Session 12: Current Trends / Sustainability

Question 1

How to decide between options for sustainability?

Answer 1

Short-run:
- the current costs and revenues related to a current
decision on corporate activities

Long-run:
- the current costs and revenues related to that current
decision
+
- the future costs and revenues related to that current
decision (danger forgotten, ignored as can’t measure and/or mgt. doesn’t sufficiently care)

Question 2

What pursue sustainability?

Answer 2

► Brand and business model differentiation
► Employee attraction & retention
► Product differentiation, pricing premium
► Lower kc / higher earnings multiple
► Risk reduction
► Cost savings e.g. reduced RM inputs, home working
► First-mover / innovation advantages re new products,
new processes and new business models

Question 3

How can the effectiveness of sustainability be measured?

Answer 3

What set of measures, financial and non-financial, appropriately reflects Social & Environmental Sustainability?
You get what you measure so…
• May also need measures to prove progress / realise some benefits
• Companies often measure/report the “inputs” (e.g. money spent, time volunteered) rather than the sustainability “outcomes”
• Risk that “If I can’t measure what I want, then I want what I can measure”