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Sustainability is a large, rapidly growing, critical, complex and
contested topic. This is because it responds to growing perceptions
that the way we are producing and consuming is unsustainable – meaning
things cannot go on as they are. Perceptions of the drivers of
unsustainability are broadly environmental, social and ethical. These
give rise to claims about major systemic fault lines in the way
industry, trade and society is structured globally.
Recently the sense of urgency for change has been fuelled by
politicians accepting scientific evidence of man-made climate change
providing a massive threat to humanity, equal or greater than the
threat posed by terrorism. The highly visual and emotional drama of
unfolding ‘climate chaos’ and ‘eco-doom’ in reports of dangers to
polar regions, glaciers, permafrost, fish stocks and other species has
become a daily feature of media news and entertainment. But these
stories co-exist with our over-riding commitment to business growth,
GDP as a measure of progress and a consumerist culture. As the saying
goes, ‘we live in interesting times’.
Confusion, denial or dialogue towards sustainability?
It might not be too harsh to say that currently most organisations and
consumers are confused or quite uncertain about unsustainability and
sustainability. Opinions and arguments are diverse. Many
sustainability champions are from outside of the business community in
Non-Governmental Organisations (NNG0s) and think-tanks. They
articulate a vision of sustainability based on a radical
transformation of social equity and ecological justice as they define
these terms.
In part responding to these critiques of globalisation over the last
two decades, a small avalanche of business books has argued that
sustainability offers business new ways to make money and to
simultaneously make the world a better place. This view has gained
considerable traction. Approximately seventy percent of the FTSE 100
now report on a triple bottom line, i.e. they report on their social
and environmental performance alongside their traditional financial
accounting. In order to manage what is measured, new roles directing
and managing corporate responsibility and sustainability have been
created and environmental management, stakeholder dialogue and
community involvement have become staples of the boardroom. In
addition to non-financial reporting, investment in ethical or
sustainable funds has grown rapidly over the last decade.
However, many sustainability champions still argue that our current
response to sustainability indicates we either do not understand the
problem, or we are in denial, or worse we are deliberately seeking a
‘have cake and eat it’ society. For example, the WWF campaign for ‘one
world living’ argues that if today’s global population lived at UK
consumption levels we would need three planets, and if the world lived
at US consumption levels we would need six planets.
Within government and business we seem open to the charge we are not
joining up the dots or taking a global systems perspective. The media
and public debate on whether concern with light bulbs, carrier bags
and bottled water is tokenism or ‘greenwash’, that is an attempt to
look responsible whilst effectively continuing with a fundamentally
unchanged business model? Surveys of the public and opinion leaders
are instructive. Ipsos MORI surveys in 2006 and 2007 suggest the UK
general public’s expectations are very close to that of NGOs and CR
experts. Sixty-eight percent of the general public compared to 75% of
NGOs and CR experts agreed that ‘Industry and commerce do not pay
enough attention to their social responsibilities’. Interestingly 30%
of ‘captains of industry’ also agreed with this statement.
A range of surveys indicates that sustainability demonstrates a
typical ‘early adopter’ profile. Namely 10-13% of individuals and
organisations are activists. Ipsos MORI find there are 11% of regular
ethical or green consumers. At the end of 2007 the National Audit
Office found 12% of large UK businesses with annual energy bills over
£50,000 had worked with the Carbon Trust to reduce greenhouse gases
(though 60% of these clients had implemented fewer than half of the
recommendations made).
Critically not all non-activists are opposed to sustainability.
Research on the British general public conducted by the retailer Marks
and Spencer suggests:
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11% are ‘Green Crusaders’
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27% want sustainability ‘If it is easy’
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38% ask ‘What is the point?’
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24% say
This
and research on the US market for ‘Lifestyles of Heath and
Sustainability’ (LOHAS), currently estimated to be 19% of all US
adults (41 million), suggests the unfolding dialogue on sustainability
is in its infancy. Progress will reflect a better understanding of
sustainability so that we all ‘know the point’ and business models
have changed to make sustainability ‘easy’ or just taken for granted
strategy.
The point or principles of sustainability
With some risk of over simplification, sustainability is a set of
ideas seeking to ensure the long-term well being of the planet and all
its life forms. This is often expressed as an attempt to secure a
better balance between economy, ecology and society (or profit, planet
and people). In this phrase is the fundamental assumption that two or
three hundred years of industrialisation has taken us to an unbalanced
position where the economy is privileged over and above the
environment and society to a dangerous/unsustainable degree.
This pre-occupation with the economy can itself be expressed as a
market failure, so that the market price of goods and services has
externalised social and environmental costs. Sustainability requires
the economy or markets to internalise these costs. An example of this
thinking is found in the UK Stern Report which described climate
change as the largest market failure in human history and made
recommendations to price greenhouse gas emissions through CO2
equivalent quotas and trading schemes. Despite the tipping point in
public consciousness about climate change that has happened in the
last few years, it is critical to recognise that sustainability speaks
to a larger agenda. A sustainable philosophy has at least four key
elements or principles:
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Living within the biophysical parameters of the earth
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Living in harmony with other life forms
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Living to allow future generations to do so also
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Living with greater equity
Leading for Sustainability
So for example the idea of the biophysical parameters
of the earth speaks to the carrying capacity of the earth,
highlighting the services that the earth provides us in the form of
resources, food, waste processing, drinking water and supportive
climate. The second element noted above, bio-diversity, is critical in
its own right, because sustainability is avowedly not anthropocentric
(human centred) and because complex eco-systems support the carrying
capacity. The third element above is sometimes referred to as an
inter-generational responsibility. Whilst greater equity is advanced
both on the grounds that extremes of poverty fuels population growth
and it is unethical.
The business case for sustainability
Given the well known view that ‘the business of
business is business’ and the over-riding view of most CEOs and their
boards that their primary duty is to maximise the financial returns of
the business for shareholders, business may not seem a natural
bedfellow for sustainability principles. However, as noted above over
the last two decades, the ‘business case’ for sustainability has
become an increasingly well-worn argument. It runs along the lines of
enlightened self-interest and extends a stakeholder perspective to
assert a win-win relationship between shareholders and sustainability
(society and the environment). In short, it suggests increasing public
awareness of sustainability principles and issues raises expectations
on business performance. The ‘licence to operate’ is raised and if
businesses do not respond they face a range of risks and reputational
(share price) damage.
The other side of risk is opportunity. It is argued that the
application of sustainability principles and related ideas such as
‘biomimicry’ and ‘closed loop systems’ allows the business to reduce
costs, increase revenues, innovate, differentiate and enhance brands.
In addition there are further competitive advantages from improved
recruitment and retention and the ability to partner and lobby
government. Within this business case for sustainability a critical
element is technological innovation, which is deemed able to provide
ever increasing material living standards for everyone in developing
and developed economies as population grows. The world population is
anticipated to rise from its current level of 6.7 billion people to an
estimated 9.6 billion by 2050 - an increase of approximately 80
million per annum.
Beyond the business case
It may seem premature, when most businesses have limited experience of
the business case for sustainability, to be raising limitations with
this approach. However, if the issues of confusion and denial raised
in this paper’s opening remarks are to be overcome, dialogue on
limitations should be encouraged. Thus we can observe, that currently
where businesses are attempting to bring triple bottom line
considerations into decision making, most only feel able to take
social and environmental factors into account to the extent that they
benefit financial performance. Social and environmental benefits that
cost or only offer a distant financial return may be excluded.
Thus some sustainability ideas associated with ‘eco-efficiency’ may
fit very easily within an existing business model committed to
maximising short-term shareholder value. More radical sustainability
ideas associated with ‘eco-effectiveness’ or ‘social justice’ may be
excluded on the grounds there is not a short-term financial return.
Critically this calculation may limit investments in R & D that might
provide radical technological innovations to support the vision of
future green material growth. The way in which the triple bottom line
can be operated by business leaders may appear to set limits on the
type of sustainability that can be achieved through public companies
and partnerships with NGOs. However, in addition to pointing to the
importance of new social and environmental entrepreneurship and
government for sustainability, limitations to the business case
indicate the need to address the concept of collective governance and
leadership.
Governance and the field of multi-stakeholder dialogue
Business leaders often express the view that their scope for action on
sustainability is constrained – by consumers, by competition, by
investors, and by the law for example. Here, it will be suggested that
this is actually an admission of a failure to provide leadership, in
particular a failure to engage with collective leadership. Figure 1.
(below) ‘The field of stakeholder dialogue’ illustrates that the
‘business model’ is subject to continuing discussion and debate
amongst stakeholders. What we mean by responsible business is
constantly negotiated between businesses, consumers, governments and
investors. There is also, as we have described above, a growing
ability of NGOs, think tanks, science, particularly the IPCC (Inter
Governmental Panel on Climate Change) and the media and internet (with
over 13 million sites for sustainability and over 15 million sites for
sustainable development) to influence the discussion.
Dialogue (as distinct from simply discussion and debate) has been
described as a state in which individuals are aware of their own
interests but are not wholly tied to them; so that they can fully
engage with others and are able to see larger patterns, systems or
needs. If individuals from all locations in the field of
multi-stakeholder dialogue could achieve a high quality of dialogue
then there is no reason that governance of business could not evolve
and organisations could become engines for comprehensive conceptions
of sustainability.
Distinctive features of leadership for sustainability
Consistent with this picture of sustainability emerging
through multi-stakeholder dialogue, I argued in research for the WWF
in 2003, that as the logic of sustainability became more widespread,
strategic change for sustainability could emerge in a top-down,
bottom-up, outside-in and inside-out manner. That is, change could be
championed by ‘bosses’ and managers and employees throughout the
organisation. It could emerge from trade and sector initiatives, as
organisations copy competitors, benchmark, adopt standards or create
partnerships, and it could emerge from chance or deliberate attempts
to learn.
I also stressed that if we were interested in making sustainability
the basis of strategic change, it was helpful to see strategy as a
story and to recognise that stakeholders’ participation in
conversations helped to enable change (Downing, 2004). Today,
following further research, I would add that it is clear that
individually and collectively stakeholders make sense of
sustainability through distinctive generic plots. I have labeled these
plots a Quest, a Contest, a Scam and a Downfall. As these sense-making
devices are selective and emotional, learning to recognise others’ and
one’s own plotting of sustainability is very helpful for the
development of dialogue (Downing, 2007).
An ability to see how these plots are constructed in stakeholder
conversations about change (with competing goals, problems agents and
causalities) and how the plots are replicated in our inner dialogue is
an important aspect of awareness for leaders. Indeed Senge et al
(2005) have linked this sort of awareness to a state of ‘mindfulness’
and ‘presence’ that they believe is critical for the profound
innovations that are required to secure sustainability. Similarly
Boyatsis and Mckee (2005) suggest that the same Buddhist notion of
mindfulness enables leaders to resonate with followers by keeping them
compassionate and optimistic; and also by connecting individuals to
the big picture and maintaining hope. Individuals who understand the
detail of numerous competing optimistic and hopeful Quests for
sustainability, but who also attend to the fear, cynicism and anger in
others’ sense-making in Downfalls, Scams and Contests, can be powerful
influences on the creation of collective Quests. Greenleaf (1975) said
that this ability to conceptualise and make sense of change was a key
skill for ‘servant leaders’ who do not trivialise complex problems and
impose over simplistic solutions on them. They lead assuming an
intelligent audience and because they do not impose their own quick
fixes they invite those around them to take responsibility for
solutions. The servant leader seeks primarily to serve, before desires
for power, money or fame. Like the mindful individual the servant
leader knows that the latter are distractions from inner growth. Both
appreciate the wisdom of Ghandi’s advice: ‘we must be the change we
seek in society’. Inner growth is the hardest work but it may be the
greatest prize of sustainability.
References
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Boyatsis, R. E. & Mckee, A. (2005) Resonant Leadership: Renewing
yourself and connecting with others through mindfulness, hope and
compassion. HBS Press
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Downing, S. (2004) ‘Building sustainable strategic management’
Chapter in To Whose Profit? Evolution Eds. Kemp, Stark, Tantram,
World Wide Wildlife Fund.
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Downing, S. (2007) ‘Making SENSE of narratives of corporate
responsibility and sustainability: how to read and lead the plot’
Paper given at the 13th Annual International Sustainable Development
Research Conference` June 10-112, Vasteras, Sweden
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Greenleaf, R. K (1977) (reprinted 2002) Servant Leadership: a
journey into the nature of legitimate power and greatness Paulist
Press
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Senge, P. Scharmer, C. O., Jaworkski, J. Flowers, B. S. (2005).
Presence: exploring profound change in people, organisations and
society, Nicholas Brealey Publishing, London.
Steve Downing is an Associate Professor of Strategy based in the
School of Reputation and Relationships at Henley Management College.
He is a founder member of Henley’s Madejski Centre for Reputation and
is responsible for the subject of entrepreneurship and the creation of
a new Centre of Excellence in Sustainability. He is a highly rated
teacher on the college’s international MBA programmes and many
executive courses and was previously responsible for the subject area
of business transformation.
by
Steve Downing, Associate Professor at Henley Management College
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