50 American Journal of Management Vol. 24(4) 2024 

Sustainability Management in Industrial Companies 

  
Thomas Göllinger  

University of Applied Sciences Konstanz 

 

 

 
Industrial companies have numerous avenues for implementing sustainability innovations, which can 

significantly reduce the negative ecological impact of their activities. In this context, a variety of options 

for action and types of innovation are available to companies at different system levels. These range from 

innovations in the material and energy flows used for processing, procedural and product innovations, 

through to comprehensive organisational and functional innovations at the consumer and user level. There 

are numerous interdependencies between the different levels and types of innovation. 

 

Keywords: production & product ecology, function orientation, system levels, types of innovation 

 

INTRODUCTION 

 

There is a substantial agreement among scientists and politicians that the current ecological challenges, 

such as climate change, are of a global scale and are approaching planetary boundaries (Rockström et al. 

2009). Furthermore, these challenges are posing significant obstacles for the economy and businesses. 

Industrial companies are especially affected by this phenomenon, as they contribute significantly to 

ecologically problematic material and energy flows and are therefore particularly affected by ecologically 

motivated political and social demands and government regulations. In this regard, addressing the 

ecologically sustainable value creation issue represents a significant future challenge for these companies. 

Concurrently, a multitude of innovations exist that can facilitate ecological improvements at the 

organizational level. When implemented appropriately, these innovations have the potential to enhance the 

long-term viability of industrial companies. 

 

SUSTAINABILITY AS A TASK FOR CORPORATE MANAGEMENT 

 

The perception of sustainability issues within society exhibits a cyclical pattern, characterized by 

periods of both ascension and decline. However, an overall upward trajectory is discernible. It is, therefore, 

of existential importance for companies to address the issue of sustainability. Otherwise, they risk finding 

themselves in a situation that threatens their existence in the long term. 

Therefore, dealing with the issue of sustainability represents a general challenge for corporate 

management and requires qualified sustainability management. The following definition is used as a basis 

for the following explanations: 

Sustainability management is defined as the comprehensive design, steering, and development of a 

company that considers economic, ecological, social, and socio-cultural aspects. Consequently, the 

objective is to establish a multidimensional target reference, or "sustainability polytelia", within the context 



 American Journal of Management Vol. 24(4) 2024 51 

of a dynamic equilibrium between competing target dimensions. This entails a comprehensive assessment 

of economic, ecological, social, and socio-cultural opportunities and constraints, intending to shape 

corporate policy in a manner that optimizes the realization of these diverse objectives. As a cross-sectional 

function, sustainability management is cross-functional, encompassing all company functional areas and 

involving all employees. Furthermore, it is cross-company and also takes into account cooperating 

companies in upstream and downstream stages. Finally, it is characterized by a proactive behavioral and 

transformative innovation orientation. 

 

CURRENT CHALLENGES FOR SUSTAINABILITY MANAGEMENT 

 

Contemporary sustainability management is based on an equal footing on both the social-human and 

ecological dimensions. It can be defined as value- and responsibility-oriented management (corporate social 

responsibility, CSR) (Pfister 2020) on the one hand and as environmental and resource-oriented 

management on the other. These two issues are considered part of an integrated management system. This 

form of management is innovation-oriented and therefore highly relevant for the future viability of 

companies. (Seidel (Ed.) 1999, Göllinger 2022). 

Companies are not only directly confronted with current problems such as the environmental and 

climate crisis, supply bottlenecks, and geopolitical developments, but also with many demands from society 

and politics regarding sustainability. These demands have already led to market-relevant consequences. 

Consequently, companies are facing an increasing number of demands in this area. 

Additional specific objectives include: The concept of a circular economy, defined as a system in which 

materials are kept in circulation for as long as possible, has gained significant traction in recent years. This 

approach, also known as "cradle to cradle", is designed to reduce the amount of waste generated by avoiding 

unnecessary consumption and promoting recycling. (Migliore/Talamo/Paganin (Ed.) 2020). In light of the 

mounting challenges posed by waste accumulation over the past few decades, governments and 

corporations have been pursuing a range of measures to reduce waste and increase recycling. The principles 

of a comprehensive circular economy are increasingly guiding these efforts. A key concept is the notion of 

a fully residue- and waste-free (zero waste) production and economic system. In a narrow sense, this 

concept is related to the specific operational production processes, which makes its implementation 

challenging. This is because a multitude of industrial production processes yield a range of undesirable by-

products and secondary products that cannot be directly utilized in the production or operation process and 

therefore accumulate as residues. However, suppose the guiding principle is interpreted broadly, in the 

sense of recycling residues in the value creation network of the entire economy. In that case, it can be 

expected that a zero-waste strategy can increasingly be realized. The cradle-to-cradle approach should be 

seen in this context (McDonough/Braungart, 2009). This relies on consistent recycling by either 

continuously keeping material flows in technical cycles or returning them to natural cycles. 

The considerable number of regulatory measures in place give rise to many requirements, which 

presents a significant challenge for companies in terms of developing efficient concepts and integrating 

them into their established corporate routines. The question of reconciling economic, social, and ecological 

objectives has been a topic of social and political debate for some time. In recent times, disputes between 

disparate ecological objectives have also emerged. One illustrative example of an internal ecological 

conflict is the ongoing debate about the relative priority of climate protection over nature conservation. The 

conflicts mentioned above of objectives and values give rise to a more complex situation about the social 

evaluation and interpretation of information concerning the actual or only supposed social and ecological 

benefits of certain materials, products, and production processes. This is due to the various interactions and 

the difficulties in adequately recording them. As a result, the demands on companies' social and ecological 

communication are increasing. 

Concurrently, the escalating costs associated with environmental and resource consumption (e.g., CO2 

pricing) necessitate a thorough examination within the context of a company's profitability calculations. In 

favorable circumstances, these augmented endeavors may culminate in augmented resource and cost 

savings for companies. (Fernández/Zubelzu/Rodrigo (Ed.) 2017). 



52 American Journal of Management Vol. 24(4) 2024 

TOPICS AND TASKS OF SUSTAINABILITY MANAGEMENT IN INDUSTRIAL COMPANIES 

 

In the traditional economic perspective, a company's material value creation process is conceptualized 

as the transformation of raw materials and supplies (input) into goods and services (output). In contrast, the 

ecological perspective posits that the corporate performance creation process is a transformation of resource 

input (energy, materials) into desirable products and undesirable emissions, residues, and ecological risks. 

From this perspective, value creation processes are inextricably linked to harmful creation processes, which 

are referred to as external effects in environmental economics. While the traditional economic perspective 

abstracts from the material-energy processes in the value creation process, the ecological perspective 

explicitly addresses these material-energy aspects. (Costanza 1991, Daly/Farley 2004, 

Weizsäcker/Hargroves/Smith 2009). 

In the future, the emphasis will be on developing products (goods and services) that do not present any 

risks to human health or the environment throughout their entire life cycle, from manufacture and use to 

consumption, recycling and disposal. Furthermore, these products will consume few resources. 

(Seliger/Khraisheh/Jawahir 2011, Benetto/Gericke/Guiton (Ed.) 2018). 

 

Greening of Industrial Production - Production Ecology 

Traditional Environmental Protection in Industrial Companies 

In the context of operational production within industrial companies, sustainability is closely associated 

with traditional operational environmental management and its orientation towards the environmental 

protection function. The operational processes of the production area and the associated neighboring areas 

constitute the primary focus of tasks and activities. Environmental and organizational issues are of 

particular importance, particularly concerning operational and production-related environmental protection 

measures. This dominance is a consequence of the environmental protection legislation that has developed 

over decades, which has been and continues to be strongly oriented towards environmental media, 

substances, and plants. 

Similarly, aftercare environmental protection has been a dominant area of focus for an extended period. 

It is important to distinguish between remedial environmental protection, which employs cleaning and 

repair technologies, and additive environmental protection, which utilises filter and retention technologies. 

Remedial environmental protection is only applicable when pollutant emissions have already occurred, that 

is to say, when an environmental medium has already been polluted. A case in point is removing 

contaminated sites, for example, cleaning contaminated soil or leaking landfills. It is inevitable that 

remedial environmental protection will be required in the future, given that numerous contaminated sites 

still need to be removed to prevent more serious harmful effects. The implementation of filter and retention 

technologies represents an initial step in the process of additive environmental protection. These 

technologies are designed to address emissions, which, despite not being eliminated, can be contained and 

prevented from spreading. In this regard, the concept of additive environmental protection is concerned 

with avoiding emissions. (Haasis (Ed.) 2007). 

 

Production-Integrated Environmental Protection (PIEP) 

Production-integrated environmental protection (PIEP) represents a proactive and innovative avoidance 

strategy (Göllinger 2012). It entails the implementation of integrated environmental protection technologies 

and a corresponding organizational orientation of operational environmental protection, intending to 

prevent emissions and residues from occurring in the first place. The fundamental premise is that 

environmental protection measures must be initiated at the earliest stage of the production process, which 

is why industrial production represents the central starting point. This is what is meant by the term 

"production-integrated environmental protection," or PIEP. This objective entails an ecological 

modernization of the entire production process, entailing a structural change in the production processes 

themselves. Consequently, environmental protection becomes an intrinsic aspect of production, 

accompanied by reduced resource utilization. The following sequence of steps can be regarded as 

programmatic for PIEP: avoid, then reduce, then recycle, then dispose. 



 American Journal of Management Vol. 24(4) 2024 53 

Recycling as an Integral Part of a Circular Economy 

The integration of recycling as a fundamental component of a circular economy is a necessity, despite 

the advent of revolutionary advancements in production and manufacturing techniques. The aspiration of 

achieving an entirely residue-free production process remains unattainable. It is of paramount importance 

that unavoidable residues resulting from production processes be reused. In this regard, all potential avenues 

for recycling must be pursued. The term "recycling" is typically understood to signify the reintroduction of 

residual materials into the economic cycle. (Göllinger/Harrer-Puchner 2022). 

This may occur within the company's own production (internal recycling) or by extending the recycling 

possibilities beyond the company itself (external recycling). Typical measures include the implementation 

of use and recycling cascades, such as establishing closed water cycles or recovering materials from 

electroplating and etching processes. (Veit/Bernardes (Ed.) 2015). 

A further differentiation can be made based on the spatial or institutional scope of the material flows. 

A company can have several production facilities at one location that are networked with each other in 

terms of their material flows. One example of this is chemical Verbund sites. In such constellations, the 

recycling basis for residues extends to all processes within the inter-company production network (inter-

company recycling).  

A number of industrial recycling networks have already been established based on inter-company 

cooperation. These networks are formed with the aim of recycling residues and are therefore referred to as 

recycling networks (industrial ecology) (Isenmann/Hauff (Ed.) 2007). Figure 1 illutrates the areas of 

responsibility of PIEP and recycling. 

Residue recovery tasks can be subsumed under the term "operational reduction management". The 

coordination between operational production and operational reduction leads to an integrated production 

and reduction economy. 

 

FIGURE 1 

PIEP AND THE POSSIBILITIES FOR NETWORKING MATERIAL FLOW 

 

 
  



54 American Journal of Management Vol. 24(4) 2024 

Product-Related Environmental Management - Product Ecology 

Product-related Environmental Management represents an extension of production ecology to 

encompass product ecology. The environmental impact of products is not limited to the production phase; 

it also extends to the use phase. From a product-related environmental management perspective, products 

themselves can be a source of emissions. For instance, adhesives may release solvents into the environment. 

Conversely, utilizing a multitude of products necessitates utilizing supplementary resources in the form of 

operational materials, such as electricity for the refrigerator. The additional consumption of resources and 

the associated emissions and environmental impact have the potential to exceed the environmental impact 

of producing a consumer good over its lifetime. In light of the legal requirements and customer preferences, 

companies must prioritize the development of environmentally conscious and resource-efficient products. 

(Göllinger 2012, 2022). 

Upon reaching the end of their useful life, products are ultimately destined for the waste management 

system as consumer waste. Up until this point, the prevailing practice has been to dispose of these materials 

in landfill sites or incineration plants. This approach is not aligned with the tenets of a circular economy, 

as the products in question may contain valuable raw materials that should be returned to the economic 

cycle. Subsequent to the production and consumption phase, the objective of the reduction phase is to 

conclude the material cycle. (Charter/Tischner (Ed.) 2001). 

Product ecology can be summarized as follows: The use of hazardous substances to the environment 

and health should be avoided. 

Products should be designed to allow for resource conservation and minimal emissions, possess an 

extended service life, and be straightforward to repair and recycle. These objectives may be subject to some 

degree of overlap, but they may also be in competition with one another. In individual cases, it is important 

to utilise appropriate instruments, such as product life cycle assessments, in order to optimise the entire 

product life cycle. If all areas of a company that are affected by the product issue (e.g. R&D, materials 

management, marketing) are included in this optimisation, the result is an ecological product policy.   

 

Function- and Needs-Oriented Corporate Policy 

Both production ecology and product ecology concentrate on technological innovations. Nevertheless, 

these approaches are inadequate for fully exploiting the existing potential for efficiency. The functional 

orientation approach incorporates an additional dimension: benefit or functionality. The objective is to 

ascertain the benefits that a product offers the user and determine how this useful service can be provided 

ecologically efficiently. The objective is to provide services that meet consumer demand, focusing on the 

use of fewer ecologically compatible products. The functional orientation approach involves the integration 

of product and process innovations, as well as organisational innovations. In essence, the aim is to satisfy 

the service demanded by consumers with fewer but ecologically compatible products. A number of service 

concepts already exist that increase the ecological efficiency of goods through professional product usage 

management. (Göllinger 2012, Vester 2007). 

The goods and services offered by companies represent specific solutions to problems encountered by 

customers or users. The user typically combines multiple goods and services to derive specific benefits. 

Such offerings may be designated as a "utility service" or "product as a service." One illustrative example 

is that of chemical companies, which offer application consulting services in addition to their chemical 

products. In many instances, this is the very factor that enables the effective and efficient utilisation of 

chemicals, as exemplified by the case of agrochemicals in agriculture. From the user's perspective, it is 

paramount to provide the desired chemical usage service through an optimal combination of chemical use 

and application advice.  

The emphasis in usage-oriented services is no longer on the tangible benefit, but rather on the customer 

benefit that is effectively generated. The services are designed in such a way that the utilization potential 

of a carrier medium is used as intensively as possible. The service consumers can be either individual 

customers who borrow a carrier medium or several people who use a carrier medium together (e.g., car, 

washing machine, etc.). Rental of products is also included in these usage-oriented services, as are concepts 

of joint use of products (pooling and sharing). 



 American Journal of Management Vol. 24(4) 2024 55 

The rental of products is by the manufacturer's product responsibility. In the event that the manufacturer 

rents out products, the products are returned after use. The manufacturer is then responsible for the recycling 

or disposal of the products. The manufacturer's economic interest is already geared towards recycling-

oriented product design during the product development stage. If the products are made available to users 

via a pool, the manufacturer is interested in the longest possible and most intensive use. This is achieved 

by having several users in a pool, while a long service life is attained by a product design oriented towards 

the product's service life. 

 

Expansion to Include Further Properties and Functions 

An expansion to include further properties and functions is achieved by extending the ecologically 

compatible design of all infrastructures and processes to the buildings and land used, thereby creating 

factory and site ecology. In this context, the objective is to identify and assess the direct ecological impact 

of operational activities at the local site. The effects are particularly felt by local stakeholders, including 

residents, environmental groups, local government, and local service providers. 

Socio-ecologically oriented processes are also integrated into the procurement of raw materials, 

consumables, and supplies and the distribution of goods. This corresponds to a functional, holistic approach 

in which the aforementioned processes of procurement, distribution, production, and product ecology are 

linked together. (Vester 1980, 1988, 2007). 

 

INTERDEPENDENCIES OF THE SYSTEM LEVELS AND INNOVATIONS 

 

In previous literature, analogous integration-oriented attributes have been identified as characteristics 

of environmental management, which can be considered a precursor to sustainability management 

(Göllinger 2012). To gain a more comprehensive understanding of sustainability that encompasses the 

social, socio-cultural, and societal dimensions, it is essential to integrate the aspects above. 

There are numerous avenues for an ecological orientation of companies, occurring at disparate system 

or action levels and associated with diverse types of innovation. Figure 2 illustrates these system levels, 

measures, and innovation types in tabular form. 

 

FIGURE 2 

SYSTEM LEVELS, OPTIONS FOR ACTION AND TYPES OF INNOVATION IN THE 

GREENING OF INDUSTRY 

 

 



56 American Journal of Management Vol. 24(4) 2024 

The scheme presented gives the impression of a clear and linear layering of the individual levels and 

options for action or measures. However, an analysis of the interrelationships reveals that the scheme is, in 

fact, more complex and can be viewed in two fundamental aspects: 

1. Interconnections between the levels: The levels are interwoven in a variety of ways, rendering it 

generally infeasible to view them in isolation. In particular, a substantial number of foundational 

repercussions on lower levels can be observed, as the following examples will illustrate.  

− For instance, process and procedural innovations that result in a reduction and/or alteration 

of the quality of operational emissions frequently necessitate the substitution of raw, 

auxiliary, and operating materials to ensure the optimal functioning of these novel 

processes. 

− This is particularly relevant in the context of the inter-company exchange of material flows 

within the framework of inter-industrial material flow networks.  

− In addition, product innovations within the context of product ecology may necessitate the 

implementation of alternative production processes. A central tenet of product ecology is 

the utilisation of alternative raw materials for products with a reduced environmental 

impact. 

− System innovations, such as the energy or mobility transition, typically necessitate the 

coordinated development of a multitude of innovations at the underlying levels. This is 

particularly relevant in the context of organizational and functional innovations that more 

closely align with the needs and expectations of consumers and infrastructure users. 

2. The fundamental level of analysis is that of material and energy flows: The initial or fundamental 

system level (material and energy flows) serves as the foundation for all subsequent levels, as it 

possesses a dual and therefore optimal function within this comprehensive system. 

− From the perspective of operational material and energy flows, there is a clear opportunity 

for innovation in greening corporate activities. In this context, the substitution of 

problematic Raw, auxiliary, and operating materials is of particular relevance, as it 

represents a crucial avenue for advancing material and raw material innovations. In this 

context, the development of consistency innovations is of particular significance. 

− Conversely, the material and energy conversion processes that result from operational 

value creation are responsible for the material and energy flows exchanged with the natural 

environment. This implies that all innovations and measures at the other levels ultimately 

exert an influence on the first level (as evidenced by the large downward arrow in Fig. 4.6). 

This is because the various measures at these levels each serve the purpose of quantitatively 

and qualitatively modifying the material and energy flows induced by companies. In this 

respect, this level differs fundamentally from all other levels. 

 

CONCLUSION AND OUTLOOK 

 

There are numerous opportunities for industrial companies to implement innovations at different system 

and operational levels  thereby reducing the environmental impact of operational value creation processes. 

The innovations mentioned initially extend to the level of material and energy flows, then cover the level 

of production processes and extend to the products. Additionally, consumer usage systems are 

encompassed. In addition to technological innovations, organizational and functional innovations are also 

necessary. With regard to this, there is an observable increase in system integration and innovation 

orientation can be observed with the ascending levels, which results in numerous repercussions and 

interdependencies between the levels and innovation arenas.  

 

 

 

 



 American Journal of Management Vol. 24(4) 2024 57 

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