Sustainability lessons 2024, Lectures de Développement économique

Télécharge Sustainability lessons 2024 et plus Lectures au format PDF de Développement économique sur Docsity uniquement! Sustainability Sustainable development: "meets the needs of the present without compromising the ability of future generations to meet their own needs." (Brundtland, 1987). Context –> Anthropocene: geological epoch following Holocene, where there is a human dominance of biological, chemical, and geological processes on earth. Humans then become a major geological force. Climate change –> the pace of the change is the real problem, not the change itself. The key driver of temperature increase is CO2 emissions: - Decreasing human CO2 emissions does not lead to a decrease in average temperatures as long as we continue to emit, it only slows down the increase - To decrease emissions, human CO2 emissions should be negative (more removals than emissions –> carbon neutrality) What can companies do? Two elements: - Mitigation –> do better with less resources (reduce impact) - Adaptation –> adapt companies to climate change, loss of biodiversity, resource scarcity è Avoid maladaptation Biodiversity and planetary boundaries Nine planetary boundaries: Planetary boundaries define the key processes which influence the stability of earth system and define the limits that should not be crossed (tipping points: as of today, 6 out of 9 are already crossed) One of the nine boundaries is biosphere integrity –> biodiversity, defined as the richness of life on earth. Three levels: - Genetic diversity –> variation of genes within a species - Species diversity –> variety of species within an area - Diversity of ecosystems –> assortment of ecosystems Ecosystem services: the ecological functions that directly or indirectly contribute to human wellbeing: that is, the benefits that people derive from functioning ecosystems. Categorized in 4 types of services: 1. Provisioning services 2. Regulating services 3. Cultural services 4. Supporting services As of today, of an estimated 8 million animal and plant species (75% of which are insects), around 1 million are threatened with extinction. Five main drivers of biodiversity erosion: 1.changes in land and sea use 2.climate change 3.over-expolitation of resources 4.invasion of alien species 5.pollution Link between business activities and biodiversity: - Economic activities to Biodiversity and ecosystem services: impact (biodiversity erosion) - Biodiversity and ecosystem services to Economic activities: key resources + risk of biodiversity loss Different steps for the connection: 1. Spotting the critical impacts: current agri-food models have a high impact on biodiversity (overfishing, deforestation, chemicals…) Finance, reporting, measurement ESG is a booming market in finance Strong vs weak sustainability –> strong sustainability puts everything in relationship with natural ecosystems Sustainability may represent a very significant financial risk in relationship with planetary boundaries –> risks: - Physical: risks which arise from the physical effects of climate change and environmental degradation - Transition: business-related risks that follow societal and economic shifts toward a low-carbon and more climate friendly future. - Stranded assets: Economic assets (pipeline, coal mine, powerplant, etc.) which are no longer used and may end-up as a liability before the end of their anticipated economic lifetime Current regulatory & standard debates in the field of sustainability finance & reporting: - Single materiality approach: the company has to provide investors with transparent information on the impacts of climate change on the assets of the firm. - Double materiality approach: the company has to provide investors and other stakeholders with transparent information on: o the impacts of climate change on the assets of the firm o the climate externalities generated by the firm activity EU: green taxonomy, defining the criteria for sustainable activities so that investments are channelled to the right projects, fighting against greenwashing. Sustainability reporting: Corporations implementing materiality matrixes (break down stakeholders’ interests and the consequences of the company on them) è importance of common standards Business models for sustainability A business model describes how an organisation creates, delivers, and captures value based on a particular value proposition. What we need are not just better products and processes, but fundamentally different business models è most likely, in these new business models, stakeholders replace shareholders as the focus of value maximization Business model for sustainability considers: - a company’s sustainable value proposition to its customers, and all other stakeholders - how it creates and delivers this value - how it captures economic value - how a company maintains or regenerates natural, social, and economic capital beyond its organizational boundaries Business model innovation happens when significant changes in the business model are needed Sustainable business model innovation: Five drivers: - entrepreneurial values (doing good) - consumer awareness - gain and keep competitive advantage - costs of resources and supply risks - regulation Guiding principles: - sustainability orientation - extend value creation (not just financial value) - systems view (interdependent activities) - stakeholders’ integration Barriers: - costs: new machineries, partnerships, infrastructures - readiness: employees lack knowledge, suppliers don’t understand the new model, customers lack knowledge on green issues, traditional habits 45 patterns identified to integrate sustainability in business models –> pattern groups (pricing, financing, supply chain…) + forms of value creation (economic, social, ecological…) Examples: Uber, Spotify –> business models for sustainability that are scalable and disruptive Sustainability management Global value chains: Flexible and spatially dispersed modes of production, slicing up production into specific tasks and moving some of these out of the boundary of the firm through external contracting. Global value chains are very unsustainable –> proliferation of sustainability standards in the industry –> too many standards! Climate change is the biggest issue that must be considered in business, and it has to be faced with unity, being complex, uncertain and evaluative Multi-stakeholders’ initiatives (MSIs): multi-sectoral initiatives that bring together a range of stakeholders to create governance solutions for social and environmental problems (NGOs, associations, roundtables). They: - share best practises - produce certification schemes - promote fair governance principles Need for a collective governance –> integrate public and private actors to gain legitimacy and evolve towards a hybrid governance approach