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Foundations of Sustainable Business: Theory, Function, and Strategy

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Foundations of Sustainable Business: Theory, Function, and Strategy

Nada R. Sanders, John D. Wood

ISBN: 978-1-118-44104-6 October 2014 352 Pages

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Description

Foundations of Sustainable Business is designed to introduce future business leaders to the most important social and environmental issues of our generation.  From the perspectives of a business thought-leader and a public interest policy expert, the text provides a comprehensive, balanced introduction to sustainable business that integrates sustainable policies into all core business functions, including leadership, finance, accounting, risk management, marketing, supply chain management, and operations. 

Presenting sustainability as a strategic priority for all aspects of business, the text clearly defines all key concepts and shows how social, economic, and environmental trends are interconnected and relevant to corporate strategy. While the text provides an honest look at climate change, human trafficking, and environmental issues such as water shortage and ecosystem health, all normative guidance is based on traditional business value propositions, taking into account cost, risk, strategy, marketing potential, and operational feasibility.

Additionally, the text offers a variety of pedagogical tools in each chapter to provide an engaging, qualitative-based learning process.  Each chapter ends with original cases with focused questions that test comprehension of concepts. With in-chapter discussion questions, illustrative diagrams, ethical dilemmas, managerial insights, links to fascinating TED Talk videos, and on-point Harvard Business Review cases, Foundations of Sustainable Business is user-friendly for instructors and accessible to students.

Related Resources

Preface vi

Part I Introduction

1 Introduction to Sustainable Business 3
Sustainable Companies Gain the Upper Hand

1.1 What Do We Mean By “Sustainability”? 4

1.1.1 Sustainability is a Loaded Word 4

1.1.2 Running Out of Space 6

1.1.3 The New Global Trend: Doing Less Bad and More Good 10

1.1.4 The Unsustainable Status Quo: Fisheries 11

1.2 Causes and Consensus Around Sustainable Business 12

1.2.1 What Do Externalities Have to Do with it? 12

1.2.2 Shareholder Pressure 14

1.2.3 Multiple Drivers, One Destination 15

1.2.4 Baseline Shift Toward Sustainability 15

1.3 The Forms and Stages of Sustainable Business 17

1.3.1 Sustainability Marginalized 17

1.3.2 Sustainability Grows Up 18

1.3.3 Sustainability Gears Up 21

1.4 The Business Case for Sustainability 22

1.4.1 There is Actually Just One Bottom Line 22

1.4.2 Environmental Changes and Business Implications 24

1.4.3 Green Shoots and Blue Oceans 24

1.4.4 Overview of the Textbook 24

Key Terms 28

Discussion Questions 28

Case 1: BMW Pioneers Sustainable Automotive Technology 28

Case 2: Greening the Game of Golf 29

Further Research 30

Endnotes 31

2 Perspectives 33
Ecosystem Services

2.1 Introduction: Perspectives on Sustainability 34

2.2 Social Perspectives 35

2.2.1 Stakeholder Engagement 35

2.2.2 Corporate Social Responsibility 36

2.2.3 Human Rights 40

2.2.4 Laws and Regulations 40

2.2.5 Ethics and Environmental Justice 41

2.3 Economic Perspectives 43

2.3.1 Globalization and its Discontents 43

2.3.2 Environmental Kuznets Curve and its Criticism 46

2.3.3 Natural Capital Accounting and Sustainable Land Use 48

2.3.4 Sustainable Engineering 50

2.4 Environmental Perspectives 51

2.4.1 Regenerative Capacity 51

2.4.2 Biomimicry 52

2.4.3 Cradle-to-Cradle 53

2.4.4 Human Ecology 53

Key Terms 54

Discussion Questions 55

Case: E merging Drinking Water Contaminants 55

Additional Material 56

Endnotes 57

3 Leadership, Change Management, and Corporate Governance 59
Sustainable Leadership, Corporate Governance, and Innovation at Unilever

3.1 Introduction: Leadership as Antidote to Collective Action Problems 60

3.1.1 What is a Collective Action Problem? 61

3.1.2 What is a Tragedy of the Commons? 62

3.1.3 Sustainability through Self-Regulation 63

3.1.4 The Sustainable Leadership Gap 64

3.2 Leadership 65

3.2.1 What is Sustainable Business Leadership? 65

3.2.2 New Competencies of Sustainable Business Leaders 67

3.2.3 Sustainable Leadership Strategy 68

3.3 Change Management 70

3.3.1 Entrepreneurialism and Innovation 70

3.3.2 Developing a Sustainable Business Strategy 72

3.3.3 Change Management 73

3.3.4 Hiring Strategy and Employee Engagement 75

3.4 Strategic Alignment for Sustainability Through Corporate Governance 76

3.4.1 Strategic Alignment: Integrating Sustainability into Corporate Strategy 76

3.4.2 Sustainable Corporate Governance 77

3.4.3 Corporate Governance Mechanisms 79

3.4.4 Resolving Conflicts Between Shareholders and Stakeholders: Rise of the B-Corp 81

3.4.5 Executive Compensation 83

3.4.6 Rise of the Chief Sustainability Officer 84

Key Terms 86

Discussion Questions 87

Case 1: Corporate Leadership Amidst Turbulent Times 87

Case 2: Drilling Down on Corporate Governance 88

Further Research 89

Endnotes 89

Part II Accountability

4 Legal Frameworks for Sustainability 95
Climate Change Divides Corporate Lobbying Efforts

4.1 The Role of Law in Corporate Sustainability 96

4.1.1 Hard Law, Soft Law, Legal Hierarchy, International Law 99

4.1.2 The Legal Environment of Business 102

4.1.3 Incentives for Legal Compliance 102

4.2 Law and Sustainability by Business Area 104

4.2.1 Design, Production, and Pollution 105

4.2.2 Supply Chain, Marketing, and Consumer Protection 109

4.2.3 Packaging, Waste, and Disposal 114

4.2.4 Land Use Planning 116

4.3 Limits of the Law 117

4.3.1 Legal Compliance vs. Sustainable Performance 117

4.3.2 Lobbying for Lax Laws 118

4.3.3 Under-Enforcement of Good Laws 119

Key Terms 120

Discussion Questions 121

Case 1: Can Litigation Set Public Policy on the Use of Drugs in Industrial Agriculture? 121

Case 2: The American Legislative Exchange Council and So-Called “Ag Gag” Rules 122

Further Research 123

Endnotes 123

5 Metrics, Tools, and Reporting: The Role of Finance and Accounting 127
Nature’s Invoice

5.1 Introduction: Why Measure and Report? 128

5.1.1 The Role of Finance & Accounting 128

5.1.2 Information-Driven Sustainable Business Model 130

5.1.3 (Almost) Everyone is Doing it 132

5.1.4 What are the Benefits of Monitoring and Reporting? 132

5.1.5 Drivers of Sustainability Reporting 134

5.2 Metrics 136

5.2.1 What are Metrics? 136

5.2.2 The Triple Bottom Line 137

5.2.3 Sustainability Performance Metrics 138

5.2.4 What to Look for in a Metric 139

5.3 Tools 140

5.3.1 Natural Capital Accounting 140

5.3.2 Life Cycle Assessment 141

5.3.3 Environmental Footprinting 143

5.4 Reporting 145

5.4.1 Leadership and Reporting 146

5.4.2 Threshold for Reporting: Materiality 147

5.4.3 Sharing Sustainability Information with End Consumers 148

5.4.4 ISO Standards for Sustainability Reporting 148

5.4.5 Global Reporting Initiative 149

Key Terms 151

Discussion Questions 152

Case 1: Chocolate Crusaders 152

Case 2: Suede Shoe Blues 153

Further Research 154

Endnotes 154

6 Risk Management 157
Happy Meals Dodge Tainted Toys

6.I Risk Management and Sustainable Business 158

6.1.1 The Role of Risk Management in Sustainable Business 159

6.1.2 The Risky Environment of Business 161

6.1.3 The Moral Psychology of Risky Business Decisions 161

6.1.4 The Enterprise Risk Management Continuum 162

6.2 Risk Identification 166

6.2.1 Business Risks Managed by Sustainability 166

6.2.2 Preventable Versus Uncontrollable Risk 169

6.2.3 Water-Related Business Risks 170

6.2.4 Climate Change-Related Business Risks 171

6.3 Risk Assessment 171

6.3.1 Scenario Planning 172

6.3.2 Measuring the Materiality of Risk 173

6.3.3 Vulnerability 174

6.3.4 Putting it All Together 176

6.4 Risk Response 176

6.4.1 Bearing Risk 177

6.4.2 Avoiding Risk 178

6.4.3 Mitigating Risk 178

6.4.4 Sharing Risk: Insurance 179

6.5 Risk Management Strategies in Business 181

6.5.1 Business Continuity Planning 181

6.5.2 Resilience 182

Key Terms 183

Discussion Questions 183

Case: Managing a Hospital’s Fight Against an Epic Flu 184

Further Research 184

Endnotes 185

Part III Implementation

7 Marketing 189
From Superbowl Ads to Viral Videos

7.1 Introduction: Marketing Sustainability 190

7.1.1 Conventional Marketing Versus Marketing Sustainability 191

7.1.2 Segmenting the Market for Sustainable Products 192

7.1.3 Trends in Marketing Sustainability: Avenues for SMEs 194

7.1.4 Rewards of Sustainable Marketing 196

7.2 Legal and Ethical Boundaries 198

7.2.1 Truth-In-Advertising Rules 198

7.2.2 Guidelines for Marketing Environmental Attributes 199

7.2.3 Product/Process Information Distinction 200

7.2.4 What is Greenwashing? 202

7.3 Strategy for Marketing Sustainability 203

7.3.1 Sustainability Marketing Principles 203

7.3.2 Brand Development 204

7.3.3 Stages of Marketing Sustainability 205

7.3.4 International Marketing 206

7.3.5 Challenges to Marketing Sustainability 207

7.4 Certification Programs 211

7.4.1 Guidelines for Third-Party Certification Programs 212

7.4.2 Types of Certification Programs 213

7.4.3 Certification Design 214

7.4.4 Challenges to Sustainable Certification 216

Key Terms 217

Discussion Questions 217

Case 1: Marketing Sustainable Dinner Ware 217

Case 2: Nike, Inc. v. Kasky 219

Further Research 220

Endnotes 220

8 Supply Chain Management 223
Building a Sustainable Supply Chain: Lessons from Starbucks

8.1 Sustainable Supply Chain Management in Context 224

8.1.1 The Role of SCM in Sustainability 225

8.1.2 Managing Supply Chain Risks: Going Beyond the First Tier 227

8.1.3 Traceability and Increased Supply Chain Transparency 228

8.1.4 Business Benefits of Sustainable SCM 229

8.1.5 Water-Related Supply Chain Risks 230

8.1.6 Human Rights, Child Labor, and Occupational Safety in Global Supply Chains 230

8.2 Managing the Entire Product Life Cycle 232

8.2.1 Life Cycle Assessment and Cradle-to-Cradle Design 233

8.2.2 Product Design 234

8.2.3 Packaging 234

8.2.4 Sourcing 236

8.2.5 Process Design 237

8.3 Managing the Supply Chain Infrastructure 238

8.3.1 Logistics 238

8.3.2 Reverse Logistics 239

8.3.3 Transportation 241

8.3.4 Facility Location 242

8.4 Managing Supply Chain Stakeholders 244

8.4.1 Suppliers 245

8.4.2 Consumers 246

8.4.3 Non-Governmental Organizations (NGOs) and Non-Profits 248

8.4.4 Governmental Agencies and Regulation 248

8.4.5 Competitors 249

8.4.6 Communities 250

Key Terms 252

Discussion Questions 252

Case 1: G one Fishing: Human Trafficking on the High Seas 252

Case 2: iSlave: Labor Conditions in Consumer Technology Parts Suppliers 253

Further Research 254

Endnotes 255

9 Operations Management 259
Ancient Air Conditioning in Modern Building Design

9.1 The Role of Operations Management in Sustainability 260

9.1.1 The OM Function 260

9.1.2 How OM Impacts Sustainability 262

9.1.3 Water-Related Operations Management Risks 263

9.2 Operations Strategy 264

9.2.1 Sustainable Operations as a Competitive Priority 264

9.2.2 Sustainable OM Strategy 265

9.2.3 Stakeholder View of Operational Output 267

9.2.4 Striking the Right Balance through Quality Management 267

9.3. Operations Design 268

9.3.1 Product Design 268

9.3.2 Process Design 272

9.3.3 Process Performance Metrics 273

9.4 Operations Planning & Control 275

9.4.1 Inventory Management 275

9.4.2 Work System Design 276

9.4.3 Enterprise Resource Planning: Using Big Data Analytics 277

9.4.4 Healthy, Productive Employees: Scheduling 278

9.5 Facility Management, Layout & Design 280

9.5.1 Facility Management 280

9.5.2 Facility Layout 281

9.5.3 Facility Design 282

Key Terms 284

Discussion Questions 284

Case: Too Little or Too Much: Inventory Management During Environmental Crises 285

Further Research 285

Endnotes 286

Glossary 289

Index 313

  • Provides real-world examples from domestic and international companies of all sizes.

  • Offers separate chapters on Finance and Accounting, Risk Management, Operations, Supply Chain Management, Marketing, Legal Compliance, and Leadership.

  • Provides a strong foundation in social, economic, and environmental literacy. 

  • Packed with pedagogical tools in each chapter to provide an engaging, qualitative-based learning process: in-chapter discussion questions, illustrative diagrams, ethical dilemmas, managerial insights, links to fascinating TED Talk videos, and links to on-point Harvard Business Review cases.

  • Each chapter ends with original cases with focused questions that test comprehension of concepts introduced in each chapter.  

  • Offers a chapter on how sustainability impacts virtually all of the disciplines encountered in a traditional MBA curriculum.