Corporate Sustainability – Redefining the Future of Business

Can corporate sustainability and implementing the triple bottom line into business practices work? Are the rewards worth the risk? Read on for 3 great perspectives:

Tony Blair, a British politician and former Prime Minister of the United Kingdom, stated that, “The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge, but all economies know that the only sensible long term way of developing is to do it on a sustainable basis.” A major topic in the 21st Century is regarding sustainability and climate change, but as a society, we are not sure how to deal with the abundant amount of scientific research that is overwhelming our minds. The most basic definition of sustainability is using resources that meet our current needs so they are not depleted and can meet the needs of future generations. Citizens worldwide share many different viewpoints on this issue. Some are all for the idea of fighting climate change; others do not believe it is true; and even more are indifferent. Since the topic has consumed the press, our decisions, and our lives, people are accounting for a global perspective on the environment. People who definitely have had conversations about sustainability are the corporations and businesses that drive our economy.

One concept that businesses make a point of emphasis on is the triple bottom line. The triple bottom line focuses on three distinguishing pillars of people, profit, and planet, and measures organization success economically, ecologically, and socially. Examples of each part would be cutting down on production costs, being eco-friendly, and treating employees honorably. The three types of capital relevant within the concept of corporate sustainability are economic, natural, and social capital. Since there are many aspects a business must cover with this concept, there is much discussion whether or not it can be implemented, or if the risks are worth the rewards. According to Thomas Dyllick, sustainability has become a mantra for the 21st century, and the quest for economic growth and social equity has been a major concern for most of the past 150 years. “When transposing this idea to the business level, corporate sustainability can accordingly be defined as meeting the needs of a firm’s direct and indirect stakeholders (such as shareholders, employees, clients, pressure groups, communities, etc), without compromising its ability to meet the needs of future stakeholders as well” (Dyllick). The range of viewpoints on sustainability in relation to business comes from a variety of scholars, executive officers, and authors. First, John Robinson discusses the overall meaning of sustainability and its definition. He believes that it is very vague, attracts hypocrites, and fosters delusions. Second, Milton Freidman believes that a business must use its resources and engage in activities designed to increase its profits and only profits. Lastly, Ray C. Anderson is the founder of a carpet company called Interface Global, where he turned around a business that was high in pollution into one that is now a model for other businesses to follow in combating climate change. He believes focusing on the triple bottom line can actually increase profits that could not have been acquired previously. All three sources outline different perspectives on climate change in relation to business practices, and help better understand information on sustainability in the 21st century. Can corporate sustainability and effectively implementing the triple bottom line into business practices work, and are the rewards worth the risk?

First, the primary concern when deciding to implement the triple bottom line is whether or not a definition of sustainability in itself is clear. There are many different forms of sustainability ranging from agriculture, architecture, tourism, energy, and is even implemented in lifestyles. All different forms all have one thing in common in that they meet current needs while preserving resources and the environment for future needs. Since there are so many applications of the term, Robinson argues that sustainability is vague, attracts hypocrites, and fosters delusions. Robinson says that “one of the most striking characteristics of the term sustainable development is that it means so many different things to so many different people and organizations. The literature is rife with different attempts to define the term and debates have erupted between those who prefer the three pillars approach (emphasizing the social, ecological and economic dimensions of sustainable development), or a more dualistic typology (emphasizing the relationship between humanity and nature), or others.”

Second, Robinson states that a related but perhaps more serious issue has to do with the way sustainable development language is being used to promote what may be unsustainable activities. This basic concern is also called cosmetic environmentalism and is greatly influenced by government and business. According to Anderson, a recent study by TerraChoice Environmental Marketing, Inc., showed that in 1,018 consumer products bearing 1,753 environmental claims, all but one was demonstrably false, or risked misleading their intended audiences. When marketing a product in the 21st century it is a trendy idea to implement something “environmental” or “green,” but many times this is misleading. Failing to create an ethical, environmental marketing plan is often referred to as “green washing” where the audience is left to believe what marketers say, even if it is incorrect. Sustainability can be prone to hypocrisy and be lured into this fake greenery. Lastly, Robinson states that sustainability fosters delusions as an oxymoron, and as pursuing the wrong agenda. By being an oxymoron, many sustainable actions may in return be unsustainable. In the past decade topics such as eco-efficiency, dematerialization, industrial ecology, biomimicry, and sustainable design have all had an explosive growth. However, to implement many of these practices many implications must be carried out. The technology has advanced enough where efficiency and innovative designs can create energy in a means that is cleaner, sufficient, and attainable. These elegant processes may end up being great for the environment and improve energy efficiency, but the costs are inflated to a point where affordability is the only concern.

Another delusion of sustainability is pursuing the wrong agenda. The concept of sustainability is thought of as an actual distraction from real problems and potential solutions to development. Robinson argues that sustainable development distracts from real problems and changes that improve human well-being, especially to the poor. Collectively, Robinson believes that sustainability should be implemented, but as an integrative concept that covers many different fields and sectors. His argument deals with  “an approach to sustainability that is integrating, is action-oriented, goes beyond technical fixes, incorporates a recognition of the social construction of sustainable development, and engages local communities in new ways.”

Second, Friedman evaluates the bottom line within business practices. The triple bottom line focuses on three aspects, economic, social, and ecological, but he suggests that there is only one bottom line. According to Friedman, “there is only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The argument enforces that companies should mainly be focused on increasing shareholder value without worrying about other dimensions. The other dimensions are social and environmental factors, aspects that are sometimes hard to judge. Of course one can determine if an action is socially acceptable or ethical, but there is ambiguity in how it can be measured. For example, profits can be measured on a financial report, but social and environmental actions cannot necessarily be measured. Does giving to charity get a higher rating than employee promotions? Does constructing a building to LEED certification outperform recycling products? Also, the industry of health care and hospitals would have trouble being rated because the underlining theme of their business is to promote healthy lifestyles. “A group of personas might establish a corporation for an eleemosynary purpose – for example, a hospital or a school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services” (Freidman). Also, Wayne Norman and Chris MacDonald feel that even the social and ecological bottom lines are unclear as well. They state that, “while it makes perfect sense to take the costs of labour and materials and subtract those from sales revenues, it makes little sense to talk about (for example) taking a social “minus” such as a sexual harassment lawsuit and subtracting that from a social “plus” like having engaged in corporate philanthropy.” These bottom lines are obviously unclear because a bottom line is undeterminable.

Another way of viewing social responsibilities of a company is by understanding where they come from. Freidman argues that as a person, someone may have other responsibilities that he recognizes voluntarily, such as his family, charity, church, clubs, and his community. He states that, “in these respects he is acting as a principal, not an agent; he is spending his own money or time or energy, not the money of his employers or the time or energy he has contracted to devote to their purposes. If these are ‘social responsibilities,’ they are the social responsibilities of individuals, not of business.” When examining the three aspects of the triple bottom line, there are many flaws, and there seems to be an unclear bottom line. “The kinds of issues that arise in social and environmental domains can be (and regularly are) managed, but they will never be reducible to the kind of common unit of measure that would allow for straightforward bookkeeping” (Norman). Freidman believes there should only be one sole bottom line, and that social and environmental responsibilities are unclear.

Lastly, implementing sustainable initiatives in a business and its functions may ultimately lead to increased company value. Anderson exemplifies the transition of a business model into a leader in sustainability through his management. He is the founder of Interface Global, a module carpet company that set a goal to take nothing from the earth that can’t be replaced by earth. His understanding is that newer profits can be exploited by focusing on the triple bottom line. He found the major flaws within business and says, “it was the entire linear, take-make-waste industrial system. Fundamentally, it was a way of thinking about the world that assumed unlimited resources, unlimited energy, and unlimited space. It assumed sources that were able to provide whatever we wanted, and sinks able to absorb whatever poison we might send their way.” Anderson also believes in Paul Hawken’s ideas from The Ecology of Commerce, which states that business and industry were instrumental in global destruction, but also the only institution large and powerful enough to make change. In response to Hawken’s ideas, Anderson formed a sustainability task force that arranged objectives to climb “Mount Sustainability,” and entitled his approach Mission Zero. His mission to become completely environmental friendly followed seven main tasks: moving toward zero waste, increasing benign emissions, increasing efficiency, closed-loop recycling, resource-efficient transportation, changing minds of clients, and redesigning commerce. All seven facets with correct integration led to a more profitable business for Anderson.

The goals that Interface set were laid out in all aspects of the business. First was to define waste in relation to one’s business, and set up a procedure that measures waste correctly. Then, year-on-year goals can be established and plotted for all clients to see. This was the concept dealing with waste in making carpets, which at the time was toxic and petroleum based, releasing immense amounts of pollution. However, since Anderson’s entrepreneurial idea took flight, the company cut greenhouse gas emissions by 82%, cut fossil fuel consumption by 60%, cut waste by 66%, cut water use by 75%, invented and patented new machines, and most importantly to a business, increased sales by 66%. The company doubled earnings simply by changing the way production was done from start to end. Focusing on production, distribution, and waste helped Interface improve the quality of the environment while making more profits. With practical ideas and measurable outcomes that every business can use, Anderson shows that profit and sustainability are not mutually exclusive: businesses can improve their bottom lines and do right by earth. Anderson was able to focus on a global industry on the subjects of costs, products, people, and marketplace. These changed mindsets opened eyes to newer ideas and markets, and also lead to money and profits waiting to be found.

After carefully reviewing each viewpoint, I have concluded that corporate sustainability and the triple bottom line are a viable option for businesses to practice. I respect all of the points made, especially one opposition by Freidman. He states that business should only be focused on profits; however, there is an underlying flaw in this conclusion: focusing on other aspects, like ecological and social issues, can render a significant increase in a company’s profits. By focusing on three bottom lines, the shareholder and stakeholder’s value of a company can be increased. According to Making Sustainability Work, Marc J. Epstein states that, “a balance between economic progress, social responsibility and environmental protection, sometimes referred to as the triple bottom line, can lead to competitive advantage. Through an examination of processes and products, companies can more broadly assess their impact on the environment and society and find the intersection between improving social and environmental impacts and increased long-term financial performance.” The evaluation of these topics is necessary to make effective operational and capital investment decisions that impact a business’ overall objective.

The three pillars of people, profit, and planet are an integrative system that can help improve overall business. One of the most basic science formulas relating to this business case is one on human impact; human impact equals population multiplied by technology squared and again by affluence, or consumption of goods. In Interface Global’s equation for human impact, affluence is written as a lowercase “a,” suggesting that it’s merely a means to a different end. Then on the bottom half, happiness is added, which describes a more sustainable civilization. Happiness is applicable to social and ecological aspects, and the conditions of employees and the environment. These main variables are all influenced immensely by corporations.

I still believe the points made by my oppositions are strong, but there remains one flaw that should be recognized. By having a vague and open-ended definition to sustainable development, corporations were able to focus this topic and directly apply it to business. Robinson argues that it creates delusions, but what seems to be a “buzzword,” general sustainability opened the doors for many different routes businesses could take when regarding climate change. Every corner of an industry can focus on sustainable practices. Sustainable production, waste, marketing, building, development, landscape, design, agriculture, and other subjects all have the ability to focus on environmental practices.

The history of sustainable practice is not very extensive but has been transformed even in the 21st century. The evolution of sustainability has taken sustainable development, corporate social responsibility, stakeholder theory, and corporate accountability theory, and has contributed to a new definition of corporate sustainability. In the Ivey Business Journal, Mel Wilson says, “corporate sustainability can be viewed as a new and evolving corporate management paradigm. The term ‘paradigm’ is used deliberately, in that corporate sustainability is an alternative to the traditional growth and profit-maximization model. While corporate sustainability recognizes that corporate growth and profitability are important, it also requires the corporation to pursue societal goals, specifically those relating to sustainable development — environmental protection, social justice and equity, and economic development.” This can further be tested after given time to acquire research.

Several research initiatives can be implemented in more than a month to further evaluation corporate sustainability. Evaluations of business models worldwide can be examined to reassure that they are following the triple bottom line through waste, efficiency, and financially. For example, from 1995 to 2008 Interface Global diverted 175 pounds of waste from landfills, and saved over $400 million by focusing on energy efficiency. These are relevant in a business that has served as a model for others, but not everyone can achieve such a great efficiency. Other programs and enterprises can be used to determine sustainability. The United States Green Building Council is responsible for evaluating sustainable buildings through LEED certification. Other companies could be used for research such as Waste Management, electrical companies, and financial reporters. LEED certification would be able to determine the efficiency of buildings, Waste Management could accumulate data from the waste of a company, and financial companies can utilize their yearly income statements. Simply by doing extensive research within the same company, and utilizing outside sources, corporate sustainability could be researched to determine its capabilities.

Not only is corporate sustainability responsible for implementing natural practices through wind, solar, and water, businesses are also responsible for social and financial responsibility. The triple bottom line reinforces people, profit, and planet in the industry and help creates a more sustainable environment to live in and do business in. There are several opposing viewpoints, however, concerning the topic. First, Robinson believes that sustainability in itself is vague, attracts hypocrites, and fosters delusions. Second, Freidman argues for a bottom line in business that should only reflect financial gains. Lastly, Anderson states that by implementing the triple bottom line, profits will be beneficial and significantly increase. Although the fundamental goal of a business is to achieve maximum profits, focusing on other factors can coalesce into combating climate change. Corporations are fundamentally large enough and wealthy enough to promote action and should, for they are most responsible for the pollution in the environment. The triple bottom line at times may seem risky, but the rewards are definitely worth the risk, and sustainable business models should be implemented in corporations worldwide. Business can relate to many things in life and help drive the economy, and as pioneer John Muir said, “when we tug at a single thing in nature, we find it attached to the rest of the world.”

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About Zak Suhar

Student at Mount Union. Outdoor enthusiast. Perspective and jumping photographer. Entrepreneurial mind-setter. Green Bay Packer & Wisconsin sports fan.
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4 Responses to Corporate Sustainability – Redefining the Future of Business

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