ABB Hydro power Sustainability Dilemma Harvard Case Solution & Analysis

ABB Hydro power Sustainability Dilemma Case Study Solution 

For better future it is necessary to incorporate sustainability in our decision. Companies mostly use natural resources to develop their products. Therefore, they should incorporate sustainability element in their objectives or goals so that our future generation can survive. We can say that sustainability is about how we use resources to meet our needs without compromising the needs of the future generation. Our team isassigned to analyze the case ABB’s Hydropower Sustainability Dilemma.

We are required to answer certain questions like the ABB sustainability evolution, sustainability related trade-offs in a dam project, reputational risk associated with the project NT2 and International River letter, recommendations about April 2010, and changes required in ABB sustainability strategy along with the recommendation about how and why these changes are required.

In this report we try to help the company in finding the answers of the above questions.Additionally, we identify the main characters of the case and their business strategic issues and recommend some actions which should be taken by the company immediately, in 3 years and in 10 years’ time to satisfy them under summary head.


 

Introduction

Asea Brown Boveri abbreviated as ABB is a multinational company established in Zurich, Switzerland. The main operation of the company is to supply power and automation technologies to the industry and utility customers. They are one of the largest electrical engineering companies in the world.

ABB are an environmentally dominated company whocare too much of the environment. This is the company behind the development of ISO 14001 which is about the environment. The company were ontopof the list of sustainability for several years.

ABB’s sustainability evolution

The evaluation of sustainability strategy of ABB Corporation which is a multinational blue chip company stared in 1990s. The Chief Executive Director (CEO) of that time Percy Barnevik was the visionary person but along with this he was also an environment dominated person. Due to this, his concern about the environment increased together with the growth of the company. But he could not move towards the environment protection because of the competitors whotook advantage of this. To achieve his purpose, he contacted with International Organization of Standardization (ISO) along with Stephen Schmidheiny (the majority shareholder of ABB Corporation) to discuss his concern. ISO appreciated Barnevik’s advice and immediately started to act upon it. In 1996, ISO 14001 was established and ABB Corporation werethe first company to adopt it.

ABB played a proactive role in the development of ISO 14001. Therefore,theywere the first company whowas ISO 14001certified. In 1995, Barnevik developed Environmental Affairs Department which directly reported to him because he knewthat environment is an essential part for the success of business. Due to Barnevik’s efforts and proactive role in the ABB Corporation, Dow Jones Sustainability index declared ABB at the top of the list for three consecutive years. In 2000, ABB produced first triple bottom line sustainability report which gave itessence over the competitors and forth time ittopped the list.

The journey does not end here according to 2008 sustainability report;ABB continuously took proactive steps in incorporating sustainability in their core operations. They incorporated sustainability from design and manufacturing of the products to health and safety of the employees. This indicates that sustainability becomes one of the objectives of ABB Corporation.

Finally, we can conclude that the basis of ABB’s sustainability is resulted from Percy Barnevik’s efforts which started in 1990.

Sustainability related trade-offs in a dam project

The sustainability strategy of ABB Corporation is a wider one.The companyconsiders the following main things in theirstrategy:

How they design and manufacture the products.

What they offer to customers.

How they engage suppliers.

How they asses risk and opportunities.

Health and safety of employers, contractors and others affected by their activities.

And the development of technologies which are more energy-efficient and have low carbon emission.

If we analyze China and Turkey contracts (dam project contracts). Then we will be able to conclude that how much sustainability related trade-offs are there in dam projects of ABB.

ABB Corporation had accepted the China contract. According to manager of ABB, this project will replace 40 to 50 tons of raw coal consumption each year and will also reduce the carbon and Sulphur emission rate. This indicates that it was an energy efficient project. But, on the other hand, due to the project too many Chinese people have to be relocated and they were forcibly relocated which impacts negatively on their ecological habits.

On the other hand, ABB refused to take part in the Turkey project however, this project is the main catalyst in developing rural areas of Turkey. ABB gives the argument that they refused it because of their sustainability criteria. It is true that the project is against the sustainability threshold of ABB because due to the project some rare habitats have to be relocated and the project will also damage some historical places of the country.

If we critically analyze both projects, then we can conclude that the Turkey project was clearly against the guidelines of World Bank and several NGOs were also lobbing against it. While the China project was against some of the sustainability points of ABB but not of the World Bank guidelines. This indicates that ABB Corporation does not involve themselves in any project which is against the World Bank guidelines or where NGOs are confronting them. However, they can compromise on their own criteria which indicates low sustainability related trade-offs in the dam project...............

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