To pack or not to pack green: ympäristövastuullisen päätöksenteon haasteita
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This document discusses sustainability decisions for businesses. It notes that sustainability can provide competitive advantages like efficiency, reputation benefits, and avoiding future regulations. However, sustainability orientation does not always lead to improved firm performance and may require large trade-offs. Studies discussed found that willingness to switch to more sustainable materials depends on factors like a product or process's dependency on existing materials and environmental friendliness as a predictor of change. The document advocates making sustainability decisions by responding to and anticipating stakeholder needs and feelings, including others' perspectives, and considering one's responsibilities.
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To pack or not to pack green: ympäristövastuullisen päätöksenteon haasteita
- 1. To pack green or not to pack green? Sustainability decisions: “Meeting the needs of the present generation without compromising the ability of future generations to meet their needs" (Brundtland, 1987) Pack to the Future, PackageHeroes Stakeholder seminar, 15.2.2022 Henri Hakala Professor (Entrepreneurship) LUT School of Business & Management henri.hakala@lut.fi
- 2. If not for the moral responsibility and ethical motivation.. How about? Competitiveness: • Efficiency and waste reduction • Green marketing and reputation building • Improved access to specific clients/customers Legitimacy & Pressure • Anticipate future regulation • Early adopters can co-write regulation • Avoid penalties • Institutional investors • Employee attraction & retention
- 3. Does doing good - also mean doing well? Unfortunately, it is not so simple. In our longitudinal study of 267 manufacturing firms, firm performance was measured 2 years after ‘sustainability orientation’. If trade-offs required are too large - > Mission drift or revenue drift But generally - Sustainability indeed “sells” and is becoming a ‘hygiene’ factor for everything. Kautonen, T., Schillebeeckx, S. J., Gartner, J., Hakala, H., Salmela-Aro, K., & Snellman, K. (2020). The dark side of sustainability orientation for SME performance. Journal of Business Venturing Insights, 14, https://doi.org/10.1016/j.jbvi.2020.e00198
- 4. Money is not the only form of “profit” • Profit can be thought also as: • value for society, value for environment..
- 5. As previously said, it is not easy – Yet Companies are willing to switch.. Functional parity - Apples and Pears But how new (materials) resources are selected and how they are matched with the existing resources in place in the organization? + Environmental friendliness is highly significant predictor of change! Asset base reflects the history of the firm – and constrains the managers ability to change the organization Product’s dependency on the material - ‘Production’ process dependency on the material - Firm’s dependence on the intangible assets + The study was about most important materials - Switching less central materials/resources should be easier. Compare: meat vs. packaging for a meat manufacturer. Controlled: costs, risk of supply, stakeholder/competitive pressure Robustness: Willingness to pay -> results are similar. Supply risk? – change less likely. Schillebeeckx, Simon JD, Teemu Kautonen, and Henri Hakala. "To Buy Green or Not to Buy Green: Do Structural Dependencies Block Ecological Responsiveness?." Journal of Management (2020): https://doi.org/10.1177/0149206320977896 In this study, we looked at 1602 decisions by 267 manufacturing business leaders, and their decisions to switch to more sustainable materials.
- 6. How are ‘right’ sustainability decisions made? • Respond & Anticipate • Include & Reflect • What things you are ‘responsible’ for and to whom? • Feelings are ‘way of knowing’ affected by your cognitive knowledge (and vice versa) • Objectively - this can be right or wrong. Commitment to Responsible Product Innovation Framework An individual-level cognitive-emotional process model Research papers in progress, in peer-review. Feeling of making the right choice Respond: How do I feel and what I know Anticipate: How will I feel if I act / do this? Reflexivity: How might the stakeholders react to this decision? Include others: What does this mean to the important stakeholders In another study we looked at 26 ‘Trailblazing’ entrepreneurs who are very committed for responsible business (core of their business idea)
- 7. Bankrupt companies do not make any sustainability improvements
- 8. No time, not sure, unclear.. but you just must make the decision: Meme: Can market need payback love ? • Can you do it? – Do what YOU can and can afford now - learn more – become better at things.. • Need? – Does the market ‘need’ it, benefit from it, value it…? • Payback? – Is it worth it? Does this lead to good things? Avoid harm? “Profit” you, environment or society? • Love? – Do my customers, investors, stakeholders, society, environment love this? Want to learn more about strategy making tools? Check out our book: Hakala, H., & Vuorinen, T. (2020). Tools for Strategy: A Starter Kit for Academics and Practitioners. Cambridge University Press. Available pdf/printed at: https://www.cambridge.org/core/elements/abs/tools-for- strategy/C843B370B13875EC6E18684BDF6749CF Teko Tarve Takaisi nmaks u Tunne
- 9. Thank you for your attention. Questions? More info? Contact: henri.hakala@lut.fi
Editor's Notes
- Overall story of the presentation: Shakespeares Hamlet discusses how painful and miserable human life is, and how death (specifically suicide) would be preferable, would it not be for the fearful uncertainty of what comes after death Sustainability decision are difficult and complex, and often rely on the idea that we should just do it because it is right for the planet and people .. but maybe we can find more compelling, business reasons. Doing good, unfortunately does not automatically mean doing well. -
- Tässä tutkimme siis miten yrityksen ympäristö-orientaatio, taipumus tehdä ympäristövastuullisa tekoja vaikuttaa yrityksen kannattavuuteen. Ja miten ‘vastuullisuus-trade-offit tähän vaikuttavat’ ympäristövastuullinen bisnes voi siis olla hyvinkin menestyksekästä, mutta sitä ei voi tehdä taloudelliset seikat unohtaen. Looginen tulos – eikä tästä ei tämän, enempää, mutta tämä oli tehtävä, koska usein vallalla on vain suuri usko siihen että ‘hyvän tekeminen on aina hyvää bisnestä..’’
- It’s not just co2.. Climate change is a big thing, but sustainability is more complex In this study, we looked at 1602 decisions by 267 manufacturing business leaders, and their decisions to switch to more sustainable materials. The questions were about core materials. Päärynöistä ei tietysti saa omenapiirakkaa, mutta päärynäpiirakkakin voi olla hyvää – joten ’functional parity’ tarkoittaa että ’uusi materiaali’ hoitaa hommansa tyydyttävästi. how new resources are selected and how they are matched with the existing resources in place in the organization Asset base reflects the history of the firm – and constrains the managers ability to change the organization Product dependency - if highly dependent on a specific input material – less sensitive to the positive attributes of alternative input materials ‘This has worked well for us’ - “ I do not see this important to us’ Process dependency - disrupt the firm’s highly specialized, efficient production process retooling, machinery, re-training, Intangible's dependence + intangibles have a higher level of plasticity—an ability to respond to environmental opportunities E.g. Reputation can be leveraged across a wide spectrum of products and services Frims relying on intangibels more sensiteive - higher capability and stronger potential for value capture Switching less central materials/resources should be easier (i.e. like packaging for a food manufacturers But, costs, risk of supply, - stakeholder pressure less. Robustness – we checked also ‘willingness to pay’ .. 10-20% more expensive However, if scenario contains item ‘temporary supply disruptions, interactions are not significant, and willingness to switch because EF becomes considerably weaker.
- Understandably.. While we might wish, hope and dream.. Economic reality is that customers have to pay for the additional cost / and if environmental friendliness makes the company uncompetitive – and bankrupt - because some competitors will benefit from lower cost at the cost of the environment the changes will not happen. Yet another good reason for collaborating.. Between companies, and between regulators.
- Tämä on kaikki niin vaikeaa, ja tutkijat tutkii ja on eri mieltä ja epäselviä.. Mutta lopulta Päätöksillä ja teoilla se maailma menee oikeasti eteenpäin, Hyvät päätökset perustuu faktoihin, mutta faktat muuttuu, eikä niitä nyt vaan aina ole saatavana. Jos olisi, niin algoritmit ja koneet tekisi paremmat päätökset kuin johtajat. (tästäkin muuten on tutkimusta..) ja kaikki tekisi samat päätökset… ja kukaan ei olisi erilainen, tai kilpailukykyinen.. Siksi minä olen alkanut puhua tällaisesta yksinkertaistetusta meemistä päätöksentekoon. Teko Tee heti se, mitä voit – hanki lisää tietoa ja opettele paremmaksi kestävyysasioissa Tarve. Mieti, onko toiminnalle kysyntää – hyötyykö siitä joku, antaako se lisäarvoa, onko markkinoilla aukko Takaisinmaksu. Onko toiminta vaivan arvoista, kuka siitä hyötyy, aiheuttaako se haittaa Tunne (ja tieto). Pitävätkö asiakkaat, sijoittajat, osakkeenomistajat ja yhteiskunta kyseisestä toiminnasta Ja kun tässä oli neljä pointtia, eikä perinteiset kolme, niin Kirsi ymmärtääkseni puhuu sitten seuraavaksi vielä tunteista päätöksissä, että jäisi sekin mieleen.