Sustainability in the Global Marketplace: Business-Almost-as-Usual?

By Jalal, A+ CSR Indonesia, and Andrew Hoffman and Terry Nelidov, Erb Institute for Global Sustainable Enterprise, University of Michigan

Sustainability goes mainstream, but not yet global

Business sustainability has gone mainstream—at least in the developed world. Companies tout sustainability reports; hire Chief Sustainability Officers; promote their sustainability strategies; and integrate sustainability into global codes of conduct for their global supply chains. Meanwhile, MBA programs know demand when they see it and are scrambling to make sense of sustainability in their core courses and to equip future business leaders with the tools they need for business in this brave new world. And these efforts are well placed. Today’s social, environmental, and governance challenges are global, bridging East and West, developed and emerging, rich and poor. They can’t be solved without business, and the first step is effective business education.

But the problem with business sustainability, at least with our current rendering of it, is that it’s often defined by those with the loudest voices and deepest pockets—usually giant U.S. and European transnationals. Sustainability has emerged as a largely western concept, driven by government programs, media-intensive companies, and research-rich universities. The result is a version of sustainability that has been framed in the language most palatable to western business, one which fits within the existing rules of the western market. It addresses operational efficiencies, cost of capital, consumer demand—all based on an assumption of boundless growth and “consumers” whose principal role in the market model is to consume. Sustainability has become merely an extension of business-as-usual. It is, as John Ehrenfeld says, Business-Almost-as-Usual, and its goals are all about reducing unsustainability, not creating sustainability.

So, in spite of all this effort at sustainable business, the problems that the sustainability agenda was meant to solve are still worsening. CO₂ levels continue to rise; water supplies are dwindling; inequality gaps in all parts of the world (including the U.S. and Europe) are widening; and violations of basic human rights continue to plague both developed and developing worlds.

Give sustainability a global equity-test

So, when we talk about the mainstreaming of sustainability, we need to also ask if sustainability stands up to the global-equity test. At the global level, can we consume and develop our way to a sustainable future? How often have we repeated the oft-told truism, borderline cliché, that if everyone lived by the standard of a person in the U.S., the world would need seven planet Earths to survive? For those in the developed world, this is insulting. The affluent 20 percent of the world (with 86 percent of global wealth) are not likely to accept a reduced standard of living. Are they then asking the poorest 20 percent of the world’s population (with their 2 percent of the global pie) to accept reduced growth rates and an arrested journey to quality of life?

It’s simple mathematics. For development to be truly sustainable—and global—two things need to be addressed: the rich need to consume fewer resources, and the poor need to accelerate their economic and human development.  This is the global-equity test for us all.

Sustainability, Indonesia, and Mickey Mouse

But the reality is that sustainability, when viewed from the developing world, leaves a lot to be desired. Take a look at the concept from the perspective of Indonesia, for instance. Universities here have progressive environmental and social studies, and produce lots of research papers that clearly define the problems and propose enticing solutions. But in reality, true sustainability remains elusive. The triple bottom line, from which most of the sustainability agenda is derived, is nice in concept but doesn’t naturally lead to sufficient action.

If sustainability is depicted as the nexus of three interlocking circles representing economy, social, and environment, the way that development has been pursued in Indonesia suggests a giant Mickey Mouse head: a big circle for economy (which is always important to business and government), but two very small (and separate) circles for social and environment.  The practical result of this Mickey Mouse development model in Indonesia is increasing community protests, labor riots, and human rights abuses, all exacerbated by accelerated environmental degradation.

Without a global equity test, sustainability is merely a way to continue the status quo.  The continual focus on the business case for sustainability means that the underlying rules of development—economic growth and whole scale consumption—have not changed. Nor have the rules of the north-south divide. The MBA is a classic expression of western business, pioneered in U.S. business schools and adopted most widely in developed countries. The challenge now is for business education to keep pace with the global nature of sustainability and to confront some deep-seated and unquestioned assumptions: the traditional consumption model, belief in constant economic growth, the perverse signals created by discount rates, the short-term thinking promoted by quarterly reporting, nature as having value only as an immediate commodity or feedstock for industrial supply chains, etc. MBA programs will need to balance cool new apps and the latest in consulting techniques, with a renewed commitment to cultivating change agents who can lead their companies from within to meet the global equity test. Next week, we suggest how. 

The Erb Institute is committed to creating a socially and environmentally sustainable society through the power of business. Building on nearly two decades of research, teaching, and direct engagement, the Institute has become one of the world’s leading sources of innovative knowledge on the culture, technologies, operations and governance of business in a changing world.  The Institute’s impact is realized most powerfully through our vibrant global network of students and alumni who are the transformative change agents in business, government and the non-profit worlds.

[globe image credit: Judy van der Velden: Flickr cc]