SOS L5-23

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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY LECTURE LECTURE BUSINESS & GENERIC DRIVERS OF SUSTAINABILITY OVERVIEW THE TRI-DIMENSIONAL MODEL BUSINESS & GENERIC DRIVERS Content and design by Dr Peter Atorough 5
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY TODAY’S AGENDA 1. Recap of Lecture 3 2. Introduction and overview: 3. Tri-Dimensional Model 4. Drivers of Sustainability 5. Exploration (Practical) 6. Link to assignment 7. Preview 8. Questions and answers Content and design by Dr Peter Atorough 1 2 3 4 5 6 7 8
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY …Last Week Content and design by Dr Peter Atorough We will examine the main driving factors, starting with the business case drivers and then looking at the generic drivers. We will continue to explore the data. This Week… I. We looked at some of the evidence showing how sustainability is growing in impact and importance to organisations; we considered the relevance to strategy.
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Recall Some Definitions Content and design by Dr Peter Atorough According to Epstein et al. (2017) Sustainability is the economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. For businesses, this includes issues of corporate social responsibility and citizenship, improved management of corporate social and environmental impacts, and improved stakeholder engagement.
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Recall Some Definitions Content and design by Dr Peter Atorough a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making . A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives. Watkins (2007)
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 1.1 THE TRI-DIMENSIONAL MODEL Content and design by Dr Peter Atorough Based on Passet (1979)
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 1.2 THE TRI-DIMENSIONAL MODEL • Beware of incomplete sustainability analyses (example of Borneo in the 1950s) Content and design by Dr Peter Atorough With the insecticide DDT it was possible to kill mosquitoes and thus stop the spread of malaria on the island. However, it also led to the collapse of rows of cottage roofs on Borneo and to a shortage of food for the population. DDT not only destroyed malaria- carrying mosquitoes, but also wasps, which nourished their offspring with caterpillars. Without the wasps, the spread of the caterpillars increased exponentially. As a result, the caterpillars were able to invade and destroy the roofs of the local population’s cottages. In addition, many cats died from the use of DDT, much to the delight of the rodents on the island. Thus, they were able to devour the grain supplies of the local population undisturbed. The example of Borneo shows how a well-intentioned measure to strengthen the social dimension (better health by controlling malaria) led to a change in the environmental dimension (fewer wasps and cats, more caterpillars and rodents) and ultimately to a weakening of the economic dimension (fewer supplies, damage to property).
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 1.3 THE TRI-DIMENSIONAL MODEL Content and design by Dr Peter Atorough • Business depends on sustainable development • The business community has a strong self-interest in sustainable development. • Only a sustainable and careful use of the production factors labour, soil and capital can ensure the economic capacity to act in the long term. • Sustainability is therefore the basis of entrepreneurial action, as this is the only way to guarantee economic success in the long term.
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 1.4 THE TRI-DIMENSIONAL MODEL Content and design by Dr Peter Atorough • Social Dimension • Social sustainability includes equality and justice, human health, resource security, and education, among other important social elements of society. • Under the three pillars concept, efforts to promote social sustainability should also aim to foster economic and environmental benefits, too. • For businesses, efforts to generate social sustainability could include focusing company efforts on employee retention instead of economic priorities.
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 1.5 THE TRI-DIMENSIONAL MODEL Content and design by Dr Peter Atorough • Economic Dimension • Economic sustainability includes job creation, profitability, and proper accounting of ecosystem services and resource utilisation for optimal cost- benefit analyses. • In this way, the economic drivers requiring companies to need employees and for people to need jobs can also foster social sustainability if employment offers people security. • However, today's gig economy places social and economic sustainability at odds with one another. • The gig economy causes many people to contribute to the economic sustainability of companies without receiving the social safety nets typically provided by employment in return
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 1.6 THE TRI-DIMENSIONAL MODEL Content and design by Dr Peter Atorough • Environmental Dimension • Environmental sustainability focuses on the well-being of the environment. • This pillar includes water quality, air quality, and reduction of environmental stressors, such as greenhouse gas emissions. • Human health depends greatly on the quality of a person's environment, inextricably linking human health and the state of the environment. • Therefore, efforts to preserve and restore the environment benefits people, too, contributing to the social dimension. • The environment also provides natural resources necessary to foster economic sustainability. Companies rely on the extraction of natural resources to be economically sustainable.
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY DRIVERS OF SUSTAINABILITY Content and design by Dr Peter Atorough PART A ROSI FRAMEWORK
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 2.1 DRIVERS OF SUSTAINABILITY Content and design by Dr Peter Atorough From Schaltegger et al., 2016: • Companies can probably have the largest impact, more than governments and consumers, to reduce the human footprint on the environment. • By rethinking their business strategies, companies can drive the transition towards a sustainable society. As a result, sustainability efforts can bring a new competitive advantage for many companies. • However, to be successful, sustainability should have a business case and bring a financial “return on investment”.
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 2.2 DRIVERS OF SUSTAINABILITY Content and design by Dr Peter Atorough The Return on Sustainability Investment (ROSI TM ) framework, developed by the NYU Stern Center for Sustainable Business ROSI Framework
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 1. Risk Reduction • A short- to medium-term impact of sustainability pertains risk reduction, in particular risks related to the supply-chain. And regulatory compliance. • By adopting sustainable practices with suppliers, companies can mitigate supply-chain risks such as regulatory risk and disruption risks. • Regulatory risk is important because compliance has its cost. Companies who are exposed to multiple local regulations because of their supply chain may incur litigation costs and paper-work to deal with different requirements. 2.3 DRIVERS OF SUSTAINABILITY
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 2. Customer Loyalty • On the short-term, sustainability can boost intangible benefits such as customer loyalty and employees’ engagement. • A 2017 survey on Americans shows how almost 90% of consumers would buy a product with a social and environmental benefit and would be more loyal to a company that supports social or environmental issues. • In developed countries, generation X – those born between the mid- 1960s and late-1970s – represent the generation that spends most of their income. Data from the World Economic Forum shows that their spending on sustainable brands have increased by 29% from 2019 to 2021. 2.4 DRIVERS OF SUSTAINABILITY
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 3. Employee Relations • Strong evidence suggests that more employees are becoming more likely to take a job or remain with an employer who is actively pursuing sustainability as part of its strategy. • A recent survey by Gallop shows that about seven in 10 workers in the US say that a company’s environmental record matters to some degree in whether or not they would take a job with that company. • Moreover, management research at INSEAD shows that employees who participate in corporate initiatives with explicit social and environmental impact goals are more loyal to the company. The resulting effect is higher employee retention for companies that promote such initiatives. 2.5 DRIVERS OF SUSTAINABILITY
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 4. Product/Service Innovation a. Green design. Optimizing a single aspect or feature of a product is the first, usually less costly, level towards a sustainable product design. b. Eco-efficiency. Focusing on the full product lifecycle rather than a single product feature is the next level of sustainability. c. Sustainable design. Sustainability includes social and economic aspects into the equation. Products with a sustainable design are those that address multiple aspects of sustainability. d. Design for sustainability . The highest level of sustainability. A product conceived to be sustainable will have marketing, sales, development, operations and finance functions focused on sustainability. 2.6 DRIVERS OF SUSTAINABILITY
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 5. Media Coverage • Traditional media can be a great way for companies to display sustainability efforts to customers and prospects. Thus, the media can amplify sustainability efforts, either for the good or for the bad. • Research shows that sustainability information about a company on social media has a huge impact on how social media users perceive the company and their buying intentions towards the brand. 2.7 DRIVERS OF SUSTAINABILITY
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 6. Sales & Marketing • Promoting sustainability efforts is generally good, as businesses and consumers tend, on average, to put a premium on sustainability. • As sustainability adds a new dimension to a product or service, it enables differentiation from competitors’ offerings. • However, when brands exaggerate or lie about their sustainability efforts in their marketing, consumers can react negatively . 2.8 DRIVERS OF SUSTAINABILITY
SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 7. ( a ) Operational efficiency 2.9 DRIVERS OF SUSTAINABILITY • Regardless of industry, some companies more than others seek operational efficiencies in order to reduce their costs and optimize resources. • Elimination of waste is not only a prerogative of operational efficiency but also a central concept of sustainability. • Therefore, by removing waste, managers will not just reduce operational costs, but also contribute to make production more sustainable.
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 7. ( b ) Link btw Waste and Sustainability 2.9 DRIVERS OF SUSTAINABILITY Lean Waste Examples of Related Sustainability Aspects Inventory Waste • Oversizing of warehouse and production areas, increased energy usage (Planet) • Unnecessary frustration of moving excess inventory to reach needed bays (People) • Inefficient use of capital and resources (Profit) Talent Waste • Decreased employee satisfaction and engagement (People) • Inefficient use of one of the organization's most valuable assets (Profit) Waiting Waste • Energy waste from idled or below-capacity use of machinery and buildings (Planet) • Energy waste from idled or below-capacity use of machinery and buildings (Planet) • Increased labor cost; Inefficient use of capital and resources (Profit) Motion Waste • Excess motion likely means unnecessary energy and fuel consumption for machinery (i.e., conveyors, forklifts, etc.) (Planet) • Potential for increased injuries; Excess "round trips" on site likely unrewarding; Increased physical requirements for the same job; Position may no longer be appropriate for older or less-conditioned employees (People) • Increased labor cost; Increased injuries; Increased cost of energy; Decreased machine life (Profit)
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 7. ( c ) Link btw Waste and Sustainability 2.9 DRIVERS OF SUSTAINABILITY Lean Waste Examples of Related Sustainability Aspects Defects Waste • Increase in disposed packaging and product; Increase of in-line waste; Additional materials/processes/energy needed to rework (Planet) • Increased frustration and decreased morale in employees (People) • Decreased profitability from writeoffs and increased waste (Profit) Transportation Waste • Increased Scope 3 energy use and emissions; Increased use of related chemicals and solvents (Planet) • Need for transport support potentially reducing opportunities in other positions (People) • Decreased profitability (Profit) Overprocessing Waste • Unnecessary use of resources, energy, or materials which are not adding value (Planet) • Unnecessary work and potential for injury; Decreased morale in doing "busywork" (People) • Decreased profitability (Profit) Overproduction Waste • Excessive energy use and emissions; Wasteful use of materials (Planet) • Unpredictable shift loads; Potential for temporary disruptions or layoffs; Decreased morale (People) • Decreased profitability; Increased overhead (Profit)
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 8. Supplier Relations • The relationship with suppliers is key to many companies. Indeed, suppliers share risks and credibility on the downstream company. • They have an impact on the company’s reputation and affect the value of the final product. As such, suppliers are essential to supporting or hindering a company’s ability to reach sustainability goals. • Moreover, when a company pursues a sustainability strategy, it will also contribute to facilitate its suppliers in becoming more sustainable. As a result, the relations with suppliers improves. 2.8 DRIVERS OF SUSTAINABILITY
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 9. Stakeholders Engagement • Stakeholders include all the external entities that are impacted by a company’s products and strategy. • Some industries are particularly vulnerable to stakeholder scrutiny and actions. For example, NGOs, local communities, governments and media may be particularly active in industries such as Mining, Oil and Gas, and Tobacco. • Therefore, by putting relevant sustainability efforts, companies can manage stakeholders and avoid repercussions than can hurt reputation or cause costly litigations. 2.8 DRIVERS OF SUSTAINABILITY
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I will be back soon, I promise SHORT BREAK AND REFLECTION Content and design by Dr Peter Atorough Break What is lean six-sigma? Why should you consider becoming a certified practitioner?
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY DRIVERS OF SUSTAINABILITY Content and design by Dr Peter Atorough PART B GENERIC DRIVERS
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough The STEEPV Framework the EEA has developed and identified six thematic clusters using the STEEPV framework (i.e. society, technology, economy, environment, politics and values): • Cluster 1 — Growing, urbanising and migrating global population. • Cluster 2 — Climate change and environmental degradation worldwide. • Cluster 3 — Increasing scarcity of and global competition for resources. • Cluster 4 — Accelerating technological change and convergence. • Cluster 5 — Power shifts in the global economy and geopolitical landscape. • Cluster 6 — Diversifying values, lifestyles and governance approaches. 3.1 DRIVERS OF SUSTAINABILITY
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough Four Generic Drivers • Consumers and Society • Active consumership • Consumer attitudes • Generational changes 3.2 DRIVERS OF SUSTAINABILITY • Technology & Science • Processes and production • Movement and transportation • Renewable energy Digital and social media • Globalisation • Global interconnectedness • Sourcing and markets dependencies • Regulations and law • Resource Depletion • Environmental impact • Population growth • Resouce scarcity • Conflicts
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY Content and design by Dr Peter Atorough 3.3 DRIVERS OF SUSTAINABILITY
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 4.1 LET’S EXPLORE EVIDENCE Content and design by Dr Peter Atorough ❖ STATISTA ❖ Find trends ❖ Explore new segments ❖ Discover consumer attitudes
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 4.2 LET’S EXPLORE EVIDENCE Content and design by Dr Peter Atorough ❖ SUSTAINABILITY- REPORTING.COM ❖ See company self reported data and performance ❖ Evaluate and compare companies based on sustainability performance
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 5.1 LINKS TO ASSESMENT Today’s topic can help you: Content and design by Dr Peter Atorough • You will require evidence of sustainability drivers and influencing factors, including business factors, consumer behaviour, competitor actions and government regulations • You should provide and discuss the relevant evidence to show the growing impact of sustainability on organisations
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 5.2 GUIDED LEARNING PREVIEW 1. Make a short list of three well known companies that you want to consider for your ASSIGNMENT. 2. Log into Statista and explore the different sections. Familiarise yourself with the platform and read the tutorial. Watch the video tutorials 3. Go to the Company Insights section in Statista and find your companies. Review the information and select one company from your shortlist. Create a summary profile of your company on a single Powerpoint slide using the information that you find. 4. Now go to the Statistic s section and select the industry in which your company belongs. Create a summary of the main statistics and data about that sector on a single PowerPoint slide. Try to capture the current trends, the main competitors and the latest predictions. Content and design by Dr Peter Atorough
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY 5.3 NEXT LECTURE Principles of Sustainability Content and design by Dr Peter Atorough
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY SUGGESTED READING • Stead and Stead, 2014, Sustainable Strategic Management ; Routledge: New York. C1 & C2 Content and design by Dr Peter Atorough
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY QUESTIONS Content and design by Dr Peter Atorough
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SUSTAINABILITY & SUSTAINABILITY & ORGANISATIONAL STRATEGY SUSTAINABILITY & & ORGANISATIONAL STRATEGY • Tell me about the company you chose • What area of sustainability are they focused on? • What is the result? Content and design by Dr Peter Atorough
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