SME M3 - Fundamentals

Fundamental Concepts of Sustainability

Sustainable SMEs Course

After today, we will be able to:

Understand the structure of this course

aaa

Find the role of SMEs within Sustainable Development

List the main sustainability issues of our time

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What is a sustainable business?

From a traditional perspective, the objective of companies is to grow.

What is a successful business?

+ 170%

Revenue, year over year

Tesla Inc. 2021

+ 11%

Net sales, year over year

Apple Inc Q1 2022

Examples of successful companies:

World Bank (2021). China Economic Update: December 2021

Apple Inc. (2022). Apple Reports First Quarter Results

What is a successful business?

However, in light of the new global awareness on the climate change and social issues, the past 20 years have seen a progressive shift in our definition of corporate success.

Click to learn more

In a nutshell, we still think that growth is important, but we need a more

holistic approach.

In 1972, the Limits to Growth report blew the whistle on the contrast between the exponential economic (and population) growth and the planet's finite supply of resources.

The key message: in order to create a society in which to live indefinitely on earth, limits on the production of material goods must be imposed.

Club de Rome (1973). The Limits to Growth.

The new model for a successful company is that which creates not only economic value,

but also social value.

A new definition

Making up a large portion of businesses globally,

SMEs need to pursue this "dual project" to generate economic and social utility to operate a long-lasting and competitive business model.

A new definition

In the words of Harvard's distinct professor Michel Porter:

Click to play

A new definition

For your business to fundamentally increase its economic and social impact, commonly referred to as

you need to understand what they are and how they work.

EXTERNALITIES

Click to

learn more

Externalities

...and when you bring them a cost it is called a negative externality.

An externality is a cost or benefit caused by your business activity but incurred by a third party.

When you bring them a benefit it is called a positive externality...

Can you identify the externalities?

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Further explanations of the content on the main page
Links to videos, podcasts, websites that will open in another tab of your internet browser
Enlarged versions of pictures or graphs that might be on the main page so you can see them in more detail
Pictures of graphs that relate to the topic at hand and help you build better connections with the content

ACTIVITY

Differentiating positive and negative externalities,

PLAY

Drag and Drop each externality into the positive or negative boxes

Differentiating positive and negative externalities:

Air Pollution

Job Creation

R&D Activities

Water Pollution

Tax Payment

Noise Pollution

People/Skills

Training

People Exploitation

Job Destruction

Infrastructure Development

Drag and Drop each externality into the positive or negative boxes

Differentiating positive and negative externalities:

Air Pollution

Job Creation

R&D Activities

Water Pollution

Tax Payment

Noise Pollution

People/Skills

Training

People Exploitation

Job Destruction

Infrastructure Development

How did you do?

BACK TO COURSE

Externalities

Failing to account for negative externalities, which has been the rule for businesses until not long ago, brings considerable damage to

employees, local communities, and the environment.

As your SME advances on your sustainability journey, managing the relationships with these third parties...

...can make the difference between success and failure.

also known as

STAKEHOLDERS

Who are your stakeholders?

A definition

A stakeholder is an individual or group that has an interest in any decision or activity of an organization.

Every day, they are growing in:

Number

Importance

From ISO26000 - Guidance on Social Responsibility

Global customers and supply chains

Social media and activist groups

A definition

Stakeholder management can be a source of:

Jeopardized future opportunities

Increased tensions and mistrust

Worsened brand image

Better relationships with local authorities

Improved information gathering

Higher feedback leading to better products

NUMEROUS BENEFITS

NUMEROUS RISKS

Stakeholder categories

Internal

Legal

entity

Owners

Employees

Those within the organization

Simplified from: Laasch & Conaway (2015). Principles for Responsible Management.

Stakeholder categories

Primary

Internal

Legal

entity

Owners

Employees

Local community

Local ecosystem

Compe-

titors

Clients

Media

Regulators

Suppliers

Those who directly affect or are affected by the business

Simplified from: Laasch & Conaway (2015). Principles for Responsible Management.

Stakeholder categories

Secondary

Primary

Internal

Legal

entity

Owners

Employees

Local community

Local ecosystem

Future

generations

Suppliers'

suppliers

Activist

groups

Media

consumers

Global

ecosystem

Clients'

clients

Employees'

family

Compe-

titors

Clients

NGOs

Media

Regulators

Suppliers

Those who may affect relationships with primary stakeholders

Simplified from: Laasch & Conaway (2015). Principles for Responsible Management.

ENGAGEMENT

Understanding your stakeholder base and establishing active communication channels with them will define the success of your sustainability strategy.

We will develop a detailed stakeholder engagement strategy for your business at a later stage of the course.

Your key objective

" The purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large. "

Davos Manifesto 2020

World Economic Forum

For its 50th anniversary, the World Economic Forum recalled its 1973 Manifesto by publishing a 2020 version calling back for a stakeholder-driven view of business. During the forum taking place in Davos, numerous private and public sessions took place to discuss the manifesto and its potential implications for the future of our world.

Access the full Manifesto here.

Which are

your impacts?

From externality to impact

As stakeholders incresingly hold businesses accountable for their externalities, these so-called "impacts" start to be internalized into corporate functioning and accounting systems.

These impacts...

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Direct vs Indirect

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

Flash quiz

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

Flash quiz

Yes! Work is at the heart of QWL. Quality work carried out in suitable conditions contributes to the good health of employees .

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Flash quiz

No! This is a regulatory obligation for the employer independently of a QVT approach.

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Flash quiz

Yes! Social dialogue and professional dialogue are essential to the success of the approach.

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Flash quiz

No! This is not mandatory, but recommended if you need some help carrying out your QWL approach.

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Flash quiz

Yes! The QWL approach will hopefully lead to the design and implementation of new methods of work.

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Flash quiz

Yes! It is a continuous improvement approach that needs to be structured and managed like any other project.

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

What are the ideal conditions to improve Quality of Working Life?

Find the 4 correct answers:

Flash quiz

Yes! work is at the heart of QWL. Quality work carried out in suitable conditions contributes to the good health of employees .

No! That way, you risk getting unrepresentative results from your monitoring assessments and stigmatizing some employees.

Consider work as a health-promoting factor

Managing QWL in a project approach

Be ready to modify your ways of working

Carry out a professional risk assessment

Involve employee representatives to discuss changes and new initiatives

Test your new initiatives with the people who are the most reluctant to change

Get help from an outside consultant

Summary of today's module:

Planetary boundaries

There are nine Earth systems that have limits to how much humans can exploit them. Some of them are already exceeded, threatening harmful changes in the planet and therefore our ability to live on and use the planet.

Frameworks for change

Negative externalities do not equal business success. Existing international frameworks provide SMEs with structures in which to frame their sustainability goals and efforts and guide progress with positive impacts.

IMPACTS ON PEOPLE

The first social sustainability issues with which to be concerned are decent work opportunities and safety and security when at work. Women and children especially face labor injustices within supply chains.

All together now

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The SME Sustainability Methodology

Congratulations, you finished this module!

International Frameworks to Address Impacts

There are three main frameworks that are crucial to understanding how companies are moving toward sustainability.

The Paris Agreement

The European Green Deal

International Frameworks

Insert link to NOTION PAGE that has an updated version of this chart. By updated, I mean including the uses for SMEs and written for SMEs not for academics. (as a green button)

There are three main frameworks that are crucial to understanding how companies are moving toward sustainability.

International Frameworks

The Paris Agreement

The European Green Deal

The Sustainable Development Goals (SDGs)

In 2015, the UN adopted thes

that formed another major framework for collective action by states.

The SDGs were adopted by all UN Member States to address the global challenges we face, including poverty, inequality, climate, environmental degradation, prosperity, and peace and justice.

SUSTAINABLE DEVELOPMENT GOALS

Back

The SDGs

Back

The SDGs consist of 17 goals and 169 targets that specifies what and how to achieve sustainable development. These targets set the agenda from 2015-2030 with a goal of reaching them by 2030.

All 17 goals are interconnected, meaning that success in one can lead to success in others. It also aims to leave no one behind and involve everyone including businesses.

Take a look at all 17 goals in detail here.

The SDGs

Back

The 17th goal of strengthening partnerships explicitly brings companies into the picture and is a key to success. This includes large companies as well as SMEs like yours!

The SDGs

To promote sustainable development, it is important for companies to collaborate with different stakeholders - different organizations, governments, customers, industry and sector, and the society.

This is when the SDGs step in, providing a universal and visionary framework for this global cooperation, enabling all stakeholders to proactively solve these challenges.

Back

The SDGs

SDGs can play the role as a guideline for businesses and will allow leading companies to demonstrate how their business helps to advance sustainable development.

Back

What is the Paris Agreement?

Back

TRUE

FALSE

TRUE

FALSE

The Paris Agreement's goal is to reduce greenhouse gas emissions enough to limit climate change to +3 degrees C.

THAT'S CORRECT

The aim of the Paris Agreements is to keep global warming to well below 2 degrees Celcius and preferrably to 1.5 degrees C. The warming of the climate beyond 2 degrees C will cause much more catastrophic damage to the earth's systems.

THAT'S INCORRECT

Paris Climate Agreement

Although some countries did not ratify the Paris Agreement, it was successfully put together under significant and growing pressure from civil society.

Learn more about the Paris Climate Agreement here:

See the 5 year (2020) update on the Agreement here:

Back

An overview on the progress since the signing of the agreement in 2015 here.

A more data-oriented account of the progress since the signing here.

Climate Neutralilty

Becoming climate or carbon neutral by 2050 requires a transformation of energy systems & clean hydrogen

The European Commission has prepared the European Green Deal for a better future and is mobilizing all components of a sustainable transformation through its Green Deal.

The EU Green Deal

Click on the icons for more information via the EU site!

Back

Climate Neutralilty

Becoming climate or carbon neutral by 2050 requires a transformation of energy systems & clean hydrogen

The EU Green Deal

Circular Economy

Transforming the economy while protecting the environment through various sectors.

The European Commission has prepared the European Green Deal for a better future and is mobilizing all components of a sustainable transformation through its Green Deal.

Back

Sustainable Finance

Climate Neutralilty

Integrating sustainability considerations into financing policy. Can take the form of EU Taxonomy, green bonds, etc.

Becoming climate or carbon neutral by 2050 requires a transformation of energy systems & clean hydrogen

Circular Economy

Transforming the economy while protecting the environment through various sectors.

The EU Green Deal

The European Commission has prepared the European Green Deal for a better future and is mobilizing all components of a sustainable transformation through its Green Deal.

Back

As you can see, there are imbalances in our world that are becoming more important for companies to pay attention to because of their impacts.

The Current State of the World

The next modules will discuss how we take the acknowledgement of these issues into action within our companies.

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+ 45 m.

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Timeline

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write

title

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Slide text

Example: Human Captial

Hover your mouse over the circles to see examples of metrics for "human capital":

Accidents & Absenteeism

Training Spending

Disability

Turn Over

Employee Satisfaction

Level of Compensation, Parity

Diversity

Health Status, Disease Prevention

Skill Levels

SME M3 - Fundamentals

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