Business, Sustainability and
Innovation
Lecture 1: Business & Sustainability
- The role of business in society
- The business case for sustainability
- Corporate sustainability and its implementation
A business enterprise (or a company/firm) is:
- A profit-seeking organization
- That provides goods and/or services designed to satisfy customers’ needs
- By transforming lower-value inputs into higher-value outputs (adding value)
Business
The value chain depicts all the activities a company engages in while doing business
The role of business in society
There is one and only one responsibility of business: to use its resources and engage in activities
designed to increase its profits so long as it stays within the rules of the game.
Shareholder theory (or stockholder theory):
“Shareholder theory equates to an influential view on the role of business in society which pushes
the idea that the only responsibility of managers is to serve in the best possible way the interests
of shareholders, using the resources of the corporation to increase the wealth of the latter by
seeking profits. According to this theory, such behavior, done within the constraints of law and
1
,without deception or fraud, would be beneficial for society as a whole. Within this theory corporate
social responsibility is defined in purely economic profit making terms.”
Stakeholders are all those who can affect, or affected by, the achievement of organizational
objectives.
“Corporate activities have an impact on society and the natural environment and, therefore, may (or
may not) contribute to sustainable development (SD).”
Stakeholders’ expectations about the environment can affect business. They can present both
threats (e.g. rejection of environmentally harmful products) and opportunities that arise from
customer preference for environmentally friendly goods (e.g. new market opportunity, investments).
What is beyond the boundaries of the firm
Depends on the business model and behaviour of the company look at in the course
Focus of assignment what the company is doing or not doing
The role of business in society
1. which company would you consider to be a leader in sustainability?
Cheaper, society as a whole benefits. What makes them different new business model.
2. Why do you consider the company a leader in sustainability? To what degree does the company
think and act differently from others?
Long-term
3. Why do you think the company engages in sustainability? What competitive advantages and other
benefits might the company gain by being a leader in sustainability? Who else benefits from these
actions?
The business case for sustainability
Business case in the context of sustainability: wether and how a company can actively create
synergies between managing environmental or social issues in a way that increases corporate
economic performances.
Why companies consider sustainability?
Needs to make profit to stay alive finding the business case for sustainability, increase corporate
economic performances.
The business case for sustainability
1. Costs and cost reduction (cost savings) benefit from sustainable changes in product
2. Risk and risk reduction (improving risk management)
3. Sales and profit margin
4. Reputation and brand value present themselves as more sustainable brand value higher
5. Attractiveness as an employer (attracting and engaging employees/employee motivation)
impottant to attrackt high skilled employees, important to be more sustainable, younger generations
care about that
6. innovative capabilities (fostering innovation)
Corporate sustainability and its implementation
2
, the sustainability traingle.
5 stages of organizational growth – corporate sustainability and its implementation
1. “It’s Not Our Job to Fix That” (Defensive stage)
2. “We’ll Do Just as Much as We Have to” (Compliance stage)
3. “It’s the Business, Stupid” (Managerial stage)
4. “It Gives Us a Competitive Edge” (Strategic stage)
5. “We Need to Make Sure Everybody Does It” (Civil stage)
Tutorial 1: Innovating for a circulair economy
1. Linear & Circular Economy
2. Circular manufacturing systems
3. Eco-innovation in the transition to a circular economy
What are the characteristics of the Linear Economy?
4 big assumptions
- Growth will go on forever, (bad for GDP good for society?)
- There is no limited supply
- Trouble with limits and irreplacebility
- China richer, more equil but not democratic
- Pollution how to measure? (Africa)
Discourses of climate delay
Who is gone pay, by default its gone be you.
The Circular Economy
3
, How to circulair economy will look like (goal)
Through innovation, things can cycle cycle forever
However, “The circular economy is often heralded as a panacea that will allow green growth
(ie, decoupling economic growth from the ecological impacts associated with
economic activities) [However], global absolute decoupling of GDP growth and
resource consumption, a necessary condition for green growth, is still far from a
reality.Is a genuinely circular economy compatible with economic growth?”
“There are, I argue, two main possible paths: persisting in attempting to reconcile
the circular economy with economic growth or adopting a post-growth approach to
the circular economy.”
Unmade-made-remade
Panacea solution for everything
Doughnut Economic and Circulair Economics compare:
Critics donut: too basic, doesnt indicate ?
Poverty and wealth on it facing each other across the donut
1. what are similarities between CE adn D?
They are in line with the principles of a regenerative and redistributive economy by
design
They are both based on economic theories
Synasizem , real part of a debate
2. what are differences?
D makes a difference between poor and rich while CE does not take it seperately.
D more outstanding / compass , CE more of a roadmap (how it might actually change the system)
reconfiguration. D political compass to help us understand how to get pass climate delate?
4