Sustainable Management
European Perspectives
Prof. Dr. René Schmidpeter
Dr. Juergen Meyer Endowed Chair for International Business
Ethics and Corporate Social Responsibility, Cologne
Business School
Foto Schmidpeter
Foto Schmidpeter
World
in
Transition
Business Challenges in a “World in Transition”
Business Challenges
Market Volatility
• Volatility of
Demand / Supply
• New markets
• Changing
demographics
Global Value Chain
Accelerators
Natural resources
•
•
•
•
Fossil Fuels
Rare Earths
Fertile Farmland
Freshwater
Natural disasters
“What is the right
approach to value
creation?”
x
Profit vs. Purpose
Social Pressure
• Interdependencies
• Disruption risks
• Stability of supply
networks
Key Question
• Record Profits
• Societal Issues
• Compliance
Source: Michael Dheur (2013) CSR und Value Chain Management. Management-Reihe CSR (Schmidpeter)
ausschließliche
Gewinnmaximierung
ohne
Ziel und Plan
Corporate
Social Responsibility
reine
Philanthropie
Gesellschaftlicher
Mehrwert
Eigene Darstellung (2012)
Current Business Models get under pressure
Scarcity
of Resources
Societal
Pressure
Pure
Profit
Maximation
Financial
Crises
Pure
Philantropy
© Schmidpeter, 2014
Economic
Pressure
Integrative Growth through Sustainable Business
New Opportunities
Inclusive
Business
New Growth
Opportunities
???
Shareconomy
Limits
of
Growth
Pure Profit
Maximization
New
Challenges
Corporate
Social
Responsibility
Pure
Philantropy
Social
Entrepreneurship
Limits
of Good Causes
High Expectations towards Business
Edelmann Trust Barometer 2011
Factors influencing Corporate Reputation
Source: Edelmann Trust Barometer 2011
Seite 12
Factors influencing Corporate Reputation
Source: Edelmann Trust Barometer 2011
Bewertung von Unternehmen
Wie wichtig sind diese Faktoren für die Unternehmensreputation ?
Hohe Qualität der Produkte und Services
Transparente und faire Geschäftspraktiken
Unternehmen dem ich vertraue
Fairer Umgang mit Mitarbeiter
Kommuniziert oft
Faire Preisgestaltung
Aktives Engagement für Gesellschaft
Innovator
Bekannte Führungspersönlichkeiten
Finanzielle Gewinne für Investoren
Quelle: Edelmann Vetrauensbarometer, 2011
Corporate Social Responsibility
as Cornerstone of Sustainable Growth
„CSR is a process whereby companies integrate social, environmental and
ethical issues into their business operations and strategy in close interaction
with their stakeholders, going beyond the requirements of applicable legislation
and collective agreements. …
A strategic approach to CSR is increasingly important to the competitiveness of
enterprises, helping them to create value both for owners and shareholders …
to win the trust and respect of citizens …
Source: Communication European Commission , Oktober 2011
Business and Society: Win-Win Perspectives
87 % of the citizens appreciate social engagement
of business, 76 % see it as an important
business challenge to invest in
solutions for societal and ecological problems
Win-Win
86 % of the people are convinced, that corporations
which are investing in society are more successful
in the long-term
University of St. Gallen 2004
Sustainable Business Models are performing better
Sustainable
Investments
over 5.000 Billion
Euro worldwide
During the crises
non-sustainable companies
lost 50 %,
Sustainable company only 43 %
of their market value
Over 60 % of the top
manager: „Sustainability
adds to profit“
Sustainable companies
in 16 out of18 branches/industries
have 15 % less capital costs
Source: Oekom Research 2010, A.T. Kearney 2009, Sloan Management Foundation 2013
non-sustainable
companies lost
1.9 $ billion
more in average
Sustainable Management:
New Strategic Management Thinking
Dimensions
of Responsibility
1. Dimension:
Value Creation Processes
Analysis of Contigency
Impact of CSR
Strength & Weaknesses
Economic:
Internal and external
Impact mechanism
2. Dimension:
Value Creation Idea
Societal:
3. Dimension:
Beyond Value Creation
(Corporate Citizenship)
Opportunities & Threats
Source: Philipp Schreck (2012) in Schneider/Schmidpeter (Hrsg.): Corporate Social Responsibility, S. 78
Contribution to
Solve societal
Challenges
New Strategic Thinking
• On a long-term perspective,
social and economic
objectives can be combined
• The success of companies is
dependent on local
conditions
• Social improvements
strengthen economic
developments
• Ideally, companies and
society benefit at the same
time from an engagement
Source: Porter, M. / Kramer, M. (2002): The Competitive Advantage of Corporate Philanthropy, in: Harvard
Business Review, Vol. 80 Issue 12, p56-69.
Business Ethics: Aligning Social and
Organisational Interests
Organisation
Stakeholder/
Society
New Products and Services
New Processes
New Markets
New Business Models (Sustainable Value Creation)
New Management- and Reportingsystems
Source: Eva Grieshuber (2012) in Schneider/Schmidpeter (Hrsg.): Corporate Social Responsibility, S. 375 nach Savitz/Weber
Business Ethics and Value Chain Mangement
Quelle: Otto Schulz(2012) in Schneider/Schmidpeter (Hrsg.): Corporate Social Responsibility, S. 272
Several Companies Have Decided to Lead the Way Towards
Regional
Sustainable Value Creation
Administration
1
2
3
4
Value Creation
Strategy
Sustainable
Products
Sustainable
Operations
Enterprise
Architecture
Creating Shared
Value Program
Plan A
Committment
Energy Saving
ICs
Reduced
Impacts during
Use Phase
Sustainable
Supply Chain
5
6
7
Sustainable
Apparel & SC
Integrated
Scorecard
Measuring
sustainability in
the Agro SC
8
Stakeholder
Collaboration
Business
Planning
Continuous Cost
Reduction
Supplier & Partner
Networks
Development
Partnership
Safe & Fair Labour
Planning for Asset
Recovery
Demand-Supply
Synchronization
Logistics Cost
Reduction
Environmental P&L
Empowering rural
women
Localized Vanilla SC
Sustainable Management: Extended capital theory
market value of the firm
physical capital
human capital
social capital
Business and society
SustainableManagement: Stakeholder theoryI
Traditional management model
Stakeholder model
The traditional management model identify four
stakeholders for the company: suppliers and employees
(provide the basic resources for the corporation ),
customers and shareholders (the owners of the firm)
For the stakeholder model, shareholders are only one
group of stakeholders. The company has several
obligations to all the groups affected by or that can affect
the firm’s actions
ILO (2013) Training Course: Introduction to CSR
Business and society
SustainableManagement: Stakeholder theoryII
• The network model of stakeholder theory suggests that firms have indirect
relationships with a whole range of constituencies via their immediate
stakeholders.
ILO (2013) Training Course: Introduction to CSR
CSR and sustainability
Corporate sustainability
A sustainable enterprise is able to continue its
activities in the long run, taking into account
the impact of its actions on natural, social, and
human capital.
Convergence between corporate
strategy
and CSR
The CSR concept has become the managerial
framework wherein the relationship between
business and society are studied.
Social responsibility is essential to
sustainable development
ILO (2013) Training Course: Introduction to CSR
Carroll’spyramid
Business and society
The most established and accepted model of CSR (Carroll 1979, 1997, 2009) regards
CSR as a multilayered concept.
ILO (2013) Training Course: Introduction to CSR
CSR and Management practice
What is CSR?
“Corporate Social Responsibility is the continuing commitment by business to
contribute to economic development while improving the quality of life of the
workforce and their families as well as of the community and society at large”
(WBCSD, 1998)
ILO (2013) Training Course: Introduction to CSR
28
What is CSR?
To sum up…
Integrate social and
environment concerns
in business operations
Voluntary basis
CSR
Exceed compliance
with the law
Business contribution
to sustainable
development
29
ILO (2013) Training Course: Introduction to CSR
Norms and Values
Activities integrated in core
business
Triple Bottom Line
Corporate Social
Responsibility
Sustainable
Management
Business Ethics
Corporate Governance
Economic
Responsibility
Ecological
Responsibility
Social
Responsibility
Corporate Citizenship
Philanthropy
Norms and Values
Source: Schulz, Frankfurt 2013
Activities related to core
business
Activities without a
connection to business
CSR: Innovation through Sustainability
environmental and climate issues are becoming
more important
accumulated needs for eco-efficient products
start of the Green Flagship Concept 1998
development of innovations and product
leadership in 6 areas: energy use, packaging
hazardous substances, weight,
recycling and waste, durability
eco-efficient products as market strategy
support through environmental lobbying
education initiatives
Unilever: Sustainable Iglo Fish production
• pioneer in the field of sustainable
fishing
• cooperation with the World Wilde
Fund: Founding of the Marine
Stewardship Council (MSC) in
1997: Development of a
certification program for
sustainable fishing
• change to MSC certified coalfish in
Mai 2005
• more than 40 certified fisheries as
suppliers
CSR matters – public policy too
 Of course: first and foremost CSR
addresses the business world
 But: CSR can only reveal its full potential
when public policy plays an active role in
implementing and supporting CSR
 Facing the complex problems of today‘s
world – we need the contribution of all
societal actors to find appropriate
solutions
Capabilities of actors to
contribute to problem solving
sources: World Bank, Public sector roles in strengthening corporate social responsibility: a baseline study; Bertelsmann Stiftung: The CSR-Navigator – Public Policies
in Africa, the Americas, Asia and Europe
3. November 2007
Page 33
New Trends:
Bringing Business and Society together
Sustainable growth models have always been based on serving
the needs of society. Due to its problem solving capacity business
has always been a main driver for social innovation.
Under the current circumstances business models which are
cooperative and sustainable are becoming more relevant again.
Sustainable Entrepreneurship und Corporate Social Responsibility.
many examples and initiatives do exist in order to reactivate
mainstream businesses’ role as a driver for social innovation
Corporate Responsibility and Sustainability can be a driver for
new business approaches in the fields of education, job creation,
minority integration
Thankyou