Reasons for Sustainability Innovation

Corporate Sustainability
Knowledge Center


Next Topic

Corporate Sustainability > Best Practices > Reasons for Sustainability Innovation

Reasons for Sustainability Innovation
Anneke Zwart, Student (University), Netherlands, Moderator
A lot of attention has been paid to sustainability over the last decade. In an article, Schaltegger and M. Wagner try to clarify when sustainable entrepreneurship emerges (what TRIGGERS it) and when innovations for sustainability will be made (FUNDAMENTAL REASONS).

According to the authors a number of factors can trigger the decision of an organization to get engaged in SI. Examples of such triggers for Sustainability Innovation (SI) are:
A. Changes in policy regulation
B. Management changes
C. Activity changes of crucial stakeholders.

But underlying such immediate triggers, there are 3 general or fundamental reasons for SI that have to do with the private benefit of an investment (reducing costs) versus its social benefits (benefits related to life quality, well-being and health).
1. The positive private benefit of an innovation exceeds the negative social effects. Higher positive benefits means a higher potential of a certain innovation to be able to justify the negative social benefits (compensation potential of the private benefit).
2. An innovation has a positive social effect that exceeds the negative private benefit it generates. In this case the positive social benefits have the compensation potential.
3. An innovation for which positive private and social benefits coincide. This is the most desirable case, in which the “compensation potential” is irrelevant, because nothing has to be compensated for.
Source: Schaltegger, S. and M. Wagner. (2011). Sustainable Entrepreneurship and Sustainability Innovation: Categories and Interactions. Business Strategy and the Environment..

Are there any other immediate triggers for SI? Or do you know another fundamental reason for SI?

Triggers for SI
Vivian, ICT Consultant, United States, Member
In most cases the immediate reasons are indeed B. management changes and also
D. Development of long term strategy.
I am hoping more corporates can adopt this approach.

Sustainability Cost-benefit Analysis
Nikandish, Manager, Member
Approaching this subject as a cost-benefit analysis is a good idea, but:
1. How do you calculate and measure social benefits and private benefits? What are your indexes? Do they have direct relations with eachother?
2. Sometimes we need to split up private benefits into employee benefits and organization benefits!
Therefore you need to have a SI map strategy to prove or apply your comment.

Corporate Sustainability Goals
Herie Saksono, Indonesia, Member
When we try to identify and verify the goals we are trying to achieve with SI, there are a number of (interrelated) goals typically mentioned, such as:
1. Economic Sustainability (Profit)
2. Environmental Sustainability (Planet)
3. Social Sustainability (People)
Together these 3 are called "Triple Bottom Line".
Also sometimes we find:
4. Community Participation
5. Local Innovation.

Sustainability Innovation - a Way of Life
Len Pretorius, Project Manager, South Africa, Member
No company [or organisation, or person] can exist without change as it is imposed upon all of creation and ourselves. We can only aspire to be able to maintain a semblance of control and the status quo, albeit for a small and limited time period. This time period is perceived as getting shorter, as change accelerates.
The only way to shape the future in order to exert control and direction is to innovate on a daily basis. This will change the future outcome, sometimes negative, but if thought through carefully and with added wisdom from others, may well be positive and increase the probability of a more sustainable outcome.
There is no other way in all mankind's endeavours. We must innovate at an increased pace to manage ourselves a better and sustainable future and planet earth for our future generations.
The adage is so true: 'If you persist to do what you did yesterday, you will only get the same results". Why expect things to be different?

Market-based Solutions Can Lead the Public Opinion
Dorian Dale, Director, United States, Member
The municipality for which I served as energy director and sustainability officer, Babylon, NY, pioneered property-assessed clean energy. It was based on the ESCO model where energy savings cover the capital cost. In other words it was a market-based solution.
A corporation can get only so much PR mileage and institutional gratification from astroturfing before Beyond Petroleum, aka BP, eliminates its solar division and gets back to its historic business, i.e. fossil fueling.
Factoring for externalities sounds fine in the abstract, but monetizing carbon has only been attempted piecemeal and is far from delivering.
The good news is that even eco posturing contributes to heightened awareness and the population gets 'going green,' in principle. The big push from corporate has to take on defenders of the status quo, like the US Chamber of Congress.

Reasons for SI: Article and Recent Book
Teun Wolters, Professor, Netherlands, Member
If more elaborate theory is needed, helpful could be:
- Article: H. Patzelt and D.A. Shephard (2011) Recognizing opportunities for SD", Entrepreneurship Theory & Practice, Vol. 35, Issue 4, 631-652, 2011 (e.g. the role of relevant knowledge).
- And perhaps my new book: Teun Wolters (June 2013), "Sustainable Value Creation - as a Challenge to Managers and Controllers" WUP (NL). ISBN: 978-90-816996-9-3. (role of values and strategy; management roles that can be changed for the better).

Business Continuity as a 4th Fundamental Reason for CS
Nomi Hattingh, Australia, Member
I wonder if
4. Business Continuity
should be included to your list - ensuring your future existence, and capacity to recover from disaster?

Business Continuity as an Additional Fundamental Reason for Corp. Sust.
Jaap de Jonge, Editor, Netherlands
@Nomi Hattingh: Thanks for your suggestion which I believe is useful.
Indeed business continuity - if it could be threatened due to a lack of attention for CS - could be a 4th category. It makes any further cost / benefit analysis of private company benefits (and cost) versus the societal benefits superfluous.
Consider in this regard that due to the increased connectedness (internet, cell phones, social media), the risks and conseqences of any environmental disaster or perceived corporate misbehavior have increased. Merely managing your online corporate reputation at an operational level is not enough to face global public outrage.
So your suggestion makes sense. For certain categeories of risks its better to be prepared so you're able to show your firm made resonable efforts to prevent them from happening.
And that goes beyond a cost / benefit approach.

Sustainable Innovation
Arif ur Rehman, Professor, Pakistan, Member
"We need to paint a better world, articulate a better future that doesn't involve willful consumption"
Will Day, Chairman, Sustainable Development Commission
Innovation, the forerunner of/for change, comes from and for people; if you and I – ordinary consumers – are not to benefit from it, then it is mere scrap. Razor-blade handles, refillable bottles and canisters, and recyclable plastic bottles/cans usually all end up as litter. The reason is obvious – you’re being put the drudgery of work which is too mundane for all and sundry. Sustainable innovation provides products that are self-educating and their designs are obvious in making life more comfortable/utilitarian. For the architect or innovator innovation sustainability must be reflected in natural adaptability of the product itself, per se..

The Drivers of Corporate Sustainability
Anneke Zwart, Student (University), Netherlands, Moderator
Recently, Donald Trump has won the US elections. This has been a fear for those who aim to combat climate change, since Mr. Trump appears to take a hostile stand towards it, claiming for instance that global warming does not exist but is rather ‘created by and for the Chinese’ as a means to compete with U.S. manufacturing.
Will this political shift diminish the efforts and corporate action around social and environmental sustainability? Winston (2016) argues that organizations will continue to pursue sustainability goals, because there are 5 macro forces that give reason to the drive for corporate sustainability:
  1. ECONOMIC VIABILITY: It has already become economically viable to produce in a more sustainable way on many dimensions. For example, the costs to produce clean energy have fallen by 60 – 80% since 2010. Due to technological advances, those costs are likely to decrease even more in the future. This makes it more and more attractive for organizations to make the transition towards clean energy.
  2. CLIMATE SYSTEMIC RISKS: There are major risks of climate change on organizational performance. Changing weather can be devastating for the production of different types of crops. Natural disasters can cost organizations millions of costs due to factory damage and the turn down of local economies. Again, there is an economic argument in favour of pursuing sustainable development.
  3. MILLENNIAL DEMAND: The new generation of Millennials desire to work in organizations that highly value environmental and social sustainability. Employees like this put pressure on organizations’ behavior.
  4. SOCIAL MEDIA & TRANSPARENCY: The digital era forces companies to be more transparent by being critical, and by obtaining and quickly spreading stories on the performance of organizations. It is not only the endproduct that matters anymore. Rather, consumers nowadays consider all practices throughout the whole value chain in forming and spreading an opinion of the products consumed.
  5. GLOBAL COMMITMENT & COMPETITION: Although the U.S. can be said to be a world super power, it is not the only country in this world that has a say in the future of sustainability. Governments and corporations in nations all over the world take action to combat climate change and enhance social issues. In fact, sustainability has become a condition to stay competitive in global markets.
Source: Winston, A. (2016) "Sustainable Business Will Move Ahead With Or Without Trump's Support" Harvard Business Review November

Special Interest Group Leader

Interested? Sign up for free.

Corporate Sustainability
Best Practices

Corporate Sustainability
Knowledge Center


Next Topic

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2019 12manage - The Executive Fast Track. V15.1 - Last updated: 23-8-2019. All names ™ of their owners.