Sustainability

David Wasieleski, James Weber, David M. Wasieleski, James Weber

• Publisher: Emerald Publishing Limited
• Year: 2020
• ISBN:
  9781838673758
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

The Business and Society (BAS) 360 book series is an annual publication targeting cutting-edge developments in the broad business and society field, such as stakeholder management, corporate social responsibility and citizenship, business ethics, sustainability, social entrepreneurship and others. Each volume will feature a comprehensive discussion and review of the current "state" of the research and theoretical developments in a specific business and society area.
Volume Four focuses on research drawn from work grounded in " Sustainability." Scholars known in this discipline contribute to a 360-degree evaluation of the theory, including cross-discipline research, empirical explorations, cross-cultural studies, literature critiques, and meta-analysis projects. Sustainability should appeal to wide range of readers – from emerging and senior business school educators researching and teaching in the business and society field to doctoral and masters level students across the business, social sciences and natural sciences seeking to learn about this multi-discipline and sustained field of management study.

PART I

THEORETICAL ADVANCEMENT AND MODEL-BUILDING

CHAPTER 1

BUSINESS AND SOCIETY IN THE ANTHROPOCENE

Paul Shrivastava and Laszlo Zsolnai

ABSTRACT

This chapter aims to help redirect Business and Society (BAS) scholarship to embrace the unprecedented challenges of the Anthropocene era including climate collapse and ecological breakdown. The existential risk presented by the new reality of the Anthropocene requires a radical rethinking of the purpose of business and its dominating working models. This chapter discusses the main problems of efficiency and growth and shows that business efficiency often results in aggregate ecological overshot. It is argued with Herman Daly that frugality, that is, substantial reduction of the material throughput, should precede business efficiency for achieving ecological sustainability. This chapter suggests new directions for BAS scholarship by highlighting three major issues, namely the scale of business activities relative to the ecosystem of the planet, short termism that is the discrepancy between the time horizon of business decisions and that of ecological processes, and inequality which is the result of current business models that are all about accumulation of wealth and not paying enough attention to distribution of wealth. The chapter concludes that the Anthropocene era represents a clear disjuncture and discontinuity from the past and business needs to find a new realignment to achieve a sustainable world. That realignment requires a drastic modification of business-nature relations.

Keywords: Anthropocene; Business and Society scholarship; efficiency; short termism; inequality; realignment of business

The Business and Society (BAS) discourse has come a long way over the past four decades. It has sought to find a place for social responsibility of business organizations, an understanding of nature as part of the business environment, and articulate the role that businesses can play in the progress of communities. Many corporations are doing many good and socially responsible things that deserve to be reported and acknowledged, as they do in corporate sustainability reports.

However, most companies that are sensitive to and aware of environmental challenges, are still working within the narrow eco-efficiency paradigm – that is, willing to undertake sustainability programs to save costs and leverage that investment for branding and PR purposes. They issue informative and sometimes simply slick “sustainability reports” each year expressing business commitment to social and ecological wellbeing. However, during the past half century of corporate environmentalism, on the whole the natural environment, earth systems, and climate systems have fared rather poorly, under pressure from human social and economic activities and impacts. Therefore, the main challenge for BAS scholars now is to figure out how to bring our economies in better balance with nature.

This chapter aims to help redirect BAS scholarship to embrace the unprecedented challenges of the Anthropocene era including climate collapse and ecological breakdown. The existential risk presented by the new reality of the Anthropocene requires a radical rethinking of the purpose of business and its dominating working models.

This chapter is organized as follows. First, we discuss the main problems of efficiency and growth and show that business efficiency often results in aggregate ecological overshot. We argue with Herman Daly that frugality, that is, substantial reduction of the material throughput should precede business efficiency for achieving ecological sustainability. Second, we describe the main characteristics of the Anthropocene era and highlight that the planet is becoming more unsustainable despite of the noble efforts of incorporating nature as an important stakeholder of business and the abundant sustainability reports produced by companies. Third, we suggest new directions for BAS scholarship by highlighting three major issues, namely the scale of business activities relative to the ecosystem of the planet, short termism that is the discrepancy between the time horizon of business decisions and that of ecological processes, and inequality which is the result of current business models that are all about accumulation of wealth and not paying enough attention to distribution of wealth. We discuss how these basic challenges imply new directions for BAS scholarship, including new social contract for business, new business models, new ways of reporting and accounting, and new distribution systems for wealth created. Finally, we conclude that the Anthropocene era represents a clear disjuncture and discontinuity from the past and business needs to find a new realignment to achieve a sustainable world. That realignment requires a drastic modification of business-nature relations. Nature must mediate all analyses of business–society relationships.

1. INTRODUCTION: PROBLEMS WITH EFFICIENCY

Transforming toward a sustainable world is a societal imperative in which businesses can and should play a leading role. However, as Herman Daly pointed out the “economics of growth” is not capable of achieving environmental sustainability. Economists since the period of John Stuart Mill have assumed that the economy of nations can achieve “stationary state” on its own. This assumption may have been reasonable in a world (of 1800s) when the world population was under one billion, and most of the technologies we know today were not yet invented. In light of the ecological destruction caused by economic activities, Daly and others have argued that self-guidance of the invisible hand of the market is not capable of producing a steady-state economy. It is thermodynamically impossible to have infinite economic growth in a finite physical environment. We need to impose permanent restrictions on natural resource use to the point of making earth systems ecologically sustainable (Daly, 1991). They also suggest that prosperity is still feasible in a post-growth society (Jackson, 2009).

Daly (2007) also argues frugality should precede efficiency in achieving sustainability. He suggests understanding sustainability in the terms of throughput. In a sustainable economy, physical throughput should be sustained, that is, the entropic physical flow from nature’s sources through the economy and back to nature’s sink should be sustainable.

Daly emphasizes that the problem with “efficiency first” is what comes second. An improvement in efficiency alone is equivalent to having a larger supply of the factor whose efficiency increased. The price of that factor declines and more uses for the cheaper factor are found. The net result is that there is greater consumption of the resource than before, even if it is produced more efficiently. So, the scale continues to grow. A policy of “frugality first,” however, induces efficiency as a secondary effect, while “efficiency first” does not induce frugality. The main task of our age is to limit the scale of the economy relative to the ecosystem by restraining uneconomic growth that increases costs by more than it increases benefits, thus making us poorer instead of richer (Daly, 2007, pp. 221–222).

An unregulated free economy does not reduce inequalities or extreme economic vulnerability, as the experience of past hundred years has shown. Piketty (2014) reviewed capital growth in the twentieth century, and found that the rate of return on capital exceeded the rate of economic growth for long periods, resulting in the concentration of wealth in the hands of few. The growing unequal wealth distribution is a main cause of social and economic instability. The global economy is gripped by a generalized Jevon’s paradox, in that technological progress or government policy have increased the efficiency with which environmental resources are being used and consumed faster. We are efficiently consuming resources to the point of their complete depletion.

A sustainable economy would need to be based on assumptions of sufficiency over efficiency, and frugality over mass consumption. Sustainable economic development refers to pacing of current production and consumption to a level that we do not jeopardize the ability of future generations to meet their needs (Brundtland Commission, 1987).

Mitigation of climate change to keep earth temperatures under 2 °C is failing. Neither governments nor businesses are drawing serious policy lessons from the many scientific reports on climate change released in the past years. Adaptation to climate change is a big challenge for business, but it could also be a business opportunity. However, even opportunities seem to be addressed only when they meet short-term goals and only in selective sectors or industries.

2. BUSINESSES IN THE ANTHROPOCENE

The “Anthropocene” is a term that some scientists are using to characterize the current period post 1950s, as an era that is fundamentally different from the Holocene era in which we were for past several thousand years. The difference is that in the Anthropocene is human (anthropos) and social processes that are driving major changes in planetary natural cycles such as hydrological, carbon, nitrogen, and phosphorus cycles. To the degree human and social processes of wealth creation are executed via business organizations, businesses need to understand what their responsibilities are in the Anthropocene.

Over the past 50–60 years, there has been a great acceleration of economic and technological growth. Population has grown from 2.2 billion in 1950 to 7.3 billion in 2019 and likely to increase to 10 billion by 2050. The concomitant growth of the global economy (about US$80 trillion in 2018 expected to reach $200 trillion by mid-century) is an increasing threat to human and nonhuman life on earth. Economic activities are based on the extraction of resources from earth systems, value creation with land use manipulation, and accumulation of surplus wealth by a few, which comes with commensurate decline of earth systems. Many earth systems including forests, oceans, deserts, mountains, rivers, aquifers, biodiversity, etc. are now under tremendous deterioration and decline. The emission of carbon into the atmosphere is spawning changes in climate that poses an existential threat to life on earth. On a number of life support earth system parameters, we are approaching planetary boundaries. Going past these boundaries risks changing our natural environment permanently in ways that it will not be able to support life (Rockstrom et al., 2009). Global economy needs to be brought into balance with earth systems. Clearly, businesses have a central role to play in achieving this mandate. BAS scholars are particularly well positioned to address the needs for this change and processes by which it can occur.

BAS scholarship is well intentioned and ...