Sustainability Management Test 2: C5, C7

Invention

A novel idea or discovery that could lead to new products or processes, but is justthe starting point

Innovation

The applciation and economic exploitation of an invention

Diffusion

For long-term success, innovations must spread and be potentially imitated

Eco-innovations

Actions by various actors (ex. firms, governments and households) that develop new ideas or products to reduce enviormental impacts

Sustainability-oriented innvoation

Changes to an organization’s values, products, or processes aimed at creating social, environmental, and economic value

Conclusion

Sustainability innovations involve various actors and can include technological, organizational, social, or business model changes.

Regulatory Push

Governments set sustainability standards, forcing companies to change (ex. CO2 emission standards for cars).

Technology Push

New technologies disrupt industries, creating opportunities for new business models (ex. mobile tech enabling the sharing economy).

Civil society push

Activists, scientists, and media pressure others to act sustainably through evidence and public attention

Cost Push

Rising costs of resources and regulations drive companies to innovate and optimize resource use

Regulatory Pull

Governments provide incentives for voluntary sustainability actions (ex. funding or support programs).

Visionary Pull

Industry leaders or national agedas guice sustianability innovations through vision adn values

Market Pull

Increased consumer demand for sustainable products pushes companies to innovate

Interdependence

Push and pull factors often influence each other (ex. regulations and consumer demand driving alternative transportation technologies).

Directional certainity

helps manage uncertainty and ensures innovations support future sustainability.

Two considerations to achieve directional certainity

economic and ecological reversibility

Economic reversbility

Avoid irreversible investments and ensure customers have alternatives.

Ecological reversibility

Ensure innovations don’t cause irreversable enviormental harm

directional certainity, economic reversibilitya dn ecological reversibility GOAL

allow room for errors, as not all innvoations will be fully sustainable in the long-term

Three levels of innovation

1. Operational optimization

2. Organziational Transofrmation

3. Systems building

Operational Optimization

•Most widespread approach

•Innovations build upon given set of needs and try to satisfy them more (eco-)efficiently than before

•Such innovations are usually reactive, incremental, and internal

•Typically, incremental innovations address a single sustainability issue at a time

•Aim at reducing current negative impacts without fundamental changes to business model

•Tend to focus on new technologies without drastic changes and by relying on company internal resources to innovation

Examples of operational optimization

• Product level: product miniaturization, redesign of packaging, reduction of hazardous materials

• Organizational level: more resource-efficient processes, improved waste management

Organizational transformation

•a significant and strategic shift in how an organization operates, often involving fundamental changes to its structure, culture, processes, and technology

Next evolutionary step of sustainability-oriented innovations after operational optimization

•Aim at providing novel goods, services, and business models → Moving toward fundamental shift in organization’s mindset

•Combine technological and socio-technical innovations

•Often focus on delivering services instead of creating or improving physical products

•Innovations may serve new markets with novel, sustainable products à Catering to adapted consumer needs

•Innovations increasingly build upon collaboration along value chain and with external stakeholders

Examples of organizational transformation

• Sharing economy

• Services that otherwise change consumption habits such as replacing physical with electronic services

• Products specifically designed to cater to need of poor populations

systems building

•Most far-reaching approach → Only few organizations or industries occupy this realm

systems building innocations require a radical shift

Requires thinking beyond boundaries of single organizations to include partners in previously unrelated areas or industries

Cooperation and creation of sustainable value in networks is key

Economic activity regarded as being part of society, not distinct from it

Results of systems building

novel products or even entirely new business models and business thinking that drive institutional change

social enterprises

business with a social mission, sustaining operations through commercial activites

Industrial symbiosis networks

Companies in a region exchange materials and energy for a circular economy.

Frugal Innovations

BoP innovation focuses on "good-enough, affordable products" for resource-constrained consumers.

Frugal innovations result

a product, service, or solution that meets customer needs despite limited resources, often at a lower price than competitors.

Frugal innovations use

few resources and are low-cost, but deliver effective, outcome-oriented solutions.

Frugal Innovation Picture

Typical traits of frugal innovations

Use cost-effective raw materials and low operational costs.

Source and produce locally to reduce imports and boost local value.

Focus on core features with minimal automation and simple functionality.

Design for high ease of use, requiring little to no training.

Tailor innovations to handle harsh environments and poor infrastructure.

codes of conduct outline

appropriate and inappropriate behaviors in organziations

management systems provide

guidelines for implementing sustainability, without setting specific performance goals.

Hyrbids combine

behavioral guidelines with implementation strategies.

codes of conduct

Sets of commitments that define certain attitudes, behaviors, or actions

Soft law (ex. quasi-legal instrument without legally binding force)

Do not have to cover sustainability-related topics, but often include certain environmental, social, ethical, or governance issues

Codes of conduct image

Codes of conduct can be devised by

• Companies (typically for themselves and their employees or for their suppliers)

• Industry associations (for their members)

• Inter-governmental actors (e.g., UN Global Compact)

• Through multi stakeholder processes (e.g., ISO 26000 )

• For entire professions (e.g., Hippocratic Oath for physicians)

Principle-based codes

• Short list of general statements that can cover a wide variety of issues

• Statements do not target specific behaviors or actions

• Meant to guide behavior more generally in a variety of contexts

• Rather flexible and relevant over longer periods of time

• Express expectations as yardsticks instead of regulating behavior

Rule-based codes

• Usually larger lists of more specific statements and behavioral commitments

• Tell individuals more precisely what they can(not) do

• Provide clear indication of expected behavior

• Easier to measure

• Unlikely that very situation of behavior can be influenced by exact rules → gaps likely

• Need to constantly update to address omission and changing situations

Effective codes

combine both elements of principle based and rule based codes

Benefits of codes of conduct

• Flexible and low-cost to implement.

• Can level the playing field among competitors.

• May reduce the need for government regulations.

• Provides clearer expectations for stakeholders.

• Recognizes key issues as relevant through the code.

• Creates internal pressure to follow through.

• Changes driven internally are more likely to succeed if there's commitment.

Limitations of Codes of Conduct

• Many codes lack accountability, monitoring, and sanctions.

• Implementation and enforcement can be weak.

• Codes may exist but aren't applied in daily business.

• Many employees may be unaware of the code.

• Codes may be ignored if complaints or whistleblower protection are lacking.

• Company-written codes lack input from outside groups.

• Multistakeholder codes often set minimal standards.

• Implementation is less likely if actors don't see the benefits.

The UN GLobal Compact Principles: Human Rights

1. Businesses should support and respect the protection of itnernationally proclaimed human rights, and

2. make sure that they are not complicit in human rights abuses

The UN GLobal Compact Principles: Labour

3. Businesses should uphold the freedom of association adn the effective recognition of the right to colelctive bargaining;

4. the elimination of all forms of forced and compulsory labour

5. the effective abolotion of child labour, and

6. the elimination of discrimination in respect of employment and occupation

The UN GLobal Compact Principles: Enviorment

7. Businesses should support a precautionary approach to environmental challenges

8. undertake initiatives to promote greater enviormental responsibility, and

9. encourage the development and diffusion of enviormentally friendly technologies

The UN GLobal Compact Principles: Anti-Corruption

Businesses should work against coruption in all its forms, including extortion and birbery

Possible benefits of UN Global Compact

• Principles provide yardstick for exchange (not meant as benchmark)

• They allow addressing a broad target group of small and large companies

• Focus “beyond” the principles in on learning and continuous improvements

• Reporting requirements create some pressure by transparency and commitment

Possible criticism of UN Global Compact

• Principles rather vaguely formulated, lack clarity

• Provide only a minimum standard

• Free rider problem as it is comparable easy to join the UN Global Compact

• Potential lack of monitoring, sanctions, and enforceable rules → “Bluewashing”

• Low reporting requirements

ISO 26000

Extensive document (>100 pages) that outlines the social responsibilities of organizations

• Suitable to any kind of private, public, and nonprofit organizations worldwide

Limitation sof ISO 26000

• Companies cannot subscribe to or join the standard

  • Not possible to evaluate how many companies or other organizations use the principles and guideline

  • Difficult to judge if ISO 26000 is successful in reaching its goals of providing guidance on social responsibility of organizations

• It “is not a management system standard. It is not intended or appropriate for certification purposes or regulatory or contractual use. Any offer to certify, or claims to be certified, to ISO 26000 would be a misrepresentation of the intent and purpose of the International Standard” (ISO, 2010a, p. vi)

How to control problems if they happen?

1. Denial

2. Scapegoat

3. Attack the Accuser

4. Excuse

5. Justification

6. Ingratition

7. Concern

8. Compassion

9. Regret

10. Apology

Denial

Management claims there is no crisis

Scapegoat

Management blames some outside entity for the crisis

Attack the Accuser

Management confronts the group or person claiming that something is wrong

Excuse

Management attempts to minimize crisis reponsibility by claiming lack of control over the event or lack of intent to do what they did

Justification

Management attempts to minimize the percieved damage caused by the crisis

Ingratiation

Management praises other stakeholders and/or reminds people of past good works by the organziation

Concern

Management expresses concern for victims

Compassion

Management offers money or other gifts to victims

Regret

Management indicates they feel badly about the crisis

Apology

Management accepts full responsibility for the crisis and asks stakeholders for forgiveness