Abstract
Society’s transition towards sustainability comes with radical change, which entails significant threats and opportunities for product development and manufacturing companies, for example related to new legislation, shifting customer preferences, and increasing raw material prices. Smart risk management therefore plays a key role for successfully maneuvering society’s sustainability transition. However, from a company perspective, it remains challenging to connect the macro-level societal change with tangible risks for the business on the micro level. Based on interviews with academic and industrial experts, this study identified 21 key aspects for sustainability risk management. Drawing on these results and research from the areas of transition design, strategic sustainable development, and sustainability risk management, a conceptual approach for strategic risk management within the sustainability transition is presented. It builds on layered, double-flow scenario modelling in which backcasting from a vision, framed by basic principles for sustainability, is combined with forecasting from the present. The implications of such scenarios, i.e., risks, can then be identified and managed. By doing so on different scales, connections between macro- and micro-level change can be established. Thereby, product development companies shall be supported in making sustainability an intrinsic part of decision-making across the strategic, tactical, and operational levels to increase competitiveness while contributing to the transition towards a sustainable society.
Highlights
From a societal perspective, it is crucial that product development companies accelerate their sustainability-related efforts
The study has three aims: (i) to identify aspects that are essential for sustainability risk management in a product development company context and that can function as concrete recommendations for practitioners; (ii) to validate the sustainability risk definition and hypotheses proposed in an earlier study by Schulte and Hallstedt [6]; and (iii) to develop a conceptual approach that can support companies in finding and maneuvering the smart zone between being too passive and too proactive in relation to sustainability
Based on interviews with industrial and academic experts, 21 key aspects for successful sustainability risk management in product development companies were identified, covering the core steps of the risk management process described in ISO 31000
Summary
It is crucial that product development companies accelerate their sustainability-related efforts. A risk management lens has been pointed out as a constructive way to engage in a more hands-on manner with companies around the business benefits related to sustainability aspects and to understand and address the implications of the ongoing transition of the societal system on the macro level for companies and product development on the micro level [6]. The main potential of applying a risk management approach is that it can use a familiar language and process to highlight the motivation and driving forces for sustainability in terms of both threats and opportunities on different organizational levels of the company Such risks can be related to, for example, reputation, the ability to attract investment and talented employees, supply chain resilience, and raw material and energy costs [1,9,10]. The study has three aims: (i) to identify aspects that are essential for sustainability risk management in a product development company context and that can function as concrete recommendations for practitioners; (ii) to validate the sustainability risk definition and hypotheses proposed in an earlier study by Schulte and Hallstedt [6]; and (iii) to develop a conceptual approach that can support companies in finding and maneuvering the smart zone between being too passive and too proactive in relation to sustainability
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