Strategy for sustainability

Positive Causal Links

- Positive causal links (marked as "+" or "s" for "same"): the two nodes move in the same direction. o When one node goes up the other goes up too o Lead in the same direction. Ex. one node goes up and the other goes up

Strategic CSR

- = transformation of value chain to benefit society while reinforcing a firm's strategy and competitive advantage + strategic philanthropy that leverages capabilities to improve salient areas of competitive context. - Strategic CSR; is better - Example: Lego o Changed their product, value chain, strategy o Bring imagination to kids; new games in business school o Changed their company to better align with their values o Bring education to kids who can't have it o Support education with imagination

A Theory of change

- A Theory of Change is an organization's hypothesis of the changes that will occur as it is utilizing its strategies and activities to achieve its mission. o becomes a roadmap, providing pathways of outcomes that lead to the organizational mission. It is essentially the logic behind an intervention

What is a system?

- A perceived whole whose elements "hang together" because they continually affect each other over time o Biological organisms, the atmosphere, organizations, families, ecological niches... o Parts are generally systems themselves and are composed of other parts

What is the difference between activities, output, outcome? theories of change reading

- Activity o Process driven o Coordinated set of actions - Output o Results measured (Tangible) o Directly produced o Immediate o Value created o Intention - Outcome o About people o Consequences of output o Indirect result - Resources= activities= outputs= outcomes= impact - Impact is not really what you've been shown

Has Rainforest Alliance certification been a success for Unilever? Why or why not?

- Assessing supply chain: o Yes, Spearheaded the transformation of the entire tea industry o New practices offer substantial benefits o High cost associated with the certification but eventually became the cost of doing business in the industry for all major producers - Assessing the marketing efforts; Overall o Yes: minimal costs, real market share gains, competitors have followed, certification to become industry standard, employee recruitment, retention etc. ■ It's about improving the bottom line for consumers o No: a lot of energy invested for something that hasn't given a long-lasting differentiation, made itself more vulnerable to attacks from ngos by claiming the moral high road

Bringing the environment down to earth

- Differentiating products o Find the right public good or offer an imaginative bundle of public and private goods - that will app0eal to a targeted market o Ex. meat from cattle that have not been exposed to herbicides or hormones o Ex. Patagonia and its loyal high-income customer—partly due to the fat that its brand identity is linked to conservation

Positive Feedback Loop

- Enhance or amplify changes; this tends to move a system away from its equilibrium state and make it more unstable.

System Analysis traffic, roads, carts

- Expand the roads? Ease the traffic? - The extension of roads is met with proportional increase in traffic - The fundamental Law of Road Congestion o The extension of roads is met with a proportional increase in traffic - Problem = traffic - Symptomatic solution = highways - Negative side effect; people pushed to suburbs - Long term; increases traffic because more people are incentivized to drive into the city if they live far away - Fundamental law of road congestion o The extension of roads is met with a proportional increase in traffic

GHG Principles (5)

- GHG accounting shall be based on the following principles 1. Relevance ■ Contains information that users (both internal and external) need for their decision making 2. Completeness ■ In practice, lack of data may be a limiting factor 3. Consistency ■ Consistent application of account approaches, inventory boundary, and calculating methodologies is essential to producing comparable GHG emissions data overtime. 4. Transparency ■ Information should be disclosed in a clear, factual, neutral manner based on clear documentation and archives 5. Accuracy ■ Data should be sufficiently precise to enable intended users to make decisions with reasonable assurance that the reported information is credible

Balancing Loop & Gap

- Generates forces of resistance - Maintains equilibrium - Maintain stability and lead to equilibrium - Keep systems "where the out to be" - Negative feedback loop - Keeps systems "where they ought to be" Gap - Show stopper, allows the loop to be stopped

Intent = impact

- If you cant actually show it, the intent is null - Contention is that intent is not always measurable - We need to invent a new way to measure it - Intent is not solely built on measurement o Intent doesn't have to be measurable Assumed for a long time between; Intent <-> Impact - Then intent doesn't matter. Not always measurable. - Need to find a new way to measure it; measurement can be done. - Ex. GDP; US was wrong but they did first time. Scandinavian countries incorporated more, and rethought GDO

Carrying Capacity

- It is the max number of a species an environment can support indefinitely - Every species has a carrying capacity, even humans - Very difficult for ecologists to calculate human carrying capacity - Humans are complex species o Does not reproduce, consume resources, and interact with living environment uniformly

What's net green argument by LCA vs. argument of Zink and Geyer "theres no such thing as a green product"

- LCAs assume that each 'green' product will replace a standard product one-for-one and that all other variables remain fixed, therefore reducing environmental impact - Zink and Geyer argue that: a more efficient or 'greener' product may increase demand for, or usage of, a product. The net effect would therefore be an increase in consumption. all products will have an impact on the environment. They challenge the very concept of a 'green' product or service

Systems are circular; links, node, linked list

- Linkages § One element points to the rest - Node o Lead you to the link, built the relation - Linked list o List of things that show that one element link to another

Links, Mechanisms, and Assumptions

- Links; like in systems diagrams causal links are specific, clearly linking two nodes. They explain how A leads to B. - Mechanisms will explain the 'how' of the Theory of change. They are broader than specific links. Loops in system diagram are often mechanisms. - Assumptions are broader than mechanisms and are typically untested or untestable.

What should Unilever do with its tea business in India? Getting the tea leaves and selling to India?

- What are the success factors for rolling new standard among small holder farms? o Access to farmers o Training and education capabilities o Farmer access to capital and or fair share of short-term value creation o Measurement, auditing o Demand from farmers (must see benefits) - Are these factors present in India? o Not really: no strong cooperative, no affiliation, most sell to domestic market (no sustainability interest) o One positive aspect: sustainable practices= benefiting farmers

The path towards resolving wicked problems is...

- is not more planning or better planning - It is about tackling the problem in fundamentally different way, one that is more suited to their very nature - Having a thorough understanding of stakeholders and working through an innovative approach - Creative as possible and start working backwards towards a goal

To determine if a causal loop is balancing or reinforcing ....

- look at the causal links o Reinforcing loops have an even number of negative links (or 0) and balancing loops an uneven number. - Resistance in the balancing loops is the negative & positive

Fundamental solutions ....

- solutions are often found "outside the box" that create the problem (and thus may be cultural)

"Magical solutions" from HBR reading for poverty, climate change, eliminate waste and address resource scarcity

- to address poverty, o companies can access huge, untapped markets by selling products to poor people; - to solve climate change, o we just need to encourage the use of more efficient gadgets; - to eliminate waste and address resource scarcity, o we can profitably recycle and reuse everything; - to solve remaining social-environmental challenges, o we only need executives to realize they can grow profits by doing good

Prototypical Problem solving

1. Analytical 2. Data based 3. Methodical 4. Thorough You cannot solve a system thinking problem (sustainability) with a linear solution Prototypic Problem Solving is Linear

Organizational Boundaries

o Companies can be large, complex entities that participate in joint ventures, collaborations, and multiple subsidiaries. How to draw the boundaries? Who reports what? § Equity share approach: reports share of emissions that corresponds to its equity share § Control approach: reports emissions for operating over which it has control (financial or operational) o Remember the dimensions

Operational Boundaries

o Decided at corporate level after setting the organizational boundary; o Three scopes across a value chain ■ 1.Direct GHG: emissions from sources that are owned or controlled by the organization ■ 2.Energy indirect GHG ■ 3.Other Indirect GHG

Strategic Risk

o Failure to adapt business strategy to external changes. o Gas Car vs. Electric Car ■ Increased Regulations ■ Expanding Infrastructure ■ Increased demand ● Pollution Awareness ● Lower operating cost ● Govt. subsidies

Measuring sustainability at different levels; individual, product, corporate, country level

o Individual ■ E.g. Global footprint that you calculated o Products/Services ■ E.g. LCA of a product/service o Corporate ■ E.g. GHG protocol o Country Level ■ E.g. Environmental Performance Index (EPI)(http://epi.yale.edu/

LCSA

o Life Cycle Sustainability Assessment: 'whole picture' -extend current life cycle thinking to encompass all three pillars of sustainability o Decision making approach to move towards products that are sustainable throughout their lifecycle

Three forms of organized action

o Orchestrated Planning (public sector) o Grounded engagement (plural sector communities/ social (ngos) o Autonomous venturing (private sector)

Financial Risk

o Risk related to a business' cash flow (possibility of sudden financial loss) o Increased insurance cost linked to climate change/natural disasters risks o "Munich Re found that weather related losses have increased nearly fourfold in the United States since 1980...extreme weather events (such as prolonged droughts, hurricanes, floods, and severe storms) led to $560 billion in insured losses from 1980 to 2015".

Main factors to consider if EV is really cleaner

o Sourcing o Production = energy grid, factories, energy needed to make the car o Usage = infrastructure o Recycling = can lithium be recycled? o Energy production = battery ● Electric vehicles are not complete solutions to car emissions ○ They seem to be a symptomatic solution that causes other delays of recycling the unsustainable batteries etc ○ They produce manufacturing emissions (more than regular) ○ We don't know the metrics they use to measure

Strategy "Fit" Among Activities

o Strategy involves creating "fit" among a company's activities. Fit underlies both competitive advantage and sustainability o Strategy is about combining activities to achieve "fit ", which underlies both competitive advantage and its sustainability. o Adding value ■ Stakeholders (anyone who is affected by your companies' activities) ● Suppliers, investors, community, government, customers, market, ngos, employees, competition,

What is strategy?

o Strategy is the creation of a unique and valuable position, involving a different set of activities... The essence of strategic positioning is to choose activities that are different from rivals. (Porter, 1996) o Strategy requires organizations to make trade-offs when competing -to choose what to do and what not to do. ■ Which one is chosen to gain advantage (can't choose them all) ■ Organizing activities to gain advantage

Intent = strategy

o Take corporate strategy -> profit goal -> shared value -> how much of my profit can I share? o Ability to increase share value without losing profit

Porter Shared Value

o The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Share value creation focuses on identifying and expanding the connections between society and economic progress. o The concept rests on the premise that both economic and social progress must be addressed using value principles. Value is defined as benefits relative to costs, not just benefits alone. Value creation is an idea that has long been recognized in business, where profit is revenues earned from customers minus the costs incurred. However, businesses have rarely approached societal issues from a value perspective but have treated them as a peripheral matter. This has obscured the connections between economic and social concerns.

Operational Risk

o Unexpected failure in the day-to-day operations. o Textile industry and changes in precipitations and droughts (lower cotton yields) o Changes in precipitation and drought led to lower cotton yields and higher cotton prices. This increase in material costs put pressure on our average unit costs and gross margins. Going forward, potentially worsening drought conditions in China and the U.S. could continue to affect cotton production. o Thailand, November 14th, 2011, tropical storm nock ten o Brand new cars are going to bin from the storm o Risks coming from natural disasters that impact your operations

Value created

o Willingness to pay and actual price ■ How much is client willing to pay ■ Price will be set on top of value created o Related to clients

Net Green Business Activities ....

o are those that reduce or avoid other activities that have even larger environmental impact, so that overall impact is reduced. o It is the difference between avoided and incurred impacts that is the source of meaningful corporate environmental greening.

Triple Bottom Line

people, planet, profit

Stages of theory of change

§ Design stage · makes the design more solid by testing its internal coherence and linking strategies and activities to expected outcomes. § implementation / monitoring stage · can allow the stakeholders involved in the intervention to know the short-term, intermediate, and long-term outcomes § Evaluation stage · considering the "why" -i.e., why were the intervention's outcomes achieved or not achieved? This facilitates the organization's strategic learning and provides the organization with the opportunity to go beyond a "proving" mind-set

How can marketers help consumers make more ethical decisions?

■ Continually remind them, even at point of purchase, of their products' ethical attributes. ● Everlane; Built social responsibility in business model ● Patagonia ■ concentrate on the bright side, describing how happy their well-paid workers are and how their contractors are good environmental stewards instead of pointing out the bad things their competitors do. ● Based on what we learned, that approach would make ethical consumers less likely to subconsciously dodge this issue.

Why would Patagonia want to recycle their clothing?

■ Save on raw material costs ■ Increase customer loyalty ■ Available to broader market ■ Give motivation to customers (feeling useful)

attributional life-cycle assessment

○ 1 LCAs result in a set of environmental impact indicators per product. When this analysis is used, product A is deemed greener than product B if it has lower indicator results than product B. ■ A product is called green when its life-cycle environmental impacts are lower than those of the benchmark.

is car sharing net green?

○ typical arguments for the greenness of car sharing include vague assertions that it is more efficient, and slightly more defensible claims that it reduces the total number of cars, ■ lion's share of environmental impact happens during their use, not during the production of the vehicles. ■ The impact of transportation use is determined by the distance travelled and the efficiency of the transportation mode. 1. joining a car-sharing service can lead users to increase or decrease their amount of car travel. 2. the shared cars might have higher or lower fuel efficiency than the cars owned by its users. 3. car sharing can change the mix of transportation modes used by their members and the frequency with which they use them. And 4. car sharing can affect the total number of cars produced and sold, Whether car sharing is green is not an attribute of the service itself; it depends on who the customers are, what they would do without the service, and how joining the service changes their behaviour. Net green when ● If car-sharing attracted only previously carless users, it would increase total environmental impacts. ● If it attracted only people who shed cars and drive less, it would decrease total environmental impacts. ● A company marketing to and attracting primarily previously careless people is unlikely to be net green. A company attracting many people who will shed cars and drive less, on the other hand, is much more likely to be net green.

naivee assumption about green products

○ which is that each product category has a constant or at least predetermined sales volume, and customers simply choose among the alternatives within the category. ○ That the problem goes far beyond choosing benchmarks can be illustrated in recycling

Tragedy of the Commons

● A situation where people have access to shared resources like the environment and act in their own interest which depletes the resources while at it ● Do we implement population control? ● If there is a shared resources, increased pressure to use it up as fast as possible

Reinforcing Loop

- Pushes in the same direction. - Generates unnecessary growth - A closed circular set of links create a loop - Pushes it even further - If doing something great, it pushes it even further - If doing something bad, pushes it even worse - Ex. System's View of the Arms Race - Ex. The World Wants Air Conditioning - Ex. Amazon rainforest die-off - Ex. melting permafrost

Log Frame structure

- Reads bottom to top. As if activities were carried out, the output reached, the outcome attained, and the goal achieved.

Paradigm

A theory providing a unifying explanation for a set of phenomena in some field which serves to suggest methods to test the theory and develop a fuller understanding of the topic, and which is considered useful until it is replaced by a newer theory providing more accurate explanations for a wider range of phenomena

Science

The state of knowing; knowledge as distinguished from ignorance or misunderstanding

failures of command and control regulations

○ Not flexible (limitation of government to pick winners'' -possibility of lock-in if government encourages a particular technology) ○ Slow to respond to fast moving technologies ○ No incentives to go above and beyond ○ Bias toward end of pipe solution ○ Tend to be reactive to past damages instead of precautionary ○ Costly to taxpayers ○ Discretion over enforcement ○ Does not involve all stakeholders in search for best solutions ○ Perverse incentives (e.g. Rebates for return of toxic waste leads to production of counterfeit waste)

net green business activities

○ are those that reduce or avoid other activities that have even larger environmental impact, so that overall impact is reduced. ○ It is the difference between avoided and incurred impacts that is the source of meaningful corporate environmental greening.

Three ways for successful regulations

○ be able to set measurable performance standards; ○ have access to information to verify compliance; ○ be in a position to enforce their rules.

Green products increasing consumption; 'direct rebound effect', example LED lights

○ increase the rate at which the product itself is used. ○ "direct rebound effect" of fuel-efficient vehicles. ■ The owner will save by not paying gas etc BUT owner will use some of the savings to drive more LED problem ■ total consumption has increased dramatically as the cost of lighting has decreased. ■ "backfire," the situation where the increase in lighting consumption outweighs the increase in lighting efficiency and leads to a net increase in electricity consumption and related environmental impacts.

Competitive advantage stems from the way activities ....

fit and reinforce one another a competitor can easily imitate a product but not an entire system

Operational effectiveness does not equal

strategy The root of problems is the failure to figure out between operational effectiveness and strategy

Features of Labelling programs

1. Participation is voluntary 2. Typically created by governments or organizations 3. The structure generally has to ways Definition of product, groups and ecological criteria 4. Application , approval and award process License fee corresponding to revenue

Patagonia's Product Life cycle

1. Reducing, repairing, reusing and recycling 2. Swap market with worn wear 3. Buy less and think twice

How do strategic fits create competitive advantages?

1. Simple consistency 2. Reinforcing activities 3. Optimization of effort

Criteria for sustainable leadership

1. Someone who shows you how to do things 2. Sets a direction, focus and vision for people to follow 3. Demonstrates certain attributes like integrity trusts critical and analytical thinking 4. Taking action in getting involved and getting people to commit to movements 5. Lead others

Distinctive elements of a theory of change (3)

1. Special causal links; recognition that not ever strategy influences every result, reality is not linear ex. meeting and sharing evidence with policy makers will influence their decisions and budget allocations. 2. Mechanism; casual chains that explain how and or why one action provokes another. explanation of why actions are going to trigger the expected results. 3. Assumptions; belief that is accepted as true or take for granted.

value captured

= gap between price and cost (internal cost) o Difference between costs and selling price o Costs of providing goods and service in the market o Operational cost that allows for output o Labour

CSR vs. CSV

CSR - Not going to change strategy o Complementary to it CSV Corporate Social Value - Economic and social benefits; complementary o Realign cost structure o Share more value with the society I am living in. o Bring more value services § Yielding based on value - Need to bring benefits to society and stakeholders while still being valuable

Mitigation

Mitigation is limiting global climate change by reducing emissions or reducing use of environmentally harmful products (its harder to do but better) Limiting global climate change by reducing ghg emissions etc Carbon sequestration Going to the source of the problem to reduce effects from finding roost

Leverage Points Systems Characteristics (4)

Parameters Feedback Design Intent

Design

the social structures and institutions that manage feedback and parameters

Patagonia went into differentiation for....

- The above requirements for environmental and life quality - Create unique set of internal value chain, internal to external company wide - Walking the talk: taking environment into product lifecycle development - Started thinking about defensible strategy and properties o Business and people - Differentiated themselves by creating niche o It is measurable (trying to be) - They want to grow a model o Early adopter of alternative business model o If others a smart they would look towards them and start doing things their way ■ North face started taking baby steps

Loops

- a closed circular set of links create a loop - There are two types of loops o reinforcing loops o balancing loops

Sustainability assessment questions that arise

1. Which dimensions of sustainability are being measured? 2. What is the weight given to each dimension? Which is more important and which less? 3. Where does a product's responsibility begin and end? 4. Where does an organization's responsibility begin and end? 5. Where does a country's responsibility begin and end?

Keys to differentiating successfully (3)

1. the business must find, or create, a willingness among customers to pay for environmental quality; 2. the business must establish credible information about the environmental attributes of its products 3. its innovation must be defensible against imitation by competitors

Dilemmas in general planning; properties of planning type problems

1. there is no definitive formulation of a wicked problem. 2. Wicked problems have a no stopping rule. 3. Solutions to wicked problems are not true-or-false, but good or bad. 4. There is no immediate and no ultimate test of a solution to a wicked problem. 5. Every solution to a wicked problem is a "one-shot operation" ; because there is no opportunity to learn from trail-and-error, every attempt counts significantly. 6. Wicked problems do not have an enumerable (or an exhaustively describable) set of potential solutions, nor is there a described set of permissible operations that may be incorporated into the plan. 7. Every wicked problem is essentially unique. 8. Every wicked problem can be considered to be a symptom of another problem. 9. The existence of a discrepancy representing a wicked problem can be explained in numerous ways. The choice of explanation determines the nature of the problem. 10. The planner has no right or wrong.

Sustainable strategic positioning three trade offs

1. to avoid brand inconsistencies 2. for activities themselves (ikea self-assembly means less able to meet the needs of consumers who require more services) 3. limits on internal coordination and control

Weak Strategy (4)

1. tying to be all the things 2. picking components of other companies' strategy 3. confusing strategy with operation effectiveness 4. remaining committed to outdated model

Activity Maps

Activity maps show how a company's strategic position is contained in a set of tailored activities designed to permit realizing that position. ■ Note the similarity, but not equivalence, to systems diagrams ■ Identification of virtuous, self-reinforcing cycles is key o Example: IKEAS activity map o Dark blue is what guides the map, their core strategy o Key activities that set Ikea apart

Purpose and stages of theory of change

Allow for transparency and understanding of the intervention's approach to achieving its mission and/or objectives as well as insights into the ways in which they can link to the intervention or partner with the organization.

Managing competitors through regulations

Band together with similar positioned companies in the marketplace to create a private industry wide standard GMOS Use the government to persuade them in creating environment regulations that favour your company First mover advantage

Corporate sustainability movement examples and explanation

Carbon footprint: the amount of carbon dioxide (or other GHG) released into the atmosphere as a result of the activities of a particular individual, organization, or community - May incorporate LCA thinking in that it tries to take into account the whole lifecycle (sometimes), but only one particular environmental impact (GHG emissions) o Standards for sustainability metrics are still evolving o Examples of Carbon footprint standards: ■ PAS 2050 (British Standard Institute -Carbon Footprint) ■ The Greenhouse Gas Protocol (World Business Council for Sustainable Development and World Resources Institute) Greenhouse Gas Protocol o Provide GHG accounting standards for companies; o Enables companies to measure, manage and report GHG emissions from their operations and value chains. o Simplify and reduce the costs of compiling a GHG inventory o (where the success lies) Increase consistency and transparency in GHG accounting and reporting among various companies and GHG program ■ Not transparent of process

Anthropocentric perspectives on Climate Change

Climate Change is bad for humans 1. dominant social paradigm 2. sustainability paradigm

Green meter

Everyone's "green meter" is different, matter of people's perception of what is green - need to find the leverage that allows us to understand the impact of the output ex. leverage ->Consumer purchasing intentions because we if target them to think about real consequences (small element) it can create a larger impact in the total reduction of consumption § Targeting social norms behind consumerism · This will shift the paradigm and allow to become the new norm

Two types of regulations

Command and control Carbon tax? Not flexible, reactive nor precautionary Not incentive to go above and beyond Slow to respond to fast moving changes Not involving stakeholders Market mechanisms Market based incentives Cap and trade Hybrid Voluntary

Information loop

Corporation feeds = (info withhold) individuals feeds = products and services but stops at corporation because they withhold information

Dominant Social Paradigm

The view that humans are superior to other all other species, the Earth provides unlimited resources for humans, and that progress is an inherent part of human history. The impact of unmitigated climate change might be worse than the cost/inconvenience of addressing climate change; Needs are less than wants Our short term wants are dominant, they are creating the futures wants and precedent

Environmental regulations linked to innovation because

First mover advantage Force a parameter shift in the industry with using sustainability and a parameters to fuel sustainable systems solutions Changing the willingness to pay industry wide Need to have symmetric information across managers and business Looking at product lifecycle and supply chain inefficiencies

Porter's Hypothesis about environmental regulations

His argument was that pollution contributes to a waste in resources and productivity so by reducing it it will increase productivity and outweigh the costs of working with it He thinks that taxe and cap implementation trigger innovation Pollution can control the reduction of waste in business

Which dimensions of sustainability are measure?

Individual -> E.g. Global footprint that you calculated Products/Services -> E.g. LCA of a product/service Corporate -> E.g. GHGprotocol Country Level -> E.g. Environmental Performance Index (EPI)(http://epi.yale.edu/

Problems with Labels

It can benefit poor performers by having them design their metrics and parameters and deceiving consumers and stakeholders. It also confuses consumers and socially responsible investors so it devalues the products and measures 2. It can shift away from bigger issues like child labour restrictions (looking at single issues and not the whole picture) They preach to the converted and are limited for the rest People need to be motivated and incentives to look for them

Consumerism

It has been crafted with the help of skilful advertisers and marketers, by corporate celebrity culture, and by a media that casts us as the recipient of goods and services rather than the creators of political reality. It is the ideology we need to change and not the products in it It makes us powerless It traps us in a narrow decision making process It makes it easy to shift blame like Westerns shifting population growth problem to China targetted problems; rich westerners blaming planetary destruction on the birth rates of much poorer people, or on "the Chinese". This individuation of responsibility, intrinsic to consumerism, blinds us to the real drivers of destruction

Is the business model sustainable?

Keeping their niche of active consumers It is the most sustainable out there as it provide a closed loop system thinking from start to finish They also have developed systematic solutions for delays such as providing recycling and reusing options, making it easier for the consumers and more appealing

Life Cycle Thinking and Systems

Life Cycle Thinking (LCT): ■ Going beyond the more narrow traditional focus on an enterprise's production site and manufacturing processes. ● Goals: ○ Reduce resource use and emissions to the environment; ○ Improve socio-economic performance through the whole lifecycle. (dynamic) ● Study full cycle of product ● Can something go in my "blue loop"

Sustainability paradigm

Meeting the needs of the present generation without compromising the ability of future generations to meet their needs". (Brundtland commission)

Is the standard notion of value creation (gap between WTP and cost) the right way to think about value creation in the case of Patagonia?

No its not the standard way of thinking Done by the eco/social awareness Counterintuitive decision making Aligning with the global climate change movement brings value the value differs because of the environmental aspect

Strategic position

Performing different activities than rivals or similar activities in different ways

Operational Effectiveness

Performing similar activities better than rivals It can be efficient Differentiating yourself in this is important because it is directly related to relative cost posting and levels of differentiation Constant improvement in operational effectiveness is needed to achieve superior profitability But not the only thing 1. Rapid diffusion of best practices makes it hard to stay ahead 2. Imitate management techniques 3. New technology 4. Input improvements 5. Competitive convergence is more subtle and insidious. More benchmarking, more look alike 6. Buy up their rivals 7. Face diminishing returns 8. Zero sum competition, static/ declining prices and pressures of costs compromise long term

Scientific Method

Principals and procedures for the systematic pursuit of knowledge involving the recognition and formulation of a problem, the collection of data through observation and experiment, and the formulation and testing of hypotheses.

Why has Unilever committed to source 100% of its agriculture inputs sustainable? Does this commitment make strategic and economic sense?

Reduce reputational risks from supply chain Increase security of supply needed for continued operations and business growth, create value along the supply chain answer to the demand for sustainable products in certain markets: market advantage, open sales channels, differentiation Strategic rationale: consistent decision across products and markets Doing the right thing: corporate values, retain talented employees

Porter's 4 causal links

Strict and flexible environment regulations( taxes) lead to innovation which lead to better environmental performance and better business performance

Reading; beyond the business case for social responsibility

The business case (appealing to the corporation by proposing a profitable more sustainable alternative) is actually less productive. policy/regulation change is actually more likely to inhibit bias and lead to more inclusive behaviour 1. moral and legal justifications for change 2. finding better measures to make change appealing to a variety of stakeholders (who the corporations are trying to please) 3. `changing forms of governance to allow stakeholders to cocreate value in a collaborative process

How does Patagonia inspire others to follow its lead?

They are transparent to a fault Provide all information of company Continues to innovate in sustainable efforts and conveys that to their products They inspire others by being so honest that no one can turn away from it, by wanting people to be one purchase consumers and come back for repairs and recycling instead of buying more they are changing the buying habits of consumers and making people think about their actions. ex. talked to nike and gap, clif bar etc, and all introduced environmental policies Inspire through action (lead through action) Talk the talk and walk the walk

How does Patagonia create and capture value?

Through their sustainable business model however it is not the traditional way that people think of creating value

Logic Model

Visual representation of how a program is organized, including activities, resources, short-term and intermediate outcomes, and program goals.

Chouinard business philosophy and mission (patagonia)

We need to challenge the conventional wisdom and present a new style of responsible business Businesses are much to blame for environmental, social and economic problems Mission statement; Build best products in creating no unnecessary harm and using business to inspire and implement solutions to the environmental crisis Product development and product line

Should they pursue Rainforest Alliance certification? Should it market sustainable tea to consumers? (in India)

Yes RA seal provides credibility Risk in losing goodwill created in other markets if not consistent throughout Competition might stil first mover advantage in india if do not certify now RA valuable partner to have Moral argument: child labour, pesticides etc

Is Patagonia a role model for other corporations pursuing sustainability? What general lessons can be learned, if any?

Yes they are Lessons can be learned are to not want to growth exponentially quickly as this stagnates your growth in the maternity phase and always leads to unsustainable practices in getting there Don't focus on low cost differentiation is you can create something with a moral and ethical backbone Treat your employees and the people around you with total confidence and independence and you can achieve amazing products and new innovative ideas that will drive to substantial growth opportunities

Can a person be a leader in sustainability

Yes, ex. greta thunberg, indigenous activists Leaders in sustainability can show people what to do collaborating and bringing people together with their characteristics of integrity, charisma, charm, critical and analytical thinking Leading a movement to change the social norm along with other important leverage points They could be using governance and the power in a operational model And this will create a real change in system thinking for sustainability

Implications for Businesses using environmental regulations

You can have the first move advantage It can create barriers of entry for competitors It can become very expensive to comply because you'll also need to shift business model and show proof of compliance Regulation can incentive innovation but the uncertainty can also deter way from it

Sustainability issues ....

are wicked problems.

Eco centric perspective on climate change

climate change is bad for many species including humans ▪ Basis for deep ecology ▪ The well-being and flourishing of human and nonhuman life on Earth have value in themselves; ▪ These values are independent of the usefulness of the non-human world for human purposes; ▪ Richness and diversity of life forms contribute to the realization of these values and are also values in themselves; ▪ Humans have no right to reduce this richness and diversity except to satisfy vital needs.

Paradigms shift

ex. the earth is flat ex. sun is at the center of the solar system, not earth

Systems thinking ....

helps crystalize their nature and can be used to find solutions.

Feedback

interactions between elements within a system that drive internal dynamics

a strong theory of change can improve all aspects of an ....

intervention ; design, implementation, monitoring, and evaluation, strategic implications and impact

Reading; Leverage points: Places to Intervene in a system (12)

leverage point. place where small shift can create big change Places to Intervene in a System (in increasing order of effectiveness) 12. Constants, parameters, numbers (such as subsidies, taxes, standards) 11. The sizes of buffers and other stabilizing stocks, relative to their flows. 10. The structure of material stocks and flows (such as transport networks, population age structures) 9. The lengths of delays, relative to the rate of system change 8. The strength of negative feedback loops, relative to the impacts they are trying to correct against 7. The gain around driving positive feedback loops 6. The structure of information flows (who does and does not have access to what kinds of information) 5. The rules of the system (such as incentives, punishments, constraints) 4. The power to add, change, evolve, or self-organize system structure 3. The goals of the system 2. The mindset or paradigm out of which the system—its goals, structure, rules, delays, parameters—arises 1. The power to transcend paradigms

Product redesign ...

may be helpful in promoting cultural shifts without ideological confrontation

If a problem is linked to a dominant scientific paradigm then solutions to the problem

might require a paradigm shift ex. climate change, even when scientist agree still have to convince the public and the solutions will require paradigm shifts

Parameters

numbers and mechanistics typically targeted by policy makers

Environmental Labels definition + goals (3)

o Any label describing or identifying environment related characteristics of products or services o Also referred to as "green label" or "ecolabel" o Goals: 1. Mark products or services as environmentally preferable to their counterparts so consumers can make decisions based on the product's or service's environmental impact. 2. Provide market advantage to environmentally sound goods and services 3. Assure consumers products have met strict criteria set by an independent organization

Strategic Plans

o Are one-to five-year plans that map out an organization's strategies and the implementation of those strategies through activities and resource allocation. o goals/Objectives, Values, Principles, Strategies, Activities, and Strengths, Weaknesses, Opportunities and Threats (SWOT Analysis)

Reputational Risk

o Damaged reputation o Animal cruelty in food and apparel industry

Carrying capacity estimates involve making predictions about future trends:

o Demography o Resource availability o Technological advances o Economic development

Compliance risk

o Unexpected /unknown changes in regulations. o GMO regulations in different countries ■ Ex: Farmer wanting to expand sales internationally o Can bite you back o Compliance if once business is established

A dominant scientific paradigm occurs when

scientist reach a consensus

Intent

the underpinning values, goals, and world views of actors that shape the emergent direction to which a system is oriented.

Unintended Consequences

the unexpected and unplanned results of a decision or action

Porter's Five Forces

threat of entry, threat of substitute, supplier power, buyer power, and competitive rivalry

Negative Casual Links

- Negative causal links (marked as "-" or "o" for "opposite"): the two nodes move in the opposite direction. o When one node goes up the other goes down, opposites direction of nodes

Responsive CSR

= good citizenship to address generic social impacts + mitigation of harmful impacts from value chain.

Understanding Problems (7)

- Guidance needed? - Role of participants? - Predictability of outcomes? - Decision making - Level of agreement - Need to question the status quo?

Adaption

(we do this more) Adaptation is targeted actions towards weak systems that have been impacted by climate change in the aim to reduce climate change. Shoreline restoration, stabilization and erosion control etc Problem is that itself will not going to fix everything but we need to systematically apply it

Measured sustainability & impact now what?

- Report/disclose it? o Typically, companies done o Public GHG registries and databases ■ Climate registry ■ Carbon disclosure project ■ World economic forum global GHG registry ■ California Climate Action Registry - Improve upon it? o Any robust strategy requires setting targets for revenues, sales, and other core business indicators, as well as tracking performance against those targets. Likewise, effective GHG management involves setting a GHG target. ■ Minimizing and managing GHG risks ■ Achieving cost savings and stimulating innovation ■ Preparing for future regulations ■ Demonstrate leadership and corporate responsibility ■ Participating in voluntary programs

Fundamental Solutions for roads and cars example

- Road and cars again including the fundamental solution o Proper infrastructure for homes. No more suburbs, o Acquisition of cars, put a cost on it $$$, ex. taxes o Usage; costs for highways, cannot park cars certain places, can drive but cannot park §Maybe be able to trigger a cultural change

Negative Feedback Loops

- Tend to dampen or buffer changes; this tends to hold a system to some equilibrium state making it more stable.

Why do we need to do system analysis?

- The complexity of the world dwarfs our understanding - Our mental models o Are limited, internally inconsistent, and unreliable. - Our ability to understand the unfolding impacts of our decisions is poor. - We take actions that make sense from our short term / parochial perspectives o Due to our imperfect appreciation of complexity, these decisions often return to hurt us in the long run

Delays reinforcing vs. balancing loops

- Typically occur in both reinforcing and balancing loops - Delays are often taken for granted and underestimated o Reinforcing loops - because things don't change as fast as we want o In balancing loops - delays lead to surprises collages

Pitfalls of sustainability metrics

1. Counting what's easy to count rather than what's important. - Everything that can be counted does not necessarily count; everything that counts cannot be necessarily be counted - Einstein 2. Same data, but seen from different worlds. - Numbers are numbers, data is data, facts are facts. That might be true, until you have a subjective, biased (perhaps unconsciously so), unavoidably emotional human interpreting them. 3. Relying on averages, estimates, and even lies rather than actual or appropriate data. - Important: what are you counting 4. Setting and starting out on goals without doing the groundwork to assess what - and who - are being left out. As sustainably can be more complex than it initially appears, goal setting while pursuing it can be even more challenging. - Maybe the numbers are better now, but how do we really know whether it was our efforts which led to this improvement? Perhaps it was due to other factors which we overlooked. 5. Missing the value of metrics process. 6. Overlooking nonlinearities. 7. Failure to embrace uncertainty, seeing data as sufficient without wizened interpretation and perceived human biases

Obama reading; trend towards green energy (4)

1. Economies can grow whilst emissions are restrained. In fact, studies show that they do. 2. It is economically responsible and feasible for private sector corporations to cut their emissions, especially with higher efficiency standards. 3. As these technologies become more prominent and common on the market their price falls. 4. The global market is shifting, and backing out of the Paris accords would set us back in the race for dominance of the clean energy market.

What is managers and managements cruder approach to greenness

= simply look for one product attribute that can be labeled green and call a product green if it scores high in this attribute. ● We need to measure the overall net green ● Interesting approach of buying things that are relatively better than other similar product rather than nothing at all

Value creation

= the gap between willingness to pay and costs

Types of Risk

1. Financial risk 2. Reputation risk 3. Compliance risk 4. Operational Risk 5. Strategic risk

Basic Elements of theory of change (5)

1. Impact; ultimate change the intervention seeks to achieve. mission, goal, ultimate outcome. ex. children get a good education 2. Outcomes; changes that result from the activities and are seen along the way to impact. changes, specific objectives, results. ex. better trained teachers 3. Outputs; immediate effects and results of the activities. products, immediate results. ex. staff met with 20 legislators 4. Strategies; approach the program is going to use, the set of actions that will trigger the change. ex. advocacy campaign 5. Generic Causal links; the cause-effect relationship among arrows, the relationship between different outcomes. ex. the arrow between better-trained teachers, and the impact = more children graduate with a meaningful valuable education.

Intervention

= theory of change for organization, program, project

Benefits of LCSA

1. LCSA enables practitioners to organize complex environmental, economic and social information and data in a structured form. 2. LCSA helps in clarifying the trade-offs between the 3 sustainability pillars, life cycle stages and impacts, products and generations by providing a more comprehensive picture of the positive and negative impacts along the product life cycle. Starting up front and not down the line 3. LCSA will show enterprises how to become more responsible for their business by considering the full spectrum of impacts associated with their products and services. 4. LCSA promotes awareness in value chain actors on sustainability issues. 5. LCSA supports enterprises and value chain actors in identifying weaknesses and enabling further improvements of a product life cycle. For instance, it supports decision-makers in enterprises in finding more sustainable means of production and in designing more sustainable products. Enabling company to look at factors that are improving value chain 6. LCSA supports decision-makers in prioritizing resources and investing them where there are more chances of positive impacts and less chances of negative ones. 7. LCSA helps decision-makers choose sustainable technologies and products. 8. LCSA can support consumers in determining which products are not only cost-efficient, eco-efficient or socially responsible, but also more sustainable. 9. LCSA stimulates innovation in enterprises and value chain actors. 10. LCSA has the potential to inform labelling initiatives. 11. Communicating transparent LCSA information helps enterprises to raise their credibility. 12. LCSA provides guiding principles to achieve sustainable consumption and production

Net green definition

=A business activity is net green if and only if it reduces overall environmental impact.

Challenges to measuring (6)

1. WHAT are you measuring? ○ (Weighting of different factors, but also which indicators are you choosing? What is the baseline? May introduce bias...) 2. WHO is doing the measurements? ○ (Many certification entities, self-assessment?) 3. WHERE are you measuring? ○ (reliability of measurement in different jurisdictions? Are there regional boundaries that should be considered?) 4. WHEN in time do you measure? ○ (One-time certification vs. performance review over time? Calendar year or fiscal year?) 5. WHY is an entity measuring? ○ (Marketing purposes, sustaining operations, competitive advantage, business identity?) 6. HOW is sustainability measured? ○ (Employee training, what units are you using, what are the boundaries, etc.)

Three sources of strategic poisition

1. variety-based position; ex. wide range of customers bank 2. needs based positioning ex. target market like ikea 3. access based positioning; rural? urban? dense? sparse?

There are 2 fundamental societal response options for reducing risks:

Adaption and Mitigation

What are the key characteristics of Patagonia's competitive strategy? How important is Patagonia's environmental positioning?

Differentiation through focus Focusing on future instead of short term Developing practices everyone can use not just them Appealing to all generations as wanting to conserve and improve planetary ecosystems Their environmental positioning is extremely important as this is the base of their entire strategy and business model. without the environmental positioning, the value they provide to customers would be much lower

Reading: Client Earth. (2018). Risk unwrapped: Plastic pollution as a material business risk.

Different risks in using plastic and other non environmentally friendly options Plastic are a threat to humans, living things like marine environment They contribute to climate change They have costs to society It is a material business risk Companies in plastic intensive sectors have highest value at risk Reputational risk is the risk of damaging or losing organizations reputational capital Physical risk is the risk of plastic being present in the environment where it affects infrastructure workforce productivity , supply chains and contributes to resources scarcity Liability risk is when companies suffer from losses or damage from plastic pollution and want to recover

How is Patagonia's environmental mission achieved?

Having regular awareness (WTP) Adding in an eco/ social awareness part, into marketing their brand, programs supplied and the physical product. Niche consumer base that makes them more aware and proactive about the environment Achieved by integrating their mission in every part of their model from the strategy, product, employee, competitors and consumers and their future purchase intentions "the footprint chronicles on the website"

Causality

How can we be sure that X causes y? X and Y are related (logically and statistic ally) X comes before Y in time All other possible explanations for Y can be ruled out explains relation, cause and effect

Why did Unilever commit to sustainably source 100% of its tea?

Sustainable living plan - To secure the supply chain for tea, perhaps cost - Risk mitigation: reputation, financial, operational - Build differentiation through first-mover advantage - Other benefit: business with a purpose, goodwill, motivation across employees

Theory of Action

The delivery model for a Theory of Change. o A Theory of Action is the operationalization of the Theory of Change of a specific program or intervention. These tools are implementation theories and illustrate how a program is constructed to 'activate' the Theory of Change.

Meaningful causal strands

The following strands should be included in a Theory of Change: Direct and indirect effects; spurious components (two effects having the same cause); interactive relationships among causes; suppressors (elements that eliminate or reduce an effect); simultaneous or correlational causes; and reinforcing or mitigation loops