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Conceptualizing sustainability
“Sustainable Development meets the needs of the present without compromising the ability of future generations to meet their own needs.” UN Brundtland Report -1987
“..sustainability is a mere possibility that human and other life will flourish on the Earth forever.” John Ehrenfeld
Triple Bottom Line
Profit for a company is like oxygen for a person. If you
don't have enough of it, you're out of the game.
But if you think your life is about breathing, you're really
missing something.
-Peter DruckerManagement Guru
Sustainability as Resilience
• Resilience improved when– Reduced dependence on high risk inputs (ie heavy metals,
energy, fossil fuels, particular industries, etc.)– Encourage diversity (in firms, in practices, etc.) – Emphasize caution and prudence over risk and optimization– Preparing for shocks and disturbances
How well our society absorbs disturbances; changing and adapting but still retaining its identity
A role for firms?UN Global Compact (2013)Over 8,000 firms participating in Global Compact63% - Expect sustainability will transform their industry in 5 years76% - Sustainability will drive new revenue opportunities33% - Think that businesses are doing enough84% - Businesses should lead solutions
McKinsey Sustainability’s Strategic Worth (2014)49% - Place sustainability with a firm’s top 3 strategic priorities
43% - Using sustainability to align with company’s goals and mission
Carbon disclosure project (2014)767 – institutional investor signatoriesUS $92 Trillion – in assets
Some Sustainability Challenges
• Holistic understanding of a firm’s social and environmental footprint
• Unlocking value from sustainable technology• Distinguishing “identical” products made through
very different processes• Managing and navigating diverse stakeholders
How to understand the full scope of a firm’s environmental/social impacts?
Raw Material
ExtractionMaterial
Processing
Manufacturing Parts
Assembly
Product Use
End of Life
Life Cycle Assessment
Life Cycle Assessment
• Identify and understand risks– Reputation, regulation, resources
• Opportunities for improvement– Cost reductions, supply chain
partnerships, competitive advantage
• Redesign processes and products– New materials
Product Servitization•Increase product utilization•Drives product innovation around cradle to cradle•Permits adoption of expensive technology•Monetizes sustainable technologies•Establishes ongoing client relationship•Provides the function without the product
How to unlock value from sustainable technologies?
• How it works– Independent third parties define certification rules– Provides transparency of product and process
• Key success factors– Strong branding and awareness (combat label
proliferation)– Partnering; firms, NGOs and government– Target willing customers (often higher prices)– Ongoing monitoring
Certifications
Stakeholder Analysis
What are their Interests? Goals?Concerns?
What is the impact of your firm on them?
Who is powerful? urgent? legitimate?
Firm
Other Parties
Stakeholders
Stakeholder Analysis
4 Dominant Stakeholder
1 Dormant Stakeholder
7 Definitive Stakeholder
2 Discretionary Stakeholder
8 Nonstakeholder
6 Dependent Stakeholder
3 Demanding Stakeholder
5 Dangerous Stakeholder
Legitimacy
Power
Urgency
How can a stakeholder exert power and influence?
What makes a stakeholder have more or less legitimacy?
Why is urgency an important consideration?
How can I sell more sustainable initiatives within a company?
Source: Berns et al 2009 Sustainability and Competitive Advantage. MIT Sloan Review, 51(1)
What role do you occupy? What issue selling efforts are required?
Lego: A Sustainability Strategy• 9,000 employees• 400 billion bricks made since 1949• 19 billion bricks annually• 50 million children annually