Environment-friendly Management

1. Today’s Business World
Far different from the Industrial Age of the 20th century which solely emphasized profit maximization, today’s corporates face a different business environment where environmental externalities are not only reflected, it must be embraced.
The financial market is showing a notable tendency for companies’ environmental achievements and threats to be taken as main factors of the corporate value. Tangibly, many developed countries are expanding the environmental credibility assessment that reviews the potential environmental risk, environmental management capability, and environmental achievements of companies.
Another factor of influence in the business world would be the increasing connection between trade and the environment. Trade barriers spawned by the setting of environmental standards often serve to restrict products from entering the foreign markets. Accordingly, in the context of the 21st century, where everything is connected into one global market, environmental factors have become a major player in enhancing international competitiveness.

With the growth of environmental awareness and the expansion of green consumerism, the environment-friendliness of a company now serves as a powerful marketing tool. In other words, companies must stress environment-friendliness of economic and industrial activities in order to attract consumers and build the corporate success upon their trust. As the importance of preventing environmental pollution is being highlighted, the need for cleaner technology is becoming ever more palpable for the efficient management of resource, energy and ecosystem. Along with this need, the scale of environmental industry and related markets is growing, and the efforts to develop assorted environment-friendly technologies are accelerating to construct an optimal production and process system.


2. What is the “Environment-friendly Management”?

Although its definition may vary, environmental management can be broadly defined as a business management that is built upon a “green” organization that caters to the demands of today and the future, by establishing environmental and economic efficiency, building clean production and sound recycling systems, vigorously promoting green marketing and green purchase, and having transparent environmental accounting and investment systems.
The organizational setup of the environment-friendly company accommodates environmental management, while maximizing the participation of organization members through the administration of a fair evaluation and compensation system based on their achievements in the area of environmental management. Once the green organization is structured, the environmental and economic efficiency would serve to formulate coherent management strategies that can effectively respond to the new international trade and environmental order. The clean production and sound recycling systems are the foremost essential tools in cutting down the costs by improving production and management methods, introducing environment-friendly production techniques and developing clean production technology. Finally, creations of the images of an environment-friendly product and/or company promote the green marketing, which also includes the disclosures of corporate efforts in addressing clean production processes. In addition, the environment-friendly company carefully considers inherent environmental risks and uncertainty in the investment decision-making procedure and thoroughly analyzes environmental costs and benefits through a sound environmental accounting system.


3. Some examples of the Environment-friendly Management

Many corporat e visi onarie s in Korea are paving the way towards the environment-friendly management for the rest to follow. LG Electronics established the Disposed Household Appliances Recycling Center, which resulted in 15,000 tons of resource recovery every year. Yuhan-Kimberly, another leading environment-friendly company, is working on various environmental programs including forest cultivation fund, onsite environmental education for teenagers, as well as environmental research, survey, and publication. Recently, Hyundai and Kia Motors declared their commitment to global environmental management, while the Nationwide Environment-friendly Business Association consisting of 137 environment-friendly businesses (established in May 2000) spearheaded the environmental management of domestic companies through process innovation and development of environmental management techniques. These are, among many others, apparent examples that Korea’s leading companies are strategically carrying out environmental management based on the belief that it can strengthen their competitiveness while contributing to the economic growth. In turn, the environmental management would spur a long-term corporate success through new revenue generations, cost savings, and brand value enhancements.


4. The governmental efforts

The Korean Government is making concerted efforts to attain the policy objectives to facilitate environment-friendly business management and to further establish a sustainable production and consumption mechanism.
Building upon the cooperation and partnership between companies and the Government, Korea introduced the Environment-Friendly Company Designation System and Voluntary Environmental Agreement System in 1995 and 1999, respectively, in order to initiate companies to voluntarily make efforts for environmental protection.
Furthermore, the Korean Government has developed and distributed numerous advanced environmental techniques, including Corporate Environmental Report, Environmental Cost Accounting, and Environmental Achievement Assessment Index. These techniques aim to have companies fully take on their social and environmental responsibilities and simultaneously enhance their environmental management capability by assessing companies’ internal environmental achievements and risks and disclosing environmental information. In order to expedite the establishment of a sustainable production system, Korea has introduced the environmental labeling system like Environmental Mark System and Environmental Performance Record Certification System. Additionally, the Government assists in the drafting and distribution of Eco Design Guidelines and supports Eco Supply Chain Management Project to catalyze the supply of environment-friendly raw and subsidiary materials.



5. The future of Korea’s Environment-friendly Management

In Korea, most companies are beginning to introduce Environmental Management responding to the government measures. The Government continues to strengthen and enforce strenuous policies to realize sustainable development in the business world. To that end, Korea aims at the optimal state of the environmental management, which requires an integrated management system, a sound eco-efficiency, and a concrete cooperation between the government and the corporation. In step with the governmental efforts, companies should develop more proactive and aggressive management strategies that strive to discern the trend of national as well as international environmental regulations and play it to their own advantage. Only there lies the shortcut to the optimal state of the environmental management, which will in turn spur their business competitiveness in the 21st century.