Submitted by Markus Hemetsberger, BSc. Submitted at Institute of Strategic Management Supervisor MMag.a Dr.in Melanie Wiener MBA November 2020 Sustainability initiatives and practices in the Smartphone industry Master Thesis to confer the academic degree of Master of Science in the Master’s Program Management Sworn Declaration I hereby declare under oath that the submitted Master’s Thesis has been written solely by me without any third-party assistance, information other than provided sources or aids have not been used and those used have been fully documented. Sources for literal, paraphrased and cited quotes have been accurately credited. The submitted document here present is identical to the electronically submitted text docu- ment. ______________________________ ________________________ Markus Hemetsberger, BSc. Date Page i Executive Summary Sustainability which consists of environmental, social and economic aspects (triple bottom line) and the Circular Economy approach, which closes the loop of take-make-dispose by applying reduce, reuse, recycle and recover as well as increases production efficiency by using less materials and energy, had gained a worldwide awareness within the last years. This aware- ness raised through alarming global sustainability issues, and the pressure from different stakeholders to tackle these issues increased. As a consequence, a trend to sustainability initiatives and practices within the smartphone industry is visible which are related to the Cir- cular Economy approach, with the focus on environmental sustainability. Consequently, this thesis gives an overview of the theoretical basics of “Sustainability” and “Circular Economy”, the best practise initiatives in the social and environmental area of sustainability, a critical re- view on practices and principles which are against the sustainability approach and shows which actions can be established to improve sustainability. In order to gain clarity, this thesis is based on a systematic literature review and gives a comprehensive overview on the previ- ously mentioned topics. The term “Sustainability” has developed through the United Nations and researchers to a broad term which includes environmental, social and economic aspects which are intertwined and not separate, meet the needs of the present without compromising the ability of future gener- ations by carrying capacity of the ecosystem through development of renewable natural re- sources which implies respecting limits of the site’s natural land, water and energy resources and by improving the quality of the human life through rising of real income, increasing educa- tional standards and improvement of the health of the nation to advance the general quality of life. The thesis describes the researched sustainability models “Triple Bottom Line”, “Circles of Sustainability”, “Three-nested dependencies Model” and “Prism Model of Sustainability”. The outcome is that all four models are focusing on addressing different stakeholders and address- ing the economic, environmental and social dimension although the “Prism Model of Sustain- ability” adds the institutional perspectives and the “Circles of Sustainability” politics. The “Triple Bottom Line” is more an accounting model which tries to measure sustainability in each area, the “Tree-nested dependencies Model” is mainly an environmental measurement toll and the remaining two other Models show how companies or politicians are performing in the different areas of sustainability. Some of the researched benefits which are created through sustaina- bility are: higher brand value, increased financial performance, better reputation, higher cus- tomer satisfaction, better brand image and positive effects on customer loyalty. The challenges of sustainability are strategic integration, trustworthy sustainability reporting and communica- tion, not becoming a greenwashing company as well as environmental sustainability through forces from governments and institutions. Page ii The concept of the “Circular Economy” was getting more relevant especially within the last twenty years. It is a regenerative system in which the demand of resources is minimised by slowing, closing, and narrowing material and energy loops, in which waste would be used as a resource to reduce primary resource consumption which leads to a sustainable, resource- efficient and a competitive economy. Products could be repaired, reused, maintained, refur- bished or upgraded instead of thrown away with the focus on recycling, use of renewable en- ergy and eliminating the use of toxic chemicals, which should keep the resources in use for as long as possible, which increases the value of products as well as maximize the ecosystem functioning and the human well-being. The thesis describes the researched Circular Economy models “R Frameworks”, “ReSOLVE Framework” and the “System Diagram”. The results are that the different R frameworks serve as core principles behind the circular economy and are sharing the dimensions: Reduce, Reuse, Recycle as well as Recover. The System Diagram serves as basis for a better understanding of the Circular Economy and is translated into the six business actions of the ReSOLVE Framework which are applied from global leaders. Some researched benefits of the circular economy are: reduction in negative environmental external- ities, minimising of imports dependency, economic growth, better financial performance through savings and fostering innovation. Some challenges of the circular economy are: re- bound effects, difficulties in implementing, design and quality challenges as well as technolog- ical limits of recycling. The best practise initiatives within the smartphone lifecycle phases are, in the raw materials extraction and production phase, in the environmental and social area of sustainability, to con- vince suppliers to use fair and sustainable raw materials, the usage of certificated raw materi- als as well as a transparent supply chain. Within the other phases are some examples in the environmental area: carbon reduction, use of renewably energy, reduction of water, waste and toxic materials, use of recycled raw materials, no loss of guarantee by self-repairs or installing other software, long product life and using time, device deposits as well as buyback programs. The social aspect in the production consist of fair wages, increased employee satisfaction, occupational health, safety and hazard prevention. Practices which are against the principles of sustainability are found in every aspect of the smartphone lifecycle phases. Some examples in the environmental area are pollution, toxic risks, high material consumption, short average operating life, expensive and difficult repairs, planned obsolescence, recycling issues and in the social area are visible: lack of labour rights, work around laws, child labour, overtimes, not adhered code of conducts, dehumanisation, low wages as well as health issues. Page iii The actions which can be established to improve sustainability in general are: include social / environmental sustainability in the whole lifecycle, effective legislation as basis for further ac- tions and investing profits in environmental and social sustainability. Some examples for envi- ronmental actions are: integration of the Circular Economy within all lifecycle phases: “Raw materials extraction” (refuse), “Production” (reduce / reuse), “Use” (repair) “End of life” (reuse, remanufacturing, refurbish, recycling, recover) which are all described in detail within this the- sis. Examples of the social actions are: introduce a strict code of conduct with an enhanced monitoring system, increase employee satisfaction and offer high safety standards. Limitations within this master thesis are on the number of the analysed companies, therefore further research, should be on analysing all smartphone manufacturing companies. Further- more, it would be interesting how sustainability is affecting the financial performance as well how different stakeholders influence the social, environmental and financial dimension of sus- tainability. Page iv Table of Contents 1 Introduction .................................................................................................................... 1 1.1 Problem Statement .............................................................................................. 1 1.2 Objective.............................................................................................................. 4 1.3 Research Design ................................................................................................. 4 1.4 Structure of the Thesis ......................................................................................... 9 2 Sustainability ................................................................................................................10 2.1 Historical development of “Sustainability”............................................................10 2.2 Definition/s of “Sustainability” ..............................................................................14 2.3 Dimensions of Sustainability ...............................................................................18 2.3.1 Environmental aspect ......................................................................................19 2.3.2 Social aspect ...................................................................................................20 2.3.3 Economic aspect .............................................................................................21