Advanced Management Control and Sustainable Development Lecture 1: WHAT IS SUSTAINABILITY? Prof. Angelo Riccaboni University of Siena Department of Business and Law angelo.riccaboni@unisi.it

Agenda What is Sustainability? Importance of Sustainable Development Key Dimensions of Sustainability Challenges of Integrated Sustainability Implementation of Integrated Sustainability Integrated Governance Hybrid Business Models for Integrated Sustainability The role of Integrated Management, Measurement and Reporting Systems Key Elements in the Implementation of Integrated Sustainability

Lecture 1: What is Sustainability? Sustainability - refers to the need to develop the sustainable models necessary for both the human race and the planet Earth to survive. Sustainable Development – refers to the development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED, Bruntland Report, 1987) Sustainable Development embodies: environment society economy integration understanding acting on the complex interconnections between

Lecture 1: What is Sustainability? Dimensions of Sustainable Development Environmental sustainability Economic development Social inclusion

Lecture 1: What is Sustainability? Sustainability is not only a complex and elusive notion, but is a concept which is fraught with potential contradictions. Contradictions between sustainability dimensions: Social performance requires freedom and flexibility from financial constraints and business logics, as to find solutions to social problems. The pursuit of social performance should aim at creating value primarily for the community rather than for individuals, thus financial performance works in the opposite direction. Social and financial contradiction Effective environmental management lead to increased production efficiency, cost reduction, improved market reputation with benefits for financial performance. Environmental performance requires for high costs of compliance, huge investments and may limit opportunities for growth and for competitive improvement at the detriment of financial performance. Environmental and financial contradictions A new solution for a more effective management of environmental resources may conflict with social needs. A new solution to social problems may conflict with the need to preserve natural resources Social and environmental contradictions

Strategy & Business Models Management. Measurement & Reporting systems Lecture 1: What is Sustainability? Implementing integrated sustainability: key levels Integrated Governance Strategy & Business Models Management. Measurement & Reporting systems

Integrated Governance Lecture 1: What is Sustainability? Performance Risk Knowledge Compliance Integrated Governance Strategy & Business Models Management. Measurement & Reporting systems Integrated Governance

Lecture 1: What is Sustainability? Integrated Governance Strategy & Business Models Management. Measurement & Reporting systems Focus on the value creation for society. Need for financially sustainable models Focus on the value creation for the company. Need for social and environmental performance(beyond compliance)

Lecture 1: What is Sustainability? Integrated sustainability Plan Do Check Communicate Integrated Governance Strategy & Business Models Management. Measurement & Reporting systems Integrated performance management and measurement systems- Business planning Integrated reporting beyond compliance Enacting processes of hybridization and integration among social, environmental and financial performance dimensions Continuous monitoring and learning to avoid “mission drifts”

Key elements in the implementation of integrated sustainability Lecture 1: What is Sustainability? Key elements in the implementation of integrated sustainability The integrated governance system-whose implementation requires effective management of compliance, financial, social and environmental performance; risk management and knowledge management; The definition of adequate (hybrid) business models, which are requested to address social, financial and environmental performance dimensions simultaneously Integrated management, measurement and reporting systems, which may allow an integrated approach to sustainability through planning, execution, monitoring and communication