The Business Sustainability Typology (Dyllick & Muff 2016) offers a practical approach to evaluate different levels of integration of sustainability in business. As such, it provides an answer to the difficult question of what business sustainability actually means and how to differentiate between beginning, intermediate and advanced levels in business practice.
The framework classifies companies to different types based on their efforts to move from “business-as-usual” to “true business sustainability”, and thus provides a framework to engage in the transformation of business. The typology for business sustainability is further explained in the following video.
CLARIFYING THE MEANING OF SUSTAINABLE BUSINESS
Business Sustainability Typology (BST)
Sustainability in business has become a buzz word. But what does it actually mean? And how do existing models measure up to the sustainability challenge that business and society are facing? While sustainability management is becoming more widespread among major companies, the impact of their activities do not reflect in studies monitoring the state of the planet and society. What are the reasons for this “big disconnect”? And how can business make an effective contribution to resolving the economic, societal and environmental challenges we are collectively facing? When is business truly sustainable? The True Business Sustainability Typology attempts to answer these questions.
In a first phase of sustainability engagements the relevant concerns considered by business mostly shift from purely economic concerns to include social and environmental concerns related to sustainability issues faced by society. As the values created remain firmly attached to the generation of shareholder value, this is not more than a “refined shareholder value management”. We call this Business Sustainability 1.0.
In a more advanced phase the value created by business shifts from shareholder value to a broadened value proposition including people, planet, and profit. What results is a “management of the triple bottom line” which we call Business Sustainability 2.0.
In a most advanced form the organizational perspective shifts from an inside‐out perspective, with a focus on the business, to an outside‐in perspective, with a focus on society and the sustainability challenges it is facing. This shift results in the associated redefinition of strategies being driven by sustainability challenges thus reframing the business concerns and business models, as well as the associated redefinition in values created. What results from this is Business Sustainability 3.0 or “true business sustainability” as the most advanced form of business sustainability. The focus shifts from reducing the negative impact of business to making a positive impact in critical and relevant areas for society and the planet. Only true business sustainability holds the promise to overcome the big disconnect between the sustainability issues society is facing and business contributions.
TRUE BUSINESS SUSTAINABILITY TYPOLOGY CLASSIFIES ORGANIZATIONS IN 4 CATEGORIES:
Business as usual
Purely economic view of the firm and the business processes.
Typical economic concerns are pursued to produce economic value
Shift from purely economic concerns to include social and environmental concerns
Refined shareholder value
Business Sustainability 2.0
Shifts from shareholder value to a broadened value proposition including people, planet, and profit.
Management of the triple bottom line
Business Sustainability 3.0
Shifts from an inside‐out perspective, with a focus on the business, to an outside‐in perspective, with a focus on society and the sustainability challenges it is facing
Reframing the business concerns and business models,
Business Sustainability 1.0
We have compared these three types in terms of value creation, primary corporate attitude, primary focus, strategy, market definition and positioning, products and services, governance and leadership, types of CEOs, types of companies, sustainability implementation, processes, reporting and stakeholder influences. To me, the exciting thing about this typology is to envision the three shifts that are involved in advancing from one type of Business Sustainability to the next. As illustrated in Table 1, these are:
First shift: “The relevant concerns considered by business shift from economic concerns to three-dimensional concerns (social, environmental and economic) related to the sustainability challenges we are collectively facing.
Second shift: The value created by business shifts from shareholder value to a broadened value proposition including all three dimensions of the triple bottom line (people, planet, profit).
Third shift: The shift in fundamental organizational perspectives from an inside-out perspective, with a focus on the business, its activities and interests, to an outside-in perspective, with a focus on society and the sustainability challenges it is facing. This shift results in the associated redefinition of strategies being driven by sustainability challenges thus reframing the business concerns (what), as well as the associated redefinition in values created from the triple bottom-line to a positive contribution to solving sustainability challenges and the creation of value for the common good.” (Dyllick & Muff 2013)
Having analyzed many industries with students in this past year to understand what type of company fits in which typology and what kinds of examples there are for each of these types by industry. The more work we do on this, the more we are encouraged to develop an atlas of organizations as a guideline and for provide some signposts and milestones for the professional community of sustainability experts.
Examples of the different types of Business Sustainability
Each of these phases of becoming a truly sustainable business holds its unique challenge and one can easily question if a stock-quoted company can indeed make it until B.S. 3.0 or if such a vision needs to be in the DNA of a company from its foundation. If you are interested in more about this, we have studied the extensive organizational challenges and consequences in the following domains:
a) Ownership: financing, shareholders, time-horizon and value distribution
b) Governance: stakeholder engagement, measuring, transparency and reporting
c) Strategy: business models, products and services
d) Culture: leadership, innovation and organizational behavior
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TRUE PRODUCT SUSTAINABILITY TYPOLOGY CLASSIFIES PRODUCTS IN 3 CATEGORIES:
Product Sustainability 1.0
From selective improvements to holistic improvements
Product Sustainability 2.0
From better products to good products
Product Sustainability 3.0
From product value to societal value