SUSTAINABLE DEVELOPMENT

Learning
At the end of this lecture, you will be able to:
Objectives
Acquire knowledge of sustainable development.
Understand sustainable challenges and opportunities amidst
world economic and social crises.

Discuss why sustainable development is good for business and

the importance of good leadership in achieving sustainability.

Describe how businesses can be change agents to overcome

barriers to sustainable development.
 Topic
Outline
1. Sustainable Development
2. World Economic & Social Crisis
3. Sustainable Development for Business
4. Importance of Leadership in Achieving
Sustainability
5. Agents to Overcome Barriers to Sustainable
Development
 Sustainable Development

Sustainable development is the idea

that human societies must live and
meet their needs without compromising
the ability of future generations to meet
their own needs. The “official” definition
of sustainable development was
developed for the first time in the
Brundtland Report in 1987.
Sustainable Development
 It is an approach to development
that considers future impacts.
 Sustainable development is about
finding better ways of doing things,
both for the future and the present.
 It is an economic development that
focuses on fulfilling the basic needs of
citizens rather than amassing profits.
 Sustainability considers the long-
term capacities of a system to exist.
Sustainable Development
 Sustainable Development
How did the idea of sustainable development get relevant?

The industrial revolution is connected to the rise of

the idea of sustainable development. From the
second half of the 19th century, Western societies
started to discover that their economic and industrial
activities had a significant impact on the
environment and the social balance.

Several ecological and social crises took place in the

world and rose awareness that a more sustainable
model was needed.
 World Economic and Social Crisis
Also known as 1907 Bankers’ Panic or Knickerbocker Crisis.
Was a US financial crisis that took place when the NYSE fell almost 50%
from its peak the previous year.
Numerous runs on banks and trust companies.

1907
American
’
Eventually spread throughout the nation when many state and local
banks and businesses entered bankruptcy.
Causes
s  Retraction of market liquidity by a number of NYC banks.
Banking  Loss of confidence among depositors.
Crisis Exacerbated by unregulated side bets at bucket shops.
 Triggered by failed attempt to corner the market on stock
of the United Copper Company.
When this bid failed, banks that had lent money to the
cornering scheme suffered runs that later spread to
affiliated banks and trusts.
Lead to the downfall of the Knickerbocker Trust Company
 NYC’s third largest trust
Regional banks withdrew reserves from NYC banks.
 At the time there was no central bank in the US to inject
liquidity back into the market.
By November, the financial contagion had largely ended, only to be
replaced by further crisis.
 World Economic and Social Crisis
Collapse of the Knickerbocker Trust
 Based on a rumor
 Failed bid to corner United Copper Co. stock.
1907
American
’  Bank runs become widespread panic-contagion
JP Morgan engineers plans to stem the panic
 Furnishing a public good
s
Banking  Benefits in a number of ways
 Pledged large sums of his own money, and convinced other NY
Crisis bankers to do the same, to help the banking system
 He had already helped rescue the US Treasury during the Panic
of 1893.
 Morgan and his associates examined the books of the
Knickerbocker Trust
It was insolvent so he did not intervene to stop the
run BUT its failure led to runs on healthy banks.
Congress sets up the National Monetary Commission to “study” the
money and banking systems of the US.
Even the US Treasury was low on funds.
Public confidence in banks needed to be restored.
 World Economic and Social Crisis
Aftermath
 May 1907 - June 1908
 Significant economic disruption
1907
American
’ o Industrial production dropped further than after any
previous bank run.
*Production fell by 11%
s
Banking o Imports fell by 26%
o Unemployment rose to 8% from under 3%
Crisis o Immigration dropped to 750,000 people in 1909 from
1.2 million two years earlier.
 World Economic and Social Crisis
Who did what? In 1922 the ministry ordered increased print runs of
banknotes.

1923
American
’
• The Weimar government decided to subsidize this strike, a decision
that had a devastating impact on Germany’s already depleted
economy.
s • Freidrich Ebert
Hyper Inflation • German Emperor Wilhelm II and the German parliament decided
Crisis unanimously to fund the war entirely by borrowing.
• Believed they would pay off debt by winning a war.
• Hans Luther- German finance minister
• Hjalmar Schacht new prime minister 1923.
• Rudolf Havenstein- president of Reichsbank during hyperinflation.

Where? Germany

Why? Borrowed huge amounts of money which were to be paid by the

enemy after Germany had won the war, Much of the borrowing was
discounted and monetized by the Reichsbank.
 World Economic and Social Crisis
• Reparations placed on Germany after they lost the war - led mark to
depreciate against foreign currencies.
• Ebert had promised the people all types of bounties--increased wages,
reduced hours, an expanded educational system, and new social benefits.

1923
American
’
But all this meant a vastly increased demand on limited production
capacity.
• Prices are rising faster than the rate money was being printed.
s • People were saving their money instead of spending from 1914-1920 bc of
Hyper Inflation war expenses and fear of taxes.
Crisis • The public lost confidence in mark bc of rising price rate- consequence -
billions of hoarded marks started entering the marketplace.
• Price index held stable but the government continued to print more money
• July 22 hyperinflation began- prices had raised 700%, the government still
printing money but at a slower rate, and Reichsbank 100% in debt.
• French - alleging treaty violations - occupied Germany's key industrial
district, the Ruhr. Germany subsidized the occupied companies and
financed an expensive program of "passive resistance." New billions of
marks were printing to finance these heavy new costs. By late 1923, 300
paper mills were working top speed and 150 printing companies had 2000
presses going day and night turning out currency.
• When the crisis hit, 1 American dollar was worth 4.2 trillion German marks
November 1923.
 World Economic and Social Crisis
Motives. In early 1923 German workers embarked on a prolonged general
strike, a protest against the Ruhr occupation.
• hoping to stimulate the economy and pay striking industrial workers in the
Ruhr.

1923
American
’
• Did not want to admit to foreign countries that it could not pay reparation.
Actions. Berlin continued to pump paper money into the German economy,
an approach that devalued banknotes and gave rise to the hyperinflation of
s late 1923.
Hyper Inflation • Urged factories to close down.
Crisis Consequences. Unemployment disappeared but wages dropped badly.
• The economy began to collapse- men got paid 3 times a day, wives would
rush to trade the money for goods but the shops were all going out of
business bc they couldn't obtain goods fast enough to protect their cash
receipts.
• Food riots broke our, unemployment soared.
• The liberal democratic regime was discredited.
• Lifetime savings couldn't buy a subway ticket.
• Adolf Hitler, leader of the small Naziworker'ss party, used this crisis to gain
political standing among far-right groups and wanted to overthrow gov in
1923.
Outcome. “Miracle of Rentenbark”, Deprecation halted and the business
review - Inflation spree ends.
 World Economic and Social Crisis

1923
The
’
s
Financial
Crisis
 World Economic and Social Crisis
The Wall Street crash of 1929, also called the Great Crash, was a
sudden and steep decline in stock prices in the United States in late October
of that year that contributed to the Great Depression of the 1930s.

1929
The main cause of the Wall Street crash of 1929 was the long period of
speculation that preceded it, during which millions of people invested their
’ savings or borrowed money to buy stocks, pushing prices to unsustainable

sWall levels. Other causes included an increase in interest rates by the Federal
Street Crash Reserve in August 1929 and a mild recession earlier that summer, both of
which contributed to gradual declines in stock prices in September and
October, eventually leading investors to panic.

Many factors likely contributed to the collapse of the stock market. Among
the more prominent causes were:
 the period of rampant speculation (those who had bought stocks on
margin not only lost the value of their investment,
 they also owed money to the entities that had granted the loans for
the stock purchases),
 tightening of credit by the Federal Reserve (in August 1929
the discount rate was raised from 5 percent to 6 percent),
 the proliferation of holding companies and investment trusts (which
tended to create debt),
 a multitude of large bank loans that could not be liquidated,
 and an economic recession that had begun earlier in the summer.
 World Economic and Social Crisis
The Great Depression, which began in the United States in 1929 and
spread worldwide, was the longest and most severe economic
downturn in modern history. It was marked by steep declines in
industrial production, mass unemployment and sharp increases in rates

1929
Great
’
of poverty and homelessness. Its social and cultural effects were no less
staggering, especially in the United States, where the Great Depression
represented the harshest adversity faced by Americans since the Civil War.
s
Depression The worst depression ever experienced by the world economy stemmed
from a multitude of causes.
1) The stock market crash of 1929 shattered confidence in the American
economy, resulting in sharp reductions in spending and investment.
2) Banking panics in the early 1930s caused many banks to fail,
decreasing the pool of money available for loans.
3) The gold standard required foreign central banks to raise interest
rates to counteract trade imbalances with the United States,
depressing spending and investment in those countries.
4) The Smoot-Hawley Tariff Act (1930) imposed steep tariffs on many
industrial and agricultural goods, inviting retaliatory measures that
ultimately reduced output and caused global trade to contract.

The economic impact of the Great Depression was enormous, including both
extreme human suffering and profound changes in economic policy.
 World Economic and Social Crisis
The recovery from the Great Depression was spurred largely by the
abandonment of the gold standard and the ensuing monetary expansion.

1929
Great
’
1) Abandonment of the gold standard and currency devaluation enabled
some countries to increase their money supplies, which spurred
spending, lending, and investment.
s 2) Fiscal expansion in the form of increased government spending on
Depression jobs and other social welfare programs, notably the New Deal in the
United States, arguably stimulated production by increasing
aggregate demand.
3) In the United States, greatly increased military spending in the years
before the country’s entry into World War II helped to reduce
unemployment to below its pre-Depression level by 1942, again
increasing aggregate demand.

In most affected countries, the Great Depression was technically over by

1933, meaning that by then their economies had started to recover. Most
did not experience full recovery until the late 1930s or early 1940s,
however. The United States is generally thought to have fully recovered
from the Great Depression by about 1939.
 World Economic and Social Crisis
Third World debt, also called developing-world debt or debt of
developing countries, debt accumulated by Third World (developing)
countries. The term is typically used to refer specifically to the external

1982’ debt those countries owe

multilateral lending institutions.
to developed countries and

ThesDebt Shock The rapid growth in the external debt of developing countries first became
a key issue in the early 1980s. Debt becomes a potential problem only
of Developing when the borrower is unable to generate sufficient funds to meet the
Countries repayments. The issue among developing countries took prominence in
August 1982 when Mexico declared that it could no longer meet the
repayments on its external debt. In the following decades, many of the
poorest countries in the world had to make sacrifices in key areas of public
spending in order to service their debt.

Three key factors led to the emergence of a crisis in Third World debt in
the early 1980s.

 There was a second oil-price shock in 1979 that led to economic

recession in Western economies and put a further strain on the balance
of payments of oil-importing countries in the developing world.
 World Economic and Social Crisis
A shift in economic policy making took place in the West that resulted in
the use of interest rates to control inflation. With inflation set to rise
sharply as a result of the increase in oil prices, interest rates were

1982’ significantly increased in an effort to contain inflation. That rise in global

interest rates dramatically increased the costs of debt servicing for
developing countries.
ThesDebt Shock The recession in the West multiplied the problems for the developing
of Developing world. In the face of the need to raise additional foreign exchange to meet
their debt repayments, one option would have been to increase their
Countries exports. However, the market for what were mostly
primary commodities had declined as a result of the economic downturn in
the West, and that, in turn, depressed prices for the majority of
commodity exports from developing countries.

The initial response to the developing-world debt crisis was an approach

centered on short-term measures to prevent debt defaults. The IMF and the
World Bank provided loans that were conditional on borrowing countries’
following a series of structural adjustment measures. Those were designed
to increase the productivity of their economies in the hope that such
increases would enable them to resolve their problems.
 Why is Sustainable Development
Good for Business
Sustainable development is good
business in itself. It creates
opportunities for suppliers of 'green
consumers', developers of
environmentally safer materials and
processes, firms that invest in eco-
efficiency, and those that engage
themselves in social well-being.
 Why is Sustainable Development
Good for Business
In addition to environmental and social
benefits, companies that incorporate
sustainable development into decision
making process can reap significant
financial advantages and attract more
interest from investors, which is a key
to long-term profitability.
Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Environmental Sustainability
-It is about making responsible decisions that will reduce
your business' negative impact on the environment. It is
not simply about reducing the amount of waste you
produce or using less energy, but is concerned with
developing processes that will lead to businesses
becoming completely sustainable in the future.
Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Environmental Sustainability
Investment in renewable energy is a growing momentum among big
organizations, with many building their own solar and wind farms in
order to phase out the consumption of fossil fuels and reduce carbon
emissions.
Businesses are expected to lead in the area of environmental
sustainability as they are considered to be the biggest contributors
and are also in a position where they can make a significant
difference.
 Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Sustainability and Employment
Sustainable employment is the ability of the employee to provide added value for an
organization now and in the future, they are willing to pay their workers’ salaries and
benefits that allow them to live a sustainable life.

This builds loyalty within the organization, benefiting the company through increased
productivity and creativity, as well as lower levels of frauds and mismanagement. When
organizations take measures to make their employees healthier, happier and thus they
will be more effective and genuinely interested in contributing to the success of the
business. Satisfied and healthy employees are very important for the company’s success.
 Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Sustainability in Business Practices
Sustainable employment is the ability of the employee to provide added value for an
organization now and in the future, they are willing to pay their workers’ salaries and
benefits that allow them to live a sustainable life.

This builds loyalty within the organization, benefiting the company through increased
productivity and creativity, as well as lower levels of frauds and mismanagement. When
organizations take measures to make their employees healthier, happier and thus they
will be more effective and genuinely interested in contributing to the success of the
business. Satisfied and healthy employees are very important for the company’s success.
 Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Sustainability Investing
Sustainable investing is broadly defined as the practice of
using environmental, social and governance (ESG) factors when making
investment decisions about which stocks or bonds to buy. It directs investment
capital to companies that seek to combat climate change, environmental
destruction, while promoting corporate responsibility. Sustainable investment
also aimed to “adopt progressive ESG practices that may enhance value.
 Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Sustainable Development Goals
The Sustainable Development Goals (SDGs), also known as the Global Goals, were
adopted by the United Nations in 2015 as a universal call to action to end poverty, protect
the planet, and ensure that by 2030 all people enjoy peace and prosperity.

The 17 SDGs are integrated—they recognize that action in one area will affect outcomes in
others, and that development must balance social, economic and environmental
sustainability. Countries have committed to prioritize progress for those who're furthest
behind. The SDGs are designed to end poverty, hunger, AIDS, and discrimination against
women and girls.
Concepts applied in Terms of the
Environment, Employment and
Business Practices:
Therefore, the incorporation of sustainability
principles into business practices is becoming
mainstream. Companies who don’t follow
this tendency are likely to lose credibility
from investors, as well as opportunities to
generate revenues and the chance of being
an example to society.
 IMPORTANCE OF GOOD LEADERSHIP IN ACHIEVING
SUSTAINABILITY

Leaders, rather than

providing a solution, need to
“create opportunities for
people to come together and
generate their own answers.”
IMPORTANCE OF GOOD LEADERSHIP IN ACHIEVING
SUSTAINABILITY

• The performance of any country, in seeking to

achieve SDGs, to a large extent depends on
leadership. Effective leadership translates into
prudent public policy formulation and
implementation, as well as good public service
delivery, to meet the needs and aspirations of the
citizenry.
• The world needs effective leadership for
sustainable development and this leadership
requires an inner process, in which a leader must
first be grounded in an understanding of self and a
relational view of the world, in order to effectively
work with others to make change.
 IMPORTANCE OF GOOD LEADERSHIP IN ACHIEVING
SUSTAINABILITY

To achieve the SDGs, leadership at both the

national and organizational levels must adopt
leadership styles that engender a sense of
shared responsibility toward the attainment of
the goals, is focused on the long-term, and thus
would establish systems that would persistently
ensure the pursuance of these goals in the
future. Leaders must understand the need for
collective efforts at both the national and
organizational levels, be willing to learn and
finally exhibit and promote ethical behaviour and
standards.
IMPORTANCE OF GOOD LEADERSHIP IN ACHIEVING
SUSTAINABILITY

The achievement of sustainable development is

observed as a cyclical relationship with planning and
implementation and monitoring of the strategies as
key responsibilities of the leader. Finally, strong
leadership, a coherent implementation plan and
engagement of all government departments and
diverse stakeholders are necessary to ensure that
the Sustainable Development Goals are achieved at
national and international levels.
 HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

Looking at the barriers that impact an organisations

ability to efficiently and effectively become sustainable.

Common barriers to change toward

sustainability:
• Competing priorities of managers – profit and growth
prioritised over environment and human capital

• Organisational systems not up to managing the task

• Lack of capital to invest in new ways of design and

managing operations

• Organisational culture not open to new ideas and

innovation

• Economic and financial priorities of business

overshadow human sustainability issues.
HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

Change Agent

Every organizational change, whether

large or small, requires one or more change
agents. A change agent is anyone who has
the skill and power to guide and facilitate the
change effort. Change agents may be either
external or internal. The success of any
change effort depends heavily on the quality
and workability of the relationship between
the change agent and the key decision
makers within the organization.
(Lunenburg, 2010)
 HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

Here’s what the experts say about overcoming

them:

1. Use sustainability as a unique selling point

Consumers are increasingly looking to buy
ethically sourced, sustainable products, especially in
the food sector. Brands should use their sustainability
as a point of difference to encourage sales.

2. Think long term

One of the main cultural barriers across society is
the focus on short-term key performance indicators
(KPIs) and budgets. A sustainable business needs to
encourage all those it works with to look at, and
reward, long-term results.
 HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

3. Communicate differently
People become involved with sustainable businesses for
a variety of reasons. For a graduate, it might be the
interesting work or the higher purpose. For an investor, it
might be the unique nature of the business and its growth
potential. Sustainable businesses should, therefore, tailor the
way they communicate with each group, depending on their
interests. “Be clear about what’s important to each, and also
what sort of language and approach will be most effective,”
says David Symons, director of sustainable consulting
business WSP Group.

4. Embed sustainability throughout your organization

Changing organizational structures or creating roles,
such as sustainability managers, might only act as a bolt-on,
when a complete change in business culture and managerial
priorities is needed.
HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

5. Improve management skills

Symons says that sharing knowledge from the experts
to every member of staff is one of the biggest challenges to
achieving full sustainability. It is difficult, he says, to find the
opportunity “to give all our design teams a practical
knowledge of our future world, so that they can design to it”.
Good management, however, could make this change
happen.

6. Take risks
Many sustainable businesses have taken risks by
investing in systems and technologies that are not yet
mainstream. While it is easier for new businesses to set up in
a sector with more developed systems working and paying
for themselves, it is much tougher for early adopters to raise
the finance for relatively unproven technology
 HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

7. Disrupt old business models

For Ramon Arratia, the sustainability director of
flooring business Interface, true sustainability comes
in the form of Tesla – the American automotive and
energy storage company. Arthur Kay, the chief
executive of bio-bean, agrees, saying that “disruption
has the greatest impact when it interfaces with and
improves existing infrastructure or attitudes”.

8. Network
There are a number of regional initiatives, such as
Venturefest in Bristol, that give smaller – and startup
– companies the opportunities to meet, network with
investors and establish like-minded and sustainability-
orientated companies, says Mohammed Saddiq,
managing director of GENeco.
HOW BUSINESSES CAN BE CHANGE AGENTS TO OVERCOME
BARRIERS TO SUSTAINABLE DEVELOPMENT

9. Support other sustainable businesses

Many businesses tell a pleasing
sustainable story when they sell their own
products, but they might not buy into the
sustainability stories presented by other
companies.

“Continuing to meet and share

experiences even in tough times can inspire
and encourage businesses to keep working
towards their goals,” said Alastair
Fischbacher, chief executive, Sustainable
Shipping Initiative. “It’s important to keep
sharing successes.”
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https://youmatter.world/en/definition/definitions-sustainable- development
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%20to%20change%20toward,of%20design%20and%20managing%20operations
SUSTAINABLE DEVELOPMENT