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Summary of readings and lectures of Business & Sustainability Challenges
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Business & Sustainability Challenges Lecture SummaryIs sustainability more a social challenge than a technological one?
Context
Corporations are major contributors to the world’s sustainability challenges. During the
last two decades, corporations have been the main drivers of dramatic economic and
technological changes. Their economic power has expanded through privatisation and
liberalisation.
Nonetheless, corporations possess resources, technology, global reach, marketing skills
and motivation to work towards a more sustainable society. Initiatives, tools and
approaches that go beyond compliance have been developed for and by corporations,
evolving from ‘end-of-pipe’ solutions to whole-system approaches, which can be
measured by key performance indicators (KPIs)
,Sustainability: the long-term goal to a more sustainable world on social,
environmental and economic areas. It includes the economic, environmental and
social pillar and time on the short- and long-term perspective.
Sustainable development: the processes and pathways needed to achieve
sustainability ‘Ensuring that we meet the needs of the present without
compromising the ability of future generations to meet their own needs.’
Corporate sustainability: aiming for long-term stakeholder value through the
implementation of a business strategy which focuses on ethical, social,
environmental, cultural and economic dimensions of doing business. looks forward
and develops a sustainable strategy for the future.
Corporate responsibility: the way a company takes responsibility for its actions
and their impacts on employees, stakeholders and communities (social pillar of TBL)
Corporate social responsibility is a management concept whereby companies
integrate social and environmental concerns in their business operations, strategy
and interactions with stakeholders, going beyond compliance.
Circular economy: umbrella term that covers concepts as systems thinking,
industrial ecology and cleaner production, operationalised through approaches like
life cycle analyses, focusses more on the environmental pillar.
Different schools of thought on how to implement sustainability:
- Status Quo proponents: sustainability can be achieved within the present structures,
we will become sustainable over time, no need for fundamental change, economic
growth will bring equality and sustainability (not many concerns). ‘while changes in the
environment and society are necessary, our current political and economic institutions can
achieve the necessary results without any alterations’
- Reformists: Fundamental reform is necessary but without full transforming, we trust
the basic mechanism but certain reform is needed to speed up sustainability.
Technological innovation and energy efficiency will save environment and equality in
combination with a larger governmental role. ‘significant changes in current policy and
lifestyle will be necessary in order to achieve Sustainable Development’
- Transformationists: social and political transformation is needed to become
sustainable and prevent a collapse of society. ‘our environmental and societal problems
are caused by the fundamental structures of society, such as our political and economic
institutions, and that major changes to these structures are necessary to overcome the
current challenges’
Natural capital: the world’s stocks of natural assets, like geology, soil, air, water and all living
things, whereof we derive ecosystem services.
Weak sustainability: believes that there can be a perfect substitution between natural
capital and other types of capital (manufactured, human capital)
Strong sustainability: believes that natural capital cannot be viewed as a simple stock of
resources that can be substituted with other forms of capital. Natural capital provides critical
elements for human existence and well-being which cannot be interchanged with other
forms of capital.
Innovation procurement for sustainability
,Innovation procurement: carrying out procurement (buy-in) responsibilities and tasks in an
innovative way. This supports demand side innovation (market pull instead of technology
push) and can help procurers to achieve goals:
- Primary goals: improving services, reducing costs
- Secondary goals: inducing innovation and sustainability
Types of procurement:
- Pre-commercial procurement (PCP): an approach to public procurement of R&D,
which stimulates innovation, it enables the public sector to steer the development of
new solutions towards its needs. Buying the process of innovation (R&D services)
with partial outcomes (buying innovations that do not yet exist, the buyer describes
the need and thereby prompts businesses and researcher to develop innovative
products/services/processes to meet that need)
- Public Procurement of innovative solutions (PPI): this happens when the public
sector uses its purchasing power to act as an early adopter of innovative solutions
which are not yet available on large scale commercial basis. Buying the outcomes of
innovation created by others (instead of buying off-the-shelf innovation, the buyer
acts as an early adopter and buys a new to the market product/service/process. This
can create a disruption and help the guidance of the search.)
- Innovation partnership (IP): purchasing from a single supplier of R&D services and
the final product
- Cross-border/joint procurement: when two or more contracting authorities from
different states are jointly purchasing products, works or services through one
tendering procedure.
Incremental innovations: adapting/integrating/customising existing solutions to meet user
needs (can be done through PPI)
Radical innovations: products or services with characteristics that surpass those currently on
the market (can be done with PCP or IP)
Types of procurement with respect to the environment:
- Green Public Procurement (GPP): reduces environmental impacts across
product/service life cycles, public authorities procure goods and services with
reduced environmental impact (instead of polluting goods that otherwise would be
procured) standards set specifications beyond compliance and drive market
demand & innovation for eco-technologies (e.g. energy efficiency standards,
ecolabels and certifications)
- Circular procurement: (part of GPP) the purchase of products and services that
contribute to the closed energy and material loops within supply chains while
minimising the negative environmental impacts and waste creation across the life-
cycle.
- Public procurement for eco-innovation: innovation for environmental benefits.
, The procuring party needs to decide what end-users need, if there is a solution on the
market and if not, how much R&D is needed, is intellectual property blocking innovation,
what standards are available, how can costs be reduced, would the investment be profitable,
are suppliers interested and how to design the tender specifications.
- Knowledge asymmetries: when one side knows more than the others about
something which affects them. Can be overcome by:
o Knowledge sourcing by the procurer, which reduces information asymmetries
with suppliers
o Business cases can reduce buyer risks and increase supplier incentives by
identifying the need of the innovation and the suppliers’ ability to meet the
need.
o Evaluate post-procurement
Calculating value
- Multi-criteria decision analysis (MCDA): choosing between different innovations to
pick the best one on different criteria, one of them is costs (setting criteria and weigh
the criteria, then see what option scores highest). Useful for early-stage, higher level
decision making.
- Net present value: time is money. If the value is positive, it creates value for the
company. NPV calculates the required investments and benefits of the project.
- Life cycle costing: not only considering the costs during the project, but also
afterwards (what are the benefits, who takes ownership and maintains and pays later
costs). E.g. project is buying a car, what if you have the car? There are new costs,
maintenance etc. these costs need to be integrated in the project costs. It also
considers environmental/social costs (externalities).
Strategies from the supply side to getting procurement:
- Innovation (innovativeness/R&D activity)
- Collaboration (external alliances, engagement in standardisation)
- Market environment (low competition markets, lower threats)
- Size (smaller firms)
Barriers to innovation procurement: Too low/no incentives for suppliers to perform R&D
towards innovative solutions (because of insufficient funding or not enough buyers/demand)
Private equity firms: firms that raise funds from institutions and wealthy individuals and
invest that in buying and selling businesses. Having private equity firms invest in pre-
procurement processes can improve the outcomes and bridge the gap of insufficient funding
(valley of death) between PCP and PPI. (the time that a new innovation has to become a
success as a business)
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