Sustainable Development in Practice: Case Study of L’Oréal

Abstract

Purpose: This paper attempts to analyze sustainable development initiatives undertaken by businesses and discuss them in relation to the literature on sustainable development and triple bottom line. Extant literature lacks studies that provide a detailed account of the application of sustainable development initiatives in the real business case. Methodology: The paper utilizes a case study methodology to understand the method by which sustainable development is efficiently pursued by an organization. The case of sustainable development efforts pursued by L’Oréal is discussed. Findings: L’Oréal effectively pursues sustainable development initiatives without compromising on its economic prosperity. Moreover, it is evident that organizations must embed sustainable development principles in all their activities in order to achieve the triple bottom line. Practical Implications: The paper contributes to the practitioners by providing a detailed account of the ways and means by which sustainable development is efficiently pursued by an organization. This can act as a guideline for decision making in a different business context for taking up sustainable development initiatives. Research Implications: The paper provides a practical approach for taking up research on sustainable development forward and suggests that future research must incorporate business cases as a method to discuss the implementation of sustainable development activities. Social Implications: This paper attempts to bring forward a business case wherein sustainable development is pursued and provide evidence to demonstrate that sustainable development is possible. Originality/Value: This paper is amongst the few papers that go beyond the theoretical and empirical assessment of sustainable development. The case analysis determines that sustainable development must be an organization-wide initiative and requires a long-term commitment to being successful. Corresponding author: Ishita Batra Email addresses for the corresponding author: ishita.iitdelhi@gmail.com First submission received: 14th February 2019 Revised submission received: 20th April 2019 Accepted: 23rd April 2019 Introduction Corporate sustainable development is an important area of research ever since the World Commission on Economic Development called for Sustainable Development (Bansal, 2005; Diamond, 1996; Dubey et al., 2017). Sustainable development has three guiding principles – Environmental Integrity, Social Equity and Economic Prosperity that make up the important concept of ‘Triple Bottom Line’ that Journal of Business and Retail Management Research (JBRMR), Volume 13, Special Issue May 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 36 governs business in the 21st Century (Chavan, 2005; Gimenez, Sierra, & Rodon, 2012; Hacking & Guthrie, 2008; Jamali, 2008; Norman & Macdonald, 2004). Businesses are striving to gain economic prosperity through value creation, social equity by corporate social responsibility initiatives and environmental integrity by ensuring minimal environment damage in its operations (Bansal, 2005; Dubey, Gunasekaran, & Chakrabarty, 2015; Mohan Das Gandhi, Selladurai, & Santhi, 2006; Sharfman & Fernando, 2008; Stubbs & Cocklin, 2008). Corporate sustainability initiatives are driven either by the resources of the business (Barney, 1991; Sanjay Dhir & Batra, 2018; Eisenhardt & Schoonhoven, 1996; Harrison, Hitt, Hoskisson, & Ireland, 2001) or by the need for societal acceptance (Felin, T, Foss, N.J., Ployhart, 2015; Meyer & Rowan, 1977; Rowley, Shipilov, & Greve, 2017; Scott, 1987). Moreover, sustainable enterprise performance is gained through sustainable corporate development facilitated by dynamic capabilities of the organization (Sanjay Dhir & Dhir, 2015; Swati Dhir & Dhir, 2018; Raisch, Birkinshaw, Probst, & Tushman, 2009; Teece, 2007; Wamba et al., 2017). This further allows businesses to achieve sustainable competitive advantage in the long run – the ultimate aim for organizations (Charles Jr, Schmidheiny, & Watts, 2017a; Sanjay Dhir & Mital, 2013; Dubey, Gunasekaran, Sushil, & Singh, 2015; Parameswar, Dhir, & Dhir, 2017; Saeidi, Sofian, Saeidi, Saeidi, & Saaeidi, 2015). Researchers have scantly explored the methods by which businesses ensure to meet the three guiding principles of sustainable development– environment integrity, social equity and economic prosperity (Charles Jr, Schmidheiny, & Watts, 2017b; Elkington, 1994; Giddings, Hopwood, & G., 2002; Gupta & Racherla, 2018; Redclift, 2005; Swanson & Zhang, 2012). Further, sustainable development is an organization-wide effort, a matter of corporate importance that is provided for by the top management of the organization (Bansal, 2002, 2005; Montiel & Delgado-Ceballos, 2014; Parameswar & Dhir, 2019a; Perrini, Russo, Tencati, & Vurro, 2011). However, such research efforts do not provide a clear understanding of the way businesses strive to gain sustainable development without compromising on any front – profits, environment and society (Elkington, 1994; Dhir, Aniruddha, & Mital, 2014; Hall, Daneke, & Lenox, 2010; Husser, André, Barbat, & Lespinet-Najib, 2012; Flexibility and Sustainability pp. 77– 87; Parameswar & Dhir, 2019b; Svensson & Wagner, 2011). This paper provides a detailed analysis of the ways and means by which a renowned cosmetics business organization – L’Oréal undertakes sustainable development. The choice of business in the cosmetics industry is driven by two reasons. Firstly, the cosmetics industry is considered to be environmentally unfriendly and highly profitable (Dhir, 2017; Dhir & Mital, 2013a; Kate & Laird, 2000; Parameswar & Dhir, 2018; Sahota, 2014; Secchi, Castellani, Collina, Mirabella, & Sala, 2016). Secondly, there are few businesses in this industry that comply with sustainable development goals and have gained a sustainable competitive advantage. A detailed examination of L’Oréal that has embedded sustainable development in each and every dimension of its working provides an exemplary model for sustainable development that can be adopted by other businesses. The detailed literature review on the need for sustainable development, triple bottom line and sustaining sustainable development allows the reader to comprehend the actions of the business in light of the concepts. Finally, the paper concludes with implications, future research, and limitations. Literature Review The word ‘sustainability’ was first used in the literature on forestry, where it means we should not harvest higher than what the forest yields in new growth (Boyko, Cooper, Davey, & Wootton, 2006; Kuhlman & Farrington, 2010; Wiersum, 1995). The concern was about preserving the natural resources for the future. The foundation of sustainability is inferred from its definition – meeting the needs of the present without compromising the ability of future generations for meeting their own needs (World Commission on Environment and Development, 1987). The main principle of sustainability is to secure intergenerational equity (Dhir, 2016a; Gladwin, Kennelly, & Krause, 1995). The same logic applies to business, which is about their attempts to manage the impact of their businesses on the environment (Anbarasan & Sushil, 2018; Grewatsch & Kleindienst, 2017). Extant literature argues that sustainability is related to three shared elements – economic, social and environmental considerations (Dyllick & Hockerts, 2002; Kuhlman & Farrington, 2010; Milne & Gray, 2013; Pawłowski, 2008). These three elements mutually reinforce each other, and economic growth and social well-being are underpinned by environmental concerns, and vice versa (Dhir & Mital, 2012; Kuhlman & Farrington, 2010; Pawłowski, 2008; Wood et al., Journal of Business and Retail Management Research (JBRMR), Volume 13, Special Issue May 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 37 2015). The next aspect of sustainability by the business is the expectation of going over and above regulatory compliance to promote innovation and encourage continuous performance improvement (Dhir, 2016b; Halme & Korpela, 2014; Seyfang & Smith, 2007; Starik & Rands, 1995). Thus, the organization identifies a part of the society, the environment and the economic activities (Proto, Malandrino, & Supino, 2007; Satyro, Sacomano, Contador, Almeida, & Giannetti, 2017). The sustainable enterprise is the one which focuses on these factors of sustainable development rather than the traditional focus on the economic gains (Baumgartner & Rauter, 2017; Benn & Baker, 2009; Leon, 2013). Thus, an organization collectively emphasizing economic, societal and environmental well-being is a sustainable organization (Hart & Milstein, 2003). These three dimensions – economic, social and environmental benefits manifest from the Triple Bottom Line concept (Elkington, 1994). The triple bottom line includes the 3Ps – ‘People, Profits, Planet'. The literature argues that the 3Ps are a mechanism of addressing the social, economic and environmental discourse communities (Parameswar, Singh, Malik & Dhir, 2018; Webber, Frost, Line, & 2013, 2004; Wexler, 2009). The approaches adopted for sustainable development by different firms would be different; however, the underlying intention is the same. One of the modern approaches adopted by firms is stakeholder's theory approach. According to this theory, stakeholders of a firm include internal (employees, management and owners) and external individual/groups (customers, suppliers, and local communities) (Anbarasan & Sushil, 2018; Freeman, 2010). Literature suggests that the responsibility of stakeholders lies in the hands of top management in the form of three dimensions discussed below. Environmental Factors The literature on sustainability argues that environment plays a pertinent role in production and consumption pattern (Anbarasan & Sushil, 2018; Giddings et al., 2002; Goodland, 1995).