1 Towards Sustainable Business

2 Review of the Implementation of Agenda 21The United Nations Conference on Environment and Development (UNCED) was held in Rio de Janeiro in This conference included wide global agreement on the implementation of the groundbreaking Agenda 21 which offered a practical approach to applying sustainable development policies at the local and national level.

3 Review of the Implementation of Agenda 21How are we doing 20 years later with regards to implementing Agenda 21? The UN Division for Sustainable Development commissioned Stakeholder Forum for a Sustainable Future to answer this question – their report was published in 2012 (on Mole). The Following pages contain extracts of the Agenda 21 Scorecard taken from this report.

4 Review of the Implementation of Agenda 21The Agenda 21 scorecard rates progress by means of four colours:

5 Review of the Implementation of Agenda 21The Ecological Footprint of the global population has increased by over a third since the production of Agenda 21 twenty years ago.

6 Review of the Implementation of Agenda 21

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8 Review of the Implementation of Agenda 21: Recommendations3.2. Fiscal Reform – Taxes should be used to incentivise positive behaviours and discourage harmful ones.

9 Review of the Implementation of Agenda 21: Recommendations

10 Lecture Contents Business Design for SustainabilitySustainability-Driven Enterprises Bulldozers & Dinghies Benefit Corporations The Phoenix Economy Paradigms & epistemes Are you happy? A World in Transition

11 Business Design for Sustainability

12 Revision: Redesigning Entrepreneurs

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14 (helping the poor to help themselves)

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16 Can we design all the changes we need?We need changes to industry but will change to industrial products and processes design be enough for sustainable development? Should not individuals also seek to have great lives….. …but by treading more lightly on the material world? The design changes identified above and the need for changes in individual lives all add to something momentous – a change or culture, of era… ….even of episteme.

17 Revision Episteme Change: Implications for BusinessA Move from “BULLDOZER COMPANIES” in a Passive Nature With such features as Deterministic/Predictable Independent Forcing way forward To “BOAT COMPANIES” in an Active Nature With features such as Indeterminate/ Unpredictable Interdependent Sensing way forward

18 Broad Implications for Business“Boat Companies” are not lost at sea but are carefully finding ways forward being sensitive to waves, currents, weather, supplies etc i.e. Sensitive to stakeholders, social and ecological as well as business/economic context.

19 (not on abstract rational belief systems).Why this transition? Scientific knowledge now shows that we are embedded in complex relationships with the rest of the natural world. If we damage the natural world, we damage ourselves. …… This is a new fact of life based on empirically-grounded studies (not on abstract rational belief systems). Also since the origins of man and his relations to the wider world are now known – or being studied, epistemological man become history (so does the Modern Age). The emerging age is one in which origins and original relations between things are known, a Primal Age.

20 These changes are happening now…we can already see them affecting business.One question is “What more is needed before we become sustainable?” Answering this one question may take the rest of this century. But a change of episteme will enable us to not only find new answers but also to find new questions.. . and leave the old ones behind. In the Primal episteme, we can ask for example “What core business values are needed to make the world a better place?” i.e. a shift in emphasis from “costs” to “values” is required.

21 A shift in emphasis from “costs” to “values” is represented by theTriple Top Line performance appraisal that generates social, environmental as well as economic benefits. The Triple Bottom Line has social & environmental aspects on the bottom line but only economics at the top; consequently social & environmental aspects may easily; be regarded as additional obstacles – or costs - to be overcome in the pursuit of economic gain B Corps – Benefit Corporations – see below in this lecture

22 Example of the emerging age or episteme: Towards Sustainability Drive Enterprises The Phoenix Economy Phoenix Economy Report is available on Mole

23 The Phoenix Economy a report by Volans (2009)The Phoenix Economy, subtitled 50 Pioneers in the Business of Social Innovation, is the first Volans market intelligence report. It reveals how leading entrepreneurs, investors and businesses are thinking as they develop and scale market solutions to a broad array of economic, social, environmental and governance challenges. Extracts from the report: A new economic order is rising from the ashes—and a new generation of innovators, entrepreneurs and investors is accelerating the changes essential for delivering scalable sustainable solutions to the world. Seismic change is clearly underway, with the collapse of global financial markets threatening to make already critical challenges—climate change, water scarcity, geopolitical instability— much worse.

24 …more extracts from The Phoenix Economy ReportAs James Lovelock recently observed at the launch of his book—The Vanishing Face of Gaia: A Final Warning—our ecological debt far outweighs our financial debt and the ensuing ecological crunch will be severe. This sentiment was echoed by our survey respondents and interviewees who stressed that the world now faces multiple crunches in areas such as energy security, food, biodiversity, pandemic risks and climate instability, amongst others. Times are tough and getting tougher, but leading social and environmental entrepreneurs are confident that—with the right assistance—the time is ripe for a true paradigm shift to a more sustainable economy.

25 The Phoenix Economy: Implications for Business EducationMost leading business schools have started to look at social entrepreneurship, but this has tended to be a marginal activity, with teaching and research kept in ‘social’ silos within the schools. Now is the time to bring this teaching and research agenda closer to mainstream business education, looking beyond social enterprises to what Volans calls the ‘business of social innovation’.

26 The Phoenix Economy: Implications for Business EducationRethink the curriculum and research agenda The growing impact of the economic discontinuity suggests that it is time to question the very principles on which business educators base their curricula, where areas like financial modelling, strategy and marketing, show little evidence of the integration of ethical, social and environmental considerations. This is true for accounting as well … except for Sheffield University students!

27 The Phoenix Economy & EntrepreneursSo how do leading entrepreneurs see the challenges and opportunities today? Our survey results spotlight five trends that will shape the agenda: 1 Weathering the Storm 2 Rebooting the Business Case 3 Evolving the ‘Ecosystem’ 4 Bridging the Micro-Macro Divide 5 Delivering Government-as-Unusual

28 The Phoenix Economy as a Paradigm ShiftOur respondents believe that the prospect of a true paradigm shift has never been greater—in the original sense of the term ‘paradigm’: a prevailing worldview and what is taken for normality. A paradigm shift is under way—with profound implications for society, and for politics, economics and entrepreneurship in particular.

29 N.B. Paradigms & Epistemes“Paradigm” means “typical example” or “model of something”. It is from the ancient Greek meaning to show side by side – such as the templates used to enable the replication of columns in temples etc. An “episteme” in contrast refers to the possibility of knowledge. It is a more fundamental concept. A new episteme will bring about new paradigms but a new paradigm does not imply a new episteme.

30 N.B. Paradigms & EpistemesSo An Episteme may be close to the original meaning of Paradigm, a world view. But Epistemic analysis tells us about the underlying possibilities of knowledge that allow for different paradigms: epistemes explain from where worldviews come. Where will the change to a Primal episteme take us? It is up to you!

31 With a little help from….The World Business Council for Sustainable Development Example of the Emerging Age or Episteme. Report is available on Mole

32 Vision 20:50 A platform for dialogue – not a blueprintThis report does not offer a prescriptive plan or blueprint but provides a platform for dialogue, for asking questions. Its highest value may be in our narrative of the gap between Vision 2050 and a business -as-usual world, and the queries and dilemmas it raises. An equally firm finding is that business-as-usual cannot get us to sustainability or secure economic and social prosperity; these can be achieved only through radical change, starting now.

33 Vision 20:50 Turbulent Teens (2010-2020): Crisis, clarity, actionThe global financial crisis at the end of the previous decade rocks people’s faith in business and governments, spurring a quest for renewal of trust and cooperation. Vision for 2050: “One World– People and Planet” lifestyles New ways of living have taken root all over the world, inspired by a change in the way success is defined and measured, as well as innovative forms of education and connectivity. The “One World – People and Planet” ideal is embedded and practiced globally, emphasizing interdependence among all people and dependence on the Earth. Rebuilding the economy, with new rules Efforts begin to develop frameworks that decouple economic growth from resource consumption and ecosystem degradation. How to measure success and progress is reconsidered.

34 Vision 20:50 Road Map

35 Vision 20:50 Co-creating value in webs Complex systems will provideNo business is an island. Neither is it a single supply chain with simple linear inputs and outputs. The more apt and more valuable metaphor for business today is the network, or web, of relationships and systems, each with its own inputs and outputs. Complex systems will provide the foundation Our findings suggest that there is no simple, single path, but rather the need to design, build and transform complex systems (e.g., energy, finance, food, forests, transport and cities) that will in turn provide the foundation for survival and human development throughout the 21st century and beyond. N.B. Vision 2050 is another example of the transition to a Primal Episteme. This is apparent in the call for new values, lifestyles and business models. The Ecological Economy (ISD Book) summarises Vision 20:50 concepts and new research in Agent Based Modelling (next lecture) explores new ways of managing and appraising complex relations.

36 A Primal Business Declaration?We envision a new sector of the economy which harnesses the power of private enterprise to create public benefit. This sector is comprised of a new type of corporation which is purpose-driven, and creates benefit for all stakeholders, not just shareholders. As members of this emerging sector, We hold these truths to be self-evident: That we must be the change we seek in the world. That all business ought to be conducted as if people and place mattered. That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all. To do so, requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations. Actually it is the B Corps Declaration see the PR Blog

37 B Corps: example of the emerging Age or EpistemeA benefit corporation or B corporation is a corporate form in the USA designed for for-profit entities that want to consider society and the environment in addition to profit in their decision making process. B corporations differ from traditional corporations in regards to their purpose, accountability and transparency. The purpose of a benefit corporation is to create general public benefit, which is defined as a material positive impact on society and the environment. The additional accountability provisions found in a benefit corporation require the director and officers to consider the impact of their decisions not only on shareholders but also on society and the environment. The added transparency provisions of a benefit corporation require that the company produce an annual benefit report on its overall social and environmental performance. Benefit corporations do not need to be certified or audited by the third party standard. Instead, benefit corporations utilize third party standards similarly to how the Generally Accepted Accounting Principles (GAAP), solely as a rubric a company uses to measure its own performance.

38 B Corps A revolution that is happening now. In the USA, B Corps legislation is being adopted state by state. For latest position see B Corps Net

39 B Corps In making decisions, benefit corporation directors and officers are required to consider the effects any action may have on— the corporation’s ability to accomplish its general and specific public benefit purposes; the corporation’s shareholders; the employees and workforce of the corporation and suppliers; the interests of customers as beneficiaries of the corporation’s public benefit purposes; community and societal considerations, including the communities in which offices or facilities of the corporation and its suppliers are located; the local and global environment; and the short- and long-term interests of the corporation. Source: Benefits Corps Net

40 Are You Happy? Can we have new goals for development to replace economic measures such as GDP, ROCE, Share Holder Value etc? Perhaps a radical goal that assesses our overall well-being & not just our economic performance? Is this something just Hippies can help with; i.e. not serious researchers and institutions?

41 Are You Happy? Can measures of happiness really replace economic measures as development goals? Some serious and influential minds think that perhaps we can… for example… John F. Helliwell: Vancouver School of Economics, University of British Columbia, and the Canadian Institute for Advanced Research (CIFAR) Richard Layard: Director, Well-Being Programme, Centre for Economic Performance, London School of Economics. Jeffrey D. Sachs: Director, The Earth Institute, Columbia University

42 Are You Happy? Helliwell, Layard and Sachs are the authors of the World Happiness Report 2013 Report is available on Mole.

43 Are You Happy? Jeffrey Sachs has been identified as the “the most important economist in the world” by the New York Times.

44 Are You Happy? Wo r l d H a p p i n e s s Report , pp

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46 A Happiness – or well-being Development Triangle?Four of the top five happiness countries are well known for their sustainable development successes – Switzerland too had some important sustainable development initiatives. So are happiness or well-being related? If you recognise the role of relations in sustainable development (as in say an economic ecology), then it is perhaps that case that good relations bestow many benefits… Happy People …and Triple Top Line business accounting systems will help to get us there! GOOD RELATIONS Social Well-Being Flourishing Ecosystem

47 Episteme Change & BusinessRevision A World in Transition: Episteme Change & Business From Intrinsic Sustainable Development: Epistemes, science, business and sustainability by Birkin & Polesie, 2011, World Scientific Press.

48 The business world we inheritedMan’s Lived Natural World: World Only of interest as a resource or constraint on growth?

49 The Emerging World Is one of Environmental Economics: a subfield ofeconomics concerned with environmental issues. Environmental Economics Environment

50 The Future World? EcoPeople ECOSYSTEM EcoBusinessAn Economic Ecology: where economic activity grows within and is supported by a healthy ecosystem ECOSYSTEM EcoBusiness EcoPeople

51 The Future World? Needs new forms of accounting & new kinds of accountants Management Accounting will continue to evolve in response to these new challenges. Some of you will carry these changes forward.

52 Key Points for RevisionWhat fundamental changes are being or may be made for a more sustainable business? 52