Balancing Business & Sustainability motives
The Divide
Business is about making money. Sustainability is about protecting the planet and the creatures (including humans) on it. The time scale for business is measured in quarters, annual results, three-to-five-year plans, etc. Climate change, deforestation, reduction in biodiversity, etc. occur over decades or even centuries. It’s difficult to bridge the gap. Business as a general rule has a hard time with the concept of environmental sustainability. Sustainability, or to be more precise, the men and women who are deeply concerned about it, often have a difficult time with business. For many activist and government administrators, the fundamental motives of business are opaque and even suspect. Many environmentalists see the relentless drive for business profits as exacting heavy social and environmental costs.
Business leaders, on the other hand, find this view misguided. Most businesses do not regard themselves as being anything other than forces for good in the world, attributing the advances and accomplishments of modern society to the hard work of entrepreneurs and the indispensable products and services they create for the world to enjoy. The primary concern of senior managers and board members is the financial performance of the firm. As such, environmental problems can pass under the radar or arise as an unintended consequence of a firm’s cost-saving measures. This focus on financial performance contrasts starkly – and sometimes directly – with the priority of most environmental groups, which is environmental sustainability. Even entrepreneurs involved in developing new environmentally friendly technologies often fall short when thinking through how to fund their development and actually make a return on any potential investor’s money. Business leaders generally look to the government to set the rules of the game. So, when they are held to much higher standards by the general public or an activist community, they cry foul. Everyone desires clear ground rules by which to operate. The idea that a firm should be held liable for actions taken years ago when those same actions were legal is broadly seen as unfair.
Potential Bridges & Pathways
(A) CONSUMERS
One constituency that has the potential to connect these two worlds are consumers. The problem is that even in the relatively rich, so-called developed world, it is difficult to get people to pay more for goods and services that are supposedly more sustainable. Though some such claims are tenuous at best, there does appear to be firm evidence of a growing segment of consumers who will, all things being equal, make purchasing decisions that they perceive to be more eco-friendly. A growing body of research indicates that some customer segments might abandon certain brands altogether based on their (perceived) environmental performance. For now, however, most of these eco-minded consumers focus exclusively on the food category; even they appear reluctant to pay extra for this benefit when it comes to other types of purchases. Given the growing allure of environmentally friendly consumer products, the biggest strategic risk that companies face is falling into the temptation of “greenwashing” their environmental performance. If companies make inaccurate environmental claims about their products or services, they run a very serious risk of being caught and called out for misleading customers. The damage of that can be irreparable.
(B) ACADEMIA
Another place one might look for balance is academia. Yet even here we find a deeply polarized situation. Most academic papers dealing with these issues are written by researchers and professors who care deeply about the environment and their personal bias shines through their research. On the other side, researchers are so highly skeptical, their work is not even taken into consideration by the first group. To make this all more complicated, the mathematical models that determine the new impact of virtually any technology or practice are very complex. This complex nature leaves plenty of room for bias: previously held assumptions creep in to make such calculations possible.
