Ethical and Sustainable Business
Prof. Hans Verboven
2025-2026
Gabriel Gonzalez-Lopez
1
, Ethical and Sustainable Business 1
1. What is Sustainability ? 3
2. Free will - Free Choice ? - Morals 7
3. Lesson III 11
4. Lesson IV 15
5. Operational Excellence 24
6. VSME European Sustainability Reports and Standards 29
7. Purpose & Organisational Excellence 33
8. Sustainability and Circularity in Business 41
9. Corporate Governance and Other Topics 46
10. Arti cial Intelligence 51
2
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, 1. What is Sustainability ?
At its core, sustainability is a holistic approach designed to maximize the added value of
business activities for as many stakeholders as possible while minimizing the waste of
resources, nancial assets, time, and human talent. To achieve this, sustainable business
practices are generally divided into two main categories: sustainable business
optimization (which accounts for about 80% of efforts) and sustainable business
innovation (the remaining 20%).
• Sustainable optimization: is an internal focus on ef ciency. It is the rigorous,
continuous process of cleaning up supply chains, reducing energy consumption, and
squeezing waste out of the current business model.
• Sustainable innovation: requires creativity, strategic pivots, and sometimes
"disruptive" ideas. It means looking at the world's mega-challenges (like climate
change or resource scarcity) and inventing new business models or technologies
that turn those challenges into pro table opportunities.
To put it in perspective: If you run a logistics company, sustainable optimization is out tting your
current eet of trucks with more aerodynamic parts, training drivers to use less fuel, and tracking
your CO2 emissions to hit annual reduction targets. Sustainable innovation, on the other hand, is
completely reinventing your business model to deliver goods using autonomous electric drones,
or shifting from a delivery company to a hyper-local 3D-printing service that eliminates the need to
transport physical goods altogether. Both are absolutely necessary to survive and thrive.
In practical terms, this is achieved through Corporate Social Responsibility (CSR). CSR
is a continuous process of improvement where organizations voluntarily integrate
economic, environmental, and social considerations into their operations, relying heavily
on stakeholder consultation.
A vital narrative is that businesses must be the solution to global problems rather
than the cause. While political regulations are necessary to prevent a "prisoner's
dilemma" scenario where companies race to the bottom, politicians often only operate
on short-term mandates and can only redistribute money. Entrepreneurs, on the other
hand, have « skin in the game », they are directly accountable and stand to lose
everything if they fail. Because companies possess the resources, organizational
structures, and know-how, the most impactful solutions to global challenges will emerge
from socially responsible, innovative companies operating effectively within a free
market system.
3
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, Why is it on the Agenda? (The Six Drivers of Sustainability)
The shift toward sustainable business is not a passing trend; it is driven by six
fundamental pillars that make it an absolute necessity for modern
strategy.
1. Sustainable Development and the 3 P’s (and 5 P's)
The foundational de nition of sustainable development
comes from the 1987 Brundtland Commission: it is
development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs. Historically, this has been guided by the "triple
bottom line" of People, Planet, and Pro t (Prosperity),
emphasizing that economic success must be balanced with
environmental stewardship and social equity. Recently, this
framework has expanded to the "5 P's" to also include Peace and
Partnerships.
Before we were thinking with an idea of —> EARNINGS - COSTS = PROFIT
But as for today, we want to include the environmental and social costs. So here is a
« new » way of viewing pro t
—> EARNINGS + EXTERNAL VALUE COSTS - EXTERNAL COSTS = VALUE AND PROFIT
2. Risk Management
Sustainable business means being aware of local and global risks for the own company
and the approach to address or mitigate them
Sustainability is a critical mechanism for navigating a highly volatile global risk
landscape. Businesses today face existential threats ranging from extreme weather
events and natural disasters to cyber-attacks, geopolitical instability, and resource
scarcity. Proactively addressing these local and global risks helps businesses safeguard
their operations and protect their reputations. Proper risk management also yields direct
nancial bene ts; for example, banks often provide lower interest rates or discounts to
businesses or individuals investing in highly energy-ef cient real estate.
3. Stakeholder Expectations
The world is being shaped by massive megatrends, such as rapid urbanization, shifting
economic power to emerging markets, and unprecedented technological
breakthroughs. In this shifting landscape, the expectations of stakeholders have evolved
dramatically. Consumers, investors, and regulators now demand much higher
transparency and accountability regarding corporate practices. Businesses that fail to
4
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Prof. Hans Verboven
2025-2026
Gabriel Gonzalez-Lopez
1
, Ethical and Sustainable Business 1
1. What is Sustainability ? 3
2. Free will - Free Choice ? - Morals 7
3. Lesson III 11
4. Lesson IV 15
5. Operational Excellence 24
6. VSME European Sustainability Reports and Standards 29
7. Purpose & Organisational Excellence 33
8. Sustainability and Circularity in Business 41
9. Corporate Governance and Other Topics 46
10. Arti cial Intelligence 51
2
fi
, 1. What is Sustainability ?
At its core, sustainability is a holistic approach designed to maximize the added value of
business activities for as many stakeholders as possible while minimizing the waste of
resources, nancial assets, time, and human talent. To achieve this, sustainable business
practices are generally divided into two main categories: sustainable business
optimization (which accounts for about 80% of efforts) and sustainable business
innovation (the remaining 20%).
• Sustainable optimization: is an internal focus on ef ciency. It is the rigorous,
continuous process of cleaning up supply chains, reducing energy consumption, and
squeezing waste out of the current business model.
• Sustainable innovation: requires creativity, strategic pivots, and sometimes
"disruptive" ideas. It means looking at the world's mega-challenges (like climate
change or resource scarcity) and inventing new business models or technologies
that turn those challenges into pro table opportunities.
To put it in perspective: If you run a logistics company, sustainable optimization is out tting your
current eet of trucks with more aerodynamic parts, training drivers to use less fuel, and tracking
your CO2 emissions to hit annual reduction targets. Sustainable innovation, on the other hand, is
completely reinventing your business model to deliver goods using autonomous electric drones,
or shifting from a delivery company to a hyper-local 3D-printing service that eliminates the need to
transport physical goods altogether. Both are absolutely necessary to survive and thrive.
In practical terms, this is achieved through Corporate Social Responsibility (CSR). CSR
is a continuous process of improvement where organizations voluntarily integrate
economic, environmental, and social considerations into their operations, relying heavily
on stakeholder consultation.
A vital narrative is that businesses must be the solution to global problems rather
than the cause. While political regulations are necessary to prevent a "prisoner's
dilemma" scenario where companies race to the bottom, politicians often only operate
on short-term mandates and can only redistribute money. Entrepreneurs, on the other
hand, have « skin in the game », they are directly accountable and stand to lose
everything if they fail. Because companies possess the resources, organizational
structures, and know-how, the most impactful solutions to global challenges will emerge
from socially responsible, innovative companies operating effectively within a free
market system.
3
fl fi fi fi fi
, Why is it on the Agenda? (The Six Drivers of Sustainability)
The shift toward sustainable business is not a passing trend; it is driven by six
fundamental pillars that make it an absolute necessity for modern
strategy.
1. Sustainable Development and the 3 P’s (and 5 P's)
The foundational de nition of sustainable development
comes from the 1987 Brundtland Commission: it is
development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs. Historically, this has been guided by the "triple
bottom line" of People, Planet, and Pro t (Prosperity),
emphasizing that economic success must be balanced with
environmental stewardship and social equity. Recently, this
framework has expanded to the "5 P's" to also include Peace and
Partnerships.
Before we were thinking with an idea of —> EARNINGS - COSTS = PROFIT
But as for today, we want to include the environmental and social costs. So here is a
« new » way of viewing pro t
—> EARNINGS + EXTERNAL VALUE COSTS - EXTERNAL COSTS = VALUE AND PROFIT
2. Risk Management
Sustainable business means being aware of local and global risks for the own company
and the approach to address or mitigate them
Sustainability is a critical mechanism for navigating a highly volatile global risk
landscape. Businesses today face existential threats ranging from extreme weather
events and natural disasters to cyber-attacks, geopolitical instability, and resource
scarcity. Proactively addressing these local and global risks helps businesses safeguard
their operations and protect their reputations. Proper risk management also yields direct
nancial bene ts; for example, banks often provide lower interest rates or discounts to
businesses or individuals investing in highly energy-ef cient real estate.
3. Stakeholder Expectations
The world is being shaped by massive megatrends, such as rapid urbanization, shifting
economic power to emerging markets, and unprecedented technological
breakthroughs. In this shifting landscape, the expectations of stakeholders have evolved
dramatically. Consumers, investors, and regulators now demand much higher
transparency and accountability regarding corporate practices. Businesses that fail to
4
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