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Highlights Day 3: Sustainability is driving innovation

Sustainability is no longer an additional aspect of doing business. It has become the core of doing business. As participants at LISDAR’s third day pointed out, businesses have to rethink their business model as well as their organisation – and they need information systems suitable for their needs.

Sustainability is no longer an additional aspect of doing business. It has become the core of doing business. As participants at LISDAR’s third day pointed out, businesses have to rethink their business model as well as their organisation – and they need information systems suitable for their needs.

LISDAR’s third day focused on business models in a sustainable economy as well as on the information systems that help make businesses sustainable. Responsible businesses and information systems are central to a sustainable economy, as Congress chair Peter Droege pointed out at the opening of the Congress two days earlier.

Get sustainable or vanish

Sustainability is already now an important topic for many companies. It has been proven suitable for companies seeking to achieve a competitive advantage, hedge risks and positively impact relationships with salient stakeholders, be they customers, employees or others, said Moritz Loock, Assistant Professor at the Good Energies Chair for Management of Renewable Energies at the University of St. Gallen. However, sustainability management requires unique competencies, namely the ability to manage cognition beyond firm boundaries, trade-offs in strategic choices and the reality-perception gap.

These competencies can decide the fate of a company. For Stefan Gueldenberg, Chair in International Management and Dean of the Graduate School at the University of Liechtenstein, the decisive question is whether top management is able to reinvent and renew itself; should a perfect storm sweep away old-style industrial management, this will spell the end for many companies resisting change. On the other side, living organisations – i.e. those open to their environment and with a strong cohesion and tolerance for new ideas – are able to learn faster than their competitors. Living organisations, however, need entrepreneurs ready to learn and reduce learning barriers inside their companies. They have to lead precisely because they are role models.

Old textiles get a new life

Sustainable businesses care about the environment not only by reducing their negative impact, but also by avoiding negative impacts altogether, as Backhausen interior textiles and design in Hoheneich, Austria demonstrates. The company developed a special textile called ‘returnity’, the world’s first environmentally friendly and fully recyclable fabric made Trevira CS, a flame-retardant, high-quality textile. Together with the German environmental research institute EPEA, an environmentally friendly chemical optimisation process was developed based on the Cradle-to-Cradle philosophy that spans the entire production process for upholstery and decorative textiles. Questionable chemical substances have been replaced with environmentally safe ones. This allows the fabric to recirculate without any residue in a technical recycling cycle. Returnity can be returned after use and begin a new life as a new product.

Sustainable businesses care about biocultural diversity, too, said Barbara Fuchs, Lecturer at the Van Riemsdijk Chair in Entrepreneurship at the University of Liechtenstein. Biocultural diversity comprises the variability of biological species and ecosystems and the distinctiveness of cultural groups who interact with theses resources. Unfortunately, the erosion of biocultural diversity has been observed in different countries. Oftentimes, commercialisation and conservation of biocultural diversity are perceived as a competing forces. This need not necessarily be the case.

Sustainability needs transparency

Information technology can help turn businesses sustainable, explained Daniel Schmid, Head Sustainability Operations at German software giant SAP. Sustainability begins with creating transparency because you can only improve when you first know where you stand. The ambitious goal of turning a business sustainable is not accomplished through greater efficiency alone. Things must also be done differently. This is why sustainability is a strong driver for innovation.

Green logistics are an example, said Thomas A. Weber, Director at the Management of Technology and Entrepreneurship at the Ecole Polytechnique Fédérale de Lausanne. Logistics is the management of the flow of goods and services from firms to consumers. The design of a high-performance logistics network that balances corporate profitability goals with environmental responsibility remains an elusive undertaking because the value of sustainability objectives is usually difficult to quantify. Standard supply chain metrics need to be adjusted and augmented to capture green objectives and indicate suitable ‘sustainability gaps’.

Green logistics, where not specially mandated, constitutes a part of corporate social responsibility which positively affects society by promoting environmentally conscious actions, such as supply-chain decarbonisation, energy conservation and diligent waste management. Firms can design products that achieve ambitious green performance goals over their entire life cycle with a particular focus on preventing waste. They can reconfigure supply chains and capitalise on emerging clean technologies.

Energy efficiency has cannibalised itself

However, the few gains made can easily be lost, explained Horace Herring, Visiting Research Fellow at the Open University. Energy efficiency has been heavily promoted over the last few decades, but it has failed to deliver its promised savings. This is mainly because of the ‘rebound effect’. Whilst there has been some energy savings at the local level, national energy use has continued to grow despite large increases in energy efficiency. This is because we choose to convert the financial savings gained from energy efficiency into greater consumption. Basically, energy efficiency has stimulated economic growth. Now in an era of austerity and minimal economic growth, energy efficiency could play a role in achieving a ‘steady state’ economy. It could help change our economies towards low-carbon ones based on reduced resource flows. But it needs government policies to reduce resource use through (carbon) taxation and to encourage social and technical innovation.

Green business does not stop at green products

Dennis Pamlin, Director of the UN Global Compact project ‘21st Century Clusters’ and Global Policy Advisor for the Global e-Sustainability Initiative, delivered the closing remarks. He explained that it is not enough simply to reduce problems; rather, there is a need to undertake transformative change. A new industrial revolution has already begun, and it will lead us away from a production-oriented economy to a solution-orientated one. Eco-efficiency as a standard is only the first step. Taking the life cycle impact of products into account is the next one.

Environmentally friendly design is even better but still only belongs to the ’first generation‘ of green business. Delivering solutions that support sustainable lifestyles leads to the ’second generation‘ of green business, which includes sustainable business models as well. This stage can still be driven by economic trends and corporate strategy. The ‘third generation’ of green business starts when new clusters are built around a vision for the future. They will be driven by ethics – but we are not there yet.