Abstract
This chapter explores how strategic management systems drive sustainable business models. It discusses the link between sustainability and financial success, leveraging frameworks like RBV and Triple Bottom Line. Practical insights from cases like Unilever and Patagonia are examined, emphasizing stakeholder engagement and performance metrics. The role of emerging trends like circular economy and digitalization is highlighted. The chapter underscores the need for integrating sustainability systematically and offers a roadmap for organizations to achieve lasting impact.
TopIntroduction
In the past couple of years, organisations have been faced with growing calls to focus, not only on financial returns but also on environmental, social, and governance issues within the sphere of the organisation’s influence, which implies integrating the notion of sustainability into the organisational framework and operating model. With these renewed calls for sustainability practices and principles in the organisational context, paradigms have shifted, and organisations are beginning to appreciate why financial performance is now inextricably linked to a robust sustainability strategy. A recent report by Mckinsey emphasised the idea that a robust synergy between sustainable business models and strategic management systems creates increased competitive advantage for the organisation. In addition, the Global Reporting Initiative (GRI) found that long-term shareholder value is created when sustainability is integrated into the organisation’s overall strategic framework. Tesla, Patagonia, and Unilever are all examples of organisations that have built sustainable business models via strategic management systems.
Structure
This chapter has been structured into roughly 5 major segments: We will consider (1.) Evolution of Strategic Management Systems and Sustainable Business Models, looking into how sustainability in business has evolved since the industrial revolution till today. (2.) Sustainable Business Transformation: Culture, Performance and Concepts, delving into performance management, the triple bottom line performance measure, sustainability reporting, materiality assessment and multi-stakeholder collaboration. (3.) Trade-offs and Risks Between Short-term Financial Goals and Long-term Sustainability Objectives, regulatory fears and critical reputational dangers will be considered as well as guidelines to evade such dangers (4.) We will consider Case Studies of Interface Inc., Unilever and Patagonia. In the last major segment, (5.) Sustainability Models and Innovations in Strategic Management with a focus on importance of circular economy, digitalization and technology, then also discussing the role of organisational leadership in driving the needed change.
Overall, this chapter covers various topics around Strategic Management Systems for Sustainable Business Models, from historical perspectives to contemporary challenges and innovative solutions. It provides a well-rounded view of the topic and incorporates case studies for practical illustration.
TopEvolution Of Strategic Management Systems And Sustainable Business Models
The Industrial Revolution, which began in the mid-18th century, necessitated the emergence of the concept of Sustainability in business operations. Though sustainability in business has taken on different names and evolved in forms over several decades. Sustainability and the industrial revolution are interdependent upon each other as sustainable goals induce industrial revolution and industrial revolution facilitates sustainability (Vivek et al., 2022).
In the 19th and early 20th century, some early environmentalists, such as John Muir and Henry David Thoreau, raised concerns about the impact of industrialization on the natural environment, leading to environmental awareness.
The mid-20th century ushered in more hope for sustainability as governments began to introduce environmental regulations in response to growing pollution and environmental degradation. The environmental movement in the United States, which is broad in scope, responded to growing industrialization, population, and pollution, as well as to resource exploitation (Lazarus, 2004), resulting in the establishment of agencies like the U.S. Environmental Protection Agency (EPA) in 1970 and landmark environmental laws like the Clean Air Act (1970) and Clean Water Act (1972) in the United States.
Key Terms in this Chapter
Stakeholder Collaboration: This is the process an organisation uses to communicate, exchange knowledge, and work as a collective to accomplish shared goals, frequently connected to social, environmental, or corporate objectives.
Corporate Sustainability: Corporate sustainability refers to a business strategy that incorporates environmental, social, and governance (ESG) issues into the operations of an organisation and business strategy.
Greenwashing: When a firm or organisation makes overstated or fraudulent claims about the environmental friendliness or sustainability of its products, services, or general business practices, it engages in greenwashing, a dishonest marketing technique.
Sustainable Business Model: A business strategy that puts long-term economic, social, and environmental sustainability first is a sustainable business model.
Circular Economy: A circular economy is a type of economy that seeks to reduce waste and maximise the use of resources.
Sustainability: The ability to preserve or endure a system or process, through time without significantly harming the environment, society, or future generations is called sustainability.
Strategic Management Systems: Organisations utilise structured procedures, structures, and tools known as strategic management systems to create, carry out, and evaluate their strategic plans and activities in a way consistent with their goal.
Sustainability Reporting: Sustainability reporting is a means organisations communicate their environmental, social, and governance performance and impact to diverse stakeholders.