Microsoft’s Sustainable Development Report

Executive summary

The business world is drastically evolving. In an attempt to address the global environmental and social challenges, big companies through their actions and influence are adopting new policies, products and approaches and are also demanding their dealers and their clients to change too due to both the market demands answers that assist a company of any size function in a sustainable manner and build sustainable brands.

This case looks at Microsoft Corporation, a technology firm that aims to develop software for sustainability required to make it possible for companies to move the needle on this vital concern.

Introduction

The society perception towards the environment is changing as people acknowledge that their everyday activities have a direct impact on the environment. Thus, the environment ought to be preserved and that there is as a correlation between environment, society and the economy.

Businesses due to their practices and public pressure have to acknowledge that they play a great role towards the positive and negative impact on the environment.

Hence, organizations such as Microsoft are aspiring to have sustainable development practices in their operations. Its aspirations of sustainable development can be seen in its global operations as Microsoft business activities cross over its boundaries due to its global market, distributors and supply chains (Hopwood et al., 2005).

Due to the need to grow sustainable businesses, companies and governments have come up with legal policies and frameworks aimed at ensuring that the business community understands and implement the principles of sustainable development into their organizations. Some even have incorporated sustainable development into their mission statements (Devinney, 2009).

Prior to sustainable development principles, companies used to value their strength by their financial position; thus the more profitable a company was, the stronger it was. Nevertheless, as time went by, the negative practices used by companies in their operations started affecting the environment.

Due to this, change was needed in the production cycles and as a result organizations started adopting green business practices but haven’t yet fully incorporated sustainable development practices. Organizations realized that using financial indictors as a measure of success was a short term analysis as long term effects would significantly affect the productivity of their companies.

Smith and Rees (1998) explain that “this meant expanding the company’s focus from merely creating shareholder value to include all stakeholders — meaning the people who work in our companies, the people who live in the communities where our products are manufactured, the customers who use our products and the workers in the factories that create them”.

Sustainable development is not only a motivating strategy for big corporations but a core element in the organizations future corporate efficiency. This paper will thus seek to critically analyze how Microsoft will hope to achieve the three aspects of sustainable development as employed by Microsoft namely; environment, society and the economy.

Review and Evaluate (Microsoft) policies and practices

Sustainable development takes into consideration three issues, that is, environment, society and the economy. According to Presas (2001, 205), “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

Microsoft “aspires to be more than just a good company, it aspires to be a great company.” It acknowledges that it has to adopt sustainable development if it is to achieve this. Microsoft strives to incorporate the principles of sustainable development in its day to day operations towards its long term objectives.

This, in turn, Microsoft hopes will have a win-win situation among all its stakeholders in issues concerning the environment, the society and the economy.

As a result, Microsoft management aspires to take the three core issues seriously in its development agenda these as Ayong Le Kama (2001, 1915) notes that “three elements of sustainable development constitute a corporate evaluation model measured by the so-called ‘triple bottom line’, covering a company’s impact on people, planet and profit, respectively”.

Nevertheless, Microsoft acknowledges that there are issues in implementing the system; for instance, how would the company know if their practices are sustainable and to what extent?

With time, there has been significant development in sustainable development systems with the development of Global Reporting Initiatives (Florida, 2011). These guidelines operate as a framework that has key performance indicators in areas such as the economy, society and social sustainability.

According to Microsoft’s Environmental manager, the company hopes to attain its sustainable development by pegging itself on three core pillars, information technology, innovation and energy efficiency. As a result the company continues to celebrate earth day and stressing on the need of observing issues related to climate change. It further notes that IT products result in at least 3 percent of carbon emissions.

Due to this fact, the company is keen on new innovations that will cut back on its carbon emission and reduce its energy emission. “For instance, Microsoft’s own use of Unified Communications virtual meeting and telework software is already reducing employee travel by approximately 1 million air miles a year, and reducing our carbon footprint by 17,000 metric tons annually” (Pearce et al, 1989).

Thus Microsoft’s aspires to attain efficient, sustainable development by adopting strategies that focus around environmental sustainability. These will entail the company coming up with new and innovative technologies which can be adopted in the global arena.

In addition, the company is in the course of adopting other performance indicators that ensure effective and efficient green business practices in its operations, for instance, the ISO 14000. From late 2013, the company has put a system that will require its supplier and distributor chain to provide data on their compliance to environmental issues that are provided by the companies’ guidelines.

These guidelines act as a benchmark through which all other stakeholders have to adhere to. Florida, (2011) notes, “ the new reporting mechanism complements and strengthens Microsoft’s existing auditing and assurance programs, which include third-party monitoring of its contract hardware manufacturers.”

Therefore in the coming months, the company plans to start a sensitization program through which key stakeholders will be informed on its key policies on sustainable development. This will aim at encouraging transparency in its sustainable development program.

As indicated above, Microsoft takes sustainable activities seriously and is in the process of adopting all its practices into the system. Despite the fact that there are numerous hindrances in achieving their current and future objectives, Microsoft will have one of the best sustainable practices compared to other companies in the field.

This is due to its sustainable development policy and framework that will serve as a benchmark in its aim of achieving a sustainable development agenda. In addition, its policies encompass both a qualitative and quantitative approach, thus making it a very comprehensive framework. Microsoft also acknowledges that achieving a fully sustainable development practice into the company is an issue that will take a lot of time.

As a result, its performance indicators are scheduled to introduce the practice on a timeline basis, taking into consideration the bottlenecks it might face from different stakeholders. This forms one of the best practices as the company appreciates the fact that adopting sustainable development in all three core areas is quite a challenge but has formulated a timeline of achieving them in the long run.

Also Microsoft hopes to adopted proactive sustainable approaches where it will be applied not only in their production plants but also on its supply lines. This has been done in consideration that Microsoft’s sustainable strategies extend beyond it cooperates boundaries and if it is to achieve their sustainable development agenda.

In order to achieve this, it has had to come up with policies and internal control systems (ICS) as its suppliers and distributors come from outside Microsoft home region and are thus spread across the globe. As a result of this, a lot of environmental and social problems are spread across the globe using these supply and distribution lines (Manning et al., 2011).

As noted above, sustainable development practices are activities that companies aspire to attain but haven’t achieved yet. Microsoft is one company whereby it hopes to operate in a sustainable business environment; it hasn’t been able to do so.

Though their policies and guidelines that guide it in its activities to ensure that their activities operate in a green environment, they are still far from achieving a sustainable development practice. This is due to the fact adopting sustainable development practices are quite a hard task though it has its advantages in the long run.

Sustainable development will require the company and other organizations to make an overhaul to its traditional practices. This will require a lot of time, capital and human resource, a fact that companies don’t appreciate. In addition, there will be a significant change in the operating systems and a decline in profit margins a fact that the management and shareholders don’t appreciate.

As a result, Microsoft and other companies lack a strong and immediate structure that calls for a fast adoption of sustainable development. Due to the above facts, sustainable development continues to remain as a future goal and not something already in use.

Limitations

Organizations have realized that achieving sustainable development practices into their manual and activities is quite a hard issue as several issues need to be taken into account.

For example, some stakeholders in the supply and distribution chain weren’t keen in observing Microsoft’s sustainable development agenda as they saw it as an intrusion on their profit margins. In addition, there were legal issues as the supply and distribution chains fell in different legal jurisdictions hence lack of a harmonious approach to the issue.

There were also internal barriers whereby, the Microsoft management wasn’t in consensus about the right approach the company should take in this issue. Also, different stakeholders in Microsoft had different interests as they had to put the desires of shareholders (profits) into consideration since buy adopting sustainable development practices would mean cutting on profits in the first stages of implementation.

Methodology

Based on the research topic, the researcher used secondary sources of information as the main form of information for the research. The researcher used his discretion which enabled him to go through very large volumes of relevant data secondary sources and subsequently select the most appropriate data from published sources which came from books and official websites.

The data were collected from official websites and industry sources in order to add credibility and reliability to the research findings, additionally qualitative data was used to analyze the results and support discussions.

The Secondary data collection method that was used included Microsoft’s official website. Since the aim of the research was to investigate the sustainability performance of Microsoft with regards to its management of corporate strategies, it thus aimed the company’s website and journals.

The secondary data collection was an effective method of collecting information since it saves time and could offer more accurate and unbiased information.

Through journals, it was also easy to make a follow up when looking for finer details of any interesting piece of information by comparing peer-reviewed journals. Therefore due to the large amount of information collected by secondary data collection methods, they enabled a conclusive determination of the sustainability performance of Microsoft.

The choice of quantitative data collection as the methodology to be used is backed by the fact that quantitative research has the capacity of providing detailed information regarding the company’s sustainable development practices in its operations hence the methodology fitted well with the aim of the research.

Comparison of the data with other peer-reviewed when collecting information could only be achieved by using quantitative methods.

Data analysis is a crucial part towards completion of a study. In this research, data analysis involved carefully looking at the results from the journals and other websites. From the data provided by the articles, the researcher tried to identify how Microsoft manages corporate responsibility. In the analysis, the practicality of the research outcomes in solving the real problems in the field was also evaluated.

It is common for research undertakings to present challenges and this research is no exception. The first challenge was that some of the journals may have been too old and provided information that was not reliable. This may have been as a result of continuous change in operations or bias of some authors.

Another challenge was the financial cost of the research. Although the initial budget had been factored, additional cost sprung up while the research was in progress and this proved to be a limitation.

The research was generally time-consuming and this proved to be a limitation since a lot of time was put in the collection of data as well as in the analysis of the collected data.

Findings

Microsoft has committed itself towards providing software solutions and business practices that are sustainable and can thus assist the business world and the society achieve their sustainability maturity model. This has been done with a view to enable the market and other stakeholders have the capacity to analyze each of their decisions from an environmental as well as economical and social point of view.

Moldan et al. (2011 p.11) state that “to begin on that path, we have created the Environmental Sustainability Dashboard for Microsoft Dynamics® AX 2009 as a first foray in utilizing software to address the environmental sustainability challenge our customers face”.

These new systems are aimed at providing new solutions about an organization trends in matters of utilization, related costs and the environmental consequences arising out of it. Thus Microsoft develops its systems with the sole intention of creating awareness and solutions to enhance sustainable development.

As a result, organizations can now get crucial information or data on a daily occurrence, thereby incorporating the system as part of normal day activity. Consequently, the data gathered can be analyzed by professionals who can give a critical review about the success or failures of the company in attaining sustainable development.

It thus analyses the cost associated with their activities in relation to energy consumption. Once the analysis is made, an organization can take the necessary measures for cost reduction that also translates to environmental benefits.

Discussion

Environmental sustainability

In some cases environmental sustainability is implemented as a business strategy by green businesses and Microsoft is an example of such an organization. Since there are chief factors that have a potential influence on the environment, it is therefore necessary for the company to look into its sustainability performance.

It is therefore evident that the introduction of environmental sustainability measures in Microsoft Corporation; the company experiences a reduction in costs, a consequential increase in production and it acquires a good reputation. The aspect of reduction in costs arises from the fact that environmental sustainability saves resources since it greatly reduces waste matter.

Due to the implication of environmental sustainability, Microsoft has acquired a positive reputation as well as good public relations; a key factor that enhances the growth and success of the company. This results to the profitability of Microsoft Corporation (Ans & Rob, 2010).

Social sustainability

Microsoft has greatly invested time and resources in Corporate Social Responsibility (CSR) under its social sustainability business strategy. CSR is basically defined as the obligatory responsibility a company is expected to carry out for the society in form of enhancing both development and growth of the society.

It is vital for the Microsoft to indulge in Corporate Social Responsibility since it forms a platform for vital decision-making tools apparently which center on social impacts. The social sustainability of the corporation focuses on four fundamental. They include: charity, safety, health care, and lastly employment equity.

The corporation has achieved great heights in terms of carrying out Corporate Social Responsibility factors (Endress et al., 2005).

Economic sustainability

Microsoft has achieved sustainable development hence a reduction in its costs of production. For example, the corporation implemented the use of highly capable manufacturing facilities as well as the use of materials that have been recycled. This aspect has led to the corporation experiencing an increment in its profits (Dyllick & Hockerts, 2002).

Since governments and local communities in many parts of the world are knowledgeable on sustainable development of Microsoft, the corporation has resulted to keenly focusing on sustainable development of their stakeholders. In event, the company realizes economic benefits.

Conclusion

Sustainable development of business organizations has become a crucial point in the successful running of businesses. This has been as a result of the recent negative changes associated with environmental pollution.

As a result, organizations have taken a lead role in ensuring that their practices are sustainable and don’t pollute the environment; hence, the concept of “green businesses”. Green businesses embrace the theory of the interrelation between the environment, society and economy. Microsoft, like other organizations, has sought to balance these three concepts.

By achieving a balance of the three concepts, organizations will have achieved sustainable development in their activities. In addition, the government and the global population that forms the market have put pressure on organizations to be environment conscience; a fact that Microsoft has taken seriously. Thus, Microsoft has ensured that its sustainable activities go beyond its borders to its supplier and distribution chains.

Corporate social responsibility (CSR) are interconnected with green businesses and therefore form part of Microsoft’s mission and other companies that operate as “green businesses”.

As a result, organizations ought to ensure that they maintain a “green image” in order to ensure that it maintains its market and is in line with government policies concerning environmental issues. In addition, the consumer attitude has critically changed whereby they will use principles of sustainability in choosing where to buy or not to.

As a result, sustainable development strategies have become a crucial operating principle of Microsoft and other organizations that operate as “green businesses”.

Recommendations

Due to the business and environment changes, Microsoft management has been forced to change its perception towards the environment and acknowledge the importance it plays. As a result, the management ought to be in the fore front in ensuring that its practices and activities are compliant to sustainable development objectives.

It is on this point that Microsoft should take upon itself to implement sustainable development strategies in the development of its systems. Apart from that, the company should acknowledge the fact that its business transcends across its borders since it has a global market, distributors and supplier. Thus, it has to ensure that all stakeholders adhere to the principles of sustainable development.

In addition, the company should commit itself towards the development of software’s that embraces sustainability and can assist companies maneuver around this core and sensitive issue in the activities. In addition, the systems should assist its supplier and distribution chains to gather crucial data that they can use in assessing their performance in this issue.

The system can also be used as a reference point where organizations can take action in cases where its activities aren’t in line with sustainable development. More importantly, the systems should offer the cheapest and quick performance analyses systems which are very practical to green companies.

References

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Ayong Le Kama, L 2001, ‘Sustainable growth renewable resources and pollution’, Journal of Economic Dynamics and Control, pp. 25:1911–1918.

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Dyllick, T & Hockerts, K 2002, ‘Beyond the business case for corporate sustainability’, Business Strategy and the Environment, vol. 11 no. 2, pp. 130-141.

Endress, L, Roumasset, J & Zhou, T 2005, ‘Sustainable Growth with Environmental Spillovers’, Journal of Economic Behaviour and Organization, vol. 58 no. 4, pp. 527-547.

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Pearce, A, Markandya, L & Barbier, R 1989. Blueprint for a green economy, London: Great Britain.

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