The Basis of external environment management control systems：A case study of green supply chain management at Daiwa House Industry

Management Control Association, European symposium at ESSCA School of Management, Lyon Campus, France.

Buyers often assembles product parts purchased from suppliers, such as in the automotive industry. Therefore, if buyers want their companies to achieve carbon neutrality, developing decarbonization measures only within their own factories isn’t often sufficient. They need to motivate their suppliers to decarbonize and continue supplying environmentally conscious components. Therefore, at present, decarbonization measures for large companies are a challenge for the entire supply chain. How do buyers seek to influence their suppliers towards carbon neutrality and the achievement of external corporate goals (e.g. SBT and SDGs)? This presentation aims to define the concept of external environmental management control based on a case study and the results of previous studies. The single case study method will be used using the Japanese housing manufacturer Daiwa House Industry as a critical case (Yin 1994). The company has developed progressive practices to integrate external and internal environmental management control systems in their company (Ando 2021).
　The key finding of this study is that, while providing concrete solutions for the challenges facing supplier companies, it emphasizes the ‘sincere understanding’ of each company’s especially top management. The principle of external environmental management control is the integration of partial and total optimization (environmental goal congruence). ‘Partial’ refers to the environmental goals of individual suppliers, while ‘total’ refers to environmental goals across the entire supply chain, including Daiwa House Industry. When a large company declares itself carbon neutral, hundreds of supplier companies are likely to follow suit, thus increasing the decarbonization of society as a whole. In this sense, the socio-environmental significance of this case study is especially important.