introduction to sustainability & entrepreneurship (march 2014)

Sustainability & Entrepreneurship (a brief introduction)

Edward M. Erasmus MA Faculty of Accounting, Finance and

Marketing March 11, 2014

Outline presentation

• The myth of infinite growth

• Addressing sustainability

• Sustainability challenges

• Sustainability & entrepreneurship: best practices

• New forms of ‘preneurship’ for Aruba

Before we start…

Myths we live by…

• Every society clings to a myth by which it lives…

• Ours is the myth of infinite (economic) growth

Unlimited frontiers…

• God provided infinite land, food and resources for Europeans to exploit…

Discovery of America

Unlimited knowledge sources…

• Science will solve all of the world’s problems

Renaissance

Unlimited production capacity…

Industrial revolution

Rapid economic progress…

“Global economic activity (GDP) has increased by a factor of 40 since the start of the Industrial Revolution.”

~Intergovernmental Panel on Climate Change (IPCC), Special Report on Emissions Scenarios, 2001

The myth of infinite resources…

Cross border exchange of…

Goods….

People….

Culture…

Capital…

…and cross border exchange of…

Information….

Dramatic increase in production capacity

Era of unlimited choice…

More than we can process or consume…

How many t.v. channels do you have in your cable package?

More than we can process or consume…

How many apps for the iPhone?

The age of Consumerism…

Reality check….

In the next 40 years the pressure on Earth’s ecosystems will increase dramatically

The competition for FOOD, WATER, LAND and ENERGY will intensify.

Addressing sustainability

• Firstly seriously discussed in the 1980s

• Led by the United Nations

• Focus on critical issues of environment and development

• Strengthen international cooperation

• Population, food security, the loss of species and genetic resources, energy, industry, and human settlements are all interrelated

Sustainable Development

“Development which meets the needs of the present, without compromising the ability of future generations to meet their own needs.”

- Our Common Future

The Brundtland Commission Report

(1987)

Rio Declaration on Environment and Development (1992)

The world is using the equivalent of one and a half planet to support life on Earth

“Our consumption of the Earth’s natural resources is depleting the

planet’s ability to replenish itself - and to sustain life on earth.”

- WWF Global Report

So what does it all mean for a small country like Aruba?

Our current challenges… • How to achieve real GDP growth again?

• How to cope with uneven income distribution?

• How to manage limited space?

• How to deal with a rapid ageing population?

• How to diversify the economy in a sustainable way?

• How to improve the health/fitness level of the country?

• How to increase social cohesion?

• How to become more self-sufficient?

• How to lower our dependency on fossil fuel oil?

Finding the right balance…

We should strive to maintain a delicate balance between our need to improve lifestyles and feeling of well-being on one hand, and preserving natural resources and ecosystems, on which we and future generations depend on the other hand.

Improvement of lifestyles

and well-being

Balance

Preserving natural

resources and

ecosystems

Nos Aruba 2025

2008 - 2010

Since 2011…

So does it mean we are sustainable?

• Global economic downturn

• Market competitiveness

• Consumerism as fuel for growth

• Short-term thinking

• Political will

• Renewable energy is still too expensive

• Collective awareness is a long process

• Crisis of “Overshooting”

Sustainability challenges

The Sustainability Challenge….

(duurzaam ondernemen)

Sustainable Entrepreneurship

ENTREPRENEUR HIP SU

STA

INA

BIL

ITY

Unsustainable business models never pay off in the end….

An outdated approach to business and value creation

• Companies have overlooked

the wellbeing of their customers

the depletion of natural resources vital to business

the viability of key suppliers

“the economic distress of the communities in which they produce and sell”

New leadership calls for a new approach to conducting business Visionary leaders think ‘sustainable’….

(duurzaam ondernemen)

Sustainable Entrepreneurship

1. Goals: exploring and developing innovations to solve sustainability-related problems

2. Organization: creative (out-of-the-box) business structures and models

3. Process: innovative and eco-friendly (circular economy)

4. Output: social and ecological value

Sustainable entrepreneurship

“business with a cause” - where world problems are turned into business opportunities by deployment of sustainability innovations

(maatschappelijk verantwoord ondernemen)

Corporate Social Responsibility

…..the integration of business operations and values, whereby the interests of all stakeholders including investors, customers, employees, the community and the environment are reflected in the company's policies and actions.

Corporate Social Responsibility

Self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.

• ISO 26000 Standards (international guidelines)

Why practice CSR?

• Companies have learned the hard lesson that without a sustainable society, there is no sustainable business….

• So in instead of focusing on short-run returns

• Companies focus on contributing to long-term societal well-being in which everybody can develop and grow.

The evolution of responsibility

1970s Shareholders

1980s Philanthropy

Late 1990s Stakeholders Engagement

Late 2000s Responsible

Competitiveness

Late 1990s Stakeholders Engagement

Late 1990s Stakeholders Engagement

Late 1990s Stakeholders Engagement

Late 1990s Stakeholders Engagement

Late 1990s Stakeholders Engagement

1980s Philanthropy

Early 1990s Corporate

Governance

Early 2000s Corporate

Accountability

Late 1990s Stakeholders Engagement

1970s Shareholders

1980s Philanthropy

Late 1990s Stakeholders Engagement

Focus CSR

People

Planet

Profit

CSR towards a new approach?

CSR can only be resilient if it is part of the DNA of an organisation, i.e. CSR will only survive the vagaries of fickle markets, fluctuating profits, financial crises and leadership whims if it is totally embedded in the corporate culture, strategy and governance systems”

– Wayne Visser, 2008 Environmental

Integrity

Societal Contribution

Good Governance

Value Creation

CSR

Let’s start from the very beginning....

Porter and Kramer How to reinvent capitalism – and unleash a wave of innovation and growth

Harvard Business Review 2011

Companies must bring business and society back together

• Shared value – creating economic value in a way that also creates value for society by addressing its needs and challenges.

• “Business must reconnect company success with social progress.”

Entrepreneurship on Aruba

Aruba SME sector

• Competition oriented (no differentiation)

• Same products in same markets

• Lack of innovation

• Comfort zone

• Technically challenged

Aruban entrepreneurial reality More of the same….

Basic conclusion

A change in the fundamental entrepreneurial thinking on Aruba should happen quickly, otherwise the small and medium business sector will autodestruct itself through far-going cannibalization…

Innovation and sustainable entrepreneurship is the key…

Renewable Energy

Ageing Population

Tourism Demographics Social Media

Mobile

Gateway/Export

Generation Y

Recycling/Upcycling

Consumer Awareness

Creative Industries

Sustainable Food

Health Consciousness

Local trends

Developing smart ventures

• Innovation

• Sustainability

• Diversification

• Productivity (resource efficient)

• Smart growth

• High-skilled jobs

• Driven by technology

• Shared value

New forms of ‘-preneurs’

Key areas in Aruba that require entrepreneurial innovation

Ecopreneuers

Sociopreneuers

Creativepreneurs

Globopreneurs

New forms of ‘-preneurs’

Entrepreneurial areas

Ecopreneurs

Ecological entrepreneurs

• Commercial ventures geared towards solving ecological and environment problems

Ecopreneurs

Ecopreneurs

Waste separation and export of recyclable products (paper, plastic, aluminum, etc.)

Waste separation plant Barcadera Free Zone

Ecopreneurs (in Aruba)

Ecopreneurs (in Aruba)

Entrepreneurial areas

Sociopreneurs

Social entrepreneurs

• Entrepreneurs with innovative business solutions to society’s most pressing social problems.

Sociopreneurs

https://www.facebook.com/dogoodaruba

Sociopreneurs (Aruba)

Green Vibes Sustainability, Land & Energy NV.

https://www.facebook.com/dogoodaruba

Sociopreneurs (Aruba)

Entrepreneurial areas

Creativepreneurs

Creative entrepreneurs

• One who undertakes the creation/production and distribution of an original creative work and is able to create wealth through an established business venture.

Creativepreneurs

Creative industries taking over...

Added value: approximately € 7.1 billion in the Netherlands

Architecture

Smart Highways

Creativepreneurs (in Aruba)

Entrepreneurial areas

Globopreneurs

Global entrepreneurs

• Developers and/or distributors of products and services destined for export (competing in the global market space).

Globopreneurs

Export expands the economic pie, generates flow of foreign currency, attracts new technologies and creates new forms of employment.

Globopreneurs (in Aruba)

• Utilizing Aruba’s unique socio-economic resources and geo-political position within the Kingdom of the Netherlands to develop new economic opportunities.

• Positioning Aruba as a strategic hub (gateway) for European businesses doing business in Latin America.

Globopreneurs (in Aruba)

• Moving towards a knowledge-driven economy.

• Attracting foreign investment with focus on innovation and sustainability.

• Synergy free zone, airport and harbor.

Final thought…

Instead of thinking “outside the box”, just

get rid of the box…

Paper assignment

Acknowledgements

• Government of Aruba, Ministry of Economic Affairs, Social Affairs and Culture: The Green Gateway: http://www.freezonearuba.com/docs/The-Green-Gateway-Economic-Vision-and-Policy.pdf

• Green Aruba: http://www.greenaruba.org/

• Lindgren, Anders. Six Forces. Shaping our Present and Future Lives. www.slideshare.com: anderslindgren4u

• Nos Aruba 2025: http://www.nosaruba2025.aw

• Porter, Michael and Mark R. Kramer, Creating Shared Value: http://hbr.org/2011/01/the-big-idea-creating-shared-value