Does (or Should) Business Have Social and Environmental Responsibility?

Leunig cartoon
Cartoon by Michael Leunig (thanks to Mia for the link)
A week ago I wrote an article linking business risk, business sustainability and business resilience, arguing that the best way to get companies to pay attention to their social and environmental actions is to frame the challenge as a business risk and business sustainability issue, rather than something business should do just out of a sense of responsibility.

A business colleague has since sent me a paper and a video of a presentation to the Institute of Chartered Accountants of England and Wales by Rob Gray of St. Andrew’s University. Gray argues that what currently passes as ‘sustainability reporting’ is, at best, meaningless rhetoric and, at worst, dangerous greenwashing (dangerous because it gives us a false sense of security that we’re effectively dealing with the problems). There is no correlation between ‘sustainability reporting’ and more socially and environmentally responsible business practices, he shows, and those practices, at any rate, are not even beginning to address the problems our planet and civilization now face.

In essence, Gray is saying:

  • Business sustainability and the sustainability of our planet and civilization are, ultimately, connected (if there’s no planet there’s no business), but in the shorter term they are not necessarily correlated and may in fact be inversely correlated (what’s in the best interest of the short-term bottom line of the company may harm society and the planet). By extension, appealing to business to focus on business sustainability may actually make the situation worse.
  • We all, including business, have a responsibility to take the drastic steps needed now to try to ensure the sustainability of our planet and civilization. For business to say that this is government’s job, and that they will cooperate with regulations but otherwise be passive in addressing this threat, is an abrogation of that responsibility.

On the first issue, I’m not sure I agree. It may be in the best interests of an oil company, for example, to spend money on greenwashing PR and advertising while its competitors spend money investing in clean technologies. But getting the business to focus on business sustainability can’t make this any worse — the worst corporate criminals are already doing that and will continue to do so. In my experience few people read (or believe) sustainability reports anyway.

There is a concern that governments (usually well-paid by corporatists) may be complicit with greenwashers by encouraging wishy-washy sustainability reporting instead of passing regulations to make business more sustainable. After all, the public has been hoodwinked into believing that ‘free’ trade agreements benefit the majority rather than a corporatist elite (and these agreements are a race to the bottom when it comes to labour and environmental regulation, since it effectively makes such regulation illegal in signatory states). So why not hoodwink us again by selling us on ‘sustainability reports’ instead of ‘sustainability actions’, so the government can essentially do nothing, and allow socially and environmentally irresponsible corporations to do nothing?

I’m not sure there’s anything than can be done to stop or mitigate this from happening anyway — there’s too much of a reward for doing so. Those who want to advance the cause of sustainability need to decide whether to spend their time fighting for honest accounting and reporting, or fighting for real action and regulation. It’s not really a hard choice.

On the second issue, I do agree with Gray. Our whole civilization is unsustainable. We need to drastically lower birth rates to bring human population down to sustainable levels. That can only be done culturally, not politically, and as I’ve said before I don’t think it will happen — it’s just not in our nature.

We also need regulation that makes it prohibitively expensive to pollute and waste, or to consume a disproportionate amount. But more than that we need enforcement of such regulation. Today’s globalized economy encourages polluters, wasters, and conspicuous consumers to exploit countries that either lack regulation or lack enforcement. And even in countries with both, successfully cheating on taxes and other regulations, in today’s cynical anti-government world, is something people actually brag about.

More than that, our entire economy is built on growth in consumption, which translates into greater growth in profits. Without profit growth, the equity markets would (some say will) crash, and our economy will crash with it. If we were to recognize this real white elephant in the room, we’d have to acknowledge that we need both corporations and individuals to reduce their footprint, in many cases drastically, as an absolute precondition to sustainability of our planet and civilization. We need to consume much less, which means we need to produce much less. We need to re-internalize all the externalized costs that, for many corporations, are the difference between today’s extraordinary profits and insolvency. We need to eliminate pollution and waste entirely, not just to start to slow global warming but because no amount of pollution and waste is sustainable. No amount of resource extraction beyond what the planet, over millions of years, slowly replenishes, is sustainable. ‘Sustainable growth’ is an oxymoron.

There are a few companies, like Interface Carpets (full disclosure: I own a few shares in this company), that have come to this realization, and they are beginning to begin to do what would be necessary to become truly sustainable. But they are a tiny part of a massively complicated economy which must somehow all start moving, very quickly and consistently, in that direction. When we have no idea how to do so. When we are rewarded (in fact corporations are chartered) to do the exact opposite.

Therein lies the quandary. To transform our economy would take an unprecedented, herculean, collaborative, and punishing effort by all of us, moving quickly, starting now. The alternative is to throw up our hands and say we’re all fucked anyway, so we might as well enjoy what we have while we have it. There is a terrible temptation to do just that, to embrace the greenwashing and the tepid, inadequate tiny steps towards being a little less grossly irresponsible, a little less unsustainable. To try to convince ourselves that we’re doing our best, and slowly improving. At least until some disaster comes along to force us to do more.

So far, the generations that will follow us, as our planet and our civilization careen over a cliff, are none the wiser. They’ve bought the propaganda we tell them, and tell ourselves. So far.

What will we do, though, when they learn what we’ve done? And what, as we desperately and ludicrously tried to convince ourselves that we were onthe road to sustainability, we failed to do?

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3 Responses to Does (or Should) Business Have Social and Environmental Responsibility?

  1. Good post Dave, and an important subject area. My reflection is that people are glad that businesses create work, for without work they could not live, and therein lies the problem: everyone (well, overwhelming majoirty) is working against sustainable development. I rant on more about this on my blog. leads us to the question – of course business is not working. Can we fix it or should we look for another solution? I have tried, but everyone calls me a communist. Talk about being stuck in a conceptual straightjacket! Ideas anyone? Dave?

  2. Guy Cross says:

    Hwy Dave – I havent finsihed reading yet, but guess what? I live about 5 miles from St. Andrews University, and my Wife is a student there!!!!!

  3. steve black says:

    This is not flagrant spam but does endorse the bank I work for.I work for Bendigo Bank in Australia who have a very strong motto and commitment to creating successful communities to create successful customers to create a successful bank. The community banking model sets up a company in the community (who are the shareholders). The bank supplies the product and infrastructure. They share 50/50 (yes half) the profits of the product and service through the branch back to the community. This model is so successful it is being duplicated into community telcos, bio-diesel, and other products and services that are relevant to and supportive of community owned companies.It is actually working and it is helping with our sustainability through these tough times.Thought you might need some good news Dave.

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