Recycling waste and upcycling people: a new type of environmentally-motivated social enterprise strategy

Tom  McNamara

With the use of a case study methodology, the socially responsible enterprise La Feuille d'Erable, based in north-west France, was analysed based upon the framework proposed by Boons and Ludeke-Freund (2013). Within an overarching green management philosophy, this firm incorporates a program for the integration of socially and economically excluded people into a recycling and upcycling business activity. Our findings suggest that success for social enterprises, that combine the dual aims of green production and inclusion of hitherto disadvantaged groups, under the banner of corporate social responsibility, is linked to several clearly identified factors. The previously proposed typology (Vickers and Lyon, 2014) of environmentally-motivated social enterprises' strategies is amended. Guidelines and insights are offered to managers who may wish to implement socially responsible human resource management (SRHRM) techniques in their own organisations.

270 Int. J. Manufacturing Technology and Management, Vol. 32, No. 3, 2018 Recycling waste and upcycling people: a new type of environmentally-motivated social enterprise strategy Irena Descubes* and Tom McNamara ESC Rennes School of Business, 2 rue Robert d’Arbrissel, 35000 Rennes, France Email: irena.descubes@esc-rennes.com Email: tom.mcnamara@esc-rennes.com *Corresponding author Tony Cragg Ecole Supérieure de Logistique Industrielle, 26 quai Surcouf, 35600 Redon, France Email: tcragg.esli@campus-redon-industries.com Abstract: With the use of a case study methodology, the socially responsible enterprise La Feuille d’Erable, based in north-west France, was analysed based upon the framework proposed by Boons and Lüdeke-Freund (2013). Within an overarching green management philosophy, this firm incorporates a program for the integration of socially and economically excluded people into a recycling and upcycling business activity. Our findings suggest that success for social enterprises, that combine the dual aims of green production and inclusion of hitherto disadvantaged groups, under the banner of corporate social responsibility, is linked to several clearly identified factors. The previously proposed typology (Vickers and Lyon, 2014) of environmentally-motivated social enterprises’ strategies is amended. Guidelines and insights are offered to managers who may wish to implement socially responsible human resource management (SRHRM) techniques in their own organisations. Keywords: socially responsible human resource management; SRHRM; green social economy; GSE; social enterprises; waste recycling; social inclusion. Reference to this paper should be made as follows: Descubes, I., McNamara, T. and Cragg, T. (2018) ‘Recycling waste and upcycling people: a new type of environmentally-motivated social enterprise strategy’, Int. J. Manufacturing Technology and Management, Vol. 32, No. 3, pp.270–296. Biographical notes: Irena Descubes is an Assistant Professor of Marketing and Manager of the Executive MBA at the Rennes School of Business. Her research is driven by her interest in societal change, sustainable marketing innovation and responsible managerial practices. She holds a PhD from the University of Economics in Prague, Czech Republic. Her work has been published in the Journal of Business Strategy, Strategic Change and Journal of Organizational Change Management. Tom McNamara is an Assistant Professor of Operations Management at the Rennes School of Business, France and Manager of the MSc in the Supply Chain Management. He is also a former Visiting Lecturer at the French Copyright © 2018 Inderscience Enterprises Ltd. Recycling waste and upcycling people 271 National Military Academy at the Saint-Cyr, Coëtquidan, France. Previous to academia, he worked at a Fortune 500© energy company. His current research interests include issues and trends in production and strategic management. Tony Cragg obtained his PhD from the University of Westminster in 2016 for his research into small firms and global supply chains in the agricultural machinery sector. He teaches at a specialist school in the industrial logistics and is currently researching the management of change and the automation of processes in regional distribution centres. 1 Introduction A steady increase in world population, combined with the voracious appetite of emerging economies for ever more resources to fuel their growth, has put tremendous stress on already fragile ecosystems (De Burgos and Cespedes, 2001; Esty and Winston, 2009; Kleindorfer et al., 2005). As concern about the health and safety of the planet grows, production managers are increasingly becoming cognisant of the fact that they need to take into account how their operations impact the environment around them. Pressure to do so is coming from no less an organisation than the United Nations (UN). In its ‘2030 agenda for sustainable development (SD)’ (UN Resolution 70/1, 2015), the UN clearly states the need to “ensure the lasting protection of the planet and its natural resources” and that member states “resolve also to create conditions for sustainable, inclusive and sustained economic growth” [UN Resolution 70/1, (2015), p.3]. The European Union, for its part, says that it is fully committed to implementing the ‘2030 agenda’ and that all of the document’s sustainable development goals (SDGs) will be incorporated into future EU policies (European Commission, 2016). While many governments and international agencies are actively promoting green and sustainable initiatives, it has also been observed that markets attribute a distinct premium to companies that are considered as being green (Brandt, 2007; Saha and Darnton, 2005; Yang et al., 2010). But markets are not perfect. This continued (if not to say renewed) emphasis on concern for the environment has forced many businesses to look at not only the financial aspects of their operations, but the social and ecological ones as well (Bevilacqua et al., 2007; Bullinger et al., 1999; Le Pochat et al., 2007; Lee and Klassen, 2008). A key component in the achievement of the goals set by the UN 2030 agenda for SD will most surely be the concept of ‘green production’ (GP), an expression commonly used interchangeably with the term ‘green manufacturing’ (GM). While there is no exact definition, GP would generally be considered as a manufacturing principle that places respect for the environment and conservation of resources at the centre of all activities which result in the production of a good or service (Zhou et al., 2012). It is seen as having the potential to solve or mitigate many of the challenges currently facing the planet (Rehman and Shrivastava, 2013). While any activity that results in the use of less energy and the production of less waste should be applauded, it should be noted that the majority of GP initiatives would be characterised as expensive, risky and technologically challenging, with a relatively slow 272 I. Descubes et al. rate of return on initial investment (Bititci et al., 2012; Montalvo, 2008; Noci and Verganti, 1999). While competition obliges firms to innovate and provide customers with goods and services at affordable prices, the market, in itself, does not produce equality of incomes and may produce negative environmental externalities, such as pollution and climate change. Inequality can be dysfunctional, as it disrupts social ties and leads to insecurity, a lack of autonomy and social exclusion (Wilkinson and Pickett, 2009). Equally, citizens are increasingly seeking protection from the environmental damage caused by polluting firms, as well as taking legal actions (Tirole, 2016). When the state and state-funded agencies fail to address the problems that arise as a result of the gap between the ‘haves’ and the ‘have-nots’ created in market economies, as well as any related environmental concerns, it is usually left to charities as a last resort to alleviate hardships caused by the rigours of the market (Bywaters, 2012). While a logical first step to becoming a model corporate citizen would be to lessen the environmental impact of ones operations, the importance of green human resources management (GHRM) is increasingly being recognised and understood (Jabbour et al., 2010; Jackson et al., 2014; Renwick et al., 2013). Guerci et al. (2015) define GHRM as a “set of management processes that companies implement for responding to stakeholder pressures on environmental issues”. And while there is evidence supporting the argument that a positive correlation exists between GHRM and improvements in a firm’s performance in terms of respect for the environment (Renwick et al., 2013), there is still some ambiguity as to how GHRM principles can best be employed to achieve green outcomes (Jackson et al., 2011; Jackson and Seo, 2010; Renwick et al., 2013). The primary challenge associated with the implementation of GHRM is the prerequisite that companies need to be knowledgeable and proficient in human resources management, environmental management and operations management (Jabbour and Jabbour, 2016). No small feat. However, in recent decades another form of organisation that implements innovative HRM practices has developed rapidly, namely the social enterprise. On a spectrum ranging from traditional charities, where the primary objective is social value, to traditional commercial businesses, where the primary objective is financial value, social enterprises occupy a space somewhere between these two (Bolton et al., 2007; Bridge et al., 2009; Chell, 2007). It can be argued that social enterprises focus on civic initiatives that pursue social and environmental goals with an entrepreneurial spirit. They engage in the delivery of social and work integration services for disadvantaged groups and communities. They are distinct from non-profit organisations, because they are directly engaged in the production and/or sale of goods and services. Distinct from commercial businesses, social enterprises tend to have higher levels of participation in management, with goals that would include quantifiable benefits to the community. Hence it can be said that for social enterprises: “economic drivers are means to a social end, not the end in itself” [Granados et al., (2011), p.199]. Research has shown a rapid worldwide growth in this sector (Kerlin, 2009) and that social enterprises appear to be increasingly successful (Chiapello, 2015). For example, in the UK, as compared to traditional SMEs, social enterprises saw a greater increase in their turnover over a 12 month period, higher rates of development of new products or services, greater presence in deprived communities, as well as high rates of employment of ex-offenders, people with disabilities and the long-term unemployed. Additionally, social enterprises are a diverse sector: they are more likely to be led by women; more Recycling waste and upcycling people 273 likely to be managed by younger leaders and more likely to be led by someone from a minority ethnic background than a contemporary business (Villeneuve-Smith and Temple, 2015). Within the social enterprise sector, one subset is green social enterprises (Lucas et al., 2003; Smith and Young, 2007). These companies combine social priorities with an overarching green agenda which permeates the different organisational functions: production processes, management, HRM, office based services, inter-firm relations, etc. Given the relatively recent emergence of this new phenomenon and their importance in the social economy (Murray, 2009), from an academic research perspective, it is pertinent to ask two key questions: firstly what indicators can be used to measure success in a green social enterprise, given that the conventional business indicators of sales, profit and market share are insufficient and secondly what are the factors that lead to success on these terms? An investigation along these parameters would be an extension of the increasing research being done that tries to identify and quantify the concerns and key success factors associated with developing a business model that is both commercially viable and environmentally sustainable (Bocken et al., 2013, 2014; Boons and Lüdeke-Freund, 2013; Carraher et al., 2008; Parnell, 2008; Schaltegger et al., 2012, 2016; Rauter et al., 2015; Stead and Stead, 2000, 2004, 2008; Wells, 2013). Vickers and Lyon (2014) propose a typology of three distinct growth strategies for environmentally-motivated social enterprises (further ESE). These are: 1 ‘small and beautiful’ (restricted to niche/premium market services) 2 ‘green knowledge economy’ (reliant on niche markets driven by regulation and sustainability policies of public sector) 3 ‘green collar army’ (dependent on public quasi-markets and subordinate to corporate prime contractors). The purpose of this paper is to put forth the proposition that there exists another type of ESE with a distinct set of socially responsible human resource management (SRHRM) key performance indicators and to analyse the underlying governance model that is based on an enhanced, systemic and differentiated managerial approach. Some of the existing literature on sustainable business model archetypes (Bocken et al., 2014) and social enterprise growth strategies (Vickers and Lyon, 2014) has neglected the importance of SRHRM as part of a sustainability agenda. This paper, by focusing on a particular case study, aims to redress the balance through an application of the four elements of a sustainable business model (Boons and Lüdeke-Freund, 2013): the value proposition, the supply chain, the customer interface and the financial model. While Lovins and Hawken (1999) touch upon the importance of investing in human capital in their concept of ‘natural capitalism’, the originality of this case study is that the firm’s value proposition emphasises the empowerment of socially disadvantaged employees and human resource management practices that are innovative and progressive. As a result, the case study presents a model of a firm that encompasses both social and environmental priorities in a holistic format. The present authors carried out a case study research initiative into a green socially responsible recycling firm, La Feuille d’Erable (FE), in Rennes, north-west France. This firm specialises in the collection and recycling of waste from businesses, communities and government agencies. It has developed an innovative program for the employment of 274 I. Descubes et al. socially excluded people and has implemented a green management philosophy. It has become increasingly autonomous, by progressively reducing dependence on state and regional subsidy. In the first part of this article, we will review the literature relevant to GHRM and green social enterprises, along with associated key success factors. Then we will discuss the case study methodology used. Next, we will present the case study of FE and analyse how this firm has achieved success in terms of sustainability. In the following part a modified typology model of ESEs will be proposed. The newly identified ESE type will be explained, with the relevant factors used to measure success being outlined. Lastly, we discuss our findings and present conclusions. 2 Literature review The term ‘green’ is often used to denote a state of awareness and concern for the environment. When used in conjunction with production or manufacturing, it is considered to be referring to a process that takes into consideration, through effective management and control, its impact on the use of resources and the environment (Deif, 2011). However, as the desire for companies to become more responsible increases, the term green is being applied to other disciplines (Alfred and Adam, 2009), such as operations management (Govindan et al., 2014; Gunasekaran and Ngai, 2012; Gunasekaran and Spalanzani, 2012; Sarkis, 2001), and, interestingly enough, human resources management (HRM) (Jackson et al., 2011; Renwick et al., 2008, 2013). 2.1 Defining GHRM Starting with the UN Conference on Environment and Development in Rio de Janeiro in 1992, followed by the introduction of ISO14001 (the international standard for environmental management systems), the 1990s saw an increase in the amount of research into the greening of organisations (Biehler-Baudisch, 1994; Hale, 1995; Wehrmeyer, 1996). What soon became apparent was the importance of HRM in any initiatives to promote respect for the environment and other green priorities (Daily and Huang, 2001; Govindarajulu and Daily, 2004; Guest, 1997; Paauwe and Boselie, 2005; Schuler and Jackson, 2014). Eventually, GRHM came to be considered as simply using basic HRM activities (i.e., recruitment, employee assessment, compensation, training, etc.) to achieve specific environmental or green goals (Jabbour et al., 2010), with Jabbour (2013, p.147) defining GHRM as being “concerned with the systematic, planned alignment of typical human resource management practices with the organisation’s environmental goals”. Employees must be motivated, empowered and environmentally conscious in order for an organisation to become green (Callenbach et al., 2000). It is the proper use and implementation of HRM that is seen as being critical to the efficient functioning of any environmental management policy or system (Daily et al., 2011; Daily and Huang, 2001; Jabbour and Santos, 2008; Jabbour et al., 2010; Kitazawa and Sarkis, 2000). At the foundation of any successful green initiative would be corporate culture (Branzei et al., 2004; del Brío et al., 2007; Marshall et al., 2005; Siebenhüner and Arnold, 2007). A sincere and dedicated respect for the environment must be present at all levels Recycling waste and upcycling people 275 of an organisation, but especially with senior management (Govindarajulu and Daily, 2004). GHRM policies and initiatives have been shown to be integral to creating an overall greener corporate culture (Gupta and Kumar, 2013; Jabbour and Santos, 2008). Furthermore, it has been shown that reorganising and empowering workers, so as to better align them with environmental objectives, can result in a greener organisation, with autonomous and dynamic employees (sometimes working in teams) having been found to be effective at arriving at solutions to complex environmental challenges (Daily and Huang, 2001; Daily et al., 2012; Jabbour et al., 2013). Another important element of GHRM is the efficient design and implementation of employee training program. In-house training as it relates to green issues has become fairly widespread (Renwick et al., 2013). Proper instruction can directly affect an employee’s ability to identify, understand and implement best practices in terms of environmental management (Daily et al., 2012; Sarkis et al., 2010), as well as provide them with new technical and managerial skills that will help promote green initiatives (Hart, 2005; Perez-Sanchez et al., 2003). Good training program have also been found to improve employees’ opinions and motivations with regard to environmentally responsible initiatives (Fernández et al., 2003), as well as promote the development of a green corporate culture (Clarke, 2006). Also, effective GHRM can be used to highlight the importance of responsible behaviour and the achievement of green objectives through a well-designed employee evaluation and compensation process (Calia et al., 2009; Jabbour and Santos, 2008). Clear green performance criteria and metrics should be established by a firm so as to provide guidelines for expected employee behaviour (Jackson et al., 2011). This would have the added benefit of reinforcing a green organisational culture. Studies show that respect for the environment was associated with higher levels of CEO pay, as well as tying a CEO’s compensation package to the establishment of long-term green goals (Berrone and Gomez-Mejia, 2009; Cordeiro and Sarkis, 2008). However, it should be noted that poorly designed incentive program may actually hinder green efforts as employees might be reluctant to report problems out of fear of retribution (del Brío et al., 2007). Also, primarily at the CEO level, there is always the risk of abuse through accounting fraud or some other means that ensure that certain performance goals will be met to the detriment of other stakeholders (Benz and Frey, 2007; Denis et al., 2006). The challenge associated with financial incentives would be the development of precise and objective criteria to measure desired green performance, as well as providing rewards that sufficiently motivate and penalties that do not overly demotivate (Fernández et al., 2003; Jackson et al., 2011). The field of GHRM could be considered as still being in its infancy (Jabbour, 2013; Jackson et al., 2011; Renwick et al., 2016), as well as somewhat esoteric and lacking in a practical framework that can be generalised and readily applied (Daily and Huang, 2001; Govindarajulu and Daily, 2004; Renwick et al., 2013). That said, evidence exists showing that companies that invest in GHRM are considered as being more desirable to work for than companies that choose not to (Golds, 2011; Phillips, 2007; Stringer, 2010), and that employees who are actively engaged in green initiatives are less likely to quit (Benn et al., 2015). Some companies have even gone so far as to take a candidate’s green attitude into account during the selection process (Ones and Dilchert, 2013). Furthermore, similar to findings in the study of GP, a correlation has been found to exist between the use of GHRM practices and positive environmental outcomes for companies that use them (Daily et al., 2012). 276 I. Descubes et al. 2.2 Defining the green social enterprise Social enterprises are defined as those that do not place the market at the core, but rather the welfare of the people participating in them (Granados et al., 2011). This loose definition encompasses a wide range of organisations from charities which have trading arms to commercial organisations which engage in charitable activities. Furthermore, there exist many hybrid forms of social enterprises actively using and promoting sustainable managerial goals and practices (Epstein and Buhovac, 2014). One can find examples of entrepreneurs trying to achieve sustainable business practices as far back as the 19th century (Anderson, 2000). In general, the early literature on sustainable entrepreneurship was more concerned with issues of conservation and the environment (Staber, 1997; Keogh and Polonsky, 1998; Pastakia, 1998; Linnanen, 2002; Schaltegger, 2002; Walley and Taylor, 2002; Lehmann et al., 2005; Schaper, 2012). The phrase ‘SD’ is credited with being used for the first time at the UN Conference on the Human Environment in 1972 (Hall et al., 2010). But there are two major reference points that are recognised as vital in the evolution of sustainability, resulting in it being seen as something that can lead to behaviours that address environmental as well as social problems. One was the Brundtland commission, created by the UN in the early 1980s (WCED, 1987), with the other being the Earth Summit in Rio in 1992. These events were key in the promotion of the importance of SD. Defined as “development to meet the needs of current generations without compromising the ability of future generations to meet their own needs” [WCED, (1987), p.54], the concept of SD forces organisations to endorse moral responsibilities that go far beyond their previous notion of ‘business’ and which now forces them to take more into account their social and environmental impacts (Pasquero, 2007). The International Standard Organization (ISO) brought further clarity, and emphasis, to sustainable behaviour by defining it as the “responsibility of an organisation for the impacts of its decisions and activities on society and the environment through transparent and ethical behaviour that: contributes to SD including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour, and is integrated throughout organisation and practiced in its relationships (activities include products, services and processes; relationships refer to an organisation’s activities within its sphere of influence)” (ISO 26000 in AFNOR, 2010). As pointed out by De Lange et al. (2012), a sustainable organisation must consider its performance in a long-term and holistic nature, integrating the three fundamental pillars of SD – the economy, social equity and ecological preservation – in order to meet the needs of its current and future stakeholders. Organisational sustainability is considered as “the result of the activities of an organisation voluntarily or governed by law, that demonstrate the ability of the organisation to maintain viable its business operations (including financial viability as appropriate), whilst not negatively impacting any social or ecological systems” [Smith, (2012), p.5]. In order to understand the phenomenon of environmentally-motivated social enterprises, there is a need to focus on the normal practices of firms and, in particular, the environmental value that they create, as well as their contribution to communities and individuals (Korsgaard and Anderson, 2011). The creation of environmental value can be seen as a redress to the increasing marketisation of nature (Polyani, 1944). A number of Recycling waste and upcycling people 277 case studies attest to the ‘neoliberalisation of nature’, in other words, the perception of nature as a source of accumulation or as an object of governance (Castree, 2008; Duffy, 2013). Some researchers see the negative environmental externalities produced by markets as opportunities for social entrepreneurs (Dean and McMullan, 2007), while others view profitability and SD as two incompatible and opposing ideas (De Clercq and Voronov, 2011). Smith (2012) argues that the characteristics of social economy organisations allow for the meeting of social needs fulfilled neither by the state nor for-profit enterprises. Moreover, social enterprises are deemed to be better suited for promoting ‘green citizenship’ than the dominant form of capitalist ventures where profit motives override environmental ones. Rather than the economic output of social enterprises in terms of goods and services, it is “their purposes and the way they organise and manage their productive activity” that define whether or not they belong to the “economie sociale sector” [Molloy et al., (1999), p.8)]. Since the 1960s, the green social economy (GSE) has been focused upon an ecologically modernised system of economic exchange within existing and mostly neo-liberal institutions (Carson, 1962; Hardin, 1968; Pearce, 1988). GSE has setup environmental-friendly norms and specifications within the market economy. In other words, it is primarily related to production or distribution channels, concerning it self with values that are not exclusively monetary in nature, but still striving to make a profit and achieve economic growth. Recently, a new version of ‘cultural green economy’ (Berndt and Boeckler, 2009, 2011; Barr, 2014) has shifted focus towards the role of social relations and the need to construct market forms other than the neo-liberal ones for encouraging a truly sustainable green economy. Vickers and Lyon (2014) introduced a typology of three distinct approaches explaining alternative ways of enhancing the social and environmental values of ESEs. They were defined as ‘small and beautiful’, ‘green knowledge economy’ and ‘green collar economy’. Although Vickers and Lyon (2014) do not propose a model per se, they explore the capabilities needed to realise various conceptions of strategies enabling the scaling-up of ESEs and increasing their impact on specific markets (see Table 1). Table 1 Typology of ESEs strategies Small and beautiful Capabilities Green activists able to engage and manage volunteers; supportive activists and volunteers; other social economy organisations and networks Market Local/regional ethical consumer market Green knowledge economy Capabilities Highly qualified experts and enthusiasts in partnership or cooperative structures Market Knowledge-intensive for public (government, universities), private (B2B, B2C) and third sector (social enterprises) Green collar army Capabilities Diversified teams with strong set of business skills capable to manage beneficiaries with limited empowerment and ‘hard to help’ Market Public quasi-market (e.g., welfare-to-work programs) Source: Vickers and Lyon (2014) 278 I. Descubes et al. The present study endeavours to contribute to the research stream on cultural green economy and socio-technical systems’ innovations that generate fundamental changes to patterns of harnessing renewable resources in a socially responsible way (Bessant and Tidd, 2007). Research into GSE considers that environmental and social sciences should not just contribute to the mitigation of the impact that a neo-liberal society and economy has on the environment. Rather, it should contribute to shaping ideas as to what type of truly sustainable society and economy concerned individuals would like to create for this and future generations (Burritt et al., 2002; Upward and Jones, 2016) within the critical boundary areas that will preserve conditions for humans to thrive as defined by Rockström et al. (2009) in the planetary boundaries approach to corporate social responsibility (CSR). Schaltegger and Wagner (2006) claim that an enterprise cannot be considered as a successful sustainable business if it does not incorporate sustainability metrics into accounting practices and/or managerial decisions. Important efforts have been lately made to establish generally accepted set of sustainability accounting measures such as the Global Initiative for Sustainability Ratings (GISR). GISR’s vision is to “transform the definition of corporate value in the 21st century such that markets reward the preservation and enhancement of all forms of capital – human, intellectual, natural, social and financial” (GISR, 2016). Vickers and Lyon (2014, p.455) found that all identified types of ESEs “demonstrated elements of scaling-up and growth”. We argue that these types represent ‘weak sustainability’ as their business philosophy is built upon the idea that manufactured capital is equal to natural capital and can replace it. We argue that there exists at least one other type of ESEs that has not been proposed by Vickers and Lyon (2014) that is ‘strongly sustainable’. It will be demonstrated that this type of ESE is not primarily motivated by economic growth or geographic expansion, considering that natural capital is of a higher value than the manufactured type and that the latter cannot fully substitute the former (Daly et al., 1969). We shall contextualise this new type of ESE in terms of internal social norms and managerial practices in relation to external formal regulations. 3 ‘La Feuille d’Erable’ FE is a socially responsible enterprise that was founded in 1983 and is located in the Brittany region of France, in the north-western part of the country. Its main activity has been the recovery and recycling of paper and cardboard. ‘Let us recycle to preserve humankind and its environment’ is the company’s leitmotif, clearly in line with the conceptual framework of CSR offered by Carroll (1979). Its mission is “to develop an urban ecology and to promote a social integration of the long-term unemployed and the socially disadvantaged by using economic leverage” (La Charte de La Feuille d’Erable, 2009). FE was created thanks to the dedication of a handful of environmental activists who started out by recycling paper from a non-profit book store. In the beginning, the organisation was a workers’ cooperative primarily comprised of people whose sole goal was environmental protection. Originally, the members would go ‘door to door’ collecting paper waste, but it was soon realised that this would not be practical. In 1990, FE began collecting waste and recyclables in the city of Rennes on the basis of an Recycling waste and upcycling people 279 agreement it had with local elected officials and the national agency for waste recovery (ADEME, formerly ANRED). In 1993, FE specialised even further, expanding into the collection and recycling of waste from companies and government agencies in the greater Rennes area. In 2009, FE won a business tender for the collection of waste in the Rennes metropolitan area for a period of six years. The social aspect of FE’s recycling, in which efforts would be made to work towards reintegrating people who had been previously excluded from the community, took shape in the 1990s when the company was contracted by the French government to help reintegrate at-risk individuals. FE was chosen for this case study because of its strong sustainable business practices and its unique profoundly humanist SRHRM approach that extends the typology of environmentally-oriented enterprises. FE has been considered a successful environmentally-oriented social enterprise by various stakeholder groups, such as regional and departmental institutions, members of the waste recycling companies’ guild, customers and media. It was awarded the ‘Oscar of Sustainable Development’ prize in the French Département (county) of Ille-et-Vilaine, of which Rennes is the capital city, in 2014. It will be hereby demonstrated that FE “eliminates the organisation’s contribution to society’s violation of the sustainability principles; AND within the constraints of the sustainability principles, the organisation’s vision and goals” [Robert et al., (2012), p.49]. Furthermore, a presentation will be made of FE’s sustainable business model factors which differ from the ones previously identified by Vickers and Lyon (2014) and that allow FE to create value and engender success. 4 Research methodology There has been an ongoing call for further longitudinal work inside ESEs as well as within a wider institutional and economic context (Davies and Mullin, 2011; Hynes, 2009; Vickers and Lyon, 2014; Upward and Jones, 2016). The present paper is an attempt to address this lack of longitudinal work as the data used in this study spans almost a decade, going from 2008 to 2016. This research employs qualitative case study research methods (Eisenhardt, 1989; Stake, 2005; Flyvbjerg, 2006; Eisenhardt and Graebner, 2007; Yin, 2014). Case studies provide the ability to examine a topic in depth, which can result in a richness of description and unintended insights. They can also lead to the development of theory and allow “the much more meaningful question of why, rather than just what and how, to be answered with a relatively full understanding of the nature and complexity of the complete phenomenon” [Meredith, (1998), p.444]. A series of ten semi-structured interviews with decision-makers and managers at ‘FE’ were carried out. The number of interviews conducted reflects an attempt on the part of the present authors to reach a state of ‘saturation’, i.e., that the chances of new data or relevant themes emerging are minimal. Previous research has indicated that this state is generally achieved after seven interviews (Guest et al., 2006). The basic thematic elements arrived at in the present study all emerged within the first five interviews, with additional interviews serving to provide richness of examples. Glaser (2001) makes the point that saturation is linked to a notion of conceptual density. Therefore sample size may be small but the key criteria for testing validity are whether the categories have been filled and not whether enough interviews have been carried out. In this case, the ten 280 I. Descubes et al. interviews allowed the research question and linked categories to be fully explored and expanded from multiple perspectives. Past research has found semi-structured interviews to be ideally suited for registering the changes that would take place over time with respect to the accepted customs and behaviours of an organisation (Flyvbjerg, 2004). All interviews lasted between 40 and 60 minutes, and were digitally recorded and transcribed. The transcripts were analysed and coded using a grounded theory approach (Charmaz, 2006; Charmaz and Belgrave, 2012). The interviews, after being recorded and transcribed, were summarised and sent back to the interviewees to be checked for accuracy. Further data were provided by the HRM manager and the operations manager upon request by e-mail. Interpretations of primary and secondary data by the researchers were conducted in order to validate the research and draw lessons in an iterative analytical process (Yin, 2003). In an effort to complement the data that was collected (in the form of copies of internal and external communication, reports from meetings, dashboard indicators, etc.), and in order to carry out triangulation, inter-rater reliability was ensured by having all three authors carrying out analysis on the same material (Stake, 2005). Yin encourages researchers to aim towards analytic generalisations and argues that: “findings from a single case study nevertheless can be generalised to a broad variety of other situations” [Yin, (2014), p.42]. The generalisability of the findings of this research, which focuses on a green social enterprise in a specific sector and in a specific region, to the wider area of social enterprises, is, of course, an important question. The focus of any qualitative research will be limited by constraints, but this should not distract from the possible generalisable insights and replicable best practices that it may be able to contribute (Halinen and Törnroos, 2005). 5 Strongly sustainable type of environmentally-oriented enterprise Recent studies on sustainable business models have come up with various, more or less, exhaustive performance indicators (Bocken et al., 2014; Boons and Lüdeke-Freund, 2013; Schaltegger et al., 2012, 2016; Rauter et al., 2015; Wells, 2013). None of these studies was conducted in the specific area of environmentally-oriented enterprises. We hereby propose to carry out, to the best of our knowledge, the first such analysis by conducting a case study of FE’s value creating content, governance structure and transaction mechanisms. The study is based upon the following four business model constituting elements that reinforce sustainability [Boons and Lüdeke-Freund, (2013), p.13]: 1 the value proposition provides measurable ecological and/or social value in concert with economic value 2 the supply chain involves suppliers who take responsibility towards their own as well as the focal company’s stakeholders 3 the customer interface motivates customers to take responsibility for their consumption as well as for the focal company’s stakeholders 281 Recycling waste and upcycling people 4 the financial model reflects an appropriate distribution of economic costs and benefits among actors involved in the business model and accounts for the company’s ecological and social impacts. The constituting elements of FE’s business model that support rigorous sustainability are summarised in Table 2. Table 2 Constituent elements of FE’s rigorous sustainable business The value proposition The entrepreneurial human-centred vision of FE is based upon the embedded value proposition that everyone is employable and that waste can be turned into a resource in several recycling or up-cycling virtuous circles (e.g., timber fiber used in paper can be recycled up to five times). The customer interface FE provides its customers with training in in-situ waste preservation and sorting that enables and increases their environmental responsibility. It also provides learning-by-doing environmental education at schools. The supply chain FE holds a leader position in the office supplies recycling supply chain. Furthermore, FE gives priority to recycling the material via channels that are the most efficient logistically. The financial model FE’s financial model is based on the promotion of a “humanist economy in which profit is not an end but a means to increase the success of La Feuille d’Erable’s mission”, preserving the financial health of the company with entrepreneurial spirit, and continuously improving and measuring La Feuille d’Erable’s service performance. Next, each dimension is analysed and presented in further detail. 5.1 The double social and environmental value proposition The company has a very strong social grounding in that it proposes fixed-term employment contracts (‘Le contrat à durée déterminée d’insertion’ in French) to unemployed people who face particular social and/or professional difficulties such as former prisoners, long-term unemployed people, etc. It encourages the employees’ participation in the decision-making and co-builds with each fixed-term contract (FTC) employee their integration project, contributing to the recognition of the skills acquired through the delivery of a certificate of competences at the end of the FTC contract, and enabling access of FTC holders to sustainable employment through local partnerships. A robust follow-up process has been put in place that allows FE to monitor the professional track of their FTC employees from their recruitment until six months after they have left the company. The management of FE has setup three periods in the FTC contract, each focused on a different professionalisation aspect. The first one is aimed at evaluating the FTC candidate’s capacity to fit into the company’s overall culture and mode of operation. The second one highlights the individual’s particular social problems such as inadequate housing, unstable marital situation, debt problems or criminal convictions. The third period prepares the individual for when their FTC status ends and includes two telephone contacts, three and six months respectively, after the individual has left the company. 282 I. Descubes et al. The number of FTCs has grown steadily since 2008, and there were 40 people under FTC contract in 2016. The average length of a FTC contract at FE has increased by approximately a month since 2008, standing at 14.5 months in 2016. The FTC is signed for a minimum period of four months and is renewable up to a total duration of two years. The above stated work contracts specify agreed upon conduct in terms of absenteeism, misconduct towards colleagues, clients and management and alcohol or drug consumption. According to the management these strict rules, which are understood by all and applied rigorously, are one of keys to a well-functioning collective effort. It has been the experience of the General Manager of FE that FTC employees appreciate when the rules are applied to all with no exceptions. Furthermore, the greatest benefit to the ‘at risk’ employees appears to be the recognition of their skills rather than feelings of pity for them because of their social difficulties. The FTC employees have the possibility to voice their concerns and make suggestions for improvements in company procedures or propose innovations during regular meetings called ‘Exprim’Café’. What is interesting about this procedure is its empowerment effect on FTC employees, as they are held responsible for the implementation of the measures that they have proposed. For example, in March 2016 it was proposed that FE provide FTC employees a multimedia centre with books and DVDs with resources useful for their professional growth, e.g., traffic rule manuals for truck drivers or textbooks for the preparation of competitive exams for positions such as fire fighter, prison guard or delivery person. One permanent employee and the FTC employee who made the proposal were designated as implementation team responsible for the realisation of the project. In this case, the multimedia centre started operating in May 2016. Since 2015, the company has held the AFAQ EI/ETTI certification for its FTC management procedures. One of the interesting visual tools used by the management is the displaying of quality indicators at the entrances of the company’s facilities. An example of the indicators used would be the level of absenteeism or the number, the trend and the annual average of customer complaints. FE tracks the professional evolution of FTC employees once they have left the company and differentiates between four potential exit paths: sustainable employment (temporary job contract for a period longer than six months or permanent job contract), transitional employment (temporary job contract for a period shorter that six months), positive outflow (an additional training period to increase the level of competence and employability) and ‘cancelled out’ due to specific circumstances such as a prolonged sickness period, instability or dissatisfaction with abandoned job positions. The sustainable, transitional and positive paths are gathered under a single heading called ‘dynamic’ exits and are audited by the departmental council for integration through economic activity (French acronym CDIAE). The required dynamic exit rate is 60% (and is comprised of sustainable employment, transitional employment and positive outflows). At FE, the dynamic exit rate has steadily grown from below 50% between 2008 and 2014, to 54% in 2014, 71% in 2015 and 85% in 2016. The most important environmental element of the FE’s value proposition is found in the deliberate and voluntary geographical limitation of the area where waste material is collected, recycled and/or upcycled. Although the company could increase its revenues by selling the collected material to major (mostly Chinese) players in the waste market, it carries out its operations in a geographically limited area in order to preserve and, if Recycling waste and upcycling people 283 possible, even create more ‘non-offshorable’ jobs and to lessen their carbon and water footprints. 5.2 The supply chain This Rennes based company operates in a highly competitive industrial environment, mainly due to pressure from Asian recycling companies that are able to offer higher prices to collectors of waste paper. But the environmental footprint of paper recycled by Asian competitors is much higher than when it is recycled in a closed loop. FE insists that collected recyclable material is never sent to a paper mill more than 430 kilometres from the Rennes metropolitan area where it was collected and sorted by quality. For example, mixed colour paper or newspapers and magazines are recycled at a plant near Rouen in Normandy, while white or blank paper is processed at another mill near Le Mans (see Figure 1). Figure 1 Paper mills collaborating with FE (see online version for colours) FE is competing against mainly Asian for-profit paper producers not only to remain competitive price wise, but also to establish a recycling system and routes that provide the lowest possible carbon footprint. In 2014, FE equipped its fleet of trucks with a GPS system that allows the operators to optimise their routes. In 2013, FE launched a new recycling program called ‘Adalia’, specialised in collecting and recycling various office supplies such as fluorescent tubes and bulbs, electrical disposable batteries, print cartridges abd toners, soft and hard plastic covers and containers and plastic cups. Again, the inherent motivation for launching ‘Adalia’ was the increased efficiency of the collecting process measured in tones per kilometre and turnover per kilometre. 284 I. Descubes et al. 5.3 The customer interface Customers are asked to take an active part in sorting paper by quality, e.g., white, mixed colour, newspaper, etc. They are provided with one-day training and inventive cardboard boxes called ‘tri-kest’ that facilitate the sorting process (see Figure 2). Figure 2 Tri-kest 100% recyclable cardboard boxes (see online version for colours) An on-board truck weighing system enhances the transparency and trust between the operators and the customers as at the end of each collection both parties co-sign an electronic receipt certifying the quality and the quantity of the picked-up material. The reduced carbon and water footprint resulting from the recycling of paper and cardboard is translated into easy to understand equivilents in the CSR reporting that all FE’s customers have been receiving since 2011. The company has worked out a unique system of reporting that customers can easily understand as it ‘translates’ the material savings into daily-life environment-impacting phenomena such as showering, driving, taking a high-speed train between Rennes and Paris or the personal consumption of energy. Furthermore, each report contains information regarding the amount of work that was created by the customer due to their collaboration with FE (see Figure 3). FE also accompanies its customers by proposing to them regular diagnostics of their internal and external waste management according to the ever-evolving legislative requirements. It provides a grid that allows for understanding the existing recycling solutions’ carbon and water footprint as well as the level of awareness of the employees regarding recycling activities and environmentally responsible behaviour. Based on this diagnostics, FE proposes to its customers coaching and corrective actions. The company’s management considers that to be truly sustainable, the company should rather educate its customers and prospects to enlarge the variety of collected and re-purchased recyclable and reusable material within a limited geographical area. Thus, since 2010 the company has collected and recycled the FSC poplar lumber from wooden crates left behind by merchants at the end of the daily open-air markets in the Rennes metropolitan area. The wooden crates are dismantled, crushed and the obtained wooden chips are soaked in paraffin to become ecological fire lighters (see Figure 4). The amount of collected material is approximately 100 tons of wood per year and provides jobs to three long-term unemployed mildly mentally disadvantaged workers who are members of a local partner not-for-profit organisation called ‘agir’. Recycling waste and upcycling people Figure 3 285 Example of the CSR reporting for a regional middle-sized company (see online version for colours) Yet, another example of proactive and long-term orientated customer interfacing is the company’s waste management education program that it provides in kindergartens, elementary and high schools in the Rennes metropolitan area. Children and adolescents (the consumers of tomorrow) are provided with learning-by-doing training that is differentiated by age category, such as recycled paper crafting, vermicomposting, participation in the EU Comenius program specialised in recycling, etc. (see an example in Figure 5). 286 I. Descubes et al. Figure 4 Ecological and socially inclusive fire lighters (see online version for colours) Figure 5 Recycled paper crafting at a kindergarten (see online version for colours) Recycling waste and upcycling people 287 5.4 The financial model As previously stated, the financial model of FE is based on the promotion of a “humanist economy in which profit is not an end but a means to increase the success of FE’s mission”, preserving the financial health of the company with entrepreneurial spirit, and continuously improving and measuring FE’s service performance. Therefore, the company is not measuring only its profit (that has actually grown from 700,000€ in 2008 to 1.8 million € in 2016) but includes in its ‘eco-global’ balanced scorecard the collected material tonnage per kilometer, per type and per FTC employee. 6 SRHRM: beyond recycling material and towards upcycling people SRHRM is omnipresent at FE in that it can be found in the daily routine that has been adapted for the previously socially excluded workers. The FTC employees fully understand the challenges of the multi-faceted and competitive business environment they are involved in and are proud of the fact that 90% of the paper collected is consistently recycled. The practice of management at FE, just as in a conventional enterprise, is based on formal rules comprised of specific written procedures covering a whole host of items (established work hours, lateness and absences, hygiene, safety, discipline, etc.). But it is also based on the ability of managers to perceive the subjective and individual past experiences of employees and their capacity to grow professionally. Instead of deploying extrinsic motivation tools, management prefers methods of intrinsic motivation that encourage self-reliance, so that both the full-time and FTC employees are self-motivated. It starts with their (re) learned autonomy, and the company helps them to use the natural potential that already exists in them. The next step is to encourage workers and support them with a vision that says every individual is naturally inclined to act positively, to explore his or her own environment, to create and to learn without the need for conditioning. And finally, to create the context in which people will get motivated by themselves. At FE, managers spend about 80% of their time managing and about 20% developing people and giving advice. This could be likened to the Anglo-Saxon concept of ‘management by walking around’. Management strives as much as possible to get all employees, both permanent and temporary, to first understand both the immediate and long-term strategic issues involved, and then decide collegially and collectively to make decisions and implement them. In other words, the management tries to follow the formula attributed to Benjamin Franklin: “tell me and I forget, teach me and I may remember, involve me and I learn” (Pankey and Davis, 1985). Employees are encouraged to find solutions to problems themselves by making them more involved in the company’s operations. The management applies a five-step approach, which is to say; it specifies the expected results, gives guidelines, identifies the resources needed, defines how results will be evaluated, and determines the consequences of failure or success. Then it applies the principle of positive stimulation, namely, giving recognition for effort and positive results first and not spending time criticising what is wrong. 288 7 I. Descubes et al. Conclusions An in-depth case study analysis was carried out at FE along four axes in terms of the company’s core activities as they relate to the creation of measurable ecological and/or social value, i.e., FE’s 1 value proposition 2 supply chain 3 customer interface(s) 4 financial model. After analysing FE’s internal and external operations, elements were identified that contributed to the successful achievement of the dual objectives of GP and the social inclusion of previously disadvantaged social groups: in other words elements that reinforce sustainability. The findings of this case would also shed light on specific features of yet another type of ESE that does not aim solely for ‘high economic/financial growth beyond a regional base to multiple sites’ nor is it ‘dependent on public quasi-markets’ (Vickers and Lyons, 2014). We hereby propose that FE does not belong to any of the environmentallymotivated social enterprise types proposed by Vickers and Lyons (2014) due to its strongly sustainable business model that could be labelled as ‘empowering and optimising’. Neither does FE fit into one of the sustainable business model archetypes as defined by Bocken et al. (2014), because of its main value proposition of SRHRM, which these archetypes do not include. Indeed the unique advantage of FE and the original contribution of this case study is the combination of the four elements of a sustainable business model (Boons and Lüdeke-Freund, 2013) and in particular the empowerment of socially disadvantaged employees. As a result, there are indications that a business model is more than just a ‘market device’ that simply acts as an intermediary between various stakeholders (Doganova and Eyquem-Renault, 2009; Muniesa et al., 2007). This research project suggests that for organisations to be sustainable, both social and environmental priorities need to be taken into account and would include environmental stewardship, respect for persons and nature, and social equity (Stubbs and Cocklin, 2008). This multidimensional approach with regard to concern for society, the environment and equality can be considered as the determining factor that results in FE’s business model and internal structure being referred to as ‘sustainable’ (Dyllick and Hockerts, 2002; Schaltegger and Wagner, 2006; Stead and Stead, 2008). It can be argued that this additional typology, in the context of environmentally-motivated social enterprises, can provide a helpful framework for extended study into the identification of key success factors for promoting sustainability in terms of creating social and economic value. Furthermore, this case study shows that a motivational system based on intrinsic bottom-up empowerment rather than one that uses an extrinsic set of carrots (rewards) and sticks (punishments) better reflects the social objectives of ESEs, namely, a long-term social utility that every social entrepreneur seeks to achieve, while at the same time focusing on creating real “customer and social value by integrating social, environmental, and business activities” [Schaltegger et al., (2012), p.112]. Promisingly, there also appears to be an absence of the trade-offs often found in sustainable business Recycling waste and upcycling people 289 models, i.e., increased environmental performance but with an associated increase in operating cost or reduced efficiency (Boons and Lüdeke-Freund, 2013; Charter et al., 2008). Observations from this case study provide evidence that applying intrinsic motivators in environmentally-motivated social enterprises generates better results (e.g., the number of dynamic exits reaching 85% in 2016). The importance of effective management, in conjunction with the proper use of efficient management tools, with regard to ensuring the viability of a sustainable enterprise, is fairly well-known (Birkin et al., 2009a, 2009b), but would be reinforced by the findings of the present study. We suggest that a system of management and governance that encourages an individual to use their potential to the best of their ability leads naturally to an increase in the performance of the organisation and maintains (as well as sustains) the creative force of people operating in the third sector in a social and communal sense. 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