Shared Value and Sustainable Entrepreneurship
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Increasing shared value through sustainable entrepreneurship Corporate social responsibility Innovation Smart ventures Edward Erasmus MA University of Aruba Faculty of Accounting, Finance and Marketing March 11, 2013
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Slides of my guest lecture during the kick-off event for the project of Sustainable Entrepreneurship (3rd year students of the Faculty of Accounting, Finance and Marketing, University of Aruba)
Transcript of Shared Value and Sustainable Entrepreneurship
Increasing shared value through sustainable entrepreneurship
Corporate social responsibility Innovation Smart ventures
Edward Erasmus MA University of Aruba
Faculty of Accounting, Finance and Marketing March 11, 2013
Outline presentation • The myth of infinite growth • Sustainability • Sustainable entrepreneurship • Corporate Social Responsibility • Shared Value • Aruba’s challenges • New forms of ‘preneurship’ for Aruba
The myth of infinite resources
• Every society clings to a myth by which it lives… • Ours is the myth of infinite economic growth
The myth of infinite resources
• God provided infinite land, food and resources for Europeans to exploit…
Discovery of America
The myth of infinite resources
• Science will solve all of the world’s problems
Renaissance
The myth of infinite resources
Industrial revolution
It fueled 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?
The digital revolution…..
The downside….
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)
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
• 3/4 of the world’s fisheries are over-fished • Half of the world’s original forest has been
destroyed. Additional 2% lost every year. • Species extinction is currently 1,000x the
natural evolutionary rate • 1/4 of all the birds and mammals on earth
are in danger of extinction. • Climate change is already happening, and
poses a threat unlike any other facing civilization.
So what does it all mean for a small country like Aruba?
Our current challenges… • Real GDP per capita remained virtually flat since 1990. • Uneven income distribution. • Population density: 550 inhabitants per square kilometer. • Individuals aged 60+ will double between now and 2025. • 42% of Aruba’s population is currently chronically obese. • A public health care deficit that is growing. • Educational performance below expectations. • Increased crime and other social problems. • Huge government deficits.
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
So where do we go from here?...
It’s more than obvious that a new economic, social and environmental (strategic) model needs to be implemented……
Sustainability should be the primary focus
Nos Aruba 2025 Abo dicidi awe, nos Aruba di mañan
Why Nos Aruba 2025?
• To involve the broad community in creating together a vision for Aruba’s future.
• Stimulate sustainable development. • National Integrated Strategic Plan (NISP). • To stimulate coordination and dialogue
between all stakeholders.
Discovery Dream Design Destiny
The process…
Discovery of the Positive Core
Dream of the desired future
Design of the ways this can be brought
about
Destiny - Building the plan to achieve
this future
The Sustainability Challenge….
Principles • We integrate economic, social, community and environmental
priorities. • We respect and live within the natural resources and limits of
our island. • We must achieve a diversified and dynamic economy (beyond
tourism). • We honor our culture and values • We make decisions based on meeting the present needs without compromising the needs of future generations. • Everyone — individuals, families, communities, businesses and government — has accountability for achieving a sustainable
Aruba.
Some great initiatives as a result of Nos Aruba 2025
However, more needs to be done…
(maatschappelijk verantwoord ondernemen)
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’….
• Environmental resources are limited and are quite sensitive to everything that we do.
• We are starting to experience the effects of the actions of generations that came before us.
To make sure that future generations will not experience worse, we need to be aware of the ideals and requirements of sustainability….
Think sustainable….
Corporate Social Responsibility (maatschappelijk verantwoord ondernemen)
…..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.
Also known as: sustainable entrepreneurship
Sustainable enterprises
1. Incorporating principles of sustainability into each of their business decisions.
2. Supplying or consuming environmentally friendly products or services that replaces demand for non green products and/or services.
3. Greener than traditional competition. 4. Enduring commitment to environmental principles
in their business operations.
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
The evolution of responsibility
1970s Quality
management
Late 2000s Sustainable markets
Early 1990s Environmental management
Early 2000s Triple bottom line
1980s Health & safety
Late 1990s Health, safety &
environment
Focus CSR
People
Planet
Profit
CSR towards a new approach?
Corporate Social Responsibility Philanthropic Risk-based Image-driven Specialized Standardized Marginal Western
Corporate Sustainability & Responsibility Collaborative Reward-based Performance-driven Integrated Diversified Scalable Global
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 entrepreneurs
• Competition oriented (no differentiation) • Same products in same markets • Fear of trying out new things • Lack of motivations (comfort zone) • Technically challenged (so much more
out there)
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…
Developing smart ventures • Innovation • Sustainability • Diversification • Productivity (resource efficient) • Smart growth • High-skilled jobs • Driven by technology • Shared value
New forms of ‘-preneurs’
• Aruba government economic policy is geared towards the development of new entrepreneurial ventures.
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
Waste separation and export of recyclable products (paper, plastic, aluminum, etc.)
Waste separation plant Barcadera Free Zone
Ecopreneurs (in Aruba)
https://www.facebook.com/dogoodaruba
Ecopreneurs (in Aruba)
https://www.facebook.com/dogoodaruba
Entrepreneurial areas
Sociopreneurs
Social entrepreneurs • Entrepreneurs with
innovative business solutions to society’s most pressing social problems.
https://www.facebook.com/dogoodaruba
Sociopreneurs (Aruba) Green Vibes Sustainability, Land & Energy NV.
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
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.
We share an awesome responsibility, you and I, a responsibility that transcends this time and this place.
Final thought…
Instead of thinking “outside the box”, just
get rid of the box…
Paper assignment
Edward M. Erasmus, MA [email protected] [email protected] Facebook: http://www.facebook.com/edwardmerasmus Twitter: http://www.twitter.com/em_erasmus LinkedIn: http://www.linkedin.com/in/edwardmerasmus Blog: http://edwardmerasmus.wordpress.com
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
