♟️Competitive Strategy Unit 12 – Ethics and Sustainability in Business

Key Concepts and Definitions

• Ethics involves the moral principles and values that guide behavior and decision-making in business contexts
• Sustainability focuses on meeting present needs without compromising the ability of future generations to meet their own needs
• Corporate social responsibility (CSR) refers to a company's commitment to managing its social, environmental, and economic impacts
• Stakeholders include any individuals or groups who can affect or be affected by a company's actions (employees, customers, shareholders, communities)
• Triple bottom line (TBL) is a framework that considers social, environmental, and financial performance measures
  • Also known as "people, planet, profit"
• Greenwashing describes the practice of making misleading or false claims about the environmental benefits of a product or company
• Ethical dilemma arises when there are conflicting moral principles or obligations in a given situation
• Codes of ethics are formal statements that outline a company's values, principles, and expected behaviors

Ethical Frameworks in Business

• Utilitarianism seeks to maximize overall happiness or well-being for the greatest number of people
  • Decisions are evaluated based on their consequences
• Deontology emphasizes adherence to moral rules and duties, regardless of outcomes
  • Focuses on the inherent rightness or wrongness of actions
• Virtue ethics focuses on cultivating moral character traits (honesty, integrity, compassion)
• Care ethics emphasizes the importance of relationships, empathy, and attending to the needs of others
• Rights-based approaches assert that individuals have fundamental rights that should be respected (privacy, safety, non-discrimination)
• Justice-based frameworks aim to ensure fair and equitable treatment of all stakeholders
• Relativism recognizes that moral norms and values can vary across cultures and contexts
• Integrative social contracts theory (ISCT) proposes that companies should adhere to both hypernorms (universal principles) and local norms

Sustainability Models and Practices

• Circular economy aims to minimize waste and keep resources in use for as long as possible through reuse, recycling, and regeneration
• Life cycle assessment (LCA) evaluates the environmental impacts of a product or service throughout its entire life cycle (raw materials, production, use, disposal)
• Cradle-to-cradle design seeks to create products that can be fully recycled or safely returned to the environment
• Biomimicry involves emulating nature's strategies and designs to create more sustainable solutions
• Renewable energy sources (solar, wind, hydro) can reduce reliance on fossil fuels and mitigate climate change
• Green building practices aim to minimize the environmental impact of construction and operation (energy efficiency, water conservation, sustainable materials)
• Sustainable supply chain management involves considering environmental and social factors in sourcing, production, and distribution decisions
• Carbon footprint refers to the total greenhouse gas emissions caused by an individual, organization, or product

Stakeholder Analysis and Management

• Stakeholder mapping involves identifying and categorizing stakeholders based on their level of interest and influence
• Engagement strategies aim to build relationships and foster dialogue with stakeholders (surveys, focus groups, advisory panels)
• Materiality assessment helps prioritize sustainability issues based on their importance to stakeholders and the company
• Stakeholder value creation focuses on generating benefits for all stakeholders, not just shareholders
• Conflict resolution techniques (negotiation, mediation) can help address competing stakeholder interests
• Collaborative partnerships with NGOs, government agencies, or industry peers can amplify sustainability efforts
• Transparency and reporting practices (sustainability reports, ESG disclosures) enable stakeholders to assess a company's performance and hold it accountable
  • ESG stands for environmental, social, and governance factors

Integrating Ethics and Sustainability into Strategy

• Embedding ethical and sustainability considerations into the core business model, rather than treating them as separate initiatives
• Aligning sustainability goals with the company's mission, values, and long-term strategic objectives
• Incorporating sustainability metrics and targets into performance management systems and incentives
• Conducting regular audits and assessments to identify areas for improvement and ensure compliance with standards
• Investing in employee training and engagement programs to build a culture of ethics and sustainability
  • Can include workshops, e-learning modules, and recognition programs
• Collaborating with suppliers and partners to extend sustainability practices throughout the value chain
• Engaging in public policy advocacy and industry initiatives to drive systemic change
• Communicating sustainability commitments and progress to stakeholders through various channels (website, social media, annual reports)

Case Studies and Real-World Examples

• Patagonia's commitment to environmental activism and sustainable materials sourcing (organic cotton, recycled polyester)
• Unilever's Sustainable Living Plan, which aims to decouple business growth from environmental impact and enhance social impact
• Tesla's mission to accelerate the world's transition to sustainable energy through electric vehicles and renewable energy solutions
• Grameen Bank's microfinance model, which provides small loans to help alleviate poverty and empower women in developing countries
• Ben & Jerry's social mission, which includes supporting progressive causes and sourcing fair trade ingredients
• Seventh Generation's focus on creating environmentally-friendly household and personal care products
• Interface's Mission Zero initiative, which aims to eliminate any negative environmental impact by 2020
• Toms Shoes' one-for-one model, which donates a pair of shoes to a child in need for every pair purchased

Challenges and Opportunities

• Balancing short-term financial pressures with long-term sustainability investments
• Overcoming organizational silos and resistance to change
• Navigating complex and evolving regulatory landscapes across different jurisdictions
• Addressing concerns about greenwashing and ensuring authentic and verifiable sustainability claims
• Managing trade-offs and unintended consequences of sustainability initiatives (rebound effects, burden shifting)
• Harnessing emerging technologies (AI, blockchain, IoT) to drive sustainability innovation and transparency
• Tapping into growing consumer demand for sustainable products and services
• Attracting and retaining talent, especially among younger generations who prioritize purpose and sustainability
  • Millennials and Gen Z increasingly seek employers aligned with their values

Future Trends and Implications

• Increasing investor focus on ESG performance and risk management
  • Growth of sustainable investing and shareholder activism
• Expansion of the circular economy and closed-loop systems across industries
• Shift towards regenerative agriculture and sustainable food systems
• Rise of the sharing economy and product-as-a-service models (car sharing, clothing rental)
• Growing importance of climate resilience and adaptation strategies
• Heightened scrutiny of corporate political activities and lobbying efforts
• Emergence of new business models and value creation opportunities in the low-carbon economy
• Integration of sustainability into core business education and professional development programs