Change Management for sustainability strategies.pdf

Change management for sustainability strategies LESSON 1: Introduction Reading #1- No more business as usual: in “The Great Reset” business schools must lead the way – 4/02/2021 https://theconversation.com/no-more-business-as-usual-in-the-great-reset-business- schools-mu...

Change management for sustainability strategies LESSON 1: Introduction Reading #1- No more business as usual: in “The Great Reset” business schools must lead the way – 4/02/2021 https://theconversation.com/no-more-business-as-usual-in-the-great-reset-business- schools-must-lead-the-way-152622 Business schools can valuably contribute to the COVID-19 efforts too. For example, with their expertise in managing supply chains, operations and logistics they can advise on the massive challenge of manufacturing and distributing billions of vaccines and scrutinising the integrity and ethics of vaccine testing and rollout. The mission of business schools has evolved. Today their horizons have expanded towards improving well-being in society. Their stakeholders extend beyond students and businesses to include governments and not-for-profits. Central to their agendas should be applying all their knowledge and skills to dealing with wicked problems such as climate change, ethics and fairness, and disruption by digital technologies and artificial intelligence. COVID-19 represents a tipping point for business schools to use their expertise to reset, reinvent and relaunch their role in promoting ethical and sustainable business practices. https://sdgs.un.org/goals Reading #2- How to make Sustainability every employee’s responsibility- 23/02/2018 https://hbr.org/2018/02/how-to-make-sustainability-every-employees-responsibility Summary: Unsurprisingly, carbon emissions by the world’s largest companies are increasing, and only one-third of the 600 largest companies in the U.S. have any systematic sustainability oversight at the board level. Based on interviews with CEOs and other executives, companies that are winning the sustainability battle have created the conditions for their stakeholders to own sustainability. In these companies, sustainability is not someone else’s problem. A three-phase model of incubation, launching, and entrenching can help companies move beyond rhetoric and take ownership of sustainability. Psychological ownership refers to feelings of possessiveness and connection that we develop toward an appealing object such as a person, company, or even an idea. And research has shown that feelings of organizational ownership lead to greater job satisfaction, My framework for creating such sustainability ownership has three phases: incubate, launch, and entrench. Incubation is the process of, first, defining the contours of your sustainability domain by reflecting on the purpose of your business and its specific role in the world. The second step involves concretizing your goals by generating a research-based list of material issues across your entire value chain. Such a list identifies areas of overlap in companies’ and stakeholders’ sustainability priorities. Launching your sustainability plan entails enthusiastically introducing it to stakeholders and setting the idea of ownership in motion. To entice employees and relevant stakeholders to own sustainability, sell it as an opportunity to contribute to the future well-being of both the company and society. Sometimes you have to appeal to the head (monetary incentives, cost savings, career advancement), other times to the heart (look at the difference we make), and very often, both. Having the proper training and systems in place is also critical to enabling everyone to make sustainability part of their job Entrenching these feelings of ownership makes sustainability routine — something people just do. Having measurements of success and providing ongoing feedback on sustainability targets will demystify stakeholders’ contributions and gradually move them to own sustainability as indivisible from their jobs. You can also consider the indirect effects of sustainability — using indicators like employee retention and customer loyalty rates — to make a continued business case for sustainability. Using statistical analyses such as regression, I’ve found that, all else equal, company sustainability initiatives positively influence customers’ buying behavior, employee retention, and even investor reactions. Companies are also wise to expand the ownership experience by participating in industry- wide or multisector efforts to drive systemic change. Most of us work to preserve the value of things we own. Establishing ownership of sustainability issues prevents the feeling that it’s “someone else’s problem” to manage. Lesson 1 04/09 PPP- People, Planet, Profit There must be balanced between those to obtain sustainability. United nations objectives agenda- sustainable development goals. Materiality matrix- a tool to see which the most pressing material are issues a company has. The framework of planetary boundaries- Safe operating space. Tipping point- threshold of no return Science-based target: Targets considered science-based that companies can agree on applying, they are in line with what the latest climate science deems necessary to meet the goals of the Paris agreement. Sullites- certification of sustainability knowledge. We have to pass, but the result does not relate to de course grade. It’s going to be free. September 20-septmeber 30th. In those 10 days you will have to sit for 2 hours to do the sullitest, a series of 90 question. Videos in the axa climate school modules. 3 watch for Fridays The great climate system The collapse of biodiversity 3cfu LESSON 2: Business and Climate Change Mandatory requisites Modules Chapter 7- Consequences today How would you say climate change is related to extreme weather events? Climate change increases the power and frequency of weather events (but they can’t be attributed to it.) Video It is now clear that atmosphere is trapping more and more heath and that’s impacting all the spheres of the climate, the hydrosphere, the lithosphere (the land and the rock) and the biosphere. Average temperature rise could mean that is a +1-degree change in Australia, but a +6 degrees in the Antarctic. What we are seeing nowadays, is how a relatively small change in average temperatures, results in large increases in the risk of extreme hit waves. That had big consequences for farming and food supply. But also, the energy grid, and human health. For example, insect will move into new areas, potentially bringing vector borne diseases along with them. Extreme events are warning us about climate change. Statistics say that the frequencies of high intensity hurricanes will increase in most places, specifically in the northern atmosphere. There is also a very strong consensus that rainfall from hurricanes will go up as the temperature warms. Tropical storms gain energy from the energy in the oceans. As the ocean gets warmer, there is more energy in the system, the storms have more speeds and get more disruptive. We expect to see more floods and more droughts (dry places will be drier, more rain where there is a lot of rain.) Chapter 8- Predicting the future There is no debate that burning fossil fuels is causing major changes in the climate system and that those changes have direct consequences, including more extreme weather events happening in the future. But the feedback loops are going to create other massive changes too. Climate models are used to calculate the consequences. We know they worked for the present, but for the future, uncertainty remains, especially around how much CO2 humans are going to continue to emit. In order to calculate the uncertainty, scientist is working with the IPCC (United nations Intergovernmental Panel on Climate change). Together they formulated some scenarios. The group came up with 8 possible scenarios: The more optimistic, carbon neutrality is achieved by 2050, meaning we emit as much CO2 as the earth can absorb. Here, we can stay under 2-degree warming compared to the pre-industrial age. In the worst-case scenario, business and emissions go on as usual. Here we can expect 4 to 6 degrees warming, compared to the pre-industrial age. We don’t know which case will emerge, an increase of 2 degrees, seems to be inescapable by 2040. Other uncertainty remains. For example, we impact manmade climate change is going to make on the quantity of clouds. Some models say they will increase, making temperatures go lower as they repel more of the sun radiation. Other say that they will be less, and that will further raise temperatures. Scientists have highlighted certain tipping points that we need to be aware of. Once I cross that tipping point, it is virtually impossible to go back to the initial scenario. 9- Tipping points Scientists have identified 9 tipping points that could be triggered by increased climate change. An example would be the Western Antarctic ice sheet could have had a tipping point that was already pasted. Just a small about of warming of the oceans around Antarctica seems to be triggering an accelerated retreat of the ice sheet, and as the it melts, it destabilizes the rest, eventually leading to 3,5 meters of sea levels rise and in an irriversable way. At the moment it will take several centuries to unfold, but the more we warm things up, the faster it will happen. The sea level rise it’s going to reshape the planet coastlines and flood major megacities, and that the only way to deal with that is major relocations of human population. The issue at the moment with the poles warming up rapidly, it’s not only the rise of sea level. As sheets melt, the permafrost is realising carbon dioxide into the atmosphere and increases global warming. The 9 tipping points: 3 are melting related: The accelerating ice lost in Greenland Same in western Antarctica The melting of the permafrost Next 3 related to the shift in water circulation: The Atlantic circulation slowing down A shift that affects rainfall in western Africa Monsoons concerns in India The final 3 are tipping points that affect Animal and plants (Biome shift): A large-scale coral reef dies off Fire and pest in the boreal forest Frequents draughts in the Amazon rain forest These 9 tipping points affect each other. They can interact in a way that make each other cascade. For example, the lass of the Arctic sees ices causing the artic to warm 2 or 3 times as faster as the others, is accelerating the Greenland the melt of the Greenland ice sheet. The melted water that is flooding of Greenland is is contributing to weakening the overturning circulation in the Atlantic Ocean, which is leaving heat behind in the Southern Ocean, where it can contribute to melting the Antarctic ice sheet and shifting the balance of rainforest in the tropics and disrupt the Monsoons. These is called a cascade effect. We have to find and activate the good tipping points (like the use of clean energy production methods). Articles #1: Harward business review- Leading a new era of climate action https://hbr.org/2020/01/leading-a-new-era-of-climate-action The text discusses the dual approach required to tackle climate change: reducing emissions (mitigation) and preparing for its impacts (adaptation). The emphasis is on mitigation because solely adapting, like building higher walls or increasing air conditioning, won’t suffice. Businesses have a significant opportunity to cut emissions while remaining profitable. To achieve this, businesses should: 1. Use their political influence to advocate for strong climate policies. 2. Empower stakeholders (suppliers, customers, employees) to drive change. 3. Rethink investments and business models to minimize waste and carbon emissions. The shift away from focusing solely on shareholder profits to a broader social responsibility is evident in major corporations' recent stances. Companies are increasingly pressured by customers and employees to adopt sustainable practices. As societal expectations evolve, businesses must not only meet these demands but also innovate in sustainability, as early adopters of such practices often lead the way and influence larger corporations. Companies have substantial sway over governments through campaign donations and lobbying, a power that should be redirected towards advocating for strong climate policies. While many businesses have made public commitments to climate goals, they must also actively lobby for policies that facilitate a low-carbon future. Historically, fossil fuel industries have dominated climate policy discussions, but now companies across various sectors must recognize that climate change poses an existential threat to their own industries. There's often a discrepancy between a company's public climate commitments and its lobbying activities, which can undermine their credibility. Increased transparency about these activities is essential. Companies with renewable energy sources or climate-positive products should be particularly proactive in lobbying for carbon pricing and other stringent climate policies, as these measures could benefit their business models. Leaders who engage in climate advocacy not only uphold principles but also align with their business strategies, as seen with companies like DSM. Effective climate lobbying involves supporting carbon pricing, enhancing performance standards, and increasing transparency to drive the transition to a low-carbon economy. Climate Policies Companies Should Advocate For: 1. Implementing a rising carbon price and shifting subsidies from fossil fuels to clean technologies. 2. Incentivizing regenerative agriculture. 3. Funding recycling and reuse to promote a circular economy. 4. Investing in clean technology research and development, such as climate taxes for green innovations. 5. Setting high performance standards for major energy users like cars and buildings. 6. Phasing out harmful technologies and encouraging low-emission alternatives. 7. Ensuring transparency through initiatives like the Task Force on Climate-related Financial Disclosures. 8. Funding resources for climate adaptation, including city resilience planning and retraining programs. Leverage Stakeholder Relationships: Companies should use their influence over suppliers, customers, and employees to drive climate action: 1. Suppliers: Demand sustainability and provide financial support for transitions to cleaner practices. Collaborate on innovations and prioritize low-carbon suppliers. 2. Customers: Encourage sustainable consumption and engage in climate activism. Use marketing to educate and inspire consumers about sustainability. 3. Business Customers: Avoid supporting high-carbon industries and focus on sustainable business practices.  4. Employees: Attract and retain talent by aligning with their values on sustainability. Incorporate climate action into incentive structures and performance metrics. By advocating for robust climate policies and leveraging their extensive networks, companies can drive systemic changes and support a transition to a low-carbon economy. Optimizing Internal Processes for Climate Action 1. Capital Expenditures & Hurdle Rates Companies should adjust their capital expenditures (capex) and hurdle rates to account for intangible benefits like community impact, employee retention, and business resilience. This means prioritizing investments that, while potentially costly upfront, offer long-term benefits such as energy efficiency and carbon reduction. 2. Internal Carbon Pricing Implementing a real internal carbon price—where divisions pay for their emissions—can drive more substantial investments in low-carbon projects. Companies like Microsoft and Disney are already using this approach, reinvesting the "tax" revenue into sustainability efforts. 3. Water Risk Management As global temperatures rise, the risk of water scarcity and extreme rainfall increases. Companies must prepare for these impacts by incorporating water risk into their strategies. 4. Green Bonds & KPIs Utilizing green bonds and tying them to performance metrics related to sustainability goals, like ENEL’s approach, can support emissions reduction efforts. 5. R&D Investments Companies should shift their R&D focus towards sustainable technologies. For example, Daimler is investing heavily in electric vehicles, and Nestlé is focusing on plant-based proteins, which have a smaller carbon footprint. 6. New Business Models: Transitioning to innovative business models can drive substantial change. Examples include Philips Lighting’s “light as a service” model, which promotes energy efficiency, and Ørsted’s pivot from fossil fuels to offshore wind farms. The Need for Aggressive Climate Action: Companies need to move beyond incremental changes and adopt bold climate actions. This includes:  Mobilizing all assets to address climate change at the necessary scale. Embracing next-generation climate strategies that create long-term value, build stakeholder relationships, and drive disruptive innovation. Recognizing that significant climate action is critical for both business success and the survival of humanity. Adopting these strategies will not only help mitigate climate risks but also position companies for future success in a rapidly evolving market. Article 2 – Climate tipping points: too risky to bet against november 2019 https://www.nature.com/articles/d41586-019-03595-0 cannot access Lesson 2 06/09 Global warming is different than climate change. >9 planet boundaries, most of them are collapsing >In 2009 there was only 3 of them that had been trespassed, now only 3 are not. >Important: climate change and biosphere integrity Novel entities: elements introduced by humans (ex. plastic) IPCC- one of the entities with a lot of info about climate change. Panel of governments that work together in U.N. against climate change. Gren house emissions: Series of gasses that are naturally occurring in nature (Carbon dioxide, methane. Greenhouse effect: The sun emits UV. The atmosphere protects us from them, but it pushes away the heat. The GHE helps us retain the heat and make the temperature warm enough for life. The gases are mostly produced by fossil fuels, In the last hundred years, we increased the burning of fossil fuels, and the green-house effects is increasing, causing global warming. Relative vs absolute goals: relative are goals x unit of production, absolute are goals at the company level. You always measure CO2 emissions in tons. Scope 1- direct, in house-energy Scope 2- indirect, electricity from outside Scope 3 -all the things coming from outside of the supply chain. Everything for material to produce the product to consumption  LESSON 3: Business and Biodiversity loss Class prerequisites Modules 8. The 6th Extinction: Land Use and Overexploitation The living world is a dynamic world. Sometimes it happens so fast, that species can’t adapt fast enough and go extinct. Figures today suggest we are currently experiencing another mass extinction and is happening faster than the others. The big difference today, is that it isn’t caused by a natural disaster, but by the human. Anthropocene era: the time where we can really see the effects that human had on weather and climate. Beginning from the 1800s the effects of this era are so big that they are currently creating a geological layer, that will remain for millions of years after our own extinction. Our human activity of the years has severely altered 75% of the terrestrial environment and 66% of the Marine environment. The two major causes the impact biodiversity is: 1. Land Usage 2. Overexploitation of resources They are responsible for half (50%) of biodiversity loss. Today converting lands for crops and grazing, is the cause for 80% of deforestation on earth, destroying habitats for half a million species. When your habitat is facing you have 3 choices: 1. Adapt- sometimes happens to fast for animals to be able to adapt. 2. Move- humans have created fragmentation of ecosystems. For Example, frogs, when they come out of their hibernation, they go to a wetland to reproduce. If a big road blocks their way, they will cross it, but they might be squashed by a car. 3. Go extinct. Fragmentation also threatens the genetic diversity of species, making reproduction difficult. The overexploitation of animal, plants, and other organism trough harvesting, logging, hunting and fishing, has a huge impact of biodiversity too. Example: Overfishing of Cod. Worldwide 33% of species are overfished. They are being taken, and not allowed to restock. 9. The 6th Extinction: Climate, pollution and invasive species Neonicotinoids are insecticides efficiently used for protecting crops, but they are a danger to insect life, pollinators in particular (bees). So, 50% of biodiversity loss is down to human land use and overexploitation of resources. The other 50% is caused by: 1. Climate change Temperature increases in the sea and on land affects species. Example: 1 degree warmer, and migratory birds lay their eggs two days earlier. Might be a small change, but that could be there are less food for the new babies. Other example: Sea turtles get their sex from the temperature of the beach when eggs are laid. Higher temperatures, means more females, and with only females, they will soon go extinct. 2. Pollution Example: Neonicotinoids are the most wildly available families of insecticides in the world today. They are called systemic. They penetrate the whole plant, which can make them dangerous. When pollinators such as bees forage for flowers, they face serious damage. They can lead bees to slow development, malformation, loss of orientation, inability to recognize flowers, weaken immune defences. 80.000 bees can die for the effects of a single grain of corn coated with half a milligram of clothianidin, a pesticide of the neonicotinoid family. Waste is also a big problem. Plastic accumulates up the food chain, potentially carrying toxins too. A university in Australia, estimated that each week, we could each be consuming around 5gr of plastic, the equivalent of a credit cards worth. 3. Invasive Species Every day, largely through trade or tourism, hundreds of species are introduced to areas where they have not been before. Example: Black rat. Brings diseases and causes disruptions for the native species. How can species adapt to these changes? As we said they can either: 1. Adapt: plants are blooming earlier and earlier each year. And pollinators have to adapt, moving around. 2. Move: if they can’t adapt, they have to migrate. But species don’t migrate with the same speed. Animals like split-hoofed mammals like antelopes, dears, pigs, sheep, they are slowly migrating to escape the climate change. But they shift only by around 60 km per decades. Trees do the same thing. 3. Go extinct: Adaptation and migration are a matter of speed. If species can cope with that speed, they’ll go extinct 10. The 6th extinction: Tipping points All these factors led to what has been called a 6th mass extinction. Is our Earth’s ecosystem able to adapt to the changes we have imposed on it? Scientists were able to show what was the extinction rate for mammals in the last few million years. These was losing 2 species every 100 years, for every 10.000 species present. Now, the bottom line was that the number of the species lost in the last 100 years would have taken 10.000 years under the normal extinction rate. The extinction rate today is 100x faster than it was. It’s not only happening, but it is also accelerating. In terms of geological time, this is an instant extinction. Example: at the beginning of 1900s, there used to be 10millions elephants, at the beginning of the 2000s there were only half a million left, now, there are only between 200.0000 and 300.000. What happens in the next 15 years will define the faith of most series of earth, but also the future of humanity and if we are going to collapse. A collapse of civilization is erosion of the social, the political and the economical way we are used to because of environmental problems. The sixth extension is massive, rapid and obvious. Each mass extinction was followed by a renewal of life and biodiversity, but it tooks several million years to happen. Our species has the power to understand and change what is happening. We rely on the biodiversity around us. It gives us access to food, medicine and technology, but we are not doing enough to protect it. Articles Article one: The Biodiversity Crises is a Business Crisis 03/2021 Fact number one: biodiversity—the level of diversity in the natural world, at the ecosystem, species, and genetic levels—is being destroyed at an alarming rate. Fact number two: biodiversity loss has massive implications for business. Biodiversity creates significant economic value in the form of such ecosystem services as food provisioning, carbon storage, and water and air filtration, which are worth more than $150 trillion annually—about twice the world’s GDP—according to academic research and BCG analysis. Five primary pressures—land-use and sea-use change, direct overexploitation of natural resources, climate change, pollution, and the spread of invasive species—are causing steep biodiversity loss. Already, the decline in ecosystem functionality costs the global economy more than $5 trillion a year in the form of lost natural services. Many business activities, especially activities related to resource extraction and cultivation, contribute to the pressures driving biodiversity loss. The operations of four  major value chains—food, energy, infrastructure, and fashion—currently drive more than 90% of man-made pressure on biodiversity. UNDERSTANDING BIODIVERSITY Biodiversity reflects the range and variety of life on Earth—and thus the health and resilience of nature—at three levels (see Exhibit 1): Ecosystems. Diversity at the level of entire ecosystems—for example, wetlands, grasslands, or forests—is a function of the size of the intact ecosystem area, the magnitude of its biomass, and its ability to provide ecosystem services such as water regulation or air purification. Species. The variation in species, including plants, animals, and microorganisms, involves both richness (number of species) and abundance (population for each species) within each ecosystem, as well as the distribution of species across ecosystems. Genes. Genetic variability is essential to species’ ability to adapt to environmental changes and their resilience to external threats such as diseases. Ecosystem services fall into four primary categories: regulating, cultural, habitat, and provisioning. 1 The value is split across the categories as follows: Regulating. Natural ecosystems provide multiple services that are essential to environmental stability. Among them are climate regulation (through carbon sequestration), water storage and filtration, air purification, and control of biological disturbances such as diseases. Cultural. Natural ecosystems serve diverse spiritual, heritage, educational, and recreational functions. Habitat. Ecosystems provide space for plant, animal, and microorganism species to live, migrate, and procreate, and they support the formation of fertile soil, which is vital for the survival of plants and other organisms and for food production. Provisioning. This category captures the share of the value of nature-based products such as food, timber, and medicinal inputs that is created within ecosystems. On the basis of research from the TEEB initiative, we estimate that the combined annual value of these four ecosystem services is more than $150 trillion, almost twice the size of global GDP. Risks. Businesses face three main biodiversity-related risks: Given that more than half of the world’s GDP depends heavily on functioning natural ecosystems, according to the WEF, the decline of natural ecosystems threatens to disrupt many important supply chains. Pressure on business from governmental regulations related to biodiversity is increasing and may impose significant additional costs in the future. Companies that fail to address the negative impact their operations have on biodiversity put themselves at risk of eroding the goodwill of their customers and other stakeholders Opportunities. Companies that lead on biodiversity will have significant opportunities to benefit from these efforts: They will position themselves to enter profitable new markets by developing valuable new products, services, and entire business models. They can improve their value proposition and their brand by responding to public demand for sustainability. They will have better access to capital and potential operational synergies, including through reductions in raw material and energy costs. Biodiversity Loss in Value Chains: Biodiversity loss occurs throughout the economic value chain, with resource extraction and cultivation activities accounting for over 60% of the pressure. Other activities, such as resource conversion, manufacturing, services (e.g., transportation), and consumption also significantly contribute to biodiversity loss. Four key value chains are responsible for about 90% of this impact: 1. Food: Accounts for over 50% of man-made pressure on biodiversity through practices like deforestation, overfishing, and plastic waste. 2. Infrastructure and Mobility: Contributes 25% through land use, pollution, and ecosystem modification. 3.Energy: Responsible for 10% due to emissions and pollution during extraction and use. 4. Fashion: Has a significant biodiversity footprint through natural and synthetic fibre production and waste. Building a Biodiversity-Positive Business To counter biodiversity loss, companies must transform their operations using a four-step approach: 1. Determine the Scope of Action: Identify key issues across ecosystems, prioritize them, and set strategic objectives. 2. Align on Targets: Set actionable, science-based targets, measure progress, and publicly disclose the results. 3. Build the Foundation for Success: Educate employees, integrate biodiversity into governance, and form partnerships to enhance capabilities. 4. Take the Right Actions: Manage biodiversity footprints, innovate for less ecosystem disruption, and provide advanced biodiversity support through stewardship and collective action. Businesses should adopt these steps to become biodiversity-positive and create meaningful, measurable benefits for ecosystems. 2 article- Aligning Accounting Approaches for Nature The document, "Aligning Accounting Approaches for Nature," addresses the importance of biodiversity measurement and valuation in corporate and business settings. It emphasizes that businesses and financial institutions are increasingly being called upon to assess their impacts and dependencies on biodiversity as part of natural capital accounting. The decline of biodiversity poses risks and opportunities for businesses, and there is an urgent need for standardized metrics and approaches for assessing biodiversity impacts. Natural capital accounting (NCA) is an approach used to systematically measure and report on the stocks and flows of natural resources (such as forests, water, air, and minerals) and the ecosystem services they provide. The Align project, led by UNEP-WCMC and supported by the European Commission, has developed recommendations to standardize biodiversity measurement and valuation, with a focus on how businesses can better understand and report on their biodiversity impacts and dependencies. These recommendations are intended to support broader reporting standards like the Corporate Sustainability Reporting Directive (CSRD) and the Science-Based Targets for Nature (SBTN). Key takeaways include: > Double materiality: Companies should assess biodiversity from both societal and business perspectives to understand both financial and social implications. > Indicators: The use of ecosystem extent, condition, and species-level indicators is recommended for measuring biodiversity state, with attention to both common and rare species. > Valuation: Biodiversity should be valued comprehensively, considering both its societal and business importance. > Business Dependencies: Companies need to measure not only their impacts on biodiversity but also their dependencies on ecosystem services, which may be affected by biodiversity loss. > Accounting for biodiversity: While still developing, formal biodiversity accounting approaches are essential for tracking gains and losses in biodiversity, analogous to financial accounting. In conclusion, the Align project aims to provide businesses with tools and criteria to better measure and manage biodiversity, helping them align with emerging biodiversity policies and standards. Lesson 10/09 1. Impact of biodiversity loss? Services that we have lost 2. Impact on biodiversity loss? When they talk about emissions, companies talk about tons units. When company talks about land, they use ha, hector. Materiality: If something becomes material, it means it has become relevant Mean species abundance- talks about how ina very global position a company has affected flora and fauna. For the projects, do not focus on social problems. Circular life If you are very disoriented on where to find problems, go back to it. Zara project 1. What are the company targets to reduce their negative impact in terms of climate change and biodiversity https://www.inditex.com/itxcomweb/en/sustainability Our Main Goals 2025 / 100% linen and polyester from preferent sources 2025 / 25% reduction of water consumption in our supply chain 2025 / Reaching three million people in our supply chain with our Workers in the Centre strategy 2030 / Protecting, restoring, regenerating or otherwise improving biodiversity across 5 million hectares 2030 / Reducing our emissions by over 50% (including the design and manufacture of our products, their distribution and their end-of-life management) 2030 / Using only textile raw materials that deliver a lower impact on the environment, so- called preferred fibres 2040 / Achieving zero net emissions by reducing our carbon footprint by at least 90% by comparison with 2018 How do you assess their reporting and targets? Does anything seem to be biased, underestimated, misleading? What is the gap between the current situation, the company’s objectives, and what would need to be done to comply with the climate change and biodiversity loss planetary boundaries? How could/should the company act to close the gap and further reduce its negative impact? Zara is one of the stores not to currently use plastic bags and Inditex, the company that owns the chain, says that by 2020 it will eliminate the use of plastic bags across all of its brands Materiality: if something becomes material, it becomes relevant. LESSON 4: Sustainable business model transformation (I) Required readings Reading #1: The Circular Business Model More and more manufacturing companies are talking about what’s often called the circular economy—in which businesses can create supply chains that recover or recycle the resources used to create their products. Shrinking their environmental footprint, trimming operational waste, and using expensive resources more efficiently are certainly appealing to CEOs. But creating a circular business model is challenging—and taking the wrong approach can be expensive. Reading #2: How Sustainability Efforts Fall Apart Sustainability has become the new corporate imperative. Companies have begun doing their homework, diligently setting up a number of initiatives. This is a good starting point, but too often, firms are unable to systematically scale these efforts to achieve a more transformative outcome. This is because internal hidden enemies act as antibodies and resist the change. Unless a company tackles the enemies early on, it will never be able to achieve sustainability at scale. Defeating the enemies is possible, as shown by the success stories in different industries. It’s time for firms to put in practice concrete countermeasures to fight back against the hidden enemies and unleash the full potential of sustainability. So, what makes sustainability at scale difficult to achieve? Talking with executives, a number of recurring patterns emerge. They show that the real blockers to sustainability are hidden inside companies and are often the result of what was considered sound management practice in the 20th century. These are the “hidden enemies” of sustainability: the prevailing organizational winds that tend to blow in the direction of routine and an incremental approach rather than sustaining a more radical and transformative journey. Hidden enemy #1: Structure and governance Hidden enemy #2: Processes and metrics Sustainability is often not integrated into business processes, as they were originally designed with profit as the sole focus. Traditional decision-making criteria prioritized metrics like price, costs, profits, and market share, neglecting environmental and social considerations. Despite senior leaders' intentions, sustainability efforts are undermined by outdated corporate procedures and inconsistent metrics. Unlike profit-related metrics, sustainability measures, such as ESG reports, are fragmented, unverifiable, and lack standardized rigor, limiting their effectiveness in driving real change within organizations. Hidden enemy #3: Culture and leadership Hidden enemy #4: Methods and skills To overcome these "hidden enemies" of sustainability, companies must learn from past business transformations, such as digitalization, and follow four key solutions: 1. Establish a Sustainability Network: Create a cross-functional team that integrates sustainability throughout the organization, as seen in companies like Enel and Clariant. 2. Embed Sustainability into Processes: Incorporate sustainability into all business decisions, from R&D to travel policies, like Unilever and other companies have done. 3. Create a New Social Contract: Encourage leaders to co-create solutions with employees and external stakeholders, fostering trust and concrete, observable behaviours that support sustainability. 4. Foster Ecosystem Thinking: Develop strategic partnerships and ecosystems, as demonstrated by BASF’s xarvio sustainable farming model, to enable co-creation and systemic, sustainable business models. The article emphasizes that while companies are taking steps toward sustainability, true transformation requires addressing internal obstacles and embedding sustainability across all levels of the organization. Only by confronting these challenges can companies achieve sustainability at scale. Lesson 13/09 Circular economy Paris agreement- 2050 de-carbonized economy Business model: mix of activity that creates value. Th building industry example: they take sand (finite resource), you create buildings, and then you destroy them, and it is not possible to recover sand out of them. This is called the Linear economy. Chain economy- the recycle process is not efficient and creates waste. Recycling- out of something you create something equally good. Downcycle- plastic is down cyclable. From one unit of plastic, only 75% of it will be recovered the first time, 50% the second time, etc. The quality also gets progressively worse Upcycle- giving a new life to a project you also improve the quality of it. Clothes or shoes out of trash like Adidas. Product life- right now products are designed to last less. Consumers the leasing on clothes. You can lease them by lending from the day, or a subscription system where you can rent clothes for a year and then bring it back. 1. Retaining product ownership (RPO)- lending products and costumers have to bring it back 2. Product life extension: make products that last longer to decrease overconsumption. Modular design: for parts that are always breaking 3. Recycle- back market Reduce-> reuse-> recycle Upcycle- LESSON 5: Sustainable Business model transformation (II) Required readings Article 1 (not accessible): Rethinking Sustainability in Light of the EU’s New Circular Economy Policy Summary Many companies face serious challenges when it comes to executing on a circular economy (CE) strategy. They usually lack access to used products, they aren’t able to refurbish or recycle used products in a cost-effective way, their products are not designed with circularity in mind, and their customers discount the value of refurbished or remanufactured products. But these obstacles can be overcome. Companies can take three actions to build strong CEs: 1. Creating modular products, 2. Developing a refurbishing infrastructure, and 3. Leasing. Companies that aren’t succeeding in building CEs often adopt some of these approaches, but never all three in coordination. It is the combination of all three approaches that improves access to products, reduces costs, and increases value to the consumer. Together, they create the scale needed to make CEs profitable. Article 2: The Quest for Sustainable Business Model Innovation (March 2020) Over the last few decades, managers have relaxed their ambitions regarding sustainable competitive advantage and have focused instead on shareholder returns. The result has been a greater reliance on financial strategies and M&A and a relentless optimization of processes and organization for efficiencies. While such priorities can create shareholder value in the near term, they can also hide weaknesses in the business model and work against the building of sustainable advantage. And when it comes to issues of sustainability and societal challenges, managers have often treated these separately from core business operations. We have a long way to go before the two main uses of the S-word in business— sustainability and sustainable competitive advantage—fuse coherently in a way that can guide management thinking and corporate action in the decade ahead. This disconnect is both a wasted opportunity and an urgent social priority. For all the effort to date, we are making little or even negative aggregate progress in essential areas like carbon emissions, even as the societal effects and business impacts are increasingly apparent. The article critiques the focus on ESG (environmental, social, and governance) metrics as ends in themselves rather than tools for strategic action. Sustainability issues require collective action, but most companies focus only on their own operations, missing the broader ecosystem impact needed to tackle problems like climate change. To address these challenges, the concept of Sustainable Business Model Innovation (SBM- I) is introduced. SBM-I builds on traditional business model innovation by testing a company's model for sustainability across broader societal, temporal, and spatial contexts. It emphasizes integrating sustainability into core business strategy, creating new value, and aligning it with competitive advantage. The process involves piloting new models that connect sustainability to financial performance, fostering industry-wide collaboration, and taking collective action. Key characteristics of a sustainable business model include scalability, differentiation, durability, societal surplus, and network effects. SBM-I suggests expanding the business context by analysing the entire value chain and ecosystem, stress-testing the model against socio-environmental trends, and simulating business scaling to identify potential risks and opportunities. This approach aims to integrate sustainability and strategy, ensuring resilience and creating long-term value for shareholders and stakeholders alike. The framework for transforming business models to achieve both sustainability and competitive advantage through Sustainable Business Model Innovation (SBM-I). It emphasizes moving beyond compliance and reporting to create actionable and strategic advantages. Key steps in SBM-I include: 1. Modular Transformations: Apply SBM-I transformations to address business model fractures and generate new advantages, such as: o Owning the Origins: Enhance societal content of inputs (e.g., sustainable sourcing). o Owning the Whole Cycle: Focus on the entire product lifecycle (e.g., circularity, waste reduction). o Expanding Societal Content: Increase the societal benefits of products/services (e.g., ethical practices). o Energizing the Brand: Leverage societal value in branding and customer engagement. o Relocalizing/Regionalizing: Adapt value chains to local markets to enhance societal benefits. o Expanding Chains: Integrate with other industries to extend benefits and share risks. o Building Across Sectors: Collaborate with public and social sectors to enhance business and societal impact. 2. Creating Environmental and Societal Surplus: Sustainable models generate surplus value that benefits both the business and society. For instance, using regenerative farming practices to create carbon offsets. 3. Linking Transformations to Value Drivers: Assess how new models connect to business value drivers and ecosystem performance, and iteratively refine the approach.  4. Enabling Systems-Level Strategy: Address industry-wide issues through collective action, collaboration, and policy advocacy, recognizing that individual efforts alone are often insufficient. 5. Transitioning from Reporting to Action: Shift focus from mere ESG reporting to integrating sustainability into core business strategy for long-term resilience and competitive advantage. The aim is to create models that deliver both business value and positive societal impact, ensuring companies remain competitive and sustainable in the long term. LESSON 6: Change management overview Mandatory readings Reading 1: Successful Organizational Change: Integrating the Management Practice and Scholarly Literatures This paper explores the challenges contemporary organizations face in creating meaningful, sustainable changes, focusing on the gap between popular change management models and scientific evidence. Many organizations rely on expert-driven change models rather than those based on empirical research, leading to frequent failures in planned change initiatives. Only about one-third of such interventions are considered successful, and organizational change can cause significant stress for employees. We define planned organizational change as deliberate activities that move an organization from its present state to a desired future state The paper identifies two primary challenges in managing change. First, the scientific literature lacks consensus on change processes, resulting in fragmented knowledge. Second, learning from change management experiences is difficult because feedback on outcomes can take years to materialize. Unlike more discrete, repeatable tasks (e.g., playing a musical instrument), change management often lacks clear, immediate feedback, making it harder for practitioners to gain expertise. To address these issues, the paper reviews both practitioner-oriented models and scholarly research on organizational change. It outlines seven popular prescriptive models of planned organizational change, including (in chronological order of appearance): 1. Lewin’s Three-Phase Process: (1) Unfreezing- establishing a change vision and developing a change plan; (2) Transitioning to a new stage- putting the change in place and modifying existing systems in support of the change; (3) and refreezing- the consolidation of the change so that it aligns with the other organizational structures and procedures. 2. Beer’s Six-Step Model: A systems approach that (1) emphasizes the need to join two aspects of change, an accurate diagnosis of the problem situation, which in turns  helps mobilize commitment to change. (2) A change vision then should be developed specifying the focus of the change by defining new roles and responsibilities. (3) Next, a consensus in support of this vision needs to be established, a step involving communicating the vision to stakeholders. (4) The change should now be implemented and spread throughout the organization through the involvement of stakeholders. (5) The change should then be institutionalized, that is, integrated with formal structures and systems. (6) Finally, the change should be monitored and adjusted as needed, a unique feature of Beer’s model relative to others. 3. Appreciative Inquiry (AI): It distinguishes among the stages of discovery, dream, design and destiny. (1) The discovery stage comprises thinking about what goes well in the current organization and what factors contribute to this success. (2) The dream stage encourages employees to think about their “ideal,” new features that would make the organization even better. (3) The destiny stage next involves creating change plans to enable these “dreams,” and execution is begun. AI focuses more on developing a common conception of what should be changed and involving stakeholders to become part of and provide support for the change. We note that AI gives considerably more attention to change recipient participation than other models and framing the change as an opportunity or positive event for improvement. 4. Judson’s Five Steps: (1) Analysing and planning change, (2) communicating change, (3) gaining acceptance for the required changes particularly in behaviour, (4) transitioning from the status quo to the new situation, (5) and institutionalizing change. 5. Kanter, Stein, and Jick’s Ten Commandments: A comprehensive approach that includes: (1) analysis of the organization and the need for change, followed by (2) the creation of a shared vision and common direction in which emphasis is put on (3) the separation from the past and (4) creating a sense of that important change is needed. (5) A strong leader role should support the change to increase its legitimacy, (6) where political sponsorship is sought to create a solid base for the change then sets the stage for (7) the development of an implementation plan. (8) Enabling structures should be put into place to help implement the change such as pilot tests, training, and reward programs. (9) Change communication should be open and honest and involve all stakeholders in the change process. (10) Finally, the change needs to be reinforced and institutionalized to incorporate new behaviors in day-to-day operations. 6. Kotter’s Eight-Step Model: eight-step model that starts the change process with: (1) establishing a sense of urgency in which employees are alerted to the fact that change is essential. (2) A guiding coalition is formed which in turn (3) develops the change vision. (4) This vision is communicated to employees and (5) the coalition (and employees) is involved in the change process by developing change plans. (6) The next step promotes for short-term wins to reinforce the change implementation. (7) Then,  he defines the consolidation stage which strengthens and continues the change by making additional changes that were not implemented yet but need to be taken care for. (8) The final stage institutionalizes the change by integrating it with the organization’s structures and systems. 7. Hiatt’s ADKAR Model: the ADKAR change model, the acronym standing for awareness, desire, knowledge and ability, and reinforcement. (1) “Awareness” involves promoting employee beliefs that change is needed. It involves creating a change vision and communicating it. (2) The “desire” stage entails the implementation of the change vision and focuses on empowering employees to be actively involved in the change. (3) Employee knowledge and skills are developed to support their participation in the change. (4) Finally, in the reinforcement stage, the changes are strengthened and consolidated into the organizations’ processes and structures. ADKAR focuses considerable attention on the processes that help employees to serve as ambassadors of the change. The text discusses the integration of multiple prescriptive models on change management, identifying common steps for successful organizational change. It synthesizes seven models into 10 key steps, incorporating insights from empirical research and scientific literature. The models are discussed sequentially, highlighting both consensus and disputes among the models regarding key practices, and scientific evidence is reviewed for each. 1. Assess the Opportunity/Problem: Diagnosis is a key first step in several models, but some models focus more on creating urgency rather than proper diagnosis. Research supports deliberate diagnosis as crucial for effective change. 2. Select a Guiding Coalition: Most models emphasize forming a coalition to support the change. This coalition is advised to maintain supportive relationships and ongoing communication with top management, but they differ on composition and role. Empirical research is limited, but trust, expertise, and power in coalition members are important. Starts here for required readings lesson 7 3. Formulate a Compelling Vision: A clear vision is essential for motivating change, though models disagree on who should create it. Research highlights the importance of a shared vision that aligns with stakeholders' needs but notes challenges in creating one that all employees endorse. 4. Communicate the Vision: Effective communication of the change vision is vital to creating awareness and support. The vision should be clear, accessible, and relevant to employee concerns. Open, transparent communication is key, with role models in leadership exemplifying the vision. Consistency and addressing employee concerns like fairness and future opportunities are critical. Communication should use multiple channels and be reinforced continually. Scientific evidence supports that clear explanations of change enhance trust and reduce resistance, especially in challenging situations like layoffs or pay cuts. The timing and manner of communication may vary, but openness and transparency are central themes across models. 5.Mobilize Energy for Change: This phase involves planning and assessing readiness for change, with models differing on when assessments should occur. Readiness assessments should consider factors like past success, frequency of change, and resource availability. Research shows that effective change planning includes preparing managers and ensuring they are ready to lead change, as this reduces employee stress and scepticism. Timing also plays a role, with models advocating different paces for implementation based on organizational readiness. Successful change involves ensuring that employees have the ability, motivation, and opportunity to practice new behaviours, which increases the likelihood of desired outcomes. 6.Empower Others to Act: Empowerment fosters responsibility and ownership of change among employees, who should be involved in implementing changes and solving problems. Managers play a role in removing obstacles and providing support through coaching and conversation. Empowering employees can take various forms, such as participation in decision-making, proactive problem-solving, and team-based initiatives. Research supports the value of employee participation in reducing resistance to change and promoting self- efficacy, while group-level interventions are often more effective than individual efforts. Empowerment also involves creating environments that encourage initiative and bottom-up processes, enhancing adaptive responses to change. 7. Developing Change-Related Knowledge and Ability: Effective change typically involves learning new skills and knowledge. Hiatt emphasizes learning, knowledge, and removing barriers like psychological blocks, while Kotter touches on this indirectly. Training, coaching, and psychological safety are important to support learning, though models often overlook how and when learning should occur. Developing knowledge and ability related to the change emphases the importance of learning to successful change and is related to both understanding the vision and being motivated to change. A critical factor in the TPB (Ajzen, 1991) is having the requisite ability to engage in new behavior. In individual-level change, ability is a relatively early focus in planned change efforts, whereas in organizational change it often comes later in the process. Research on learning related to organizational change suggests that the uncertainties associated with change can hamper both learning and the motivation to accept change. Perceived uncertainty makes it more difficult to store, retrieve, and put to use new information (Schechter & Qadach, 2012), whereas learning leads to self efficacy, which itself is related to change motivation 8.Identifying Short-Term Wins: Kotter stresses setting short-term goals to create a sense of accomplishment and motivate employees. These wins reinforce progress and convince sceptics of the change’s viability. However, short-term wins should align with long-term goals to avoid undermining important activities like learning. 9.Monitoring and Strengthening Change Over Time: Ongoing monitoring is essential, including revising change plans and ensuring sufficient resources. Employee feedback and adjusting based on emerging challenges are vital to sustaining the change process. Stops here for required readings lesson 7 Start lesson 8 required reading 10. Institutionalizing Change: The passage discusses the final steps in successfully institutionalizing organizational change, focusing on two key aspects: 1. Communicating the Benefits: Kotter (2005) emphasizes the importance of clearly communicating to employees how the change has led to improved performance. Using multiple channels to explain the results enhances credibility and ensures employees understand the benefits. Other authors, including Beer (1980) and Kanter et al. (1992), advocate for quantifying change outcomes through data collection, interviews, or focus groups to verify that objectives have been met. 2. Leadership Alignment: For sustained success, both top and middle management must consistently embody the change vision. If future leadership does not align with these new behaviours, change efforts could fail. This highlights the need for board involvement to ensure long-term alignment in management succession. The passage also notes broad academic agreement on institutionalizing change by aligning structures with new practices, though systematic empirical evidence remains limited. Studies suggest that embedding new routines is crucial for sustaining change, but less attention is given to addressing misaligned structures and rewards. Final implications The passage discusses key implications of change management practices, highlighting both consensus and gaps between practitioner models and scientific research. Change management experts largely agree on steps for successful organizational change, though their frameworks differ in some details. Most models adopt a top-down approach, reflecting their focus on senior executives, but lack specificity on how to mobilize bottom-up support from lower-level employees. Key points supported by research include: The importance of initial diagnosis and planning, which builds confidence in leaders and improves outcomes. The need for empowering employees and developing change-related knowledge and skills, supported by studies on the role of learning. The value of feedback and ongoing monitoring to strengthen the change process. However, several areas lack thorough empirical backing, such as the best way to institutionalize change (e.g., aligning structures and systems), the composition of guiding coalitions, and the focus on short-term results. There's also little research on the specific qualities of a compelling vision, though all models emphasize the importance of communicating the vision effectively. The passage concludes by acknowledging the limitations in research on guiding coalitions and suggesting that broader employee and management participation may be beneficial. The scientific literature on change management highlights several critical insights into how employees perceive and respond to organizational change: 1. Micro-Level (Individual Factors) Commitment to Change: Employee commitment to change is a central focus, shaped by individual traits and perceptions of change. Personal factors like dispositional employability, self-efficacy, and optimism positively influence how employees react to change. Reading lesson 8 stops here Predispositions: Positive predispositions toward change (e.g., being adaptable, having a high tolerance for uncertainty) increase the likelihood of employees accepting change. In contrast, dispositional resistance to change leads to negative attitudes. Motivation: Employee motivation is linked to how favorable they perceive the change to be. If the anticipated gains from the change outweigh the losses, employees are more likely to embrace it. This motivation is reinforced by the organization's commitment to supporting employees through the change, by providing resources and reducing uncertainty. Stress and Threat: Change can trigger stress and negative emotions like fear, especially if employees feel a loss of control or perceive the change as a threat. Reducing perceived threats and increasing employee control over the change can improve their response. Perceptions of Fairness: Employees’ perceptions of fairness during change are crucial. Interpersonal justice (how respectfully employees are treated) and procedural justice (whether they can voice concerns) significantly affect their change commitment. 2. Meso-Level (Group and Interpersonal Factors) Manager Support: The extent to which managers support their teams during change heavily influences employee commitment to change. Effective leaders serve as role  models and promote fairness, which in turn enhances cooperation with the change process. Justice and Fairness: Employees' perceptions of fairness in the change process, especially anticipatory fairness, impact their engagement. Fair treatment by supervisors and opportunities for employees to voice concerns contribute to more positive attitudes toward change. 3. Macro-Level (Organizational Factors) Organizational Identification: Employees who strongly identify with their organization tend to focus less on the potentially negative outcomes of change and more on the process of change itself. This organizational identification can facilitate smoother transitions by encouraging employees to align with the change process rather than resist it. In summary, employee commitment to change is deeply influenced by their personal predispositions, the support they receive from leaders, and their perceptions of fairness. Efforts to mitigate stress, enhance communication, and foster a sense of involvement can improve change acceptance and outcomes. Article #2 "Leading and Managing Change" by Raffaelli (2018) from Harvard Business School 1-9 The article "Leading and Managing Change" by Raffaelli (2018) from Harvard Business School discusses frameworks and strategies for effectively leading and managing organizational change. The focus is on how leaders can guide organizations through transitions while dealing with resistance and uncertainty. The article starts with three lead assumptions: (1) Organizations are systems, if you alter on component, you will affect the others. (2) Change is both a process and an outcome, and how the process is managed will affect the outcome. (3) there is no single correct formula for managing successful change. Diagnosis the need for Change Why is change needed? To determine why change is indeed warranted and perhaps even necessary, leaders can consider a useful assessment for diagnosing whether their company, unit, or team faces a performance gap or an opportunity gap. Performance gaps require change that improves current organizational routines and practices, while opportunity gaps require change that creates new routines and practices for the future. Designing Change Leaders must recognize different types of change, including incremental (small adjustments) and transformational (large, disruptive shifts). Leaders make decisions about change. Those decisions reveal the SORT of change that will be required—based on Scope, Origin, Rollout, and Timing, which are four critical elements of change design and implementation. 1. Challenges in Leading Change: o Resistance is a common response to change, stemming from fear, uncertainty, or loss of control. o Leaders need to anticipate these reactions and plan strategies to address them proactively. 2. Framework for Leading Change:  o Raffaelli introduces frameworks for understanding change management. The frameworks highlight the importance of setting clear goals, communicating the vision effectively, and building commitment among stakeholders. o A successful change process involves diagnosing the need for change, planning, implementing, and sustaining the change. 3. Role of Leadership: o Leaders play a crucial role in driving change. They must align the organization's culture and structure to support the new direction. o They must act as role models, displaying behaviors that align with the change vision, and motivate employees to adapt. 4. Key Success Factors: o Effective communication is vital throughout the change process. o Building trust and involving employees early in the process increases engagement and reduces resistance. o Monitoring progress and adjusting strategies as needed helps sustain the momentum of change. 5. Case Studies and Examples: o The article provides examples of companies that successfully navigated change by employing strong leadership, strategic planning, and fostering a culture open to innovation. In summary, the article offers insights into how leaders can effectively manage the complexities of organizational change, emphasizing preparation, communication, and the importance of leadership in aligning organizational efforts. Class 19/09 Change management overview Change management- it is a process of dealing with the changes, dealing with how to change things, to integrate the process of dealing with the impact of change. On notebook Group exercises: Tactical change. It will come from upper management, and it will focus on changing strategically small parts over time, such as materials, adding renting programmes, finding new way to produce clothes.  LESSON 7: Stakeholder analysis and change communication Mandatory readings Raffaelli, R. (2018). Leading and Managing Change, 10-15; 19-20. HBS n° 9415040. Boston, MA: Harvard Business School Publishing (10-13) The passage discusses the process of organizational change, and the challenges leaders face while implementing it. Kotter’s eight-step change model is emphasized, but the sequencing of steps isn’t linear, as change involves both success and failure. Adjustments may be necessary because organizations are systems, meaning changes in one area affect others unpredictably. Leaders must create buy-in by assessing readiness across four key areas: discrepancy, appropriateness, efficacy, and support. Resistance often arises due to stress, workload, or perceived loss of control. However, it can provide valuable feedback for improving change strategies. Leaders should engage individuals throughout the change process, progressing them through stages of acceptance from awareness to becoming champions of the change. Effective leaders use three key skills: delivering persuasive messages, role- modeling desired behaviors, and establishing supportive mechanisms. This approach ensures they foster acceptance and commitment to change while addressing resistance. (15) The text emphasizes the challenges leaders face in driving organizational change, specifically the risks of premature celebration or defeat and change fatigue. Leaders must avoid declaring success too soon after initial wins or assuming failure after setbacks. Change fatigue is common when enthusiasm wanes, and employees struggle to adapt to new relationships, behaviors, and priorities. Leaders must bridge the gap between effort and results by seeking middle management support, creating small wins, and finding new ideas. Continuous feedback is essential to assess progress and make adjustments that improve the chances of success.  (19-20 Stouten, J., Rousseau, D. M., & De Cremer, D. (2018). Successful Organizational Change: Integrating the Management Practice and Scholarly Literatures. Academy of Management Annals, 12, 752-788 (758-766 for this class). In previous required readings- lesson 6 Lesson 7- Stakeholder analysis and change communication  23/09 Stakeholder: individuals who are affected by the change Stakeholder analysis: to do for project McDonald’s case Qualify the change: Why is the change necessary? What type of change is it? It it necessary because of greater competition, desire for divers’ products from the consumer and various factor that led the population to demand healthier choices. Moreover, a future threat of increased taxing on their product line would be reduced if introducing healthier products. I would qualify it as a Transformational change, because it went from the top- executives, and it was a big change on their menu, which usually only had incremental change. Identify the stakeholders (both internal & external) Internal stakeholders: Costumer-end staff (service and cooking), Restaurant managers, middle managers External stakeholders: Suppliers, Costumers (?), media, competitors, government(?) Which type of stakeholders each of them represents (role in the change)? Staff- Target/ -/++ Restaurant management/middle manager- Agents/-/++ Suppliers- Target/ Influencer /+/+ Customers(?)- / +/++ Media- influencer +/++ Government? Assess their current position to the change and identify their desired” position, i.e. their “best” possible future reaction/commitment to the change Done before Sponsor: people with power and money. They actually decide in the change happens. They provide resources for the change Stakeholders: Can also be people da affect the change, not only affected such as the government. They could be put down has influencers, with an explanation about it. Only if very important. Do group activity 2 at home Point 3,4,5. You shouldn’t worry about it in your group project. Point 2 is the most relevant for the project. LESSON 8: Risk analysis, contingency plan and change evaluation Required readings Raffaelli, R. (2018). Leading and Managing Change, 16-18. HBS n° 9415040. Boston, MA: Harvard Business School Publishing. Evaluating Change How can the Impact of Change be Assessed and Measured? Measuring the impact of change can be an elusive task, especially because it is often difficult to determine a specific start and end to a change, to design appropriate metrics for each stage of the process, or to define the change’s long-term effect. Although one change effort may appear complete, rarely does change itself ever end. In fact, as we noted at the beginning of this reading, global executives report that they devote an average of six months per year to change and transformation initiatives. Leaders who carefully select a handful of critical indicators to track progress will increase the likelihood that change will achieve their intended goals. These metrics should be tied to the specific performance or opportunity gap the change was intended to address. Leaders should focus on two aspects of measurement: 1. The Proximity to the Desired “Hard” or “Soft” Outcomes Some change initiatives have “hard” goals in which profitability or shareholder value is the sole objective and others have “soft” goals in which changing the corporate culture or increasing organizational and individual learning is the immediate objective; many have both hard and soft goals. Leaders need to be explicit about whether they are seeking hard and/or soft outcomes—and how the balance between them might change over the course of a change initiative. Finally, they must identify and update their outcome measures regularly to reflect these goals. 2. Progress Toward Achieving Buy-in Among Individuals in the Organization To track the level of readiness and ongoing buy-in for a change initiative, leaders should seek feedback on whether employees believe the change is needed; that the specific change proposed will work; that the organization is capable of successfully making the change; that formal leaders support the change; and the personal benefits or costs that individuals perceive the change will have. Evaluation should occur throughout the process, not just at the beginning and end. Finally, successful change leaders create processes that promote significant feedback and foster opportunities for continuous learning. Embracing the Inevitability of Chance Many leaders emphasize the challenges of managing change in today’s faster-moving, global, competitive environment. In many industries, for example, technology cycles often last weeks rather than year. Companies must build a dual operating system: one system, based on the best traditional structures, for ongoing operations and incremental improvements, and a second, fluid and agile system designed to identify and respond to big opportunities and big threats as (or before) they emerge. Ultimately, your ability to lead real and substantive change will come not only from familiarity with the frameworks and diagnostic tools presented here. As a leader of change, you must also actively seek opportunities to learn from others’ successes and failures, and simultaneously cultivate an ability to improvise. Stouten, J., Rousseau, D. M., & De Cremer, D. (2018). Successful Organizational Change: Integrating the Management Practice (758-766) In lesson 6 Lesson 8 27/09 Next week case study. It’s a must to read It before class. Shock-> Denial->Anger->Depression->(Experiment)->(Decision)->Acceptance- 5 stages of grief It shows the extreme case of change adaptation. Can be applied to corporate change. But we can create acceptance to change with support:  Unfreezing: get ready for the change, push people towards the change. He says to make people feel uncomfortable in the current situation Change Refreezing: we anchor the changes in the organization. The final step. Once people are feeling this is part of their identity, then the change has been successful. It’s important to have milestones that are reachable and feasible, so that people can feel like they reach certain step.  Is it desirable? Is it feasible? And is it relevant? Primary goal of the implementation phase: you have to leverage the momentum gained trough short – term wins to consolidate change. In that moment when they’ll feel satisfie they will be more open to adjustment. It’s not just the structure that is important in organizational change, but it’s 5 factors that together play a role in that. First of all, do you have a vision or strategy? Then, if you do, d you have the structure? Who has the power and responsibilities? Then we need to know how the organization is flowing. How are information being shared? Then we are looking into processes, how are the ways of working together in the organization? Another aspect is rewards. We need to motivate people. How can we do that, how can we measure progress. And lastly, the people. Do we have the people in the organization that are willing and able to go trough the change with us? Get the people part right but thinking about how to implement the changes in ALL levels of the organization. What resources do people need in all levels to implement the change. Middle managers are especially important, because wee need them to support our project to motivate the staff. Planning the implementation When we go in implementation, we have to look at the potential risks. We can have internal and external factors that are potentially threatening our initiative. Perform a risky analysis A contingency plan for Zara's sustainable transformation is essential to mitigate potential risks and ensure business continuity. Below are contingency strategies for each of the proposed changes: 1. **Moving Away from Fast Fashion to Long-Term Clothing** - **Contingency Plan**: If the shift to long-term, higher-quality clothing leads to a significant drop in customer demand (as fast fashion buyers may switch to other brands), Zara could: - **Introduce a Hybrid Approach**: Continue offering a limited, fast-fashion line alongside the higher-quality range to retain a broad customer base. - **Ramp Up Marketing and Education**: Use campaigns to educate customers on the long-term benefits of durable clothing to drive demand and shift consumer mindset. - **Partnership with Influencers**: Collaborate with influencers and sustainability advocates to create buzz around the quality and timeless design of new collections. 2. **Making Stores More Efficient and Environmentally Friendly** - **Contingency Plan**: If the investment in energy-efficient stores and green technology becomes too costly or causes disruption in operations, Zara could: - **Phased Roll-Out**: Gradually implement these technologies across stores, starting with flagship locations, and continuously monitor cost-effectiveness. - **Offset Costs with Energy Savings**: Use energy savings from efficient technologies (LEDs, HVAC systems) to fund further upgrades. - **Explore Government Incentives**: Seek tax credits or government subsidies for energy- efficient improvements to ease financial strain. ### 3. **Creating Modular and Adjustable Clothing Designs** - **Contingency Plan**: If modular clothing does not gain widespread customer acceptance due to unfamiliarity or lack of demand: - **Test with Capsule Collections**: Introduce modular designs through limited-edition, trial collections and gauge customer interest before full-scale implementation.  - **Customization Options**: Offer more customizable modular pieces, allowing customers to tailor their clothing to personal tastes, thus increasing appeal. - **Educate Consumers**: Launch educational content in-store and online, showing the benefits and versatility of adjustable designs to win over hesitant buyers. 4. **Creating a Renting Program for Clothes** - **Contingency Plan**: If the renting model faces low participation due to hygiene concerns or lack of infrastructure: - **Hybrid Ownership-Renting Option**: Offer customers the option to rent first and then buy if they decide to keep the item after a trial period. - **Hygiene Certifications**: Partner with certified cleaning services to assure customers of high-quality garment sanitation. - **Optimize Logistics**: Start small with a limited geography or collection and expand as the logistics and demand improve. 5. **Program for Reusable Packaging** - **Contingency Plan**: If customers do not return packaging or the system for tracking and reusing packaging proves inefficient: - **Incentivize Returns**: Offer stronger incentives, such as larger discounts, loyalty points, or exclusive access to new collections for customers who consistently return packaging. - **Simplify the Process**: Make the return process as seamless as possible, with drop-off points at accessible locations like grocery stores or transit stations. - **Use Biodegradable Packaging**: In case returns lag, move to fully biodegradable packaging to minimize environmental impact without relying on returns. 6. Making Clothes from Trash (Adidas Model) - Contingency Plan: If sourcing waste materials for garments becomes logistically challenging or quality control issues arise: - Diversify Material Sources: Work with multiple waste suppliers to ensure a steady flow of recycled materials and explore alternative sustainable fabrics like organic cotton or bamboo if issues arise with trash-based textiles. - Gradual Integration: Incorporate waste-based materials into only a percentage of Zara’s clothing lines at first, monitoring quality and consumer feedback before expanding.  - Invest in R&D: Develop proprietary technologies to improve the conversion of waste into high-quality fabrics, ensuring long-term sustainability. General Contingency Strategies: - Consumer Research and Feedback: Continuously gather customer feedback through surveys and focus groups to adjust strategies in real time. - Partnerships with Sustainability Experts: Collaborate with external sustainability consultants or environmental organizations to ensure best practices are implemented effectively. - Monitor Competitor Movements: Keep a close watch on how other fashion brands are implementing sustainable strategies to learn from their successes and mistakes. This contingency plan ensures that Zara can adapt to potential challenges in its journey toward sustainability without negatively affecting its business model, customer base, or profitability. LESSON 9: Changing through a sustainable organizational culture Lesson #9 04/10 Remember to check if you have evaluation criteria in your project. To address social environmental issues, you need to build the right culture. The right culture is always the culture that is fitting the needs of the organization and the mindset of the people that are working there. It is unique for every organization because it depends on values and assumptions of the people working in it. It’s not so simple to change the culture in an organization.  We have different layers. And most of them you can’t see directly, you can see the outer layer. Norms are unwritten roles, but as a newcomer you have to ask, “How do you do things here?”. Values is something we can’t directly see, but everyone in the organizations knows about them. The deepest layer is basic assumptions. It usually deeply inside us, and it comes with use in the organization, we don’t learn it there. It is usually non-negotiable and non-discussable, and very unlikely to change. This is why, it is difficult to change culture. We simply cannot see it. Example of resources: an analyser from outside. We need to align the purposes. You need to have people aligned with you in this change. If people are not aligned, then it will be difficult to reach that goal. What you need to know about this model is that you have 2 stages: Important 1. The first one talks about reframing the company’s identity and culture. For that you need strong commitment. And external engagement 2. Stage 2 involves building internal support (codify the new identity). We really have to get it into the organization’s members. Therefore, we need the employee engagement  and processes and structure in the organization that are helping us establish this new organizational culture. These 2 stages interact and reinforce each other, and they then help to create this new culture. 3. A third point that is important is that you have companies that have more chances to change the environment into sustainable more successfully. Those are innovative and open companies. These companies have a much higher chance to build a sustainable culture. Case study Unilever Transformational change- if you change culture, it’s a hard change. Part 1: Evaluating the USLP strategy of Paul Polman to deal with Unilever ‘s challenges: 1. What was the situation in 2009, when Paul Polman took over as CEO at Unilever? 2. How would you evaluate Polman ‘s decision to introduce a new strategy based on the USLP plan (and what is the USLP plan)? 1. Shareholders – of USLP- Negative: he was basically shifting the focus from gaining profits for shareholders to create value for stakeholders, so at the beginning. He said “We need to know why we are here. The answer is, for consumers not shareholders”. Also, bad reviews and interviews like the financial times one, stressed that the focus wasn’t the profit anymore, which probably did not make them happy. Also, during a bad period for the company, they shareholders prefer to cut costs, rather than spending more for sustainability. Positive: However, in the long run they were very happy because as it is said in the article” Not only had investors been rewarded with an 18% rise in total shareholder return, but employee engagement scores tracking job satisfaction, pride, loyalty, and so on were also very strong at 75%, well ahead of the 63% level of 2009.” Important: Look at the numbers for report Important: no Unilever case in test- it will be more about theoretical knowledge. Read well results sulitest. We need to focus on those stuff, but it is also important to analyse all value chain, to see if they are aligned with the sustainability strategy. Also checking if we have the performance indicators. We need to collaborate internally as well as externally. Is important to ensure two-way communication and use different channels of communication. Talking about resistance to change, is very important to keep the stress level as low as possible, because people sensible to anxiety could be affected. Survey the employees on how they are feeling.