Reconciling the creation of value,
sustainability, and corporate social
responsibility
- a strategic stakeholder approach
David Wheeler
Schulich School of Business
& Sustainable Enterprise Academy
York University
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Dimensions of organisational strategy
- three key dimensions (de Wit & Meyer)
 Context

world trends
 Content
 Process

organisational responses and a
navigational tool
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Key indicators 1950 - 1997
(Worldwatch Institute, 1999)






population - doubled
megacities - tenfold increase
food production - 40 per cent increase
fisheries catch - fivefold increase
water use - trebled
carbon emissions - quadrupled
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Consumption and production
(UNEP, WBCSD & WRI)
 The money spent on household consumption worldwide
increased 68% between 1980 and 1998. NB In many
developing countries, food purchases account for as much
as 70 % of family income.
 World energy production rose 42% between 1980 and
2000 and will grow 150-230% by 2050. NB Renewable
resources like solar and wind account for only 11.5% of
current consumption.
 Over the past century, world water withdrawals increased
almost as fast as population growth. NB Currently, 70% of
freshwater withdrawals is for agriculture.
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75 per cent of global materials flow is waste
Natural
Resources
Goods and
Services
Pollution, Waste
and Environmental
Disturbances
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Atmospheric carbon dioxide concentrations
(1750 to present)
370
parts per million volume
360
350
340
Mauna Loa (1958-present)
330
Siple Station (1750-)
320
310
300
290
280
270
1750
1800
1850
1900
1950
2000
Data Source: C.D. Keeling and T.P. Whorf, Atmospheric CO2 Concentrations (ppmv) derived from in situ air samples collected at Mauna Loa
Observatory, Hawaii, Scripps Institute of Oceanography, August 1998. A. Neftel et al, Historical CO2 Record from the Siple Station Ice
Core, Physics Institute, University of Bern, Switzerland, September 1994. See http://cdiac.esd.ornl.gov/trends/co2/contents.htm
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Water scarcity in 2025 - a threat to public
health and security (WRI)
outlines show watersheds that are both
in and approaching scarcity; about 2.3
billion people are living in conditions of
water stress or water scarcity.
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Demographic, democratic and
technological shifts (UNEP, WBCSD & WRI)




The current addition of 60 million urban citizens a year is the equivalent of
adding another Paris, Beijing, or Cairo every other month.
In developed countries, the working age population will shrink from 740
million to 690 million between 2000 and 2025. NB In developing countries, it
will increase from 3 to 4 billion people.
There are 119 democratic states out of a total of 192 countries in 2000, as
compared to 22 democratic states out of 154 countries in 1950. In 1948, only
41 non-governmental organizations had consultative status in the UN; now
there are 2,091.
Today, over 400 million people use the Internet, compared with less than 20
million 5 years ago. By 2005, there will be about a billion users. NB More than
half the world's peoples have never used a telephone.
World population growth
billions of people
10
8
6
DEVELOPING
4
2
DEVELOPED
0
1950
1970
1990
2010
2030
2050
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Basic social needs
 more than 150 million children
malnourished
 more than 750 million people lack health
services
 more than 1250 million people lack access
to safe drinking water
 more than 850 million adults can not read or
write
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Social equity?
 seven fold increase in developing country
debt since 1970
 in 70 countries around the world average
incomes today are less than they were in
real terms in 1980
 there are between 200 and 300 million
children working world wide; one million
children work in the sex industry
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On the future...
We must recognise that we are living with a time bomb, and
unless we take action now it could explode in our children’s
faces. If we do not act, in thirty years the inequities will be
greater. With population growing at 80 million a year,
instead of 3 billion living on under $2 a day, it could be as
high as 5 billion. In thirty years the quality of our
environment will be worse. Instead of 4 per cent of tropical
forests lost since Rio, it could be 24 per cent.
James Wolfensohn, President, World Bank
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In summary……economic, social and
environmental drivers of change






environmental and biophysical limits
social inclusion and equity
population growth
consumption and production shifts
demographic, democratic and technological shift
values shifts: assurance: stakeholders’ - including
investors’ - need for assurance and companies’ need for
trust and loyalty
 governance shifts: the retreat of the state, the rise of civil
society
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Strategy process
 Analysis
 Formulation (choice)
 Implementation
Linear or systems based?
Stakeholder inclusive or exclusive?
Mental models matter!
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Mental models - linear or systems
thinking?
A world in which
poverty and inequity
are endemic will
always be prone to
ecological and other
crises.
World Commission on Environment and
Development, 1987
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Sources of wealth creation and competitive
advantage - stakeholder exclusive or
stakeholder inclusive?
20th Century
 production inputs
 access to capital
 market domination
 proprietary
information
21st Century
 knowledge
 innovation
 competencies
 intellectual property
and social capital



brands
reputation
relationships
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.
Sustainability - a potential new strategic
framework for business
Economi
c value
Social
value
Competitive,
ethical and
sustainable
Environmental
value
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A new ‘capitalism’: three capitals in
dynamic synergy
Natural capital
Social capital
Financial capital
The Shell Canada approach to SD
Business planning
Product Stewardship
Branding
Green Products / Image
Stock price
Reputation
Supply Chain Management
Shell Environmental Fund
Resource management
Energy efficiency projects
Consultation - Engagement - Climate Change Panel
Diversity
Social Investment
SD Principles
Employees
United Way/ Days of Caring
Community Development and Education
Industry Guidelines and Standards
Green House Gases
STEP - VCR - ABC
Waste
Emissions
Toxics
Biodiversity - TNCC
Ecosystems
ISO 14001 - HSSD - MS
HSSD Assessments
Research
Courtesy of Murray Jones
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Novartis approach to SD performance
Economic Objectives
Growth
Shareholder value
Efficiency
Sustainable
Growth
Social Objectives
Empowerment & Equity
Social mobility
Social cohesion
Cultural identity
Institutional development
Environmental Objectives
Ecosystem integrity
Climate integrity
Carrying capacity
Biodiversity
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Courtesy of Novartis
Sustainability and stock performance the Jones Heward Index
170
150
130
Jones Heward Investment Counsel
Sustainable Development Equity Fund
Total Return = 43.5%
JHIC Equity Pooled Fund
(net of cash)
Total Return = 44.8%
110
TSE 300
Total Return = 2.8%
90
70
Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun01
00 01
00
00
99 00
99
99
98 98 99
98
98
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Innovest Index
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
8/
8
8/
22
12
/2
7
1/
10
1/
24
2/
7
2/
21
3/
7
3/
21
4/
4
4/
18
5/
2
5/
16
5/
30
6/
13
6/
27
7/
11
7/
25
-20%
• aerospace defense
• specialty chemical
• chemicals
• communication
equipment
• electric companies
• electronics
(semiconductors)
• health care
17.0% Out- • iron and steel
Performance
Margin as of
• paper, forest
1/2/99
products, etc.
• petroleum
9/
5
9/
19
10
/3
10
/1
7
10
/3
1
11
/1
4
11
/2
8
12
/1
2
12
/2
6
EcoValue ‘21
Top and Bottom Rated Companies1998
Total Return
10 AAA vs.
10 CCC
companies in:
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How are leading edge companies
responding at the organisational level?
 Systems thinking and future focused
 Sensitivity to stakeholder relationships
(creation of communities of interest)
 Capability-based
 Innovation-based
…….all of these are strategic responses
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Reconciling the creation of value, sustainability,
and corporate social responsibility - a strategic
stakeholder approach: 1 - Mindsets
Do maximum good
Tier
3
Tier
2
Tier
1
Do minimum harm
Interdependence
Balance
Control
NOTE: Copyright Protected. May only be used for
academic purpose only.
Reconciling the creation of value, sustainability, and
corporate social responsibility - a strategic
stakeholder approach: 2 - Behaviours
Do maximum good
Tier
3
Tier
2
Tier
1
Do minimum harm
Engaged
Responsive
Compliant
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academic purpose only.
Stakeholder capitalism
Stakeholder capitalism sets a high standard,
recognizes the common-sense practical
world of global business today, and asks
managers to get on with the task of creating
value for all stakeholders.
Freeman, 2000
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