Project Management and Sustainable Development Principles

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Chapter 1

Introduction

1.1 The Purpose of this Book

Corporate sustainability initiatives performed by many organizations can be understood as paying only lip service. Often philanthropic activities are provided in order to do good for society. Seriously considering sustainable development (SD) principles means integrating these principles into services, products, and processes. This operationalizes the SD of organizations.

Although SD is sometimes considered a fad, here, SD is perceived as a new management paradigm, which allows for coping with the complexity and dynamics of organizations. SD as a new management paradigm is also of relevance for temporary organizations (i.e., for projects and programs). The SD principles, namely economic, ecologic, and social-oriented; short-term, mid-term, and long-term oriented; local, regional, and global-oriented; as well as values-based, can be considered in the project initiation process and in the project management process in order to improve the quality of these processes and by this, indirectly improving the quality of the project results.

The purpose of this book is to report on the results of the Research Project: SustPM. The focus is on operationalizing SD for projects and providing viable approaches to consider SD principles in the project initiation process and the project management process.

1.2 The Relevance of Sustainable Development for Societies

The concept of sustainable development (SD) has acquired wide attention following the publication of the so-called Brundtland Report by the World Commission for Environment and Development in 1987. The Report defines sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED 1987, p. 43). The international attention given to this report culminated in the 1992 United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro (also called the ‘Earth Summit’), where the Rio Declaration, the most important political declaration on SD, was signed by 153 states and Agenda 21 was adopted. This document attempts to embrace the entire environment and development agenda (Parson 1992) by focusing on social and economic dimensions (e.g., poverty, demographics, health), conservation and management of resources (atmosphere, forests, water, biodiversity), major societal groups (women, NGOs, businesses, local authorities), and means of implementation (financial resources, institutional and legal arrangements, education and awareness building, development cooperation). Throughout the 2000s, at the UN level, the SD concept has been partially integrated into the (sustainable) human development concept, expressed in the UN Millennium Declaration and the Millennium Development Goals, which place SD in the broader context of striving to achieve human well-being.

The importance of sustainable development was acknowledged by the European Union (EU) in 1992, when the EU signed the Rio Declaration and committed itself to drawing up a cross-sectoral SD strategy. This commitment was confirmed when the EU included sustainable development objectives in the 1997 Amsterdam Treaty: The Union shall set itself the following objectives: to promote economic and social progress and a high level of employment and to achieve balanced and sustainable development (…). In its meeting in Gothenburg in June 2001, the European Council decided on the first EU Strategy for Sustainable Development, which was renewed in 2006 by the European Council. It defines four key objectives (environmental protection, social equity and cohesion, economic prosperity, international responsibilities) and ten policy-guiding principles.

Although in Europe SD is an area of policy integration driven by the EU level, the United States has no single SD policy document or process in place. The governance mechanisms in the United States are mainly coordinated through partnerships and agencies and subordinated to the individual U.S. states. Generally, environmental policy-making is the prevalent approach rather than integrated sustainable development. The Environmental Protection Agency (EPA) plays an important role in environmental policy.

Canada has assigned responsibility for SD to individual government departments and agencies. This responsibility is laid out under the Auditor General Act, which requires 31 departments to submit to the parliament so-called Departmental SD Strategies, in which each department defines objectives and plans for action. This decentralized approach has given the Canadian provinces an important role in promoting sustainable development. A guiding document for departmental SD strategies aims to strengthen coherence and accountability by defining six government-wide sustainable development goals: clean water, clean air, and reducing greenhouse gas emissions, sustainable communities, sustainable development and use of natural resources, and governance for sustainable development.

Recently, China has been placing increasing importance on sustainable development issues. This is mainly due to its fast growing population and economy, which have placed an increasing amount of pressure on the environment, as well as the prospect of becoming a leader in green technology. China's Agenda 21 can be divided into four main sections: (1) general strategic issues of sustainable development; (2) societal aspects of sustainable development; (3) sustainable development of the economy; and (4) protection of resources and the environment. China's Agenda 21 is integrated into the Five-Year Planning process of China's economy; however, it is less integrated into sectoral plans and within overall national environmental planning. The current five-year plan (2006–2011) emphasizes the balanced relation of growth and environmental aspects.

In 2002, in the absence of an individual SD strategy in India, sustainable development principles were outlined in a detailed study entitled, Empowering People for Sustainable Development (EPSD) and in the National Five Year Plans, which outline the main development trends for the whole country. The five main objectives are: (1) combating poverty, (2) empowering people, (3) fostering competences in science and technology, (4) setting environmental standards, and (5) improving core sectors of the economy.

1.3 The Relevance of Sustainable Development for Companies

During the last several years, businesses all over the world have committed themselves to implementing the concept of sustainable development as an active corporate engagement that goes beyond legal compliance:¹

ISO 14001 and EMAS are both voluntary sets of standards designed to support an implementation of effective environmental management systems in organizations. Since 1996, more than 223,000 companies in 159 countries have implemented and certified environmental management systems following ISO 14001 requirements. EMAS has been implemented by about 4,500 organizations in Europe. In 2010, the International Organization for Standardization launched an additional international standard named ISO 26000 to provide globally relevant guidelines for social responsibility among private and public sector organizations.

In 2000, the United Nations published the Global Compact, a set of ten principles on human rights, labor standards, environmental standards, and anti-corruption measures, implemented by companies around the world on a voluntary basis. Today, approximately 8,000 businesses and non-business stakeholders from 135 countries participate in this UN-driven initiative.

In 2000, the OECD re-edited its Guidelines for Multinational Enterprises, including recommendations for voluntary responsible business behavior concerning employment, natural environment, industrial relations, corruption, consumer interests, and competition (Morgera, 2011). National Contact Points responsible for promotion and diffusion of the Guidelines were established in more than 42 of the most developed countries, which account for 85% of total foreign direct investment flow.

In 2002, the Global Reporting Initiative (GRI) released Sustainability Reporting Guidelines, which encourage and guide corporations to report not only on economic, but also on social and environmental business aspects. In 2010, approximately 1,500 companies published sustainability reports based on the GRI guidelines. Corporate Register, the leading organization in collecting, publishing, and analyzing corporate sustainability reports worldwide (www.corporateregister.com) contains more than 30,000 reports from approximately 7,500 companies; their long-term analysis shows that environmental reporting, which dominated the 1990s, has been consistently replaced by sustainability reporting.

In 2006, the International Labour Organization (ILO), a UN-affiliated agency, amended the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, which was designed as a universal instrument supporting companies, governments, and employers’ and workers’ organizations in their efforts in areas, such as employment, training, and conditions of work and life (Alcock, 1971). The impact of the ILO's Tripartite Declaration of Principles is reflected in the fact that it brings together governments, employers, and workers from 181 member states.

Social Accountability International (SAI) is a multi-stakeholder global organization that has established one of the world's most preeminent social standards, the SA8000. The aim of this standard is to promote socially responsible types of behavior among businesses by setting an auditable system of requirements to be met by employers in terms of workers’ rights, workplace conditions, and management systems (Braun, 2011). In 2011, the SA8000 standard was implemented in 62 countries and 65 industrial sectors, which covered about 2,800 facilities and about 1.6 million workers.

1.4 The Relevance of Sustainable Development for Projects and Programs

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SD is of relevance for different social systems, such as societies, regions, and companies, but also projects and programs. Projects and programs play important roles in value creation in contemporary society and companies. An estimate suggests that approximately 30% of global economic activities are initiated through projects (Turner et al., 2010). Although there has been consideration of SD at the company level, projects and programs have not yet been in focus. Nevertheless, there are activities to integrate SD into projects and programs and their management. At the EMEA Conference 2009 in Amsterdam, Nokia Siemens Networks presented on how they are rethinking business by considering SD to gain business success for their projects.

SD principles are considered in specific project types, such as public, engineering, and construction projects. Klakegg and Haavaldsen (2011) highlight the importance of SD in major public investments. Another stream of research concentrates on SD in construction projects (Abidin & Pasquire, 2007; Edum-Fotwe & Price, 2009; Eid, 2009; Khalfan, 2006; Shelbourn et al., 2006). Khalfan (2006) focuses on the implementation of SD in construction projects with the aim of creating a sustainable construction (see also Shelbourn et al., 2006). Edum-Fotwe and Price (2009) discuss the possibility of integrating social aspects in construction projects. For engineering projects, Labuschagne and Brent (2005) developed a framework to consider SD in early project phases. Their research focuses on the development of a Sustainable Project Life Cycle Management methodology (Brent & Labuschagne, 2006; Brent & Labuschagne, 2004; Labuschagne & Brent, 2005; Labuschagne et al., 2005).

For an impact assessment of large investments with significant impacts on the environment and society, a number of procedures have been established that take SD into account as well (e.g., Environmental Impact Assessment, Sustainability Impact Assessment). On the one hand, banks and funding authorities play an important role in disseminating these procedures, because, more and more, they must prove that the impacts of large investments are taken into account early enough (see World Bank). On the other hand, many companies are the main target groups of these procedures, because they are the owners and drivers of the assessed investments. These assessment and evaluation procedures are not well integrated into project management and therefore do not have relevant effects on project management procedures and