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Shared Value and Sustainable Entrepreneurship


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Slides of my guest lecture during the kick-off event for the project of Sustainable Entrepreneurship (3rd year students of the Faculty of Accounting, Finance and Marketing, University of Aruba)

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Shared Value and Sustainable Entrepreneurship

  1. 1. 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
  2. 2. Outline presentation The myth of infinite growth Sustainability• Sustainable entrepreneurship• Corporate Social Responsibility• Shared Value• Aruba’s challenges• New forms of ‘preneurship’ for Aruba••
  3. 3. The myth of infinite resources• Every society clings to a myth by which it lives…• Ours is the myth of infinite economic growth
  4. 4. The myth of infinite resources• God provided infinite land, food and resources for Europeans to exploit…Discovery of America
  5. 5. The myth of infinite resources • Science will solve all of the world’s problemsRenaissance
  6. 6. The myth of infinite resourcesIndustrial revolution
  7. 7. It fueled rapid economic progress
  8. 8. “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
  9. 9. The myth of infinite resources
  10. 10. Cross border exchange of…Goods…. People…. Capital…Culture…
  11. 11. …and cross border exchange of…Information….
  12. 12. Dramatic increase in production capacity
  13. 13. Era of unlimited choice…
  14. 14. More than we can process or consume… How many t.v. channels do you have in your cable package?
  15. 15. More than we can process or consume… How many apps for the iPhone?
  16. 16. The digital revolution…..
  17. 17. The downside….
  18. 18. In the next 40 yearsthe pressure on Earth’s ecosystemswill increase dramatically
  19. 19. The competition for FOOD, WATER, LAND andENERGY will intensify.
  20. 20. 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
  21. 21. 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)
  22. 22. The world is using the equivalent of oneand a half planet to support life on Earth
  23. 23. “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
  24. 24. • 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.
  25. 25. So what does it all mean for a small country like Aruba?
  26. 26. 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.••
  27. 27. 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.
  28. 28. 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
  29. 29. Abo dicidi awe, nos Aruba di mañan Nos Aruba 2025
  30. 30. • 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.
  31. 31. 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
  32. 32. The Sustainability Challenge….
  33. 33. 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.
  34. 34. Some great initiatives as a result of Nos Aruba 2025 However, more needs to be done…
  35. 35. (maatschappelijk verantwoord ondernemen)
  36. 36. Unsustainable business models never pay off in the end….
  37. 37. 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”
  38. 38. New leadership calls for a newapproach to conducting businessVisionary leaders think ‘sustainable’….
  39. 39. 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….
  40. 40. 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.
  41. 41. 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.
  42. 42. 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.
  43. 43. The evolution of responsibility Late 2000s 1980s Responsible Philanthropy Competitiveness 1970s Shareholders Early 1990s Early 2000s Corporate Corporate Governance Accountability Late 1990s Stakeholders Engagement
  44. 44. 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
  45. 45. Focus CSR PlanetPeople Profit
  46. 46. 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  
  47. 47. 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
  48. 48. Let’s start from the very beginning....Porter and KramerHarvard Business Review 2011How to reinvent capitalism – and unleash a wave of innovation and growth
  49. 49. 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.”
  50. 50. Entrepreneurship on Aruba
  51. 51. 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)•
  52. 52. 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…
  53. 53. Developing smart ventures Innovation Sustainability• Diversification• Productivity (resource efficient)• Smart growth• High-skilled jobs• Driven by technology• Shared value••
  54. 54. New forms of ‘-preneurs’• Aruba government economic policy is geared towards the development of new entrepreneurial ventures.
  55. 55. New forms of ‘-preneurs’Key areas in Aruba that require Ecopreneuersentrepreneurial innovation Sociopreneuers Creativepreneurs Globopreneurs
  56. 56. Ecopreneurs • Commercial ventures Ecological entrepreneurs geared towards solving ecological and environment problemsEntrepreneurial areas
  57. 57. Ecopreneurs
  58. 58. Ecopreneurs (in Aruba)Waste separation plant Barcadera Free Zone Waste separation and export of recyclable products (paper, plastic, aluminum, etc.)
  59. 59. Ecopreneurs (in Aruba)
  60. 60.
  61. 61. Sociopreneurs • Entrepreneurs with Social entrepreneurs innovative business solutions to society’s most pressing social problems.Entrepreneurial areas
  62. 62. Sociopreneurs
  63. 63. Sociopreneurs (Aruba) Green Vibes Sustainability, Land & Energy NV.
  64. 64. 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
  65. 65. Creativepreneurs
  66. 66. Creative industries taking over...Added value: approximately € 7.1 billion in theNetherlands
  67. 67. Creativepreneurs (in Aruba)
  68. 68. Globopreneurs • Developers and/or Global entrepreneurs distributors of products and services destined for export (competing in theEntrepreneurial global market space). areas
  69. 69. GlobopreneursExport expands the economic pie, generates flow of foreign currency, attracts new technologies and creates new forms of employment.
  70. 70. 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.
  71. 71. Globopreneurs (in Aruba)• Moving towards a knowledge- driven economy.• Attracting foreign investment with focus on innovation and sustainability.• Synergy free zone, airport and harbor.
  72. 72. We share an awesome responsibility, youand I, a responsibility that transcends thistime and this place.
  73. 73. Final thought… Instead of thinking “outside the box”, just get rid of the box…
  74. 74. Paper assignment
  75. 75. Edward M. Erasmus, MAe.erasmus@fzanv.comedward.erasmus@ua.awFacebook:
  76. 76. Acknowledgements• Government of Aruba, Ministry of Economic Affairs, Social Affairs and Culture: The Green Gateway: Vision-and-Policy.pdf• Green Aruba:• Lindgren, Anders. Six Forces. Shaping our Present and Future Lives. anderslindgren4u• Nos Aruba 2025:• Porter, Michael and Mark R. Kramer, Creating Shared Value: