This case is about the multinational company ABB, the development of its sustainability strategy, and its dilemmas in supplying hydropower dam projects. Adam Roscoe, head of sustainability at ABB Group, had to evaluate the content and the business consequences of a letter written by the non-profit organization (NGO) International Rivers. The letter discussed the alleged violations of sustainability criteria when building the Nam Theun 2 dam in Laos. Roscoe needed to assess what implications the letter had for ABB. ABB had a large stake in the outcomes of the project. As ABB had a well-developed sustainability practice in its core business, such a letter from a large well-known NGO might affect ABB’s policies and practices in sustainability.
On the one hand, the World Bank and the Asian Development Bank had a large stake in seeing that the project was successful in its environmental and social aspects. The dam project would be providing the country with much needed economic development: supplying rural areas of Laos as well as Thailand with electricity, bringing in a large source of revenues that would be used in poverty reduction programs for Laos, and lastly providing a non-carbon-based energy source.
On the other hand, ABB had to consider the position of its stakeholders including customers, investors, media and NGOs. If ABB was associated with a dam project that did not comply with international regulations outlined by the World Bank and the Equator Principles of financial institutions, the company could face a reputation risk associated with the project. This could lead to negative publicity and, potentially, loss of business.
Adam thus faced two interweaved questions: Would the International Rivers’ letter pose a reputation risk for ABB? What would this example mean for ABB’s sustainability criteria and objectives and would this need to be acknowledged, and, if so, how?