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S1V0
In this first introductory video, we want to focus on our current debates on management and consider how we need to incorporate our management practices into sustainable development. What are we going to learn in this session? In this session, we want to analyze the current challenges that organizations face today in their environments and understand how management has traditionally been and how it might look in the future.
To sum up, in our video, we want to shed light on how we develop a common understanding of what management must address as future challenges and how we can incorporate today’s business practices into a sustainable future.
Now, let’s look at the topics we have in this first video session. We will use Shell as an example. What is Shell doing, or what has Shell done in the past? First, it is a producer of fossil fuels, and thus it has contributed to the climate problems we already know. Shell is a large oil and gas producer, extracting thousands of barrels of oil per day. Altogether, the oil Shell is responsible for has already produced more than a million tons of CO2 equivalents.
Shell was also involved in large natural disasters. Think of the Brent Spar incident back in 1995, when a big oil platform sank in the North Sea, or more recently, oil spills in the Niger Delta. At the same time, Shell is highly profitable—it reached a record income from oil in 2022, earning more than 4 billion US dollars. It is also highly professionalized, using five different business units and operating various firms worldwide, which can be seen as a standard management practice.
We also see that Shell is incorporating what we call environmental and social governance (ESG) factors into its decision-making, aiming to act more responsibly toward the environment, the people who work there, and society at large. Shell is also investing in renewable energies, trying—at least seemingly—to change how it delivers energy.
Despite these efforts, Shell is still criticized for being a very active player in the fossil fuel industry, for lacking transparency, and for its oil exploration activities and heavy lobbying for fossil fuels. In 2021, a court in The Hague sentenced Shell to reduce its emissions, indicating that judges see Shell as not doing enough to change its business practices.
Shell can be seen as a typical example of a traditional company that must change and wants to change, but faces critical questions about how to do so. We ask ourselves how we can understand how managers and organizations act in the current economic, ecological, and societal landscape.
In this session, we will discuss four key questions:
Our session is divided into several videos. In the first video, we will look at sustainable development challenges—asking what ecological, economic, and societal situations the world faces and how these relate to organizational change. In the next video, we will explore management in general: what management is, the processes behind it, and what we need to learn about innovation and strategies.
In the fourth video, we will look at organizational responsibility: What are organizations responsible for today, given the environment and the broader society? Finally, we will examine how organizations act against the backdrop of sustainable development challenges and why many may not be as proactive as they could be.
To sum up, in this first video session, we will look at the challenges that society and organizations face in today’s business environment. Then we will consider organizational responsibility—what it is that organizations are responsible for—and the need for change as organizations decide where they should go next.
Thanks for watching this video.
S1V1
Kadus, planet Earth—what is the present condition of our planet, and what might the future look like for all its inhabitants? This is what we are focusing on in this video. We want to understand the origins and effects of climate change and the further challenges that might accompany it. Furthermore, we are reflecting on the implications for organizations, innovation, and societies at large. Finally, we want to understand the long-standing research on environmental issues and how it developed over time.
Looking, for example, at the average global temperature from the 1850s to today, we can see that the global temperature on average has risen and increased dramatically since the 1960s. Today, we cannot deny this effect anymore because the increase is now well above 1.0 °C. What might cause this increase? Looking at the concentration of the three main greenhouse gases, you can clearly see that the rise from the 1990s to the 2020s has been dramatic, and it is evident this is a major driver of climate change, especially since the Industrial Revolution.
Having understood the past and the causes of climate change, we will now look at its future. Here, we are borrowing from the IPCC and have taken some of their analyses for global warming scenarios from 1.5 °C up to 4 °C. On this slide, we see various outcomes of climate change. On average, in these scenarios, an increase of 4 °C is possible, but this is just a global average. The temperature increase will be distributed unevenly. For example, in a 4 °C scenario, certain regions in South America (and elsewhere) could experience increases up to 7 °C, while other regions might see a less severe rise. The same holds true for other effects of climate change.
Taking a look at soil moisture, for instance, we see that in Central Africa, there might be a strong increase in wetness. This is linked to changes in precipitation under these temperature-increase scenarios. If you look at the 1.5 °C scenario, some regions show rising precipitation, which intensifies with increasing temperature. Some regions get hotter and also experience more rainfall over time.
We might ask, “What is causing this?” We have seen that the rise in temperature is linked to increasing greenhouse gas concentrations in the atmosphere. These emissions per capita occur mainly in developed countries with large industrial sectors. Industrial and economic activity drives per capita emissions around the globe.
Breaking down greenhouse gas emissions by sector, we see that industry is the major contributor, and transportation is the second largest (23.9%), followed by electricity and heat production, agriculture, and buildings. Within industry and transportation, activities like fossil fuel extraction, chemical production, iron and metals manufacturing, passenger cars, and aviation have a high impact on greenhouse gas emissions. Clearly, there is a lot of innovation potential in these sectors to reduce emissions and drive a sustainable future.
So far, we have talked about climate change and greenhouse gases as factors driving climate change and its potential outcomes. However, discussing climate change alone is not enough, so let’s look at other global developments happening at the same time.
Population is growing, especially in certain regions such as Africa, India, and China. Meanwhile, many regions and countries do not have enough nutrition. On one slide, we see the average supply of calories per day, and in a group of the least developed countries, the supply is not above what an average individual needs. Moreover, “supply” here includes food waste, so the real nutrition situation is even more dramatic, given that population growth will increase food demand in the coming years. Additionally, more people will require medical care, and many already face challenges in accessing proper treatment.
One complex slide shows the Human Development Index (HDI) on one axis (ranging from 0 to 1) and per capita CO₂ emissions on the other. With a higher HDI, emissions also tend to increase. The United Nations suggests that an HDI above 0.8 reflects very good living conditions, but we also aim for per capita CO₂ emissions under about 2.5 tons per year for the planet to handle. This threshold doesn’t factor in the needs of nonhuman life forms, so the actual value should be lower. Only countries that meet the HDI target (above 0.8) while remaining under this CO₂ threshold can be considered truly sustainable. Hence, there is a strong drive toward innovations to achieve real sustainability for our global society.
What does all this mean for organizations? We are now facing raw material shortages, a war for talent, environmental degradation, innovation pressure, and many other challenges forcing organizations to adapt and incorporate these changes into their daily business. Social issues, limits on resources, and the need for affordable medical solutions create “mission orientation” for organizations. Higher food demand requires sustainable food innovation. Political and societal instability can also hinder business innovation. These social issues must be incorporated into the future of businesses.
On the environmental side, organizations must contend with shortages of raw materials, adjust production processes to reduce harm, and meet heightened regulatory requirements for sustainability. In many cases, such changes are difficult to implement. Overall, companies face enormous pressure, but each finds its own way to address these challenges.
None of this is truly new, as there have been decades of research on sustainability and climate-change drivers, along with many global initiatives. Let’s look at a brief history of how environmental research began. A 1912 newspaper article already noted that coal consumption affects the climate by increasing CO₂ in the atmosphere. Rachel Carson’s book Silent Spring (1962) is often considered a key starting point of modern environmental consciousness, describing how pesticides harm insects (including bees) and thus lead to a “silent spring.”
The first report that gained worldwide attention was The Limits to Growth (1972), led by Dennis Meadows at MIT for the Club of Rome. It examined planetary boundaries and the capacity for economic activity. In 1987, the Brundtland Report (by the World Commission on Environment and Development) provided a foundational definition of sustainable development: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Since then, research has advanced significantly, and there have also been government initiatives and global agreements. In 1992, the UN Framework Convention on Climate Change was approved, marking a major step in addressing climate issues. Starting in 1995, the Conference of the Parties (COP) has met annually to discuss climate change mitigation and adaptation. Major milestones include the Kyoto Protocol (1997, entering into force in 2005), COP 15 in Copenhagen (2009), and the Paris Agreement (2015), which was a clear milestone in fighting climate change. COP 26 (2021) in Glasgow and COP 28 (2023) in Dubai continued the process, though some countries have withdrawn from certain agreements.
One critical milestone in recent years has been the development of the Sustainable Development Goals (SDGs). These 17 goals aim to address issues like poverty, hunger, and inequality, while also fighting climate change (Goal 13) and promoting partnerships worldwide (Goal 17). Each SDG includes specific targets and sub-goals.
What did we learn in this video? We looked at how climate change is driven by human consumption of fossil fuels and economic activity, threatening our livelihood. We also explored societal challenges accompanying climate change, such as population growth and unequal distribution of resources. From a historical perspective, there have been many initiatives and much research, but it is clear that more must be done. Thank you for watching this video, and stay tuned for our next ones.
S1V2
What is management, and what are traditional ways of management? What are the tasks and goals of management? This is what we will explore in this video. We want to understand the general purpose of management and examine the principles and goals that guide organizations and their management. Furthermore, we will reflect on the implications of these principles for organizations and their structures. Finally, we aim to understand the context of different management levels that must be taken into account.
Why Do Organizations Exist?
From an economic perspective, competition is the driving force behind decision-making in organizations. For organizations, the overarching goal might be maximizing the value for those who own the organization—often referred to as shareholder value. Because companies in a market face competitive pressure, they need to adjust to market circumstances and competitors.
In essence, the organization that survives is the one producing the product customers demand at the lowest price while covering its own costs. Successful companies tend to be imitated by others. For example, in the beverage industry, whenever Coca-Cola or Pepsi introduces a new flavor or a low-calorie drink, the other quickly offers a similar product. Over time, routines, processes, and organizational structures across the industry become more similar due to this imitation.
Adapting to Change
Because organizations must constantly adapt to change, we ask: What is management, and how can it ensure organizations survive in a changing environment? What is the manager’s responsibility in this regard?
There are many definitions of management. One definition (1986) states:
“Management is the organ of society specifically charged with making resources productive by planning, motivating, and regulating the activities of persons toward the effective and economical accomplishment of a given task.”
Another definition (1995) says:
“Management is the process of planning, organizing, leading, and controlling the efforts of organizational members and the use of other organizational resources in order to achieve stated organizational goals.”
Summing up, management involves being goal-oriented, focusing on effectiveness, planning, regulating, emphasizing organization, seeking profitability, and motivating people.
A famous doctrine by Milton Friedman suggests that only individuals have responsibilities, and that businesses’ main responsibility is to make as much money as possible for their shareholders. This idea leads to an emphasis on integrating shareholder value into organizational activities at all levels. Various measures and indicators exist (from the CEO down to team level) to monitor how well an organization pursues shareholder value.
Balancing Efficiency and Effectiveness
Organizations must balance two core principles:
The difference between input and output determines a company’s profit or value. In this sense, organizations strive for:
Thus, management is about profitability (maximizing shareholder value) by choosing the right things to do and doing them in the right way.
What Is an Organization?
Managers work in firms, and each firm has an organization—its specific way of arranging parts and people. We also use “organization” to refer to a company itself, as well as the process of ordering individual activities (i.e., procedures within a company). When we organize, we define structures and processes that regulate how employees behave. This standardizes actions, ensures compliance with rules, and may involve sanctions or rewards.
Establishing organizational structures is a central management tool to ensure efficiency and effectiveness.
Three Layers of Management
Management pursues three primary aims or layers:
These layers move from the external/future perspective (normative) to the internal/present focus (operative).
Tasks Within Management
We have discussed various dimensions, such as planning, organizing, and motivating, all of which can span normative, strategic, or operative levels. Management also ensures information flows between these levels and across different activities.
At the higher (normative and strategic) levels, managers must:
Thus, normative and strategic management shape how the organization and its individuals behave.
Key Takeaways
Thank you for watching this video. We look forward to seeing you in the next one.
S1V3
Do organizations have responsibilities beyond benefiting their shareholders? Do they need to consider other stakeholders in their field, and how can they incorporate sustainability? That’s what we will explore in this video. We want to understand that an organization’s responsibility goes beyond satisfying shareholders. We will also look at various stakeholders of organizations and the importance of accounting for the “triple bottom line” of sustainability—profit, ecology, and social sustainability. Finally, we will understand the concept of regenerative businesses and how this differs from being merely a sustainable organization.
How Do Organizations Contribute to Social Welfare?
A 2007 McKinsey study, with around 2,600 respondents, examined how organizations contribute to or harm the common good. Some organizations help the common good by creating jobs (about 65% agreed) or supporting the local economy through tax revenue (around 35%). Others preserve the environment, adding further benefits.
However, certain organizations harm the common good by polluting or damaging the environment or by treating employees unfairly. People perceive both positive and negative impacts from organizations, reflecting the range of ways companies can affect social welfare.
CEOs’ Perspectives on Responsibilities
Another study looked at CEOs and board members of German companies. Only 11% agreed that a company’s only responsibility is to maximize profit, a view that has declined from 2005 to 2015. Meanwhile, 97% agreed that businesses should act in ways that account for social and environmental concerns, and many felt companies should engage in community projects.
When asked whom they feel responsible for, these leaders named employees, customers, and shareholders, but also mentioned the broader community, the location or region where they operate, and even suppliers and government. This shows they recognize responsibilities that go beyond pure profit-making.
Stakeholders, Not Just Shareholders
Companies now increasingly factor in various stakeholder groups: not only owners and shareholders but also direct business partners (suppliers, customers), employees, investors, activists, trade unions, or trade associations. These groups can influence or be influenced by a company’s practices and decisions. Therefore, organizations must interact openly with multiple stakeholders and consider their societal and ecological impact.
What Is Sustainability?
Sustainability has several definitions. In a general sense, it refers to something long-term, permanent, and systematic—nothing specifically environmental. Narrowing it down to ecology, it implies strengthening, preserving, and lasting over time. Going further, sustainability involves balancing resource consumption and reproduction, ensuring we do not deplete resources faster than they can be replenished.
A widely cited definition comes from the 1987 Brundtland Commission report, which says:
“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
It emphasizes both intragenerational justice (meeting the needs of all people in the present) and intergenerational justice (preserving resources for future generations).
Triple Bottom Line: Profit, People, Planet
John Elkington’s concept of the “triple bottom line,” introduced in Cannibals with Forks, says businesses should account for three dimensions:
In corporate philosophy, this might look like:
Corporate Social Responsibility (CSR)
CSR is about integrating social interests into business, sometimes sacrificing profit in the social interest. It aims for joint value creation, going beyond legal requirements to identify, prevent, and mitigate a firm’s negative impacts on society. There are four levels of CSR:
Pathways to Sustainability
Businesses can become more sustainable in different ways:
Measuring Sustainability Efforts with ESG Scores
“Environmental, Social, and Governance” (ESG) criteria help measure sustainability and CSR efforts.
ESG scores show how a company implements its sustainability strategy in practice.
Moving Beyond Sustainability to Regenerative Business
Some argue that “sustainable” (i.e., net zero harm) may not be enough because much damage has already been done to our planet. Instead, companies should strive to become regenerative, which means actively restoring resources and improving ecosystems. This approach involves:
Some companies, such as Decathlon, have declared a vision of responsible growth that benefits people and the planet—beyond just being sustainable.
Shifting Motivations for Sustainability
A McKinsey survey of corporate employees shows that while improving a company’s reputation remains a reason for addressing sustainability, alignment with society and core values is gaining importance. Cost-cutting as a motivation has become relatively less critical, while a genuine commitment to societal well-being has grown.
Key Takeaways
We look forward to seeing you in our next video.
S1V4
We all know how important sustainability is for organizations. Yet why do some organizations still struggle to incorporate sustainability into their management and business models? That’s what we will discuss in this video. We will introduce different pathways to becoming sustainable, and we will look at one example from Germany—the so-called Energiewende—as a path toward a sustainable future for the country. Furthermore, we will explore the organization’s role as a major contributor and key lever for sustainability. We will also analyze why some organizations fail to adapt and why internal and external pressures hinder their progress toward the triple bottom line.
Emission Pathway and the Paris Agreement
Looking at the emission pathway toward the Paris Agreement, from the 1960s until the early 2000s there has been an increase in CO₂ emissions per year. We need to consider ways to cut this trajectory and reduce CO₂ emissions. Scientists have outlined various approaches to limit global warming to 1.5 °C or at most 2.0 °C. Each country and each player must decide on the path to achieve these reductions.
Germany’s Energiewende
Germany, for example, uses the term Energiewende to describe its energy transition. A 2024 diagram from the German Environment Agency shows good progress in renewable energy usage for electricity production. However, there is still significant potential for improvement in the heating, cooling, and transportation sectors. Organizations play a major role here, because they are responsible for a large share of emissions through their products and processes, and they can act as key levers to achieve the triple bottom line of sustainability.
But if organizations need to act quickly to meet the Paris Agreement targets, why does the transition often seem slow? Why aren’t companies changing more swiftly?
Why Is It Hard for Organizations to Change?
On a broad level, many factors can drive change, such as new competitors, changing markets, globalization, technological advances, social pressure (e.g., Fridays for Future), demographic shifts, political pressure (e.g., the European Green Deal), or economic turmoil (e.g., the 2008–2009 financial crisis).
Despite these forces, companies often find it difficult to change. Research by Michael Hannan and John Freeman on organizational ecology offers insights. It adapts ideas from population ecology and Darwinian evolution, suggesting that certain factors make an organization resistant to change.
They propose three phases in organizational evolution:
Internal and External Constraints (Inertia)
Established organizations often face inertia—they are slower to reorganize than the environment changes. This can arise from:
Because these constraints make change difficult, a fast-evolving environment (e.g., sudden societal demand for sustainability) can overwhelm established routines and institutions.
Stakeholder Influence on Organizational Inertia
External stakeholders can also slow organizational change:
Key Takeaways
Companies must balance these diverse interests when making the transition to sustainable organizational change.
Thank you very much.
S2V0
What makes organizations economically viable? That’s what we will discuss in this video. Our learning objectives are:
Apple as an Example
Let’s consider Apple, arguably a very successful company:
Why Are Some Organizations Economically Successful?
Apple raises the question: What makes organizations economically viable and successful? We will discuss four key questions:
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