Lesson 3 - Sustainability Thinking #3: Long Term Thinking

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Do curso por University of Colorado System

First Steps in Making the Business Case for Sustainability

10 ratings

University of Colorado System

First Steps in Making the Business Case for Sustainability

10 ratings

Curso 1 de 4 em Specialization Become a Sustainable Business Change Agent

The Business School at the University of Colorado Denver wants to help you become a change agent for sustainable business. We hope that with the skills and concepts you gain from this specialization that you will help your business reduce its social and environmental impact. Being a change agent is hard. It takes courage and passion and knowledge. To implement change also requires being able to make the case for that change in terms that people in your company or organization respond to and understand. After completing the specialization, you will be able to: * Discuss the threats and opportunities that major global trends such as climate change present to businesses; * Identify ways a company can improve its environmental and social performance; * Evaluate and compare companies’ sustainability activities and products; * Develop a business case for implementing sustainability investments; * Identify key criteria of green businesses and product design; * Be a change agent in your organization; * Understand emerging topics in sustainable business, including those in the public policy space. We're very excited about offering this MOOC specialization and hope it gives you the first step toward learning about and taking action to make the places you work and the products you buy more sustainable. Sustainable business changes daily with new products, innovations and ideas, so you will be important in keeping the class current. We look forward to learning from you as you take this green journey! ______

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Sustainable Thinking

The Business School at the University of Colorado Denver wants to help you become a change agent for sustainable business. We hope that with the skills and concepts you gain from this specialization that you will help your business reduce its social and environmental impact. Being a change agent is hard. It takes courage and passion and knowledge. To implement change also requires being able to make the case for that change in terms that people in your company or organization respond to and understand. We begin our journey to being a change agent by introducing sustainability thinking. Sustainable business requires a new way of seeing and thinking about how business operates. By beginning to think sustainably you will be better able to identify ways that your company can improve and explain those changes to decision makers. We will look at 6 ways of thinking related to sustainability: • Life-Cycle Thinking • Long-Term Thinking • Circular Thinking • Resilience Thinking • Systems Thinking • Context Thinking

Sustainability Thinking Intro (Start Here)1:26

Lesson 1 - Sustainability Thinking #1: Life Cycle Thinking7:40

Lesson 2 - Sustainability Thinking #2: Circular Thinking6:49

Lesson 3 - Sustainability Thinking #3: Long Term Thinking7:37

Lesson 4 - Sustainability Thinking #4: Resilience7:44

Lesson 5 - Sustainability Thinking #5: Systems Thinking7:10

Sustainability Thinking #6: Context-Based Thinking8:44

Assignment Intro: About the B-Lab Assessment - Oxana Trotsenko7:11

Conheça os instrutores

John Byrd
Senior Instructor
Managing for Sustainable & Finance

Hi, I'm John Byrd and

in this lecture I want to talk about three topics related to long term thinking.

First, I want to discuss the problem with short term thinking.

Then, we'll talk about how long-term thinking is different and better.

And finally, I want to introduce the idea of intergenerational equity or

fairness to the future.

So let's begin.

Companies are often criticized for having very short-term horizons.

That is, decisions are based on how

those decisions will affect stock price next quarter or even next week.

Some people call this myopia, or shortsightedness.

And it's shortsighted because some decisions that look

good in the next few months might not help the company in the long term.

In fact, they can do the company harm.

Let me give you a couple examples.

There's some evidence that as CEOs get close to retirement

that they reduce spending on research and development so profits are higher.

Now this may result in higher pay for the CEO but

it doesn't position the company for success in the future.

Another example is a company that doesn't deal very fairly with employees or

suppliers or customers.

In the short run, that may save a little bit of money.

But over time the resentment that the company generates

with those stakeholders can be costly.

Suppose that you postpone paying a supplier.

You keep saying the check is in the mail.

But it never is.

In the future, you may need raw materials in a hurry.

And that supplier may not give you special treatment or

they may even close your account.

It's the same with employees.

If employees don't feel like they're being treated fairly, they may look for

another job or not be as innovative and productive as they could be.

The ones that are going to be the first to leave are probably the best employees,

because they can get hired most easily.

You can't have a successful company in a competitive economy if you lose

your best talent.

Short term decision making often sacrifices

higher value in the long term for lower but more immediate gratification.

When we begin to use long term thinking in our decision making

we almost always find that being nice is the best policy.

You probably learned this in Kindergarten and it still holds true.

If we treat all of our stakeholders, suppliers, customers, employees fairly,

then, in the future we will attract and retain the most talented employees.

Have suppliers that will help us when we need special service.

We're going to live in healthy communities and have a thriving environment.

But how does this helps shareholders and publicly treated companies?

Managers are supposed to work on behalf of shareholders.

How does shareholder benefit if the company is nice to all the other

stakeholders?

Well, we'll do a little thought experiment.

If you don't know exactly when you're going to sell the shares that you own in

a company, how do you want managers to make decisions?

It should be pretty apparent that you want managers to try to increase the long term

value of the company.

So that at any point and time if you sell your shares,

there value will be relatively high.

On average long term value creation based on fair dealings with stakeholders

will produce a higher value than cycles of short term manipulation.

This is because a short term approach can harm some relationships with

key stakeholders that'll eventually result in value losses.

So long term thinking, which means establishing and nurturing

good relationships with stakeholders almost always creates more value for

everyone including shareholders.

This doesn't mean that we go overboard and

pay suppliers more than the price they're asking or give huge amounts of money to

community charities or ask employees to only work a few more hours a day.

It means we treat people fairly and honestly.

So they're happy to have continue transactions with our company.

Repeated transactions, knowing you'll see a person or do business with

somebody many times in the future leads to a much different behavior and

much better behavior than one time or one-off exchanges.

In small towns, you always see people over and over.

So you make decisions as if you're in a small town.

Let's move to the next topic, intergenerational equity or

fairness to the future.

Intergenerational equity asks the question what sort of an obligation do we

have to future generations and what does that imply about how we live today?

These questions are very important when thinking about sustainability,

the whole notion of sustainability, is that maintaining or sustaining some

level of activity or quality of life for an extended period, like centuries.

If we don't concern ourselves about future generations, I guess we can consume and

pollute as much as we want now because we don't care about what we leave for

our children and our grandchildren.

And this is certainly one possible opinion,

but it's not one that most people would agree with.

Most people are concerned about the future and

the quality of life that their children will have.

What endowment should we leave for our children and all future generations?

Think of an endowment as the resources, the technologies,

the infrastructure, the institutions and the knowledge

that give societies foundation as well as the health and wealth of individuals.

We also pass on financial and environmental debts.

Some argue that the entire package

should be identical to the endowment to current generation inherited.

This is called strong form sustainability.

It implies no drilling for oil or mining for ore since those are non-renewable.

It also ignores the constant innovation that goes on that enhances the future.

A much more reasonable approach is called weak form sustainability.

That says we should provide the capabilities to have a quality of life

at least as good as the ones we have now.

That means that in some areas technology and innovation can substitute for

natural resources so we need to use resources carefully.

We need to continue to invest and maintain infrastructure.

And we need to create new technologies that will help fill in for

the resources we consume.

We want our kids to look forward to a wonderful future.

All of this means that when companies make decisions,

they need to look into the future and

make sure their decisions don't create impact for future generations.

We have to be nice to the future as well as the people we deal with today.

Maybe the best summation of this whole notion of fairness to the future is this

wonderful Native American statement.

Make your decisions on behalf of the seven generations coming, so

that they may enjoy what we have today.

What about the seventh generation?

Where are you taking them?

What will they have?

That's from Oren Lyons.

So we've talked about the problems with short term thinking,

the value of long term thinking and being nice and

fair, and the importance of intergenerational equity.

Next we're going to talk about resilience thinking.

Thanks.

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