Greenwashing, redwashing: How are these two megatrends, social sustainability and digital transformation, influencing each other? Two experts wrote a book about it. Fragment.
Prof. Dr. Esin Bozyazi is Professor of Business Management and Entrepreneurship at the University of Management in Mannheim. Prof. Dr. Dilek Kurt is an expert in digital transformation. The book is shared by two pioneers “Sustainable Social Development and Digital Transformation” written. The question is why startups and companies often neglect both sustainability and digitization. Fragment.
Why are business models so important in the debate about social sustainability in the transformation process? It can already be seen today that companies are undergoing a fundamental structural change. Both megatrends of digitization and sustainability must converge in the corporate DNA to change the future. If they are only partially and not fully taken into account in different departments (IT and Sustainable Development Management), we will not be successful. To ensure success, business models open up new freedom and redesign opportunities for companies that are currently undergoing the structural changes and stiffness that is often associated with it. Therefore, this chapter covers options for designing business models:
- How can companies defend themselves when their markets change more and more drastically due to disruptive technologies?
- How can companies design their value chain in times of climate change to attract and retain key stakeholders (e.g. environmentally sensitive customers, employees)?
- What challenges (risks and opportunities) are associated with the effects of climate change in the digital transformation?
In answering these questions, we observe three basic types of company responses:
No reaction to changes. Traditional profit-driven management measures seem to be reaching their limits more and more. Many business models based on this common approach are no longer in line with the requirements and megatrends of the 21st century, they are simply no longer relevant (Bungard 2015, pp. 3ff.).
In the old economic approach, companies try to generate more profits for themselves and see themselves as victims of transformation. Everyone was surprised by the turmoil in the market and they face enormous challenges in adapting their business models, which are necessary for survival (Bungard 2015, p. 4). Examples include some classic companies such as tour operators such as TUI or AIDA Cruises, multiple retailers, banks etc. Under the AIDA Sustainability Course, for example, it wants to be carbon neutral by 2040 (AIDA Sustainability Course, bd). In this context, the seriousness of firms should be examined. Many companies in this category are involved in “greenwashing”.
Innovators with a CSR approach
Conditional response to change. The corporate social responsibility approach deals with both digitization and sustainable development, albeit partly in the form of a compromise approach that balances sustainable development with profitability: Modern companies generate more through the use of technology through increased efficiency and productivity. as a donation and / or as a contribution to social events.
Companies try to avoid harm to nature and people, but continue to accept harm to society and the environment when necessary, as they focus on the economic aspect. Some innovations result from cooperation between producers and consumers and from the improvement of resource use in production. Unfortunately, fundamental shift and sustained macroeconomic impact are still missing. This category includes most companies in Germany with a CSR department and those with “innovation laboratories” and / or their own foundation. For example, Deutsche Telekom SG (37% of women on the board), Merck KGaA and METRO AG are the three German companies with the best digital CSR performance in the benchmark in the first quarter of 2021. In this context, however, it means above all that they presented their CSR activities best on their websites. There is something special for many companies in Germany sustainable social development still in its infancy: if we look at the percentage of women in management positions in the 100 largest German companies, which is only 13.7 percent, exemplary CSR activities will be put into perspective. In this context, we speak of ‘washing in red’: social sustainability is not taken seriously, but rather presented on paper.
Nextpreneurs with a holistic approach
A real answer to change. Nextpreneurs are entrepreneurs with innovative and sustainable business models, prepared for the future. They follow a holistic approach and contribute to the consolidation of the economy and the sustainable development of society. In this way, they manage to identify opportunities and potential for transformation. You will master Sustainable Business Transformation. Examples of other entrepreneurs are Yvon Chouinard, who made Patagonia the most remarkable textile producer in the world (Wirtschaftswoche 2014a), Jacques-Philippe Piverger, who, together with the startup MPOWERD, supplies solar lamps to developing countries, and Sissy Müller, who supports the energy transformation with green crowdfunding. (Wirtschaftswoche 2014b).
Companies with innovative and, at the same time, holistic business models are characterized by an ecological, social and economic focus on added value. In this way, they manage to simultaneously and effectively solve social and ecological problems, bringing profit at the same time (Ahrend 2016). For example, Patagonia has developed an overall sustainable business model that not only brings its sales of around $ 1 billion, but is also recognized by experts as one of the world’s leading companies in the field of sustainability, according to a study by GlobeScan and SustainAbility (2020) classified (GlobeScan 2020).
In this chapter, we focus on two megatrends of “sustainable development and digitization” as key factors influencing the change of business models and the associated paradigm shift in management. These megatrends are increasingly impacting the world of work, requiring new ways of thinking and behaving, and forcing new entrepreneurial, holistic thinking.
Thanks to the Nextpreneurs approach, companies are making a positive impact on the economy, society and nature while digitizing. The term social entrepreneurship is also used in this context, although different definitions and other terms can be found in the literature. In particular, in the startup ecosystem, other terms are used for this, such as social impact, social enterprise, social business, sustainable business, etc. It would be beyond the scope of this paper to distinguish these terms from each other. Figure 3.2 shows social entrepreneurship classified between NGOs and traditional companies (Bozyazi 2018).