Impact of Regulatory Requirements on Sustainability

Impact of Regulatory Requirements on Sustainability

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Impact of Regulatory Requirements on Sustainability Initiatives

Business sustainability is the current trend in the global market. Assuring the survival of a company and her durability in a competitive market is very important. To ensure a sustainable business, tough and wise managerial decision and business models have to be put in place in addressing social, environmental and financial concerns (Wiggins, 2014). In order for a company to qualify as sustainable; a financial value which is long term has to be created, must be able to control their operations to impact positively on the environment and influence a positive social change to their employees, community, and customers. Sustainable companies have strategies that think long term unlike the myopic nature of some companies that focus on short-term profits (AtKisson, 2008).

The government of Saudi Arabia has formed a business hub for corporations and companies that are business sustainable by setting up viable regulatory measures to ensure that business sustainability is impacted. Through business regulations that foster compliance to sustainability, the government of Saudi Arabia has encouraged the forging of a good relationship and partnership between companies, their employees and the community at large so as to create a cohesive business environment (Marín & Morgera, 2012).

It has also put in place regulatory measures to ensure that business organizations have a controlled waste disposal methods and a conservative way of utilizing natural resources. Through these regulations, the Saudi government has availed a conducive environment for businesses to thrive. The sustainable businesses have been able to survive economic shocks such as global recessions, myriads of worker’s strikes, boycotts from environmental activists and even scandals as they have fostered a good and sustainable business environment (Foxell, 2014).

The fundamental aim of the Saudi government is to create a competitive environment for business as well as helping the same businesses realize value without affecting the society negatively. Regulatory requirements have ensured that environmental issues in the course of doing business are catered for. They advocate for a healthy way of doing business while impacting a positive change to the environment through taking environmental responsibilities. The regulations also impact on sustainability by fostering innovation and improvement in infrastructure, forging a competitive market and creating a reliable communication or ICT network to improve the business network. International treaties have been catered for through setting of friendly regulatory measures ( R & Burnes, 2013).

It is the interest of the government and regulators to ensure that sustainability is enhanced. This is to create a market that has efficiency in operations as well as progress in the achievement of development goals. Both private and state-owned companies are required to report on their sustainability progress on an annual basis in Saudi Arabia and particularly in many other countries too. This is to ensure transparency on social, environmental and governance factors (Sabic, 2015).

Through this practice, a culture of transparency is created. Sustainability reporting is very important to the government of any country; it is a platform to enable the government to assess the way companies are contributing to the environmental and social sustainability. Secondly, apart from transparency, a dialogue between the government, the stakeholders and the company is created (Wiggins, 2014). It is a very good strategy by the Saudi government to hold the companies liable to the impacts that they have on the country as a result of their activities.

Benefits from Sustainability Initiatives

The sustainability initiatives and regulations put by the Saudi government have had immense advantages to the community, the companies themselves and the country at large. One advantage is the aspect of enhancement of the company’s brand resulting in a competitive advantage. A company that creates a healthy business culture creates a name and brand for itself and hence becoming more competitive in the market. Sustainable business practices also lead to an increase in productivity and reduction in operational and maintenance costs among others. This is because, through these practices, efficiency is improved, as there are better use and conservation of resources ( R & Burnes, 2013).

Companies that have a culture of sustainability have realized an improved financial and investment opportunity. This is especially in regards to those companies that have better practice in energy efficiency and excellent environmental conservation strategies. Strong sustainability policies have proven to generate more revenues since they have created a much more market-friendly environment for her customers. Moreover, it is through a sustainable business environment that carbon risk is reduced, and energy efficiency is improved tremendously. Through a responsible business practice, the environment is catered for effectively (Wiggins, 2014).

The most important asset for any organization is her employees. Organizations that respect their employees pay them well, train them accordingly and have viable performance appraisal programs have realized a sustainable environment regarding employee retention and recruitment. It is through corporate social programs and environment conservation programs that an organization gets a reputation. It is a way to show the world that she cares about her customers and stakeholders. As a result, employees feel motivated and ready to keep on working for a company that cares for them (World Water & Environmental Resources Congress, Walton, R., American Society of Civil Engineers, & Environmental and Water Resources Institute (U.S.), 2005).

Sustainability Initiatives in Saudi Basic Industries Corporation (SABIC)

SABIC is a non-oil company based in Saudi Arabia. She is one of the largest manufacturers of petrochemical products in the Middle East. She produces a varied of products such as basic chemicals, plastic polymers, metals and fertilizers. She is one of the companies that have been known to follow keenly Saudi’s regulatory measures in ensuring a sustainable business environment. SABIC has branches in more than forty-five countries ( R & Burnes, 2013). The fact that the company deals with chemicals and other bio-hazardous products has made the company make an even keener approach in ensuring that sustainability is maintained. SABIC’s mission is to ensure that a lasting value is created across her economic platform, the environment, the humanity and social dimensions through sustainability. She uses community involvement programs, eco-friendly disposal of waste products and ensuring sustainability in the manufacturing of her products (In Madhavan et al, 2013).

Commitment through Products

SABIC is a company that is dedicated to the manufacturing of safe products by use of high-performance products. The materials used to produce these products, the polymers, significantly reduce the weight of the components of the products and as a result, the GHG emissions are lowered. The metal manufacturing also registers a significant reduction in GHC emissions, consumption of water, energy consumption and waste reduction. This has seen the operational efficiency of the company improve tremendously (Sabic, 2015). Most of the energy sources for the company are from hydrocarbon resources. SABIC utilizes these resources efficiently to ensure that the GHG emissions are at a minimum. In product sustainability, energy and material efficiency is achieved through the use of raw materials that are lighter weight and thinner walls (Sharma, 2012).

Apart from producing safe products and reducing emissions in GHG, SABIC emphasizes on improved technology to ensure a sustainable production. The incorporation of new technology has seen the company improve her production capacity, reduce product harm, improve employee safety and maximize on energy consumption saving. Product innovation both in production and constituents has been another sector that the company has employed to ensure sustainability. Safer, reliable, efficient and cost-effective production strategies and products have been devised. This has helped the company remain relevant in the market while at the same time ensuring it is consumer friendly regarding product quality and safety (Sabic, 2015).

Commitment through Operations

The operations that SABIC has undertaken in the generation of revenue are very sustainable. Her performance is measured on the value created through societal relationships, capabilities in the human-resource and environmental ecosystem. These are the operations that create value for the company. When it comes to suppliers, SABIC has a reliable and consistent supply base ensuring sustainability. The processes used in value creation include manufacturing, sales, processing and innovations. The operations in SABIC are customer oriented. She does not only concentrate on waste reduction but also on energy and water conservation. In fact, the innovative technologies employed in production ensure minimum use of energy and its wastage.

In regards to social relationships, the company creates a very conducive environment for customers by ensuring that they are treated with respect and taken seriously. The products delivered to customers are ensured that they have no defects; they are well packaged and are delivered in time. Engaging in community charity programs is another approach that the company uses to ensure that it connects socially with the society (Sharma, 2012). The human resource department, on the other hand, ensures that it employs highly skilled and trained personnel to ensure sustainable production and commitment to customer products is of-of most importance (In Madhavan et al, 2013). In regards to the environment, SABIC’s operations are environmental friendly through employing strategies that ensure minimum emissions of GHG to the atmosphere as well as an effective water recycling system. A good example is in Jubail Chemical facility whereby the company has invested in a carbon by-product capture to re-use in the chemical processing plants (Saudi Arabia: Sabic & ExxonMobil – carbon black, 2011).

Transporting Waste to into Useful Products

Even though the chemical products are not biodegradable, the company does not dispose of them; they are recycled. This creates a very eco-friendly system. The polyethylene products produced and chemicals undergo a reversal system that utilized them to make other products afresh. On the other hand, large emissions from the chemical products emission are now being captured and recycled in fueling the production process. This has reduced energy consumption and GHG emissions (In Madhavan et al, 2013).

Interestingly, the highly captured carbon four oxides emitted in the glycol process is recycled to make other important products used in fertilizer manufacturing; it makes urea, methanol, and industrial grade CO2. These by-products are also sold to the food industries in the production of beverages and food. This generates more sustainable value. In metal production, SABIC has invested in de-dusting steel furnaces that reduce dust emissions from the furnaces by about 60% (Saudi Arabia: Saudi Kayan & Sabic – carbon black, 2007).

Also, the CO2-capture program at Jubail purifies the emitted carbon four oxide from the ethylene glycol plant and pipes it to other SABIC affiliates for the production of more fertilizers and other by-products. As an environmental strategy, the company aims at reducing CO2 emissions to a minimum required standard and energy usage reduced by 13%. There is also a large recycling of waste products, such as aluminum cans. Thus, the anticipation is to reduce industrial wastage by more than 76%. As an environmental responsibility, SABIC has embarked on clean energy measures. She has embarked in the production of solar panels as an alternative source of energy to run the small plants while at the same time commercializing the products to help the society embrace an eco-friendly energy power in their homes (Wiggins, 2014).

Social Responsibility

As one of SABIC’s social aspects, she invests intensely in the training of her employees in various programs as well as availing employee education programs for personal development. The company values her employees and thus they are well paid with high standard employee treatment in the workplace. A conducive environment is created. The company has invested in excellence whereby employee performance is measured, and equal reward or appraisal is awarded. Through this system, employees are highly encouraged and motivated. The workforce in SABIC is diversified regarding all races, gender, and even professions. This ensures diversity in culture and ideas to create a viable working environment (Sharma, 2012).

As a corporate social responsibility, the company also caters to the community as a way of giving back. She offers scholarship programs to the needy and bright student. A good example is that of a student, called Hisham, who was given SABIC’s Higher education scholarship. The company also engages in community development programs such as the building of healthcare centers, educational programs, and schools, disaster relief management for the community. All these projects mark the social responsibility of SABIC to the community. There also voluntary employee programs that embark in helping the community in various aspects such as during disaster. This has created a strong social bond between the community and the company (AtKisson, 2008).


SABIC company is a good example of the efforts the Saudi government has put in ensuring that sustainability in business is enhanced. Saudi Arabia is one of the most viable countries to set a business as the sustainability policies there have seen both the country and investors benefit. It is through sustainability that the economy of a country improves, and the revenue generation of a company is sustained (Wiggins, 2014) .


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