Archive for the ‘environment’ Category
Why Do (or Don’t) Companies Go Green?
Filed under: CEOs, corporate citizenship, energy, environment, NGO, sustainability, values |
Comments (5) Why do some companies “go green,” while others are satisfied to go grey? Why do some develop robust sustainability programs while others sit back and watch?
Yesterday, as part of my Business Ethics Speakers Series at the Ted Rogers School of Management, I had the pleasure of hosting Hamish van Der Ven, a Ph.D. candidate from the University of Toronto. The title of Hamish’s talk was “Big-Box Retail and the Environment: Why Some Firms Innovate and Others Stagnate.” His main contention was that the main factor at play is the socialization of high-level executives at multi-stakeholder sustainability networks. In other words, what matters is whether the leaders of the company in question make use of opportunities to sit down with a range of folks to talk about sustainability.
The main competing theory of why companies go green is the theory that it all has to do with profitability. Companies go green, on this theory, because they buy into the “business case” for sustainability. That is, they come to believe that reducing energy usage, minimizing packaging and waste, and so on, will be good for the bottom line. Alternatively, they come to believe that being perceived as environmentally-progressive will win them customers, and increase profits that way.
But as Hamish rightly points out, that explanation suffers from a serious defect. Every company is subject to those pressures — they all want to cut costs and reduce waste and attract environmentally-concerned consumers— but only some of them actually put much effort into sustainability programs that will do those things. If the business case is such an important motivator, why don’t all companies buy into it?
Much more significant, Hamish argues, are the opportunities executives take, or don’t take, to open themselves up to internalizing new social norms. The process of socialization involves precisely the process of internalizing social norms. And that happens through social interaction.
And when leaders change their thinking, they tend to do a lot to change corporate culture. As the head of CSR for one major corporation told me, “We talked a lot about going green, but then one day the CEO called and said ‘Make it happen,’ so it happened.”
Of course, this isn’t just just a story about how policy-makers and activists can influence companies by influencing leaders. It’s also a story about how leaders can implement change in their own organizations. As Hamish put it, “If you sit down with people who think differently, you start to see things in a new light. We cannot expect change to result from [instead] sitting around a table with people who think just like you.”
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Update, Dec. 14, 2013: Hamish has now published a paper based on this research. “Socializing the C-suite: why some big-box retailers are “greener” than others,” Business and Politics Ahead of print (Dec 2013)
Global 100: Sustainably Misleading
Filed under: accountability, awards, consultants, definitions, environment, greenwashing, rankings, sustainability |
Leave a comment Corporate Knights continues to mislead. Once again they’ve issued a list of the world’s “most sustainable” corporations — the Global 100 — and once again the metrics they’ve used have surprisingly little to do with what most of us mean by the word “sustainability.”
First, let’s get one thing out of the way. The organization is right to defend the fact that there are oil companies (including Enbridge, for example) and other producers of “sin” products on their list. There’s nothing in principle that says an oil company can’t, in some useful sense, be sustainable. And even if you think the fact that a company like Enbridge should be docked points because oil is a non-renewable resource, it still is a useful and interesting exercise to look at which oil companies (for example) are leading the field in terms of sustainability. So, CK is right to defend itself in this regard.
No, the problem with the Global 100 is not that they give kudos to a few unpopular companies. The real problem lies in the criteria used to measure what they refer to as “sustainability.”
Here are the 12 “key performance indicators” that get a company onto the Global 100:
- Energy productivity;
- Carbon productivity;
- Water productivity
- Waste productivity
- Innovation Capacity
- Percentage Tax Paid
- CEO to average employee pay
- Pension fund status
- Safety performance
- Employee turnover
- Leadership diversity
- Clean capitalism pay link.
These are essentially the same criteria they used (and which I critiqued) last year. The only difference is that they’ve added the bit about “Pension Fund Status,” the relevance of which may already have you wondering.
Hopefully the problem with those criteria is clear to most of you: only the first four — the first third of the criteria — actually have something to do with what most of us mean by “sustainability.” The rest are important issues, to be sure, but not relevant to the question of sustainable use of resources, or to the notion of sustainable economic growth that is compatible with environmental conservation.
Many will surely defend these criteria, and will tell me that I’m working with too narrow a conception of sustainability. Sustainability, they may say, isn’t just a narrow environmental concept. It’s about the whole People-Planet-Profits nexus. Well, certainly you can draw a diagram with boxes and arrows that shows connections of various kinds between those three. But to say that the three are one is to make so many undefended ethical, conceptual, and factual assumptions that the only result must be unnecessary confusion.
No, the Global 100 really isn’t a sustainability index, at least in the way that word is used by normal folks. It’s a complex index of sustainability, fairness, and a bunch of other positive stuff. And if you’re interested in all that stuff, why not just say so? Why bury it in a word that most people take to mean something else entirely?
The kicker, in terms of misleading language, here, is the tag-line that completes the title of the Corporate Knights list: “The Global 100: World Leaders in Clean Capitalism.” The problem here is that “Clean Capitalism” is a term Corporate Knights uses to describe what others might refer to as “conscious” capitalism, or perhaps “corporate social responsiblity.” But when most of us hear “clean,” we think “not dirty,” or “not polluting.” The implication, here, whether intended or not, is that the firms on this list are clean ones, firms unlike the dirty, polluting, earth-pillaging firms of the past.
Now, it would be one thing if Corporate Knights wanted to turn the word “sustainability” (or “clean”) into a technical term, a term of art with a special meaning for experts in the field. But that’s not what’s going on. Instead, they’re turning the word into a brand, a buzzword, and it’s a buzzword with which 100 companies are today adorning press releases. A hundred firms are today bragging about being sustainable, and are doing so with Corporate Knights’ endorsement. But “sustainable,” here, simply does not mean what you think it means.
Kinder Morgan and the Ethics of Public Consultation
Filed under: accountability, activism, corporate citizenship, energy, environment, protest, public relations, stakeholders |
Comments (2) Energy company Kinder Morgan ran head-first into the complex ethics of public consultation last week. The company shut down an information session in Victoria, British Columbia, in response to what the company is calling “vandalism” of some of its on-site signs. The so-called “vandals” tell a slightly different story: they say all they did was peacefully replace the company’s signs with their own placards.
Public consultation is a regular part of business for many companies these days, especially those in the energy and extractive industries. In some cases, public consultation is required by legislation; in other cases, it’s just good business sense. But none of that means that all companies are going to be at ease with the process. To say that public consultation is common is not to say it is easy. For starters, the word “public” is too broad to provide clarity about what the process even amounts to. You’re not really going to consult the entire public. So who should you consult? The activist public? The educated public? The elected or appointed representatives of the public?
For that matter, how do you even label the process? Without harping too much on words, consider the difference in attitude implied by the terms “public consultation,” “public information,” and “public engagement.” The public’s perception of the process is liable to vary considerably depending on the way the process is labeled, never mind what it implies about the role the thing is going to play in a business’s operations.
From an ethical point of view, public consultation has two distinct objectives. First, consultation is a sign of respect, a way of saying to concerned individuals and groups, “We think you matter.” The other ethically-significant reason for public consultation is to gather input that might actually affect decision-making. Unanticipated concerns can easily come to light; asking people what they care about can be much more effective than guessing. These twin objectives — expressing respect and seeking information — provide hints as to how the process needs to go.
Of course, the information gathering goal is the easy part. Give people a microphone and they’ll talk. A company still needs to make an effort to get the right people in front of the mic, but that’s not rocket science.
The harder part is how to show respect, especially when the project at hand is a controversial one over which tempers are likely to flare. Like, say, a pipeline. And that’s where Kinder Morgan ran aground, in a mutual failure of respect. It’s not nice to mess with someone’s signs, but it behooves a company to respond to such things by taking the high road. After all, a company in the energy sector needs to not just show up; it needs to be good at this stuff. In public consultation, the kind of sophistication that befits a first-rate company means more than glossy handouts. It means being able to roll with the punches, because sometimes that’s what respectful dialogue requires.
Storms, Global Warming, and Corporate Citizenship
Filed under: corporate citizenship, disaster, efficiency, environment |
Comments (6) Humans are (very likely) changing the earth’s climate. And changes in climate are (very likely) making storms worse. And worse storms are (definitely) a bad thing. Granted, it’s hard — in fact, foolish — to try to draw a straight line between any individual’s or even any corporation’s behaviour and the Frankenstorm that just slammed New York and surrounding areas, but the fact remains that the devastation that storm wrought was not the effect of a mere freak of nature. As Businessweek bluntly put it, “it’s global warming, stupid.”
But what matters more than the cause of global warming is what we can do about it. In particular, what can business do about it?
Large-scale problems tend to require large-scale solutions, and so there’s a natural tendency to leave such issues to government. This is so for two reasons. First is simple scope: you driving a hybrid car or switching to CFL bulbs just isn’t going to accomplish much. Second is the nature of collective action problems: each of us benefits from a wasteful, energy-intensive lifestyle, and it seems narrowly rational to let other people (or other companies) bear the costs of doing things differently. But the fact that it’s tempting, or even narrowly rational, to let others bear the burden, or to wait for government to act, doesn’t make it the right thing, or even the minimally decent thing, to do.
So what can businesses do — what is it possible for them to do — in response to a trend in global warming that is clearly posing increased risks?
To begin, of course, they can work to avoid making things worse, by avoiding burning carbon and adding to the load of carbon dioxide in the atmosphere. This means looking at relatively small, obvious stuff like seeking energy efficiencies in their operations, promoting telecommuting, reduce air travel, and so on. Luckily, most such efforts are relatively painless, since they tend to reduce costs at the same time. Sometimes mere laziness or a focus on “how we’ve always don’t things” gets in the way of making such win-win changes. Don’t be lazy. Innovate. Share best practices with your suppliers, with other companies in your sector, and if you’re a B2B company, with your customers.
The second thing that businesses can do is to work with, rather than against, government efforts at making things better. In particular, it is a fundamental obligation of corporate citizenship not to block government action aimed at effective action at slowing climate change, and in particular action aimed at dealing effectively with the effects of climate change. If, for example, a government wants to pass rules forcing businesses to pay the full cost of their energy usage, or rules that impose industry-wide energy efficiency rules, business should welcome rather than oppose such changes. Energy inefficiencies impose costs on other people, and hence count as the kind of externalities that go against the fundamental principles of a market economy.
It’s also worth noting that asking what business can do is not quite the same as asking what your business, or any particular business, can do. Business organizations and trade associations abound, and there’s plenty they can do to a) help members share best practices and b) foster industry-wide standards that can help businesses live up to their social obligations while at the same time maintaining a level playing field.
Finally, business can do the things that business is supposed to be good at: efficient management, synergistic use of a range of kinds of human capital, and innovation. That stuff isn’t just a good recipe for commercial success. It’s an absolute obligation. And innovation is clearly the key among those three aptitudes. Efficiency — tightening our belts — will only get us so far. We desperately need a whole slew of truly brilliant new ideas for products, services, and productive processes over the next decade if we are to meet the collective challenge posed by changes in our environment. And it’s foolish to expect government to provide those ideas. It’s time for business to step up to the plate. There can be no better way to manifest a commitment to corporate citizenship than to be the kind of corporate citizen that sees a business model in trying to help us all cope with global warming.
Vancity vs Enbridge
Filed under: energy, environment, investing, public relations |
Leave a comment It was recently reported that Vancity Investment Management is divesting its shares in beleaguered Canadian oil company, Enbridge.
Enbridge has made the news repeatedly over the last few years because of leaks in its pipelines. Not unrelatedly, the company has faced opposition from native and environmental groups with regard to its planned pipeline across northern Alberta and British Columbia. The combination of errors in its past and risks in its future is apparently just too much for Vancity, and perhaps for other socially- and environmentally-conscious investors.
This new announcement is, on the surface at least, a good example of the connection between ethics and business. It is often pointed out that, in order to stay in business, a company needs to maintain its ‘social license to operate.’ But more specifically it needs to retain the goodwill of key stakeholders, and investors are very high on that list.
But of course, investors can turn on a company for all kinds of reasons; the perception that the company isn’t doing well socially or environmentally (or more generally, ethically) is just one. Companies can take a hit to their shares for any number of reasons. Even if we limit ourselves to broadly “social” reasons, there are good and bad reasons, reasons about which there is broad social consensus (e.g., child labour) and ones that are socially divisive (e.g., contributions to pro-choice or anti-abortion groups). And so on.
This points to an interesting question about the obligation that managers and boards have to manage risk. It is increasingly clear that the obligation to manage risk includes not just financial risk, but just about any risk to which the company might be subject. That includes environmental risks and reputational risks. Understandably, the two are intertwined. According to the story cited above, one “ethical investment” company (Northwest & Ethical Investments LP) has expressed concern about Enbridge not (just?) because of the risks its pipeline poses, but because of the risk posed by opposition.
Should Enbridge (and its shareholders) be concerned about the Vancity divestment? That’s unclear. The divestment itself doesn’t sound catastrophic, but things could change if other investors follow suit. How likely that might be is also unclear. The interesting question is which kind of worry is more likely contagious: worries over environmental risks (and financial risks that go with those) or worries over risks of opposition.
In the end, it may not matter much. As I’ve argued before, oil companies need to do a better job of managing environmental risks. If they can succeed at that, they may well see the risks of social opposition melt away at the same time.
Needed: A High-Efficiency Oil Company
Filed under: complexity, efficiency, energy, environment, pollution, risk, workplace safety |
Comments (3) A Nimitz-class aircraft carrier is a hellishly complex piece of machinery. Picture a boat the length of three football fields, carrying several dozen heavily-armed aircraft into a war zone. It’s a boat with a crew of 3,200 plus an additional 2,400 involved in flying, maintaining, and launching aircraft. Oh, and it’s powered by a pair of Westinghouse A4W nuclear reactors.
As it happens, the US Navy has 10 such carriers. And on these unimaginably complex machines, errors of any significance are practically unknown. Time after time, F/A-18 Super Hornets laden with missiles are literally catapulted from the flight deck, sent out on missions, and then land again on the carrier’s super-short runway. And failure is practically unknown. This requires amazing skill on the part of pilots, but it also requires an incredible team effort, and a system built to include multiple redundant safeguards. The safety record of nuclear aircraft carriers is so good that they are now a standard example of highly-efficient, low-failure, complex systems, the kind that other complex systems should aspire to become. They are systems in which failure is simply not an option, and smart design makes sure it just doesn’t happen.
Next, let’s look at another complex system, namely an oil company and its network of pipelines. Let’s look in particular at one Canadian company, namely Enbridge. Enbridge’s pipeline system, as far as I can tell, is significantly more prone to failure than an aircraft carrier. Just under a year ago, I wrote about a leak in an Enbridge pipeline running past the tiny northern Canadian town of Wrigley. That was a small leak, but one that raised serious concerns for the local native community that eked out its living from the now-polluted land. That leak involved maybe a thousand barrels of oil. But just a year earlier, an Enbridge pipeline running through southwest Michigan spilled 20,000 barrels into a creek leading to the Kalamazoo River. And now, this past Friday, another significant leak was reported. This time, the company’s “Line 14” spilled about a thousand barrels of crude into a field in Wisconsin. And this is just to name a few of the company’s pipelines over the last decade.
Of course, there’s no special reason to pick on Enbridge. Other companies in the oil exploration and refining industry have spotty records, too. BP is perhaps the most dramatic example that comes to mind. It was the company behind the explosion on the Deepwater Horizon, and the subsequent spill that devastated a big chunk of the Gulf coast.
There’s little doubt that, for the foreseeable future, oil companies like Enbridge and BP are a practical necessity. Like it or not, our economy depends on them. They are as necessary to our economy as an aircraft carrier is to the US’s naval supremacy. But the fact that those companies are so essential is precisely the thing that dictates that they must do better. They must seek the kind of never-fail efficiency exemplified by carriers like the USS Harry S. Truman and the USS Abraham Lincoln.
There are of course important differences between an aircraft carrier and a system of pipelines. For one thing, an aircraft carrier exists in a single place, under the watchful eye of a single Commanding Officer; a pipeline can stretch for thousands of unobserved miles, necessarily subject to only infrequent inspection. For another thing, various corporate motives summed up very imprecisely by the term “the profit motive” mean that there will always be temptations for oil companies to cut corners. But the example is there, and the body of knowledge is there. Oil companies can, and must, do better.
Meatless Monday and Social Responsibility
Meat has recently taken on the role of the culinary bad boy, the gustatory rebel without a cause. Meat is the leather-wearing trouble-maker that scoffs at moral authority, making some people tsk-tsk and making others swoon.
Witness the fact that, couple of weeks ago, the New York Times announced a contest, asking entrants to provide their best argument as to why eating meat is ethical. In other words, the idea is to provide a rebuttal to what is by now nearly the default position, which is that meat is ethically problematic. And it’s not hard to see why. Even if you aren’t convinced that contributing to vast animal suffering is unethical, there are the very significant environmental impacts to consider. And when meat is thought of as a product that you either sell to consumers or feed to your children, health impact certainly becomes part of the ethical equation: how much beef you consume is between you and your colon, but how much you foist on others is open to scrutiny. So if meat If meat isn’t outright unethical, it’s certainly not the most socially-responsible product I can think of.
So, given the current ethical presumption against meat, do food companies that see themselves as socially responsible have a responsibility to minimize, or at least reduce, the amount of meat they sell?
In that regard, see this interesting report about how one company — Sodexo — worked to reduce the amount of meat eaten by its customers. The company runs cafeterias at hospitals and government buildings and so on, and serves over 9 million meals each day. And about a year ago, Sodexo announced that it would participate in the “Meatless Monday” program, urging customers to eliminate or reduce the amount of meat consumed just one relatively painless day each week.
The result is an absolutely perfect case study in the debate over corporate social responsibility.
The Sodexo experiment starts off as nothing less than a best-case scenario of CSR. Sodexo, in introducing Meatless Monday in its cafeterias, was arguably pursuing a win-win strategy. Serving less meat is good for the environment, good for consumers’ health, and (since meat is an expensive ingredient) maybe good for the bottom line. As an experiment, at least, it’s not crazy from a business point of view. So Meatless Monday presented the possibility of social benefit without pain: the holy grail of CSR.
Notice also the lack of sanctimony here. There’s nothing preachy about Meatless Monday: it’s just a way of saying hey, there are some really simple, painless steps that all of us can take to make the world a slightly better place.
But wait: it’s too soon to celebrate. It turns out that among Sodexo’s participating cafeterias, almost a third saw a drop in sales, and some saw a drop in customer satisfaction ratings. So much for the win-win! In the face of a significant drop in sales, a corporation’s managers face a true ethical dilemma, torn between social responsibility and responsibility to vulnerable shareholders. Should the company’s managers stick with Meatless Monday — ostensibly the socially responsible choice — or give it up and bring sales back to their previous level? Which matters more, social benefit or profits? Or, more precisely, how much would sales have to drop in order plausibly to say that the company was taking social responsibility too far?
A case like this strikes me as a pretty good litmus test with regard to divergent views on corporate social responsibility. It’s easy to be in favour of the win-win stuff. If a company can boost profits while doing some good in the world, who could complain? And if you can help others (or society) at no cost to yourself, maybe you’re even obligated to. But fewer people, I suspect, are willing to argue for a corporate obligation to engage in socially beneficial behaviours that not only hurt profits but also reduce customer satisfaction.
The next step in the litmus test, of course, is to adjust the ethical inputs, namely the strength of the ethical ethical arguments against meat. If you’re generally supportive of Sodexo’s move, how much weaker would the arguments against meat have to be in order to change your mind? And if instead you think Sodexo’s experiment is unjustified, how much stronger would the case against meat have to be to convince you that a company is justified in at least attempting to pursue socially-good objectives through its business practices? Answering such questions is a crucial step towards understanding your own point of view, and hence to being better prepared to engage in thoughtful discussion of corporate social responsibility.
The Right Amount of Waste
Filed under: crime, efficiency, energy, environment, markets, pollution, values |
Comments (2) 
A recent story in the NY Times provides some encouraging anecdotes about companies that are moving to take greater responsibility for recycling. Companies like Starbucks and Coca-Cola, for instance, are finding new — and in some cases profitable — ways to take responsibility for the waste that their product packaging generally becomes. More recycling generally means less waste, less energy used, and less pollution.
Waste and pollution are business-ethics topics about which there is some room for agreement between the moralist and the economist. The moralist points out that it’s unfair to make innocent bystanders suffer the ill effects of your factory’s pollution. The economist points out that market inefficiency can result when costs, financial or otherwise, are not internalized (i.e., when costs are instead imposed on innocent third parties).
But an economically-savvy point of view must also recognize that there is in fact a socially-efficient level of waste and pollution, and that that level is not zero. Waste and pollution could only be driven to zero by shutting down industry (of all kinds) altogether, and that would have disastrous effects. In other words, we would have to sacrifice things we care about, like the ability to raise world-wide standards of living, in order to reduce pollution and waste to zero.
Consider this analogy: economists likewise sometimes argue, rightly I think, that there is an efficient level of crime. The methods by which crime could be driven to zero are both enormously invasive and enormously costly. It is not efficient — not a good use of resources — to drive crime to zero, even if we think it technically possible.
So waste and pollution, we might say, are always bad, but not always wrong. They are features of a system the overall productivity of which is an enormous boon to humankind. It would be crazy to say that gains in productivity must be sought at any cost, but it is likewise crazy to value anything else (e.g., the environment) so highly that it drowns out all considerations of efficiency.
Now none of this tells us about whether particular efforts at waste reduction or pollution abatement are good or bad. But it helps frame the issue. What we’re looking for is the right level of pollution and waste, and that level is not zero. It is also likely to shift over time, as affluence grows and technology evolves, and as companies like Coke and Starbucks and a thousand anonymous start-ups find new ways to make environmental protection efficient, in the broadest, most ethically-significant sense of the word.
Apple: The Ethics of Spending $100 Billion
Filed under: accountability, boards, charity, decision-making, economics, environment, governance, shareholders |
Comments (4) What’s the best thing to do with a hundred billion dollars? Apple — the world’s richest company — gave its answer to just that question, when it announced yesterday how it will spend some of the massive cash reserve the company has accumulated.
Of course, spending the whole $100 billion was never on the agenda. The company needs to keep a good chunk of that money on-hand, for various purposes. Then there’s the fact that a big chunk of it is currently held by foreign subsidiaries, and bringing it back to the US to spend it would require Apple to pay hefty repatriation taxes. But any way you slice it, Apple has a big chunk of cash to spend, and so its Board faces some choices.
In the abstract, there are lots of things one could do with that much money. Financial analysts had rightly predicted that Apple company would decide to pay out a dividend (for the first time since 1995). Some were predicting bolder moves, like buying Twitter (which would use up a mere $12 billion). But what could Apple have done with that much money, aside from narrow strategic moves?
The money could have, in principle, been spent on various charitable projects. That amount of money could also do a lot towards helping developing countries combat and adapt to climate change. Or it could revolutionize the American education system. Closer to home, the company could spend a bunch on improving working conditions at its factories in China, conditions for which the company has been widely criticized. All of these, and many more, are (or rather were) among the possibilities.
But business ethics isn’t abstract; Apple’s Board faced a concrete question. And the Board has ethical and legal obligations to shareholders. Those aren’t its only obligations, but once workers are paid, warranties are honoured, expenses are covered, and relevant regulations are adhered to, the main remaining obligation is to shareholders.
Now, there’s a significant strain of thought that says that a company’s managers (and its Board) are not there just to serve the interests of shareholders, but also to carry out shareholders’ obligations. So, if you believe that Apple shareholders have an obligation to fight climate change or to promote education or to improve conditions for workers, then maybe it makes sense to think that the company ought to help shareholders to act on that obligation. But keep in mind that Apple’s shareholders are a rather amorphous group. Shares in corporations change hands incredibly frequently, and the interests and obligations of shareholders vary significantly, so a Board ‘represents’ shareholders (or acts as their agent) only in a rather abstract sense.
The alternative, of course, is for Apple’s Board to give itself some leeway, forget about what shareholders’ collective obligations might be, and go back to thinking abstractly about what to do with that big pile of cash. They can simply decide whether the shareholders’ financial interests outweigh their collective obligation to do some good with that money, and simply decide which of the various worthy causes it should go to. But of course, lots of people are rightly uncomfortable with the idea of well-heeled corporate boards arrogating to themselves that kind of power. The question for discussion, then, is this. Which is the greater evil? For corporations not to step up to the plate and contribute to social objectives, or for corporate leaders to presume to spend vast sums of money as if it were their own?
Sustainability Isn’t Everything
Filed under: awards, complexity, consultants, critical thinking, definitions, environment, jargon, rankings |
Comments (5) The word “sustainability” doesn’t just refer to everything good. If it did, we wouldn’t need the word “sustainability” at all; we would just use the word “good.”
I’m just a small-town philosopher who likes words to mean what they mean. That’s why I got cranky when I saw the new Global 100 Ranking, which is ostensibly a sustainability ranking. (See my blog posting here.) Why cranky? Because over half of the criteria used to arrive at that ranking have nothing to do with what I — and, I suspect, most people — think of when they hear the word “sustainability.”
But let’s set aside the fact that this usage is potentially misleading; words evolve, and maybe the public will catch up with the Global 100 in its broad understanding of the term “sustainability.” Does this new, revised meaning of “sustainability” make sense?
Let’s start with the word “sustainable.” Well, standard dictionary definitions suggest that it means something like, “Able to be maintained at a certain rate or level.” OK, good. That’s a positive thing, right? But wait. No one cares about corporate sustainability in that sense, with the possible exception of certain narrow-minded shareholders. We want businesses that are more than merely capable of being maintained. We want businesses that are worthy of being maintained.
So sustainability needs some normative content. It needs some goodness baked in.
In this regard, the touchstone is the U.N.’s Brundtland Commission. In 1987, the Brundtland Commission asserted that “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” And ever since then, at very least, the words “sustainable” and “sustainability” have had very significant environmental overtones. OK, good. Here, “sustainability” is being used to indicate some plainly good things: environmental sustainability isn’t the only good thing in the world, but it’s definitely a good thing from a social point of view, embodying not just the value of the natural environment but also a sense of intergenerational justice.
But some people (including the people behind the Global 100) want to expand the term “sustainability” to include other, non-environmental dimensions. From a certain point of view, this makes sense: other things required to allow a company to “sustain” operations. But then further problems arise.
Note that when we expand “sustainability” this way, a subtle bit of sleight-of-hand takes place. Previously, we were talking about business operations that were environmentally sustainable. Now, we’ve switched to sustainable organizations. What does it take to sustain an organization? Lots of things, and not all of them are good. And being sustainable isn’t, in itself, a good thing. The tobacco industry has lasted for centuries, leaving millions of dead bodies in its wake. Very, very sustainable. But bad.
As noted above, we don’t generally care whether companies can stay in business. We want them to merit staying in business. And if the companies on the Global 100 merit staying in business, why not just say so?
In the end, I guess my point really is that environmental sustainability is important all on its own, and doesn’t need to be fluffed up with issues like workplace safety or leadership diversity or CEO pay; and issues like workplace safety and leadership diversity and CEO pay are too important to stuff into the simple concept of sustainability.
The Business Ethics Blog 