msc. gaston plantaz - sustainability to stay

7/30/2019 Msc. Gaston Plantaz - Sustainability to Stay

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Article Social InnovationApril 2012

Faculty of Management

Sciences

RADBOUD

UNIVERSITYNIJMEGEN

Sustainability to stayHow can organizations align their sustainability effortswith organizational performance?

- A literature review of the leading perspectives on the relations between

sustainability and organizational performance.-

Author: Msc. Gaston P.A.A. Plantaz


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Keywords:

Sustainability, Shared Value, Organizational Performance, Profitability, CSR

Abstract

This article describes how organizations used sustainability efforts in the past and elaborates

on the evolution of perspectives which see sustainability as a mean to increase organizational

performance. From the old situation where organizations saw sustainability as something they

had to do we witness a shift towards a model that integrates sustainability as a core aspect of

the business model which enhances profitability and long-term organizational success. The

evolution of these perspectives leads to new phenomena like shared value & the network

approach. By taking a closer look at empirical findings and two success stories, this article

tries to give a valid contribution towards the discussion about sustainability. It addresses the

topics of why and how organizations should change. In this way this article tries to make

organizations excited about change towards a sustainable but at the same time profitable

business.


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Preface

While following the course of Social Innovation & Organization, a new world has opened to

me. Yet back in my mind I already knew that we as society cannot go on in the way we do

right now. The different lectures made it clear to me that we as the new generation of

managers are the ones who have to change the way we do business. The several examples

given in class, interesting movies, guest speakers and so on, all focussed on the urge to act

more sustainable. However, I felt that sustainability is perceived as an obligation towards

organizations. Because they have experienced wealthy times in the last decades, they now

have to step up to handle and solve upcoming social problems. Although we can accept that

these organizations also have a great deal in the birth and development of these problems, itremains a hard task to make them act in a better, more sustainable way. Because profitability

lies within the DNA of businesses, I think it is important that organizations find ways in order

to act sustainable and be profitable at the same time, and as ultimate goal, making

sustainability a necessary means to achieve competitive advantages. Because I think that there

is enough descriptive literature discussing all the problems we are going to face in this life or

which we pass on to our next generations, I wanted to write an article that makes managers

excited about using sustainable efforts, and hopefully guides them to a sustainable path of

profit maximization and organizational success. If it is possible to create such a model, with

accompanying critical success factors, a huge step can be made. However, in order to achieve

this, we have to change our mind-set in multiple ways.

If we take a survey of the greatest actionsin the worldwe shall find the authors of

them all to have been persons whose Brains had been shaken out of their natural position.

- John Adams -


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Table of content

1. Introduction ........................................................................................................................ 5

2. Theoretical framework ....................................................................................................... 8

2.1 The relation between sustainability and organizational performance ............................ 8

2.2 Sustainability, how to make it profitable ....................................................................... 10

2.3 The concepts of Shared value and the Network approach........................................ 12

3. Empirical findings and success stories .............................................................................. 15

3.1 Sustainability at Puma .................................................................................................... 17

3.2 Sustainability at Nutreco ................................................................................................ 18

4. Conclusion & Discussion ................................................................................................... 19

References ................................................................................................................................ 19

Appendices ............................................................................................................................... 24


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1. Introduction

In todays world, we increasingly start to recognize the problems that arise from the way we

live and do business. To ensure a world where our future generations can live towards acertain standard, we have to change these ways we live and do business. In other words we

have to become sustainable. According to the Brundtland Report (1987) Sustainable

development is development that fits the needs of the present without jeopardizing the ability

of future generations to provide for their needs. Of course we all as individuals need to make

contributions to a better world. However in recent years business increasingly has been

viewed as a major cause of social, environmental, and economic problems (Porter & Kramer,

2011, pg. 4). Yet the problem is that for social issues like, air pollution, the shortage of

drinkable water, food and raw materials, it is hard to account specific companies and

industries for these problems and make organizations solving them.

Even worse, the more business has begun to embrace corporate responsibility, the

more it has been blamed for societys failures. The legitimacy of business has fallen to

levels not seen in recent history. This diminished trust in business leads political leaders

to set policies that undermine competitiveness and sap economic growth. (Porter &

Kramer, 2011, pg. 4)

So, even as organizations are increasingly acting in a more sustainable way, they do not find

many positive effects for themselves. Many organizations put more effort in acting

sustainable by for example: small investments in CSR initiatives, the use of natural energy

sources and conducting other CSR practices, like charity events. Yet it is questionable if the

underlying reasons for these efforts are right. No self-respecting company nowadays can

afford not to pay attention to sustainable entrepreneurship, even though the concepts and

practices still differ. Addressing the harsh reality of organising often happens by means of the

so-called Triple-P concept: people, planet and profit. (Jonker, 2011, pg. 10). Corporate

responsibility programs -a reaction to external pressure- have emerged largely to improve

firms reputations and are treated as a necessary expense. Anything more is seen by many as

an irresponsible use of shareholders money. (Porter & Kramer, 2011, pg. 5). This implies

that organizations feel forced to use some sustainable practices in order of damage control,

instead of turning them into opportunities. This is mainly explained by the view that these

sustainable operations are often perceived as less-profitable then in the way organizations can


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operate without them. For the sake of enduring long-term sustainability efforts of

organizations it is therefore of great importance to discover ways of sustainable business

practices that at the same time prove to enhance organizational performance and profitability.

An adequate level of investment in philanthropy and social activities is also acceptable for the

sake of profits (McWilliams and Siegel, 2001). When organizations develop a better

understanding of social issues and their consequences in the long term, they could explore

new opportunities that result from the incorporation of sustainability into the business model.

Acute and accurate perceptions of social change, and a high degree of responsiveness

to those changes, is essential for business to develop its products and services

products and services that are socially responsible because they meet a market need

with the knowledge of the wider long term impacts of providing those products and

services. (Mitchel, 2007:8)

As already mentioned, in the last decade we see that businesses finds new ways to increase

their value by acting more sustainable. Yet they continue to view value creation narrowly,

optimizing short-term financial performance in a bubble while missing the most important

customer needs and ignoring the broader influences that determine their long-term success.

(Porter & Kramer, 2011, pg. 4). A more long-term focus enables organizations to recognize

the different potentials sustainability efforts have to offer. Consumer demand is increasingly

focussing on sustainable products, and new eco-friendly technologies offer higher efficiency

and reduce the waste of natural resources.Further social investments can eventually lead to

new markets. Yet we still lack an overall framework for guiding these efforts, and most

companies remain stuck in a social responsibility mind-set in which societal issues are at

the periphery, not the core (Porter & Kramer, 2011, pg. 4). We are ready for something

new, something that does not just help put sustainability on the agenda, but actually organises

it as well; and not just on an organisational level, but perhaps even broader. (Jonker, 2011,

pg. 10).

This article tries to contribute to the debate by examining the use of sustainability efforts by

organizations in order to increase organizational performance and profitability. Though the

role of organizations in widely discussed in the literature about sustainability, there is a lot

less research about the ways in which organizations can benefit from sustainability efforts.

Therefore a closer examination of the existing views within this topic contributes to the

existing literature. On the other hand this article tries to provide more insights for


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organizations by examining the relations between organizations success and sustainability. By

a closer examination of empirical findings, and corporate success stories critical success

factors can be developed which could give managers new insights in the way they should

incorporate sustainability in their business.

This outline of this paper is as follows. First the main existing theories about this subject are

discussed. By the use of literature review it is explained how existing theories describe the

link between sustainability efforts and organizational performance and how these evolved.

Subsequently this relation is substantiated by empirical findings. Further, this article will give

some practical examples of how Puma and Nutreco managed to effectively use sustainability

in order to increase their performance and profitability. In the conclusion the results of this

study will be summarized and discussed, and limitations will be given.


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2. Theoretical framework

The raison dtre of an organisation is its ability to create value for people within the

internal and external environment (Jonker, 2011, pg. 15). Therefore this article describes howorganizations can create value with sustainability. First the relation between sustainability and

organizational performance is explained. This is done by describing the evolution of

perspectives which describe this relation. Then more insights are given in the ways an

organization should use sustainability. This will finally lead towards an elaboration on the

state-of-the-art perspectives of Shared Value and the Network perspective.

2.1 The relation between sustainability and organizational performance

In describing the relation between sustainability there are some leading perspectives available,

to start with Instrumental Theory (IT). This perspective has often been used to describe the

sustainable efforts of organizations. As Windsor (2001) has pointed out, a leitmotiv of

wealth creation progressively dominates the managerial conception of responsibility

(Windsor, 2001, p. 226). IT describes how organizations can use sustainability or CSR as an

instrument who gives a valuable contribution to the organization. In the group of InstrumentalTheories CSR is only seen as a strategic tool to achieve economic objectives and, ultimately,

wealth creation (Garriga & Mele, 2004, p. 53).From this perspective it becomes clear that

these CSR practices can create opportunities for organizations to increase their overall

performance. However, this perspective is mainly focussing on the direct relation between

sustainable efforts and profit maximization. When we take a Stakeholder perspective we find

that sustainability can contribute to economic performance in other ways. Concern for profits

does not exclude taking into account the interests of all who have a stake in the firm

(stakeholders). It has been argued that in certain conditions the satisfaction of these interests

can contribute to maximizing the shareholder value (Mitchell et al., 1997; Odgen and Watson,

1999). (Garriga & Mele, 2004, p. 53). The problem with IT and Stakeholder theory is that

they do not explicitly explain the relation between certain efforts and profitability. However,

past research has discovered a correlation between CSR and corporate financial performance.

These findings show a positive correlation between the social responsibility and financial

performance of corporations in most cases (Frooman, 1997; Griffin and Mahon, 1997; Key

and Popkin, 1998; Roman et al., 1999; Waddock and Graves,1997).Of course, not all CSR


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efforts contribute in the same way or to the same extend. For organizations it is important to

know which investments should be made with the available budgets assigned to CSR. Garriga

& Mele (2004, p. 53) note that Any investment in social demands that would produce an

increase of the shareholder value should be made, acting without deception and fraud. In

contrast, if the social demands only impose a cost on the company they should be rejected.

This view describes how organizations choose between different ways of becoming more

sustainable but the focus lies within the short-term. Nevertheless these ideas led to the birth of

new perspectives. Jensen (2000) has proposed what he calls enlightened value

maximization. This concept specifies long-term value maximization or value-seeking as the

firms objective. At the same time, this objective is employed as the criterion for making the

requisite trade-offs among its stakeholders. (Garriga & Mele, 2004, p. 54). Although these

theories describe the underlying reasons for the CSR-strategies organizations pursue

nowadays and describe how economical characteristics of different ways of operating

influence strategic choices, they lack the incorporation of sustainability into the heart of the

organization in the form of a business model. Unless sustainability adds to profits over time, a

sustainability agenda will likely fail to gain or hold its traction in the enterprise. (Kiron,

Kruschwitz, Haanaes & von Streng Velken, 2012, pg. 72). Therefore it is essential that

profitability and sustainability go hand in hand with the business model of firms.

Profits involving a social purpose represent a higher form of capitalism -one that will

enable society to advance more rapidly while allowing companies to grow even more.

The result is a positive cycle of company and community prosperity, which leads to

profits that endure. (Porter & Kramer, 2011, pg. 15)

In the article Sustainability nears a tipping point (Kiron, et al., 2012) it is described that the

so called sustainability movement reaches a critical tipping point. This tipping point can be

defined as: the point at which a substantial portion of companies not only see the need for

sustainable business practices but are also deriving financial benefits from these activities .

(Kiron, et al., 2012, pg. 70). This tipping point is essential in the development of new theories

who take a new integral perspective of sustainability within the organization.


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2.2 Sustainability, how to make it profitable

The question that remains is; in which ways can organizations make money from

sustainability? Garriga & Mele (2004, p. 54) state that all the different efforts can be

categorized within three overarching approaches. First they mention social investments in

competitive context. This approach is based on using the Porter model on competitive

advantage (Porter, 1980), and applies this well-known and widely accepted model to the

competitive context of organizations. Porter & Kramer (2002, pp. 6061) themselves mention

philanthropic investments by members of cluster, either individually or collectively, can

have a powerful effect on the cluster competitiveness and the performance of all its

constituents companies.

It will be in the long run interest of a corporation that is a major employer in a small

community to devote resources to providing amenities to that community or to

improving its government. That makes it easier to attract desirable employees, it may

reduce the wage bill or lessen losses from pilferage and sabotage or have other

worthwhile effects. (Friedman, 1970)

The second approach refers to the natural resource-based view of the firm and its dynamic

capabilities. The resource-based view of the firm (Barney, 1991; Wernerfelt, 1984)

maintains that the ability of a firm to perform better than its competitors depends on the

unique interplay of human, organizational, and physical resources over time. (Garriga &

Mele, 2004, p. 54). To coordinate and control these resources, organizations have to focus on

dynamic capabilities. The dynamic capabilities approach presents the dynamic aspect of the

resources; it is focused on the drivers behind the creation, evolution and recombination of the

resources into new sources of competitive advantage (Teece et al., 1997).

Based on this perspective, some authors have identified social and ethical resources

and capabilities which can be a source of competitive advantage, such as the process of

moral decision-making (Petrick and Quinn, 2001), the process of perception,

deliberation and responsiveness or capacity of adaptation (Litz, 1996) and the

development of proper relationships with the primary stakeholders: employees,

customers, suppliers, and communities (Harrison and St. John,1996; Hillman and Keim,

2001). (Garriga & Mele, 2004, p. 54)


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The final approach that is mentioned in the article are strategies for the bottom of the

pyramid. Prahalad (2002) describes how organizations, by the means of sustainable

investments, can create new markets. There is a huge potential of new customers in the

bottom of the pyramid countries, like for example Brazil, Russia, India & China. This

approach tells us something about how for example new sustainable technologies, can offer

huge growth potential for firms who at this moment oversee the market of poor people in this

world. Organizations can also use specific innovations or investments to increase the value

that can be captured. By creating value for the people in this Bottom of the Pyramid, these

people become wealthier and in this way potential new customers.

Disruptive innovations can improve the social and economic conditions at the base of

the pyramid and at the same time they create a competitive advantage for the firms in

telecommunications, consumer electronics and energy production and many other

industries, especially in developing countries. (Hart and Christensen, 2002; Prahalad

and Hammond, 2002).

Another way of using sustainability efforts for the sake of profits is cause-related marketing

which can be defined as the process of formulating and implementing marketing activities

that are characterized by an offer from the firm to contribute a specified amount to a

designated cause when customers engage in a revenue-providing exchanges that satisfy

organizational and individual objectives (Varadarajan and Menon, 1988, p. 60). Its goal then

is to enhance company revenues and sales or customer relationship by building the brand

through the acquisition of, and association with the ethical dimension or social responsibility

dimension (Murray and Montanari, 1986; Varadarajan and Menon, 1988).A great example of

this way of marketing is offered by the company TOMS1. TOMS is a brand that sells shoes

and sunglasses. Their marketing strategy is: With every pair you purchase, TOMS will give a

pair of new shoes to a child in need. One for One.1 and With every pair you purchase,

TOMS will help give sight to a person in need. One for One. 1 By the use of this strategy

TOMS became a trend and increased their sales and profits.

From these different perspectives it can be concluded that there is a shift in the way

organizations look towards sustainability. The most recent literature describes how

1Retrieved from:http://www.toms.com
http://www.toms.com/http://www.toms.com/http://www.toms.com/http://www.toms.com/


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sustainability should be incorporated, and is therefore in relation to the presuming

perspectives rather prescriptive than descriptive. This change in mind-set led to the upcoming

phenomena of shared value and the network perspective

2.3 The concepts of Shared value and the Network approach

In their paper Creating Shared Value (Porter & Kramer, 2011) the concept of shared value

is introduced. Shared value can be defined as Creating economic value in a way that also

creates value for society by addressing its needs and challenges. [] Shared value is not

social responsibility, philanthropy, or even sustainability, but a new way to achieve economic

success. (Porter & Kramer, 2011, pg. 4). In that way this perspective is different than

preceding views, which stressed that organizations, according to their responsibility have to

put effort into CSR. Shared value explains sustainability as something that organizations

should do to remain competitive and capture more value for themselves and the society.

A growing number of companies known for their hard-nosed approach to business -

such as GE, Google, IBM, Intel, Johnson & Johnson, Nestl, Unilever, and Wal-Mart -

have already embarked on important efforts to create shared value by reconceiving the

intersection between society and corporate performance. (Porter & Kramer, 2011, pg.

4).

So it can be concluded that large corporations start to recognize and act upon the opportunities

the concept of shared value has to offer. The question however is: How can organizations

create this shared value? First it is important to mention that creating shared value is not

about specific actions an organization has to perform in order to end up with shared value. It

has to be seen as a process that takes place in the long term, by incorporating sustainability in

the whole line of operations.

Realizing it will require leaders and managers to develop new skills and knowledge -

such as a far deeper appreciation of societal needs, a greater understanding of the true

base of company productivity, and the ability to collaborate across profit/non-profit

boundaries. And government must learn how to regulate in ways that enable shared

value rather than work against it. (Porter & Kramer, 2011, pg. 4).


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To create shared value organizations have to step back from their existing view that their

strategy must mainly focus on profits, but align their goals to create shared value.

This will drive the next wave of innovation and productivity growth in the global

economy. It will also reshape capitalism and its relationship to society. Perhaps most

important of all, learning how to create shared value is our best chance to legitimize

business again (Porter & Kramer, 2011, pg. 4).

Shared value, then, is not about personal values. Nor is it about sharing the value already

created by firmsa redistribution approach. Instead, it is about expanding the total pool of

economic and social value. (Porter & Kramer, 2011, pg. 5). Of course, in order to change the

mind set of companies, they have to recognize that creating societal value will eventually

contribute to their own goals. Long-term vision and strategy is therefore essential. Managers

focus mainly on short term goals, in order to increase shareholder-value, because this defines

their own performance. But for the sake of long term growth, organizations must face that

societal problems can harm the value chain in the future.

A companys value chain inevitably affectsand is affected bynumerous societal

issues, such as natural resource and water use, health and safety, working conditions,

and equal treatment in the workplace. Opportunities to create shared value arise because

societal problems can create economic costs in the firms value chain. (Porter &

Kramer, 2011, pg. 8)

Besides that, investing in social issues can provide new opportunities in the form of new

markets and customers. The societal benefits of providing appropriate products to lower-

income and disadvantaged consumers can be profound, while the profits for companies can be

substantial (Porter & Kramer, 2011, pg. 8). In their article Porter & Kramer (2011) mention

three ways an organization can create economic value by creating societal value. These ways

are: reconceiving products and markets, redefining productivity in the value chain, and

building supportive industry clusters at the companys locations.

Although the new concept of shared value offers a very interesting perspective on how to

look towards businesses, it treats the organization as an entity that can create this shared value

by itself. But it is important to note that due to factors as globalization and vertical

disintegration within the value chains the business environment is rapidly changing.

Organizations increasingly operate within networks with competitors, suppliers, customers,


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NGOs and other institutions like governments. Therefore in order to create this shared

value academics increasingly focus on a network perspective instead of treating

organizations from a focal point of view. McVeau and Freeman (2005:59) state: In an

economy that is increasingly influenced by the role of networks, it is ever more important to

view firms as networks of relationships that extend well beyond the traditional boundaries of

the organization. It is therefore of great importance that organizations adjust their strategies

in order to create as much social & economic value within the network they operate in.

Wouldnt it be better to start thinking in terms of networks of companies; that is,

configurations of (inter) dependent actors connected with each other on the basis of

place, means and transactions? Indeed, this is not particularly simple. Therefore, it is

a good thing that we simultaneously experiment with new ways of organising, such as

transversal teams, various sustainability alliances between organisations and new

configurations of stakeholders in old and especially new networks. (Jonker, 2011,

pg. 12)


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3. Empirical findings and success stories

In the article Sustainability nears a tipping point (Kiron, et al., 2012) empirical research is

conducted about how organizations, which manage to use sustainability in a way that creates

value, differ from organizations that did not. The dataset included 2,874 respondents, which

are all from commercial enterprises. These organizations are worldwide located and represent

different industries. For more information about the dataset see (Kiron, et al., 2012). In this

research the authors refer to these successful organizations as Harvesters. These are the

organizations that have found a way to improve business performance by the use of

sustainability efforts. The article describes in which ways these Harvesters differ from otherorganizations. First they mention that these Harvesters are much more likely to embrace

sustainable activities than the organizations which are more cautious to adapt to these efforts.

Often this embracing is done by the use of a business model which is focussed on

sustainability. To describe the differences between Harvesters and other organizations, the

authors placed their empirical findings under three dimensions. The first concepts relates to

the organizational support.

Compared to non-Harvesters, Harvesters

are three times as likely to have a business

case for sustainability [...] they are also

50% more likely to have CEO commitment

to sustainability, twice as likely to have a

separate sustainability reporting process and

twice as likely to have a separate function

for sustainability [...] and harvesters are

also 50% more likely to have a person

responsible for sustainability in each

business unit and nearly 2.5 times as

likely to have a chief sustainability officer. (Kiron, et al., 2012, pg. 5). (See Figure 1)

Furthermore, the authors give research results which show how Harvesters manage to link

sustainability to their organizational performance and profitability.

Figure 1: Organizational Support

Retrieved from: Kiron, et al., (2012), pg.


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Compared to the organizations that

other survey respondents are part of,

Harvesters are twice as likely to clearly

communicate who has responsibility for

sustainability, are more than twice as

likely to have operational and personal

key performance indicators linked to

sustainability, and are 60% more likely

to link sustainability with financial

incentives [...] Also, Harvesters are

more than twice as likely to say that

sustainability has increased their

collaboration with internal business

units across geographies. (Kiron, et al.,

2012, pg. 73). (See Figure 2)

Finally the authors describe how

sustainability can increase intra- and

inter-organizational collaborations,

which eventually contributes to the

firms performance. Harvesters are

more than twice as likely to say that

sustainability has increased their

collaboration with competitors []

Harvesters are also likely to be

collaborating more with customers,

suppliers, government,local communities

and NGOs as a result of sustainability

[] Also, Harvesters are more than twice as likely to say that sustainability

has increased their collaboration with internal business units across geographies. (Kiron, et

al., 2012, pg. 73). From the data analysis the authors further found that compared to non-

Harvesters, Harvesters adopt their business model to sustainability. The specific focus of

these organizations is towards: increasing competitive advantage, higher innovativeness,

expanding market boundaries and the increase of market share. On the other side non-

Figure 2: Link sustainability, performance & Profits

Retrieved from: Kiron, et al., 2012, pg. 72

Figure 3: Sustainable practices improve collaboration

Retrieved from: Kiron, et al., (2012) pg. 73


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Harvesters focus more on brand related concerns. It also becomes clear that Harvesters

manage to create more value from sustainability because they recognize that in order to

make these specific efforts profitable, their focus must lay on the long-term. To conclude

the findings of their research some other findings implicate that sustainability contributes to

organizational success. Two-third of our respondents said that sustainability was critically

important to being competitive in todays marketplace, up from 55% in our 2010 survey

(Kiron, et al., 2012, pg. 70). Further they found thatabout 31% of the respondents said their

companies are currently profiting from sustainable business practices (Kiron, et al., 2012,

pg. 70).

3.1 Sustainability at Puma

Puma, which is a worldwide brand in sports goods, is a good example of a company who

integrated sustainability into their business model. For a long time our mission has been to

become the most desirable Sportlifestyle company. With this next phase of our sustainability

program we have evolved our mission to be the most desirable and sustainable Sportlifestyle

company in the world, said Jochen Zeitz, Chairman and CEO of PUMA2. Recently Puma

faced problems with the packaging of their sport shoes. Because Puma has a strong incentiveto act more sustainable, the existing way of packaging was not in line with their ambitious

long-term sustainability program. Therefore Puma designed a new way of packaging called

the Clever Little Bag (see appendix 1). The new innovative solution will significantly

reduce the amount of waste and CO2 emissions that traditional product packaging such as

shoe-boxes and apparel polyethylene bags generate and underpins PUMAs target of reducing

carbon, energy, water, and waste by 25%, and developing 50% of its international product

collections in footwear, apparel and accessories according to best practice sustainability

standards by 2015.2 On the one hand this new way of packaging offered many positive

effects from a societal point of view. The introduction of PUMAs innovative packaging and

distribution system will reduce the paper used for shoeboxes by 65% and carbon emissions by

10,000 tons per year the remaining packaging materials used will be fully sustainable by

2015.2 However on the other side it increased profitability, and effective use of resources.

Less packaging means fewer raw materials, less use of water and energy to produce, and less

weight to ship and to be disposed of.2 Further it can be reasoned that by promoting this new

2http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/
http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/


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sustainable way of packaging is a good way to attract customers. This example clearly shows,

that sustainability can offer opportunities instead only expenses.

3.2 Sustainability at Nutreco

Nutreco, which is the global market leader in animal nutrition and fish feed, has as its slogan

Feeding the future3. This company is one of the leading organizations in incorporating

sustainability in their overall business strategy.

In 2009, Nutreco made a strategic choice to embed sustainability throughout Nutreco

operations. We began by formulating a sustainability policy, set targets for the managers and

initiated a programme to facilitate the embedding process and ensure it is change that last.

[] It is important to note that we interpret the term sustainability to include harmony with

our environment and having good relations with our employees, our neighbours and wider

society as well as economic sustainability., says CEO Wout Dekker.3

Nutreco should be seen as a good role model for other organizations, in the way they

embedded sustainability in their business model. Their long-term focus is expresses in the

goals they made for the year 2050. They closely work together with different kinds of

stakeholders in order to increase the efficiency of their sustainability efforts. In an interview4

CEO, Wout Dekker states:sustainability lies within our DNA. Nutreco recognizes the need

to incorporate sustainability and invest in different initiatives in order to ensure future

business. In the same interview4, Wout Dekker says: I am convinced that it is possible to

increase the production of livestock and fish farming while at the same time reduce the

negative impact on the environment. This phrase directly relates to the concept of shared

value. Nutreco is a nice example of an organization that recognizes the need to create sharedvalue, from a network perspective.

3http://nutreco-sustainabilityreport.ireports.nl/en

4http://managementscope.nl/magazine/artikel/548-wout-dekker-nutreco-sustainability-dna
http://nutreco-sustainabilityreport.ireports.nl/enhttp://nutreco-sustainabilityreport.ireports.nl/enhttp://nutreco-sustainabilityreport.ireports.nl/enhttp://managementscope.nl/magazine/artikel/548-wout-dekker-nutreco-sustainability-dnahttp://managementscope.nl/magazine/artikel/548-wout-dekker-nutreco-sustainability-dnahttp://managementscope.nl/magazine/artikel/548-wout-dekker-nutreco-sustainability-dnahttp://managementscope.nl/magazine/artikel/548-wout-dekker-nutreco-sustainability-dnahttp://nutreco-sustainabilityreport.ireports.nl/en


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4. Conclusion & Discussion

In this article the main topic is the relation between sustainability and organizational

performance, which often is measured by economic results. The development of social

problems like for example poverty, pollution, hunger and the shortages of water and raw

materials, is strongly connected to the way organizations operate. In the past organizations

often did not take their responsibilities regarding these social problems. Hence, it can be said

that organizations now increasingly start to recognize the need to contribute to a more

sustainable world. However the way they give form to sustainability is not in line with the

opportunities the concept has to offer. Organizations use CSR efforts and other sustainable

initiatives mainly because they are forced by the market. From an Instrumental perspective

it can be argued that sustainability should be effectively used to create economic gains. The

Stakeholder perspective contributes to this view that by stating that creating value from

sustainability not only depends on the direct relation between sustainable efforts and profits.

Organizations that create social value for their stakeholders indirectly contribute to their own

organizational success. These two perspectives have led to the upcoming phenomena of

Shared Value and the Network approach. These new concepts describe how organizations

can achieve organizational success and simultaneously create societal value by incorporatingsustainability in their business model and network. Findings from the empirical research of

Kiron, et al. (2012) substantiate these new perspectives. What we witness nowadays is that

pioneering organizations like Puma and Nutreco, have managed to create shared value within

their network.

We can conclude that the way organizations look towards sustainability is constantly

changing. Organizations increasingly recognize that sustainability has a lot to offer. Not only

for the sake of being social responsible but also as a mean to ensure profitability and growth

of the firm. Of course, the incorporation of sustainability within the core of the business is a

very complex process. Further it remains unclear whether these new ways of sustainability

eventually can solve social problems. It is even questionable whether the influence of specific

sustainable business models is sufficient to fight up against the growth and development of

these problems. The rapid growth of the world population, and the fast depletion of raw

materials, food and water, will lead to a quick and strong development of societal problems.

Solving these problems needs much more effort than contemporary businesses can offer bythemselves. The main limitation of this research is that it is mainly focussed on commercial


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enterprises. Other organizations like governments, NGOs, regulating institutions and of

course the individual, all have a large stake in making the world more sustainable. Further

research, which applies the new perspectives of shared value and network approach towards

these groups, can give valuable new insights.

This article does not provide the holy grail, in the form of a clear path towards a sustainable

environment. Nor is it providing fixed critical success factors that enhance the creation of

shared value. It tries to give a valuable contribution to the scientific and practical discussion,

by providing different perspectives about how businesses should incorporate sustainability. It

shows that sustainability is a concept that has to be continuously developed in order to create

a better world while simultaneously enhancing organizational success.


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Appendices

Appendix 1

Clever Little Bag by PumaRetreived from:http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-

behar/
http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/

msc. gaston plantaz - sustainability to stay

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