Ioannis Ioannou

Research interest: Sustainability and Corporate Social Responsibility
Qualification: PhD, [Harvard], Assistant Professor
Nationality: Greek-Cypriot
At LBS since: 2009
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Full paper available at SSRN.

The recent economic and financial crisis of 2007-2009 had dramatic consequences for individuals, communities, corporations, and governments around the world. In fact, the period of the crisis has been named the “Great Recession” because it is the worst post-World War II contraction on record.[1] According to the U.S. Department of Labor, the U.S. gross domestic product (GDP) contracted by approximately 5.1% between December 2007 and June 2009. About 8.7 million jobs were lost, while the unemployment rate climbed from 5.0% in December 2007 to 9.5% by June 2009, and peaked at 10.0% by October of the same year. Long-term unemployment also rose to historic highs during the same period.

Economic crises such as the Great Recession are disruptive for firms across industries, markets, and geographies. Crises of this magnitude trigger discussions about fundamental issues of strategy and radical organizational change since they are typically associated with periods of significantly greater uncertainty (Bloom 2014), changes in the regulatory and policy framework (Baker et al. 2013, Pastor and Veronesi 2012, Rodrik 1996), higher cost of capital and tightened access to external sources of credit (Chodorow-Reich 2014), disruptions in supply chains (Cattaneo et al. 2010, Levy 1994), deteriorating consumer demand (Mian et al. 2013), and increased risk of firm failure (Bernanke 1981, Bhattacharjee et al. 2009).In short, an economic meltdown leaves virtually no aspect of firms’ business environment unaffected, disrupts their stakeholder relationships (such as relationships with employees, customers, suppliers, and local communities), and generates a major shift in the competitive landscape. Thus, companies need to fundamentally rethink and reshape their strategies to ensure firm survival and sustain (or even enhance) their competitiveness.

Despite the severity and frequency of economic crises, we know surprisingly little about their impact on firm-level decision-making and, in particular, on firms’ competitive strategies (e.g.,[…]

It is hard for any business leader today to ignore sustainability.

Indeed, the latest UN Global Compact–Accenture CEO study found that 97% of the 1,000 CEOs interviewed across 103 countries and 27 industries see sustainability as important to the future success of their business. Moreover, 78% see sustainability as an opportunity for growth and innovation. Notably, 84% of the CEOs believe that business should lead efforts to define and deliver sustainable development goals, and 79% of them see sustainability as a route to competitive advantage in their industry.

Effective and responsible leaders are those who are able to integrate sustainability throughout all aspects of their business and their strategy. In previous decades we mostly focused on leaders who were exceptionally good at managing within the economic context. Now we need leaders who can also thrive within the social and environmental context in which their businesses operate. The two are in fact intrinsically interdependent and building an integrated business model is the way to establish a truly sustainable competitive advantage in the long term.

This is where leading business schools can play a critical role. We need to develop leaders capable of thinking beyond the short-term economic objectives and ambitious enough to take on the world’s biggest challenges such as climate change, extreme poverty and income inequality. We need to teach them how to synergistically manage the social and environmental contexts in combination with the economic one and how to value, understand and be accountable for, their businesses’ financial as well as non-financial performance.

The truth is this is still unchartered territory. As academics, we are only now beginning to understand how businesses become sustainable given that businesses themselves are still experimenting in terms of the strategies and initiatives that they are adopting.

While there isn’t a comprehensive set of best practices that business schools can confidently prescribe, what we can do is to be actively involved in[…]

ADVEQ Applied Research Series: ESG moving out of the Compliance Room and into the Heart of the Investment Process

Executive Summary:

Environmental, social, and governance (ESG) concerns are increasingly being factored into the valuation and management of financial assets. Issues such as climate change, sustainability, consumer protection, social responsibility and employee engagement are no longer viewed solely as components of risk management, but have also gained recognition in recent years as important drivers of firm value, particularly in the long term.

We present results from one of the first comprehensive surveys covering the role of ESG in the investment practices of the private equity industry. This is the first phase of a deeper academic investigation of the topic. Based on responses from 42 private equity firms, representing a broad geographic and sector focus and a cumulative total of over US$640 billion in assets under management, the findings indicate that ESG policy – far from being a peripheral consideration – emerges as a core value-creation strategy at private equity funds for portfolio companies.

We find that this trend appears to be led by LP demand, and that the integration of ESG permeates down from the highest board levels, throughout the organization and all the way through to the individual private equity fund level, with core investment professionals often tasked with ESG policy implementation. Moreover, ESG policy appears to be rather sophisticated in that consideration of such issues takes place at the origination stage as well as during the period of asset ownership, although adherence to ESG policies is not uniform and is often implemented through guidelines rather than investment rules. We also find that ESG policies encompass not only environmental, social, and governance matters but also ethical issues, with companies actively monitoring their activities, gathering data and reporting along these dimensions.

In our sample, the emphasis on ESG policy as a core[…]

This week, I was an invited panelist at the Multi-Stakeholder Forum on Corporate Social Responsibility organized by the European Commission in Brussels (http://www.csrmsf.eu/). Our panel discussed “CSR as a Driver for Innovation, Competitiveness and Growth”. It was a really insightful and engaging conversation that I thoroughly enjoyed. Here are my opening remarks:

• It’s really a pleasure and a privilege to be here with you this morning. Thank you to the organisers and the European commission for giving me this valuable opportunity to share some useful academic insights on this very critical issue of CSR.

• Partly because of growing corporate engagement, and partly because of increasing data availability and comparability across industries and geographies, a lot of academic work has taken place in the domain of CSR in the last couple of years, both theoretical as well as empirical.

• Scholars have not only focused on the big question, whether CSR pays, but the research questions have become more sophisticated: in particular, we now ask under what conditions does CSR pay, and of course, relevant for this panel is the question of, what are the mechanisms through which value may be created through CSR.

• I should note that more recent work, is slowly adapting to a new language, and rather than CSR, we begin to discuss issues of sustainability, not in terms of green strategies, but indeed, in terms of the sustainability of the business within its economic, but also within its broader social and environmental context.

• In other words, the social and environmental pressures and challenges that the world is facing have fundamental consequences on the role of the corporation in society, and the role of business. This is particularly important given that business has been traditionally viewed as part of the problem rather than as part of a potential solution to these great challenges, such as climate change, or extreme income inequality.

• So, what do we know today about how the best of firms go about implementing CSR? Well, one thing we do know well is that there[…]

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Why is it that engaging with charities has always been such a challenge for corporations? First and foremost, charities are quite a distinct stakeholder and one that corporations have the least experience in dealing with.

There is also a lack of mutual trust that raises suspicion and doubt regarding their respective goals and objectives. Some charities may perceive corporate engagement as a diversionary tactic used by corporations to deflect attention away from actions and behaviours that could cause them reputational damage.

Corporates tend to engage with charities through one-off direct corporate giving rather than considered campaigns. They provide a short-term boost rather than long-term support. Some people even argue that direct cash donations are a bad idea. They say that charities would benefit much more from the transfer of corporate expertise. This would include sharing knowledge and training in management, administration, growing an organisation, gathering resources and developing capabilities towards a clear objective.

Against this background then, how can corporations really engage with charities in a mutually beneficial, long-term oriented and effective way that is based on trust and co-operation? Here are some common pitfalls that I have encountered to date, together with suggestions on how best to avoid them.


Corporate language is significantly different from the language that charities and other non-governmental organizations use. Co-ordination and honest discussion become a key challenge. Corporates would be better off forgetting idiosyncratic[…]

Check out my latest interview (video) with Prof. Karl Moore (@profkjmoore) posted in The Globe and Mail (@globeandmail)


You can read my latest interview about the Sustainability Agenda in the latest issue of the Business Strategy Review (Summer 2014) here:


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Are business schools equipping the leaders of tomorrow with the skills they’ll need to face a number of urgent global challenges?

From climate change and resource scarcity to inequality, the business world is shifting rapidly and business leaders need to understand and tackle these in a transparent way. Yet business schools often fail to address sustainability at all, or address it only as a separate, niche add-on to the course.

In this podcast our panel of experts discuss, and disagree over, whether business schools are lagging behind on integrating sustainability in their curricula and explore what makes good business leaders able to respond to complex sustainability challenges. They also discuss Nespresso’s competition, which challenged MBA students to tackle a very practical sustainability problem.

Ioannis Ioannou, assistant professor of strategy and entrepreneurship, London Business School.
Polly Courtice, Cambridge Institute for Sustainable Leadership.
David Grayson, director of the Doughty School for Corporate Responsibility, Cranfield School of Management.


Over the past few decades, several countries around the world have experienced unprecedented economic development as measured by unceasingly accelerating GDP growth rates. This explosive growth, however, has also led to overconsumption or even destruction of natural resources, and to an overwhelming and unsustainable increase in greenhouse gas emissions. The ensuing impacts of global warming and climate change have severely damaged the planet’s capacity to sustain human development. According to current estimates by the World Wildlife Fund ([WWF] 2012), by 2050, when the earth’s population is expected to reach 9 billion, we will need as many as three planets to sustain current levels of consumption.

Beyond the negative environmental consequences, this type of economic growth has generated several pressing social issues: ever-increasing income inequality; often uncontrollable urbanization; high unemployment rates, particularly within the younger segments of the population; and social immobility leading to social instability, and even social unrest, around the world (e.g., the Occupy movement). This is especially evident when one considers the proliferation of NGOs and their increasing demands and expectations of companies, governments, and transnational institutions. Or when one considers that, according to Oxfam (2014), currently the world’s 85 richest individuals own as much wealth as does the bottom half of the entire global population. In other words, we are witnessing a potential erosion of the social fabric across countries, despite our collective ability to produce more goods and services than ever before.

Meanwhile, in the business world, multiple corporate scandals, coupled with the recent dire crisis of the financial system itself, the numerous environmental disasters directly attributed to companies’ operations (e.g., the BP oil spill), and even the resulting and regrettable loss of human life due to compromised health and safety standards (e.g., the Savar building collapse in Bangladesh, suicides at Foxconn), have severely undermined the public’s trust in the modern business organization, and demands for transparency and accountability,[…]

Doctor Ioannis Ioannou is Assistant Professor of Strategy and Entrepreneurship at London Business School, specialising in sustainability and corporate social responsibility. Tim Cooper interviewed him on behalf of the Accenture Institute for High Performance (AIHP) as part of a new research project on business agility—in particular, the way in which businesses can enhance their agility through the way they engage with stakeholders outside the boundaries of the firm.

AIHP: We hear a lot today about the need for companies to be more agile in response to today’s volatile and uncertain environment. From your perspective, how are businesses doing this?

DR. IOANNOU: I think a good way to think about agility is the ability of a company to strike a balance between their “explorative endeavours” (innovation, R&D, entering new markets) and their day-to-day focus on execution and meeting their margins—what we could call their “exploitative side”. These so-called “ambidextrous organisations” are able to exploit their current position while keeping their eyes focused on their external environment, reacting and seizing opportunities as they unfold. They usually do this by designing exploratory entities that act as filters between the outside world and the organisation. For example, venture capital vehicles, employee incentive schemes or open innovation programmes. UK supermarket chain Sainsbury’s recently crowd-sourced the development of elements of its sustainability strategy through an event organized by Green Monday, and opened it up for criticism and feedback by a panel of top business and thought leaders. Or take the example of Oticon, a Dutch hearing-aid company that during the 1980s lost a significant proportion of its market share to a competitor who introduced the in-ear hearing aid device. To resuscitate the company’s innovative ability, a newly appointed CEO, Lars Kolind, turned it into a “spaghetti organisation”. This meant no hierarchy, no fixed processes and slimmed-down bureaucracy. In a sense, you could see them as actively replicating external market pressures in[…]