IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i11p4137-d181939.html
   My bibliography  Save this article

Company Risk Management in Light of the Sustainability Transition

Author

Listed:
  • 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)

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.

Suggested Citation

  • Jesko Schulte & Sophie I. Hallstedt, 2018. "Company Risk Management in Light of the Sustainability Transition," Sustainability, MDPI, vol. 10(11), pages 1-25, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:11:p:4137-:d:181939
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/11/4137/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/11/4137/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rosa Dangelico & Devashish Pujari, 2010. "Mainstreaming Green Product Innovation: Why and How Companies Integrate Environmental Sustainability," Journal of Business Ethics, Springer, vol. 95(3), pages 471-486, September.
    2. Derk Loorbach & Janneke C. van Bakel & Gail Whiteman & Jan Rotmans, 2010. "Business strategies for transitions towards sustainable systems," Business Strategy and the Environment, Wiley Blackwell, vol. 19(2), pages 133-146, February.
    3. Marco Bertoni, 2017. "Introducing Sustainability in Value Models to Support Design Decision Making: A Systematic Review," Sustainability, MDPI, vol. 9(6), pages 1-31, June.
    4. Terje Aven, 2013. "On How to Deal with Deep Uncertainties in a Risk Assessment and Management Context," Risk Analysis, John Wiley & Sons, vol. 33(12), pages 2082-2091, December.
    5. Rupert J. Baumgartner & Daniela Ebner, 2010. "Corporate sustainability strategies: sustainability profiles and maturity levels," Sustainable Development, John Wiley & Sons, Ltd., vol. 18(2), pages 76-89.
    6. Ofer Zwikael & Mark Ahn, 2011. "The Effectiveness of Risk Management: An Analysis of Project Risk Planning Across Industries and Countries," Risk Analysis, John Wiley & Sons, vol. 31(1), pages 25-37, January.
    7. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
    8. Oliva, Fábio Lotti, 2016. "A maturity model for enterprise risk management," International Journal of Production Economics, Elsevier, vol. 173(C), pages 66-79.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agostino Vollero & Alfonso Siano & Alessandra Bertolini, 2022. "Ex ante assessment of sustainable marketing investments," Italian Journal of Marketing, Springer, vol. 2022(3), pages 271-287, September.
    2. Szymon Zaleski & Rafał Michalski, 2021. "Success Factors in Sustainable Management of IT Service Projects: Exploratory Factor Analysis," Sustainability, MDPI, vol. 13(8), pages 1-28, April.
    3. Jesko Schulte & Carolina Villamil & Sophie I. Hallstedt, 2020. "Strategic Sustainability Risk Management in Product Development Companies: Key Aspects and Conceptual Approach," Sustainability, MDPI, vol. 12(24), pages 1-20, December.
    4. Corina Graziella Bâtcă-Dumitru & Cleopatra Șendroiu & Lavinia Denisia Cuc, 2023. "A new challenge in the risk management: sustainability risks," Journal of Financial Studies, Institute of Financial Studies, vol. 15(8), pages 13-28, December.
    5. Nini Johana Marín-Rodríguez & Juan David González-Ruiz & Alejandro Valencia-Arias, 2023. "Sustainability, Uncertainty, and Risk: Time-Frequency Relationships," Sustainability, MDPI, vol. 15(18), pages 1-18, September.
    6. Jesko Schulte & Sophie Isaksson Hallstedt, 2018. "Self-Assessment Method for Sustainability Implementation in Product Innovation," Sustainability, MDPI, vol. 10(12), pages 1-24, November.
    7. Patricia Lagun Mesquita & Merlina Missimer, 2021. "Social Sustainability Work in Product Development Organizations: An Empirical Study of Three Sweden-Based Companies," Sustainability, MDPI, vol. 13(4), pages 1-21, February.
    8. Manuela Gomez‐Valencia & Maria Alejandra Gonzalez‐Perez & Ana Maria Gomez‐Trujillo, 2021. "The “Six Ws” of sustainable development risks," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3131-3144, November.
    9. Jen-Chieh Lee & Tyrone T. Lin, 2020. "Decision Analysis on Sustainable Value: Comparison of the London and Taiwan Markets for Product Integration of Family Security Services and Residential Fire Insurance," JRFM, MDPI, vol. 13(11), pages 1-15, October.
    10. Xin Liu, 2019. "The Role of Enterprise Risk Management in Sustainable Decision-Making: A Cross-Cultural Comparison," Sustainability, MDPI, vol. 11(10), pages 1-15, May.
    11. Jyoti Dua & Anil Kumar Sharma, 2024. "Corporate Sustainability and Capital Costs: A Panel Evidence from BRICS Countries," Indian Journal of Corporate Governance, , vol. 17(1), pages 77-101, June.
    12. Ramsey Jadim & Mirka Kans & Jesko Schulte & Mohammed Alhattab & May Alhendi & Ali Bushehry, 2021. "On Approaching Relevant Cost-Effective Sustainable Maintenance of Mineral Oil-Filled Electrical Transformers," Energies, MDPI, vol. 14(12), pages 1-17, June.
    13. Merlina Missimer & Patricia Lagun Mesquita, 2022. "Social Sustainability in Business Organizations: A Research Agenda," Sustainability, MDPI, vol. 14(5), pages 1-13, February.
    14. Carolina Villamil & Jesko Schulte & Sophie Hallstedt, 2022. "Sustainability risk and portfolio management—A strategic scenario method for sustainable product development," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1042-1057, March.
    15. Magdalena Zioło & Iwona Bąk & Anna Spoz, 2023. "Incorporating ESG Risk in Companies’ Business Models: State of Research and Energy Sector Case Studies," Energies, MDPI, vol. 16(4), pages 1-25, February.
    16. Agnieszka Czajkowska & Manuela Ingaldi, 2021. "Structural Failures Risk Analysis as a Tool Supporting Corporate Responsibility," JRFM, MDPI, vol. 14(4), pages 1-20, April.
    17. Semih Coşkun & Elif Akgül, 2022. "Sustainability Management Model Based on Risk Analysis and Implementation of the Model," Sustainability, MDPI, vol. 14(8), pages 1-15, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. João M. Lopes & Sofia Gomes & Rosselyn Pacheco & Elizabete Monteiro & Carolina Santos, 2022. "Drivers of Sustainable Innovation Strategies for Increased Competition among Companies," Sustainability, MDPI, vol. 14(9), pages 1-18, May.
    2. Patrícia Tourais & Nuno Videira, 2024. "Sustainability transition strategies in a business context: A co‐creation process in the Portuguese hospitality sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 600-628, January.
    3. Jesko Schulte & Sophie Isaksson Hallstedt, 2018. "Self-Assessment Method for Sustainability Implementation in Product Innovation," Sustainability, MDPI, vol. 10(12), pages 1-24, November.
    4. Sophie I. Hallstedt & Ola Isaksson & Anna Öhrwall Rönnbäck, 2020. "The Need for New Product Development Capabilities from Digitalization, Sustainability, and Servitization Trends," Sustainability, MDPI, vol. 12(23), pages 1-26, December.
    5. Emilia Vann Yaroson & Soumyadeb Chowdhury & Sachin Kumar Mangla & Prasanta Kumar Dey, 2024. "Unearthing the interplay between organisational resources, knowledge and industry 4.0 analytical decision support tools to achieve sustainability and supply chain wellbeing," Annals of Operations Research, Springer, vol. 342(2), pages 1321-1368, November.
    6. German Arana‐Landin & Waleska Sigüenza & Beñat Landeta‐Manzano & Iker Laskurain‐Iturbe, 2024. "Circular economy: On the road to ISO 59000 family of standards," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1977-2009, May.
    7. Kara, Karahan & Yalçın, Galip Cihan & Akagün Ergin, Elif & Simic, Vladimir & Pamucar, Dragan, 2024. "A neutrosophic WENSLO-ARLON model for measuring sustainable brand equity performance," Socio-Economic Planning Sciences, Elsevier, vol. 94(C).
    8. Qaisar Ali & Sulistya Rusgianto & Shazia Parveen & Hakimah Yaacob & Razali Mat Zin, 2024. "An empirical study of the effects of green Sukuk spur on economic growth, social development, and financial performance in Indonesia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 21097-21123, August.
    9. Alison Ashby, 2016. "From global to local: reshoring for sustainability," Operations Management Research, Springer, vol. 9(3), pages 75-88, December.
    10. Fiaz Ahmad Sulehri & Saba Sharif, 2022. "The Impact of Firm Sustainability on Firm Growth: Evidence from USA," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(2), pages 1-15, August.
    11. Zhang, Yibin & Hafezi, Maryam & Zhao, Xuan & Shi, Victor, 2017. "Reprint of “The impact of development cost on product line design and its environmental performance”," International Journal of Production Economics, Elsevier, vol. 194(C), pages 126-134.
    12. Ki‐Hoon Lee & Ji‐Whan Kim, 2011. "Integrating Suppliers into Green Product Innovation Development: an Empirical Case Study in the Semiconductor Industry," Business Strategy and the Environment, Wiley Blackwell, vol. 20(8), pages 527-538, December.
    13. Chinyerem Grace Adeniji & Odunayo Paul Salau & Opeyemi Olunike Joel & Oluwakemi Oluwafunmilayo Onayemi & Oluwakemi Rebecca Alake, 2024. "Personality-Traits Taxonomy and Operational and Environmental Performance: A Cross-Sectional Analysis of Small and Medium Scale Manufacturing Enterprises," Sustainability, MDPI, vol. 16(8), pages 1-22, April.
    14. Hsueh, Che-Fu, 2014. "Improving corporate social responsibility in a supply chain through a new revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 151(C), pages 214-222.
    15. Surajit Bag & Shivam Gupta, 2017. "Antecedents of Sustainable Innovation in Supplier Networks: A South African Experience," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 18(3), pages 231-250, September.
    16. Miethlich, Boris & Oldenburg, Anett G., 2019. "Social Inclusion Drives Business Sales: A Literature Review on the Case of the Employment of Persons With Disabilities," EconStor Conference Papers 200752, ZBW - Leibniz Information Centre for Economics.
    17. Liangdong Lu & Mengyao Wang & Jia Xu, 2023. "How to Keep Investors’ Confidence after Being Labeled as Polluting Firms: The Role of External Political Ties and Internal Green Innovation Capabilities," Sustainability, MDPI, vol. 15(17), pages 1-19, September.
    18. Annette Brunsmeier & Markus Groth, 2015. "Hidden climate change related risks for the private sector," Working Paper Series in Economics 333, University of Lüneburg, Institute of Economics.
    19. Andrea Lučić, 2020. "Measuring Sustainable Marketing Orientation—Scale Development Process," Sustainability, MDPI, vol. 12(5), pages 1-22, February.
    20. Lin, Edward M.H. & Sun, Edward W. & Yu, Min-Teh, 2020. "Behavioral data-driven analysis with Bayesian method for risk management of financial services," International Journal of Production Economics, Elsevier, vol. 228(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:11:p:4137-:d:181939. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.