As we head into winter, many of us start to think about holiday shopping. A time when the shops are bustling with people, spending thousands on presents, decorations and food, the holiday season also brings with it a lot of waste.
The waste generated at Christmas goes up by 30 percent, compared with the rest of the year, according to Business Waste, with the biggest problem being the food we consume. Approximately 66 percent of people admit to buying too much Christmas food that ends up being thrown away, contributing to greenhouse gas emissions. Black Friday only adds to this waste, with more than 80 percent of Black Friday purchases thrown away after the first few uses.
Incidentally, the holiday season also coincides with the UN Climate Change Conference, UNFCCC COP 28, which this year is being hosted in Dubai in the UAE from 30th November. World leaders will gather to discuss some of the biggest environmental issues to date, and try to come up with solutions. Some regions have already taken drastic measures to reduce their negative environmental impact. For example, all nations in Southeast Asia have committed to reaching net-zero carbon emissions by 2050.
To achieve these goals, there needs to be a collective push – not just from governments mandating change but from businesses being able to adapt their practices in order to contribute better.
Unsurprisingly then, business schools have pushed for a huge focus on sustainability in their research and projects. But can business school sustainability initiatives really make a difference in industry?
We explore five key ways business schools can directly impact industry: research, executive education and projects. We take a deep dive into each of these, to better understand how business schools are making a difference when it comes to climate change.
Shaping policy
When considering how companies can progress their sustainability strategies, we need to first look at how they are currently approaching sustainability, and what they can do moving forward. Business schools play an essential part in shaping company policy around climate change.
Business schools’ research often leads the way in providing valuable insights and frameworks for companies to help develop sustainable business models. It can offer practical advice and evidence-based recommendations based on analysis of ESG practices.
Here are several examples of ways recent business school research is helping businesses shape their sustainability policy:
Redefining strategy
Phrasing is important when talking about the environmental effects of business. Some businesses use phrasing to their advantage. We need to separate the terms ‘impact’ and ESG, writes Jasjit Singh, Professor of Strategy at INSEAD Business School.
He gives the example of a fast fashion company with an ESG strategy to reduce the environmental footprint of each unit it sells. In theory, this sounds great. However, if the company’s business model is built on the back of aggressively selling large quantities of cheap products, their aggregate impact will still be negative. In addition, by marketing their ESG strategy, consumers might start buying more of the product as they now perceive it as green, worsening the overall environmental impact.
“Even in scenarios where ESG does reduce the aggregate harm a specific company causes, mitigating this harm is not the same as moving towards real solutions to the grand challenges humanity faces,” he said.
The Institute for Management Development (IMD) suggests a more unusual way to think about climate change. Picture a chicken and a pig discussing a bacon and egg sandwich – the chicken is engaged, but the pig is committed. IMD says we need to take this way of thinking to the boardroom.
To do this, boards need to be more involved and engaged in ESG risk assessments. This can be done through workshops or interviews to ensure the impact of climate scenarios and materiality on the company’s strategy are taken into account.
Companies need to establish a formal sustainability governance process that creates clarity for roles and responsibilities, and helps to embed the notion that the company’s ESG performance is not just the responsibility of the sustainability department.
Developing global frameworks
The way companies report on sustainability has to change, says Nyenrode Business University Professor, Dr Michael Erkens.
Dr Erkens gives the example of a Dutch company that is also listed on the US stock exchange and has stakeholders in other countries. This firm would have to comply with Dutch, European and American rules on sustainability reporting. He adds that the company’s stakeholders may also want to receive reports in accordance with supranational regulations, such as those of the ISSB and the GRI.
“But those guidelines often do not correspond with one another, leaving you with the question of what to do as a company?” he says.
If we want to make sustainability reports themselves sustainable, we must work towards a globally uniform framework and measuring system, says Erkens.
“It would be a good start if the largest authorities in this field would sit down together to jointly define universal standards,” he suggests.
Sharing lessons from industry
Patagonia is just one example of a company with a positive approach to sustainability. Patagonia’s approach prioritises purpose over profit, with 100 percent of its profits going to organisations fighting climate.
Vincent Stanley, company director of Patagonia, and visiting fellow at the Yale School of Management, spoke to Yale Insights about the lessons its peers can take about sustainable business, and the improvements he’d like to see Patagonia make in the future.
Stanley said: “We’re honing our practices so that we’re creating the least amount of pollution and using the least amount of resources to create a product. That’s reducing harm. That’s not the same as practices that could be sustained indefinitely. Restorative would be a step beyond sustainable.
“A regenerative business is fundamentally non-extractive. It gives back to the earth and to people as much or more than it is taking away. That type of generosity toward communities and the environment as part of a business model is something we hope to create and we hope to see more of in the world.”
However, Stanley admits Patagonia isn’t yet a regenerative business. “Ask me that question in 10 years and I might have a different answer”, he tells Yale Insights.
Transforming the c-suite
It’s not just customers who are putting pressure on companies to be more environmentally friendly. They are joined by the companies’ employees, who are holding their organisations to account for sustainability commitments.
According to a survey by Deloitte, more than 42 percent of Gen Zs and 41 percent of millennials would switch jobs if their employer did not take action on climate change. Clearly employee activism is on the rise.
It is up to a company’s HR department to explain a firm’s purpose and impact if they are to attract and retain talent, explain Natalia Olynec, Chief Sustainability Officer at IMD and Lars Häggs, Senior Advisor at IMD.
“If HR is going to lead efforts to make sure an organization stays true to its sustainability commitments, they must also play a role in shaping strategy. The CHRO must work closely with the CEO to help set a clear purpose and strategic vision to drive change from the top. This prevents the firm from making lofty promises that are not held in the eyes of the employee,” they write.
Moreover, companies need to reframe the perception of activism. It’s important to recognise that activists are engaged, passionate employees, not disloyal ones.
“Understanding their concerns is key to hiring and retaining a new generation?of?talent, so why not involve them in the decision-making process by soliciting their input and suggestions on sustainability practices?” ask Olynec and Häggs.
While this is just a small selection of the excellent research business schools are conducting every day, it’s clear that the relationship between business school research and corporate sustainability is instrumental in shaping the future of sustainable business practices.
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