introduction to sustainability & entrepreneurship (march 2014)
TRANSCRIPT
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?
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