CSR

Beyond the Mainstream

Seminar 6

S ta k e ho ld e r e n g a g e m e nt a nd
in no v a tion for s us ta in a b le
b us in e s s m od e ls

D r S a m e nth a G oe tha ls
Outline
Quiz based on seminar 5

Part 1 - Lecture
• principles of sustainable business models
• stakeholder engagement
• innovation & entrepreneurship
Part 2 - Activity
Veja value mapping and flourishing business case study
Key words: Business model innovation, stakeholders, business
as a set of relationship, relational responsibilities, meaningful
stakeholder engagement
Chapters 4 and 19
Key competencies Collaborating across diverse perspectives
to co-create solutions and innovative business models for
sustainability
Business model innovation for sustainability
PART I.
Activity 1
On K2 open CSR 2025 Session Activity 1- Discovering Business Models and
Stakeholder Theory
Use the slides below and instructions in the activity 1 file to guide you through
part 1
 Think

Recall:
Friedman’s1970
doctrine of
companies’ sole
responsibility to
shareholders
(see session 3)

What kind of business model does this doctrine speaks to

and/or leads to…?
 Business
Model
Innovation for
Sustainability
– Overview

Chapter 19
Why Think About Business Models?

Business models describe (conceptually) and influence (practically)

how companies create, propose, deliver and capture value. Value
creation, in turn, relates in manifold ways to the natural environment
and society.

A conceptual definition: ‘A On a practical level, business

business model describes models refer to what
how an organisation creates, companies do and the
delivers, and captures value characteristics they have.
based on a particular value
proposition.’

Osterwalder & Pigneur, 2009: 14

What Is a Business Model for Sustainability and Innovation?
By combining both notions, on the one hand an entrepreneurial and innovative
stance on corporate sustainability, and on the other hand business models as an
expression of how companies create value, we get to two core concepts…

Business Model for Sustainability… Business Model Innovation for

Sustainability…
is about solving ecological and social
challenges through the value creation helps companies to create value for
activities of a company. A company themselves and their stakeholders and
operating a (theoretically) perfectly to preserve or maybe even regenerate
sustainable business model would the natural environment, i.e., to create
restore the natural environment, create sustainable value.
social value, and make a profit with
every product or service it sells. .
 Managerial and Reactionary Passive
Entrepreneurial Views on
Corporate Sustainability

• Reactionary views: Sustainability is not part of

the duty of managers beyond what is legally
required
• Passive views: Companies as regulation
takers, process optimisers and as adapters to Active Proactive
societal pressures from various stakeholders
• Active views: Sustainability engagement is
seen as a field to express the strive for highest
quality while applying the best available
technologies and implementing best practices
• Proactive perspectives: Broaden the
management scope of sustainability
engagement even more towards actively
contributing to solving grand sustainability
challenges Chapter 19
Innovation as a Means to Achieve Corporate Sustainability

1 2 3
Innovation in processes Innovation in products Innovation in services

• Improves companies’ capabilities • Gives new capabilities to • Alters the capabilities of suppliers
to produce with different or even customers (e.g., capability to to interact with their customers
less resources and less ecological repair and maintain products) (e.g., by adding new services to
harm existing physical products), that is
• For example, Fairphone offers
• Process improvements that modular smartphones; screens by moving towards product-
reduce resource consumption are batteries, and other components service systems
an almost natural approach for can be replaced so that the • For instance, moving from owning
most companies. Less resource lifetime of the product can be to sharing cars, and combining
consumption typically means extended by the customers with public transportation systems
reduced production costs. themselves
The Value Mapping Tool Considers Multiple
Forms of Value

• Allows mixed stakeholder

groups to engage in
processes of value
proposition design

• Considers multiple forms

of value (e.g., value for
customers, value for
suppliers or value in
ecological and social
terms)

Adapted and modified from Bocken et al., 2013

Act
 Act
The Flourishing Business Canvas

• Positions the business model within

its wider ecological, societal and
economic environments

• Considers all normative guiding

principles of sustainable business
model innovation and emphasises
the various relationships between
business activities and their
ecological and social contexts in a
very clear way

http://www.flourishingbusiness.org/
Case study: Veja innovating for sustainability
Disclaimer we are not promoters of the brand! But it is a good case study for
this class!
• Watch this 10min clip https://project.veja-store.com/en
• 20min Analysis and debrief with peers
➢Group As (half the class on my right) takes notes to analyse the case using
the Value Mapping Tool and questions on the next slide and K2, then 10min
debrief with peers to come up with a collective set of answers
➢Group Bs (half the class on my left) takes notes to analyse the case using the
Flourishing Business Canvas and questions on the next slide and K2, then
10min debrief with peers to come up with a collective set of answers
20min class debrief
• Share findings, compare insights from the two frameworks and discuss practical
takeaways for sustainable business models.
Interact
Group A: Flourishing Business Group B: Bocken’s Value Mapping
Canvas Tool

1. Value Co-Creation: A. Value Captured:

How does Veja create value for stakeholders What benefits does Veja’s model currently
such as rubber-tappers, cooperatives, deliver to its stakeholders and the
consumers, and the environment? environment?
2. Environmental and Social Impact: B. Value Missed:
What are the positive and negative What opportunities for improvement or
environmental and social impacts of Veja’s expansion (e.g., scaling, diversifying income
rubber sourcing model? sources) are not being fully utilized?
3. Sustainable Innovation: C. Value Destroyed:
What innovative practices or strategies make Are there any negative consequences of Veja’s
Veja’s business model sustainable? model, such as dependence on premium
pricing or barriers to scaling?
4. Stakeholder Engagement:
How does Veja involve stakeholders in its D. New Value Opportunities:
decision-making and operations? What additional strategies or innovations
could Veja pursue to increase sustainability
and impact?
 Part 2
Stakeholder engagement
for sustainable business model innovation
From case to practice
• Stakeholder engagement for sustainability and business value co-
creation
• Use the slides below on stakeholder identification, mapping and
engagement to guide you to advance your project and complete
CSR 2025 session 6 activity 2 (instructions available on K2)
 Four Guiding
Principles of
Business Model
Innovation for
Sustainability
Stakeholders Theory (Freeman 1984 onwards)

Confronts the shareholder-primacy view that inhibits

managers’ attention to social issues

Understands business as a set of relationships

Businesses should create value for all their

stakeholders – those who can affect or be affected by
the realization of an organization’s purpose (the wide
definition) or those without whose support the
organization would not exist (the narrow definition)

The composition of stakeholders may differ depending

on a company’s industry and business model…

The firm and its primary and secondary stakeholders

are interdependent
Chapter 4
 Stakeholder Theory (Edward
Freeman, 1983)

The theory was developed to solve three

Stakeholder theory argues that all main problems…
organisations exist within a set of
relationships, interactions and How is value creation and trade
interdependencies involving a
1 possible in fast-changing environments
variety of different groups and that have little stability?
individuals.
How do we understand the ethics of
These “stakeholders” both affect, 2 capitalism, and how can we put
and are affected by, an organisation capitalism on firmer ethical ground?
and the achievement of its
objectives. What should we teach in business
3 schools?
 Defining Stakeholders

We can define ‘stakeholder’ in a number of ways.

Business, large or A stakeholder is any Mitchell et al. (1997:

small, is about group or individual 277) ask ‘which groups
creating value for that can affect or be are … deserving or
those groups without affected by the requiring of
whose support, the realisation of an management attention,
business would cease organisation’s and which are not?’
to be viable (primary purpose (secondary Who gets this attention,
stakeholders) stakeholders) when, and how much
attention they get is not
fixed.
Business as Relationships Among Stakeholders

Stakeholder theory provides a novel, useful and impactful lens through which to view
organisations, and opens up many exciting possibilities in terms of reorienting the relationship
between business, society and nature.

Business can be understood as a Stakeholder theory considers Stakeholder theory considers

set of relationships among the dynamic relationships the question of what
groups that have a stake in the between groups and individuals characteristics a
activities that make up the who affect and are affected by group/individual must have
business. Business is about how an organisation, usually but not to be considered to hold a
customers, suppliers, employees, always a for-profit business, and ‘stake’ in the actions and
financiers (stockholders, its decision-making processes. outcomes of an organisation.
bondholders, banks, etc.),
communities and managers
interact and create value.
Identifying Stakeholders Act
Act

To identify stakeholders an organization should ask itself the following

questions:

⎯ To whom does the organization have legal obligations?

⎯ Who might be positively or negatively affected by the organization's decisions or activities?
⎯ Who is likely to express concerns about the decisions and activities of the organization?
⎯ Who has been involved in the past when similar concerns needed to be addressed?
⎯ Who can help the organization address specific impacts?
⎯ Who can affect the organization's ability to meet its responsibilities?
⎯ Who would be disadvantaged if excluded from the engagement?
⎯ Who in the value chain is affected?
 Act
Evaluate your ‘sphere of influence” and
identify all stakeholders

An organization derives
influence from sources such as:
⎯ ownership and governance
⎯ economic relationship
⎯ legal/political authority
⎯ public opinion
Example: Fair Wear Foundation garment sector stakeholders
Example ABN
AMRO (Dutch
Bank leverage
over cocoa
supply chain)
Engaging Stakeholders Act
Act

What is stakeholder engagement?

• Dialogue between the organization and its stakeholders
• It provides an informed basis for its decisions
What does it look like?
• Can be informal or formal
• Wide variety of formats: individual meetings, conferences, workshops, public hearings, round-table
discussions, advisory committees, consultation procedures, collective bargaining and web-based
forums.
• It is interactive and is intended to be two-way communication
Fair and proper process is important:
• An organization should not neglect stakeholders who are silent
• An organization should strive to partner with independent parties
• An organization should transparently disclose financial ties and support with any parties
 Stakeholders in sustainability due diligence (SDD)
approach (see session 3)

Affected stakeholders who are negatively

affected by the activities of the business or
that of its business partners

Business partners who are involved in the

harm by causing it, contributing to it, or
otherwise being involved through their own
operations, products or services or those of
their business partners.
> The lead company has leverage over them
to change the situation
> Pierces the corporate veil limiting
responsibility
 Affected stakeholders, Rights-holders in Sustainability Due
Diligence
Identifying affected-stakeholders/rights- 3 groups to consider especially
holders
• Potentially affected stakeholders and their
legitimate representatives
• Credible proxies who have a sufficiently deep
experience in engaging with affected
stakeholders
• Human Rights experts for how the company
can effectively manage human rights (not a
replacement for affected stakeholders)

Why introduce the concept of rights-holders?

What does it change, adds to affected
stakeholders?
Oxfam identification of stakeholders in the textile and extractive sectors:
who are they usual stakeholders or rights-holders?

Workers workers in
in the the
factory company

Local Local
authorities
Suppliers
authorities
Farmers

Stakeholders Stakeholders
in the textile in the
sector extractive
sector

Children Indigenous
Unions and people and Artisanal
adolescents
local
communities
miners

Human rights
women and
environmental
defenders
 Stakeholders: Sustainability due diligence vs
business as usual perspective

In small groups, map a

company’s stakeholders
from a management Explain why they differ
perspective and from a
sustainability perspective

Interact
 Drivers of meaningful stakeholder engagement from a
business perspective
• Meaningful engagement benefits: • Ineffectual engagement risks:
• Better-informed decisions and a reduction in the • Negative human rights impacts due to a failure to
severity of impacts address stakeholder concerns early and
• Develop trust with affected stakeholders from the effectively before they escalate
start
• Stakeholders feel used if only consulted when the
• Improve the quality of analysis of human rights company needs it, and their needs and voice are
impacts not reflected in decision making > mistrust
• Understand power dynamics and interests of
different stakeholders
THE BUSINESS CASE
• Ability to prioritise those impacts, without the
company making those decisions alone Reputational and governance risks
• Understand how to manage identified impacts Divestment from investors
Costs of remedy
• Create co-ownership of necessary solutions
Loss of social license to operate
Loss of business partners (for suppliers)
 Participation: Interests, Knowledge, and Power challenges

Significant imbalance of power Power dynamics at play within

between large companies, their Power dynamics between rights- affected communities, they are not
business stakeholders and people holders, those who represent them, homogenous > roles of women and
affected by their activities and companies and state actors and men in family, work and social
relationships (e.g. government, between the people in the structures, understanding of
investors, competitors, people with assessment team vulnerability based on analysis of
influence) contextual circumstances

Adequate responses should be

Whose knowledge is accepted: Whose interests are prioritized highly culture sensitive and the
expert, scientific, experience of between the company and the process must be informed by
affected people? multitude of stakeholders knowledge of local culture, gender,
values, customs

Think
 Act
Oxfam meaningful participation in Sustainability
Due Diligence

Early and ongoing participation Informed Participation

Meaningful
participation in HRDD

Facilitated and safe participation Inclusive Participation

Take aways on business model innovation for
sustainability
Business model innovation for sustainability can help companies create value for
themselves and their stakeholders and preserve the natural environment, i.e., to
engage in sustainable value creation

Innovation alters the ability of companies to act, and hence their ability to integrate ecological and
social concerns into their business activities

There are various types of business models for sustainability which are supported by the notion of
business model pattern as well as various tools available for their development
 Take aways on stakeholder engagement
Stakeholder theory is ‘first, and most fundamentally, a moral theory that specifies the obligations
that companies have to their stakeholders’ (Freeman et al., 2010: 212).

The age of sustainability makes stakeholder mapping, engagement and ongoing dialogue more
critical than ever before, due to the scale and urgency of the challenges facing our planet.

Companies do not exist in isolation. Continued relevance, and survival, means they must
understand, and proactively engage with their stakeholders, and implement effective stakeholder
management.