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Sustainability management
Preface
Movement towards sustainable development, sustainable economies and sustainable businesses.
x The sustainable development goals (17 goals) x The Paris Agreement
x The European Green Deal Three pillars of sustainability
x Economic x Ecological x Ethical
Is all about the choices we make and about the future we create through those choices.
New ways of thinking about - How we should live
- How we should manage our businesses - How we should shape our economies Why?
- To meet global needs
A large percentage of world’s population lacks the basic requirements of a decent human life. To meet these needs, the world’s economy must produce sustainable goods and distribute them to those who need it.
- Businesses do not operate in isolation
In the current times, you can’t take any actions without affecting other business markets all over the world thanks to the integrated global economy.
- Economic activities transgress the biophysical boundaries of our planet
We should redesign and reconceptualize businesses in a way that meeting the real needs of the world’s current population doesn’t jeopardizes the biosphere’s ability to meet the needs of future generations.
Chapter 1: The coming age of sustainable business INTRODUCTION
The world’s challenges x Extreme poverty
Half of the people living in extreme poverty in 2015 can be found in only 5 countries. This also leads to food insecurity. Since 2015 this level is rising again and is back to levels seen in 2010-2011
x Political repression/war
You only live in a free country when political rights and civil liberties are in place x Population growth
The world’s population continues to grow, albeit at a slower pace than at any time since 1950. It still remains a challenge for sustainable development.
The 47 least developed countries are among the world’s fastest growing. x Globalization
This creates a concept called a global value chain (GVC). A GVC breaks up the production process across countries. Firms specialize in a specific task and do not produce the whole product. A GVC creates jobs, increases income and reduces poverty. But the gains are not equally shared an can hurt the environment. x The Earth’s biosphere is under threat
- Depletion of natural resources - Species extinction
- Emission of our waste products (local and global impact)
Æ Economic activities are needed, integrated with social and political leadership. Not economic growth
How to shape our businesses? - Economically vibrant
- Ecologically informed (so we won’t destroy our resource: Earth) - Ethically sensitive (so no human dignity will be lost in the process) A new business paradigm
In many practical ways, the shift to a new business and economic paradigm is already well underway. But theory, especially concerning management ethics and corporate social responsibility, lags behind practice.
Æ The old business paradigm: - Growth
- Ethical and ecological consideration are a burden - Law restrict businesses
- Economics and ecology are e zero-sum game Æ new business paradigm:
- Many ways to pursue profitability
- Environmental responsibility is not a side-constraint - Self-interest and ethical responsibility do not conflict
3 Current misguided assumptions
- Economic growth will solve our challenges (global poverty and the social and ecological problems)
- Businesses can operate independent of environmental and ethical concerns ECONOMICS, ECOLOGY, ETHICS
Economics
Concerned with the ways in which human beings produce and distribute the goods and services that they need and desire.
Ecology
Concerned with the relationships by which humans (and other living beings) interact with their natural environment.
Ethics
Concerned with the basic question of how humans ought to live their lives
Æ These three pillars are connected. Economics should not be value-neutral, it’s a wrong idea.
All of these pillars are directed at: ‘What are the best ways for human beings to live and flourish within the biosphere that is their only home?’
This is the question that recognizes a more adequate model which recognizes that economic, ecological and ethical concerns are all directed at the same question. INDIVIDUALS, GOVERNMENT AND BUSINESS
Another misguided assumption
- Values of individuals are given, businesses and governments merely respond to their demands
Public policy should prepare for an ever growing demand. The government chooses how that demand is fulfilled through subsidizing different sectors. Businesses have a passive role to play.
Ö This is an old is incorrect way of looking at the world, it’s way more complex. The picture explains that all three
the actors influence each other. The government influences the
individuals by promoting certain thing by using f.e. subsidies. While a consumer only buys what he knows. So by making certain products available, businesses influence what we buy. Next the government can also choose to support certain sectors and influence businesses in that way.
ECONOMIC GROWTH: PROBLEM OR SOLUTION
The consumer demand is given. The quantity or quality of that demand is not questioned. A bigger economy is a better economy. (globalization is the solution to everything) This is the reigning paradigm. Together with the fact that you need to bring the supply in line with the demand.
They assume an unending growth in consumer demand and that satisfying this demand is a good thing.
The question is whether the economy needs to grow forever (is it even possible?) and do we neglect the poor or do we change our way of working? Do we create business and how do we not destroy the biophysical environment?
THE SUSTAINABILITY PARADIGM
Sustainability involves three dimensions.
Æ economic, ecological and ethical (three pillars of sustainability)
Businesses have three goals, connected with the three pillars. Å goals must balance on LT The problem is not economic growth itself, but the unqualified and undirected economic growth. Economic development cannot be separated from the question of social justice and ecological stability.
Æ Economic growth vs economic development Æ Bigger vs better
SUSTAINABLE AS SOCIAL JUSTICE
Sustainable development (def. Brundtland Commission 1987)
= development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Distributive justice: equal opportunity to attain the ends for which resources are used/to secure their equal rights to life and liberty.
Aristotles: “treating equals equally and thus giving each person his/her due.”
What each person is due is unspecified and it does not explain which inequalities would justify unequal shares of certain goods/resources.
Æ Intra- and intergenerational The conception of justice:
- It is the right of the poor and the right of future generation to attain appropriate natural resources and use them for their own needs
- When our actions deny others this equal opportunity, we have an obligation to compensate them for this losses
- It is our duty to invest in the technology that is needed to maintain equal opportunities
5 Egalitarian justice: To make sure that everybody has equal opportunities, including future generations. It’s not about the fact that future generations need to have the same amount of nonrenewable resources, because nobody uses them as an end product. Future
generations will create heat f.e. in another manner. Locke’s theory:
You can only take possession of a house, if other’s aren’t denied an equal opportunity to attain a similar house.
The creation of currency solved this ‘problem’. Since everybody can work and earn money, everybody has the same opportunities.
Philosopher Brian Barry:
present generations have the right to use nonrenewable resources, even if it puts future people at a relative disadvantage, as long as they compensate future generations for the loss.
It is our duty to invest in technology that will be needed for future people to maintain equal opportunities.
Æ To live off of interests rather than savings! Natural capital as a stock
A stock is the foundation of any system. Stocks are the elements the system that you can see, feel, count, or measure at any given time.
A system stock is just what it sounds like: a store, a quantity, an accumulation of material or information that has built up over time.
It may be the water in a bathtub, a population, the books in a bookstore, the wood in a tree, the money in the bank, your own self-confidence.
To live off of interest rather than savings:
Natural capital is the environmental stock or resources of Earth that provides goods, flows and ecological services required to support life.
Examples of natural capital include: geology, soils, air, water and all living organisms. Natural capital has financial value as the use of natural capital drives many businesses. Current business practices; development patterns; environmental modifications;
exploitation of resources from other countries and government policies are degrading or decreasing stocks of natural capital.
This not only has financial implications, but also environmental implications as services provided by ecosystems are damaged and unable to function effectively which in turn, causes flow on effects.
Example: greenhouse gas emissions
If economic and societal development is allowed to grow uncheck, stocks of natural capital will continue to decline, resulting in problems for natural life support systems, increased market prices and a decrease in the quality of human life.
Not all services or products provided by natural capital can be replaced by technology and some alternatives are either expensive or inefficient.
Herman Daly
“Sustainable use of renewable resources means that the pace should not be faster than the rate at which they regenerate.”
“nonrenewable resources should be exploited, but at a rate equal to the creation of renewable substitutes.”
Distinguish between needs and desires Well-being:
- maximizing pleasure and minimizing pain. (hedonic school of thought)
Related to the concept of utility: the property of any object that tends to produce the happiness of the party whose interest is considered.
Maximizing utility: (infinite) preference satisfaction through market consumption Æ income/GDP (objective measure)
An ethical void: any consumption behavior is justified in terms of individual well-being.
Paves the way to increased economic activity to become primary national policy goal. - The enabling of humans to reach their highest potential within the context of their
society (Eudaimonic school of thoughts) NOT a subjective experience
What one can do or be in one’s life
Individual is put in a broader context of her (future) society. Measured by life satisfaction (subjective) of HDI (objective) Human needs
There are a finite number of needs that are - Self-evident (universal)
- Satiable - Irreducible
- Non-substitutable - Non-hierarchical
7 Goal: minimally impaired participation in social life
Risk: being considered paternalistic and externally imposed.
The means to satisfy human needs are culturally, socially and temporally flexible. A gain in the level of satisfaction of one need can hinder the satisfaction of other needs. Æ enables the inclusion of environmental limits and limits to consumption
Æ allows for a systemic analysis TWO CAVEATS
Sustainability is a popular word. A changed culture and a changed economy is needed. The concept of sustainability applies only at more general and systematic levels. Caveat 1:
sustainable living and sustainable development require a changed economy and a changed culture within the consumerist societies of the industrialized world.
Caveat 2: The concept of ‘sustainability’ most accurately applies only at a more general and systemic level. A company that changes and acts sustainable won’t sustain if the broader biosphere in which it is embedded collapses.
