The Sustainable
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ffirs.indd vi 10-10-2013 14:52:37 Praise for fi rst and second editions Second edition “The fi rst edition is a spectacular book – its message: green business is good business for any business. The new edition is even better, and includes every component of an MBA program – from accounting to personnel manage- ment. Who should read it? Students, those about to start a business, employ- ees, government offi cials, staff of global organizations concerned with private sector development, and the general public. Ms Weybrecht’s book is a genuine service to our planet.” Guy Pfeffermann, CEO, Global Business School Network “We know that the greening of London’s businesses will be essential for our economy in the coming years. The Sustainable MBA will help graduates develop the vision and expertise to lead such change.” Matthew Pencharz, Senior Advisor Environment & Energy to the Mayor of London “Giselle Weybrecht provides practical insights for business schools to include sustainability in education and their daily operations. The Sustainable MBA will be a great inspiration for any academic institu- tion … as well as business leaders and entrepreneurs. Giselle shows that sustainability is feasible for every type of organization regardless of size and industry.” Jonas Haertle, Head, UN Principles for Responsible Management Education “Ms Weybrecht has written a useful book for anyone who cares to do some- thing about tomorrow, today. The Sustainable MBA provides champions with knowledge and tools to affect change and instills hesitant believers with the confi dence to act. For business professors, Ms Weybrecht demon- strates how each of us can amplify our own social impact by developing more forward-thinking, responsible citizens and business leaders for our future.” Dan Le Clair, EVP & COO, AACSB (Association to Advance Collegiate Schools of Business) “The Sustainable MBA is a comprehensive look at sustainability within all functions of business. It’s a wonderful foundation for any business person trying to grasp the full scope and importance of sustainability.” Dr Tima Bansai, Executive Director, Network for Business Sustainability ffirs.indd i 10-10-2013 14:52:36 First edition “…The Sustainable MBA presents a timely and important case for compre- hensively integrating ESG issues into business training.” Ernst Ligteringen, Chief Executive, Global Reporting Initiative “The role of business is to make the world a better place … The Sustainable MBA will help us along this road with its abundance of thinking, tools, and resources.” Kevin Roberts, CEO Worldwide, Saatchi & Saatchi “Giselle has provided practicing managers with this helpful and thought- provoking green business guide.” Sir Andrew Likierman, Dean, London Business School “If people are central to the purpose of a business, then corporate respon- sibility or sustainability cannot be an add-on … Giselle Weybrecht, in her comprehensive book, perhaps fi rst of its kind, has shown how this can actually happen. The book is a must for management students, researchers and practitioners.” Anant G. Nadkarni, Vice President, Corporate Sustainability, Tata Group “… this book should be read by CEOs, CFOs, CSOs (the new breed of chief sus- tainability offi cers) and everyone else in – or aspiring to enter – the C-Suite.” John Elkington, Co-Founder of Environmental Data Services, SustainAbility and Volans “An essential read for managers and entrepreneurs alike…” Tom Szaky, CEO, Terracycle “This groundbreaking book … is full of useful tips and advice for those look- ing to apply sustainability to their job, whatever job or business that may be.” Liz Maw, Executive Director, Net Impact “… I hope The Sustainable MBA book becomes a prerequisite text for all MBA programmes as sustainability is a key issue that the next generation of managers cannot afford to miss.” Professor Eric Cornuel, Director General & CEO, EFMD (European Foundation of Management Development) “…This book is a timely resource which will enable and empower many sectors of society to ‘fast forward’ their sustainable journeys.” Martin Hancock, Chief Operating Offi cer, Westpac London and Former Chair United Nations Environment Programme Finance Initiative (UNEP FI) ffirs.indd ii 10-10-2013 14:52:37 The Sustainable MBA A Business Guide to Sustainability SECOND EDITION Giselle Weybrecht ffirs.indd iii 10-10-2013 14:52:37 This edition fi rst published 2014 © 2014 John Wiley & Sons, Ltd First edition published 2010 by John Wiley & Sons, Ltd Registered offi ce John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offi ces, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www .wiley.com. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on- demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trade- marks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be sought. Library of Congress Cataloging-in-Publication Data Weybrecht, Giselle. The sustainable MBA : a business guide to sustainability / Giselle Weybrecht.— Second Edition. pages cm Includes bibliographical references and index. ISBN 978-1-118-76063-5 (cloth) 1. Management—Environmental aspects. 2. Business enterprises—Environmental aspects. 3. Sustainable development. 4. Social responsibility of business. I. Title. HD30.255.W49 2014 658.4'083—dc23 2013024208 Cover design: Rogue Four Design Set in 11/15pt ITC Garamond by MPS Limited, Chennai, India Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK, an ISO14001 Environmental Management System Certifi ed Company, using vegetable-based ink and FSC® paper ffirs.indd iv 10-10-2013 14:52:37 Para mis abuelos Elena y Antonio Paulino, por sus vidas llenas de entusiasmo, alegria y entrega a los demas. ffirs.indd v 10-10-2013 14:52:37 ffirs.indd vi 10-10-2013 14:52:37 Contents Preface xv Acknowledgments xix PART I: SETTING THE SCENE 1 Chapter 1: About this Book 3 Who is The Sustainable MBA for and why should I read it? 5 What you will fi nd in The Sustainable MBA 7 How The Sustainable MBA is organized 9 Ideas on how to use this book 9 Planet Earth fact sheet 10 Chapter 2: What is Sustainability? 13 The basics 14 Other defi nitions 16 Sustainable development: A global effort 19 Working together: Stakeholders in sustainability 21 Chapter 3: What does this Mean for Business? 23 The business case 24 The sustainability sales pitch 30 Chapter 4: The Sustainability Journey 33 The journey 34 What does a leading company look like? 37 Chapter 5: Getting Started 41 Step by step 42 Getting past internal excuses 48 ftoc.indd vii 10-10-2013 14:59:34 viii Contents PART II: THE CORE TOPICS 51 Chapter 6: Accounting 55 Why is it important? 56 The key concepts 58 Full or true cost accounting 58 Materiality 61 Key performance indicators 64 Measuring social impact 67 Sustainability in fi nancial statements 68 Integrated reporting 70 Assurance 72 Challenges? 75 Trends and new ideas 76 Bringing it all together 76 Increased disclosure 77 Recognizing unrecognized assets 78 Different forms of reporting 78 Shadow reporting 79 Sustainability reporting 81 Chapter 7: Economics 85 Why is it important? 86 The key concepts 87 Sustainable consumption 88 The commons 90 Externalities 92 Market-based incentives 93 Re-evaluating GDP 97 Emerging markets 99 Challenges? 103 Trends and new ideas 104 Alternative trading systems 104 A new economic model 105 Estimating the cost of inaction 107 From free to fee 108 Valuing future generations 108 Regulatory instruments 109 Environmental valuation 111 Business and the world’s poor 117 Chapter 8: Entrepreneurship 123 Why is it important? 124 The key concepts 125 ftoc.indd viii 10-10-2013 14:59:34 Contents ix Social/environmental entrepreneurs 126 Exploring new business models 129 Making changes from within 130 Generating ideas 133 Funding 136 Challenges? 139 Trends and new ideas 140 Merging and selling 140 Microbusinesses