ESG Advanced Environmental – Session 6:

Organisational strategy &

execution
Martin de Jong and Teresa Brose
8 December 2023
Picture by masterzphotois on iStock
Agenda
Time Topic
9.00 h • Welcome and reflections
• Feedback on work on assignment
9.05 h 1. What is (ESG) organisational strategy & execution?
9.35 h 2. Readings: Serafeim (part I)
10.00 h Break (10 minutes)
10.10 h 2. Readings: Serafeim (part II)
10.30 h 3. Organisational change
11.20 h Break (10 minutes)
11.30 h Final assignment
11.40 h 4. Evaluation: in-class and 10 minutes to complete the feedback form
11.50 h Goodbye, good luck, and a photo moment

2
Context
Product Project Organisation

• Internal monitoring
• Controlling
• Steering

LCA EIA ISO14001

EPD MKBA (NL) E P&L ESG ratings

Cradle 2 Cradle Natural Capital CDP
External
certifications Eco labeling TCFD/TNFD
and reporting True Price EU Taxonomy
(examples) CSRD
3
 1. What is (ESG) organisational strategy & execution?

What is organisational
ESG strategy and
execution? And why is
it important?
4

Picture by Kelly Sikkema on Unsplash

1. What is organisational ESG strategy & execution?
Organisational ESG strategy and execution involve aligning business
practices with environmental stewardship, social impact, and ethical
governance to create long-term value while minimising negative impacts
on the environment and society.

Source:

5
1. What is organisational ESG strategy & execution?
Organisational ESG strategy and execution involve aligning business
practices with environmental stewardship, social impact, and ethical
governance to create long-term value while minimising negative impacts
on the environment and society.

Source:

6
 33% 7

Prof. George Serafeim

1. What is (ESG) organisational strategy & execution?
ESG and Financial performance of businesses: 1.272 different scientific studies (captured in a meta-analysis)

Positive Neutral Mixed Negative

58% 13% 21% 8%

0% 20% 40% 60% 80% 100%

Source: NYU/Stern 2021 8

8
1. What is (ESG) organisational strategy & execution?
ESG and Financial performance of businesses: 1.272 different scientific studies (captured in a meta-analysis)

Positive Neutral Mixed Negative Why in the optional readings?

• Innovation rate
• Risk management & BCM
• Cost control
58% 13% 21% 8%
• Products and services fit for the
future
• Better image/ reputation
• …

0% 20% 40% 60% 80% 100%

Source: NYU/Stern 2021 9

9
Value of assets under management

(almost)
50%

10

10
Value of assets under management

11

11
BlackRock’s Larry Fink  10 trillion USD in 2023

• “We focus on sustainability not because we're environmentalists but because we are
capitalists and fiduciaries to our clients.”
• Every company and every industry will be transformed by the transition to a net zero
world. The question is, will you lead, or will you be led?
• Our conviction at BlackRock is that companies perform better when they are deliberate
about their role in society and act in the interests of their employees, customers,
communities, and their shareholders.
• I believe the decarbonizing of the global economy is going to create the greatest
investment opportunity of our lifetime.”

13
Imagine you are a CEO and BlackRock is one of your
shareholders

• What do you feel?

• What do you think?
• How will you act?
“Will you go the way of
the dodo, or will you be a
phoenix?”
14
Pushback from 19 different US State Attorney’s

15
Forces: Investors

60% + 29%

67% + 26%
Source: ESG Global Study (Capital Group and Harvard 2022) 16

16
2. Readings: Serafeim

Picture by masterzphotois on iStock

2. Readings: Serafeim
1. Strategic ESG

2. Accountability

3. Purpose &
culture

4. Change for
execution

5. Transparency &
investor relations

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 18
2. Readings: Serafeim
• Differentiation from competitors, common practice vs. strategic practice
1. Strategic ESG
• Financial material (in the sense of relevant) ESG and material from an impact perspective

CO2
reduction

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 19
2. Readings: Serafeim
2. Accountability • C-level compensation

Driven by purpose
At Philips, our purpose [strategy] is to improve people's
health and well-being through meaningful innovation.
We aim to improve 2.5 billion lives per year by 2030,
including 400 million in underserved communities.

As a technology company, we – and our brand licensees

– innovate for people with one consistent belief: there’s
Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020;
always a way to make life better.
https://www.results.philips.com/publications/ar22/downloads/files/en/PhilipsReportoftheRemunerationCommittee2022.pdf?v=20230303084113 20
2. Readings: Serafeim
2. Accountability • Dedicated C-level position, e.g., Chief Value Officer

The rise of the CVO (chief value officer)

Sirka Hintze  from CFO to CVO and CFO (growing, protecting and
optimising value in every regard and for all stakeholders).

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 21
2. Readings: Serafeim
3. Purpose & • Purpose-driven cultures in combination with excellent communication
culture • True commitment (by internal management) and a flat organisation

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 22
10 minutes!

Picture by a_crotty on iStock

2. Readings: Serafeim
4. Change for
• Evolution of organisational ESG
execution

3. Efforts to innovate and grow

2. Efforts to improve operating

efficiency
1. Efforts to reduce risk and
compliance with regulations & laws
Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 24
2. Readings: Serafeim
4. Change for
• Ambitious goals
execution

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 25
2. Readings: Serafeim
5. Transparency & • Communicate and engage directly with investors
investor relations • Change the perception of value: Impact Weighted Accounts (impact measurement, CSRD etc.)

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 26
2. Readings: Serafeim
• Differentiation from competitors, common practice vs. strategic practice
1. Strategic ESG
• Financial material (in the sense of relevant) ESG and material from an impact perspective

• C-level compensation
2. Accountability
• Dedicated C-level position, e.g., Chief Value Officer

3. Purpose & • Purpose-driven cultures in combination with excellent communication

culture • True commitment (by internal management) and a flat organisation

4. Change for • Evolution of organisational ESG

execution • Ambitious goals

5. Transparency & • Communicate and engage directly with investors

investor relations • Change the perception of value: Impact Weighted Accounts (impact measurement, CSRD etc.)

Source: Serafeim, G., Social-impact efforts that create real value, HBR, 2020 27
 3. Organisational change

Voettekst 28

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3. Organisational change
10 steps for successful organisational change
1. Assessment of problems, risks, and
6. Empowering others to act
opportunities

2. Selecting and supporting a guiding change 7. Developing and promoting change-related

coalition knowledge and ability

3. Formulating a clear and compelling vision for 8. Identifying short-term wins and using them as
sustainability reinforcement of change progress

9. Monitoring and strengthening the change

4. Communicating the vision
process

10. Institutionalising change in company culture,

5. Mobilising energy for change
practices, and management succession

Stouten, J., Rousseau, D.M., Cremer, D.D., 2018. Successful organizational change: integrating the management practice and scholarly literatures. Acad. Manag. Ann. 752–788. https://doi.org/10.5465/annals.2016.0095. Inspired
29
by Sancak, I.E.; Change management in sustainability transformation: A model for business organizations, Journal of Environmental Management 330 (2023)
3. Organisational change - A model and the ESG context (1/2)
Possible challenges and
Change step Action (level)
dilemmas

1. Assessment of problems, risks, and • Facts & data • Availability and reliability
opportunities • Comprehensive analyses • Knowledge and experience of teams

2. Selecting and supporting a guiding change • Strategic

Not creating a powerful enough guiding coalition
coalition • Operational

3. Formulating a clear and compelling vision • A goal that can be broadly shared
for sustainability • Purpose-based

4. Communicating the vision Use the holy 3: Visible, tangible, and credible

• Planning the actual change incl. RACI

5. Mobilising energy for change
• Prep managers

Stouten, J., Rousseau, D.M., Cremer, D.D., 2018. Successful organizational change: integrating the management practice and scholarly literatures. Acad. Manag. Ann. 752–788. https://doi.org/10.5465/annals.2016.0095. Inspired by Sancak, I.E.; Change
management in sustainability transformation: A model for business organizations, Journal of Environmental Management 330 (2023) 30
3. Organisational change
Optional reading

The board has increased the focus on

sustainability, but the gap remains.

 Directors (71%) understand risks and

opportunities but are less comfortable with
challenging execution.

31
3. Organisational change - A model and the ESG context (1/2)
Possible challenges and
Change step Action (level)
dilemmas

1. Assessment of problems, risks, and • Facts & data • Availability and reliability
opportunities • Comprehensive analyses • Knowledge and experience of teams

2. Selecting and supporting a guiding change • Strategic Not creating a powerful enough guiding coalition
coalition • Operational (remember the Vodafone video)

3. Formulating a clear and compelling vision • A goal that can be broadly shared • Not removing obstacles to the new vision
for sustainability • Purpose-based • To which extent will the SDGs help?

• Internal competition with other visions

4. Communicating the vision Use the holy 3: Visible, tangible, and credible • Leaders are not showing environmentally
friendly behavior

• Planning the actual change incl. RACI Employee resistance (see Kubler-Ross change
5. Mobilising energy for change
• Prep managers curve)

Stouten, J., Rousseau, D.M., Cremer, D.D., 2018. Successful organizational change: integrating the management practice and scholarly literatures. Acad. Manag. Ann. 752–788. https://doi.org/10.5465/annals.2016.0095. Inspired by Sancak, I.E.; Change
management in sustainability transformation: A model for business organizations, Journal of Environmental Management 330 (2023) 32
3. Organisational change
Execute change - The change curve

Source: https://growingorganisations.com/where-are-you-on-the-change-curve/ 33
3. Organisational change
Execute change - The change curve

Rebuilding

Status Quo

Acceptance
Disruption

Source: https://growingorganisations.com/where-are-you-on-the-change-curve/ 34
3. Organisational change - A model and the ESG context (2/2)
Possible challenges and
Change step Action (level)
dilemmas
• Empowering employees with time and knowledge
How to create a shared responsibility with an
6. Empowering others to act • Establish a central sustainability unit driving the roadmap from
integral approach?
step 5

7. Developing and promoting change-related

Exercise: form 2 groups of 5

knowledge and ability

8. Identifying short-term wins and using them

as reinforcement of change progress Team 1: Complete the actions of step 7.
9. Monitoring and strengthening the change Team 2: Add the possible challenges and
dilemmas.
process

10. Institutionalising change in company

culture, practices, and management
succession
You have 10 minutes!
Stouten, J., Rousseau, D.M., Cremer, D.D., 2018. Successful organizational change: integrating the management practice and scholarly literatures. Acad. Manag. Ann. 752–788. https://doi.org/10.5465/annals.2016.0095. Inspired by Sancak, I.E.; Change
management in sustainability transformation: A model for business organizations, Journal of Environmental Management 330 (2023) 35
10 minutes!

Picture by a_crotty on iStock

3. Organisational change - A model and the ESG context (2/2)
Possible challenges and
Change step Action (level)
dilemmas
• Empowering employees with time and knowledge
How to create a shared responsibility with an
6. Empowering others to act • Establish a central sustainability unit driving the roadmap from
integral approach?
step 5

Short-term incentives, shortage of expertise,

7. Developing and promoting change-related • Learning (knowledge & skills)
capital-budgeting limitations, and investor
knowledge and ability • Innovation as driver
pressure (Eccles & Serafeim 2013)

• Sustainable change will take more than 5

8. Identifying short-term wins and using them • Need for success
years
as reinforcement of change progress • Balance short-term and long-term wins
• Declare the victory too soon

9. Monitoring and strengthening the change • Go back to step 7 and 8 Reporting and ESG assurance is not the
process • Reporting objective

10. Institutionalising change in company

• Taking sustainability as an opportunity instead of a risk More on this in the Advanced Governance
culture, practices, and management
• Sustainability is the new norm Course
succession

Stouten, J., Rousseau, D.M., Cremer, D.D., 2018. Successful organizational change: integrating the management practice and scholarly literatures. Acad. Manag. Ann. 752–788. https://doi.org/10.5465/annals.2016.0095. Inspired by Sancak, I.E.; Change
management in sustainability transformation: A model for business organizations, Journal of Environmental Management 330 (2023) 37
3. Organisational change

Reflection question:
To what extent is an
organisational change for
sustainability different from
another theme?

Picture by Mauro Gigli on Unsplash

3. Organisational change
Where are you on the red line?

Source:
https://www.researchgate.net/publication/331619213_Citizen_Science_During_t
he_Flint_Michigan_Federal_Water_Emergency_Ethical_Dilemmas_and_Lessons_
Learned/figures?lo=1 39
Final assignment
• It is an essay (Word!) with 2,500 words.
• The tasks will be based on the previous work you have done in the sub-
assignments and reflects additionally the content of week 5 and 6.
• You have a bit more than five weeks' time (deadline is 14 January
2024, 23.59 h).
• Instructions are available under “ESG Advanced Environment" under
"Assignments" and “Final assignment“.
• Upload on Canvas to “ESG Advanced Environment" under
"Assignments" and “Final assignment“.
• You might be invited to a 15-minute Teams call to discuss your
assignment.
• Grades are "pass" and "fail". In case you get a "fail", you have to resit
the assignment.
• If you have questions, please contact Teresa or Martin.
Good luck! 40
Questions
&
answers
41
4. Evaluation

42

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In-class evaluation

One thing you liked. One thing you would

like us to improve.
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Survey Amsterdam Business School: Feedback form (10 minutes)
Access to the feedback form:

1. Go to Canvas.

2. Go to “Modules”.

3. Scroll down to “Qualtrics Questionnaire”.

4. Click on the link.

This questionnaire is time-locked and only open

from 09:00 until 17:00 on 8th December.

44
Sources for slides 45