Increasing shared value through sustainable entrepreneurship Corporate social responsibility Innovation Smart ventures Edward Erasmus MA University of Aruba Faculty of Accounting, Finance and Marketing March 11, 2013
Outline presentation The myth of infinite growth Sustainability• Sustainable entrepreneurship• Corporate Social Responsibility• Shared Value• Aruba’s challenges• New forms of ‘preneurship’ for Aruba••
The myth of infinite resources• Every society clings to a myth by which it lives…• Ours is the myth of infinite economic growth
The myth of infinite resources• God provided infinite land, food and resources for Europeans to exploit…Discovery of America
The myth of infinite resources • Science will solve all of the world’s problemsRenaissance
The myth of infinite resourcesIndustrial revolution
“Global economic activity(GDP) has increased by a factorof 40 since the start of theIndustrial Revolution.”~Intergovernmental Panel on Climate Change (IPCC),Special Report on Emissions Scenarios, 2001
In the next 40 yearsthe pressure on Earth’s ecosystemswill increase dramatically
The competition for FOOD, WATER, LAND andENERGY will intensify.
Addressing sustainability• Firstly seriously discussed in the 1980s• Led by the United Nations• Focus on critical issues of environment and development• Strengthen international cooperation• Population, food security, the loss of species and genetic resources, energy, industry, and human settlements are all interrelated
Sustainable Development“Development which meets theneeds of the present, withoutcompromising the ability of futuregenerations to meet their ownneeds.” - Our Common Future The Brundtland Commission Report (1987)
The world is using the equivalent of oneand a half planet to support life on Earth
“Our consumption of the Earth’s natural resources is depleting theplanet’s ability to replenish itself - and to sustain life on earth.” - WWF Global Report
• 3/4 of the world’s fisheries are over-fished• Half of the world’s original forest has been destroyed. Additional 2% lost every year.• Species extinction is currently 1,000x the natural evolutionary rate• 1/4 of all the birds and mammals on earth are in danger of extinction.• Climate change is already happening, and poses a threat unlike any other facing civilization.
So what does it all mean for a small country like Aruba?
Our current challenges… Real GDP per capita remained virtually flat since 1990. Uneven income distribution.• Population density: 550 inhabitants per square kilometer.• Individuals aged 60+ will double between now and 2025.• 42% of Aruba’s population is currently chronically obese.• A public health care deficit that is growing.• Educational performance below expectations.• Increased crime and other social problems.• Huge government deficits.••
Finding the right balance… Balance Preserving Improvement natural of lifestyles resources and well- and being ecosystemsWe should strive to maintain a delicate balancebetween our need to improve lifestyles and feeling ofwell-being on one hand, and preserving naturalresources and ecosystems, on which we and futuregenerations depend on the other hand.
So where do we go from here?...It’s more than obvious that a new economic, social and environmental (strategic) model needs to be implemented……Sustainability should be the primary focus
Abo dicidi awe, nos Aruba di mañan Nos Aruba 2025
• To involve the broad community in creatingWhy Nos Aruba 2025? together a vision for Aruba’s future.• Stimulate sustainable development.• National Integrated Strategic Plan (NISP).• To stimulate coordination and dialogue between all stakeholders.
The process… Discovery Dream Design Destiny Design of the ways Destiny - BuildingDiscovery of the Dream of the this can be brought the plan to achieve Positive Core desired future about this future
Principles• We integrate economic, social, community and environmental priorities.• We respect and live within the natural resources and limits of our island.• We must achieve a diversified and dynamic economy (beyond tourism).• We honor our culture and values• We make decisions based on meeting the present needs without compromising the needs of future generations.• Everyone — individuals, families, communities, businesses and government — has accountability for achieving a sustainable Aruba.
Some great initiatives as a result of Nos Aruba 2025 However, more needs to be done…
Unsustainable business models never pay off in the end….
An outdated approach to business and value creation• Companies have overlooked the wellbeing of their customers the depletion of natural resources vital to business the viability of key suppliers “the economic distress of the communities in which they produce and sell”
New leadership calls for a newapproach to conducting businessVisionary leaders think ‘sustainable’….
Think sustainable….• Environmental resources are limited and are quite sensitive to everything that we do.• We are starting to experience the effects of the actions of generations that came before us.To make sure that future generations will notexperience worse, we need to be aware of theideals and requirements of sustainability….
Corporate Social Responsibility (maatschappelijk verantwoord ondernemen)Also known as: sustainable entrepreneurship …..the integration of business operations and values, whereby the interests of all stakeholders including investors, customers, employees, the community and the environment are reflected in the companys policies and actions.
Sustainable enterprises1. Incorporating principles of sustainability into each of their business decisions.2. Supplying or consuming environmentally friendly products or services that replaces demand for non green products and/or services.3. Greener than traditional competition.4. Enduring commitment to environmental principles in their business operations.
Why practice CSR?• Companies have learned the hard lesson that without a sustainable society, there is no sustainable business….• So in instead of focusing on short-run returns• Companies focus on contributing to long- term societal well-being in which everybody can develop and grow.
The evolution of responsibility Late 2000s 1980s Responsible Philanthropy Competitiveness 1970s Shareholders Early 1990s Early 2000s Corporate Corporate Governance Accountability Late 1990s Stakeholders Engagement
The evolution of responsibility Late 2000s 1980s Sustainable markets Health & safety 1970s Quality management Early 1990s Early 2000s Environmental Triple bottom line management Late 1990s Health, safety & environment
CSR towards a new approach?Corporate CorporateSocial Sustainability &Responsibility Responsibility Philanthropic Collaborative Risk-based Reward-based Image-driven Performance-driven Specialized Integrated Standardized Diversified Marginal Scalable Western Global
CSR towards a new approach? CSR can only be resilient if it CSR is part of the DNA of an Value organisation, i.e. CSR will Creation only survive the vagaries of fickle markets, fluctuating Good Governance profits, financial crises and leadership whims if it is Societal totally embedded in theContribution corporate culture, strategy and governance systems”Environmental Integrity – Wayne Visser, 2008
Let’s start from the very beginning....Porter and KramerHarvard Business Review 2011How to reinvent capitalism – and unleash a wave of innovation and growth
Companies must bring business and society back together• Shared value – creating economic value in a way that also creates value for society by addressing its needs and challenges.• “Business must reconnect company success with social progress.”
Aruba entrepreneurs Competition oriented (no differentiation) Same products in same markets• Fear of trying out new things• Lack of motivations (comfort zone)• Technically challenged (so much more• out there)•
Basic conclusionA change in the fundamental entrepreneurialthinking on Aruba should happen quickly,otherwise the small and medium businesssector will autodestruct itself through far-going cannibalization…Innovation and sustainableentrepreneurship is the key…
Sociopreneurs (Aruba) Green Vibes Sustainability, Land & Energy NV.https://www.facebook.com/dogoodaruba
Creativepreneurs • One who undertakes the Creative entrepreneurs creation/production and distribution of an original creative work and is able to create wealth through an established businessEntrepreneurial venture. areas
Globopreneurs • Developers and/or Global entrepreneurs distributors of products and services destined for export (competing in theEntrepreneurial global market space). areas
GlobopreneursExport expands the economic pie, generates flow of foreign currency, attracts new technologies and creates new forms of employment.
Globopreneurs (in Aruba)• Utilizing Aruba’s unique socio- economic resources and geo- political position within the Kingdom of the Netherlands to develop new economic opportunities.• Positioning Aruba as a strategic hub (gateway) for European businesses doing business in Latin America.
Globopreneurs (in Aruba)• Moving towards a knowledge- driven economy.• Attracting foreign investment with focus on innovation and sustainability.• Synergy free zone, airport and harbor.
We share an awesome responsibility, youand I, a responsibility that transcends thistime and this place.
Final thought… Instead of thinking “outside the box”, just get rid of the box…
Edward M. Erasmus, MAe.email@example.com@ua.awFacebook: http://www.facebook.com/edwardmerasmusTwitter: http://www.twitter.com/em_erasmusLinkedIn: http://www.linkedin.com/in/edwardmerasmusBlog: http://edwardmerasmus.wordpress.com
Acknowledgements• Government of Aruba, Ministry of Economic Affairs, Social Affairs and Culture: The Green Gateway: http://www.freezonearuba.com/docs/The-Green-Gateway-Economic- Vision-and-Policy.pdf• Green Aruba: http://www.greenaruba.org/• Lindgren, Anders. Six Forces. Shaping our Present and Future Lives. www.slideshare.com: anderslindgren4u• Nos Aruba 2025: http://www.nosaruba2025.aw• Porter, Michael and Mark R. Kramer, Creating Shared Value: http://hbr.org/2011/01/the-big-idea-creating-shared-value