There’s a more profound "business case" that the authors do not seem to notice. Some are calling it "double materiality": systemic risks threaten the future of the socio-economic context for the business to function. So, in the end, solving for social and environmental "externalities" is core to the business itself. See Rebecca Henderson’s "Reimagining Capitalism" and the denser but similarly profound "Moving Beyond Modern Portfolio Theory" by Lukomnik and Hawley.
The authors of this article point to some difficult realities of business sustainability as I have watched it develop over the past 25-30 years. Yes, there are more corporate commitments and jobs in sustainability today than I have ever seen. But too many corporations are pursuing outdated ideas of addressing their impact on the environment. The challenges we face today (like climate change, ocean acidification, water scarcity and species extinction) are systemic, so the solutions too must be systemic and reach into the fundamental levels of business. As the authors rightly point out, easy wins and technological solutions based on increased consumption and endless economic growth as presently measured will not work. Tesla, for example, is a great car, but the answer is not another car; we need to rethink mobility. Similarly, we need to rethink norms of collaboration versus competition, growth (and degrowth), sustainable consumption (if such a thing is possible), the purpose of the corporation in society (moving beyond Milton Friedman), the role of government in the market, the role of corporations in policymaking (and the distorting influence of money and lobbying), circular economies, carbon neutrality (or even carbon negative), etc. Only by asking these kinds of fundamental questions can we find the answers we need. I applaud the authors of this piece, and the editors of SSR, for calling attention to taking business sustainability to the next level that reflects the scope of the challenges we face.
Great article raising critical issues and proposing interesting solutions. A couple of points…
1. While you raise the issue of time, I just wonder, give the scale and scope of change necessary, what are the prospects that we will get "there"? and what will it take to move enough corporations fast enough?
2. You mention the rising middle class and the propensity to consume. Can the current consumers continue to consume at the rate they do even while new consumers enter the market? What about the poor—extreme poverty (at $1.90) around 800 million pre COVID? What about those just above the poverty line 26% of the worlds population at less than $3.20 a day and 46% of the world population at less than $5.5 per day?
Regarding Hal’s comment, we authors definitely have noticed systemic risk to socio-economic context for the business—and for all businesses, but more importantly, all of humanity—to function. Concern for this existential problem is what drove us to write this, and what drives our individual research agendas more broadly. Each of us authors, for a while anyway, thought that firms could do more to internalize these externalities. But we, and others in our field, some of whom have published their work here recently, have come to realize that the business case won’t get it done. It’s been an attractive diversion. But it will take collaboration and formal regulation to deal with this systemic risk.
Thanks for your comment, Andy. The challenges we face today are big, and though we seem broadly concerned and constantly busy finding solutions, well, we’re not getting it done. So yes, time to rethink how we’re going about it. Much obliged for your work in these areas, which serve as constant sources of motivation and direction.
Regarding Gerard’s comment, absolutely time is of a concern, which is why we’re eager to stop doing the busy work of the business case and get onto more systemic solutions. Consumerism, market signals, public shaming, etc don’t seem adequate to get it done fast enough, or much at all. It’ll take government regulation. We’ve lost so much time pretending otherwise. Yet, even as the dangers of inaction continue to rear their ugly heads, government intervention is hard to muster. So I guess I’ll hold out hope also that technology might save us. And regarding consumerism, no, we can’t continue to consume at this rate. We need to find less destructive ways to survive and thrive, in the developed and developing worlds alike.
Mike, I agree that "making the business case" can lead to inadequate shifts, but in my experience this is all a continuous process of engagement, commitment, learning, and trying out solutions at the next layer of system dysfunction. Not either or. But you name the most important step: from private sector only solutions to a combination of private and public sectors.
Gerard, thanks for your engagement with the article, specifically the issue of consumption.
It is clear now that reducing the consumption in the West alone will not make the desired dent. Not to advance the per capita versus total consumption debate here, but the rise in consumerism in the most populous countries (including my home country, India) is seriously concerning. Corporations relentlessly propel consumerism in the name of improved quality of life.
Rajat, Thanks for responding. I agree that consumption the West alone is likely insufficient. However it represents the model that is mimicked, giving rise to consumerism in countries like India (my home country too!). Yet, at the same time we also need to recognize the hundreds of millions who are under consumers of even the basic necessities for a reasonable quality of life. Even in India, I suspect the number of under consumers far exceeds the number of over consumers.
COMMENTS
BY Hal Hamilton
ON May 27, 2021 03:39 PM
There’s a more profound "business case" that the authors do not seem to notice. Some are calling it "double materiality": systemic risks threaten the future of the socio-economic context for the business to function. So, in the end, solving for social and environmental "externalities" is core to the business itself. See Rebecca Henderson’s "Reimagining Capitalism" and the denser but similarly profound "Moving Beyond Modern Portfolio Theory" by Lukomnik and Hawley.
BY Andrew Hoffman
ON May 28, 2021 06:47 AM
The authors of this article point to some difficult realities of business sustainability as I have watched it develop over the past 25-30 years. Yes, there are more corporate commitments and jobs in sustainability today than I have ever seen. But too many corporations are pursuing outdated ideas of addressing their impact on the environment. The challenges we face today (like climate change, ocean acidification, water scarcity and species extinction) are systemic, so the solutions too must be systemic and reach into the fundamental levels of business. As the authors rightly point out, easy wins and technological solutions based on increased consumption and endless economic growth as presently measured will not work. Tesla, for example, is a great car, but the answer is not another car; we need to rethink mobility. Similarly, we need to rethink norms of collaboration versus competition, growth (and degrowth), sustainable consumption (if such a thing is possible), the purpose of the corporation in society (moving beyond Milton Friedman), the role of government in the market, the role of corporations in policymaking (and the distorting influence of money and lobbying), circular economies, carbon neutrality (or even carbon negative), etc. Only by asking these kinds of fundamental questions can we find the answers we need. I applaud the authors of this piece, and the editors of SSR, for calling attention to taking business sustainability to the next level that reflects the scope of the challenges we face.
BY Gerard Farias
ON May 28, 2021 09:19 AM
Great article raising critical issues and proposing interesting solutions. A couple of points…
1. While you raise the issue of time, I just wonder, give the scale and scope of change necessary, what are the prospects that we will get "there"? and what will it take to move enough corporations fast enough?
2. You mention the rising middle class and the propensity to consume. Can the current consumers continue to consume at the rate they do even while new consumers enter the market? What about the poor—extreme poverty (at $1.90) around 800 million pre COVID? What about those just above the poverty line 26% of the worlds population at less than $3.20 a day and 46% of the world population at less than $5.5 per day?
BY Mike Barnett
ON May 28, 2021 11:01 AM
Regarding Hal’s comment, we authors definitely have noticed systemic risk to socio-economic context for the business—and for all businesses, but more importantly, all of humanity—to function. Concern for this existential problem is what drove us to write this, and what drives our individual research agendas more broadly. Each of us authors, for a while anyway, thought that firms could do more to internalize these externalities. But we, and others in our field, some of whom have published their work here recently, have come to realize that the business case won’t get it done. It’s been an attractive diversion. But it will take collaboration and formal regulation to deal with this systemic risk.
BY Mike Barnett
ON May 28, 2021 11:04 AM
Thanks for your comment, Andy. The challenges we face today are big, and though we seem broadly concerned and constantly busy finding solutions, well, we’re not getting it done. So yes, time to rethink how we’re going about it. Much obliged for your work in these areas, which serve as constant sources of motivation and direction.
BY Mike Barnett
ON May 28, 2021 11:13 AM
Regarding Gerard’s comment, absolutely time is of a concern, which is why we’re eager to stop doing the busy work of the business case and get onto more systemic solutions. Consumerism, market signals, public shaming, etc don’t seem adequate to get it done fast enough, or much at all. It’ll take government regulation. We’ve lost so much time pretending otherwise. Yet, even as the dangers of inaction continue to rear their ugly heads, government intervention is hard to muster. So I guess I’ll hold out hope also that technology might save us. And regarding consumerism, no, we can’t continue to consume at this rate. We need to find less destructive ways to survive and thrive, in the developed and developing worlds alike.
BY Hal Hamilton
ON May 28, 2021 12:27 PM
Mike, I agree that "making the business case" can lead to inadequate shifts, but in my experience this is all a continuous process of engagement, commitment, learning, and trying out solutions at the next layer of system dysfunction. Not either or. But you name the most important step: from private sector only solutions to a combination of private and public sectors.
BY Rajat Panwar
ON May 28, 2021 01:43 PM
Gerard, thanks for your engagement with the article, specifically the issue of consumption.
It is clear now that reducing the consumption in the West alone will not make the desired dent. Not to advance the per capita versus total consumption debate here, but the rise in consumerism in the most populous countries (including my home country, India) is seriously concerning. Corporations relentlessly propel consumerism in the name of improved quality of life.
BY Gerard Farias
ON June 10, 2021 11:29 AM
Rajat, Thanks for responding. I agree that consumption the West alone is likely insufficient. However it represents the model that is mimicked, giving rise to consumerism in countries like India (my home country too!). Yet, at the same time we also need to recognize the hundreds of millions who are under consumers of even the basic necessities for a reasonable quality of life. Even in India, I suspect the number of under consumers far exceeds the number of over consumers.