Introduction to Sustainability Management Leena Lankoski & Armi Temmes Oct. 2, 2017
Objectives for today s lecture 1. Understand the fundamental idea of the sustainability specialization 2. Get a taste of what studying sustainability management is like: Towards understanding strategic management of sustainability (readings) 3. Learn what sustainability management courses are available in the specialization
1. Sustainability management as a specialization
Why sustainability management in firms? Discussion: What are the drivers for business to consider social and environmental issues?
Discussion outcomes BUSINESS REASONS: Stakeholders care > company has to do it Reduce reputation risks > avoid impacts on turnover Reduce costs in production Differentiate product from competitors (Tesla) Increase employee engagement Attract new employees ETHICAL REASONS: Livelihoods, well-being, social benefits REGULATORY REASONS
Why choose the sustainability management specialization? Why should someone working in business (or with business) have expertise in sustainability management?
2. Towards understanding strategic management of sustainability - Key concepts within sustainability management - Positioning strategic sustainability management - Models for strategic sustainability management
Key concepts Sustainability performance Sustainability Corporate responsibility Corporate sustainability Sustainable development
Corporate responsibility The idea: companies have a responsibility for the public good The public good in different situations is connected to sustainable development defined by stakeholders Impacts on economic conditions of stakeholders (financial flows: profits, wages, taxes, purchases, charitable contributions) as well as broader impacts on economic systems (GRI) Impacts on natural systems, including land, air, water and ecosystems: relate to inputs (energy, water) and outputs (emissions, effluents, waste) (GRI) Economic Responsibility Profit Corporate responsibility Environmental Responsibility Planet Social Responsibility People Impacts on social systems (labour practices, human rights, product responsibility) (GRI)
Corporate responsibility vs. business sustainability Source: Bansal and Song, 2016 Corporate responsibility Strategic management Business sustainability 1950s Managers morality 1980s Limits to growth 1990s Society Profit Profit Environ ment 2000s Society Profit Environ ment Future research Normative theory of the firm Profit Environ Society ment Systems theory of business and society
Source: Lankoski (2016), Journal of Cleaner Production Corporate sustainability vs. systemlevel sustainability
Sustainable development: meeting the needs of the present without compromising the ability of future generations to meet their own needs: What would Oct it 2, 2017 mean in practice?
Sustainable development goals approved by UN General Assembly Sept. 25, 2015
Positioning strategic sustainability management Strategic sustainability management: Selecting the target level of responsibility for each issue and planning how the available business benefits can flow to the firm vs. Operative sustainability management: Making the selected level as well as the associated business benefits happen
Key questions for strategic sustainability management What level of corporate responsibility should we strive for? What will the impacts of this choice be on our financial performance? What will the impacts of this choice be on society and the environment?
Source: Halme, M., Rintamäki, J., Knudsen, J. S., Kuisma, M., & Lankoski, L. (2017). When is there a sustainability case for CSR? Pathways to environmental and social performance improvements. From sustainability management to social and environmental impacts
Source: Lankoski (2008), Business Strategy & the Environment From sustainability management to financial performance impacts
Three models for strategic sustainability management Hahn et al. (2010) Halme & Laurila (2009) Porter & Kramer (2011)
Corporate responsibility types (Halme & Laurila 2009) -CR type = the way CR is put into action in a company -Baseline: mandatory legal and economic responsibilities -Philanthropy: donations, sponsorships, voluntary work of personnel etc. -CR Integration: Responsibility in own (existing) business and in primary stakeholder relationships (employees, customers, suppliers, local communities) -CR Innovation: Solving social and/or ecological problems with own (new) products and services (business models based on e.g. eco-efficiency or inclusive innovations for poverty alleviation)
Dimension of action Source: Halme and Laurila, Journal of Business Ethics, 2009 Comparison of CR types Relationship to core business Target of responsibility CR action type Philanthropy CR Integration CR Innovation Outside of firm s core business Extra activities Close to existing core business Environmental and social performance of existing business operations Enlarging core business or developing new business New product or service development Expected benefit Image improvement and other reputation impacts Improvements of environmental and social aspects of core business Business opportunity for now & future Example Microsoft's software donations for charity groups. Merck employees build timber houses for poverty-stricken people Certifying facilities with e.g. ISO14001 or SA8000 Zero carbon energy technologies; BOP and eco-efficient service business models
Potential financial & societal benefits Source: Halme and Laurila, Journal of Business Ethics, 2009 Potential financial and societal benefits of CR types CR INNOVATION CR INNOVATION CR INTEGRATION CR INNOVATION PHILANTHROPY Baseline: Economic & legal responsibility Outside of the core business Business integration of CR Integration with the core business Extension of the core business
What do Porter and Kramer (2011) suggest? Shared Value refers to policies and practices that enhance the competitiveness of a company and simultaneously advance the economic and social conditions in communities in which it operates
Porter and Kramer resist: - Charity & stakeholder driven responsibility Doing good and trying to be everybody s darling - CSR as PR campaigns - Short-termism and narrow value creation - Pitting benefit of business and society against each other - CSR separate from real business Porter and Kramer support: + Choosing responsibility tasks with real impact and that are strategic opportunities for the company + Company specific agenda + Cooperation locally and in the supply chain + Sufficient resources to integrate responsibility into business
But is sustainability management always a win-win situation? Hahn et al. (2010): The win-win-win centre of the triple bottom line thinking is the smallest common denominator
Trade-offs in sustainability management (Hahn et al. 2010) Outcomes help one issue, harm another Time now or later? Interests good for me, bad for the society Perceptions what is most important? what is the best way to proceed? Source: Hahn et al. (2010), Business Strategy and the Environment
Group assignment: Using the articles and the provided frameworks, please analyse the corporate responsibility work of Company X
Our fictional case company Company X operates in the food service sector in Helsinki region, running 25 student restaurants and workplace cafeterias.
Work on one of the following topics: Halme & Laurila: Provide examples of what corporate responsibility work in the form of philanthropy, integration, and innovation could be for Company X Hahn et al.: Provide examples of what kinds of different trade-offs Company X might face in its corporate responsibility work Porter & Kramer: Provide examples of how Company X could create shared value through its corporate responsibility work
Dimension of action Source: Halme and Laurila, Journal of Business Ethics, 2009 Analytical framework for Halme & Laurila Relationship to core business Target of responsibility Expected benefit CR action type Philanthropy CR Integration CR Innovation Outside of firm s core business Extra activities Image improvement and other reputation impacts Close to existing core business Performance of existing business operations Improvements of core business Enlarging core business or new business New product or service development Business opportunity for now & future Examples
Analytical framework for Hahn et al. Outcome does helping one issue harm some other? Temporal is there conflict between short term and long term? Do the interests of the company differ from those of individuals or society at large? Society Industry/Company Industry/Company Individual
Source: Porter & Kramer (2011), Harvard Business Review Analytical framework for Porter & Kramer Examples:
Takeaways 1. The strategic management of sustainability revolves around obtaining desired environmental/social benefits and business benefits. 2. Environmental and social problems can create both risks and opportunities for a business enterprise. Sustainability / corporate responsibility can be, but is not automatically in all cases, profitable for the company. 3. It is also not self-evident that sustainability / corporate responsibility initiatives result in actual improvements in social or environmental conditions. Social Environmental Economic 4. Successful strategic sustainability management is a professional skill which can be learned.
3. Further studies in sustainability management
21E16000 Sustainable Business & Consumption (6cr, period I) Minna Halme Angelina Korsunova Introducing the fundamental business concepts, approaches, strategies, tools and innovations in response to contemporary sustainability challenges What? How? Context of sustainable business: Sustainability challenges, business in society, stakeholder engagement Managing sustainability: Strategy, supply chain, communications and management tools Sustainable consumption: Active roles for consumers in sustainability Innovation for sustainability: How can businesses innovate to address sustainability challenges? Eco-innovation, business models for eco-efficiency, circular economy innovation opportunities Participative lectures using multimedia Guest speakers: experts from academia and industry Case studies Peer to peer learning Participative computer-based stakeholder simulation Interactive Q&A session Assessment: Exam 70% Individual / group assignments 30%
21E10000 How to Change the World: Innovating toward Sustainability (6 cr, period III) We can approach to large-scale problems (e.g. poverty alleviation, environmental degradation, social injustice) by discussing local situationtailored solutions Introduces themes such as: Business models for social and ecological sustainability Inclusive innovation for poverty alleviation in emerging markets Frugal innovations Promotes critical thinking and discussion through exercises and Reading Corners organized as part of the course. Promotes new discoveries through Happiness Diaries and Sustainability Deeds. Engages students in a team-project to innovate a business model that promotes sustainability. Offers capabilities for Capstone course and stepping stone to Sustainability Entrepreneurship course. Teachers 2017: Professor Minna Halme, Sara Lindeman & Marleen Wierenga
22E29100 Accounting for Sustainability (6 cr, II period 2.11.- 7.12.2017) Teachers: Hanna Silvola & Visiting Profesor Eduardo Schiehll Teaching methods: Lectures, cases, project work Topics: SUSTAINABILITY STRATEGY AND PERFORMANCE EFFECTS GLOBAL VS. FINNISH INSIGHTS ON DISCLOSURE REGULATION INCORPORATING SUSTAINABILITY INTO FINANCIAL DECISION MAKING IDENTIFYING AND MEASURING ENVIRONMENTAL COSTS MEASURING AND REWARDING SUSTAINABLE PERFORMANCE INVESTORS & SUSTAINABLE INVESTMENTS SUSTAINABILITY REPORTING SUSTAINABILITY ASSURANCE VS. AUDITING
25E18000 Sustainable Entrepreneurship (6cr, 26.02-06.04.2018) Teachers: Steffen Farny Learning content: Topical overview of scholarly and policy discussions about sustainability entrepreneurship Learning to analyse the social and ecological sustainability of current entrepreneurship practices in different geographical contexts (Inter-)Active engagement in sustainability practices, to identify opportunities in developing and presenting a sustainable business idea Session Themes: Sustainable Future: Relevance, Urgency and Actor Profiles Sustainable Entrepreneurship Process, Finance and Scaling Culture, Geography and Sustainable Entrepreneurship Insights from Extreme Environments (e.g. Haiti, North Korea) Written and Oral Group Assignment (70%): based on own interests, students focus on one of the three Actor-tracks: (1) Consultant for sustainable venturing, (2) Sustainable entrepreneurship researcher, (3) Sustainability-oriented entrepreneur Written Individual Assignment (30%)
21E16100 Energy Business and Innovation (6 cr, period V) Teachers: Jouni K. Juntunen & Paula Kivimaa What: Understand distributed energy markets from social sciences perspective. Get familiar with sustainable energy transitions (strategic niche management, policy). Get knowledge on business models and innovation (types, dynamics and diffusion). How: Participative lectures Guest lecturers: Academic and industry experts Group work Grading: Exam (70%) Group work (20%) Written Individual Assignments (10%)
21E11001 Dialogues on Corporate Responsibility in Global Economy (6cr, period V) Method of learning: intense dialogue we practice dialogue skills and facilitation What do you get: A truly collective learning experience - we have a starting point, but the learning journey may take us into places we cannot imagine beforehand! Exploration of corporate responsibility through critical reflection and explorative tasks What we require from you: Preparation for each class (by reading, or by doing experiments) Mandatory presence in 10 out of 11 class sessions to enable collective learning Doing exercises each week (reflection papers & experiments) Two group works instead of final exam Facilitators: Galina Kallio and Timo Järvensivu
21E12002 CAPSTONE in Creative Sustainability (6 cr, periods III-IV) Description Intensive team work Real-life social and environmental challenges brought by partner organisations, which can be e.g. companies, public organizations or NGO s. Tutorial sessions and presentations How to join Most suitable for 2 nd year of studies Presentation of projects at the end of autumn term in MyCourses Motivation letters to show interest and commitment to a specific project are used as a basis for eventual selection of students Coaches: Armi Temmes, Mikko Jalas, Leena Lankoski, Jarkko Levänen
Courses offered in 2017/18 Period I Period II Period III Period IV Period V 21E16000 Sustainable business & consumption, 6 cr (Angelina Korsunova, Minna Halme) 22E29100 Accounting for Sustainability (Hanna Silvola) 21E10000 How to change the world: Innovation toward Sustainability, 6 cr (Minna Halme, Sara Lindeman, Marleen Wierenga) 25E18000 Sustainable entrepreneurs hip, 6 cr (Steffen Farny) III-IV: 21E12002 Capstone in Creative Sustainability, 6 cr (Armi Temmes, Mikko Jalas, Leena Lankoski, Jarkko Levänen) 21E11000 Dialogues in Corporate Responsibility in Global Economy, 6 cr (Galina Kallio, Timo Järvensivu) 21E16100 Energy Business and Innovation, 6 cr (Jouni Juntunen) Other elective courses from BIZ 51E00100 Business ethics, 6 cr (Matti Häyry IV) 21E06050 Responsibility management, book exam, 6 cr (Mika Kuisma)