4 - Challenges

• Why the climate inaction?

  Cultural explanation

  • Climate change scepticism
  • Cultural shift

  Economic explanation

  • Incentives: distribution of impacts
  • Tragedy of the commons

  Behavioural explanation

  • Individual impact
  • Temporal scale
  • Diffusion of responsibility
• Sustainable entrepreneurship: “the process of identifying (discovering or creating) and pursuing economic opportunities consistent with pro-social and environmental objectives.”
• The tragedy of the commons is a concept in economics and environmental science. It describes a situation where multiple individuals, acting independently in their own self-interest, deplete a shared resource, leading to its degradation or depletion. This occurs because each individual benefits from exploiting the resource, but the cumulative effect harms everyone.
• Sustainable entrepreneurship characteristics:

  • free from existing business constraints
  • not vested in incumbent system
  • innovative potential
  • market uncertainty
  • collective action problem
• Sustainability entrepreneurs market uncertainty

  • demand uncertainty: Real or perceived unpredictability of consumer preferences
  • supply uncertainty: Absence/unpredictability of producers or ways to produce and supply a good or service
• Sustainability entrepreneurs collective action problems:

  • Suppose each member of a group has a choice between engaging in an activity and not engaging in it. The group has a collective action problem if it is better for all if some do it than if nobody does, but better for each not to do it.
  • eg: taxes, R&D, market formation efforts
• Incremental products:

  • Low demand uncertainty
  • Low supply uncertainty
  • Competition from extant offerings/firms
  • Limited market share growth
  • No or few collective action problems
• Demand disrupting products: eg: smart home control, upcycled clothes

  • High demand uncertainty
  • Low supply uncertainty
  • Constructing a new product category
  • collective action needed to build legitimacy & consumer awareness
• Radical products: eg: green fuels, bio plastic

  • Low demand uncertainty
  • High supply uncertainty
  • High risk with unproven tech
  • Supply side collective action problems with coordination of inter-dependent decisions
• Market transformation products: eg: geo-engineering

  • High demand uncertainty
  • High supply uncertainty
  • Collective action problems multiplied
  • Supply coordination
  • unclear consumer demand
• Sustainability in organisations

  • Sustainability is more than just a change initiative
  • Look a the entire value chain
  • Make sustainability a priority for the board
  • Gain buy-in from the undecideds
  • Make sustainability a part of every employee's job
  • Redefine the competitive space through collaborations
• A sustainable business model is iterative, constantly evolves over time, and is a moving target. 
• • Change management: driven by external factors/internal performance issues → driven by profitability & shareholder value 
  • Sustainability involves creating value for all stakeholders in the ecosystem and viewing profits as a consequence of such value creation.
• Gain buy-in from the “undecideds”

  • establish accountability
  • showcasing economic rationale