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Digital Sustainability and Entrepreneurship: How Digital Innovations Are Helping Tackle Climate Change and Sustainable Development

January 2020
Entrepreneurship Theory and Practice 45(1):104225871989942

DOI:10.1177/1042258719899425

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CC BY-NC 4.0

Authors:

Gerard George

International Medical University

Ryan Merrill

Global Mangrove Trust

Simon Schillebeeckx

Singapore Management University

We explore how digital technologies are helping address grand challenges to tackle climate change and promote sustainable development. With digital technologies, entrepreneurial organizations have adopted innovative approaches to tackle seemingly intractable societal challenges. We refer to these broadly as digital sustainability activities. By focusing on the digital toolbox employed by pioneering organizations, we propose a research agenda that generates novel questions for entrepreneurship, business models, and ecosystems as well as new ways of thinking about trust and institutional logics. We believe that digital sustainability can spur empirical advances in entrepreneurship, innovation, and strategy with potential for positive impact on society.

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Digital Sustainability and Entrepreneurship: How Digital Innovations Are Helping Tackle

Climate Change and Sustainable Development

Gerard George

Lee Kong Chian School of Business

Singapore Management University

50 Stamford Road, Singapore 178899

ggeorge@smu.edu.sg

Ryan K. Merrill

Lee Kong Chian School of Business

Singapore Management University

50 Stamford Road, Singapore 178899

Rkmerrill@gmail.com

Simon J.D. Schillebeeckx

Lee Kong Chian School of Business

Singapore Management University

50 Stamford Road, Singapore 178899

simon@smu.edu.sg

Accepted for publication in Entrepreneurship Theory & Practice

January 2020

Please cite the paper as:

George, G., Merrill, R. K., Schillebeeckx, S.J. D. 2020. Digital sustainability and

entrepreneurship: how digital innovations are helping tackle climate change and sustainable

development, Entrepreneurship Theory & Practice. DOI: 10.1177/1042258719899425

Digital Sustainability and Entrepreneurship: How Digital Innovations Are Helping Tackle

Climate Change and Sustainable Development

Abstract

We explore how digital technologies are helping address grand challenges to tackle

climate change and promote sustainable development. With digital technologies, entrepreneurial

organizations have adopted innovative approaches to tackle seemingly intractable societal

challenges. We refer to these broadly as digital sustainability activities. By focusing on the

digital toolbox employed by pioneering organizations, we propose a research agenda that

generates novel questions for entrepreneurship, business models, and ecosystems as well as new

ways of thinking about trust and institutional logics. We believe that digital sustainability can

spur empirical advances in entrepreneurship, innovation, and strategy with potential for positive

impact on society.

Introduction

We observe a convergence of two seemingly disparate trends in business with

consequences for entrepreneurship theory and practice. The first trend relates to the heightened

attention to the climate emergency and the need for societal actors to take on expanded roles in

the production of environmental and social value (Di Domenico, Haugh, & Tracey, 2010;

Embry, Jones & York, 2019; George, McGahan, & Prabhu, 2012; Howard-Grenville, Buckle,

Hoskins, & George, 2014). Earth’s dire situation has been brought to the fore by diverse

stakeholders. The European parliament recently followed the UK and Canadian governments in

declaring a climate emergency. In popular media, Netflix and David Attenborough’s “Our

Planet” and a wave of activists are raising awareness among the general public. Among

scientists, the IPCC (2018) report on climate change and the devastating IPBES report on

biodiversity loss (Díaz et al., 2019) restate insights known for decades in ever more forceful

terms. In business, companies are voluntarily or, under pressure of investors, governments, and

other stakeholders committing to ambitious environmental goals (Delmas, Lyon, & Maxwell,

2019; Nave & Ferreira, 2019; Pacheco, York, & Hargrave, 2014; York, Vedula & Lenox, 2018).

This is the sustainability imperative.

The second trend involves the rapid digitalization of the economy. A variety of new

technologies are forming a digital toolbox of solutions that challenge the status quo. Artificial

intelligence and machine learning (AI/ML) are advancing exponentially and both businesses and

governments compete in a race to harness its potential. While PwC (2017) estimates AI will add

some 14% - or USD 15.7 trillion - to the global economy by 2030, observers raise concerns

ranging from adverse employment impacts to the ethical implications of AI-based decision

making (Jarrahi, 2018). As AI/ML begins rapidly altering resource allocations within and across

economies, the Internet of Things (IOT) promises to connect billions of devices in webs of

autonomous communication. The resulting “smart” houses, transportation systems, electricity

grids, and cities will increase economic flows by lowering transaction costs (Pasolini et al.,

2018) in ways that make lives easier and increase welfare. And simultaneously, distributed

ledgers or blockchains are emerging from their initial hype with a promise to reorganize

transactions in fairer, more decentralized, open access, efficient, and reliable ways (Hammi,

Hammi, Bellot, & Serhrouchni, 2018). Some insiders consider blockchain so transformative it

will instigate the next ‘infrastructure inversion’ – the previous three being driven by steam,

electricity, and the internet – that will fundamentally alter the global economic and institutional

infrastructure and our very social fabric (Antonopoulos, 2015). This is the digital imperative.

The convergence of the sustainability and digital imperatives is beginning to gain traction

in the private and public sectors (Merrill, Schillebeeckx, & Blakstad, 2019), but has yet to

galvanize systematic and rigorous academic research. While a growing cadre of social scientists

attend to inclusion (George, Baker, Tracey, & Joshi, 2019; George et al., 2012), natural resource

management (Delmas et al., 2019; George & Schillebeeckx, 2018; George, Schillebeeckx, &

Liak, 2015; Markman, Russo, Lumpkin, Jennings, & Mair, 2016), and societal grand challenges

(George, Howard-Grenville, Joshi, & Tihanyi, 2016), management scholars have yet to embrace

the urgency of climate change and sustainable development in their work. With this article, we

hope to inspire fellow academics and practitioners to increase their focus on and advocacy for

entrepreneurial organizations developing digital sustainability activities. Given the scientific

consensus on the urgency and gravity of the challenge to combat man-made climate change, our

scholarly communities should not remain on the side lines. Beyond looking in and helping

students – from undergraduate to executive education – understand what is at stake, our

managerial studies can encourage and guide leaders and institutions to lead the way to a carbon-

free society.

In our exploratory research, we see entrepreneurial actors employing digital technologies

to tackle crucial sustainability challenges. They have done so, not only through technological

innovation, but also by developing business models that infuse innovations with new purpose.

The activities of these actors, their business models, and the problems motivating their work

form the focus of this article. We define digital sustainability as the organizational activities that

seek to advance the sustainable development goals through the creative deployment of

technologies that create, use, transmit, or source electronic data. The digital nature of these

activities enables them to be less constrained by geographic boundaries and enhances scalability

across ecosystems, leading to higher impact. In addition, the objectives guiding these activities

focus on the creation of socio-ecological value as an integral part of an economic proposition

such that there is no need for a tradeoff between profit and purpose. This differentiates the digital

sustainability lens from more established lenses we discuss below.

In the following section, we paint a picture of the climate emergency by summarizing key

findings in the natural sciences and revisit four complementary phenomenological lenses

investigating sustainability problems and the role of entrepreneurship. We then abstract from

their foci to extract six high-level problems that underpin the organizational challenge of tackling

sustainability after which we delineate our novel perspective focusing on digital sustainability.

Next, we propose six digital sustainability pathways that creatively use the new digital toolbox to

address some of the most important challenges we face as a species. We conclude with a

proposed research agenda on digital sustainability.

Overview of the Literature

Planetary Boundaries

Perhaps the foremost challenge facing humanity is a three-pronged overshooting of

planetary boundaries beyond which sustaining life as we know it becomes precipitously

untenable (Rockström et al., 2009; Steffen et al., 2018). Critical pathways leading to overshoot

and collapse involve run-away global warming due to carbon-intensive industrialization,

overconsumption of nitrogen and phosphorous, and wholescale biodiversity loss. An

overwhelming body of scientific work describes the link between industrial pollution and self-

reinforcing feedback loops that drive additional greenhouse gas emissions (Lenton et al., 2008).

Feedbacks range from methane release from thawing permafrost (Dean et al., 2018) and the

dieback of boreal forest (Burke et al., 2017) to albedo loss from shrinking ice caps and melting

sea ice. Cognizant of the slow rates of natural, terrestrial carbon sequestration, climate feedbacks

reveal humanity racing stubbornly towards a point of no return (Bendell, 2018).

Second, industrial agriculture’s over-reliance on nitrogen and phosphorous inputs is

poisoning waterways, producing massive algae-blooms and coastal dead zones, and threatening

global food security (Conijn, Bindraban, Schröder, & Jongschaap, 2018). Nitrogen pollution

poisons infants and contributes significantly to global warming (James, Janie, & Stephen, 2018),

exemplifying the interrelatedness of environmental factors in a complex nexus (Schillebeeckx,

Workman, & Dean, 2018). The overuse of chemical fertilizers, driven mainly by animal-rich

diets, remains the primary driver of nitrogen and phosphorous pollution.

Third, nearly 50% of all Earth’s individual animal populations are suffering from habitat

destruction (land consumption) and poaching (animal consumption) that will – if unabated -

drive an estimated one million species to extinction in the next decades (Díaz et al., 2019). The

IPBES report finds that unprecedented declines in biodiversity threaten over 80% of SDG targets

related to poverty, hunger, health, water, cities, climate, oceans, and land. Overuse of grazing

land for livestock, deforestation, and pernicious demand for rare animal parts as medicines and

status symbols, remain major drivers of species loss today. Countering these existential threats to

our natural ecosystems, while staying within the safe operating space for six other planetary

boundaries is the most pressing issue of our time (Rockström et al., 2009).

Grand Challenges

Grand challenges as a thematic focus reached mainstream management research only

recently (George et al., 2016). Grand challenges comprise specific critical barriers whose

removal would significantly help solve globally important societal and/or environmental

problems. “Grand challenges” thus engage a broad problem scope ranging from global warming,

aging populations, inequality, and poverty to health, resource scarcity, and the elusiveness of

sustainable livelihoods. Addressing these complex problems requires coordinated and

collaborative efforts at the firm, community, state, and regional level as well as behavioral

change to produce solutions across political and geographic boundaries (George et al., 2016).

The grand challenge lens is thus largely agnostic about the focal actor. Scholars have

engaged grand challenges by looking at incumbents (Luo, Zhang, & Marquis, 2016), NGOs

(Mair, Wolf, & Seelos, 2016), single-purpose organizations (Cobb, Wry, & Zhao, 2016),

partnerships (Doh, Tashman, & Benischke, 2018), and supply chains (Kim & Davis, 2016).

Others have engaged communities (Berrone, Gelabert, Massa-Saluzzo, & Rousseau, 2016),

bureaucracies (Heese, Krishnan, & Moers, 2016), emergent organizations in disaster relief

(Williams & Shepherd, 2016) and the policy-research interface (Vakili & McGahan, 2016).

Thanks to the rich contexts offered by grand challenges, theoretical lenses in this

emerging area of scholarship are equally diverse. Recent contributions have focused on resource

dependencies and nexus thinking (George et al., 2015; Schillebeeckx et al., 2018), framing

(Reinecke & Ansari, 2016; Wright & Nyberg, 2017), as well as the pursuit, promise, and

limitations of inclusive growth (George et al., 2019; Halme, Lindeman, & Linna, 2012). Others

have drawn attention to capability perspectives (Ansari, Munir, & Gregg, 2012) and to dynamic

institutional fields in “entrepreneurial contexts relevant to grand challenges and wicked

problems” (Briscoe et al., 2018). In sum, the grand challenges approach envelops a variety of

actors and means through which the SDGs are being tackled.

Such contextual and theoretical breadth makes the grand challenges approach at once

inclusive and potentially cumbersome. As a relatively nascent perspective, it may lack the clear

identity needed to rally a cohesive group of scholars to rapidly advance thinking in this space.

Further, grand challenges’ scope inevitably leads to a need for multi-disciplinary, multi-method

research that is often difficult to publish in academia, particularly within such long-established

fields as sociology and economics (Ferraro, Etzion, & Gehman, 2015). Though hybrid fields like

strategy and entrepreneurship may more readily draw on multiple bodies of theory, the shared

language problem and some of the more dogmatic institutional incentives may persist – at least

indirectly – in restraining progress in cross-disciplinary scholarship, thereby perpetuating the gap

between (social) science and sustainability practice (Banks et al., 2016; UN Environment, 2018).

While the grand challenges literature is relatively nascent, the managerial literature of the

last few decades has cultivated a variety of subfields focusing their lenses on related, non-

traditional forms of entrepreneurship. These non-traditional forms typically combine the profit

motive with extra-fiduciary motivation and new logics. Three of these entrepreneurship lenses

inform emerging advances in digital sustainability.

Forms of Entrepreneurship

Social entrepreneurship (SE) is probably the most studied form of non-traditional

entrepreneurship. The literature focuses on the use of market-based methods to address social

issues and create social value through the creative recombination of resources (Miller, Grimes,

McMullen, & Vogus, 2012). Considerable debate persists about the nature and identity of the

social entrepreneur, the tensions between social and commercial outcomes, and the definition of

social value (Dacin, Dacin, & Matear, 2010; Saebi, Foss, & Linder, 2019; Wry & York, 2017).

Despite these debates, scholars generally agree social entrepreneurs deploy “a business logic in a

novel and entrepreneurial way to improve the situation of segments of the population that are

excluded, marginalized, or suffering and are themselves not capable of changing this situation”

(Saebi et al., 2019, p. 1), while realizing business opportunities with priority given to social

wealth creation versus economic wealth creation (Hollensbe et al., 2015; Mair & Marti, 2006).

Social entrepreneurs exhibit a willingness to subordinate the profit motive to selected

pro-social objectives (Austin, Stevenson, & Wei-Skillern, 2012). While they often address

widespread problems like poverty, malnutrition, and health, they typically do so in specific

geographical contexts, which limits their ability to scale. Indicative studies have focused on

organizational work to empower women (Datta & Gailey, 2012), overcome poverty (Alvord,

Brown, & Letts, 2004), and expand access to finance to disadvantaged communities (Azmat,

Ferdous, & Couchman, 2015). In these ends, an entrepreneur’s choice to deploy a for-profit or

non-profit model may hinge upon the focal social need and the nature of the opportunity by

which the firm can capture some of the produced value to survive (Peredo & McLean, 2006).

Institutional entrepreneurship (IE) is rooted in institutional theory (DiMaggio, 1988) and

a recognition of organizations’ embeddedness within their various social, economic, and political

contexts. These contextual webs convey opportunities, costs, and benefits on market actors

through constituent logics (Lounsbury & Boxenbaum, 2013) that in turn constrain and stabilize

behavioral routines. DiMaggio (1988) identifies institutional entrepreneurs as actors who

envision and enact new institutions as a means of advancing interests previously suppressed by

incumbent logics. To illustrate, seminal work by Greenwood and Suddaby (2006) studies

institutional work by the big five accounting firms who - while shaped by their context - enact

changes to that context to pursue new aims. The work illuminates a “paradox of embedded

agency” that has inspired Battilana and D’Aunno (2009) to unpack “the tension between the

notion of actors as strategic agents and the powerful influence of institutional forces on human

agency” (p 96). A salient topic in IE is then the investigation of actors who become motivated

and enabled to change the structures within which they are themselves embedded.

This paradox proves especially salient in poorer, resource-deprived contexts marked by

institutional voids. Here, entrepreneurs need first to build institutions from whole cloth before

investing effort to reshape them to advance a given set of particular interests (Mair & Marti,

2009; Stephan, Uhlaner, & Stride, 2015). Recent examples examine the role of collective

emotions in shaping institutional change and rebuilding in the wake of a natural disaster (Farny,

Kibler, & Down, 2019) and the role of social movements in legitimizing and accelerating the

market penetration of wind energy (Pacheco, York, & Hargrave, 2014).

Sustainable entrepreneurship (STE) is a more recent addition to entrepreneurial study

amidst complex, social and environmental problems (Shepherd & Patzelt, 2011). While many

large firms have built corporate social responsibility departments to generate pro-social outputs

from a subset of firm activities while separating those activities from core processes since the

definition of sustainable development in the Brundtland and WCED (1987), a smaller subset of

firms have sought to incorporate pro-social choices into their core strategies, practices, and

processes (Aragon-Correa & Sharma, 2003; York, Vedula & Lenox, 2018). In this line, Hall,

Daneke, and Lenox (2010) trace the emergence of STE in practice as a progression in firm

orientation. This progression initially manifests in a shift in goal-setting away from reducing

environmental impacts – doing less harm – and “going green” (Ambec & Lanoie, 2008) towards

a more transformative commitment to correct a market failure at the crossroads of the economic,

social, and environmental realm (Cohen & Winn, 2007). The most ambitious sustainable

entrepreneurs then intentionally seek net positive environmental impacts (Levinsohn, 2011).

In its mature form, STE may thus link together a heightened attention to improved

processes with a triple bottom line to balance firm production of economic, social, and ecological

value. Here, transformative change empowers a “systems view” of the firm in its socio-

ecological context and a toolbox for sustainable impact. As sustainable entrepreneurs reshape

capital structures and corporate cultures, they engender a growing population of organizations

for whom the pursuit of sustainability has become a core economic opportunity and a way to

forge novel capabilities (Bansal & Roth, 2000). Hoogendoorn, van der Zwan, and Thurik (2017)

identify sustainable entrepreneurs as those “who start a business to serve both self-interests and

collective interests by addressing unmet social and environmental needs” (p. 1), capturing the

field’s coalescing focus on not only the firm but also its founders and its mission.

The table below provides an overview of the planetary boundaries perspective, the grand

challenges approach, and the three non-traditional entrepreneurship lenses. The depiction

indicates for each the primary focal actor or unit of analysis, the central actor’s commonly agreed

upon objective, and the essential means or behavior of that actor being studied. To this table we

add the sixth lens of digital sustainability, which we will discuss later.

---------------- Insert Table 1 about here ----------------

Managerial Problems of Mitigating Climate Change and Advancing Sustainability

Planetary boundaries, grand challenges, and the forms of entrepreneurship offer different

toolkits with which to plot a course to impact. Planetary boundaries draw chiefly on the natural

sciences while the other four lenses leverage diverging theoretical approaches (ways of

thinking), attend to distinct sets of focal actors (areas of study), and explore various outcomes

(research and organizational objectives). Yet, despite their differences, we believe these fields’

‘raisons d’être’ exhibit clear common cause. To produce impactful research, organizational

scholars work to distill challenges into tractable managerial problems, capture their underlying

causes, and link their engagement to practice.

To support this effort, we next advance six managerial problems that undercut attempts to

drive positive change towards sustainability, and whose study promises insights towards

solutions. We select these problems (from among a potentially wider universe of options) as they

conceptually align with the design elements that characterize the activity-system perspective on

business models (Zott & Amit, 2010). These authors define an “activity in a focal firm’s business

model… as the engagement of human, physical, and/or capital resources of any party to the

business model (the focal firm, end customers, vendors, etc.) to serve a specific purpose toward

the fulfilment of the overall objective” and suggest that weaving such activities together is the

essence of business model design (Zott & Amit, 2010: p. 217). The activity-system perspective

proposes three design elements: content, structure, and governance. These three align with the

six sustainability challenges we highlight. What we know and how we value natural capital is the

content of digital sustainability’s focus. Similarly, challenges with communication, coordination,

and trust require the (re)structuring of organizations and markets in ways pioneered by digital

sustainability activities. Finally the governance aspect addresses the actors involved, and exposes

difficulties with reaching disenfranchised populations and the institutions that (fail to) govern

sustainable development.

We exclude from the analysis a wealth of problems that are less clearly related to

business model design or are driven by local and regional differences that require a more

contextual understanding These include but are not limited to issues of ethics, such as the

question of anthropocentrism in utilitarian logics (who matters), and power, as regarding for

example the means and legitimacy of actors who have established the rules of the game in which

organizations operate in the day to day.

Problems of Knowing

Much of the consumption underlying the global overshoot of planetary boundaries flows

from two knowledge gaps. The first involves a failure to generate and disseminate valuable

information concerning the condition of the natural biosphere on which civilization relies, as

well as the types and magnitudes of impacts our behavior has on all forms of life. When prices

fail to reflect the true costs of unsustainability, market participants too often remain unaware of

the shadow costs of their choices. As such, they do not incorporate the real impacts of

consumption and production choices into decision-making. A lack of knowledge not only puts

more sustainable goods and services at a disadvantage, it erodes the economy’s ability to

efficiently husband Earth’s stock of social and natural capital.

In confronting problems of knowing and empowering more responsible patterns of

production and exchange, organizations contend with a second and related type of knowledge

gap concerning known unknowns and unknown unknowns. To illustrate the former, we can

quantify annual global increases to the atmospheric carbon stock with a high degree of certainty.

We can further detect, with great certainty, increases in global temperatures. Yet we confront

much greater levels of uncertainty in apportioning emissions across countries and firms. To the

latter, we further face “unknown unknowns” in quantifying thermal forcing from non-carbon-

based greenhouse gases like methane, which may prove an enormous and increasing - though ill-

understood - contributor to global warming (Dean et al. 2018). To take another case, computer

models have made great headway mapping the likely impact of rising sea levels on coastal real

estate (Bernstein, Gustafson, & Lewis, 2019), but have struggled to quantify the impacts of still

poorly understood climate feedbacks and non-linear changes to major earth systems (Bonan &

Doney, 2018) on near-future conditions. These blind-spots undermine efforts to establish the full

set of factors underlying the true social cost of carbon and so calibrate a demonstrably science-

based, rather than politically-mandated, a global carbon management system with which to

preserve the value of one of Earth’s most valuable assets, a stable climate.

Problems of Valuation

As Dees (2017, p. 4) observes, “[i]t is inherently difficult to measure social value

creation. How much social value is created by reducing pollution in a given stream, by saving the

spotted owl, or by providing companionship to the elderly?” A key challenge in achieving

sustainability involves quantifying the value of mitigating negative spillovers or producing

marginal increases in shared socio-ecological value. Emerson notes in this light that “it has been

taken as a virtual given that most elements of social value stand beyond measurement and

quantification” (2003, p. 40), not in the least because of the difficulty of parsing the value of a

single action’s contribution to an often harder to identify objective and beneficiary.

Difficulty in quantifying socio-ecological value remains a central reason real costs

remain hidden. Where calculations are expensive or contentious, not only do the true costs of

unsustainability remain obscure, so too do the benefits of achieving discrete goals. Biologists

have made progress establishing how much carbon one tree absorbs, and economists make strong

arguments for quantifying how much dirty energy a solar array displaces. Yet firms that quantify

changes to the rate of carbon emissions do so in the absence of broader agreement on the true

cost of atmospheric carbon (Presse & Paetzhold, 2018). Relatedly, entrepreneurs struggle to

secure a consistent price for ecosystem services. While firms are starting to see success in

measuring habitat gains by combining satellite sensing, AI, and machine learning, they still

struggle to ascertain how much value society places on preventing a given species from going

extinct. Where progress on assessing impacts fails to translate into consensus on valuing

outcomes, firms face reduced incentives to bear certain opportunity costs to make risky

investments in sustainability actions.

Problems of Communication

While better science may eventually inform a global carbon tax with the potential to

obviate a portion of the valuation problem for carbon (e.g. Presse & Paetzhold, 2018), industries

continue to generate massive, negative footprints in water (e.g. meat production), land (e.g. palm

oil) and other forms of natural capital. Consumer products driving these “externalities” range

from meat to chlorine bleach, dry cleaning chemicals, microfiber clothing, disposable razor

blades, consumer electronics, and single use plastics. Plastic waste in particular poisons marine

ecosystems and consumers of seafood and shellfish the world over (Lebreton et al., 2017) and

much of this waste stems from the “throw-away” products of a handful of multinationals who

deploy vibrant social responsibility programs and espouse their commitment to sustainability.

Yet even as impact valuation grows tractable, organizations working for sustainability

may struggle to clearly communicate their value propositions to consumers, in effect struggling

to market the value proposition of discrete and collective investments in socio-ecological value

to a wider audience. This may in part result from the complexity of information related to

sustainability efforts and the long range of their anticipated effects. Another problem involves

humans’ bounded rationality and limited attention spans, biological characteristics that lower

consumers’ willingness to invest scarce cognitive resources in unpacking multifarious value

propositions soliciting concrete reallocations of day to day spending. This “friction” in the

communication of socio-ecologically efficient opportunities is further exacerbated by the actions

of unsustainable product producers who invest significant resources in counter-narratives.

Problems of Coordination and Trust

Coordination is often critical both for creating socio-ecological value and for capturing

some of that value for communities. Key challenges include high costs of establishing

sustainable patterns of exchange, forging agreements on valuing sustainability efforts, assessing

an equitable distribution of that value among stakeholders, and enforcing those distributions

(North, 1991). Coordination costs are particularly pernicious for sustainable business due to the

complexity of the socioecological systems in which organizations devise ‘impact projects’. Such

projects often produce new shared value along multiple vectors (social, environmental, etc.).

Organizations who work to coordinate these projects often bear significant, and often difficult-

to-anticipate coordination costs to quantify social value propositions, make these comparable to

inform tradeoffs among partners, and market outputs to stakeholders in a credible fashion.

This last point, of credibility, resonates with the challenge of trust. Where trust is lacking,

parties to a collective effort struggle to become exposed to risks of opportunistic behavior by

collaborators. Not only does a sustainable business incur high coordination costs, it must

credibly forgo the capture of the full value-add of work whose positive spillovers flow to third

parties of the world at large. Implicit “sacrifice” of value by the organization leads to a situation

in which entrepreneurs rely on subsidies, donations, and volunteer to offset the value-capture

problem. Such reliance on altruistic support to cover the costs of coordinating economic behavior

for creating and marketing socio-ecological value “further muddies the waters of market

discipline” (Dees, 2017, p. 37), as firms can no longer be expected to reach efficient investment

levels based solely on utilitarian logics.

Problems of Access and Reach

Problems of access come in two complementary types: access to people and access for

people. Underpinning these stand socio-political issues “labelled a problem in the arenas of

public discourse and action” (Hilgartner & Bosk, 1988, pp. 53-54). Lack of access to people

occurs when “not everyone has access to a product or service that is generally seen as a

meaningful enhancer of social or economic wellbeing” (George et al., 2019, p. 14). Reaching

people in the bottom of the pyramid (BoP) - living on less than $2/day - is often hard because

common operational models fail to service hard-to-reach customers, leaving these markets

unexploited. A lack of access results in exclusion from service (e.g. the digital divide) and from

finance (e.g. being unbanked). Whereas problems of access to people describe challenges in

provisioning, problems of access for people change the perspective and describe challenges in

institutionalized exclusion or social rules that exclude certain groups of people from drawing

benefits from private or public goods. Where demographic characteristics like gender identity,

religion, and race limit the access of certain groups to specific services and products, total

welfare suffers due to an increase in both market inefficiency and injustice.

For companies working on sustainability, access challenges reduce their ability to

efficiently generate impact at scale. Lack of access to people at the BoP distances firms from

those populations for whom the “bang of a buck” of impact spending is often highest, whose

consumption decisions could well prove the most price sensitive (responsive to intervention),

and whose day to day decisions (such as poaching endangered species for subsistence) have

some of the most profound consequences for husbanding natural resources. Lack of access for

the most vulnerable also reduces their ability to advocate for institutional change or otherwise

improve connections between marginalized communities and the organizations and resources

that often prove so critical to developing sustainable livelihoods and transferring the fruits of

socio-ecological investments across boundaries.

Problems of Institutions

Institutional failures form an additional and systemic challenge for sustainability efforts.

In many contexts, the weakness or corruption of governance regimes translate into profound

disadvantages to firms who either work to internalize their own negative spillovers or call

consumer attention to opportunistic behaviours by competitors. Where weak institutions allow

regulatory capture to become the norm, even well intentioned organizations struggle to convince

stakeholders that contributing to the social good will not simply be exploited by competitors

(e.g., Pacheco et al., 2014; York et al, 2018). Nowhere is this dynamic clearer than in common

pool resource management, as for public forests, fisheries, and shared watersheds. When

institutions cannot place credible checks on exploitative behaviour by private and state-owned

organizations, any initiative to contribute to the public good will most likely devolve into an

opportunistic windfall for predatory competition. From a race to the top, these environments

deteriorate rapidly into a spiral of overconsumption and abuse.

Finally, even when governments are not corrupt, limitations in capacity may leave many

legitimate authorities unable to hold organizations to any meaningful regulatory standard.

Highlighting the potentially catastrophic results of such challenges in governance, scientists

recently concluded a swath of firms from various provinces in Eastern China have restarted

mass-producing chlorofluorocarbons long banned under the Montreal Protocol (McGrath, 2019),

in spite of widespread regulation to enforce their moratorium. For the institutional actor, such

limitations may be due to a lack either of capacity (and/or resources) to enforce rules, or of

sufficient information with which to identify rule-breakers. At the extreme, limitations in

governance manifest as institutional voids, where the regulatory function de facto ceases to exist.

Digital Toolkits and Business Model Innovations to Address Sustainability Problems

The problems discussed above paint a sobering picture. Yet we propose that many of

these problems can be meaningfully addressed through the deployment of exponential digital

technologies that underpin new activities and new business models. Traditionally, responsibility

for producing public goods (e.g. national parks, clean water) has fallen to the State, due to its

ability to coordinate shared investments and prevent outsiders from freeriding on shared benefits.

Now, entrepreneurial start-ups, non-profit ventures, and incumbent organizations engaging in

digital sustainability activities are tackling problems that were once the strict prerogative of

governments, the NGO, and international agencies, pursuing a variety of objectives that

principally relate to the preservation and regeneration of the natural world.

If we follow the ecosystem-as-structure approach as proposed by Adner (2017), we can

interpret all organizations that are actively seeking to create public value by supporting and

regenerating natural capital as nodes in a global, distributed ecosystem. In the absence of a

central platform actor driving these activities, localized hot-pockets of decentralized production

are increasingly, and jointly, pursuing common objectives. Digital sustainability activities

regularly employ ecosystem architectures as force-multipliers. Actors devoted to digital

sustainability support ecosystem-level coordination among disparate players, enabling them to

work together towards shared objectives related to sustainable development. Horyou, the Regen

Network, and Veridium are just a few examples of organizations operating in this manner.

The technologies most commonly used in ‘digital sustainability activities’ include

distributed ledger technologies (blockchain), artificial intelligence and machine learning

(AI/ML), Big Data Analytics, mobile technology and applications, sensors and other devices

related to the internet of things (IOT), and other telemetry tools like satellites and drones. Table 1

highlights key and distinguishing features of the digital sustainability lens, relative to established

perspectives on planetary boundaries, grand challenges, and entrepreneurship.

Of fundamental importance to the success of this ecosystem and its constituent actors is

the low-cost scalability of exponential technologies. A capacity for replication makes digital

toolkits resemble the scale-free resources described by Levinthal and Wu (2010). In addition, the

open source and collaborative nature of many initiatives within the digital sustainability

ecosystem further accelerates the scaling of coordination and trust. For instance, blockchains can

help organizations sustain systems of shared value and exchange while remaining spatially

unbound, such that loose networks of actors in diverse locations in the world can share and

exchange material resources in their work to address a sustainability problem threatening current

and especially future generations at a global scale.

Digital sustainability activities are thus characterized by high scalability and ecosystem

coordination. Together, these properties enable actors to break the trade-off between private and

public value. Specifically, through digitization, it becomes possible to coordinate investments

across a wide array of ecosystem level actors, appropriate a portion of the residual benefits of

public goods and enable the broader market to value the impacts of socio-ecological investments.

For instance, when a public forest is tokenized, tokens can represent the preservation

and/or production of ecosystem services – including carbon sequestration - to which token

holders in the wider market can lay legitimate claims and trade these claims in markets for

ecosystem services. Tokenization drives a productive wedge between public ownership and

private benefit appropriation (in terms of ’bragging rights’) while the most important benefits (in

terms of climate stabilization) remain public. Discrete claims are similar to emission rights, but

rather than incentivizing a one-off cash-out for an interested party, tokens represent long term,

fungible investments in shared natural capital. Further, ecosystem players who co-create the

platform on which the tokenization occurs can share in the reputational gains of solving a

sustainability problem of coordinating investments in public forests.

To illustrate in greater depth how digital sustainability is already beginning to make

headway in the world, we next discuss six pathways we consider instrumental in tackling the

challenges we face. Table 2 reviews the six managerial problems and links them to digital

sustainability pathways that organizations can use to shape socio-ecological outcomes. We

discuss each pathway separately, illustrate relevant, enabling innovations of the digital toolbox,

and provide examples of noteworthy activities and actors.

-------------- Insert Table 2 about here --------------

Codifying Observations to Address Problems of Knowing

New use-cases for technologies that enable short and long-distance observation empower actors

to collect high-resolution data on the specific natural biomes and their interactions with the wider

ecosystem. These telemetry tools help firms observe and quantify aspects of nature, distill new

knowledge on the functioning of complex socio-ecological systems, and codify those

observations into instruments and insights to guide action. By making these insights available

across the value chain, firms may succeed in both creating and capturing a portion of new socio-

ecological value. Key technologies range from satellites, drones, and the internet of things to

technology-assisted citizen science. These tools fill knowledge gaps and mitigate blind spots and

improve the quality and quantity of knowledge with which decision makers may assess business

risks and market failures relevant to the balanced production of economic, social, and ecological

value.

Nascent ventures have started to use such tools to codify observations about the natural

world to produce shared value. Planet Labs operates an armada of micro-satellites that provides

“ultra high frequency, high resolution monitoring [which] is taking Earth science to a completely

new level” (Greg Asner, lead scientist at the Carnergie Airborne Observatory

). Saildrone builds

and operates a growing fleet of unmanned drones that sail around our oceans independently,

collecting high-resolution atmospheric and deep oceanic data to disrupt a market traditionally

reliant on expensive buoys and manned vessels. Envirate uses people’s sensory inputs (seeing,

feeling, and smelling) to rate how humans experience the natural world through a simple smart

phone application. After codifying raw observational data, the second step these organizations

take entails turning data into tangible information and instruments to inform decision-making.

Using advanced machine learning, Planet Labs has trained algorithms to correlate the

spatial structure of private satellite data to the very detailed and expensive LiDAR data. They

thus created low cost indicators of how earth’s natural capital evolves over time. Saildrones are

equipped with over 40 sensors to track fish and mammal populations, map sea beds, and monitor

temperatures, currents, and hurricane intensities. The company turns these data into quasi real

time information feeds to facilitate clients’ decision-making. Envirate turns crowd-sourced

information into open access codified heat maps of the earth, over time demarcating zones of

https://medium.com/planet-stories/the-sensor-revolution-using-lidar-and-satellite-imagery-to-map-drought-

3ee4d8d57993

environmental improvement and degradation.

All these organizations share a goal to create non-appropriated value by making their

activities and instruments available to a wider ecosystem. Planet Labs’ ‘Ambassador Program’

brings its observation tools to the scientific community to help investigate important

socioecological questions. In an interview with the authors, Saildrone’s Liz Douglas told us that

the company always asks itself “what is the scientific purpose of this job?” If the answer is

missing or unclear (i.e. if public value creation is low), they just won’t do it. By collaborating

with incumbents, Envirate inspires the allocation of resources for CSR programs to areas with

the highest possible impact rather than those with the lowest political hurdles.

Improving Liquidity to Tackle Problems of Valuation

Digital sustainability activities also entail the use of emerging technologies to create new

markets for ecological public goods and services that were previously prohibitively difficult to

measure and/or exchange. Two interesting elements in the digital toolbox that support new

market formation are tokenization and packetization. The former refers to the application of a

digital proxy, such as a blockchain token, to represent a previously amorphous unit of natural

capital. The latter, often employed as a supplement to tokenization, describes a process of

bundling data into small packets that contain valuable information and enable a much greater

distribution of risk and ownership. Singaporean start-up Maecenas for instance tokenizes and

sells 49.9% of an art work’s ownership rights to people who want to own a tiny fragment of a

masterpiece, expecting greater resell value in the future. Together, tokenization and packetization

allow businesses to render natural capital into well defined, small, fungible, and tradeable units,

for which new markets can set prices (e.g. for commons-destroying spillovers) and generate

rewards for investing in ecological public goods.

Poseidon, a Malta-based foundation, is tokenizing carbon credits from conservation

programs in the Andean rainforest onto the Stellar blockchain and packetizing those credits into

“carbon by the gram”. Swytch tracks, verifies, and tokenizes renewable energy produced and

associated avoided carbon emissions. Both groups packetize valuable provenance information

into their tokens and then sell them to interested parties. Poseidon specifically focuses on

enabling micro-transactions to offset the footprint of retail products and services, such as filling

up a tank of gasoline, in a bid to help consumers attain “carbon-neutral” consumption. The

foundation for instance partnered with Ben & Jerry’s ice cream and ultra-fast vehicle

manufacturer BAC, which now offsets double its production emissions through Poseidon and

helps clients offset miles driven during their yearly maintenance

By packetizing granular data on energy production, including exactly what was produced

and where, when, and how much carbon emissions have been displaced by a unit of renewable

power, Swytch gives token buyers increased flexibility and accuracy when claiming attribution

for carbon reductions in their sustainability reporting. Both Poseidon and Swytch thus support

the transition to a post-carbon economy by adding liquidity for consumers and producers of

environmental benefits (carbon credits and kilowatt hours of renewable power). Swytch

leverages a very advanced AI system to allocate a value to each kWh of renewable energy by

accounting for factors including risk, institutional capacity, and availability of alternative

https://poseidon.eco/clients.html ; https://www.btcwires.com/round-the-block/ben-and-jerrys-partners-with-carbon-

poseidon-blockchain-for-neutral-business/

supplies, ensuring that higher risk projects receive higher rewards to support a more efficient

market evolution.

Facilitating Attention to Confront Problems of Communication

Because the meta-challenge of sustainability is so complex and fast-evolving, consumers

often feel their efforts are meaningless, or lack awareness of where their energies may be best

directed. In response, some firms now leverage digital tools to communicate simple, engaging

sustainability messages to large populations. These activities often build on processes of

gamification, transposing pro-sustainability behaviors into fun, social, and competitive

environments. By contextualizing users’ sacrifices and micro-commitments within an

encouraging game, new ventures along these lines may not only generate impactful behavioral

change, but also develop a more engaged user-base through the repeated and paired provision of

a simple, yet laudable, service and a clear, environmental message.

As an example of gamification, Ant Forest is a green initiative within the Chinese

payment and lifestyle application AliPay. Ant Forest has evolved into a social game that tracks

and rewards green lifestyles (e.g. walking to work, paying bills online, taking the metro etc.)

with “energy points” representing grams of carbon saved. Energy points became valuable

commodities users can spend to plant and nourish digital trees or sponsor land conservation. To

ensure consistent engagement, Ant Forest allows users to steal small amounts of energy from

friends or help water friends’ digital trees. The parent company, Ant Financial, plants a real-life

tree for each digital tree a user raises to maturity. Since 2016, Ant Forest has increased customer

satisfaction and strengthened Ant Financial’s brand identity as a global leader in sustainable

finance, while planting 500 million trees in Inner Mongolia. By October 2018, Ant Forest reports

almost 400 million regular users.

Another form of facilitating attention involves simplification, a process of effortlessly

embedding a pro-sustainability impact in a daily activity. A fine example is Ecosia, a search

engine that uses 80% of its advert revenue to plant trees to fight global warming. Since its launch

in 2009, Ecosia and its user community report planting over 61,000,000 trees in Ethiopia, Brazil,

Indonesia, and Spain. Ecosia differentiates itself from market leaders by establishing

sustainability as its core business logic and value proposition. In the company’s own words:

“we're interested in trees, not your data”. Ecosia enables users to contribute to tree planting by

simply installing Ecosia as their default search engine. A comparable organization is “Tab for a

Cause”. This simple plugin shows users a beautiful landscape and advertising that each time they

open a new tab in their internet browser and donates 30% of add-revenue to a one of nine

charities based on a user’s selection. Not surprisingly, Tab for a Cause has made it easy to

integrate Ecosia into all new tabs, helping users double their impact with zero new effort.

Embedding Verification to Counter Problems of Coordination and Trust

Organizations are employing digital tools to reduce transaction costs and moral hazard in

sustainable supply chains. Many key technologies in this space are similar to those being used to

solve problems of valuation, with a heightened focus on solving coordination problems in the

production and distribution of shared value. Pioneering organizations in digital sustainability are

now embedding verification processes within the architecture of exchange systems. Embedding

verification enables diverse market players to engage in arm’s length - and often trustless -

buying and selling with much-reduced risks of freeriding and opportunism. Key innovations

include smart-contracting (hardcoding terms of trade into transaction flows to automate business

logics) and layering, a process of digitizing evidence of (sustainable) provenance for storage

within immutable, tamper-proof ledgers. These tools promise to solve adverse selection

problems that have disadvantaged superior, sustainable products in open markets.

A key challenge in economic exchange, especially in international trade, involves

ensuring the quality and provenance of goods purchased from sellers at the far side of the world.

DiMuto, a Singaporean start-up, is addressing this challenge by restructuring fruit and vegetable

trade using digitized trade papers and a blockchain-based, track-and-trace system running from

farm to fork. By on-chaining trade operations between multiple players, DiMuto produces a

dynamic log of agreements, contracts, store locations, delivery times, and transfer points. This

reduces risks of fraudulent data flow and allows for faster identification of volume, quality, and

origin discrepancies. By linking smart locks and temperature sensors to the DiMuto platform, the

system also provides quasi real time updates about the state of the cold chain. The private value

of the platform thus involves reducing trade frictions, whereas the public value lies in reducing

energy loss and food waste while providing verification tools to support a transparent “race to

the top” in fruit production. The new platform also helps small-scale farmers’ access inventory-

based finance and insurance, reducing risks and helping them plan strategic investments.

Efforce is a blockchain-based energy-saving trading platform seeking to revolutionize the

market for Energy Performance Contracting (EPC) for infrastructure upgrades that reduce

energy costs. An energy service company (ESCO) proposes improvements to an industrial

facility, which are then financed by a finance partner. The facility pays back the ESCO and

finance partner based on energy savings. EPC regularly returns 20-25% in energy savings and

promises 20-25% returns for financing partners. Yet uncertainty about moral hazard (including

cheating, underreporting of savings etc.) has kept the EPC market small relative to its potential.

EFFORCE now retrofits facilities’ smart meters with an algorithm that outbounds contract-

encoded tokens reporting energy savings unto a public ledger, thereby ensuring reliable

verification which facilitates the coordination of economic action and improves the functioning

of the EPC market.

Empowering People to Reduce Problems of Access and Reach

Digital sustainability activities can be used to increase access and reach in ways that

promise to empower previously disenfranchised communities that often lack access to formal

efficient markets. This exclusion is one of the principal reasons why so often it is expensive to be

poor. Innovations driven by digital technologies can balance power and information asymmetries

to underpin business solutions at the “base of the pyramid”. Solutions manifest both at the supply

side (to empower small scale production) and at the demand side (to better reach customers and

consumers).

At the supply side, Olam, an agribusiness multinational based in Singapore, is working to

digitize the origination process for crops like cocoa across its global network. By equipping

small scale famers with mobile phones armed with a digital sales platform, Olam cuts out price-

setting middlemen and provides higher prices to farmers. To develop this platform, Olam

managers used a user-centric design thinking method to learn from farmers what the value-add of

middlemen is (largely assessing crop value and estimating transaction costs) and how it would

need to adjust its supply chain operations to prioritize minimal disruption at the farmer level. In

collaboration with scientists, they digitized the valuation of cocoa based on moisture content

using image recognition and machine learning so that they could create a real-time pricing tool

that would make earnings for farmers more predictable and pricing more transparent and less

susceptible to the bargaining and haggling power of middlemen. Via digital re-intermediation,

Olam can now pay farmers more, improve the stability of supply and widen margins while

encouraging digital “lock-in” to their digital platform (Olam Direct).

On the demand-side, Hiveonline is a digital exchange system for the unbanked. The

Danish start-up provides a contracting and accounting system for formal and informal, generally

unbanked microbusinesses, that enables reputation building, social network verification using

phone records for KYC, and tokenization of natural capital assets. The overarching goal is to

provide digital proof of creditworthiness and thusly expand access to finance and employment

for impoverished communities. In Niger, Hiveonline’s platform intermediates between

community lending circles who lack access to financial services and Village Savings and Loan

Associations. Through their technology, they can help their financial partners reduce risk and

empower local businesses.

Fortifying Infrastructure to Lessen Problems of Institutions

Last, digital sustainability organizations can fill institutional voids and reduce agency

costs in the generation of sustainable value. Institutional voids can arise from trust problems

rooted in corruption and other failures of institutions and governance. By fortifying existing or

developing novel digital infrastructures in a decentralized and/or peer to peer way, organizations

are providing new goods and services or ensuring rights and titles. Key technologies include

blockchain to support trustless exchange, the collateralization of social capital, and mechanisms

for building consensus. By digitizing institutions, these technologies allow organizations to solve

governance failures and allow new and existing markets to reduce dead weight loss and expand

socio-ecological surplus.

Arbol is pioneering a global, location-specific, peer-to-peer index insurance market using

blockchain, smart contracts, and public weather data. The platform addresses unmet needs of

farmers whose livelihoods hinge on local events like droughts and heatwaves, and for whom

existing insurance products are ill-suited due to inflexible terms and prices driven by large US

agrobusinesses. Arbol’s tokenized smart contracts are transparent and cost-effective (no human

interaction), paying out a pre-set amount whenever an agreed-upon weather threshold is reached

to replace output ambiguity (i.e. damage) with input alignment (e.g. more than 125 ml of rainfall

in a 3-month period). As a P2P platform, Arbol also enables anyone to enter as an underwriter

and absorb counterparty risk by trading in a new asset class, which is why the platform has been

appealing to both classic insurance companies that find new ways of underwriting local risks as

well as to hedge fund managers looking for new asset classes that are uncorrelated from major

markets. Tokenized contracts can also be traded on a secondary exchange, ensuring underlying

capital remains liquid during the contract period.

Ukraine has followed in Georgia’s and Sweden’s footsteps to develop a land registry for

its farm land on the blockchain, after recognizing that “its current system is vulnerable to fraud

that leads to conflict over ownership” (Verbyany, 2017). In places like Ukraine, where trust in

the government may be low, such solutions can enhance transparency and ensure that no illicit

activities underpin the auctions of state land leases. Democracy Earth is non-profit technology

company that built a platform that helps others build democratic, transparent, and incorruptible

decision processes for organizations. The organization has broad goals that all fall under the hat

of personal sovereignty, including returning ownership of user data on social platforms to the

people, online, anonymous, and incorruptible voting, which enables quadratic voting as well as

vote delegation to more erudite or more able people (Jacomet & Deville, 2017).

To summarize, we present a stylistic model (Figure 1) of how digital technologies are

being used to tackle climate change and to boost sustainability. This model connects the six

problems we identified as fundamental causes of our limited ability to achieve sustainability

objectives to the proposed digital sustainability pathways that tackle each problem through the

digital toolbox. The objective of digital sustainability activities is to create highly scalable

market offerings that directly improve socio-ecological outcomes.

----------- Insert figure 1 about here -----------

A Research Agenda on Digital Sustainability and Entrepreneurship

We reviewed the planetary boundaries approach and four managerial lenses and

presented digital sustainability as its own idiosyncratic lens with a unique combination of focal

units of analysis (organizational activities), objectives (focus on sustainability and socio-

ecological value creation), and means (spatially unbound, scalable deployment of digital

technologies). These lenses are a selection of the approaches present in our field that investigate

questions of global importance in relation to sustainability. In entrepreneurship for instance, an

additional yet scarcely developed lens is the one of development entrepreneurship as an

integration of institutional, social, and business entrepreneurship (McMullen, 2011). In order to

stimulate debate and invite our colleagues to join conversations about how digital technologies

are transforming the way organizations tackle sustainable development, we introduce a variety of

other perspectives and possible research questions in Table 3. While the first two rows stem from

topics discussed above, the next four are briefly introduced below.

---------- Insert Table 3 about here ----------

Social Movements for Sustainability

Social movement theory has also been used as a lens to discuss sustainability topics such

as degrowth (Demaria, Schneider, Sekulova, & Martinez-Alier, 2013), climate justice (Pettit,

2004), and climate change more generally (Jamison, 2010). Relevant social movements manifest

as more loosely organized entities that, while lacking the formal organizational structure of

entrepreneurial firms, nevertheless strive towards similar goals as social or sustainability

entrepreneurs. To take an extreme example, a growing chorus of scientists now argue - based on

the scientific evidence – the inevitability of catastrophic global warming and at least partial

societal collapse (Bendell, 2018). Humanity’s increasingly dire position has inspired a growing

array of loosely-coupled social movements such as the “Extinction Rebellion” movement in the

UK to refocus their professional and personal life on deep adaptation through resilience,

relinquishment, and restoration.

From a digital sustainability angle, it would be valuable to study how social movements

use digital technologies to expand and activate their user base to achieve their ends and whether

such social movements behave in differently from engaged corporate stakeholder communities.

While quantitative data around these types of loosely coupled organizations may be hard to come

by, in depth case studies of activist organizations like ‘Avaaz’ or problem-focused organizations

like ‘charity: water’ would be of interest, given that both have excelled at leveraging digital and

mobile technologies to boost the size and concomitant power of their community. Comparative

studies between social movements, digital sustainability actors, and corporate actors that all seek

to address a similar problem would be of great interest.

Business Model Innovation and Ecosystems

Our conceptualization of digital sustainability as a new lens that explicitly focuses on

activities undertaken within a larger ecosystem that works towards the achievement of the SDGs,

marries the business model approach advocated by Zott and Amit (2010) with the ecosystem-as-

structure approach proposed by Adner (2017). Adner (2017) starts from an overarching value

proposition that can only be accomplished by a multitude of interdependent activities that are

performed by a diverse set of actors. Zott and Amit (2010) see the business model as an activity

system that consists of content (in terms of value proposition), structure (how activities interact),

and governance (who is leading and who is involved). An activity is the engagement of resources

“by any party to the business model”, thus including stakeholders, buyers, and suppliers, “to

serve a specific purpose toward the fulfillment of the overall objective” (p. 217).

Looking at organizations as constellations of activity systems, some of which fit into an

ecosystem-as-structure that seeks to achieve the SDGs is challenging but relevant from the nexus

perspective that stresses the interlinkages between all types of activities in the achievement of

sustainability goals (Bock & George, 2018; Schillebeeckx et al., 2018). Activity-centricity also

opens up the possibility that some actors are fully embedded within the ecosystem while others

only have one activity in this ecosystem. This possibility of partial affiliation raises interesting

questions as to how organizations deal with conflicting logics (Purdy & Gray, 2009; Zhao &

Lounsbury, 2016), how external audiences evaluate partial category membership (Durand &

Paolella, 2013; Hsu, Hannan, & Koçak, 2009), and how actors whose activities are fully

embedded within the ecosystem perceive the activities of those who straddle ecosystem

boundaries (Rossignoli, Ricciardi, & Bonomi, 2018).

Legal and Non-Market Approaches

We identified six managerial problems that underpin the current climate and

sustainability crisis and presented pathways to tackle these issues rooted in the creative

deployment of digital technologies, yet digital is not the only way. Tempus Energy, a UK-based

energy service company that provides demand flexibility solutions (using the smart grid and

smart appliances to balance electricity demand to lower the need for peak electricity capacity),

won a European Court of Justice forcing the UK to revisit its capacity market, as it was

interpreted as illegal subsidy (The UK government pays big fossil fuel suppliers for providing

peak capacity that sits idle most of the year) (Sara Bell, CEO Tempus, private communications).

More generally, over 1,300 legal actions over climate change have been taken against

both governments and firms globally (Laville, 2019). Besides legal and digital strategies, there

remain other non-market strategies organizations could undertake to achieve the same ends

(Baron, 1995a, 1995b; Capron & Chatain, 2008). There is surely a need for more research on

non-market strategies and to learn more about whether these non-market strategies are

complements or substitutes to digital strategies. Conversations with Tempus’ CEO showed this

legal strategy was a direct consequence of an anteceding non-level playing field for the digital

solution the company wanted to bring to market. Process studies of how various non-market

strategies are used by institutional and development entrepreneurs, could provide rich insights

into how organizational activities are sequenced to achieve preset goals.

Trust and Digital Sustainability

Some of the activities we discussed rely on blockchain technology and the embedding of

verification into economic exchange transactions. As distributed ledger technology is known as

trustware because it replaces interpersonal trust with technological verification, many have

wondered what the implications will be for those business that are in the business of being a

trusted intermediary (Hammi et al., 2018; Schramm, 2019). This new form of technological trust

offers a lot of possible benefits. It can reduce the capacity of actors to behave opportunistically

(reducing the need to be vulnerable), enhance input verifiability (facilitating control), ensure

transparency and traceability during transaction time and transportation (improving monitoring),

boost the speed of settlement (reducing non-payment risk), and leverage actor embeddedness in

an ecosystem (increasing reputational risk of non-conformity).

Yet, trust is more than a mechanism to avoid opportunistic behavior of the other party.

Research has found that trust plays an important role in team, organizational, and collaborative

innovation (Barczak, Lassk, & Mulki, 2010; Dovey, 2009; Fawcett, Jones, & Fawcett, 2012) and

it is unlikely that “technological trust” can replace the same mechanisms. While in healthcare for

instance, the ability to share data anonymously and have confidence they cannot be tampered

with offers great opportunities for research and development (Mettler, 2016), there are

undoubtedly also application areas where blockchain-mediated economic exchange could

hamper flexibility to respond and undermine innovative practices. Entrepreneurship scholars

interested in trust should see this as a unique opportunity to theorize about various trust

dimensions and the contingencies of trust across various types of entrepreneurial activity.

Conclusion

A variety of phenomenological lenses co-exist that each have an idiosyncratic perspective

on how to tackle climate change, sustainable development, and the creation of socio-ecological

value. To this, we add the digital sustainability lens that focuses on activities undertaken by

entrepreneurial and incumbent firms who rely on digital innovations to create scalable socio-

ecological value. We highlight six problems that hide beneath the surface of sustainability and

are directly relevant to management and entrepreneurship theory and practice. To address those

problems, we formulate digital sustainability pathways grounded in innovative and creative

deployment of digital technologies.

Most of the actors we provide as examples in this emerging field of digital sustainability

have been young entrepreneurial ventures that create socio-ecological value around which they

develop an economic proposition. We believe these organizations, and those that will follow

their example, will play a pivotal role in how the global industrial complex will respond to

climate change and other grand challenges. While many hurdles need to be jumped before we

can even begin to dream of a sustainable economy, we remain hopeful that entrepreneurial

ventures will find solutions that become so powerful they can overcome the lack of urgency

manifest in most governments and large parts of civil society. Climate scientists say we have

about 10 years left to take drastic action if we want to avoid the worst effects of climate change.

The time to act is now.

As scholars, our role is first and foremost to observe, analyze, and bring insights back to

industry. Digital transformation is undoubtedly one of the most influential trends affecting

businesses now, and climate change the most existential threat. Some of the most exciting

research ideas and entrepreneurial ventures companies are due to the convergence of the digital

and sustainability imperatives. We hope others will be inspired to start studying these actors,

their activities, and spur their students and colleagues into action.

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Table 1: Five Phenomenological Lenses that Address Social and Environmental Challenges

Lens

Actor / Unit

Objective

Means

Study Examples

Planetary

Boundaries

Natural ecosystems,

biomes, political

actors

To ensure humanity does not transgress

planetary boundaries (ideally by staying

in the safe operating space)

- Mitigation, policy for damage reduction,

geo-engineering

Rockstrom et al. 2009; Steffen

et al. 2018

Grand challenges

Broad: incumbents,

partners, supply

chains, government,

community

Solving complex, tractable problems that

require coordinated effort (e.g.

Sustainable Development Goals)

- Social, institutional, development, and

sustainable entrepreneurship

- Private sector involvement in SDGs

- Capability development

George et al., 2016; Mair et al.,

2016; Reinecke & Ansari,

2016; Vakili & McGahan, 2016

Social

entrepreneurship

New for-profit and

non-profit

enterprises and their

founders

Social value creation. Typically locally

embedded with a focus on current,

ongoing social issues. Limited intent to

appropriate private value.

- Creative recombination of resources

- Economic value capture to ensure

financial viability

- Linear scaling

- Geographically constrained

Dacin et al., 2010; Mair &

Marti, 2006; Miller et al., 2012;

Peredo & McLean, 2006; Saebi

et al., 2019

Institutional

entrepreneurship

Individuals,

corporations

Institutional change and filling of

institutional voids, often as a means to a

separate (higher order) end being

commercial, social, or environmental

- Institutional work to alter norms, culture,

and practices

- Escaping the paradox of embedded

agency

Battilana & D’Aunno, 2009;

DiMaggio, 1988; Farny et al,

2019; Green & Suddaby, 2006;

Mair & Marti, 2009; Pacheco et

al, 2014

Sustainable

entrepreneurship

Individual

corporations and

non-profits

Solving socio-ecological market failures

to produce commercial, social, and

environmental value.

- Transformative change in focus to triple

bottom line

- Process orientation

- Strategic balancing

Cohen & Winn, 2007; Hall et

al, 2010; Hoogendoorn et al,

2017; Levinsohn, 2011;

Shepherd & Patzelt, 2011;

York et al, 2018

Digital

sustainability

Organizational

activities within the

planetary ecosystem

Create socio-ecological value as a core

part of an economic value proposition.

Recognition of faster feedback loops

makes it easier to establish causal effects.

Long term public value creation.

- Digital technologies like blockchain,

AI/ML, IOT and big data

- Scaling to remedy tragedy of the

commons

- Breaking economic value / sustainability

trade-off

- Spatially-unbound

Merrill et al., 2019

Table 2: Managerial Problems and Digital Sustainability Pathways

Managerial

Problems in

Sustainability

Issues

Digital

Sustainability

Pathways

Digital toolbox

Exemplary

ventures

Problems of

Knowing

Information gaps

and blind spots

Codifying

observation

Instrumentation

Envirate, Planet,

Saildrone

Problems of

Valuation

Profitable

externalities and

freeriding

Improving

liquidity

Tokenization

Packetization

Poseidon, Swytch

Problems of

Communication

Short termism and

bounded

rationality

Facilitating

attention

Gamification

Simplification

Ant Forest, Ecosia

Problems of

Coordination and

Trust

Moral hazard and

transaction costs

Embedding

verification

Smart Contracting

& Layering

Efforce, DiMuto

Problems of

Access and Reach

Exclusion and

asymmetries of

power

Empowering

people

Re-intermediation

Olam, hiveonline

Problems of

Institutions

Institutional voids

and corruption

Fortifying

infrastructure

Digitizing

institutions

Arbol, Democracy

Earth

Table 3: Avenues for Future Research in Digital Sustainability

Research Areas

Sustainability Pathways

Exemplary Research Questions

Non-traditional

entrepreneurship

Fortifying infrastructure

Codifying observations

- What is the role of sustainability intrapreneurs within existing multilateral agencies such as

the UN or the World Bank?

- When and how can digital sustainability (DS) disrupt structures or institutional constraints?

Contextualizing

managerial

problems

Facilitating attention

Empowering people

Fortifying Infrastructure

Codifying observation

Improving liquidity

Embedding verification

- Can we quantify and compare the salience of the organizing problems of DS across

countries and regions? For example, when do the problems of knowing and problems of

valuation become more important relative to other managerial problems?

- Does culture shape the effect of organizing problems on the likelihood of achieving SDGs?

Which cultural dimensions (normative, cognitive, and material) have a strong influence?

- What are the ethical drivers of individual actors in DS?

Social Movements

for Sustainability

Facilitating attention

Empowering people

Fortifying Infrastructure

- Are social movements more or less effective in deploying digital technologies?

- Which forms of engagement in DS are more likely to be achieved by social movements?

- What can for-profit companies learn from the DS approach of social movements?

- Can social movements organize effectively to achieve SDGs?

Business Model

Innovation and

Ecosystems

Codifying observation

Improving liquidity

Embedding verification

- Do organizations benefit from partially or fully embedding themselves in the sustainability

ecosystem? How do DS actors relate to organizational identity?

- What are the characteristics of profitable DS business models? Which ecosystem activities

are more likely to generate financial returns?

- Which new business models are developed to capture value by addressing organizing

problems? For example, does information transparency increase customer premiums?

Legal and non-

market approaches

Fortifying infrastructure

- How can firms leverage legal and non-market strategies to change the institutions?

- When and why do legal and non-market strategies change the behavior of competitors?

- Which government interventions are likely to be challenged by DS entrepreneurs?

Trust

Embedding verification

Empowering people

- Can trust be commoditized through technology? What are its implications for trade and for

economic activity in institutional voids? How does commodification affect innovation

outcomes and organizational structures?

- How do trusted transaction systems influence the value of intermediaries and reputation?

- What is the role of the multisided market makers if trust becomes a technological

commodity?

Figure 1: Stylistic Model of Digital Sustainability

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Mar 2025

Addressing the complex challenges of the 2030 Agenda requires innovative solutions, an entrepreneurial mindset, sustainable practices and individuals committed to driving meaningful change. This chapter explores the transformative impact of the Enactus programme, a global student-led initiative that integrates action-based experiential learning with social innovation as a means of delivering Education for Sustainable Development (ESD). It is aligned with UN SDG 4 that emphasises the importance of inclusive and equitable quality education, lifelong learning opportunities and enhancement of knowledge and skills to promote sustainable development relevant for employment, entrepreneurship and society. Within this context, higher education institutions (HEIs) are mandated to meet these objectives through ESD which also encompasses global citizenship education. Our research is positioned at the intersection of entrepreneurship education and ESD, highlighting the synergies between these fields. This approach develops the essential competences empowering learners to make interlinkages between the environmental, social and economic dimensions of sustainable development and foster positive change through inclusive, circular and regenerative solutions. By critically examining the Enactus programme and reflecting on our experiences of facilitating it at our HEIs, we uncover how it contributes to SDG 4 and more broadly to the 2030 Agenda for Sustainable Development. In doing so, we also consider how the Enactus programme contributes to developing students’ sustainability and entrepreneurial competences, empowering them to become the entrepreneurial leaders and the changemakers of tomorrow.

Digital transformation, innovation capability, and ESG performance

Article

Mar 2025
Finance Res Lett

Nexus Between Disruptive Digital Frugal Innovation and Sustainable Development in Africa

Chapter

Feb 2025

Circular Economy 5.0 on Its Way: A Digital Sustainability Transition

Article

Feb 2025
AMP

Our research introduces the concept of Circular Economy (CE) 5.0 into the digital sustainability paradigm. We argue that CE 5.0, which integrates CE with Industry 5.0, can unlock new opportunities to boost business resilience, environmental sustainability, and societal welfare. We explore a key set of drivers and enablers of the CE 5.0 transition, focusing on the influence of institutional pressures and organizational readiness. Through systems thinking, we develop a model that maps the complex cause–effect interactions between organizations and their institutional environment when shifting to CE 5.0. Our analysis shows how institutional pressures create feedback dynamics that stimulate CE 5.0 adoption, with organizational readiness catalyzing this process. To highlight the model’s practical value, we share insights from real-world CE 5.0 implementation cases, and offer actionable implications for managers and policymakers to navigate this digital sustainability transition.

Climate Change and Entrepreneurship

Chapter

Full-text available

May 2019

Inclusion and Innovation: A Call to Action

Chapter

Full-text available

Aug 2019

Social inclusion is at the heart of sustainable development. Innovation in the ideation, development, and implementation of solutions is necessary to improve social inclusion by systematically addressing the barriers that disenfranchise individuals and communities. We synthesize the 26 contributions in this Handbook to provide a framework for academics and policymakers to study, design and implement innovative ideas that support social inclusion. We present a future research agenda as a "call to action" for management, business, and social science scholars to define questions and highlight solutions that can produce meaningful social impact.

Understanding the Role of the Corporation in Sustainability Transitions

Article

Full-text available

Jun 2019

The state of the planet calls for large-scale sustainability transitions involving systemic adoption of markedly better environmental and social practices. The objective of this symposium is to better understand the role of corporations in promoting such systemic change. We present four case studies—representing diverse industries and change mechanisms—-to investigate corporate leadership in sustainability transitions. The cases examine a wide range of mechanisms used by corporations to progress toward sustainability, such as political coalition building and information strategies through eco-labels, socially responsible investing, and the public statements of CEOs. In this introduction, we discuss the challenges associated with both achieving and studying systemic change, explain the rationale for a case study approach, describe the findings from the case studies, and draw some general conclusions on the mechanisms by which firms may be able to lead, or at least participate in, systemic change in the different phases of sustainability transitions.

Adapting to Grand Environmental Challenges Through Collective Entrepreneurship

Article

Full-text available

Nov 2018

Businesses are increasingly participating in cross-sectoral partnerships to reduce their environmental impacts on society. At the same time, some are pursuing more entrepreneurial ventures to stimulate environmental innovations. Environmental issues, however, are evolving into grand challenges that could create massive disruptions to organizational and societal systems that transcend the interests or influence of individual firms. As such, successful adaptation to these challenges will require innovative solutions that leverage the resources and capabilities of all relevant actors. Drawing from research on cross-sectoral partnerships and environmental entrepreneurship, we propose collective environmental entrepreneurship (CEE) as a strategy to facilitate adaptation to changing global ecosystems. We explain how cross-sectoral partnerships can overcome some of the constraints facing individual sectors in developing innovative adaptations to grand environmental challenges by pursuing CEE. Further, we show how these initiatives can institute governance arrangements that help individual sectors reconcile their diverging interests. We then apply these insights to three cases where governments, private interests, and nonprofits have collaborated to adapt to the physical impacts of climate change through innovative partnerships and draw implications for how this construct could be applied to other global challenges facing society.

Urgent action to combat climate change and its impacts (SDG 13): transforming agriculture and food systems

Article

Full-text available

Aug 2018

Actions on climate change (SDG 13), including in the food system, are crucial. SDG 13 needs to align with the Paris Agreement, given that UNFCCC negotiations set the framework for climate change actions. Food system actions can have synergies and trade-offs, as illustrated by the case for nitrogen fertiliser. SDG 13 actions that reduce emissions can have positive impacts on other SDGs (e.g. 3, 6, 12, 14, 15); but such actions should not undermine the adaptation goals of SDG 13 and SDGs 1, 2, 5 and 10. Balancing trade-offs is thus crucial, with SDG 12 central: responsible consumption and production. Transformative actions in food systems are needed to achieve SDG 13 (and other SDGs), involving technical, policy, capacity enhancement and finance elements. But transformative actions come with risks, for farmers, investors, development agencies and politicians. Likely short and long term impacts need to be understood.

Disaster on the horizon: The price effect of sea level rise

Article

Nov 2019
J FINANC ECON

Homes exposed to sea level rise (SLR) sell for approximately 7% less than observably equivalent unexposed properties equidistant from the beach. This discount has grown over time and is driven by sophisticated buyers and communities worried about global warming. Consistent with causal identification of long-horizon SLR costs, we find no relation between SLR exposure and rental rates and a 4% discount among properties not projected to be flooded for almost a century. Our findings contribute to the literature on the pricing of long-run risky cash flows and provide insights for optimal climate change policy.

Handbook of Inclusive Innovation

Book

Jun 2019

Corporate social responsibility strategies: Past research and future challenges

Article

Feb 2019

Corporate social responsibility (CSR) is not only increasingly valued by companies but also plays an extremely important role in the development of their strategies. This study systematically reviews literature that seeks to ascertain just which CSR strategies feature in the literature and their means of implementation by companies. We made recourse to the ISI Web of Science database for the search and collected 119 articles spanning a 25‐year period. The results enable the identification and categorization of CSR strategies into four key categories: (a) dimensions, (b) benefits, (c) value creation and stakeholders, and (d) motivations. We also identify that major companies around the world are ensured the implementation of their CSR strategies throughout their organizational structures with specialized resources. This systematic review provides a path for future research.

Towards a Global Climate Strategy: Reconciling ecological, entrepreneurial and social elements of Sustainability

Chapter