Achieving environmental sustainability of Small and Medium Enterprises through selective supplier development programs

Some of the major issues in Environmental Sustainability relate to environmental burden associated with product's life cycle, and consequently, environmental practices within supply chains are receiving increased attention. The Environmentally Oriented Supplier Development is a critical aspect of this inter-organizational focus and refers to Green Knowledge Transfer, Investment and Resource transfer along with other Managerial practices. Most of the Suppliers being Small and Medium Enterprises do not possess the resources to address some of the serious environmental issues they face. They represent key stages in the supply chains of many Multinationals and are responsible for more than 60% of Green House Gases emissions and 70% of all pollution. They differ widely on the basis of internal characteristics like their environmental commitment, knowledge about such issues and business performance commitment. Based on these characteristics their behavior towards environmental issues is markedly different which may range from Mock Compliance to Minimum Compliance of the Environmental Regulations, and, from being Environment Driven to Proactive Advantage Driven. This paper suggests that the Supplier Development Programs focusing on helping the small suppliers to improve their environmental performance should be designed after taking into account internal characteristics of SMEs so that they acts as an impetus for adoption of environment friendly practices and is not counterproductive. As an example, Profit Driven small Supplier will revert back to previous practices which cause environmental damage once the financial support to them under the Supplier Development program is stopped, suggesting that financial support cannot change the environmental commitment of such SMEs. Similarly, Advantage Driven SMEs having very high degree of business performance commitment and environmental commitment will use the knowledge transfer and application of management and organizational practice for creative innovations and to pursue new opportunities. Such SMEs can become future targets for acquisitions by the MNEs enabling them to further strengthen their supply chains.