Introduction of Sustainable SABIC

        Over the years, as the level of awareness has increased among the people, majority of them is now supporting environment protectionism in as many things as possible. Now, people have realized that their actions are negatively affecting the environment that is causing a lot of trouble for everyone. It’s high time that everyone acts as a responsible individual and protects the environment for themselves and for the future generations as well. Sustainability is probably the most popular term these days it means using resources in a sustainable way so that we leave behind something for the future generations too (Abaza 2017).

        Since most resources are being used by businesses around the world, they have increased their focus on sustainable measure. Businesses have to sell their products in the end to customers and since now they are demanding sustainable measures ever business has understood that by adopting such measures they can achieve success. Organizations globally are now changing their yearlong practices and are becoming sustainable. Following the trend many organizations in the Kingdom of Saudi Arabia too are giving importance to sustainability. One example of such an organization is the Saudi Arabia Industries Cooperation.

        SABIC started its operations in 1976. SABIC is a public company that is located in Riyadh. It is one of the world’s biggest petrochemicals manufacturers. Around 70% of its shares are owned by the government of Saudi Arabia while the rest are freely traded on the stock exchange. With its commitment the company today is operating in more than 50 countries and is employing a workforce of around 35000. The chairman of the company is DR.Abdulaziz Saleh Aljarbou. There are four different business units of the organization namely, Specialties, Metals, Petrochemicals and Agri-nutrients. An executive vice president is present for each business unit. The vision of the company is to be the world leader in chemicals. The mission statement of the company is that it wants to provide quality products through innovation, learning and operational excellence and keep all its stakeholders satisfied (Sabic 2019).

        The company has set standards and follows them strictly, this has made such great success possible for SABIC. The company uses human capital and physical capital effectively by making sure that none is exploited. The company has invested heavily in technology and encourages education and innovation. SABIC gives great importance to integrity and it establishes its aims and objectives based on it. The business practices safe methods and makes sure that it does not compromise on this. SABIC recognizes that sustainability is an important thing to follow that can lead to long term success of the business. Sustainability is kept in mind whenever any decision is being made. The core strategy of the organization is made by combining the social, economic, and social factors (Hitt, Ireland and Hoskisson 2012).

        SABIC recognizes that population growth is a major challenge that is going to be faced by companies worldwide. It is estimated that by 2050, 9 billion people will inhabit earth and most of them will live in the urban area. This will ultimately lead to higher demand of goods and services. This means that the company will have to increase its production as well as to meet the rising demand. In order for the production to increase the company will need higher levels of food, materials, energy and other important resources that are already scarce. The company has integrated sustainability in its everyday actions. This challenge cannot be solved by any one company rather every organization needs to work together towards achieving this goal of sustainability at a rapid pace since there is time pressure. This is the reason why SABIC believes that it is important to take every stakeholder and business partner in the value chain along as it can best be achieved collectively. Innovations solutions that promote sustainability should be created so that all industries and entire region can take advantage of it. Sustainability is a journey that requires reexamines off all the objectives and goals to make sure that they are meeting the expectations. The process involves continuous learning and improvements. Huge amount of effort is made every day at the organization just to make sure that all its decisions are being made keeping in consideration sustainability.

        SABIC since the beginning of its operation had great concern for environment. It made remarkable contributions in the storage of carbon since it is really concerned about climatic changes. An example of this can be that SABIC is using the largest carbon dioxide purification plant. This has enabled it to continue production processes but with lower emissions of carbon/CO2. So, it is meeting its sustainable goals. The company is also an active member of Carbon Sequestration Leadership Forum this is made so that a number of stakeholders can interact and discuss on how to further reduce pollution in order to reduce the negative impact on the environment. Furthermore, energy efficient approaches are discussed so that the cost is decreased as well. SABIC has always encouraged efforts made by the government to enhance innovations and development so that the stakeholders are satisfied. In 2017 SABIC came up with four new sustainable solutions. Around 80 innovations projects were analyzed related to sustainability (Dangelico and Pujari 2010).

        A new plant has been established in Indiana that uses less coal. In total the company was successful in reducing its greenhouse gas intensity by 9.3%, energy intensity was reduced by 7.6%, material loss intensity has been reduced by 35.2% and water intensity has been reduced by 8.8% among another major milestone. We can clearly see that the organization has been interested in sustainable growth and it has future plans of further increasing its focus on sustainability. Of course, it benefits the organizations as well when it becomes sustainable. We are going to look at some of the disadvantages in detail below.

        The chemistry council of America has recently acknowledged the efforts of SABIC in being an innovative plastic company. By becoming a sustainable company SABIC has received recognition nationally and internationally. This has made its image better and since now consumers too are looking for environmentally friendly companies SABIC has become their first choice. Same is the case with other businesses that are now more willing to join hands with SABIC. This has overall increased the goodwill of the company.

        Other than this, there are numerous other advantages of becoming a sustainable organization. SABIC has also largely benefited from financial benefits. This is because by adopting sustainable measures it has been able to reduce its operating costs, administrative costs and capital costs. This reduction in costs has increased its revenue.

        Since now the customers are satisfied with the practices of SABIC, it has increased their market share and has made way for further innovation. Moreover, the company has more growth opportunities now that can take advantage of and make higher levels of profits. SABIC is now also more encouraged to spend on research and development in order to get more innovative ideas that will help it increase its position in the market more.

        Since SABIC has invested in sustainable measure this has also helped the company to achieve operational advantages. Some examples of such advantages can be that there are higher process innovation, productivity gains and resource efficiency. The company is focusing on waste minimization that means that it using the scares resources effectively that also helps the company to keep its costs under control.

        By becoming a sustainable organization SABIC had also been able to take advantage of some advantages that are large spread. For instance, the employees feel encouraged that they are working for an organization that takes into account its corporate responsibility as well along with other things. This fact has increased their level of motivation that has led to higher productivity level. The stakeholders that include all the third parties that are affected by the decisions that business made like government, suppliers etc. are also satisfied with the company. This has made the relationship with SABIC and its stakeholders really strong that helps in future as it can take up more projects due to its loyalty. When the government is seeing that the company is bringing huge benefits for the country it also wants to support and encourage the organization. The government is less likely to intervene in any decisions of SABIC as long as the company keeps following its track. Overall more people prefer to be inked or associated with the organization because it has a big name and individuals know that their learning chances are likely to increase.

As already mentioned that the employees of the company are highly satisfied with the company’s work and policies this means that the turnover rate is lower. Turnover refers to the number of employees leaving the company. Lower turnover rate is something that every company dreams of achieving because of several benefits attached with it. When the turnover rate is higher companies have to spend on hiring new employees, training new employees etc., so this adds to the cost of the company. Moreover, there is no guarantee that the performance of the employee will be good or not and if this cycle of turnover keeps on increasing then eventually employees will not consider SABIC as an ideal company to work with. It is calculated that the hiring costs in Riyadh are around U.S $5000, this clearly shows that companies will have to spend such great amount of the hiring process considering the fact that there are still chances that if an offer is made to an employee, he/she can refuse. Lower turnover rate saves a lot of money and time of SABIC.

        Turnover not only affects the costs of the company but it also leads to unsatisfied customers. Customers are no usually comfortable working with a new employee every time they visit the company. This means that the customers can become frustrated and not prefer SABIC that will reduce the market share of the company. Moreover, it is important to remember that every time an employee leaves the job he/she takes the knowledge with them as well. Employees have good levels of information like about the internal operations of the company, its consumers and its suppliers. This information is built overtime so whenever a new employee is brought in the organization they will take time to gain this knowledge. It is better if the company retains its knowledgeable employees by keeping the turnover rate lower (Hancock, et al. 2013).

    Furthermore, from the perspective of the employees too, turnover is not a good thing. The other employees will think like there is something seriously wrong with the organization and the remaining employees feel insecure about their jobs.

References of Sustainable SABIC

Abaza, Wasseem. 2017. "Comparing internal and external impacts of sustainable innovation: an exploratory study." Journal of Global Entrepreneurship Research 7 (3): 1-18.

Dangelico, Rosa Maria, and Devashish Pujari. 2010. "Mainstreaming green product innovation: Why and how companies integrate environmental sustainability." Journal of business ethics 95 (3): 471-486.

Hancock, Julie I., David G. Allen, Frank A. Bosco, Karen R. McDaniel, and Charles A. Pierce. 2013. "Meta-analytic review of employee turnover as a predictor of firm performance." Journal of Management 39 (3): 573-603.

Hitt, Michael A., R. Duane Ireland, and Robert E. Hoskisson. 2012. Strategic management cases: competitiveness and globalization. Cengage Learning.

Sabic. 2019. About. https://www.sabic.com/en/about.