Philip Sutton
Director, Policy and Strategy
Green Innovations Inc.
Tel & fax: +61 3 9486 4799
Philip.Sutton@green-innovations.asn.au
Paper marked up in HTML format
by
Greg Naylor.
Sutton, P. (1999). "The sustainability-promoting firm". Greener Management International 23, UK.
This paper recommends an appropriate role for the private sector where society is aiming to be sustainable. The meaning of sustainability is clarified. To be meaningful sustainability must refer to maintaining or restoring something specific . The paper provides what the author hopes is a more adequate basis for firms to promote environmental, social and economic sustainability.
Key characteristics and competencies for sustainability-promoting firms are proposed. A simple model for action by small firms is presented to demonstrate that action on sustainability issues is possible for firms of any size. The key drivers that could motivate firms to take up the sustainability-promoting stance are examined and the need for a campaign to push for corporate adoption of the sustainability-promoting stance is identified. The paper finishes with a model for guiding action to promote sustainability through the peaks and troughs of the business cycle.
Many people hold the view that the role of private firms is to produce products and services, and make money, and it is government's job to safeguard the community's interests. According to this way of thinking, although firms are expected to comply with the law, they are not expected to be proactive in helping society solve its wider problems. So there is a division of labour between firms and the government.
This division of labour is justified by what might be called a doctrine of 'diminished responsibility', that is, a diminished responsibility by firms for ensuring the community or public good (Note 1)
This is not to suggest that governments, and all their multitudes of agencies, uniformly and routinely exhibit exemplary responsibility, while all businesses are totally devoid of moral concern. In reality concern for the community good can be found, somewhat patchily, in both the business and the government sectors. Instead what is being argued is that there is a widespread public expectation that the core business of government should be the advancement of the public good while the core business of business is the production of goods and services and the generation of profits. This can be put still more strongly. At this point in time virtually no-one thinks that the core purpose of business should be the general advancement of the public good.
The division of labour that allows firms to have diminished responsibility for the public good will work where governments are strong and firms are not powerful enough to make their private interests prevail over the public good. But with the globalisation of the economy and the absence of effective global governance, the private sector has gained a decisive advantage.
So it is now frequently the case that the more important an environmental issue is, the harder it is for the public good to prevail. This is because big environmental issues often require profound economic restructuring; and large private sector coalitions (Note 2) to campaign against such change can be and indeed are mobilised.
We can see this pattern when we compare the response to damage caused by chlorofluorocarbons (CFCs) on the one hand and greenhouse gases on the other. The CFC issue was reasonably clear cut scientifically, the threats to the public were clear and effective responses were possible without having to revolutionise the structure of industry - so governments were relatively more powerful than the firms that had a vested interest in the maintenance of the status quo. The global warming issue is rather different. Society can only solve the problem if the use of fossil fuels is phased out completely (Note 3). But change on this scale affects so much of the economy that there are currently whole branches of industry that would rather not change. So it should not be surprising that governments could only agree, at the Kyoto Conference in 1997, to a mere 5.2% global reduction in greenhouse gas emissions compared to the realistically (Note 4) needed 100% reduction.
So we seem to be locked into a pattern of inadequate response to major environmental issues. Is there no way through to a more effective response?
If, even when on balance public opinion and the influence of organised community groups favours government action, governments nevertheless do not feel powerful enough to take action, then the dynamics of the environmental protection process are not likely to improve until the behaviour of the private sector changes. So, paradoxically, the growth in corporate power over recent decades - that has made it easier for firms to avoid public responsibility - actually undermines the legitimacy of this avoidance because the doctrine of diminished responsibility can only work while governments are powerful enough to carry out their half of the bargain which is to safeguard the public good.
If society is to be sustainable when corporate power is dominant, then, with that power must come responsibility for the public good. And the responsibility needs to be exercised.
If the private sector is to take up responsibility for the public good this would require firms to not only reduce their negative impacts, but to go a very significant step further. They would need to pro-actively help society to achieve sustainability. In other words we now need to introduce a new ethic for firms based on a doctrine of their 'undiminished responsibility' for the promotion of the public good.
Firms that adopted an ethic of undiminished responsibility for the achievement of sustainability could be thought of as 'sustainability-promoting firms' (Note 5). And if they were to proliferate there would be profound effects on the power balance in society.
At present the vast majority of firms (both large and small) have a relatively low direct effect on the environment. These firms tend to have minimal engagement in the process of influencing public policy. As a result they are politically irrelevant even though they make up the majority of firms of their size-class. Those firms that do engage in the political process - to influence public environmental policy on any particular issue - are overwhelmingly the ones that are trying to defend the environmentally-damaging status quo or are trying to moderate the pace of environmental improvement. So, despite their relatively small numbers, in each size-class across the economy, it is currently the negatively proactive firms that are by far the most influential.
A countervailing proliferation of sustainability-promoting firms will come about if an increasing number of firms:
While some sustainability-promoting firms might come into existence as start-ups, it is more likely in the long run that they will emerge as a result of policy and cultural change within existing firms.
If sustainability-promoting firms proliferate, so that they outnumber firms in their size-class that defend the environmentally damaging status quo, then they will gain the corporate balance of power. This dynamic is summarised in Figure 1.
Figure 1 - From defensive action to creative engagement
| The stance of firms | Defending environmentally damaging status quo | Neutral or only reducing own negative impacts | Creating environmentally beneficial future for society | |
| Number of firms / share of GDP | Now |
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| Preferred future |
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|
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| Action with respect to system-wide change | Negative proactivity | Minimal engagement | Positive proactivity - via paradigm shifting products or influence | |
| Strength of forces | Now |
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|
Preferred future |
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|
|
This swing in corporate behaviour would not only have the benefit of creating a business 'mandate' for governments to act on sustainability issues (to complement the democratic mandate) but it would also:
Before plunging into the practicalities of what sustainability-promoting firms might look like and how a proliferation of such firms can be catalysed, it is desirable to spend a moment clarifying the mission of such firms.
If a firm is to promote 'sustainability' what should it be promoting?
It was concern for the environment that projected the terms 'sustainable development' and 'sustainability' into the language of economics and business management. Environmental policy makers of the late 1970s and the 1980s wanted to overcome the widespread notion that environmental and economic concerns were fundamentally hostile, where a gain for one must mean a loss for the other (Note 6). They argued that firms and societies needed protected environments and conserved natural resources in order to sustain the society and the economy (the 'wise use' argument). Others argued the flip side, that viable economies and societies were needed so that the environment could be sustained.
The term sustainable development was appealing because it implied the possibility of win-win solutions. It also integrated the notions of progress (development) and sustainability thus linking the interests of very large numbers of people.
However as the various groupings in society worked to claim the concept of sustainable development as their own, a number of widespread meanings have emerged that are problematical. Many people now use the term sustainable development (Note 7) to mean either:
This is one reason why more and more people are now focussing on the concept of sustainability as such rather than the broader notion of sustainable development - because the need to retain the reference to 'maintenance' of something is more glaringly obvious for the term 'sustainability' than in it is for 'sustainable development'.
Figure 2 highlights the relationship between sustainability (maintaining or restoring a necessary or current standard) and progress (striving for a new standard). It also suggests that this distinction is relevant across the environmental, social and economic dimensions. Figure 2 also teases out a number of levels for sustainability ie. survival sustainability, sustainability of the current standard and sustainability of the capacity for progress.
Figure 2 suggests that a hierarchy of importance should apply to the sustainability levels. If we are to care for all people and species now - and into the long-term future - then we must ensure that we achieve survival sustainability. In communities that are already tolerably well off, there is not much point in striving for more 'icing on the cake', that is going for improvements in quality of life beyond the current standard if this prevents effective action to sustain the underpinnings of ecosystems, human communities and the economy. Unfortunately it is now common in many countries, both developed and developing, to find that efforts to improve the standard of living in the shorter term is diverting crucial resources and attention away from the longer term maintenance of basic survival capacity.
Figure 2 - Sustainability & progress
Objective |
Priority: |
Environmental |
Social |
Economic |
SUSTAINABILITY |
At survival level |
Protection of life support systems
Prevention of species extinction |
Capacity to solve serious problems |
Subsistence |
At the current standard |
Maintenance of current environmental quality |
Maintenance of current social quality (eg. vibrant community life) |
Maintenance of current standard of living |
|
Of the capacity for progress |
Maintenance of the capacity for environmental progress |
Maintenance of the capacity for social progress |
Maintenance of the capacity for economic progress |
|
PROGRESS |
Actual improvement in environmental quality above the current standard |
Actual improvement in social quality above the current standard |
Actual improvement in the standard of living above the current standard |
|
Especially at the survival level, sustainability in any one of the environmental, social or economic dimensions cannot be achieved if sustainability is not also achieved in the other two dimensions. For example if society is riven by active conflict and hatred or eroded by serious corruption, both the environment and the economy are likely to suffer. Similarly if the economy goes into free fall then the environment and society will suffer (Note 8).
Many people with a concern for the environment recognise that "sustainability goes beyond action in just the environmental sphere". Programs like Agenda 21 have promoted the idea that this extension should focus on efforts to improve equity and participatory inclusion. However there is far more to social and economic sustainability than equity and participatory inclusion.
For example, if society and indeed the environment and the economy are to be sustained, society must have the capability and resilience to solve its major problems. In turn, the capacity to solve major problems depends on society being:
Logically, sustainability issues are ones that involve a significant threat to the functioning of environmental, social or economic systems (see Figure 3). So it doesn't make much sense to try to limit the promotion of sustainability to one dimension when the viability of ecological, social and economic systems is so interdependent and the need for sustainability in each dimension is so compelling in its own right.
Figure 3 - Key characteristics of a sustainability problem
|
The functioning of a major SYSTEM is seriously THREATENED |
...so it is important to take action |
|
There is a DEADLINE THAT MUST NOT BE MISSED |
... so there is a need for assured progress and there may well be urgency |
|
The PROBLEM IS DENIABLE or IGNORABLE |
...so active steps need to be taken - in opposition to the pressure for denial - to engage society in achieving a solution to the issue. |
The three characteristics of sustanability issues identified in the left hand column of Figure 3 can be illustrated well by the Y2K ('millennium bug') problem.
The functioning of a major system is seriously threatened: It is now increasingly accepted that if computers, software and embedded microprocessors (chips) are not fixed or replaced, almost every area of economic activity could conceivably be disrupted - electricity might not be generated and distributed, planes might not fly, banks might not operate and so on. So clearly this problem is capable of disrupting a major system - in this case the economy. And the ripple effects could, in the worst case, severely effect the sustainability of society (social cohesion could erode if the necessities of life are not supplied as usual) and the sustainability of the environment (there could be malfunctions for example in oil rigs, sewage plants, chemical factories, nuclear reactors and weapons systems).
There is a deadline that must not be missed: The deadline or at least the principle deadline in the case of the Y2K issue is painfully obvious ie. the first moment of the new year in the year 2000. The fact that the deadlines for other sustainability issues are often not anywhere near as clear or as immovable does not mean they do not exist. Any issues that involve irreversibility (extinction, long term loss) have implicit deadlines at least for the generations who live through the period of loss.
The problem is deniable or ignorable: Society can fail to comprehend sustainability problems or effective action can be put off for a variety of reasons including a lack of compelling short term benefits for some and the existence of strong disbenefits for others. This pattern is also clear in the case of the Y2K issue (Note 9):
The Y2K problem began in 1959 when Grace Murray Hopper, the inventor of Flow-matic - the first computer language written in plain English, and a number of other programmers including Robert Bemer of IBM developed a compromise computer programming language for business. This language was COBOL. To save valued space on data-entry punch cards and in computer memory, the language abbreviated years to two digits (e.g., 1959 was represented as 59). Some of Robert Bemer's IBM clients however needed to deal with dates outside the current century (eg. for genealogical records) so he invented the picture clause in COBOL that allowed a four-digit year to be programmed.
In 1960, only one year after the invention of COBOL the Y2K problem was identified. Robert Bemer and 47 other computer scientists anticipated problems that would occur forty years later and began lobbying for the four-digit year to be made the norm in programming. Unfortunately this lobbying failed a crucial early test in 1964 when IBM introduced the hugely successful System/ 360 mainframe and retained the two-digit year as the norm for its programming.
However in 1967 things looked up for the first generation Y2K lobbyists. The White House ordered the National Bureau of Standards to settle the date debate. But Bemer and his colleagues suffered a critical setback when, under pressure from the Pentagon, one of the largest user of mainframe computers, the Bureau stuck with the two-digit year.
In the 1970s the International Standards Organisation set a four digit date standard, but this failed to shake industry practice. Although the Pentagon promised to adopt year 2000 compliant date system around 1974 action failed to eventuate.
Bemer renewed his lobbying efforts in 1979 with the first widely published prediction of the Y2K crisis - in the journal Interface Age. However the response to the article was minimal and the issue died down again for another fourteen years.
Then in 1993 staff monitoring nuclear weapons at NORAD advanced their computer clocks to Jan. 1, 2000 - and the ICBM alert system crashed. That same year, Peter de Jager broke into print with his "Doomsday 2000" article in Computerworld. This launched him onto the lecture circuit to campaign on the Y2K issue.
This time the new generation of Y2K campaigners that de Jager's efforts spawned succeeded in getting the issue onto the mainstream agenda - and in keeping it there. In 1995 IBM finally acknowledged the Y2K bug and announced plans to help its customers make "timely year 2000 transitions". A year later in 1996, at the request of Senator Daniel Patrick Moynihan, the Congressional Research Service wrote its first report on Y2K. Moynihan warned Clinton of the "Year 2000 time bomb". Two years later, in 1998, the White House appointed John Koskinen as its Y2K czar and he found that most government agencies were unprepared for the Y2K transition. 1998 was also the year when most big businesses and many governments around the world finally committed themselves to strong action on the issue.
Within a year of the problem being created (the Y2K non-compliant COBOL programming language), key people knew there would be problems. But society denied the problem for 35 years before vigorous action was finally catalysed. Why was it Peter de Jager's activism, beginning in 1993, and not the lobbying of Robert Bemer in 1960 that finally engaged society with the issue? The realisation that time was running out may have had something to do with it, as well as the increasingly ominous tone of the warnings. Compare Bemer's dry 1979 prophecy: "Don't drop the first two digits. The program may well fail from ambiguity" with De Jager's call to arms twenty years later: "The economy worldwide would stop ... you would not have water. You would not have power ..."
Nevertheless the lead times required to check and correct billions of
lines of computer code, billions of embedded chips and millions of
computers mean that there is a very real prospect that many
organisations will not be fully Y2K compliant when the new year 2000
rolls around. The deadline that must not be missed will be missed.
And the disruptions that this will cause have been estimated by Ed
Yardeni, Chief economist with Deutsche Bank Securities, to lead to a
70% probability of there being a world recession (Note 10)
Most attempts to date to extend the sphere of concern of
sustainability into the social and economic realms have been partial
and ultimately inadequate. So if the sustainability-promoting firm is
to tackle sustainability across the board, what issues or problems
might it concern itself with? Figures 4 and 5 give an indication of
the scope of sustainability issues.
Figure 4 - Drivers of unsustainability Driver Examples Comment Accelerating / overwhelming corruption Russia, Colombia, Papua New Guinea Oppressive dictatorship North Korea, Burma Paralysed democracies USA, European Union Unable to reach consensus on key issues at all or within a practical timeframe (ie. the EU and
inaction over Bosnia) Intolerance / hatred based
on ethnicity / religion Northern Ireland, the former
Yugoslavia, Middle East, South Asia Population growth Haiti, some
African states, Bangladesh. Especially where the population
density and growth rate are both high. Growing
water shortage China, India, Middle East, North
Africa May lead to aggression between countries Global warming Global Declining commitment to maintaining/building a healthy society Global Driven by: economic
individualism, primacy of corporations over society. Discounting the value of investments so that benefits or costs beyond a few decades count for
nothing Global So-called "short-termism". Large-scale labour shedding High labour cost
countries, recessed economies Can lead to insufficient
purchasing power and savings thus undermining the economy, can lead to poverty and unstable social
systems. Technological fragility Global / Y2K, loss of agricultural genetic diversity Resource
depletion World oil production peak in 10+
years In the case of oil, this is a key issue if efficiency
plus renewable energy sources cannot be mobilised rapidly enough. Super-pathogens HIV-Aids / Africa,
Asia Emergence of antibiotic resistant microbes Global Destruction of natural habitat/life support systems Global / bushland clearance, soil degradation The triggers in Figure 5 can dramatically reveal the unsustainability caused by the drivers in Figure 4
Figure 5 - Triggers of unsustainability Trigger Examples Comment Collapse of governance Russia Fragility in Indonesia / China. Economic depression Asia Can lead to political instability, scapegoating, aggression and lack of resources to deal with other
sustainability issues. Y2K digital systems date
problem Global Could trigger a global recession. Wars / super terrorism WW1, WW2 / Rwanda, former
Yugoslavia, Cambodia Risks in Middle East,
Asia. Extreme earthquakes, Tsunami Rare but devastating if large
enough. Catastrophic cyclones Central America Catastrophic floods China, Bangladesh 200 million at risk if the
Yellow River breaks its levy banks. Catastrophic
bushfires Indonesia, Brazil Catastrophic droughts Sub-Saharan Africa Catastrophic crop failures Russia, North Korea Critical
if combined with lack of income to buy from elsewhere. Catastrophic collapse of ecosystems supporting economy Newfoundland fishery (Canada) Seen from this multi-dimensional perspective we can say that the world has already been challenged by a number of
economically or socially-driven global sustainability crises, for example, World War 1, the 1930s Depression, World
War 1 and the Y2K crisis.
A number of future global sustainability crises can be anticipated. For example the economic impact of the Y2K
crisis, coupled with the ongoing impact of the Asian economic meltdown, could well trigger a very severe global
recession.
And although the world has not yet faced an acute environmentally-driven global sustainability crisis, such
crises are likely to be felt no later than the first two decades of the new century - propelled for example by global
warming, the peaking of global oil production (Campbell & Laherrere, 1998, International Energy Agency, 1998),
fresh water shortages and damage to soils and natural habitats.
Already over the last decade disturbed weather conditions, possibly caused by global warming, have had a draining
effect on economies in many parts of the world through the impacts of severe cyclones, floods, fires, droughts, etc.
The insurance industry, which has suffered from massive pay outs caused by these abnormal events, has become very
aware of this pattern. It lobbied actively in the lead up to the 1997 Kyoto conference, urging governments to take a
strong stand on global warming.
It can be expected that this trend towards severe environmentally-related stresses on all the major systems,
social, economic and ecological, will intensify. If society waits however until such time as these issues are
incontrovertibly recognised as a serious problem, it may not have the economic and human capital resources to deal
with them.
These five core requirements make it clear that a firm that has its sights set exclusively on the firm's
self interest in the short term cannot really be a sustainability-promoting firm. The core requirements, especially
the last four, are of no practical value to the firm in this context.
There are six additional actions that it would be desirable for sustainability-promoting firms to take to magnify
their effectiveness. They should:
Sustainability-promoting firms need to be distinguished from firms whose principal contribution to the achievement
of sustainability is an exemplary product or production process. Sustainability is a system characteristic and so
sustainability-promoting firms need to take undiminished responsibility for catalysing a paradigm shift to
sustainability.
In order to identify the key competencies that sustainability-promoting firms need to have, we must first consider
the common characteristics of sustainability issues across the three key areas: environmental, social and
economic. The characteristics of sustainability issues that demand special
competencies Sustainability issues arising in the environmental, social and economic dimensions are
incredibly diverse. And yet there are some shared characteristics. A great many of the issues involve:
Standing in the way of an effective response to most sustainability issues are factors such as:
Since sustainability issues have common characteristics it makes sense to develop special competencies than can be
applied across a wide variety of sustainability issues.
These key competencies include the ability to:
Management researchers, educators and communicators need to develop and propagate these key competencies (Note 16).
Given the breadth and complexity of sustainability issues there is a considerable benefit to be gained by using a
conscious management system to handle them. Fortunately, the ISO 14001 environmental management methodology could be
easily extended to handle sustainability issues across the environmental, social and economic dimensions - see Sutton
(1997b).
Figure 6 - Strategic directions for achieving ecological sustainabilitySustainability flashpoints
The key characteristics of the sustainability-promoting firm
Having established the need for sustainability-promoting firms and indicated a desirable scope for their action on
sustainability, it is now time to look at what sustainability-promoting firms need to do. If firms want to be
classed as 'sustainability-promoting' there are five things they need to do as their minimum commitment:
The key competencies of the sustainability-promoting firm
The key competencies
| Policy |
Objectives (9 system conditions) |
Targets (9 stretch goals) |
Actions (15 generic strategies) |
| Society should be ecologically sustainable. |
Ecological sustainability must not be undermined by systematic:
Society must make it easy to achieve system conditions 1-4 by ensuring that:
|
Society should aim for: |
Society should take action to:
|
While the reader may have accepted the logic of each individual step of the argument so far, the end point of the argument, that firms should take responsibility for sustainability issues identified in Figures 4 and 5, might now seem impossibly far removed from anything that is relevant to the average firm. Can we seriously expect firms to feel any responsibility for or take any action on the enormous range of huge issues catalogued above?
Certainly the public affairs branches of the very biggest firms deal with at least some of the issues in Figures 4 and 5, for example, economic stability, governability, human rights, corruption and global warming. Perhaps the mega-firms could be convinced, over time, to place these issues in a more comprehensive sustainability framework and to take on a wider range of issues.
But of what relevance are these issues to the vast majority of firms that are dramatically smaller, that lack the resources to devote to the big picture issues and that lack the political clout of the mega-firms?
There is one strategy that might enable small firms to take on the full array of sustainability issues, despite these limitations, and that is outsourcing. How might a small firm promote sustainability using the outsourcing strategy?
Just before answering this question, it is worth noting that a sceptical reader might feel that answering this question is pointless if no convincing arguments are provided to show why small firms would take up a sustainability-promoting stance in the first place - given that it is notoriously hard to motivate small firms to tackle issues that go beyond short term survival or that appear to divert the owner or manager from their preferred course. The issue of motivation will not be ignored. It is the topic for the next section.
To test the limits of what small firms can do to tackle a large array of 'big picture' sustainability issues let's consider the example of the ten person company (Note 19). Given the huge data requirements and the complex skills required, the identification of sustainability issues and the development of strategy options is largely beyond the internal capacity of the small firm, so these tasks would have to be outsourced. A micro-organisation will most likely have a micro-budget to match, and so the outsourcing is likely to be most effective in the form of a subscription to a research organisation - involving an investment of perhaps no more than a few hundred dollars a year. While this amount of money will not of itself buy much research, the research organisation could fund a full program provided it had a sufficiently large subscriber base. The research organisation would need to have the capacity to produce condensed briefing materials so that busy people in micro firms can absorb the key messages despite the pressure of other work.
When doing strategic thinking the people in the ten person sustainability-promoting firm would need to consider modifying their production processes, their product range and their use of influence and they would need to think about sustainability in all three of its key dimensions: environmental, social and economic.
All small firms need to devote most of their labour to production, product development and marketing, otherwise they are likely to fail. The ten person sustainability-promoting firm would have to do likewise - easily devoting 95% of their effort to these hands-on areas. But to have a significant impact on big sustainability issues it is critical that firms, no matter how small, also exercise whatever influence that they can muster. Since the ten person sustainability-promoting firm would have so little time to give to exercising influence this function would have to be largely outsourced too - to a range of skilful lobbying organisations that share the values and basic strategies of the firm. Even the task of finding appropriate lobbyists would most likely need to be outsourced to a broker. Once again the firm might only be able to devote a few hundred dollars a year to this lobbying.
Expenditure on making an effective contribution to sustainability-promotion through modified production processes and products will need to be much more substantial than the expenditures for strategic briefings and influence-services. But if the firm's strategies are clever, these expenditures need not be additional costs but can be centrally relevant to getting 'product' out the door. This is why firms have moved, for example, from end-of-pipe pollution control to 'upstream' cleaner production techniques which often eliminate the add on cost by building pollution and waste prevention into the core production processes.
The number of sustainability issues to be dealt with in the production and products area is large and the expertise and support services and products needed to act on them would be large too. So the firm would most likely need to hire a broker to tap the necessary expertise and products.
Even learning how to effectively manage a sustainability-promoting firm would be something that could be facilitated by buying in management training or tapping into other externally produced educational resources.
Figure 7 - Outsourcing of sustainability-promoting functions by small firms
| Areas of leverage | Types of service providers |
| Management approach that is orientated toward sustainability-promotion | Management training; publishing |
|
Identification of sustainability issues and development of strategic options | Research; strategic advice generation; communications |
| Influence | Brokerage service to identify influence service providers; influence service providers (eg. lobbyists, educators/trainers, advertising agencies, media services, publishers) |
| Modification of production processes and products | Brokerage service to identify relevant production and product-related service providers; the production and product related service providers |
It is possible that the service providers identified in Figure 7 will be urged into existence by the small
sustainability-promoting firms. But more likely it will require the initiative of industry associations, government
agencies, existing consultancy firms, environmental advocacy groups or professional 'greening of business'
groups.
In the section on "The key characteristics of the sustainability-promoting firm" it was argued that
firms focussed exclusively on their short-term self interest are most unlikely to see the point of being a
sustainability-promoting firm. They would only adopt a sustainability-promoting stance if it was an externally
imposed requirement demanded by government, customers or other organisation whose cooperation was essential for the
firm (eg. Their industry association, financier, insurer etc.). But there is a paradox here. Governments,
customers, industry associations, financial institutions, insurers etc. will only have the freedom to impose such a
requirement if the concept of sustainability-promotion is already widely supported in the business community. So
other motivators will be needed to prompt firms to be early adopters of the sustainability-promoting stance.
Competition might be a powerful driver. If highly competitive firms adopted the sustainability-promoting firm
approach and it could be demonstrated that this stance contributed materially to their competitive success then many
other firms would be tempted to adopt this approach as well.
But what will motivate the first cohort of firms to take up the idea, well before it is proven to be
competitively potent or before it has become a requirement? Firms that are sensitive to public opinion might be
motivated if the public demands that the firm be sustainability-promoting - especially where this view is held by the
firms' customers. This might partly explain why businesses such as the Body Shop, Patagonia, the Cooperative Bank,
Ben & Jerry's and MAC (Note 20) have a high profile commitment to ethical business practice.
The first cohort of sustainability-promoting firms might also be motivated by other aspects of their
long-term self interest, for example, the enhancement of staff morale and commitment, long-term relevance to a
changing market and the long-term maintenance of a positive business climate (Note 21).
And there are motivations that go beyond the self interest of the firm. The
personal feelings and beliefs of key decision makers play an important part too. While final decisions may well be
justified on the basis of hard-nosed calculations of the benefit to the firm, the inspiration for a business
initiative can sometimes spring from privately held ethical beliefs. For example, Interface, a global manufacturer
of carpets took on a very proactive environmental program after the CEO, Ray Anderson decided it was time to take an
ethical stand.
Even if strong external pressures were eventually to build up to make it pragmatically useful for firms to adopt
the sustainability-promoting stance there is still a practical reason for the commitment to be driven by a moral or
cultural imperative. This is because sustainability-promotion can only be truly effective if people are personally
motivated to apply their full creative powers to the task. Legal requirements might generate compliance with
identified minimum standards but they cannot force people to excel. The required commitment to excellence can only
grow in the heart and mind of each person as a result of moral and/or intellectual engagement.
Ultimately, at the heart of the concept of the sustainability-promoting firm is the practical need for vision and
ethical commitment. For many this will sound warning bells. Surely the pursuit of visions and ethics guarantees
that the firm will lose the plot commercially? Not necessarily according to research by Collins & Porras (1994).
They found that where firms, such as Hewlett Packard and Merck, combined a strong commitment to both short
term survival and to timeless and inspirational non-commercial values, they created the possibility for not just
average but superior commercial performance and for well above average corporate longevity.
So perhaps the potential motivators for sustainability-promoting firms of pursuing:
can be actualised most powerfully in combination.
Let's return now to the issue of the motivations of small firms. According to Simon Whalley of the UK Federation
of Small Businesses many small firms are dominated by a struggle for day-to-day survival and by the entrepreneur's
desire for control so that they can gain a sense of independence or actualise a vision (Sheldon, 1998). Also small
firms tend to operate very informally. These factors combine to make it very difficult to get small firms to
systematically address issues that are not already well known to the entrepreneur and that are not considered to have
practical relevance.
Many small firms will never adopt the sustainability-promoting approach. Their leadership is simply unwilling or
unable to take a proactive stance on sustainability. If the economy as a whole moves in the direction of
sustainability they will just be swept along and become greener because of their need to remain relevant to the
changing market place - otherwise they will not change.
But a significant number of small firms could potentially be motivated to take up the sustainability-promoting
approach. These are the firms led by proprietors or managers who:
The key issue in relation to these people is not whether they could take up the sustainability-promoting firm
stance in theory but whether they will ever find out enough about how to be sustainability-promoting to know what to
do and whether they will ever experience the triggers that will switch them from aware to active. Most small
business managers have little time for formal learning - they absorb ideas verbally and from experience. So the idea
of being a sustainability-promoting firm will have to come to them through a drip-feed process from workmates,
family, friends, and the media.
The importance of personal values and learning via informal workplace and community networks suggest that the
adoption of a sustainability-promoting approach in firms requires cultural and moral change that can only be
engendered (relatively) quickly through a community-based campaign.
Where will this campaign for sustainability-promotion come from? How will it generate the credibility and
resources needed to foster change powerful enough to create something on the scale of a second industrial
revolution?
There are elements of every firm that are already involved in contributing to the achievement of sustainability.
The elements include those involved in, for example: environmental management, occupational health and safety, equal
opportunity employment, training and knowledge retention, physical asset maintenance, management for business
continuity and Y2K preparedness.
And there are whole organisations devoted to sustainability-related activity (see Figure 8).
Figure 8 - programs /industry sectors promoting some form of sustainability Environmental Social Economic Global warming
prevention / mitigation Heath (physical and mental)-
remedial / preventive Promotion of competitiveness - in the
firm and in the value chain Fisheries and
forestry conservation Corruption and crime
prevention Macroeconomic stabilisation Water conservation Policing / private security Asset
maintenance Soil conservation Poverty relief Y2K impact prevention / mitigation Urban and land use planning Promotion of racial
and ethnic harmony Occupational health and
safety Pollution prevention Overseas aid Quality management Waste
prevention Emergency services / disaster
prevention Risk management Nature conservation Disaster relief Insurance / insurance risk
prevention Environmental management Human rights promotion Savings promotion Environmental
education Programs for fair treatment (of workers and the
community) Corruption and crime prevention Environmental activism Quality of work life Vocational and management education Protection of indigenous cultures Urban and land use planning Cultural conservation Environmental management Urban and land use planning Change management Military security / threat prevention Broad-based education Promotion of religious and non-religious
ethics Social activism It will almost certainly be organisations and individuals involved in these programs across the whole economy and
society that will be the base from which the campaign for sustainability-promotion will emerge. These programs
already deploy a significant percentage of the GDP, although probably more is spent on sustainability-via-remediation
than on sustainability-via-prevention. Effort needs to be put into linking some of the outreach efforts of these programs into a mutually supporting
campaign for sustainability-promotion.
Programs of outreach into firms already exist in all three dimensions of sustainability-promotion via:
In the first section of this paper it was argued that the achievement of sustainability often requires quite
massive changes in the economy or society if it is to brought about relatively quickly. Fast change will only occur
if large sections of the society can be mobilised in favour of the change and the forces opposed do not create a
logjam that blocks progress. The 'large change' aspect means that the campaign for sustainability-promotion has to
be very radical in the scale of its objectives and the speed of their implementation, but the need to avoid a social
logjam means that the campaign must not be fundamentally oppositional in psychology (ie. a psychology of 'us' versus
'the enemy' is not appropriate) and it must strive as far as possible for win-win solutions.
The radicalism objective suggests that the campaign needs to be independent of forces substantially tied to the
status quo so that it is not paralysed by a fear of 'frightening the horses'. It is this fear that drives most
mainstream reform processes to compromise their objectives very substantially, so that patronage or apparent
credibility can be retained. But for sustainability issues it is not appropriate to water down the objectives.
These requirements mean that the campaign needs to be led by non-government organisations that are not tied to
governments or firms.
On the other hand the 'oppositional' or 'anti' mentality that pervades most change movements that operate outside
the control of status quo forces is not appropriate either.
So a new style of campaigning needs to be forged that is radical and friendly (Note 22).
The functions of the campaign for sustainability-promotion would be to:
Because the concept of sustainability is so wide ranging it is likely that most people will become engaged through
mini-campaigns built around more specific issues. For example around stretch goals or generic strategies. Examples
in the environmental dimension can be found in Figure 6. Some firms might however become involved through 'broad
spectrum' business ethics campaigns.
Of course the process of creating a sustainable society is so huge a task and is so complex and difficult that it
will not happen simply because there is a campaign for sustainability-promotion. Other triggers of change and other
change agents will play important parts. This fuller process is discussed at more length in Sutton (1998b) (ie. the first "Sustainability-promoting firm" paper) and on
the Green Innovations web site in general (see the URL at the end of the paper).
The time to implement dramatic new things is in the upswing of the business cycle. People are optimistic, there's
money to invest and people are prepared to take risks (Note 24). However the time to prepare
for dramatic new things is well before hand and as often as not that will be in the down swings of the business
cycle. (See Figure 9.)
Figure 9 Managing for sustainability-promotion through the business cycle
If we want businesses globally to embark on the transition to a
sustainable economy as soon as possible and if we want to make a major
leap in that direction then we need to be ready to capitalise fully on
the next boom period from its very start. The boom times are windows
of opportunity for dramatic change and they only come around every
7-11 years. They are opportunities that should not to be
squandered.
Currently there is little awareness within firms of what needs to be
done to create a sustainable (as opposed to a merely somewhat greener)
economy. This awareness needs to be generated. There is, as yet, no
consensus in business that there should be a transformation to
a truly sustainable economy. That consensus needs to be built. Plans
need to be prepared to clarify and guide the introduction of the all
the necessary changes. Early-mover companies need to be engaged in
the process at both a strategic and practical level. And the less
visionary firms need to be involved through cost-saving, risk
management and customer loyalty programs (see Arnold & Day, 1999).
Economic downturns, far from being lost time, could be fruitful times
to do the preparation and sow the seeds.
The author's organisation, Green Innovations Inc., will be pursuing this agenda and it welcomes collaboration from
others. More information on these ideas is available on the Green Innovations web site:
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Page first posted: 15th February 1999Why will firms want to be sustainability-promoting?
The well-springs of the sustainability-promoting firm campaign
The character of the sustainability-promoting firm campaign
Tackling sustainability through the business cycle
There is a common perception that sustainability issues rise to near the top of the public and commercial agendas
when the economy is booming and drop well down when the economy goes into recession. However such an on-off approach
is not necessary or appropriate.![[Graphic: Action
through the business cycle]](b-cycle.gif)
(This figure is not a prediction - it is for
illustrative purposes only)Conclusion
The key conclusions of this paper are that:
Notes
References
Page last modified: 3 January 2001
