Summary Basic Principles of Sustainable and Resp.
Business and Economics
Introduction
ERS = Ethics, Responsibility and Sustainability
- Ethics = multidisciplinary field with foundations in moral philosophy,
behavioural psychology, organizational theory and business and economics
- Responsibility = management of the integration and/or balancing of
economic, ecological and social policies
- Sustainability = future orientations regarding complex social,
environmental and economic challenges
Brundtland’s definition of sustainable development (SD)
“Sustainable development is development that meets the
needs of the present without compromising the ability of
future generations to meet their own needs. It contains within
it two key concepts:
- the concept of 'needs', in particular the essential needs of the
world's poor, to which overriding priority should be given; and
- the idea of limitations imposed by the state of technology
and social organization on the environment's ability to meet
present and future needs.”
Definition is also about:
- Equity, definition contains 2 dimensions of equity/fairness:
Within current generation, between rich and poor
= INTRA generational equity
Between generations, between current and future people
= INTER generational equity
Development cannot be called sustainable if these principles are
violated
- Needs, more than only food, shelter, money, income, …
Physiological needs
Safety needs
Social needs
Esteem needs
Self-actualization needs
- Ability, linked to the state of environment, technology and social
institutions that the current generation leaves behind for future
generations
Links SD to the notion of non-declining capital stocks*:
= Physical capital, Human Capital, Institutional Capital, Natural capital
* non-declining capital stocks means that the total wealth or productive capacity of society should
not decrease over time, so that future generations can enjoy at least the same opportunities for
well-being as the present generation
,Trade-offs:
- Equity: trade-off between needs of current and future generations
Non renewable vs renewable resources
Beyond Brundtland
- 3Ps
- 5Ps
Four ERS competency areas:
1) ERS worldview
The ERS worldview provides a comprehensive, science-based understanding of
the planet and how humans, economies, and organizations interact with it. It
examines major sustainability challenges, questions different worldviews and
their assumptions, and explores the underlying values that shape them.
2) Complexity in ERS
Grand challenges are seen as wicked problems because they arise from the
complexity and interconnection of natural, social, technological, political, and
economic systems. Understanding them involves recognizing system
interconnections, feedbacks, and tipping points, addressing tensions like short-
term vs. long-term goals, and moving beyond simple dualistic thinking.
3) Future orientation for ERS
Futures literacy helps people imagine alternative futures, use creative and
transdisciplinary thinking, and inspire societal transformation through
imagination and foresight
4) Acting for ERS
how individuals and organizations address societal challenges and promote
sustainability through new governance, leadership, and collaboration, while
reflecting on the values, tensions, and contradictions involved.
,ERS World view
Session 2: Views on ERS and their assumptions
Disparate view:
Disparate = ‘totaal onafhankelijk’
- Main thesis
Social and environmental systems are separate
Companies should not engage in non-economic systems
- Assumptions
Beneficiary: Economy
Hierarchy: Non-related systems + economic system as the largest
Market regulation: The invisible hand of the market
- Business model
Profit maximalization or “The only business of business is business”
- Implications for sustainability
Goal: Social responsibility of business is to make profit
Focus: Social and ecological costs are seen as externalities
Assessment: Financial performance
- If attention to sustainability, it is along
Legal compliance
Personal initiatives: philanthropy, volunteering, ...
- Criticism
Negative consequences for social and environmental systems (negative
externalities)
Social and environmental needs are not addressed
Subsuming view:
Strategic vision on sustainability
- Main thesis
Social and environmental systems contribute to economic systems
Companies should engage in environmental and/or social systems
to the extent that it increases economic performance.
- Assumption
Nested hierarchy, pursuing economic benefits of social and
environmental issues
- Example business model
Shared value model - “recognizes that societal needs, not just conventional
economic needs, define markets”
- Implications for sustainability
Goal: mutual reinforcement between business growth and social/environmental
progress
Focus: social and environmental needs are seen as drivers of innovation,
competitiveness, and growth
Assessment: economic valuation of social and environmental resources
==> strategic integration
- Criticism
Profit maximalisation remains major goal
Instrumental approach: social and environmental needs are only addressed for market
opportunities
, Intertwined view:
The 3 are equal, all dependent on each other
- Main thesis
Each system is equally valid; companies should balance their considerations
for each.
- Assumption
No hierarchy - Win-win-win approach
- Business Model
3-P (profit, people, planet) model
- Implications for sustainability
Goal: Long term harmony between economy, society, and environment
Focus: Companies must weigh and report on all three dimensions equally
Assessment: non-financial reporting + financial performance
==> balance of three pillars
- Criticism
Balancing trade-offs is challenging – profit may still dominate
Measurement difficulties of social and environmental dimensions
Reporting checklist rather than rethinking the system (risk of greenwashing
and social washing)
Embedded view:
- Main thesis
Economic system is embedded in social system, which is
embedded in environmental system; economic activity as a
means to achieve social and environmental wellbeing
- Assumption
A new hierarchy that gives dominance to the environmental
system which hosts the social system which hosts the economic
one
- Example of business model
Regenerative model - "We're in business to save our home
planet,"
Economic model: Doughnut economics
- Implications for sustainability
Strong sustainability
Think differently about 'economic performance'
Profit as a means to prosperity, purpose...
Think differently about 'win-idea'
From one party wins, to win-win-win, … to abandon the whole
idea of 'who wins'
- Criticism:
Niche model
Weak Sustainability
= Interchangeability of natural capital and human-made capital
Strong Sustainability
= An essential physical subset of natural capital must be preserved, this
cannot be substituted
*(9 Planetary boundaries see slides)
Business and Economics
Introduction
ERS = Ethics, Responsibility and Sustainability
- Ethics = multidisciplinary field with foundations in moral philosophy,
behavioural psychology, organizational theory and business and economics
- Responsibility = management of the integration and/or balancing of
economic, ecological and social policies
- Sustainability = future orientations regarding complex social,
environmental and economic challenges
Brundtland’s definition of sustainable development (SD)
“Sustainable development is development that meets the
needs of the present without compromising the ability of
future generations to meet their own needs. It contains within
it two key concepts:
- the concept of 'needs', in particular the essential needs of the
world's poor, to which overriding priority should be given; and
- the idea of limitations imposed by the state of technology
and social organization on the environment's ability to meet
present and future needs.”
Definition is also about:
- Equity, definition contains 2 dimensions of equity/fairness:
Within current generation, between rich and poor
= INTRA generational equity
Between generations, between current and future people
= INTER generational equity
Development cannot be called sustainable if these principles are
violated
- Needs, more than only food, shelter, money, income, …
Physiological needs
Safety needs
Social needs
Esteem needs
Self-actualization needs
- Ability, linked to the state of environment, technology and social
institutions that the current generation leaves behind for future
generations
Links SD to the notion of non-declining capital stocks*:
= Physical capital, Human Capital, Institutional Capital, Natural capital
* non-declining capital stocks means that the total wealth or productive capacity of society should
not decrease over time, so that future generations can enjoy at least the same opportunities for
well-being as the present generation
,Trade-offs:
- Equity: trade-off between needs of current and future generations
Non renewable vs renewable resources
Beyond Brundtland
- 3Ps
- 5Ps
Four ERS competency areas:
1) ERS worldview
The ERS worldview provides a comprehensive, science-based understanding of
the planet and how humans, economies, and organizations interact with it. It
examines major sustainability challenges, questions different worldviews and
their assumptions, and explores the underlying values that shape them.
2) Complexity in ERS
Grand challenges are seen as wicked problems because they arise from the
complexity and interconnection of natural, social, technological, political, and
economic systems. Understanding them involves recognizing system
interconnections, feedbacks, and tipping points, addressing tensions like short-
term vs. long-term goals, and moving beyond simple dualistic thinking.
3) Future orientation for ERS
Futures literacy helps people imagine alternative futures, use creative and
transdisciplinary thinking, and inspire societal transformation through
imagination and foresight
4) Acting for ERS
how individuals and organizations address societal challenges and promote
sustainability through new governance, leadership, and collaboration, while
reflecting on the values, tensions, and contradictions involved.
,ERS World view
Session 2: Views on ERS and their assumptions
Disparate view:
Disparate = ‘totaal onafhankelijk’
- Main thesis
Social and environmental systems are separate
Companies should not engage in non-economic systems
- Assumptions
Beneficiary: Economy
Hierarchy: Non-related systems + economic system as the largest
Market regulation: The invisible hand of the market
- Business model
Profit maximalization or “The only business of business is business”
- Implications for sustainability
Goal: Social responsibility of business is to make profit
Focus: Social and ecological costs are seen as externalities
Assessment: Financial performance
- If attention to sustainability, it is along
Legal compliance
Personal initiatives: philanthropy, volunteering, ...
- Criticism
Negative consequences for social and environmental systems (negative
externalities)
Social and environmental needs are not addressed
Subsuming view:
Strategic vision on sustainability
- Main thesis
Social and environmental systems contribute to economic systems
Companies should engage in environmental and/or social systems
to the extent that it increases economic performance.
- Assumption
Nested hierarchy, pursuing economic benefits of social and
environmental issues
- Example business model
Shared value model - “recognizes that societal needs, not just conventional
economic needs, define markets”
- Implications for sustainability
Goal: mutual reinforcement between business growth and social/environmental
progress
Focus: social and environmental needs are seen as drivers of innovation,
competitiveness, and growth
Assessment: economic valuation of social and environmental resources
==> strategic integration
- Criticism
Profit maximalisation remains major goal
Instrumental approach: social and environmental needs are only addressed for market
opportunities
, Intertwined view:
The 3 are equal, all dependent on each other
- Main thesis
Each system is equally valid; companies should balance their considerations
for each.
- Assumption
No hierarchy - Win-win-win approach
- Business Model
3-P (profit, people, planet) model
- Implications for sustainability
Goal: Long term harmony between economy, society, and environment
Focus: Companies must weigh and report on all three dimensions equally
Assessment: non-financial reporting + financial performance
==> balance of three pillars
- Criticism
Balancing trade-offs is challenging – profit may still dominate
Measurement difficulties of social and environmental dimensions
Reporting checklist rather than rethinking the system (risk of greenwashing
and social washing)
Embedded view:
- Main thesis
Economic system is embedded in social system, which is
embedded in environmental system; economic activity as a
means to achieve social and environmental wellbeing
- Assumption
A new hierarchy that gives dominance to the environmental
system which hosts the social system which hosts the economic
one
- Example of business model
Regenerative model - "We're in business to save our home
planet,"
Economic model: Doughnut economics
- Implications for sustainability
Strong sustainability
Think differently about 'economic performance'
Profit as a means to prosperity, purpose...
Think differently about 'win-idea'
From one party wins, to win-win-win, … to abandon the whole
idea of 'who wins'
- Criticism:
Niche model
Weak Sustainability
= Interchangeability of natural capital and human-made capital
Strong Sustainability
= An essential physical subset of natural capital must be preserved, this
cannot be substituted
*(9 Planetary boundaries see slides)
