustainable development progress and for reporting that progress to employees, shareholders, customers and to the general public. IISI has published the first sustainability report of the world steel industry in 2004, where forty-two steel companies worldwide including the world's top five steel producers have reported voluntarily on 11 sustainability indicators. This landmark report is among the first to be published by an industry. The steel industry's economic performance is measured by four of the 11 indicators: Investment in Processes and Products, Operating Margin, Return on Capital Employed, and Value Added. Greenhouse Gas Emissions, Material Efficiency, Energy Intensity, Steel Recycling, and Environmental Management Systems measure the industry's environmental performance. Social performance is measured through the final two indicators, Employee Training and Lost Time Injury Frequency Rate.
The conceptual confusion; its vagueness and ambiguity, the complexity of challenges, changes in the perception of managers on sustainability issues across the world and fluidity of the sustainability concept, compounded with the short term vision of the industry, lack of clear-cut and practical framework are causing concern in the steel industry. Moreover, it remains uncertain that how some firms proactively initiate sustainability management practices while addressing the expectations of their stakeholders. The importance of organizational-stakeholder relationships has and continues to be of interest in the organizational studies literature. Number of management tools exists in practice and literature to support environmental management. Some of the tools are Environmental Management Systems as per ISO 14001 standard, Environmental performance indicators based on ISO 14031, Life cycle assessment, Pollution Prevention, Environmental accounting, SA 8000 etc. Similarly, proliferation of management systems such as ISO 9001:2000, EFQM, Balridge Model, Balanced Scorecard, Six Sigma, Knowledge management etc has been adopted by industry as add ons with no systematic linkage to the core management system. Majority of these are either complicated to implement or lack effective change management and completeness The traditional management system does not allow a smooth integration of these management systems as these tools work in isolation. To date, there is little literature available on development and implementation of sustainability management system.
There are number of frameworks of sustainability assessment that evaluate the performance of companies. The World Business Council for Sustainable Development (WBCSD, 1997), the Global Reporting Initiative (GRI, 2002a; 2002b) and development of standards (OECD, 2002) were the foundation for sustainability reporting. Despite the sustainability assessment tool, there is still no comprehensive framework exist for establishing sustainability management system (SMS) at company level. It is quite difficult to develop and implement a SMS in absence of any specific standard.
It can be seen that the sustainability in the steel industry is a broad and complex concept. Many companies have initiated a variety of sustainable development initiatives to address the demands and expectations of society. Steel companies do undertake sustainable development initiatives in isolation of business activity and are not yet directly linked to business strategy. At the same time, host of research and tools also exist in this domain but most of them address sustainability issues at theoretical level and are either complex to use or less comprehensive. As a result, major barriers still persist in integrating sustainability issues at the strategic level. Moreover, there is lack of tool for sustainability assessment at operational level particularly for steel sector. Hence, there is a need to establish clear and user friendly methodologies and tools to understand the sustainability issues, to implement sustainability management and to measure the sustainability performance of the steel companies.
The present research is based on the premise to integrate sustainability in the steel industry by understanding the sector specific issues, barriers, drivers, motivations, short-term and long-term scenarios, stakeholder expectations both at the strategic as well as operational levels, followed by evolving appropriate measurement tool(s) for assessing sustainability and finally developing systems and practices for the implementation and management of sustainability.
Aim and Objectives
The above background and the preceding subsection underscore the need for improving understanding of sustainability management in steel industry and enhancing the effectiveness of actions to implement sustainability strategy as an integral part of business process. This section presents the research aim and objectives of the PhD project.
Aim of the Research
The overall aim of this research is: ?To develop a practical and easy to use sustainability management framework and tool to aid the implementation, integration and management of sustainability issues in steel industry?. This could be achieved by developing a sustainability management system that helps steel companies identify key sustainability issues, gaps in their corporate sustainability implementation efforts, assess stakeholder expectations, focus attention on areas for improvement, benchmark their performance with best practices. In this context, three key objectives were identified.
Objectives of the Research
This study aims to contribute to the knowledge on methods and procedures to implement sustainability management and measure sustainable development in the steel industry, and to provide a tool for assessment of corporate contribution to sustainable development. It is directed towards the development of a relevant, comprehensive and consistent methodological structure of sustainability management system and metrics for sustainability index for internal decision making.
In order to achieve the above mentioned research aim, the following three key objectives have been set:
to investigate the concept of sustainable development in steel industry;
to assess the stakeholder-organizational relationship related to sustainability issues in a steel plant;
to examine and develop framework for designing and implementing sustainability management system and to develop sector-specific composite index for sustainability assessment for a steel plant.
Objective I : Concept of sustainable development for steel industry (Case study for steel industries world-wide)The Figure below illustrates the research focus for achieving the research aim.
Objective II: Stakeholders-organisational relationship with respect to sustainability issues (Case study for a steel plant)
Objective III: Framework for sustainability management system (Case study for a steel plant)
Figure 1.2 Research Focus
Structure of the Thesis
This thesis is organized into eight chapters, which is structured as follows.
Chapter 1 introduces the research. It describes the background, aim and objectives, justification and scope of the research as well as summary of the chapter. Chapter 2 provides related literature reviews and previous work in the subject area. It describes the novelty of PhD research in the context of related and previous work. Chapter 3 reviews a range of research methods and presents and evaluates the research method chosen. More specifically, it explains (1) why and how design and instruments of this study were selected, and (2) how the data collected and analyzed. Chapter 4 presents the research undertaken to understand the sustainability context in steel industry. Chapter 5 discusses the research undertaken for assessment of stakeholders and organizational relationship related to sustainability issues. Chapter 6 discusses the development of simplified framework for designing, implementing, monitoring and reviewing the sustainability management system. Chapter 7 discusses the development of sustainability assessment methodology based on composite sustainability performance index with a case study at steel plant. Chapter 8 presents the conclusions and summary of the findings. It also presents the conclusion derived from the research and recommendations for further study.
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