2.

The business case for sustainability

Athena Piterou
Sustainability in Business (BUSI 1552)
 Module outline
1. Introduction to the course & the assessment
2. The business case for sustainability
3. Beyond the business case: eco-efficiency and eco-effectiveness?
4. Environmental auditing and impact assessment (1)
5. Environmental auditing and impact assessment (2)
6. Green consumerism
7. Sustainable innovation (eco-innovation)
8. Environmental regulation: government policy and business reaction
9. Financing sustainable development
10. Behavioural change & eco-innovation: alternatives to sustainability
11. Guest lecture
12. Course review

2 The business case for sustainability

 Reading

Esty, D. & Winston, A. (2011). The green to gold

Business Playbook: How to Implement Sustainability
Practices for Bottom-Line Results in Every Business
Function. John Wiley & Sons.-Chapter 3 Building a
winning eco-advantage strategy pp 23-35

Link available on moodle

3 The business case for sustainability

 Lecture Outline

Sustainable development: origins of the concept

The 3 pillars reconsidered
Economic growth and environmental impact
Natural capitalism
The de-growth movement
The role of business in achieving sustainability
The sustainability impacts of business
Sustainability & benefits to business

4 The business case for sustainability

 The Brundtland report Our Common Future (1987)
defined sustainability as using resources to meet present
needs without compromising the ability of future
generations to meet the needs of the future.

5 The business case for sustainability

 The three spheres of sustainability

6 The business case for sustainability

 The planetary boundaries model

Stockholm Resilience Centre

(2015)
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The origins of sustainable development
Discontent with progress and impacts on nature
Limits to growth report(1972)
Sustainable Development concept was introduced
by the International Union for the Conservation of
Nature and Natural Resources (1980)
Came to prominence with the Brundtland report
Our Common Future in 1987
Balance between environmental protection and the
needs to address poverty at a global scale

(Dresner,
8 The business case for sustainability 2008)
 The 3 pillars revisited

9 The business case for sustainability

 The 3 pillars revisited

10 The business case for sustainability

 Sustainability in Business
Lecture 2 Part B

11 The business case for sustainability

 Lecture Outline

Sustainable development: origins of the concept

The 3 pillars reconsidered
Economic growth and environmental impact
Natural capitalism
The de-growth movement
The role of business in achieving sustainability
The sustainability impacts of business
Sustainability & benefits to business

12 The business case for sustainability

 Sustainability and economic growth
How to decouple economic growth and environmental
degradation?
Natural capitalism (Lovins) as a new industrial
revolution
The economy is embedded in the environment
Yet, the value of the ecosystems and its services is not
reflected on company balance sheets
Natural capitalism would properly value natural capital
and hence improve the productivity of natural resources
Currently, accounting practices reward the inefficient use
of natural resources

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 Sustainability and economic growth
A number of environmentalists argue that
continued economic growth cannot be reconciled
with sustainability
Degrowth was developed as a concept and
movement in the early 21st century
It promotes a voluntary reduction in consumption
and production in order to achieve social and
ecological sustainability
Concept of the “steady state economy”

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 Business & Environmental impacts
Waste, packaging and recycling
Air pollution
Water pollution and availability, “water footprint”
Climate change, greenhouse gas emissions, energy use
Use of chemicals & other dangerous substances in the product
and associated waste
Resource impacts
Land use

Environmental impacts occur in both sphere of production and

consumption
Businesses need to prioritise and target areas of stronger impact

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 Business & Sustainability impacts
On the basis of the triple bottom line approach to
sustainable development business may address social
concerns along with environmental impact
Worker rights and benefits, safety in the workplace
Workplace diversity
Community development
Property rights
Ethics in global supply chains

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 Inside out perspective
What impacts are generated by the activity of the business?
⤳ Own impacts
⤳ Upstream impacts resulting from the suppliers
⤳ Downstream impacts resulting from customer use

What is the degree of accountability for these impacts?

“extended producer responsibility”
Outside in perspective
How do sustainability issues affect the running of the
business
⤳ Access to resources
⤳ Environmental regulation

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 Sustainability and competitive advantage
From a strategic perspective environmental and
social concerns provide opportunities and threats
Addressing sustainability issues in business
operations helps anticipate and reduce risks
Cost reduction, mainly through improved
efficiency in energy and resource use
Sustainability as a driver for innovation and
revenue growth
Contribution to building brand loyalty and
maintaining or improving corporate reputation

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 Chlorofluorocarbons
(CFCs)were used in a
number of consumer
products.
Detrimental effect on the
ozone layer
In 1975 SC Johnson
voluntarily and unilaterally
eliminated
chlorofluorocarbons
(CFCs) from their aerosol
products, three years before
the U.S. mandate and the
1987 Montreal Protocol

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 Increased demand for transparency
US Environmental Protection Agency greenhouse gas
reporting regulations for large emitters
UK Government introduced Environmental Reporting
Guidelines for quoted companies in 2013 (GHG
emissions)

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 Eco-efficiency
Investing in eco-efficiency in buildings, manufacturing
, transport and communications can provide quickly
observable financial benefits
Improved efficiency may be the starting point of a
sustainability strategy as benefits can be realised in the
short term
Increasing energy demand & demand for natural
resources
Population increase
Growth in emerging economies
Fluctuations in energy prices affect decision-marking
regarding the adoption of eco-efficiency measures
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 International Energy Agency
22 The business case for sustainability
(2020)
 BP Statistical Review of World Energy
2017 (BP Global Energy Outlook
23 The business case for sustainability
(2020)
 Price fluctuations

(International Energy Agency, 2020)

The business case for sustainability
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 Sustainability as an innovation driver

“Creative destruction” launch of new industries

associated with environmental technologies such as
renewable energy

A study in Harvard Business Review (2009) looked into

the sustainability initiatives of 30 large corporations
Greening business generates additional revenue
through better products (e.g. cold water detergents)
Early movers can establish competitive advantage
(Nidumolu et al. 2009)

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 Sustainability and corporate reputation
Besides consumer interest in sustainability issues, 2/3 of
consumers find it difficult to identify which products and
services are good for the environment (Consumer Focus, 2009)
43% consumers in UK &US survey stated that brands make it
harder to make environmentally friendly and ethical choices
(Futerra One Pulse Survey, 2018)
73% of consumers say they would definitely change their
consumption habits to reduce their environmental impact
(Nielsen, 2018)

Project ROI report (2015): “sustainability leaders” can expect up

to 20% revenue increase and charge up to 20% premium

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 Additional information
Dresner, S. (2008). The principles of sustainability.
Earthscan.
Hawken, P., Lovins, A. B., & Lovins, L. H. (2013).
Natural capitalism: The next industrial revolution.
Routledge.

27 The business case for sustainability