Sustainable Business | Frank Wijen | TEDxErasmusUniversityRotterdam

sustainability is a hot topic these days it used to be the Reaume of the occasional tree hugger and bird lover but it seems that today everybody has

embraced sustainability be it firms governments citizens everyone is talking the sustainability buzz in the context

of business sustainability is also known under one of its many related terms such as corporate responsibility shared value

creation inclusive capitalism social plant enterprise and so on and so forth as an academic you might expect me to disentangle all these different terms

but I would just say for forget about the academic crap because in essence all these terms boil down to sustainable

development a term that was coined in 1987 by the United Nations Commission held by Gro Brundtland defining sustainable development as meeting the

needs of the present without compromising the ability of future generations to meet their own needs in other words you can have your share of

the pie but you should also leave enough for others so that they can have theirs as well sustainable development is sometimes misinterpreted as saving the

planet forget about that the planet will easily outlive humanity it is rather about us saving us from ourselves by

wisely managing natural resources sustainable development is also about social inclusion making sure that marginalized actors the have-nots

will have equal access to job opportunities and they'll be elevated out of poverty so sustainable development as

development has both an environmental and a social dimension now at a higher level this may seem quite obvious or

appealing but what if we want to translate these principles into actual practices as an academic research for management

I've been trying to get my head around the question for the past 20 plus years and I must admit I haven't managed to do

so properly and this just freaks me out it drives me crazy what is on the line this difficulty to come to practical

terms with sustainable business in essence it's a combination of three factors sustainable business is fairly Laden or normative it is about what is

good what is bad and who decides what's good and what is bad it is complex there is a multitude of interactions among and

between actors and factors and this dynamic is a moving target hard to catch and this combination of factors Rannells

it so damn hard to operationalize sustainable business this has not been though that we should give up on our ambition to come to terms with it or

that all interpretations are equally imperfect some are clearly better than

others let me give you a few examples of bad interpretations I was recently in a

hotel that proudly served Fairtrade shampoo from Mauritius an island of the South East African coast and at first sight you would say that's a great idea

you give a decent price to these poor farmers so that I could can sustain a better life a live Lee hood so who would be against that but if you think more

carefully about it what about the carbon footprint of bringing the ingredients all the way from reaches to the Netherlands now what

about the plastic disposable packaging of that shampoo how sustainable as that another example in a related vein is the

use of microcredit these small loans given to marginalized actors so that they can have access to

credit and to develop some business in itself this can be an effective tool to pull marginalized actors out of their

poverty cycle however the popularity of microcredit has led to a genuine proliferation of schemes and sometimes

flooding markets such as Kenya and India and the combination with a social pressure of local communities who are jointly liable for individual micro

loans this has sometimes led desperate defaulting micro borrowers in India to

commit suicide how sustainable is that we are finally sort of collectively understood that we need to move away from fossil fuels towards more renewable

types of energy and in the domain of mobility electric cars are a very promising contribution to that energy

transition there are though a few tiny problems with electric cars at this at this moment in particular the batteries

they have some issues the production of battery is extremely energy intensive where does that energy come from is

there from renewable sources what about the recharging of the batteries does that come from renewable energy the batteries themselves they contain all

kinds of toxic materials you too rather not be exposed to what about their sourcing what about the use including

the possibility of the release of these toxic chemicals during the car accident what about their disposal after the useful lifetimes

furthermore these batteries contain the cobalt and other rare earth minerals mined from conflict-ridden areas such as

Sudan and Democratic Congo what is the impact of this mining on the local sometimes armed conflicts the mining

itself furthermore literally devastates the local landscapes so how sustainable

is that fortunately there are also better interpretations one is oddly

enough in the domain of child labour to be sure in an ideal world there is no child labour kids should go to school

that should play they should relax be kids and when I was first confronted with child labor I was marketing manager frequently

traveling to Africa I was really shocked and I thought we should ban child labour for sure but if you think more closely about this what if you ban child labour

and there's no better alternatives what happens to the fate of these kids that might actually end up in worse outcomes

such as prostitution such as mining and their families might further impoverish that is why certain companies rather

than washing their hands in innocence have taken bold step forward to address this problem heads on IKEA teamed up

with UNICEF accepting child labor and the production of Indian carpet manufacturer drug manufacturing provided there would be structural solutions

including schooling including access to credit facilities for their parents so that the deaths of their parents which are in India often a root cause of child

labor could be addressed and that if the kids would have prospects of a brighter future you might have heard of sustainability standards these are for example

ecological labels social schemes signaling that certain products have social and/or environmental benefits the

American non-governmental organization rainforest alliance issues such standards and the nice thing about their work is they have differentiated

standards per region and per group of users for example they have different water management practices prescribes

for dryland farming than for agriculture in tropical rainforests and they have different standards for smallholder

farmers than for larger more industrially operating farmers because the local needs and possibilities are

different per region there are different per group and by matching these needs and possibilities with the prescriptions

they come to more effective solutions I'm a chocolate lover and apparently I'm not the only one because the demand for cocoa beans a major ingredient of

chocolate has been on the rise for years the supply of cocoa beans fluctuates depending on the harvests but we can see

that structurally speaking it is sort of stagnating why 60% of the cocoa bean production originates from Ghana and

Ivory Coast and due to unsustainable agricultural practices in the past the soil had been eroded and it was impossible to increase the production

volumes therefore Mars the chocolate bar producer set up a scheme whereby

technology was transferred and farmers were schooled in order to enrich the soils and to come to more sustainable solutions for the long run

speaking about the long the Dutch government Believe It or Not as sometimes proceeded from simply

buying products towards procuring services in a traditional tender the government would simply buy from the

lowest bidder meaning that companies will be incentivized to offer and fear your products and a new system that

works quite differently rather than simply buying the goods they would tender the services take the example of a road construction company the company

would not just sell a rota to come to the government no instead it will build a road but also maintain that piece of

road over a period of 20 years maintaining it and therefore the company is obviously incentivized to use very

durable materials this is one example of a circular economy where we move away from a system of frequently procuring

using and discarding of resources to its closing the loop and using and reusing

resources over and over and over if you take the good and the bad examples what are some lessons we can distill what are

some key principles to effectuate more sustainable practices first we need to

see the bigger picture rather than focus only on specific issues say carbon footprint say direct farmer income we need to see all the different issues

combined we need to see not only the direct effects but also the indirect effects think of addressing the problem of child labour where there might be a

sort of a loophole if we don't have better alternatives we should think not only of the short-run outcomes but also of the longer-run outcomes think of the

short-run effect of direct access to credit versus the possibility of over indebtedness if you want to avoid such situations we need to see that bigger

picture now obviously this is easier said than done it's quite complex but fortunately with the advancements in information technology think of big data

think of artificial intelligence this should become increasingly feasible how

sustainable could that be second we need to contextualize actions we need to move

away from broad-brush Universal one-size-fits-all solutions towards more contextualized solutions that fit with

the needs of local regions and local groups think of dryland farming versus rainforest farming and also think of the

needs of small farms and the managerial practices and resources they have versus large more industrially operating forms

if you contextualise actions looking on a case-by-case basis what are the most optimal practices you can apply we can

make bold steps forward how sustainable could that be thirdly we need to align

incentives we need to ensure that the short-term incentives for individual producers and consumers become aligned

with a longer-term collective interests that we all cherish and this means that we need to redesign the game structure

think for example of moving away from linear towards more circular solutions also think in terms of moving away from

short-term agricultural practices exploiting the soil degrading it towards longer run solutions incentivizing

people to work towards the sustenance of their agricultural so if you combine these three principles

what can be infirm I think it's fair to say that sustainable business will to a certain extent always remain somewhat context it because we all have different

values and interests and we all have an imperfect understanding of reality we can though surely make both steps

forward if we live up to their three principles of seeing the bigger picture of contextualizing actions and of

aligning incentives sustainable business should not be about quarrels of the use of the right terminology neither should

it be about good intentions and bad practices but it should definitely about moving towards more effective solutions

that were both locally and globally for sure this will be a demanding but also a very important and a fascinating journey

and I invite you to join me on that journey thank you you