Strategic Approaches to Sustainability Flashcards
(14 cards)
Definition
Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of markets to fulfil stakeholder expectations.
Strategic Decisions
Strategic decisions are concerned with the entire firm (entering a product market). Strategic decisions deal with the future (which makes them anticipatory reflections and hence risky). Strategic decisions aim at achieving a competitive advantage for the corporation.
The Business Case
A strategic and profit driven response to environmental and social issues. it focuses on the alignment of corporate strategy and corportate sustainability: measured by the corporate financial performance (FP) and the environmental social performance (ESP) respectively.
Sustainability of the Business Case
Mixed evidence on the existence of the business case for sustainability. Strength of alignment between FP and ESP depends on context variables (industry type) and indicators (profit or cost reduction for FP, emissions and pollution for ESP).
Capgemini research showed that 63% of executives in 2023 said that the business case for sustainability was clear, up from 21% in 2022.
Outside-in approaches
Competitive context as an opportunity or barrier. Factor (input) conditions: resources to do business. Demand conditions: customer demands and preferences. Supporting industry: competitive supplier networks influence business competitiveness. Strategy context: government regulations such as anti-trust and corruption.
Inside-out approaches
Primary and secondary activities of a business as an opportunity or barrier. Primary activities are directly connected to the product or service (such as low emission inbound logistic transportation, repair incentives for customers in services). Secondary activities such as procurement, technology and HR management as well as developing firm infrastructure, apply to the company as a whole and not just the one product/service.
Strategy-Sustainability Alignment
Exclusion->Inclusion. Inequity->Equity. Disconnected->Interconnected. Firms can be in denial (exxonmobil continue unsustainable operations), defensive (bp, shell acknowledge their harm but continue), isolatd (car manufacturers making EVs), embedded into change, or transformative and being the change they want to see.
Ellen: All-electric ferry
Connecting Danish islands, costing around 21mn EUR which is 40% more than non-sustainable diesel alternatives. Long-run operating costs were 75% lower however.
Interface - Global Leader in Carpet Tiles
Traditionally an unsustainable industry (synthetic fibres, high emissions, non-recyclable), Interface’s deep sustainability efforts span back to 1994 (recycling and take-back programmes, sustainable materials and a minimised operational footprint).
The Believers
Business case is sufficient as it is grounded in economic thinking. It is necessary for sustainability action as they believe without a business case there will be no reform.
The Hopeful
The business case is an enabling tool to guide sustainability innovation.
The Sceptics
Business case is a fixation on economic ideologies and might undermine efforts and discourage individuals when the business case is needed to justify socio-ecological action.
Limitations on the Business Case
We observe inaction in spite of the business case being “out there”.
Individuals might feel alienated from sustainability efforts.
For some issues it won’t pay, at least in the short-run.
Conclusions
Strategic approaches are also called instrumental approaches - guided by economic rationales and profit motives.
The business case for sustainability is a strategic approach about aligning corporate strategy with corporate sustainability.
Strategy-sustainability alignment can be the result of different activities, including inside-out and outside-in approaches.
Different actors (employees, management, stakeholders) ascribe different levels of importance.
