I. Triple Bottom Line & Sustainability Reporting
The concept of creating shared value amalgamates with the ideologies of the triple bottom line. When seeking an exemplar to grasp an ameliorate understanding of how the two concepts tie together, one may refer to PepsiCo’s vision statement: “Performance with Purpose.” The company believes it should not only generate revenue for the good of the company but use the revenue earned to invest in a better environment and society. They recognize societal value in their business as opposed to just economic opportunities. As mentioned in the article, “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success” (Porter, Kramer 2011). It is not about sharing existing value within a firm; it is about expanding the pool of economic and social value.From Eccles and Serafeim discuss in their work, The Performance Frontier, the four initiatives which are required for a company to develop a certain type of innovate program that promotes sustainable strategies which are: 1.) Identifying material ESG issues 2.) Quantifying the relationship between the financial and ESG performance 3.) Innovating products, processes, and business models 4.) Communicating the company’s innovations to stakeholders (2013). These steps help support that major, innovative strides in products, processes, and business models help to address ESG issues within a company.
When trying to identify a company's material ESG issues, the article introduces the “The Sustainability Accounting Standards Board” (SASB) materiality map. The framework identifies 43 ESG issues ranking from their materiality which examines the evidence of interest and the evidence of economic impact. Through this, a company will be able to recognize what the major materiality issues are that need to be addressed. Once a company has recognized what major materiality issues need to be addressed, it must then understand the relationship between financial and ESG performances by looking at it as cost reductions, revenue growths, and gross margin defenses. Many factors will complicate the relationship between both, therefore companies are required to measure their performance and financial variables in order to determine the causes for the financial results. Next, the company must then find new products, processes and business models that can improve the ESG issues and also increase its lead against its competitors, The more dramatic the innovations are, the greater the impact it will have. Lastly, the company must then be able to communicate its improvements to its shareholders and stakeholders. Shareholders and other stakeholders will not understand how innovations can improve ESG and financial performance is there is an absence of communication. An effective way of communicating the improvements is by integrating a report that will contain ESG and financial performances.
Petra Molthan-Hill expands on Eccles and Serafeim's last step of communicating the improvements made or intended by a company by discussing the concept of sustainable reporting. As of today, companies can use a sustainability reporting framework that is provided by the GRI (Global Reporting Initiative) to compromised their reporting guidelines. The most G4 is the most current version of the GRI as it sets guidelines on the principles of content (i.e., stakeholder inclusive, sustainability context, materiality, completeness) and quality (balance, comparability, accuracy, timeliness, clarity and reliability). The idea of the guidelines is to assure that the GRI cover the necessary issues and set standards for what the reports should meet.
Although GRI reports are beneficial for companies to have, there have been some critiques. It is claimed that these reports focus on showcasing only the more on favorable and positive actions while dismissing the less faltering issues to help uphold a company's image. Therefore, Molthan-Hill explains how it is essential that in addition to GRI reports, companies include shadow and territorial reports. Shadow reports allow the readers to understand the perspective of stakeholders and other external sources. Territorial reports are used to bring different perspectives from various stakeholders in a region rather than focusing on just a the report of the company. These reports will help balance the to keep their sustainability reports with other perceptions to help obtain and unbiased report.
II. Sustainability Strategies & Operations
The Performance Frontier relates to a company that has a sustainability strategy that works towards innovation that accounts for environmental, social, and governance (ESG) issues. In the article, the authors provide a framework on creating sustainable strategies by focusing on the increase of financial and ESG performance. There are four initiatives that the article presents which are required for a company to develop a type of innovative program that promotes sustainable strategies: 1.) Identifying Material ESG Issues 2.) Quantify the Relationship between Financial and ESG Performance 3.) Innovate Products, Processes, and Business Models, and 4.) Communicate the Company’s Innovations to Stakeholders. The ESG materiality issues can be identified by examining what problems a company may face in its industry that is indicated on the SASB Materiality Map.
In the article, “Why Sustainability is the New Key Driver of Innovation”, Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami, studied and analyzed 30 companies involved with sustainability initiatives and their outcomes. They bring forth the idea that there are five different stages that classify the status of a company regarding their sustainable performance. The five stages are: viewing compliance as an opportunity, making value chains sustainable, designing sustainable products and services, developing new business models, and creating next-practice platforms. With each step that a company takes helps lead them into an innovative increase.
In Chapter 9 of Molthan-Hill’s Guide to Sustainable Management, it goes into detail about concepts of LCA (life-cycle assessment), sustainable product design, and green manufacturing. The idea of LCA is looking at the inputs and outputs of a company. By doing so, a company will be able to properly recognize and assess their products’ and activities’ environmental impacts during its whole life cycle. The LCA is used for 3 primary reason: “1.) evaluate environmental burdens associated with a product, process to activity by quantifying and identifying energy and materials used and wastes released into the the environment 2.) assess impact of materials and energies that have on their environment 3.) identify opportunities to affect environmental improvements.”When it comes to lean systems and green manufacturing, Molthan-Hill indicates how these work towards finding more efficient way of doing thing by helping to eliminate waste/mudas (i.e., overproduction, inappropriate processing, waiting, transportation, motion, inventory, defects and under utilization of employees). It focuses on things such as just-in-time inventory, waste elimination, value streams, and continuous improvement as opposed to just mass production. In addition to improving efficiency, lean systems works on reducing non-value-added activities and producing only the amount of a product that is needed. Both lean and green systems focus on reducing waste and energy but do so in a way that leads to the improvement of the product’s quality. The use of lean and green practices can bolster a company’s competitive standing and become environmentally friendly.
III. Sustainable Innovations Systems
With the prevalent culture becoming more technologically inclined and reliant, it is imperative to also know how to interject the concepts of sustainability into that field as well. In the article, "From Green IT To Sustainable Innovation” , Osch and Avital focus on discussing the concepts of Green IT and ‘Green IS’ to demonstrate the importance and awakening of ‘sustainable innovation.’ The idea Green IT (also referred to as greening by IT) which examines ways to reduce not only CO2 emission but also energy consumption and waste produced in product's lifecycle. Green IS utilizes IT/IS to help organizations manage their environmental footprint. Although these sustainable approaches focus on bolstering environmental sustainability, regulatory compliance (Green IT) and cost reduction (Green IS), they overlook two important issues: the creation of social impacts and utilization of technology to create sustainable innovation. Green IT/IS do not use the maximum potential that IT and IS are capable of; they have the capacity to create a source of social, environmental, and economic worth for all stakeholders involved. The paper proposes the idea of sustainable innovation which is defined as “...designing and implementing sustainable organizational processes and practices that generate social, environmental, and economic value for all stakeholders involved.”
Abraham and Mohan build on the idea of sustainable innovation in their article, "Sustainability Innovation Systems.” They mention how firms follow a series of stages to reach “sustainable maturity” in which companies undergo different focuses of sustainability. The authors recognize how there are five different stages that classify the status of a company regarding their sustainable performance and within every stage, businesses their innovations. The authors propose to address this questions by supply information and prescriptions on what IT investments a company should make during each of the 5 stage which they refer to as “Sustainability Innovations Systems” (SIS).The sustainable research paper, Empirical Investigation of Sustainability Innovation Systems and the Stages of Sustainability Maturity, highlights the impact Information Technology (IT) has towards the investment of companies in IT assets to support the sustainable strategy as company’s progress through the sustainability stages of the sustainable maturity framework. The 6 year sustainable research (2009-2015) of sustainable companies in the pharmaceutical industry justify that the integration of Information Technology servers an important role in reinforcing businesses’ sustainability strategy. The role of IT assets depends on the stage business aim to achieve within the stages of sustainable maturity framework.
The concept of creating shared value amalgamates with the ideologies of the triple bottom line. When seeking an exemplar to grasp an ameliorate understanding of how the two concepts tie together, one may refer to PepsiCo’s vision statement: “Performance with Purpose.” The company believes it should not only generate revenue for the good of the company but use the revenue earned to invest in a better environment and society. They recognize societal value in their business as opposed to just economic opportunities. As mentioned in the article, “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success” (Porter, Kramer 2011). It is not about sharing existing value within a firm; it is about expanding the pool of economic and social value.From Eccles and Serafeim discuss in their work, The Performance Frontier, the four initiatives which are required for a company to develop a certain type of innovate program that promotes sustainable strategies which are: 1.) Identifying material ESG issues 2.) Quantifying the relationship between the financial and ESG performance 3.) Innovating products, processes, and business models 4.) Communicating the company’s innovations to stakeholders (2013). These steps help support that major, innovative strides in products, processes, and business models help to address ESG issues within a company.
When trying to identify a company's material ESG issues, the article introduces the “The Sustainability Accounting Standards Board” (SASB) materiality map. The framework identifies 43 ESG issues ranking from their materiality which examines the evidence of interest and the evidence of economic impact. Through this, a company will be able to recognize what the major materiality issues are that need to be addressed. Once a company has recognized what major materiality issues need to be addressed, it must then understand the relationship between financial and ESG performances by looking at it as cost reductions, revenue growths, and gross margin defenses. Many factors will complicate the relationship between both, therefore companies are required to measure their performance and financial variables in order to determine the causes for the financial results. Next, the company must then find new products, processes and business models that can improve the ESG issues and also increase its lead against its competitors, The more dramatic the innovations are, the greater the impact it will have. Lastly, the company must then be able to communicate its improvements to its shareholders and stakeholders. Shareholders and other stakeholders will not understand how innovations can improve ESG and financial performance is there is an absence of communication. An effective way of communicating the improvements is by integrating a report that will contain ESG and financial performances.
Petra Molthan-Hill expands on Eccles and Serafeim's last step of communicating the improvements made or intended by a company by discussing the concept of sustainable reporting. As of today, companies can use a sustainability reporting framework that is provided by the GRI (Global Reporting Initiative) to compromised their reporting guidelines. The most G4 is the most current version of the GRI as it sets guidelines on the principles of content (i.e., stakeholder inclusive, sustainability context, materiality, completeness) and quality (balance, comparability, accuracy, timeliness, clarity and reliability). The idea of the guidelines is to assure that the GRI cover the necessary issues and set standards for what the reports should meet.
Although GRI reports are beneficial for companies to have, there have been some critiques. It is claimed that these reports focus on showcasing only the more on favorable and positive actions while dismissing the less faltering issues to help uphold a company's image. Therefore, Molthan-Hill explains how it is essential that in addition to GRI reports, companies include shadow and territorial reports. Shadow reports allow the readers to understand the perspective of stakeholders and other external sources. Territorial reports are used to bring different perspectives from various stakeholders in a region rather than focusing on just a the report of the company. These reports will help balance the to keep their sustainability reports with other perceptions to help obtain and unbiased report.
II. Sustainability Strategies & Operations
The Performance Frontier relates to a company that has a sustainability strategy that works towards innovation that accounts for environmental, social, and governance (ESG) issues. In the article, the authors provide a framework on creating sustainable strategies by focusing on the increase of financial and ESG performance. There are four initiatives that the article presents which are required for a company to develop a type of innovative program that promotes sustainable strategies: 1.) Identifying Material ESG Issues 2.) Quantify the Relationship between Financial and ESG Performance 3.) Innovate Products, Processes, and Business Models, and 4.) Communicate the Company’s Innovations to Stakeholders. The ESG materiality issues can be identified by examining what problems a company may face in its industry that is indicated on the SASB Materiality Map.
In the article, “Why Sustainability is the New Key Driver of Innovation”, Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami, studied and analyzed 30 companies involved with sustainability initiatives and their outcomes. They bring forth the idea that there are five different stages that classify the status of a company regarding their sustainable performance. The five stages are: viewing compliance as an opportunity, making value chains sustainable, designing sustainable products and services, developing new business models, and creating next-practice platforms. With each step that a company takes helps lead them into an innovative increase.
In Chapter 9 of Molthan-Hill’s Guide to Sustainable Management, it goes into detail about concepts of LCA (life-cycle assessment), sustainable product design, and green manufacturing. The idea of LCA is looking at the inputs and outputs of a company. By doing so, a company will be able to properly recognize and assess their products’ and activities’ environmental impacts during its whole life cycle. The LCA is used for 3 primary reason: “1.) evaluate environmental burdens associated with a product, process to activity by quantifying and identifying energy and materials used and wastes released into the the environment 2.) assess impact of materials and energies that have on their environment 3.) identify opportunities to affect environmental improvements.”When it comes to lean systems and green manufacturing, Molthan-Hill indicates how these work towards finding more efficient way of doing thing by helping to eliminate waste/mudas (i.e., overproduction, inappropriate processing, waiting, transportation, motion, inventory, defects and under utilization of employees). It focuses on things such as just-in-time inventory, waste elimination, value streams, and continuous improvement as opposed to just mass production. In addition to improving efficiency, lean systems works on reducing non-value-added activities and producing only the amount of a product that is needed. Both lean and green systems focus on reducing waste and energy but do so in a way that leads to the improvement of the product’s quality. The use of lean and green practices can bolster a company’s competitive standing and become environmentally friendly.
III. Sustainable Innovations Systems
With the prevalent culture becoming more technologically inclined and reliant, it is imperative to also know how to interject the concepts of sustainability into that field as well. In the article, "From Green IT To Sustainable Innovation” , Osch and Avital focus on discussing the concepts of Green IT and ‘Green IS’ to demonstrate the importance and awakening of ‘sustainable innovation.’ The idea Green IT (also referred to as greening by IT) which examines ways to reduce not only CO2 emission but also energy consumption and waste produced in product's lifecycle. Green IS utilizes IT/IS to help organizations manage their environmental footprint. Although these sustainable approaches focus on bolstering environmental sustainability, regulatory compliance (Green IT) and cost reduction (Green IS), they overlook two important issues: the creation of social impacts and utilization of technology to create sustainable innovation. Green IT/IS do not use the maximum potential that IT and IS are capable of; they have the capacity to create a source of social, environmental, and economic worth for all stakeholders involved. The paper proposes the idea of sustainable innovation which is defined as “...designing and implementing sustainable organizational processes and practices that generate social, environmental, and economic value for all stakeholders involved.”
Abraham and Mohan build on the idea of sustainable innovation in their article, "Sustainability Innovation Systems.” They mention how firms follow a series of stages to reach “sustainable maturity” in which companies undergo different focuses of sustainability. The authors recognize how there are five different stages that classify the status of a company regarding their sustainable performance and within every stage, businesses their innovations. The authors propose to address this questions by supply information and prescriptions on what IT investments a company should make during each of the 5 stage which they refer to as “Sustainability Innovations Systems” (SIS).The sustainable research paper, Empirical Investigation of Sustainability Innovation Systems and the Stages of Sustainability Maturity, highlights the impact Information Technology (IT) has towards the investment of companies in IT assets to support the sustainable strategy as company’s progress through the sustainability stages of the sustainable maturity framework. The 6 year sustainable research (2009-2015) of sustainable companies in the pharmaceutical industry justify that the integration of Information Technology servers an important role in reinforcing businesses’ sustainability strategy. The role of IT assets depends on the stage business aim to achieve within the stages of sustainable maturity framework.
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