Chapter 1: Introduction to Sustainable Business Development PDF

Chapter 1: Introduction to sustainable business development Sustainable Business Management Definition • Definition is usually too ambitious or too narrow • Our definition describes SBM as it is practised today, with a window of opportunity for the future Sustainable Business Management The Tr...

Chapter 1: Introduction to sustainable business development Sustainable Business Management Definition • Definition is usually too ambitious or too narrow • Our definition describes SBM as it is practised today, with a window of opportunity for the future Sustainable Business Management The Triple Bottom Line Proposed by John Elkington in 1994: People, Planet, Profit Sustainable Business Management The Global Ethical Trilemma • Three domains • Social • Economical • Ecological Sustainable Business Management The Global Ethical Trilemma - Economical • Beginning of the 70’s: first awareness that economical growth could not be unlimited (Club of Rome) • 80’s – 90’s: technological revolution fuelled the age of efficiency • • • • More efficient production lead to more products instead of less use of resources Cheaper products meant replacing became cheaper than repairing Mass-consumption became accessible for a lot more people Smart marketing increased level of consumption even more Sustainable Business Management The Global Ethical Trilemma - Economical • 21’st century • More awareness due to visible effects of climate change, microplastics, rising social problems,… • Still a lot of work to do! • Economic growth stays global standard for succes Sustainable Business Management The Global Ethical Trilemma - Social • Social justice • Human Rights Declaration (UN): social justice should be achieved and maintained globally • But: inequality is still rising! • 5% of the global population has as much income as 80% Sustainable Business Management The Global Ethical Trilemma - Environmental • Awareness has mostly grown in industrialised countries • Kuznet’s curve • Resources for ”green behaviour” are only available when basic needs are filled • In industrialised countries, we have more service-oriented businesses Sustainable Business Management The Global Ethical Trilemma - Environmental • Green movement • Planetary boundaries are (close to being) overstepped • At this rate, we will use “3 earths” per year by 2050 in terms of resources and waste disposal • We use 1,7 earth a year today Sustainable Business Management The Global Ethical Trilemma • Three approaches • Global Social-Democracy • Eco-efficient Capitalism • Red-Green Planetarism Sustainable Business Management Global-Social Democracy • Addresses both the economic and social aspect of sustainability • “Create global economic order” • “Improving the global common good” • Ecological aspect is not mentionned Sustainable Business Management Eco-Efficient Capitalism • Addresses both the economic and ecological aspect of sustainability • “Buying cleaner cars” • “Creating a greener environment” • Social aspect is not taken into account • The LEZ creates inequal circumstances for those who cannot afford to buy a cleaner car Sustainable Business Management Red-Green Planetarism • Addresses both the ecological and social aspect of sustainability • “Avoid depletion of ressources” • “Ensure basic life quality for every individual” • Economic aspect is not considered as important • Economic growth is seen as counterproductive Sustainable Business Management Carroll’s Pyramid First popular definition of CSR was created by Archie Carroll in 1979 and is still used today: the CSR Pyramid which gives 4 types of expectations that society has of business: 1. Economic 2. Legal 3. Ethical 4. Discretionary/Philantropic Sustainable Business Management Carroll’s Pyramid – Economic Responsibility • Basic responsibility of all businesses is to create goods and services that • That society wants • That can be sold with a profit • Companies that are not profitable yet, will not prioritise sustainability • Most companies will make sure that they are profitable first and try to cover their economic responsibilities: • • • • creating an income paying their employees paying their suppliers providing goods and services for their customers Sustainable Business Management Carroll’s Pyramid – Legal Responsibility • The responsibility of a company to run it’s business and creating economic value within the boundaries of the law • This seems evident in developed countries • However, in many countries, governments are weak and are failing so legal compliance becomes voluntary • In developed countries, sustainable business management is largely enforced in developed countries, by governments imposing measures and fines for companies that do not comply • This is mostly true for the ecological aspect of sustainability • Legal compliance is not Sustainable Business Management Sustainable Business Management Carroll’s Pyramid – Ethical Responsibility • The actions that companies take that are not determined by economical calculations or legal compliance • Decisions on green suppliers • Avoiding suppliers who involve child labour • Investing in green technology • Make business decisions not only by considering what will deliver the most profit but also by considering what is the right thing to do • Business Ethics Management is not the same as Sustainable Business Management Sustainable Business Management Carroll’s Pyramid – Philantropic Responsibility • The idea of giving something back to the world through charity, donations, volunteering,... • Facebook: Mark Zuckerberg donates 99% of his fortune to charity • Walmart spends 100 million to advance economic mobility for retail workers • KPN/Janssen Pharmaceutica engage employees in volunteering • These activities are usually seen as CSR (Corporate Social Responsibility) Sustainable Business Management Business Ethics Management • Business Ethics becomes increasingly important • • • • Making the “right” decision Lot of scandals and whistle blowers Data privacy Big companies often have an ethics committee • Sustainable business management is broader than only making the “right” choice Sustainable Business Management Corporate Governance • Corporate governance is the framework for making decisions in a company • Making sure that decisions lead to the best outcome for all stakeholders • Not only the “right” decision in an ethical way, but the right decision for anyone • The decision will always be a compromise and will not necessarily be a sustainable one Sustainable Business Management Case: UN Sustainable Development Goals (p. 37-39) Sustainable Business Management