Tag: #sustainability

Constructing Social Portfolios: A Quantitative versus Screening Approach

By Alina Hofer, Lea Katharina Kasper & Dr. Kristjan Jespersen 

◦ 5 min read ◦

When we talk about ESG, one could argue that there is a strong bias focused on climate investing, reaching net zero targets as well as good corporate governance and diversity themes. But there is much more to ESG. The “Social” dimension of ESG is hugely under explored and developed and covers under studied issues such as how companies treat their employees and care for the responsibility of their products. Still further, assessments linked to human rights codes and social impacts is only now receiving the attention it truly deserves. Although the importance of these topics is undisputed, we see that attention to particularly address the social dimension has been lacking, whereas awareness of other ESG risks has been rising immensely during the past years. 

Not only is the general knowledge and focus on the social dimension of ESG limited, its overall  implementation in portfolio management has not been sufficiently experimented with and addressed.

The delay to properly implement the “S” in ESG is often explained because of the challenges to quantify, assess, and integrate social factors generally.

However, this argument should not be a sufficient justification for neglecting the “S” in ESG and for investigating a possible relationship between a good social rating and superior financial performance. To tackle this lack of awareness, we constructed two portfolios which integrate Refinitiv’s Social ratings based on different integration strategies and test their performance towards the market between 2012-2021.

When integrating social – or other ESG – ratings into the investment process, we find there is often disagreement on how to best consider these factors in portfolio construction. Currently, it is most common to apply screening or best-in-class strategies. These approaches aim to remove assets that do not fulfill certain criteria from a defined investment universe. Negative screening would mean to remove those companies that perform worst from the pool of assets. Inversely, an investor could also only continue with those firms who at least have a certain minimum rating. For both approaches, the portfolio weights are then allocated to the assets that remain. This is done using conventional indicators such as value, size or expected risk-adjusted returns. In our study, we, however observe a clear shortcoming of this approach: After screening out the worst 10% “social performers” and allocating weights based on a risk-return trade-off, the portfolio does not necessarily promise a higher overall ESG score than a portfolio would reach which does not consider the ratings at all. Although the portfolio yields a solid financial performance, this raises the question whether any ESG-related impact has been made with this integration approach.

To make sure an investor can improve his exposure to assets that score well in the social dimension, we integrate the rating scores directly into the optimization problem of our second portfolio. This leads to a very different outcome on the social rating:

Looking closer at the mechanics of this approach, we extend the traditional Sharpe Ratio with the ESG factor, meaning to add by how much it a company “outscores” the market average. This results in the following “Social Sharpe Ratio”:

We add a fifty percent weight split, which can be flexibly adjusted towards investor preferences. And we now balance a risk-return-social trade-off. This explains why the second approach over 9 years constantly beats the market average in respect to the integrated Social factor without sacrificing any performance on the financial side. In fact, we find that in 5 out of 9 years, the second strategy would have also led to higher risk-adjusted returns measured by the Sharpe ratio. Moreover, returns were consistently higher compared to the market benchmark. This result is quite remarkable, given that it is often questioned whether investors need to sacrifice returns in order to make their investments more socially responsible. 

Lastly, our study resulted in one more unforeseen twist when it comes to integrating ESG ratings. That is, the question whether we can actually trust the rating scores. To answer this, we must first understand how scores are created. Rating providers look at an immense amount of publicly disclosed information, reports and policies. And based on what company’s report, rating scores are aggregated. However, it is clear that a firm would only report on things they do well. In fact, we observe that with increased reporting, ESG scores also improve. But what about the real-life actions and impacts? Some rating providers offer a combined score, which also considers media reports on the involvement in controversial actions. As these scores are only available at an aggregate level, we calculate them on a single-pillar level using Refinitiv’s methodology, which adjusts for firm size and industry. Looking at specific examples in our portfolios, we found that the impact of such controversy involvement on the overall score could still be larger. Nevertheless, we stress that in order to have a complete picture of a firm’s ESG behavior, the impact of these controversies needs to be reflected in investment decisions. 

To sum up, given the results of our research, there are three things we aim to highlight:

  • It is crucial to increase investors’ awareness of “Social” matters and provide a better landscape for impact investments in this specific dimension.
  • Integrating ESG ratings does not always promise a better ESG performance for the whole portfolio. Therefore, it is necessary to focus on strategies that lead to actual impact.
  • Third, looking beyond the information that is disclosed by companies themselves, more attention should also be addressed to “real life actions” when making investment decisions. 

About the Authors

Lea Kasper has recently graduated with a MSc. in Finance and Investments (cand.merc.) from Copenhagen Business School. Her interest and enthusiasms about sustainability and how to more efficiently integrate non-financial factors in investment decision-making contributed to her choice to further investigate this topic throughout the master thesis. 

Alina Hofer has recently graduated with a MSc. in Finance and Investments (cand.merc.) from Copenhagen Business School. Being passionate about creating impact through ESG-aligned investments, she was excited to further focus on her interest in this field throughout the master thesis.

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.

Image source: SustainIt

ESG investing in a changing regulatory environment: investing in active or passive ESG financial products?

By Marco Morazzoni and Dr. Kristjan Jespersen

◦ 8 min read ◦

The impending climate crisis emphasizes the need to mobilize large-scale investments to finance the transition towards a more sustainable and inclusive economy. The financial sector plays a pivotal role in this context, as it allocates capital from investors who wish to pursue financial and non-financial objectives to corporations and stakeholders who need these resources to empower the sustainability transition.

Over the past decades, individual investors have become aware of the risks inherent in unsustainable business practices, being increasingly interested in financial products that combine a competitive risk-adjusted return with Environmental, Social and Governance (ESG) criteria. Despite the increase in funds, indices and benchmarks that include ESG dimensions, the universe of ESG financial products remains difficult to navigate for individual investors due to the range of investment strategies that can be used to pursue ESG goals, such as negative and positive screening, best-in-class, ESG integration, impact investing and ESG engagement. In addition to ESG strategic considerations, investors ought to consider the level of active management inherent in their ESG products, since it has considerable implications for financial returns and the ESG objectives pursued.

In fact, while some financial products have an active investment approach, trying to beat a reference benchmark, others merely aim to replicate the ESG impact and financial performance of an index.

‘Active versus passive’ debate

The literature on conventional active and passive investing is almost unanimously in favour of long-term passive investing, due to active managers’ inability to consistently beat the market and to the lower fees charged by passive funds. However, the ‘active versus passive’ debate in the context of ESG investing is more nuanced.  This is because ESG investing entails the pursuit of intangible and hardly quantifiable goals that go beyond the achievement of mere financial returns. Furthermore, due to the different definitions and methodologies used in the assessment of ESG performance and the resulting unrealiablity of ESG data, the trade-off between impact and financial returns can be difficult to reconcile. 

A study conducted on 78 ESG active mutual funds and 15 ESG exchange-traded funds (ETFs) seeks to contribute to the debate by illuminating the financial and non-financial features that characterize these sustainable financial products. The funds were selected from Morningstar Direct according to specific criteria, such as: availability of an ESG rating, European domicile, invested in equity, active investment approach (for mutual funds) and passive investment approach (for ETFs).

By constructing an equally-weighted portfolio for the selected ESG active mutual funds and ESG ETFs, the study used the CAPM, three-factor, four-factor and five-factor model to compare the portfolios’ risk-adjusted perfromance before and after fees. To increase the robustness of the study, the regression analysis was conducted on various market benchmarks, such as MSCI World, STOXX Europe 600, MSCI World ESG Leaders and MSCI Europe ESG Leaders.  

The regression results indicated that the ESG active portfolio outperformed the ESG passive portfolio both before and after accounting for management fees. Controlling for the criteria used in the selection of the funds, the active outperformance could be attributed to the funds’ instrinsic characteristics, such as investment orientation, ESG investment approach and ESG scores. Accordingly, 77% of the ESG active portoflio had a global investment orientation compared to 27% of the ESG ETF portfolio. This entails that the active portolio covered more geographies, exhibiting higher diversification and improved risk-mitigation.

Further, 83% of the active portfolio practiced ESG engagment, a strategy that previous literature associates to superior financial returns and improved ESG impact.

By engaging with companies on ESG issues, ESG active funds may have been able to help ‘lagging’ firms improve their ESG performance, while enabling ‘leading’ firms to address their ESG issues. With respect to ESG scores (Morningstar and MSCI), the active portfolio displayed a lower overall ESG score compared to the ESG ETF portfolio. This finding could suggest that the active portfolio invested in lower rated companies on average, with the objective of helping them transform their ESG strategy and thus pursue higher risk-adjusted returns.

Insights to individual investors in ESG financial products

Recognizing the limitation derived from the small sample size and the fact that the active outperformance might be due to the specific funds selected, the findings were used to provide a set of insights to individual investors who wish to invest in ESG financial products.

Firstly, individual investors were categorised into ESG-unaware, ESG-aware and ESG-motivated, according to the investor labels used by Pedersen et al. (2021) “Responsible investing: The ESG-efficient frontier”. This categorization simplified reality to the extent that it became easier to derive actionable insights. Furthermore, it provided more granularity with respect to investors’ prerogatives regarding the trade-off between the pursuit of an ESG impact versus a risk-adjusted return.

Based on this categorization, investors who disregard ESG information (ESG-unaware) should invest passively in broad conventional ETFs or in a diversified portfolio of more specific conventional ETFs.

Investors who consider ESG information for risk-mitigation purposes (ESG-aware) ought to focus on the level of selectivity displayed by active managers in their stock-picking activity, measured in terms of high/low R-squared. If active managers are highly selective (low R-squared), ESG-aware investors may consider foregoing part of their return, due to the higher active management fees, and thus benefit from managers’ ability to pursue a greater ESG impact and potentially higher risk-adjusted returns.

Conversely, if active managers exhibit low selectivity with respect to a reference benchmark (high R-squared), investors would be better off investing passively in broad ESG ETFs or in a diversified portfolio of more specific ESG ETFs. Lastly, ESG-motivated investors may be better off investing in ESG active funds who practice ESG engagement, as the higher fees charged by these funds would worthwhile, given the superior ESG impact inherent in ESG engagment strategies.

Regulatory considerations

In addition to the empirical findings, the study also included regulatory considerations in the assessment of the suitability of active versus passive ESG financial products for individual investors. This was critical, since the new MiFID for sustainability preferences will come into force on the 2nd of August 2022.

According to this regulation (2021/1253), investment firms will be obliged to ask their clients about their sustainability preferences and find out whether they are interested in sustainable financial products. If the answer is affirmative, financial advisors will only be allowed to offer MiFID-aligned products to their clients. A MiFID-aligned product will have to include a minimum portion of ‘environmentally sustainable Investments’ (SFDR article 9), EU Taxonomy-aligned investments, or enhanced article 8 investments, consisting of article 8 investments (SFDR article 8) which also include Principal Adverse Impact (PAI) indicators.

Linking the new regulatory requirements to the findings of this empirical research, it is reasonable to expect that ESG-unaware investors will no longer exist, as investment firms will be legally required to inform these clients about the ESG implications inherent in their investments. This will give rise to an increase in supply of sustainable financial products (MiFID-aligned), as investment firms strive to keep up with the increased demand for these products. The rise in supply will most likely be larger than the increase in demand, since a portion of the new ESG-aware investors might continue disregarding ESG information, if ESG financial products are priced unreasonably (excessively high management fees). This will ultimately lead to higher competition among investment firms, with a consequent downward pressure on fees in the long-run. Lower investment costs could subvert individual investors’ incentives, as they decide on whether to invest in ESG active or passive funds. Accordingly, it might become desirable for ESG-aware investors to invest in ESG active funds who practice ESG engagement, as opposed to it being a strategy exclusively suitable for ESG-motivated investors.

The information contained in this blog post is not to be taken as constituting the giving of investment advice or recommendation. The reader is acting for its own account, and they will make their own independent decisions as to whether any investment is appropriate based upon their own judgment.

About the Author

Marco Morazzoni is a recent graduate in MSc Applied Economics and Finance from Copenhagen Business School. Having an interest in finance and ESG, he wrote his master’s thesis on “ESG exchange-traded funds versus ESG active funds: how can individual investors pursue ESG objectives while achieving competitive risk-adjusted returns?”

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: Khanchit Khirisutchalual on iStock

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

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

EU proposal on Corporate Sustainability Due Diligence for human rights and the environment

Advancing responsible business conduct, but failing to consider key functional challenges for remedy

By Karin Buhmann

◦ 9 min read ◦

Why is the proposal important?

The EU Commission’s draft Directive on mandatory ‘corporate sustainability due diligence’  published in the end of February is already recognized to have the potential to become a game changer for responsible business conduct (RBC) in Europe and beyond. If adopted, the proposed Directive will turn international soft law recommendations for companies to exercise risk-based due diligence in order to identify and manage their harmful impacts on human rights and the environment into hard EU law and therefore binding obligations for companies. Companies will be required to exercise due diligence with regard to actual and potential human rights adverse impacts and environmental adverse impacts, with respect to their own operations, the operations of their subsidiaries, and the value chain operations carried out by entities with whom the company has an established business relationship. 

The proposal also aims to establish accountability through corporate liability for violations related to insufficient due diligence.

What the draft directive refers to as ‘corporate sustainability due diligence’ draws on what the OECD Guidelines for Multinational Enterprises refer to as ‘risk-based due diligence’, and what is referred to as ‘human rights due diligence’ by the United Nations (UN) Guiding Principles on Business and Human Rights (UNGPs). Indeed, the proposal refers directly to those two international soft-law instruments, which are generally considered state of the art for responsible business conduct (RBC).

This form of due diligence is a process to identify, prevent, mitigate, remedy and account for risks or actual harm caused by the company (or its partners) to society. Unlike financial or legal liability due diligence, the focus is not on risks to the company, although of course societal (including environmental) harm may also affect the company negatively (see also Buhmann 2018). 

For companies covered by the directive, this will fundamentally change RBC from being voluntary to becoming legally binding. 

The Draft has generally been welcomed by business associations, although some remain hesitant towards a (much watered-down) proposal to strengthen top-level sustainability corporate governance. Civil society also generally approve although the range of companies covered has been criticized for being too narrow, and business relations too focused on contractual relations rather than impacts. The proposal’s introduction of civil liability with EU courts for victims from non-EU countries has been lauded. Yet this could and perhaps should also usher in a deeper debate on the fundamental characteristics of what constitutes adequate or meaningful remedy for harmful impacts on human rights impacts or the environment, and as importantly, how host-country victims will be ensured a de-facto equal standing with frequently well-resourced EU companies in front of EU courts. This short note addresses all of the above issues.

Part of EU corporate sustainability law

After a slow start up to around 2011, the EU has been moving fast since in an incremental development of increasingly detailed obligations on companies, including institutional investors, with the aim of creating transparency on business impacts on human rights, the environment and climate. Given the speed and political support for adopting EU law on these matters, it is quite likely that the proposed Directive will be adopted, although possibly with some changes. 

The proposal forms part of the larger package of corporate sustainability legislation undertaken by the EU recently. This includes the Taxonomy Regulation (which also refers to procedures that companies should undertake to ensure alignment with the UNGPs ad OECD Guidelines); the Non-Financial Reporting Directive (requiring some information on due diligence and risk assessments on human rights), which is expected to be replaced by the Corporate Sustainability Reporting Directive; and the Disclosure Regulation, which requires financial product providers to publish certain types of sustainability related information, including information on due diligence related to harmful impacts on environment and human rights.

The draft Directive builds on a proposal from the European Parliament, but it also follows trends in several individual EU countries to introduce mandatory risk-based due diligence. 

What companies are covered?

The draft Directive applies to ‘very large’ EU based companies (more than 500 employees on average and a worldwide net turnover exceeding EUR 150 million). ‘Large’ companies (having more than 250 employees on average and more than EUR 40 million worldwide net turnover) are included if they operate in specific high-risk sectors: textiles (including leather and related goods), renewable natural resources extraction (agriculture, forestry and fisheries), and extraction of minerals.

The draft Directive’s listing of activities related to minerals is quite wide and applies regardless of the place of extraction. They will therefore apply to many types of raw-materials used in the EU, including those used for power and heating, construction and the ‘green’ energy transition.

Non-EU-based companies are covered if their turnover in the EU corresponds to that of ‘very large’ companies, or that of high-impact sector companies for activities in those sectors. It is expected that requirements will be cascaded onto SMEs through the value chains that they are part of. 

What are companies required to do?

Importantly, like risk-based due diligence and human rights due diligence, corporate sustainability due diligence is not a compliance obligation simply discharged by undertaking and documenting a specific action.

Rather, as established by the UNGPs and the OECD Guidelines, it is an ongoing task that requires continuous assessments of risks or actual harm, and re-assessments, follow-up and efforts to prevent risks from becoming actual harm, and mitigation and the provision of remedy when harm has occurred.

Although the draft Directive seeks to establish that, it does rely heavily on companies applying contractual assurances, audits and/or verification. As argued by the expert organization SHIFT, these are not necessarily the best options for the purpose.

The due diligence obligations proposed are generally in line with the UNGPs and the OECD Guidelines, but in some ways narrower. This applies in particular to the limitation of some aspects of the due diligence process to what the draft Directive defines as ‘established business relationships’, i.e. relationships of a lasting character. This contrasts with the UNGPs and OECD Guidelines which do not require a business relationship (e.g. with a contractor, a subcontractor or any other entity such as a financial partner) to be lasting but, rather, focus on the connection between the company and risk or harm. This is one of the points that have generated criticism of the draft. 

Directives must be implemented by Member States. The means that some specific requirements may differ across EU countries. However, regardless of this companies will be required to integrate due diligence into all their policies and have a policy for due diligence that describes the company’s approach, contains a code of conduct for its employees and subsidiaries, and its due diligence process.

This must include verification of observation of the code of conduct and steps to extend its application to ‘established business relationships’. In terms of specific steps, companies must identify actual and potential adverse impacts; prevent potential adverse impacts; and bring actual impacts to an end (whether they were, or should have been, identified) or minimize impacts that cannot be stopped. In that context they should seek to obtain cascading by seeking contractual commitments from business partners in the value chain.

However, contrary to the UNGPs’ recommendations, there is no requirement that the company actively engages with business partners in its value chain to enhance due diligence cascading. Moreover, the provisions on involving potential or actual victims (‘affected stakeholders’) meaningfully in the development of prevention action plans, let alone the identification and redress of risks and impacts, lags behind the UNGPs.

In line with the UNGPs and OECD Guidelines, ceasing business relationships is not considered the first option. Rather, collaboration should be sought in order to advance better practices. If that is not possible, cessation a relationship may be appropriate.

Companies must also set up a complaints mechanism that can be used by affected individuals, trade unions and civil society organisations. Moreover, companies must regularly monitor their operations and due diligence processes, those of their subsidiaries and ‘established business relationships’ in the relevant value chain. They must also regularly report on these non-financial issues. 

Overall responsibility for the due diligence actions is charged on a company’s directors as part of their duty of care.

Enforcement: administrative and civil liability

Companies’ compliance will be monitored by authorities in each EU country. They may request information from companies and carry out investigations based on complaints by individuals or organisations, or on their own initiative. They may impose interim measures to try to stop severe or irreparable harm, and sanctions for violations of the due diligence requirements.

Companies will not be entitled to public support if they have been issued with sanctions under the directive. 

Importantly, companies can be subject to civil liability for damages resulting from a failure to adequately prevent a potential harmful impact or bring an actual impact to an end. Civil liability means that victims (or in the terminology of the UNGPs and OECD Guidelines: ‘affected stakeholders’) must themselves sue the company. 

A step forward for accountability and victims – but multiple challenges remain

The institution of civil liability for third-country victims in front of courts in EU-based companies’ home states is clearly an advance in regard to establishing formal accountability. However, the complexities of the legal system, especially for those seeking damages through civil liability, can hardly be overestimated. This challenge has been absent from most discussions leading up to the current draft Directive.

By contrast to criminal courts, civil courts generally make judgments based on the ability of one party to convince the court of its arguments. Research has shown that formal civil liability regimes tend to favour those who have the legal knowledge resources to do so. A market based good, legal expertise can be very expensive. The better the record in obtaining results that a client wants, the higher the cost. This may cause a highly problematic discrepancy between the possibilities of victims/affected stakeholders and companies to argue their case. Even if some victims are able to be assisted by civil society organisations, their legal expertise for arguing a case in court, or their resources to obtain such expertise, will not necessarily match those of companies.

Moreover, the civil liability regime focuses on economic damages and compensation. Although that may be relevant in some cases, in others a sum of money does not adequately redress harm suffered. Indeed, the UNGPs emphazise that remedy can take many forms of which economic compensation is only one. 

Arguably, the draft Directive falls short of adequately considering the situation of victims in non-EU countries in regard to having not just formal but actual meaningful access to justice in front of courts. It presents an approach to remedy that does not necessarily fit the complex situations and limited resources of victims/affected stakeholders. It is to be hoped that as the draft will be negotiated and amended towards the version that may be adopted, this issue will gain further prominence.

Conclusion 

The draft directive is an important development towards ensuring that companies based or operating in the EU take steps to identify and manage their harmful impact on the environment and on human rights, and to provide accountability. Although the draft does not cover all EU-based companies, it does cover the largest ones, and large ones in the textile, renewable and non-renewable natural resource extraction, all of which are known to be high-problem sectors. However, the affected stakeholder engagement, remedy and accountability provisions of the draft display too limited understanding of the situation of victims/affected stakeholders.

About the Author

Karin Buhmann is Professor of Business and Human Rights at the department of Management, Society and Communication at CBS, as well as the Director of the Centre for Law, Sustainability and Justice at University of Southern Denmark. Her research and teaching focus on sustainability and responsible business conduct (RBC) with a particular emphasis on social issues, especially in climate change mitigation, business responsibilities for human rights, and sustainable finance.

Photo by Guillaume Périgois on Unsplash

How do we find the green elephant in the classroom?

By Lavinia Cristina Iosif-Lazar, Jens Riemer and Caroline A. Pontoppidan

“Environmental sustainability to be at the core of EU education and training systems” – So reads the latest recommendation from the European Commission to EU education ministers, which highlights that “learning for environmental sustainability is not yet a systemic feature of policy and practice in the EU.” How then do we better inform practice and policy? Where does one even start to look at what has already been achieved and what more needs to be done on environmental sustainability, especially in Higher Education Institutions (HEIs)?

Coupled with the complexities of incorporating sustainability in HEIs and the diversity of methods used by HEIs in advancing these efforts or curriculum  overhaul, the task of bringing about systemic change and reaching the targets set on climate mitigation and biodiversity can seem daunting. But this is where a good picture of where we are now and where we want to be, can make a difference. 

Global pollution of, among other things, air, soil, and water, increasing exploitation of the resources of the Earth, and global climate change are challenging nature, environment, and public health. Also, Denmark and the world are in the midst of a biodiversity crisis caused by man-made pollution and exploitation of natural resources and habitats, global spreading of invasive species, and climate change. The intensive exploitation of the open land, forests, coastal zones, and marine areas has caused nature to be fragmented and continuously exposed to a number of stress factors, which means that biodiversity is on a constant decline

(p.17)
The EU Context: broadly speaking, all education needs to be green

At the EU level, we do not lack initiatives that have brought into focus the greening of the curriculum and the need to address climate and environmenal issues at all levels of education and training. The European Education Area (EEA) is an initiative aimed at strengthened collaboration between European Union Member States to build more resilient and inclusive education and training systems. One of the five focus topics of the initiative centers on Green Education. GreenComp – The European Sustainability Competence Framework developed by the European Commission was one of the cornerstones in the educational scope of the European Green Deal. Published in January 2022 and aimed at providing a shared competence framework on sustainability to guide educators and learners, the framework can be used by member states as a reference when rolling out educational initiatives on sustainability. 

However, even with all the attention given to education initiatives, there is little  direct appealing to HEIs at the EU policy levelMost of the time, communication is directed towards the whole sector leaving the specific directionality of the initiatives to the individual Member States and HEIs are most often mentioned together with schools and other training institutions. The GreenComp report mentions Higher Education a few times but only to illustrate that Higher Education has succeeded in creating a focus on competences for environmental sustainability in relation to preparing the students to address sustainability challenges and opportunities in their working life.

The Danish Context: The Danish Ministry of Education and the Green Transition

In September 2020, the Ministry of Higher Education and Science, Denmark, published ‘Green solutions of the Future’, a strategy for investments in green research, technology, and innovation. It also highlighted the important role of close collaborations between knowledge-institutions and the business community. To get things moving, the Danish government decided to allocate research funds to boost green research and also bringing more focus on green study programmes.  

And the issue of what was happening in HEIs on  green research quickly became a focal point. In December 2021, the Danish Ministry for Education and Science sent a request for data on the work HEIs were doing to integrate green themes in educational programmes. The Ministry asked institutions to submit an overview of seven green themes and the coverage of those themes in their programmes. Among these themes, two were focused on energy production and effectiveness, and the others addressed agriculture, transport, environment, biodiversity and sustainable behaviour. 

The CBS Context: Green Themes in study programmes 

There are multiple ways in which HEIs can find out what content in their educational offerings addresses the green themes described by the Danish Ministry. The way in which CBS did it, was to build on already initiated course content analysis and expand it to include the seven themes. In the academic year 2021-2022, CBS offered 18 Bachelor (undergraduate) programmes, 36 Master (graduate) programmes, as well as HD, Executive and special Master programmes. This amounts to a lot of data to go through and analyse. Other universities or schools might face the same issue of data being both diverse and difficult to gather, but once it is gathered, the managing the amount of data can become a challenge. 

CBS used the qualitative research tool NVivo, to analyse and code data from courses in all CBS’study programmes. This was done by identifying specific key words related to the given seven green themes (see table below). The data collected was derived from study programme competency profiles, course descriptions and learning objectives. For every search result returned, the context was analysed and only relevant hits were then recorded in the respective codes. 

Theme 1Theme 2Theme 3Theme 4Theme 5Theme 6Theme 7
Energy productionEnergy effectivenessAgriculture and Food productionTransportEnvironment and Circular economyNature and BiodiversitySustainable behaviour and Societal consequences
How do Green Themes look like in a study programme at CBS?

Once the data was collected and the content analysed,  a relatively comprehensive picture emerged of how and where the green themes are present in a study programme at a European business school like CBS. 

Case 1 below, illustrates a visualization  of an anonymised bachelor programme. It presents how the seven green themes can be visualized so to give an “as is” picture. With this information, study programmes can dive deeper into the green content that they already have embedded in their programmes and/or identify that they are interested in additional integration of the seven environment themes into education.

Figure 1: Case 1 – Bachelor Study Programme A (BSc. A)

Bachelor Study Programme A had extensive coverage of Green Themes 5 through 7. The numbers in each cell of the below table represent the number of hits (keywords) per theme. Within the Bachelor Study Programme A, the green themes were identified in both mandatory and elective courses, in their respective course descriptions (CD) and learning objectives (LO). Environment and Circular economy, Sustainable development and Social consequences, as well as Nature and Biodiversity were the themes found represented in the Bachelor Study Programme A courses. 

The continuous loop: research, policy, strategy and the classroom 

The analysis and reporting of course content on green and environmental themes can function as a basis on which discussions about environmental sustainability in an institution’s educational activities can be taken. Getting this overview can inform further work to advance both content and scope that strengthens the advancement of environmental sustainability competences. These can later also find their way into regional strategies as well as inform policy makers at the International and European level. Having a well-informed stance on how, where and which environmental content and competencies HEI graduates obtain during their education can  highlight where efforts need to be targeted. This also means that HEIs become a part of the action on “greening” the curriculum and, in turn, can better inform policy makers and education initiatives.

The business school sector has much to build upon. Pioneering scholars have long focused on issues of the environment and sustainability. There has been a dramatic uptake in the last decade of attention to climate change by business scholars, encouraged by editorial statements and special issues in the leading journals in every one of our disciplines. In the classroom, these issues are increasingly being discussed in core and speciality courses, representing significant curricular shifts, and supported by our accrediting bodies

(Galdon et al., 2022)

To read the full report, please visit CBS PRME InFocus Report series: https://www.cbs.dk/viden-samfundet/indsatsomraader/principles-responsible-management-education/resources/prme-infocus-reports

References

Bianchi, G., Pisiotis, U. and Cabrera Giraldez, M., (2022). GreenComp: The European sustainability competence framework, Punie, Y. and Bacigalupo, M. editor(s), EUR 30955 EN, Publications Office of the European Union, Luxembourg, 2022.

Danish Ministry of Higher Education and Science (2020). Green solutions of the future – Strategy for investments in green research, technology, and innovation.

Galdón, C., Haanaes, K., Halbheer, D., Howard-Grenville, J., Le Goulven, K., Rosenberg, M., Tufano, P. and Whitelaw, A. (2022) Business Schools Must Do More to Address the Climate Crisis.

About the Authors

Lavinia Cristina Iosif-Lazar is a project lead on Principles of Responsible Management Education at the CBS Teaching & Learning Department. Lavinia’s work centres on curriculum development, climate and carbon literacy and systemic thinking in management education, as well as assisting in the development of teaching materials. 

Jens Riemer is a Green Transformation Officer at Copenhagen Business School, within Executive Support and Communcations. Jens works with the cross-cutting strategic initiative Green Transition, which focus on bringing together key players in establishing an organizational frame and initiate concrete problem-based research and educational activities.

Caroline A. Pontoppidan, Associate Professor department of Accounting & Academic director CBS PRME. Her research often engages with the institutionalization of global standards into local context – and challenges herein.

Photo by Alex Lvrs on Unsplash

CBS Permahaven: A new campus chapter

By Isabel Fróes and Maribel Blasco

◦ 2 min read ◦

Sustainability – finding ways to walk the talk

We report here on a new campus initiative to create a permaculture garden on the CBS campus, opposite the Kilen building and very close to Fasanvej Metro Station. CBS owns a piece of fairly large plot of land here that is currently unused.  

A design workshop was held on 4th March, where different groups of participants (students, faculty, representatives from Frederiksberg municipality and others) worked collaboratively on a design for Permahaven.

‘Permaculture’ stands for ‘permanent agriculture’, a term coined by Tasmanian Bill Mollison in 1978.  He defined it as:

“The conscious design and maintenance of agriculturally productive systems which have the diversity, stability, and resilience of natural ecosystems. It is the harmonious integration of the landscape with people providing their food, energy, shelter and other material and non-material needs in a sustainable way.” 

Permaculture offers a holistic framework for creating sustainable ways of living. It aims to integrate land, resources, people and the environment by maximizing beneficial relationships, observing, emulating and working with rather than against nature to enhance resilience, diversity, productivity and stability (Hopkins 2020; Permaculturenews.org 2020). Permaculture advocates three overarching ethics: earth care, people care, and fair share, and twelve design principles – the petals of the so-called ‘permaculture flower’ (see Figure below.

Permaculture Flower – The seven domains of permaculture action (https://permacultureprinciples.com/flower)

Ultimately, the goal is to foster responsible cultivation, production and consumption through a whole-systems approach. But permaculture is much more than that – increasingly, the concept is being applied beyond the field of agriculture to support and inspire more sustainable lifestyles, to improve mental health, sanitize consumption, and design livable, humane social systems (Blasco, forthcoming).

What can a permaculture garden bring to a business school? Regenerating learning through permaculture

More from the event

About the Authors

Isabel Fróes is a postdoc at MSC Department at Copenhagen Business School working in three EU projects (Cities-4-People, iPRODUCE and BECOOP). Isabel also has wide industry experience and has worked both as a user researcher and service design consultant for various companies in Denmark and internationally. For more detail please see her Linkedin profile.

Maribel Blasco is Associate Professor at MSC Department at CBS. Her research focuses on management learning and higher education, notably at business schools; as well as cross-cultural inquiry. She is interested in learning not only as the transfer of know-how and technical skills but also more broadly as a process of identity formation, acculturation and development of tacit abilities such as intercultural competences, ethical awareness and creativity and innovation.

Are sustainable and healthy diets always compatible? Needs for an emic-oriented cultural research on sustainable consumption

By Fumiko Kano Glückstad

◦ 6 min read ◦

It is widely acknowledged that a plant-based diet is healthier than an animal-based diet (Willett, et al. 2019). However, a group of Japanese researchers recently published a thought-provoking article demonstrating that a lower diet-related Greenhouse gas emission (GHGE) has generally resulted in an inadequate nutrient intake among Japanese adults (Sugimoto et al. 2020).

Their results seem to support the fact that the Japanese Government has excluded any dietary-related initiatives from its long-term national strategies concerning the targeted 80% reduction of greenhouse gas emissions by 2050. In other words, Japanese opinion leaders seem to challenge the generally accepted viewpoint of a direct positive correlation between a sustainable diet and a healthy diet, contradicting widely accepted European studies and initiatives (e.g. Sjörs et al. 2017). This apparent controversial observation motivated me to look into the historical development of meat consumption on a global scale. Most importantly, the recently published guiding principles by the Food and Agriculture Organization of the United Nations (FAO) and World Health Organization (WHO) in 2019 state that “Sustainable Healthy Diets” are a trade-off between the two dimensions: sustainability and healthiness of diets. Thus, countries should decide on such trade-offs in consideration with their situation and goals (FAO & WHO, 2019). 

The following figure indicates such a trade-off situation for various geographical regions and it clearly shows that the meat consumption in Western countries is obviously higher than the rest of the world such as compared to e.g., Africa or Asia, although a substantial increase of meat consumption is observed in both China and Japan.

In particular, the main increases observed in China and Japan seem to be well-synchronized with the periods of their respective economic developments that simultaneously triggered their modernization (Westernization) process in their markets. However, the curves of Japanese and Chinese meat consumption also show a noticeable difference. Whereas the meat consumption in China has steeply increased since the 1980es, Japan seems to moderate its increase from the early 1990es and ahead, which is most likely explained by their respective economic developments. However, in this blog, I want to supplement these observations with some personal insights on what has happened in Japan during this period through my work experiences in the related industry.

Meat consumption in this blog refers to the average supply of meat across the population shown in this figure. Food supply is defined as food accessible for human consumption meaning the food remaining for human use after deduction of all non-food utilizations. Source: Our World in Data https://ourworldindata.org/grapher/meat-supply-per-person

During the Japanese bubble economy in the 1980es to the early 1990es, the Japanese middle class had increasingly wider opportunities to be exposed to the Western food culture due to their Westernization. This somewhat alarmed key Japanese health professionals, nutritionists, food experts and industries who considered a ”Western lifestyle and food culture” as a source of lifestyle-related chronic diseases e.g., diabetes 2 and cardiovascular issues, which would gradually impact Japanese consumers.

This subsequently triggered a countless number of initiatives aimed to nudge a wide range of the population towards a healthier diet. The initiatives were eventually formalized as a Health Promotion Act in 2002 and the Basic Law on “Shokuiku (food and nutrition education)” in 2005 by the Japanese government (MAFF, 2019).

Source: Ministry of Agriculture Forestry and Fisheries. 2019. “A Guide to Shokuiku.” https://www.maff.go.jp/j/syokuiku/guide/pdf/00_en_guide.pdf

The Shokuiku act has since become a comprehensive program targeting everyone from school children to the elderly, and its initiatives have involved a broad range of Japanese stakeholders, not only the central and local governments, health professionals and nutritionists but also food and restaurant businesses and their consumers.

The Shokuiku program has promoted the nutritional education from a holistic viewpoint and emphasized the importance of enjoying healthy meals from societal and cultural perspectives through various sensory food experiences. As a consumer researcher in the 1990es in one of Japan’s largest high-tech companies producing various kitchen appliances, I also personally participated in a variety of initiatives involving consumer organizations, health professionals, nutritionists and food and restaurant businesses to nudge consumers towards a healthy diet at that time. 

In a European context, nudging consumers towards a sustainable and healthy diet usually implies the replacement of an animal-based diet with a plant-based diet with emphasis on ingredients. One major difference to the Japanese nudging initiatives is that the Shokuiku promotion has encouraged consumers to learn how to select “nutritionally balanced meals” in their daily life while enjoying variations in sensory food experiences. Consumers have many ways to achieve this by following the “Japanese food guide spinning top” that can be easily followed by a wide range of population groups, i.e. from school children to the elderly (see the below picture). The maintenance of a moderate meat consumption level observed from the Japanese curve in the above figure might be partially attributed to such ‘enjoyable’ Shokuiku initiatives (see Yoneda, 2019).

Japan has been able to moderate its overall meat consumption without specific promotions of plant-based diets also thanks to the traditional Japanese food culture that is originally rooted in a plant-rich diet. Thus, in a Japanese context, it is perceived possible to achieve a well-balanced diet while simultaneously enjoying variations in sensory food experiences, in other words, nudging a healthy diet can be perceived as an enjoyable experience. Interestingly, Kanemoto et al. (2019) recently reported that meat consumption only weakly explains the difference between high- and low food carbon footprints (FCF) among 60,000 Japanese households. This study ponders that Japanese should (also) consider restricting their consumption in other areas than meat consumption with a higher estimated FCF such as restaurant foods, confectionary and alcohol. 

Source: Ministry of Agriculture Forestry and Fisheries. 2019. “A Guide to Shokuiku.” https://www.maff.go.jp/j/syokuiku/guide/pdf/00_en_guide.pdf

These observed trends indicate the importance of fully understanding social, cultural and dietary contexts in various countries and regions when researching on sustainable food consumption because food is inherently deeply rooted in the specific cultures. In other words, sustainable consumption studies should ideally shed more light on an emic approach addressing a specific sample of that region and discuss adaptability of such studies to countries outside of the specific region with due respect of the embedded cultural contexts. 

About the Author:

Fumiko Kano Glückstad is Associate Professor of Cross-Cultural Cognition at the Copenhagen Business School. She works in the area of cross-cultural psychology and her recent project “iBeauty” funded by the third largest Japanese cosmetic company investigates associations between personal values, beauty and well-being in cross-cultural contexts. She previously worked as a consumer researcher and product concept designer of kitchen appliances at Panasonic Corporation, one of the largest Japanese electronics industry enterprises.

Negative Capability: Sustaining our discomfort towards a collectively responsible society

By Tali Padan

◦ 3 min read ◦

In my PhD studies, I work with a different type of sustainability. Not the sustainability of carbon footprints or systemic transformations but a sustainability of reflection. How we do keep ourselves in continuous reflexive dialogue (with ourselves and others) so that we don’t prematurely reach conceptual closure, stagnating in our own comfort?  

Maybe comfort is sustainability’s biggest threat. 

I say this considering the many years I’ve lived in the US, after a few formative years in Israel. Comfort is the reason my mom uses paper towels in lieu of regular towels in the kitchen, and the reason my dad cannot stand critics of Israel. Comfort is identity. It is plastic. It is the reason I throw away the whole moldy cream cheese instead of washing and separating. It is why it is easier not to participate in big group meetings. This blog post itself is a distraction from the discomfort that Chapter 5 of my PhD dissertation brings. 

When this comfort is shaken up, there are many ways of trying to get there again – avoiding, rejecting, resisting – and in the case of global shakeups like the Covid pandemic, the talk about ‘getting back to normal’. But what if we were able to maintain a state of uncertainty, of not knowing what the solution is or how to get there. And rather than spending energy trying, we settle into the unsettlement, letting it stir up the hurricane of trapped emotions and meeting visitors we thought we buried years ago? This is what the poet John Keats called ‘negative capability’, the ability to be in uncertainties, mysteries and doubts ‘without any irritable reaching after fact & reason’.

 What if that ‘irritable reaching’ was in reality counterproductive towards our individual and therefore collective growth? 

Here comes the ‘don’t get me wrong’ section. I am not suggesting we linger in the dissonance until the glaciers drown us. Nor that we use this approach as an excuse not to try, or ironically – get so comfortable with the discomfort that we disengage from any responsibility. But that we let each shake-up sufficiently run its course so that our demons can be faced, both individually and collectively.  

In the elective course that I teach for third year Bachelor’s students, this is what we practice. First, and maybe most importantly, we sit in a circle. The circle grounds us in our fundamental equality and triggers us to explore our many inequalities. The class engages in a series of activities dealing with democracy, using an Israeli democracy education method called ‘Betzavta’ (Hebrew for ‘togetherness’). Betzavta, developed in the Adam Institute in Israel, integrates and emphasizes dilemmas and conflicts in order to experientially learn how to live with others in a democratic society. Each activity in the method includes reflecting on the result of the activity but also on the process. By shifting the reflection towards process, students are provoked to examine their own dynamics. Subconscious assumptions and habits can then be revealed and questioned.  

It is by no means an easy process. As one student succinctly put it in the final evaluation: 

“I thought that the whole thing was very good, good questions, good topics, good dialogue. But man, did it suck. It was horrible actually. But very cool.” 

The ‘horrible’ part that this student is referring to could range from the discomfort of conflicting opinions to the tension of judgement, and the palpable, heavy silence that can be felt when students hold back from sharing these tensions. The good part, as I perceive it from the facilitator’s chair, is that these tensions are exposed, felt and explored, and subsequently used towards a reflexive type of learning. Lingering in these tensions cultivates our negative capability and is the doorway towards this learning. 

The class represents a miniature society. When going through such an experience, students start to naturally move away from an exaggerated individuality and become more considerate towards the collective. By exposing and sharing the more difficult emotions we usually avoid – anger, irritation, overwhelm, anxiety, boredom – students get the opportunity to practice living together more genuinely, modeling the society most of us wish to see in the world. Lingering in these emotions requires being negatively capable because the habit is to seek comfort, stability, a pleasant state of mind. In this way, the ‘negative’ in negative capability does not refer to what is undesirable but rather an absence, the absence of habit, identity, or ideology. It means having the ability to stay in uncertainty without resorting to previous knowledge structures or beliefs. It’s in the letting go, entering the vulnerable home of the unknown, where thought is not there to fragment and give birth to anxiety, that we may connect with each other more genuinely. This, in my view, is a sustainable practice that could benefit us individually and therefore collectively. 

About the Author

Tali Padan is currently in the final year of her PhD at CBS, writing about experiential learning techniques in the business classroom. As a facilitator and researcher, Tali is interested in how purposeful experiences of dissonance can contribute to learning. She is from Israel/USA and has lived in Denmark for ten years. 

“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

Sustainable brands on Black Friday: What do consumers perceive as authentic?

By Nina Böntgen, Sara Derse and Meike Janssen

◦ 4 min read ◦

The fashion industry has repeatedly come under fire for its negative effects on the environment. With heightened attention towards the climate crisis and scandals highlighting the industry’s social shortcomings (Rana Plaza, 2013), more and more ‘native’ sustainable fashion brands have emerged. However, parallel, we witness a trend towards ever-increasing consumerism. Frequently, Black Friday is seen as the epitome of consumerism which raises the question: How do sustainable fashion brands approach the biggest shopping day of the year – Black Friday – and how do consumers perceive these campaigns?

We reviewed Black Friday Instagram posts by self-claimed sustainable fashion labels and found they can be conceptualized along two axes: (1) the level to which consumption is encouraged / discouraged, and (2) the degree of action taken by a brand to express its commitment to sustainability. This conceptualization accounts for existing societal marketing strategies, particularly Demarketing, Green Marketing, and Cause-related Marketing. On the one hand, the brand Raeburn closes its shops and urges consumers to use Black Friday to repair their clothing rather than buying new items (Demarketing). On the other hand, the brand People Tree promotes 30% off everything claiming that consumers should “add some green to [their] wardrobe” (Green Marketing). 

Business-as-usual, a revolution, or planet-saving purchases – what is actually authentic?

By interviewing 20 consumers, we found that they judge authenticity by inspecting various cues that are leveraged to identify authenticity drivers. For example, donating to WWF (Cause-related Marketing) yielded legitimacy for TwoThirds’ Black Friday campaign. Authenticity is a complex concept – it is multidimensional, subjective, dynamic and socially constructed. Multidimensionality implies that one cannot answer “what is authentic?” precisely; it is an interplay of different attributes. In our case, respondents described an advertisement as authentic when it was credible, relatable, congruent, original and/or impactful. Next, subjectivity means that what is authentic for one person is not necessarily authentic for another. Influential consumer characteristics are a person’s general scepticism towards advertising, level of environmental concern, and understanding of sustainability, resp. do we simply need less- or better/greener consumption to mitigate climate change?

“and it’s kind of a contradiction: ‘Please shop to help the planet’ and I think you can’t shop and help the planet at the same time. So less or no consumption is at all times the best option” (Consumer 1)

“you’re using capitalism to make the world a little bit better. And I think in my eyes, that’s a good strategy to go for” (Consumer 2)

Third, authenticity perceptions can change over time, for example upon new information. Last, authenticity does not exist as a stand-alone concept but is always sensitive to societal changes.

What does this imply for marketers of sustainable brands?

Black Friday is a dynamic context in which brands have to actively reflect on their communication strategy and respective consumer authenticity perceptions. Consequently, no communication strategy shows clear advantages or can be labeled ‘most authentic’. We advise brands to reflect on: 

  1. Their standpoint regarding Black Friday
  2. The needs of their target group
  3. The statement they want to make on Black Friday
  4. The tone they want to adopt in their campaign

Sustainable brands increasingly embrace creative ways to distance themselves from the traditional Black Friday, e.g. by closing shops, ‘selling rubbish’ or even raising prices. It remains unclear, however, whether these forms of brand activism reflect a brand’s honest opinion or are employed as a tool to stand out.

We also observe brands who are holding their customers responsible: on Black Friday 2020, Armed Angels let buyers choose between a higher discount or rainforest protection. After Black Friday, the brand revealed that the majority of their customers had chosen the higher discount, which raises the question: 

Can consumers be held responsible for making more mindful purchase decisions or is increased action by companies and governments needed? 

Upon stating its disappointment about the outcome, followers accused the brand of shaming their customers for choosing higher discounts. This translates to another relevant consideration for sustainable fashion labels – choosing the right tone. While radical messaging conveys urgency and appeals to environmentally concerned consumers, others feel opposed to it and, instead, want to be involved in dialogues. Again, this shows that when it comes to Black Friday, there is no ‘one size fits all’ solution – rather, brands should take time to think about their values and how they can make a meaningful difference on Black Friday 2021.

Throughout the interviews in our study, multiple consumers shared with us how they were inspired by campaigns of sustainable brands and respectively questioned their purchase decisions. This demonstrates that sustainable brands’ communications can actually exceed Black Friday and have lasting effects – not only on their brands’ perceived authenticity but also on our planet’s future.

About the Authors

Nina Böntgen is a recent graduate from MSc Brand and Communications Management program at Copenhagen Business School. Next to her studies, she was actively engaged as team lead and board member of oikos Copenhagen, a student initiative driving change towards greater sustainability. She’s happy to share further insights or engage in discussions on the post or the broader thesis (how sustainable brands navigate authenticity and greenwashing) via email (n.boentgen@web.de) or Linkedin.

Sara Derse is a recent graduate of the Msc Brand and Communications Management program at Copenhagen Business School. Fascinated by the topics of consumer psychology and purpose branding, she was involved in the sustainability-focused student initiative oikos as a Project Manager. She is happy to discuss her thesis (consumer perceptions of fashion brands with a purpose centred around sustainability) in further detail via email (saraderse@live.de) or Linkedin. 

Meike Janssen is Associate Professor for Sustainable Consumption and Behavioural Studies, CBS Sustainability, Copenhagen Business School. Her research focuses on consumer behaviour in the field of sustainable consumption, in particular on consumers’ decision-making processes related to sustainable products and the drivers of and barriers to sustainable product choices.

Photo by Ashkan Forouzani 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 Strategies. Stanford Social Innovation Review, Winter. Online first.  

Sjåfjell, B. (2018). Redefining the Corporation for a Sustainable New Economy. Journal 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

Are we asking the wrong questions in corporate social responsibility (CSR) research?

By Rikke Rønholt Albertsen

◦ 3 min read ◦

The sustainability contributions of business are under increased scrutiny in society. Observations of greenwashing, blue-washing, corporate hypocrisy, and decoupling suggest the existence of an intentional or unintentional gap between espoused CSR strategies and actual sustainability outcomes at the societal level. In other words, there seems to be more “talking” than “walking”.

This has inspired a growing concern in parts of the CSR research community that maybe we have been asking the wrong questions. Is it possible that in some ways we are contributing to this gap between strategy and impact?

Next year, an entire subtheme of the annual European Group for Organisational Studies (EGOS) conference will be dedicated to “Rethinking the Impact and Performance Implications of CSR”. This subtheme will address the tendency in CSR research to focus on outcomes at the organisational level without analysing impacts at the societal level.

There are valid reasons for limiting the scope of CSR research in this way: from an organisational performance perspective, many of the traditional success criteria for CSR policies—such as strengthening legitimacy, market position, and employee satisfaction—do not require data to be gathered on sustainability impact from a societal perspective.

However, the urgency and magnitude of the current global crisis related to climate, biodiversity, and social inequality fuels the expectation that corporations should acknowledge their role in creating these crises and take decisive action to be part of the solution. From this perspective, one would expect CSR research to provide knowledge of how, when, and why CSR policies and practices truly contribute to solving sustainability challenges. Yet, as a review of current CSR literature shows, this is rarely the case [1].

So what constrains CSR researchers from addressing this impact gap? In the following, I will highlight two interrelated mechanisms that have emerged from my research.

1) Sustainability impact is non-linear, systemic, and complex.

The problem with measuring sustainability impact is that it does not conform to conventional systems of measurement and reporting. Company CSR reports primarily provide key performance indicators linked to resource use per unit of production or list company policies and protocols to ensure compliance with various sustainability standards. In general, companies tend to (self) report on the successful implementation of their (self-imposed) CSR strategy, which happens to align with existing business objectives. However, as dryly noted by former environmental minister and EU commissioner Connie Hedegaard: the need for CO2 reductions is not relative; it is absolute! The melting Arctic poles do not really care that a company has made an effort to reduce its relative emissions if the net result is still more CO2 [2].

The negative impact on ecosystems is subject to irreversible tipping points where effects compound and accelerate. Thus, the societal impact of a sustainability policy or protocol cannot merely be assessed at the organizational level. It must be traced up and down the value chain and checked for unintended systemic consequences and hidden noncompliance [3]. Think of ineffective emission off-set schemes or families impoverished by bans on child labour. Ultimately, being “less bad” does not necessarily amount to being good.

2) Researchers do not have the necessary information.

Analysing the societal impact of corporate CSR policies and practices is a highly resource intensive task, which requires an entirely different set of research skills and data access than traditional organisational research. Instead, researchers most often opt to evaluate sustainability performance through estimations, perceptions, and narratives offered by company staff in surveys and interviews [1]. This data is context specific and prone to subjective biases, making it difficult to draw objective conclusions about societal impact.

Consequently, because there is so little existing knowledge of the link between CSR initiatives and societal impact, the CSR contribution of corporations is primarily assessed based on compliance with reporting standards and commercial rating initiatives such as the Dow Jones Sustainability Index [4]. This, for lack of better options, becomes the go-to objective indicator of CSR performance used by CSR researchers. Through this self-fulfilling circular logic, these indicators are used to identify CSR high performers for research on best practice. CSR research thus potentially perpetuates the perception of what successful CSR policies and practices look like—all without examining the societal impact of these practices.

Is this a problem?

Just as corporations increasingly realise that addressing CSR issues is no longer optional, we as CSR researchers may need to move beyond asking how, when, and why corporations engage with sustainability and begin asking how, when, and why corporations contribute to sustainability. If we do not, we risk losing our relevance when corporations look to academia for guidance on how to design and implement CSR strategies based on maximum impact rather than just maximum compliance and minimal risk.

We are challenged to expand our field of enquiry and be innovative when assessing how the observed means ultimately align with desired ends. This will require forging research alliances with new knowledge fields and establishing relationships with new groups of informants beyond company employees. The first step, however, is to rethink the questions we ask.

Further reading

[1] J.-P. Imbrogiano, “Contingency in Business Sustainability Research and in the Sustainability Service Industry: A Problematization and Research Agenda,” Organization & Environment.

[2] C. Hedegaard, “Farvel til ‘logofasen’ -nu har vi set nok grønne slides,” Berlingske, 2020. [Online].

[3] F. Wijen, “Means Versus Ends In Opaque Institutional Fields: Trading Off Compliance And Achievement In Sustainability Standard Adoption,” The Academy of Management review.

[4] M. Zimek and R. J. Baumgartner, “Corporate sustainability activities and sustainability performance of first and second order,” 18th European Roundtable on Sustainable Consumption and Production Conference (ERSCP 2017).

About the Author

Rikke Rønholt Albertsen is a PhD Fellow at the Department of Management, Society and Communication at Copenhagen Business School and a member of the multidisciplinary CBS Sustainability Centre. Her research focus is on exploring and understanding gaps between the espoused sustainability objectives of corporations, and their actual contribution to sustainability. She has a background in consulting at Implement Consulting Group and in sustainability advocacy as co-founder of Global goals World Cup. 

LinkedIn Profile.

Photo by Emily Morter on Unsplash

Are social media platforms good places to discuss global challenges?

By Daniel Lundgaard

◦ 3 min read ◦

According to a recent analysis by Datareportal, the number of active social media users grew globally by 13.2% from January 2020 to January 2021, which means that as of January 2021, there are 4.2 billion active social media users. With the increasing use of social media, it only makes sense that important discussions are moving to these platforms. This is especially seen during political elections, but social media are also becoming some of the most important platforms to discuss issues such as gender equality, racism, and climate change. However, while we have seen the potentials of social media for raising awareness about these issues, it is still unclear whether social media are suitable platforms for such discussions.

Throughout my research, I investigated the climate change debate on Twitter, and I want to highlight two important patterns that I found, each illustrating some of the potentials and challenges with the use of social media to discuss global challenges. 

The potentials

On the one hand, I found that the debates on social media platforms are characterized by equality and inclusiveness. It is common knowledge that everyone has a voice on social media, and anyone can contribute to a debate, but simply having the opportunity to contribute does not mean that everyone will have an impact.

Interestingly, what I found was that not only can anyone contribute – everyone can have an impact on the debate and affect how issues are discussed.

This both includes users with less than 100 followers and minority voices such as climate change skepticism. Seeing that even smaller users and minority voices can have an impact is particularly interesting on social media, where it has been argued that it is only the “popular” accounts, influencers, or central actors that shape the debate. Naturally, this does not mean that everyone will influence the debate, but it means that anyone can, which I see as an important part of creating a good place for discussing global challenges.  

The challenges

On the other hand, I found that the use of Twitter to discuss climate change rarely included ongoing dialogue.

There is very little exchange of opinions between two participants – instead, participants share their thoughts by engaging in broader conversations, e.g., by using specific hashtags or by mentioning central figures. In other words, what I found was that participants engage with an imagined audience, not directly with others.

Sometimes a discussion unfolds in the replies to a tweet or in the comments to a Facebook post, but the vast majority of contributions to debates about global issues are more about voicing an opinion, e.g., through retweeting, not back-and-forth dialogue between participants. This means that while most participants actively contribute to the debate, there is rarely any direct response to these contributions, which is a critical challenge, as I see some form of back-and-forth exchange of opinions as an integral part of good discussions. 

So, are social media platforms good places for debates about global challenges?

Well, yes and no – and naturally dependent on how you define a “good” debate. The inclusiveness and equality are great, and this is unparalleled compared to offline arenas that are limited by time and space, thus highlighting the potential for social media to empower citizens, both in their role as ordinary citizens and as consumers or activists that challenge corporate behavior. On the other hand, the distinct lack of ongoing, reciprocal exchange of information or dialogue is a critical challenge, highlighting issues with using social media to debate global challenges. This poses an interesting puzzle.

The lack of dialogue suggests that we need to be careful about using social media platforms to discuss global challenges.

Still, the use of social media to discuss global challenges is rapidly growing. Hence, we cannot disregard the importance of social media, but perhaps we can re-think their role in global discussions. 

I suggest that we move away from the expectation that social media platforms, by themselves, cultivate high-quality debates and instead see them as platforms that mainly inform and develop participants’ views. Hence, rather than providing platforms for dialogue, social media contributes to global debates by providing platforms where participants can become informed and better prepared for subsequent discussions – discussions that often unfold outside social media platforms. In other words, while social media, by themselves, are imperfect places for debates about global challenges, their role in informing participants, including both citizens, corporations, and politicians, illustrates that social media are a critical part of a more extensive media system, and we should not disregard their importance in debates about global challenges. 

A word of caution

However, if we accept that social media mainly serves to inform participants, we also have to consider that some potentials can become challenges. Specifically, the equality found in the debate can become a serious issue.

Without the ongoing dialogue, we miss opportunities to contest and challenge disruptive voices such as climate change skepticism.

Hence, while climate change skepticism, in an ideal and high-quality debate, could be beneficial by inspiring others to improve their arguments and refine opinions, the lack of dialogue on social media means that such voices are not contested and are not inspiring others to improve their arguments.

This is even more important with the increasing polarization we see on social media and highlights that if social media mainly serves to inform participants’ views, there is a greater responsibility on us as participants. Specifically, we still need to seek out these opposing opinions. Even though it might be futile to engage with those opinions, seeking out these opposing views may still inspire us to improve our arguments and, in some cases, even inspire us to refine our own opinions and ideas. 

About the Author

Daniel Lundgaard is a PhD Fellow at the Department of Management, Society and Communication at Copenhagen Business School. His research investigates how communication on social media (e.g. the use of emotions, certain forms of framing or linguistic features) shapes the ways we discuss and think about organizational and societal responsibilities.

Photo by Joshua Hoehne on Unsplash

Mapping unchartered territory: Ecuador’s journey to sustainable palm oil

By Mathilde Birn, Sanne Qvarfordh, & Dr. Kristjan Jespersen

◦ 3 min read ◦

Sustainability certifications have become a widely used mechanism to signal to consumers that a product was ostensibly produced sustainably. Nevertheless, such certifications typically fail to scale beyond at most a fifth of global production. Within the palm oil sector, widely known as a major deforestation driver, the Roundtable for Sustainable Palm Oil (RSPO)’s Jurisdictional Approach is one of a growing number of examples of upscaling strategies. Under the Jurisdictional Approach, all value-chain actors within a province or even an entire country would be certified simultaneously. Ecuador is piloting the initiative at the national scale and is currently developing a national commitment.

The research is informed by 21 interviews with a variety of actors in the Ecuadorian palm oil sector. After qualitatively coding these interviews and looking for common patterns, we identified four main motivations behind Ecuadorian interest in jurisdictional palm oil certification. First, interviewees reported a concern that Ecuador risked losing market access due to sustainability-related import restrictions and consumer preferences in certain markets. Second, 90% of Ecuador’s palm oil producers are smallholders, whose resource limitations make it difficult to achieve RSPO certification on their own. Under the Jurisdictional Approach, smallholders would be grouped together, allowing them to pool resources and share costs. Third, the Jurisdictional Approach facilitates governmental sponsorship for smallholder capacity building. Fourth, previous experience and institution-building around sustainability in general and anti-deforestation in particular produced forward momentum on the part of the civil society and the Ecuadorian government that has led to an institutional infrastructure favourable to ideas like the Jurisdictional Approach.

In the most optimistic scenario, the Ecuadorian government’s commitment to the Jurisdictional Approach, strengthened by multi-stakeholder support, could encourage more sustainable production practices. However, we also identified certain risks associated with the implementation of the initiative. These risks especially significant given the Jurisdictional Approach’s relative novelty. As one interviewee put it: “we have been flying the plane while we’re building the plane”.

We have identified six key risks to Ecuador’s implementation of the RSPO Jurisdictional Approach and paired them with mitigation recommendations. This list is certainly not exhaustive and ought to be further assessed and developed by local stakeholders equipped with relevant expertise.

The Jurisdictional Approach affects several different stakeholder groups with diverse interests that must be actively engaged in the process to achieve success. To this end, efforts should be made to include representatives of stakeholders that are currently missing (or insufficiently represented) in the governance structure of the RSPO Jurisdictional Approach in Ecuador. These stakeholders include academia (which was involved in the beginning of the process but no longer is), domestic civil society organizations, local communities (including Afro-Ecuadorian and indigenous peoples), local governments, and representatives of the global palm oil industry.

About the Authors

Mathilde Birn graduated from CBS with a BSc and MSc degree in International Business and Politics. Academically, her main interest is within the field of sustainable development and the impact of stakeholder dynamics on such development, with a focus on emerging economies.

Sanne Qvarfordh graduated from CBS with a BSc. and a MSc. degree in International Business and Politics. Her main academic interest is sustainable development in emerging economies, with a focus on multi-stakeholder initiatives in Latin America.

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 Andrés Medina on Unsplash

Unaccounted Risk: The Case of Sulfur Hexafluoride (SF6) in Offshore Wind Energy

By Esben Holst & Dr. Kristjan Jespersen

◦ 5 min read ◦

Carbon accounting provides a science-based measurement of greenhouse gas (GHG) emissions, achieving greater accountability of companies’ emissions causing global warming. GHGs are reported in CO2 equivalents (CO2e), meaning GHGs with widely different chemical qualities and environmental impact can be presented in a single understandable metric. However, the underlying methodology is debatable. This article questions whether the CO2e of Sulfur Hexafluoride (SF6) is misreported.

What is SF6 and why is it a hurdle for a green energy transition?

SF6 is used as an insulator in a wide variety of electrical equipment, mainly to prevent fires in incidents of short circuits. It is found in transformers inside windmills, offshore and onshore substations, and in power cables.

(Illustration to the left shows a sideview of a windmill turbine – Source: CAT-Engines. Right: an offshore wind energy system – Source: Nordsee One GmbH)

SF6 is a synthetic man-made GHG and cannot be reabsorbed naturally like CO2, meaning once emitted, it does irreversible damage. Most GHGs remain in the atmosphere around 100 years – SF6 remains for 3,200 years. These numbers are given by the Greenhouse Gas Protocol (GGP) based on calculations by the Intergovernmental Panel on Climate Change (IPCC). 

The IPCC’s metric Global Warming Potential (GWP), reveals environmental harm of a given GHG in CO2e. What then, makes SF6 problematic when converted into CO2e? SF6 has a GWP 23,500 times higher than CO2 – a value that is difficult to comprehend. The GWP metric is calculated using a 100-year timeframe based on GHG’s environmental harm. Yet, SF6 has an atmospheric lifetime of 3,200 years, essentially leaving 3,100 years of environmental harm unaccounted for. Using a simple logarithmic function incorporating IPCC data accounting for the missing 3,100 years, the GWP almost doubles. As illustrated below, this indicates how SF6 may be misrepresented in terms of environmental harm in CO2e emissions reporting.

As found by AGAGE – MIT & NASA, other worrying trends are observed. The atmospheric concentration of SF6 has more than doubled in the past 20 years. Luckily, its current concentration in the atmosphere remains low relative to other GHGs such as Methane or Nitrous Oxide.

Source: AGAGE

Regardless, the GWP of these two GHGs pales in comparison to the mindboggling detrimental effect of SF6 on the environment. Emitting this gas should therefore be strictly regulated.

Greenhouse Gas Emissions Reporting – Diverging Approaches

It only takes a little digging into offshore wind energy players to uncover diverging conversion methods of SF6 into CO2 equivalents (CO2e). The GHG emissions reporting methodologies of industry leaders use different emissions factors to convert SF6 into CO2e. An example of underreporting is illustrated by Vattenfall in their 2019 sustainability report, reporting SF6 as 15,000 times more potent than CO2. The emissions factor given by the GGP is 23,500. Ørsted uses a GGP emissions factor for the same gas in their 2019 ESG report. Yet, while Energinet also states it uses the GGP reporting framework in their 2020 CSR report, it uses an emissions factor of 22,800. The ownership distribution between Vattenfall and Ørsted in the Danish wind farm Horns Rev 1 of 40% and 60% respectively, thus blurs accountability and severity of reported emissions. As highlighted by the BBC, atmospheric concentration of SF6 is ten times the reported amount by countries. The IPCC and GGP are also aware of this.

During the past decade…actual SF6 emissions from developed countries are at least twice the reported values. (Fifth Assessment Report of the IPPC)

Measuring Impact of SF6 Leaks by Offshore Wind Players

SF6 emissions will rise exponentially alongside expanding electrified energy infrastructure using equipment containing this gas. This, together with repeated SF6 leaks, perpetuates the worryingly steep upward trend in atmospheric content of SF6 shown above. In 2020, Energinet reported a leak of 763.84kg SF6, or 17,950,240kg CO2e. The environmental impact of this leak is about the same as the emissions of 53 SpaceX rocket launches. Energinet has since admitted to years of underreporting of SF6, leading to amended SF6 emissions related to normal operations doubling.

Leaks of SF6 are too common. In Ørsted’s 2020 ESG report, a major leak at Asnæs Power Station was mentioned without disclosing the actual amount – withholding important risk-related data from investors. However, Energinet disclosed an SF6 leak of 527kg at that same facility in their 2020 CSR report. The leak for which Ørsted is responsible, yet feels is not material to disclose, is therefore potentially around 12,384,500kg CO2e. Indicating light at the end of the tunnel, Vestas has included SF6 on their Restricted Materials list since 2017, as well as introducing a take-back scheme for infrastructure containing this gas – setting a better example for business models of our green energy transition leaders.

Strengthening the Global Response to Climate Change Risk

It is vital that we understand SF6 is so detrimental to fighting climate change beyond 2100 that it has no place in sustainable business models today. Even if CO2 emissions are reduced in alignment with 2100 Paris Agreement goals, reporting in a 100-year timeframe will not save a planet billions of years old. GHG reporting must be better regulated and scrutinised in order to deliver a truly green energy transition. Releasing a gas causing irreversible damage cannot be an acceptable trade-off for a short-term “green” transition. While most company reports claim no alternatives exist, this is not true. Therefore, SF6-free equipment must be mandatorily installed.

A green transition goes beyond 2100, yet poor regulation enables energy companies to present SF6-CO2e favourably by using lower emission factors. Offshore wind energy players have not provided comparable, accountable, and transparent reporting – indicating stricter regulations on GHG reporting are necessary.

The Way Forward: Better Regulation

In 2014, an EU regulation banned the use of SF6 in all applications except energy after lobbyists argued no alternatives exist. The EU acknowledges the environmental harm of SF6, yet EU action has been described as inadequate. Asset managers, institutional and retail investors are exposed to hidden environmental risks related to SF6 in terms of double materiality. Double materiality referring to the financial costs related to management of SF6 incurred once completely banned. Non-financial reporting of GHG emissions and CO2e needs to be regulated far more than current global regulations. Investors, society, and most of all our environment deserves better protection.

NOTE: This article is based on a Copenhagen Business School (CBS) research paper in the course ‘ESG, Sustainable & Impact Investment’ taught by Kristjan Jespersen – Associate Professor at CBS – as part of the newly introduced Minor in ESG. The paper questions the greenness of wind energy by using the case of three large offshore wind energy farms in Denmark: Horns Rev 1 & 2 and Kriegers Flak. The findings are based on ESG, sustainability & annual reports from 2015-2019 of all involved OEMs, manufacturers, operators, and energy grid providers. Implications of the findings point to a coming hurdle within the electrification of a global green energy infrastructure transition. 

About the Authors

Esben Holst, an SDG and CSR research intern at Sustainify, is a Danish-Luxembourgish masters student at Copenhagen Business School. Besides attending the newly introduced Minor in ESG at CBS, his past studies focus on international business in Asia and business development studies.

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 Karyatid on Unsplash

March for Gender #4: Leaving no one behind

By Maria Figueroa

◦ 3 min read ◦

To mark International Women’s Day 2021, the University of Bath’s Business and Society blog and Copenhagen Business School’s Business of Society blog have teamed up to present March for Gender. This month we will explore research focusing on gender, or research findings that have specific implications for women.

In our final piece of the month Maria Figueroa looks beyond gender, and explains how business education and research can create a fully inclusive society that leaves no one behind.

The ethos of the Sustainable Development Goals (SDGs) is that society should be inclusive, environmentally just and enabling economic prosperity leaving no one behind. Business knowledge, education and research in these areas keep however advancing in separated disciplines, often directing the focus of attention to partial responses that may contribute to perpetuate conditions that leave people behind. Cohesion in achieving the SDGs goal of leaving no one behind cannot rely in adapting sameness of solutions. It requires attending to societal differences and facilitating the multiplication of ideas, creativity and forms of collective action and knowledge production and dissemination.

There is a critical role for research and education to help deepen the inquiry of what it takes to leave no one behind particularly a key role in business education.  

The ethos of business education and research for sustainability is to prepare private actors, investors, new business models, organizations and institutional actors in finding ways of addressing SDGs. In the selection and adoption of seventeen development goals of 2015 involvement of a great array of societal actors, from national governments to business representatives, big corporations and civil society organizations was ensured. The resulting agenda for action made emphasis to acknowledge the central role in achieving SDGs to be played by private actors, private finance, and businesses in forms of public private partnerships.

However, more than five years later, only marginal changes are tangible within business school education and research and a weak articulation of the bold SDG agenda for change.

Besides individual courses and occasional initiatives, no major overhaul or programmatic educational shift effort within or across departments has challenge the operation and scope of business education. 

A common approach in universities and business schools has been identification of how many SDGs goals are being targeted in their scope of education and current action, and reporting on these as evidence of engagement with SDGs. A similar approach serves to help businesses and public actors learn and report on what they are already doing to engage with SDGs. This together with helping business explore effective reactive stances to avoid societal or environmental crisis or challenges emerging.  These two common approaches to business research and education make no clear inroad for how business and private actors can contribute to leaving no one behind. 

The ethos of civil society is to generate voices and manifestations that reveal the extent of economic, social and environmental discontent, lack of improvement and unjust conditions and of articulating demands for action and changes at all levels. Recent events have elevated voices in movements such as Black Lives Matter, Me Too, Fridays-for-the-Future, Extinction Rebellion, Indigenous communities and other organized voices in society ranging from extreme right movements to nature representatives organizing other than human voices (forest, soil, pollinators, biodiversity).

The complexity of the current climate and environmental challenges and increasing volume and presence of these voices cannot be dismissed in business education and research, or handled in separated efforts as matter of concern only to businesses operating in international or developing regions and localities.

Leaving no one behind requires engaging in knowledge production that gives attention to all forms of engagement in business and societal interactions. This attention should facilitate changes in education that to produce exceptional novelty and innovation and to nurture a potential to advance knowledge of practical and academic high quality, education that is capable of setting new frontier research bringing in systemic interactions within a variety of academic disciplines and ensuring practical and transformative business knowledge with a holistic and environmentally just take toward sustainability transition. 

Business schools are posed to advance breakthrough knowledge to meet the “leave no one behind” goal, tackling several areas from the production and service processes transparency specifically in value creation, to emphasising sustainability and environmental justice through the company’s technological advancements and presenting sustainable values, mission and vision.

Furthermore, business education need incorporating appraisal of systemic change associated with challenging processes and their ecological and social impact and behavior change. With the capability to increase the value for the environment, participation of nature in business innovations, the understanding of what enhances people’s agency, what provision safe wards participation, and improves cooperation and what helps to unleash individuals vitality and imagination and can contribute to co-create new market niches and business opportunities. 

Maria Figueroa is an Associate Professor in Sustainability Management at the Department of Management Society and Communication at Copenhagen Business School.  Her research intersects scholarship from urban sustainability science, comparative international politics of climate mitigation, innovation, and partnerships for sustainable development. She focuses on the assessments of drivers, trends and challenges of low carbon transitions and sustainable development. 

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

Is Pollution the Only Road to Business Prosperity?

Sustainable Visioning as a driver of Corporate Transformation

By Heather Louise Madsen

◦ 4 min read ◦

CO2 reduction is a hot topic for almost every company today. Here the focus is not just on the CO2 generated by the company itself, but also on the carbon emitted along its value chain. The problem is that changing processes, or even products and services, to make them more environmentally friendly can be a daunting and costly task. This can leave CEOs and other top managers wondering what the real cost and impact of CO2 reduction is, where to start, and whether it is even possible to create a prosperous business without generating pollution.

In answer to many of these tough questions, an increasing number of companies are succeeding in reducing carbon and completely transforming their businesses into sustainable and profitable powerhouses, using a combination of strategic vision and sustainability orientation.

A new CEO for a Company Topping the Sustainability Ranking Charts

January 1st, 2021 was Mads Nipper’s first day as CEO of the Sustainable Energy Giant Ørsted. And before the end of his first month in this new position, Ørsted ranked the most sustainable energy company for the third year in a row, and the second most sustainable company in the world after Schneider Electric. This raises the question, what is Nipper’s position on sustainability,  and are these views important for his role as CEO of Ørsted?  

In 2016, as the then CEO of Grundfos, Mads Nipper gave a presentation for the Global Compact Leaders Summit in New York where he stated: “I represent an SDG 6 and 13 company, who also happens to be the biggest water pump company in the world.” The UN Sustainable Development Goals (SDGs), representing a global platform and common language for addressing 17 core sustainability issues and their impact, also figure prominently in Ørsted’s corporate language. From Annual Reports to investor letters, Ørsted identifies SDG 7 (energy) and SDG 13 (climate action) as their primary impact areas. This indicates that there may be some very fundamental alignment between Nipper’s visionary statement and the mindset of his predecessors at Ørsted.

What led Ørsted to up-end their core business and undertake a sustainable transformation?

In 2001, Ørsted (then DONG Energy) hired CEO Anders Eldrup, just as Denmark was going through a liberalization of the electricity and gas sectors, which was putting extreme financial pressure on the company. Eldrup was the former Danish Secretary of State, and as such had extensive experience with both financial and political mechanisms. Seeing an opportunity to take advantage of an emerging political demand for climate action and policies to accelerate the development of offshore wind, Eldrup began increasingly to focus innovation resources on offshore wind and renewable energy, while the primary business of the company remained oil and gas. As renewable energy subsidy schemes increased in Denmark and the EU in the years that followed, Eldrup formulated a new company strategy that was released in 2009 called 85/15: “to transform our company from a situation of 15% renewable energy and 85% of fossil-fuel based energy to the opposite”. Jakob Askou Bøss, Head of Strategy and Communication at Ørsted, identified the strategic analysis of CEO Anders Eldrup as “The driving force behind formulating the new vision of the company,“ referring to the 85/15 objectives.

Despite the sacrifices that would need to be made as the core competencies of the company would have to be completely re-designed and transformed to focus on not-yet price competitive technology, the decision had been made. And this strategy was then further anchored to sustainability with Ørsted’s vision: “creating a world that runs entirely on green energy”. This vision made explicit the desire to reach outside of the organization with their “green” aspirations, connecting not only to ideals of wealth and prosperity, but also to planetary concerns.

These ‘green aspirations’ were then followed up by Eldrup’s successor Henrik Poulsen, who became Ørsted’s CEO in 2012. As stated by Poulsen:

“In the world of energy, the fundamental challenge we face is to transform our energy systems so that more and more of the energy we generate comes from renewable sources such as wind power, biomass and solar energy.”

Ørsted, Our sustainability reports, 2012, DONG Energy’s GRI Reporting 2012  

Poulsen then backed these aspirations by setting very specific targets for the company including “quadrupling our offshore wind capacity, from 1.7 GW in 2012 to 6.5 GW in 2020“. By 2017 Ørsted had completely divested all upstream oil and gas. This was also the year that newly built offshore wind became cheaper than black energy for the first time in history. By the time Ørsted reached 2020, the company was ranked number 1 of more than 7500 international, billion-dollar companies in the Corporate Knights’ 2020 index of the Global 100 Most Sustainable Corporations in the World, making Ørsted the most sustainable energy company in the Global 100 index. As demonstrated by Ørsted, strategic vision and sustainability orientation were used as drivers for innovation, transformation  and growing the company’s sustainable business and investment portfolio. But how can Ørsted’s story help other businesses? The answer lies in sustainable visioning. 

How can sustainable visioning help businesses onto a path of prosperity AND sustainability? 

Sustainable Visioning is a new term defining the management process of combining a strong strategic vision with the acknowledgement of the necessity of committing more profoundly to people, planet and prosperity concerns.

Madsen & Ulhøi, 2021

The following are guiding principals of sustainable visioning that Ørsted can be seen as applying, and which may be able to help other companies onto a similar path. First, in order for businesses to achieve sustainable visioning, they need to practice proactive, extroverted and visionary, rather than introverted approaches to sustainability. When working on sustainable innovations, it can also be wise to engage the Tripple Helix model including industry, universities and government working together. Innovation can also be usefully extended beyond products and services, to include business model innovation. This can help to navigate to a desirable sustainable future through direct planning, decisions, actions and behavior in all aspects of the business. And finally, taking a clear long-term orientation is also seen as important for sustainable visioning to be successful. 

In practice, following these key guiding principals of sustainable visioning may make it more likely to effectively link strategic visioning to long-term sustainability objectives, providing the necessary support for corporate growth and innovation needed to ensure a successful transformation.

Further Reading

Madsen, H.L., Ulhøi, J.P. 2021. Sustainable visioning: Re-framing strategic vision to enable a sustainable corporate transformation. J. Clean. Prod. 228.

About the Author

Heather Louise Madsen, Ph.D. is the PRME Strategy Manager at Copenhagen Business School, and has over ten years of professional experience working with sustainability. As a sustainability expert, she has worked with the organizational implementation of the UN SDGs in the private sector, and has extensive experience working with CSR, the UN Global Compact, carbon footprint reporting and social, environmental and economic sustainability. Heather is dedicated to topics of innovation, strategy, business transformation, organizational learning, business model innovation, renewable energy and sustainability.

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.

Innovating Under Pressure – Grassroots’ social and distributed manufacturing during the pandemic

By Isabel Fróes

As Bowie almost made a prediction when he sang in his lyrics from 1981: ‘It’s the terror of knowing what this world is about/Watching some good friends screaming “Let me out!”/’, 2020 proved to be a year of challenges, which however took us to higher grounds of learning and collaboration in many unexpected ways.  

The sudden changes and lockdowns across the world led by Covid-19 sparked many initiatives and innovation in various fields. As presented in a previous blog post, it created opportunities for urban spaces to be rethought, experimenting with expanding and further developing various mobility formats.

Beyond urban spaces, the pandemic also became a fuel to push initiatives in other fronts, such as social and local manufacturing. 

Makerspaces and local production initiatives were well described in a recent blog post by my colleague Efthymios Altsitsiadis. During the pandemic, makerspaces became more than a niche, through shared content and distributed leadership, these spaces became relevant production resources. Makers collaborated and engaged in locally producing personal protective equipment (PPE), helping cities and countries better cope with the shortages and international supply chain issues during the first lockdown.  

CBS has followed this process closely as it is currently a partner in the EU-funded iPRODUCE project. The project started in January 2020 focusing on developing a novel social manufacturing platform that embraces manufacturing companies in the consumer goods sector. In short, the project is committed to bringing closer manufacturers, makers and consumer communities (MMCs) at the local level; to engage them into joint co-creation challenges for the manufacturing of new consumer products and the introduction of novel engineering and production (eco)systems; to fuse practices, methods and tools that both makers and manufacturing companies (SMEs specifically) are employing.

The project, as an innovation action (IA), has formed clusters in six locations, Denmark, France, Germany, Greece, Italy and Spain composed of Fablabs, makerspaces and research institutions. These clusters are defined as Collaborative Manufacturing Demonstration Facilities (cMDFs). In Denmark, CBS is the research institution working closely together with betaFACTORY forming the DK-cMDF.

In the context of this project, social manufacturing can be described as a primary ground to democratise innovation.

The ‘Do it yourself’ (DIY) movement, assisted by makerspaces and fablabs, offers opportunities for real exchange towards solutions to inform the development of many products through an open platform, to not only support, but also to expand these processes and broaden their reach across society. 

During the onset of the pandemic, when the project was only in its third month, while project activities required adjustments and re-planning, the fablabs and makerspaces in the distinct locations became important resources for local manufacturing facilities, closing a gap of problems related to international supply chain production and distribution regarding protective medical gear.

The open source community’s umbrella became a key local asset in bridging various groups and bringing makers together towards one goal – manufacturing products that would help save lives.

Spain, which was hit hard by the pandemic early on, spearheaded this movement in Europe. Already in March 2020, DIY groups organised themselves online (primarily WhatsApp and Telegram), sharing questions and designs through these social media platforms. Doctors and other types of stakeholders also joined some of these groups, providing expert information. They shared requests, talked together and developed designs and models, which were then 3D printed widely across in various makerspaces, sparking a local production and distribution supply chain. The distribution, which was initially done by volunteers, was carried out by taxi drivers and local police in an extraordinary mode of collaboration during the most extreme lockdown phases. By June 2020, over one million face shields had been produced and distributed across Spain [1].  

The Spanish face shield design, under the creative commons licence, was picked up by makers everywhere, including in Denmark, where the Facebook group ‘DK Makers mod Corona’ (DK Makers against Corona) was quick to adapt the design to specific Danish regulations and started locally producing the face shields during the first Danish lockdown. Over 63000 face shields were produced and distributed across the country by July 2020 and the Facebook group grew from 50 to over 2500 members during the same period.

In both cases, what stands out is the fact that the expertise, manufacturing capability and human resources are without doubt available everywhere and when a common and purposeful goal is set, fast and impactful results can be achieved.

These civic responses also bring forward questions on how society could make better use of these valuable resources for other distinct local challenges, and how we can positively disrupt mass global manufacturing towards distributed local manufacturing. As the pandemic initiatives have shown, by reorganising and setting common goals, makers and industry can bridge gaps, creating wider societal benefit that challenge the status quo and push new manufacturing opportunities that can define ‘new normals’ also for local production – taking all of it to higher and more sustainable levels in the 21st century.

iPRODUCE – “A Social Manufacturing Framework for Streamlined Multi- stakeholder Open Innovation Missions in Consumer Goods Sectors” (2020-2022) has received funding from the European Union’s Horizon 2020 research and innovation programme under Grant Agreement no. 870037. This publication reflects only the author’s view and the Commission is not responsible for any use that may be made of the information it contains.

References

[1] MAKERY, 2020. Spanish makers’ ongoing fight against COVID-19. Published by Cesar Garcia Saez.

About the Author

Isabel Fróes is a postdoc at MSC Department at Copenhagen Business School working in three EU projects (Cities-4-People, iPRODUCE and BECOOP). Isabel also has wide industry experience and has worked both as a user researcher and service design consultant for various companies in Denmark and internationally. For more detail please see her Linkedin profile.

Photo source: NC State University

How do the arts impact our societies in times of digitalisation?

By Kirsti Reitan Andersen and members of the Artsformation consortium 

Two decades into the new millennium it is almost impossible to imagine a future in which digital technologies do not play a key role. Today, digitalisation changes the way things are done across business and society alike. 

This includes for example the impact of new technologies on processes of democratisation, like the role of Facebook in the UK referendum in 2016. Or the increasing collection and analysis of personal data in the use of any social media. Another area in which technology is having an enormous impact is in our ways of communication and being together, for example through technologies like Zoom or Facetime.

Throughout history, the arts have always reflected major transitions as they unfold.

Therefore, it is perhaps no surprise that the social, environmental and economic consequences of the digital transformation are now also increasingly addressed by artists. For example, with the project SOMEONE (2019), Lauren McCarthy tries to address the advances in human-machine relationships represented in ‘smart houses’ and try to give back a human identity to artificial intelligent devices through active human participation.

As part of the H2020 research project Artsformation, we explore the current and potential role of the arts in the digital transformation. Exploring the role of the arts across both business and society, one part of the project has a particular focus on marginalized groups of people who today do not reap the acclaimed benefits of the digital transformation (e.g. Gangadharan and Niklas, 2019; Gebru, 2018; Neves, Franz, Munteanu and Baecker, 2018; Park and Humphry, 2019). In this context, the “socially engaged arts” (Bishop, 2012) is of particular interest.

In contrast to more traditional forms of art, socially engaged artists often work closely with their audiences in one way or other.

For example, by gaining in-depth knowledge of particular challenges in specific communities and creating awareness about such issues through the artwork or by directly engaging people in the production of art. One such example could be the engagement of people in the production of artwork using the so-called maker spaces as a place of work and thereby also introducing “audiences” to new digital technologies and skill sets. Catch, a center for art design and technology located in Elsinore, for example, has much experience facilitating such processes of learning.  

In recent years we have seen artistic examinations of the digital transformation become increasingly complex, evolving from what we might understand as a fascination or embracement of digital tools to reflections on the transformation itself. In general, we find that socially engaged artists are addressing societal issues (of the digital transformation) in three ways (Andersen et al., 2020):  

  • The artist as a commentator:  The artist as a commentator is not directly concerned with audience engagement as part of the artistic process. The work of Dr. Ahmed Elgammal and an artificial intelligence named AICAN exemplifies “the artist as a commentator”. In this case Dr. Elgammal and AICON created an exhibition of prints called Faceless Portraits Transcending Time. While there is no direct audience engagement, the work of Dr. Elgammal and AICON brings attention to current debates about technology and creative work.
  • The artist as one who gives voice to a community:  More than ever, artists have become ever more important as voices of reason and clarity, pressing for social justice and engaging the public conversation about the controversial issues shaping the world in which we live. Forensic Architecture’s attempt to raise awareness of oil and gas pollution in Vaca Muerta, Argentina, is a good illustration of this approach. Vaca Muerta has become one of the world’s largest shale oil and gas fields. It is also the home of indigenous communities, including some of the Mapuche people who live between Chile and Argentina. In collaboration with The Guardian newspaper, Forensic Architecture investigated a local Mapuche community’s claim that “the oil and gas industry has irreversibly damaged their ancestral homeland and eroded their traditional ways of life.”
  • The artist as a social entrepreneur: consults and facilitates a community problem in a much more ‘organised’ and ‘long-term’ manner than is typical of the two previous roles. This, for example, is what happened when artist Olafur Eliasson and engineer Frederik Ottesen at London’s Tate Modern launched the social enterprise Little Sun in 2012, setting out to change the world with ‘solar art’. Little Sun aims to bring clean, reliable and affordable energy to the 1.1 billion people who live without electricity while raising awareness of energy access and climate action worldwide. Eliasson demonstrates his conviction that art can change the world by continuing to promote Little Sun as an extension of his art practice, arguing that many of Little Sun’s “current and future projects stem from art, involve artistic thinking or use our products themselves to create art”.

While all three roles co-exist, intersect and share the ability to imagine new ways and generate change, each role does so in slightly different ways. We suggest that each of the three roles requires artists to organise in different ways, which may also impact the kinds of change they can facilitate. Moving forward, we are extremely eager to explore the ways in which artists as social entrepreneurs may inspire and offer new and more sustainable ways of organizing. 

Further Reading

The Social and Civic Impact of the Arts

About the Author

Kirsti Reitan Andersen is a Post Doc at the Department of Management, Society and Communication, Copenhagen Business School. In her current work, she explores the role of the arts in the transformation towards more sustainable ways of organizing.

Photo by Stan Narten and Otto Saxinger, SOMEONE.

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

By Efthymios Altsitsiadis

Anyone can and should have access to the tools and knowledge necessary to build anything they might need or want. This statement struck me when I first read about the makers movement – a cultural trend that is associated with democratized manufacturing, 3D printing and maker spaces.

At the heart of the movement lies a simple premise – ordinary people manufacturing themselves what they need. Makers, alone or in communities, from any career or skill level are pulled into making something, from calligraphy to furniture to technology and lately to personal protective equipment.

Large institutions like the European Commission, the White house and the Chinese government herald the maker movement as a major driver for the new “industrial revolution”, a thriving multibillion market and a potential asset in the fight against climate change.

But as with every nascent field, there are many hurdles on our way there – this piece will touch upon what many (including me) consider the most important: understanding how and why people embrace the movement.

We already know that the increase of availability and affordability of digital fabrication tools such as 3D printers and laser cutters and the advance in certain collaborative technologies have favored the creation of a rapidly increasing number of Do-It-Yourself communities. What we know much less about is why people choose to become makers. This matters gravely, not only because makers are the lifeline of the movement – but because we need to be sure that everyone can enjoy the same access to fabrication. In a large study supported by the EU, we asked thousands of citizens around Europe their opinions regarding the maker movement [1].

We wanted to understand better what people know about the maker movement, how aware they are about fabrication and how they perceive the different facilities (e.g. makerspaces). We also investigated various attitudes and potential reasons that could be driving or hampering people’s support to the movement. More importantly, however, we asked participants about their intentions to become makers and what motivates them. 

Findings of our study

What we found confirmed many of our initial thoughts.

Most of the participants were not well aware about the maker movement (40% had no familiarity with the term), but about 1 in 5 respondents had some previous experience with making. These people come from all walks of life, and despite some small differences in demographics, every cohort is represented.

A very positive finding was that most people were very open to visiting, supporting or participating in making activities in their local area. For the majority of respondents, their participation in maker spaces would provide them with benefits and help them improve their skills. The majority also believes that makerspaces will have a positive impact on their region and will open-up new professional opportunities. We dug a bit deeper so we can get a better understanding of people’s motivations.

We found that respondents who have positive perceptions about sustainability and circular economy, who were familiar with the maker movement and who defined themselves as persons who like to repair or make things were significantly more likely to join the movement.

The results also indicate that demographics like gender and age could be playing a role in driving respondent’s perceptions and participation.

This study is useful in providing some additional evidence and answers regarding the engagement of Europeans with the Maker Movement to the existing body of knowledge. But it is obviously not enough. There are literally dozens of overlooked dimensions and potential levers for getting people involved or at least for actively supporting the movement. Essential issues like awareness, knowledge and skills, safety and accessibility, tools and incentives are all open for inquiry and experimentation. The movement itself is still shaping and many of the key characteristics should not be taken for granted; least of all its openness to everyone and its sustainability/circularity character.

The good news is that there are already major initiatives being deployed at various levels that are working on many of these angles (for interested readers I would like to refer you to projects like Pop-Machina, iProduce, Reflow, all sponsored by the EC and open to interested members of the public). In all these initiatives, cross-collaboration is key. Academics should work hand in hand with practitioners, industry and policy makers to embrace and support this amazing revolution and help nudge it towards its greatest ambitions – democratized access to circular production.   

References

[1] Panori, A., Piccoli, A., Ozdek, E., Spyridopoulos, K. and Altsitsiadis, A. (2020). Market research report. (Deliverable 2.2). Leuven: Pop-Machina project 821479 – H2020

About the Author

Assistant Prof. Efthymios Altsitsiadis, PhD 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. 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.

Sustainable livelihoods? The informal sector beyond Covid-19

By Søren Jeppesen

As a number of the CBS Sustainability blogs have mentioned since March 2020, the official reactions to Covid-19 have (so far) not been doing much for sustainable development (apart from lower CO2 emissions from air travel). Despite concerned voices criticizing the limited attention to combating climate change (‘environmental sustainability’) in the longer run, little impact on policy makers has been registered.

If we focus on ‘social sustainability’ the picture is similar. Discussing the social side of sustainability is part and parcel of assessing the situation in the informal sector and among the estimated two billion people reliant on their livelihoods through the informal activities across the Globe. Sadly, the situation has shown that this group of people and their families have suffered from the imposed restrictions due to Covid-19 (see here).

While the negative impact on income and livelihoods probably is the most severe consequence of inability, lack of willingness (and in some cases maybe even sheer ignorance) among authorities, the events since March can also be viewed ‘an opportunity missed’ regarding (more) sustainable practices.

The classical example is waste handling where informal workers (or scavengers) are involved in waste collection, sorting and identifying material for recycling and reuse. The Indian system where almost all component of waste are sorted and reused is well-known. But additional examples are found in areas like minimizing food waste and establishing social safety nets (Tucker and Anantharaman, 2020). Had governments appreciated the role of the informal sector and the activities undertaken, the period since March could have been used to change towards a ‘sustainability footprint’.

So, instead of using the (unfortunate) challenge to aim for positive change why have governments then been so keen to do the opposite and merely lockdown the informal sector (including denying poor people of their meagre livelihoods)? As Tucker and Anantharaman (2020) argue, it might be due to informal work being perceived as a ‘deficit’ (lack of contracts, lack of permits, lack of tax payment, lack of this and lack of that). International organisations like ILO have long been arguing in favor of ‘formalization of the informal’ (ILO, 2019). And not to romantize the informal sector, nevertheless it is intriguing that this is and has not been a sector perceived as ‘creative, agile, flexible’ and all the buzz that the present glorification of the private sector and individual initiative otherwise has been marked by.

Now, we can’t change what have been the typical type of reactions to the Covid-19 situation across the globe, but we do note that we have increasing social challenges ahead due to rising poverty levels, the naïve, optimistic wish for the New Year is that attention will be placed on how to engage the informal sector and all its resources in the strive for a more sustainable development path. It will not only open up the Pandora’s box regarding new and valuable ways on dealing with the Global trajectories, but could provide avenues for the informal sector to be reckoned as ‘a contributor’ (instead of ‘a deficit’).

References:

CGAP, 2020. Covid-19 Briefing. Insights for Inclusive Finance. Relief for Informal Workers: Falling through the Cracks in the COVID-19 Crisis. August.

ILO . International Labour Organization; 2019. Work for a Brighter Future. Geneva.

Tucker, J.L. and Anantharaman, M. 2020, Informal Work and Sustainable Cities: From Formalization to Reparation, One Earth. 2020 Sep 18; 3(3): 290–299. (doi: 10.1016/j.oneear.2020.08.012)

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).

Photo by The Ian on Unsplash

Sustainability claims: In what sense are they performative?

By Lars Thøger Christensen

The number of products advertised as “green” or climate neutral has exploded in recent years, according to several newspaper articles. Should we be alarmed? To some extent, yes. In addition to cases of blatant fraud and manipulation, there is reason to be concerned when a plethora of green labels for products – ranging from milk over burgers to gasoline – competes for attention, especially when the variety confuses understandings of what it means to be sustainable.

Moreover, since carbon offset programs tend to obscure the fact that neither air travel nor fashion clothing is or can be CO2 neutral, the need to question and test green advertising claims is more pressing than ever. It is therefore commendable that politicians and NGOs in some countries call for more control with corporations that claim to market green or CO2 neutral products. 

The growth in green advertising claims attracts increased scrutiny, regulation and control.

At the same time, the expansion in green advertising claims illustrates the growing social, political and economic premium put on sustainability. Even if many such claims are superficial and hypocritical, their combined existence is performative beyond what individual corporations, NGOs and regulators can imagine and control. 

When all social actors express the significance of sustainability, something has changed.

Scholars of communication often emphasize that communication is constitutive of organizational and social reality. Communication, in their view, is performative because it does something more than simply describe a preexisting reality. Yet, in what sense does this logic apply to issues of climate change and the broader sustainability arena? 

To what extent has communication performative potential in the sustainability arena?

Critics of the performative view on communication view argue that green messages often fail to change anything, either because the senders are insincere or because larger social forces, such as profit motives or efficiency demands, override any talk about sustainability. The power of sustainability communication to shape organizational practices is therefore often described as naïve or overly optimistic. These are important objections to the performativity perspective. Yet, communication still plays a significant role in instigating better practices.

The articulation of sustainability ideals is often “the leading incident” in its performance (Austin, 1962, p. 8).

It is certainly true that sustainability communication is insufficient in and of itself to ensure more sustainable practices. Some sustainability claims may even prevent organizations from moving in the right direction. Nonetheless, communication about sustainability is an important dimension of sustainable action. Without a communicative engagement of major corporations with the values and ideals of sustainability, changes in that arena are likely to be significantly slower. 

Interestingly, critique and control of sustainability claims may help such claims to perform.

Talk about sustainability and green products tend to attract attention of critical stakeholders and increase internal and external pressure to walk the talk. Bold statements combined with public exposure and critique are important dimensions of what we might call the performativity “cocktail”. Green advertising claims and public statements about CO2 neutrality can be used to apply pressure on corporations and remind them of their promises. If major corporations, out of fear of attracting negative stakeholder attention, decide to remain silent on the sustainability issue, critics and regulators have less material to work with. In other words, a willingness on the part of corporations to expose themselves to critique is key.

Communicative performativity in the sustainability arena is a macro phenomenon.

Obviously, an organization does not become sustainable by simply “talking green”. In fact, it is a mistake to think of performativity – especially in complex areas such as sustainability – as a result of discrete and isolated organizational messages or claims. It doesn’t work that way. Even with the best intentions, green talk takes considerable time and effort to materialize into more sustainable practices. Moreover, it is rarely an organizational effect. Performativity is an outcome of multiple claims that are repeated and reformulated again and again over time and across multiple organizations, public as well as private. The sedimented effect of such dynamic interaction that lead to what Butler (2010) calls “socially binding consequences” (p. 147).

The performativity of sustainability claims should be understood as sedimented effects of multiple claims and understandings. 

The communicative performativity of sustainability claims involve reactions of stakeholders, competitors, legislators and consumers who are variously affected, inspired or provoked by the claims to expect and demand better practices. Still, there is no guarantee that the claims will stimulate significant changes. That, of course, is true for all types of messages. Messages and claims can be ignored, forgotten or outright contradicted by subsequent claims or other types of action. Without the claims, however, society and the physical environment is likely to be worse off. The trick is to use them actively to remind the senders of their social and environmental responsibilities. 

Further readings

Austin, J. L. (1962). How to do things with words. Oxford: Oxford University Press.

Butler, J. (2010). Performative agency. Journal of Cultural Economy, 3(2), 147-161.

Christensen, L. T., Morsing, M., & Thyssen, O. (2020). Talk-action dynamics: Modalities of aspirational talk. Organization Studies. 

Fleming, P., & Banerjee, S. B. (2016). When performativity fails: Implications for Critical Management Studies. Human Relations, 69(2), 257-276.

About the Author

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

Photo by Helena Hertz 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

Making Corporate Sustainability More Sustainable

For too many firms corporate sustainability is itself not a sustainable endeavor

By Andreas Rasche

Corporate sustainability initiatives are blossoming around the world. While some firms have built robust infrastructures around their efforts, other firms struggle to do so, making their engagement a short-lived endeavor. In other words, corporate sustainability is itself often not sustainable enough to create lasting change in organizations. While there is hope that firms’ sustainability strategies are becoming more robust (e.g., because basic market conditions have shifted in favor of sustainability and make it difficult to ignore), there is still much work to be done to create sustainable corporate sustainability efforts.

The Challenge of Integration

One important barrier is the belief that “integrating” sustainability is more important than having an own dedicated organizational infrastructure around it. In 2019, the Danish multinational Maersk laid off a significant part of its sustainability team (including the head of the division). The aim of the reorganization was to merge its ongoing sustainability activities with work undertaken in other departments of the company. While integration may sound like a sound strategy and for many years consultants advised firms to make sure that sustainability work is not detached from the core of the firm, it also comes at a price:

In many firms, integration “waters down” sustainability efforts, makes them less visible in the organization and hence easy to neglect.

Don’t get me wrong: I am not arguing against integrating sustainability into organizations. I am arguing against using integration as a cover-up strategy to make sustainability efforts themselves less sustainable. Integration can easily be misused. Take the example of business education. For many years, business schools have struggled with finding the right balance between creating standalone courses on sustainability topics and integrating related content into the regular curriculum. Over time, integration proved to be difficult and only very few schools succeeded with truly embedding sustainability content across their curriculum. The main hurdle was to free up room in otherwise already packed courses and to also move beyond a symbolic adoption of sustainability content in classes.  

Business schools’ experience holds a lesson for corporations. If you integrate, you need to ensure that wherever integration happens enough resources support the journey (e.g., time, knowledge but also interest). Often, this is where integration fails…

The Challenge of Corporate Size

Another barrier to making sustainability more sustainable is corporate size. Recently, I published a paper that analyzed which types of firms are delisted from the UN Global Compact (UNGC). We analyzed over 11,000 firms (both active and inactive participants in the UNGC). One key finding was that small and medium-sized enterprises (SMEs) were much more likely to leave the initiative than larger firms. It would be easy to conclude from this that SMEs are less sustainable than larger firms – but this would be the wrong conclusion.

What it shows is that SMEs struggle to develop lasting organizational structures around their sustainability efforts. UNGC delisting is based on firms’ failure to submit a mandatory annual implementation report. While larger firms usually do not struggle with such reporting, because this task is anchored somewhere in the organization, smaller firms find it more difficult to make reporting a lasting endeavor (e.g., because of resource constraints or lack of knowledge). Often, sustainability commitments by SMEs are based on internal champions who push relevant efforts and also sign the organization up to the initiatives like the UNGC. Once these people leave the organization or assume a different role within the firm, there are little formal structures that could fill the void that is left behind.

SMEs sustainability work is often more implicit and tied towards the communities they operate in. However, in a more transparent world where sustainability is increasingly datafied and benchmarked such implicit efforts may be easily confused with corporate sustainability lacking sustainable implementation.

Sustainable Corporate Sustainability

So, what is the bottom line? Making corporate sustainability itself more sustainable remains a key management challenge, both for larger and smaller firms. Creating durable organizational structures that can withstand the pressures of crisis situations and related cost-cutting efforts is one important way to address this challenge. Such structures have to be integrated with the rest of the organization to be not an add-on, but they also need to have a life on their own. What may even be more important is that corporate leaders and associated Boards need to develop an unambiguous vision for where the firm is supposed to go with its sustainability activities. This puts Board-level engagement with sustainability topics at the very top of the agenda, both for practitioners and academics.

About the Author

Andreas Rasche is Professor of Business in Society at Copenhagen Business School and Visiting Professor at the Stockholm School of Economics. He just released “Sustainable Investing: A Path to a New Horizon” (together with Herman Bril and Georg Kell). More information at: http://www.arasche.com

Photo by Egor Vikhrev 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, 2008; Ardoin 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

Private Standard-setting Organizations and the Theory of Change

Theory of Change – Evaluating Supply Chain Outcomes

By Kamilla Hvid Andersen, Eileen Ryll, Dr. Caleb Gallemore and Dr. Kristjan Jespersen

Due to globalization, supply chains are becoming increasingly complex, challenging national governments’ regulatory capacity, or, perhaps, political will. Amid these “governance gaps” some private-sector organizations have begun setting voluntary standards promoting sustainable production practices. As they are not backed with legal force, private standards must demonstrate both positive impacts, credibility and inclusive decision-making to be perceived as legitimate in the eyes of external observers and member firms. Due to the complex and interrelated nature of sustainability issues, it can, however, be difficult to relate outcomes back to activities of the standard setting system.

To monitor their programs and evaluate their impact, many standard-setting organizations have adopted a Theory of Change (ToC).

Based on Carol Weiss’s theory-based evaluation approach, a ToC is a cause-and-effect illustration that makes explicit often implicit beliefs and assumptions about how different actions should generate impacts.

Evaluating impacts then requires collecting data that show how the proposed causal sequence plays out and, if discontinued, where it broke down. On this account, the ToC is necessary because practitioners often rely on tacit knowledge or even guesswork, rarely articulating the conceptual foundations of their actions explicitly.

ISEAL – The Standard for Standards

The ISEAL Alliance has been a key ToC promoter for many major sustainability standards. The organization is in essence a benchmarker for certification systems, working to disseminate better practices across sustainability standards. While the organization has a relatively small membership, its members include prominent standards like the Roundtable on Sustainable Palm Oil (RSPO) and the Forest Stewardship Council (FSC). Its Impact Code strongly encourages, though does not require, a ToC as the foundation for robust Monitoring & Evaluation (M&E).

While couched in an M&E framework, ISEALs’ framing of a ToC as a way to articulate building blocks for long-term goals also links it to strategic planning.  For the organization, a ToC is both product and process. As a product it maps out what to measure to assess a standard’s impact. As a process, it can help define a shared vision of how the standard should be making change, helping get member and observer buy-in on its strategic trajectory.

Case in Point – RSPO

The RSPO is a good example of how ToC procedures can influence organizational operations. Following ISEAL recommendations, the RSPO constructed an elaborate ToC in 2017. While its stated primary goal of making sustainable palm oil the global norm has remained since the standard’s early days, the ToC outlines the strategies deemed necessary to achieve this vision. By explicating the assumptions behind its actions, the RSPO’s ToC is simultaneously an M&E tool and a strategy. Though, like ISEAL, the RSPO introduced the ToC as an impact evaluation tool, the process generated critical discussions on the organization’s shared vision and explicated previously implicit beliefs regarding what making sustainable palm oil the norm actually means and how it could be achieved.

Because ToCs have both M&E and strategic planning components, responsibility for their development and implementation should not reside solely in M&E departments. Rather, effective ToC processes should include the whole organization and external stakeholders, requiring strategic decision-making support. Continuous feedback from all actors implementing elements of the ToC into their daily work can be valuable to highlight shortcomings of the ToC in place and guide future strategy reviews.

The Mechanics of TOC

A ToC process includes two broad phases. In the first, relevant actors develop or refine a shared vision and outline causal sequences necessary to achieve it. In the second, actors must incorporate the ToC into day-to-day routines.

The ToC as it emerges from the first phase is an intermediate outcome, part of a continuous learning loop that can be influenced by other processes surrounding the organization. It also may trigger other processes, as was the case within the RSPO when the ToC heavily informed another strategy document outlining member responsibilities across the value chain. The division between these phases, of course, is blurry, and it is always possible to re-evaluate and re-model the intermediate ToC, making the process iterative. All this work goes far beyond simple M&E, a lesson the RSPO learned the hard way, at first significantly underestimating the effort necessary to develop its ToC, regarding is simply as mapping out what was already there.

The Role of Interactive Adaptivity in Supply Chains Evaluation

Based on the example of their use by ISEAL and the RSPO, ToCs can serve several purposes:

  • First, they can support strategic planning while structuring strategic reconsiderations over time. Their iterativity might make it particularly important for organizations to revisit their ToCs before strategic re-alignments or in times of upheaval.
  • Second, in a complex field that spans multiple stakeholder groups, which as is case with the RSPO, most likely have divergent underlying assumptions, the ToC process can help illuminate blind spots. To be effective, the ToC needs to be inclusive of as many of the actors affected by the organization’s activities as possible.
  • Third and more prosaically, a ToC, while more than impact evaluation, can support evaluative work, serving as the backbone for M&E activities.

About the Authors

Caleb Gallemore is an Assistant Professor in the International Affairs Program at Lafayette College. He holds a Ph.D. in Geography and within his teaching, he focuses on southeast Asia, global land use, sustainability, research methods and geographic information science.

Eileen Ryll graduated from CBS with a degree in MSc. Business, Language and Culture with a focus on Diversity and Change Management. She has previously studied Business and Cultural Studies in Germany and Sweden. Her main interests are organizational strategy and intercultural encounters. 

Kamilla Hvid Andersen studied her bachelor’s and master’s degree at Copenhagen Business School. In June 2020, she graduated from the MSc. in Business, Language and Culture with a specialization in Diversity and Change Management. Her personal interests include sustainability, intercultural communication, and organizational change. 

Kristjan Jespersen is an Assistant Professor at the Copenhagen Business School. He studies 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 Jungwoo Hong on Unsplash

Normative foundations for stakeholder involvement in environmental and societal impact assessments

A complex issue of global relevance

By Karin Buhmann

This article is based on previously written piece for the Centre for Business and Development Studies. It focuses on the normative foundations, such as guidelines and legislation as well as some common features or practices for good stakeholder involvement in environmental and societal impact assessments. As a part of the blog-post series on Consultations, Public Participation and Meaningful Stakeholder Engagement, it considers various aspects of stakeholder involvement as an element in the planning and decision-making relating to renewable energy, mining, infrastructure etc.

These blog-posts disseminate preliminary results from project examining best practice in stakeholder engagement as part of impact assessment. The project partly builds on investigations and interviews in Greenland in August 2018 and Sápmi in June 2018. [Ref: NOS-HS project, ref. 2017-00061/NOS-HS, on Best practice for Impact Assessment of infrastructure projects in the Nordic Arctic: Popular participation and local needs, concerns and benefits, Principal Investigator: Karin Buhmann)].

Public requirements on consultations and corporate management of risk to society

Consultation of the public in the context of assessments of societal or environmental impacts is not only common but mandated by law in several countries. In many places mandatory environmental impact assessment goes back to the 1970s. Mandatory impact assessments of other issues, such as societal sustainability or human rights, is a more recent phenomenon that to an extent builds on experiences gained around environmental impact assessment.

Even when impact assessment is not mandatory, it may be wise for a company to reach out to the local community and other potentially or actually affected stakeholders in order to map societal risks. This may contribute to counteracting a loss of the corporate ‘social licence to operate’.

Recommendations on ’meaningful stakeholder engagement’ in societal impact assessments

It is a general expectation that companies conduct so-called ‘meaningful stakeholder engagement’ in order to identify potential or actual adverse impacts on, for example, the environment, labour conditions and human rights. This is a result of the OECD Guidelines for Multinational Enterprises – a detailed set of recommendations from OECD member states as well as several countries in Africa and Latin-America.

The recommendations target companies operating in or out of the relevant countries. Likewise, all companies (regardless of form and countries of registration or operation) engage meaningfully with affected stakeholders whose human rights are or may be harmed by a business activity, in order to understand and map the impact from the perspective of these affected.

The United Nations (UN) Guiding Principles for Business and Human Rights, which were a source for the 2011 update of the OECD Guidelines, refer to meaningful stakeholder engagement in this context. The objective is that the impact assessment will be conducted in a manner that takes account of the affected stakeholders’ perception of risks or actual harm caused, that is, adopting a bottom-up perspective.

The company is expected to prevent risks and actual harm that it causes or contributes to. It can only do so if it understands the problems from the perspective of those who experience or fear the problems.

OECD has developed a detailed Guidance on Meaningful Stakeholder Engagement for the Extractive Industries. The guidance includes an annex particularly on engagement of indigenous people. A translation into the Sami language was introduced at a seminar taking place back-to-back with the assembly of the Sami Parliament in Northern Norway in June 2019.

Even so, at a meeting on mining and sustainability, which took place in Northern Sweden later in June 2019, we observed very limited awareness of the guidance and relevant global guidelines among local NGOs and other civil society organisations. In fact, awareness is higher with some companies. Lack of knowledge of the normative standards that apply to companies make it difficult for civil society to require that companies observe the norms.

The OECD Guidelines and the UN Guiding Principles are not binding but mark a tendency towards recognition of individual access to influence through making one’s views and concerns known, even if this may not take place through a formalized process.

Overall, the past 40 years have witnessed a development in international environmental and human rights law towards direct access for the individual to partake in decision-making on business activities affecting one’s life [Pring and Noé, 2002]. Rights of indigenous and tribal peoples to be involved in decision-making on mining and other forms of natural resource extraction are often highlighted in this context [Triggs, 2002]. Consultations can form one element among others in ensuring such participation.

Mandatory requirements

The Nordic countries, which include Arctic areas, have long mandated planning of specific types of activities to include assessments of the environment so that the information can form part of the authorities informed decision-making. In some Nordic countries environmental impact assessments include broader societal aspects, such as impacts on health, employment, traditions and business operations [Nenasheva et al. 2015].

Specific requirements of separate assessments of societal impacts are less common in a Nordic context. However, Greenland’s self-government has introduced explicit requirements in the Act on Raw Materials mandating social sustainability assessments of activities that are may have significant societal impacts. Greenland has also introduced rules enabling authorities to make permits conditional on the company contribution to society, for example through vocational capacity building, employment of local labor, or locally based processing of explored raw materials.

Our project has shown that there are diverse opinions of such ’Impact Benefit Agreements’ (IBAs) that are tailored to each specific project and local context. While IBAs offers opportunities to agree on specific local measures, limited transparency on the contents reduce opportunities to develop solutions across projects.

Authorities can introduce specific requirements on the consultation process through general or special legislation. While such demands vary between countries, involvement of local communities and other affected stakeholders is a general element [Vanclay and Esteves, 2012].

Common demands on a good consultation process

As regulations and levels of detail vary between countries and types of impact assessments, specific demands on the process will not be described here. However, general indications are given by the so-called Aarhus Convention [UN 1998], which fleshes out the implications of the political decisions from the 1992 Rio Summit concerning public participation in decision-making concerning projects with environmental impacts.

The convention also covers human health and safety, locations of cultural significance etc., provided the impacts have a connection to the environment.

The Aarhus Convention establishes that:

  • the public must be informed about an activity in the early stages of a decision-making process;
  • the information must, among other things, include the character of the activity; what permit is applied for; the responsible authorities, timeline, place and procedure for public consultations on the activity; and available information on the activity’s impacts on environment, health etc.;
  • the information must be free and provided as soon as it is available;
  • reasonable time should be set aside between different phases of the process, and therefore both to inform citizens and for citizens to prepare and actively participate in the decision-making process;
  • the applicant for a permit is encouraged to actively engage in dialogue and to contribute information on the project;
  • authorities are responsible for making relevant information accessible, for example on the location for the activity, impacts on the environment in a the above sense (inclusive of health and safety), what measures will be taken to prevent adverse impacts, and alternatives to the proposed plan;
  • a summary of the information must be provided in a non-technical form that can be understood without technical prerequisites;
  • the consultation process must provide citizens with opportunities to express comments, information, knowledge and views that they find relevant. Citizens or NGOs who perceived their rights to be infringed upon are to have access to remedy provided by a court of law or another independent institution.

The Aarhus Convention has been signed by most European countries, including the Nordic states, and a few Central-Asian states.

Obviously, participation in a consultation process should not require participants to be familiar with the law, nor should the quality in principle depend on participant’s awareness of the informing normative foundations. It is possible, especially in countries with well-functioning public institutions, to ask the relevant authority to explain the rules and requirements and their implications. Elsewhere, civil society organisations are often able to provide advice and guidance.

Consultations aim to create dialogue, not conflict

Even if participation in a consultation is not a claim to having one’s view win out, a consultation is ideally a dialogue between citizens and the authorities or companies that conduct the consultation.

Consultations build on an aim of exchanging knowledge, views, concerns and needs and thereby to provide the best possible informed foundation for decisions and for projects to be adapted and regulated in response to the concerns and needs that have been voiced or identified through the consultation.

Both process and outcome depend on the involved understanding and respecting that the process builds on a conversation which is not about identifying a winner and a loser, but rather a dialogue towards an adapted result which may be a compromise between the original project idea and the thoughts, concerns and views expressed during the consultation process.

References

Esteves AM, Franks D, Vanclay F (2012) Social Impact Assessment: the state of the art, Impact Assessment And Project Appraisal 30(1) 43-42.

Nenasheva M, Bickford SH, Lesser P, Koivurola T & Kankaanpää P (2015). Legal tools of public participation in the Environmental Impact Assessment process and their application in the countries of the Barents Euro-Arctic Region, Barents Studies: Peoples, Economies and Politics 1(3) 13-35.

Pring, George (Rock) and Susan Y. Noé (2002). The Emerging International Law of Public Participation Affecting Global Mining, Energy, and Resources Development, in Zillman, Donald M., Alastair Lucas and George (Rock) Pring (eds) Human Rights in Natural Resource Development: Public participation in the Sustainable Development of Mining and Energy Resources, Oxford Scholarship Online, DOI: 10.1093/acprof:oso/9780199253784.003.0002.

Triggs, Gillian (2002). The Rights of Indigenous Peoples to Participate in Resource Development: An International Legal Perspective, in Zillman, Donald M., Alastair Lucas and George (Rock) Pring (eds) Human Rights in Natural Resource Development: Public participation in the Sustainable Development of Mining and Energy Resources, Oxford Scholarship Online, DOI: 10.1093/acprof:oso/9780199253784.003.0004.

UN (1998). Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention).

About the Author

Karin Buhmann is Professor at Copenhagen Business School, where she is charged with the emergent field of Business and Human Rights. Her research interests include what makes stakeholder engagement meaningful from the perspective of so-called affected stakeholders, such as communities, and the implications for companies and public organisations carrying out impact assessments.

Photo by Clay Banks on Unsplash

Aspirational talk for a challenging walk

Professor Mette Morsing takes over the UN PRME  

By Jeremy Moon

The CBS Sustainability Centre and the Department of Management, Society & Communication (MSC) recently held a Panel Discussion to farewell Mette Morsing as she becomes the new Head of PRME (Principles for Responsible Management) based at the UN Global Compact office in New York.

This is clearly a challenge. Mette will be a rare academic in a world of international officials. She will lead a small team that supports the PRME initiative. PRME is intended to transform business and management education through research and leadership. It consists of 800+ business and management schools that have signed up to implement six principles concerning responsible and sustainable business education.  

Of course, the 800+ schools reflect very different educational and business cultures, and may have very different understandings of responsible and sustainable business. Doubtless the schools have other concerns so they may prioritize these differently… not least in these troubled times.

So in order to help – as well as challenge – Mette, we designed the Panel around the question: “What Should Business Schools Know and Do about Sustainability?”  The Panel duly raised challenges for Mette, reflecting their various vantage points around business and management education. The Panel members were:

  • Lise Kingo, Independent Board Member and former CEO & Executive Director, United Nations Global Compact (by video)
  • Florence Villeséche, Co-Director of the Diversity and Difference Platform and Associate Professor at Dept. of Management, Politics and Philosophy
  • Gregor Halff, CBS Dean of Education
  • Caroline Aggestam Pontoppidan, Academic Director of CBS PRME & Associate Professor at Dept. of Accounting
  • Claus Meyer, food entrepreneur and Adjunct Professor at the Department of Management, Society & Communication.

Mette Morsing responded to the perspectives raised by the Panelists and other participants were drawn into the conversation. This covered a range of issues and approaches to the sustainability challenges:

From the role of the ethic of care for people in business, to the role of data in sustainability; from how to integrate and govern environmental, social and governance responsibilities to forms of business school engagement for sustainability; and of course, strategies for green transformations.

I was particularly struck by the way that Claus Meyer contextualized his own work in the state of the food business which he described as being characterized by greed, obesity and other recipes for ill-health, over-supply, and starvation among other things. So, Claus takes a big picture and identifies and develops his responsibilities in his bakeries, restaurants and philanthropic work in this light.

How should Deans of Business Schools regard ‘their business’?

On the one hand, they could refer to the market for business management education, demand and supply; vital assets; competitors and collaborators; the impact of and influence upon regulators. But what I get from Claus is the big picture thinking.

So should the Deans bring into their strategic thinking the circumstances from which their students come – and don’t come, and the state of the businesses that their graduates enter (the distributions, resource uses, the dominant values)?

Isn’t this what they need to know for understanding and developing their impact on sustainability?  Is this the logic of a stakeholder approach to sustainability?

OK, Jeremy this is just talk… but as Mette reminded us in one of her most significant papers, aspirational CSR talk may be an important resource for social change … and thus part of the walk [1]. So, my parting advice to Mette is to try and get Business School Deans to better understand and connect with their wider context in order to act for sustainability.

References

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

About the author

Jeremy Moon is Professor at Copenhagen Business School, Chair of Sustainability Governance Group and Director of CBS Sustainability. Jeremy has written widely about the rise, context, dynamics and impact of CSR.  He is particularly interested in corporations’ political roles and in the regulation of CSR and corporate sustainability.

What does it mean to call someone a stakeholder?

By Matthew Archer

The word “stakeholder” is ubiquitous in sustainability discourse. We see it in corporate sustainability reports, policy documents, business plans, and sustainable development guidelines. Stakeholders are discussed in parliaments, in corporate boardrooms, at sustainability conferences, and in classrooms around the world.

The stakeholder concept was popularized with the 1984 publication of R. Edward Freeman’s Strategic Management: A Stakeholder Approach, where the stakeholder was defined as a person or group who are able to affect or are affected by an organization pursuing its goals. Although the term has been hotly debated ever since, it is clear that Freeman’s work has had a huge impact on management discourse, especially when it comes to social responsibility and sustainability.

In my own ethnographic research over the past few years among people I refer to as “sustainability professionals,” I’ve heard the word stakeholder mentioned countless times, in nearly every context, from venues like the COP21 negotiations in Paris to casual conversations with friends and colleagues at the pub.

Students in my classes use it fluently to refer to groups as distinct as shareholders, consumers, and factory workers. They’re able to classify these different stakeholders according to how important they are from the perspective of the company. Sometimes, the stakeholder concept can seem too expansive, with students questioning whether anyone is not a stakeholder.

But in my own research, I’ve found that although it is pretty widely accepted that most people are stakeholders in one form or another, there is a particular imaginary surrounding stakeholders. In a recent article, I found evidence for this by looking at the images that accompany mentions of the word stakeholder in sustainability reports and standards guidelines.

More often than not, these images depict workers in the Global South who are almost always people of color, and who are often women.

Similarly, when people use the word “stakeholder” in interviews, they are typically referring to people in producer countries, with the implication that these distant, marginalized stakeholders are the ones who stand to benefit the most from sustainability projects and, crucially, stand to lose the most if those projects are unsuccessful.

This led me to question the power dynamics that are inherent in the stakeholder concept. There’s a big literature in geography and anthropology on the power to categorize groups of people, drawing on decades of critical research on international development. More to the point, when companies talking about engaging with stakeholders in their corporate sustainability and corporate social responsibility initiatives, most of the time they’re actually treating the people we think of as stereotypical stakeholders as stakes, that is, what stands to be lost in a game of chance.

Given the power differences between people who can affect an organization and people who are affected by it, perhaps it’s time to come up with an alternative to the stakeholder concept.

About the author

Matthew Archer is Assistant Professor at Copenhagen Business School. He is an ethnographer and political ecologist interested in corporate sustainability and sustainable finance. Visit Matthew’s personal webpage.

By the same author:  Teaching (and doing) anthropology in a business school

Photo by Antonio Janeski 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

Fresh Air: An Impact Story

By Lara Anne Hale

What do fresh air, canaries, and research all have in common? Academics often humbly conduct and publish research, hoping but not knowing if it had any impact on society (we hope very strongly!). This becomes even more bewildering when it comes to the advent of research impact metrics, such as with the UK’s Research Excellence Framework (REF) (UKRI, 2020). It is a rare and wonderful occasion in which one can not only bear witness to impact but actually physically touch it. As an industrial researcher with CBS and the VELUX Group, I am often moving between theory and practice, but the tale of an innovation process stands out. This impact story is the story of how research became related  — albeit several steps removed — to the development of an innovative product, AirBird®, co-created by GXN, the VELUX Group, and Leapcraft. Moreover, it is the story of inspiration in practice, a breath of fresh air in the academic realm.

The academic story starts with a group of nine researchers. The ‘Smart Buildings and Cities’ research group is composed of nine industrial PhDs and postdocs employed in diverse Danish organizations and universities, housed in the BLOXHUB Science Forum and supported by Realdania and the Danish Innovation Fund. Some of us are social scientists engaging with engineering (that would be me), some are architects engaging with computer science, and yet others are engineers conducting social research. I’ve never seen such a mad mess of transdisciplinarity, and it’s beautiful (and also very much guided by our Science Forum coordinator, Pernille Berg).

The innovation process parallels the fourth research case I have been building to better understand and theorize business model innovation for smart technology in the building industry. This case concerns indoor climate data-driven building renovations as a potential business model and involves collaboration among CBS and the VELUX Group (the research), Kokkedal Skole (the building), and Leapcraft (the technology). Fredensborg Kommune has allotted nearly 1 billion DKK (120 million euro) to the improvement of its schools in a program called ‘Fremtidens Folkeskoler’ (Primary Schools of the Future); and it is kicking off the program with an investment of over 35 million DKK (4 million euro) in renovations at Kokkedal Skole. Prior to renovations, we needed to answer the questions: How is the building being used now? What is the indoor climate like? How do teachers and students interact with space? And then we can compare the data post-renovation. This kind of research, as it turns out, is especially timely, given the Danish government’s commitment of 30 billion DKK for sustainable housing renovations.

Kokkedal Skole
Image by Lara Anne Hale

The Kokkedal Skole project is a fascinating one to discuss with others, given the visionary leadership of their principal Kirsten Birkving and excellent building management of their facilities manager Lars Høgh-Hansen. They have in fact been featured on CNN Business for bringing new technology into the classroom, namely Leapcraft’s AmbiNode sensors and SenseMaking tool, the latter having been developed by VELUX based on the Green Solutions House project. Two of the Science Forum group’s companies, GXN and the VELUX Group, started to take discussions at length about the emerging findings on health in buildings, the invisibility of indoor climate, and the need for a simple alert when the situation is dangerous. They posed the question, is it possible to make an indoor health equivalent of the canary in the coal mine, who would start tweeting to coal miners when in contact with dangerous air?

Early in 2019 these talks came to fruition when Realdania invited applications for seed funding to research group members interested in collaborative innovation. This led to the Smith Innovation-coordinated workshop “The Canary in the Goalmine” with the VELUX Group and GXN working on the goal of defining how the ‘canary’ would look like, and – based on the research at Kokkedal Skole and renovation challenges presented by the Student and Innovation House – how it would function. A year later, I am working with VELUX and Leapcraft to finalize the one-year monitoring report from Kokkedal Skole, and AirBird® is ready to hit the shelves. The concept is simple and beautiful, just like the bird: when the CO2 levels indicate unhealthy air, AirBird sings a bird song to let its users know they should bring in some fresh air; which TV2 Lorry featured at Kokkedal Skole on the 25th of May. The AirBird® has been ideated, designed and developed in co-creation between GXN, VELUX Group and Leapcraft.

Airbird introduction
Image by Lara Anne Hale

Although the development of AirBird® does not tell the story of sustainability dynamics within innovation ecosystems (Oskam et al., 2020), nor the story of smart technology-facilitated business models for health and well being (Laya et al., 2018) – two examples of academic work that resonate with my research – it does challenge the idea that business model innovation precedes product innovation. Nudging tools like AirBird® may stimulate awareness and behavioural changes that anticipate business opportunities for a healthy indoor climate. Further, serendipitous product innovations may serve as artifacts embodying value negotiation, the foundations of business model innovation.

But ultimately, the AirBird® story is attractive because it presents impact that is tangible. And whereas the physical product is the most tangible of all, this innovation has had other impacts as well: collaborative innovation experience among the organizations involved; encouragement within the Science Forum of the value of transdisciplinary research; and the need to face directly the tensions between the academic and practice worlds. For my part, it’s uncomfortably different from the impact implied in academic publications and absolutely refreshing — something fresh air, canaries, and research should all have in common.

References

Laya, A., Markendahl, J., & Lundberg, S. (2018). Network-centric business models for health, social care and wellbeing solutions in the internet of things. Scandinavian Journal of Management, 34(2), 103–116.

Oskam, I., Bossink, B., & de Man, A.-P. (2020). Valuing Value in Innovation Ecosystems: How Cross-Sector Actors Overcome Tensions in Collaborative Sustainable Business Model Development. Business & Society, 000765032090714.

Rafaeli, Anat, & Pratt, Michael G. (2006). Artifacts and Organizations: Beyond Mere Symbolism. Mahwah: Lawrence Erlbaum Associates Inc,US.

UKRI (2020). REF Impact. Accessed 29 May 2020 from: https://re.ukri.org/research/ref-impact/

About the author

Lara Anne Hale – Ph.D., M.Sc., Assistant Professor, Industrial Postdoc Fellow with CBS and VELUX. Lara conducts transdisciplinary research on sustainability in the built environment, including aspects of digital transformations, circularity, user-centered design, and systems thinking. Her current project focuses on business model innovation for smart buildings in the BLOXHUB Science Forum ‘Smart Buildings & Cities’ research group, supported by the Danish Innovation Fund and Realdania.

Photo by Kinga Cichewicz on Unsplash

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

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 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).

More about coronavirus pandemic on Business of Society blog:

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 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

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

By Isabel Froes

Cities are hard and complex systems. With their defined policies, grids and routes, they offer limited space for experimentation, with a low threshold for any type of interference to their regular flow.  To test and prototype [1] in the urban, besides dealing with regulatory procedures, require clear indications of the positive impact those tests might bring. Thus, any change in routine flows is disruptive and not necessarily welcomed by all.

Some of these difficulties have become explicit during the processes carried out by various cities in four EU funded neighbourhood projects, Cities-4-People, Sunrise, MUV and Metamorphosis [2]. These projects have brought together citizens and other key city stakeholders to identify and co-create mobility solutions and approaches to tackling local problems. Each project has had a distinct goal, but all are part of the CIVITAS initiative focusing on ‘sustainable neighbourhood mobility planning’ and have been running since 2017, with three of them to end in 2020 and another in 2021. In the case of the Cities-4-People project, running in the cities of Hamburg, Istanbul, Oxford, Trikala and Budapest, cities, citizens and transport authorities have worked closely together to co-create and implement solutions addressing congestion, bike parking, safe and new routes to reach public transportation, and more [3].

Primarily, one of the biggest difficulties in deploying urban prototypes deals with permissions, space sharing, closing parts of or an entire street, or pavement, changing traffic routes, etc.

Even when implementing aspects citizens see as valuable and beneficial, such as bike racks, paths, during construction, these processes tend to be perceived as a nuisance. Another aspect stems from the fact that, unless it is a whole new city or neighbourhood been planned, the city, as a canvas, is never blank. Therefore, cities are constantly bound to develop solutions, which are imposed over an existing and fixed grid with very little wiggle room. All true, until March 2020.

The pandemic, through lockdowns and other movement restrictions, has changed the flow of cities almost overnight. For the first time, since the widespread city development focusing on automobiles, cities have had a chance to look at their now empty public spaces and rethink their use and purposes. These changes have forced the neighbourhood projects into a sudden halt, as people’s engagement with urban spaces has been very limited. However, while physical workspaces, shops and many businesses closed their doors, with citizens mostly at home, cities have encountered an unprecedented opportunity to rethink their streets.

In two related mobility examples, Vilnius, Lithuanian capital, the city Mayor has opened up eighteen of the city’s public spaces, free of charge, to bars and restaurants, so they can run while keeping the required social distancing [4].

In Milan [5], over the summer, the city will engage in a large-scale urban prototype, deploying 35km of temporary biking lanes and enlarged pavement areas.

While the city slowly opens up, with most employees still working from home and not commuting as much, citizens, when going out, should have enough space to keep a safe distance, while also experimenting in environmental friendly modes, such as walking and biking.

When some of the neighbourhood projects, such as Cities-4-People, resume in a few months, their cities and citizens might have changed. However, instead of considering the data that has been collected in the projects prior to the lockdown as ‘outdated’ or no longer valid, these projects can consider repurposing this data, using it as a robust baseline to be compared with post lockdown. From a mobility perspective, this ‘new normal’ might prove itself a valuable mobility asset. As people return to their streets, they can experience these known spaces in new formats encountering novel mobility patterns, where people and businesses can repopulate streets differently, reconfiguring city flows.

Furthermore, some of these temporary changes might prove to be popular and become permanent, promoting not only better mobility, but also lower pollution and improved air quality [6], indirectly helping cities leapfrog into achieving some of their sustainable development goals (SDGs). The opportunity to reset busy urban centres is rare; however, as it has occurred and continues to run with the pandemic, more cities and citizens have the unique chance to engage and exploit their cities’ canvas in new ways to seize their days.

References

[1] Implementing a temporary solution

[2] https://civitas.eu/projects/research

[3] https://cities4people.eu/

[4] https://www.theguardian.com/world/2020/apr/28/lithuanian-capital-to-be-turned-into-vast-open-air-cafe-vilnius

[5] In Milan, the lockdown brought a city to an almost complete stand still, decreasing an endemic congestion problem by 30-75%, thus improving air quality. https://www.theguardian.com/world/2020/apr/21/milan-seeks-to-prevent-post-crisis-return-of-traffic-pollution

[6] https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-impact-of-covid-19-on-future-mobility-solutions?cid=soc-app

About the Author

Isabel Fróes is a postdoc at MSC Department at Copenhagen Business School working in two EU projects (Cities-4-People and iPRODUCE) dealing with distinct aspects of urban services and sustainability. Her latest publications deal with urban planning and co-creation based on results from the Cities-4-People project. Isabel also has wide industry experience and has worked both as a user researcher and service design consultant for various companies in Denmark and internationally. For more detail please see her Linkedin profile  

More about coronavirus pandemic on Business of Society blog:

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

Photo by ?? Claudio Schwarz | @purzlbaum on Unsplash

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

More about coronavirus pandemic on Business of Society blog:

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

Photo by Dieter Zinnbauer

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

Normalizing Sustainability

By John Robinson, University of Toronto

We often hear the argument that, given the urgency of climate change and sustainability concerns,  significant changes to individual behaviours and lifestyles are required. This has led to a wide array of public education and climate literacy campaigns aimed at changing such behaviours. In this blog, I will argue that some fairly strong research findings suggest that such campaigns are of limited value in influencing behaviour change, and moreover that focusing on changes in individual behaviours may be distracting us from much more significant possible steps.

There are many models of behaviour change in the literature, and of the relationships among values, attitudes, intentions and behaviours. It is probably fair to say that many of the most influential conceptualizations of behaviour change assume that most individual behaviours are the result of some form of conscious decision-making about desirable outcomes based in turn on some assessment of the consequences of different courses of action. [1]

On this view, people act in environmentally irresponsible ways because they lack the information they need to make better decisions. Such an ‘information deficit’ model leads in turn to what we might call a persuasive communication approach to stimulating behavior change, which assumes that providing more information as to those consequences, through information provision, educational programs, and science and climate change literacy campaigns, will lead to better and more environmentally responsible decision-making [2].

Unfortunately, the relevant research on the relationship between information and behaviour shows that persuasive communication approaches based on an information deficit model are not only ineffective in changing behaviours in the desired direction [3], but may in fact have perverse consequences.

Studies of the relationship between knowledge and attitudes have found that increased science literacy does not lead people to become more concerned about climate change, but on the contrary, actually increases polarization on this issue[4]. It seems that educating people on the science of climate change, or other sustainability problems, will not lead them to change their views on the problem itself, but instead may further reinforce their prior position.

In fact there is evidence from many fields of study, going back multiple decades, that information is only weakly connected to behaviour change. Studies of the effectiveness of energy efficiency programs [5], research in health promotion[6], or community-based social marketing[7], over many decades have all reached similar findings. So widespread are these findings that it can be said, in the words of my colleague David Maggs that:

The best evidence that information does not change behaviour is that we have decades of evidence in multiple fields that it does not do so, yet we continue to create and implement pubic education campaigns intended to change individual behaviour.

While this is bad enough, the problem gets worse.

It turns out that it is not clear that changing individual consumption behaviour is the right goal anyway. A number of studies have shown that there is no significant difference in either the carbon or ecological footprint of individual who cares deeply about environmental issues and behave accordingly, and those who do not care at all and do not behave in environmentally responsible ways [8]. The reason is that the ecological and carbon footprints of individuals are determined much more by their income than by the degree to which they choose more environmentally appropriate behaviours such as recycling or buying sustainable products.

So we seem to be in a depressing circumstance: information and literacy programs won’t change behaviour; moreover, it wouldn’t much matter, in term of overall environmental impact, if they did.

But rather than ignoring this evidence and intensifying our efforts to educate people into sustainability, or else throwing up our hands and retreating into apathy, perhaps a more fruitful approach is to reframe the original questions and ask whether a different approach altogether might be useful, on both these questions.

With regard to information provision, instead of a persuasive communication approach, it might be more useful to take what we might call an emergent dialogue approach [9]. Instead of assuming that we know the right answers and we have to get those answers into the heads of our audience, perhaps we need to listen as much as we speak, and to find two-way approaches to dialogue in order to co-create narratives with citizens that describe our circumstances in ways that are more faithful to the disparate views and values of different groups and that thereby offer the possibility of finding common ground on controversial societal problems.

The goal switches from a focus on changing behaviours to a focus on trying to create shared narratives, in order to better inform collective decision-making processes, and to foster social mobilization in support of policy change.

With regard to individual behaviour change, perhaps we need to rethink our ideas about change itself. As long as sustainability requires change, then it is fragile because human activities and practices will often snap back to prior unsustainable normals. Instead, we need to normalize sustainable practices, so that they become the default, not the required change [10]. In this connection, it might be useful to move from a focus on conscious individual behaviour and pay more attention to more collective processes of activity. There has been an upsurge of work on social practice theory approaches to human activity, which suggests that much of that activity is unconscious and collective, connected to social processes and relationships, and social and cultural norms [11]. Can a focus on collective social practices lead us towards processes of normalization of sustainability?

Following this line of thought, it is not about encouraging behaviour change instead of technological change, but of exploring how the overall socio-technical system itself, including powerful social norms, influences and is influenced by individual choices and actions, including political demands or support for changes in collective decisions. Perhaps we need to try to create ‘virtuous cascades’ 12 of positive normative change and identify leverage points that will allow us to foster and encourage more sustainable outcomes. Trying to convince people to change their lifestyles in the absence of change in the overall system will be ineffective and may even work against larger system change.

About the author

John Robinson is a Professor at the Munk School of Global Affairs and Public Policy and the School of the Environment at the University of Toronto.  He is also an Adjunct Professor at Copenhagen Business School. His research focuses on the intersection of climate change mitigation, adaptation and sustainability; the use of visualization, modelling and citizen engagement to explore sustainable futures; sustainable buildings and urban design; the role of the university in contributing to sustainability; creating partnerships for sustainability with non-academic partners; the history and philosophy of sustainability; and, generally, the intersection of sustainability, social and technological change, ways of thinking, and community engagement processes. 

References

[1] E.g. see Ajzen, I. (1991). The theory of planned behavior. Organizational Behaviour and Human Decision Processes, 50(2), 179-211

[2] Masud, M.M., Al-Amin, A.Q., Junsheng, H., Ahmed, F., Yahaya, S.R., Akhtar, R., & Banna, H. (2016). Climate change issue and theory of planned behaviour: relationship by empirical evidence. Journal of Cleaner Production, 113, 613-623. See the discussion in Kollmuss, A., & Agyeman, J. (2002). Mind the Gap: Why Do People Act Environmentally and What are the Barriers to Pro-Environmental Behaviour? Environmental Education Research, 8(3): 239-260.

[3] See, for example, Kollmuss & Agyeman, op. cit.; Sheeran, P., & Webb, T.L. (2016). The Intention-Behaviour Gap. Social and Personality Psychology Compass, 10(9), 503-518; Ungar, S. (1994). Apples and oranges: probing the attitude-behaviour relationship for the environment. Canadian Review of Sociology, 31(3); Steg, L., Perlaviciute, G., & van der Werff, E. (2015). Understanding the human dimensions of a sustainable energy transition. Frontiers in Psychology, 6; Owens, S. 2000. `Engaging the public’: information and deliberation in environmental policy, Environment and Planning A, 32, pages 1141-1148; Shove, E. 2010. Beyond the ABC: climate change policy and theories of social change, Environment and Planning A, 42, 1273-1285. 

[4] Kahan et al, (2012) The polarizing impact of science literacy and numeracy on perceived climate change risks, Nature Climate Change, 2(10), pp.732-735; Drummond, C., & Fischhoff, B. (2017). Individuals with greater science literacy and education have more polarized beliefs on controversial science topics, Proceedings of the National Academy of Sciences, 114(36), 9587-9592.

[5] Stern, P. C. 1986. “Blind spots in policy analysis: What economics doesn’t say about energy use.” Journal of Policy Analysis and Management, 5(2), 200-227; Hirst, E. (1990). Progress and Potential in Evaluating Energy Efficiency Programs. Evaluation Review, 14(2), 192–205; Robinson. J. (1991). “The proof of the pudding: Making energy efficiency work.” Energy Policy, 19(7), 631-645; Abrahamse, W., Steg, L., Vlek, C., & Rothengatter, T. (2005). A review of intervention studies aimed at household energy conservation. Journal of environmental psychology, 25(3), 273-291.

[6] Green, L. W., & Kreuter, M. W. (1993). Health promotion planning: An educational and ecological approach. McGraw-Hill

[7] McKenzie-Mohr, D. (2011). Fostering sustainable behavior: An introduction to community-based social marketing. New society publishers.

[8] Csutora, M., 2012. One more awareness gap? The behaviour–impact gap problem.  Journal of Consumer Policy, 35(1), pp.145-163; Tabi, A., (2013). Does pro-environmental behavior affect carbon emissions. Energy Policy, 63, pp.972-981; Moser, S., & Kleinhückelkotten, S. (2018). Good intents, but low impacts: diverging importance of motivational and socioeconomic determinants explaining pro-environmental behavior, energy use, and carbon footprint. Environment and Behavior, 50(6), 626-656.

[9] Robinson, J. (2004) “Squaring the Circle: Some thoughts on the idea of sustainable development”, Ecological Economics, 48(4): 369-384; Antle, A. N., & Robinson, J. (2011). Procedural Rhetoric Meets Emergent Dialogue: Interdisciplinary perspectives on persuasion and behavior change in serious games for sustainability; Bendor, R., Lyons, S. H., & Robinson, J. (2012). What’s there not to ‘like’? sustainability deliberations on facebook. JeDEM-eJournal of eDemocracy and Open Government, 4(1), 67-88; Maggs, D. and Robinson, J. (2016) “Recalibrating the Anthropocene: Sustainability in an Imaginary World”, Environmental Philosophy, 13(2), 175-194; Robinson, J. and Cole, R. (2015) Theoretical underpinnings of regenerative sustainability, Building Research & Information, 43(2), 133-143; Westerhoff, L. and Robinson, J. (2013) “’Practicing’ narratives: exploring the meaning and materiality of climate change”, Proceedings of Transformation in a Changing Climate, June 19-21, 2013.

[10] John Robinson, “Normalizing Sustainability: from behavior change to metamorphosis”, Keynote Presentation at IST2019: Accelerating sustainability transitions: Building visions, unlocking pathways, navigating conflicts, Ottawa, Jun 25 2019

[11] Gram-Hanssen, K. & Georg S. 2017. Energy performance gaps: promises, people, practices, Building Research and Information 46(1), 1-9; Strengers, Y., & Maller, C. (Eds.). (2014). Social practices, intervention and sustainability: Beyond behaviour change. Routledge; Shove, E., Pantzar, M., & Watson, M. (2012). The Dynamics of Social Practice. London, UK: SAGE Publications; Hargreaves, T. (2011). Practice-ing behaviour change: Applying social practice theory to pro-environmental behaviour change. Journal of consumer culture, 11(1), 79-99; Reckwitz, A. (2002). Toward a theory of social practices: A development in culturalist theorizing. European journal of social theory, 5(2), 243-263.

[12] Homer-Dixon, T. Coronavirus will change the world. It might also lead to a better future. The Globe and Mail, Mar 5, 2020  https://www.theglobeandmail.com/opinion/article-the-coronavirus-is-a-collective-problem-that-requires-global/

Photo by Francesco Gallarotti on Unsplash

Sustainable Consumer Behavior: Go Big or Go Home?

By Laura Krumm

In recent years, news on issues such as climate change, environmental degradation and plastic pollution was almost inescapable. At least in Europe, newspapers reported on environmental topics regularly, political discussions often revolved around greenhouse gas emissions or environmental policy, and sustainability content creators gained large numbers of followers on social media with tips on package-free grocery shopping and vegan recipes. Additionally, with Fridays for Future, environmental issues inspired one of the largest youth movements to date. It is fair to say that almost everyone is talking about the environmental issues we are currently facing.

The role of consumption

With almost everyone talking about environmental issues, most have understood that our consumption behavior in the industrialized world is a major cause of environmental problems. After all, the issue of climate change is an issue of consumption. Almost three-quarters of greenhouse gas emissions originate from household consumption (1). A change in consumption behavior, therefore, is deemed necessary to have a chance of mitigating climate change.

Even though environmental beliefs and values are increasing, consumers often do not follow through and translate their attitudes into environmental behavior. Many scholars are concerned with this phenomenon, often termed attitude-behavior gap or value-action gap (2, 3). This gap is frequently calculated by subtracting the market share of sustainable goods, e.g., organic produce, from the percentage of consumers having an intention to buy those products. The estimated size of the gap ranges mostly around the 30% mark (4, 5).

If consumers acted according to their attitudes, the market share of sustainable products would, therefore, increase by 30 %, which would certainly have a substantial environmental impact. Is it, however, enough to focus on closing the attitude-behavior gap? Unfortunately, no.

How sustainable are we really?

Behaviors commonly considered as sustainable, such as bringing our own reusable shopping bag instead of using the plastic bags provided by the store, might not have the big environmental influence we think they have. Bilharz and Schmitt have termed such actions as the “peanuts of sustainable consumption” (6). Often, consumers that identify themselves as “green” have similar ecological footprints to consumers who do not identify themselves as “green” (6, 7).

A green self-image, although associated with higher rates of some environmental behaviors, is therefore often misleading.

This can be problematic. If consumers with high attitudes towards sustainable consumption overestimate their own positive impact and already perceive themselves as sustainable after performing relatively low-impact sustainable behaviors, such as stopping the water while brushing their teeth or using a reusable tote bag for shopping, the motivation for bigger steps might be reduced. While these small behaviors are important actions and first steps in the right direction, they are only that: first steps. To mitigate climate change and solve other environmental issues, more drastic measures will be necessary.

Focus on high-impact behaviors instead of low-hanging fruits

Some researchers, therefore, suggest to reduce the focus on the intent-based view of sustainable behavior (e.g., environmental attitudes or motivations) and rather take a more impact-based perspective (8). In that case, the actual environmental effects of certain behaviors and actions are assessed in the form of, e.g., emitted greenhouse gases or ecological footprint calculations. An impact ranking of sustainable behaviors can then give insightful information, which behaviors to give priority.

A recent study found, e.g., that a change towards a vegan diet has the potential to mitigate up to 14% of European carbon emissions, whereas a change towards exclusively purchasing organic food has the potential to mitigate 2% (9). While this certainly does not mean that organic food products are not important and we should stop buying them, a focus on them will not suffice to reduce our greenhouse gas emissions significantly.

This change in perspective is not only important for consumers themselves, but also for companies, research and policy. While, e.g., an EU-wide ban of single-use plastic or company initiatives to eliminate plastic bags in some supermarkets have a considerable positive impact on the problem of plastic pollution, it is by far not enough.

Even though the probable consequences of climate change are well known and already start to become apparent, countries and governments still fail to adopt effective measures to reduce greenhouse gas emissions (10).

An enhanced focus on high-impact behaviors and actions can help political institutions, research organizations and consumer education strategies achieve their sustainability goals. While it is certainly necessary to address small and easily implementable changes, they should not distract us from tackling the big consumption challenges (11).

About the author

Laura Krumm is a PhD fellow at the Department of Management, Society and Communication and part of the Consumer & Behavioural Insights Group at CBS Sustainability. Her research interests lie in the fields of sustainable consumption behaviour and policy.

References

(1) Hertwich, E.G. and Peters, G.P., 2009 – Carbon Footprint of Nations: A Global, Trade-Linked Analysis, in: Environmental Science and Technology, 43(16), 6414-6420.

(2) Kollmuss, A. and Agyeman, J., 2002 – Mind the Gap: Why Do People Act Environmentally and What are the Barriers to Pro-Environmental Behavior?, in: Environmental Education Research, 8(3), 239-260.

(3) Huddart Kennedy, E., Beckley, T.M., McFarlane, B.L. and Nadeau, S., 2009 – Why We Don’t “Walk the Talk”: Understanding the Environmental Values/Behaviour Gap in Canada, in: Human Ecology Review, 16(2), 151-160.

(4) Carrington, M.J., Neville, B.A. and Whitwell, G.J., 2010 – Why Ethical Consumers Don’t Walk Their Talk: Towards a Framework for Understanding the Gap Between the Ethical Purchase Intentions and Actual Buying Behaviour of Ethically Minded Consumers, in: Journal of Business Ethics, 97(1), 139-158.

(5) Young, W., Hwang, K., McDonald, S. and Oates C.J., 2010 – Sustainable Consumption: Green Consumer Behaviour when Purchasing Products, in: Sustainable Development, 18(1), 20-31.

(6) Bilharz, M. and Schmitt, K., 2011 – Going Big with Big Matters, in: GAIA, 20(4), 232-235.

(7) Gatersleben, B., Steg, L. and Vlek C., 2002 – Measurement and Determinants of Environmentally Significant Consumer Behavior, in: Environment and Behavior, 34(3), 335-362.

(8) Moser, S. and Kleinhückelkotten, S., 2018 – Good Intents, but Low Impacts: Diverging Importance of Motivational and Socioeconomic Determinants Explaining Pro-Environmental Behavior, Energy Use, and Carbon Footprint

(9) Vita, G., Lundström, J.R., Hertwich, E.G., Quist, J., Ivanova, D., Stadler, K. and Wood, R.,  2019 – The Environmental Impact of Green Consumption and Sufficiency Lifestyles Scenarios in Europe: Connecting Local Sustainability Visions to Global Consequences, in: Ecological Economics, 164, 106322.

(10) UN Environment Programme, 2019 – Emissions Gap Report

(11) Centre for Behavior & the Environment, 2018 – Climate Change Needs Behavior Change: Making the Case For Behavioral Solutions to Reduce Global Warming

Photo by Markus Spiske 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

Just announced: And the world’s worst company is …. Really?

Why naming a hardly known German company as the world’s most controversial company inadvertently makes a lot of sense

By Dieter Zinnbauer

Business bashing is a popular spectator sport in some quarters – sometimes justified, sometimes not. So there is certainly no shortage of strong contenders for the most controversial company contest. Who would be your pick for the 2019 shortlist? Perhaps one of the companies that led millions of people into opioid addiction? The biggest carbon dioxide emitter? Or someone from the big tech side that as many believe has ushered in a new, toxic era of surveillance capitalism?

Picking the unlucky winner is as difficult as it is subjective.  But as is always the case these days big data and AI are riding to the rescue. They are claimed to power an evidence-infused attempt by a boutique ESG consultancy to identify the most controversial company in the world. According to the inevitable marketing pitch, a secret-sauce algorithm churns through a proprietary database of millions of new and old media mentions for more than 140,00 companies to bring science to the art of naming and shaming and to reveal the 2019 most controversial company in the world.

And as just announced last week, the winner is:

Tuev Sued!

?

Tuev Sued?

If you are not a German car owner (the company is best known there for carrying out the obligatory and feared periodic car inspections) or an expert in technical certification issues you may have never come across this name before.

Tuev Sued is one of the big players in the global certification-of-everything business. Born as the Duev (“Dampfkesselueberwachsungsverein” – steam boiler inspection association) in 1800 to bring technical oversight to the issue of exploding steam boilers during the industrial revolution, the Tuev Sued (and its brother) Tuev Nord have grown into multinational enterprises that provide technical audits and certification services for an ever-growing number of products, processes and service across industries and across the world.

Arguably the main reason why Tue Sued was picked as the most controversial company (besides a weighing in favor of novel entries that guarantees sustainable newsworthiness to an annual ranking now in its 10th edition) is that it is implicated in the infamous 2019 Brumadinhu dam disaster in Brazil. A collapse of a dam erected by a mining company unleashed a toxic mudflow on the downstream communities that killed more than 250 people. Tuev Sued had carried out technical inspections of the dam and allegedly assessed it as safe. The case is still in court, no conclusive verdicts have been reached.

So is it fair to put the spotlight so fully on a comparatively small technical certification outfit, rather than say the big mining company that built and ran the dam?

Irrespective of what one thinks about the merits of this choice,  the case highlights what I would submit is one of the most fundamental and unresolved drivers of corporate irresponsibility: the persistent challenge to make all kinds of certification and assurance processes that are so essential to functioning markets and economies work as intended.

From the never-ending string of accounting and auditing scandals to the crucial role of rating agencies in the 2007+ financial crisis to emerging examples of greenwashing in the carbon market certification business, there as common thread: certification and assurance often fail to provide the independent, effective vetting that it is supposed to deliver.

Issues involved include:

  • the under-resourcing of the inspection process as neither principal nor agent have strong interests in overly strict and deep inspections,
  • pitching certification as loss leaders to open the door for upselling into other lucrative consulting services;
  • borderline rubberstamping of certifications to secure repeat business and avoid being viewed as difficult in the industry and thus putting off other potential clients.

Strengthening liability, setting more stringent standards for the standards watchdogs, tightening compliance measures and building public reputational pressure go some way to rework incentives towards more credible certifications.

But at the end of the day they are more ameliorative than tackling the root problem:

As long as certification services are selected by and directly paid for by the very clients that are meant to be certified, assured, rated or audited and as long as certification is strictly a for-profit business there are fundamental conflicts of interests at the root of these services that put their efficacy and independence at risk.

Ideas of how to rewire these markets and business models abound yet so far the problem of thin political markets seems to hold: both certifiers and certified have strong interests to preserve the status quo and formidable lobbying power to advocate for this, while the dull technical nature of the issues at stake and the dispersed group of beneficiaries from alternative solutions prevent a forceful, concerted push for better arrangements.

Yet there is hope that this fundamental conflict of interest issue will gain more prominence in the policy and public debates very soon. The emerging transformational push to de-carbonize businesses and economies relies in part heavily on carbon credits, carbon offsets and other green-impact instruments whose efficacy and the very reason for existence relies on proper certification and assurance.

 How to move beyond and away from issuer-directly-pays certification services will have to be an important part of the policy designs in the making.

Tuev Sued is a symptom of the problem – it is the systemic issue at the root of the case that justifies putting it into the spotlight – although it is unclear of the secret-sauce algorithm at work had this in mind when making the selection. 

Let’s hope that in twenty years’ time the idea of a rating agency, a dam examiner, a medical device inspector or a carbon credit certifier being selected by and paid directly by the people they are supposed to pass an independent judgment on appears as strange as the notion that a pharmaceutical company would be able to choose between different agencies to get its drugs approved and directly funds large parts of their budgets.

About the author

Dr. Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS researches focus 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

Photo by Icons8 Team on Unsplash

Lead where others follow

By Sim de la Torre

One of the most exciting and influential areas of business today, Governance & Sustainability has also become a must-have skillset for business leaders looking to stay on top of their game. An MBA level certificate in Governance and Sustainability from CBS will enable you to take your organisation to the next level.

Providing sustainable directions

There’s little doubt that today’s business environment is evolving at a striking rate. And the increased focus on sustainability from the perspective of risk management, compliance and governance can often leave business leaders searching for clarity when they should be providing direction. These are strategically critical elements – some might say preconditions – of business today and they are defining the debates that are being held in boardrooms across the globe.

Andreas Rasche, Professor of Business in Society and CBS Associate Dean, explains more about this cutting-edge Concentration.

“To date, a lot of the conversation has been focussed on either the CSR or philanthropic agenda, but ours is based on the modern understanding of sustainability and how to govern; how to set agenda; and how to include cutting edge thinking and action across the sustainability field.”

Sustainable finance is one example of where managers are being challenged in this arena. How do you integrate wider social and environmental concerns – or responsibilities –  into your financial decision making? This is one of the Concentration’s key topics and MBA students will learn to balance the needs of society with the needs of their organisation.

Sustainability toolset

“Meanwhile,” says Professor Rasche, “another trend that we cover is corporate governance and risk management, which is all about steering an organisation and equipping you with the tools to make intelligent and reasoned recommendations to the board. The course will enable you to plot a path for the company from a business mindset while weaving in sustainability. And of course, we also help you to identity and exploit the opportunities that your organisation will face as a result of this agenda.”

Across the globe, the corporate governance debate is happening at the highest level of business and the leaders of today and tomorrow need to know how to have these conversations and how to steer their organisations effectively.

Be where the focus is

Other aspects covered by the course include circularity, which is particularly relevant to modern leadership, as well as risk management which often appeals to practitioner students. Says Professor Rasche,

“These mindsets can have a huge influence on an organisation and again, we’ll give you the tools you need to not just understand the conversation, but to make a valued input and be part of the debate. The things you learn today on this course will equip you for tomorrow. If you want to really know more, come and join us. Be where the focus is.”

In April 2020, you can start your CBS Executive MBA with a Concentration in Governance & Sustainability.  

About the author

Sim de la Torre is a former journalist turned freelance writer working with the CBS MBA programmes.

Photo by Ian Stauffer on Unsplash

Helpful hypocrisy? The ‘ironic turn’ in corporate talk about sustainable development

By Sarah Glozer and Mette Morsing

Do you feel uneasy to think that companies use a humorous tone in their communications about grave challenges such as climate change, pollution and inequality? We suggest the notion of helpful hypocrisy to coin this new ironic turn in recent corporate communications.

Ironic campaigns

We have ourselves been intrigued by this new ‘ironic turn’ in corporate communications. Large international fashion brands such as Patagonia, Benetton and Diesel have recently challenged conventional informational approaches to marketing communication about sustainability, choosing instead to incorporate a humorous (or more precisely, an ironic) edge to their visual representations as they address issues of climate change.

Such campaigns are ironic because they bring a twist of message incongruity and ‘double talk’, where they show a world within which ambiguity, incongruity and contradictions are real and leaving it to consumers what to make of it. This stands in sharp contrast to conventional prescriptions in marketing communications where the idea of ‘one message’, or what we refer to as ‘single talk’, prevails with the purpose of targeting consumers effectively. In our recently published paper, we suggest the term ‘helpful hypocrisy’ as a way of coining the ironic turn.

On the one hand, these new ironic messages show consumers the dire consequences of pollution, climate change, flooding and deforestation (i.e. implications of consumption) and on the other hand, they simultaneously carry strong aesthetic appeals to enjoy life and consume more, comforting consumers that ‘life goes on’ and hedonistic lifestyles will continue. In new ‘twisting’ advertising campaigns, companies blend these two narratives in complex, ironic visualization.

Such double talk is often deemed hypocrisy and greenwashing in research as well as in practice. And while we agree with such assessment, our analysis shows that there is also something else going on.

Double talk

We point to how such double talk may also provoke critical reflection and surprise through displaying inconsistencies between ‘talk’ and ‘talk,’ and hereby engage its audiences as more than passive recipients. In a cosmopolitan context, where people like to think that they are able and capable of critically reflect on their own lives and make their own decisions, preaching and moralizing communications about ‘good behavior’ is becoming increasingly less effective.

Youth is particularly opposing being told what to do. And even in spite of the severe consequences of continued consumption, a certain ‘climate change fatigue’ has entered the market. Consumers know that they should buy less and more sustainable products, but they are resistant to messages that give them feelings of guilt and shame.

In such a world, we suggest, one way to gain traction is to engage audiences in ironic and humorous communications in which the receiver is him- and herself activated to interpret incongruous ambiguous messages.

Helpful hypocrisy

Analyzing Diesel’s Global Warming Ready campaign, we find how the technique of irony is particularly outspoken as beautiful people in beautiful clothes are inserted into out-of-place environments, juxtaposing them if you will, by the dire implications of climate change, in a way which makes the whole scenery appear absurd.

In our analysis, we develop an analytical model that positions irony and double talk vis a vis conventional marketing campaigns.

We point to how the blend of climate change and luxury consumption is an ambiguous affair, and we show how incongruity is present across four levels of Diesel’s use of irony: fantasy versus reality (framing), survival versus destruction (signifying), utopia versus dystopia (symbolizing) and political activism versus consumer society (ideologizing).

Without moralizing or telling consumers what to do, or even restraining from telling consumers how good the corporate sustainable activities are, Diesel exposes the ambiguities of society and sustainability by using humor.

Now, we are not fooling ourselves. Diesel is a company with an ambition of selling more products. And where satire is a technique that intends to improve humanity by critiquing its ‘follies and foibles’, companies are generally known to have less noble ambitions.

But we argue – with Swedish sociologist Nils Brunsson – that “hypocrisy appears to be exactly what we demand of modern organizations: if we expose organizations to conflicting demands and norms, and expect that they should respond to them, then we must also expect hypocrisy” (1993: 8-9).

We propose that irony may be considered a means of ‘helpful hypocrisy’ in which the public is exposed to the contradictions and vices of society with the purpose of changing people’s opinion and create betterment of society.

References

Brunsson, N. (1989). The Organization of Hypocrisy: Talk, Decisions and Actions in Organizations. Wiley.

Glozer, S. and Morsing, M. (2019). Helpful hypocrisy? Investigating ‘double-talk’ and irony in CSR marketing communications, Journal of Business Research

About the authors

Sarah Glozer is Associate Professor of Marketing and Society in the School of Management at the University of Bath, UK. She is also Deputy Director of the Centre for Business, Organisations and Society (CBOS). Her research focuses on corporate social responsibility (CSR) communication, digital marketing and ethical markets/consumption.

Mette Morsing is Professor and Mistra Chair of Sustainable Markets at Stockholm School of Economics (Sweden) and Professor of Corporate Social Responsibility at Copenhagen Business School (Denmark). Her research concerns how organizations govern and are governed in the context of sustainability. She is particularly interested in how communication, identity and image dynamics work in this regard.

The image is one of the eight images displayed in Glozer & Morsing (2019) from the Diesel Global Warming Ready campaign: New York City submerged in water

SDG 17 check in: cross-sector partnerships from the beneficiary perspective?

By Anne Vestergaard, Luisa Murphy, Mette Morsing and Thilde Langevang

Have you ever wondered how SDG 17 is, in fact, delivering on its promise? Does it sometimes cross your mind to what extent cross-sector partnerships are benefitting all parties involved, including those people whose livelihood they are intended to assist and advance? Some years ago, we set out to explore the effectiveness of North-South cross-sector partnerships with a particular focus on providing novel knowledge to understand better the partnerships from the vantage point of its beneficiaries. Some of our main findings have just been published.

Understanding the value of cross-sector partnerships

In research as in practice, there are high hopes for cross-partnerships as the new global governance mechanism. Cross-sector partnerships are presented as particularly well-suited to solve some of the world’s most critical global challenges such as poverty, climate change, and inequality. No one organization, business or institution can do it alone.

It is better to address wicked problems together. It does indeed sound plausible: the more perspectives, the more knowledge, the more resources, the better. However, as we experience the emergence of a great number of cross-sector partnerships, we also see an increasing concern expressed from research and practice about the effectiveness of these partnerships.

Do they really deliver better and more than a government or a business or an NGO could alone? Are they really providing better conditions for the world’s poor? Are cross-sector partnerships more efficient in addressing fundamental problems of inequality?

So far, we have only very little research to substantiate such claims. A large part of current research has so far emphasized the advantages for the (typically North-based) business partner to partake, leaving us with a certain Northern and corporate bias in understanding the value of cross-sector partnerships.

Study of the ‘Best in class cross-sector partnership’

Our study explored what was by the Danish embassy to Ghana assessed as the ‘best in class cross-sector partnership’ involving Ghanaian and Danish actors. Over three years, we visited the cross-sector partnership several times, observed and interviewed the young single mother employees, as well as the Northern business and the Southern NGO partners.

At first glimpse, the ten-year-old partnership looked promising. A number of young mothers had been employed over the years. It was prestigious and competitive to get a job with the partnership. It had its own physical building within the NGO where the women were sitting at a table assembling the jewelry in the designed styles, talking, working and laughing.

When interviewed, the NGO manager or one of their two supervisors were initially present. English conversation was difficult for them. We heard the same kind of appreciation of the partnership as we had heard from their leaders. It was not until next time we arrived that we started to see a potentially problematic pattern arise.

This time, we interviewed the young mothers in their home territory in their villages, where the managers were not present. Also, we had a local translator, so the conversations took place in the women’s local language.  All this is just to remind ourselves, how difficult it is to get access to ‘good data’ in such circumstances.

Competence without agency

At this second glance, we found that the cross-sector partnership resulted in what we term ‘competence without agency’ for the beneficiaries. The partnership was found to provide new resources and knowledge to the young single mothers but failed to generate the conditions for these to be transformed into significant changes in their lives.

Only the most capable young women, the ‘viable poor’ were offered a job, excluding the poorest young single mothers in the villages. Women had to travel far to work in the NGO, leaving their children behind in the village and preventing traditional practices of sharing work with family and wider community.

The partnership drew on old craftsmanship from the region which was modified to fit Northern standards – all decided and directed by the Northern entrepreneur, leaving the young mothers with the task of adapting and imitating rather than innovating.

On top of that, income for the young mothers was unstable due to fluctuations in European demand for the product produced, making it impossible for the women to plan ahead and to improve support for their children’s schoolwork.

These were just some of the unexpected, invisible and unpronounced outcomes of the cross-sector partnership which occurred as the entrepreneur and the NGO leaders were focusing on making the partnership work and the Northern government initially supporting the project was happy to see some business result from the collaboration.

SDG 17 through cross-sector partnerships

While the main novel research findings from this study do not deliver an immediately positive tale of ‘how to do partnerships in a few easy steps’, it points importantly to how the whole idea of expecting cross-sector partnerships to work as development agents and to create sustainable development, must take into consideration how to empower those people who the cross-sector partnership is intended to benefit in the long-term.

This implies that instead of assuming that the young single mothers engaged in this cross-sector partnership would inevitably be better off working for the prestigious partnership by having an (infrequent) income, a careful inquiry should be engaged into how the project could potentially empower these young women (and their children) in non-financial ways and in the long-term perspective (fx. education, professional training, health provision, etc).

We argue that when considering the potential of cross-sector partnerships, it is crucial that outcomes are not conflated with impact, that it is acknowledged that resources, be they money or skills, do not necessarily transform the lives of the poor and marginalized.

This research calls for organizations, businesses and governments partaking in SDG 17 through cross-sector partnerships to engage in much more, and deeper consideration for the beneficiaries if they want to provide something more meaningful than the usual ‘North benefitting from inexpensive labor in the South’.

Factbox designed by Maja Michalewska

References:

Vestergaard, A., Murphy, L., Morsing, M., and Langevang, T. (2019). Capitalism’s new development agents: A critical analysis of North-South CSR partnerships. Business & Society

About the authors

Anne Vestergaard is Associate Professor at Center for Corporate Social Responsibility at Copenhagen Business School. Her research revolves around mainstream discourses of morality with a particular interest in how processes of institutional, technological and semiotic mediation contribute to them.

Luisa Murphy is a PhD Fellow in corporate sustainability at Copenhagen Business School. Her research examines multi-stakeholder initiatives, anti-corruption and human rights.

Mette Morsing is Chair of Sustainable Markets and Executive Director of Misum at Stockholm School of Economics and Professor of CSR and Organization Theory at CBS. Her research focuses on how identity is governed in the interplay of internal and external stakeholders, in particular in the context of CSR and sustainability.

Thilde Langevang is Associate Professor at Centre for Business and Development Studies at Copenhagen Business School. Her research interests are in the area of entrepreneurship and development studies with a particular focus on youth, women, and creative industries in Africa.

Photo by Amy Humphries on Unsplash

Better than nothing but still “exSASBerating”!

By Dieter Zinnbauer.

Why a powerful push by the world’s top asset manager towards more sustainability reporting still falls pretty short.

Great news

BlackRock, the world’s largest asset manager promises to leverage its weight and voting power for more consistent and comprehensive corporate reporting on sustainability. And this includes corporate lobbying.

Good news

The Sustainability Accounting Standards Board (SASB) standard that BlackRock backs also includes a reporting dimension on what it calls “Management of the Legal & Regulatory Environment”. According to the SASB this category “addresses a company’s approach to engaging with regulators in cases where conflicting corporate and public interests may have the potential for long-term adverse direct or indirect environmental and social impacts.” 

Now, this sounds quite promising.

It really seems to recognize the urgent imperative for business to align corporate political activity with its social and environmental responsibility and to assure all stakeholders in your reporting that this is the case.

Or to take a plain language and not entirely hypothetical example: as a responsible corporate citizen show everyone that you are not a hypocrite and that you do not lobby against improved fuel efficiency standards while at the same time celebrating your green credentials by supporting smart transport initiatives.

As the SASB further elaborates on this reporting dimension, the category addresses among other “a company’s level of reliance upon regulatory policy…  actions to influence industry policy (such as through lobbying) … [and ] it may relate to the alignment of management and investor views of regulatory engagement and compliance at large”[1]. And the related accounting metric mandates a “discussion of corporate positions related to government regulations and/or policy proposals that address environmental and social factors affecting the industry.”

One could be a stickler and criticize that this is not comprehensive and specific enough, as it, for example, does not require to disclose how much money is spent on specific lobbying issues or what other of the growing repertoire of corporate influencing and communication strategies beyond lobbying are deployed to shape the public policy debate on these issues.

But let’s be pragmatic, the fact that the world’s largest asset manager has chosen to explicitly demand reporting on lobbying from the many companies it invests in and also threatens openly to vote against boards of companies that do not play along is a great step forward.

But then the really not so good news

The SASB only requires companies to report on corporate political activity in sectors where this category is judged to be material. And quite startlingly corporate political activity is only viewed as material for some segments of the oil & gas sector, biofuels, and chemicals. That’s it.

How can this be? No mention of air freight & logistics, airlines, marine transportation or the car industry  – sectors in which many (but not all) companies are out in force to lobby against green taxes and/or higher resource efficiency standards, thus delaying much-needed investments in future-proof technologies and creating a regulatory backlog that all but exacerbates the material risks of stranded assets and failing business models further down the road.

How about construction materials or the steel industry whose future trajectories in energy efficiency or recycling and the rules and regulations that will apply are material to global sustainability and corporate success alike?

How about the meat, poultry and dairy sector? I have not researched their lobbying activities but would imagine that they are very much engaged around evolving rules for methane emissions as one of the most potent climate gasses in a world of growing appetite for meat. No need for investors to know how corporate strategy, public policy engagement and sustainability dynamics line up?

Or how about coal and electricity & power generation? Are these sectors viewed as a lost cause where corporate political action will simply be assumed to be misaligned with societal sustainability goals and thus not worthwhile accounting for? Does this do justice to and incentivize responsible corporate political engagement where it is perhaps more material and needed more than in many other areas?

These are just some examples with regard to climate change. Corporate political engagement is plausibly a material issues for many other sectors as well, for example when thinking about social aspects of sustainability, e.g. how platform economies craft business models and lobby on the rules that apply to gig work, how big tech seeks to shape privacy rules that are closely linked to their advertising-based business models…

Corporate political activity is a highly cross-cutting material issue. Expecting corporate reporting on it is urgent and most welcome. Yet, limiting this push to only five of overall more than seventy business sectors is more than unfortunate. Trailblazing trustees of our savings and investments and the reporting standards that they promote must and can do better.

About the author

Dr. Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS researches focus 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

References:

[1] Annotations as extracted from SASB materiality map https://materiality.sasb.org/

Photo by Guido Jansen on Unsplash

We can’t better the world at once. So let’s do it together!

By Julia Köhler

Sustainability – a concept that accompanies us every day: whether it is sustainable consumption, sustainable nutrition, sustainable traveling or sustainable management. What does sustainability actually mean and does it only serve as a means to an end?

Meet oikos Copenhagen

A big topic that concerns a student organization. Founded in 1987 in St. Gallen, oikos has ever since grown into an international student initiative with 50 local “chapters”, as we call it, on almost every continent in the world. With the underlying idea of ​​integrating sustainability as one of the core topics in economics and business, this initiative has now been running for more than 30 years.

With its 48 active members, oikos Copenhagen is one of the largest chapters and contributes to the sustainability discussion at the Copenhagen Business School since 2012. By bringing students of different backgrounds together, the six projects are looking at the topic from various perspectives and are aiming at more sustainability in business and management education.

Image by oikos Copenhagen
Image by oikos Copenhagen

The triple bottom line is at the center of our values. Future leaders should be empowered to take change into their own hands. Integrity is a central component of organizational DNA: members stand behind the core values ​​and actively develop them further. For this, our members are in a constant dialogue with each other and deal critically with the topic.

We see ourselves as representatives of the sustainability movement and each fulfills the role of a moderator in discussions with social environments.

That’s the way it should be. On the way there, oikos regularly encounters hurdles. Not only in management issues but especially on a personal, cultural and financial level. Our core values ​​reflect a way of thinking that is becoming more and more recognized but is still not adequately represented and acknowledged by our educational system. Is it even possible to combine sustainability and business at all or is a system change required first?

What if you can make a change?  

I started my time at oikos in 2018 as the Project Manager of oikos Impact, one of the six projects of the Copenhagen chapter. The project objective is to improve sustainability on the CBS campus.

Our team was negatively surprised that a university in one of the sustainable Nordic countries does not recycle.

In May 2019, we launched a pilot project with two recycling stations on campus. Recently, the campus management decided to launch recycling stations inspired by oikos Copenhagen at every canteen.

A very central project of our organization – Curricular Transformation – deals with the integration of sustainability topics in the curricula of all degree programs. oikos Copenhagen does not intend to create separate study programs exclusively on the subject of sustainability.

We see sustainability as a relevant topic just like accounting, taxation, innovation, strategy and entrepreneurship.

Our team is in touch with the Dean of Education and would appreciate supporting departments, course coordinators and professors in the shift to a greener curriculum.

oikos Career reflects the typical cycle of a student preparing for a career in the sustainability scene. Initially, students are accompanied by the content design of the curriculum vitae. Afterwards, networking event participants have the opportunity to meet potentially attractive employers. With the Career Fair, we optimally made it easier for some students to enter sustainable businesses.

Social Pioneers offers companies, mostly start-ups but also established smaller companies, a platform to teach students that it is possible to profitably combine entrepreneurship and sustainability. Students gain insights into the day-to-day work of companies, find out which obstacles founders have encountered on their way and can clean up the assumption that one cannot be profitable in running a responsible business.

Image by oikos Copenhagen

As one of our most established projects, the annual GreenWeek marks a week in which the CBS campus and teaching activities are focused exclusively on sustainability. Here we invite guest speakers, representatives of sustainable companies, experts, researchers, and generally interested people to discuss the topic together and to seek mutual exchange. In addition to lectures, keynotes, and panel discussions, we offer workshops on the topic. This year’s GreenWeek will take place from the 10th to the 12th of March 2020.

The oikos Case Competition is a project that connects students with different backgrounds to an interdisciplinary collaboration. Students from across the Copenhagen area: from the Danish Technical University (DTU), Copenhagen University (KU) and the Copenhagen Business School (CBS) work together with companies and/or public institutions on sustainability issues. Our past cooperation partners include Accenture, the city of Copenhagen and IBM.

Let’s make a change, altogether…but how?

Since June 2019, I am sitting on the board of oikos Copenhagen with five other members and as the president and head of project management, I am leading the organization.

When requesting more support from decision-makers I often get asked about the competitive advantage the university could expect from oikos’ work. oikos Copenhagen stands for values ​​that are hard to ‘sell’ as a business case.

The general opinion about sustainability is an important cultural barrier for oikos Copenhagen, as it is still considered an annoying side issue for ‘hippie’ students. The challenge is to build and maintain an exchange of ideas and communication about the relevance of the topic. I believe that business schools are an extreme example of this.

Meanwhile, several other organizations are being founded around the topic of sustainability and it is becoming increasingly difficult to keep track of the various initiatives. Questions like: ‘Who works on which topic?’, ‘How can we collaborate on solving the problem most efficiently?’ and ‘How do we communicate that we are working on something?’ pop up.

Another problem is the lacking overlap with other disciplines outside economics. Currently, our members are mainly CBS students. Although we offer room for students from other universities to be oikos members and to participate in the oikos Case Competition, this is not enough to recruit active members from other universities.

In my opinion, this interdisciplinarity is extremely relevant in all sustainability issues. In addition, it would help us to break away from the typical business thinking so present at CBS and to look at the challenge from several perspectives.

To achieve an effective transition towards a greener Copenhagen Business School, including a sustainable campus and direct as well as indirect education in sustainability for every CBS student, we want to be the bridge to bring all actors together to work on a solution.

For more information about oikos Copenhagen, visit our website at www.oikos-copenhagen.org

Facebook https://www.facebook.com/oikosCopenhagen/

Instagram https://www.instagram.com/oikoscopenhagen/

LinkedIn https://www.linkedin.com/company/oikos-copenhagen.

You are also very welcome to contact me personally via e-mail: president@copenhagen.oikos-international.org.

About the author

Julia Köhler is the President of oikos Copenhagen and a student in the management of innovation and business development at Copenhagen Business School.

Teaching (and doing) anthropology in a business school

By Matthew Archer

For a while now, the discipline of anthropology has studied relatively marginalized or dispossessed people and communities, often in developing countries or poor parts of developed countries. What this means is that anthropologists are often critical of powerful organizations like governments, banks, and multinational corporations.

For the past year, I have tried to integrate these critical perspectives into my teaching at Copenhagen Business School. Although CBS is not a typical business school in the sense that it is not primarily an MBA-granting institution, many of my students are pursuing careers in finance and consulting that are typical of business school graduates.

Challenging business students

For young professionals who have been trained in both their classes and their internships to simplify and synthesize difficult concepts, it can come as a bit of a shock to be asked to read an essay about climate change adaptation in Guyana or vanilla bean farming in Madagascar, and unpack the theories and methods to think about how they relate to questions of corporate sustainability and sustainable finance.

But while this may be challenging, I’ve found that students often find it exceedingly valuable.

One of the hardest things to deal with as a young professional is often the tension between personal, ethical values and the pressures a company puts on you to increase profits.

The critical theories that anthropologists use to make sense of the world help students make sense of their work, especially those who are planning to go into sustainability-related careers. Understanding the way humans have navigated the relationship between nature and culture across time and space turns out to be a key piece to the puzzle of how the financial system or tech companies mediate that relationship in more familiar contexts.

Critical thinking

Just as important, it helps them learn to critically reflect on their choices as consumers, investors, citizens, and the numerous other social roles they inhabit, roles that tend to evolve fairly dramatically over time (for example, after they graduate, after they get their first promotion, after they’ve started families, etc.). This kind of reflection is key to building a more just and sustainable society.

Thinking about the role of emotions in determining who has access to clean water in Bangladesh, for example, might seem far removed from concerns here in Denmark about pension funds and money laundering, but as we’ve learned in my classes over the past few semesters, emotions like hope and anxiety play a big role in the way financial resources are distributed and accessed.

Anthropological theories and methods might seem far removed from the quantitative approach to management that defines contemporary sustainability. But to understand the role of businesses in society, the study of societies has to be taken at least as seriously as the study of business, and anthropology is a fruitful way of introducing this perspective in business schools.

About the author

Matthew Archer is Assistant Professor at Copenhagen Business School. He is an ethnographer and political ecologist interested in corporate sustainability and sustainable finance. Visit Matthew’s personal webpage.

By the same author: Sustainability’s Infrastructure

Photo by José Martín Ramírez C on Unsplash

Football and the Meaning(lessness) of Management Concepts

By Esben Rahbek Gjerdrum Pedersen

Romanticized management concepts often seem to fall short in capturing actual management practices in today’s corporate world. Experiences from other types of organisations may help deepen the understanding of the concepts and the phenomena they are trying to portray.

Romanticized concepts

The management literature is full of concepts, which indicate passion, engagement and community. Internally, terms like corporate culture, values, karma, spirituality, passion and even love and religion express a deep symbiosis between the individual and the organization. Externally, corporate communication is soaked in references to sustainability, citizenship, social responsibility, and community engagement.

If we are to believe the “About Us” sections, corporations today are more about benevolence than business.

There is a problem though.

What happens if you compare the rosy picture of business with harsh business realities? One illustrative example is the talk about management commitment. How does it go along with the fact that the average tenure of CEOs is steadily decreasing? And how do you combine talks about commitment with the recurrent discussions about bonus schemes? It seems like an awful waste of money to approve exorbitant compensation packages to CEOs if they were driven solely by an inner sense of duty and dedication to the job.

What all these management concepts have in common is that they try to give business personality, heart, spirit, and soul.

However, if we are interested in concepts like commitment, passion, and loyalty, today’s corporate world is perhaps not always the right place to look. Probably more than ever before, these concepts seem more meaningful in private life and collectives rooted in the local community.

Like community football…

As part of a survey among Danish football clubs (supported by a UEFA research grant), I asked club representatives a simple, open question: – What is the main reason to be engaged in the club? A few quotations are found at the bottom of the text and well illustrate some of the differences between the corporate world and community sport.  A few examples:

  • Stickiness. Commitment means being in it for the long haul. It is not unusual that volunteers are members of football clubs for 20, 30, and 40 years. When managers drift from one company to another, it serves as proof that they are committed to their career. Not the organisation.
  • Obligation. The quotations from the survey indicate that commitment to community sport is often linked to an obligation to support the local community and paying back for own experiences as active players.
  • Community. In community sport, commitment has roots. You are committed to something: – the sport, the people, the club, and the community. It is probably no coincidence that local club names usually refer to a city or a region, whereas the corporate names are mostly faceless abstractions referring neither to activity nor geography.

The real motives

The point is not that club volunteers are all saints dedicated to the greater good of society. Most volunteers probably start off with instrumental motives when they become engaged in club life; either because they play themselves and/or have children in the club. However, for some volunteers club life gradually becomes part of one’s identity and network.

The question remains, however, why the management literature seems so eager to wrap business in romantic rhetoric about commitment, loyalty, authenticity etc. when these concepts often seem to reflect what has been lost rather than what can be found in today’s corporate world. Of course, part of the management vocabulary can be passed off as organizational bullshit, but even the disregard of truth may reveal some truths about our society.

Maybe the abundance of romantic management concepts reflects a dream about relationships in a market characterized by transactions.

A seek for passion in a highly professionalized work life. Longing for a community when people have all become individuals. Whatever the reason, a researcher should restrict the use of concepts to organisations where they have not yet become emptied of meaning.

Like community football…

Table 1: Respondents about the main reasons for being active members of the football club (Translation from Danish)
– ”Make a difference in my local community and support my interest in grassroot football. Jeg am a club person and believe voluntary work should be a ”citizen duty” (…)”
– ”After a whole life as active in the club, also as trainer and board member, it was natural to continue (…) and give something back. I think it is fun to work with kids and people, who also give me a lot I can use in the work life”.  
–  ”I like the social life in the club and want to help others in getting the same experience”.
– ”I have played football from when I was a kid and had wonderful experiences that I like to hand over to the youth”
– ”Because I love football and like to give something back for all the years when I was more on the field than outside. Moreover, it is important that somebody do something in the associations in our community”. 
– ”Because my kids play in the club and because I think you should make an effort in the associations in the city. And not least because I like to be part of making a difference in the local associations.
– ”Have been an active football player all my youth, where I met engaged trainers and leaders. So it is probably to give something back”
– ”Help our city in having a place where children, young and elderly can play football under good conditions”
– ”Funny, I have asked myself the same question:-) I have been an active player from when I was 8-9 years old, to league player, to old boys – so it is simply paid back time for all the experiences (…) to all the people who made it possible.” 
– ”Always been involved in football. Somebody helped me when I was playing myself. Think that you have to give something back.”
– ”Payback to the club which has given me a lot of good experiences. My contribution to Danish associations – the voluntary brigade!”
– ”Lifestyle after more than 30 years of voluntary work. Help young athletes to get a good future. This has been my goal throughout the years and has given me a lot of good experiences”
– ”Voluntary work helps in creating a well-functioning local community. For children, it is important to promote active living. And it is also developing you personally. Unity and identity”
– ”For many years, I had children in the club and therefore I am involved in the work. I have enjoyed playing football and would like to give others the same experience. ”
”As a child, I experienced a lot of good things. Now when I have the opportunities, I feel obliged to give something back.” ”Have always been a volunteer in community sport and for more than 50 years. Nice to see things grow and do something good for a lot of people. Not least the social element of the club.  And you get to know a lot of people and build some friendships for life”. 
– ”Have been involved in football for 45 years. Good friends and good network. Be part of making a difference on a voluntary basis”.
– ”For 20 years, I have played football in the same club. To have a good club I also have to take responsibility”
– ”The community and the joy of working with other people who love football”.”Football has always meant a lot to me and I think you have an obligation to contribute to the continuation of football. Every community needs a football club. Everyone should have an opportunity to do team sport which can also be a great foundation for your future life.”

Learn more about our research on football and CSR here: https://www.tandfonline.com/doi/full/10.1080/16184742.2018.1546754

About the Author

Esben Rahbek Gjerdrum Pedersen is Professor at the Department of Intercultural Communication and Management at Copenhagen Business School. He researches CSR, Corporate Sustainability, Non-financial Performance Measurement, Supply Chain Management and Process Management.

By the same author: The Business (and Politics) of Business Cases

Photo by Click and Boo on Unsplash

How SDGs help us see buildings through a different lens

By Ingrid Reumert

Despite a lot of focus on climate change recently, the impact of one ‘hidden climate’ on people’s lives often goes unnoticed – the indoor climate. And the indoor climates in the buildings that we normally feel most comfortable in – our homes – are much worse than we are aware of.

Safe and sound at home?

Our homes are traditionally seen as places where we recharge our batteries. They are where we seek shelter and refuge from the hustle and bustle that we often experience in our everyday lives when away from them. As we wind down at the end of a busy day in the comfort of our homes, we take it for granted that we can relax, knowing that our health is not at risk when inside.

However, there’s increasing evidence that although we might arrive home safe and sound, the time we spend at home might not be safe and sound after all.

As ‘safe as houses’?

The saying ‘it’s safe as houses’, which is used to describe things as being completely safe, cannot be used about many homes in Europe. We know from our Healthy Homes Barometers, an annual research-based report designed to take stock of Europe’s buildings, that one out of six Europeans lives in unhealthy homes. For children in Europe, it’s worse, with one out of three being exposed to health risks in their homes. And the health risks are not just isolated to our homes. The same also goes for the environments inside buildings where we work and learn.

Furthermore, we know that people spend 90 percent of their time indoors, where the air can be up to five times more polluted than outside. The potential risks to people’s health and wider society are not insignificant, with poor indoor climates directly leading to conditions such as asthma or allergies, due to dampness and mould.

Ongoing dialogue and modified solutions

For years we have been using such well-documented research to engage in dialogues with legislators, housing professionals, building owners and industry representatives to push for steps to make buildings healthier. In recent years, we have also modified our solutions, which bring daylight and fresh air through roofs, to be more automated and also compatible with digital technologies and the internet of things, and thereby make creating healthy indoor climates hassle-free.

Using SDGs to push harder for healthier indoor climates

At VELUX Group, it is our strong belief that if indoor climates are not good for our health, then we’ll see problems for individuals and for society. Now, with the help of the United Nations Sustainable Development Goals, we have an extra toolbox to support our efforts to address this.

We believe that by embracing this common global language of SDGs, we can leverage our efforts to make buildings healthier.

More specifically, we use three SDG goals to help people see the world through a different lens and to reveal the possible negative effects on their health from the ‘hidden climate’ – the indoor climate. We do this by showing how good indoor climates and healthy buildings can safeguard good health and well-being (SDG 3) and also how this can contribute to more sustainable cities and communities (SDG 11), with the help of partnerships for the goals (SDG 17).

Revealing what’s right under our noses for a more sustainable future

With much of the current climate change and sustainability focus on natural renewable energy sources or companies’ steps to reduce their carbon footprints, the climates inside our homes and other buildings, and their potential negative effects on our health and well-being continue to be ignored. That’s why the VELUX Group will persist with research and activities to boost indoor climate awareness and continually improve our products, to address what’s right under our noses but often overlooked – the indoor or hidden climate. By improving indoor climates to help make buildings healthier, we are confident that we will contribute to a more sustainable future.

About the Author

Ingrid Reumert – VP, Global Stakeholder Communications & Sustainability at VELUX Group

Photo by Timothy Buck on Unsplash

Further reading: Researchers in BLOXHUB seeking to improve indoor climate

Regulating 300,000 Years – Nuclear Waste, Sustainability and the Need to Talk to the Distant Future

By Andreas Rasche

Whenever we think about regulating sustainability problems, we usually think about the here and now or at least about the not too distant future. Even with regard to climate change, which clearly is a problem for future generations, regulators have a time horizon of not more than 30 or 40 years. The Paris Accord is a case in point – it sets targets for 2050. Also, the European Union’s climate strategy sets goals until 2050. But, what happens if regulators need to think about a very distant future?

Consider the example of nuclear waste. The challenge is not only to find a secure location to store the byproducts of burning uranium. The challenge is also, and maybe most of all, to prevent future generations to disturb the deep underground storage facilities, be it intentional or not. This requires “talking to” distant future generations. Chlorine-36 (one of the byproducts) has a half-life of approximately 300,000 years. Compare this to the roughly 40,000 years that the behavioral homo sapiens is supposed to be around – i.e. human beings which engaged in the development of language and early forms of religion – and you get an idea about the scope and scale of the underlying challenge.

Deep underground storage is, at least as of now, the only option to deal with nuclear waste. In the 1980s, some governments considered the idea of simply firing nuclear waste into space. This idea was rejected due to security concerns. Right now, there are few final repository sites for nuclear waste, such as the US-based Waste Isolation Plant in New Mexico.

>>How do we secure these sites from future human intervention? What is needed is a way to communicate with future generations. <<

By definition, the future is unknown and we do not know whether future generations may try to dig at the sites where nuclear waste is disposed. There are many reasons why such underground storage sites could be interesting for future generations, ranging from pure curiosity to a danger that they misread/misinterpret warning signs or other artifacts. What will be a symbol of danger in, say, 150,000 years from now? How does memory survive?

Governments around the world have developed different approaches to talk to the future. One possible US solution includes giant granite markers that are supposed to prevent human intervention (see picture). The US Department of Energy writes:

“Regulations require that waste disposal sites use markers and other controls to indicate dangers and locations of waste.”

One problem with these giant markers is exactly that they are giant and that they are supposed to signal fear and danger. What, however, if signals of fear and danger incite curiosity? The US facility will not be closed until 2050, so there is still time to decide otherwise.

Source: US Department of Energy (Concept: Mike Brill, Drawing: Safdar Abidi, Image courtesy of BOSTI)

If a written message were to be attached to any warning markers, how would such a message look like? One current proposal is to use the message (see below) which is then to be translated into every written UN language. Although there is no consensus on the content and nature of the message among members of the Nuclear Energy Agency (NEA), it is clear that such a message needs to be developed.

“This place is a message… and part of a system of messages …pay attention to it! 
Sending this message was important to us. We considered ourselves to be a powerful culture. 
This place is not a place of honor … no highly esteemed deed is commemorated here… nothing valued is here. 
What is here was dangerous and repulsive to us. This message is a warning about danger. 
The danger is in a particular location… it increases towards a center… the center of danger is here… of a particular size and shape, and below us. 
The danger is still present, in your time, as it was in ours. 
The danger is to the body, and it can kill. 
The form of the danger is an emanation of energy. 
The danger is unleashed only if you substantially disturb this place physically. This place is best shunned and left uninhabited.”

Trauth, K.M., Hora, S.C., & Guzowski, R.V. Expert judgment on markers to deter inadvertent human intrusion into the Waste Isolation Pilot Plant. United States. doi:10.2172/10117359, pp. F49-F50

Alternative?

An alternative solution would be to adopt a more evolutionary approach. Such an approach would not put the message into granite (or other materials). Rather, it would create “an enduring culture around the nuclear waste depositories.” (Financial Times, 14 July 2016) Keeping the memory alive, then, would be an accomplishment that is passed from generation to generation (e.g., via stories, exhibitions, songs, art). As language and symbols change over time, this evolutionary approach would adapt the message to the contextual particularities that evolve in the future. Such a community-based approach would then rely on locals, who live around a waste storage site, to warn others.

There are pros and cons for both approaches and it is uncertain what regulators will do. However, what this example shows is that thinking about regulating actions in the distant future requires drawing on insights from multiple disciplines, ranging from linguistics to nuclear scientists and anthropologists.

Does all of this have something to do with sustainability? Just think about a world in which we cannot securely seal nuclear waste…

About the Author

Andreas Rasche is Professor of Business in Society at CBS and Associate Dean for the CBS Full-Time MBA Program. He is also Visiting Professor at Stockholm School of Economics. More at: www.arasche.com.

By the same author:

Why Corporate Sustainability is Bullshit (And Why This is a Good Thing)

The Ethical Blindness of Corporate Sustainability

Photo by Ra Dragon on Unsplash

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

How sustainable is ecotourism?

Written by Erin Leitheiser, this article is based on her previously written piece for the Centre for Business and Development Studies.

Tourism is a key driver of development, particularly in areas with rich environmental or cultural resources.  The United Nations declared 2017 as the year of Sustainable Tourism for Development, but how sustainable is ecotourism? 

Setting off on a once-in-a-lifetime adventure on safari in East Africa for our summer holidays, my husband and I wanted to be as sustainable as possible.  We carbon offset our flights, worked directly with locally owned and operated “eco-tour” providers, and engaged in both social and environmental eco-friendly activities. Yet, several moments throughout our trip made me question how eco-friendly and sustainable such travel really is or can be. 

To start, what is “ecotourism”?  The terms ecotourism, responsible travel, sustainable tourism, ethical tourism, green travel and more have arisen as of late to describe smaller-scale, lower-impact tourism that is qualitatively different from mass commercial tour operations.  The term “ecotourism” has many definitions, most of which embody the key notions of supporting and experiencing local environments, wildlife and communities and while minimizing negative impacts.  Activities may be environmental, like through small-scale tours of natural environments, or social or community-based – like our visit to a local women’s education and empowerment sewing collective in Rwanda.  Tourism represents a major and increasing share of GDP in many developing countries.  Indeed, such natural and cultural resources are increasingly being commodified and therefore used as justification for sustainability.  According to one popular eco-travel blog,

“Elephants are worth 76 times more alive than dead. When you consider the revenue from wildlife photography tours, luxury safari camps, and other ecotourism offerings, a single Elephant is worth $1.3 million over the course of its lifetime!” 

But – how sustainable are such ventures?  While I have numerous examples from my two weeks of travels, anecdotes from each country I visited caused me to question how ecofriendly or sustainable these activities really are:

  • When nature disagrees with what is “eco-friendly”: chimpanzee tracking in Uganda (tourism=8% of GDP).  After purchasing the proper permits (which help fund conservation activities), tourists are paired with a well-trained guide to track habituated chimp groups in the forest and are allowed to spend “at most an hour” with them once they’re found.  Kibale Forest National Park states that “By going for chimpanzee tracking, you directly contribute to the conservation efforts.”  My group got lucky and found one group of chimps within about 15 minutes, including a few on the ground which our guide had us follow through the forest.  While I was happy to hang back and enjoy them at a distance, my guide – a fun but bossy, older sister type whom usually got her way – insisted that I get closer, at one point directing me ever closer a chimp lying on the ground.  So, closer I went, even while in my head I was thinking “I’m too close!”  In an instant, the chimp jumped up, clapped and yelled angrily, and picked up a large branch which he threw at me javelin-style!  I jumped back and he moved away.  I felt so conflicted, as this seemed to me a striking example of how nature (i.e. the chimp) didn’t agree with how “eco-friendly” the activity was. When I pushed back on other insistencies by our guide to get closer to the chimps, she rationalized that “If you don’t get close and get some good pictures, when you get home, you might not think it was worth it.” 

Photo by Erin Leitheiser

Seemingly, our chimp tracking experience had a strong undercurrent of value-for-money, realized via pictures.

  • Wild animals may not be so wild: safari in Tanzania (tourism=12% of GDP).  Departing a visitor’s center in Serengeti National Park in our safari vehicle, we – along with around two dozen other vehicles with tourists on safari – encountered a pride of lions out on a morning hunt.  Large 4×4 vehicles lined the roadside, yet the lions seemed completely unperturbed by our presence, assessing the vehicles as non-threatening and navigating deftly between them.  A couple of lions even used the vehicles (including mine) to hide between while they stalked their prey!   This was striking to me, calling into question how “wild” these wild animals really are if they’re so used to human activity and presence that they have grown to utilize such intrusions for their own ends.  Indeed, the vast numbers of vehicles in the parks and conservations areas seemed overwhelming at times, demonstrating clearly that the notions I had of “wild” animals and preserves as devoid of humans were romanticized at best or nearly inaccurate at worst.

Photo by Erin Leitheiser

  • Prioritizing tourists over locals: fast highways in Rwanda (tourism=15% of GDP).  The country of Rwanda was striking to me for its cleanliness, orderliness, and structure.  For example, the streets were clean (much cleaner than Copenhagen), motorbike taxis are safe and highly-regulated, the economy is booming, and the country has gradually begun to overcome its legacy of genocide to build a business-friendly, women-friendly, corruption-free future.  One of the key developments has been infrastructure, including building fast highways linking major tourist destinations.  While the speed at which we could travel was an undeniable benefit for us, I was constantly worried about the vast numbers of people (and in particular, children) walking, playing, and lounging by the roadside.  The multitude of fast-moving vehicles posed clear safety issues to locals.  Seemingly, the cultural and historical importance of roads in connecting communities and commerce had shaped both the orientation of villages (which stretched along the road, rather than deeper back or behind them) as well as how people interacted with them (as a place for playing, socializing, trading and the like).  While such infrastructure improvements undoubtedly help communities transport and receive goods, foster tourism and the like, the stark replacement seemingly upended community and local norms and practices. 

Sustainable tourism represents an important and apt opportunity to help contribute to sustainable and responsible development, particularly as opposed to antithetical activities popular throughout Africa such as trophy hunting (particularly “canned hunting”) and (irresponsible) mass tourism.  Yet, throughout my travels I was struck by how many compromises (in my view) were being made for sustainability, be it the through taming of wildlife, prioritization of economic development at the expense of local customs, or many other examples.  Others have expressed concerns too.  Harvard hosts an International Sustainable Tourism Initiative, the Global Sustainable Tourism Council has set criteria and performance indicators around sustainable tourism, and an organization called the Travel Foundation has arisen to help bridge tourism with “greater benefits for people and the environment”.

Eco-tourism is undoubtedly a more responsible and sustainable option that many other tourism choices.  But, let us not overly romanticize positive impacts of such travel, nor grow complacent over the trade-offs, compromises, and potentially negative impacts that it may have.

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

Green – a special shade of innovation.

By Valentina De Marchi.

How can firms change for sustainability?

As political and societal pressures increase, and more and growing evidence supports a business case for sustainability, an increasing share of firms is considering how to change their activities to reduce environmental impacts. However, going green does not entail the innovation process firms are used to.

Changing for green

The way firms might reduce their environmental footprint is by changing their products and/or the activities needed to realize them, that is, to innovate. Such innovation might regard the type of inputs used.

For example, in the context of apparel, substituting traditional cotton or synthetic fibers with new ones like bamboo and eucalyptus, that require less water and pesticides to be produced. Or the features of the product – designed for easy disassembly and recycleability. Also, they might regard the process – i.e. investing in machines and process layout that might allow reusing waste from their own activities within the production cycle, or more efficient use of resources. Or, more often, both of them, as a holistic approach to the reduction of impacts on environment might require a profound transformation of several aspect of the firm’s production activities at once [1].

A peculiar shade of innovation

Innovation is not a novel aspect for firms – the intensification of international competition has made it the key mantra for companies in most industries in the recent years. But innovating for environmental sustainability entails peculiar challenges [2, 5].
Environmental innovations are, on average, more complex than other (non-green) innovations.

  • They are characterized by a higher degree of novelty – still representing a technological frontier for which many firms are still inexperienced. They often require resources and skills distant from the traditional knowledge base of the industry.
  • They are associated by a higher degree of uncertainty and risks – as there are not yet widely accepted standards, either in terms of specific technological solutions or measures for evaluating the environmental performance of products and processes.
  • They require a systemic approach, as the possibility of a firm to realize a green product is strictly depending on the green performance of the suppliers of raw materials of components or on the clients that are going to use it.
  • Finally, they entail a credence character, as the environmental feature of a product or process, i.e. being realized via a low polluting process, is often a hidden attribute that cannot be disentangled even after the purchase.

Planning for green innovation

Considering for such special character of environmental or green innovations, effectively developing them requires a peculiar process, too. In particular, empirical studies converge in suggesting that a key aspect regards the importance to rely on knowledge and competences coming from external partners.

In order to introduce new products or processes that reduce emissions and wasteful use of resources, firms need to cooperate with external partners more than with respect to other innovations. This is especially the case of cooperation with suppliers, to ensure the supply of inputs or components with the needed eco-friendly features – that might not be readily available on the market – to close the production cycles and to enhance ‘recycleability’. And of cooperation with ‘knowledge providers’, being private design studios or environmental consultants (including non-profit actors such as NGOs), or public institutions such as research centers or universities [2, 3].

Interestingly, the importance of cooperation increases for the most intense green innovators, those who introduce changes that reduce several environmental impacts, such as: reduction of air, water, soil pollution, increased energy or material efficiency, improved after-use recycling of products, and others. Indeed, they are more likely to cooperate with a higher number of external partners, being also more often foreign partners [4].

However, such an open approach to innovation does not replace the internal innovation effort of the firm: investing in an internal research and development (R&D) office and in the skills and competences of the firms’ remains a key driver to ensure the effective development and introduction of a green innovations [5].

A call for a new approach toward innovation and sustainability

Willingness to reduce its own impact on the environment is not enough. To become effectively green, firms need to carefully plan their innovation activities toward this goal. The approach to innovation developed during the firm’s experience might not be enough to take up this challenge: opening up to external partners needs to be an essential complement to an internal investment to environmentally upgrade.

How to identify the correct partners to enter this new field, so as to govern the collaboration both with private and with public or not-for-profit organizations and mix it with internal, private effort might be challenging. But it is an essential step toward a lower impact production system. United we stand, divided we fall far from reaching sustainability goals.

References

[1] Network for Business sustainability (2012), “Literature Review: innovating for sustainability”, December
[2] De Marchi V. (2012), “Environmental innovation and R&D cooperation: Empirical evidence from Spanish manufacturing firms“, Research Policy, 41(3), 614–623
[3] Roscoe, S., Cousins, P. D., & Lamming, R. C. (2016). “Developing eco-innovations: A three-stage typology of supply networks”. Journal of Cleaner Production, 112, 1948-1959.
[4] De Marchi V., Grandinetti R. (2013) “Knowledge strategies for environmental innovations: the case of Italian manufacturing firms“, Journal of Knowledge Management, 17(4): 569-582
[5] Cainelli G., De Marchi V., Grandinetti R. (2015) “Does the development of environmental innovation require different resources? Evidence from Spanish manufacturing firms”, Journal of Cleaner Production, 94: 211‑220.

The Author

Valentina De Marchi is Assistant Professor at the Department of Economics and Management ‘Marco Fanno’ at the University of Padova, Italy, and Governing Responsible Business Research Environment (GRB) research fellow at Copenhagen Business School. She is interested in the study of the peculiarity of environmental innovations and on the greening of firms embedded in Global Value Chains.
Website: www.valentinademarchi.it
Twitter: @dema_val

Photo by Edgar Castrejon 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 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.

Acting Collectively and Bottom-up for Sustainability: Does it work? How do we know? Why does it matter?

by Maria Josefina Figueroa.

Collective bottom-up actions for sustainability are on the rise in many corners of the global community. Actions are inspired by a realization that local solutions present opportunities to also pursue and reach global commitments, especially those agreed by all nations with the Paris climate agreement and the Agenda 2030, and its 17 Sustainable Development Goals (short SDGs).

What counts as collective bottom-up action?

A wide array of actions and forms of engagement by civil society, public and private actors can be counted as forms of collective bottom-up action. Examples range from actions of green activist and volunteers in organized community-led activities, over private entrepreneurs in small and medium enterprises and local businesses, to local authorities seeking to engage citizen participation in the implementation of sustainability solutions. With the sense of urgency attributed to both achieving climate goals and the SDGs, a logical expectation can be that increasing bottom-up engagement and action will easily translate into contributions for sustainability. Moving away from a mere presumption to gaining knowledge in support of this case requires posing questions such as these: “Does bottom-up collective acting work for sustainability?”, “How can we know?”, and “Why does it matter that we know?”

Does it work?

From a systems perspective, a simplified affirmative answer can be offered: bottom-up collective actions can play a big or small part toward systemic change. They can do this by setting in motion key system levers or eventually by helping catalyse a movement that can potentially contribute toward systemic change. However, even if this is the case, how can we know that the change set in motion will be advancing important sustainability goals?

How do we know?

The answer can be approached within a variety of disciplinary fields. These include (but are not limited to) social science, engineering, psychology, economics, political science, technological innovation studies and economy-energy studies. Some approaches target consumption and production, behaviour, lifestyles, and service provision; others target systemic infrastructure impacts and technology choices. Each approach favours a partial disciplinary assessment. Each field converges towards certain expert knowledge which tends to make its use difficult in an open public conversation or public deliberation. Gaining full understanding of the way collective bottom-up actions can work for sustainability requires further efforts to synthesize partial field approaches and for learning in action.

Recent efforts by the international research community are helping advance multidisciplinary frameworks for assessment and systemic thinking in approaching complex sustainability challenges and solutions. Evolving research efforts in multi-disciplinary teams are helping find ways of bridging evidence from natural and social systems with political and ethical considerations. The results offer a more complete evaluation of bottom-up actions’ impacts, synergies and potential conflicts. Similarly, they offer a scope for creative thinking and innovation enlarging the sustainable solutions space.

Experimentation, assessment, learning and knowledge creation approaches are a necessary component of the transition

Why does it matter to know if bottom-up actions work for sustainability?

Here are three reasons why it matters. First, because gaining knowledge of what constitutes effective collective action is essential for informed decision-making at all levels. There is a short time span for countries to deliver on their commitments to limit global warming below dangerous levels and to achieve SDGs as an integrated vision. More knowledge can make clear the opportunities for innovation and help to understand where trade-offs may be unavoidable.

Second, because sustainability gains may be easier to obtain and assess locally but it is also important to learn how they can be scaled up and offer improvements toward global goals.

Finally, because experimentation, assessment, learning and knowledge creation approaches are a necessary component of this transition, in this process universities have a very important role to play.

The task of universities is to form well-equipped sustainability professionals with strong capabilities to work in multi-disciplinary teams. General eagerness to understand the systemic interconnections between sustainability and climate challenges and solutions is just as important.

So far, this task has been addressed in Denmark by the University of Copenhagen (UCPH), the Danish Technical University (DTU) and Copenhagen Business School (CBS) joint developing electives (e.g. this and this) that can be chosen by students from any discipline and from any of the three universities – provided their study board will accept the course for credit.

Universities have unique resources and facilities to contribute in strengthening the knowledge creation, self-awareness, complex system thinking and multidisciplinary learning process. They can help enrich and transform the scope of bottom-up collective action into plausible solutions that pave a sustainability-transition path.

Maria Josefina Figueroa is assistant professor and academic coordinator of the Copenhagen Sustainability Initiative COSI at Copenhagen Business School. She is also lead author of the IPCC Fifth and coming Sixth Assessment Report.

Pic by Sharon Mollerus, Flickr

Changing Sustainability Norms through Processes of Negotiation – Strategic Arguments and Collaborative Regulation

By Karin Buhmann.

Two newly published CBS-authored books look at how public-private collaboration can bring sustainability norms into existence and offer recommendations for civil society, business, regulators and academics. Based on research on the discursive evolution of the Business & Human Rights regime and taking an interdisciplinary social science approach, both volumes target broad audiences of sustainability-concerned practitioners and academics across the social sciences.

Read on to learn about the background (urgency for sustainability-concerned stakeholder to have knowledge on processes to develop norms of conduct for transnational economic operations) and insights offered by the books in regard to argumentative strategies for advancing new sustainability norms and their acceptance; and procedural organisation to balance power disparities and avoid capture of the negotiation processes. Titles and details for ordering can be found at the end of this post (with discount offers).

The urgency
What does a Tesla in space have in common with conflict minerals or labour abuse in the garment supply chain? The question may look like a new school children’s riddle. In fact, it is a strong reminder of the urgency to consider how public and private organisations can collaborate to develop norms of responsible conduct, especially in areas marked by governance gaps; how such processes can avoid capture by particular interests; and what communicative strategies actors can deploy to advance the acceptance of new norms across functions and interests.

When Elon Musk earlier in February 2018 successfully launched a space rocket that carried a Tesla headed for Mars (although in missing that target it was less successful), the project was heralded as a break-through in private space exploration. Some have described Musk’s idea of colonizing Mars as a ground-breaking response to the Earth’s depletion of resources and space (!) for an ever-growing human population. Others have lamented the quest for extra-terrestrial resources, and called for humanity to solve problems on this planet before moving on to (as it has been put: wreck) other planets and their eco-systems. Some have been raising warning signs in regard to private exploration of resources in space at the backdrop of an absent or at best immature Earth-ly system for governance of earthlings’ interests and desires in extra-terrestrial resources, whether explored and potentially exploited by private or public actors.

Unfortunately, issues of territory and governance gaps are not limited to outer space. They are very much a fact of life on Earth. They are the cause of many of the social and environmental sustainability concerns that keep media, corporate watchdogs and CSR consultants busy. They are also the causes of tragedies like the 2013 collapse of the Rana Plaza building in Dhaka, Bangladesh, which killed more than 1000 workers employed in garment factories in the building, and injured more than 2000.

Governance Gaps – not only a matter of state weakness
Governance gaps caused by limited territorial jurisdiction of companies’ home states and limited political will to adopt international rules setting a level playing field for companies without freezing the bar at low levels are also at least partial reasons for abuse of workers in numerous other factories, mines, quarries, infrastructure or agri-industry projects or in the informal industry that form part of global value chains, typically supplying goods made in low-wage countries to buyers or retailers in higher-wage countries. These problems have been argued to be due to states (in capacity of governance phenomena) being absent, weak or ineffective. Academics have been debating so-called political CSR, arguing for private enterprises to fill gaps left by ineffective nation states. However, the reason for governance gaps is not only state weakness. Jurisdictional limitations on states’ powers to regulate and enforce rules outside their territory is also part of the reason, shared by nations across the world and exacerbated by disagreement and lack of political will at the international governance level to adopt international rules pertaining to business.

The issue of nation state jurisdiction and territory can be compared to tedious situations in everyday life that are annoying but hard to change: If your neighbour plays music that you do not like in his or her home, you are not allowed, to access that home and turn down the volume.  Unless, of course, the neighbour invites you to do so, or a prior agreement has been put in place. Similarly, you probably would not be pleased if your neighbour trespassed your property to turn off your music. Instead, the solution is to communicate and to do so in a manner that will – hopefully – drive change with your neighbour. Governance of transnational business activity largely depends on similar action, at least until governments agree to adopt and accept strong national rules with extraterritorial application, and/or international rules that apply to business. And as long as Earth’s governments do not agree on such rules for earthlings’ activities beyond our planet, this goes for exploration and exploitation of outer space too.

Beyond CSR guidelines, reporting and codes of conduct
Global sustainability concerns go beyond climate change, often related to economic practices with social and environmental impacts. Excessive natural resource exploitation, land grabbing and sub-standard labour conditions in global supply chains are frequent occurrences that also have high sustainability relevance.  Such practices pose risks to the environment and human lives currently as well as in a longer term sustainability perspective of balancing current needs with those of the future. Investments and trade have caused depletion of large stretches of tropical forests, which not only harms the environment and adds to climate change, but also affects the socio-economic conditions of communities. The transnational character of these economic activities often involve or affect numerous private and public actors in several states or regions. This causes challenges for singular or even sector-wide private self-regulatory initiatives, and reduces the effectiveness of self-regulation by individual actors on their own. The enormity and encompassing character of global sustainability challenges have also drawn attention to the limitations of singular initiatives like private or sectoral Corporate Social Responsibility (CSR) guidelines, reporting schemes and codes of conduct. Hence, broadly applicable multi-stakeholder-created sustainability governance schemes have emerged to fill gaps left by public as well as private governance.

Breakthroughs in global sustainability governance
The UN Global Compact with its ten principles in the four issue areas of human rights, working standards, environment and anti-corruption, is a prominent example. Yet like the Paris Climate Change Accord offers a general normative framework but leaves much to further detailing of implementation. The UN ‘Protect, Respect and Remedy’ Framework  and Guiding Principles on Business and Human Rights (UNGPs) offer more detailed guidance that has inspired several other transnational business governance instruments even beyond human rights, thus influencing the evolution of CSR norms and governance in a broader sense (Buhmann 2016, 2015). All these instruments were firsts within their fields, and broke previous stalemates. What causes such breakthrough? How can organisations concerned with sustainability engage with a regulatory process to advance substantive outputs? Understanding this can have far-reaching impacts for future public, private and hybrid governance of sustainability, locally, globally and beyond, and whether private, public or hybrid.

Norms of conduct: the road to the product is as important as the product
When we think of normative directives for private or public organisations for actions that conform with global sustainability needs, the focus is often on the substantive content of the rule as such: in other words, what are organisations encouraged or required to do? However, the road that leads to that substantive content of a rule is a condition for what ends up in the rule, whether soft (guiding) or hard (binding). It is therefore crucial to understand what makes some processes progress and deliver results, whereas others stall.

Across the globe, organisations of many types encounter difficulty in adequately meeting environmental and social sustainability challenges. The diversity of processes and outcomes calls for insights on what drives and impedes processes of clarifying what constitutes acceptable conduct. There is a particular need for knowledge on what makes for effective processes for defining norms for such conduct, and for the norms to become accepted with a view to integrate into organisational practice.

The field of business responsibilities for their societal impacts is marked by a diversity of interests that are often not aligned, even within a sector: those of different business organisations and sectors, different civil society organisations with diverse focus issues, and various national or local governments with diverging interests. As result, developing norms of conduct becomes a process of negotiation in which participants often have regard to what is in their own interests. The bumpy road to the 2015 Paris Climate Change Accord is a case in point, but not unique. The evolution of international normative guidance for businesses in regard to human rights leading to agreement on the 2008 UN  Framework and 2011 Guiding Principles on Business and Human Rights have received less attention and acclaim outside human rights circles, but the processes to those results represent important innovation too and potential lessons for future collaborative regulation.

Studies suggest that while some initiatives to develop norms of conduct for responsible business conduct get weakened in the process, typically as a result of lobbying by certain organisations (Kinderman 2013; Fairbrass 2011; Buhmann 2011), in other cases the key to a strong or weak result is in the capacity of actors at making the effective argument, and linking up with the right partners for that purpose (Hajer 1995; Kolk 2001[1], Arts 2001[2]).

How are norms on sustainability issues negotiated?
At this backdrop, it is highly necessary to understand how norms on sustainability issues are negotiated and how stalemates that mark many such efforts can be broken. Two new books by CBS professor Karin Buhmann deal with this issue, both drawing on the evolution of the emergent regime on business responsibilities for human rights. Of the two monographs, Changing sustainability norms through communicative processes: the emergence of the Business & Human Rights regime as transnational law (Edward Elgar 2017) undertakes an analysis of the discourse that marked the construction of detailed normative guidance for businesses and states in regard to business responsibilities on human rights. It analyses communicative and argumentative dynamics that allowed the multi-stakeholder process launched by the UN to break previous stalemates in several settings, as well as dynamics that caused previous initiatives to fail. It finds that the ability to address other actors in terms that directly speak to their rationality and interests holds big potential for obtaining significant influence on the details of the normative outcome, and its acceptance. The book offers a theoretical explanation of this, and expands the analysis through findings and explanations on how actors in multi-stakeholder regulatory processes may strategically play on the interest of other actors in change and in preserving their interests. It offers insights on argumentative strategies that can be applied by civil society, CSR- and sustainability-committed companies, regulators or others to advance the acceptance of new norms on sustainability with other actor

Collaborative regulation for balancing of power disparities
In recognition that where negotiations take place on issues marked by highly divergent interests and issues of power, legitimacy of the process and output are significant for a normative outcome to be meaningful, the other monograph, Power, Procedure, Participation and Legitimacy in Global Sustainability Regulation: a theory of Collaborative Regulation (Routledge 2017) offers a theory-based proposal for collaborative regulation that takes account of power disparities and continuously manages these. The analysis combines empirical experience on public-private regulation of global sustainability concerns and theoretical perspectives on transnational regulation to offer a new theoretical approach to guide multi-stakeholder negotiations. It sets out detailed suggestions for the organization of multi-stakeholder processes to regulate sustainability issues to avoid capture and ensure the legitimacy of the regulatory process as well as the outcome of that process. In a global legal and political order, in which the private sector is increasingly replacing the public in terms of power and privilege but lacks the democratic legitimacy of the state and international organisations, such issues are of global as well as regional or local pertinence.

By addressing the same overall topic of developing sustainability norm and empirical cases to inform the analysis, the books develop synergy through two separate analyses that are mutually complementary. Both volumes apply theoretical perspectives from organisational and communication studies, political science and sociology to enrich the socio-legal analysis of regulatory strategies and innovative transnational law-making. This makes the volumes speak to the broad audiences that are engaged in the development of sustainability norms in practice and theory.

Focusing on the processes for developing norms of conduct, the analyses leave assessments of the uptake and effectiveness of such norms in organisations to future studies.

Titles and publisher details

Karin Buhmann (2017) Changing sustainability norms through communicative processes: the emergence of the Business & Human Rights regime as transnational law Edward Elgar Publishers (Globalization, Corporations and the Law). 416 pages.  Order here; 35 % discount code valid through March 2018: VIP35.

 

Karin Buhmann (2017) Power, Procedure, Participation and Legitimacy in Global Sustainability Regulation: a theory of Collaborative Regulation. Routledge/Taylor & Francis Publishers (Globalization: Law and Policy). 200 pages.  Hardcover and e-book available here.

 

 

Karin Buhmann is Professor with special responsibilities for Business and Human Rights. She is employed at the Department of Management, Society and Communication (MSC) at Copenhagen Business School (CBS). She currently serves as the interim Academic Director of the cbsCSR (CBS Center for Corporate Social Responsibility) and CBS Sustainability.

[1] Kolk, A. (2001) Multinational enterprises and international climate policy. In Arts, Bas, Math Noortmann and Bob Reinalda (eds) Non-state actors in international relations, Hants: Ashgate: 211-225.

[2] Arts, B. (2001) The impact of environmental NGOs in international conventions. In B. Arts, M. Noortmann and B. Reinalda (eds). Non-state actors in international relations, Hants: Ashgate: 195-210.

Pic by David Watkis, Unsplash.

 

 

 

 

Considering Impact on the Road to Sustainability

By Paige Olmsted.

Mainstreaming the environment is a key component to achieving sustainability objectives – how organizations account for their existing impact, and assess the impact of innovative solutions is a focal area for a new CBS effort bringing academic expertise to real-world challenges.

Why nature matters
When we hear words like “biodiversity” and “conservation”, it often conjures images of tigers or coral reefs, of rare and endangered species in faraway places. The benefits that are provided to us from ecosystems however, are not just something that happen somewhere else. Forests not only provide paper goods and construction materials, they regulate rainfall, are the source for new medical discoveries, and remove toxins from the air and soil. Coastal wetlands provide flood regulation, improve water quality, and sequester vast stores of carbon.  With the advent of climate change it has become increasingly clear that protecting wild places and sustainably managing natural resources is critical to sustainable communities and economies.

Despite increased awareness of the large-scale impacts of human activity on natural resources, at best we have collectively slowed bad trends, rather than reversed course toward positive ones. Part of this may be explained by Malthusian logic – even if we produce goods more efficiently and with less net input per unit, as populations increase geometrically, and middle class populations balloon in countries like Brazil, China, and India, demand for more goods far exceeds any efficiencies of new design or technology.  Reconciling how to navigate on this road to sustainability is a central question of our time.

What is the role of business?
Since natural resource consumption — agriculture, mining, fisheries — are major drivers of habitat conversion, corporate actors receive particular attention with respect to their role in ecosystem degradation. This also means that changes toward more sustainable practices can have substantial impact. The former president of WWF Canada explained the corporate relationship with Coca Cola in the following way

Coca Cola is in the top three consumers of sugar cane, glass, and coffee in the world.  We can campaign twenty-five different governments for fifteen years to change the way sugar cane is produced in countries that likely can’t enforce such regulation, or Coke can mandate change and it happens overnight” (Dauvergne and Lister, 2013).

There is inherent skepticism that consumption and corporate action can help address environmental concerns, but we have seen organizations increasingly recognize how sustainability matters are critical to their operations. The environment is not seen as being in opposition to economic growth, but instead seen as essential for it. International reports such as the Millennium Ecosystem Assessment, The Economics of Ecosystems and Biodiversity, and organizations like UNEP’s Green Growth Initiative and the World Business Council on Sustainable Development all either implicitly or explicitly endorse the idea that we (as individuals, governments, businesses) will benefit in the long term from healthy ecosystems.  Therefore, even for those not motivated by a conservation ethic, they emphasize that we all benefit directly from their sustainable management.

Of course, to deeply integrate sustainability to the core of doing business, and to achieve ambitious global targets such as those included in the UN’s sustainable development goals, truly transformative action is needed. It will have to involve innovation at all levels of society, across supply chains, and through creative partnerships that leverage the reach of large corporations without discounting the livelihoods and well-being of communities all over the world.

What is happening at CBS?
As one effort to support transformative change in the realm of sustainability, CBS is developing an “Impact for Innovation Lab”. We have chosen impact as the core theme because it is so crucial to understanding whether solutions are truly making a difference – within organizations or on the ground.

The Impact Lab will be a hub for engagement across academic disciplines, civil society, and private sector actors to collaborate on real-world challenges. We will combine ecological, economic, and institutional expertise to develop and test new tools and methodologies. With agricultural commodities, the built environment, and technology as overarching themes, we aim to address environmental and social issues across supply chains, consider the most impactful (as in damaging) practices, to implement the most impactful (as in positive) outcomes. If these sound like challenges your organization is wrestling with, or you want to apply your research efforts to tackling complex problems, do not hesitate to contact Paige Olmsted (po.msc@cbs.dk) or Kristjan Jespersen (kj.msc@cbs.dk). With respect to the road to sustainability, there is likely more than one route or vehicle needed, and we are looking for test drivers.

Paige Olmsted is a postdoctoral scholar at the Institute for Resources, Environment & Sustainability at the University of British Columbia, and a guest researcher at CBS in the Department of Management, Society and Communication for 2017-2018.

Pic by Pranam Gurung, Unsplash.

Role Reversal: When Business Safeguards the Public Good

By Erin Leitheiser.

Earlier this week Patagonia launched what may be corporate America’s most forceful action yet against the government’s assaults on the environment and vulnerable communities: announcing that it would sue the Trump administration.  Such action signals a new era for business leadership on social and sustainability issues.

No Government-as-usual and no Business-as-usual
More than a year ago – and before the 2017 U.S. election – I wrote about Trump, anti-intellectualism and the new role for business.  While the takeaway then was that business was increasingly expected to step up contributions to solving social and sustainability issues, the new reality of a Trump administration necessitates yet another re-evaluation of business’s role in society.  No longer is it simply enough for companies to contribute to the broader public good via philanthropy or (more) sustainable business practices; such approaches assume a stable and accepted regulatory environment facilitated by the government.  We now live in a time when Americans are facing a hostile government that is pushing through major changes to the tax code which would benefit the wealthiest at the expense of the poorest, rolling back protections for women to access reproductive healthcare, and reneging on the country’s commitments and obligations to do its fair share to stymy carbon emissions, among countless others.  This is not government-as-usual, so it can no longer be business-as-usual either.

A new Role of Business in Trump Times
We have seen encouraging moves by state and local governments to do what they can to work around Trump (for example, on the Paris agreement), and business is also playing a new role.  While corporate lobbying and political involvement is nothing new, what is different is that business is now engaging on a range of social and environmental issues that have little to do with their core business activities.  A few notable examples include: