Corporate Social Responsibility - Sustainable Leadership

COLOGNE BUSINESS SCHOOL (CBS)

Sustainable Leadership

Term paper for Corporate Social Responsibility

Winter/ Semester 2015

Lecturer:                 Prof. Dr. René Schmidpeter

Student's Name:        Christine Heitmann

Master of Arts in         International Business / Consulting

Student-No.:                 1155500032

Table of Contents

1.        Introduction to Sustainable Leadership        

2.        Definition and Importance of Sustainability        

3.        Sustainability as Core Business        

4.        Sustainable Leadership        

4.1.        Five Cornerstones of Sustainability        

4.2.        Implementation of Sustainability        

4.3.        Skills of a Sustainable Leader        

4.4.        Sustainable Leader Characteristics        

4.5.        Challenges Sustainable Leaders May Face        

5.        Conclusion        

Bibliography        

Table of Figures

Figure 1- Dimensions of Sustainability        

Figure 2- Organizing Framework for Ethical Behavior in International Business        

Figure 3- Functional vs. Systematic Thinking        

1. Introduction to Sustainable Leadership

Sustainable leadership is a leadership style that can be applied in all different kind of businesses, NGOs and governments. It includes the principles of sustainability. Leading in a sustainable way empowers managers to create long lasting local and global value for environment, society, economy and all affected stakeholders (Lead-Ahead, 2014). Sustainable leadership is a crucial element of corporate social responsibility. Implementing corporate social responsibility, as well as sustainability in the daily business operations, requires the commitment of the entire organization, but especially the top management. Their tasks and influence in sustainable leadership, as well as the importance of sustainability in core businesses will be analyzed in this part of the paper. Following this chapter, there will be presented two cases, prime examples for sustainable and non-sustainable leadership in different businesses. This paper examines the role and different aspects of leadership in corporate social responsibility. With reference to the prior chapter, the definition of leadership and the explanation of the awareness of corporate social responsibility in leadership, this chapter will analyze sustainable leadership as well as giving further explanations of how to implement and conduct sustainable leadership.

1. Definition and Importance of Sustainability

The term sustainability has been used in in a variety of contexts and the meaning of the word is strongly depended on the context. Sustainability may be defined in different ways, but the simplest and most fundamental is “ability to sustain” or “the capacity to endure” (Costanza & Patten, 1995, p.68).  Meaning “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (Werther & Chandler, 2011, p.321). Sustainability is the potential for long-term maintenance of well-being, which has environmental, economic and social dimensions. These dimensions are presented in Figure 1- Dimensions of Sustainability, showing that sustainability consists of social, environmental as well as economic pillars. As the figure shows, if any of these pillars is missing or at least too weak, the entire system as a whole is unsustainable. But why is sustainability so necessary for today’s business? These days, sustainability is demanded by customers and the government.  Government regulations require that companies increasingly address sustainability. Noncompliance with regulations may be very costly. Also the general public, as well as activist NGOs, are becoming aware of the importance and the impacts corporations have on the society and their environment (Epstein, 2008, p.33). Not only they, but also customer, partners, shareholders, and the media increasingly believe firms have an obligation to be socially responsible to the societies where they operate. Particularly because of this impact, companies should be aware of the responsibility they have and therefore manage sustainability effectively. In a long-term prospective, well managed sustainability will pay off. Improved corporate reputation will lead to higher revenues and process improvements will cause decreased costs.[pic 1]

1. Sustainability as Core Business

Today’s business challenges conclude from increasing population, high market volatility, finite natural resources as well as from changes occurring through global value chains and the challenging question whether to operate your business mainly profitable or also sustainable. Natural disasters and social pressure are acting in this context as additional accelerators, leading to the key question “what is the right approach to the value creation?

[pic 2]While finding an answer for this question, special focuses need to be put on corporate social responsibility (hereinafter CSR) and hereby also sustainability. CSR has become a crucial component for successful business in today’s global environment during the past decades. According to Cavusgil, Knight and Riesenberger (2013, p. 146), corporate social responsibility is defined as “a manner of operating a business that meets or exceeds the ethical, legal, commercial, and public expectations of customers, shareholders, employees, and communities”. In order to effectively profit from CSR, it must be an integrated in the entire corporate strategy. Hereby corporate governance plays a major role. Corporate governance, “the system of procedures and processes by which corporations are managed, directed, and controlled” (Cavusgil, Knight, & Riesenberger, 2013, p.146), provides in this context the mean through which companies undertake CSR and sustainability. The key player of successful corporate governance is formed by the top management and the different stakeholders. Their tasks and influence in sustainable leadership, as well as the importance of sustainability in core businesses will be analyzed in this part of the paper.[pic 3]