The case describes the challenges around sustainability within the Energy industry using Royal Dutch Shell (Shell) as an example. Two key challenges for Shell are explored: How to meet the demand for energy sustainably and profitably, and how to gain a licence to operate from society. Further, the case presents some negative views of Shell in the media; describes what is happening in adjacent industries, the investor community and with policy makers that will impact the energy transition; and concluded with what Shell, other oil and gas companies and policy makers are doing in relation to the sustainability and the energy transition. Lerning objective: The case can be utilized to accomplish several learning objectives: 1) How sustainability topics affect business strategy, and vice versa; 2) How to manage through a major industry transition (using PESTEL to assess "new" vs "old" industry); 3) How the media and external communications policies impact strategic decision making; 4) Overall awareness of sustainability.
An increasing number of organizations are subscribing to sustainability, but how can sustainability performance be measured? Unlike financial performance, which can be assessed through accounting techniques that aggregate various numeric indicators, sustainability performance is more complicated. For financial institutions the situation is even less straightforward - while traditional sustainability frameworks, such as the triple bottom line (TBL), are concerned with the direct inputs and outputs of an organization, financial institutions have indirect impacts based on the loans and financial instruments they offer. Triodos Bank, a pioneer in the sustainability banking sector since it was founded in the Netherlands in 1972, has been grappling with this issue. Peter Blom, Triodos Bank's CEO, defined sustainable banks as "value-driven banks" that "prioritize people over profits" by "lend[ing] to and invest[ing] in organizations that benefit people and the environment." Transforming this definition of sustainable banking into a tangible performance measurement framework was a significant challenge facing managers at Triodos Bank. From aiding loan officers in their decision-making process to determining how successful Triodos Bank was at fulfilling its mission, measuring sustainability performance was a daunting yet critical challenge.The case assesses Triodos Bank's various initiatives, along with the current best practices for measuring sustainability performance. While some frameworks have been developed to cater to the financial sector, particularly the investment sector (which has many similarities to the sustainable banking sector), no existing frameworks effectively convey the sustainability performance of Triodos Bank.The case therefore provides an excellent vehicle for students to develop a sustainability performance measurement framework for Triodos Bank.
In 2005, Patagonia launched the Common Threads Recycling Program. The goal was to reduce the number of products Patagonia customers purchased through a two-fold effort. The first part was to encourage customers to fix damaged clothing. Patagonia began publishing do-it-yourself repair guides to assist customers in repairing their clothing. To provide an alternative for customers who were unable or unwilling to repair their clothing themselves, Patagonia charged an affordable fee to have garments shipped to their repair facility. The second aspect of the Common Threads program was to create a second-hand market for Patagonia garments that did not fit or that were no longer worn. Patagonia collaborated with eBay to develop a storefront and also created an online marketplace on its main website. Patagonia also offered to cover the shipping costs for garments that were beyond repair, which Patagonia would then break down and repurpose. To promote its Common Threads initiative, Patagonia created "Worn Wear," a program that highlights thousands of videos and pictures from customers around the globe who treasure their worn, patched-up Patagonia garments with pride. While most companies would encourage customers to repeat their purchases, Patagonia prides itself and its customers on waste-free purchases. Patagonia's next step was to launch a campaign in 2011 to dissuade customers from purchasing clothing that they did not really need. On the busiest weekend for retailers in the US, a 2011 New York Times ad from Patagonia featured a picture of one of Patagonia's highest grossing fleece jackets below the words: "DON'T BUY THIS JACKET." Underneath was a detailed description that defended Patagonia's rationale based on the negative environmental impacts caused by consumerism. Despite Patagonia's efforts, sales increased by approximately 30% in the nine months following the ad. The case concludes with the business dilemma facing Chouinard: What should Patagonia do?
How should organizations balance pressures to decrease short-term costs at the expense of long-term profitability? How "long" is the long-term? What is the cost of innovation? These are the questions that CEO Mary Barra must face when leading General Motors (GM) into the 21st century. GM became the world's first mass-produced electric vehicle retailer when it released the "EV1" in 1996. However, GM canceled the program in 2002, citing high costs, a limited market for electric vehicles, and the lack of technology available to make high-performance vehicles. The emergence of Tesla Motors in 2006 and its exponential growth in the electric vehicle market has proven otherwise. Ironically, Tesla Motors began with the same technology that GM already had access to with only a fraction of GM's resources. The rapid rise of Tesla Motors in the electric vehicle market and the subsequent bankruptcy of GM suggest that GM made the wrong decision to abort its electric vehicle program in 2002. However, it is unclear how GM should proceed. In 2015, the company will launch its first all electric vehicle since the EV1, the Chevrolet Spark. To what extent should GM enter the electric vehicle sector? Tesla Motors is already scheduled to release a more affordable car in the next two years and has been proving its autonomous driving technology. Other automobile manufacturers have also released all-electric vehicles, including BMW, Nissan, Ford and Toyota. Hydrogen fuel cell technology is also on the rise and may be a promising alternative to electric vehicles. Lastly, the Asian markets are leading the demand for automobiles. Place yourself in the shoes of Mary Barra. What should GM's strategy be in order to regain its stature as the world's leading automobile manufacturer? Learning objectives: When organizations are first established, their success largely depends on their value proposition and unique offering to the market as they achieve their vision. But then what? Often times, large or
Although most cases on the sustainability of supply chains focus on environmental impacts, this case assesses the role of producers and the social impact of value chains by focusing on the argan oil sector. As scientific processes proved the significant health and beauty benefits of argan oil in the 1990s, demand stirred in European and North American Markets. Dr. Zoubida Charrouf founded the first argan oil cooperative in 1996 to provide jobs to the under-privileged female producers in rural Moroccan areas. While cooperatives paid three-times more than their private competitors, women still earned a fractional share of the final retail value of the oil they worked tirelessly to produce. The question addressed in this case is: how can producers gain a greater percentage of value in the argan oil sector? Is ethical labeling, such as Fair Trade, the solution? Alternatively, could the value chain be transformed more significantly by increasing the role of certain actors (such as producers) while eliminating some actors altogether? By investigating the current value chain of argan oil cooperatives, readers are called upon to contrast the value provided by actors with their economic costs to determine a more sustainable value chain.
The situation was clearly untenable. In March 2008, ESB's chief executive Padraig McManus made the startling announcement that the company would become a net-zero carbon emitter by 2035, and would still remain competitive. Under his leadership, ESB was going to lead the way in slowing the growth of Ireland's GHG emissions. He declared that to achieve this goal, ESB would invest €22 billion over 15 years to develop alternative clean technologies, including energy efficiency measures, the use of clean coal, and the connection of an electricity-generating wind farm to the national grid. His target would make ESB the world's first carbon-neutral electric utility. This strategy presented a number of significant risks: 1) Financial risk - the €22 billion capital investment had to succeed. 2) Technological and ecological risks - the strategic framework relied on clean coal technology, still being developed. 3) Credibility risk - what if ESB was not able to achieve its goal? 4) Stakeholder risk - Landowners, concerned over health, environment and property prices, were ready to oppose the wind farms. McManus was conscious of the risks, and he also knew that high performing leaders always take risks even while confronting dilemmas such as: Could an electric utility achieve a zero carbon footprint and remain competitive? Can a responsible leader risk jeopardizing the present and future well-being of his company, the environment, and his country? Could he exert his leadership by influencing Irish, and possibly European, climate policy? The case provides an opportunity for a debate on responsible leadership. It was written for use in senior executive and MBA programs.