Institutions matter: The importance of institutional quality when embedding sustainability within the capitalistic realm

By Lisa Bernt Elboth, Adrian Rudolf Doppler, & Dr. Kristjan Jespersen

◦ 5 min read 

Institutions not only structure any sort of social interaction [1], but are also essential in solving societal problems [2], such as climate change and the associated threat towards a fair and just future. It is not without reason that the United Nations particularly emphasized institutional progress within SDG 16 [3] to advance to a more effective, inclusive, and accountable society. In a recent study, it was found that institutions matter to a great extent when scrutinizing the relationship between corporate financial performance (CFP) and ESG performance. More specifically, the institutional environment a company finds itself in determines whether sustainable business practices get transformed into financial returns.

The claim that more sustainable companies are outperforming their not so sustainable peers is not new [4] and the consequent shift of investors’ preferences towards more sustainable companies has been taking place with increasing speed over the last decade [5]. Associated wake-up calls and the urge to take ESG into consideration are not surprising either. Besides the alleged desire of investors for a just and sustainable future, this shift is more likely based on the theory that sustainable finance delivers abnormal returns [6]. But is the relationship between sustainable behavior and financial performance as straightforward as it is disseminated? Are more sustainable corporations indeed more likely to achieve better financial results regardless of where they are and what they do?

In fact, when utilizing ESG scores, rankings, and performance as a proxy for sustainable behavior, two meta-analyses [7] [8] concluded that in most empirical studies the resulting relationship was not as simplistic, universal or linear as it is often propagated. In a corresponding literature review, the researchers also identified a large number of discrepancies among scholars in how to statistically model the relationship, what control variables to use and how to even quantify the dependent and independent variables of focus. Following these insights, the researchers uncovered a determining factor in establishing and shaping the emphasized relationship – institutional quality.

Key Findings

The final sample consisted of datapoints from 6,976 corporations, situated in 75 different countries over a period of eleven years or, specifically, from 2009 to 2020. Subsequently, these were analyzed applying fixed effects panel regression models. Both an accounting- and a market-based measure were used to quantify corporate financial performance, respectively, Return on Assets (ROA) and Tobin’s Q. Meanwhile, ESG performance was proxied by ESG scores from Refinitiv (former Thomson Reuters). The variables associated with institutional environment were split into 

  1. Institutional Quality, calculated through a factor analysis and based on the World Governance Indicators from the World Bank and 
  2. Industry Sensitivity, a dummy variable equal to 1 if the GICS industry of a firm was deemed sensitive towards ESG.
Institutions are among the determinantal factors for the link 

Interestingly, the general statistical analysis of ESG and CFP did not yield any significant results, however, when moderating effects stemming from the institutional environment were introduced, this changed. Under high institutional quality, the researchers found a positive relationship between ESG scores and financial performance. Contrarily, the relationship was negative under low institutional quality. Exemplified below by the case of Finland 2012, Argentina 2018 and Zimbabwe 2012, institutions can be seen as the determining factor for direction of the focal link. Furthermore, the industrial environment a corporation finds itself in was found to affect the relationship ambiguously. Generally, sensitive firms seem to receive relatively less financial gain for improved ESG performance, and it may even be negative.

Possible explanations for such dynamics
  • Legal institutions, such as environmental regulations, labor laws or health and safety requirements, can serve as the means of reflecting sustainable behavior inside a company’s balance sheet. Finland was for instance the first country to introduce a carbon tax capturing corporate pollution by giving it a price and hence affecting accounting profits.
  • In highly corruptive settings, where the trust of the general public is lacking, the likelihood of sustainable activities being perceived as greenwashing and thus not rewarded by investors, could be another reason for an inverse relationship in low institutionally developed regions. 
  • In line with the previous, when accountability is low, and corporate entities can disclose information without third party verification, it could be relatively easy to stay focused on short-term profits through unsustainable practices but still receive a better ESG rating.  
  • In environments with low institutional quality, banks tend to only give out short-term loans in order to reduce their own risks. This can lead to a vicious cycle of corporate lenders also only focusing on short-term profit maximization which then again decreases their access to capital, constraining their ability to engage in long-term sustainable practices.
Putting the SO WHAT into practice

When setting out for systemic change, it is important to ensure the necessary institutional environment in order to encourage individuals, as well as corporate entities to act in the best interest of the entire society and the planet. Thereby, a bottom-up approach focusing on incentivizing every individual and a top-down approach, fostering legal macro-level change can be synthesized, leading to the best possible outcome. These institutions should seek to maximize accountability, transparency, and mechanisms to internalize negative externalities. Corporations within such environments should fully leverage opportunities associated with sustainable practices, such as cheaper access to capital, in order to incrementally advance the progress towards a just space for humankind. Corporations, which are especially sensitive towards ESG related elements irrespective of their ESG scores, should aspire to enhance their own credibility, as this might award them with a competitive advantage. Lastly, societies with high institutional quality should strive for teaching about their institutions and the associated benefits to everyone else, as a global problem can only be solved on a global level. 


References

Doppler, A.R., & Elboth, L.B. (2022). Institutional Quality, Industry Sensitivity and ESG: An Empirical Study of the Moderating Effects onto the Relationship between ESG Performance and Corporate Financial Performance (Unpublished master’s thesis). 22098. Copenhagen Business School, Denmark.


About the Authors

Lisa Bernt Elboth recently graduated with an M.Sc. in Applied Economics and Finance as well as a CEMS Master’s in International Management from Copenhagen Business School and Bocconi University. Her interest in global matters and sustainability has flourished during her studies impacting the choice of master thesis topic and this subsequent blog contribution.

Adrian Rudolf Doppler works as a research assistant for the Department of International Economics, Government and Business at Copenhagen Business School and had just graduated with a Master’s in Applied Economics & Finance and the CEMS Master’s in International Management after a two-year journey. He had always been passionate about ESG, Sustainability and the existing links with the capital markets, as well as the complex system dynamics arising form it.

Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies on the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.


Photo credit: Galeanu Mihai on iStock

Corporate sanctions in the context of the Russian invasion of Ukraine

Summary of the discussion with Sophia Opatska at CBS

◦ 8 min read 

This blog post is a repost and has first been published by UCU Business School on 5th of April 2022.

In normal life, I am a vice-rector for the strategic development of the best Ukrainian private nonprofit University and founding dean of UCU Business School. Right now, I am one of 4 million Ukrainians who left Ukraine because of bomb shelling and war, which Russia started on February 24th.

Sophia Opatska, 2022

What happens in Ukraine right now is devastating. Every day more and more people die, more and more cities are ruined. Over the weekend, the Kyiv region was liberated after a month of occupation. Pictures of Bucha (a beautiful small town near Kyiv) can make any normal person sick: mass executions, civilians being killed on the streets, lying there for days and weeks, half-burned bodies of raped and naked women, robbed houses.  Those pictures are telling the terrible truth about Russia, russians, and their war in Ukraine. There is no excuse for terrorism and what we live through and observed by the whole civilized World – is terrorism and genocide. 

Since this meeting and discussion is about business and economics, there should be numbers. So I will try to get into them, but no numbers can validate what Ukrainians saw in their cities after russian invaders left them. 

According to various estimates, our economy is ruined by between 500 billion and trillions of dollars. In 5 weeks. And it will take years and years to rebuild Ukraine. 

I think this is the first time in history when war is so connected to economics.

Unfortunately, Russia’s domestic political stability at the moment looks high. Protest sentiments in Russia are low, there has been no significant split between elites, and the loyalty of the security forces to Putin is not yet in question. 

There is little dissatisfaction with the consequences of the war among a small number of elites, mostly «technocrats» and «old officials». Young people under the age of 30 and the urban middle class are the most affected by the current situation and sanctions out of the population capable of protest. 

There are two types of sanctions – official sanctions of countries and private companies.

The G7 and the EU have decided to disconnect several Russian banks from the SWIFT system. The disconnection of banks from SWIFT does not limit their ability to make payments in foreign currency, but slows down payments and makes them more expensive.

It is important to note that the problems of banking transactions are rather temporary. At the moment, this leads to supply disruptions and rising costs, but over time, both importers and banks are adapting. Alternative and fast methods of payment through third countries or analogs of the SWIFT system will be created (for example, Russian SPFP and Chinese CIPS).

And if we are talking about the economics, let me give you 10 consequences of sanctions in the near future (1-6 months, key – 2nd quarter of 2022) for Russia in order to understand if and how they help Ukraine, mostly leading to changes within russia itself. As a basis, I took a report from the Ukrainian Institute of the Future that analyses the impact of the sanctions.

1. Devaluation. During the month of the war, the Russian ruble fell by 19% against the US dollar. In March, the European Union and the United States imposed a ban on the import of banknotes into Russia. Though the official exchange rate almost did not change on the «black» market, one dollar is estimated at 250-300 rubles.

It is believed that the devaluation of the ruble by 10% leads to inflation by 1%. Accordingly, the fall of the ruble will lead to a «weight of wallet», a reduction in real household income, and a reduction in effective demand.

2. Reduction in the supply of imported products, a sharp narrowing of supply, shortages of certain goods.

According to FourKites, since the beginning of the war, imports to Russia have fallen by 59%, including imports of household goods and industrial goods.

3. Inflation. A reduction in supply is always an increase in prices. 

First, the rise in prices will affect the «middle-class urban family», which has a high share of imported products in the consumer basket. Due to sanctions and inflation, the consumer line is expected to change in the long run, namely simplification, fewer high-tech products, and an increase in the share of Chinese and Indian goods (medicines, gadgets, cars, etc.). 

In villages with conventionally grown potatoes, locally produced pasta, oil, and sugar, it may be a little easier at first. However, with a certain time lag, prices will rise for everything, including domestic products. And for low-income people, whose consumer basket consists mainly of food and medicine, the consequences will be the most traumatic. 

Inflation is hitting the poorest. But the poor are not a protest power. The likelihood that they will join the protest audience remains low. It is most likely that 70-80% of the population will suffer, trying to «squeeze» something out of the state and thus become even more dependent on the state.

4. Fall of the industry: decline in production, fall in employment, unemployment. The largest hit by the sanctions is the aviation sector, the automotive industry, mechanical engineering, the electronics sector, the oil, and gas sector (its modernization), and metallurgy. The more technological the production, the higher the share of imported components, and, accordingly, the more it will suffer from sanctions.

If the shutdowns take place, it will have a multiplier effect on the economy. And this can be disruptive. e.g., The Russian car industry employs about 300 thousand people, and another 700-900 thousand are employed in Russian companies that are suppliers to the car industry.

5. Falling incomes and employment in services. The first thing that consumers save on when real incomes are reduced are services: beauty salons, fitness centers, catering, restaurants, recreation, and more. The tourism sector is likely to fall. A decline is expected in trade. This is an important part of the Russian economy: the share of wholesale and retail trade is almost 12% of GDP and 15% of all employees. 

6. A blow to the construction and real estate market. About 40% of Russian companies have already frozen their construction projects across the country. This is due to the imposition of sanctions against Russia, which leads to disruptions in the supply of construction materials, their shortage, and a rise in price. According to experts, since the beginning of the war, the cost of building materials has increased in some segments by 80-100%. Some companies decide to freeze some projects indefinitely and redirect resources to complete near-completed projects.

7. In Russia, it is planned to transfer to the state assets owned by foreign companies that have left the market. The Public Consumer Initiative has created a list of 59 companies that can be nationalized, including McDonald’s, Volkswagen, Apple, IKEA, Microsoft, IBM, Shell, Porsche, Toyota, H&M, and others.

8. Exit from partnerships of oil and gas foreign partners. I am not going to name all, just a couple: 

  • BP sells a stake in Rosneft (19.75%).
  • Shell is leaving the joint venture with Gazprom and is terminating its participation in the Nord Stream-2 project.
  • Exxon Mobil stops oil and gas production in Russia (on the island of Sakhalin) and stops new investments. The company leaves the Sakhalin-1 consortium and recalls American specialists from Russia.

What is critical here is that companies are leaving with their own technologies, including offshore drilling technologies for gas production, which Russia needs to develop new fields.

9. Sharp increase in interest rates on loans and lack of working capital in the business.

10. Reduction of microcredit (lending for those who cannot reach the next salary). People who live from salary to salary cannot get a loan today. This is again a factor in the growth of poverty, the barbarism of the population, and the growth of crime.

Russia’s economy is going down. Experts talk about the beginning of the economic winter in Russia, use the term “Iranisation” of the Russian economy, and draw parallels between Russia and North Korea.

Current sanctions have critical consequences in terms of living standards and quality of life in Russia over the next 10 years. Lack of prospects, opportunities to realize their life potential, the need to survive instead of making plans for the future and development – all this calls into question the feasibility of life in Russia on the horizon of 5-10-20 years and makes the issue of emigration more relevant than ever. Summing up in one sentence, we can say that «Vladimir Putin stole the future from the Russians

At the same time, the basis of internal stability in Russia is Putin’s personal image and absolute trust in him PERSONALLY by the population, not the government, parliament, or government as a whole. It holds an elite consensus, as well as a social contract in Russia, which he himself guarantees and embodies.

I would like to finish again with images of BUCHA – a beautiful town near Kyiv that made me sick on Saturday evening and the entire day yesterday. People’s lives cannot wait for another 10 years so that the current status of sanctions works slowly and mildly on society which Putin created in russia and people accepted by voting for him for 22 years and western society inviting him every time to the table. There is a huge moral dilemma in what we currently experience, there is a huge challenge to democratic order with respect to Human dignity, freedom of speech, and free society which Europe was building for many years. 

There are many concerns: what if the situation engages more countries, what if we give more military weapons to Ukraine, what if… many more what if? But I would like you to ask yourself – What if Ukraine loses? Everybody in the free world will lose, as when they come here they will do the same as they did in BUCHA. 

How do we think about sustainable investing? Suggestions from an exploratory study

By Margherita Massazza & Dr. Kristjan Jespersen

◦ 4 min read 

From the outset, this blog post takes the perspective that behavioral finance is required to assess the perceived tension in sustainable investing (SI). Our work investigates the extent to which sustainability considerations are included in investment decisions, and the drivers behind SI approaches.

Sustainability is increasingly integrated in financial markets, with the acronym “ESG” (Environment, Social, Governance) becoming an all-encompassing term widely used in all phases of the investment process. According to a recent global review, sustainable assets [1] reached USD 35.3 trillion at the end of 2019, representing 35% of total professionally managed assets, and they are set to grow further in the coming years. Yet, despite its growth and the positive sentiment associated with it, there is an inherent tension in sustainable investing.

This tension stems from the apparent disconnect between the theoretical assumptions of classical financial models, focused on risk and financial returns as the predominant determinants of investment decisions (e.g., Capital Asset Pricing Model, Modern Portfolio Theory, etc.), and the empirical evidence of SI, where portfolio allocations are affected by non-financial aspects like personal values and social pressures. How can we make sense of this tension? 

Usually, the contradiction is formulated in terms of a tradeoff between financial returns and ESG impact: in order to achieve one, investors must forego the other. However, this view is still rooted in a traditional finance perspective, according to which including ESG considerations or seeking a non-monetary impact comes at the expenses of returns.

There needs to be more nuance in how sustainable investing decisions are investigated and assessed. Given the pervasive and engaging nature of ESG issues, sustainable investing is likely shaped by internal and external forces that go beyond the financial-vs-impact debate. By acknowledging the role that cognitive limitations, biases, and the external context play for investments, behavioral finance allows to capture the financial impact of factors that tend to be overlooked in mainstream financial theories. 

Under this perspective, the authors carried out a study based on primary data from European retail and professional investors. It focused on two main questions:

To what extent are sustainability considerations included in investment decisions?

Firstly our analysis broke down the relative importance of four attributes for the investment choice, i.e. the relative weight (expressed in percentage) that each characteristic exert on the investment decision. Sustainability attributes carry a relative importance of about 38%, with ESG score displaying a 26% relevance, and the investment’s end objective a 12% relevance. Taken together, these parameters display a larger role than standard financial attributes of risk level (relative importance of 33%) and expected returns (relative importance of 29%) (Figure 1). The results confirm the significance of ESG aspects for a well-rounded assessment of an investment, arguing against the traditional perspective of risk and returns as the sole determinants of investment choices.

Figure 1 – Relative importance of investment attributes for investment choice, by investor type
What drives investors to invest sustainably?

Secondly, we identified the main tendencies leading investors to engage in SI. Starting from a set of 16 heterogeneous motives, 4 main drivers emerged: a desire for self-expression, a financial-strategic rationale, the influence of the external context, and an opportunistic motive (Table 1). These drivers depict SI as a multifaceted phenomenon that unfolds along various dimensions, and not only on the financial and impact layers. They propose a novel perspective to think about SI, which takes into consideration how endogenous (e.g., alignment with values) and exogenous (e.g., role of regulation) forces may affect investments. 

Table 1 – Drivers of Sustainable Investing
How can the findings help us better assess sustainable investing?

This analysis shows the extent to which ESG aspects are integrated in investments, confirming their importance for investment choices. It also shows the multidimensionality of SI drivers, which eschews the rigid perspective of traditional finance and accounts for the impact of relevant internal and external factors. 

With this understanding, it is possible to formulate practical insights for industry participants to address the current challenges of SI. In fact, there are concerns related to the over-inclusion of sustainability in investment decisions at the expenses of fundamental financial analysis, which may lead to mispricing, inflated asset evaluation, and potentially an “ESG bubble”.

  • Standardize definitions and improve sustainability communication. Social context emerged as one of the drivers of SI, and regulators have a strong role to play in harmonizing the meaning of sustainability in finance. Legislative and non-governmental bodies are working to overcome the lack of standard definition and frameworks in SI – e.g., via the European Union’s Sustainable Finance strategy. Their effort to create a common vocabulary and shared understanding of what SI entails will help to align incentives, concepts, and strategies. In parallel, the financial-asset supply side (e.g., fund providers, financial advisors, etc.) should communicate clearly and extensively on the sustainability aspects of financial products. Given the importance of ESG characteristics for investment choices, this will ensure investors have reliable and trustworthy information to guide their investments. Together, the agreement in terminology and the availability of sustainability information will reduce the possibility for misinformation and opportunistic tendencies to sway investment decisions.
  • Recognize the existence of complex drivers behind sustainable investment decisions. Investors, both professional and retail, should evaluate how different motives affect their investment choices. Knowing that multiple drivers exist will ensure that investment are aligned with goals, limiting the influence of irrationality and misinformation. This will not only benefit investment strategies, but also curb counter-productive results such as the emergence of an ESG price bubble. To explore what drives investor’s decisions, an ad-hoc survey could be submitted ahead of opening investment accounts, mirroring the logic of the MiFID directive. This may have positive effects, such as involving more retail investors in sustainable investing [2].
  • Finally, consider adopting a behavioral approach when studying sustainable investing. The flexibility of behavioral finance may allow to grasp further insights and help to think about this timely topic in a novel way.

References

[1] The Global Sustainable Investing Alliance (GSIA) considers defines “Sustainable” all assets that integrate ESG factors in the analysis and selection of securities. More detail in their latest global report.

[2] Retail investors still face barriers to fully engage in SI: the topic is investigated in the paper “Investment Barriers and Labeling Schemes for Socially Responsible Investments” by Gutsche and Zwergel (2020).


About the Authors

Margherita Massazza is a CBS and Bocconi graduate in Economics of Innovation, with a focus on Sustainability. Her research investigates the links between traditional investments and behavioral finance to understand how sustainability decisions unfold. She is currently working in the Foresight team of AXA, an insurance company, where she studies the role that corporations will play in the future and how the concept of sustainability will evolve. 

Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies on the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.


Photo by PiggyBank on Unsplash

Sustainable labour market integration: challenges and advancements in algorithmic profiling of jobseekers

By Clément Brébion and Janine Leschke

◦ 5 min read 

The number of countries that are using algorithms to profile jobseekers has been on the rise since the 1990s. Algorithmic profiling aims at identifying individuals with little counselling needs, and those for whom intensive counselling and active labour market policies (ALMP) are expected to have the largest returns. The ultimate goal is to target services and thereby expenditures towards the latter. In a dual context of budget constraints and of technological innovations (which makes it possible to build and analyse large register databases), profiling algorithms are increasingly seen as an important vehicle to identify and target those unemployed who are most likely to become long-term unemployed. In an EU-funded project, HECAT – Disruptive Technology Supporting Labour Market Decision Making, we question this consensus. The goal of the project is to go beyond state-of-the-art profiling tools and develop a tool that will allow jobseekers and counsellors to get a snapshot of their labour market situation and a better sense of their labour market options.

State-of-the-art statistical profiling tools carry important shortcomings. One of them relates to the outcome category when used for defining the profiling categories. Most profiling algorithms approach jobseekers’ needs for counselling and for training programs by measuring their likelihood to remain unemployed for more than 6 or sometimes, 12 months. Usually, any type and length of employment spell is counted as a successful exit from unemployment in these models. Research on the causes and consequences of long-term unemployment (LTU) is extensive and we know that an early identification of the jobseekers that are likely to fall into LTU to take action at the earliest stage possible is key.

However, the mere focus on exits towards any type of employment is problematic. On individual grounds first, it disregards the agency of the unemployed by ignoring her lived experience of unemployment and wishes and aspirations for future labour market integration. Second, such a focus on exits without job quality in focus, can also be dysfunctional and inefficient both from the perspective of the individual and the PES as unsustainable labour market integration is likely to lead to vicious circles where people circle between (short-term) employment and unemployment.

In order to address this shortcoming, in deliverable 2.1 of the HECAT project, we discuss the scope for using job quality information in profiling and job matching tools. We develop a list of 24 items covering 7 dimensions that we see important to take into account to meet SDG (sustainable development goal) 8 on decent jobs and economic growth [1]. We do so by drawing on established job quality indices (e.g. here and here).

By putting the quality of jobs in focus, such an approach provides a more complete and sustainable vision of the labour market to the unemployed and the job counsellors and thereby increase their agency.

As we outline in the deliverable there are a number of challenges with this approach. This includes the high complexity of multi-dimensional job quality indices in view of an efficient and usable counselling and visualisation tool as well as a lack of sufficiently detailed job quality indicators on the level of occupations or sectors.

As regards data protection and data privacy, profiling algorithms also carry the risk of being in conflict with the GDPR and the case law of the European Court of Human Rights and the Court of Justice of the European Union. Importantly, these legal bases provide no ready-made ‘checklist’ as to which data can be used, nor which algorithms can be implemented. Impact assessment of algorithmic profiling or job matching tools based on algorithms must therefore take place on a case-by-case basis that takes into account the impact of the algorithm on the citizens. Governments most often disregard the need for these impact analyses and entire profiling algorithm are therefore at risk of being shut down, such as in the Austrian case in 2020.

Impact assessments should first stress the necessity of using privacy-violating profiling algorithms. This can be justified in order to comply with a legal obligation to which the public authority is subject or for the performance of a task carried out in the public interest. The proportionality and fairness of profiling algorithms must also be checked and ensured. Proportionality relates to whether the ends justify the means.

For instance, collecting and analysing data carries a cost, in terms of privacy, which must be compensated by clear gains in accuracy. One should therefore not feed the algorithm with variables that have little explanatory power. Fairness concerns imply that one should ensure that profiling algorithms are not discriminatory. This is not straightforward. Profiling algorithms classify the unemployed based on the typical behaviour observed among other jobseekers with similar characteristics. As a result, individuals from social groups that are traditionally the least attached to the labour market will be profiled as high-risk individual more often than the rest.

While this behaviour of profiling algorithms seems intuitive, research has found that among jobseekers who happen to quickly find a job, those from foreign origin are more likely to be misclassified as high-risk individuals ex-ante than natives.

The fairness condition therefore seems hard to meet for profiling algorithms. Last, profiling algorithms should only use data that is up to date and relevant and, importantly, one should ensure that jobseekers and PES counsellors who use the algorithm have a good understanding of its functioning and limitations. 

Whether or not the use of an algorithm is legal must be continually assessed before, during and after development and implementation. In a working paper based on deliverable 2.2 of the HECAT project, we therefore propose a model for designing algorithms to sum up these considerations. The model is circular in order to illustrate that the assessment should be continually updated.

A proposed model for designing algorithms 
Source: Working paper based on HECAT deliverable 2.2
“Working with not on the unemployed”

Given these shortcomings of state of the art profiling tools, our European project HECAT puts the unemployed persons and their aspirations and needs centre-stage. It aims at building a sustainable digital platform “My Labour Market” which provides both information on the estimated length of time before one exits the unemployment record and a visualisation of labour market opportunities according to one’s job quality preferences. This digital platform, to be piloted at the Public Employment Services in Slovenia, builds on extensive sociological fieldwork on unemployed persons and case workers. This tool will not sort jobseekers into profiling groups associated with specific services and labour market measures. Instead, we believe that well-informed jobseekers will make the best choices for themselves.


[1] The dimensions are: pay and other rewards, intrinsic characteristics of work, terms of employment, health and safety, work-life balance, representation and voice, distance to work.


Further readings

HECAT, deliverables 2.1: https://hecat.eu/wp-content/uploads/2021/11/Deliverable_2_1_final-2.pdf

HECAT, Deliverable 2.2: https://hecat.eu/wp-content/uploads/2021/05/Deliverable-2.2-v.7-RR_final.pdf


About the Authors

Clément Brébion, postdoctoral researcher, received his PhD in economics in November 2019 from the Paris School of Economics. His main research interests are labour economics, economics of education and industrial relations. He has a particular interest into comparative research. More recently, he started working on the EU H2020 project HECAT that aims at developing and piloting an ethical algorithm and platform for use by PES and jobseekers.

Janine Leschke, political scientist, is prof MSO in comparative labour market analysis. Her research interests comprise issues such atypical work, job quality, labour mobility and migration, youth unemployment, as well as gender. She is currently the Danish lead partner in the Horizon 2020 project HECAT, participant in EuSocialCit and one of the editors of Journal of European Social Policy.


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“A Little Less Unsustainable Is Not the Same as Sustainable” – Why Including Fossil Gas and Nuclear Power Will Harm the EU Taxonomy

By Andreas Rasche 

◦ 3 min read 

The EU Taxonomy reflects a classification system that assesses whether certain economic activities are environmentally sustainable. Without doubt, the idea is a good one and the Taxonomy acts as a prerequisite for the EU’s Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR) to unfold their full potential. But: should fossil gas and nuclear power be included into the Taxonomy and hence count as environmentally sustainable? A leaked EU “non-paper seems to suggest exactly that… 

Including fossil gas and nuclear power will significantly harm the Taxonomy, both in terms of its perceived legitimacy but also in terms of its consistency with existing policy frameworks and regulations. I believe that there are three key points to consider: 

  1. Legal Inconsistency: Including fossil gas and nuclear power into the Taxonomy is likely to undercut the very regulation that the Taxonomy is based on. Article 10 of the Taxonomy Regulation (EU 2020/852) makes clear that an economic activity is considered sustainable if “that activity contributes substantially to the stabilisation of greenhouse gas concentrations in the atmosphere” (my emphasis); at least for fossil gas this is highly questionable. Although nuclear power is a low-carbon energy source, it is by no standards a safe alternative to renewables. In fact, it is a risky energy source, especially if we consider its entire life cycle. This is exactly why many investors see nuclear power as an exclusion criterion for sustainable finance products. When considering the entire life cycle of nuclear power, this energy source creates non-calculable risks vis-à-vis the Taxonomy’s environmental objectives (e.g., the protection of healthy ecosystems). For instance, the mining and processing of uranium has a questionable sustainability track record
  2. Policy Inconsistency: The EU itself suggested that to reach its goal to reduce emissions by 55% until 2030, there is need to cut 30% of the total consumption of fossil gas by 2030. However, including fossil gas into the Taxonomy will re-orient capital flows in a way that money is flowing into this sector (and not away from it). At the end, it is likely that this will lead to higher usage of fossil gas, much beyond the “transitional use” that the EU intends to establish. Further, a number of EU member states have pledged during COP26 to show “public support towards the clean energy transition and out of unabated fossil fuels.” This pledge does not seem well aligned with an inclusion of fossil gas into the Taxonomy. 
  3. Reduced Perceived Legitimacy: A factor that is less debated in the public, but still very relevant, is the reduced legitimacy of the Taxonomy. Although the Taxonomy, and linked regulations like SFDR, imply more work and a certain “bureaucratic burden” for financial market participants, many market actors have welcomed the new regulations. They increase transparency, make greenwashing harder, and hence have the power to re-orient capital flows into sustainable economic activities. Including fossil gas and nuclear power into the Taxonomy, endangers this legitimacy. In fact, the Taxonomy may move “from hall of fame to wall of shame”, as the WWF recently suggested. 

At the heart of the problem, lies a misunderstanding, I think. The EU Taxonomy is supposed to single out those economic activities that have the potential to make a substantial contribution to reaching six environmental objectives. Just because an economic activity is a little less unsustainable than comparable activities, it is not ipso facto sustainable. Being less unsustainable is different from being sustainable. Put differently, just because nuclear may be “cleaner” than coal does not imply that the former contributes to sustainability. 

It is often argued that fossil gas and nuclear power need to be included into the Taxonomy as they are necessary “transitional activities”. I believe this claim is misleading: 

  • Focusing on “transitional activities” sets the bar very low for Europe’s ambitions Green Deal. Ursula von der Leyen called the Green Deal Europe’s “Man on the Moon” moment, pointing to its ambitious character. If contested energy sources like fossil gas and nuclear power become part of the Taxonomy, we have not put a man on the moon. Maybe, then, we have not even managed to let the rocket start… 
  • Excluding fossil gas and nuclear from the Taxonomy does not imply that these energy sources will vanish overnight. It simply means that they will not be considered a sustainable economic activity (like a number of other economic activities). 

It is time to take the Taxonomy seriously, otherwise we may slow down or even hinder the necessary green transition of Europe’s economy…


About the Author

Andreas Rasche is Professor of Business in Society and Associate Dean for the Full-Time MBA Program at Copenhagen Business School. More at: www.arasche.com


Photo by Frédéric Paulussen on Unsplash

Climate Change and Magical Thinking

By Steen Vallentin

◦ 7 min read 

COP26, the 26th UN Climate Change Conference, has just ended. It was supposed to be ‘the next big and significant one’: the great follow-up to COP21 five years ago, the outcome of which was the Paris Climate Agreement, the first binding international treaty on climate change. The global urgency regarding climate issues has certainly never been greater. 

Although COP26 has yielded some results and some progress has been made, it has been a disappointment to many, including the iconic and omnipresent Greta Thunberg, who was filmed chanting “you can shove your climate crisis up your a…” along with other demonstrators at a rally in Glasgow – and who summarized the accomplishments of COP26 in three words:

Blah blah blah.    

Looking at the Glasgow Climate Pact and its immediate reception, we are certainly, once again, witnessing a political willingness to attribute considerable significance to (non-binding) declarations of intent regarding (possible) future actions and to the mere mentioning of the 1,5°C temperature increase target and efforts to phase-down (not phase-out) the use of coal power and fossil fuel subsidies.    

In the absence of truly transformational commitments and progress, the espoused political belief in the power of words to move action can seem quite magical at times, indeed reflective of magical thinking. Certainly, there was nothing magical about the moderate public and civil society expectations of progress preceding COP26. We have to look elsewhere for the magic. We have to look inside the established political system, where magical thinking is at play in definitions of climate problems and solutions, and where it, in itself, constitutes a problem worth addressing.

What is Magical Thinking?

To begin with a definition, magical thinking refers to “the idea that you can influence the outcome of specific events by doing something that has no bearing on the circumstances”. It is a well-known phenomenon in the area of human health and disease. Children are known to practice it. 

However, in the area of climate change and sustainability it is the grownups, in particular politicians, that tend to have a proclivity for magic – with the younger generation seeking to expose the deficiency and unrealness of subsequent courses of action.

In relation to sustainability, magical thinking is a matter of believing that certain outcomes – decoupling of economic growth and GHG emissions, a zero carbon economy – can be achieved by means that, although they may have some bearing on circumstances, are insufficient and ultimately unfit for purpose (according to the best available scientific knowledge). 

Ends and Means: Strong and Weak Sustainability

One way to frame this problem, at the most general level, is to distinguish between strong and weak sustainability, as illustrated in the table below. 

– source: developed from Sjåfjell (2018)

While strong sustainability calls for radical and systemic change guided by a biocentric preoccupation with planetary boundaries, non-negotiable ecological limits and safe operating spaces, weak sustainability signifies a more pragmatic and incremental approach to change, maintaining an anthropocentric focus on development as (economic) growth, human needs and intergenerational equity. An important point being that urgent calls for action tend to draw on the repertoire of arguments provided by strong sustainability, whereas most solutions ultimately fall under the heading of weak sustainability. They are not radical, only incremental, and certainly pragmatic. 

The question is whether it is indeed an act of magical thinking to believe that we can accomplish strong sustainability ends by weak sustainability means. In other words, that we can reach the climate targets we need to reach, according to science, by way of incremental, small steps change – holding onto the growth paradigm, the business case and win-win. 

The Magic of Win-Win

Andrew A. King and Kenneth P. Pucker, in a recent piece in Stanford Social Innovation Review, speak of “the costs of magical thinking” in relation to the prevalence of the win-win (or triple-win) mindset and associated terms such as CSV (creating shared value). They talk about “strategies [that] rely on improbable mechanisms, promise implausible outcomes, and boast effectiveness that outstrips available evidence.” Strategies that “inflict harm because they distract the business world and society from making the difficult choices needed to address pressing social and environmental issues”. 

This begs the question: What is located on the other side of win-win? How can we escape its magical allure and the often exaggerated claims made in its name? Unfortunately, King & Pucker do not have much to say about this. They speak only of how: “It is time to turn away from alluring unproven strategies and refocus our efforts on those interventions that have proven effective – such as government regulation”.

It is not a terribly convincing argument. Government regulation in the age of man-made climate change is not so much an escape from win-win as it is an embodiment of win-win – and arguably needs to be. Sustainable development is not only about climate change and climate solutions – the social and economic pillar of sustainability need to be considered alongside the environmental pillar at all times. That is, questions of social justice and of what is economically feasible also need to be addressed.    

The European Green Deal as a Win-Win Scenario

The European Green Deal is, for better or worse, an illustrative example of this. The President of the European Commission, Ursula von der Leyen, has referred to the green transition as ‘Europe’s Man on the Moon Moment’. Nevertheless, the framing of the European Green Deal reads like a textbook case of win-win, and not a very advanced one at that. As you can read on the Green Deal webpage: “Making Europe climate-neutral and protecting our natural habitat will be good for people, planet and economy. No one will be left behind.” The Green Deal is Europe’s new growth strategy, it will help cut emissions while creating new jobs and, again, it will leave no one behind.

Speaking of private businesses, the arguments for going beyond win-win are quite straightforward. There are ethical issues and matters of responsibility that need to be addressed regardless of whether the company can derive any commercial benefit from it. However, in the political realm of multiple and competing interests and policy concerns it is more difficult to escape the clutches of win-win.

Imagine if von der Leyen would have said: “We need to make sacrifices in order for the green transition to happen. We need to slow down growth, it will cost jobs and we cannot guarantee that some people will not be worse off as a result’. It is a virtually unthinkable scenario. Not least because we know that it is the poorest and most vulnerable population groups that are bound to be worse off.   

The Magic of Danish Government Policy

That is to say, government as we know it does not represent a solution to the problem of widespread magical thinking about climate change and sustainability. It is very much part of the problem and there is no apparent escape. Not even for the most advanced nations in Europe. Let us take Denmark as an example. Denmark was just ranked 4th in the 2022 Climate Change Performance Index (CCPI). As the three top spots were left empty to signal that not a single country currently deserves a ‘Very high’ rating, Denmark is supposedly the leading country in the world measured on criteria regarding climate policy, renewable energy, energy use and GHG emissions. 

This is not to say, however, that Danish climate policy is bereft of magic. Quite the contrary. Dan Jørgensen, the Danish Minister for Climate, Energy and Utilities, has become famous for waving his own kind of somewhat oversized magic wand: ‘the hockey stick’. The hockey stick was originally used (by American climatologist and geophysicist Michael E. Mann) to illustrate temperature changes over time and the transition from the Holocene era (the long shaft) to the Anthropocene era (the short blade). There is nothing magical about this science-based graph.

However, the image of the hockey stick has in recent years been appropriated by management consultants and policy makers who are using it to serve instrumental and sometimes magical purposes. In the instrumentalized imagery, the bend between shaft and blade represents the (magical) moment of innovative/technological discovery, an inflection point allowing, ideally, for a transition from a period of inferior – ineffective, unsustainable – solutions (the shaft) to a period of superior solutions (the blade). 

Dan Jørgensen has been widely criticized for his espoused belief in a long shaft (gestation) period, that tends to become longer and longer and is so far marked by a lack of truly groundbreaking results and postponement of difficult decisions (particulary regarding implementation of a CO2 tax). On the one hand, the inflection point is continually moved further and further away. On the other, it is assumed that the magical moment of discovery and transformative change will happen in time for Denmark to be able to deliver on the Paris Climate Agreement and the even more ambitious Danish climate law. 

A concrete example of magic at work in Danish climate policy is the below image from the recent government action plan on green transition. Notice in particular the small miracle that is supposed to happen from 2029-2030, where all the technical reduction potentials on display somehow reach their target of zero. It seems magical. It is certainly not well explained in the action plan how this can come about – or why the reader should find this sort of technical forecast even remotely believable.

The Great Balancing Act: Magic and Reality

There is an upside and a downside to magical thinking and political talk and action that can be said to reflect magical thinking. Today’s magical ideas may turn out to be next year’s (or the next decade’s etc.) realistic solutions or courses of action. Magical thinking blends into notions of aspirational talk and aspirational policymaking, suggesting that lofty goals can help inspire, motivate and accelerate change processes. 

However, the downside is if magical belief in win-win solutions becomes a sort of self-imposed constraint or censorship standing in the way of open and honest discussions about the changes and sacrifices needed to make the green transition happen.

This can exacerbate accusations of greenwashing and create more public cynicism regarding climate policy and the willingness and ability of the political system to act proportionately. Magical ambitions needs to connect with harsh realities.


Further Reading

King, A.A. & Pucker, K.P. (2021). The Dangerous Allure of Win-Win StrategiesStanford Social Innovation Review, Winter. Online first.  

Sjåfjell, B. (2018). Redefining the Corporation for a Sustainable New EconomyJournal of Law and Society, 45(1), 29-45.


About the Author

Steen Vallentin is Academic Director of the CBS Sustainability Centre and Associate Professor in the Department of Management, Society and Communication at Copenhagen Business School. His research is centered on CSR as a social and political phenomenon in the broadest sense, increasingly with a focus on corporate sustainability, circular economy and business model transformation – along with the politics and aspirational aspects of sustainable development more broadly. 


Heading photo by Kristopher Roller on Unsplash.

How the EU Taxonomy Impacts Businesses Beyond Europe

By Andreas Rasche

 4 min read ◦

In 2020, the EU launched its classification system for environmentally sustainable economic activities, the so-called “EU Taxonomy Regulation” (hereafter: the Taxonomy). The Taxonomy is part of an integrated system of new EU-wide sustainability regulations, including new disclosure requirements for investors. While the Taxonomy is based on EU regulation, it can be expected that it will also have effects on businesses beyond Europe. 

Basically, there are two ways in which the Taxonomy can affect non-EU companies. First, there are direct regulatory effects on non-EU companies. Because of the global nature of financial markets and the existence of global trade flows, non-EU companies will be directly exposed to the Taxonomy in different ways. Secondly, there will also be more indirect consequences, which I call “ripple effects”. Such effects exist because the Taxonomy raises the bar globally for how sustainability information should be disclosed, by whom it should be disclosed, and it which ways it can be disclosed. I briefly discuss both effects. 

Direct Effects 

In the short run, some non-EU companies will be exposed to the Taxonomy because of direct regulatory effects. Consider the following two examples: 

  • A non-EU investor or financial advisor that wants to offer products on the European markets will be exposed to the Sustainable Finance Disclosure Regulation (SFDR) which requires an alignment with the EU Taxonomy. To offer financial products on European markets non-EU investors will therefore have to align with SFDR and hence the Taxonomy.  
  • A non-EU company with EU-based investors is very likely to receive questions from these investors about the company’s alignment with the Taxonomy. Investors need this information to meet disclosure requirements under SFDR, for instance to classify their financial products in terms of their sustainability exposure. In other words, at least some non-EU companies will start disclosing more on Taxonomy-related indicators. 

I could list more examples here (e.g., non-EU asset managers wanting to raise money in the EU), but the message is clear: the effects of the Taxonomy are not limited to businesses located in Europe. Particularly, the Taxonomy’s interaction effects with SFDR will affected non-European companies as well as investors.  

Ripple Effects

Ripple effects are more indirect effects. They occur if an intervention, such as the introduction of a new regulation, creates further effects that reach beyond the system that was supposed to be influenced by the intervention. Such regulatory ripple effects can occur in different ways.

In the context of the Taxonomy, one important ripple effect is related to the practices of European businesses. Many of these businesses are global players, and they will apply the Taxonomy to their global operations regardless of whether these operations occur in a country that is legally covered by the Taxonomy. Sustainability reporting is usually done at the corporate level and therefore also includes firms’ non-European operations. The EU’s new disclosure regulation the Corporate Sustainability Reporting Directive (CSRD) will require that such reporting at the corporate level is taxonomy-aligned. In this way, European global players will “export” the Taxonomy to other parts of the world.

There are also ripple effects at the political level. The system of new EU legislation – including, the Taxonomy, SFDR, CSRD and other regulatory elements – is unique in the world. So far, no other region or country has a comparable system. However, the major economic regions in the world have also realized that future business will be difficult without sustainability-related regulations that enhance transparency and prevent greenwashing.

Consider two recent examples: In June 2021, the UK announced the creation of a Green Technical Advisory Group. This Group is supposed to develop and implement a UK green taxonomy, which is expected to be based in part on the EU Taxonomy system (e.g., in terms of metrics). In the US, President Biden signed Executive Order (EO) 14008 during his first days in The White House. While this EO does not aim at creating a US-based taxonomy, it has created a National Climate Task Force across different federal departments, which at least some see as an important step into the direction of more rigorous ESG-related regulation. 

Other countries and regions are likely to look to Europe when thinking about how to design a workable taxonomy regulation, as the challenges that have driven the creation of the EU Taxonomy are the same throughout the world: we need more transparency around sustainable economic activities, we need to better benchmark firms’ sustainable activities, and we we need to prevent greenwashing.

It is too early to say whether there will be convergence among the taxonomies developed by different countries and regions, but one thing is for sure: they are here to stay… 


About the Author

Andreas Rasche is Professor of Business in Society and Associate Dean for the Full-Time MBA Program at Copenhagen Business School. More at: www.arasche.com


Photo by Krzysztof Hepner on Unsplash

Social impact bonds in the Nordics: insights from ‘Copenhagen Impact Investing Days 2021’

By Mikkel M. Andersen and Ferran Torres

◦ 5 min read 

A social impact bond (SIB) is an innovative model for public service delivery characterized by flexible service interventions and an outcomes-based payment structure. SIBs use private investments to drive new types of welfare activities, shifting the risk from the public to the private sector. Today, several SIBs are emerging in Nordic countries, but do rich welfare states even need these financing mechanisms? And in case they do, for what? These questions were discussed by three leading SIB-experts during the ‘Copenhagen Impact Investing Days’ 2021.

During the last few years, the use of social impact bonds (SIBs) and other social finance-instruments has increased dramatically in Nordic countries. SIBs were originally used as financing tools supporting public organizations in the UK experiencing budgetary restraints. Thus, as the model spread into other contexts, the question begged whether this tool would be appropriate for Nordic countries as well. The following piece summarizes some key reflections from the panel discussion regarding this question at Copenhagen Impact Investing Days 2021 (CIID). 

SIBs in the Nordic countries: an emergent but fast-growing field 

While more than 200 SIBs have officially been developed worldwide, they are still an emergent phenomenon in most Nordic countries. Currently, 17 SIBs have been initiated in Finland, Sweden, Denmark, and Norway – primarily within employment, preventive health, and social welfare. Also, at least 7 additional SIB-projects have been announced. The first SIB-evaluations are also starting to come up; for example, the assessment of the first Swedish SIB in Norrköping shows promising social effects, despite not creating a financial return for investors. Finnish intermediary-organizations are also planning to develop SIB-projects within environmental areas, including recycling and energy efficiency in housing.

Overall, Finland seems to be on the forefront in the Nordic regions, followed by Sweden, while Denmark and Norway are a few years behind. On the investment side, significant progression is also being made. A Finnish fund-of-funds is currently being developed with an expected capital of 100 million Euro. In Sweden, work is also being done to set up a national outcomes financing structure to ensure the scaling of future outcome-based initiatives. Last, legislative action to ensure social finance practices has been taken – most recently in Denmark with Børnene Først promising more focus on social investment-practices to ensure preventive social welfare.  

Emerging practices for Nordic SIBs 

Some early experiences regarding the relevance and usage of SIBs in the Nordic countries were discussed during the CIID-conference. First and foremost, SIBs seem to be a part of a much larger trend in public welfare, oriented towards measuring, incentivizing, and resourcing towards long-term social outcomes. While SIBs might constitute effective solutions in themselves, they are also catalysts for evolving social investment practices because they can 1) showcase the benefits of new types of welfare services by linking social and economic outcomes, 2) provide practical solutions for realizing preventive and proactive welfare services, and 3) facilitate cross-sectoral coordination through new procurement frameworks by bringing new stakeholders to the table. 

The SIB can be a useful way to show the municipalities, and the government, how to buy the solutions that actually work. 

Hans Henrik Woltmann, Investment Manager, The Social Investment Fund (DK)

What seems to be critical is also the perception that SIBs in the Nordic countries should not function as a replacement to or a privatization instrument for public welfare services. Instead, SIBs should be understood as a supplement to these, allowing public actors to change how they buy public interventions while testing new welfare solutions through de-risking strategies. Still, the novelty of the method, and its experimental character, makes it challenging to assess its true potential.

Does the SIB really allow us to scale or is it just a fancy way of financing projects? I think the question is still out there 

Tomas Bokström, Project Manager, Research Institutes of Sweden
Looking into the future: necessities for a social finance-ecosystem 

Summarizing the points from the debate, SIBs in the Nordics are on the rise and have the potential to become welfare instruments themselves, and a vehicle for promoting a social investment agenda. Looking ahead, three key aspects will be important for enhancing the Nordic social finance ecosystem: 

  1. Establish more evidence from practice and leverage these actively with public organizations to spark discussions. 
  2. Insist on experimentation and a methodological openness towards the SIB-model. Its value also resides in its ability to test innovative social interventions to later diffuse them through public practices fitting better into specific welfare situations. 
  3. Follow and engage in political discussions regarding the ambitions for SIB-practices. The SIB market is still in its infancy and relies heavily on market-maturement initiatives to develop better infrastructure.

Panelists for the discussion of Nordic Impact Bonds at ‘Copenhagen Impact Investing Days 2021’:  

· Tomas Bokström, Project Manager, Research Institutes of Sweden
· Hans Henrik Woltmann, Investment Manager, The Social Investment Fund 
· Mika Pyykkö, Director, The Centre of Expertise for Impact Investing, Finland
· Mikkel Munksgaard, PhD Fellow, Department of Management, Society, and Communication, CBS (moderator)
· Ferran Torres Nadal, PhD Fellow, Esade Entrepreeurship Institute & Institute for Social Innovation, ESADE (moderator)


About the Authors

Mikkel Munksgaard Andersen is PhD Fellow, at CBS Sustainability, Department of Management, Society and Communication (MSC) at CBS. Through his PhD-project, Mikkel studies the development and implementation of social impact bonds and payment-by-results methods in Denmark. His work centralizes around the distinct characteristics of Scandinavian impact bonds and their role in supporting and financing public services. The research is driven by a participatory research design and is co-financed by Region Zealand. Mikkel has earlier worked in the social finance-field both on an academic and practical level.

Ferran Torres Nadal is PhD Fellow at the Entrepreneurship Institute and the Institute for Social Innovation, ESADE Business School in Spain. His PhD advisors are Lisa Hehenberger and Tobias Hahn. His work is focused on understanding and explaining tensions and paradoxes around complex phenomena. He is particularly interested in studying the challenges and opportunities that come with cross-sector initiatives, such as social impact bonds.   


Photo by Katt Yukawa on Unsplash

The Concept of Fragmented Labour Markets

By Janine Leschke and Sonja Bekker

◦ 4 min read 

The employment and social impacts of the Covid-19 pandemic have been larger on some groups of workers than others. In particular, low-wage workers and workers in forms of employment that differ from full-time wage and salary work with a permanent contract seem to have been especially exposed to job and income losses (see ILO-OECD Covid-19 report). The concept of fragmented labour markets, which we propose here, highlights the large and growing diversity in employment relationships. It demonstrates the relevance of relating the impact of the crisis on jobs, income and social security to the degree of ‘resilience’ workers had prior to the crisis in terms of job stability and decent earnings. It is therefore very suitable for detecting vulnerabilities that have been built into labour markets over the past decades.

Rise of diverse types of non-standard employment relationships

The concept of fragmented labour markets focuses on the group of workers commonly termed ‘outsiders’ or the population in non-standard (also termed atypical) employment. It goes beyond traditional views on segmented, dual or primary versus secondary labour markets, which divide employment into ‘good’ and ‘bad’ jobs. There are a number of arguments as to why the use of binary divisions with regard to labour market status or outcomes are obsolete, such as the substantial variety within both the groups of standard and non-standard jobs.

Over the past decades, a further fragmentation of employment status has occurred. Some speak of an ‘explosion’ of diverse types of non-standard employment relationships, making these types of jobs an often occurring or even ‘normal’ phenomenon at least for some labour market groups, such as women. Consequently, within the group of ‘outsiders’, an ever greater variety of forms of employment is materialising, making the groups themselves far from homogeneous. 

Call for a new approach

The inadequate binary division of the labour market into groups of ‘insiders’ and ‘outsiders’ has spurred a call for a new multidimensional approach to understanding inequalities in work and employment. These suggestions go beyond merely defining non-standard work as all forms of work that deviate from the standard employment relationship.

Based on the trends and observations highlighted above, we develop the concept of fragmented labour markets as a way to both define and explore the most vulnerable types of non-standard employment. We build on the work of authors who point at key elements of such a definition, including the different labour market groups that have different sets of rights and labour conditions, and refer to different employment statuses such as part-time work, fixed-term contracts, temporary agency work, self-employment, marginal employment, platform work and other ‘non-standard’ forms of employment.

Additionally, we look at the earnings that workers (can) generate with their jobs, and whether they combine several employment statuses (e.g. being part-time as well as fixed-term employed). Moreover, we zoom in on certain occupational groups. The latter focus is relevant in order to prevent certain vulnerable groups remaining ‘hidden’ in overall labour market averages (see, e.g., the example of the occupational groups of cleaners below).

Therefore, we define fragmented labour markets as:

Labour markets characterised by an accumulation of insecurities. Fragmentation is evident where workers combine non-standard employment with low wages or where they combine several forms of non-standard employment − situations that are dominant in particular occupational groups.

We argue that using the concept of labour market fragmentation may render visible which labour market groups are generally more insecure and vulnerable to job and/or income loss and fluctuations and would therefore need additional support particularly when crises occur.

Exploring selected occupational groups in Germany and the Netherlands

Using this concept exploratory with a focus on two affluent countries – Germany and the Netherlands – highlights vulnerability in some occupations, particularly among women, but at times also among men.

For instance, almost 70% of female personal care employees in Germany are part-time employed and 18% of those combine part-time employment with a fixed-term employment contract (see EU-LFS). In the Netherlands, 43% of women in the occupational group of cleaners and helpers & service employees are marginal employed (less than 15 working hours per week) and 27% of those combine marginal part-time employment with fixed-term employment. Both occupations, and particularly cleaning are at the same time characterised by low wages (see SES). These groups would have been ‘invisible’ if only data on the average economy had been used. 

Additionally, the use of the concept of labour market fragmentation shows that in some occupations and groups, there are hardly any standard jobs left.

For instance, among women in the Dutch personal care and cleaners and helpers occupations, nearly everyone has a part time job (>90%), while in Germany the vast majority of women with a cleaning and helpers occupation has a part time job (>85%). At the same time these jobs are commonly relatively poorly paid and it is not uncommon that these part-time jobs are combined with other flexible forms of employment to make ends meet.

This not only has consequences for employment and earnings security while being in a job but also has important knock-on consequences for accessibility to and adequacy of social security, which is affected to a large degree by the level of earnings and job tenure (with the exception of social minimum benefits).

The concept of fragmentation thereby transcends labour markets and its value becomes particularly evident in times of crisis. As a result of the pandemic, low-wage workers and workers in diverse forms of non-standard employment relationships have been especially exposed to job and income losses. Moreover, in times of economic downturns, new jobs will often be more likely to be non-standard contracts than in times of economic upturns.

Both in Germany and the Netherlands, social security coverage has been problematic for some of these groups during the coronavirus crisis.

Understanding the growing flexibility in labour markets

The concept of fragmentation thus assists in achieving a more profound understanding of what growing flexibility in labour markets really entails in terms of cumulative insecurities for some labour market groups. It helps fuel discussion on making social security more inclusive for workers, regardless of their labour market position. Last but not least, with respect to occupations where up to 90% of (female) workers are in non-standard employment, often combined with other forms of non-standard employment and/or low wages, it helps raise questions as to how much labour market fragmentation affluent societies can legitimise.


Further reading

Bekker, S. and Leschke, J. (2021), Fragmented labour markets in affluent societies: examples from Germany and the Netherlands, OSE Paper Series, Research Paper No.48, Brussels: European Social Observatory, 24p.


About the Authors

Janine Leschke, political scientist, is prof MSO in comparative labour market analysis. Her research interests comprise issues such atypical work, job quality, labour mobility and migration, youth unemployment, as well as gender. She is currently the Danish lead partner in the Horizon 2020 project HECAT, participant in EuSocialCit and one of the editors of Journal of European Social Policy.

Sonja Bekker is an associate professor European Social Policy at both Utrecht University and Tilburg University. Her research interests include European employment policies and social policies, particularly focused on vulnerable groups such as people with flexible employment relations, youth, people experiencing in-work poverty. She is part of the Horizon 2020 WorkYP project.


Photo by Danny Sunderman on Unsplash

The maker movement, the quiet, game-changing revolution near you #2

By Efthymios Altsitsiadis

◦ 5 min read 

One of the most overlooked and yet promising agents in the fight against climate change and towards realizing a circular society is the maker movement – a cultural trend that was founded on a simple premise: ordinary people manufacturing themselves what they need.

In the previous article, a glimpse of the transformative potential of democratized production for reaching the pressing societal, environmental and economic goals was attempted. The maker revolution, facilitated by the technological collaborative manufacturing capabilities can help citizens with getting access to advanced fabrication tools, skills and knowledge, to meet their own needs, reduce their carbon footprint, while creating new entrepreneurial opportunities for them and their community. For this potential to be realized, it is arguably increasingly important to understand how and why people become makers.

No movement can be successful, no community can be effective without engaging, growing, and sustaining its member base.

This was the organizing idea in the previous article. The empirical results from the Pop-Machina project were presented in overview to show the key motives, barriers and driving forces behind the decision to support and be involved in making. In this follow-up note, we complement this baseline with the next step: what can be done to act upon this knowledge.  

We draw this time insights from another running EU project – iProduce. Two large scale studies collected data from regular citizens, makers and manufacturers around Europe and the synthesis of the main quantitative results is taking place to compile some clear and actionable recommendations on how to engage with makers, existing and potential ones. The recommendations below are a preview of the upcoming report on the full findings, so it should be treated as work-in-progress snapshot.

Recommendation 1: Clearly communicate the culture of the community

On the one hand, many new makers seem to be driven by ecological and community progress beliefs and attitudes. The majority of people believe that makerspaces can make a big difference. On the other, respondents reported a lack of information with regard to the exact makerspaces’ scope and actions. Awareness about the maker-movement and its mission and benefits should not be considered a given, yet the alignment can make a considerable (and oftentimes ignored) difference in engagement. Community development and team building should be heavily promoted as in most makers, collaboration with like-minded peers is of highest priorities.

Recommendation 2: Encourage direct knowledge sharing: virtual training and skills exchange

Exchanging knowledge and gaining access to dedicated trainings is very important for makers. Such facilitations can take place digitally in which case users would expect to increase their knowledge and skills. Training could be targeted either to support a specific business venture, a creative project already underway, or for the primary purpose of gaining competencies for later use. Support in terms of direct knowledge sharing and mentorship, peer to peer online learning could be an additional option to allow existing technicians and experts to occasionally serve as mentors and advisors rather than teachers in platform-developed projects. 

Recommendation 3: Support matchmaking and professional networking

Participation in makerspaces opens up new horizons, enabling makers to reach out to a wider network which could also yield more professional opportunities. Or at least this is what the majority of the respondents expect. Makers and consumers want to be empowered, not only to depict their ideas for new products but to also be able to find expertise and manufacturing capabilities to implement them. Matchmaking services are deemed essential and at the same time, the analysis of existing roles and collaborations can set the ground for new synergies to be established and new opportunities to be identified. 

Recommendation 4: Diversity, inclusiveness, accessibility and empowerment

Makers tend to care a big deal about accessibility; they want to see action to involve groups which are underrepresented in the maker movement, such as women, elderly, low socioeconomic status groups or people with disabilities. They stress the importance of a respectful, inclusive and supportive culture, the unwarranted genderisation of tasks/interests and the need for more female role models in the social manufacturing world. While the maker movement has unique cultural elements, these are all cemented on the principles of diversity empowerment and unfettered access. 

Obviously, this list is not exhaustive. There are still so many lessons to learn, angles to explore, and diverse experiences and stories to be shared and studied that one should not treat this as anything more than a humble start. The empirical nature of these insights provides some needed confidence to these results, but as is often the case with self-reported data and online data collection methods, there are some limitations to the transferability and generalizability/representativeness of these results. Nonetheless, the people working in iProduce have put considerable effort to help practitioners, policy makers and makerspace managers better reach out to the maker base. These stakeholders sometimes must face an uphill battle, especially in the covid-era, in keeping things afloat, exploring different tools, triggers and business models. One can hope that such insights can still be useful or bring up more discussion about the way forward.   


This publication was based on the work undertaken by the European projects iPRODUCE “Unlocking the community energy potential to support the market uptake of bioenergy heating technologies”. iPRODUCE has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 870037.


About the Author

Assistant Prof. Efthymios Altsitsiadis, PhD (male) is a behavioural economist with a mind for interdisciplinary research. A user-centricity enthusiast, Efthymios is set to help provide evidence-based answers to some of the most persistent and evasive behavioural questions in a variety of areas like sustainability, health, energy and mobility. His Phd was in decision support systems and he is currently teaching Machine Learning and Digital Behaviour at CBS. He conducts research in collaborative production and circular economy, in advanced technological agents (smart apps, avatars, chat-bot services) and has worked as a social scientist in several cross-disciplinary research projects. 

Megacorporations

By Glen Whelan

◦ 2 min read 

Whatever you did today, there is a fair chance that you used a product or service that is somehow connected to Alphabet. If you watched YouTube on your Android phone in an Uber, for example, then you were simultaneously contributing to Alphabet’s coffers in three ways. And on the off chance that you were thinking of enjoying your evening by first reading two new papers – on the naked mole-rat as a non-aging mammal and what classic Atari video games can tell us about the human brain respectively – and then planning out your possible life on Mars, then you would once again be thrice-engaged with Alphabet investments.

As these examples suggest, Alphabet, whose most famous asset is Google, is not just any other corporation. Rather, it is what can be termed – in building on an idea associated with the novelist William Gibson – a megacorporation.

For the present purpose, a megacorporation can be simply defined as a corporation that influences the lives of a huge number of people in fundamental ways; whose sway is greater than that of most other organizations combined. 

Perhaps the clearest historical example of a megacorporation is the English East India Company. Following its establishment in 1600, ‘the Company’ proved itself a formidable commercial, governmental and military force. Indeed, and whilst the Company was gradually disbanded around the middle of the 19th century, it still exerts influence today through its having shaped, amongst other things, a worldwide thirst for tea, the way in which people conceive of the ‘firm’, and, more controversially, how people understand the ‘orient’.

When the continuing influence of the English East India Company is acknowledged alongside Alphabet’s current scale (e.g., it is currently valued at more than $1.5 trillion), vague claims from the latter’s elite that it might exist 100 or even 1000 years from now, are not as ridiculous as they might first seem. Moreover, if predictions by Google’s Director of Engineering, Ray Kurzweil, come true, then at least some of us could still be around in digital form, and able to confirm whether or not Alphabet is still going strong a thousand years hence. Of course, if your (happy) digital existence is dependent on Alphabet technologies, then you would have reason for wanting the megacorporation’s reign to be a very long one.  

Such speculations about Alphabet’s centrality to our future existence may ultimately prove more fanciful than factual. Be this as it may, it is difficult to deny that Alphabet already records, stores and shapes the past in major ways. For many people Alphabet is the custodian of their personal memories, the story of their life. Through its control of Gmail and Google Photos, and its vast array of ‘smart home’ technologies, Alphabet collects seemingly ever-increasing amounts of information on us. And as anyone familiar with the academic pissing contest that is Google Scholar will know, the megacorporation also goes to some length to make sure that one’s back catalog of scholarly writings is ‘unforgettable’.

When these individual collections of personal memories and activities are noted alongside Alphabet’s vast digital store of world culture and heritage, the extent to which Alphabet can influence the writing and creation of social histories becomes clear. Whilst historians worldwide can currently access a great deal of information through the megacorporation’s various platforms, Alphabet itself can play the role of historian too. Given its expertise in information storage and machine learning, Alphabet is in a prime position from which to conduct macro level, cross-cultural, historical analyses. And as the megacorporation arguably has a better understanding of what retains attention than most (through its tracking of YouTube viewing practices for example), it seems uniquely capable of presenting such historical analyses in ways that prove captivating to a wide-ranging audience. 

In short, Alphabet’s influence over how we live, and how we make sense of, the past and the future, results in it being uniquely deserving – amongst contemporary firms – of the megacorporate label. In all likelihood, and for good or bad, this influence will continue for some years to come. As a result, people in general, and business and society scholars in particular, are well advised to further consider the profound ways in which it shapes existential concerns worldwide.


About the Author

Glen Whelan’s book, Megacorporation: The Infinite Times of Alphabet, is out now through Cambridge University Press. He sometimes teaches at McGill, and researches the moral, political and social influence of corporations, amongst other things. He is on twitter @grwhelan.


Photo source: chrome unboxed

Impact of COVID-19 on mortality inequalities: The case of France

By Clément Brébion

◦ 3 min read 

Despite an unprecedented worldwide decline in mortality over the last century, a substantial income gradient in life expectancy persists within most countries. In the US for instance, the 1% richest men have a life expectancy at the age of 40 that is 15 years larger than the poorest 1% (difference of 10 years for women) and this spread is currently increasing. In France (on which this blog post is based), the income gradient is of a similar size despite a more egalitarian access to health care.

Pandemics likely amplify this spread because they reveal latent inequalities in individual health capital and because they spread differently across living environments. Our recent study reveals that the COVID-19 crisis, which epitomizes such massive mortality shock on a worldwide scale, is not an outlier in this respect.

A few definitions

We analyse the impact of COVID-19 on mortality inequalities over the whole year 2020 in France, one of the most severely hit country in the world. We use comprehensive registered data, allowing us to study the evolution of mortality as well as the income level of each municipality of metropolitan France. Given the unreliability of public data on deaths attributed to COVID, we focus on excess mortality occurring in each municipality, defined as the deviation in 2020 all-cause mortality with respect to the average of 2019 and 2018. The link between poverty and morality related to the epidemic is thus analysed by comparing excess mortality between ‘rich’ and ‘poor’ municipalities, where ‘poor’ is defined as belonging to the poorest 25% of municipalities (‘Q1’ hereafter).

Two waves that have affected more the poor municipalities 

Figure 1 below shows that, as in many European countries in 2020, France has been hit by two distinct waves that peaked in April (17,000 extra-deaths) and November (15,100 deaths), respectively. Each time, a lockdown was implemented at the national level to reduce the spread of the disease (March, 17 to May, 11 & October 30 to December 15). The first lockdown was the most stringent and has seemingly worked best to reduce casualties to COVID-19.

Figure 1: The figure represents the difference between the monthly number of deaths in 2020 and its average over 2019 and 2018 in France

Figure 2 shows the distribution of excess mortality across municipalities according to their income. Each month, the figure shows the average number of abnormal deaths that occurred since the beginning of the year in each group of municipalities (per 10k. inhabitants). While no specific pattern can be seen over the first three months of 2020, a marked difference between the two groups of municipalities appears in April (wave 1), that further grows as the second wave takes place (October-December). 

In-depth analyses tell us that excess mortality in poor municipalities was 30% larger than in non-poor municipalities in 2020 (2.6 more extra-deaths per 10k. inhabitants). Our research shows that this spread directly relates to COVID-19 and is not explained by differences in the geographical localisation, in the share of old-age inhabitants or in the life conditions under the lockdown between rich and poor municipalities.

Figure 2: The graph plots the cumulative sum of all excess deaths per 10,000 inhabitants from January 2020 for poor and non-poor municipalities in French urban areas.

The fact that the income gradient uncovered during the first wave is not compensated during the second wave, but rather reappears with regularity every time the epidemic returns must be emphasized. One can indeed show that the income gradient is the strongest in areas that got most affected by COVID-19 in 2020. If further epidemic waves occurred – and some signs suggest that it has already started in France as well as in several other countries – our result suggest that, once again, the poorest municipalities will suffer greater losses.

Worse housing conditions and higher exposure through employment

What are the main differences between poor and non-poor municipalities that explain the income gradient in Covid-19 mortality? Our analysis highlights the key mediating role of labour market and housing conditions, in line with the idea that local factors are important determinants of the spread of epidemics. More specifically, the larger share of essential workers and of overcrowding housing almost fully explain the income gradient in COVID-19 related mortality. Interestingly, labor-market exposure remains an important determinant of COVID-19 mortality across both waves, while the role of housing conditions decreases over time, probably because the second lockdown was less stringent. 

Our work shows that the current health crisis amplifies already existing socio-economic inequalities. It also suggests that public policies aiming at limiting its effects should primarily focus on the poorest municipalities, notably by protecting workers as much as possible in the short term and by improving housing conditions in the medium term.


References

Brandily, P., Brébion, C., Briole, S., & Khoury, L. (2021). “A Poorly Understood Disease? The Impact of COVID-19 on the Income Gradient in Mortality over the Course of the Pandemic” , Working Paper, n° 2020-44, Paris School of Economics.


About the Author

Clément Brébion joined CBS in September 2020 as a postdoctoral researcher.  He received his PhD in economics in November 2019 from the Paris School of Economics. His main research interests are labour economics, economics of education and industrial relations. He has a particular interest into comparative research. More recently, he started working on the EU H2020 project HECAT that aims at developing and piloting an ethical algorithm and platform for use by PES and jobseekers.

SFDR, NFRD and the EU Taxonomy – What is their relationship?

By Andreas Rasche

◦ 5 min read 

The new Sustainable Finance Disclosure Regulation (SFDR) is on the minds of many investors these days. While a lot has been written on SFDR itself, I discuss how it relates to the Non-Financial Reporting Directive (NFRD) and the EU Taxonomy on sustainable economic activities. Taken together, these regulations can be overwhelming and maybe even confusing. While this is not the right place to comprehensively discuss all three regulations, I make some clarifications on their interlinked nature. 

SFDR, NFRD, and the EU Taxonomy – What are we Talking About? 

To start with, let us briefly review the three legal instruments, all of which belong to a series of EU regulations under the EU Action Plan on Sustainable Finance.

  • NFRD is the EU legal framework for regulating the disclosure of non-financial information by corporations. It was adopted in 2014 and states that corporations have to report on ESG information from 2018 onwards (for the 2017 financial year). NFRD is rather flexible – it applies only to so-called “public interest entities” (basically rather big corporations) and it contains so-called comply-or-explain clauses (allowing for non-disclosure of information if this is made transparent and reasons are given). 
  • SFDR is the new EU regulation that introduces rules for financial market participants (FMPs) and financial advisers (FAs) to report on how they account for sustainability risks. SFDR applies at the “entity level” (i.e. requiring financial firms to report on how the whole organization deals with such risks) and also on the “product level” (i.e. requiring firms to report on how their financial products are affected by such risks). SFDR contains few comply-or-explain clauses (e.g., smaller firms, with less than 500 employees, can opt out of reporting on due diligence processes). The regulation asks all FMPs and FAs to report on sustainability risks even if they do not offer ESG-related products. If an entity offers ESG-related products, SFDR requires additional disclosures depending on how “green” the product is considered to be. SFDR came into force on 10 March 2021. 
  • The EU Taxonomy regulation (hereafter: the Taxonomy), which entered into force 12 July 2020, reflects a common European classification system for environmentally sustainable activities. Basically, the Taxonomy tried to answer the question: What can be considered an environmentally sustainable activity? Answering this question is essential for investors to prevent “greenwashing” – i.e. a situation in which financial products are marketed as being sustainable without meeting sustainability criteria. The taxonomy defines six environmental objectives, and it defines an economic activity as sustainable if this activity contributes at least two one of these objectives without, at the same time, doing significant harm to any of the other objectives. 
Differences and Commonalities 

To start with, it is important to note the different legal status of SFDR/the Taxonomy as well as NFRD. NFRD is based on an older EU Directive (2014/95/EU). Directives imply that EU member states have to translate the broad requirements into national regulation. By contrast, SFDR (2019/2088) and the Taxonomy (2020/852) are both based on European regulation, which is immediately enforceable and does not require transposition into national law. 

To understand how the three legal frameworks relate to each other, look at the Figure below. NFRD applies to corporations of all kinds. Hence, for investors NFRD is mostly relevant because it stipulates how investee companies report ESG data. SFDR, by contrast, most concerns financial market actors and ensures transparency about how these report on sustainability risks to their audiences (e.g., retail investors). The Taxonomy was introduced to have a common reference point when trying to figure out whether an economic activity really is sustainable. The Taxonomy therefore has the power to further specify the regulations set out in SFDR and NFRD. 

source: Andreas Rasche
Emerging Relationships  

The linkages between the three frameworks will be further specified throughout the coming years. While SFDR has been in force since 10 March 2021, it is only in the so-called “level 1 stage of development”. As with many EU regulations, level 1 development sets out the basic framework principles for a regulation, however without specifying technical details. SFDR level 2 will come into force once the regulation is complemented with Regulatory Technical Standards (RTS), which are developed right now. The RTS will also specify the linkages to the Taxonomy in more detail (e.g., related to the “do-no-significant-harm” concept inherent in SFDR). 

So, what can we say right now? The current versions of SFDR and NFRD do not yet link disclosures to the Taxonomy. This is likely to change, especially with the SFDR RTS being further specified and rolled out (in early February the European Supervisory Authorities released their final draft of the SFDR RTS). Moreover, the NFRD regulation is currently under consultation and will be revised in the near future. However, two important linkages are important to consider right now.  

  • First, the scope of the Taxonomy is defined through NFRD and SFDR. In other words, if an organization is affected by NFRD and/or SFDR, the Taxonomy will also be relevant for its disclosure practices. It is important to note here that the EU Taxonomy defines further mandatory disclosures in addition to what is laid out by NFRD and SFDR. 
  • Second, the Taxonomy asks companies (incl. asset managers) to report the percentage of their turnover and capital as well as operational expenditures that are aligned with the Taxonomy. It also asks asset managers to report the percentage of their portfolio which is invested in economic activities that are aligned with the Taxonomy. 
The Future

We will witness a good deal of technical specifications of all three regulations throughout the next years. SFDR level 2 reporting will kick in once the RTS standards are part of the reporting (probably by mid-2023); also by 2024 year-on-year comparisons of data points under SFDR will be likely mandatory. The six environmental objectives of the Taxonomy will be specified through technical screening criteria, some of which will be released very soon. 

It is good to see non-financial reporting and sustainable finance being backed by strong European regulations. It allows for more comparison and benchmarking and hence transparency. But, of course, we should also be prepared for a good deal of clarifications that will be necessary until institutionalized reporting cycles can fully kick in and unfold their potential. 


About the Author

Andreas Rasche is Professor of Business in Society at the Copenhagen Business School (CBS) Centre for Sustainability. His latest book “Sustainable Investing: A Path to a New Horizon” (with Georg Kell and Herman Bril) was published recently. Email: ar.msc@cbs.dk Homepage: www.arasche.com

Who really cares about the SDGs when it comes to nobody’s responsibility?

By Suhyon Oh

◦ 2 min read ◦

The Sustainable Development Goals (SDGs) are the common goals of global development as we all agreed. Since its endorsement in 2015, it has become the norm. Multilateral corporations, aid agencies, development finance institutions and international organizations all refer to one or two Sustainable Development Goals (as their priorities) to legitimize environmental and social impact of their business activities. (I must confess here that I was also one of them). However, what are the actual changes in practices? Does it merely work as one other additional reference to our work? Otherwise, does it provoke transformational changes in our business strategies and practices for sustainability? Ironically, the Sustainable Development Goals are at once too sophisticated and too vague to do so.

The complexity of the goal structure should not be an excuse.  

The development process of SDGs has been grounded based on lessons learnt from the Millennium Development Goals. Because the MDGs excessively focus on the social aspect of development, the SDGs embrace economic, social, and environmental aspects. This led the number of goals to increase from 8 to 17. In relation to the goals, 169 target goals and 231 indicators have been developed to track the progress of 17 goals (In comparison, the MDGs only have 21 target goals and 60 indicators). These vast numbers intend to strengthen progress monitoring and enhance result management; however, such complexity seems problematic to fulfil the initial purpose. Some indicator selection processes are still under the technical review process after five years of SDGs have once passed and almost half of the indicators (106 out of 231) contain technical difficulties producing data on a regular basis to track the progress. I know that measuring the fulfillment of the whole massive SDGs is complex and may not be an easy task. However, when it comes to wrestling with such a giant, the sophisticated skill set (here, seeking clear target goals and indicators) would be a winning strategy rather than hurdles. Thus, how should we deal with the giant?  

 We have to consider which specific target goals and indicators are aligned with my actions if you have a will to achieve the SDGs. Simply stating one of the goals does not track your achievement. Each goal cannot be even drawn in parallel rather they are all interlinked.

Universality matters, but not everyone is in the same boat. 

We know why the SDGs have a principle of “No one left behind” across all the goals. This principle is again a result of lessons from the MDGs, which were criticized for the fact that they did not consider inequality and vulnerable groups in a development process. So that, this core principle is embedded into seventeen goals with the terms “inclusive”, “for everyone”, “for all” regardless of the developmental stage of their nations. Then, how can we make sure this would go far beyond the rhetoric?

We need extreme caution here. Do we have enough knowledge on those who are left behind? To move forward beyond the rhetoric, we need to unpack the word ‘everyone’. Even though ‘universality’ is an essential principle, we have to find out ‘who is left behind’ in every different context to make them not left behind, rather than concealing those excluded people under the name of “for everyone”.

Let’s see microfinance. It was expected as a universal means to reduce poverty and inequality since it provides a way of financial inclusion to those previously excluded to access credit. However, many research findings demonstrate that a particular type of “financial inclusion” which is embedded into microfinance cannot solve the marginalized groups’ economic challenges by itself. Without complementary social support, it was not enough to empower the poor, and even sometimes it resulted in an exacerbating situation for the people. I think this tells us the importance of deeper understanding of the poor, thus the need for a carefully targeted approach for impact. 

In brief, working for “everyone” requires additional attention and effort. Whose reality should count first? How could we guide us to hold clear accountability to turn the “No one behind” catchphrase into concrete actions? I believe one of the roles of research on the SGDs should be founded here.

SDGs as a norm: it should be embedded into everyone’s everyday life. 

Unlike the age of the MDGs, the SDGs involve a variety of actors such as private sectors and civil societies, who were not officially a part of the MDG process. Various stakeholders can create synergy through cooperation, but the responsibility to fulfil the SDGs become vague. According to Jurkovich (2019), three essential elements are needed to become a norm: “a moral sense of “oughtness”; a defined actor “of a given identity”; a specific behaviour or action expected of that given actor”. The SDGs as a global norm neither identify relevant actors for each specific goal and indicator nor have a compliance mechanism.

Sadly, the SDGs do not assign the responsibilities to anybody and the technical difficulty to monitor them also implies oughtness can be weakened. Frankly speaking, we officially have no obligation to contribute to the SDGs. 

Despite its non-obligatory identity, I strongly believe that most of us have a willingness to dedicate to the SDGs. Although we all understand its complexity of monitoring, ambiguity of target people and non-compliance mechanisms. I urge you as an individual, a scholar or a member of the whole global development community to carefully consider what goals/target goals/indicators and for whom I can contribute with a strong responsibility. Otherwise, the SDGs risk losing its political power and may be on track to decay its status as the norm before its completion in 2030.


About the Author

Suhyon Oh is a PhD fellow at the Department of Management, Society and Communication, Copenhagen Business School, and has over ten years of professional experience working with the donor agency, international organizations, development consultancy, NGOs as well as private sectors. As an international development expert, she has worked with the projects on development finance, financial inclusion and global value chain development, etc. Her current research interest is development finance institutions, impact investing funds in developing countries, hybrid organization strategy and strategy as practice.  

How organizations avoid to hire highly-skilled migrants

By Annette Risberg and Laurence Romani

◦ 2 min read ◦

Labor integration of migrants is a topic frequently on the public and political agendas, as it is increasingly seen as the first step to successful societal integration. Often the light is turned on the migrants and what they need to change and improve to get a job. They are expected to make themselves employable by learning the local language, by adapting to local ways of applying for jobs, and by adding local skills to their existing competencies. So, it seems, the moment migrants show some form of adaptation, they should do fine on the job market. But do they?

Why do organizations under-employ highly-skilled migrants? 

Well, maybe there is more to it. Highly-skilled migrants are often underemployed. This means they get jobs below their qualification level. We have all heard of the medical doctor driving a taxi. But who asks ‘why does a taxi company hire a medical doctor as a driver’? In a recent study, we decided to turn the light on the employers, the hiring organizations, instead of the migrants. We searched for an answer to the question of why organizations under-employ highly-skilled migrants.

We followed a mentor program aiming to integrate highly-skilled migrants in the labor market through mentorship and internship. In this program, support was given to migrants to learn the rules of the Swedish employment game, how to write a strong CV, cover letters, the importance of networks, for example. In our interviews, we talked to both mentors and mentees (migrants). They told us about arguments used in organizations to explain (or shall we say justify?) the under-employment of highly-skilled migrants. 

Alleged risk, but for whom?

They said that migrants are often described as lacking local job-seeking skills, how to write a CV, how to present oneself in the application letter, how to get in contact with a potential employer. At times, they may lack local language skills too. Yet, these skills were precisely what they acquired in the program (and in internships) and many of the migrants we interviewed possessed those skills, yet, remained unemployed. More interestingly, we got to hear that the highly-skilled migrants were also talked about in terms of bringing with them the unknown and the unfamiliar: unknown diplomas, unfamiliar job references, unfamiliar working cultures, and habits, for example. And, interestingly, in the interviews, this unknown was associated with a risk… but a risk of what? And, a risk for whom?

Keeping migrants in a lower symbolic position to maintain the power of ‘normality’.

Using the relational theory of risk, a theory where risk is seen as socially constructed, we realized two things. First, if people talked about risk, it was because they felt that something that they value was being threatened.  We found that they valued their usual (habitual) ways of doing things, the organizational normality, more than the new skills and experiences the skilled migrants could bring to the organization.

Hence, highly-skilled migrants were perceived to be a risk to the valued organizational normality and kept away from employment, to avoid disruption of this normality.

Second, if employed, they were hired at a level that did not allow them to fully contribute to the organization, at a level that indicated: your skills are not valued here, they are not to be considered, they are not to transform our usual way of doing things. 

These findings point to an organizational ground for the underemployment of migrants, independent from migrants’ skills and adaptation efforts. In simple terms, organizations may have an interest in under-employing migrants: they assure that their ‘normal’ way of working is not changed, that they are not challenged in their comfortable, everyday routines. The organization’s interest in under-employing migrants goes beyond having a (cheap) skilled workforce without recognizing its value, it is also to clearly indicate that ‘the way we do things around here is valued and we don’t want to question it’.

Who should be seen as a risk? The migrants or the organizations?

In a nutshell, we got to hear that migrants are presented by some as being a risk. But, frankly, a risk for whom? For those comfortably installed in their routines? How about we turn things around and consider that those organizations, not the migrants, should be seen as a risk.

Indeed, by stopping the integration of highly-skilled migrants, are those organizations not a risk to a sustainable society and the (labor) integration of the migrants we welcomed?

The good news is that often, this comfort of the ‘normality’ is not so difficult to change. Organizations’ routines are constantly in the making and it is actually beneficial to challenge and change them from time to time to continuously adapt to the organization’s changing environment.  So, the next time you hear that it is ‘normal’ to expect a local degree for this position, ask yourself: who really benefit from this ‘normal’? And, who should be seen as a threat here?


Further reading

Risberg & Romani (forthcoming) “Underemploying highly skilled migrants: An organizational logic protecting corporate ‘normality”. Human Relations. 


About the Authors

Annette Risberg is a Professor of Diversity Management at Copenhagen Business School and Professor of Organization and Management at the Inland Norway University of Applied Sciences. Her research focus is on practices of diversity management in general and the inclusion of immigrants in organizations. Her latest co-edited book is The Routledge Companion to Organizational Diversity Research Methods and Diversity in Organizations.

Laurence Romani is an Associate Professor at the Stockholm School of Economics. Her work focuses on representation and interaction with the cultural Other in respectful and enriching ways. She currently investigates the conditions of integration of the perceived cultural Others (e.g. ethnic minorities, migrants) in the Swedish labor market. She critically studies race, gender and class hierarchies in organizations’ work with cultural diversity.

A Southern-centered perspective on climate change in global value chains?

By Peter Lund-Thomsen

◦ 2 min read ◦

The garment and textile industries account for around 10% of global CO2 emissions, and their fast fashion approach consumes huge amounts of water in production and processing stages. While the fast fashion model incentivizes the overproduction/consumption of clothes, more sustainable solutions lie in the configuration of value chains towards slow fashion (durable products produced on demand) and the introduction of circular business models. Such a transformation will have consequences for the environment, workers’ conditions, and economic development.

This is particularly the case in the light of COVID-19, which led to a temporary disruption in the global garment and textiles value chains as stores closed in Europe and the United States in the spring of 2020. The cancellation and non-payment of garment orders particularly affected suppliers and workers in Bangladesh, leaving hundreds of thousands of workers without jobs and possibly facing destitution. 

This is the focus of a new research and capacity-building project on ‘Climate Change and Global Value Chains’ coordinated by the CBS that has recently been funded by the Danish Development Research Council. In this research project, we will be working with colleagues from the University of Aalborg and Roskilde University in Denmark as well as BRAC University and the University of Dhaka in Bangladesh. Private sector partners include the Danish Ethical Trading Initiative and Danish Fashion and Textile. 

I think that a key challenge in this new project is how we approach ‘climate change’ in the context of global value chains.

In the Danish debate on climate change, it is almost universally accepted that climate change should be at the top of the political and corporate sustainability agendas. However, both employers and workers in the Bangladeshi garment and textile industries may not perceive climate change mitigation as an immediate priority.

First, the purchasing practices of major brands sourcing garments from Bangladesh tend to result in downward price pressures, seasonal fluctuations in demand, and shorter lead times while, at the same time, these brands are also imposing ever greater environmental and labor standard requirements on their suppliers (not only in Bangladesh but elsewhere in the global South). Economic value is very unevenly distributed along the textile/garment value chain, with major brands reaping up to ten times higher economic value than suppliers – and even less reaching workers.

Hence, Bangladeshi suppliers often perceive the environmental and labor requirements of brands as adding to their costs without bringing additional business benefits.

In this context, suppliers may have very few, if any, incentives to address climate concerns in their value chains, while workers in the industry are trying to survive in a context of economic uncertainty.

In my view, a critical aspect of this new project is therefore that we will not only look at climate change from a Northern-centered perspective; that is, we are not only concerned with how brands and factories engage in the process of decarbonization. We will also zoom in on the importance of climate change adaptation, which I would label a more Southern-centered perspective on climate change in global value chains.

In fact, Bangladesh is one of the countries most affected by global climate change whose coastal areas and ports are prone to flooding, resulting in disruptions of the garment/textile value chain and economic losses for local manufacturers and workers.

Moreover, garment factories in greater Dhaka have extremely high lead and CO2 emissions, while many factory workers live in parts of the city that have unhygienic water supplies and must cope with living conditions that affect their health. Hence, integrating climate change and global value chain analysis from a Southern-centered perspective, I would argue, involves looking at the ‘business case’ for climate change adaptation – in other words, we must understand how can climate change adaptation can help in securing the future viability, competitiveness, and jobs in the garment industry and textile industries of Bangladesh. 


About the Author

Peter Lund-Thomsen is Professor at the Department of Management, Society and Communication at Copenhagen Business School. His research focuses on sustainable value chains, industrial clusters, and corporate social responsibility with a regional focus on South Asia.

The Uberization of corporate political action

By Dieter Zinnbauer

With more than USD 12 billion spent the 2020 US election cycle may well have been the most expensive political campaign in the world so far. Yet in the shadows of this epic political contest another campaign unfolded that in my view provides some really interesting early signals on emerging trends in corporate political activity.

Alongside the national election Californians went to vote on a number of plebiscitary ballot measures. Among them Proposition 22 that like no other exemplifies how business lobbying unfolds in the era of what is often called the gig-and platform economy.

Prop 22, as it is known for short, was spearheaded by Uber and Lyft as a last ditch effort after exhausting all judicial and legislative tactics to win an exemption from a new Californian labor law that aimed to force these companies to classify their drivers as employees, rather than independent contractors.

A special type of thing

Leaving aside the merits of the argument – as consequential and hard to defend the position of Uber and peers may be-  Prop 22 is remarkable on many fronts.  It exemplifies the growing use of what was once meant to be a plebiscitary counterweight to corporate influence by these very corporate actors to advance their own interests.  

It saw platform companies that connect millions of drivers and tens of millions of passengers in so called two-sided markets take fully advantage of these relationships by intensely lobbying and mobilizing these constituencies for their cause.

It witnessed the deployment of targeted push messages and suggestive survey snippets through the proprietary app infrastructure, administered and tracked by a black-box algorithm that also sets prices and assigns business opportunities and thus commands Foucauldian-like disciplinary allure. Which driver would want to be seen and classified to be unsupportive of the company’s political project while the day’s earnings depend on being assigned this one lucrative trip to the airport? 

Ballot 22 also starkly illustrates the chimera of political equality or of even the resemblance of a level playing field in a world with unconstrained campaign expenditures that resulted in the gig-side outspending the labor side by a factor of 10 to 1.  And it is truly remarkable in its brazen disregard of democratic legitimacy. It aimed to expressly derail a provision that was not hidden on page 1205 of a large body of complex legislation and stealthily whisked through without much public scrutiny. Instead it took aim at a piece of legislation that had been in the public, even international spotlight for quite some time, extensively discussed and lobbied on and resoundingly tested and confirmed in court.

Even more astounding, Prop 22 sought to prevent any future democratic course correction through including a clause that would require an unprecedented 7/8 supermajority in the legislature for overturning it – a much higher hurdle than is set for amending the US constitution.

All these features are fascinating in themselves and deserve a much more detailed examination which has already begun in academic circles, for example with regard to platform-led mobilization  or data-driven corporate advocacy and to which I hope to contribute to in a longer essay elsewhere soon. Here and now I just wanted to offer some very early and unpolished ideas on one more, largely overlooked angle that makes Prop 22 and the corporate political actions of Uber et al. so fascinating.

In very broad brushes the thinking here goes as follows: 

Businesses that are not explicitly chartered as public benefits corporations derive their social license to operate primarily by making a positive economic contribution in terms of innovation, resource efficiency et al. (and yes, by doing this as responsible corporate citizens that respect the spirit of applicable laws, planetary boundaries etc.). The longer-term ability of a company to be financially self-sustaining in a competitive, externality-free market situation is – absent any other claims about achieving non-financial societal benefits – a first approximation for such a positive economic contribution.

Society puts a higher economic value on the contribution of the corporation than the costs of its fairly priced inputs. The business model adds overall economic value, the business organization – not just the people involved in it as individuals claiming their citizenship rights – can invoke this overall economic contribution to justify a certain degree of standing in the democratic discourse.  

Yet this is precisely not the case with companies such as Uber and Lyft.  They have been losing vast sums of money for years, bleeding cash on every ride even while exploiting many regulatory gaps that lower their cost structures relative to their competitors in the ride-hailing business. All this was made possible by enormous sums of venture capital funding – USD 26 billion for Uber alone up until April 2020. Venture funders bet on those companies to eventually achieve a winner-takes-most status and commensurate pricing power in a market characterized by strong network effects and economies of scale /scope. 

The envisioned route to economic dominance, however, also requires to simultaneously build and assert the political influence necessary to stave off regulatory efforts such as categorizing drivers as employees and many other pricey regulations that threaten to close the very regulatory arbitrage opportunities on which large parts of the business model  of Uber, Lyft and other gig companies are ultimately built. 

Overall this results in a situation where venture-funding is at least as much about blitz-scaling political power as it is about financing hyper-growth for market dominance. Both are necessary, both reinforce each other. The build-up of political good will and supportive constituencies is not a by-product of building customer loyalty. It is an essential part of the strategy to architect a business model that critically depends on regulatory accommodation and complicity. Yet, all along and rather ironically this heavy reliance on political action and political success stands in stark contrast to the relative normative weakness of claims made by companies without a clear route to profitability that cannot convincingly back up their political voice with an obvious net positive contribution to overall economic welfare. Stripping away all ornaments what’s left is a story of VC-funded particularistic political rent-seeking. 

Now, much more needs to be explored here and there are many holes that can be punched into this storyline as described in these very broad terms. So please check back here soon for a more developed version of this argument. In the meantime I would love to hear your comments and criticism to help advance this conversation. 


 Epi-epilogue

Uber et al. won Prop 22 by a large margin of 58% to 41%. Prop 22 turned out to be the most expensive ballot initiative in US history. So far.  After the vote Uber’s CEO announced in an analyst call that the company will “more loudly advocate for laws like Prop 22  [and] work with governments across the US and the world to make this a reality.”  The company continues to loose large sums of money.


About the Author

Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS research focuses on business as political actor in the context of big data, populism and “corporate purpose fatigue”.


Photo by ryan park on Unsplash

Insecure work: rethinking precarity through Kenya’s tea plantations

By Hannah Elliott

Over the last decade, the term ‘precarity’ has become ubiquitous in studies of work and labor, as jobs are increasingly characterized by temporary and insecure contracts; lack of basic welfare provisions such as paid leave; and low pay. The informalization of work has gained pace in a post-Fordist world. And we can expect to see more precarity. The COVID-19 pandemic is pushing employers the world over to think of new ways to reduce labor costs as economies flounder.

Anthropologist of work Kathleen Millar has argued that we need to be careful about how we think about ‘precarity’ when we talk about insecure work. The term can inadvertently “smuggle in a conservative politics”, valorizing and romanticizing a Fordist past of full-time wage labor. This employment past is not universal. In the majority of the world, economies have historically been characterized by informality. Here, formal secure work has been more of an idea, a promise tied up in teleological ideals of modernization and development, than a reality. Furthermore, in former settler colonies such as Kenya and South Africa, formal wage employment has roots in colonial capitalism, coercion and exploitation.  

I’ve been thinking about precarity through the case of changing employment conditions on Kenyan tea plantations, where I’ve been researching the production of certified sustainable tea as part of the SUSTEIN project. I carried out my latest fieldwork between January and March this year, right up until the majority of European countries went into lockdown. A few weeks later, Kenya followed suit. In Kericho, the heart of Kenya’s tea production and where I spent most of my stay, there was little sense that the world was on the brink of an impending global pandemic, let alone reflection on what that could mean for the tea industry. And yet, in conversations with diverse actors in the sector, there was a shared narrative that the industry, responsible for one of Kenya’s biggest export commodities and foreign exchange earners, was struggling.

Enduring low prices of tea on the global market and rising costs of production have led multinational companies owning large tea plantations to look for ways to cut labor costs.

Tea is a labor intensive crop, and companies have historically depended on large resident workforces to pluck tea, plant and prune tea bushes and operate factories, among a multitude of other tasks required to maintain vast tea plantations. Biannual collective bargaining agreements led by the workers’ union have seen wages increase at a rate companies say is unsustainable for business. Citing high wages relative to other agricultural sectors in Kenya and the additional costs of employee benefits such as free housing and water, payment of retirement funds, and contributions to health insurance, along with the costs of maintaining infrastructures used by workers and their dependents such as schools and dispensaries, companies argue for the need to reduce labor forces.

The gradual reduction of company-employed low-level or ‘general’ workers has been taking place through parallel processes of mechanizing tea harvesting and outsourcing tasks outside of companies’ core activities of tea harvesting and factory processing. While workers carrying out core tasks continue to be employed directly by the company, thus receiving a union-negotiated wage and the package of employment privileges described above, outsourced workers are hired on insecure terms by external service providers who hold contracts with tea plantation companies. Outsourced workers are typically employed on short contracts, sometimes for as little as a few days. This renders them ineligible for union membership, and most earn less than half the daily salary of a company employee. If they are unable to work due to sickness, they will not be paid. The contractors who employ them are required by the company to make deductions from their salaries to national health insurance and social security schemes, but low wages and short-term employment mean that contributions are meagre.

Kenya has a large work-seeking population, and people are prepared to take outsourced jobs because of few employment opportunities.

In spite of the striking unsustainability of labor outsourcing for these workers, international sustainability standards say surprisingly little about this category and establish few mechanisms to safeguard them.

In the context of decreasing opportunities for employment in permanent company jobs on tea plantations, current and former workers talk with nostalgia about a time when company jobs and their related securities were a plenty. This nostalgia echoes the valorization of stable, full-time wage labor that Millar identifies as lurking in the notion of precarity. But, without dismissing workers’ nostalgia, we should be careful not to romanticize plantation jobs of the past which were, in spite of their securities relative to outsourced work, inherently precarious.

During the early twentieth century, the colonial administration sought to disrupt and undermine subsistence economies so that people would be forced to seek work on infrastructure projects and in settler industry and agriculture, including tea plantations. For decades, the industry struggled with labor shortage which undermined its growth and expansion. During the 1940s and 50s, efforts were made to create permanent resident labor forces through welfare provisions such as housing, kitchen gardens and retirement funds. Yet workers could never own the houses they lived in, nor the land they were given to cultivate, which remained the property of the company.

In seeking to create a stable workforce that could make Kenya’s tea industry sustainable, the colonial administration destabilized rural economies and created a class of people who would be forced, for generations, to seek wage labor.

If, in these uncertain times, we shouldn’t wish for a whole-sale return to permanent, full-time wage labor, what might we hope for instead? Millar argues for a critical politics of precarity that problematizes the centrality of economically productive work and its promise in contemporary capitalism rather than calling for a return to stable full-time work. Campaigns that propose alternatives to work include Universal Basic Income – where governments makes regular unconditional payments to every individual – and Universal Basic Services. A 2017 study by UCL’s Institute for Global Prosperity proposing Universal Basic Services in the UK argues that government provision of basic services such as food, shelter and transport has the potential to reduce dramatically the cost of living for those on the lowest incomes, making participation, belonging and cohesion possible in the face of increasingly precarious work. These initiatives are becoming more compelling as the world reels from the pandemic and we try to imagine a recovery that prioritizes social and environmental justice.


References

Kathleen M. Millar (2017) ‘Towards a critical politics of precarity’. Sociology Compass, 11 (6), pp. 1-11.

Henrietta Moore, Andrew Percy, Jonathan Portes and Howard Reed (2017) Social prosperity for the future: A proposal for Universal Basic Services. Social Prosperity Network Report: Institute for Global Prosperity, UCL.


About the Author

Hannah Elliott is a postdoc at MSC focusing broadly on the political and economic anthropology, in particular in eastern Africa where she has been conducting research since 2009. Her current research examines the production of certified sustainable tea in Kenya as part of the SUSTEIN project. 

Delivering and Financing Better Societies

How can cities self-finance environmental and social solutions?

By Luise Noring

Every week, more than three million people move into cities looking for places to work and live. This puts an enormous strain on cities’ finances and capacity to provide for their residents. We can no longer – if we ever could – assume that taxes will pay for growing urban populations with growing demands for public infrastructure, goods and services. We need to find new ways of delivering and financing good societies for the billions of people living and working in cities.

Therefore, the challenge is not only to find the best environmental and social solutions for cities, but also to address how these solutions can be delivered and financed. All too often, for example, brilliant climate solutions are presented, but nobody wants to take responsibility for delivering and financing them. All too often, we hear of good solutions for social preventive action and public health that are never put into action. The solutions are there. The challenge is that the business case and investment proposition are either weak or non-existent. As a result, the only one with the incentive to implement the solutions is the cash-strapped government itself.

Hopeful scholars demonstrate how investing taxpayers’ money today could prevent massive expenditure tomorrow. Yet today’s tax revenues are already accounted for to pay for schools, roads, housing, hospitals, etc. This leads me to my principal research question and mission in life:

How do we deliver and finance better societies?

All too often, the only financial solution on the table is to increase and spend tax revenue. But there is no financial innovation in increasing and spending taxes. This ‘solution’ just means that bonds are repaid with future taxes even though we know full well that, in the future, taxes will still be needed to finance schools, roads, housing, hospitals, etc. Spending future taxes today only jeopardizes future generations’ ability to finance their schools, roads, housing, hospitals, etc. The same applies to tax increment financing (TIF), which is a common practice in urban development and economic revitalisation used in the US and subsequently adapted across much of the world.

The idea behind TIF is that local governments issue bonds based on future tax revenue increases. TIF assumes that urban regeneration can be financed by bonds that are serviced and repaid by future tax revenue increases. The proceeds of the TIF bonds are thus used to stimulate economic development through investments in urban regeneration, infrastructure and other public goods. The bonds are repaid mainly through property taxes resulting from investments and development activities. What happens though when the public investments fail to increase tax revenue paid by private owners? In such cases, local governments remain obliged to repay the government- guaranteed bonds.

Conventionally, in the US, local property taxes fund elementary and secondly education, supplemented by federal and state contributions. However, when future property taxes are used to finance infrastructure, public investment capital is in effect flowing from elementary and secondly education to infrastructure and other development activities in order to secure projected tax increases.

Thus, while TIF creates new economic development opportunities in one area, such as derelict neighbourhoods, it hollows out potential future investments in other areas, such as education.

Finally, it is common in many US cities for governments to woo private investment by offering tax reductions or exemptions. This amounts to making investments today with the tax revenues of tomorrow. This is how cities acquire unfunded liabilities.

The above paints a bleak picture of future financing of good solutions for better societies. However, during my research, I have come across many sound finance mechanisms. For instance, land value capture (LVC), which is commonly used in Northern Europe. LVC bundles publicly owned land, such as former port and military areas, or areas over which the public can take ownership, such as derelict areas. Once the local government has secured land ownership, it rezones and repurposes the land.

For example, former industrial land can be repurposed for commercial and residential use. This increases land values, which enables the government to take out loans based on the increased value of the land. With renewed borrowed capital, local government can make infrastructure and other investments in the land. This again increases land values. Once the land has been properly matured, it is sold to private investors and developers, including institutional investors, such as pension funds. Revenues from land sales are used to service and repay the debts. You can read more about this model in my Copenhagen City & Port Development report.

Another solution is for local government to raise seed capital, for instance from philanthropies, pension funds and other large institutional investors that invest with long time horizons. This seed capital is used in projects as low-yield and high-risk investment capital that is capable of attracting other investments that are more high yield and low risk. Once projects have been realised, they are refinanced, and the seed capital is withdrawn and put into another project. This is a kind of project-by-project financing. You can read more about this model in my Cincinnati Development Corporation report.

This blog post has offered a snapshot of several research projects I have conducted over the years. All my works contain key enabling features for replication, which allow me to scale solutions to other cities. If you want to learn more, please visit this page or get in touch with me: lno.msc@cbs.dk.


Further Reading

Luise Noring (2019) Public asset corporation: A new vehicle for urban regeneration and infrastructure finance. Cities.

Bruns-Berentelg, J., Noring, L., & Grydehøj, A. (2020). Developing urban growth and urban quality: Entrepreneurial governance and urban redevelopment projects in Copenhagen and HamburgUrban Studies.


About the Author

Dr. Luise Noring is an Assistant Professor at CBS, where she also attained her Ph.D. in supply chain partnerships. Noring challenges taken-for-granted and commonsense solutions – which are only ever taken-for-granted and commonsense within their specific contexts. Part of what makes her work innovative and has assured its impact in research and practice is precisely her insistence on reaching across national and sectoral contexts, drawing experiences from a great diversity of urban systems. This has allowed Noring to identify what kinds of city solutions work best in particular contexts and how certain kinds of institutional vehicles and finance mechanisms can be adapted to diverse cities and countries.


Photo by Denys Nevozhai on Unsplash

Top Leadership Compensation: From Hockey-Stick to Shared Pay-checks

“Sharing is Caring” is a way to manage post-COVID19 Economic Crises and Layoffs

By Anirudh Agrawal & Bharat Dhamani

10 of the 25 Linkedin review of best companies to work in India published in 2019 are firing their employees in 2020.  They paid huge performance based salary to top management, who drove performance by reducing pay of the lower rung employees [1].

There is a moral dilemma when we compare top management compensation with those employed at the lower levels or those employed on temporary contracts in India Inc. The median top management salary in India is as much as 243 times than those at the lowest strata of the organisation [2]. During the recent Covid-19 crises, this wage asymmetry between the lowest rung employees and top management the resulting crises of legitimacy were further highlighted. This opinion piece discusses three strategies to control hockey stick pay-outs to the corporate leadership. Contrary to current narrative on free market  and invisible hand, the corporate must self-reflect and implement policies for greater employee rights and dignity, collective bargaining and equality of pay to create  sustainable competitive advantage. 

India Inc. must learn from Scandinavian enterprises about their top leadership compensation model where the compensation is decided collectively ( along with the employee union), ensuring fairer pay and shared accountability towards organizational performance. Scandinavian strategy of collective bargaining has ensured multiple benefits [3].

  1. It has ensured that the rights of the lowest-ranked individual is protected.
  2. It has ensured that organizations follow sustainable policies both internally and externally, keep sharing the impact from shareholders to stakeholders, and
  3. The employees at each level and the communities work in sync towards ensuring organisational mission and competitiveness politics, cliques and influence of personal interest groups are limited.
  4. The collective agreements ensure that the employee flights to competitors are limited.

The effect of Scandinavian model has ensured an overall positive impact on organisational longevity, brand recall and competitiveness [4].

The India Inc should engage with their Indian public sector counterparts and learn their functioning and how they treat their employees through fairer pay and work conditions. India Inc should reflect and study the pay structure adopted by the Indian Public sector [5].

The public sector salaries have ensured respect for each, preservation of rights, longevity in the job and service to all irrespective of caste, colour or religion.

For example, the public sector banks like SBI ensure delivery of financial services to the poorest of the poor while ensuring that its banking officials are paid well. Our common sense would suggest that the Indian private sector to emulate some of the public sector compensation methodology, ensuring that the employee at the lowest strata get decent wages. The private sector can learn from the public sector on how to manage organisational compensation and increase organisational loyalty and in doing so, it must also increase benefits to the lowest ranking employee in the organisation. Similarly, the public sector should develop agility to reflect on market forces and learn to innovate to ensure that it is aligned and competitive as the competition demands. 

Narayan Murthy of Infosys rightly questioned his senior management about the lack of accountability despite hockey stick payouts. He pointed out that shareholders might approve the actions of the top management but the corporate leadership must be accountable to the stakeholders that includes the public and the employees [6]

Therefore, top management compensation should be duly decided by following a strong corporate governance principles, transparency and by installing elements of corporate ombudsman

Firms with strong accountability and stakeholder interests would perform better in the long run, than those firms which are driven by offering high incentives to top management for performance.

Some Indian private sector organisations belonging to distressed industries and markets had taken large public owned capital to run their businesses, paid hefty compensation to higher management but when things went wrong, both the promoters and top management had no public accountability. Besides, when the business failed to perform, the top management were just let go while the lower-ranked employees struggled to pay their bills. The audit reports were hardly made public and the accountability measures and corporate governance rules of such organisations were never questioned.  

The organisations while deciding top management compensation must also bring proportionality in accountability and stakeholder engagement.

Collective bargaining, equality in pay similar to public sector and corporate social and moral accountability are three strategies that the Indian corporations must reflect and incorporate in their managerial processes. Some of the NIFTY fifty Indian corporations like the Tata Group, Infosys, Mahindra and Mahindra, Hero Motors, ICICI Bank have implemented in their processes and one can see these effects on the employee satisfaction on Glassdoor employer ratings, brand recall by the consumers and overall stakeholder satisfaction is reflected positively.

Therefore, if the Indian private sector implements the policies that lead to greater accountability, equality in pay, collective decision making while ensuring its flexibility to market forces, we will see a disruptive and positive change in the image, governance mechanism, competitiveness and longevity of Indian corporations.

While the hockey stick model of compensation shifts the responsibility entirely on the top management, the collective bargaining and equitable compensation distributes the responsibility to each and every employee, bringing greater sense of employee engagement and employee accountability. Such a strategy has a potential to create long term competitiveness and shareholder value.


References

[1] https://www.businessinsider.in/here-are-the-25-most-popular-workplaces-in-india-according-to-linkedin/articleshow/68704338.cms
[2] https://economictimes.indiatimes.com/news/company/corporate-trends/india-incs-top-executives-earn-243-times-more-than-average-staff/articleshow/63359591.cms
[3] https://www.socialeurope.eu/why-trade-unions-at-work-do-work
[4] http://norden.diva-portal.org/smash/get/diva2:816030/FULLTEXT02.pdf
[5] https://www.spjimr.org/blog/learning-public-sector
[6] https://www.hindustantimes.com/india-news/narayan-murthy-recounts-his-spat-with-vishal-sikka-to-drive-home-point/story-YNG126VbaGMO5nDgFx0XCM.html


About the Authors

Anirudh Agrawal is Impact Investing and Social Entrepreneurship Fellow at Copenhagen Business School and Lecturer of Entrepreneurship and Strategy at Department of Entrepreneurship at FLAME University India. He is researching on the institutional theory framework to reflect on debates in social entrepreneurship and social innovation. 

Bharat Dhamani is a Lecturer of Entrepreneurship and Strategy at the Department of Entrepreneurship at FLAME University India. He practices engagement oriented learning through simulation and practical work. His subjects include financial management, business plan preparation, new venture business strategy and social entrepreneurship.


Photo by Sharon McCutcheon on Unsplash

Branding in the COVID-19 pandemic

Not every time is the right time for real-time marketing

By Maha Rafi Atal and Lisa Ann Richey

This article is based on previously written piece for the Centre for Business and Development Studies.

As the global Covid-19 pandemic spread through Europe and North America, companies raced to communicate how they were responding to the crisis. Advertising that focuses on a company’s response to humanitarian crises is hardly new. Every holiday season features a parade of brands touting their seasonal partnerships with charitable causes. Yet these exercises in “Covid-branding” struck a particular nerve with both consumers and media commentators because so many of the brands stuck to the same script. Quickly that script even became the subject of satire.

‘The hallmarks of the coronavirus ad are so consistent they could be generated by bots. They begin with eerie drone footage of empty streets, a shot of a child staring plaintively out the window and then — cue the upbeat musical key change — a medical worker peeling off a mask, a guy jamming on a home piano, maybe a deeply pregnant woman rubbing her belly as if summoning a genie from its bottle.’

Amanda Hess, The New York Times, May 22, 2020

These patterns are important. In the uncertain early weeks of the pandemic, as governments were still crafting their responses, the stories brands told played a role in shaping how the public made sense of the crisis. What kind of a crisis was it? What sort of solutions did it need? What role should business play in delivering them? Covid-branding offered answers to those questions.

In this briefing note, we present a preliminary analysis of Covid-branding by companies in Europe and North America during March and April 2020. Our analysis finds that messaging clustered clearly into two ways could engage: ‘Covid-helping’ and ‘Covid-coping.’ These messages of ‘managing the pandemic’ and ‘managing yourself’ frame the consumption of goods and services as a way that consumers can show they care, presenting shopping as a form of everyday heroism. In this way, they make the case that private sector has a role to play in humanitarian response.

Economic Context

The Covid-19 pandemic has taken an extraordinary toll on the global economy. Measures to combat the spread of the virus, including border closures, and national lockdowns affecting one-third of the world’s population, shut down much industrial production and pushed white-collar professionals to remote work. These measures, coupled with a fall in consumers’ own confidence in response to the health crisis, contributed to rising unemployment, falling consumer activity, and the worst global recession since the Great Depression.

This context, with consumer activity declining overall and shifting from closed stores to online retailers, placed pressure on brands to compete for a share of the smaller e-commerce pie. At the same time, the recession placed pressure on marketing professionals to demonstrate their relevance at a time of overall corporate retrenchment.

Marketing Context

We focus our analysis on online communications, especially social media output. Social media marketing is often informal in tone and crafted quickly to respond to real-time events, so that brands can ride the waves of attention paid to viral news stories, from royal babies to sporting events.4 Most research about this practice has suggested brands choose to focus on positive or neutral stories to avoid mistakes, as humorous tweets about a serious event can backfire. That makes Covid-branding in the early weeks of the pandemic, when infection and death rates were rising, unusual.

We also examine promotional emails and newsletters, a form of content marketing. Content marketers have begun to develop more journalistic skills, including as storytellers and explainers of complex phenomena, and indeed many former journalists are employed as content marketers. Covid-branding, in which brands help consumers make sense of the emerging crisis, is an example of this phenomenon.

These online forms have not received much attention from researchers of corporate humanitarianism, which has focused on more traditional forms of print and broadcast advertising. We hope that this brief typology of how marketers used these newer forms in the Covid-19 pandemic encourages further research into these formats.

Covid-branding as Covid-helping

Brands that emphasized their role in helping to manage the pandemic did so in distinct ways. To understand this, we considered two aspects of each marketing message: First, whether companies are making an engaged or disengaged intervention. Companies which are engaged use their own business capacities toward the Covid-19 cause. Second, we consider whether companies are claiming to directly or indirectly impact the Covid-19 crisis itself. We investigate whether the brand claims to address the medical situation (direct) or indirect societal outcomes of the pandemic, including economic impacts.

The four modes of engagement
Direct Engaged: Business puts its core capacities into directly fighting Covid

Some companies with core operations in the fields directly linked to fighting the pandemic (i.e. health care or logistics companies) quickly began communications around their role.

This Novo Nordisk Facebook advertisement shows healthcare workers holding up a sign reading “Thanks” in Danish. Novo Nordisk is a leading pharmaceutical company. Photographs of healthcare professionals at work in Novo Nordisk-made protective gear signaled company’s direct engagement.


Examples of countries where these products are in use underscores that the company serves a modern, global, and racially and gender-diverse group of professionals. Other direct engagement included shipping company Mærsk tweeting about “Mærsk Bridge,’ an air bridge and supply chain operation to transport PPE to healthcare workers.

Indirect Engaged: Business puts its core capacities into indirectly managing Covid

Since direct business engagement was only possible for companies whose core business was in medical or logistical operations, many companies emphasised managing indirect societal impacts of the pandemic in their early response.

As a food and drinks business with a national supply chain, Starbucks was able to use its core capacities to address indirect economic impact of pandemic on food supply. Promotional email highlights corporate donations of 700,000 meals to food banks and use of company logistics network to assist foodbanks with transport.

Makes the case that hunger “is part of the crisis” to underscore relevance of this indirect engagement.

Other indirect engagement included Draper James, the American actress Reese Witherspoon’s fashion brand, announced on its Instagram account on April 2, donations of dresses for teachers (deemed essential workers during pandemic); campaign backfired when dress supplies ran out.

Direct Disengaged: Business helps others directly fight Covid

Businesses who could not easily link their core operations to medical needs instead highlighted partnerships to help others managing the Cover crisis.

A promotional email from Camper highlights the use of 3D printers from its manufacturing operation to produce medical visors. The Email also highlights donations of shoes and slippers to staff and patients in hospitals.


Camper does not claim that they are themselves engaged in work to combat the medical crisis, but rather that they are making resources and equipment available to others who can do so.

Other direct disengaged examples included fashion brand Armedangels making cloth masks while explicitly stating on Facebook that they could not protect the wearer – “we can’t produce medical masks” – but that 2 euro from the sales of each mask would be donated to Doctors Without Borders, or gas company Crusoe Energy Systems announcing that they were donating computing power to Stanford University coronavirus research.

Indirect disengaged: Business helps others indirectly manage Covid

Businesses who could not easily link their core operations to urgent economic or societal needs instead highlighted partnerships to help others managing the impact of the Covid crisis.

Instagram post by crowd-funding platform GoFundMe promoting that its platform can be used by consumers to identify causes to support. Following the link to “learn more” shows company also offering free consulting to nonprofits on how to raise additional funds.


The company is not mobilizing its own resources to support Covid-related causes, but rather facilitating donations to other organizations through information sharing. Such consulting activity is not an ordinary part of the company’s core business.

Other indirect disengaged examples included Facebook offering grants for small businesses in the United States and using its network to promote the existing loan program from the US government.

Covid-branding as Covid-coping

Many brand engagements we examined did not make any claims to be helping combat the crisis, or its social impact, at all. Rather they focused on helping individual consumers to cope with the circumstances surrounding the crisis and its personal impact on themselves.

Because these “Covid-coping” messages focused on helping individuals, rather than society or the economy, our analysis focused on the demographics of what kind of consumers each type of “coping” message addressed, as well as what the messages said. We identified three coping mechanisms brands sold to consumers in these Covid-coping messages: coping-through-practicality, coping-through-pleasure and coping-through-denial.

1) Coping-through-practicality

Like indirect Covid-helping, it portrays shopping as way to address consequences of the pandemic, but instead of focusing on consequences for society, it targets how consumers can address their own needs.

An Instagram post by Zoku, a real estate company managing coworking spaces, offered private office rooms for professionals needing a socially distant office away from their household. Emphasis is put on a spare and clean layout of the office and “peace and quiet” for workers.


It suggests appeal to professionals with children struggling with disruption to work practices in shared family homes. Coping-through-practicality engagements largely addressed themselves to consumers in their identities as professionals and parents.

Other coping-through-practicality examples included laptop manufacturers advertising tools for working from home; home furnishings brands advertising tools for cooking at home; and phone, internet and electricity providers advertising their services as essential infrastructure for remote working and home-schooling. Marketing of this type emphasizes how brands could help families and businesses carry on “as normal” during a period of crisis.

2) Coping-through-pleasure

Exclusively comprised of brands in the fashion, fitness and lifestyle industries, with messages targeted to young and predominantly white women; present luxury goods as means of coping with pandemic through ‘self-care’.

A promotional newsletter for the “athleisure” brand Jolyn depicts a slim and muscular white woman on an inflatable pool float wearing sunglasses and painted toenails. Sunlight appears to reflect off the body of water in which she floats, with a caption advertising a “Bikini for staycation.” The Image and caption present the lockdown, which compelled individuals to stay home from their usual recreational activities, as a “staycation,” an unexpected source of free time at home.

Other coping-through-pleasure messages included advertisements from fashion brands including Anthropologie and Nicole Miller advertising loungewear as “self-care style” and clothing for “virtual dates or happy hours,” as well as make-up brands offering online tutorials for those with “more time (inside) on our hands.”

These messages present the health crisis as an opportunity for women to take a “break” from work outside the home and relax with home-bound versions of their usual recreational activities. They draw on influencer culture, which depicts recreation as a full-time occupation. Coping-through-pleasure offers the chance to purchase some of the influencer lifestyle, where the pandemic is not a stressor, and one can escape at a moment’s notice to a sunlit pool.

3) Coping-through-denial

Targeted widely to all consumers, these messages suggested that consumers shop as though the pandemic were not taking place, or advertised products which made light of the pandemic.

A full page newspaper advertisement in Corriere della Sera, Italy’s mostread newspaper, on 7 March, by two Italian ski resorts, Bormio and Livigno, captioned “Live the mountain with full lungs: There’s a snowy place where feeling great is contagious!”


At the time of advertisement running, lockdown was dissuading tourists from traveling to Italy, putting pressure on ski resorts, while deaths from the respiratory virus – which kills by targeting the lungs specifically – were at their highest in northern Italy, where ski resorts are concentrated.

Other coping-through-denial advertisements included Passports, a travel rewards program, contacting members in mid-March, when concerns about virus spread were focused on cruise ships, to advertise “the best pricing and exceptional bonuses” on celebrity cruises, and online retailers of topical and humorous T-shirts advertising limited range clothing with coronavirus-related captions. Notably, these engagements came broadly from the early weeks of our sample, and brands appeared to shy away from explicitly seeking to make light of the crisis or encouraging consumers to travel in spite of it, by the end of March 2020 when more severe lockdown and suppression measures were in place across Europe.

Implications for Brands

The different types of early Covid-branding in our sample, whether they focus on helping or coping with the pandemic, offer some cautionary lessons for brands.


About Commodifying Compassion

‘Commodifying Compassion: Implications of Turning People and Humanitarian Causes into Marketable Things’ is a research project focused on understanding how ‘helping’ has become a marketable commodity and how this impacts humanitarianism. An international team of researchers funded by the Danish Council for Independent Research (2017-2021), we examine ethical consumption intended to benefit humanitarian causes from the perspectives of consumers, businesses, NGOs and recipients. The research will produce a better understanding by humanitarian organizations and businesses leading to more ethical fundraising, donors weighing consumption-based models as part of more effective aid, and consumers making more informed choices about ‘helping’ by buying brand aid products. To learn more about our work, visit the website.

Download full briefing here


About the Authors

Maha Rafi Atal is a postdoctoral research fellow at the Copenhagen Business School, where her research focuses on corporate power, corporate social responsibility and corporate influence in the media. She is a co- Investigator on the Commodifying Compassion research project. http://www.maha-rafi-atal.com

Lisa Ann Richey is Professor of Globalization at the Copenhagen Business School. She works in the areas of international aid and humanitarian politics, the aid business and commodification of causes. She is the principal investigator on the Commodifying Compassion research project. https://www.lisaannrichey.com


Photo by Colton Vond, “Obey Consumerism,” March 3, 2019. Licensed under Creative Commons CC BY 2.0.

Economics for Life

Time for a New Economics

By Sandra Waddock

Steen Valentin recently pointed out in a BOS blog that we – and particularly economists – need to look beyond Milton Friedman’s famous New York Times argument that ‘The social responsibility of business is to increase its profits’. Friedman’s argument underpins today’s dominant ideology and the economics that shapes it – neoliberalism.

Neoliberalism has a core and often repeated set of tenets or memes – the core building blocks of narratives and of culture (ideas, phrases, words, images, symbols). These well-rehearsed memes include that markets and trade are ‘free’, economic actors are self-interested profit maximizers, free markets will resolve societal problems, responsibility is individual, less government is invariably good, and continual economic growth through globalism is feasible and desirable.

Fundamentally, Friedman stated that the sole purpose of the firm is to maximize profits or shareholder wealth, despite that shareholders are, as Charles Handy long ago pointed out, hardly actual owners of the firm in any real sense.

This narrative completely overlooks both societal and ecological impacts of economic activity because nature is completely ignored, even assumed away.

As former UK Prime Minister once put it, ‘There is no such thing as society’. More to the point, Thatcher also stated, ‘There is no alternative’ to neoliberalism, a phrase that got shortened to TINA – still widely believed today.

There Really Are Alternatives!

Is there really no alternative? Particularly in the era of the Covid-19 pandemic, climate emergency, massive species extinction, and growth global inequality? In a recent paper ‘Reframing and Transforming Economics around Life’ I argued for just such an alternative, and also that economics that supports all of life needs to be the mainstream economic orthodoxy. It cannot be considered ‘heterodox’ or come with a modifier that sets it apart from the mainstream.

That means finding new memes as powerful and compelling as the neoliberal ones they need to replace.

Such thinking, while fundamentally based in economics, also needs to encompass core societal and ecological considerations to reframe how business is done and how economic activity in general is undertaken.

The paper synthesizes six new memes that frame an economics in support of all of life. It draws from a wide swath of economics and other literature (including now ‘heterodox economics’) and supports new approaches like Kate Raworth’s doughnut economics – with a few core memes. The six memes are briefly described below.

Six Core Memes for Economic Orthodoxy in Support of All of Life
  • The first new meme is stewardship of the whole, which means that all economic actors have a shared responsibility for the whole system (or nested set of subsystems) that their activities impact. This meme explicitly recognizes both the broader social – societal – system in which economic activity is embedded – and the natural environment in which societies are intimately, inextricably, and interdependently nested. The good of whole systems needs to be kept constantly in mind, whether that is the good of a whole company, a community, a nation, or the planet itself.
  • Another is Co-creating Collective Value. Here I draw from the pioneering work of Donaldson and Walsh, who stated the purpose of business as creating collective value absent dignity violations. The idea of co-creation invites collective participation in the production of value for the whole system – not just for one stakeholder but for the many that are affected by businesses and other economic actors. Multiple values and multiple stakeholders will inevitably mean new metrics by which to assess economic productivity and activity. Co-creating collective value brings back the original meaning of wealth, which has been corrupted to meaning only financial wealth, but which originally meant health, wellbeing, and prosperity.
  • A third relates to cosmopolitan-localist governance. The idea here is that though we live in a globalized world (and some things will remain globalized), many decisions – economic and other – need to be placed at the most local level feasible. That ensures access, voice, and participation by many more actors, and encourages sharing of ideas, knowledge, and other resources in contextually appropriate ways.
  • A fourth is that of regeneration, reciprocity, and circularity, which acknowledges the interconnectedness and interdependence of humans and nature, and that todays so-called take-make-waste production processes are no longer either truly efficient from a whole systems perspective. Regeneration means that production processes need to allow time for the Earth to regenerate resources that will be needed long into the future. Reciprocity means that trade and exchanges need to be mutually beneficial among other humans and with respect to nature. Circularity embodies the idea that ‘waste equals food’ as frequently expressed by the concept of circular economy.  
  • The precept of relationship and connectedness places human economic and social activity into the full complexity and ‘wickedness’ of its connected and relational socio-ecological context. It recognizes that people are social creatures by nature, who only exist in the context of community. It acknowledges, as the African saying Ubuntu goes, ‘I am because we are’.
  • Finally, equitable markets and trade recognizes that markets exist and are important to meeting real (not manufactured) human needs, and that they need to be fair to all participants throughout the supply chain. That means that products and services need to be fully-costed and priced accordingly – and that all so called ‘externalities’ or negative by-products of production need to be incorporated into prices.

Though far more detail is provided in the actual paper, this brief outline synthesizes some of the core aspects of a framing for economics that has the potential to support all of life, rather than as is the case with neoliberalism, ignoring life and our Earth itself as a living system. It is past time for such a shift in thinking – and core memes – to take place. These ideas are offered as a tentative framework for beginning to reshape economic thinking in the direction of what works for all of life – wealth in its original meaning!


Further Reading

Sandra Waddock, Reframing and Transforming Economics around Life, Sustainability, 2020, 12, 7553; doi: 10.2290/su1218755


About the Author

Sandra Waddock is the Galligan Chair of Strategy, Carroll School Scholar of Corporate Responsibility, and Professor of Management at the Carroll School of Management, Boston College, Chestnut Hill, MA USA. Her research interests include large system change; management education; cross sector collaboration; corporate responsibility; and social and organizational change.


Photo by Echo Grid on Unsplash

Is Tourism an Essential Industry?

Can it really be true that we don’t need to travel?

By Elizabeth Cooper

The COVID-19 pandemic has dramatically highlighted those workers and industries which we rely on in a time of crisis such as this – and those which we don’t. In a world in which doctors and nurses work extended hours to ensure our vulnerable citizens get the best possible care, workers in the food service industry expose themselves daily to give us access to food, and epidemiologists compete to break new medical ground with a reliable vaccine, the tourism industry has, understandably, taken a back seat. But as we desperately envision a post-pandemic utopia in which we will have supposedly learned from the lessons of the pandemic – can it really be true that we don’t need to travel? 

How do we define an essential industry?

So what actually is an “essential” industry? According to the Cambridge English dictionary, an essential industry is “an industry that is considered necessary for a nation’s economy”. Knoema.com has a neat map showing the percentage of national GDP made up by tourism for (almost) all countries of the world, and the figures vary greatly, as might be expected. On a global scale, tourism in 2019 was reported to account for 10.3% of global GDP, and 1 in 10 jobs around the world. Although there are no official numbers on exactly what percentage of GDP qualifies an industry as essential, 10% is surely significant. 

Source: lectrr.be

In a rather provocative blog post in July this year, tourism academic Jim Butcher argued against the ‘degrowth’ of the tourism industry – a movement that many propagators of the ‘new normal’ rhetoric have been calling for. He emphasised the impact of tourism standstill specifically on low-income citizens, who are more likely to work in the industry. Butcher writes:

The lesson of COVID-19 is surely that “undertourism” is a far, far bigger problem [than overtourism]. From Margate to Marrakech, Miami to Massawa, the poor are hit hardest. The UN has predicted that COVID-19, or the response to it, could lead to hundreds of millions of people becoming impoverished.

As wealthy, Western tourists, we travel in our leisure time, with our ample disposable income and our agreeably emblazoned passports. To be a tourist is certainly a privilege that is not available to everyone. From this perspective, tourism is a luxury and is non-essential. But from the perspective of those who rely on tourism’s low-paying service jobs to feed their families, it is absolutely essential.

Is tourism just an industry?

Part of the reason for this misalignment in perspectives is the framing of tourism as an industry and only that. If tourism is nothing more than an industry, then a tourist is a simple consumer, who consumes a destination. The negative connotations of this (not to mention the mental image!) are almost too much to bear.

All industries are essentially about people, but tourism perhaps more so than most, since many of its products themselves are encounters between people of different cultures.

Tourism, therefore, is much more than an industry – it is a social process with a plethora of complex implications. And contrary to the beliefs of many, a lot of these implications are positive. A good example is the wildlife tourism sector, where there are numerous cases in which the conservation of a destination relies heavily on philanthropic donations by tourists (Powell & Ham, 2008Ardoin et al., 2016).

On a more general level, tourism fosters understanding and awareness, and a world (permanently) without travel is arguably an even scarier prospect than the instability we are living in today. Few articulate this argument more powerfully than Taleb Rifai, former Secretary-General of the UNWTO.

He argues that the reason we care so much today about the negative impacts of tourism is because we are more aware than ever before – and that we should be grateful for this heightened consciousness. It is largely international travel itself that has enabled this increased awareness – nowadays, it is easier than ever before to have real connections with other cultures. And real connections create genuine concern. Rifai argues that this should be seen as progress, and that ceasing to travel would be counterproductive. Here, he’s talking in the wake of recent terror attacks in 2016, but the sentiment is valid today:

It’s very important for us never, ever to allow these forces of darkness to win the battle. That’s exactly what they want us to do. They want us to stop traveling. They want us to build walls, they want us to close borders, want to isolate us from each other and they want us to hate each other. That’s why they’re targeting tourism.

The notion of degrowth supported by ‘new-normalists’ can be realised in ways which still create value for economies that rely on tourism. Tourists can travel less frequently and less far and still provide increased value for destinations. Fewer tourists who create more value for destinations is the kind of regrowth we should aim for.

The argument for tourism being not just an essential industry, but also essential to society, is perhaps best expressed by a quote that is attributed to Mahatma Gandhi (and which also happens to be a strong candidate for my next tattoo): 

“Travel is the language of peace.”


References

Ardoin, N.M., Wheaton, M., Hunt, C.A., Schuh, J.S. and Durham, W.H., 2016. Post-trip philanthropic intentions of nature-based tourists in Galapagos. Journal of Ecotourism, 15(1), pp.21-35.

Powell, R.B. and Ham, S.H., 2008. Can ecotourism interpretation really lead to pro-conservation knowledge, attitudes and behaviour? Evidence from the Galapagos Islands. Journal of sustainable tourism, 16(4), pp.467-489.


About the Author

Elizabeth Cooper is a PhD Fellow at Copenhagen Business School, within the Department of Management, Society and Communication. Her research aims to link the fields of behavioural science and tourism, by experimenting with strategies to ‘nudge’ cruise tourists into behaving in more sustainable ways, specifically in the ports of Greenland.


Photo by KaLisa Veer on Unsplash

Tax havens, COVID-19 and sustainability

By Sara Jespersen

At CBS we will host a workshop and two public events (see below for sign up) on corporate tax and inequality next week 24th – 26th June 2020 – the COVID-19 crisis has underlined the pertinence of this topic in major ways.

Taxation, tax havens and corporate tax have been high on the agenda for a while. Since the outbreak of the global financial crisis of 2008 corporations seeking to minimize their tax payments have been under close watch from the media, civil society and politicians with a focus on ensuring that corporations pay their “fair share”. The OECD and the EU have gone to quite some length to try to stop tax-optimizing behavior through revising and modernizing existing rules and legislation. In collaboration with the IMF and the World Bank they have invested time and resources in strengthening tax systems, governance and improving domestic resource mobilization in low- and middle- income countries. This work is ongoing and corporate taxation is already high on the list of priorities for the world community. But then along came COVID-19.

Taxation is central in two ways when we reflect on the pandemic and what will follow. Firstly, governments have passed historic economic recovery packages to ensure that the private sector stays afloat and to avoid mass lay-offs during the lockdown period in 2020. The question is what can we expect in return? Secondly, the emerging discussion on the disruption caused to national economies should be thought into long-term solutions for sustainability including tax.

“Tax haven free” recovery packages

Poland and Denmark, followed by Italy, Belgium and France have attached an explicit conditionality to their COVID-19 state support that companies cannot be registered in tax havens.

In light of this clear conditionality, there has been a media storm in Denmark, when a journalistic investigation revealed that several companies that government support had an ownership structure that was associated with tax havens and with a consumer outcry on social media. This prompted one of the companies, a well-known bakery “Lagkagehuset”, to take out full-page advertisements in daily newspapers to counter the criticism and explain the company structure. The CEO also did a lengthy interview on the issue of the company’s ownership structure to a major daily newspaper. 

Two immediate takeaways can be drawn from this:

  1. It has revived the discussion about the usefulness of tax haven blacklists (see more on this by CBS professor Leonard Seabrooke in Danish).  Which countries should be on them, and what does it mean if you as a business (or individual) are associated with a tax-haven on such a list? One thing is clear, measures to push countries into greater cooperation will not in itself comprise a substitute for measures to make companies act responsibly.
  2. It has emphasized the importance of corporate governance including a reflected approach to responsible corporate tax practice. The fact that there are so-called tax havens out there warrants companies and individuals to decide how or if they want to be associated with these. If yes, companies must accept that they may be liable to critique and journalistic and even political inquiry into what that association means. It should come as no surprise that association with these jurisdictions may entail suspicion.

Tax havens are not the only concern in relation to companies’ environmental, social and governance (ESG) behavior in this pandemic. The financial times reported how NGOs and investors are challenging shareholder primacy as it leads to growing inequality. Corporate governance and ESG, including tax, is now more than ever one to watch for companies that wish to be part of a sustainable business community in the short-term and the long-term.

Opportunities in the long term

Recovery packages are short-term measures. However, in the long term,  the pandemic offers an opportunity that must not be missed in terms of taking a serious look at which direction our global society is heading.

While the pandemic, in theory, cannot tell the difference between the poor and the rich, it is clear that the existing inequality in our society is all made acutely visible during COVID-19. In the US more than 40 million have lost their jobs during the pandemic.  In Sierra Leone, there is allegedly just 1 available ventilator in the entire country (for a population of 7 million, where Denmark has more than 1000 ventilators for a population of 5.8 million).  As for the gendered impacts even for the better off, there are indications that women are less able to find time to prioritize research and publishing during the crisis than men are (). While big tech companies look to come out of this crisis more profitable and, possibly, powerful than ever.

These are just examples of how inequality is front and center in this crisis and how it offers an important opportunity to consider if the direction we are heading in is where we want to go.

With many countries having been in a complete]  lockdown and economic activity at a standstill, this presents a unique opportunity to truly rethink how well the existing economy has worked for our societies and planet. The city of Amsterdam in the Netherlands has seized the opportunity to embrace the concept of the doughnut economy and the OECD is arguing that it makes discussions about challenges of digitalization of the economy and a minimum level of tax for MNEs more pertinent.

Tax is the central tool for governments to raise revenue and engage in redistribution. However, it is much more than a technical tool in an administrative toolbox.

It is the modern social contract for individuals and businesses as highlighted by the discipline of fiscal sociology. Short term, long term, whichever way, you approach it tax should, and will, play a central role in the debate about where we want to go from here towards a more sustainable, and more equal, future.

It provides a key source of revenue to finance vital public services, it can act as an explicit redistributive tool central to fighting inequality, and if used wisely, it can incentivize the behavior of corporations and individuals including the transition to more sustainable practices. Some of these things will be discussed at CBS in June.

A timely workshop on corporate tax and inequality

At CBS we are hosting a timely interdisciplinary workshop as a collaboration between the department for Management, Society and Communication, CBS center for sustainability, and the Inequality platform on corporate tax and inequality. We are bringing together researchers from around the world to meet (virtually) and discuss different pieces of research emerging on this relationship. We have legal analysis, economic modelling, qualitative analysis of tax administration efforts, and sociological analysis of tax professionals and wider societal tendencies on the agenda.

Our keynote speaker Professor Reuven Avi-Yonah will give a (virtual) public lecture (SIGN UP HERE) on Thursday 25th of June 2020 at 14:15 CET. He will speak to the short, medium and long term revenue options in light of the pandemic including a chance for a Q & A. He is a renowned scholar and has published widely on international tax, history of the corporate form, and CSR and tax among other topics.

 The workshop concludes on June 26th 2020 with a (virtual) practitioner panel to discuss knowledge gaps (SIGN UP HERE) from the perspective of professionals of various disciplines. Bringing together professionals from media, NGOs, tax advisory services, tax administration and business. This is likely to be a lively debate with the aim of furthering the CBS tradition of engaging the private sector on what could be fruitful avenues for further research in this axis of relevance between tax and inequality.


About the author

Sara Jespersen is a PhD Fellow at Copenhagen Business School. Her research is on the emerging relationship between responsible business conduct and corporate tax planning of multinational enterprises. In a complex governance context, there are now signs of corporations’ self-regulation and the emergence of voluntary standards. Sara is interested in what this means for our understanding of corporations as political actors and the notion of political CSR.


Image by pickpik

Supplier perspectives on social responsibility in global value chains

By Peter Lund-Thomsen

Worldwide there is now a search for new ideas, business models, and innovations that can help us in rebounding from the global impact of COVID-19 and bring our planet and world onto a more sustainable future trajectory. One of the areas where this is evident is sustainability in global value chains where we have seen a global disruption of world trade in ways that have affected not only global brands but also suppliers and workers around the world. Some observers argue that this will result in a global backlash against attempts at making global value chains, for instance, the global garments and textile value chains, more sustainable. I.e. that COVID-19 will make brands and suppliers sacrifice long-term sustainability considerations at the expense of short-term business survival.

In my understanding,however, what these recent events demonstrate is not so much the need for new innovations and “thinking out of the box” but rather considering how the current organization of global value chains and thinking around sustainability have overlooked the importance of “supplier perspectives” on what social responsibility actually means in these chains. Amongst many practitioners, especially in the Nordic countries, there has been a tendency to assume that global brands’ adopting corporate codes of conduct and sustainability standards, asking value chain partners (i.e. suppliers) to implement these, and then auditing for compliance as well as helping suppliers to build capacity to enforce these guidelines would be sufficient.

The case of Bangladesh illustrates why this approach is insufficient. First, many brands have cancelled their orders with Bangladeshi garment suppliers, leaving local factories at the verge of bankruptcy, and hundreds of thousands, if not millions of workers at risk, potentially without any income to support themselves and their families. Second, even with orders that have been completed, some brands have refused to honor their contracts and either not paid for the goods received, substantially delayed payments, or asked for discounts on present or future orders from suppliers.

Globally, there has been condemnation of these “unfair” trading practices by both suppliers themselves (particularly in Bangladesh but also highlighted via social media) and also international labor advocacy organizations.

And third, the level of outrage is so strong that the Bangladesh Garment Manufacturers and Exporters Association has allegedly been considering placing a ban on particular brands so that they may not source garments from Bangladesh in the future as they have largely failed to live up to their “buyer” responsibilities towards suppliers and workers in Bangladesh.

To me, a key lesson learned from these events is that global brands, business associations, labor advocacy organizations, NGOs, researchers and students can no longer simply “overlook” supplier perspectives on social responsibility in global value chains.

The only realistic way forward is to take account of the concerns of these suppliers if global value chains are to be more resilient in the long run.

Many of these supplier concerns are already well-documented but tend to be either ignored or discarded by “global North stakeholders” in their policies, practices or discourses more broadly – for instance, in how they conceive and talk of sustainability in sustainability conferences around the world.

Just to recap some of the main points that we have learned from studies of supplier perspectives on social responsibility:

a) The factory manager dilemma – e.g., factory managers and owners – for instance, in the global garment industry – have had been asked for continuous price declines by many of their buyers while the same brands have asked for increased levels of social compliance at the same time.

b) The same dilemma arises when factory managers are asked to provide living wages around the year by their buyers when demand is seasonal and price competition is fierce in the global garment industry. For most suppliers having workers sitting around idle for part of the year is not a viable business option.

c) In addition, there is a general unwillingness amongst most (but not all brands) to co-finance – for instance, 50% – of the necessary social upgrading of factories in countries such as Bangladesh. Hence, brands tend to push “social responsibility” onto their suppliers rather than co-investing in and jointly bearing the costs of these improvements themselves.

d) Profits earned from selling goods sold to end consumers in the global North remain highly unequally shared amongst the (ironically called) value chain partners – often with suppliers winding up with 10-20 percent of the value of final retail price.

e) In addition to this, global North (read: Scandinavian) stakeholders including brands, government representatives, NGOs, students, and others often perceive “sustainability” in value chains as mainly relating to environmental and (to a lesser degree) social responsibility in the value chain. Hence, the general talk often seems to be about how suppliers should make environmental and social investments without considering the need for addressing existing inequalities – i.e. unequal distribution of value in these chains – and the business aspects of running supplier operations. In fact, for many suppliers in countries such as India, Pakistan and Bangladesh, sustainability is first and foremost related to “economic” or “financial” sustainability. Only when suppliers are profit-making can they afford to invest in social and environmental improvements. This is not exactly rocket-science but a point that often seems to be completely overlooked by Scandinavian “sustainability” advocates.

f) Finally, what is sometimes considered “social responsibility in global value chains” in the global North might be narrowly defined as the payment of minimum wages, overtime payment, social insurance, and the implementation of occupational health and safety measures in supplier factories. Of course, I am all for supplier factories implementing these measures. However, I also sympathize with many suppliers, NGOs and other stakeholders in the global South that point to other aspects of social responsibility that may be more contextualized.

For instance, in South Asia, many studies have pointed to factory managers helping to finance the education/school fees of the children of some of their workers. Financing the weddings of young workers or the weddings of the sons/daughters of their workers is another sign of social responsibility amongst many factory owners in South Asia.

From a Scandinavian perspective, this may not be related to “social responsibility”.

However, in the sub-continent, where your wedding day is often considered the most important day in your life, and very important for your family’s wider social standing in society, employers’ financial support may be seen a very valid act of practicing “social responsibility”.

Providing tea to your workers may also be considered an act of “social responsibility”. Again – from a Scandinavian perspective – this may not be considered a big act of social responsibility. However, then again, is it really that difficult to understand? How many of us in Scandinavia do not value it when our own employers provide us with free tea or coffee? It gives us the opportunity to socialize with our colleagues or take a much needed break between different work tasks. Why should it be any different in countries such as India and Pakistan where tea drinking could almost be considered a national sport?

Moreover, some factory managers in South Asia allow especially young mothers or women with even slightly older children the option of either working part-time (when the kids are in school or someone else is at home to take care of them) or engaging in home-working so that they may look after their kids while engaging in for instance (embroidery) whenever there is a free moment. Of course, I do recognize that home-working is also often associated with receiving very low wages and not having any social insurance.

However, during COVID 19, even in the Scandinavian context, homeworking has become an absolutely essential part of keeping private companies and public institutions afloat crisis under such compelling circumstances. It has also involved many challenges for families with young children who had to engage in home-based work (typically computer-based) and taking care of their children simultaneously.

Yet if homeworking is indeed not only allowed but also encouraged by most employers in Scandinavia, why it is that brands in the global North sometimes impose an outright ban on their suppliers outsourcing particular work tasks to “home-based locations”?

No wonder that many factory owners and managers in the global South believe that global brands practice double standards when it comes to their social responsibility requirements (i.e. ‘do as I say but not as I do’).

In conclusion, there seems to a great need in Scandinavia for raising our own levels of awareness about the commercial challenges faced by suppliers and acknowledge the myriad ways in which “social responsibility” may be thought of and practiced – of course, without throwing out the baby with the bathwater. Compliance with core labor standards remains a key concern, but it is not the only way of conceiving of supplier responsibility in global value chains.


About the author

Peter Lund-Thomsen is Professor at the Department of Management, Society and Communication at Copenhagen Business School. His research focuses on sustainable value chains, industrial clusters, and corporate social responsibility with a regional focus on South Asia.


More about Covid-19 pandemic on Business of Society blog:

Building A Better Planet: Toward a Sustainable Post-COVID-19 Society

Small, yet important – and still responsible. Reflections on SMEs and social responsibility in times of Covid-19

How the pandemic can reset cities and transform aspects of urban mobility

The Coronavirus Pandemic – and the Consequentiality of Metaphors

Sustainable Development, Interrupted?

The Political Economy of the Olympics – Misconceptions about Sustainability

Supply Chain Responsibilities in a Global Pandemic

A Green and Fair COVID-19 Recovery Plan

In Movement from Tanzania to Northern Italy to Denmark

How to make food systems more resilient: Try Behavioural Food Policies

Lobbying and the virus – three trends to take note of


Image by International Labour Organization ILO

Building A Better Planet: Toward a Sustainable Post-COVID-19 Society

By Daniel C. Esty

Covid-19 has dominated policy thinking across the world for several months – highlighting our vulnerability to unexpected threats, the fundamental reality of global interdependence, the critical role of science and data, and the value of collaborative efforts in response to a common challenge. And when the short-term public health crisis abates, the middle-term focus will be on economic recovery. But we should think now about the longer term – and the need to build a sustainable society that steps up to another looming threat: the prospect of destabilizing climate change.  Thus, as we rebuild our economy, we must do so in a way that moves us toward a clean and renewable energy future as well as addressing other pressing sustainability issues including air and water pollution, waste and chemicals management, and our depletion of natural resources.

To help launch the conversation about the pathways to a sustainable future, I offer below 10 key elements to consider. These concepts build on the ideas laid out in the recently released book, A Better Planet: 40 Big Ideas for a Sustainable Future, that emerged from a multi-year research and policy initiative at Yale University, where I teach. For more information on the Yale Environmental Dialogue, please see the website.

1 ) End of externalities

A sustainable future requires that we commit to an end of externalities as the foundational principle for environmental policy.  This starting point would require that we implement the Polluter Pays Principle, which means that those who release air and water pollution or greenhouse gases would have to stop these harms or to pay for their pollution.  Likewise, any user of public natural resources – including water for irrigation, forests for timber, grasslands for grazing, or public lands for the extraction of oil, natural gas, or minerals – would be required to pay full price for the resources they take. 

To be clear, making companies pay for the harms they cause will expose some business models as fundamentally unsustainable and only profitable when externalities are not internalized.  These enterprises will have to remake their business strategies or go under.

2 ) Change in systems thinking

We must acknowledge that we live in a highly integrated world, as COVID-19 has so painfully made clear.  Complex human and ecological systems require moving beyond traditional siloes to systems thinking — and regulatory design that links energy, environmental, and economic policies.  More fundamentally, we must accept the fact that we will need to pursue multiple goals simultaneously and learn to do so in an integrated way that accepts the reality that our goals will sometimes be in tension — and thus need to be traded off and balanced.

3 ) Top-down targets & bottom-up implementation

We must recognize that policy frameworks and structures require both top-down targets and bottom-up implementation. This lesson has become plainly evident in the climate change context, where it is now clear that presidents and prime ministers do not control all the levers of society that must be pulled to deeply decarbonize our economy.

 To achieve a sustainable future, mayors, governors/premiers, and other subnational political leaders – who often control economic development, transportation systems, and other key points of policy leverage — must play a significant role in reducing greenhouse gas emissions and building a more resilient society.

Likewise, business leaders – who also make day-to-day choices that profoundly shape the prospect for moving society onto a sustainable trajectory – must also be included in this conversation.  Fortunately, both the 2015 Paris Climate Change Agreement and the UN Sustainable Development Goals (SDGs) expressly acknowledge the need for broader engagement of exactly this kind.  

4 ) New economic model

New policy tools must replace the 20th Century command-and-control regulatory model with economic incentives and other market mechanisms.  While the government mandates of the past have allowed us to dramatically reduce pollution levels compared to five decades ago, further progress depends on price signals and a commitment to making emitters pay for the harm they cause.

5 ) New roles & various actors

Environmental progress must recognize new roles for various critical actors.  Specifically, in decades past, the business world was seen as the source of pollution problems. But today, most corporate leaders recognize the need to be good environmental stewards so as to maintain their company’s social license to operate. They recognize that old notions about the mission of corporations being centered on shareholder primary and the maximization of profits has given way to a stakeholder model in which businesses have responsibilities not only to shareholders, but also to their customers, suppliers, employees, and the communities in which they operate. 

Individuals are also advancing sustainability in new and important ways that go well beyond their long-recognized role as voters. Specifically, individuals today can make a difference as green consumers who make choices every day about which products to buy and which companies are selling sustainable goods and services. Likewise, a growing set of sustainability-minded investors are tracking environmental, social, and governance (ESG) performance metrics to ensure that their portfolios align with their values – and they hold shares in companies that are showing the way toward deep decarbonization and sustainability more generally. 

And some impact investors are putting money directly into sustainability projects and enterprises with an expectation that their funds will make a difference in society as well as a financial return.

  Finally, all of us with a smartphone can serve as watchdogs — capturing and sharing evidence of environmental wrongdoing on social media.  We are also all positioned to offer comments and participate in public environmental debates in many places and ways that were not possible prior to the Internet era.  This expanded access should deepen public participation and improve the diversity of perspectives that get factored into policy decisions.

6 ) Sustainable markets

We need sustainable markets that incorporate new lessons from various emerging fields of science and other emerging academic disciplines. Industrial ecology, for instance, offers new methodologies for mapping the flows of energy and materials across the economy.  In this regard, as we rebuild business in the many sectors devastated by the Covid-19 pandemic, we should look sector-by-sector for opportunities to create closed loop production processes that generate zero waste.  Such a system would focus on water recapture and the reuse and recycling of other materials.

We might, in this spirit, shift away from plastic packaging that generates greenhouse gas emissions as it is produced and too often accumulates after use in the ocean – and move toward fiber-based materials that can be more easily recycled or composted.

7 ) New tools & Big Data

Policymakers have a set of new tools at their disposal that can be deployed in support of a sustainable future.  Big Data, in particular, has abundant applications that can help us to reduce environmental impacts – tracking emissions, identifying best practices in pollution control and natural resource management, and providing metrics that help us to identify policy leaders to emulate and laggards who should be spurred to do better.  And while 21st information and communications technologies have transformed how sports teams pick players, businesses market to their customers, and all of us make purchases, technological solutions have done rather little to reshape the environmental realm.  But recent advances in data analytics, genomics, artificial intelligence, and machine learning all show significant promise for having important environmental applications.

8 ) Ethical foundation

We must build an ethical foundation for 21st Century sustainability that captures the public’s evolving thinking about core values and fundamental principles. Most notably, the idea of environmental justice and concerns about equity and inequality make it clear that our policy programs must pay attention to who benefits from environmental commitments and who gets ignored.

Indeed, who pays for environmental inaction – including lead exposure from aging water pipes or asthma risk when urban air pollution is not abated – has become a fundamental question. 

As we seek to “build back better” after COVID-19, climate change equity issues need to be given a more prominent role – both the intergenerational burden that the build-up of greenhouse gases in the atmosphere threatens to leave for today’s young people and the reality that movement toward a clean energy future will dislocate some communities, industries, and demographic groups in ways that will require transition assistance.

9 ) New ways of communication

We need a new approach to environmental communications and a commitment to translate expert guidance and science to the public in a manner that makes sense to everyday citizens. Tony Leiserowitz and the Yale Program on Climate Change Communication have demonstrated, for example, that political leaders must learn to distill and effectively translate scientific concepts and results to the public.  And as Thomas Easley makes clear in his Better Planet essay “Hip Hop Sustainability,” we need new strategies that bring the climate change conversation to inner cities and other subsets of society in a way that engages those communities in their own language and on their own terms.

10 ) Innovation

Finally, a spirit of innovation must permeate the push toward a sustainable future.  To create an environmental policy framework that is lighter, faster, and more effective than our regulatory programs of the past, we must harness the entrepreneurial capacity and creativity that exists all across the world.  Innovation broadly-conceived has already brought us technology breakthroughs in wind, solar, tidal, wave, and fuel cell power. But we must seek innovation beyond the technology domain. We need to be equally committed to fresh thinking and new approaches to finance and investments in clean energy, government policies and incentives, public engagement strategies, and public-private partnerships. 

Such innovation can reduce the cost of creating a sustainable future and diminish the perceived tradeoff between environmental progress and economic prosperity.

Despite recent challenges, the promise of a more sustainable society seems ever closer, but still just over the horizon.  Progress thus depends on sustainability pioneers who are willing to run out front, innovate broadly, take on risks, accept failures (and redeploy resources quick when unsuccessful pathways are identified), and redouble their commitment to efforts that show promise.

This commentary builds on Dan Esty’s April 2020 virtual lecture at Copenhagen Business School and the University of Copenhagen.


About the author

Dan Esty is Hillhouse Professor of Environmental Law and Policy, Yale School of Forestry & Environmental Studies and Yale Law School


More about Covid-19 pandemic on Business of Society blog:

Small, yet important – and still responsible. Reflections on SMEs and social responsibility in times of Covid-19

How the pandemic can reset cities and transform aspects of urban mobility

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The Political Economy of the Olympics – Misconceptions about Sustainability

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Image by Free images

Small, yet important – and still responsible. Reflections on SMEs and social responsibility in times of Covid-19

By Søren Jeppesen

One thing seems to be clear by now – that we are all challenged by the effects of the Covid-19 pandemic. This includes all enterprises, large as well as small firms. As states and individuals, also SMEs (Small and Medium-size Enterprises) need to figure out how to respond. SMEs constitute the vast majority of enterprises on the Globe, and their response to the current situation, including how they behave in terms of social responsibilities matter a lot. If jobs disappear, or wages are lowered and/or working conditions deteriorate, a large number of persons (employees) and families will be negatively affected. If environmental standards are lowered the nature and humans will be negatively affected.

The perception of what constitutes social responsibilities varies substantially across countries. As SMEs in different parts of the world face very different situations (see Spence et al. 2018), also in times of Covid-19, the responses will be very different. We already witness intense debates on what is the ‘appropriate way’ of reacting. Most SMEs have a less formalized way of operating compared to larger firms. While this is viewed as leading to being less socially responsible compared to large firms this type of organizing – not being so standardized – maybe be is an advantage in an unknown situation like the one that we are witnessing right now. Agility, creativity and ability to make a decision fast could be an advantage right now like the Danish small firms that have adjusted their production to include critical health products show.

However, the examples are probably the exceptions rather than the rule as only a smaller section of the SMEs typically can be characterized like this. The majority of the SMEs are operating in more traditional, standardized ways and have a more limited range of responses as things stand right now.

In our part of the world, governments have implemented numerous support schemes trying to assist the private sector, including SMEs, in various ways. The Danish SME has various public-funded support packages and a highly formalized labour market cushioned by a number of social benefit programs to factor into the considerations. Hence, we can insist that an important part of managing continues to be keeping an eye on working conditions and the environmental impact. In other parts of the world like the developing countries, governments have so far done less and given the much more informal nature of the economies, SMEs are much harder effected.

The Ugandan SME is faced with no economic assistance and a complete lockdown of the society leading to a dramatically reduced – if not totally halted – operation and turnover. In addition, no social benefits exist to assist employees who are losing their job. So, the overarching topic concerns the socio-economic dimensions of how many SMEs that survive while retaining a good number of the staff – or on the more pessimistic side – how many that go down leaving scores of people unemployed and without an income affecting individuals as well as tons of families.

What can we then expect in terms of social responsibilities in such a situation? Given that some developing country SMEs are characterized as having ‘family-like culture’, we would expect such enterprises to retain the employees (Tran and Jeppesen, 2016). Even though the SMEs retain the employees, owners and managers personally have to handle the insecurity that accompanies the situation as well as relating to the concerns among the employees.

The family-like type of organization could ensure that employees are kept and not fired. Still, we know that a number of SMEs pay little if any wages in times of limited production. Hence, having a job with no income does not make a difference right now.

Small enterprises in developing countries are also praised for their community engagement in taking up activities ensuring women (Langevang et al, 2015) or young people income. The localized response may assist in various ways of helping citizens in dire need. Religion and which church that you are a member of play a role. Some churches, as well as the wealthier members (and among these SME owners and managers), come forward to assist their congregation and the less well-off families in times of need. 

We need to wait for the answer to whether and to what extent Covid-19 will be marked by resilience and a protective and more caring (social) response by SMEs – or rather by the tough reality of downsizing and/or closing down with numerous dire consequences.


References

Langevang, T., Gough, K. V., Yankson, P. W., Owusu, G., & Osei, R. (2015). Bounded entrepreneurial vitality: The mixed embeddedness of female entrepreneurship. Economic Geography, 91(4), 449-473.

Spence, Laura J., Jedrzej George Frynas, Judy N. Muthuri, Jyoti Navaret, 2018. Research Handbook on Small Business Social Responsibility: Global Perspectives. Edward Elgar Publishing.

Tran, Angie Ngoc & Søren Jeppesen. 2016. SMEs in Their Own Right: The Views of Managers and Workers in Vietnamese Textiles, Garment, and Footwear Companies. Journal of Business Ethics, 137(3), 589-608


About the author

Søren Jeppesen is Associate Professor at the Department of Management, Society and Communication at Copenhagen Business School. His research concerns the development of firms in developing countries. He focuses on SMEs, CSR and driving forces (or lack of same) for strategies of SMEs in developing countries in engaging in CSR (or not engaging).


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Supply Chain Responsibilities in a Global Pandemic

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Image by US Army Africa

On the Ground: What CSR and sustainability standards fail to address

By Hannah Elliott

In the fall of 2019, there was a flurry of news stories in the British media about political events in western Kenya which, according to one article, threatened the future of the nation’s beloved cup of tea. In Kericho, the heart of Kenya’s tea-growing country, the local community are reclaiming vast tracts of land obtained under British colonialism for the large-scale cultivation of tea. Faced with a land shortage that hinders possibilities for sustainable development, local activists are challenging the extensive land acquisitions that took place under colonial rule, many of which constitute the premises of multinational agri-business today. CSR initiatives and the sustainability standards that are increasingly ubiquitous in Kenya’s tea industry fail to address or acknowledge a sustainability issue that is of major concern to local communities on the ground: land.

During the early 20th century, while trying to create an export economy in eastern Africa, the British government identified the highlands of Kericho in Kenya’s fertile Rift Valley as a place of high agricultural potential and gave out land to European settlers. The area was identified as an ideal place for growing tea, a commodity that was already thriving elsewhere in the British Empire. With the entry of two major companies engaged in tea production in India and Sri Lanka, further land allocations were made, providing the premises for the expansive tea plantations that dominate Kericho’s landscape today.  

Colonial laws enabled these land allocations: the British government could acquire land and relocate the ‘natives’ who were occupying and cultivating it. The Kipsigis community living in the Kericho area lost large amounts of land, only to be compensated with smaller areas of less agriculturally conducive land in designated ‘native reserves’. Others remained in their home areas but were rendered ‘squatters’ required to work for settlers in return for their continued occupation.

Many today struggle to make a living from diminishing farms in the former native reserve areas as family land is subdivided among children, while others remain landless or forced to purchase land at high prices. Land shortage poses a direct challenge to sustainable livelihoods in Kericho.

These grievances are what the Kericho County Governor seeks to address. Identifying as a victim of historical land injustices himself whose ancestral land lies within the vast tea plantation owned by the multinational giant Unilever, he advocates for reparations that acknowledge the forceful acquisition of his community’s land. This implicates multinational tea companies directly. For the Governor and Kipsigis community activists campaigning for justice, these companies are operating on stolen property that rightfully belongs to the community.

Tea plantations employ large numbers of locals in roles that range from tea plucking to top management and offer opportunities and bursaries for adult and child education. While much of the British media coverage of Kericho’s land politics, including an article in The Economist, has envisaged Zimbabwe-like evictions of British companies in Kenya, the Kericho Governor made clear when I met with him earlier this year that it is not in anybody’s interests for the tea companies to hand over the land and leave.

Rather, following recommendations made by Kenya’s National Land Commission, the Governor asks that tea companies apply to the county government for new land leases, following which the land can be resurveyed.  Undeclared acreage, he argues, should then be reverted back to the county government. In addition, the Governor seeks to increase land rent so that the county government is more adequately remunerated for the land.

This, along with demanding mesne profits from multinationals for the use of the land since 1902, is intended to enable more equitable redistribution of the wealth generated from large-scale tea production.

One Kipsigis community activist whom I met envisaged a new model of business: a continuation of plantations’ management and operations, but with the local community, the ‘rightful landowners’, as the major shareholders. This is not to say that all of these proposals are wholly feasible or realistic for tea companies, but to envisage other ways of doing business whereby local communities and authorities are rendered more equal partners.

This goes beyond CSR initiatives which, while valued in Kericho, can be seen as a continuation of colonial paternalism rather than rethinking the very premises of companies’ local engagement. It also goes beyond the certified sustainability standards provided by organisations such as the Rainforest Alliance and Fair Trade that seek to ensure economic, environmental and social sustainability in the tea supply chain yet are generic, driven more by the demands of distant buyers in Europe and North America than those of local communities on the ground.

Undoubtedly, community land claims in Kericho are entangled in local politics. The Kericho Governor’s campaigns are part of a populist political strategy that has seen him win two terms in office. Furthermore, judging by Kenya’s postcolonial history, there is no guarantee that relinquished land or funds would be equitably rolled out to the community should he succeed. Another caveat relates to major challenges facing the tea business in recent years with regard to profitability: at the time of my fieldwork earlier this year, the price of tea hit an all-time low.

The coronavirus pandemic will surely further threaten the industry. In this context, local political challenges of the kind we see in Kericho might push companies to reconsider their operations entirely.  

However, this shouldn’t preclude reimagining the terms of companies’ engagement, not only in Kenya but across Britain’s former settler economies. If large-scale agri-business is to face up to the challenges of sustainability in the places it operates, it must acknowledge the historical grievances attached to the ground beneath it and engage with local communities beyond the confines of CSR and sustainability standards.    


About the Author

Hannah Elliott is a Postdoctoral Research Fellow at CBS’ Department of Management, Society and Communication. Her research on the SUSTEIN project critically examines the production of certified sustainable Kenyan tea.


Image by ©2010CIAT/NeilPalmer

Lobbying and the virus – three trends to take note of

By Dieter Zinnbauer

Writing about anything in relation to Covid-19 is rather hopeless. Any attempt to describe current developments has a half-time of 30 minutes. Any attempt to speculate what lies ahead drowns in the flood of near infinite plausible trajectories. And any and every attempt usually ends up with the hammer and nail problem, resulting in the author pushing his favorite pre-existing policy to ask  as an essential ingredient in the crisis response, much as the whole world looks like nails when you hold the proverbial hammer in your hand.

Nevertheless here a foolish attempt to jot down some small observations of how the Covid situation is currently influencing how businesses lobby government, or in jargon corporate political activity. In a nutshell: there are indications that there is more, that it is more conventional and that integrity in lobbying is more in demand than ever.  In detail:

1) A lot to win and a lot loose means a lot to do or: “Everybody is upside down. All the clients are upside down” (US lobbyist)

Lobbying is typically understood as anti-cyclical as it tends to experience an uptick in economic downturns. Yet this time is a difference in scale and a difference in kind. Covid-19 is an essential threat to a vast array of industries and companies that until a few weeks ago looked very solid. At the same time, the scale of financial support and transformational depth of regulatory responses that are being considered and dispersed are absolutely unprecedented in the post WW2 era.

Existential stakes convert into a sharp increase in lobbying. Recent data shows that lobbying spending in the US has climbed to near-record levels already and the centrepiece of legislation, the Coronavirus Aid, Relief and Economic Security Act is the second most lobbied upon a piece of legislation.

There are new clients – that also fuel the lobbying boom – three quarters of lobbying filings in the US that mention COVID issues are by new principals. And there is a flourishing new service line out there helping companies shape new rule-writing and expedite approval for their anti-corona products. Many are desperate, everyone is out to get a piece of the cake and as even the most adept watchdogs have a hard time with tracking all proposed rule-changes and handouts it may also be a good time to slip in this long-coveted, yet unrelated regulatory tweak in one’s own favour that otherwise might have not withstood public scrutiny.

2) Forward to the basics tools, tactics and incumbents.

It seems likely and there are indications that corporate political activity is for the time being concentrating on tried and tested tools and relations. First, the Covid-19 response is the hour of the executive as the first phases of the policy response are firmly driven by the executive in most countries around the world. Emergency powers are being invoked, far-reaching policies are hastily cobbled together in small committee, and implemented qua executive orders. Ex-ante legislative deliberation is compressed, public consultations are limited and judicial reviews are only slowly kicking into gear.  All this means that lobbying is currently heavily focused pragmatically on very tangible outcomes and the executive branch of government as for example, a top German lobbyist has described in a recent interview.

Expected budget cuts and trimmed client accounts for public relation agencies in the first-affected Asia-Pacific also suggest that more sophisticated upstream strategies for framing and influencing public debates in the longer run are being put on the backburner and efforts are shifting towards core government relations work. Add to this that social distancing measures and going virtual makes it difficult to cultivate new relationships. As a result, existing, networks and long-time friends who may have walked through the revolving door between public office and private practice carry the day dealing substantive incumbency advantages to the already well-connected and established players both in terms of in-house lobbying departments and hired firms.

3) An incipient debate about the fundamentals close to home – and high stakes for integrity

Financial distress and zero-sum dynamics in what are ultimately finite support programs demand maximum resolve when making one’s case to the government. Many more interests than usually have come to the fore to compete for the pie and some of these competitors can be expected to act very opportunistically. All this puts enormous stress on integrity in lobbying. But this comes at a time when the integrity of the corporate political activity is perhaps more important than ever. 

Policy-makers enter into uncharted territory with many of their interventions and stabilization efforts. Peak uncertainty means they need accurate information on the situation of different interests and stakeholder groups and how they may be affected by different policy options. Policy-makers need more of this information more urgently than ever. Extreme fragility means that the consequences of mis-judgments are substantive.

All this highlights how important the honest, proportionate, evidence-supported articulation of interests and concerns to government is at this moment in time. In the eye of the public business appears to be largely failing in this area. Less than 40% of respondents in a very recent 11-country survey – the spring update to the 2020 Edelman Trust Barometer –  perceived business to be a reliable source of useful and accurate information during the pandemic, a number that dropped to even more staggering lows of 24% and 15%  in France and Japan respectively.

Yet, the relevance of credibly upholding integrity in lobbying goes even deeper. The specter of special interests hijacking the Covid response looms large as a tremendous PR nightmare. Such a storyline is ready to combine with the bitter aftertaste of the last financial crisis response that many perceived to be undermined by strong industry lobbying. The prospects of a special deal for special interests could thus further inflame the very anti-business sentiments that are already on the rise: in the same survey as referenced above respondents put business CEOs last when thinking which types of professions and leaders do a good job in meeting the demands the pandemic puts on them, while only 38% thought business did a good job in putting people before profits.

Pushing public opinion that is already at the edge further into the negative territory through reckless corporate political activity looks like a bad idea even from a narrow tactical perspective. This is because another fallout from Covid is an emerging public debate about the basic bargain between business and the public and the increasing readiness to consider options for a fairer settlement that until recently seemed to have difficult to find acceptance in the mainstream.

The 11-country Edelman survey again captures some of these sentiments: a remarkable 64% of people agreed with this statement:

“This pandemic has made me realize how big the gap in this country is between the rich and the working class, and that something must be done to more fairly distribute our country’s wealth and prosperity”

Massive public financial support is a great lever for updating the social licence to operate for the corporate world. This is not a theoretical possibility but has already become a reality. Widely discussed provisions to bar companies that engage in overly aggressive tax planning or pay out dividends in times of crisis from benefiting from post-Covid support is one example. So is the observation that a debate about the legitimacy of share buy-backs that despite its policy relevance was more or less confined to the fringe of experts and specialized advocates all of a sudden features prominently in the policy mainstream. It has even prompted the European Commission to require a ban on share buybacks as a central condition when government prop up companies by acquiring equity ownership.

This public limelight for a seemingly arcane issue is well deserved considering that for example the top airlines in the US that are currently clamoring for public support are estimated to have spent 96% of their free cash flow during the last decade on share buybacks and built no meaningful reserves to weather a major crisis, a strategy termed by a banker from a top firm as “a staple arrow in the quiver of companies… to optimize how they drive the most value for their shareholders”. From a corporate lobbying view not particularly productive narratives to feed any more.

Many, including this author, view this as a much needed and welcome conversation about how to refresh the principal compact between business and society in view of sharing the benefits and costs from business activity fairly and within planetary boundaries. Business will not do itself a favor when flexing its lobbying muscle too hard for special treatment at this point in time when the public is increasingly prepared to doubt and revisit the basic tenets of this compact.

Responsible corporate activity, transparent, well-governed and aligned with purpose, planetary boundaries and broader regards for all stakeholders is not a nice add on for good times. It is essential to protect the public trust in functioning institutions, functioning crisis response and a functioning societal bargain with business. This is not the time to call in special favours and push a narrow agenda. This is the time to do act as a responsible corporate citizen on all fronts and particularly when it comes to government engagement.

Now there it is:  my policy agenda framed as essential in Covid times. The whole world looks like nails when you have a hammer in the hand.  But in this instance, of course, it is for real.


About the author

Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS research focuses on business as political actor in the context of big data, populism and “corporate purpose fatigue”.

Twitter: @Dzinnbauer

Essays: https://medium.com/@Dzinnbauer

Working papers:  https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1588618


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The Coronavirus Pandemic – and the Consequentiality of Metaphors

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How to make food systems more resilient: Try Behavioural Food Policies

Photo by Dieter Zinnbauer

How to make food systems more resilient: Try Behavioural Food Policies

By Lucia A. Reisch

The vision of healthy and sustainable food systems that facilitate appropriate food choices by individuals is gaining momentum in practice and in the marketplace. As the single strongest lever to optimize both human health and environmental sustainability, the food choices we make matter in multiple ways – for our bodies, the environment, and the economic and social fabric of societies. Acknowledging and actively harnessing co-benefits of “win-win diets” is a major focus of current food, farm, environmental, and health policy that aims to positively influence consumer behaviour. A behavioural turn in food policy that puts individuals and their choices at center stage holds promise for manifesting the vision of healthy and sustainable food systems.

As we collectively ponder lessons learned from the coronavirus pandemic, a key aspect will be to consider how to increase resilience of societies and economies in general and food systems in particular, to better endure a crisis in the future.

The Food and Agricultural Organization (FAO) defines resilience as ‘the ability to prevent disasters and crises as well as to anticipate, absorb, accommodate or recover from them in a timely, efficient and sustainable manner. This includes protecting, restoring and improving livelihood systems in the face of threats that impact agriculture, nutrition, food security and food safety.’ [1]

Food chains today are long and globalized, and retail systems are streamlined for efficiency with just-in-time inventories, all adding to the vulnerability of systems. While the basic food provision in Europe continued during the pandemic (not least due to the availability of local food chains), cracks appeared at the retail level with shortages of staples. Admittedly, many shortages were due to stockpiling by frightened people – a behavioural factor rather than a reflection of true supply shortages. One can speculate now that if the crisis were to continue, other dependencies (for instance, on mostly Eastern European farm workers for harvesting) will become obvious.

In a healthy and sustainable food system, the products that are grown, processed, and distributed are health-supporting, safe, environmentally and climate friendly; farmers and laborers work for fair wages under decent conditions; and on the demand side, equal and easy access to affordable, healthy, and sustainable diets as well as nutrition security are provided for today’s and future generations. This sounds like a utopia but it is our future.

The EAT Lancet Commission on Healthy Diets for Sustainable Food Systems recently defined a concrete healthy reference diet that, if applied, can be provided “for an anticipated world population of nearly 10 billion people by 2050 and still stay within a safe operating space on Earth” (Willett et al. 2019).

Balanced and sustainable food systems that stay within the planetary boundaries and provide a minimum level of safety, access, and equity are doubtlessly more resilient – i.e., more robust in times of shocks and crisis – than lean, efficiency-maximizing, far-flung global supply systems. The advantages and necessity of system resilience are likely to constitute one big learning from the pandemic.

Another big learning is that consumer-citizen behaviour is much more malleable and adaptive than many policymakers (and researchers) had thought. People are able and ready to quickly change deeply ingrained habits, adopt new practices (social distancing, home cooking), and adhere to new social norms (wearing masks, hand washing) if – important qualifier – the reasons seem (scientifically) sound, are limited to a bearable time span, and are well explained by a trustworthy government.

Some governments (Sweden, e.g.) rely on voluntary action and “nudging” alone; others (Germany, e.g.) combine harsh bans, intense risk communication, and behaviourally informed policies such as warnings, framing, priming, reminders, defaults, and boosts. We don’t know yet which strategies will work best, but it has already become clear that much can be achieved by using behavioural insights, calling on the responsibility of people, giving positive feedback and reminders, and harnessing the power of (dynamic) social norms and peer pressure.

In the words of the great Danny Kahneman: good policy needs to activate both types of people’s decision-making: the quick, intuitive, emotional “System 1” and the slow, cognitive, deliberate “System 2”.

It is not a new idea that insights into the biases and heuristics, the habits and motivations of consumers can be useful to design effective policies. This is the essence of the new field of Behavioural Public Policy that constitutes these days an International Association of Behavioural Public Policy. The evidence is increasing that a behavioural approach can indeed help design better food policies. What we call Behavioural Food Policy puts people’s needs, biases, and decisions at center stage, offering a specific behavioural lens to existing (hard and soft) policies that can make them more effective. It relies on governance processes that are based on empirical, often experimental testing, learning, and adapting. Public deliberation and participation in these processes help consumer-citizens understand and eventually approve of the policies. This potential of behavioural policies to shift habits and food demand is under-utilized but growing.

This approach is echoed by the global climate change community in the Intergovernmental Panel for Climate Change (IPCC) upcoming 6th Assessment Report. [2] The report identifies two major behavioural changes that substantially mitigate greenhouse gas emissions: avoiding food waste and dietary shifts to plant-based nutrition. As to the former, simple behaviour such as meal planning and creative use of leftovers can help reduce food waste on the individual level; retail can adjust its marketing, and regulators can improve the handling of expiration labels and best-before dates. Regarding the latter, reducing (mainly ruminant) meat consumption and substituting animal protein with field-grown protein are seen as major steps. A diet light in meat is better for one’s health, leads to greater animal welfare, helps reduce food-borne diseases and food crisis, and produces less greenhouse gas emissions. Because individual choices are the basis of any healthy and sustainable food system, understanding and influencing consumer behaviour is a promising route to achieving sustainability, resilience, and healthfulness of our food systems and society generally.


References

[1] http://www.fao.org/emergencies/how-we-work/resilience/en/.

[2] The author is a contributing author to this IPCC AR6 chapter.


About the author

Lucia A. Reisch is Professor of consumer behaviour and consumer policy at the Department of Management, Society and Communication (MSC) within the CBS Sustainability. Her research focuses on behavioural economics, behavioural public policy, sustainable consumption (in particular, energy, food and health, active mobility and fashion), intercultural consumer behaviour, consumers and digitization, as well as consumer policy.


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The Coronavirus Pandemic – and the Consequentiality of Metaphors

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The Political Economy of the Olympics – Misconceptions about Sustainability

Supply Chain Responsibilities in a Global Pandemic

A Green and Fair COVID-19 Recovery Plan

In Movement from Tanzania to Northern Italy to Denmark


Photo by Chad Stembridge on Unsplash

A Green and Fair COVID-19 Recovery Plan

By Stefano Ponte

This article is based on his previously written piece for the Centre for Business and Development Studies.

The COVID-19 crisis has made evident the limitations of existing thinking, preparedness and policy in relation not only to health pandemics but also to the sustainability challenges we face, locally and globally. Contemporary capitalism, with its hyper-individualistic culture and just-in-time – instead of just-in-case – approach to infrastructure and essential equipment, is not geared towards solving global problems that require coordination, cooperation and solidarity. As some activists, scholars and medical personnel have stated recently, ‘We don’t need heroes if we have preparation’.

Clear examples that have emerged with particular force in the past few months include the political inability to coordinate emergency responses within the EU and the US, cut-throat competition among countries seeking to procure essential medical gear, and the realization that we have been undermining the working conditions for ‘essential workers’ for decades. Therefore, an expansive economic stimulus to restart the economy during/post-covid-19 cannot be based on the first-line response of capitalism – restoring production and consumption back to ‘usual’.

This is the time to expand and rethink our socio-economic models to stimulate a more sustainable approach to consumption – not limited to consuming more sustainable goods and services (such as organic milk, ecotourism holiday or FSC certified timber), but also on consuming less.

We need to rethink the current organization of the global economy, reform the national economic and political institutions that govern it and devise new forms of governance and collective action within states and across borders. Contemporary hyper-capitalism, rather than humanity per se, is the root cause of the global sustainability crisis and the spread of pandemics – and thus should be the focus of action.

To achieve this, we need a different kind of ‘green entrepreneurial state’ that de-couples sustainability from growth, and that does not intervene to bail out carbon-intensive industries tout court. Oil markets have tanked in recent weeks, and $0 (or even negative) oil prices are devaluing oil industry assets dramatically. A green and just recovery in the oil industry transition means focusing on helping workers first and foremost, rather than executives or shareholders. This could entail partial nationalization of assets to essentially shut the oil industry down in the mid-term and open the way for further investment in renewables, which would otherwise be dampened by competition from cheap oil.

Second, what we need is more community involvement in the economy, changes in labour law to make unionization easier, tax reforms to make municipal and cooperative forms of organization more attractive, corporate regulation to facilitate employee ownership, and stimuli to expand the radical and democratic ecological experiments that are already in place – such as the shared living communities that have been active in Denmark since the 1970s.

Third, important insights for a recovery plan can be offered by the idea of ‘just sustainability’, which incorporates ‘the need to ensure a better quality of life for all, now and into the future, in a just and equitable manner, whilst living within the limits of supporting ecosystems’. Therefore, a path towards recovery during-and-post COVID-19 needs to address inequality – as it drives competitive consumption and leads to lower levels of trust in societies, making public action (including under a pandemic) more difficult. Excluding companies from recovery funds which have made use of tax avoidance tools is one of the necessary steps. But broader and collective actions to stamp out tax heavens are needed more than ever.


About the author

Stefano Ponte is Professor of International Political Economy at Copenhagen Business School and Director of the Centre for Business and Development Studies. His latest book Business, power and sustainability in a world of global value chains was published by Zed Books in 2019.


More about coronavirus pandemic:

The Coronavirus Pandemic – and the Consequentiality of Metaphors

Sustainable Development, Interrupted?

The Political Economy of the Olympics – Misconceptions about Sustainability

Supply Chain Responsibilities in a Global Pandemic


Photo by Edwin Hooper on Unsplash

Supply Chain Responsibilities in a Global Pandemic

By Jette Steen Knudsen, Erin Leitheiser, Shaidur Rahman & Jeremy Moon

What is the responsibility of Western retailers to the workers who make their garments as the coronavirus forces factories to shut down?

Shopping malls are closed, gatherings are banned, thousands of employees have been furloughed, and movement outside of one’s home is discouraged if not outright illegal.  This has meant bad news for apparel brands and retailers as nervous customers cease buying. In the U.S., for example, retail sales in March were down almost 9% compared to in February.  Those brands and retailers which have built their businesses on a fast fashion model – predicated on the continuous churn of high volumes of cheap clothes – face unprecedented challenges and questions about responsibilities in the face of the COVID-19 pandemic. 

Retailers have responded in different ways.  As they have had to shut down their stores many have stated that they will not pay rent. For example, German sportswear producer Adidas stated (March 26 200, Reuters) that

“Almost all over the world there is no normal business anymore. The shops are closed. Even a healthy company like Adidas cannot stand this for long”.

Adidas was one of a string of retailers in Germany that said they wouldn’t be paying their landlords while their stores are closed as part of efforts to stem the coronavirus spread. Adidas said it would need credit even after staff cut their working hours, executives waived part of their pay and the company stopped share buybacks. Adidas’ decision was met with an uproar in Germany eventually forcing the company to formally apologize and to report that it planned to suspend a planned 1 billion euro ($1.09 billion) share buyback in an effort conserve cash after closing its retail outlets in Europe and North America. Adidas also said it would pay rent.

In Denmark, Anders Holck Poulsen, the owner of the clothing company Bestseller and Denmark’s wealthiest man, also announced that the company would not pay rent for its stores. Bestseller (parent company for brands like Vera Moda, Jack & Jones, Pieces, and Name It, among others) later reversed the decision following a public outcry and the CEO went on national television to apologize. Bestseller subsequently laid off 750 employees and sought financial support from the government.  This decision was met sharp with sharp criticism because over the last five years Mr. Holck Poulsen has paid DKK 7.6 billion (more than $ 1 billion) in dividends to his private holding company Heartland.

Not all companies have responded this way. Patagonia, for example, has promised that all of its employees will continue to receive their regular pay during store closures.

However, with many large brands scaling back their social responsibility in the Western part of the world, what kind of responsibility can we reasonably expect from Western retailers in places such as Bangladesh?

Bangladesh is heavily dependent on apparel production. Apparel comprises more than 80% of the country’s total export revenue and the sector employs more than 4 million workers, most of them women.  However, in recent weeks many Western brands have cancelled their orders from Bangladesh, and it is estimated that more than 2 million workers have lost their jobs.  H&M is the largest buyer of garments from Bangladesh and has reluctantly agreed to take and pay for the shipments of goods already manufactured as well as those that are still being produced. Inditex, PVH and Marks and Spencer have also agreed to pay suppliers for orders that are already produced but not all companies have done so. Primark, for example, has cancelled orders, and virtually all buyers have pulled orders that have not yet gone into production.  At the end of March 2020 orders for more than $1,5 billion had been cancelled, and Bangladesh reported -19% year-on-year export volume for the month.

What is the responsibility of large brands like Bestseller or H&M for their supplier factories in Bangladesh? Western brands have a long tradition for stating their commitment to CSR in global supply chains, including elaborate Codes of Conduct for social and environmental performance in supplier factories. Bangladesh has staked its claim as the low-cost producer of garments, and its costs and production capacities cannot be easily matched elsewhere in the world. The model of fast fashion needs Bangladesh, and Bangladesh, in turn, needs fast fashion. 

Now that crisis reigns upon all of us in the form of a global health pandemic, it is the most vulnerable of workers who have been left in the lurch, be it the retails associates who stock shelves or the stitchers who sew together T-shirts.  As buyers cancel orders, few recognize the perilous position that these workers are left in. For those working on the factory floor in Bangladesh, more than 2 million have been furloughed, many without pay, despite a governmental scheme intended to address these issues.  The meagre wages of garment factory workers have not allowed for savings that could support them in such times, and the prospect of long-term closures – or at least, no orders to fill and therefore no paid work – means almost certain disaster for them and their families. 

Garment workers in Bangladesh have risen up in protest, stating that

“…we don’t have any choice.  We are starving.  If we stay at home, we may save ourselves from the virus.  But who will save us from starvation?”

(13 April 2020, The Guardian).

While some brands, like Primark, have set up charitable funding pools to help support workers, the money has yet to make it to their pockets, and the “charitable” framing of this funding on behalf of brands speaks volumes about what they see as their responsibilities.  Yet, when the crisis passes and shopping malls re-open, brands will again be reliant upon these workers to satisfy their demand for an endless supply of cheap garments. 

Given that cheap labor is a fundamental need for fast fashion companies to survive, shouldn’t brands likewise ensure the survival of those on which it depends? 


This is the first in a series of blogs which will further explore the responsibility of the Bangladesh government, factories, Western governments and civil society organizations for dealing with COVID-19 in places like Bangladesh.  


About the authors

Jette Steen Knudsen is Professor of Policy and International Business at the Fletcher School of Law and Diplomacy at Tufts University and holds the Shelby Collum Davis Chair in Sustainability.  She is also a Velux Fellow at Copenhagen Business School where she is part of the Regulation of International Supply Chains (RISC) project

Erin Leitheiser is an Assistant Professor at Copenhagen Business School and Project Manager of the Regulation of International Supply Chains (RISC) project

Shaidur Rahman is Professor of Sociology at BRAC University where he is part of the Regulation of International Supply Chains (RISC) project

Jeremy Moon is Professor of Sustainability Governance and Director of the Sustainability Centre at Copenhagen Business School.  He is the Project Coordinator of the Regulation of International Supply Chains (RISC) project.

Photo by ILO Asia-Pacific

The Political Economy of the Olympics – Misconceptions about Sustainability

By Faith Hatani

In the midst of the global coronavirus crisis, the International Olympic Committee (IOC) and the Japanese government finally decided last month to postpone the Tokyo 2020 Olympics until next year. The general public across the world may have different views on the Olympics – positive and negative, or simply indifference. But with regard to the Tokyo Games, there is a fair reason for not just postponing them but reconsidering their relevance and preferably cancelling them altogether. The ongoing Covid-19 pandemic has underscored the long-standing controversies surrounding the Tokyo Olympics, and it is indeed sustainability that is at stake.

Economic problems in the host country

A tag line that Tokyo, the host city of the 2020 Olympics, has been using is “Recovery Olympics” for a sustainable future. The “recovery” is primarily referring to the recovery from the 2011 earthquake and tsunami, and the ensuing nuclear disaster in Fukushima, a city in northern Japan. When Tokyo was successful in its bid to host the Games, it estimated that the market effect of the Olympics and Paralympics would be more than JPY 32 trillion in total, which would be a huge boost to Japan’s shrinking economy. Clinging on to this rather optimistic figure, the IOC and the host government were reluctant to make any change to the original schedule in spite of the coronavirus pandemic, and their attitude was criticised as “wildly irresponsible” (Boykoff, 2020).

Besides the cost-benefit analysis of the Tokyo Games, it should be noted that, as of March 2020, nine years after the Fukushima disaster, approximately 48,000 people were still living in evacuation zones in Japan. Despite this, a huge amount of money has been spent on constructing new facilities for the Olympics, rather than aiming to reconstruct “sustainable cities and communities” (Sustainable Development Goal (SDG) 11) in the disaster-hit northern city. Meanwhile, the Tokyo Olympics has been the most over-budgeted Games ever, because of Tokyo’s lax policy.

Postponing the Olympics will entail an extended preparation/maintenance period for another year amid uncertainty, which is likely to impose an additional tax burden on citizens. It is highly questionable whether the host government has appropriately prioritised key issues and allocated resources accordingly.

Environmental issues: Value chains in the global sports industry 

The Olympics is big business, involving not only elite athletes, but also a large number of stakeholders such as sponsors, media, providers of various products, and spectators. A mass of people moves across borders and within the host country, consuming a great number of goods in just a few weeks. The huge amount of greenhouse gases and waste that each Olympic Games generates has been the subject of continuing international debate. These are also the problem areas addressed by SDGs 12 and 13.

On the other hand, the United Nations recognises that sport can be an enabler of sustainable development (UN General Assembly, 2018). If the host is committed to the SDGs, and stakeholders and resource-rich companies/countries collaborate to implement environmentally friendly technologies and practices, the Olympics could be a showcase of new ideas to facilitate sustainability. In this regard, the Organising Committee of the Tokyo Games has promoted several sustainability concepts and plans. Nevertheless, a group of non-governmental organisations has raised a question concerning Tokyo’s approach (Heineken, 2019). They reported that a huge new national stadium for the 2020 Games was built by cutting down trees in Indonesia and Malaysia, thereby damaging these countries’ efforts to preserve their rainforests (SDG 15).

When it comes to a mega sporting event such as the Olympics, we tend to, somewhat naively, pay attention to the downstream, in which big brands, celebrities, impressive new technologies and goods to consume are all visible, and we are often ignorant of what is happening in the upstream.

If the upstream of the whole value chain is neglected and sustainability is used (or misused) as just a fancy concept, while economic actors act irresponsibly, the SDGs will never materialise.

Health concerns: Summer heat as usual, and now Covid-19

Since Tokyo was selected as the host city for the 2020 Olympics, persistent health concerns have been raised. One of the almost inevitable problems in Tokyo is, in fact, a hot summer, which Weather Atlas describes as “oppressive humidity and extremely high temperatures”. Indeed, many people actually suffer illness each year due to the summer heat in Japan; in 2019 alone, more than 70,000 people were admitted to hospital due to hyperthermia.

Although Tokyo insists that the Olympic venues will be closely monitored with adequate safety measures, it is unclear how this can be guaranteed, not just for the athletes but also for the volunteers and spectators in the different locations.

Now, a new and bigger concern certainly involves Covid-19. To date (as of mid-April 2020), the number of confirmed cases in Japan has been significantly lower than the other G7 nations as well as neighbouring Asian countries. However, medical experts and other countries are sceptical, questioning whether Japan may be overly restricting coronavirus testing in order to maintain its safe image for the sake of the Olympics. Of course, the slow testing could be due to other factors such as the limited availability of testing kits, which has also been a problem for other countries. Nonetheless, the root cause of the concern is the slow response of the authorities in taking the necessary action, because this would trigger an explosion of infection cases as we have witnessed in other countries.

Although Tokyo eventually declared a state of emergency on 7 April, this was a few weeks later than the lockdowns enforced by many major countries, and two months after a coronavirus outbreak on the Diamond Princess cruise ship anchored offshore in Yokohama, just 30 km from Tokyo. Tokyo’s lenient approach casts doubt on its capability of dealing with communicable diseases when a rapid response is crucial (SDG 3). 

The point is not to abolish all future Olympic Games as this global sporting event can be an important platform for athletes, and potentially a contributor to peace (SDG 16), or at least a symbol of it. However, the Tokyo Olympics is missing the meaning behind sustainability in many ways. Furthermore, amongst other factors, it is also ill-timed. The world is now facing a serious challenge on a global scale.

One clear message that the coronavirus pandemic has taught us is that we may be vulnerable wherever we are – even in a wealthy country – and that we all have a responsibility to strive for sustainability.

In this context, financial resources should be invested in essential products and vaccine research to tackle Covid-19, and human resources should be allocated to immediate needs to sustain local societies. In short, get the priorities right. Then, strong global partnerships and cooperation (SDG 17) will hopefully facilitate our efforts and achieve a more meaningful positive outcome.


About the author

Faith Hatani is Associate Professor at the Department of International Economics, Government and Business at Copenhagen Business School. Her research interests reside in the role of international business in sustainable economic development, focusing on responsible management of value chains and institutional constraints in different industries and countries.


References

Boykoff, J. (2020) Cancel. The. Olympics. The New York Times.

Heineken, H. (2019) Olympic timber scandal. The Understory.

UN General Assembly (2018) Sport for development and peace

Photo by hitsujiotoko_xx

Read more about sustainability and Covid-19:

Sustainable Development, Interrupted?


Sustainable Development, Interrupted?

By Steen Vallentin

The coronavirus and responses to the pandemic are right now defining human existence inside and outside of organizations. All societal attention and communication are centred on the virus, its day-to-day consequences and possible future repercussions for the people, the economy – and the planet.

Indeed, we are living through a gargantuan social experiment, and these can turn out to be the defining weeks and months of the new decade. Social distancing. Lockdown of public institutions and private businesses. Closing of national borders. No travelling, no tourism. All live entertainment (sports, music, culture) suspended. Places for social gatherings (restaurants, cafés, bars) closed (except for takeaway). Until further notice. The mind boggles.   

The closing down of open societies is blocking the blood flow of large parts of the economy, spelling potential disaster for many businesses and cultural institutions – in spite of large relief packages. Meanwhile, waters are clearing and air pollution is going down due to the drop in industrial production. There is an ominous air about these climatic improvements, though. They seem more like a morbid dress rehearsal for life on earth after human civilization than a silver lining.

Is it the end of the world as we know it? Certainly, we can expect – at least in the privileged global north – that life will soon return to something much more normal than the current ‘show responsibility by staying as far away as you can from other people’. In Denmark, the gradual reopening of society is already underway.

However, the question remains whether we will look at each other and on human interaction (particularly in large social gatherings) in the same way as we did before. Will the awareness of ‘the others’ close to us as potential carriers of disease somehow stay with us.     

Certainly, the comparisons with war are fitting. Who would have thought that anything except a worldwide war could affect all people’s social lives and the workings of government and business so rapidly and profoundly?

The pandemic constitutes a crisis of public health and health systems of unforeseen magnitude. The noun ‘crisis’ derives etymologically from the Greek krinein (Latin: krisis), which means ‘turning point of a disease’. This point was made repeatedly in the wake of the financial crisis of 2008-9: a crisis constitutes a turning point and thus an opportunity for new things to happen, for things to be different and perhaps better than they were. As the saying goes: ‘never let a good crisis go to waste’.

After sickness, there is newfound health. A crisis is not supposed to persist. However, recent years have taught us new lessons. Crisis has to understood in the plural, as crises, there are many of them (climate crisis, refugee crisis, trust crisis etc.), they are systemic and interconnected and they do not seem to go away.

Thus, we live in an age of perpetual or recurrent crises. We can imagine another side to where we are now, a new and more social normal, but it is becoming more and more difficult to imagine a future without some profound element of crisis.

Speaking of the interconnectedness of crises, what impact will the pandemic have on sustainable development and the green agenda? Will the public health crisis, its resultant need for emergency relief and its immediate and longer-term negative impacts on the economy take the wind out of the sails of green transition for a while? Making us waste precious time.

Or will this crisis and the efforts needed to get the economic wheels turning again turn out to be the greatest of opportunities to invest in green infrastructure and the solutions needed to create a more sustainable future? At this time, it is anyone’s (more or less qualified) guess. Not least because the answer depends on actions not yet taken by government and business leaders. Both narratives are out there.

The pandemic obviously lends itself to many interpretations. Among them faith-based apocalyptic visions of the end of times. Others see potential in this for putting an end to capitalism, as we have known it. Certainly, market-based solutions are taking a backseat to government intervention in our current predicament. It appears that in times of profound crisis we have to rely on big government (federal, local) and political leadership to take care of the common good and sort things out.

Time will tell whether or how the pandemic and all that comes with it will change people’s view of the market economy and of the need for government intervention in the market economy – not to mention people’s proclivities to consume, travel, engage with (many) others in the experience economy etc.

The more moderate take is that we need a regulated market economy and that the current crisis shows the limitations of cost/benefit analysis and the neoliberal urge to subject all things to marketization and economization. In light of the human suffering and the deaths caused by the coronavirus and facing health systems and heroic health professionals in distress, the cost/benefit mindset has come up short. This calls for immediate action and full commitment – even if the odd economist may question the utility of such a course of action.

We should take this lesson with us into the broader realm of sustainable development. Market thinking will not suffice.


About the author

Steen Vallentin is Director of the CBS Sustainability Centre and Associate Professor in the Department of Management, Society and Communication at Copenhagen Business School. His research is centred on CSR (corporate social responsibility) and sustainable development in a broad sense.

Photo by Aron Visuals on Unsplash

Ensuring effective collaboration in cross-sector partnerships: three valuable lessons for partnership managers

By Leona Henry

Cross-sector partnerships (CSPs) have become a popular form of collaboration to address various sustainability matters, including plastic pollution, fair labor conditions or sustainable forestry. In CSPs, actors from different sectors bundle their resources to address such issues more efficiently than they would do on an individual basis. Most CSPs include a mix of NGOs, governmental organizations and firms.

Managing CSPs

Oftentimes, CSPs are managed by a single actor or a group of designated actors who are in charge of the partnership’s overall coordination. One of the major challenges for CSP managers is to accommodate the wide variety of ideas and interests that collide in such partnerships, while at the same time ensuring swift decision-making and operational progress.

Three valuable lessons for CSP managers

Based on insights from my latest research project, here are some counterintuitive, yet insightful lessons for CSP managers who find themselves in the position of navigating this challenge:

1. Not every task in the partnership has to be completed collectively

While we tend to believe that CSPs are all about doing everything together at all times, sometimes overall levels if collaboration might suffer by following this recipe only. At times, it can be very effective to have one actor group engage in a particular task that matches their expertise while letting others work on a different issue. Separating actor groups momentarily and where applicable avoids time-consuming conflicts and negotiations, which in turn ensures that things actually get done in the long run.

2. It is legitimate and effective to emphasize individual benefits at times

While the collective effort is what ultimately counts in CSPs, at times it can be worthwhile to also highlight the individual benefits actors may gain from participating in the collaboration. Doing so helps actors remind them of why they are part of the partnership in the first place and makes visible synergies that might not be related to the overall goal directly, but nevertheless ensure its achievement.

3. Late joiners should be welcomed with open arms but integrated carefully

A final thought that often prevails in the CSP context, is the idea that all actors have to be involved from the very beginning to ensure a successful partnership outcome. The opposite is actually true: Late joiners can be extremely valuable as they see the partnership from a fresh perspective which can lead to beneficial insights.

However, for these late joiners to be valuable to the entire partnership, and not be seen as the actors that “sneak in” at the very end, they need to be integrated carefully through a customized onboarding process and doable tasks that can be completed right away. If late joiners are not able to start contributing right away, their value is easily lost.

As CSPs are a promising means of addressing sustainability issues, I hope that these insights are worthwhile to managers in such partnerships.


About the author

Leona Henry is an Assistant Professor of Organisation Studies at Tilburg University (the Netherlands). Her research focuses on multi-stakeholder collaboration around sustainability and the practical relevance of research. This blog post is based on a joint research project with Andreas Rasche (Copenhagen Business School) and Guido Möllering (Reinhard-Mohn-Institute for Management, University Witten/ Herdecke)

Image by Creative Commons Zero – CC0

When business is not as usual – why companies should engage with humanitarian crises

By Verena Girschik and Jasper Hotho

As evidenced in places such as Syria and Yemen, humanitarian crises are becoming ever more complex (OCHA, 2017a). In response, international and humanitarian organizations increasingly call upon the private sector to help alleviate human suffering. As we describe in our recent article (Hotho & Girschik, 2019), many companies have answered this call. In the past, the role of companies in humanitarian crises tended to be limited to financial or in-kind donations. Today, more and more companies seek a direct role in the delivery of humanitarian action, often through collaborative partnerships with humanitarian organizations. 

Why invest in business-humanitarian collaboration?

Companies that engage in humanitarian initiatives often do so for philanthropic reasons. However, these companies may fail to appreciate that engagement in humanitarian initiatives can also provide them with longer-term strategic advantages (OCHA 2017b). 

To begin with, business-humanitarian collaboration likely has reputational and motivational benefits. Contributions to humanitarian relief efforts send positive signals to external stakeholders, including customers and governments, as well as internal employees. 

However, companies may also benefit in more tangible ways.

First, engaging directly in the delivery of humanitarian assistance can provide firms with the opportunity to learn about new countries and markets. For example, MasterCard’s payment solutions for humanitarian crisis situations allow the company to contribute to a good cause while developing a more detailed understanding of under-explored areas that may at a later stage become potential markets.

In addition, humanitarian engagement provides opportunities for relationship building with international organizations, governments, and local communities. Such connections can enhance a firms’ competitiveness as they may unlock or facilitate interesting market opportunities down the line.

Humanitarian crisis contexts also provide companies with opportunities to develop new skills and competencies or strengthen existing ones. For example, by participating in the Logistics Emergency Team—a business alliance providing UN agencies with vital logistical support—companies such as A.P. Møller-Mærsk have the opportunity to push their logistical capabilities while providing life-saving support during complex emergencies.

Business-humanitarian partnerships must address three fundamental challenges

Notwithstanding the potential of business-humanitarian partnerships, the extreme conditions of humanitarian crises renders such collaboration especially complicated and risky. Humanitarian assistance is often delivered to vulnerable populations in politically complex and volatile contexts. As a result, partners face three fundamental challenges that they need to be prepared to address if they are to leverage the potential of their collaboration.

1.     Securing ethical engagement

The first challenge is to ensure that private-sector involvement is ethically sound and aligned with the humanitarian principles of humanity, impartiality, neutrality, and independence. Companies and their humanitarian partners need to uphold these principles in spite of commercial interests and practical constraints.

2.     Realizing effective engagement

Collaborations between humanitarian organizations and companies are complex to navigate. Partners need to find ways to build mutual understanding and trust and create a favorable climate for mutual problem-solving. In addition, both sides may need to adjust processes and operations in order to align capabilities and enable effective collaboration.

3.     Sustaining business-humanitarian partnerships

Companies and their humanitarian partners often struggle to demonstrate measurable benefits from their collaborations. Companies need to sustain internal support for such partnerships even when there is no immediate business case. In addition, humanitarian organizations need to engage companies in the right place at the right time; namely, where humanitarian needs are greatest.

Addressing these three challenges is neither quick nor easy. It is through strong mutual commitments and innovative responses that business-humanitarian partnerships can leverage their potential and deliver humanitarian assistance ethically, effectively, and sustainably.

References:

Hotho, J., & Girschik, V. (2019). Corporate engagement in humanitarian action: Concepts, challenges, and areas for international business researchcritical perspectives on international business15(2/3), 201-218.

OCHA (2017a). Annual Report 2017

OCHA (2017b). The Business Case: A Study of Private Sector Engagement in Humanitarian Action

About the authors

Verena Girschik is Assistant Professor of CSR, Communication, and Organization at the Department of Management, Society and Communication, Copenhagen Business School. Verena’s research focuses on the responsibilities of companies in the contexts of complex societal problems and humanitarian crises. Interested in relations between companies, governments, NGOs, and other societal actors, her research explores how companies negotiate their roles and responsibilities, how they perform them, and to what consequences. Verena’s Twitter: @verenaCPH)

Jasper Hotho is Associate Professor at the Department of International Economics, Government and Business at Copenhagen Business School, and Senior Editor for the top-tier academic journal Organization Studies. Jasper’s research focuses on the opportunities and challenges that arise from private-sector involvement in the delivery of humanitarian assistance.

Image by  Colourbox.dk

Consumers fall for food products with nutrition claims – what about you?

By Meike Janssen

In a recent study, colleagues from the University of Kassel, Germany and me discovered that consumers fall for food products with nutrition claims on the package front.

Nutrition claims?

Nutrition claims are short claims highlighting a particular beneficial nutritional property, e.g. fat-free, high protein, or rich in vitamin C. In the study, we sent consumers shopping in a laboratory supermarket with real products on the shelf. The interesting fact: Consumers could choose between three orange juices with identical nutritional profiles; only that one orange juice carried the nutrition claim rich in vitamin C. And this was the orange juice most consumers bought, even though the other two orange juices contained the same amount of vitamin C (for details about the experiment, which claims were tested, and how the claims rotated across the brands, see the end of this post).

Interestingly, all types of consumers fell for the orange juice with the nutrition claim: consumers seeking for healthy products as well as consumers not caring about healthy products; consumers who knew a lot about nutrition as well as those who knew relatively little about nutrition.

Source: Johann Steinhauser; Meike Janssen; Ulrich Hamm (2019)

You might wonder: Is it allowed to prominently highlight, on the package front, an ingredient that is typically included in all products of a certain type? For vitamin C in 100% orange juice, the answer is yes.

The good and bad news

The good news is: EU law stipulates the conditions under which nutrition claims are allowed. So nutrition claims can generally be considered trustworthy. The bad news is: A nutrition claim does not mean the product is overall healthy. A nutrition claim only refers to a single ingredient.

>>For instance, it is allowed to label candy containing high amounts of sugar as fat-free. If you ask me, that is a problematic issue. <<

Are consumers stupid or irrational?

How come consumers can be ‘manipulated’ so easily, by simply highlighting one beneficial ingredient that is, in fact, in all 100% orange juices? Is it because consumers are stupid and know little about vitamin C in orange juice? No, that would not explain why even consumers with a high nutrition knowledge fell for the product with the nutrition claim. Then is it because consumers behave irrationally when they do grocery shopping? Again, the answer is no.

Squirrel_photos on Pixabay

Consumers look for simple heuristics when choosing between similar food products. When grocery shopping, we are confronted with a lot of information. Since most of us do not want to spend hours in the supermarket comparing several products and reading all information on product packages, we use ‘cues’ that help us navigate through the information jungle.

Every consumer has his/her own cues that he/she uses, often subconsciously. These cues simplify our choice tasks and allow us to make quick decisions. And the important thing is: in the end, we are usually quite happy with our product choice. Most of us walk out of the supermarket and do not worry about whether we really made the best possible choice. So in that sense, relying on simple choice heuristics and using cues like ingredients, brand and price makes perfect sense for us, at least when we do grocery shopping. There is nothing irrational about it.

Take-home message: Better check nutritional information

Whether or not you want to use nutrition claims as one of ‘your cues’ when choosing food, remains your own decision. Just bear in mind the following: Only because one brand highlights that the product contains a beneficial ingredient, does not mean other similar products do not have the same benefits. And only because a product carries a nutrition claim, does not mean the product is healthy – it might contain high amounts of other unhealthy ingredients.

If you are really interested in buying a nutritious product, better check the nutritional information on the back of the package and compare several products. You might find a product with better nutritional properties without a nutrition claim on the front.

Details about the experiment

The study participants were recruited in the pedestrian area in the city of Kassel, Germany. The 156 participants went shopping in a laboratory supermarket. They could choose between three orange juices, each of which labelled with a claim:

  • taste claim ‘simply delicious’,
  • health claim ‘Vitamin C contributes to the normal function of the immune system’, or
  • nutrition claim ‘rich in vitamin C’.

To make the purchase simulation as realistic as possible, existing brands and products were offered on the shelf. We only added the claims. The products were from other German speaking countries (Austria and Switzerland) so that the participants were not familiar with them. We wanted to rule out strong brand effects. Across the sample, the three claims rotated among the three brands.

The study results are published in two journal articles:


About the Author

Meike Janssen is Associate Professor for Sustainable Consumption and Behavioural Studies, CBS Sustainability, Copenhagen Business School

Photo by Joshua Rawson-Harris on Unsplash

Further reading: Let Me Lend You a Hand: How Behavioural Economics Can Restore Trust in Science

Towards a Realization of Sustainability Ambitions?

By Lars Thøger Christensen

Governments are increasingly being sued by citizens and NGOs for not living up to their sustainability ambitions.

Recently, for example, three German farmers along with Greenpeace arraigned Chancellor Angela Merkel’s government for failing to achieve its ambition to reduce Germany’s CO2 emission by 40 percent in 2020, as measured from 1990. Already last year, the government acknowledged that it would not be able to meet its goal. It expects to achieve a 32 percent reduction. The consequences for the farmers, the complainants argue, are dire in terms of long periods of drought and other extreme weather conditions that threaten to destroy their livelihood.

In other parts of the world – including USA, Peru, Colombia and Fiji – similar cases and complaints are arising. It is difficult not to sympathize with these complaints and their underlying concern for our shared planet.

>>It was therefore remarkable that the administrative court in Berlin rejected what was the first climate complaint against the German government.<<

The complainants, the court argued, have no basis for demanding a specific set of actions from the government whose climate protection program 2020 was described as a “political aspiration”. According to German media, the judge said that society needs to respect the executive power’s discretion and room for maneuvering. Understandably, this ruling has spawned lots of criticism.

Governments are currently not legally required to live up to their sustainability aspirations.

This case calls on us to discuss what it takes to make sure that sustainability aspirations are actually being fulfilled by governments as well as by corporations. First, however, we need to consider whether a different decision by the German court – a decision that backed the claims by the farmers and Greenpeace – would have ensured a faster and more certain goal fulfillment. In a short-term perspective, that is quite likely. Although such ruling probably would have been appealed, it would at the same time have applied immense pressure on the government to launch more intense climate initiatives here and now. The more wide-ranging effects of such ruling, however, might not have been in the interest of the sustainability agenda. 

What happens if governments and corporations are legally forced to walk their talk?

Without exonerating empty sustainability talk and lack of sufficient climate initiatives, it is important to acknowledge that governmental and corporate aspirations serve multiple functions in changing and improving existing practices. While sustainability aspirations may be used to impress and seduce voters and consumers, something that is often the case, they are simultaneously likely to shape expectations and mobilize stakeholders to apply pressure for action.

Here, the level of optimal pressure is crucial. If governments and corporations know that unfulfilled promises and aspirations will be met with damaging court cases that support their complainants, they will be less likely to announce ambitious goals, and more inclined to articulate ideals that they already, or almost already, live up to. In such cases, changes may happen slower than society may desire.

>>Conversely, lack of stakeholder pressure is likely to result in “aspirational inflation” or overbidding, thereby reducing the performative power of aspirational talk to instigate changes.<<

Under which conditions should we expect governments and corporations to live up to their own aspirations?

Obviously, the aspirations in question need to engage with salient social, political or environmental issues in order to attract external attention and interest. Most sustainability aspirations are likely to fulfill that criterion. 

At the same time, aspirations need to be bold and challenging in order to mobilize conflicting opinions and critical comments.

Without visionary idea(l)s and without critical attention and interest from stakeholders, aspirations are likely to be soon forgotten or perhaps ignored. Lofty organizational aspirations define a collective horizon of excellence that empowers stakeholders – internal as well as external – to expect and demand better practices. To ensure that the aspirations are taken seriously by all parties, they simultaneously need to be announced in public media of high status. Public announcement communicates the formal status of the ambitions to external audiences but simultaneously signals their authority and truth-value to organizational members. Hereby, they have the potential to stimulate both internal and external involvement and activism. Without such conditions, the German climate protection program 2020 might not even have reached 32 percent of CO2 reduction.

Aspirations need to be visionary, bold and public to mobilize pressure for action.

Obviously, the emphasis on consistency between words and action is important in forcing organizations to take their own words seriously. At the same time, such emphasis might breed a growing fear of criticism – a fear that can lead organizations to restrain their announcement of ambitions in the hope of escaping public attention and scrutiny. This risk is important to keep in mind when deciding how to apply pressure on governments and organizations to honor their own words.

Suggestions for further readings:

Christensen, L.T., Morsing, M., & Thyssen, O. (2013). CSR as aspirational talk. Organization, 20(3), 372-393.

Font, X., Elgammal, I., & Lamond, I. (2017). Greenhushing: the deliberate under communicating of sustainability practices by tourism businesses. Journal of Sustainable Tourism, 25(7), 1007-1023.

Girschik, V. (2018). Shared responsibility for societal problems: The role of internal activists in reframing corporate responsibility, Business & Society. https://doi.org/10.1177/0007650318789867

Haack, P., Schoeneborn. D., & Wickert, C. (2012). Talking the talk, moral entrapment, creeping commitment? Exploring narrative dynamics in corporate responsibility standardization. Organization Studies, 33(5-6), 815-845.

Kim, E-H., & Lyon, T. P. (2014). Greenwash vs. brownwash: Exaggeration and undue modesty in corporate sustainability disclosure. Organization Science, 26(3), 705-723.

About the Author

Lars Thøger Christensen is Professor of Communication and Organization at the Copenhagen Business School, Denmark

Photo by Ahmed Bibi on Unsplash

Is it a right policy to focus on SDGs during Economic Slowdown?

By Anirudh Agrawal and Ashish Tyagi

Economic problems of India were not addressed either in the 2019 electoral debates or in the recent annual budget. Markets are showing a deep imbalance between demand and supply, leading to a significant rise in loan defaults, banking crises and job losses.

MSME has not shown a tendency to grow or create jobs along expected lines despite a nationwide program of targeted lending. Indiscriminate lending in the past has increased Non-Performing Assets (NPAs) in the banking sector. The industry is still adjusting to the new GST regulations while the real estate sector has still not recovered from the demonetization shock. On top of all this, pollution is at an all-time high and climate change is manifesting itself in the form of droughts and floods in different parts of the country.

In such a slowdown, a knee-jerk policy reaction is to spur investment and growth through any means possible, including reversals on climate and Sustainable Development Goals (SDGs). Quite recently, the government allowed 100 percent FDI in the coal mining sector to spur a revival.

But in this article, we argue that a renewed focus on Sustainable Development Goals (SDGs) presents an opportunity to revive the economy, create a new wave of jobs and potentially increase the competitiveness of Indian economy vis-à-vis the SDG laggards. The discussion that follows is in the context of India but is equally relevant for the rest of the developing world.

NPA crisis and an opportunity towards SDG oriented portfolio

The main reason for a steep rise in credit default rate is that while industries expanded capacity over time, domestic and global demand has slowed down considerably, stranding the new assets. The lack of market demand causes firms to default on loans. This increases the stress on the banks, which consequently, stall the liberal credit lines to firms, further weakening the economy.

One of the significant factors causing the NPA crisis in India is the MSME loan portfolio. MSME is the backbone of any economy. In developing countries, MSME account for 90 percent of job creation and economic activities. Over time, through hard work, market and government support, these MSME entrepreneurs are able to grow, engage in employment creation, disruptive innovation and ultimately become unicorns, which are nascent businesses with high market valuation and growth potential.

>>>However, despite the important role in job creation and liberal credit lines, MSME entrepreneurs in developing countries generally remain poorly skilled, lack proper business support, access to markets and are many times bullied by bigger firms. In the end, a great deal of capital channelled to MSME is not converted into higher value. <<<

To transform the MSME sector, government and other business-sector actors must treat MSME as students who need to learn and adopt skills related to competitive management, sustainability, marketing and financial reporting so that competitiveness and sustainability become inherent within the firm. MSME entrepreneurs can aspire globally through exposure from government-sponsored programs to attend MSME events in Denmark (for their dairy and animal industry), Germany (manufacturing), Italy (leather and fashion). They can learn more about international market trends and technologies where the bottom lines are firmly grounded on SDG compliance.

Unlike bigger players which are slow, suffer from legacy issues; MSME is flexible enough to embed elements of sustainability and SDGs in their supply chains and value creation processes.

To survive and grow in a world with increasing climate change regulations, better cooperation is required between public institutions, banks and MSME entrepreneurs to work hard in sync, learn new practices and standards. Long-term growth requires MSME to make sustainability and SDG compliance inherent in the business plan, business model, management structure and type of service and product offered.

>>> Indian banks must actively focus on new industries creating products with lower environmental footprints. <<<

For example, instead of providing loans to typical plastic manufacturing SMEs, they must provide loans to entrepreneurs setting up green-materials factories, alternative plastic (biodegradable) factories, bio-diesel, or EV vehicle factories, which are environmentally efficient, follow international standards and are helping the nation achieve its Paris Agreement targets. The growth of competitive, innovative and greater SDG compliant MSME would make Indian economy stronger and mitigate job crises.

SDG focused Real-Estate Sector Regulation

Another cause of NPA crises in India is the rising real-estate inventory. Real estate sector was one of the largest employers during the 2004-2016 boom years of India (which is also true for most of the developing world). The assumption among investors during that period was that the real-estate will continue to grow and their investments will remain secure and ensure above-market returns. However, in the boom period, real-estate prices far exceeded their value, causing market failure in the current economic downturn.

But during economic downturns, it is relatively easier for politicians to make difficult decisions (as the public mandate is easier) and enforce innovative policies.

To address the issue of real estate inventory, the government must introduce regulations in the real estate market with quality controls, sustainability measures, green building codes, controls on the number of floors constructed, the green area within the apartment, restrictions on distance from the essential public services like a train station, police station, college, hospital, schools.

The regulations must forcefully move the industry towards significant sustainability goals (like those in Western Europe) with higher compliance on long-term sustainability, energy efficiency, and reliability. In addition to explicit sustainability actions like certification, greenified surroundings; firms and the government must focus on developing the real-estate sector, which is firmly embedded in a social, cultural and artistic milieu. Research has shown that housing where the communities have active social and cultural interaction tends to have higher value and lower crime.

Specific SDG driven controls would decrease the supply, increase the quality offered, and would significantly increase the value of the real-estate sector. If the buyers feel that their real-estate investments have greater value for a more extended period, the buyers and sellers will invest in the sale and purchase of the real estate, which would relieve the banks from possible NPA risks. The increased transactions in the real estate market would generate liquidity in the market that would further spurn growth. This suggestion on regulating the market stands in contrast to current appeals for liberalizing the real-estate sector. The liberalization of the real-sector has led to a rise in indiscriminate investment, increased half-built and abandoned sites which are causing a rise in water pollution, dust pollution and even dengue.

Pollution and Climate Change

Extreme climatic events and increased pollution are related to externalities that are threatening the sustainability of the Indian economy. The winter smog around the national capital Delhi significantly reduces the productivity of the city while putting residents under severe health risks. Lengthening of summer and unpredictability of monsoon is increasing water stress, as well as floods, which is putting households under stress and decreasing the overall national productivity.

To address these challenges, research-based and region-specific adaptation and mitigation investments will enable different regions to transform towards climate-resilient economic societies.

The government must invest in energy-efficient, global standard-compliant power plants to reduce smog around North India.

In addition, the government and private sector must invest significant capital in solar panel production, the infrastructure of EV automobiles, greener-sustainable materials, circular economy and responsible consumption. The green climate fund (GCF) has a specific mandate for adaptation finance for climate resilient agriculture and flood resilient infrastructure. The GCF is an interesting and evolving repository of knowledge which should help governments in designing and implementing climate mitigation and adaptation policies and investments.

Businesses around these emerging technologies are most likely to generate the next wave of job growth in the manufacturing sector.

In conclusion

Economic downturns are stressful times, but it is also said that “never let a crisis go to waste”. The downturns offer opportunities to re-write innovative policies as the public mandate is stronger for a change. India must use its current economic downturn as an opportunity to re-write public policies by incorporating elements of SDGs at each level of conception and decision and transform towards a greener, climate-sensitive and sustainable space. Sustainability at each level is the new competitive advantage and the emerging nations must capitalize it.

About the authors

Anirudh Agrawal is a doctoral fellow at CBS. His research interests are MSME finance, impact investing, social entrepreneurship and organizational 4.0. He is a chief strategy officer at Tvarit AI GmbH focusing on sustainable AI driven IT solutions and a visiting professor at Flame University India and formerly Assistant Professor at Jindal Global University.

Ashish Tyagi is currently a post-doctoral fellow and lecturer at Frankfurt School of Finance & Management. He completed his PhD from Penn State University. His research interests are environmental economics, climate change policies and sustainable transformation.

Photo by Sudha G Tilak

Social Enterprises = Sharing Economy Organizations?

By Johanna Mair, Nikolas Rathert and Georg Reischauer.

Sharing Economy Organizations

Uber, Airbnb, and Lyft are frequently cited and popular examples of new organizational forms operating in the sharing economy, which is growing at a stunning pace. One way to make sense of the sharing economy is to conceive it as a web of markets in which individuals use diverse forms of compensation to transact the redistribution of and access to resources (Mair & Reischauer, 2017).

These transactions are mediated by a digital platform run by an organization that focuses on the governance of these transactions (Reischauer & Mair, 2018a, b). Besides the focus on platform-enabled business models, the sharing economy has also spurred discussions about the implications of the sharing economy for society. Many commentators have argued that the sharing economy can become key in making modern societies more environmentally sustainable (Frenken & Schor, 2017) and inclusive (Etter, Fieseler, & Whelan, forthcoming). This debate parallels the debates on another important organizational form, social enterprises (Mair & Rathert, 2019).

Social Enterprises

Social enterprises encompass a diverse set of legal and organizational forms that use market means to effect social change (Mair & Marti, 2006). They address a range of social problems on different scales, including local communities and countries, and target societal groups that usually remain outside the reach of both commercial markets and state-run welfare schemes (Mair, Wolf, & Seelos, 2016). Social enterprises use a variety of commercial activities, including the selling of products and services, and include beneficiaries in various stages of the value creation chain (Mair & Martí, 2006; Mair, Battilana, & Cardenas, 2012). As this discussion suggests, social enterprises might have much in common with sharing economy organizations.

Social Enterprises = Sharing Economy Organizations?

Social enterprises and sharing economy organizations are both alternative forms of organizing that have developed to overcome the deficiencies of contemporary capitalism (Mair & Rathert, 2019). But what are the similarities and differences of these forms, especially with respect to dimensions that have been identified as relevant for both forms, community (Fitzmaurice et al., forthcoming; Venkataraman, Vermeulen, Raaijmakers, & Mair, 2016) and growth (Mair & Reischauer, 2017; Seelos & Mair, 2017)?
We shed light on this question with a comparative analysis of a sample of German social enterprises and sharing economy organizations, which we surveyed in 2015/2016 (social enterprises) and 2018 (sharing economy organizations). This sample encompasses 108 social enterprises and 233 sharing economy organizations that can be meaningfully compared along several indicators, including age and profit orientation. These organizations span a variety of activity fields (e.g., health care and education in the case of social enterprises, or mobility and accommodation in the case of the sharing economy).

Social Enterprises ≠ Sharing Economy!

Our analysis provides first insights that social enterprises and sharing economy organizations are, in fact, quite different animals when it comes to community and growth.
Asking both about the role of community for improving existing products, the community seems more relevant for social enterprises (Figure 1). In fact, on a 7-point scale, social enterprises’ score is over 6 on average, compared to 3.9 for sharing economy organizations. This difference remains significant after controlling for age, profit orientation, and activity field.

Figure 1: Role of Community for Product Improvement

There are also differences when asking about the role of community for entering new markets. As shown in Figure 2, sharing economy organizations use the community for this purpose to a slightly greater extent (using a yes/no variable whether or not they use the community for this purpose, with the difference being statistically significant). At the same time, the salience of the community for this purpose appears as overall lower than for product improvement.

Figure 2: Role of Community for New Market Entry

There are notable differences when it comes to growth orientation. While 79% of the surveyed social enterprises have a strong growth orientation, this is only true for 36% of sharing economy organizations. When we regress growth orientation on profit orientation and fields of activity, we find that the lack of growth orientation appears to be driven by membership in the field of room sharing, while the fields of mobility, development and housing, and health appear to be associated with a greater growth orientation.


Besides, not all growth challenges are the same (figure 3). Our analysis suggests some that some growth challenges are specific to sharing economy organizations and social enterprises, respectively. Social enterprises are more worried about three aspects: preserving program quality, securing capital, and managing growth internally. Sharing economy organizations, in contrast, care more about fidelity to the mission and managing growth internally. When accounting for profit orientation, we find that those who are profit-oriented worry about securing capital, while those that are not worried about fidelity to the mission as they grow.

Figure 3: Growth Challenges

Our analysis further identifies the variation concerning geographical growth (Figure 4). Sharing economy organizations are not looking to change their geographical scope. At most, some are considering changing from a local orientation to a regional orientation. Social enterprises are more ambitious here, often looking to scale their model to a national scale or even beyond.

Figure 4: Aspirations for Geographical Growth

Embracing Alternative Organizational Forms

Our comparison of sharing economy organizations and social enterprises for the role of community and growth indicates that alternative forms of economic organizing differ in various ways. We take this as a positive sign that also reflects a societal ability to nurture and institutionalize alternative forms of organizing that can potentially overcome well-known deficiencies of capitalism. Future research will tell how these two forms will develop, create impact, and contribute to a more sustainable society.

Acknowledgements

This research was funded by the German Federal Ministry of Education and Research (Grant Number 01UT1408C) and the European Union Seventh Framework Programme (Grant Agreement 613500).


About the authors

Johanna Mair is Professor of Organization, Strategy and Leadership at the Hertie School of Governance, Germany. She is also the Co-director of the Global Innovation for Impact at the Stanford Center on Philanthropy and Civil Society and the Academic Editor of the Stanford Social Innovation Review.

Nikolas Rathert is Assistant Professor for Organization Studies at Tilburg University.

Georg Reischauer is a postdoctoral research associate at Vienna University of Economics and Business (WU) and at Johannes Kepler University Linz (JKU).

References

Etter, M., Fieseler, C., Whelan, G. forthcoming. Sharing Economy, Sharing Responsibility Corporate Social Responsibility in the Digital Age. Journal of Business Ethics, doi: 10.1007/s10551-019-04212-w.
Fitzmaurice, C. J., Ladegaard, I., Attwood-Charles, W., Cansoy, M., Carfagna, L. B., Schor, J. B., & Wengronowitz, R. forthcoming. Domesticating the market: moral exchange and the sharing economy. Socio-Economic Review, doi: 10.1093/ser/mwy003.
Frenken, K., & Schor, J. 2017. Putting the sharing economy into perspective. Environmental Innovation and Societal Transitions, 23: 3-10.
Mair, J., Battilana, J., & Cardenas, J. 2012. Organizing for Society: A Typology of Social Entrepreneuring Models. Journal of Business Ethics, 111(3): 353-373.
Mair, J., & Martí, I. 2006. Social entrepreneurship research: A source of explanation, prediction, and delight. Journal of World Business, 41(1): 36-44.
Mair, J., & Rathert, N. 2019. Alternative organizing with social purpose: Revisiting institutional analysis of market-based activity. Socio-Economic Review, doi: 10.1093/ser/mwz031.
Mair, J., & Reischauer, G. 2017. Capturing the dynamics of the sharing economy: Institutional research on the plural forms and practices of sharing economy organizations. Technological Forecasting and Social Change, 125: 11-20.
Mair, J., Wolf, M., & Seelos, C. 2016. Scaffolding: A process of transforming patterns of inequality in small-scale societies. Academy of Management Journal, 59(6): 2021-2044.
Reischauer, G., & Mair, J. 2018a. How organizations strategically govern online communities: Lessons from the sharing economy. Academy of Management Discoveries, 4(3): 220-247.
Reischauer, G., & Mair, J. 2018b. Platform organizing in the new digital economy: Revisiting online communities and strategic responses. Research in the Sociology of Organizations, 57: 113-135.
Seelos, C., & Mair, J. 2017. Innovation and scaling for impact: How effective social enterprises do it. Stanford, CA: Stanford University Press.
Venkataraman, H., Vermeulen, P., Raaijmakers, A., & Mair, J. 2016. Market meets community: Institutional logics as strategic resources for development work. Organization Studies, 37(5): 709-733.

Photo

Photo by Markus Winkler on Unsplash

Who cares about sustainable fashion?

By Erin Leitheiser.

Can ever-higher rates of consumption ever truly be sustainable?  Consideration of up-and-coming consumers will be key to making progress in the sustainability of the fashion industry.

Each year in May, Copenhagen hosts the Copenhagen Fashion Summit, which brings together fashion industry leaders to consider the environmental and social sustainability issues rife within the industry.  While this year’s event promises discussions on important supply-side issues like materials and design, circularity, supply chains, wages, and the like, there seems to be precious little time dedicated to demand-side issues, principally the role of consumers.  As such, this post offers a review of some key facts and trends that foreshadow the landscape of the future of (sustainable) fashion, and in particular, the role of consumers.

First, some key facts about the scale of the fashion industry and its impacts:

  • Greenhouse gas emissions from the textile industry account for 8% of all carbon emissions globally, more than those emitted by all international flights and maritime shipping combined (Quantis, 2018). 
  • The top 20 companies in the clothing industry, mostly in the luxury segment, account for 97% of its economic profit (McKinsey, 2019).
  • Clothing sales have more than doubled in just the last 20 years (Ellen McCarther Foundation, 2017), and apparel consumption is projected to rise an additional 63% by 2020 (Global Fashion Agenda, 2017). 
  • Despite growing efforts to collect and recycle old textiles, less than 1% of materials used in clothing is recycled (Ellen MacCarthur Foundation, 2017). 
  • Companies – particularly luxury companies – often prioritize brand image over sustainability.  For example, Burberry found itself embroiled in scandal after it chose to burn US$37 million in excess stock last year, rather than discount or donate it.

While many of these issues skew toward supply-side, consumers’ habits play a key role in the vast excesses of the fashion industry.  Consumption rates seem to grow ever-higher.

  • Nearly half of young female consumers buy clothing at least monthly (Farsang et al, 2015).
  • An article of clothing in a woman’s closet is worn a mere 7 times on average before being discarded (Barnardo’s, 2015)
  • In the past year, a quarter of Australians (24%) have thrown away an item of clothing after wearing it only once, and 1 in 6 have binned 3 items or more after a single wear (YouGov, 2017). 
  • A third of UK women consider a garment “old” after wearing it 3 times or less (Barnardo’s, 2015).
  • 38% of Millennials have bought at least half of the clothes they own within the past year (YouGov, 2017). 
  • In China, clothing utilization (that is, the number of time a garment is worn before being discarded) has fallen by over 70% in the last 15 years (Ellen MacCarthur Foundation, 2017).  At the same time, Greater China is projected to overtake the U.S. in 2019 as the largest fashion market in the world (McKinsey 2019).

The consumer landscape is changing rapidly when it comes to “sustainable” fashion, so much so that fashion firm executives identified consumer behaviors that force industry to “self-disrupt” as the #1 trend for 2019 (McKinsey, 2019).  Key consumer trends underscore the significance, scale and potential of consumers in the quest for (more) sustainable fashion.  Younger consumers – Millennials (born 1980-2000) and Gen Zers (born 2000-now) – are largely responsible for pushing companies to become more sustainable.

  • 94% of Gen Zers believe that companies should address social and environmental issues (Cone, 2017). 
  • Gen Z alone will account for 40 percent of global consumers by 2020. (McKinsey, 2019)
  • 90% of Millennials would boycott or otherwise refuse to buy from a company that is doing harm (Cone, 2017)
  • Consumers want to support brands that are doing good in the world, with 66 percent willing to pay more for sustainable goods (McKinsey, 2019).

As younger generations increase their buying power – and couple it with ethical evaluations – companies will need to become even more responsive to and diligent about addressing sustainability issues.  Yet, high consumption rates threaten to curtail gains made from sustainability advances, like textile recycling.  In addition to more sustainable production practices – and subsequent ethical purchasing – consumption must decrease if the perils of the industry are to be addressed.

“Younger consumers are seriously concerned with social and environmental causes, which many regard as being the defining issues of our time. They increasingly back their beliefs with their shopping habits, favouring brands that are aligned with their values and avoiding those that don’t.”

McKinsey, 2019: p. 45

I am often asked what one can do as an individual to be more sustainable when it comes to fashion.  My answer is in two main parts.  First, buy fewer, better quality items and wear them for longer.  Classic, good quality pieces will wear better and last longer.  Even if they cost a bit more at purchase their extended life makes them a more affordable option in the long run.  Second, re-think how you care for your clothes.  Washing them less, at lower temperatures, and hanging them to dry will all result in gains for both your energy bill, as well as the environment, estimated at a 3% carbon reduction (WRAP, 2017).  Some proponents even argue that you never need to wash your jeans!  (though this might be a bit extreme for some)

There is no silver bullet to solving the unsustainability of the fashion industry.  But one thing does seem clear: advances and changes must come from all sides if progress is to be made.  As the Copenhagen Fashion Summit kicks off this week , please keep in mind the importance and role of everyone involved in the production, sale, and disuse of fashion, as well as the very premise that the industry is based on: consumption.


About the author

Erin Leitheiser is a postdoctoral researcher in Corporate Social Responsibility and Sustainability at Copenhagen Business School. Her research interests revolve around the changing role and expectations of business in society. Prior to pursuing her PhD, she worked as a CSR manager in a U.S. Fortune-50 company, as well as a public policy consultant with a focus on convening and facilitating of multi-stakeholder initiatives. She is supported by the Velux Foundation and is on Twitter as @erinleit.

References

Barnardo’s. (2015). One worn, thrice shy – British women’s wardrobe habits exposed!.  Retrieved from https://www.barnardos.org.uk/news/Once-worn-thrice-shy-8211-British-women8217s-wardrobe-habits-exposed/press_releases.htm

Cone. (2017) “Gen Z CSR study: How to Speak Z”. http://www.conecomm. com/2017-cone-gen-z-csr-study-pdf

Ellen MaCarthur Foundation. (2017). A new textiles economy: redesigning fashion’s future. 1–150. Retrieved from https://www.ellenmacarthurfoundation.org/publications/a-new-textiles-economy-redesigning-fashions-future

Environmental Audit Committee, House of Commons. (2017). Fixing Fashion: clothing consumption and sustainability.

Farsang, A., Gwozdz, W., Mueller, T., Reisch, L. A., & Netter, S. (2015). Survey Results on Fashion Consumption and Sustainability Among Young Consumers in Germany, the Netherlands, Sweden, the UK and the US in 2014. Borås: Mistra Future Fashion.

Global Fashion Agenda. (2017). Pulse of the fashion Industry. Retrieved from https://www.copenhagenfashionsummit.com/wp-content/uploads/2017/05/Pulse-of-the-Fashion-Industry_2017.pdf

McKinsey & Company. (2019). The State of Fashion 2019.

Quantis. (2018). Measuring Fashion.

WRAP. (2017). Valuing Our Clothes: the cost of UK fashion. Retrieved from http://www.wrap.org.uk/sites/files/wrap/valuing-our-clothes-the-cost-of-uk-fashion_WRAP.pdf

By the same author

The Government of Business Responsibility

Role Reversal: When Business Safeguards the Public Good


Photo: Courtesy of Copenhagen Fashion Summit 2018.

Let Me Lend You a Hand: How Behavioural Economics Can Restore Trust in Science

By Noah Peters.

Society’s declining trust in science in general and economics in particular is a much debated topic. Martin Wolf’s recent commentary for the Institute of New Economic Thinking (INET) is only one way of addressing the conundrum. This blog post draws on two prominent contentions underpinning the obscure notion of distrust in economics. Firstly, economists (allegedly) live in their ivory towers surrounded by mathematical formulas no outsider would even vaguely understand. Secondly, they are accused of not being able to adequately forecast crises, let alone fend them off.

One increasingly influential sub-discipline in economics tries to overhaul these stereotypes. Stemming from psychology, behavioural economics shows that humans are multi-faceted, empathetic and guided by values and social surroundings. For readers not familiar with economics, this finding might not be a major surprise. But it goes against the grain of long-standing economic traditions emphasising people’s pursuit of profit maximisation. Acknowledging people’s genuine driving forces and behavioural patterns counteracts the first contention I presented earlier: economists’ penchant for technical abstractions of human action.

Moreover, behavioural economics and behaviourally informed policy interventions address everyday problems – retirement savings, administrative procedures or identifying the healthiest product on a supermarket shelf. Behavioural policy interventions aim at improving the lives of ordinary people. Economic and financial crises unequivocally affect the lives of everyone, from investment bankers to bakers. But loosening people’s daily constraints is as important and contributes to the bigger picture. This is what behavioural policy does.

Consequently, those interventions and their economic foundations are relatable. I argue that this relatedness to the real world is pivotal in regaining societal trust and convincing citizens of the value that economic theory can add.

While this demand is not new and maybe trivial, it is worth stressing over and over again. And especially behavioural economics got the message. Unsurprisingly, key topics for policy-makers are sustainability and public health. Behavioural interventions address these challenges from an individual-level, demand-side perspective. By inquiring how people really judge and decide (using experiments and investigating people’s motivations), the overarching challenges of the 21st century can be traced to the consumer level. This way, we can elucidate how every single person can make a difference. Today’s urgencies become vivid and tangible.

A couple of examples in the domain of food choice shall underpin this connection of behavioural economic theory and everyday applications. A supermarket, for example, constitutes the perfect playground for behavioural scientists. Traffic-light labels indicating how healthy a certain product is draw on the plain fact that simplifications can enhance people’s decisions. Likewise, plate size can affect how much people eat. Restaurant menu design could steer which option customers choose. One additional strategy are default options, e.g. vegetarian snacks automatically ordered for meetings if not otherwise changed for non-vegetarian alternatives. This feature is informed by the fact that people prefer the status-quo and are sometimes too lazy to make simple changes.

This list is not exhaustive, and the interventions presented above are widely discussed in academia and rather trivial. Thus, every serious scholar would automatically defend the originality of her ideas. Others would go even further and completely demonise any form of real-world application.

I contend, however, that the frivolous essence of many behavioural interventions explains their efficacy and acclaim. Psychological underpinnings inform policy interventions in a way that relates to people’s everyday lives thereby addressing the questions of our time.

But it’s not entirely rosy for behavioural economics either. Critics contend that consumers – citizens (!) – are manipulated and deprived of their own capacity to judge. There are compelling reasons why this notion is short-sighted, though. Thus, behavioural scientists must establish guidelines ensuring their legitimate intentions and communicate their toolbox transparently. And of course: mathematics and technical tools are invaluable instruments for the empirical sciences; they are the very departure point to extrapolate the world we live in.

The combination of scientific rigour, tangible applications, and sincere motivations can help restore societal trust. Scientists who are successful in applying and communicating this trinity, can evade the curse of post-truth sentiments and latent hostility to experts.

About the Author

Noah is a visiting research assistant to the Department of Management, Society and Communication (MSC). He studies sociology, politics and economics at Zeppelin University, Germany. In his research he focuses on behavioural economics and policy applications, as well as economic and urban sociology. Partaking in an exchange programme between Copenhagen Business School and Zeppelin University, Noah supports current research at MSC’s Consumer and Behavioral Insights Group (CBIG). Connect on LinkedIn or ResearchGate if you are so inclined.


Photo by Neil Thomas on Unsplash

“We’re just geeks”: Do emergent disciplinary identities among business students affect their sense of personal responsibility?

By Maribel Blasco.

Georg*: I don’t think people from Maths are like that [selfish] because it’s another environment. We treat each other kindly. We are not like these types that want to be in front and want to be the best, and want to be in the top.

Fransisca*: We are more down to earth, just because we are geeks and people don’t show up in suits and small briefcases.

Mette*: I think we are much more down to earth than other study programs at CBS. And I think the environment at Maths makes us more responsible in some way and that we are not like “I just have to reach the top no matter what.”

(Quotes from group interview with undergraduate business and math students).
*Names changed.

Business schools invest a great deal of effort in forging a sense of shared identity among students from different subject specializations. Freshers’ weeks, introduction events, team-building exercises, and invited speakers are just a few examples of initiatives designed to strengthen students’ sense of belonging to a particular professional group.

But what if this is backfiring? Although belief in the positive features of one’s own group is known to support teamwork and cooperation, among other benefits, we also know that it can have a dark side in the form of responsibility disavowal, prejudice and discrimination towards groups perceived as outsiders. These dynamics beset firms and other organizations, where sub-groups can be a major source of conflict, and where silo thinking – unwillingness to collaborate or sometimes even communicate with other groups in the same organization – has been found to erode responsibilities and foster a culture of promoting one’s own group rather than the organization as a whole. Recent financial scandals have also revealed how such groupthink can lead people to deny personal responsibility for wrongdoing.

In this research, I show how students’ emergent professional identities can work against their sense of personal responsibility by providing rationalizations for moral buck-passing. The data consist of group interviews involving students from fifteen undergraduate business programmes. Among the most intriguing findings that emerged were three logics that students used in talking about responsibility.

Logics of Responsibility Talk

The first logic was the notion that the intrinsic nature of certain disciplines, notably numbers-oriented subjects like maths and economics, obviated the need for a responsibility focus. The second logic was that students generally felt that their own disciplinary specialization was ‘more responsible’ than others’. The third logic was that almost all students appeared convinced that decisions about responsibility were an individual matter – but they mostly regarded irresponsibility as something that other people or groups got up to.
So even though most insisted that responsibility was ultimately up to the individual, that individual was seldom itself.

“Missing from most students’ accounts was a critical appraisal of their own fallibility.”

All three logics provide rationales for disavowing personal responsibility. Missing from most students’ accounts was a critical appraisal of their own fallibility, that of their discipline, or that of their disciplinary in-group, in regard to the potential for irresponsibility. Only a few questioned their ability to resist temptation if placed in a morally dubious situation.
Particularly worrisome was that business students across all specializations regarded so-called ‘harder’ subjects, notably maths and economics, variously as neutral, objective, technical, theoretical or basic subjects that were not ‘about’ responsibility. Students tended to accept the models and theories taught in those subjects pretty much unequivocally, arguing that since these were ‘used by major institutions’ they must be responsible in and of themselves.

Separation Thesis

This kind of thinking reflects what scholars have referred to as the ‘separation thesis’, i.e. the notion that business decisions have no moral content and moral decisions have no business content (Harris & Freeman, 2008; Freeman, 1994; Wicks, 1996). This idea that facts can be separated from values is, according to some scholars, ‘ingrained in all that we do in business schools’, and leads to the notion that business theories can be morally neutral ‘while surreptitiously encapsulating certain ethical values and assertions’ (Harris & Freeman 2008: 543; Freeman, 1994: 412; Ghoshal, 2005).

Alongside this, many students, notably those from numbers-oriented specializations, associated responsibility with so-called ‘softer’, ‘discussion’ subjects like organizational studies and corporate social responsibility, and displayed a disdain for these that is also mirrored in the business world where ‘financial and market strategists who have been conditioned to respect only “hard” and quantifiable “facts” ‘with “hard” data to support them’ find it easy to dismiss human factors as ‘“soft” or “mushy” issues’ (Cartwright & Cooper 1995: 35).

Learnings

As management educators, what can we learn from this study? First, the findings open up for a debate about how to educate for subject-specific forms of responsibility without fostering a ‘silo mentality’ that may serve to disavow personal responsibility.

To address this, first, we might explore ways to render disciplinary boundaries more porous by explicitly and critically discussing, with students, their disciplinary mental models and the beliefs, identifications and behaviors they foster. Second, initiatives that encourage cross-disciplinary collaboration should be encouraged. Finally, we need to raise students’ awareness of the limits of their individual agency, and of their own fallibility when confronted with the appeal of solidarity, when it comes to responsibility decisions. In sum: we must find ways to teach students to take personal responsibility even in situations when they do not consider that it is theirs to take.

The Author

Maribel Blasco, Associate Professor, Department of Management, Society & Communication, Copenhagen Business School. Research area: Management learning and education.


References

Cartwright, S., & Cooper, C. L. (1995). Organizational marriage:“hard” versus “soft” issues?. Personnel Review, 24(3), 32-42.

Freeman, R. E. (1994). The politics of stakeholder theory: Some future directions. Business ethics quarterly, 409-421.

Harris, J. D., & Freeman, R. E. (2008). The impossibility of the separation thesis: A response to Joakim Sandberg. Business Ethics Quarterly, 18(4), 541-548.

Ghoshal, S. (2005). Bad management theories are destroying good management practices. Academy of Management learning & education, 4(1), 75-91.

Wicks, A. C. (1996). Overcoming the separation thesis: the need for a reconsideration of business and society research. Business & Society, 35(1), 89-118.


Photo by Alex Chambers on Unsplash.

The year of corporate acting—does business need a new approach to palm oil?

By Amanda Williams, Steve Kennedy and Gail Whiteman.

2018 went down as the ‘year of corporate caring’ about the palm oil controversy. A banned TV advertisement promoting a Palm Oil free Christmas by the UK supermarket Iceland went viral on social media with over 5 million views in merely a couple of weeks. Shortly after, on the south bank in London, Iceland responded to the ban with a displaced Orangutan hanging from a Christmas tree surprising tourists and drawing attention to the loss of biodiversity due to the clearing of virgin rainforests. Debates about palm oil in Malaysia and Indonesia are far from new. But recent events are surely stirring up the conversation and attention to the issue is at an all time high.

Proponents are reacting to the complete ban of palm oil with statistics on the efficiency yields from the fruit of oil palm trees and claim boycotting palm oil would simply shift demand to other types of vegetable oil to meet demand. Palm oil has climbed the charts in popularity because it is cheap, versatile and efficient. While others argue that despite the efficiency benefits of the crop, new approaches are needed to tackle this pressing humanitarian and environmental issue.

Business and Palm Oil

CEOs of multi-national corporations that depend on palm oil and tropical timber in their supply chains are well aware of their impacts and the consequences of deforestation. Outgoing Unilever CEO Paul Polman already stated back in 2015:

“We are seeing the effect of climate change in our own business. Shipping routes cancelled because of hurricanes in the Philippines. Factories closing because of extreme cold weather in the United States. Distribution networks in disarray because of floods in the UK. Reduced productivity on our tea plantations in Kenya because of weather changes linked to deforestation of the Mau forest. We estimate that geo-political and climate related factors cost Unilever currently up to €300 million a year.”

Many companies are working hard to address the issue. The Roundtable on Sustainable Palm Oil, established in 2004, brings together palm oil producers, traders, consumer goods manufacturers, retailers and NGOs to improve environmental and social criteria for the certification of sustainable palm oil. The roundtable boasts that 13.20 million tons of palm oil is RSPO certified, amounting to 19% of the global volume. Palm oil certification is expensive for farmers to obtain and has yet to solve issues of deforestation or poverty.

Yet, ambitious corporate targets are not translating into concrete results on the ground.

Beyond certification, companies are setting ambitious targets. Unilever’s touchstone Sustainable Living Plan aims to become carbon positive by 2030 and halt deforestation by 2020. And Nestle is ‘striving for zero’ environmental impact including emissions and deforestation. Yet, ambitious corporate targets are not translating into concrete results on the ground. Recent reports demonstrate that emissions and deforestation rates are still rising. In advance of 2020, at the Consumer Good Forum, brands admitted that reaching zero deforestation targets by the end of the decade is unlikely. The head of sustainability and procurement at Mars, Barry Parkin, is calling for strategies that go beyond certification that consider “new theories of change.”

Current efforts aren’t cutting it

Despite these ambitious efforts, the situation in Malaysia and Indonesia remains bleak and deforestation continues at alarming rates. In Borneo, only 43 percent of its original lowland rainforests remained by 2015. Lowland rainforests are optimal for palm oil production plants but are also home to many rare species. The consequences of deforestation extend beyond biodiversity loss to land degradation, droughts and forest fires, which interact to further increase emissions.

Even if companies successfully meet ambitious zero deforestation targets, halting deforestation may prevent further increases in emissions, but is unlikely to restore societal and environmental resilience to future shocks. If certification and deforestation targets are not the solution, then what is?

Lessons for business

How can business leaders approach palm oil production differently? Based on our latest article, we offer several suggestions:

  1. Focus on a different scale. Firm-centric approaches, such as mitigation and adaptation to the effects of climate change, may keep companies afloat in the meantime, but are unlikely to offer a long-term solution. Mitigation and adaptation aim to enhance firm performance and respond to the effects of the problem, but do little to consider the eco-systems on which the companies depend. Complex interactions in local societies and ecosystems go unnoticed and leave companies vulnerable to future disturbances. New approaches should consider how to develop healthy ecosystems that can continue to provide services for the local community and companies for decades to come.
  2. Look closer. When considering the intricacies of ecosystems, managers can monitor slow variables and feedbacks. Slow variables such as the amount of soil organic matter, insect populations or the level of rainfall can control how an ecosystem functions. Managers can identify the slow variables that govern how ecosystems behave and what levels of these variables puts the ecosystem at danger. Feedbacks offer managers warning signals that changes are occurring and allow to detect when ecosystems may be at risk. Managers can seek to tighten their recognition and action to feedback loops in order to minimize time delays and improve chances of avoiding ecosystem collapse.
  3. Manage ecosystem diversity and redundancy. Moderate levels of diversity and redundancy allow ecosystems to thrive. When a disturbance strikes, response diversity allows ecosystems to react in numerous ways. Redundancy provides substitute functions when elements that preform similar functions fail. When diversity and redundancy are compromised, ecosystems become brittle and vulnerable to even small disturbances. Firms can move beyond halting deforestation by actively building viable business models for land restoration. For example, effective cropping system diversification can lead to landscape restoration, increased economic viability and enhanced ecosystem resilience.

As companies such as Mars are calling for an overhaul in corporate efforts to tackle deforestation, we hope these lessons offer some inspiration.


Authors

Amanda Williams is a Senior Researcher at ETH Zurich in the Sustainability and Technology Group. She recently completed her PhD from Rotterdam School of Management, Erasmus University. Currently, she is a part of Copenhagen Business School’s Governing Responsible Business (GRB) World Class Research Environment Fellowship program. With Steve Kennedy (Rotterdam School of Management) and Gail Whiteman (Lancaster University) she wrote this blog post and an article on cross-scale perspective for studies of organizational resilience (see below).

Citation:

Williams, A., Whiteman, G., & Kennedy, S. (2019). Cross-Scale Systemic Resilience: Implications for Organization Studies. Business & Society. https://doi.org/10.1177/0007650319825870

By the same author

In November 2018, Amanda Williams has written an article about Corporate contributions to United Nations’ Sustainable Development Goals. Find it right here.


Photo by Marufish on flickr.

We Need To Pay More Attention To Business Associations

By José Carlos Marques.

Despite their key role in both national and international affairs, business associations remain strangely absent from academic discourse, teaching and research on corporate responsibility and sustainability. We clearly need to pay more attention to business associations.

The prominence of business associations

Business associations play an important role in promoting corporate responsibility and sustainability. One need to look no further than the events of recent weeks for evidence of their prominence and influence. At the UN summit in Katowice, Poland, national institutional investor associations – representing some of the planet’s largest asset managers, pension funds, and insurers – sent a clear message to the world’s governments: we need to end fossil fuel subsidies and introduce substantial carbon taxes if we want to avoid both environmental and financial calamity [i].

Recent headlines also point to how business associations may work to inhibit progress. Just before the UN summit began welcoming delegates, a number of fossil fuel trade associations, led by the American Fuel & Petrochemical Manufacturers, were busy lobbying the U.S. government. Their objective? Ensure that the U.S. Senate and Congress kill any hopes of reviving the federal tax credit for electric vehicles (EVs). That’s the same EV credit that helped Tesla grow its market share in the U.S. and is similar to programs that boosted EV usage in numerous other countries [ii]. While the credit program is a tiny fraction of what the fossil fuel industry receives in subsidies, it represents an obvious threat [iii].

Ensure that the U.S. Senate and Congress kill any hopes of reviving the federal tax credit for electric vehicles.

These are just some of the more visible examples of the considerable influence exercised by business associations. Countless other business associations lobby governments, develop self-regulatory programs and engage in a variety of activities that both advance and impede progress on a variety of key social and environmental issues including human rights, labor rights, climate change and inequality. Some have become highly prominent and visible in international circles – take the World Economic Forum (WEF) and the World Business Council on Sustainable Development (WBCSD).

What is a business association?

Business associations are membership organizations composed of, funded, and governed, by firms with shared interests. They represent and defend the interests of their organizational members to outside parties and frequently offer services to their membership base (Schmitter & Streeck, 1999; Lanzalaco, 2008; Barnett, 2013). Associative action is distinct from other forms of business collective action such as alliances, business groups, networks and multi-stakeholder initiatives. It is also one of the most common forms of inter-organizational business activity. There are thousands in the U.S. alone. Every industry and sub-industry has one or several associations and most companies are members of one or several associations – a trade or industry association, a chamber of commerce, an employers’ association, a sustainability coalition, a lobby group, an economic club, etc.

The peril and promise of business associations

As the examples in the introduction illustrate, collective action via business associations can serve multiple ends. In some cases, they operate as special interest groups and rent-seekers whose narrow, self-serving objectives benefit only the industries or coalitions they represent… or even a small subset of member firms within the association. As such, business associations may stall or undermine sustainability efforts and capture regulators and legislators. In these cases, they are detrimental to society and must be countered and contained by markets, governments and social movements (“peril”).

In other cases, their interests are aligned with broader social goals, and as such, they serve as powerful, well-resourced advocates for mobilization and pro-social change. Under certain conditions, business associations may also exert normative pressure upon its membership, mediate member interests, and operate as effective self-regulatory institutions, resulting in beneficial social outcomes (“promise”).

The need for more research

The idea that companies who compete in the economic sphere can also collaborate to address social and environmental concerns has taken hold in both academic and practitioner circles. However, scholarship from various disciplines suggests that achieving the institutional conditions conducive to beneficial social outcomes is difficult and that more research on business associations, and the broader topic of collaboration amongst competitors, is required. Depending on the theoretical grounding and audience, the phenomenon is being addressed under a variety of labels: trade associations, green clubs, meta-organizations, pre-collaborative collaboration, coopetition and self-regulation. Clearly, there is a strong need and there are growing opportunities to address the prominence, peril and promise of business associations.


[i] Carrington, D. (2018, Dec 10). Tackle climate or face financial crash, say world’s biggest investors: UN summit urged to end all coal burning and introduce substantial taxes on emissions. The Guardian. Retrieved from https://www.theguardian.com/environment/2018/dec/10/tackle-climate-or-face-financial-crash-say-worlds-biggest-investors?CMP=share_btn_tw

[ii] Lambert, F. (2018, Nov20). Oil companies officially ask Republicans to kill effort to extend electric vehicle tax credit. electrek. Retrieved from https://electrek.co/2018/11/20/oil-companies-republicans-kill-electric-vehicle-tax-credit/

[iii] Nuccitelli, D. (2018, Jul 30). America spends over $20bn per year on fossil fuel subsidies. Abolish them. The Guardian. Retrieved from https://www.theguardian.com/environment/climate-consensus-97-per-cent/2018/jul/30/america-spends-over-20bn-per-year-on-fossil-fuel-subsidies-abolish-them


The Author

José Carlos Marques is Assistant Professor, Strategy, Corporate Responsibility and Sustainability, at the Telfer School of Management, University of Ottawa, and Visiting Research Fellow (Governing Responsible Business) at the Copenhagen Business School. His research program, at the intersection of strategic management, sustainability and transnational governance, examines the drivers and organizational strategies of inter-organizational coalitions that address social and environmental challenges – these include business associations, multi-stakeholder initiatives and business-state interactions. His work has been published in MIT Sloan Management Review, Organization Studies, Journal of Business Ethics and Journal of World Business.
contact: jc.marques@telfer.uottawa.ca
twitter: @jcmarqz

Bibliography

  • Aldrich, H. E. (2017). Trade Associations Matter as Units of Selection, as Actors Within Comparative and Historical Institutional Frameworks, and as Potential Impediments to Societal Wide Collective Action. Journal of Management Inquiry, 27(1), pp.21-25.
  • Barnett, M. L. (2013). One Voice, But Whose Voice? Exploring What Drives Trade Association Activity. Business & Society, 52(2), 213-244.
  • Buchanan, S. and Marques, J.C. 2017. How Home Country Industry Associations Influence MNE International CSR Practices: Evidence from the Canadian Mining Industry. Journal of World Business, 53(1): 63-74.
  • DiVito, L., & Sharma, G. (2016). Collaborating with Competitors to Advance Sustainability: A Guide for Managers. Network for Business Sustainability (NBS). London, ON. Retrieved from https://nbs.net/p/guide-collaborating-with-competitors-to-advance-sustai-a95dc170-b857-49f4-82ba-42033c09b6cc
  • Grayson, D., & Nelson, J. (2013). Corporate responsibility coalitions: The past, present, and future of alliances for sustainable capitalism. Redwood City, CA: Stanford University Press.
  • Lanzalaco, L. (2008). Business Interest Associations. In G. G. Jones & J. Zeitlin (Eds.), Oxford Handbook of Business History (pp. 293-318). Oxford: Oxford University Press.
  • Marques, J. C. (2017). Industry Business Associations: Self-Interested or Socially Conscious? Journal of Business Ethics, 143(4), 733-751.
  • Nidumolu, R., Ellison, J., Whalen, J., & Billman, E. (2014, April). The Collaboration Imperative. Harvard Business Review. Retrieved from https://hbr.org/2014/04/the-collaboration-imperative-2
  • Potoski, M., & Prakash, A. (Eds.). (2009). Voluntary Programs: A Club Theory Perspective. Cambridge, MA: MIT Press.
  • Rajwani, T., Lawton, T., & Phillips, N. (2015). The “Voice of Industry”: Why Management Researchers Should Pay More Attention to Trade Associations. Strategic Organization, 13(3), pp.224-232.
  • Schmitter, P. C., & Streeck, W. (1999). The Organization of Business Interests: Studying the Associative Action of Business in Advanced Industrial Societies – MPIfG Discussion Paper 99/1. Cologne, Germany: Max-Planck-Institut.

Photo by Sebastian Bednarek on Unsplash.

Corporate contributions to United Nations’ Sustainable Development Goals

By Amanda Williams.

The days of corporate greening are over. Many companies kicked off their sustainability strategies decades ago by picking the low-hanging fruit. But there is nothing left within arm’s reach to pick. Now we expect companies big and small to demonstrate their contribution to broader societal and environmental sustainability challenges beyond firm boundaries.

The United Nation’s Sustainable Development Goals (SDGs) are arguably the most pertinent framework for corporations to demonstrate commitment to broader sustainability goals. The SDGs were adopted in September 2015 by 193 world leaders. They offer a comprehensive agenda of pressing economic, social and environmental issues. The goals are for everyone—governments, nonprofits, businesses, universities—everywhere—in all countries.

What are Companies Doing?

Encouragingly, the SDGs are showing up everywhere on corporate websites and reports. However, all this hype around the goals may not necessarily translate into more sustainability action. Many companies are taking advantage of the SDGs to repackage their existing sustainability initiatives. For example, let’s say a beverage company has a water stewardship program to increase access to clean water in the countries that they operate. It is easy for the beverage company to demonstrate a contribution to SDG 6, Clean Water and Sanitation. But this approach does not leverage the full potential the SDG framework nor business contribution to the goals.

“All this hype around the goals may not necessarily translate into more sustainability action.”

More ambitious companies are taking the SDGs as an opportunity to embed sustainability across the firm and improve their sustainability strategy. This goes beyond using the SDGs to highlight existing sustainability efforts. It requires an in-depth analysis of business operations against the goals to identify positive and negative impacts. Then it requires setting ambitious goals and developing a strategy to achieve those goals. It requires radical changes in the way the business operates. Companies that are taking the goals seriously have much to gain. Research by the Business Commission for Sustainable Development finds that there is over $12 trillion in market opportunities created if the goals are achieved by 2030.

Challenges of Implementing the Goals

Despite the potential benefits of engaging, implementing a corporate strategy that truly aligns with the goals is not easy. Many managers express that the SDGs are too complex. With over a 169 targets, it is no wonder that some sustainability managers might feel overwhelmed.

In addition to complexity, another challenge is language. The SDGs are a political framework and working with the framework requires some work to translate them into actionable business strategies and targets. It may be tempting to prioritize and identify a handful of SDGs that are most material for the company without going into much detail. But the goals were designed as a holistic agenda to capture connected economic, social and environmental issues. For the beverage company, that means they have to consider how their operations and supply chain positively and negatively impacts all the SDGs, not just singling out the positive contributions to SDG 6 through their water stewardship program.

Overcoming the Challenges

There are many success stories out there to show that making a meaningful contribution to and aligning corporate strategy with the SDGs is possible. Here are some tips for making it happen:

1. Partner

The goals are broad and complex. To help cut through some of the complexity, managers can collaborate with international organizations or universities. Many international organizations offer services related, helping companies understand the complexity of the SDGs. Collaborating with scientists can give you access to specialized and local knowledge about SDG issues and help set firm specific goals that are based on science.

2. Engage the entire company

The goals are not just for the sustainability department. They are for the entire company. Sustainability managers might take the lead on engaging with the SDGs but involving the entire company helps to create a culture of sustainability and embed sustainability across the firm. Safaricom, Kenya’s largest mobile phone operator, provides a best practice example. They embedded the SDGs into their purpose statement and each one of their business units made a specific commitment to the goals.

3. Use tools

Don’t start from scratch. Luckily, many tools are out there to help managers formulate a strategy to achieve the goals. The SDG Compass offers advice on how to deliver on the goals and is a large database of commonly used business indicators to measure and report on contribution to the goals. Also, the World Business Council for Sustainable Development runs the SDG Business Hub, a large inventory of all the resources related to business and the goals.


Author

Amanda Williams is a Senior Researcher at ETH Zurich in the Sustainability and Technology Group. She recently completed her PhD from Rotterdam School of Management, Erasmus University. Currently, she is a part of Copenhagen Business School’s Governing Responsible Business (GRB) World Class Research Environment Fellowship program.


Photo by Caitlyn Hastings on Unsplash.

The Academic Smarts in the Smart City

By Lara Anne Hale.

Smart Cities 101

Last week I had the pleasure of being one of eight students to join the University of Aalborg course “Smart Cities – Technologies and Institutions” led by Professor Anders Henten and Associate Professor Reza Tadayoni. I applied for this course in May 2018, and then promptly forgot about it again. I can’t even find any remnants of a confirmation in my mailbox; and I’m only able to figure out when I had actually applied because of a Facebook chat that took place around it.

Yet, when the acceptance pinged into the mail lineup a few weeks ago, I made sure to cancel all previous obligations to open up the time for this three-day course. This is because – although it may not be obvious – there is a shortage of educational opportunities concerning what a smart city is, who is involved, how they are working to put the pieces together, when we can realistically transition, and why this even makes sense to pursue.

There are a number of reasons for this, not least of all because most of the projects bringing forth the Internet of Things (IoT) that smart cities are founded on, are detailed somewhere between (occasionally accessible) engineering papers, such as [1], and the (overly simplified) ‘government-slash-consultancy’ reports, such as [2] and [3]. Which, while comforting to know governments are investing in this kind of research, also create discomfort over who might have the language and knowledge with which to discuss, or even influence, smart cities development.

This brings me to one of the other major reasons for the lack of academic representation: smart cities involve such a conglomeration of disciplines, skills, languages, and theories that it would seem almost impossible to embody its understandings in one scholar. And it could be seen in our group: the teachers were from political economics and engineering; and the students represented organizational studies (myself), civil engineering, architecture, IT, anthropology, and more. It reminded me of a course I took in my bachelor studies “Bioethics of the 21st Century”, requiring both a Professor of Microbiology and a Professor of Philosophy and constituted of seemingly disparate discourses merging in the reality of our bioethics challenges.

From Science Fiction to Society

At that time, anyone who believed that bioethics was unnecessary needed only to look at the mass abuse of antibiotics or the explorations into stem-cell research. And anyone who now believes that the smart city is a feature of the future had better take a look around at the present. Just consider the kind of political affiliation conclusions (otherwise known as “profiling”) that can be extrapolated from Twitter data [4]. Even WIRED Magazine recently released an article detailing how governments are bringing together the sophistication of interconnectivity and the maturation of artificial intelligence (AI). This, paired with the overly optimistic intentions for social media and the willful blindness of the West’s superpowers, could result in a new-found political war over the control of not just data, but also the city- (even nation- or internation-) wide imposition of government, industrial, and freedom controls [5]. As they call it, the “AI Cold War”.

More on the day-to-day practical side of things, the devices primed to share data to the bigger cloud for smart city processing start making themselves cozy on our shelves, sockets, and even wrists. Postscapes, an organization specializing in organizational efficiency and waste reduction through IoT and machine-learning technologies, identifies the top 2018 IoT devices as centering around convenience (e.g. smart locks, smart home hubs) and energy savings (e.g. smart thermostats, smart lights) [6]. Embedded in the banality of these literal black boxes are the governance and democratic implications set forth in the aforementioned articles; but it is the nature of technology to develop towards ease-of-use, and eventually, invisibility. Yet, where there is change, there is also opportunity.

Organizational Smarts

Certainly, building organizations are keenly aware that digitization and smart buildings are no longer a negligible aspect of the business. Rather, there is the question of how they should engage with these changes, and most importantly, how this novel connection with end-users (through the little black boxes) might change (or – more cautiously – improve) the way they do business.
One of the most prominent ways such a consideration is voiced is in the terminology of nudging, referring to a “relatively subtle policy shift that encourages people to make decisions that are in their broad self-interest” [7]; the catch being that in a smart city, it is not the policy that does the encouraging, but the technology, be it technological infrastructure, application design, or signals from devices.

For example, simply communicating electricity consumption compared to one’s neighbours changes people’s use of electricity (for better, or for worse) [8]. And so, building organizations have embarked upon a journey to apply understandings of how people behave, how smart buildings can connect with behaviour, and how it makes good business sense to digitize buildings; but they cannot do it alone. Half of the organizational smarts are about the business ecosystems and partnerships being formed in order to bring smart spaces to reality.

And despite having my hands full examining this scale of organizational work, it’s been enlightening to go from the organizational perspective on the building level (as I research about smart buildings and healthy indoor climate) to the city level. Previously I would have thought of this as being more relevant for those working with mobility or utilities; but after this course I better understand that the playing field for intention, business, and power in the communication technologies and protocols that enable smart cities (and also smart buildings) is much broader and nuanced than I had previously understood. Just learning about the communication technology forms was enough to blow this little biologist-environmentalist-organizational-sociologist’s mind. Even knowing their names and relative differences [9], I’m still not sure how this will meet expectations of a better world.

The 5Gs and 5Ds of Smart

One thing is for sure, standards matter, and standards will be made. Before this course, I had never even heard of 5G, and yet the European Commission identifies it as “the most critical building block of our digital society in the next decade” [10]. The Commission has been polishing the EU standards for 5G since 2016 [11] and has earmarked €700 million in funding, with initial rollouts planned for 2018 and followed by another, broader wave in 2020.

The concept of 5G extends well beyond an acceleration of mobile service into a virtual “stacking” of data incoming from the other communication technology forms (such as WiFi and LPWAN) in order to create a synergetic cloud-network, from which it would (hypothetically) be possible to analyze and improve upon the city system (otherwise known as us, our lives, and our environment). From what I understand, the most part of such an analysis is planned to be done by AI.

Okay, so the little black boxes track and communicate our data over these various communication systems, which are compiled into the 5G cloud, where AI interprets the Big Data into meaningful action, executed again, by the little black boxes. No wonder experts are writing articles about an eminent AI Cold War. Luckily “privacy” is not the last word in the sentence. Rather, researchers are working hard to outline what types of privacy can be protected in the various angles of the smart city. Already in 2013, Martínez-Ballesté et al. identified the 5D (five dimensions) of smart city privacy as: identity privacy, query privacy, location privacy, footprint privacy, and owner privacy [12].


The 5 dimensions of smart city privacy:

identity, query, location, footprint and owner privacy.

Martínez-Ballesté et al.

These authors also point to the necessity for further security efforts within digital infrastructures and the transportation of data; a finger which has trouble settling its point due to the vast number of parties involved in bringing smart cities to life. Which one of these organizations is responsible for guaranteeing security? And is this a public or a private organizational responsibility?

Academic Smarts

No, those were not rhetorical questions. They were academic ones. And in discussing the 5G and the 5D, I’m reminded of another 5D. During the 6th Active House Symposium workshop “Digital Design Meets Digital Use: Active House principles in BIM and smart buildings” that I co-organized with PhD fellow Federica Brunone, Federica highlighted that Building Information Modeling (BIM) technology enables planning for the built environment beyond the Height, Width, and Depth; that the 5D adds Time and Sustainability. I suppose that the latter of these five, Sustainability, is the one that we are still struggling to incorporate into the standardized practices of life.


Building Information Modeling technology enables planning for another 5D:

Height, Width, Depth, Time and Sustainability.


Although I’ve been told during my research that Sustainability was the past, and Smart is the future, I have to question if that conclusion is not a dismissal driven by the challenges that Sustainability poses to Smart. How can we be smart without being sustainable? And better yet, if we can study, research, teach, practice, policy-make, and live in a sustainable way, won’t that pave the way for smart cities? Those were not academic questions. I think you know the answer.

References

  1. Maha Saadeh, Azzam Sleit, Khair Eddin Sabri, and Wesam Almobaideen. (2018). Hierarchical architecture and protocol for mobile object authentication in the context of IoT smart cities, Journal of Network and Computer Applications, 121: 1-19.
  2. Danish Ministry of Housing, Urban and Rural Affairs. (2015). Tomorrow’s Cities are Digital and Human – Smart City methods: from ideas to action. Anders Nørskov, Kristoffer Nilaus Olsen, Lukas Beraki, and CEDI (Eds.). The Ministry of Housing, Urban and Rural Affairs, Denmark 2015. ISBN: 978-87-7134-136-2. Accessed 18 November 2018 from: https://erhvervsstyrelsen.dk/sites/default/files/smart_city_2015_english_0.pdf
  3. Doody, L., Walt, N., Dimireva, I., and Nørskov, A. (2016). Growing Smart Cities in Denmark: Digital Technology for Urban Improvement and National Prosperity. Arup and CEDI, Denmark 2016. Accessed 18 November 2018 from: http://um.dk/da/nyheder-fra-udenrigsministeriet/newsdisplaypage/~/media/UM/Markedsinformation%20Publications/Growing_Smart_Cities_in_Denmark.pdf
  4. Mathias, C., Storey, S., and Hooper, A. (2016). We the Tweeple. Huffington Post, 19 October 2016. Accessed 18 November 2018 from: http://data.huffingtonpost.com/2016/we-the-tweeple
  5. Thompson, N. and Bremmer, I. (2018). The AI Cold War that Threatens Us All. WIRED Magazine, 23 October 2018. Accessed 18 November 2018 from: https://www.wired.com/story/ai-cold-war-china-could-doom-us-all/
  6. Postscapes. (2018). IoT Devices and Products. Retrieved 18 November 2018 from: https://www.postscapes.com/internet-of-things-award/winners/
  7. Chu, B. (2017). What is ‘nudge theory’ and why should we care? Explaining Richard Thaler’s Nobel economics prize-winning concept: How subtle policy shifts can be in everyone’s best interest. Independent, 9 October 2017. Accessed 18 November 2018 from: https://www.independent.co.uk/news/business/analysis-and-features/nudge-theory-richard-thaler-meaning-explanation-what-is-it-nobel-economics-prize-winner-2017-a7990461.html
  8. Holmes, B. (2018). Nudging grows up (and now has a government job). Knowable Magazine, 1 February 2018. Accessed 18 November 2018 from: https://www.knowablemagazine.org/article/society/2018/nudging-grows-and-now-has-government-job
  9. Ledger, D. (2016). Making sense of the myriad of IoT standards and protocols. Medium Corportation, 10 June 2016. Accessed 18 November 2018 from: https://medium.com/@dledge/making-sense-of-the-myriad-of-iot-standards-and-protocols-88dc4792ba1f
  10. The European Commission. (2018). Digital Single Market: Towards 5G. Accessed 18 November 2018 from: https://ec.europa.eu/digital-single-market/en/towards-5g
  11. The European Commission. (2018). Digital Single Market: Research and Standards. Accessed 18 November 2018 from: https://ec.europa.eu/digital-single-market/en/research-standards
  12. Martínez-Ballesté, A., Pérez-Martínez, P.A., and Solanas, A. (2013). The Pursuit of Citizens’ Privacy: A Privacy-Aware Smart City Is Possible. IEEE Communications Magazine, June 2013. Accessed 18 November 2018 from: https://ieeexplore.ieee.org/document/6525606/

Author

Lara Anne Hale is an industrial postdoc fellow with VELUX and Copenhagen Business School’s Governing Responsible Business World Class Research Environment. The 3-year project is part of Realdania’s Smart Buildings & Cities cluster within BLOXHUB’s Science Forum. It builds upon her PhD work on experimental standards for sustainable building to look at the business model innovation process in organizations’ adaptation to the smart building business. Follow her on Twitter.


Photo by Kristian Egelund on Unsplash.

Sustainability’s Infrastructure

Ethnographies of the global value chain of certified tea (SUSTEIN)

By Hannah Elliott, Martin Skrydstrup and Matthew Archer.

Why SUSTEIN?

Currently, the world’s tea industry is on a race with time to source tea sustainably before 2020. But what is “sustainable tea” and how do we know if tea is sustainable or not? This project entitled SUSTEIN (SUStainable TEa INfrastructure) will focus on this question by way of looking at localized translations of transnational sustainability standards in Kenya, United Arab Emirates and corporate headquarters in Europe. We aim to advance our understanding of the global value chain of certified tea.

3 Research lines

The theoretical objective is to venture beyond the notion of global value chain by reinterpreting sustainable supply chain management through the concept of infrastructure, a notion anthropologists and other social scientists have deployed in recent years to emphasize the political and temporal aspects of networks such as transnational supply chains. We hope that this concept will allow us to better comprehend how sustainable certification schemes manifest in global value chains.
SUSTEIN consists of three sub projects, which each address a core question posed by the project:

  • How does certification shape agrarian production in the form of cultivation and factory processing, and vice versa? Who benefits from which sustainability standards? (Line A)
  • How does certification influence the valuation of tea, assessed in terms of taste, grade and price? How is the value of certification performed and capitalized? (Line B)
  • How do corporate professionals and independent auditors distinguish between “sustainable/unsustainable”? What lines of evidence are recognized? (Line C)

Each of these questions will be answered by the corresponding research line:

tea plantation
Tea plantage in Kericho; one of SUSTEIN’s field sites.

Research line A

explores agrarian questions, enquiring into the ways contemporary drives towards sustainability shape and are shaped by modes of tea production in Kenya. The research focuses on the institution of the tea plantation and its associated factories and outgrower farms, all key components of the infrastructure of sustainable tea. The tea plantation has been described as having a “dual character” (Besky 2008: 1); it has its roots in British colonialism while being contemporarily positioned in international markets for certified sustainable commodities. This research line enquires into what ‘sustainability’ comes to mean and materialise within this apparently contradictory setting. How do contemporary measures seeking to ensure sustainable tea production, such as certified standards, affect the way tea is produced in the context of the plantation? And to what extent do longer-standing modes of plantation production endure through the present, in turn shaping contemporary sustainability ideologies and practices? The research line addresses these questions through ethnographic inquiry. The researcher will spend time with the people working on tea plantations and in factories certified by different certification bodies and on the farms of outgrowers contracted to supply the companies owning plantations with supplementary sustainable tea. Through interviews and participant observation, the ethnographer will enquire into the social, political and ethical worlds surrounding sustainable tea production in contemporary Kenya.

Research line B

will follow through on the plantation and factory sites to the auction sites in Mombasa and Dubai. Ethnographic fieldwork will be conducted in the Jebel Ali Free Zone in Dubai with no tax regulations, no strict labor laws nor import/export duties, making it the perfect infrastructural hub to blend and pack tea according to corporate logic. Likely as an outcome of this, the Dubai Tea Trading Centre has since its establishment in 2005 risen to re-export 60% of the world’s tea production. These volumes are predominantly traded on virtual platforms.
In contrast, the Mombasa Tea Auction holds two weekly auctions under the auspices of the East African Tea Trade Association (EATTA), which conforms to national regulations (Tea Act of Kenya & Tea Board of Kenya). Recently, this auction site voted “against the mouse and for the hammer,” maintaining the tradition of the Dutch auction style vs. virtual trading. The ethnography for this research line will move between these two sites, following tea blenders who purchase in Mombasa vs. Dubai and investigating tea expertise and technologies as it pertains to the valuation of certified tea.

Research line C

builds on these ethnographies of production and exchange to try and understand the relationship between corporations and standards/certification regimes. There is a tension between these groups of actors whereby standards organizations such as the Rainforest Alliance and Fairtrade International need to appear independent in order for their certifications to remain credible while at the same time remaining sensitive to the financial obligations of for-profit corporations in order to promote “buy-in.”
This research line will draw on interviews with people working in these organizations and participant observation at sites where they interact, including industry conferences and trade fairs. These are the sites where sustainability is negotiated as both a concept and as a set of practices. With that in mind, interview questions will focus on, among other things, the extent to which specific agricultural and trading practices are integrated into broader definitions of sustainability and their manifestation in different certification regimes, the challenges of maintaining a critical distance between certifiers and corporations, and the way standards govern markets and, crucially, vice versa.

The grant

SUSTEIN is made possible by the Sapere Aude Starting Grant (meaning “dare to know”), awarded by the Danish Council for Independent Research (DFF). The Sapere Aude program “is aimed at younger, very talented researchers, who at the time of the application deadline and within the last eight years have obtained their PhD”. The Sapere Aude program targets “top researchers who intend to gather a group of researchers, in order to carry out a research project at a high, international level.”

Reference

Besky, S. (2008) ‘Can a plantation be fair? Paradoxes and possibilities in Fair Trade Darjeeling tea certification’. Anthropology of Work, XXIX: 1, pp. 1-9.


Hannah Elliott is a post-doc in the Department of Management, Society, and Communication at Copenhagen Business School, having recently finished her PhD at the University of Copenhagen. She is responsible for research line A.

Martin Skrydstrup is an associate professor in the Department of Management, Society, and Communication at Copenhagen Business School and is the principal investigator of SUSTEIN. He is also responsible for research line B.

Matthew Archer is an assistant professor in the Department of Management, Society, and Communication at Copenhagen Business School and is responsible for research line C. He recently completed his PhD in environmental studies at Yale University and is interested in corporate sustainability and sustainable finance.


Closing remarks

In a year we hope to update BOS readers about how far we are with answering our research questions. In the meantime, we invite you to swing by our offices at Dalgas Have for a cup of tea.
The SUSTEIN project runs from 1 July 2018 to 30 June 2020.
For further information about the project, please contact the principal investigator, Martin Skrydstrup, at msk.msc@cbs.dk.

The BUSINESS Model is Dead: Long Live the Organizational Value Model!

By Oliver Laasch.

An ApPeaRange!

Business models are logics of value proposition (Pr), creation (Cr), exchange (Ex) and capture (Ca). When closely looking at sustainability business models, it becomes clear that these ‘value functions’ are not only shaped by a commercial logic, but also by one of sustainability. Many of sustainability business models include further logics of social welfare (e.g. social enterprises), and government (e.g. private-public partnerships) (Laasch, 2018b). If a homogeneous commercial business model was an orange, these business models are more like a heterogeneous mixture between an apple, a pear and that orange, an ApPeaRange! Their value logics are not homogeneously commercial, but heterogeneous mixtures.

Strange Fruit Everywhere

Heterogeneous value logics like the one of sustainability business models are widespread. Imagine you peel an orange and find an apple inside:

Over half of the FTSE100 corporations have integrated a responsibility logic into their business model descriptions (Laasch & Pinkse, 2018). Many large businesses, such as LEGO, as well as SMEs are family-run, integrating their commercial logic with a family logic (Laasch & Conaway, 2015). We may also think of the Chinese semi-conductor producer Goodark blending commercial logic with a spiritual logic of Confucianism; the German car supplier Allsafe with its humanistic logic of freedom and responsibility; or the Brownie bakery Greyston with its commercial value logic firmly wrapped around a social welfare logic (Laasch et al., 2018). Once opening our eyes to the variety of ‘values’, of normative orientations and purposes businesses are oriented towards (Randles & Laasch, 2016), the perceived number of companies adhering to a purely commercial value logic shrinks considerably. While the purely commercial business model might not be entirely dead, it sure shouldn’t be considered the norm. And then there are entirely non-commercial organizations with value logics.

Comparing APPLE and Oranges: Yes!

Isn’t comparing a commercial organization, for instance, Apple and noncommercial organizations, let’s say a church, like comparing Apple and oranges? Yes, cheap pun intended:

“…a commercial business like Apple. With a customer value proposition (Pr) of high quality and high-end design, it depends on highest-standard production processes (Cr) and on the ability to maintain high margins (Ca).”

Laasch, 2018b: 165.

It appears we have found a purely commercial value logic, one that deserves the name BUSINESS model. Can we analyze a non-business organization, for instance a church, the same way?

“…shaped by an institutional logic of religion. It may pursue a value proposition of spiritual salvation (Pr), by helping believers to live according to religious values through the provision of religious services from marriages and funerals to humanitarian aid (Cr), and exchange value in a global network of churches (Ex).”

Laasch, 2018b: 165.

It appears non-business organizations, while not having a BUSINESS model per se, do have an organizational value model of value proposition, creation, exchange and capture. Freeing the organizational value logic from its commercial business origins enables us to take a fresh look at any kind of organization: Churches, universities, NGOs, governments, your favorite sports club, you name it! Organizational value logics lend themselves to study, design, and improve all kinds of organizations.

How to Farm Strange Fruits?

It has been argued that one of the main challenges of our times is to create companies and other organizations shaped by alternative logics, be it the one of sustainability, or of social welfare. We have seen that many organizations already have heterogeneous value logics. How to change the ones that don’t? Three interrelated manifestations of organizational value logics together form an organizational value model:

  • Cognition: An organizational value logic manifests in organizational members’ cognitive structures, their mental models and related decision making.
  • Activities: Value logics manifest in the logic of action of the activity systems through which an organization’s value model is enacted.
  • Artefacts: Value logics materialize in physical form, as texts, or images, such as a business model description in the annual report, factory layouts, or products.

Changing an organization’s value logic can start in any of its manifestations. For instance, as a corporate responsibility strategy circulated through a multinational retailer, the document’s responsibility logic was translated into peoples’ mental models, new activities and structures (Laasch, 2016, 2018a). In the companies Goodark, Allsafe, and Greyston mentioned above, new practices centered on a humanistic value logic (Laasch et al., 2018; Laasch, Dierksmeier, & Pirson, 2015) changed the networks of practices’ enacting their business models (Boons, Laasch, & Dierksmeier, 2018; Laasch et al., 2015). The emerging field of business model sociology provides further insight into such change processes (Laasch, 2018c).

Oliver Laasch is an Assistant Professor of Strategy at the University of Nottingham Ningbo China, founder of the Centre for Responsible Management Education and a visiting professor at the University of Tübingen’s Global Ethic Institute. Currently, he is a part of Copenhagen Business School’s Governing Responsible Business (GRB) World Class Research Environment Fellowship program.


References and Materials

If you enjoy strange fruits, have a look at the ‘apples and oranges’ audioslides with a more ‘academic’ presentation.

  • Boons, F., Laasch, O., & Dierksmeier, C. 2018. Assembling organizational practices: The evolving humanistic business model of Allsafe, 6th Asian SME Conference. Tokyo.
  • Laasch, O. 2016. Business model change through embedding corporate responsibility-sustainability? Logics, devices, actor networks. University of Manchester, Manchester.
  • Laasch, O. 2018a. An actor-network perspective on business models: How ‘Being Responsible’ led to incremental, but pervasive change. Long Range Planning, [DOI 10.16/j.lrp.2018.04.002].
  • Laasch, O. 2018b. Beyond the purely commercial business model: Organizational value logics and the heterogeneity of sustainability business models. Long Range Planning, 51(1): 158-183.
  • Laasch, O. 2018c. Business model sociology: Exploring alternative lenses (not only) for the study of alternative business models. CRME Working Papers, 4(4).
  • Laasch, O., & Conaway, R. 2015. Principles of responsible management: Glocal sustainability, responsibility, ethics. Mason: Cengage.
  • Laasch, O., Dierksmeier, C., Livne-Tarandach, R., Pirson, M., Fu, P., & Qu, Q. 2018. Humanistic management performativity ‘in the wild’: The role of performative bundles of practices, 32nd Annual Australian & New Zealand Academy of Management (ANZAM) Conference. Auckland.
  • Laasch, O., Dierksmeier, C., & Pirson, M. 2015. Reality proves possibility: Developing humanistic business models from paradigmatic practice. Paper presented at the Academy of Management Annual Convention, Vancouver.
  • Laasch, O., & Pinkse, J. 2018. How the leopards got their spots: A typology of corporate responsibility business models, 3rd Annual Conference on New Business Models. Sofia.
  • Randles, S., & Laasch, O. 2016. Theorising the normative business model (NBM). Organization & Environment, 29(1): 53-73.

A framework for assessing the potential of behaviour change for global decarbonisation

By Kristian Steensen Nielsen

Addressing climate change requires an urgent implementation of far-reaching solutions. Policy-makers and natural scientists have mainly offered supply-side solutions to solving the climate problem, such as widespread adoption of new or innovative technologies. While of critical importance, strictly prioritising supply-side solutions is unlikely to deliver the necessary greenhouse gas (GHG) emissions reductions within the desired time frame. An often-overlooked demand-side solution is behaviour change, which can offer both immediate and long-term reductions in GHG emissions.

There is an urgent need for rapid decarbonisation to reduce the magnitude of climate change. The Paris Agreement reflected this urgency in its formulation of ambitious goals to keep the global temperature increase below 2°C and preferably 1.5°C. Since the Paris Agreement, researchers—often affiliated with the Intergovernmental Panel on Climate Change (IPCC)—have with accelerated frequency been building scenarios for potential pathways to reach the temperature goals.[1] These far-reaching—and arguably radical—pathways involve urgent transitions to renewable energy sources and the majority assumes the use of carbon dioxide removal (CDR) technologies, such as afforestation or bio energy with carbon capture and storage (BECCS). Neither of the pathway scenarios take behavioral changes into account despite the fact that studies have shown its potential to reduce GHG emissions. For example, Thomas Dietz and colleagues (2009) found that a national implementation of behavioural changes in the United States could reduce U.S. households’ direct emissions by 20% within 10 years (representing 123 million tons of CO2). Although not sufficient single-handedly, behaviour change can help speed up the decarbonisation of societies.

 

Three dimensions of behaviour change

To identify the potential of behavioural changes to reduce GHG emissions, it is critical to consider three dimensions[2]:

  1. the technical potential (TP) of a behaviour, or the emissions reduction achieved if an individual or a target population collectively adopted the behaviour;
  2. behavioural plasticity (BP), or the proportion of the technical potential achievable through the most effective behavioural interventions; and
  3. feasibility of initiatives (IF) to induce change, which refers to the likelihood that the most effective interventions are achievable within a target population.

Focusing exclusively on either of the three dimensions will result in skewed analyses from which only imperfect interventions can be developed. For example, substituting a GHG-intensive behaviour with a less GHG-intensive alternative (e.g., flying to Bermuda on vacation versus vacationing in one’s own country) will promise a high TP but the extent to which people are willing to make such a behavioural substitution may be less promising (BP) and so might the feasibility of achieving the behavioural change across a large population (IF). Conversely, a behaviour could be easy to change (e.g., getting people to shut off lights in unoccupied rooms) and feasibly be implemented in a large population, yet hold a very low TP and therefore even in the aggregate fail to reduce emissions by much.

Identifying the most promising target behaviours

The task of researchers (across disciplines) in collaboration with policy-makers and companies is to identify the behaviours with the highest potential to reduce GHG emissions while considering all three dimensions in cohesion. Making such calculations is no easy task—as the dimensions may vary substantially between and within countries—but neither is adopting innovative technologies at a massive scale. However, focusing on both supply- and demand-side solutions will heighten the likelihood of achieving the Paris goals.

[1] Rogelj et al., 2018.

[2] Dietz et al., 2009; Vandenbergh & Gilligan, 2017.

 

References

Dietz, T., Gardner, G. T., Gilligan, J., Stern, P. C., & Vandenbergh, M. P. (2009). Household actions can provide a behavioral wedge to rapidly reduce US carbon emissions. Proceedings of the National Academy of Sciences106(44), 18452-18456.

Rogelj, J., Popp, A., Calvin, K. V., Luderer, G., Emmerling, J., Gernaat, D., … & Krey, V. (2018). Scenarios towards limiting global mean temperature increase below 1.5° C. Nature Climate Change8(4), 325.

Vandenbergh, M. P., & Gilligan, J. M. (2017). Beyond Politics. Cambridge University Press.


Kristian Steensen Nielsen is a PhD Fellow in environmental behaviour change at Copenhagen Business School. His research interests are self-control, behaviour change, and environmentally significant behaviour.

 

Pic by Duncan Harris, Flickr.

The not-so-sharing economy

By Attila Marton

With the rise of Airbnb and Uber into the elite club of Silicon Valley superstar firms, the sharing economy has become an accepted business concept and social practice. Apart from the fact that sharing economy platforms (SEPs), such as Airbnb and Uber, are very savvy in playing labelling games (most of them have little to nothing to do with actual sharing), they are also very savvy in purposefully blurring established institutional boundaries and categories – most prominently, categories of employment and labour. By facilitating the “casual participation” of private individuals as users of their services, SEPs can gain significant advantages over well-established incumbents as they disrupt mature markets and labour structures as well as challenge long-held wisdoms of how to organize the creation and distribution of value.

It’s a thing now

The sharing economy is here to stay. Although, it is not yet clear whether the sharing economy will turn out to be as big a thing as the hype surrounding it suggests. Just to give some indicative numbers; The Economist estimates that the consumer peer-to-peer rental market is worth $26 billion, McKinsey predicts that the sharing economy will rise to $335 billion in revenues by 2025. In Denmark, 10% of the population has participated in the sharing economy in some form, while the Danish government announced a sharing economy strategy. At least it is safe to say that the hype is real and so are the expectations for high returns on the investments made into sharing economy platforms.

Something new, something old

The sharing economy, in its contemporary digitally platformed version, is the result of the confluence of three developments:

  • The rise of access-over-ownership as consumers are increasingly okay with paying for services and servitised products rather than to buy stuff. Streaming services, such as Netflix and Spotify, are telling examples. When we say access-based consumption or on-demand economy, we typically refer to this development.
  • The rise of peer-to-peer networks, which allow for direct inter- and transactions between peers coordinated by trust and reputation mechanisms. Think eBay and YouTube – typical examples of what we sometimes call the peer-to-peer economy or collaborative economy.
  • Allocating idle resources in order to tap into privately owned resources (assets and labour) and to promote more economical and sustainable use of resources as a result. Examples are IKEA’s second-hand campaign or renting out idle storage space via sharemystorage.com. Terms such as collaborative consumption and circular economy typically refer to this notion.

None of these developments is, of course, new nor exclusive to the sharing economy. Clans have been sharing food and tools since the dawn of humanity. Donating blood peer-to-peer has been around for at least half a century and the allocation of idle resources in brick-and-mortar second-hand shops even longer. The same applies to digital varieties of these practices; sharing files or selling/buying peer-to-peer online have been around since the 1990s (eBay was founded in 1995, Napster in 1999, Wikipedia in 2001). What is new is how these developments come together under specific technological, economic and cultural circumstances.

Mature technologies of automation enable private individuals to casually participate in economic activities as they self-service on dedicated platforms, which run automated matchmaking algorithms. Network effects attract larger groups of participants, increasing the economic value of those platforms (and of the corporations owning them). Thus, the coordination of casual participants has become a highly profitable business model. Culturally, these developments have become socially acceptable and appropriate as the new narrative of the Web 2.0 propagates “sharing is caring” and a general fascination with technological wizardry.

Four generic types of sharing economy platforms

An important outcome of above developments is that established institutional categories are becoming blurred, and static boundaries are becoming fluid. SEPs purposefully utilize these fluid boundaries to their advantage – be it between firms and markets (are Uber drivers employees or self-employed?), between internal and external resources (Airbnb hosts bring their own assets and have all the risks), and between private and business spheres (participants monetize and commodify their private life into assets), to name but only the most important examples. In our research (with Ioanna Constantiou, Dept. of Digitalization, CBS, and Virpi Tuunainen, Dept. of Information and Service Economy, Aalto University), we found that successful SEPs are very good at exploiting these boundary fluidity for their purposes. We identified four generic types we call the Franchiser, Chaperone, Principal, and Gardener.

  • The Franchiser aims for tight control over the platform participants and high rivalry among the service providers. The prototypical example is Uber, exploiting boundary fluidity by treating its drivers like employees while making them compete for fares dictated by Uber’s algorithm.
  • The Chaperone aims for loose control over the participants and high rivalry among the service providers. This is, of course, the Airbnb model; Airbnb exploits boundary fluidity by treating its participants like community members expected to follow norms and values while making the hosts compete like micro-entrepreneurs, who set their own prices based on Airbnb’s recommendation.
  • The Principal aims for tight control over the participants and low rivalry among the service providers. For instance, Handy (a per-task labour platform) treats its service providers like employees by making them sign contracts while the service providers participate in tenders based on standardized prices dictated by Handy.
  • Finally, the Gardener aims for loose control over the participants and low rivalry among the service providers. For instance, Couchsurfing (facilitating short-term, free-of-charge accommodation) leaves it to the participants to coordinate their accommodation while eliminating rivalry among the hosts by not allowing them to charge money.

Not so obvious implications

What each of these four types have in common is that they all rely on the casual participation of their user base; that is, their users typically operate on smaller scale, use their personal resources, and are less experienced than traditional service providers and professionals (not only in terms of delivering services but also protecting oneself against exploitative business practices).[1] Combined with digitalisation, such casualness provides unprecedented sources for creating value and disguises large portions of the labour of the participants.

It is the degree to which this hidden labour has become the core of the business models of Uber, Airbnb, Handy, and Couchsurfing, that is really new.

To name just two examples. By means of the app and data-driven algorithms, Uber obviously replaces taxi dispatchers. Not so obvious, however, is the hidden labour provided by the Uber riders who, by scoring their rides, control the service quality. This used to be the purview of employed and paid middle managers. Likewise, Airbnb does not only profit from on-boarding private individuals as hosts (instead of hiring professional concierges) but also from the marketing those hosts provide not just for themselves but for Airbnb, the corporation – hidden labour, which would have traditionally required to pay marketing specialists.

It is a not-so-sharing economy we are dealing with. In fact, the sharing economy is the quintessential expression of a new logic of capital accumulation in the digital economy, where large portions of labour are disguised as casual (or even pleasurable) participation in the name of self-servicing and sharing. These forms of hidden labour are not unintended consequences; they are essential parts of the platform business model, as they sustain the digital systems and algorithmic operations of those platforms in order to make “sharing” not only economically viable but, above all, profitable. As a result, the historically and culturally important institution of sharing (in the true sense of the word) is thinned out and replaced by the logic of the platform economy, the micro-entrepreneurial ethos of monetizing every aspect of one’s “everydayness”, and the precarity of depending on demand.


Attila Marton is Associate Professor at the Department of Digitalization at Copenhagen Business School. He  focuses the interplay between information management and digital memory studies and the question how we will remember and forget the past in the future.His research can also be found on Academia and ResearchGate.

Academic Reference

[1] See Katz, V. 2015. “Regulating the sharing economy,” Berkeley Technology Law Journal (30:385).

Photo by Fancycrave on Unsplash

 

Consider also our post from last week, dealing with the topic of sharing.

Hybrid organizing in the face of grand challenges

By Ali Aslan Gümüsay.

Sharing is not always caring

In 2015, thousands of refugees arrived in Europe. A recent paper by Kornberger and colleagues (2017) zooms in on the “Train of Hope”, a civil society organization that organically gained exclusive operational command at Vienna’s main train station during this refugee crisis. The paper is a critical reflection on much of the current sharing economy ‘hype’. In contrast to cases of “collaborative consumption”[1], where platform companies such as AirBnB or Uber offer (share?) other people’s resources, this is an exemplary case of engagement and sharing without expectations for direct individual return: a sharing of a concern for social well-being.[2] Sharing then becomes caring.

Hybridity everywhere

What is Train of Hope? It is probably something of a platform and social movement blend that combines various skills like first aid, translation and accommodation services. It is a hybrid organization – and such hybrids seem to pop up everywhere lately. These novel forms of organizing combine different logics, orders of worth, value spheres, organizational forms and/or identities – struggling for a value(s) synthesis.[3] I see incubators, social ventures, ateliers, fab labs struggling to organize, represent and scale – and find their diverse pursuits fascinating, enriching and complementary. They do hybrid organizing in and for society and are frequently novel, digital, flexible, fluid, cross-boundary, multi-jurisdictional, and temporary forms.

Grand challenges & novel forms of organizing

Why now? A potential answer may lie in the types of challenges our societies face. Scholars from the field of management and organization studies speak of “grand challenges”[4] that are complex, uncertain, and multi-jurisdictional phenomena.[5] They represent fundamental, global societal concerns of ecological or social nature that require coordinated and collective efforts of multiple actors, including business firms, governments, civil society, and academia – as well as new forms of (hybrid) organizing.

Together with Emilio Marti (Erasmus University Rotterdam), Hannah Trittin (Leuphana University Lüneburg), and Christopher Wickert (VU University Amsterdam), I have initiated a scientific network that will be funded by the German National Science Foundation (DFG). The network will zoom in over the next three years on the interrelationship between grand challenges and new forms of organizing. Such organizations attempt to tackle the various sustainable development goals from climate change, decent work and sustainable growth, gender equality, populism and racism, societal cohesion, responsible consumption and production, to sustainable cities and communities.

A Janus face

The scientific network takes the vantage point in the assumption that such new forms of organizing often have a Janus face. They are both potential cause and solution for certain grand societal challenges. On the one hand, social entrepreneurial ventures[6], online communities such as Wikipedia and Linux[7], crowd science projects like Foldit, Galaxy Zoo and Polymath[8], and social initiatives like “Train of Hope” promise novel means to tackle these challenges. On the other hand, they also create new ones. For example, crowdsourcing and other new forms of platform-organized work crafted along the surge of the digital economy[9] often fuel the proliferation of precarious, self-employed and low-paid work that undermines social welfare systems and thus endanger modern democracies.[10] Likewise, in her recent book “Weapons of Math Destruction”, O’Neil (2016) describes how the (ab)use of new, seemingly efficient big data management techniques can promote, rather than reduce, racism, inequality and discrimination. Clearly then, novel hybrid forms of organizing promise many opportunities to tackle grand challenges – yet also create new (grand) challenges for society.


Ali Aslan Gümüsay is a Postdoctoral Researcher at the University of Hamburg and Research Fellow at Vienna University of Economics & Business. Twitter: @guemuesay

 

[1] Botsman & Rogers, 2010.

[2] Gümüsay, 2018.

[3] Gümüsay, 2017.

[4] George, Howard-Grenville, Joshi, & Tihanyi, 2016.

[5] Ferraro, Etzion, & Gehman, 2015.

[6] Mair & Martí, 2006.

[7] Garud, Jain, & Tuertscher, 2008.

[8] Franzoni & Sauermann, 2014.

[9] Bauer & Gegenhuber, 2015; Boes, Kämpf, Langes, & Lühr, 2016.

[10] Morozov, 2015.

References

Bauer, R. M., & Gegenhuber, T. 2015. Crowdsourcing: Global search and the twisted roles of consumers and producers. Organization, 22(5): 661–681.

Boes, A., Kämpf, T., Langes, B., & Lühr, T. 2016. “Lean” und “agil” im Büro: Neue Formen der Organisation von Kopfarbeit in der digitalen Transformation, Working Paper Forschungsförderung. Düsseldorf: Hans-Böckler-Stiftung.

Botsman, R., & Rogers, R. 2010. Beyond zipcar: Collaborative consumption. Harvard Business Review, 88(10): 30.

Ferraro, F., Etzion, D., & Gehman, J. 2015. Tackling Grand Challenges Pragmatically: Robust Action Revisited. Organization Studies, 36(3): 363–390.

Franzoni, C., & Sauermann, H. 2014. Crowd science: The organization of scientific research in open collaborative projects. Research Policy, 43(1): 1–20.

Garud, R., Jain, S., & Tuertscher, P. 2008. Incomplete by Design and Designing for Incompleteness. Organization Studies, 29(3): 351–371.

George, G., Howard-Grenville, J., Joshi, A., & Tihanyi, L. 2016. Understanding and Tackling Societal Grand Challenges through Management Research. Academy of Management Journal, 59(6): 1880–1895.

Gümüsay, A. A. 2017. Unpacking entrepreneurial opportunities: an institutional logics perspective. Innovation: Organization & Management, 1–14.

Gümüsay, A. A. 2018. COMMENTARY: Sharing is caring: From material to socio-material sharing. Academy of Management Discoveries. [Forthcoming]

Kornberger, M., Leixnering, S., Meyer, R., & Hoellerer, M. 2017. Rethinking the Sharing Economy: The Nature and Organization of Sharing in the 2015 Refugee Crisis. Academy of Management Discoveries. https://doi.org/10.5465/amd.2016.0138.

Mair, J., & Martí, I. 2006. Social entrepreneurship research: A source of explanation, prediction, and delight. Journal of World Business, 41(1): 36–44.

O’Neil, C. 2016. Weapons of math destruction: how big data increases inequality and threatens democracy. London: Allen Lane.

Pic: SDGs, circle, by UN WMO; edited.

‘Just Sustainabilities’ in a World of Global Value Chains

By Stefano Ponte.

What if we used our size and resources to make this country and this earth an even better place for all of us: customers, Associates, our children, and generations unborn? What if the very things that many people criticize us for—our size and reach—became a trusted friend? 

Excerpt from ‘Leadership in the 21st Century’, speech by Lee Scott, then CEO of Walmart, Bentonville, Arkansas, 24 October 2005 (as in Humes 2011: 102)

Whenever we engage in consumption or production patterns which take more than we need, we are engaging in violence.

Vandana Shiva, Earth Democracy: Justice, Sustainability, and Peace (2016: 102)

A New Era

Human activity is having major impact on the earth and its biosphere, to the point that geologists have now defined a new era – the Anthropocene – to reflect this phenomenon. For some, this is a period that started in the late 18th century with a marked increase in fossil fuel use, and that has accelerated dramatically since the middle of the 19th century. During this time, human action has overshadowed nature’s work in influencing the ecology of the Earth. Global sustainability crises, such as climate change, the acidification of oceans, and the ‘sixth great extinction’ of planetary life characterize this period of great turbulence in the relation between humanity and nature.

Others question the focus on humanity as an undifferentiated whole in the term ‘Anthropocene’, and propose a different term to explain the same result: Capitalocene, ‘the era of capitalism as a world-ecology of power, capital and nature’ (Moore 2016: 6). This term shifts focus away from the putative duality of human-nature relations and towards capitalism as a way of organizing nature. From a Capitalocene perspective, major changes in the world-ecology started taking place already in the mid-15th century – with a progressive transition from control of land as a way to appropriate surplus value, to control of land as a way of increasing labour productivity for commodity production. In other words, it is not enough to simply examine what capitalism does to nature and how humanity can solve global sustainability challenges through innovation in technology and business models. We need to conceptualize power, value and nature as thinkable only in relation to each other.

Sustainability Management

In addition to cost, flexibility and speed, sustainability management has become another key element of contemporary capitalism. The practices that corporations enact to address sustainability issues are also (re)shaping the existing spatial, organizational and technological fixes that are needed to ensure continuous capital accumulation.  Geographically, production is moving to locations that can meet basic sustainability specifications in large volumes and at low cost; organizationally, multi-stakeholder initiatives on sustainability have come to play a key role in global value chain (GVC) functioning; labour conditions among suppliers are under pressure from the need to meet increasing environmental sustainability demands from lead firms; and the need to verify sustainability compliance has led to the adoption of new technologies of measurement, verification, and trust.

The ‘business case’ for sustainability has been by and large solved – lead firms do not only extract sustainability value from suppliers, but also benefit from internal cost savings, supplier squeezing, reputation enhancement and improved market capitalization. As the value of goods increasingly depends on their intangible properties (including those related to sustainability) than on their functional or economic value, sustainability management becomes a central function of corporate strategy – filtering through organization, marketing, operations and logistics. Lead firms in GVCs are leveraging sustainability to extract more information from suppliers, strengthen power relations to their advantage, and find new venues of value creation and capture.

The business of sustainability is not sufficient as a global solution to pressing climate change and other environmental problems. It is doing enough for corporations seeking to acquire legitimacy and governance authority. This legitimacy is further enhanced through partnerships with governments and civil society groups. Some of this engagement is used strategically to provide ‘soft’ solutions to sustainability concerns and to avoid more stringent regulation. While the business of sustainability is leading to some environmental improvements in some places, and better use of resources in relative terms in some industries, the overall pressure on global resources is increasing. The unit-level environmental impact of production, processing, trade and retail is improving. But constantly growing consumption, both in the global North and in the global South, means that in the aggregate environmental sustainability suffers.

What To Do

Public actors at all jurisdictional levels need to put in place orchestration strategies that improve the actual achievement of sustainability goals, and activists and civil society groups should identify and leverage pressure to strengthen the effectiveness of orchestration. But these strategies have to be informed by the realities of the daily practices, power relations and governance structures of a world economy that is organized in global value chains. Orchestration is more likely to succeed when a combination of directive and facilitative instruments is used; when sustainability issues have high visibility in a global value chains; when the interests of private and public sectors are aligned, and when orchestrators are aware of the kinds of power that underpin the governance of value chains and act to reshape these power configurations accordingly.

A path towards ‘just sustainabilities’ means addressing inequality – since it drives competitive consumption and leads to lower levels of trust in societies, which makes public action more difficult; it entails focusing on improving quality of life and wellbeing, rather than growth; it demands a community economy and more public consumption; it involves meeting the needs of both current and future generations and at the same time reimagining these ‘needs’; it demands a paradigm of ‘sufficiency’, rather than maximization of consumption; it recognizes that overconsumption and environmental degradation impacts on many people’s right to enjoy a decent quality of life; and it requires a different kind of ‘green entrepreneurial state’, which also caters to these needs. Just sustainabilities necessitate building a social foundation for an inclusive and stable economic system that operates within our environmental planetary boundaries; and it demands business to behave responsibly (within its organizational boundaries and along value chains) to maintain its social license to operate.

This text is based on excerpts of Stefano Ponte’s forthcoming book Green Capital, Brown Environments: Business and Sustainability in a World of Global Value Chains, Zed Books: London. The book is based on 20 years of research on sustainability and global value chains, and builds from empirical work on several agro-food value chains (wine, coffee, biofuels) and capital-intensive industries (shipping and aviation).

Stefano Ponte is Professor of International Political Economy in the Department of Business and Politics, Copenhagen Business School and the former academic co-director of the Sustainability Platform at CBS. Twitter: @AfricaBusPol


Selected books for further reading on this topic:

Agyeman, J. 2013. Introducing just sustainabilities: Policy, planning, and practice. Zed Books.

Dauvergne, P. 2016. Environmentalism of the Rich. MIT Press.

Humes, E. 2011. Force of nature: The unlikely story of Wal-Mart’s green revolution. HarperBusiness New York.

Jackson, T. 2009. Prosperity without growth: Economics for a finite planet. Routledge.

Moore, J. 2016. Anthropocene or Capitalocene? Nature, history, and the crisis of capitalism. PM Press.

Shiva, V. 2016. Earth democracy: Justice, sustainability and peace. Zed Books.

 

Pic by Marufish, Flickr.

Wonder Tech and the Institution of Gender

by Jeremy Moon

“I didn’t realize that I was a woman until I went to the US.”

This was the rather arresting comment of a keynote speaker at the WonderTech Summit in Copenhagen, organized by a group of, mainly female, IT professionals. The speaker in question (a Senior Vice President of a leading MNC and leader of a women’s innovation initiative) explained that this awakening to gender was because in her home country, Denmark, she was used to being treated as another ‘person’ and, by inference, equal to men.

I have noted elements of equality in Denmark in: the extent of public funding for schools (overwhelmingly mixed sex) and parental leave; and the involvement of fathers in parenting. However, this is not to suggest that there is no gender institution in Denmark. The speaker referred to her disappointment that Denmark was only ranked 14th in the World Economic Forum Report for Women, and some other speakers alluded to the institution of gender in the tech industry and higher education in Denmark, and the way it worked against women.

Gender as an Institution – marco, meso and micro level

This comment struck me as a nice illustration of the idea of gender as an institution[1]: the way gender delineates the largely taken for granted roles of men and women. At the systemic (macro) level there are the respective norms, laws and rules. At the organizational (meso) level gender regimes shape the ‘way things are done here’. At the individual (micro) level there are the gendered practices in daily interactions. Of course, the gender institution is manifest in different ways in different places as illustrated by the aforementioned speaker’s contrast of its operation in Denmark and the USA.

So what, I wondered, would be the approach to this issue recommended at the conference whose purpose was ‘to celebrate the achievements of women in the industry and inspire diversity in tech’?

I was interested in the way participants addressed gender in their contexts. The aforementioned speaker advised that women disappointed in job / promotion applications, should not complain but try harder and better next time. Another speaker referred to a role model for women in blockchain entrepreneurship who advised ‘not to talk about gender’. The emphasis was upon innovation and taking initiatives at the individual level, and the numerous awards that were made enabled yet more such personal stories to be told. Wilma Rudolph was a used as a role model by one speaker (check out her amazing story of overcoming obstacles of socio-economic means and physical disability alone).

Network merit

Another key theme of the conference was at the meso level but focusing not on the oppressive organization, but on women’s self-help networks for mentoring, capacity building, career modelling, and sheer encouragement. The conference was replete with evidence of network organizations and social enterprises working in the field.

All this was so positive. The conference speakers and participants seem confident in their abilities to work professionally and effectively. There was little sense of inferiority or ‘being a woman’ in their organizations. How representative or scalable are these stories?

Too little attention on the political level

Which leads to my final observation that there was little attention to the systemic, or political, level of the gender institution to advance the careers of participants at WonderTech, even though the conference did give cases of ‘solving problems for people, businesses, and the planet’ (e.g. how ICT could be deployed to address systemic obstacles to equality for women in developing countries?).

Solving Problems for People, Businesses, and the Planet.

Can the inspiring individual stories and the network values and achievements carry the day or will more political action along the lines of the suffragettes or #MeToo be required? This might be to increase female participation in Tech science education, to increase women leaders in the Tech industry, and to enable women not to need ‘to feel like women’ – at least when doing so is a sign of adverse effects of the gender institution?[2]

 

[1] The subject of a forthcoming paper with Lauren McCarthy (more when it is published)

[2] Former Soviet countries lead the EU rankings of women in the tech workforce, presumably a legacy both of their policies of enrolling the brightest students in specialist maths high schools, and of current practices of selecting equal numbers of boys and girls in these schools, and encouraging girls to study computer science at university https://www.ft.com/content/e2fdfe6e-0513-11e8-9e12-af73e8db3c71


Jeremy Moon with some help from Marjahan Begum, Plamena Cherneva, Lavinia-Cristina Iosif-Lazar and Lauren McCarthy.

Jeremy Moon is professor at the Department of Management, Society and Communication, member of the Governing Responsible Business Environment and holds the VELUX Chair of Corporate Sustainability, all at Copenhagen Business School.

 

Pic by Jennifer C, Flickr.

A Taxonomy of Sustainable Business Model Patterns

By Florian Lüdeke-Freund & Sarah Carroux.

In recent years, so-called “sustainable business models” are increasingly gaining in importance in both practice and research.[1] There is hope that business models and business model innovation could, for instance, support the diffusion of ecologically and socially-beneficial products and services in the market.[2] Despite the growing interest, there still exists a lack of systematically-generated knowledge about the different shapes (or “patterns”) such business models can take. Hence, our research project aims to provide a comprehensive and up-to-date overview of presently known business model patterns that can contribute to the diffusion of ecologically and socially beneficial innovations. We developed a structured patterns system, a new taxonomy, of 45 patterns organized into 11 groups, including experts’ expectations for their contributions to sustainable value creation.

Key Objectives of the Study

A broad range of business models are being discussed in current scientific and applied literature. These are often identified as “patterns”.[3] Following Christopher Alexander, a pattern theory pioneer from the field of architecture, a pattern basically represents a solution to a reoccurring problem.[4] What makes patterns so special is that their solutions can be applied in different contexts. For instance, a window is a universal solution for the problem of a lack of lighting in a room. A window exists in different variations and can be applied in various contexts (e.g., for residential buildings, skyscrapers, small windows, large windows etc.). Similarly, business model patterns can be understood as replicable and modifiable solutions to reoccurring business challenges. For instance, the “freemium” business model can not only be used for online services such as Spotify, but also to market high-quality medical services that, depending on patient type, are offered either for “free” or for a “premium” (e.g. Aravind, an eye-care service provider in India).[5] The key objectives of this study are (i) to consolidate the current knowledge about business model patterns with the potential to support sustainable innovations, i.e. to develop a new taxonomy, and (ii) to prepare the foundations for a “sustainable business model pattern language”.[6]

Methodology

We identified a total of 102 potential business model patterns in the relevant literature. These were critically assessed and duplicates or irrelevant items were eliminated, resulting in a sample of 45 patterns. These were reviewed and organized into groups by 10 international experts to condense the large number of patterns in a way that allowed recognizing a systematic order. In the second survey round, the international experts were asked to assess the patterns with respect to their potential contributions to ecological, social, and economic value creation. This enabled us to develop a structured patterns system, a taxonomy, of 45 patterns organized into 11 groups, including experts’ expectations for their contributions to sustainable value creation.

 

Results and Practical Implications

The patterns system is comprised of 45 patterns that were each allocated to one out of the 11 identified groups according to their problem-solution combination. The following groups of sustainable business model patterns were found:

  1. Pricing & revenue patterns
  2. Financing patterns
  3. Eco-design patterns
  4. Closing-the-loop patterns
  5. Supply chain patterns
  6. Giving patterns
  7. Access provision patterns
  8. Social mission patterns
  9. Service & performance patterns
  10. Cooperative patterns
  11. Community platform patterns

These groups can be characterized based on (i) their specific problem-solution combinations (e.g., solving the problem of limited access to health care through a specific pricing model), and (ii) their expected ecological, social, or economic effects (i.e. their expected contribution to sustainable value creation). The patterns system is highly practice-oriented, given the input provided by the experts. For instance, it could be used as an instrument in innovation workshops. Furthermore, our patterns system could be used in combination with business model innovation tools such as the Business Model Canvas, the Business Innovation Kit, or the Smart Business Modeler. Our pattern taxonomy is based on an essential principle in business and innovation: “learning by example”. Companies that want to integrate sustainability into their business models can refer to our taxonomy for guidance and inspiration and use it as a catalogue that also includes practical examples. This means that companies do not have to start from scratch and, instead, can learn from the experiences of others and use these to progress towards sustainability. All-in-all, our sustainable business pattern taxonomy is an efficient and effective instrument that enables practitioners and scholars alike to benefit from vast years of experience. The sustainable business model pattern taxonomy is dynamic in nature and can be easily expanded with new patterns and examples. It can already be used for online business modelling by using the Smart Business Modeler.

[1] Lüdeke-Freund, F. & Dembek, K. (2017): Sustainable Business Model Research and Practice: Emerging Field or Passing Fancy?, Journal of Cleaner Production, Vol. 168, 1668-1678. [ DOI | ResearchGate ]

[2] Boons, F. & Lüdeke-Freund, F. (2013): Business Models for Sustainable Innovation: State of the Art and Steps Towards a Research Agenda, Journal of Cleaner Production, Vol. 45, 9-19. [ DOI | ResearchGate ]

[3] E.g., Remane, G.; Hanelt, A.; Tesch, J. & Kolbe, L. M. (2017): The Business Model Pattern Database — A Tool for Systematic Business Model Innovation, International Journal of Innovation Management, Vol. 21, No. 1, Article No. 1750004. [ DOI ]

[4] Alexander, C.; Ishikawa, S.; Silverstein, M.; Jacobson, M.; Fiksdahl-King, I. & Angel, S. (1977): A Pattern Language: Towns, Buildings, Construction. Cambridge, MA: Oxford University Press. [ Website ]

[5] Breuer, H. & Lüdeke-Freund, F. (2017): Values-Based Innovation Management: Innovating by What We Care About. Houndmills: Palgrave Macmillan. [ Website ]

[6] Lüdeke-Freund, F.; Bohnsack, R.; Breuer, H. & Massa, L. (forthcoming): Research on Sustainable Business Model Patterns – Status quo, Methodological Issues, and a Research Agenda, in: Aagaard, A. (ed.): Sustainable Business Models. Houndmills: Palgrave.


Florian Lüdeke-Freund is a Lecturer at ESCP Europe Business School, Berlin, where he also holds the Chair for Corporate Sustainability. Since 2013, Florian facilitates the research hub www.SustainableBusinessModel.org.

Sarah Carroux is a research associate and doctoral candidate at the University of Hamburg. As member of the Chair of Management and Sustainability, lead by Prof. Timo Busch, Sarah researches topics related to sustainable finance with a strong focus on impact investing, as well as the business case for sustainability and sustainable business models

 

Pic by Eli Duke, Flickr.

Making it to the World Heritage List: Envisioned and Hidden Effects

By Lotte Thomsen.

UNESCO’s World Heritage designation of places around the world has the honorable purpose of taking responsibility. Taking responsibility for the preservation of things that may otherwise be left unpreserved, and for which destruction would be a severe loss. Yet, making it to the World Heritage List is known to have both positive and negative effects that reach far beyond the  preservation of, for example, architecture. It may change the daily life of host communities immensely – not least in the Global South. The World Heritage site of Hoi An in central Vietnam is one of those places in which listing has led to preservation and enormous change at the same time! The city itself certainly is both well-preserved and stunning. But what is going on behind the facades of the beautiful old houses that millions of tourists visit every year? And what are the effects on the business sector?  

‘Authenticity’ and Retail in Hoi An
In the newly published article ‘Retail in Places of World Heritage and Transition: Selling Clothes to Tourists in a Context of ‘Planned Authenticity’’ (Thomsen, 2018), I show how Hoi An’s transformation into a heritage tourism site has led to the emergence of a clothing retail sector that barely existed before. The sector plays a key role in the city’s contemporary tourism industry, and has come to appear as an ‘authentic’ part of the landscape of ancient buildings and monuments.

The paper shows how the creation of a clothing retail market was linked to a well-planned configuration of an ‘authentic’ Tailor City. It is to a large extent a reflection of interactions between the transitional Vietnamese economy and heritage listing. And it is reinforced by the urge of tourists to buy presumed place-specific products such as souvenirs or tailored clothes to preserve their memories of the place of Hoi An – regardless of how few links such products actually have to the place or its history and traditions.

A Retail Landscape of Opportunities and Challenges
So, why is this revitalization of Hoi An not merely impressive, but also in some ways problematic, not least seen from a development perspective?

Well, heritage designation did in many ways boost the city’s economy, making Hoi An one of Vietnam’s largest tourist attractions. And surely this came about due to extremely well targeted and impressive local planning in interplay with the World Heritage listing. It also created much needed jobs and prosperity linked to the tourism industry in the formerly poor agrarian area. Still, the revitalization of the city also represents a development that is highly uneven. It has made certain people more powerful, some activities and products more important and ‘authentic’, and some retailers better positioned in Hoi An’s tourism economy than others.

The paper shows how the opportunities of the clothing retailers vary significantly and are related to their status within a network of tourism stakeholders. A network that is intrinsically related to the ways that businesses and the state interact in Vietnam’s transitional economy. My intention here is not at all to point fingers at the Vietnamese authorities that cleverly utilized highly needed opportunities for economic development. What else should they have done? My intention is also not really to blame UNESCO that acted to preserve invaluable world heritage.

The impact on clothing retailers that are explored in much more detail in the paper was not easily foreseen. Yet, certain consequences could perhaps have be mitigated if international interventions like those of UNESCO are done with more caution and based on a deeper understanding of those local contexts and relations they tip into.

The example of Hoi An surely serves to remind us to critically assess and consider all kinds of effects of interventions locally. It reminds us of the importance of understanding better how different types of interventions – that undoubtedly are essential in their own right and done in the spirit of responsibility – play out differently in different places.

The full paper can be accessed via this temporarily free link: Thomsen, L. (2018). Retailing in places of World Heritage, transition and “planned authenticity.” Geoforum,91, 245–252.


Lotte Thomsen is Associate Professor of Business and Development at the Department of Management, Society and Communication at Copenhagen Business School. She holds a PhD in economic geography from Copenhagen University.

Pic by Qui Nguyen Khac, Pixabay.

The Winners and Losers of Reward-based Crowdfunding

By Kristian Roed Nielsen.

Proponents of reward-based crowdfunding have touted its emergence as an alternative source of innovation finance as an exciting and democratizing event. This democratization is enabled via the unique blend of crowdsourcing (Poetz and Schreier 2012) and micro-financing (Morduch 1999). Fundraising is enabled by a widely dispersed community of users, whose interactions are facilitated by one or more platforms (e.g., IndieGoGo, Kickstarter, Kiva), trading “a small group of sophisticated investors” for “large audiences (the ‘crowd’)” (Belleflamme, Lambert, and Schwienbacher 2014:2). But how does the change in investors really change who is rewarded – basically who are the winners and losers of reward-based crowdfunding? It was with this question in mind that Caleb Gallemore, Kristjan Jespersen and I set out to follow the money and identify exactly where and who benefits from this new source of finance by analyzing data from the large US-based reward-based platform IndieGoGo.

Where does the (crowd) money go and why?
Firstly, and perhaps not surprisingly, it appears that it is the already affluent regions that benefit the most from crowdfunding activities, while less well-off areas still receive the short end of the stick. Clearly while crowdfunding may offer an extra opportunity for achieving financing, this does not offset other factors that play an important role in entrepreneurial success e.g. background, education and social network that favour areas already affluent.

More surprisingly we also found that increased competition – i.e. more campaigns – actually increase the likelihood of funding success. For each percentage increase in the number of campaigns in the same neighborhood, we estimate a decrease of about 11% in the odds that each of those campaigns will receive no funding pledges. Indicating the increased competition actually results in a net positive outcome where campaigns rather than leeching of one another, generate momentum for further success. This may be because of increased levels of visibility of crowdfunding activities as a whole at the local level. In other words, people living in areas with more crowdfunding activities might be more aware of the practice, increasing the pool of potential investors. Another possibility is that areas with high levels of crowdfunding activities might generate local communities that can share knowledge and advice about the process, improving the quality of local ventures.

Finally, and still undergoing analysis, we increasingly find that certain people are – naturally – more successful then others at achieving crowdfunding success. Witnessing that for each successful campaign launched by an individual or group the likelihood for future success increases dramatically – hence after five successful campaigns launched by a given person or group they have a near 100 pct. chance of future success. We are perhaps witnessing the birth of the professional crowdfunder.

Crowdfunding as the democratizing agent of innovation?
As money seems to coalesce around certain regions and individuals we have to wonder whether this trend will continue. Will we increasingly see certain regions and individuals benefitting while other less well-off or professional lose out? And what does this mean for crowdfunding as the democratizing agent of innovation? It offers opportunity for you and I to drive innovation, but that innovation process itself perhaps unsurprisingly still seems to cluster around certain regions and persons. While this is by no means the final word – this is still early day research of only one sample – these observations nevertheless complicate the idea of relying on crowdfunding as a new mechanism for economic development, poverty reduction, or social action. While crowdfunding certainly provides a new way to access capital, it may not provide such access equitably.


Kristian is Assistant Professor at the Department of Management, Society and Communication and Visiting Researcher at Mistra Center for Sustainable Markets – Stockholm School of Economics. His research explores the potential role that “the crowd” could play in enabling sustainable entrepreneurship and innovation. Follow him on Twitter @RoedNielsen.

Pic by olgavisavi, via Fotolia.

After #Metoo: Are We as Equal as We Would Like to Think?

By Sara Louise Muhr & Florence Villesèche.

The me too movement was founded in 2006 by Tarana Burke to help survivors of sexual violence, but it was not until after the public revelations of sexual misconduct allegations against Harvey Weinstein in October 2017 that it went viral as a hashtag and ended up demonstrating the world-wide prevalence of sexual assault and harassment, especially in the workplace.

It has been a shock to many how widespread sexual assault and harassment is – not least in a Scandinavian context, where the assumption of equality and respect long has been a foundational societal value. The massive amount of me too stories from Scandinavia – from all social classes, all occupations, all ages and ethnicities – have forced us to take another hard look at our beloved equality and ask the question ‘are men and women after all as equal as we would like to think?’.

Let’s look at some numbers…
And if we look at the numbers, we’re not… Just to take a few examples: Denmark has 6 % female CEOs in private companies, Denmark has a 16 % overall gender pay gap: 30 % among CEOs, 6,6 % among newly educated candidates, 2,6 % among our students. Around 50 % experience sexual harassment at work. Moreover, all studies point to the fact that women (and other minorities) are consistently evaluated lower than (white) men and women (and other minorities) systematically receive shorter, less-praise worthy letters of recommendation compared to (white) men.

What’s in a fight?
This means that we are not as equal as we would like to think. Some bodies fit the business world; some have to fight their way up and deal with a lot of resistance on the way. The difference here lies in the fight. Those women who make it to the top, are those who don’t give up. They are those who can take it, who have the power (or patience) to deal with or fight off the sexism and sexual harassment they are faced with on the way, every day.

Other bodies who fit the context of the business world, don’t have to fight. They just fit in. We might therefore on paper have equal opportunities, but some bodies meet resistance, some fit and do not meet resistance. As Sarah Ahmed argues in an essay about ‘Phenomenology of Whiteness’, if whiteness is our starting point – the default – then the black body is out of place. A black body is a black body; a white body is just a body. Similarly, the female body is out of place, not at home, not natural in a top management context. A female leader is a therefore always already a female leader; a male leader is just a leader. A female leader cannot escape her body.

The privilege of invisibility
This links to the privilege of invisibility, the privilege of ‘fitting’ the context, fitting the room. Karen Ashcraft refers to this as the glass slipper. Certain bodies fit certain occupations, whereas other bodies need to adapt and adjust and never really fit, always stand out. This is both the female top-manager and the male kindergarten teacher; the female fire-fighter or the male stay at home dad. The problem here, is not necessarily ‘not fitting the room’. Rather, the problem is the harassment, which is normalized against the ones not fitting the room. This is what the wide impact of the me too campaign has shown: The normalization and naturalisation of sexism against women at the workplace – from demeaning comments to actual sexual assault – which holds women back, keeps men in a positions of power; makes it necessary for women to fight for their right to a career, stick it out, deal with all the crap. It is a normalization of harassment and bullying of various kinds targeted the bodies that don’t fit in. And as Jaqueline Rose points out in a recent article in London Review of books, although sexism and harassment is often excused by being just for fun or a singular slip, it is ‘’never innocent, or a mere trifle, playful, or a ‘joke’‘.

The aggregation of micro aggressions
We therefore need to call out the sexism that sieves through every layer of our society and is weaved into our workplace cultures. Sexism is naturalized to a degree that many even feel entitled to it. Like the other day when one of us was presenting a diversity and inclusion plan to increase the number of female professors at our university, where a male participant in full honestly claimed that the low number of female professors was ‘natural’ as ‘it is scientifically proven that men are more intelligent than women’. Nobody said anything, nobody called out the injustice of such a remark, it was seen as his right to say this. The problem here is that nobody realises that micro aggressions like this – or remarks and behaviour which are even worse – are repeated every single day. And where they in and of themselves possibly can be seen as innocent and as jokes or as a remark from one radical person, together they construct the foundation of our work culture and in this way aggregated create systematic discrimination. The below quote from the everyday sexism project powerfully shows how everyday micro aggressions function in bulks:

Board member in my office: “how’s my little staff girl doing?” Same board member at an event: “it’s okay about your tits — I’m an ass man.” Another board member: “how’d a pretty girl like you get so smart?” Another board member, “I actually like that you’re so outspoken.” Another board member: “just type this up for me.” Sign on my way to work: “real men vote for Trump.” Bumper sticker on the car in front of me: “don’t be sexist — broads hate that!” At the supermarket, “gimme a smile, baby.” In the parking lot, “move it, you fat bitch.” New stories every day, every day, every day. (Website post, April 2017, Tags: Everywhere, Public space, Workplace. Themes Bodies; Experience; Resignation)

It is about time we wake up and realize that gender imbalance at management and board level, is not just because women rather want to stay at home or are less ambitious or don’t have what it takes. We have a problem with systematic discrimination in the form of every day micro aggressions – covering everything from demeaning comments to sexual harassment. And it is not a sustainable development. We do not use all the talent we have at hand when we systematically discourage parts of the population. Times up!


Sara Louise Muhr is Associate Professor at Copenhagen Business School. Her research focuses on critical perspectives on managerial identity, diversity, and HRM, and has appeared in journals such as Organization Studies, Organization; Gender, Work and OrganizationJournal of Business Ethics, Culture & Organization and Scandinavian Journal of Management.

Florence Villesèche is Assistant Professor at Copenhagen Business School. She is a Marie Curie Fellow and received an Emerald/EFMD Highly Commended Award for outstanding doctoral research. Her published work about diversity, identity and networks includes contributions to Human RelationsEuropean Management Review, Personnel Review, and Equality, Diversity & Inclusion.

Pic by Kristopher Roller, Unsplash. Edited by BOS.

How two CBS Alumni are Selling Ugly Fruits and Veggies for a Change

By Carolin Schiemer.

Never seen a 3-legged carrot in real life? You might not be alone, because you can’t find crooked fruit and veggies in Danish supermarkets, where all produce has exactly the same size, shape and colour. Give this a thought or two more and you might ask yourself: what happens to all those cucumbers, potatoes and apples that are aren’t big, small, red, green, square, round or straight enough to “pass” the strict retail beauty test?

The Issue with Standardisation
Right now, what you get in supermarkets is according to UNECE standards categorized as “first class produce”, which has to be uniform in colour, shape and size. What is being withheld from you is the perfectly edible produce of the second class or even below, which might be visually defective but retains its “essential characteristics as regards the quality, the keeping quality and presentation” – yummy stuff just with marks of life experience, so to speak!

If not sold cheaply to the food processing industry, all too often “ugly” produce never reaches end consumers. Farmers, who are well aware of their demanding buyers, have different options when it comes to dealing with the unwanted produce. It can be left on the fields as natural fertiliser, used to feed animals or to produce biogas, and often it is simply thrown away in a landfill.

In Need for New Understandings of Quality
Food waste is a huge problem globally, as about 1/6 of all veggies and fruits grown are lost on farms, where in some cases every second piece is tossed due to cosmetic flaws. EVERY SECOND. In Denmark alone, that amounts to about 100.000 tons of food waste a year during primary production only. Food waste happens in every step of our food supply chain, so globally we use about 21% of the world’s fresh water and 28% of arable land to grow food we never eat.

At the same time we are worried that we don’t have enough food for a growing world population – a narrative I have found particularly prevalent in marketing food items as the “solution” to global health and climate challenges caused by unsustainable food systems, such as quinoa and edible insects. But what this narrative often fails to address is the difficult configuration of ‘how’ to achieve a positive impact in practice. How can we say we are worried about food security while throwing away or misusing food that has been grown with the purpose of feeding people? The narrative about doomsday being just around the corner is not telling the whole story. Something’s rotten here… and it’s not an apple!

It’s Time to Feed “Ugly” Produce back into our Food Systems
The whole story describes a reality where each actor in our food systems continues to market and accept flawlessness as an indicator for quality, with the consequence that produce earns its edibility through its looks and not through its nutritional qualities. And while there are several solutions in Denmark tackling food waste at the end of the food supply chain, such as WeFood, YourLocal or TooGooToGo, there are almost none at the beginning of it. Danish farmers are lacking time, resources and channels to connect with consumers while being constantly under price pressure from cheaper producers located down south and the short contractual agreements with buyers.

As a response to this craze, my partner and good friend Petra Kaukua and I founded GRIM, a new Copenhagen food waste business. Our mission is to fight food waste and traditional food industry beauty standards by delivering boxes of ugly, organic & seasonal fruits and veggies of all shapes, colours and sizes right to Your door, which we source directly from awesome farmers located in Denmark.

Petra and I met in the first week of our Master studies in Organizational Innovation & Entrepreneurship at CBS. We are both internationals in Copenhagen and share a love for food and music, so there was no party and no school project we didn’t do together. In that sense, GRIM was really a brainchild of our teamwork in a course in Social Entrepreneurship, where we investigated with a problem-centered approach how food waste is rooted within the Danish society.

Are you the next GRIM Ambassador?
Fast forward: Since February 2018, GRIM has been part of the one year start-up incubator InnoFounder run by Innovation Fund Denmark, where we receive funding, mentoring and a desk in one of Scandinavia’s best co-working spaces, Founders House (A little side note: the application round for the next InnoFounder batch just opened, so if you are a recent graduate or about to graduate soon, go apply now!) Last month, we completed our first test run. Soon, we are hoping to come back with a second round of ugly delivery, where we for the first time want to test out pick up locations. But we need YOUR help!

We are looking for GRIM ambassadors who help us make the world an uglier place. So if you are excited about what you’ve just read and you want to be with us in our mission to put a hold on food waste, you can get involved or help us find the next GRIM pick up point location – maybe at your school, your workplace or kollegium? Drop us an email to hejsa@eatgrim.dk to learn more about what we are looking for and get yourself and your friends some great GRIM rewards.

We believe it’s time for an ugly food revolution – one where we are questioning the current concept of quality and edibility. The future of eating is ugly!


Carolin is the co-founder of the start-up GRIM and former student assistant at the CBS Centre for Corporate Social Responsibility (cbsCSR). She graduated from her Master in Organizational Innovation and Entrepreneurship at CBS in June 2017 and is the co-author of the book chapter “Marketing insects: Superfood or Solution-Food?” in: Edible insects in Sustainable Food Systems (out soon on Springer International Publishing).

Check out GRIM’s website & follow on Facebook, Instagram and Twitter.

Pic by Supermercat Studio.

Investigating Emerging Responsible Corporate Tax Practice

By Sara Jespersen.

  • In the absence of an over-arching world tax authority, much agency and power remains in the hands of the corporations operating the system.
  • Much of the discussion on responsible corporate tax practice is focused on those corporations that maximize the use of the rules to minimize their tax payments
  • But what about those corporations that do not participate in the race to the bottom on tax practices –  can we see emerging trends of responsible corporate tax practice and where?

Approximate reading time: 2-3 minutes.

The issue – corporate tax and globalization
Corporate tax planning is high on the political agenda in Denmark and, indeed, internationally since the revelations of how corporations minimize their tax bills through the use of tax havens have started rolling. Several corporations have been exposed for their aggressive practices by the European Commission, NGOs, journalists – to the great outrage of the public and politicians.

Valuable work is being undertaken to understand the depth of the crisis for society, the seriousness of the problem – its persistence and scale, and the dynamics of the politics of solving it. Much of which is focused on those corporations that maximize the use of the rules to minimize their tax payments.

But what about those corporations that already pay their so-called fair share and do not participate in the race to the bottom on tax practices? In particular, those who are not afraid to show it?

The governance challenge – tax competition among sovereign states and the offshore world
The challenge of all this arises because of the way in which the governance of the tax affairs of multinational enterprises (MNEs) is set up. MNEs that operate in several countries from the North to the South of the world operate in various judicial systems. Many of them also have mobile assets that can be moved from one jurisdiction to another through the click of a mouse and has little to do with the physical world. Some jurisdictions have set themselves up to attract the location of this type of intangible assets and will give favourable tax conditions in return. Judging where corporate assets should be taxed and what the market value is of intangible assets is no easy task for any one country in the world. With no over-arching world tax authority the outlook for permanent solutions to some of these fundamental challenges to the taxation of MNEs corporate profits is looking somewhat long-term.

What role for business and for responsible corporate tax practices?
So it looks that much agency and power remains in the hands of the corporations operating the system. In a society where the focus on corporate tax payments remains one of the hottest topics and trust in corporate tax affairs is dwindling for years on end conditions are perfect for encouraging greater responsibility in corporate tax matters. But what responses are we seeing from the business world of their own initiative if any? How are they responding to this mounting distrust in corporate taxation practices from “society”?

There are signals that somethings are brewing. The fair tax mark in the UK have taken off, CSR Europe have included the issue of corporate tax in their work, as has the network of responsible investors the Principles for Responsible Investment (PRI) and the European Commission is not shy to be clear about their vision of tax as a part of CSR (speech by Margrethe Vestager, EU trade commissioner.

My research going forward will focus on investigating this emerging trend of responsible corporate tax practice. It will investigate to what degree it is already taking place and what it might consists of, as well as its meaning and potential in an international political economy with a great focus on corporate tax payments and MNE’s role in supporting the achievement of the sustainable development goals around the world.


Sara is PhD Fellow at Copenhagen Business School and her research is focused on the emerging relationship between responsible business conduct and corporate tax planning of multinational enterprises. Building on several years of experience from working with international development NGOs, Sara is particularly interested in how this affects developing countries’ financing challenges and the focus on the role of the private sector in achieving the sustainable development goals (SDGs).  

You can contact Sara via email and follow her on Twitter.

Pic by Madison Kaminski (Unsplash), edited by BOS.

Banking on the Future – Driving Responsibility and Sustainability in the Financial Sector

By Lavinia Iosif-Lazar.

While the world seems to have moved on from the last financial crisis, one can only wonder if banks and financial institutions have learnt something from it that could steer them away from repeating the experience. From the educational side, we also have to consider whether business schools are able to instill in their graduates the values and norms to navigate financial institutions into clearer waters.

100 Years CBS – Time to Rethink Finance
During a CBS conference in the late months of 2017, academics and practitioners within the finance and banking industries alike had come together to think and “rethink the financial sector”. The purpose of the event was to bring to light the issues and opportunities of responsibility and sustainability within the financial sector, and create an agenda for future research and teaching in business schools, like CBS.

Over the course of the event, the ambition was to develop a dialogue with stakeholders from the banking and finance industry and to challenge the current attitude towards banking and its future with “responsibility” being the word of the day. The hope was that this dialogue would ignite new ideas and develop an agenda for future research and teaching in business schools towards 2117.

During the three tracks focusing on society, business models and the individual, with responsible banking being the overarching theme, participants heard speakers address issues spanning from the role Fintech and disruptive technologies like blockchain and cryptocurrencies play in industry innovation to different religious perspectives on banking and finance.

To Rethink Finance, we need to Rethink Education
When it comes to financial education, the focus was set on bringing it in sync with the new developments and real life challenges, while at the same time stressing the need for a business model based on valuation and normative principles. In crisis situations, the clear-cut modelling learnt in school no longer represents the norm. Education plays a major role in securing that the new generations of graduates have the capabilities needed to identify and understand people and their needs, rethink and modernize local banking and be attuned to the technological developments that can pave the way to a more responsible banking sector  – centered on people instead of money.


Lavinia is project coordinator at CBS PRME. You can visit the PRME Office at Dalgas Have 15, Room 2C.007  & follow CBS PRME on Twitter, Instagram and Facebook.

Pic by Markus Leo (Unsplash), edited by BOS.

Challenges & Opportunities in Local Textile Production

By Kirsti Reitan Andersen.

Today the progressive digitalization of the economy is shaping the way in which the fashion industry operates. The overarching discourse often highlights new technical concepts and currents trends of automatization and data exchange in manufacturing (the so-called fourth industrial revolution) as the primary sources of product and process innovation. However, while exploring organizational tensions in ‘local’ textile and fashion production in Norway, we were reminded that the human element of craftsmanship has always lent itself to innovation and the evolution of techniques and applications.

Local Fashion Producers in Norway – An Upstream Miracle?
Aiming to explore the way in which organizations manage opposing demands in everyday organizational life, e.g. creating high quality garments at a ‘reasonable’ price point but also produce locally, we visited some of the remaining textile and fashion producers in Norway. Amongst these were Hillesvåg Ullvarefabrikk AS, Oleana and Krivi Vev. Producing textiles and garments in a country which holds some of the world’s highest minimum salaries seems like a lost cause in an industry that over the last decades has been leading the so-called race to the bottom. Nonetheless, the designers and manufacturers with whom we met have managed to stay in business — and over the last few years — received increasing interest in their services and grow their business.

The Creative Potential of Human Craftsmanship
Arguably, the reasons behind this turn of events are many. However, during our fieldwork, two things stood out. First, although the textile and garment factories that we visited run on technologies traditional to the industry, they manage to offer services similar to those that in recent discussions have been tied to the promise of 3D printing technologies to re-localize production, enabling “close-to-market mini-factories that allow interaction with customers during localized manufacturing processes” (Ihl & Piller 20016). For example, having a flexible set up and being geographically close, they engage in co-creation, developing products in close collaboration with both designers and customers.

Second, the designers and manufacturers with whom we met continuously create new products (e.g. new fiber qualities), drawing on traditional craft techniques combined with technologies traditional to the industry. Notably, years of training and practical experience are required by craft practitioners before they are able to successfully deliver craft innovation.

New technologies offer great opportunities for innovation, not least in the textile and garment industry. However, a fascination with new technologies should never make us forget or underestimate the exceptional creative potential of human craftsmanship in combination with both old and new technologies.


Kirsti Reitan Andersen is a Post Doc at the Department of Management, Society and Communication, Copenhagen Business School. In her current work, she explores organizational tensions — specifically focusing on challenges and opportunities in local production and sustainability.

Pic by Igor Ovsyannykov, Unsplash.

Entrepreneurship: The Solution to Africa’s Youth Unemployment Crisis?

By Thilde Langevang and Katherine V. Gough.

  • Small-scale entrepreneurial activities currently provide livelihoods to a large proportion of the youth population in sub-Saharan Africa
  • In spite of a promising rise of entrepreneurship, we should be careful not to celebrate youth entrepreneurship uncritically

Approximate reading time: 3-4 minutes.

Africa is teeming with business activity managed by young people. In cities and towns, young traders are touting their goods in traffic jams, trying to sell everything from phone credits and toilet paper to drinking water and Christmas decorations. Alongside streets and pathways, young people sell a variety of items and foodstuffs from table tops or shacks. In neighbourhoods, women operate hairdressing salons and dressmaking shops often from their homes, whilst young men carve wood and fix electrical equipment. In the busy market places, young women and men trade a variety of goods including locally grown fruits and vegetables, imported new and second-hand clothes, shoes, mobile phones, and housewares. Some young people offer inventive services as and when the need arises; young men fill in potholes on the roads, hoping that passing vehicles will acknowledge their work with a token payment, while others rent out gumboots to pedestrians who seek to pass flooded streets. Others again act as ‘traffic police’ when narrow roads become jammed with cars, motorbikes and minivans.

Everyday Forms of Entrepreneurship
Such entrepreneurial practices might seem mundane, trivial, or insignificant when compared to instances of high-growth and high-tech entrepreneurship in the global North. And some might even dispute whether these types of income-generating activities should at all be labelled entrepreneurship. Yet such “everyday forms of entrepreneurship” (Welter, 2017) are significant since they currently provide livelihoods to a large proportion of the youth population in sub-Saharan Africa.

In the book ‘Young Entrepreneurs in Sub-Saharan Africa’ (Gough and Langevang 2016), we examine the rates, characteristics and experiences of young entrepreneurs in Ghana, Uganda and Zambia. Drawing on surveys conducted by the Global Entrepreneurship Monitor, we show how African youth are the most entrepreneurial in the world with around 40% of young people in Ghana, Uganda and Zambia being involved in “early state entrepreneurial activity” (which includes young people aged 18-35 setting up a business or running a business less than three and a half years old). These levels are equal to or higher than the adult population in their respective countries, and much higher than their youth counterparts in other regions of the world where average rates range from just 9% in Europe to 18% in Latin America.

Youth Entrepreneurship in Africa – Promises and Limitations
At first sight these high rates of youth entrepreneurship might look encouraging for African governments and international development organisations, which are increasingly promoting youth entrepreneurship as a solution to the mounting youth unemployment crisis. Whilst Ghana, Uganda and Zambia, together with a number of other African countries, have experienced high and sustained economic growth rates during the last two to three decades, the growth has not generated adequate, decent jobs. In a situation of very limited wage employment, and a rapidly growing youth population, young Africans are increasingly encouraged to change their mind-set from being ‘job seekers’ to becoming ‘job creators’ and are hard pressed into using their entrepreneurial ingenuity to start their own businesses as a means of creating livelihoods for themselves.

When looking closer at the statistics and listening to the experiences of young people, however, the picture is mixed. While entrepreneurship rates are high and the attitudes to business start-up very positive, a common characteristic of African young entrepreneurs is that their businesses stay at the micro-level and are concentrated in the informal economy, hence lie outside the protection and regulation of the state. Their businesses are concentrated in a limited number of vocations, with the majority engaged in trading or providing similar services. Competition is, therefore, cutthroat and earnings minimal. Noticeably, the majority of young entrepreneurs have no or only a small number of employees, which means they contribute little to job creation apart from self-employment, have low expectations for growth, and their businesses close down at a high rate.

Consequently, we should be careful not to celebrate youth entrepreneurship uncritically. It is important to acknowledge that not all young people have the skills or resources required to pursue viable entrepreneurial ven­tures. Indeed, most young people in Africa currently appear to be poorly equipped to become successful entrepreneurs in the sense of establishing durable businesses and growing them. There is also the risk that an excessive focus on entrepreneurship becomes a way to blame young people themselves for their misfortunes and provides an excuse for states not to deliver welfare services and ensure decent jobs (Jeffrey and Dyson, 2013).

No Silver Bullet for Tackling Youth Unemployment in Africa
So far the strong policy discourse on entrepreneurship in Africa has not been backed by adequate support measures. While the book reveals that the three African countries have all witnessed a similar mushrooming of entrepreneurship promotion schemes initiated by governments, NGOs and international development organizations, the general picture emerging is that youth entrepreneurship promotion is characterized by many uncoordinated schemes, which tend to have limited uptake and scope. Moreover, there tends to be a quite narrow focus on promoting business start-ups through providing finance. While more holistic approaches to entrepreneurship promotion are clearly needed it is equally vital that entrepreneurship is not singled out as the only solution to the youth unemployment crisis but rather is seen as just one element of broader labour market policies, which cannot themselves be separated from wider policies aimed at stimulating job-generating, inclusive, and sustainable economic growth and development.


Thilde Langevang is Associate Professor of Entrepreneurship and Development Studies at Copenhagen Business School.

Katherine V. Gough is Professor of Human Geography at Loughborough University.

Pic by Thilde Langevang, edited by BOS.

 

 

Another Inconvenient Truth: “Win-Win” Only Won’t Transform Our World

By Katherine Richardson.

  • A green growth project can contribute to sustainable development, but this is by no means a given
  • Characterized by a singular focus on synergies, the concept of green growth neglects unavoidable trade-offs
  • Truly contributing to the sustainable development agenda means that businesses need to abandon an exclusive focus on win-wins by acknowledging and addressing trade-offs

Approximate reading time: 3-4 minutes.

Development based on “Green/blue growth” must not be confused with sustainable development
“Green growth” and now also “blue growth”, when attention turns to things maritime, have become the new black when discussions turn to consideration of what we will live on in the future. “Green” (by design when used in this context) conjures up an image of nature and this has meant that many incorrectly assume that green growth = sustainable growth, i.e., that green growth, by definition, contributes to redirecting the societal trajectory towards sustainable development. This is simply not the case. I do not deny that there can be instances where a green growth project contributes to sustainable development, but this is by no means a given. Too often, the “green growth” label is applied to projects where the underlying philosophy is “business as usual but now we will make money on the environment”.

Sustainable development is anything but business as usual
Since the 1960s, we have had access to pictures of the Earth taken from space. These show clearly that the Earth has no connection to any other celestial body. In other words, these pictures provide proof that – once we have used the nature resources upon which we are dependent- they will not be replenished. They also show that we can never really get rid of our waste. Plastic in the ocean? Where else would it be when we since the 1950s have known that it is essentially non-degradable and our culture has embraced its one-time use? Climate change? Our society has, since the Industrial Revolution, relied on the combustion of nearly inert solid carbon products which has resulted in an excessive production of carbon containing greenhouse gas waste, including CO2. As in the case of plastic, we cannot see this waste but it is still with us.

Sustainable Development Goals (SDGs)
Despite the emergence of these pictures in the middle of the 20th Century, it was not until 2015 with the adoption in the UN of the 2030 Agenda and the SDGs that a global convention was agreed that acknowledges that the resources upon which we depend are limited. After acknowledging something is limited, one has to address how it is to be shared. In effect, the SDGs can be seen as a vision for how we want to share the Earth’s resources among what will soon be 9-10 billion people – all with a right to development. Thus, the SDGs are relevant for every person, country and company on Earth. Many assume that the SDGs’ primary focus is developing countries but, when it comes to resource (over)use, it is the developed countries that are the greatest sinners.

“Win-Win” AND Lose: Moving from green to sustainable growth
Many companies are implementing the SDGs in their activities – not least of which in their marketing! Their strategies for doing so, however, differ greatly. There are 17 goals in all. That’s a lot to handle so most companies “cherry-pick” a handful of goals against which they see a particular advantage in marketing their products. The 17 SDGs are, however, all inter-connected and must always be seen in relation to one another. When any activity is measured up against the SDGs, there will be positive interactions, i.e., synergies (“win-win”) but also negative interactions, i.e., “trade-offs”. Green growth  is characterized by a singular focus on synergies. Cherry-picking SDGs to position a company or its products in the most favourable light is nothing more than green growth by another name. Of course, sustainable development requires that we exploit the synergies that emerge from interactions between the SDGs to their fullest but it also demands that we minimize the trade-offs that emerge. It is easy to appreciate that companies don’t feel they can benchmark against all 17 SDGs but, when they focus only on SDGs that profile synergies and fail to tell the world what they are doing to minimize trade-offs, it is hard to take their commitment to sustainability seriously.


Katherine Richardson is professor and leader of the Sustainability Science Centre at the University of Copenhagen and Member of UN Panel of experts writing the 2019 Global Sustainable Development Report.

Follow Katherine and the Sustainability Science Centre on Twitter!

Pic by NASA Goddard Space Flight Center, Flickr.

 

Behavioral Insights All Over the World: A New Study from cbsCSR, CBS GRB and Harvard University

By Cass R. Sunstein & Lucia Reisch.

Worldwide, officials are employing behavioral insights to improve policies in areas that include health, finance, highway safety, employment, discrimination, the environment, and consumer protection. Some of these policies take the form of mandates, incentives, and bans, but a prominent set of behaviorally informed tools involves information, warnings, reminders, social norms, and default rules. Insofar as they steer people in certain directions without imposing significant costs, tools of this kind are called “nudges”, a term coined by Cass R. Sunstein (a CBS Honorary Professor) and Richard Thaler, one of the leading US economists about a decade ago.

Do people like nudges?
Today, more than 150 governments worldwide make use of behavioral insights and “nudges” to influence consumer behavior and consumer choices. A recent OECD report published in March 2017 presents more than a hundred examples of how they work in practice. However, not much is known about whether citizens approve of these nudges as governmental policy tools. Some work has been done in the United States and in several nations in Europe, including our own study on “Do people like nudges?”, published 2016. With the aim to provide policy makers and the public debate with empirical evidence on public attitudes towards some of these nudges, we explored the reactions from a diverse array of citizens and began to “map” people’s views across the globe. One result is that the world’s nations fall into discernible categories.

Current literature on public acceptance of nudges offers five general lessons:

  • First, citizens in diverse nations generally approve of nudges, at least of the kind that have been adopted or under serious consideration in recent years.
  • Second, citizens do not approve of nudges that they perceive to be inconsistent with the interests or values of most choosers such as a default rule by which men’s last name would automatically change to that of their wives.
  • Third, citizens do not approve of nudges that are perceived as having an illicit goal, such as religious or political favoritism.
  • Fourth, citizens object to manipulation, but they define it quite narrowly, as in the cases of visual illusions to reduce speeding and subliminal advertising (the latter does not qualify as a nudge, though).
  • Fifth, and quite surprisingly, political affiliation is generally a weak predictor of citizens’ reactions to the tested nudges.

With respect to cross-national differences, there seems, thus far, to be only one major fault line. In an impressively wide array of democratic nations, including the United States, the United Kingdom, Italy, Germany, France, and Sweden, all five lessons apply (with relatively minor variations), and citizen evaluations are unexpectedly similar. But in two nations, approval rates are significantly lower. These nations are Denmark and Hungary. To be sure, majorities in both nations do tend to approve of the tested nudges, but the level of approval is consistently lower, and in some cases, approval rates fall below 50 percent. A full explanation for these lower approval rates has yet to be provided, but greater distrust or fear of government undoubtedly provides part of the picture.

Behavioral insights all over the world
In our most recent survey from November/December 2016, we offer results from Australia, Brazil, Canada, China, Japan, Russia, South Africa, and South Korea. These nations were chosen in order obtain a broad sample of countries with diversity along several lines. We conducted representative online surveys, providing data from about 1,000 respondents per country, who were asked whether they approve or disapprove of 15 selected nudges. In order to be able to compare and enlarge the overall data set, we used the same survey instrument and largely the same methodology applied in our  earlier European study.

A general lesson is that majority support for nudges cuts across many nations with diverse cultures, political inclinations, and histories. At the same time, we find that the nations of the world can be provisionally grouped into three categories.

  • The first, consistent with the existing U.S. and European data and including several of the nations studied here, reflect all of the five lessons sketched above. Of the nations for which data are available, this is the largest group.
  • The second category, consistent with data from Denmark and Hungary, shows significantly lower approval rates; Japan now joins this category.
  • The third category, identified for the first time here, consists of nations with massively high approval ratings. China and South Korea are the current examples.

Lessons learned
For public officials, the major lesson is simple and positive: So long as the underlying end is legitimate, and so long as nudges are consistent with people’s values and interests, most citizens are offering an enthusiastic permission slip or green light. They are hardly troubled by nudges as such. Notably, the level of public support is likely to be significantly lower for mandates and bans, though of course the relevant subject area is important (people do not object to prohibitions on murder and assault).

Public approval – necessary but not sufficient
It is important to emphasize that surveys hardly tell officials everything they need to know. A full evaluation of the welfare effects of nudges, and of the underlying ethical issues, would be necessary to decide whether and how to nudge. A nudge might receive widespread public approval even though it would do little good and considerable harm – and even if it would, on reflection, raise troublesome questions on either utilitarian or deontological grounds. But insofar as officials are concerned about public opinion, they generally need not worry, at least with respect to the most of the nudges tested here.

Cross-national differences – an avenue for future research
With respect to cross-national differences, much remains to be learned. For example, we do not know whether the very high levels of support in China reflect trust in government, enthusiasm about the policy goals, adaptation to the extensive use of government power, or some form of “preference falsification”, producing misleadingly high levels of support in surveys. Nor do we know, as yet, whether many countries fall within the category of overwhelmingly pro-nudge nations, now containing only China and South Korea, or whether the category of more cautiously pro-nudge nations is small and greatly dominated, in terms of sheer numbers, by the principled pro-nudge consensus among democratic nations (as now appears). It also remains possible that some nations would show only minority support for the nudges tested here.

Read the full study here


Lucia Reisch is a behavioral economist and full professor for intercultural consumer research and European consumer policy at the Copenhagen Business School. She is also Visiting Professor at Friedrichshafen’s Zeppelin University, Germany. She is currently chairing several German and European research projects in the field of sustainable development. The main focus of her work is on consumer, health and sustainability policy, empirical research into consumer behavior (in particular sustainable consumption and production) as well as behaviorally based regulation and innovation research.

Cass R. Sunstein is currently the Robert Walmsley University Professor at Harvard. From 2009 to 2012, he was Administrator of the White House Office of Information and Regulatory Affairs. He is the founder and director of the Program on Behavioral Economics and Public Policy at Harvard Law School. Mr. Sunstein has testified before congressional committees on many subjects, and he has been involved in constitution-making and law reform activities in a number of nations.

Follow Cass R. Sunstein on Twitter.

Dirty Oil or Green Energy in the Faroe Islands?

By Árni Johan Petersen.

These are the stories from the two divided camps in the Faroe Islands – please give your take on this dilemma. Should the Faroese explore and produce oil in the Faroe Islands that will contribute to global energy safety and stability to an ever growing global energy demand? Or should the Faroese stop this process now, and rethink the current state of the world where the Faroe Islands could become the front-runner for green solutions to statuette an example, and stop the greenhouse gasses deriving from fossil fuel energy by saying no to oil?

Background
The 4th license round for rights to oil exploration in the Faroe Islands was May 17th 2017, and the search for oil in the offshore subsoil in the Faroe Islands might continue if there is an interest from international oil companies to invest in the exploration. Since the first license round in 2000 there have been conducted nine drillings in the Faroese offshore subsoil without any commercial fund but results have concluded the subsoil to have a hydro-carbon active system in place.

Today, the Faroese economy is strong, unemployment rate is close to 2 per cent, young Faroese are moving back home, population has surpassed 50.000 inhabitants for the first time, salmon industry is booming (has done so for seven years), tourism is booming (four years), and the fishery is booming. A society in prosperity where the incentives to create new jobs might be vanishing because there are no Faroese to fill in the positions and foreign workforce might become a necessary solution to keep the (capitalistic) wheels going.

Pro-oil exploration Camp
The Faroese Ben Arabo, CEO at Atlantic Petroleum, argues that the Faroe Islands should explore for oil in the Faroese subsoil. The world, he argues, demands oil and gas in large quantities because the world consumes 100 million barrels of oil every day, and the demand is increasing. Oil, as a percentage of the total world energy consumption, is decreasing but the growth of energy demand is so great that the demand for oil in quantity increases every year. Currently, he continues, approximately one third of the global energy demand derives from oil, one third from coal, and one fourth from gas. The rest derives from nuclear energy, water and other renewable energy currently supplying one-digit percentage of the global energy production.

We, who live in the privileged part of the world, Ben argues, take energy stability and security for granted while other parts of the world, e.g. India, China, Indonesia etc., do not have this luxury. Ben recommends people who think they could survive without oil should examine how long time passes before they use the first object that demands oil in its production process (e.g. tooth brush). Hydrocarbon is present in a large numbers of product ranging from mountain helmet, solar panels, aspirin, and tooth paste. The wishful thinking of “no-oil-tomorrow” is based on ideology rather than technology, Ben concludes.

Resistance Camp
For the first time since the Faroese started to dream about finding oil we are observing resistance in the Faroese community. These are mainly environmentalists who have joined forces in an attempt to stop the oil exploration in the Faroe Islands. One local NGO, Ringrás, is represented by Ingmar Valdemarsson á Løgmansbø who argues:

“The context of the opening of the fourth Faroese hydrocarbon licensing round is marked by increasing ecological turmoil and biosphere degradation stemming from anthropogenic climate change and widespread habitat destruction. Fundamentally, our global society is built upon a measure of success (unrelenting growth) which, when achieved, clashes with the integrity of the interconnected ecosystems that make life on earth viable, and thus, enable civilisation as we know it.

The challenges we face, as a country and a global community, are much greater and more fundamental than the question of energy supply alone. But nevertheless, it is evident that the energy systems of the future must, by necessity, be renewable, if they – and we – are to last. Reality is catching up with our complacency and the thwarted efforts to ditch fossil fuels and racing ahead of our expectations, but luckily on two fronts:

  1. The forecast dangers of rapid climate change are showing themselves at an accelerated, unexpected and ominous pace.
  2. Key renewable technologies have matured to take on and render fossil fuels largely obsolete.

Focusing on the latter in relation to the former, it is entirely untimely, unnecessary and unethical for the Faroe Islands to venture into a dirty industry that would threaten the mainstays of the Faroese economy, namely the fishing industry and tourism, whilst contributing to an uncertain future in favor of very dubious short-term financial gain, prone to suffer from stranded assets as disruptive technologies coupled with global weirding and climate policy expedite the transition to a low-carbon society. This is underlined by the recent developments in India, where 14 Gt of planned coal power stations have been cancelled in May alone on account of Solar PV directly outcompeting coal.

In this environment of change, we must embrace the shift away from fossil fuels and take on the potential leading role that our national goal of 100% renewable electricity generation by 2030 promises to imbue us with. This path is what we as a country need and what the world needs and, best of all, it won’t cost the world.”

According to Ingmar the Faroe Islands, the Faroese Government, has signed the Paris Agreement (COP21) which includes lowering the carbon emission to decrease the global warming.  The Faroese Minister of Industry and Foreign Affairs, Poul Michelsen, has also publically stated his support to the agreement and the Faroe Islands should be the frontrunner in the battle against fossil fuel emission adding to the fire of global warming. The long term perspective, according to Ingmar, is that this will be the sustainable solution regarding environment, society, and economics because the Faroe Islands are heavily dependent on their fisheries, salmon farming, and tourism. Oil industry will add to the carbon quantity in the natural environment and changes in the ecology will alter the livelihood of the resources in the sea. This, in turn, will negatively affect the natural resources in the Faroe Islands harming the economy and society in the long run. Exploring for oil has to stop now!

The Broader Picture
The International Energy Agency (IEA) recommends exploring for more oil in the Scandinavian area because this will provide global energy stability and security. This argument is based on the fact that the political system is transparent, and the regulation for oil activities is progressive in terms of natural environment, work processes, and overall safety. The Middle East is, according to IEA, not the most reliable nor stable area, while Scandinavian countries are triple-A-democracies, market economies and predictable partners.

Producing more oil will lower the price of oil and this automatically decreases the incentives to invest in research and development of renewable energy solutions because the energy consumer demand will, in general, follow the least expensive solution. In contrast, if the oil production is stopped the oil price will go up and the demand for alternative solutions becomes pressing and the investors will predict return on investment. This will speed up the process to develop renewable energy solutions but we will probably experience political power changes on the global arena, e.g. a stronger Middle East. The question is, for how long? The sooner the world moves to alternative energy solution the global arena will change, again, and this might be the only sustainable solution because the emission and global warming is already at a critical stage.

So, should the Faroese provide for energy stability and security, or should they be the front-runners to say “no” to oil? Could the Faroe Islands become a role model for other societies in the Arctic and beyond? And if the Faroe Islands can do this, could other countries learn from this small country? Is the Faroese political (Governmental) agenda hypocritical because of its duplicity? Or is this hypocrisy a necessary aspiration to prosper as a small society in the Arctic that might spread to other small societies in the Arctic?


Árni Petersen is PhD-Fellow at the Department of Management, Society and Communication at Copenhagen Business School. His PhD project pursues the research question: “How does future expectation of wealth deriving from the oil affect the Faroese society and the potential outcomes in the future in the Faroe Islands?” His research features an in-depth case study of the Faroese Oil Industry, including interviews, observations, and local newspaper articles about the oil industry.

You can find Árni on LinkedIn.

Pics by BSEE & Christian Reimer, edited by BOS.

CBS new Knowledge Partner of the OECD

By Karin Buhmann.

In early 2017 CBS accepted an invitation from the Organisation of Economic Collaboration and Development (OECD) to become an OECD Knowledge Partner. As an OECD Knowledge Partner, CBS joins a small group of prestigious universities – including the University of Geneva, the University of Sydney, London School of Economics and SciencesPo (Institut d’études politiques de Paris) – that are invited to share and discuss research based knowledge with the OECD, thus enhancing its ability to deliver on regional and global challenges related to economic collaboration and development. For 2017 CBS was invited to participate in two key ways: scholarly interaction at the annual political OECD Global Forum, and contributing an article to the OECD Yearbook. Both were connected to the topic at this year’s Global Forum: Bridging Divides, with particular focus on inclusive growth, digitalization, and trust.

Three CBS professors (Karin Buhmann (MSC), Kim Andersen (DIG), and Christian Asmussen (SMG) and the CBS Vice-President for International Affairs (Dorte Salskov-Iversen, who is also Head of Department of MSC) participated in the OECD Global Forum, which took place at the OECD Headquarters in Paris on 6-8 June 2017. Presenting and moderating at an ‘Idea Factory’, Professor Kim Andersen shared views on artificial intelligence. Professors Christian Geisler Rasmussen and Karin Buhmann interacted with OECD experts on issues of Inclusive Growth and the Location Choices of Multinational Firms (Geisler Rasmussen) and The role and challenges of OECD’s Guidelines for Multinational Enterprises for building trust through Responsible Business Conduct in a context of global competition (Buhmann).

With permission from the OECD, the CBS contribution to OECD’s 2017 Yearbook  is reproduced in the following.

Responsible Business Conduct and Competition: OECD’s Guidelines for Multinational Enterprises and responsible supply chain management

By Karin Buhmann, Copenhagen Business School

Surprised looks with colleagues or students are commonplace when I observe that the OECD plays an important part for the promotion of responsible business conduct (RBC), not just in OECD countries but globally. RBC is OECD ‘speak’ for corporate social responsibility, corporate sustainability and other terms indicating an expectation that businesses take responsibility for their impact on society. The OECD’s key normative instrument for RBC, the Guidelines for Multinational Enterprises, and the remedy institution that adhering states commit to establishing, the National Contact Points (NCPs), are relevant to help offset some of the social cost that competition causes to employees and communities. The Guidelines provide norms of conduct for MNEs and for how they should act to avoid harmful impact caused by their supply chains. Revised several times since first adopted in 1976, the Guidelines provide normative standards in regard to human rights, labour/employment and industrial relations, environment, bribery, consumer concerns, science and technology, competition and technology. The Guidelines also apply to institutional investors, including minority shareholders.[1] Jurisprudence (‘case law’) emerging through complaints (‘specific instances’) handled by NCPs elaborates the practical implications of the Guidelines for companies and investors, within and beyond the sector and country concerned by each case. Like the Guidelines have extraterritorial reach beyond MNE home states, NCPs may also deal with business conduct arising in non-OECD states or other states having acceded to the Guidelines (provided a connection to that state).

A case[2] that was recently handled by the Danish NCP highlights the pertinence of OECD’s Guidelines at a time when SMEs too have transnational operations, as well as of the evolving guidance developed by NCPs. The case concerned a Danish textile company that sourced from a supplier in the Rana Plaza building at the time of its collapse in 2013.

The Guidelines are recommendations from governments to companies operating in or out of states (whether or not OECD-Members) adhering to the Guidelines. With the 2011 revision, the Guidelines adopted the risk-based due diligence approach.[3] This is a process for companies to identify, prevent, mitigate and account for their impact on society. Whereas corporate legal or financial liability due diligence aims at protecting the company against harm, risk-based due diligence is about protecting society against harm caused by the company or its business relations. Of course, if done well it also protects the company against liability or reputational harm.

The case on the Danish textile company concerned the adequacy of the company’s due diligence to prevent harm directly linked to its operations by a business relationship. The NCP found that the company did not apply processes for due diligence in compliance with OECD’s MNE Guidelines. In particular, the company failed to make demands that its supplier ensure employees’ human and labour rights, including through adequate steps to ensure occupational health and safety. As to whether the company had acted consistent with what it argued to be buyer practice in regard to building inspection, the NCP observed that practice by itself may be indicative, but not conclusive regarding the scope of risk-based due diligence. In other words, a company must think and act for itself in regard to demands on suppliers to take ap­propriate measures to ensure health and safety in the workplace. Thus, the NCP statement elaborates on the practical implications of the Guidelines and due diligence for companies in the textile and other sectors for the future, in regards to building safety and supply chain management.

The collapse of the Rana Plaza building was a wake-up call in many OECD countries concerning the human and social cost that can be the price for the quest for economic gain that drives much competition. Global companies have long taken advantage of wage differentials and weak regulation to keep costs low.[4] Concerns with labour and human rights have been strong if too often ineffective drivers for corporate change and the conditions for competition.[5] The textile sector is not unique in competition causing adverse social or environmental impacts. Agri-industry and mining are among sectors in which adverse social and environmental impacts of business activity are regularly reported. Enhanced knowledge of OECDs MNE Guidelines may contribute to promoting RBC in such transnational economic activities.

 

[1] OECD (2014) Scope and application of ‘Business Relationships’ in the financial sector under OECD’s Guidelines for Multinational Enterprises, Paris: OECD Global Forum on Responsible Business Conduct.

[2] Final Statement on Specific Instance notified by Clean Clothes Campaign Denmark and Active Consumers regarding the activities of PWT Group.

[3] The term was adopted from the United Nations Guiding Principles on Business and Human Rights (UNGPs), United Nations Human Rights Council (2011) UN Doc. A/HRC/17/31.

[4] Krugman P, Obstfeld M, and Melitz M (2014). International Economics: Theory and Policy, Global Edition. 10th ed. Online: Pearson.

[5] Ruggie J (2013) Just Business – Multinational Corporations and Human Rights. Boston: W.W. Norton.


Karin Buhmann is professor at Copenhagen Business School (CBS) where she is charged with special responsibilities for Business & Human Rights, and a part-time member of the Danish National Contact Point (NCP) under OECD’s Guidelines for Multinational Enterprises. Her academic background is in international human rights law.

Pic by Solidarity Center, edited by BOS.

How Businesses Can Profit with Purpose

By Robert Strand.

Money helps us meet our basic needs, but what about our need for meaning? Businesses will profit — not just financially — by finding their souls.

How do you motivate someone to work? For many the response is quite simple: money. Want more work? Pay more money. Economists have long instructed us that human beings are rational self-interest maximizers motivated solely by the dollar.

The discipline of economics has historically dominated business schools and management research and, it follows, that the fundamental assumption of self-interest maximization is applied to companies. As the economist Milton Friedman famously wrote “the social responsibility of business is to increase its profits.”

A more powerful motivator
However, the view that money is the way to motivate someone to work is only half correct. And it is half terribly, terribly wrong. The research is in and it is clear: For knowledge workers, one must pay enough money to take the issue of money off the table. But beyond that, money is a terrible motivator.

In fact, money can be a demotivator as incentive plans often end up encouraging employees to think more about money than the work. Instead, purpose is increasingly recognized as the greatest motivator for employees and organizing force.

Purpose grows in importance with new generations of employees who are increasingly demanding that the organizations at which they spend their precious time connect to something much bigger. Great thinkers like Daniel Pink and my Berkeley-Haas colleague Barry Schwartz have much to say in support of this.

Can a business self-actualize?
Themes like social inclusion and climate change represent opportunities for companies to connect their employees with purpose. We recently held an event to explore how companies like Adobe and Microsoft are innovating their hiring practices to make it more possible for individuals from underrepresented populations to fulfill their potentials at their firms and, ultimately, encourage greater social inclusion.

For many large, established companies, connecting employees with a sense of purpose is remarkably challenging. This is where a corporate social responsibility (CSR) or sustainability group can serve an important role. CSR and sustainability groups can identify material issues for that company, such as encouraging social inclusion or battling climate change, and bring these issues into the company. Profits are a bit to the company like oxygen is to the body: Necessary for survival but a pretty lousy thing to live for. Companies that connect their employees to a greater sense of purpose are those that will foster healthier organizations and ultimately realize greater profits.

This article was first published in the San Francisco Chronicle Late Edition, 28 June 2017.


Robert Strand is Sustainability Professor and Executive Director at Berkeley-Haas Center for Responsible Business. Follow him on Twitter @robertgstrand

Pic by Hamza Butt.

The Faroe Islands: UNspoiled, UNdiscovered, UNbelievable – The Faroese Oil Industry: UNdisputed, UNquestioned, UNchallenged

By Árni Jóhan Petersen, Ph.d., CBS — Photo and copyright by Stig Nygaard —

The Faroe Islands are economically dependent on a clean environment for their fishing industry but up to now the community has not challenged the potential downsides of the Faroese oil industry. The consequences of the oil industry could have negative effects on the nature and thereby the future of the community in the Faroes. Why do the downsides not concern the local people? Is it ignorance? Is it the hope for a wealthier future? Is the progression within the oil industry an irreversible process? What is your take on this?

Visit Faroe Islands has promoted Faroe Islands as a unique travelling destination. Located in the North Atlantic Ocean between Scotland and Iceland, the islands have a nature, culture, authenticity, remoteness, and openhearted inhabitants unlike any other, that could be summed up in the words; unspoiled, undiscovered, and unbelievable. The Faroese people are proud of their culture and natural environment (Faroe Islands were elected “World´s best islands” to travel to in 2007, National Geographic Traveler, among 111 destinations).

Since the early 90´s the oil industry has flourished in the Faroes. Although the explorations and offshore drillings of the sea bedrock have not been found sufficient yet, the industry is currently evolving because of the Faroese service sector supplying the local and international oil industry. After two offshore drillings in the summer of 2014 an oil rig (platform) found its way into one of the fjords, where it was repaired – and then sent off to Canada for another offshore drilling. The reparation of the oil rig created employment for a great variety of craftsmen and other businesses in the service sector in the Faroes, and the Faroese people are proud to finally see some results – after so many years.

On one hand the oil industry has brought great excitement in the local community, and the media has mainly reported positive stories about the job creation, the learning it involves, future opportunities and development. The reparation of the oil rig has been regarded as a general test to prove major actors in the oil industry, that the Faroes can provide services of this scale. The test will potential make way for future reparations of oil rigs from the oil/gas fields on the British side of the border, because of the shorter trip to the Faroes than to Norway – and at a lower cost of labor. There is also the future opportunity for oil rig and tanker demolitions to take place in the Faroe Islands.

On the other hand there has been no debate in the local community about the possible pollution of the fjords and natural environment. As the Faroese economy is very dependent on fishery they are also dependent on a clean environment. And the islands are been promoted as clean, untouched and beautiful natural environment – but how does this fit with a very big oil rig in that same nature? What are the possible consequences associated with a demolition site and scrap yard? How much can the unspoiled nature tolerate before it becomes spOILed?

Quick facts on Faroe Islands:

  • 50.000 inhabitants
  • 18 islands
  • 1.399 square km
  • 274.000 square km sea area
  • North Atlantic Ocean
  • Self-governed part of the Danish Kingdom
  • Language: Faroese

Photo can be collected here