TUM School of Management | 15.11.2021
The corporate mindset has shifted. Sustainability has often been only part of the corporate social responsibility and not necessarily anchored across the different business functions and the value proposition of the firm. This has changed tremendously in recent years. According to the World Economic Forum, climate action failure is one of the top global risks. Therefore, sustainable economic growth is not only a political statement or a brand reputation anymore; it has become crucial for companies and for our future generations. The managers of today need to get involved in sustainable management as many stakeholders such as the government or society expect corporations to engage in sustainable business practices.
Businesses must have a corporate sustainability strategy to address climate change and ensure long-term economic growth. We spoke to Prof. Dr. Alexander Hübner, Chair of Supply and Value Chain Management at the TUM Campus Straubing, about sustainable transformation in corporations. As Academic Director of the new certificate program “Sustainable Management & Technology: Transformation towards Sustainability”, Prof. Hübner shared with us how this program introduces its participants to all aspects of sustainable change and actively supports them to transform their organizations into sustainable and profitable entities. Additionally, he gave us an understanding of how sustainability practices secure a place in future economy.
Why and how do the managers and experts of today need to get involved with sustainable management?
Prof. Hübner: Sustainability has become a core value at all business functions and a major value proposition to organizations, this is why it is managed by the C-Level in most global organizations, sometimes it lies even in the direct responsibility of the CEO. The priorities changed mainly because of the scarcity of resources leading companies to find new innovative resources like renewables; secondly, governmental initiatives like CO2 taxing, and thirdly, pressure from the society, which we see with the initiative like “Fridays for Future”.
What does sustainable management exactly mean for a corporation? How can companies integrate sustainability into the corporate strategies?
Prof. Hübner: Sustainability is a broad term and often used in the wrong context. Corporate sustainability is about more than just protecting the environment. It is a business strategy for the long-term growth that generates profits and works in harmony with people and the planet. Generally-speaking, it consists of three pillars: the economic pillar, the environmental pillar and the social pillar. Economic sustainability makes the company profitable in the long-run and ensures that the businesses thrives, e.g. by using less plastic in product packaging or creating green jobs. Environmental sustainability includes strategies to eliminate CO2 emissions and reduce the carbon footprint throughout the value chain including the protection of natural resources and reusing material within a circular economy. Social sustainability puts the people at the core. It promotes the health, safety and wellbeing of employees, customers, and communities. This includes a work-life balance for employees or ensuring good working conditions at the suppliers, when sourcing from Asia or Africa.
What are the most essential steps for companies towards sustainable management?
Prof. Hübner: Transforming a firm towards a sustainable entity is a long-term journey. It is not possible to reduce it to a certain number of steps as it affects the DNA of the entire firm. However, and most importantly, change starts from the top management. Sustainability needs to be and will be on the agenda of the board. For example, Zalando as the biggest European Online-Fashion Retailer, made sustainability and social utility their core strategy. Their objective is to be “net positive”, meaning to give the society and environment more back than they consume. Of course, they react firstly on the new changes of the market concerning sustainable products, but their strategy seems to go beyond by also giving the company and its employees a new purpose.
Transformation per definition is the process of changing completely. How can managers and experts support this transformation within their corporations or organizations?
Prof. Hübner: Options to enhance sustainable developments are everywhere. It can start from simple but effective changes in the office , or more complex changes like replacing core materials with biogenic products in the production process. The starting point can be a comprehensive life cycle assessment of the production processes and materials to identify the environmental impact of processes and products.
Which are the current and upcoming technological trends playing a role in sustainability?
Prof. Hübner: Consumer studies indicate the need for more sustainable products. This starts with sourcing. Consumers preferably are buying more and more local instead of global products. It also includes production processes and material usage, for example replacing fossil material with biogenic products or refurbishment of used products. Companies need to react to the market changes, especially because the COVID-19 situation has demonstrated that crises further accelerate developments. Therefore, understanding how to face social and economic changes and learning the skills to execute sustainable strategies that meet the requirements of future economy is now more important than ever before.