Ethic and Sustainability Issues
New Balance had faced many new challenges in terms of ethical and sustainability issues. The challenge for the company was to recognize how to incorporate an effective Corporate Social Responsibility program for stimulating a successful global business, while increasing the contribution of New Balance to developing an upright and sustainable world.
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Pertaining to the goals of New Balance for better sustainability, they faced key issues that could interrupt their process and makes things difficult for the company to move forward with a better implemented strategy. These issues included a lack of transparency throughout the company, no centralized method or metrics for measuring the company’s total contribution towards CSR, innovating new environmentally friendly products, managing oversea supplier factories, and no product life-cycle analysis for the company’s products.
New Balance had lacked the ability to have openness, communication, and accountability throughout the company. In some of the interviews with the senior management on the key aspects to CSR, they believed New Balance had left out critical areas like transparency and accountability (Veleva 8).
The organization needs to decide how to become more transparent because it increases stakeholder trust and support. Greater trust from the stakeholders allows a better emotional bond that leads to better customer loyalty. Trust is important for a company because it relieves pressures from the community to take actions on better ethical movements. A greater transparency could build trust and mitigate unexpected reputation recalls or incidents in the supply chain. New Balance also had a problem with establishing a centralized method or metrics for measuring the company’s total contribution towards CSR. Their biggest challenge was to take it to next level and fully integrate it into the core business (Veleva 6).
The company showed commitment to their CSR strategy and was their central part to the organization, but they did not have a coherent agreement or understanding of what this should entail. Due to the company’s troubles on being able to communicate effectively, managers could not be sufficiently guided on how to identify the potential business risks and opportunities. This is a huge problem because communication on an ongoing basis was critical for CSR in the core business strategy and is the obstruction the company is facing for positioning themselves as the leading company. With the growth of environmentally conscious consumers, innovating new environmentally friendly products was the next big step for New Balance’s commitment towards CSR. Read also Challenges Facing By Ikea
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They knew they needed to minimize the environmental and social impacts and maximize social benefits along the supply chain, but the company faced a lack of complete understanding of how this domain linked to CSR and how the company could better leverage its existing environmental and social incentives to generate business benefits (Veleva 10). Regulations like REACH imposed greater responsibility on companies to assess environmental, health and safety impacts of their product ingredients and to identify safer alternatives. Emphasizing the high-priority on environmental-friendly products, implementing an integrated CSR strategy was critical for New Balance to be successful in doing this. New Balance had a significant gap between the level of CSR management in the U.S. facilities and oversea suppliers.
The management in the domestic operation facilities compared to the foreign supplier facilities overseas, were not well connected and aligned. This problem could put New Balance in jeopardy of a potential risk of loss resulting from damages to a firm’s reputation, in lost of revenue or destruction of shareholder value, even if the company is not found guilty of a crime. So the company’s issue is to assess whether through compensation or retraining, how was the company going to minimize the negative social impacts on their workers overseas. New Balance monitored their oversea facilities and took action when violations occurred, but the company did not have a standard set on the short-term contracts it had with the temporary workers overseas. Use of contract labor overseas factories was an area that “raises a red flag”(Veleva 13).
Therefore, New Balance’s stakeholders had a concern about the company’s exertion of no standard set for the short-term contracts. This is something the company needs to fix so it doesn’t face issues between regulations on labor forces whether it be a domestic factory or an oversea one. New Balance did not have a system in place to assess the life-cycle impacts of products.
They were having issues on determining materials to be used in their environmental-friendly products that were durable and provided good performance. They needed to find materials the consumers liked and would wear all the time. If New Balance were to develop a system for product life-cycle analysis, it could position them as an industry leader by being able to measure their carbon footprint for decreasing gas emissions, a way of reducing environmental hazardous conditions. But the company did not have a way of measuring or communicating the carbon footprint, which makes them liable for any potential risks to do with the society or environment.
Much more education was needed to “push design teams toward using environmentally preferred products and manufacturing” (Veleva 11)
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