1.2 Case study of ILVA, Italy: The impact of failing to consider sustainability
as a driver of business model evolution
F. Tonelli 1, S.W. Short 2, P. Taticchi 3
1 Department of Mechanical Engineering, Energetics, Management and Transportation,
Polytechnic School, University of Genova, Italy
2Institute for Manufacturing, Department of Engineering, University of Cambridge, United Kingdom
3 Royal Docks Business School, University of East London, United Kingdom
Abstract
The case of ILVA steel works in Taranto, Italy demonstrates the potential impacts associated with failing
toadequately consider environmental and social sustainability issues within the business model of the firm. This
paper provides a review of the situation at ILVA today; the decisions and actions that contributed to the current
situation since privatisation of the firm in 1995; and the choices now facing government, the local community,
and the firm’s owners going forward including a review of Best Available Techniques (BATs). The review is
supported with relevant sustainability literature and explores how a more comprehensive assessment of
sustainability considerations might be better integrated into business model evolution. The paper demonstrates
that an inappropriate technology investment strategy that fails to consider broader concepts of value for the
society and environment does not pay in the long-term, and that expectations of government support to mitigate
negative impacts of business are becoming increasingly untenable.
Keywords:
Best Available Techniques; Business Model Innovation; Steel industry;Sustainable Manufacturing
1 INTRODUCTION
ILVA Taranto, Italy’s leading steel producer made headline
news across the world after being sequestered on the 26th of
July 2012 by Taranto’s regional PHJ(Preliminary Hearing
Judge). ILVA was accused of creating an unprecedented
environmental disaster; due to this, the PHJwanted ILVA to
shut down theirblast furnaces and to encloseuncovered
mineral stockpiles. The Judicial review court stated on the 6th
of August 2012 thatthe ILVA disaster over the years
isattributed to constant and repeated polluting activity
perpetrated wilfullyby the owners and managers. In particular,
the ILVA operating practices were such that they produced a
malicious disaster through actions and omissions with a high
potential for destructive outcomes for the environment (and
society).The protracted action to force changes at ILVA
Taranto was notable not just for the environmental violations
and related health issues, but also for the strong counter-
arguments presented by the labour trade union and the local
community for continuing production in order to protect their
employment, and the political activities to find a financing
solution for the necessary improvements. The complexity of
the situation, the economical, environmental and social trade-
offs under discussion and the large set of stakeholders
involved make the ILVA case a particularly interesting
scenario for the discussion of sustainable business models[1].
This paper reviews the current situation at ILVA in terms of
economic, social and environmental impacts, and explores
the options available to ILVA and the Italian Government for
improving/restoring the situation. The aim of this paper is to
suggest that a more comprehensive assessment of
sustainability considerations might be better integrated into
business model evolution in order to avoid complex situations
like the one reported.
The considered industrial case (steel) is of
particularinterestwith respect to the concept of industrial
sustainability [2]. All three TripleBottom Line
(TBL)sustainability dimensions (environmental, social, and
economic)are included,with apparent strong conflict between
each dimension. Technology (afourthdimension from an
industrialperspective) is also included as in this case it is
crucial to determine and influence the first three dimensions.
Asustainability value mapping tool[3]can be used to assess
the various forms of value and conflicting demands of the key
stakeholder groupsas illustrated in Table 1.
The sustainability problem can be categorised as:
Environmental:Assuming that the current level of
pollution is the cause of health problems and disease in
the region, is it possible to mitigate and fix this issue
through selective and incremental interventions to
improve the health and conditions of workers and
surrounding populationwhile still preserving employment?
Social:What is the social cost of a potential definitive
closure or liquidation of ILVA Tarantoon the direct/indirect
worker population (approximately 19,000 employees),
and more broadlyon the related plants in other parts of
Italy (Genova and Novi)? How can this be balanced with
long-term health issues in the region?
Economic:Can ILVA Taranto (Riva Group) afford the
investments necessary to improve and upgrade the
plant(s) in order to reach the required standards as
suggested by BATs and related Reference Documents
(BRefs) [4]? And if not, could the Government supply
resources for these investments by applying several
conditions and constraints to the ownership?
Technological: are the BATs suggested in the AIA
(integrated environmental authorisation) directive
G. Seliger (Ed.), Proceedings of the 11th Global Conference on Sustainable Manufacturing - Innovative Solutions
ISBN 978-3-7983-2609-5 © Universitätsverlag der TU Berlin 2013
25
F. Tonelli, S.W. Short, P. Taticchi
[5]issued by the regional government really effective for
the specific case and how is the best way to implement
them?
Table 1: Value mapping analysis
Stakeholder
group
Value
currently
captured
Value
destroyed or
missed
New Value
opportunity
Value chain
actors incl.
investors,
suppliers,
etc.
(Economicval
ue)
Profit
maximisation;
Long-term
relationships
with
suppliers;Loca
lised
operations
Reduced
outputand
potential
stoppage;
Reduced
profitability/
market share
Investment in
technology to
conform to EU
standards to
boostproductiv
ity and growth
Customers
(Use value)
Price, product
quality, supply
lead-time
Reduced
supplies and
potential need
to search for
alternative
steel producer
Switch to
alternative
non-Italian
producer
Environment
(Ecological
Value)
Partial capture
and
containment
of emissions
and pollutants
Pollution
; Loss
of biodiversity;
Reduced food
production in
region
Reduce
emissions and
pollution with
technology;
Contribute to
clean up of
contamination
Society
(Societal
Value)
Jobs (12,000
direct + 7,000
indirect in
supply chain);
Multiplier
effect on
regional
economic
activity and
taxbase
Health risk
and long-term
care
costs(respirat
ory disease,
cancers);
Job losses of
forced
layoffs;Agricult
ural
contamination
Enhance living
conditions for
community;
Safe jobs; Job
creation;
Reduce
healthcare
burden;
Regenerate
farming sector
2 BACKGROUND TO CASE
Italy is the second largest manufacturing nation in Europe
with major strength in mechanics, machine tools, steel,
chemical-pharmaceutical and rubber-plastics industries, foods
and textile and clothing industry. However, the country is now
in its longest recession in 20 years, and has languished in
more than a decade of almost non-existent growth.
Unemployment is at more than 11%; for under-25s it is more
than 36%. Italy also has the second highest ratio of sovereign
debt to GDP in the EU imposing severe austerity measures
on the nation. Reinvigoration of the industrial sector to
stimulate economic growth and employment is a major focus
of policy makers.
Concerning environmental sustainability Italy is subject to EU
regulations on emissions and pollutions. However, the
judiciary system is slow-moving and sometimes alarmingly
politicisedhence implementation and enforcement of
environmental legislation has often been weak or none-
existent. This is compounded by frequent changes in the
political system that undermines continuity, and a significant
level of crime and corruption within the country.
Within this context, the subject of this case study is the ILVA
steel production plant in Taranto in the region of Puglia,
Southern Italy (biggest steel production plant in Europe). ILVA
is a joint stock company owned by the Riva Group, which is
mainly based on the production and processing of steel. ILVA
was previously the State-owned company IRI acquired bythe
Riva family in the early 1990’s. The group now consists of 42
plants operating in 8 countries across the world. Based on
2011 data the Riva group is the outright leader in Italy, the 3rd
largest steel producer in Europe, and the 21st in the world by
production volume.
The steel production process of a plant such as ILVA Taranto,
and the process inputs and outputs including emissions and
potential pollutants at each stageare illustrated in Figure 1.
Figure 1: Typical steel production process
(Source: adapted from [4])
The operating equipment and facilities at ILVA Taranto
integrated steel works consist of:
Hot area
10 Coke oven batteries
2 Agglomeration plants
5 Blast furnaces
2 LD steel works (each equipped with 3 converters of
330t. and 350t. respectively)
5 Continuous Casting machines (2 strands) for slabs
26
Case study of ILVA, Italy: The impact of failing to consider sustainability as a driver of business model evolution
Rolling mill
2 Hot rolling mills for coils
1 Hydrochloric pickling line
1 Coupled pickling tandem rolling line
1 Electro galvanizing line
1 Hot-dip galvanizing line
1 Batch annealing line with 54 furnaces and 125 bases
2 Tandem skin pass mills Finishing and cutting lines
1 Heavy plates (2 stands) quarto reversing mill
Pipe mill
1 Longitudinally ERW pipes plant
2 Longitudinally SAW pipes plant
6 Pipe external coating and internal lining plants
1 External coating weighing down with concrete line
From the environmental point of view, the main polluting
elements are PM10 (Particulate Matter smaller than 10
micrometres that are capable of penetrating deep into the
respiratory tract and causing significant health damage),
polycyclic aromatic hydrocarbons (PAHs) in particular the
benzo(a)pyrene,dioxinsand heavy metals that can be
carcinogenic. Stages of the production process that are
considered particularly polluting are the mineral parks
(storage areas for minerals used in steel production), the coke
ovens,blast furnaces, and the agglomeration (sintering) plant.
3 CURRENT SITUATION AT ILVA
3.1 Economic situation
In 2011, Riva Group produced 16 Mt of raw steel, of which,
7.6 Mt of black coils, 4.1 Mt of wire rod, 2.0 Mt of concrete
reinforcing steel (rebar), 1.0 Mt of rolled bars and billets, and
0.8 Mt of quarto plates. This equated to a turnover of about
10B€, with a reported net profit of 327.3 M€. This represented
a return to profitability after poor performance in 2009 with
turnover of 5.822B€(with a reported loss of 547.7 M€), and
2010 with 7.788B€(and a loss of 66.3 M€)[6]. The ILVA
Taranto plant produces 8 Mt of steel annually, and distributes
value of 865 M€ into the Taranto region; this represented
about 75% of Taranto’s GDP based on the Bank of Italy
reports in 2008.
In the last 15 years the Riva Group has reportedly invested
about 4.4B€ in the steel making plant. ILVA report that 25% of
thishas been for environmental and safety enhancement,
although it is not possible to clearly delineate between these
investments and other forms of plant investment. About half of
the investment on environmental and safety
enhancements(447.3 M€) were reportedly for improvements
to the coke oven, but it seems littlewas invested in the mineral
parks coverage or more effective dust reduction measures;
only recentlyhas ILVA begun to invest in the coverage of the
conveyors.ILVA claim that higher rates of investment on
environmental performance were not financially feasible.
However, despite the reported losses at ILVA Taranto, the
Riva Group had positive profits as discussed above, and the
net asset equity of Riva Group is on an upward trend
(currently around 4 B€), so financing of plant improvements
appears possible, albeit perhaps not desirable to the owners
and investors.
In July 2012, the Taranto judiciary ordered the shutdown of
the plant’s smelters in an attempt to force the Riva group to
initiate the necessary investments. Facing inaction from ILVA,
in November 2012 the Taranto judiciary took the extreme
action of seizing 800 M€ of finished product in an attempt to
force change. This action was overturned by a government
decree to allow the plant to continue operating to protect jobs,
but the dispute is still on-going.
3.2 Environmental issues
In 2010, ILVA emitted over 4,000t of dust, 11,000t of nitrogen
dioxide, 11,300t of sulphur dioxide, 7.0t of hydrochloric acid,
1.3t of benzene, 150kg of Polycyclic Aromatic Hydrocarbons
(PAH), 52.5g of benzo(a)pyrene, 14.9gof organic compounds,
polychlorinated dibenzo-p-dioxins and dibenzofurans
(PCDD/F) and dioxin PCBdl. Levels of PCDD/F and PCBdl
may be traced to specific sintering activities (agglomeration
area) carried out within the plant.
To reduce emissions it is necessary to take measures
forcontainment giving priority to the reduction of emissions of
hazardous substances and metals. At present, ILVAhas
largedeposits of coal,coke and other mineralsadjacent to the
production plantin 30m high stockpiles. These are exposed
tothe weather andparticularly duringdry south-easterly wind
conditions dispersefine dust particles across the city creating
values of PM10 beyond acceptable levels. The only method
currently used for retaining this dust is to humidify the
deposits using trucks that spray water over the stockpiles.
Even though ILVA’s certifications say they respected national
laws and regional values (as measured in 2010), experts
have pointed out that to achieve the emissions targets
introduced in 1999 the humidification system would have
requiredcontinuous automatic control to activate when
conditions demanded. There was no such control, and without
this the emissions cannot be considered compliant.
Emissions from other parts of the production process are
similarly problematic. In accordance with European
Community rules on the environmental performance ofsteel
plant experts have found that: “in most of the production
areas and/or process steps, the amount of the pollutants
emitted are considerably higher than those that would be
emitted in the case of adoption by ILVA of BATs with the
performance as determined by BRefs“. Furthermore, experts
have concluded that if BATs were adopted for all phases of
production, and not only discrete parts of the process, this
would be more efficient in reducing pollutants and thus reduce
emission loads from the entire plant. The difference found
between the measured values and those expected from the
application of BAT and those reported in BRef, shows that
there is still a gap between the techniques used in ILVA and
their effectiveness.
3.3 Social issues
Evidencesuggests that the environmental contamination has
in turn created serious health problemsfor the employees and
the wider Taranto community over the past decade[7]. The
current enquiry into the site was launched after a 30% overall
spike in local cancer rates was reported, with liver cancer up
by 75% and upper uterine cancer up by 80%. Analysis of
specific disease data provided by the Ministry of Health
shows that while the cancer ratesfor the average Italian
population are decreasing and the same phenomenon can be
observed in the Puglia region, in Taranto cancer related
deaths have been increasing.For example, in the period
2001-2008 lung cancer deaths in Taranto have increased by
5%, while the Italian average has decreased by
27
F. Tonelli, S.W. Short, P. Taticchi
10%[8].Incidences of respiratory problems such as asthma
are also reportedly higher in the area, with 90% of all babies
affected.
Pollution also impactson quality of life in the Taranto
community in other ways through contamination of land and
water sourcesand the consequent risk of affecting the food
chain. Residents are advised not to grow crops or raise
livestock in the area (In 2008 roughly 2,000 sheep were
slaughtered after their milk and meat were found to contain
dangerous levels of dioxins). Furthermore,the city mayor has
issued an instruction that children should not play in unpaved
lotsto avoid contact with the omnipresent red and black dust
particles that regularly blanket the city.
Countering the health concerns are the social benefits of
long-term employment. ILVA Taranto employs more than
12,000 direct workers and 7,000 indirect workers, and is
responsible for 75% of the 50Btof traffic handled by the
Taranto port. Moreover the plant feeds ILVA’sGenova plant
(1,760 workers), Novi plant (just under 1,000 workers),
Racconigi’s plant (200 workers) and other small plants. Due
to the consequences of legal actions on the 26th of November
2012, the cold area production of the plant was stopped with
an immediate potential layoff for 5,000 employees.
Furthermore, the Puglia regionthat includes Taranto already
suffers from unemployment levels of 25%, andILVA is relied
upon as one of the main opportunities for stable employment.
So Taranto is facing a complex double problem –the
population is worried about serious disease and other health
issues caused by pollution, while at the same time employees
and their dependents, and local suppliers and businesses are
afraid to lose their jobs. Large strikes were organised in the
latter half of 2012 in Taranto and in other cities where ILVA
undertakes secondary processing, and the position of the
workers (supported by the Unions) is to defend their jobs.
4 BEST AVAILABLE TECHNIQUES (BATS)
The technological performance of the ILVA’s plant process
has been analysed in the light of known BATs&BRefs[4], in
order to identify available technologies to tackle each aspect
of the firm’s production processes and emissions.Particular
attention is paid to the following areas: mineral parks (Table
2), coke oven (Table 3), sintering (Table 4), and blast furnace
(Table 5). For each area the tables providethe current
situation and technology employed by ILVA along with
suggested BATs.
Table 2: Mineral parks BATs analysis
ILVA
ILVA PLANNED
INVESTMENTS
GOVERNMENT
REQUEST
Humidification
of the deposits
through the use
of water
cannon trucks
Construction of 2.2 km,
21 m high, barrier in High
Density Polyethylene
(HDPE); 20% reduction
of the average inventory;
Increase humidification of
road and materials with
fog cannons;
Implementation of a
monitoring system for
humidification.
To cover all the
mineral parks
(Potential
solution as used
only by Hyundai
in South Korea)
Table 3: Coke oven BATs analysis
PROCESS
PHASE
ILVA (in
progress)
BAT EU
Coal
preparation
Secondary de-
dusting
Techniques for minimising
emissions
Oven
charging
“Smokeless”
charging
machine
Preventingoven charging
emissions
Coking
Coke ovens
refractory partial
revamping
Stabilise operation;
Coke ovens maintenance;
Sealing of emissions points;
NOx reduction;
Pressure regulation of ovens;
Improvement and cleaning of
oven doors
Pushing of
the coke
Fume capturing
at coke
discharging
Techniques for minimising
emissions
Coke
quenching
Conventional
wet quenching
Improvement of coke wet
quenching;
Coke dry quenching
Treatment of
coke oven
gas
Desulphurisation
Reducing the number of
flanges;
Usinggas-tight pumps;
Avoiding emissions from
pressure valves;
Desulphurisation
Coke
handling
Secondary de-
dusting
Using enclosures;
Efficient extraction and de-
dusting
Table 4: Sintering BATs analysis
PROCESS
PHASE
ILVA (in
progress)
BAT EU
Raw
materials
preparation
Secondary de-
dusting;
Control of oil in
sinter feed
Abatement of dust emissions;
Control of residues
characteristics used in sinter
feed;
Reduction of VOC emissions
Sintering
MEEP (Moving
Electrode
Electrostatic
Precipitator);
Active carbon &
urea injection;
NOx and SO2
monitoring
Process optimisation;
Advanced electrostatic
precipitator;
Bag filter with injection of
active carbon and other
additives;
Reduction of NOx and SO2
Cooling and
processing
sinter
Secondary de-
dusting
Abatement of dust emissions
from secondary sources
28
Case study of ILVA, Italy: The impact of failing to consider sustainability as a driver of business model evolution
Table 5: Blast furnace BATs analysis
PROCESS
PHASE
ILVA (in
progress)
BAT EU
Loading
material
Stock-house de-
dusting
Minimising stock-house
emissions
Reduction
and smelting
Venturi
scrubbers blast
furnace gas
Techniques for reducing dust
emissions of blast furnace
gas
Casting iron
and slag
Cast-house de-
dusting;
Tar-free runner
linings
Minimising cast-house
emissions;
Fume suppression during hot
metal charging (with N2);
Using tar-free runner linings
Slag
treatment
Condensation of
fume from slag
processing
(partial)
Condensation of fume from
slag processing
5 DISCUSSION
While finalizing this paper interventions will start in order to
cover the mineral parks (36 months foreseen) as well as other
plant improvements. Extraordinary government funded job
protection measures will be activated for 6,417 workers of
Taranto’s plant until 2015. The job protection measures will
mitigate the social impact to implement the Integrated
Environmental Authorisation (AIA) even if they will be charged
on collectivist base in an already challengingeconomic
situation for Italy. Solidarity agreements could also be added
in this case impacting on workers salary. Notwithstanding
these measures, the situation within the Taranto plant is still
critical and one head of department has recently been
threatened with death.
The ILVA activity is under examination by technicians sent by
the Minister in the area of environmental protection and
concerning the law 231 of 2012 (see www.ispraambiente.it).
The goal is to enableopen consultation of given
prescriptionsto verify the implementation of the AIA plan. To
this concern, the last report (28th of February 2013) proposed
about 12 months of work to coverthe mineral parks according
to technologiesidentified in the BATs analysis – new fog
cannons and a monitoring system will include safety flares
and six new sensors along the external perimeter of the plant.
Within June 2013, 25 new measurement systems for
emissions will be installed monitoring the following areas:
agglomerate (sintering), coke oven, blast furnace and
steelmaking milling. Concerning the continuous sampling of
dioxin a system has already been installed andmonitoring
protocolare being defined by the environmental agencies.
The coke areas (860 M€ of interventions of the nearly 2B€
estimated), will be improved starting from coke oven
batterynumber 9,and completed within the second half of
2013, while batteries 3, 4, 5 and 6, have already been shut
down and will be rebuilt together with battery 11. For the
agglomerate, purchase orders have been placed for textile
filters (see the BATs). Also, the blast furnace area will be
improved within 18-24 months. In steel makingfacility 1 the
roof floor will be closed and connected to fumes and dust
aspiration systems, works have already been undertaken for
2 of 3 converters, and completion is expected for June 2013.
Further, ILVA has launched the purchase order for a new
textile filter (3.2 million cubic meters per hour). Finally, the raw
material conveyor belts will be covered (385 belts for 200 km),
90%of which will be covered within 2014.
But what is the cost of so many interventions as requested by
the AIA plan released the 26th of October 2012? The initial
estimation was around 3B€to 4B€. This is a significant
amount but still far from the original estimation made in the
September judicial review that put the cost close to 10 B€for
upgrade of the hot plant area. Surprisingly, the most recent
estimateundertaken (Siderweb Study Centre) suggests of
cost of approximately 1.5 B€. If confirmed it will remove any
doubt about the economic feasibility of the plan and so
remove the threat of such investments undermining the future
survival of the enterprise. However, immediately after this
statement, ILVA presented a plan costing 2.25 B€.
Thus the lesson learned is that combining environmental,
social, economic, and technical problems together results in
the most disparate estimations and that the estimation
process is strongly opaque, especially in this specific case.
But this apparent unclearness has, in our opinion, other
possible reasons. The AIA released by the Minister defines
and prescribes the company to reduce pollution by applying
the BATs. However, the company, by law, takes the final
decision on what to apply in the light of economic feasibility.
Particularly, the assessment included in the AIA (article 8, law
decree 59/2005), considers the best technologies in an
absolute way and not with respect to a cost-benefit criteria.
The cost reduction proposed by ILVA, against the first
ministerial estimation, is justified by the fact in September the
estimation process was done only in an approximate way.
Now feasibility and design quantification are in the operative
phase and only 20% variability is acceptable before closing all
the contracts for consequent activities.
Another important issue concerns the reliability and reality of
the interventions undertaken previously. On 23rd January
2013 ILVA stated that 65% of AIA prescriptions were already
in place; that is in contrast with the level of remaining
intervention costs and the related uncertainty arising. A
further unclear aspect relates to the individual investment for
each plant and sub-plant. For instance, for the coke areas,
860 M€ is the cost estimated to refurbish and rebuild, even
though in a document dated 2012 entitled “Investments for
Environment”[9], the Company stated to have already
invested since 1995 up to 2011, 480 M€. Surprisingly, after an
investment of 30 M€ per year in a single area, the area now
apparently needs to be completely rebuilt.Other estimations
are opaque and difficult to practically correlate to effective
investments in industrial sustainability; the most probable
value could be around 689 M€ in a period spanning from
1995 to 2006.
Considering the investments from the Government and tax
payers’perspective, it appears that assuring job protection of
more than 5,000 workers up to 2015 will result in a collective
cost of more than 800 M€ to the public purse. Surely it would
be better to oblige privately owned companies to respect
regulations adopting the required investments (even if this
means partially supporting them from public sources) before
reaching this critical disequilibrium point, instead of imposing
almost entirely, the huge social, economic, and environmental
(and hence serious health issues) on the country and citizens,
and finally claiming for the evident “unsustainability” of these
industrial practices/facilities.
29
F. Tonelli, S.W. Short, P. Taticchi
6 CONCLUSION
The hard choice to risk dying of cancer rather than face the
ignominy and hardship of unemployment for workers, the
institutional obligations to prohibit environmental pollutionto
guarantee health and wellbeing for the citizens of the territory,
and the conflictingmyopic profit-oriented management
strategy of Riva Group, pose an unquestionable industrial
sustainability challenge. The Riva group has claimed that
compliance costs were prohibitive. However, looking at the
economic and financial performance of Riva Group, it is hard
to acceptthey couldn’t support the right investments to
renovate the plant since 1995, and yet harder to believe they
are now demanding the government to pay.
Some commentators have suggested that inappropriate
ownership of the company, prolonged State inaction, and
corruption are the cause of the problems. There is almost
certainly some truth in this as evidenced by the fact that
polluting activities have continuedsince the 1990’s despite
environmental concerns raised by government, and award of
full environmental certifications ISO14001 and ISO18001 right
up to the current date. However, ultimately it appears that the
Riva family and the management of ILVA have simply
followed a contemporary shareholder-centric approach to
business of profit maximisation, with an expectation that
government will continue to support by taking responsibility
forthe external social and environmental costs[10].
The ILVA Taranto case isan extreme example of
environmental pollution and social harm due the size of the
plant, its national and regional importance, and the duration of
the problems, but the problematic business approach
underlying the issues is not uncommon. Recent, highly public
examples demonstrate similar compromises in pursuit of
profitsacross a broad range of sectors. For example, British
Petroleum’s environmental disaster in the Gulf of Mexico in
2010; suicides and labour disputes over pay and working
conditions at iphone supplier Foxconn in China 2010-2012,
and the collapse of an apparel factory building in Bangladesh
in 2013 killing many hundreds of workers.Similar scenarios
are likely to occur repeatedlyparticularly in regions where
regulations and governance to protect the environment and
society are weakuntil business models focused on short-term
profit maximisation are addressed. This is perhaps particularly
pertinent to large nationally strategic industry sectors.
In the past these enterprises may have benefited from implicit
guarantees of the State, enabling them to maximise short-
term profits for management and owners while acting in
areckless manner towards their broader stakeholders
including the environment, workers and society. The judicial
challenge in this particular case of ILVA demonstrates that the
changing dynamics of a recessionary and debt-laden Europe
makes such an expectation of government and taxpayer
largesse look increasingly unsustainable.Furthermore,
pressure on firms to adopt a more holistic approach to
business sustainability seems likely to increase under
changing public awareness and attitudes towards the role of
corporations in the wake of the recent examples of corporate
neglect of suppliers and the environment in pursuit of profits.
Applying a scientific and rigorous industrial sustainability
approach will be the only way to resolve paradoxes like the
one presented in this case; production (even of steel) is
possible in a way that guarantees workers and community
health and wellbeing. Technology can provide effective
solutions as defined in BRefs and demonstrated by leading
producers in Germany, South Korea and Japan who have
pioneered and championed best available techniques for the
sector. Such firms, far from being weakened by the
investment costs are now enjoying strong competitive
advantages in a global market place, supporting, rather than
damaging their local environment and communities. Such
innovation is more than just technological though – it requires
a fundamental shift in perception of the value proposition of
the firm to embrace the needs of broader stakeholder groups,
reducethe dependency on government support and fully
reconsider how the firm does business, whichare at the core
of the firm’s business model.
In conclusion, appropriate consideration of social and
environmental sustainability within the business model as
suggested by Stubbs and Cocklin[1]will therefore increasingly
become core to ensuring economic sustainability and hence
long-term survivability of the firm and protection of national
strategic capabilities and jobs. Firms and government policy
will need to shift to a more holistic perspective of value
creation, based on the TBL and BATs.
7 REFERENCES
[1] Stubbs, W., Cocklin, C., 2008, Conceptualizing a
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