By Kieran Sullivan
This blog post is an excerpt from a manuscript (of the same name) accepted for publication in the Journal of Cleaner Production. The full-text paper can be downloaded for free here until 26th December 2017.
Coming into force in January 2016, the UN Sustainable Development Goals (SDGs) established 17 goals and 169 associated targets, indicators, and metrics of sustainability. The SDGs have relevance across a wide range of sectors, providing practical guidance for public and private organizations. Often lauded as a factor that contributes to socially and environmentally unsustainable behaviour, business has a critical role to play in the delivery of the SDGs if they are to be successful. However specific examples of activities that directly and indirectly support the delivery of the SDGs remain unclear. The principles of industrial ecology (IE) have been highlighted as methods that can integrate sustainability into business practice, and have the potential to provide the breakthrough tools and methods that can deliver sustainable business activity. While IE includes tools, methods and principles that are relevant to business management, there is limited research that explicitly explores the relationship between IE and a broader agenda of business strategy for sustainable development.
To address this gap, we (Dr Sebastian Thomas from the University of Melbourne, A/Prof Michele Rosano from Curtin University’s Sustainable Engineering Group, and I) set about exploring the link between IE (both principles and real-world examples), business strategy/competitive advantage, and sustainable development as defined by the SDGs. To do this, we used keyword searches in online databases to collect 290 peer-reviewed articles that discussed these three concepts. A traditional literature review of this database would have been a time-consuming endeavour and of little value for examining the conceptual synergies and crossovers. Instead, we conducted our analysis using text analysis software called Leximancer. Put simply, Leximancer reads document sets and produces a map of key concepts, with their relationships indicated by their proximity or distance on the map. By using the software to ‘read’ the database of 290 papers, and create a map of the key concepts and relationships, we were able to draw conclusions about the data set and subsequently about the synergies, crossover and gaps that exist between IE and strategic management concepts in pursuit of the SDGs. A schematic of the research process is shown in the figure below.
Major themes that emerge from the Leximancer analysis of the SDGs are ‘countries’, ‘sustainable’, and ‘development’, which is unsurprising considering the context for which they were written. However, when these concepts are examined in greater detail, relationships that imply the role of business begin to emerge. For example, the concept ‘sustainable’ is strongly associated with ‘innovation’, ‘employment’, ‘technological’ while the term ‘development’ is associated with ‘knowledge’, ‘account’, and partnership’, terms that have relevance for business as well as in governance. In the stable concept map (see figure below), ‘implementation’ is always positioned on the outside, with few linkages, indicating that the SDG text does not discuss this idea to any great extent. By seeding the Leximancer analysis of the data set with the key concepts extracted from the SDG text, we were able to identify strengths and weaknesses in using IE as a strategic tool for business to promote the SDGs. Of the 28 concepts identified, all were present in the IE data set, indicating the crossover between the SDGs and the principles that underlie IE, as well as its implementation.
We also identified three broad areas where IE principles can lead to a sustainable competitive advantage whilst contributing to the delivery of the SDGs: resource efficiency, innovation, and climate change adaptation and mitigation (see table below). By reducing the reliance of a business on finite resources, the exposure of the business to changing markets is minimised, while also reducing the impact of the business itself. One of the major tools in practical IE implementation (and broader engineering practice) is a mass and energy balance, which allows for the identification of waste and inefficiencies in a system and driving continuous improvement. Innovation as a source of competitive advantage is a major element in the existing strategic management literature, and is also a major element of IE thinking and practice. For example, targeting inefficiencies and waste streams can lead to new and innovative products, markets and even business models. Finally, using IE principles can play a role in the mitigation of the impacts of business activities on climate change, and firms’ adaptation to those impacts. The business logics of mitigation and adaptation actions are clear: operational improvement, anticipation of climate change regulations, access to new sources of capital, better risk management, improved corporate reputation, new market opportunities, and enhanced stakeholder engagement. Our study demonstrated the utility of IE principles in facilitating these outcomes.
The traditional business practices fundamental to 20th century economic development have largely ignored the natural environment and society in which they have operated. As we move further into the 21st century - a period in which human activities are the primary drivers of planetary environmental and climate dynamics - it is evident that business leaders cannot operate in isolation, but must alter their view of the firm to one in which they recognise their critical role in a larger social-ecological-industrial system. A shift in strategic direction for business is required, one that identifies the competitive advantages associated with environmentally and socially responsible business practices through the science of IE, its focus on sustainable industrial systems and its interconnection with modern business strategy. The analysis presented in our paper contributes to the growing body of evidence that proactive sustainability practices are strategically advantageous for firms. The broad central principles of IE have the potential to contribute to the achievement of the international SDGs. IE provides a basis for a further evolution in thinking where the firm exists as part of, and because of, the social-ecological system, and competitive advantage is found through the combination of internal competencies and from the full consideration of external drivers.