Business Environment Sustainability

The TITAN Project: An Overview

The overall aim of the TITAN project is to support small business ownermanagers, and their staff, to acquire appropriate sustainably responsible leadership and innovation skills which can implemented in a working context, as a way of achieving sustainable development goals alongside delivery of value to customers and other stakeholders

The TITAN project will achieve this aim through the development and delivery of a curriculum consisting of a set of complementary learning materials and resources including:

• A set of competence matrices, or modules, related to different aspects of sustainably responsible leadership and innovation

• A number of learning materials and resources (e.g. flipbooks, video guides)

• A set of assessment tools for small business owners managers and their staff

• An open educational video resource.

The TITAN curriculum will enable small businesses and organisations to:

• Identify different ways of introducing and embedding sustainability in their business models

• Assess strengths and areas for development within their business

• Explore processes and practices which can be used to implement and embed sustainability

• Learn from the experiences of different businesses and organisations who have introduced sustainability in their business models and processes and practices.

A number of themes, or modules, underpin the TITAN curriculum including:

• Sustainably responsible management

• Business culture for sustainability and innovation

• Business ethics in leadership and innovation

• Embedding sustainability in business processes

• Business responsible innovation

• Holistic approaches to innovation.

Sustainability leadership is defined as ‘a process of influence that delivers direction, alignment and commitment, and aims to address social, environmental and economic issues to create a better world’ (McCauley, 2014) and sustainable leaders are ‘individuals who are compelled to make a difference by deepening their awareness of themselves in relation to the world around them. In doing so, they adopt new ways of seeing, thinking and interacting that result in innovative, sustainable solutions’ (Sustainability Leadership Institute, 2011).

This Flipbook

Over the last five years or so, there has been an increasing number of articles, books and papers published on different aspects of how small businesses can embed sustainability into their business models and specific business processes and practices These come from academic institutions, research institutions, policy and professional bodies and business and entrepreneurship magazines. Whilst these articles, books and papers provide valuable insights into the case for introducing and embedding sustainability and generic tips and techniques, they can often be difficult to access and tease out the practical implications for introducing and embedding sustainability, particularly for small business owner-managers and their staff. There is a lack of tailored, or demand led resources which can assist small businesses in understanding current strengths and areas for development, making sense of the importance of different opportunities in their task environment to introduce sustainability and manage the journey from idea to action.

The flipbooks have been designed to address this gap. There are six flipbooks which relate to the key themes underpinning the TITAN curriculum, and they provide:

• An accessible overview of the state of current thinking

• Insights from other small businesses who reflect on what works well and less well in introducing and embedding sustainability into their business models

• Access to exercises to support reflection on own learning and skills development

• Access to useful resources on different aspects of introducing and embedding sustainably responsible leadership and innovation.

The flipbooks are complemented by:

• A series of TEDx type videos which reflect on different aspects of sustainably responsible leadership and innovation

• A range of micro-learning activities which provide you with an opportunity to assess your own understanding, behaviours and skills.

This flipbook explores the issue of how to introduce and embed sustainability into different business processes and practices and what frameworks can be used to manage the journey from awareness to idea to action

Setting the Scene: Why?

Across Europe, in response to a number of drivers, national governments are introducing climate legislation, policies and targets aimed at transitioning towards a carbon-neutral economy and society. For example, in 2020, the European Commission launched its 2050 long term strategy which outlined a commitment to being climate neutral by 2050. They defined climate neutral as an economy with net-zero greenhouse gas emissions (The European Union, 2020)

You may have seen similar statements from your own national government For example, in the United Kingdom, the government has committed to cutting carbon emissions by 78 per cent by 2035, bringing forward previous targets by 15 years. In Germany, the country’s first national climate law was passed in 2019 and updated in 2021 outlining annual reduction targets for individual sectors until 2030 so that a commitment to reducing emissions by 65 per cent can be achieved

At the same time, we are seeing businesses make similar commitments. We only have to turn on the TV and watch the adverts to be told what businesses are doing whether this is McDonald’s and how it is using used cooking oil as a biodiesel to reduce carbon emissions of its lorry fleet or Amazon and how it is increasing its investment in renewable energy to power its operations.

For businesses, particularly smaller businesses, there will be a number of challenges in transitioning to a carbon neutral economy, not least having access to appropriate resources and business support to meet the scale of change required. However, there will be a number of opportunities for developing new products and services to meet emergent needs and changing processes and practices within the business which add value to relationships with different groups of stakeholders.

This flipbook reviews these challenges and opportunities and the potential actions and strategies for managing the journey from idea to action in embedding sustainability into the different elements of your business model. The flipbook will review what we mean by sustainability and carbon reduction before reviewing why managers and leaders need to embed sustainable practices into developing and managing their business and how businesses can make sense of the challenges and opportunities and introduce sustainability into their practices and processes.

Some Definitions

Some Definitions

A separate flipbook could be written solely on the subject of what is meant by sustainability, sustainable development and sustainable business development

A brief review of the academic and professional literature will reveal a wide range of definitions of sustainability and sustainable development. The majority of these can be traced back to the definition of sustainable development proposed in the World Commission on Environment and Development’s 1987 Brundtland report as: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Similarly, the Global Development Research Center defined sustainable development as ‘maintaining a delicate balance between the human need to improve lifestyles and feelings of wellbeing on one hand and preserving and enhancing natural resources and ecosystems on the other’.

Within these definitions of sustainable development, a couple of key themes can be identified. First, there is an approach to development that seeks to balance different, and sometimes competing, needs against a recognition of the environmental and social challenges that we face Second, it is not just about the impact on the environment. It is about recognising our responsibilities to others in society (see Figure 1).

Figure 1: What is sustainability?

These themes help us in understanding what sustainability means in the context of starting, managing and developing a business. A couple of useful definitions of sustainability here are:

Sustainability refers to environmental, social, and governance (ESG) dimensions of a company’s operations and performance. It includes activities that maintain or enhance the ability of the company to create value over the long term (Deloitte, 2020)

In business, sustainability refers to doing business without negatively impacting the environment, community, or society as a whole (Spiliakos, 2018).

The majority of definitions of business sustainability have been heavily influenced by the practices of large corporates within western developed market economies, particularly the United States. However, over the last 10 years, there has been a greater focus on understanding the ways in which small businesses can embed sustainability within businesses processes and practices This has led to the development of concepts such as green entrepreneurship, sustainable entrepreneurship, responsible entrepreneurship and responsible leadership. Within such definitions there is a focus on the opportunities for the creation of new ventures which seek to support sustainable development as well as the approaches and practices that can be adopted by businesses to manage the balance between economic, social and environment impact (see Figure 1).

Whilst notions of sustainability have been debated and defined since the early 1980s, a set of definitions related to carbon reduction have entered our business vocabulary over the last ten years. It is important that we briefly review what is meant by carbon reduction as a number of terms are used interchangeably when they mean different things, particularly in the context of developing strategies for the development of your business

Broadly speaking, carbon reduction is the process where a business or organisation reduces its greenhouse gas emissions through changes in its practices. Carbon reduction is different from carbon offset. The latter is a trade off where a business receives credits for investing in external projects that reduce emissions. Businesses in carbon-intensive sectors such as heavy manufacture, aviation and transport and construction, where they face multiple challenges in reducing their emissions, can buy offsets to balance against these by funding projects in different parts of the world that cut carbon. These can include forest restoration and timber conversation projects to energy efficiency of building and community transport initiatives.

Taken together, carbon reduction and carbon offset are key parts of the drive to net zero in member states across the European Union.

Finally, you may have read about businesses making commitments to being carbon neutral, carbon negative or climate positive. The difference between being carbon neutral and carbon negative is that a commitment to being carbon neutral means that the same amount of CO2 emitted by the business is removed through carbon removal activities. As a result, the carbon balance of the business is zero. Carbon negative means that the carbon balance of the business falls below zero so the total CO2 and the equivalent emissions of the business are less than the emissions released into the atmosphere This means that the business has proactively made a difference to its carbon footprint through carbon removals and/or avoided emissions in the design of business processes and practices. You may find that some businesses and commentators use climate positive to describe being carbon negative but these two terms mean the same thing

However, the notion of being climate positive should not be confused with being carbon positive as this describes the current situation in that a business or organisation produces an amount of carbon emissions that is more than zero. All businesses with a carbon footprint are carbon positive and hence make a contribution to climate change.

Whilst others may contest some of these definitions, within the context of supporting small businesses to manage the journey from opportunity to idea to action, these definitions are useful in:

• Understanding the motivations to embedding sustainability in business processes and practices

• Clarifying the strategy or vision for a business and the terms which can be used in marketing and communication activity to outline this direction to others (e.g. in making a commitment to being climate positive, carbon neutral or carbon negative)

• Reflecting on the opportunities and challenges that will be faced by managers and leaders in embedding sustainability in different elements of their business model.

These issues will be explored in the remainder of this flipbook.

Reflection Exercise 1: What is sustainability?

Using the box below describe what sustainability means to you.

Compare and contrast your definition to those outlined within the flipbook. Use the box below to summarise up to three similarities and differences between your definitions and those available within the academic and professional literature.

Similarities

Differences

Motivations

Motivations

There are a range of different reasons why managers and leaders are, and will need to, embed sustainability in the development and management of the business. These reasons can be labelled as motivations. Mullins (2002) defines motivation as ‘the driving force through which people strive to achieve their goals and fulfil a need or uphold a value’ .

Levontin and Bardi (2019) suggest that needs, values and goals are the building blocks of motivation that lead to action. A need can be defined as the difference between the way things are and the way they should be. Values are the things that we consider to be most important in what we do (e.g. in owning and running a small business) and goals are the outcomes that we are working towards

This distinction is useful when considering what motivates or drives managers and leaders to embed sustainability in the development and management of the business. For example, some managers will be driven by a need related to managing the impact on the environment (see Case Study 1 below) Others will be driven by values which may relate to individual and business responsibilities in society. Some businesses are explicit about their values when engaging with customers or other groups of stakeholders. For example, Innocent Drinks outline their five values on their website, two of which relate to being natural and being responsible. We have seen within the introduction of this flipbook that governments, and increasingly businesses are being more explicit in their goals towards reducing their carbon footprint. [1] When you walk through Copenhagen Airport, for example, you will see posters stating the aim of the airport to be emission-free by 2030 and the transportation to and from the airport becoming emission free by 2030. [2] Whilst it may be more difficult for smaller businesses to commit to being carbon neutral or carbon negative by a certain date, in part due to the challenges in calculating their carbon footprint, there are opportunities to be more explicit in communicating needs and values to others, whether internal or external to the business. We will explore some of these opportunities in the next section of the flipbook.

[1] https://www.innocentdrinks.co.uk/fancy a job/our values

[2] https://www.businesstraveller.com/business travel/2022/01/03/denmark aims for carbon neutral domestic-flights-by-2030/

Case Study 1: Single.Earth (Estonia)

Founded by Merit Valdsalu and Andrus Aaslaid in 2019, Single.Earth was started to tackle one of the key contributors to climate change destruction of ecosystems that support life through making sustainable forest and land management the new norm. The opportunity for the business emerged from two of Merit’s passions – innovative technology and a desire to protect the environment and it is tokenizing the world’s nature to save it, building a nature backed economy.

The business is founded on the paradox that whilst healthy ecosystems have an enormous existential value, they have little value in the modern linear economy, ultimately leading to the depletion of natural resources on our finite planet. Merit and Andrus were interested in how could value nature for its vital contributions to people, like clean air and climate regulation. Single.Earth aims to shift current behaviours by incentivising landowners to protect the ecosystems that make the planet habitable. In so doing, Single.Earth makes a contribution to two of the United Nations Sustainable Development Goals.

Single.Earth works with landowners, managers, and organisations who want to commit to preserving nature. Instead of harvesting and destroying healthy ecosystems, landowners get regular financial support for allowing their forests to grow. Based on ecological values, tokens are issued to landowners as long as the forest stays intact. Using blockchain technology, we can connect money with nature and create MERIT, a new virtual currency that puts nature at the heart of everything. Every token represents and protects ‘the work nature does’ to keep the planet habitable. The tokens are issued to landowners based on the ecological value of their lands for as long as nature is preserved. One MERIT token is equivalent to 100 kg of CO₂ captured in biodiverse nature.

With a strong team of more than 60 people, Single.Earth raised over €6.9 million in July 2021 and is growing fast.

What are some of these specific motivations, or what Mullins would call driving forces, to a business embedding sustainability in different aspects of their business model? A brief review of the academic articles and business surveys highlight a range of different motivations including:

• It is a good thing to do

• It makes economic sense

• It creates a positive image for the business

• It embeds the business in its local community

• Prevention is better than cure

• It helps in avoiding government legislation and regulation e.g. fines related to non-compliance with regulations

You will find that there are a number of ways in which academics and other commentators have attempted to categorise or group the range of different motivations listed above Two of the most commonly used groupings are:

• Push and pull motivations

• Intrinsic and extrinsic motivations

With sustainability and carbon reduction, we will see businesses pushed into embedding sustainability into their business processes and practices. This may be as a result of government legislation and regulation (e.g. through requiring businesses to report their carbon footprint as part of annual company reporting with fines for businesses who do not report or submit late reports) or due to pressure from different groups of stakeholder such as customers, suppliers or professional bodies. However, we are seeing a group of businesses who are being pulled into doing something different. This may reflect a commitment of the manager or leader to make a difference to the local community, to manage the impact of the business on the natural environment or address the problem of waste in society (see Case Study 2). In addition, they may have spotted an opportunity in terms of a group of potential customers willing to pay more for a sustainable product or service or they have found that promoting sustainable practices attracts a higher calibre of staff.

This group of businesses are what we would label as the innovators or early adopters on the Innovation Diffusion curve (Rogers, 2003). For the majority of businesses, it is likely to be a combination of push and pull motivations that inspire action (Dawson and Henley, 2012)

Case Study 2: Elvis and Kresse (United Kingdom)

Started in 2005, by Kresse Wesling, the business takes old fire hoses from the London Fire Brigade and turns them into luxury goods like handbags and wallets. Why does Kresse do this? Kresse is passionate about reducing the amount of waste going to landfill every year. Through the sales of the range of goods made out of fire hoses, they donate 50 per cent of the profits to a fire fighters' charity. Last year this was £100,000. They have formed collaborative partnerships with other organisations to assist in tackling different types of waste. For example, in 2017 the Elvis and Kresse partnered with the Burberry Foundation to tackle the problem of leather waste. A five year partnership will see over 100 tonnes of leather off cuts from Burberry recrafted into new luxury items, designed and sold by Elvis and Kresse

Also, the passion about waste means they are concerned about the sustainability of their business activities. This has led the business to: eliminate the use of single plastics from the business; use renewable energy within the business premises; make their own packaging from reclaimed materials; offer the living wage to staff; and serve on the board of Keep Britain Tidy (a waste related charity). Taken together these initiatives have enabled the business to gain BCorp certification.

You can learn more about the story of Elvis and Kresse at https://www.elvisandkresse.com/blogs/news and https://www.facebook.com/ElvisandKresse/videos

In terms of intrinsic and extrinsic motivations, an intrinsic motivation is a type of driving force that comes from within. You do something because you enjoy doing it or feel happy within yourself for achieving the goal. In comparison, an extrinsic motivation is a driving force that comes from outside, or external factors You do something for more than just accomplishing the goal but because you gain economically from it or gain recognition from others (see Figure 2). We see this difference between intrinsic and extrinsic motivations within debates about authenticity or signalling when business reflect on the extent and nature of their sustainability actions For example, in a presentation to a BCorp conference, Kresse Wesling, the Founder of Elvis and Kresse talks about ‘feeling good’ when giving 50 per cent of profits from the sale of products made from old fire hoses to a firefighters charity in London. They even have a party when they pay their taxes to the UK government. [3]

Equally, we are seeing a rise in the number of green business awards which provide recognition for different sustainability practices. But these awards are often accused of providing certain businesses, particularly larger businesses, with an opportunity to use the PR to greenwash other more negative business practices. [4] For example, in the UK, the Competition and Markets Authority is currently reviewing statements used by Asos, Boohoo and Asda related to specific product collections in light of complaints that they are too broad or vague and they may create an impression that they are more environmentally sustainable than they actually are [5]

However, it is important to recognise that both intrinsic and extrinsic motivations have benefits but in certain circumstances one may be more effective than the other. For example, extrinsic motivations may work well for short term goals (e g winning a sustainability award as a way of gaining entry into a market) whilst intrinsic motivations may work well for more long-term goals (e.g. personal satisfaction in starting and growing a business which reduces food waste).

[3] https://www youtube com/watch?v=6xFplJJs1SQ

[4] https://www bbc co uk/news/business 59119693

[5] https://www.bbc.co.uk/news/business 62344564

Figure 2: Motivations to introducing and embedding sustainability

Reflection Exercise 2: What motivations are important to you?

Rank the following motivations in order of importance to you.

Motivation Rank

1 It embeds the business in the local community

2 It avoids government regulation and legislation

3 It attracts good people

4 It makes economic sense

5 Prevention is better than cure

6 It is a good thing to do

7 It creates a positive image for the business

Once you have ranked the motivations from 1 to 7, discuss your ranking with others in the business and/or other managers and leaders of other (small) businesses Using the feedback from these discussions, identify up to three implications for your business in the near to mid term.

Use the table below to identify how you will address one of these three implications

Prompts: Implication

What action is required?

How will this be undertaken?

When will it be undertaken?

Who will be involved?

How will you review the difference created by the action?

If we can understand why we need to embed sustainability into developing and managing a business, the next question is what we can do to introduce and embed sustainability and what may facilitate or hinder the implementation of different activities and practices.

There are a range of available articles and ‘how to’ guides within the professional business literature that list the activities or practices that businesses can introduce to embed sustainability into different aspects of their business model. The most commonly cited activities and or practices include:

• Positioning sustainability within the value proposition over the last five years or so there has been an increase in the number of new businesses where sustainability is core to the value proposition of the business. For example, there are new businesses such as EcoPing which provide businesses with tools to reduce website carbon emissions [6], Project CeCe which helps people in finding brands and shops which sell sustainable fashion [7] and Solar Foods which makes a natural protein by combining renewable electricity, air and water laced with bacteria [8]

• Changing or modifying elements of the product or service offering we have seen businesses in leisure and hospitality modifying menus which draw upon the use of organic produce or ingredients which are more sustainable

• Recycling and waste management there is an increasing recognition of the need for businesses to explore how to manage e waste through the recycling of equipment, managing email traffic and reducing the time staff spend online

• Procurement of supplies from local suppliers – one way for a business to reduce its carbon footprint is to review its approach to procurement and but from local suppliers whenever possible

[6] https://ecoping.earth/ [7] https://www.projectcece.co.uk/ [8] https://solarfoods.com/

• Reviewing and changing resources used to develop and deliver the product and service offering– businesses across a range of different sectors are reviewing energy efficiency of production facilities and offices, switching to the use of green energies, investing in developing their own renewable energy sources (e.g. installation of wind turbines, using electric vehicles and reducing use of harmful chemicals

• Managing and developing people – the Covid-19 pandemic has provided an opportunity for businesses to use remote working resources to support staff in working more flexibly and reduce the amount of travelling for business purposes Also, we are seeing a group of businesses proactively introduce initiatives to address gender and diversity gaps in the workplace, as a way of retaining staff with skills which are critical to the delivery of the value proposition of the business

• Managing relationships with external stakeholders there are opportunities to develop relationships with different groups of external stakeholders which support embedding the business in local communities and networks. For example, in the United Kingdom, Mytime Active in partnership with two local medical centres has successfully managed to get golf on prescription, as a way of supporting the health and mobility of older people.

A number of these initiatives are summarised within Table 1 below and an example of how a business has introduced some of these initiatives are illustrated in Case Study 3 The key advantage of such listings is that they are useful in identifying potential opportunities for introducing sustainability into business processes and practices. Also, they are useful in identifying activities that you may have already introduced already but would not have considered as being related to developing a sustainable business By listing such activities you have started work on a sustainability or social responsibility policy. This statement does not have to be a lengthy document as it can be one or two sides of A4 which reflects on:

• Why you are committed to introducing sustainability into the business

• What activities that you have introduced

• What are your future plans for embedding sustainability in the business.

The content for your policy could be based on the outcomes from the reflective exercises within this flipbook. Once completed the policy could be posted to your website or shared with your customers, suppliers and stakeholders using social media (e.g. a LinkedIn post).

Table 1: Opportunities for introducing and embedding sustainability in your business

Elements of the business model

Product and service offering

Potential changes

• Change of menu for a restaurant to organic or locally produced food

• Delivery of programmes by an education and training provider online as opposed to in person

Value proposition

Relationships with partners and stakeholders

• Addressing an environmental or social challenge as a way of making a difference to a specific customer segment

• Sustainability as a point of difference in the market

• Initiatives with the local community (e.g. engaging with the local school)

• Sports and leisure facilities developing relationships with local GPs to facilitate sport as part of social prescription initiatives

Environmental stewardship in the workplace

• Recycling and waste management (paper, plastics, e waste)

• Incentives to support staff in using sustainable transport

Supply chain management

• Purchasing from local suppliers

• Switching to suppliers who promote sustainability

People development and management

• Recruitment of people from the local community

•

Operations

Closing gender and diversity gaps in the business

• Removal of single use plastics

• Use of chemicals and materials which are not harmful to the environment

Case Study 3: Gail’s Bakery (United Kingdom)

Gail’s Bakery was started by Gail Mejia. During the 1990s, Gail brought together a group of artisanal bakers to bake bread for top chefs and restaurants in London. This evolved into a wholesale business, The Bread Factory, which specialised in handmade, artisan baking and which continues to thrive today

The first Gail’s bakery opened in 2005 in Hampstead High Street in London. Over the last 15 years, the business has expanded with bakeries now across London, Oxford, Brighton and other parts of the South East. Underpinning the development of the business has been a commitment to sustainability As outlined within its sustainability policy, the business seeks to make a difference through environmentally friendly initiatives and a commitment to supporting the local community. In terms of the former, the business has introduced the use of: (i) biodegradable and compostable takeaway cups made from sugarcane waste; (ii) sustainable packaging wherever possible; and (iii) the use of recyclable and compostable materials from its supply chain. A good example here is the Waste Bread which was launched in 2018. To make the Waste Bread, they take unsold loaves from the previous day and turn them into breadcrumbs, before making a porridge-like mixture with them The breadcrumb porridge is then added to a fresh white sourdough dough, with the waste bread making up around a third of each new loaf. In terms of supporting the local community, the business recognises the contribution of the local community to the success of the business so, in turn, the business has introduced a range of initiatives to give back to the community For example, the bakeries set aside any leftover food and donate it to nearly 100 charities within local neighbourhoods. The aim is to ensure that any surplus goes to local charities 100 per cent of the time. During the pandemic, the business hit 100 per cent for two months due to the generosity of those at home volunteering for local organisations In addition, wherever possible, the bakeries buy local and they produce an annual gender pay report which provides an opportunity to outline their values and engagement with local people.

However, the available listings of ‘things to do’ tend to provide limited insights into how managers and leaders can manage the process of moving from opportunity to idea to action and what will facilitate or hinder making changes in business processes and practices, particularly how a change in one aspect of the business may impact upon other elements of the business model.

To this end, the use of a framework or a planning tool can add value not only in prioritising the importance and value of different opportunities but also the implications of pursuing different opportunities on key elements of your business model and key steps in moving from idea to action. A brief review of the academic and professional literature will identify a number of business sustainability frameworks and tools. These frameworks vary in terms of:

• The focus on strategy vs. process Some frameworks will support you in reflecting on how to embed sustainability into the vision and strategy of the business whilst others will focus on how to plan, introduce and review actions related to specific business processes and practices

• The focus on the internal vs. external The available frameworks vary in terms of the extent to which they explore the influence of internal (e.g. motivations of owner-managers, attitudes of staff) and external (e.g. industry norms and values, activities of professional and trade bodies) influences on the process of embedding sustainability

• The focus on the person vs. business Some frameworks provide a focus on the activities and role of the manager and leader in embedding sustainability whilst others focus on the inter-connections between different elements of the business model, thereby supporting a more holistic perspective on sustainability in managing and developing the business.

The three most commonly used frameworks and tools are:

• The Business Model Canvas Developed by Osterwalder and Pigneur, the Business Model Canvas ‘describes the rationale of how an organisation creates, delivers and captures value’ (Osterwalder and Pigneur, 2010, p.14). They suggest that there are nine building blocks to a business model including: the value proposition, key customer segments, customer channels, customer relationships, key activities undertaken to deliver the value proposition, the resources used in delivery of the value proposition, key partnerships and cost and revenue structures. Taken together the nine building blocks show the logic of how a business generates income and they map on to the four main aspects of a business customers, the offer, the infrastructure and financial viability (Gibb and Scott, 1985)

• The Sustainable Business Model Canvas Developed by Fichter and Tiemann (2015), the Sustainable Business Model Canvas integrates aspects of sustainability, such as Sustainability Development Goals into the nine building blocks of the business model (e.g. how addressing one of the Sustainable Development Goals may underpin the development of a value proposition or how engagement with the local community may provide an opportunity to support delivery of the value proposition) as well as introducing two additional blocks related to the eco-social benefits and eco social costs associated with delivery of the value proposition. As a result, the sustainable business development model canvas can be used by new ventures to address an opportunity in the green economy as well as existing business to reflect on opportunities for introducing and embedding sustainability within existing business processes and practices

• The World Business Council for Sustainable Development (WBCSD) Framework – Developed in 2000, this framework provides a tool which can be used to reflect on the steps involved in developing and managing a sustainable and socially responsible business. The framework outlines six steps to introducing and embedding sustainability in the development of the business. The six steps are: introducing sustainability; identifying the key features; positioning the business; developing an action plan; implementing the action plan; and monitoring performance. In terms of a first step in introducing sustainability, the WBCSD framework suggests completing a self-assessment tool which will assist in identifying current strengths and weaknesses (i.e. the current position) as well as future needs and requirements (i.e. vision). The completion of this tool will assist in reflecting upon how a vision around sustainability can be translated into ideas and actions In terms of moving to action, the WBCSD comment that sustainability should relate to the overall strategy for the development of the business as opposed to it being a discretionary or stand alone issue.

These tools can be used in different ways in introducing and embedding sustainability in your business. The Business Model Canvas provides a useful device for reflecting on how a change in one element of the business model impacts on other elements. For example, if you wanted to introduce a change to the activities undertaken or resources used to deliver the value proposition, the business model canvas can be used to reflect on any implications for stakeholders that need to be engaged or the cost structures. So, if you wanted to make production processes more sustainable or source and use more sustainable supplies, the business model canvas provides you with a visual tool to reflect on the implications of these changes If you use different colour Post-It Notes, you can group the potential changes and implications into similar themes and place these in the appropriate boxes within the business model, whether these changes relate to cost structures, revenue streams, customer segments or relationships with customers Another key advantage is that others can be involved in the process of identifying the implications of changes you would like to introduce and/or when you have revised your business model this can be presented to others, within or external to the business, to sense check your thoughts and identify any implications you may have missed.

The Sustainable Business Model Canvas provides you with a useful tool for reflecting on how to embed the United Nations Sustainable Development Goals (SDGs) into your business. There are 17 Sustainable Development Goals (also known as SDGs) and they were formally agreed by the UN at the Sustainable Development Summit in New York in September 2015 and they came into effect from January 2016. The goals are an internationally agreed set of global highlevel targets towards achieving a better and more sustainable future for all. Over the last five years, a range of different organisations from national governments, local authorities, large corporates to small businesses have used the SDGs as a tool to identify opportunities for adopting more sustainable processes and practices as well as reviewing progress in introducing changes and making a difference to different aspects of the triple bottom line of profit, people and the environment (Savitz, 2006; Miller, 2020).

The 17 SDGs cover challenges related to the provision of quality education, gender equality, responsible consumption and production, climate action and good health and wellbeing. [9] Whilst global high level targets they provide a framework for businesses to reflect upon the opportunities for introducing and embedding different aspects of sustainability.

[9] https://www.un.org/sustainabledevelopment/sustainable development goals/

As with the Business Model Canvas, the Sustainable Business Model Canvas provides a tool to identify the value of different opportunities and the implications of introducing any changes on different aspects of your business model. For example, you may be committed to supporting staff wellbeing more effectively and equality of opportunity to staff in their personal and professional development within the business. Again, using Post It Notes, you can brainstorm the implications of introducing changes in the business and place these implications within the different elements of the business model. What would be the socio-economic benefits and costs to the business of supporting staff wellbeing through different initiatives. How may these benefits and costs impact on the recruitment and retention of staff, engagement with external stakeholders or the cost structures of the business? It may be useful to work through these questions with others in the business or external stakeholders such as a mentor or coach who can support the questioning process and signposting to sources of support to assist in managing the journey from idea to action

Finally, the World Business Council for Sustainable Development Framework provides a useful tool for planning how to introduce sustainability and social responsibility into the strategy, processes and practices of the business, managing change and review progress (World Business Council for Sustainable Development, 2000). In terms of getting started, the WBCSD framework suggests completing a self assessment tool which will assist in identifying current strengths and weaknesses (i.e. the current position) as well as future needs and requirements (i e vision) The completion of this tool will assist in reflecting upon how a vision around embedding sustainability can be translated into ideas and actions (see Figure 3). In terms of moving to action, the WBCSD comment that sustainability should relate to the overall strategy for the development of the business as opposed to it being a discretionary or stand-alone issue

The completion of the self-assessment will assist in introducing the concept of sustainability into the business. This is Step 1. For businesses with no, or minimal, experience of introducing and embedding sustainability, this will provide an opportunity to reflect and discuss motivations and the associated benefits with others (see Section 3 earlier). Step 2 is about identifying what the business can do and the implications of these activities in developing and managing the business, i.e. what are the potential implications of introducing and embedding sustainability Step 3 is about positioning of the business as a sustainable business, both internally and externally

There are two specific activities here. First, there is a need to review how your business compares to its competitors and other businesses in the sector For example, within golf, this will involve you comparing what you do to other golf clubs, golf equipment manufacturers and other sporting facilities. This will provide you with insights around how introducing and embedding sustainability may provide you with competitive advantage. Second, these insights can be used to position sustainability internally as adding value to other activities in the business (such as engaging with customers, attracting good people, managing the supply chain).

Figure 3: The WBCSD Sustainability and Social Responsibility Framework

The next step relates to developing the management action plan. This involves:

• Setting priorities and goals

• Identifying the resources required

• Reviewing the skills to be developed amongst staff to implement the actions

• Identifying any investment required.

It is important that this action plan is not only developed in conjunction with staff in the business but also communicated to them as a way of reinforcing commitment to embedding sustainability

The action plan can then be used to manage implementation which is the next step. This involves putting strategies and actions into practice. The final step relates to monitoring performance. There are different ways in which sustainable business activities can be monitored, the most commonly used being triple bottom line accounting, although this tends to be used more by larger than smaller businesses. Within smaller businesses, it is more likely that more informal tools, such as stakeholder analysis, will be used.

Reflection Exercise 3: What are the opportunities for embedding sustainability?

Watch the following video of Kresse Wesling, the co-Founder and Director of Elvis and Kresse, reflecting on the development of Elvis and Kresse and the opportunities and challenges to embedding sustainability in her business.

https://www.youtube.com/watch?v=6xFplJJs1SQ

Use the box below to develop a list of the practices which have supported sustainable development and management in Elvis and Kresse

Rank your own business against the listing of practices. You could rank yourself on a quantitative scale (e.g. 1 to 4 where 1 = poor and 4 = excellent) or you could adopt a qualitative scale (e g red, amber and green) Once you have completed the ranking use the box below to identify up to three things which your business could do differently in embedding sustainability in the development and management of your business.

Reflection Exercise 4: What does sustainability look like in your business?

Use the Sustainable Business Model Canvas to map out what sustainability looks like in your business. It is good to use Post-It Notes to capture your thoughts related to each box within the canvas. Try using different colours for the different boxes. Once you have completed the business model canvas discuss your perceptions with others in the business if you have used Post-It Notes you can move these around or replace them with ideas from others.

Use the outcomes from completing the business model canvas and the discussions with others to identify up to three opportunities, challenges and actions for your business, in terms of embedding sustainability in different aspects of the business model.

The opportunities and challenges could relate to:

• The value proposition of the business

• The target customer segments the flipbook highlighted that the buying behaviours of certain customer segments are influenced or shaped by concerns related to sustainability

• The activities undertaken by the business to deliver the value proposition –e.g. you may want to make changes to your supply chain

• The resources used by the business to deliver the value proposition e.g. you may have concerns with supporting the wellbeing and resilience of your staff within the return to the office or with hybrid

• The cost structures of the business – e.g. with increasing utility costs there may be an opportunity to review the relationship with current suppliers and reflect on the costs and benefits of switching to suppliers with a greater emphasis on sourcing sustainable energy

The available academic and professional literature identifies a range of different factors which will facilitate and hinder smaller businesses in introducing and embedding sustainability into different elements of the business model.

Key facilitators include:

• Technology Whilst there are growing concerns with e-waste, technological developments are creating opportunities for new ventures within the green economy as well as assisting businesses in introducing and embedding sustainability in existing processes and practices. In terms of the former, for example, green tech is one of the biggest growth sectors in Europe and we are witnessing an increase in the number of new ventures developing solutions to tackle issues such as climate change, waste management and circular use of resources (see Case Study 4 below) In terms of the latter, as Covid-19 restrictions have been lifted, we have seen businesses continue to use communication tools such as Zoom, Teams and Google Meets as a way of managing the amount of travel being undertaken by staff for business purposes

• Government policy – At a macro-level, national governments across Europe are introducing green taxes on harmful environmental activities, stricter regulations relating to business activities such as waste management and tax rebates for businesses meeting certain levels of certification and environmental performance (Atalla et al , 2022) A number of national governments are introducing grant and loan schemes to encourage the creation of new ventures in the green economy and support existing businesses in introducing and embedding sustainable business activities. For example, in the UK, Innovate UK have a number of grant and loans schemes to support businesses in a range of different sectors to develop solutions or introduce sustainable practices. [10] In the Netherlands, the Netherlands Enterprise Agency (RVO) provides a subsidy to small clusters of small businesses with an idea or plan for reducing the use of resources and diminishing levels of CO2 emissions The subsidy enables the businesses to employ a process consultant who can support the businesses in putting their idea or plan into practice. [11] We are also seeing collaborations between governments, industry and education to provide tailored programmes of business and enterprise support.

[10] https://www.ukri.org/blog/putting the sbri into the sustainable innovation fund/ [11] https://business.gov.nl/subsidy/subsidy-circular-chain-projects/

• For example, in Denmark, there is the GreenUp Accelerator which provides a package of business support to new and early stage businesses developing solutions to combat climate change. Participants in the programme receive financial assistance, mentoring, workshops and space in an incubator [12]

• Changing customer expectations There is a growing evidence base that certain groupings of potential customers are willing to pay more for sustainable products and services. For example, Nguyen and Dsouza (2021) draws upon research undertaken by YouGov to illustrate that consumers are willing to pay more to address their environmental concerns. The research highlighted that 60 per cent of grocery shoppers in Germany agree that they are willing to pay more to buy products that are better for the environment A similar proportion of grocery shoppers in the United States, United Kingdom and Australia suggested that they were willing to pay more as well. A recent study by Simon Kurcher and Partners highlighted that 33 per cent of UK consumers were prepared to pay more for sustainable products and services and 86 per cent had become greener in their purchasing over the last five years Such changes in behaviour will create opportunities for both the creation of new businesses but also for existing businesses to change key elements of their business model including their value proposition, customer segments and the methods used to engage with potential and existing customers

• Changes in supply chains – Changes in regulation and legislation are driving suppliers to change practices and shape how they manage relationships within others in the supply chain. Across Europe we are seeing changes to legislation and regulations related to energy use, carbon emissions, waste management, use of harmful chemicals and materials and company governance and reporting. Whilst these changes are creating a number of challenges for businesses, they are also creating a set of opportunities for businesses to change their practices and raise awareness of these changes with key stakeholders in the supply chain. For example, a number of members states across Europe have introduced legislation and/or regulations to encourage businesses to report their carbon footprint as part of their annual reporting activities. Some businesses have used this change as a way of communicating what they are doing to introduce and embed sustainability and/or reduce the cost of transacting with others in the supply chain (e.g. through lower insurance premiums).

Case Study 4: Atelier Riforma (Italy)

Sara Secondo and Elena Ferrero, co-founders of Atelier Riforma want to make sure that no garment ever becomes waste. Founded in 2020, the business collects second hand clothes, which are catalogued and tracked via AI technology, then redirected for reuse, recycling or upcycling. The fashion industry has received a bad reputation over the years for its contribution to waste, exploitation and environmental damage and Sara and Elena are motivated by wanting to change this image by addressing consumer appetite for changing fashion trends in a more sustainable way. A key element of their business model is collaboration with partners who can support the development of a circular economy. To this end, they have undertaken innovation and research and development activity in partnership with different industry partners to explore opportunities for the development of sustainable fashion. The activities of the business have been recognised in being shortlisted for a Green Alley Award.

Source: https://www.eu-startups.com/2022/08/10-greentech-startups-tacklingeuropes-waste-problem/

Key challenges or hinderances to small businesses introducing and embedding sustainability will include:

• Attitudes and perceptions of business leaders and managers There a number of studies which have highlighted a gap between perceptions of the importance of sustainability and the extent to which this is translated into values, ideas and actions. For example, research undertaken in 2020 with over 1500 managers and leaders across six different European countries highlighted that whilst the respondents tended to attribute a high importance to sustainability, in relation to both personal perception and their managerial activities, there were important gaps in personal identification with key sustainable values and awareness of sustainability guidelines, regulations and standards. In terms of sustainability values, the report noted that ‘These results shall not be considered positively, since the motivation needed for a profound transition process must be very strong and the identification with these [sustainability] values should be widely spread. Therefore, this area shows a possible gap onto which proper focus and concentration must be paid’ (Pastore, 2020, p.27)

• Changes in the external economic environment There is evidence to suggest that downturns in the external economic environment can dampen the commitment of businesses, communities and governments to make changes related to sustainable development. Burns (2019) notes that ‘On the one hand the evidence suggests that in the short-term economic recessions can be good for environmental outcomes as emissions fall in line with declines in economic activity. However, the evidence also seems to indicate that the environment is downgraded on policy agendas in times of economic strife with negative long-term implications. Ambitious plans get shelved, funding for environmental projects gets slashed and low carbon investment goes by the wayside’ . Within this context, after the impact of Covid-19 on the financial viability of smaller businesses across a range of different sectors, it will be interesting to review how the current cost of living crisis influences the near to mid-term plans of businesses to introduce and embed sustainability

• The cost of introducing and embedding sustainability There is an ongoing debate about who should bear the cost of introducing and embedding sustainability (Gray, 2022). There is perception that shifting business practices to be more sustainable can be expensive, at least in up front costs, which can make businesses averse to making necessary changes As noted above, as businesses are currently facing increasing costs related to using key resources required to deliver the value proposition to their customers, this may squeeze potential investment planned for developing a more sustainable business model. In turn, this raises a question related to the scope for government intervention to assist businesses in managing the costs associated with sustainability and/or the need for consumers to bear these costs through higher prices for products and services

• Understanding the impact and value of introducing and embedding sustainability Another challenge relates to businesses being able to understand the impact of being sustainable on the development and performance of the business. There are a couple of issues here. First, it can be difficult to calculate the benefits from changing certain practices and processes. For example, it is relatively straightforward to calculate the saving from buying renewable energy However, it is more challenging to estimate changes introduced to the supply chain through the use of more sustainable raw materials or through the recycling of raw materials. These are likely to require a significant initial investment but the benefit may not materialise until the mid to long term (e g goodwill from environmentally conscious customers)

Second, there are tools which businesses can use to model the investment required and the anticipated benefits. However, the majority of these tools are somewhat technical in nature and, as a result, they often have to be used with the assistance of an external consultant

The collection of learning materials and resources developed through the TITAN project will assist you in reflecting on how the facilitators and challenges outlined above will shape your plans for introducing and embedding sustainability in your business These materials can be accessed at https://titan-leadership.eu/e-learning-materials/.

Summary

This flipbook has reviewed three key questions related to introducing and embedding sustainability in developing and managing a small business:

• Why do owner-managers of small businesses need to be concerned with embedding sustainability in the development and management of their business?

• What do we mean by sustainability in the context of the development and management of a small business?

• How can sustainability be embedded within different processes and practices of a business?

The flipbook has highlighted that businesses are facing a sustainability paradox in that the resources that a business can dedicate to addressing sustainability challenges are often as odds with the scale of the threat that these challenges place on businesses, communities and society.

In addition, the flipbook has demonstrated that there are a range of drivers to embedding sustainability which can be grouped into a number of different categories depending on whether they are internal or external to the business and whether behaviours, or responses are reactive and proactive. It is important to reflect on your motivations as they will shape not only the perceptions of the opportunities but also the approaches to embedding sustainability in the business and the language used when engaging with others, whether they are internal or external to the business.

There is a growing agreement that sustainability is more than just managing the impact of a business on the natural environment – it is also about the sociocultural impact of the business on different groups of internal and external stakeholders. Finally, the case studies presented within the flipbook highlight a range of different opportunities and strategies for small businesses to embed sustainability within their business model, whether this relates to their value proposition or the activities and the resources used to deliver the value proposition or the key customer segments for the business. In order to effectively plan and embed activity there is a value in using a framework such as the Sustainable Business Model Canvas or the World Business Council for Sustainable Development Framework.

Reflection

Five questions emerge from the review of the why, what and how associated with introducing and embedding sustainability in developing and managing a business.

• What does sustainability mean for your business? What does it look like?

• What would be the value of embedding sustainability within your business model?

• What are the opportunities for embedding sustainability within different aspects of your business?

• What will be the challenges, either internal or external, to embedding sustainability within different aspects of your business model?

• How will you know that embedding sustainability is making a difference in the management and development of your business?

References and Resources

The following references and resources will assist you in reflecting on what sustainability means for your business and how to embed sustainability in different aspects of your business model.

Atalla, G., Mills, M. and McQueen, J. (2022) Six Ways that Governments can Drive the Green Transition. Accessed at https://www.ey.com/en_gl/government public-sector/six-ways-that-governments-can-drive-the-green-transition

Dawson, A. and Henley, A. (2012) “Push” versus “Pull” Entrepreneurship: An Ambiguous Distinction? International Journal of Entrepreneurial Behaviour and Research, 18, 6, pp. 697 719.

The European Commission (2020) Long-term Low Greenhouse Gas Emission Development Strategy of the European Union and its Member States , The European Commission, Brussels.

Federation of Small Businesses (2008) Social and Environmental Responsibility and the Small Business Owner, Federation of Small Businesses, London.

Fichter, K. and Tiemann, I. (2015) The Sustainable Business Model Canvas, University of Oldenburg, Oldenburg.

Handy, C. (2002) What’s a Business For? Harvard Business Review, 80, 12, pp. 49 55.

Gray, C. (2022) Ensemble Piece: Who Will Wear the Cost of Fashion’s Sustainability Drive? Raconteur, 14th October.

Levontin, L. and Bardi, A. (2019) Using Personal Values to Understand the Motivational Basis of Amity Goal Orientation, Frontiers of Psychology, 9, 2736.

Miller, K. (2020) The Triple Bottom Line: What it is and Why it’s Important. Accessed at https://online.hbs.edu/blog/post/what is the triple bottom lineHarvard Business

Mullins, L.J. (2002) Managing People in Organisations, The Open University, Milton Keynes.

Nguyen, H. and Dsouza, R. (2021) Global: Consumer Willingness to Pay for Environmentally Friendly Products. Accessed at https://yougov.co.uk/topics/consumer/articles-reports/2021/04/29/globalwillingness-pay-for-sustainability

Osterwalder, A. and Pigneur, Y. (2010) Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, John Wiley and Sons, London.

Pastore, A. (2020) Sustainable Leadership in Europe, CEC European Managers, Brussels.

Rogers, E.M. (2003) Diffusion of Innovations, Fifth Edition, Free Press, New York.

Savitz, A.W. (2006) The Triple Bottom Line: How Today’s Best run Companies are Achieving Economic, Social and Environmental Success, Jossey Bass, San Francisco.

Spiliakos, A. (2018) What is Sustainability in Business? Accessed at https://online.hbs.edu/blog/post/what is sustainability in business.

The World Commission on Environment and Development (1987) The Bruntland Report of the World Commission on Environment and Development: Our Common Future, United Nations, Oxford University Press, New York and Oxford.

World Business Council for Sustainable Development (2000) Meeting Changing Expectations – Corporate Social Responsibility, World Business Council for Sustainable Development, Geneva.

If you're interested in reading more about sustainable leadership and innovation, you can find additional learning materials from the TITAN project website.

Website: TITAN | Project Transformation Training to Empower https://titan leadership.eu/

The European Commission’s support for the production of this publication does not constitute an endorsement of the contents, which reflect the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

Project number: 2020 01 UK01 KA204 079163