CONFERENCE PROCEEDINGS

26th EurOMA Conference

Helsinki, Finland
June 17-19 2019

OPERATIONS ADDING
VALUE TO SOCIETY
26th EurOMA Conference Operations Adding Value to Society

Environmental Risk Management in

Supply Chains: A Multiple Case Study

Fabíola Negreiros de Oliveira (negreiros.fabiola@gmail.com)

Pontifical Catholic University of Rio de Janeiro

Adriana Leiras (adrianaleiras@puc-rio.br)

Pontifical Catholic University of Rio de Janeiro

Paula Ceryno (paulaceryno@hotmail.com)

Federal University of the State of Rio de Janeiro

Abstract
The present paper explores the environmental risk supply chain management
through multiple case studies conducted in three Brazilian companies. We compare
the literature findings with the business reality, bringing insights on how
environmental risks are managed by industries and their supply chains, what the
potential losses perceived by companies are and the strategies adopted to hedge
against them. The case studies’ findings show that most of the risks found in the
literature were considered by the companies and that two environmental risks
highlighted by one of the companies can be added to the academic list.

Keywords: Environmental Risk Management, Supply Chain Management,

Multiple Case Study

Introduction

Risk management is one of the most significant challenges faced by supply chains
(Torres-Ruiz and Ravindran, 2018). Risks occur due to an interruption at some point
in the chain, which successively clogs the flow of materials, funds or information
among the entities of the supply chain (Bode et al., 2011). Global competition and
outsourcing render supply chains more exposed to disruptions caused by several
factors, such as uncertain economic cycles, consumer demands, natural and man-
made disasters (Torres-Ruiz and Ravindran, 2018) and adverse environmental
impacts (Levner and Ptuskin, 2018). Furthermore, supply chains are more vulnerable
to stakeholder scrutiny, which might generate vulnerability to reputation damage
(Christopher et al., 2011; Hofmann et al., 2014; Valinejad and Rahmani, 2018),
access to capital and to regulatory compliance (Torres-Ruiz and Ravindran, 2018).

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This paper focuses on environmental risks and presents a multiple case study
on the topic, since the increase of diversity and the grow of the supply chains sizes,
highlighted the importance of the environmental concerns in supply chain risk
management research (Levner and Puskin, 2018), and the literature on supply chain
risk management has largely overlooked ecological and social issues in their
operations (Hofmann et al., 2014).
As suggested by Oliveira et al. (2019), case studies should be conducted
across different companies in order to strengthen the practical field of
environmental supply chain risk management and form a basis for comparability
between academia and practice. Thus, in order to compare, validate and add new
evidence to the findings of Oliveira et al. (2019), the present research aims to
explore the environmental risks, the stakeholder effects and the consequences to the
companies, as well as the environmental strategies adopted, by conducting multiple
case studies across three large companies located in Brazil. The companies, here
designated as companies A, B and C, are respectively a petrochemical company, an
air compressor manufacturer and an agrochemical biotechnology company. More
specifically, this paper aims to address the following Research Question (RQ): Are
the environmental risks, consequences and environmental strategies found in the
academic literature also found/relevant in a business reality?
The following section outlines the case study methodology adopted for this
study. The results achieved through the conducted case studies are presented and
discussed in Section 3. Section 4 presents the concluding remarks and suggestions
for future research directions.

Research Methodology

The present research adopts the case study methodology proposed by Yin (2001),
composed of six steps: planning, project, preparation, data collection, data analysis
and sharing.
The planning intends to evaluate the relevant situation for the development
of the case study in contrast to other research methods, justifying the choice of the
case study method. Yin (2001) clarifies that the case study intends to investigate a
contemporary phenomenon within its real-life context, particularly when the
boundaries between phenomenon and context are not clearly defined. Thus, the
case study method meets the need of this research which is to analyse
environmental risk management in supply chains, since it uses several sources of
evidence, and does not have a clear definition of the boundaries between the
phenomenon to be studied and the context of the real life in which it is inserted.
Hence, the phenomenon to be investigated within a real-life context is the
management of environmental risks in supply chains, addressing the consequences
that these risks may generate for the organisations and the strategies adopted to
hedge against these risks.
The project aims to elaborate on the research question, define the case study
project (single or multiple) and define the criteria for interpreting the findings (Yin,
2001). Therefore, the main question of this study is centered around comparing and
validating the environmental risks, consequences, and strategies proposed by
Oliveira et al. (2019), with the real-life situations, observed and applied in the
supply chains of three large companies located in Brazil.
Cauchick and Souza (2012) elucidate that, in the single case study, it is
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expected that there will be greater depth in the investigation and less capacity of
generalisation. On the other hand, in multiple case studies, there is a possibility of
greater generalisation, with perhaps less deepening in the evaluation of each case.
According to Herriott and Firestone (1983), the evidence resulting from multiple
cases is considered more convincing, and consequently, the study is considered
more robust. In order to provide greater robustness to the research, through the
analysis of several organisational realities and the cross-referencing of these
various cases, the present work undertakes a multiple case study.
The case studies were conducted in three large companies located in Brazil: a
petrochemical company, an air compressor manufacturer, and an agrochemical and
agricultural biotechnology company, chosen for being ones recognised for their
sustainability visions and principles of generating positive impacts on communities
and environment.
For the preparation, Yin (2001) proposes the development of a research
protocol, which is extremely important to increase the reliability of the work,
guiding the researcher in conducting data collection for cases. Thus, for this study,
the research protocols were developed in order to guide the researchers in
performing the collection of data from the multiple case studies.
Data collection considers multiple sources of evidence, such as: semi-
structured interviews, documents, file queries, physical artifacts and direct
observation (Yin, 2001). Yin (2001) recommends the use of several sources of
evidence, since these multiple sources allow for greater detail in the collection of
data. Considering the cases studies performed here, the data collection was
conducted in the same way with the three companies under analysis. This collection
took place in three different stages and used the following sources of data:
documents provided by the company, semi-structured interviews and secondary
documents sourced from corporate websites.
For data collection, a questionnaire was initially created based on a
systematic literature review (SLR) performed by Oliveira et al. (2019) and was sent
to the companies through the SurveyMonkey platform, in order to collect
background information about their management of environmental supply chain
risks. Then, three semi-structured interviews with different managers from the
companies were performed in October and November 2018. Open questions based
on feedback from the questionnaire were used in the interviews. Finally, the
documents provided by the interviewees and secondary materials available on the
companies’ websites were compiled and analysed.
The professionals considered in these interviews are specialised in dealing
with management of environmental risks, and are: (i) Environmental, Health and
Safety Engineer of Company A; (ii) Environmental Analyst of Company B; and
(iii) Environmental, Health and Safety Engineer of Company C.
The data analysis, according to Yin (2001), is concerned with the
examination, categorisation, tabulation, testing or recombining of evidence, in
order to produce discoveries based on empiricism. This step can be driven by four
different techniques: to construct validity, internal validity, external validity and
reliability (Yin, 2001). In this study, the technique adopted is the internal validity
by means of the adaptation to the standard, where the theoretical references of
systematic literature review are used as prognosis and compared with the results of
this empirical study, in order to reinforce the validity of the study (Yin, 2001).
The final step of the methodology, sharing, aims to transmit the relevant
information of the study through the presentation of the results (Yin, 2001). This
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step is further presented in the following section.

Results and Discussion

This section presents the results and discussion of the case studies conducted in the
three Brazilian companies. The online questionnaire and the interviews allowed for
the evaluation of the environmental risks along the companies and their supply
chains.
Firstly, through the online questionnaire and the interviews, it was possible
to understand how the environmental risks and consequences were perceived and
managed by the companies. Among the environmental risks listed for the
interviewees, the ones considered for Company A were: greenhouse gas emissions
(GHG) and ozone-depleting substances (ODS); industrial ash and soot emissions;
chemicals and toxic effluents released into water or groundwater and oil; inefficient
use of water; inefficient use of energy; and explosions, fires, chemical accidents.
The most cited consequences that the risks may generate for the company were
reputational consequences. Thus, the company realises that the losses go beyond
the financial consequences that these risks can cause.
Company B considered the following environmental risks: greenhouse gas
emissions (GHG) and ozone-depleting substances (ODS); chemicals and toxic
effluents released into water or groundwater and oil; inefficient of raw materials;
inefficient use of water; inefficient use of energy; non-compliance with sustainable
laws and regulations; and explosions, fires, chemical accidents. For Company B,
the most frequent consequence was the reputational consequence. The Company
understands that damage to the companies’ reputation can cause it irreversible
losses.
Company C considered the environmental risks already mentioned, except
the environmental risk related to industrial ash and soot emissions, especially as it
is not closely related to its activities. With regards to consequences, those that were
most frequent were financial and reputational consequences.
Respondents from Company C added two risks that were not previously
included in the list of environmental risks related to the systematic literature
review, with these being: inadequate disposal of hazardous solid waste and a risk of
loss of biodiversity. These new risks should be added to the SLR list presented in
Oliveira et al. (2019), as they may create critical environmental issues. However,
the risk of loss of biodiversity is a specific risk related to the activity of Company
C, which perhaps will not fit into the list of risks of all company.
Finally, regarding the strategies to deal with the risks, among the strategies
identified in the literature, the most frequent strategies cited by the three companies
were: wastewater and solid waste management; carbon and water footprint
monitoring; efficient consumption of natural resources; substitution, precaution,
and reduction in the consumption of chemicals and toxic waste; introduction of
carbon emission reduction initiatives and practices (e.g., use of renewable energy,
filters, freight consolidation, driver efficiency, etc.; auditing, monitoring suppliers
and the use of sustainable criteria for supplier selection, encouraging suppliers and
partners to promote a sound environmental policy.
It was observed that the companies have a robust environmental policy to
deal with their environmental risks, once they consider most of the strategies
identified in the SLR of Oliveira et al. (2019).
Regarding the consequences, the respondents of the companies reported that,
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nowadays, organisations are becoming more aware of ecological issues, especially

due to stakeholder pressures, legal requirements and environmental regulations.
Thus, the companies perceived reputational losses in the same light as financial
consequences. Furthermore, it was also concluded from the interviews that all the
consequences are closely related since damage to a company's image directly
affects the company's profits. The legal consequences are also associated with
financial losses since fines and legal penalties minimise the company’s profits.
Environmental risks caused by supplier irresponsibility and their failure to
abide by environmental standards are still poorly addressed by the Companies.
Only recently have the risks arising from the suppliers become a perceptible topic
in the field of supply chain management, as mentioned by Torres-Ruiz and
Ravindran (2018). For example, recently Company A has developed voluntary
engagement actions of suppliers with a focus on sustainability, requesting them to
report their greenhouse gas emissions and water consumption, as well as the risks,
opportunities and strategies related to these specific issues.
Company C also pointed out that it seeks to engage with its suppliers,
promoting workshops in order to influence and engage them into sustainable
management practices. The workshops are also intended to encourage them to
participate in the Reforestation Program which seeks to balance the emissions of
greenhouse gases generated in their transport processes. Company B also
emphasised that it is engaging with its suppliers regarding environmental issues,
but did not mention specific actions or programmes adopted.
However, despite the engagement policies mentioned by the Companies,
they did not have a well-structured matrix of the environmental risks from the
suppliers. Companies A, B and C only audit the contracted service providers for the
destination, treatment and transportation of their chemicals effluents and waste.
Thus, it is found that the companies do not have well-structured management of
environmental risks that exceed the borders of companies (environmental risks of
the suppliers). Thus, due diligence, i.e. the co-responsibility and diligence of the
counterparties, is a topic that needs to be addressed and further explored.

Conclusion

This paper explored the environmental risks in supply chains. This was
accomplished through a multiple case study conducted in three Brazilian
companies. From these cases studies, it was possible to identify the environmental
risks, consequences, and strategies presented in the companies and its supply
chains. The results achieved allow to provide an answer to the research question of
this paper. The findings indicate that several environmental risks presented in the
literature coincide with the environmental risk considered by the studied
companies. However, it is relevant to highlight that although the types of adverse
environmental impacts are universal, the risk types should be specified for every
individual industrial enterprise (Levner and Ptuskin, 2018). For example, the risk of
loss of biodiversity mentioned by Company C may not apply to another company.
The contribution of the present study for researchers was to perform a
comparison and validation between the business reality and the academic findings
from Oliveira et al. (2019), showing that the environmental risks found in the
academic literature are in line with the environmental risks presented in a business
environment. From the case studies, we realised that the environmental risks from
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the suppliers are still poorly addressed by the companies, as opposed to the
environmental internal risks of the companies.
Furthermore, our findings contribute to the supply chain risk management
field as this paper introduces the environmental perspective and addresses the
consequences that can be felt by the companies and environmental strategies from a
practical business environment.
For future research, case studies should also consider different country
perspectives to yield interesting insights from other cultures. Moreover, case
studies conducted in different economic and climatic regions may result in different
perceptions and effects of environmental risks. The region in which the company is
located, the exposure to the risk, the intensity of stakeholder pressure and the legal
requirements of the region will certainly influence the management of the
environmental risks in the supply chain.

Acknowledgments

The authors acknowledge the support of Coordination for the Improvement of

Higher Education Personnel (CAPES) [88887091739/2014-01 - Finance Code
001]; and Foundation for Support of Research in the State of Rio de Janeiro
(FAPERJ) [203.178/ 2016].

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