Epilogue

Abstract

The chapters in this book were intended to help business leaders, strategy practitioners, and all corporate decision makers as well as students of management to improve their level of comprehension and concern of why sustainable strategizing is important in the twenty-first-century business world. While the book was finalized, civilization was confronted with fresh evidence of human sustainability issues particularly with regard to our most pressing global concern, climate change. In this epilogue, several developments are underscored which seem even more important since the chapters of this book were completed. This confirming evidence is re-emphasizing the need for corporate strategists to take “sustainability” seriously in their strategic sense-making and ideation processes and to develop impactful strategic business responses and actions. It is my hope that the ideas, management methods, and strategy practice examples presented in this book encourage and help current and future business leaders mastering this task through sustainable strategizing for positive impact toward a thriving future for both business and society.

The chapters in this book were intended to help business leaders, strategy practitioners, and all corporate decision makers as well as students of management to improve their level of comprehension and concern of why sustainable strategizing is important in the twenty-first-century business world. Human thriving, even at current population levels, depends on planetary thriving, which are both influenced by thriving business. It is my hope that the actionable business knowledge presented in this book encourages and supports current and future business leaders to contribute to this multifaceted notion of “thriving” through sustainable strategizing and positive impact. This way, prospering business activity will provide current and future generations the opportunity to thrive as well.

While this book was finalized, civilization was confronted with fresh evidence of human sustainability issues particularly with regard to our most pressing global concern, climate change. This confirming evidence is re-emphasizing the need for corporate strategists to take “sustainability” seriously in their strategic sense-making and ideation processes and to develop impactful strategic business responses and actions. The chapters in this book offer ideas, management methods, and strategy practice examples to help mastering this task. Below several developments are listed which seem even more important since the chapters of this book were completed.

• A landmark climate report published early October 2018 describes a strong risk of crises with serious consequences in the next decades if transformational global action is not taken soon to limit global warming to 1.5 °C above pre-industrial levels (IPCC, 2018). It paints a picture of the immediate consequences of climate change that is far more dire than previously thought (Davenport, 2018; Edenhofer & Rockström, 2018; Harvey, 2018; Stern, 2018).¹ Moreover, according to a recent analysis, the ocean has warmed 60% more than the worst predicted estimate of the IPCC (Resplandy et al., 2018). However, the recent IPCC special report on the impact of global warming was also received with hope as it shows that with immediate action staying below a threshold of 1.5 °C is still possible (Mooney & Dennis, 2018). Business leaders can play a crucial role in leading the way to tackle this issue.

• In summer 2018 weather experts reported the strongest Artic sea ice break ever, which was caused by warm winds and a heatwave in the northern hemisphere. Scientists are concerned about massive destabilization of polar ice caps (Willis et al., 2018) and the risk of tipping the Earth towards hothouse state (Watts, 2018). Also, recent research shows that large ice sheets can move quickly into the ocean, which can cause significant Ocean level rising (Abraham, 2018). These findings make it more crucial for us to embrace sustainable strategizing as one way to ensure viability of socio-ecological systems, business ecosystems, and organizations (see Chaps. 4 and 5).²

• The Proceedings of the National Academy of Science in the United States published an article on possible trajectories of the Earth System (Steffen et al. 2018). If not halted in time, these pathways would cause serious danger for the entire ecosystem and subsequently for our societies and economies. The sixteen scientists warn of self-reinforcing bio-geophysical feedback dynamics through human-induced emissions of greenhouse gases. This would severely endanger the stabilization of the climate and create a “Hothouse Earth” that could change the conditions for life on Earth in an unprecedented way. The authors call for collective human action as the only chance to steer away from the danger towards stabilizing climate conditions (see Chap. 12).

• Recent analyses by J. Hansen and P. Kharecha (2018) have underscored the huge “carbon debt” to posterity that has been generated just since 1980 and the huge private, public, and personal investments required to prevent “hothouse effects” in most places around the globe.

• Military organizations take climate-related sustainability issues as a threat multiplier very seriously, as reflected in the climate-related risk survey results issued by the U.S. Department of Defense in 2018 and other reports (U.S. Department of Defense, 2014, 2018). Military experts see climate change as a risk to global stability that may lead to more wars and refugees (Abel, Brottrager, Crespo Cuaresma, & Muttarak, 2019; Banerjee, 2019; Tirone, 2019). Furthermore, geopolitical tensions are growing in the Arctic as melting ice reopens natural borders (Watts, 2019). Do corporate strategists apply the same level of concern (see Chap. 3)?

• Among the first major private sector participants to invest heavily in “the economics of unsustainability” were re-insurance firms such as MunichRe or SwissRe trying to protect the customers from catastrophic losses arising from climate change and associated natural disasters, e.g., hurricanes, crop failures, floods, and wildfires (McDuff, 2018). Accounting for risk factors related to sustainability issues has become mainstream also in the financial asset management market (see Chap. 6).

• According to the Edelman Trust Barometer (2018: 5), only 53% of the general population in 28 countries trust their governments whereas 64% have trust in business. Despite some agnostics about business and sustainability (Dauvergne, 2018), this emphasizes the importance of business leaders to lead the way to a sustainable future (see Chap. 1) as governments or civil society alone may not provide sufficient leadership for various reasons.

• Recent findings demonstrate how increased market power of “superstar companies” has boosted their profitability whereas their labor take-of-share has fallen (Fleming & Brook, 2018). CEOs of the top 350 companies in the United States earn 312 times more than their workers on average last year (Rushe, 2018). This shows how an increased corporate “winner-take-all” mentality fosters shortfalls in our social foundations and emphasizes the need for more “inequality aware” organizations (see Chap. 10).

• In 2018 the Earth Overshoot Day fell on the 1st of August. This is the day when all of humanity has used more from nature than the planet can renew in the entire year. Today, we are using 1.7 Earths for our consumption and waste absorption and it is expected that we will need 2 planets by 2030 (Earth Overshoot Day, 2018; The World Counts, 2018). Moreover, the World Wildlife Fund reported in its Living Planet Report 2018 a 60% decline in wildlife populations in just over 40 years between 1970 and 2014 (WWF, 2018). All this re-emphasizes the need to move business imperatives from reducing unsustainability to creating sustainability (see Chaps. 1 and 2).

In 2018 we also witnessed many encouraging and impactful initiatives that have the potential to trigger positive changes. They underscore the relevance of new business concepts for sustainable strategizing and the importance of collaboration and open strategy:

• One of the most influential investor firms in the world, BlackRock, informed business leaders in 2018 that their companies need to have a social purpose if they want to receive the support of BlackRock (Sorkin, 2018). “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society” (Fink, 2018). In his 2019 letter to CEOs, Larry Fink underscores this message by calling business to lead with purpose and not just live with high-minded mission statements (Fink, 2019). This was the fourth annual letter from the BlackRock CEO in a row conveying a strong message related to environmental and social issues.³ This requires a rethinking of value and impact (see Chap. 7) and emphasizes the need for purpose-driven strategizing and mindsets (see Chaps. 1, 14, 15, 16, and 17). BlackRock is not an isolated example as State Street (2018) and Vanguard (McNabb III, 2017) are putting similar emphasis on long-term sustainability orientation.

• The new business imperative for private and public companies to combine economic aspirations with social purpose is reflected in the increasing number of B Corps⁴ and its legal reflection as Benefit Corporations. B Lab (2018a) currently lists 2619 Certified B Corporations in 60 countries covering 150 industries. In the meantime, also major companies such as Brazil’s Natura have joined this movement (B Lab, 2018b). In 2018 food giant Danone’s North American operation became a Certified B corporation (B Lab, 2018c). These companies apply business concepts for sustainable strategizing that consider the social and environmental impact of business activity (see Chaps. 7, 8, and 9). The “B-Impact Assessment” tool is used by more than 50,000 organizations world-wide (B Lab, 2018d).

• The We Mean Business (2018) coalition is currently listing 812 major companies with $16.9 Trillion in market cap that are leading the way toward a sustainable future through 1321 “commitments to bold action.” The importance of purpose-driven-leadership with regard to social and environmental value creation is also emphasized in a recent CEO study conducted by Leaders on Purpose (Gyori et al., 2018). There are many examples of CEOs who can be characterized as being “Future Smart” (see Chap. 18).

• TWI2050—The World in 2050 (2018) is a recent report of an international initiative by researchers and practitioners that explores science-based transformational and feasible pathways towards sustainable development. TWI2050 is a massive global research initiative that works on providing the much needed guidance for policy makers responsible to implement the Sustainable Development Goals (SDGs) as articulated in the United Nations’ 2030 Agenda. This is another example of potentially impactful international collaboration which is required at all levels of the global society (see Chap. 12).

• The importance of cross-sectoral multi-stakeholder collaboration to develop and maintain positive momentum has been highlighted in various chapters of this book (see Chaps. 12 and 15). A recent initiative of a collaborative approach to sustainability is Drawdown Europe (www.drawdowneurope.eu) which has been launched in 2018 as part of the global “Project Drawdown” coalition (www.drawdown.org).⁵

• In fall 2018, the Global Commission on Adaptation led by Bill Gates, former United Nations Secretary General Ban Ki-moon, and World Bank CEO Kristalina Georgieva has been launched. Co-hosted by Global Center on Adaptation (www.gca.org) and World Resources Institute (www.wri.org), the commission facilitates a global multi-stakeholder movement to improve resilience to climate-related threats by bringing scale and speed to climate adaptation solutions (Carrington, 2018). One of the focus areas is related to the question of how businesses can incorporate climate change risks into their investments as well as their social and economic development plans (Global Center on Adaptation, 2018).

• The Club of Rome issued its first “Climate Emergency Plan” (2018) in December urging all stakeholders, including business, to adopt a high-impact transformational action program that will reduce greenhouse gas emissions and improve community resilience. It explicitly calls for reframing business models in high-carbon industries, which will require new concepts and frameworks for sustainable strategizing as provided in Part II of this book.

• The Network of Business Sustainability (www.nbs.net) is as an initiative fostering dialogue and collaboration in and between academic research and the business community to shape a more sustainable future. With currently more than 6000 researchers and managers involved, it fosters open strategizing (see Chap. 5) and drives public-private co-creation and collaboration (see Chap. 12) focusing on a systems perspective (see Chap. 17). It draws on both real-time practitioner knowledge and contemporary research.⁶

• The generative potential of values-based stakeholder management (see Chap. 11) is assuming new relevance with the integration of refugees in Europe, but also with combating causes for refugees to escape their homes. The “Lab of Tomorrow” (GIZ, 2018) facilitates multi-stakeholder co-creation of new business models (see Chaps. 7, 8, and 9) in developing and emerging societies (Breuer, Lüdeke-Freund, & Brick, 2018).

• After mid-year 2018, China and the European Union agreed to cooperate on policies that support the transition to a circular economy (see Chap. 15). This will not only provide companies new opportunities for sustainable strategies but is expected to accelerate the adoption of circular economy practices at a global scale and thus the transformation to an economic system balancing business, people, and the environment (Ellen MacArthur Foundation, 2018). Furthermore, China plans to dominate the $550 billion market for electric car battery reuse and recycling, which could be a clean and circular energy game changer (Romm, 2018).

• The Natural Step Chemical Coalition was created in 2018 to improve sustainable life cycle management of chemicals and materials which is key for the transition to a circular economy (The Natural Step, 2018). For almost 30 years, The Natural Step has helped organizations to better understand sustainability challenges and to make meaningful progress (see Chap. 17).

• In the world of legitimate finance, G20 countries are increasingly recognizing that massive sums of investment are needed for “green finance,” so strategies can be viable in the longer term. The Green Loan Principles (GLP) of the International Capital Market Association (ICMA) are becoming ever more significant elements with the Global Green Finance Council (GGFC) (Loan Market Association, 2018). Aggressive sustainable investments (see Chap. 6) can slow the rates of negative change to permit orderly adjustments in most parts of the globe. Industry leaders take actions to further sustainable strategies products such as green bonds. Issuance reached USD167.3 billion in 2018, which shows strong market growth (Climate Bonds Initiative, 2019).⁷

• At the Global Climate Action Summit 2018, the then Governor of California, Jerry Brown, announced that California will launch its own satellite to track greenhouse gases causing climate change (Holden & Milman, 2018). An example of why this tracking is so important is provided by recent discoveries of Arctic lakes releasing large volumes of greenhouse gases (Mooney, 2018). Jerry Brown also signed both a bill establishing a legal target of zero emissions for the state’s electricity system by 2045 as well as an executive order setting a goal of zero emissions by 2045 for the entire California economy affecting transportation, agriculture and every other industry that puts emissions in the air (Gillis & Harvey, 2018). This is an example of strong political leadership toward a sustainable future which will also strongly impact the business world.

• For nearly 20 years, the Global Reporting Initiative (GRI) has been gathering, standardizing, and distributing thousands of organizational performance reports from around the globe. Its supporters and readers control USD trillions in assets. In the USA, the Sustainability Accounting Standards Board (SASB) is advancing many similar criteria, but their framework begins with a different set of assumptions and perspectives (see Chap. 13). New initiatives for “advanced” economies such as the Reporting 3.0 Platform are being rolled out with the goal to spur the emergence of a regenerative and inclusive global economy (Reporting 3.0, 2018).

• Building roads from recycled plastic waste (Boffey, 2018), advancements in Carbon Capture and Storage (CCS) or Carbon Capture, Utilization, and Sequestration (CCUS) technologies,⁸ space-based emission detection devices such as MethaneSAT or TROPOMI (EDF, 2018), and the transformation of waste carbon to jet fuel and other products (LanzaTech, 2018) are promising examples of how new technologies can help advance ecological sustainability progress. Unfortunately, new technologies such as artificial intelligence (AI) or geoengineering may not only have the potential to solve issues but also pose a significant threat to sustainability (Harari, 2017; Ó hÉigeartaigh, 2017).⁹ For companies, sustainability and singularity or technology acceleration are two interdependent developments that need to be carefully managed (see Chaps. 17 and 18).

• The One Planet Summit held during September 2018 in New York City is another reminder that there are many active private and public players including Google, World Bank, United Nations, European Union, and Bloomberg Philanthropies collaborating for creating positive impact with regard to sustainability (One Planet Summit, 2018).

Based on the current state of the planet and the information presented in this epilogue, business leaders need to make decisions about which scenario of the future may unfold and how they may choose to engage in leading the way to shape their desired future. Will there be a brighter future for humankind created through market forces, unprecedented technologies provided by the “ingenuity of man” such as geoengineering or negative emission technologies, and policy reform? Or will there be a grimmer future with sanctuaries of prosperity surrounded by environmental degradation, social chaos, conflict and violence? Or a transformed world in which fundamental economic, social, and political changes enable businesses, the natural environment and humans to thrive? (Raskin, 2016) Nobody knows the answer but the choices we make today will determine which world we will ultimately get in the future. It is my hope that this book helps managers to make business sense of “sustainability” and lead the way toward a thriving future through sustainable strategizing and positive impact.

The majority of approaches and ideas presented in this book fit change into our current economic models of free and social market economies although they challenge dominant neoclassical management paradigms and models. I believe this connectivity is required for triggering corporate action as all-encompassing “solutions” and some great ideas proposed in the world of sustainability may simply be not acceptable to people in charge of strategic decisions or policies and such are not feasible. However, looking at the magnitude of issues we face it can only be a first incremental step to ensure that our social and natural systems are thriving in the future. The goal of most parts in this book was not to challenge the underlying economic system and thus the roots of the problem may have not been fully addressed. Instead of trying to embed sustainability within the existing economic system dominated by short-termism and shareholder interest, it might perhaps be more appropriate to drive transformation of the economy towards sustainability and run it in service to life as suggested by various authors (Felber, 2015; Hoffman, & Ehrenfeld, 2015; Jackson, 2016; Maxton & Randers, 2016; Sukhdev, 2012; von Weizäcker, & Wijkman, 2018).¹⁰ With a Special Topic Forum on “New Theoretical Perspectives on Market-Based Economic Systems” (Barney & Rangan, 2019) as well as a Special Research Forum on “Understanding and Tackling Societal Grand Challenges Through Management Research” (George, Howard-Grenville, Joshi, & Tihanyi, 2016), the Academy of Management has recently addressed portions of the “disconnect” between the pressures on the Planet’s biosphere as well as other socio-ecological issues and the conceptual frameworks used in much of our research and teaching. Nevertheless, research on business and sustainability tends to remain unnecessarily separated from the advances in knowledge in the natural and physical sciences. Lack of engagement with the wider sustainability agenda has been compounded by the scarcity of trans-disciplinary teaching and research programs in our universities.¹¹ The world economy could grow on a massive scale in this century putting enormous pressure on Earth’s resources of which we are already overusing at 170%. If technology will not significantly help to solve our ecological and social problems or will even worsen them, the planet cannot sustain 11 billion people and a much larger economy by the year 2100 (Ehrlich & Ehrlich, 2008; The World Counts, 2018). To put this in the words of Kate Raworth (2017: 30): “Today we have economies that need to grow, whether or not they make us thrive: what we need are economies that make us thrive, whether or not they grow.”

Obviously, it is hard to imagine a sustainable business in an unsustainable world, people may not be motivated to act for various reasons (Graef, 2017; Markman, 2018; Marshall, 2013) and, perhaps, we may need some kind of crisis or catastrophe to trigger action (Samuelson, 2018). However, there are also new and evolving business mindsets and some kind of “Green Swans” (Elkington, 2019) that strive for positive impact. Given the many examples provided in this epilogue, I am optimistic that this can be one of various transformational drivers urgently needed to provide current and future generations the opportunity to thrive. The focus of this book was business as business leaders are best positioned to lead the way knowing that they alone will not be able to master this challenging task. In addition to the private sector (i.e. privately-held and publicly-owned companies), important contributions to sustainable development need to come from the public (e.g. governments) and particularly the plural sectors as Henry Mintzberg (2015) noted a few years ago.¹² Dialogue and collaboration within and particularly between these sectors are crucial to create the urgently needed solutions for a sustainable future (Mintzberg, Etzion, & Mantere, 2018).

There is much at stake today as humanity seems to be on a suicidal trajectory. More than ever, we need business leaders, corporate managers, and scholars that push the limits to prevent their children and grandchildren from facing a devastated world. Climate related natural disasters, scarcity of water, and fertile soils, massive species extinction, social conflicts as well as artificial intelligence deciding what is right and what is wrong are just a few elements of such a scenario. This is not “science fiction” but very real in the life span of most people reading these lines or at least their children and grandchildren. As far as business is concerned, this ultimately comes down to strategic choices made by individual executives who understand the seriousness of the issue, are convinced that sustainable development is possible, and recognize the various new management concepts and ideas available to tackle the issue and create viability for their very own organizations and society. These individual choices greatly determine which future we will get. Ray Anderson (2009), the former CEO of Interface, emphasized this point almost a decade ago at the very end of his passionate TED talk: “(…) we have a choice to make during our brief, brief visit to this beautiful blue and green living planet. To hurt it or to help it. For you, it is your call.”