Company Risk Management in Light of the Sustainability Transition

Jesko Schulte and Sophie I. Hallstedt
Additional contact information
Jesko Schulte: Department of Strategic Sustainable Development, Blekinge Institute of Technology, SE-37179 Karlskrona, Sweden
Sophie I. Hallstedt: Department of Strategic Sustainable Development, Blekinge Institute of Technology, SE-37179 Karlskrona, Sweden

Sustainability, 2018, vol. 10, issue 11, 1-25

Abstract: Many of the most important business and economic risks are directly linked to environmental and social issues. This includes both threats and opportunities, not only in relation to reputation, which is often mentioned in this context, but, even more importantly, in relation to innovation capability and legislative change on inevitably more and more sustainability-driven markets. It is, however, unclear through which mechanisms such sustainability risks currently affect companies and how they can be systematically identified and managed. Based on the Framework for Strategic Sustainable Development, this study investigates the dynamics and implications of society’s sustainability transition from a company risk management perspective. In addition, exploratory and descriptive studies were conducted at two large product innovation companies to identify current risk management practices and preconditions for sustainability integration. The results reveal that a society moving closer towards a collapse of environmental and social systems leads to increasing sustainability-related threats for unsustainable businesses and increasing opportunities for sustainable businesses. Also, risk management is found to be a promising way for maneuvering in a smart zone between being too passive and being too pro-active in relation to sustainable innovation. The study participants at the case companies were knowledgeable about risk management in general but were largely unfamiliar with risks associated with sustainability and no processes or support tools exist to work systematically with such risks. Key steps to accomplishing an integration of a strategic sustainability perspective into risk management are proposed as: (i) identifying the effects of sustainability issues on internal and external stakeholder value; (ii) actively including sustainability in objective setting and cascading objectives across the levels of the organizational hierarchy; and (iii) developing concrete support for identifying, assessing, and managing economic sustainability risks. Thereby, companies can enhance their competitiveness while providing leadership in the sustainability transition.

Keywords: risk management; sustainability; product innovation; strategic sustainable development; sustainable product development; sustainability transitions (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://www.mdpi.com/2071-1050/10/11/4137/pdf (application/pdf)
https://www.mdpi.com/2071-1050/10/11/4137/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:11:p:4137-:d:181939

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().