Sustainability as disruptive innovation and profit driver

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FELIPE CALDERON

After living in Canada for over 20 years, I found myself in mid-September standing before 26 experienced professionals from China, Japan, India, Mexico, and the Philippines who were enrolled in the Executive MBA program at the Asian Institute of Management.

My first class was on Financial Management. After the introduction about my career in banking that spanned Canada, Hong Kong and the Philippines, my students looked to be bracing themselves for a long, dry lecture on the unending quest for profitability.

Instead, I spoke to them about an emerging trend: companies adopting sustainable business practices. Sustainability focuses on integrating the triple bottom line (i.e., people, planet, profit) in business strategy and practice and I explained that a sustainable business can generate profit in ways that benefit people while not harming the planet.

At this point, my students had the same skeptical expression on their faces that my family had when I announced that I would pursue a PhD in Switzerland with a research focus on sustainable banking, while continuing to work full-time in Vancouver. (I had told my family that this would entail travelling at least 15 times between Vancouver and Switzerland to attend classes and conduct research over five years.)

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After a few seconds of uncomfortable silence, squirming and rolling of eyes, one student finally remarked that sustainable business may be popular in Vancouver but the Philippines is not ready for it.

Having anticipated such a comment, I showed the class a slide on local companies that have adopted sustainable practices. Toothpaste manufacturer Lamoiyan Corporation supports an international organization that performs corrective surgery on children with a cleft palate. The company also uses recycled wastewater, which is treated and disinfected for non-commercial use in their offices.

Then there is Imperial Homes, a builder of solar-powered, prefab houses using renewable materials. Such local examples encouraged several students to share the sustainability practices of their own employers. At that point, I became an observer as the discussion took on a life of its own!

Sustainability Has Gone Mainstream
In addition to teaching at the Asian Institute of Management, my mandate includes further enhancing the integration of sustainability and climate change into the curriculum, research and operatio ns at AIM, thus building awareness for students, staff and faculty.

This is AIM’s commitment as signatory to the UN’s Principles of Responsible Management Education. Also called PRME, its purpose is to transform business schools into organizations able to educate future generations of globally responsible professionals, managers, and leaders.

Along with over 650 signatories worldwide, AIM is part of a global effort to raise the profile of sustainability in business schools through responsible management education. As educators, we recognize our critical role in shaping the mindset of our students so they can become powerful sustainability advocates.

Sustainability is no longer limited to early adopters. It is now a mainstream business practice. The principles of sustainability can be found in marketing, leadership, finance, supply chain management, and product development.

The international accounting firm PricewaterhouseCoopers acknowledges that “sustainability is fast becoming the lens through which a business is judged by its customers, workforce, society, governments and even its investors.”

As the International Finance Corporation reports, companies that address environmental and social issues generate more profit by achieving higher growth and cost savings, as well as improving brand, reputation and stakeholder relationships.

Sustainability is considered a perfect example of disruptive innovation. The pressure for more responsible management will drive businesses to find innovative ways to deal with environmental and social issues while maintaining financial viability.

The growing popularity of sustainability reporting is evidence of the value of disclosing non-financial information (i.e., environmental, social, economic). Reliance on reporting purely financial results is slowly becoming a thing of the past.

I have now been back in my home country, the Philippines, for over two months. I have the highest respect for the resilience of traffic-weary students, staff, and faculty. They put in a good day’s work while maintaining their sense of humor and camaraderie. I believe the same resilience will carry us through our journey toward sustainability and responsible management education.

Felipe Calderon, CPA, CMA, PhD recently returned to the Philippines after working for the Business Development Bank of Canada in Vancouver for 22 years. He is an Assistant Professor in the Department of Finance, Accounting and Economics at the Asian Institute of Management. E-mail FCalderonMT@AIM.EDU for more information or visit AIM.edu.

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