Business, Government and Sustainable Development

Gerard Keijzers

• Publisher: Taylor & Francis
• Year: 2004
• eBook ISBN: 9781134300129
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The range of sustainability objectives has now developed from relatively simple issues of environmental protection to a full array of interwoven social, economic and ecological issues, nationally and internationally. The involved process of sustainable development has now become a permanent and increasingly complex process. In this insightful book,

1 Introduction

Over time, the range of sustainability objectives has developed from relatively simple issues of environmental protection to encompass international and national social, economic and ecological issues. A closer examination of the evolving range of sustainability issues, and the involved changes within governments and businesses, reveals a complex process. Related to this complexity are the benefits of a collaborative stakeholder approach in achieving objectives of sustainable development. The aim of this study is investigating these change processes in the public and the private sector and analysing the potential benefits of a collaborative stakeholder approach.

Governments continue to fine-tune policies for the sustainable development of society, while the business community strives towards enhanced corporate ecological and social responsibility. This requires understanding a government-based perspective and subsequently concentrating on the business perspective of developing and implementing strategies for the sustainability of enterprises.

To understand the evolving conditions for governments and businesses, a concise historical review of the development of the changing arenas of sustainability is provided first as a basis for consideration.

The changing ecological arena

In August 2002, exactly 30 years after the first United Nations (UN) conference on these issues in Stockholm, Sweden, and 10 years after the second conference in Rio de Janeiro, Brazil, the United Nations’ World Summit on Sustainable Development (WSSD) was held in Johannesburg, South Africa. While understanding and acting on the outcomes of the Johannesburg conference is a long-term endeavour, both earlier events set in motion important policy processes for improving sustainable development in the world. The nations, businesses and people that gathered in Johannesburg again pledged to continue and intensify the realisation of actions for sustainable development (WSSD 2002).

From a historical perspective, this process began at the conference in Stockholm in 1972, when full political attention for issues related to environmental protection and safeguarding conditions of health and safety for people and ecosystems gained attention for the first time. In the wake of this conference, a political movement was awakened, leading to a body of environmental legislation in many countries around the world. Basic principles of environmental protection slowly entered legislation and the thinking of people and businesses. The policy principle of, for instance, ‘the polluter pays’ was born in Stockholm and slowly grew to maturity in national and international regulations, despite its immediate acceptance and proliferation by the Organisation for Economic Co-operation and Development (OECD) countries. In parallel, the ‘precautionary principle’ adopted in the Rio de Janeiro conference in 1992 continues to develop and awaits adoption in government regulations and business practices. Gradually these policy processes have resulted in a remarkable improvement in environmental conditions since the beginning of the work in 1972.

During the course of the 1980s the attention given to environmental quality protection issues widened to include ecological issues related to the preservation of resource stocks (energy, water, biodiversity, minerals). These quantitative aspects of ecological control (in addition to the qualitative aspects of environmental protection of air, water and soil) were identified earlier as important issues by the Club of Rome, in 1972. Nonetheless, these issues only received full political recognition with the international acceptance of the Brundtland Report in 1987 (World Commission on Environment and Development [WCED] 1987). This report links the social, economic and ecological interests of present and future generations, including the range of relatively simple environmental protection issues and sustainability issues.

Within the Brundtland Report, sustainability is defined as a development in which present generations satisfy their own needs without compromising the ability of future generations to satisfy their needs. The challenge in this definition lies in the implicit double responsibility. In one instance, the moral duty to address today's world poverty and inequality is determined, and at the same time the responsibility to ensure adequate production opportunities for future generations through the preservation of available natural capital is expressed. Thus, sustainable development is linked to the realisation of lasting economic growth, equitable distribution of economic welfare amongst present generations, equitable distribution of natural capital between generations, adjusting consumption patterns, limiting population growth rates and innovating production technologies to maintain production growth within the planet's ecological absorption capacity.

This challenging task shared by all actors in society was included in Agenda 21, established at the United Nations Conference on Environment and Development in Rio de Janeiro (UNCED 1992), and included in the Conventions on Biodiversity and Climate Change. Ten years later, it is possible to observe the important policy developments related to these issues of sustainability. The Biodiversity Convention has been implemented in national legislation on nature protection in many countries. Similarly, important developments on the reduction of CO₂ emissions have taken place since the Rio Climate Convention of 1992 and the Kyoto Protocol of 1997. The US withdrawal from the latter agreement is, for the time being, a significant setback in achieving the objectives formulated in the Protocol. However, at the recent Johannesburg summit the minimum requirement of 55 ratifying countries – together accountable for at least 55 per cent of the world's total CO₂ emission – was nearly met, increasing the power of the Kyoto Protocol as an effective and binding piece of international legislation for all ratifying countries.

Taken together these documents and reports are a sign of progress towards declared objectives of sustainable development. And related actions such as Agenda 21 can be seen as drivers of a determined, ongoing and increasingly complex process of change that engages an ever-growing number of people, businesses and nations.

The Johannesburg Declaration determines the major challenges of sustainable development as follows:

• We recognize that poverty eradication, changing consumption and production patterns, and protecting the natural resource base for economic and social development are overarching objectives of, and essential requirements for, sustainable development.
• The deep fault line that divides human society between the rich and the poor and the ever-increasing gap between the developed and developing worlds, pose a major threat to global prosperity, security and stability.
• The global environment continues to suffer. Loss of biodiversity continues, fish stocks continue to be depleted, desertification claims more and more fertile land, the adverse effects of climate change are already evident, natural disasters are more frequent and more devastating and developing countries more vulnerable, and air, water and marine pollution continue to rob millions of a decent life.

(WSSD 2002: 2)

Today sustainability thinking encompasses socioeconomic issues, topics on democratic institutional development and international security, and a wide range of ecological concerns. And the involved policy processes demand the engagement of an equally diverse group of actors in governments and business.

Addressing both the evolving substance matter and the changing collaborative societal processes of sustainable development is central to this study. An examination of strategic change processes both from government and business perspectives allows an analysis of the evolution of government policies that are developing from a traditional and regulatory ‘command and control’ approach to a voluntary and collaborative approach of consensus-building with the private sector. And further, the research extends to the broad societal processes of ‘transition’ to new socio-technological systems for sustainable development. Thus, there is an increasing preparedness and need in the private sector to engage in a stakeholder approach to jointly design and implement business strategies for sustainable production processes and products.

The aim and structure of the research

In nearly all scenarios, policies and strategies for sustainable development relate to decision-making processes to resolve competing socioeconomic and ecological objectives that involve stakeholder interests. This study therefore highlights the increasing complexity of the change process towards sustainable development, and the necessity to intensify the collaboration between the parties involved to ensure committed and enduring change. And the study illustrates the importance of collaboration between governments, businesses and non-governmental organisations in the design and implementation of government and business strategies and practices for sustainable development.

The two main research questions of this study are formulated:

1. How does the complex and broadening range of sustainability issues affect policy processes of governments and businesses?
   First, the evolving sustainability agenda for governments and businesses, and the consequences of engaging stakeholders in related policy processes, are analysed. Subsequently, the research focuses on questions considering whether present generations actually bear ethical responsibilities for future generations to achieve a sustainable development, and how businesses can deal with the consequences of these responsibilities. Then, the operational questions of how the new issues of sustainability can affect enterprises and how governments and businesses can jointly contribute to achieve the conditions that allow for a shift to the sustainable enterprise are examined.
2. How can enterprises manage the strategic processes of adapting their resources and capabilities to the new demands for sustainability from a growing number of stakeholders?

The research questions posed in the first part of this study symbolise the increasingly complex policy process that requires intensified stakeholder engagement in the development of business strategies for sustainable development. In turn, this leads to business administration research questions related to the strategic management of the shift to sustainable business. The way businesses can arrange internal and external processes for the development of strategies to utilise the potential of sustainable development is analysed. And the question of why and how intensified processes of stakeholder collaboration can be structured for better achievement of sustainable business objectives is addressed.

This research integrates the important theoretical perspectives of the ‘consensus-building theory’ (Susskind 1999), the ‘stakeholder theory’ (Freeman 1984), and the strategic management theory of ‘resource-based views’ (Kay 1996). These theories all show the importance of transparency and flexibility in processes of collaboration and joint learning to achieve committed changes and allow for adequate treatment of all interests at stake.

Beginning with an investigation into the development of the evolving issues and processes related to policies of environmental protection, the discussion moves toward policies for sustainable development. Policy development in the Netherlands provides an example for further consideration.

A historical analysis of the development of Dutch environmental policies from 1970 to 2000 covers all relevant policy documents of the various Dutch Ministries, as well as related important literature describing and analysing the development of these policies in the Netherlands.¹ A series of interviews with staff of the Dutch Environment Ministry supports the analysis. The environmental problems addressed by the government have grown increasingly complex due to shifts in the content focus and the extending range of environmental issues. In addition, the nature of policy processes changed as a result of the growing number of involved parties, and the increased intensity of related cross-sectoral interests. It is shown that environmental problems developed from rather singular technical issues of environmental protection related to complex issues of resource stock management. Increasingly these preservation strategies connect to cross-sectoral socioeconomic and environmental interests, requiring complex processes of stakeholder engagement and consensus-building.

The future agenda for achieving sustainability, shows the complex ecological and social-economic issues calling for fundamental ‘transitions’ in technology and technological production and consumption systems, and in the related institutional, cultural and socioeconomic settings. Adopting an integrated approach to engage all relevant social, economic and ecological stakeholders in order to effectively create new directions for sustainability is key. This is evidenced by whole supply chains, new technology chains, surroundings of businesses – nationally and internationally – and interests of future generations that are included in the approach.

Historical analysis demonstrates the relevance and topicality of present policy developments with respect to dilemmas regarding inter-and intra-generational responsibilities for use of natural capital resources, as formulated by the Brundtland Commission. Present management of natural capital resources casts a shadow far into the future. Consumption rates of non-renewable energy resources and the degradation of biodiversity affect life conditions of future generations, posing fundamental ethical questions on the responsibility for future generations.

Ethical theory leads to the conclusion that present generations have substantial responsibilities for future generations in preserving ecological conditions. At the same time, it shows the complexity of transposing these responsibilities into concrete policy objectives for sustainability. Research shows that due to differences in risk and moral perception, there are no unique solutions to questions of intergenerational distribution. Subsequently, it is argued that all societal parties intensively engage in a societal process to collaboratively design and interactively build the societal road to sustainable development in which present generations satisfy present needs without compromising the ability of future generations to satisfy their needs.

The findings of a related literature search are tested in two practical case studies. The first case study reviews the preservation strategies for the limited natural gas reserves in the Netherlands and the implications for intergenerational responsibility. The second case study discusses the protection of biodiversity stocks in relation to the development of a new road in the south of the Netherlands.

On the grounds of a variety of ethical and socio-psychological reasons it is concluded that responsibility for future generations, who have the same rights and entitlements as present generations, and to whom present generations want to extend justice, must be taken. More specifically, the intergenerational responsibility of companies dealing with complicated problems raise the following questions:

• What is the specific responsibility of business for the preservation of scarce mineral resources and for investing in a timely transition to durable energy sources?
• How do companies assess and control their impact on biodiversity?
• What views might business leaders adopt in the debate on technological potential and the risks of transition towards more sustainable production processes and products?

Companies share in the common responsibility to future generations. Companies can learn to deal with questions of scientific uncertainty and potential risks for future generations. Participatory ethics that shape the corporate, social and ecological responsibilities towards present and future generations can be realised by processes of stakeholder engagement. Participatory ethics specifically relates to a revaluation of civil society to engage in the fulfillment of future-oriented responsibilities. And there is a call for a ‘third arena’, in addition to the ‘first’ (political institutions) and ‘second arena’ (the market), to enable permanent discussions between business and society on issues of sustainability. The importance of the ‘precautionary principle’ as an essential tool to guide these processes of stakeholder collaboration and consensus-building is central.

The discussion around intergenerational responsibilities of companies leads to questions of why and how companies can make the transition to become sustainable enterprises. The agenda of new sustainability issues facing the business community focuses on elements that are woven around related social and ecological issues of resource stock management and of technology development for sustainable energy production, land use and biodiversity preservation.

This indicates that the ‘license to operate’ is not a static concept, but a dynamic entity, requiring continuous maintenance at two levels. First, the daily management of the company demands continuous adjustments to meet the changing sustainability demands with which the company is confronted. Second, there is a need for companies to continuously and collaboratively work with other companies and governments on the improvement of social, economic, technological and infrastructural production conditions of the company. Sustainable business requires production conditions determined by the quality of the infrastructure for energy supply and transportation, the institutional qualities of society, and the level and focus of the work force. A next step is developing a program for businesses and governments to create the necessary conditions to allow transition to sustainable entrepreneurship for the business community as a whole, guiding individual businesses in making the change to become a sustainable enterprise.

Establishing a need for enterprises to make a transition to become sustainable calls for management strategies to realise such changes. Applying modern business administration views on ‘stakeholder theory’ (e.g. stakeholder engagement, organisational learning and action– learning networks) and ‘resource-based theory’ (the strategic management of a company's distinctive resources and capabilities) to the development of a systematic management perspective on sustainable business is explored. This perspective concerns both the internal management of strategic change and the external management of the company's relationship with its stakeholders. In an empirical investigation, the advancement of strategies for sustainable business in 11 multinationals in the Netherlands was tested. The research was guided by two questions:

1. Are companies entering a new management stage in which new sustainability issues dominate the agenda involving a wider array of stakeholders?
2. How are companies managing the strategic process of adapting their internal resources to these new demands of this enlarging number of stakeholders?

To support the analysis, a series of analytic elements were developed to test the advancement of business strategy development (e.g. regarding organisational routines). To further support the empirical analysis, a stage-model was developed to analyse the advancement of companies toward sustainability in three stages.

The research leads to lessons on the need to intensively collaborate with company stakeholders to achieve joint learning processes and to realise a c...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Business, Government and Sustainable Development
• Preface
• Acknowledgements
• Abbreviations
• 1: Introduction
• 2: The changing ecological arena
• 3: Future generations and business ethics1
• 4: The transition to the sustainable enterprise
• 5: Management strategies for sustainable businesses1
• 6: Plotting sustainable directions for business An evolving stakeholder approach in seven multinationals
• 7: Summary of conclusions
• Notes
• References