5 - Environmental Strategy and Strategic Resources

Summary

Strategic resources are the assets, capabilities, organizational processes, information, and knowledge that enable a company to conceive of and implement strategies that improve its efficiency and effectiveness in ways that are difficult for competitors to mimic. Strategic resources for environmental strategy include capacities for identifying opportunities for environmental improvements, analyzing and engaging stakeholders, managing channels for capturing value from stakeholders, and ensuring credibility with stakeholders. Transaction costs internal to companies can also inhibit companies from developing and implementing an environmental strategy. Companies may not adopt value-enhancing innovations because managers lack sufficient information and incentives to implement them. Company culture and structures that enhance the flow of information across functional units and incentivize innovation can increase the effectiveness of value-enhancing environmental improvements. Effective chief sustainability officers enhance communication across functional units. Understanding strategic resources’ role in developing and implementing environmental strategy helps identify when a company is ill-suited for what otherwise appears to be a promising environmental opportunity.