[MUSIC] Welcome to the module on sustainability and consumption. What is sustainability? How is environmental sustainability relevant to business? What are sustainable business practices? How are they different from business practices in general? Let us start by asking a question. Please write down your thoughts. Why should you bother about sustainability? Now why should you bother about sustainability? For me on a personal level, sustainability is about future generations. Sustainability is about the young people and the future that awaits them. So why should you bother about sustainability? For a number of reasons. First of all, with finite resources, it's our responsibility to understand the issue surrounding sustainability and try to find the answers to some of these challenges. Second, sustainability is an opportunity for you and your career. This is going to be a looming and large business opportunity, where you can distinguish yourself and gain some advantage in terms of your skills. Sustainability is about future generations. It is about looking our children in the eye and trying to figure out if we have done everything we can to address some of the challenges that we know exist. Sustainability is about minimizing environmental harm and increasing the quality of life in a number of ways. Sustainability is also often cost-effective. It leads to a win-win in terms of reducing cost and doing a better job with the environment. And sustainability, fundamentally, is about our own ethical system, and our own responsibility as well. Now, write down your answer to this question. Why do, or why should businesses care about sustainability? Now why should businesses care about sustainability? Well, first of all, there is a responsible way to act when you are a business, and you work in a social context in different communities. Secondly, consumers are beginning to care about sustainability, and there is an increasing demand for green products. Sustainability is also a huge opportunity for businesses to create a win-win between the social arena and the economic arena, through welfare for the community, and through better treatment of their employees, and so on. Sustainability can make better economic sense. Whether it is about reducing cost, or about planning for the future, in light of the challenges we face. Sustainability is about the future. It is about where we are headed, it is about the challenges of the future. And if you're a business with a medium term or a long term focus, you have to be concerned about where the world is going. Sustainability is about having a good reputation, sustainability is getting ahead of the regulations that are likely to be put in place, in response to some of the challenges that we face. Sustainability is all about developing a good image in the community, whether it's a brand image or a corporate image. And finally, we're in a world that is getting smaller and smaller. In a world of blogs and cellphones and the Internet. And things are getting very transparent. It is very important for businesses to operate in this transparent environment, and think about how they're interacting in the community and with larger society. These issues are becoming increasingly important as we develop an interconnected world. Where the word gets out, and consumers and individuals and non-profit organizations and governments and businesses are constantly in the public arena. Here are some examples from practice. Toyota developed a competitive advantage with hybrid cars, and Walmart found savings by focusing on sustainability. Here is a study showing some of the benefits for a business by being sustainable. Ranging from employee retention to increased revenue. The business case for sustainability is also being shown in some studies. Firms with a higher commitment to sustainability have higher returns as well. Companies high on environmental, social, and corporate governance issues have higher market value as well. I don't want to make too much of a few studies, because, to me, the issue of sustainability is not whether it leads to higher profits, but how we can work with sustainability in order for it to make sense economically as well, along with the social and the environmental aspects. It is also interesting to see where the inflection point is, in the last decade, when sustainability took off among businesses. This has been a recent phenomenon, and the landscape is changing, from the business side. Interestingly, I've been teaching this topic for more than a decade, and it is fascinating to see how the landscape is changing. With one of our assignments, I asked students to focus on sustainable business practices. Today, there are so many more examples, compared to a decade ago. In brief, do businesses care about sustainability? More and more do. Are they changing, yes. Is it profitable, yes. Are they changing fast enough, no. Is being fast enough sufficient in the status quo system? I don't think so. I think we need to rethink how the public arena interacts with business and so on. What is sustainability? I'm going to give you a few moments to think about it and jot down some thoughts. What is sustainability, really? Well, we don't know, we are trying to figure it out. At a personal level, as I mentioned earlier, to me sustainability is about looking young people in the eye. Looking my son in the eye and saying, I'm living in a way that is not taking away from his chances of a better future. And when I think about this question, am I living in a way that is not taking away from his chances or young people's chances of a better future? When I think about all the information coming at me, the reality is that I cannot look them in the eye, I cannot look young people in the eye and say that. So that is what sustainability means to me, personally. Sustainability is about profits, people, and the planet. Sustainability is about economy, equity, and ecology. Sustainability, ideally, is about a win-win-win in terms of the economic, social, and the environmental. But the reality is that there are often trade-offs and there are often synergies as well. And that is part of what we should try to do. We have to be realistic. We cannot assume because it sounds like a good thing, that we don't have to analyze things closely. We have to be honest about the trade-offs, and we have to be honest about the synergies as well. Now as we understand what's sustainability is, we also need to understand what sustainability means from a business perspective. Let me ask you to think about this for a few moments. What does sustainability mean from a business perspective? Please jot down your thoughts. Part of the issue with sustainability and the challenges that we face is that business as usual is not going to be able to cut it. We have to find new ways of conducting business. And so in a sense, in this course, in this experiment, we're going to learn together about the issues that businesses face. We don't have to be environmental experts, I'm certainly not an environmental expert, but we have to understand the issues and how they relate to business. What is sustainability from a business perspective? It is engaging in business activity without harming the environment. It is about savings in energy while doing less harm to the environment. It is about being economically sustainable. Unless the business is economically sustainable, it won't exist, or it's not going to exist. It's about using technology to improve lives and create social sustainability without depleting resources. It is about zero net impact, or at least working towards lower and lower impact. It may also be about sustaining culture and working in different communities and creating social sustainability. And in a sense, sustainability is about being harmonious with nature and with society, while living on in perpetuity. What is sustainability and what is sustainable development? Sustainable development is at the intersection of environmental protection, economic growth, and social equity. And there are a number of ways of doing this, and a number of ways of viewing this as well, in terms of the built environment, economic development, and so on. When we think about sustainability, we have to think about declining resources and increasing demand. And how we get through this bubble where the population is increasing and consumption is increasing as well, while we are using up a lot of resources. There are a number of different sustainability framework. The ecological footprint is one such framework, which looks at the ratio of the number of earths needed in order to face our consumption needs. Now take a look at this figure. This shows an income pyramid today, and with consumption increasing, it also shows how we become more unsustainable in terms of our consumption and the use of natural resources. So that is our current path. Now what we need to do is move towards the desired path, where the income pyramid moves up, but we do that in a sustainable way. That's the purpose of this particular picture. So how do we entirely turn direction? How do we move this ship towards being more sustainable? One of the frameworks is focused on the triple bottom line. This looks at outcomes in terms of economic, environmental, and social. And here are some sample measures of the economic and the environmental, for example, air quality and energy usage, and the social in terms of community impact. Here is an example of the triple bottom line as applied by the company, Patagonia. Here are some of the things that this company does in order to apply the triple bottom line framework. Here's an example where the company has an advertisement where they want you to not buy a jacket. So they focus on reduce, repair, reuse, and recycle. Natural capitalism is under the framework which focuses on natural, human, and other forms of capital, in addition to financial capital as well. It has a number of different principles such as radical resource productivity and biomimicry, service economies, and reinvestment. The natural step framework is based on some guiding principles from thermodynamics and natural cycles. The basic ideas here are to not cause a systemic increase in the environmental concentration of synthetic substances. Not cause systemic increase in the ecosystem degradation, and so on. Here's an example of how FedEx and the Forest Stewardship Council focus on applying this framework. Here's an example of IKEA using The Natural Step Framework.
