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Next Steps for the Business Community
Joel Makower, 26 Feb 06

The Worldwatch Institute has taken on the corporate establishment in the March-April issue of its monthly magazine, Worldwatch. As you'd expect from Worldwatch, it's a clear-eyed view of the greening of companies. But it also points up the relatively myopic perspective that nonprofits typically have of business.

The article, "Next Steps for the Business Community" (downloadable in PDF for a fee), begins with a description of SEE Change, a dubious sustainability initiative launched last September by the Business Roundtable to "promote better business and a better world." SEE Change, notes author Erik Assadourian, a Worldwatch Institute staff researcher, is a "celebration of sustainable growth, a term essential to a business model in which corporations depend radically on consistent quarterly rises in profits to keep shareholders from fleeing." But, he notes, "under the current business model growth will never be sustainable."

It's time for the business community to be honest. Instead of snazzy new public relations initiatives, corporations need to truly lead the charge in creating a sustainable economy. Production systems must be redesigned to imitate natural systems so that waste products become sources of "nutrients" (feedstocks), not sources of pollution. Corporations will have to become transparent and lay out specific long-term plans to achieve sustainability. And because this transformation will need the help of governments, corporations will need to redirect their vast political influence from lobbying for laws that enhance only short-term returns (often at the expense of society) to pushing for reforms that advance society's -- and their own -- long-term interests.

In making his case, Assadourian covers a lot of well-worn turf: the quest for "eco-effectiveness" over "eco-efficiency" promulgated by William McDonough and Michael Braungart; the conversion of oncologist Swedish Karl-Henrick Robert that led to creation of The Natural Step (a nonprofit business framework that recently closed its U.S. office, having failed to gain traction); and the efforts by BP, Goldman Sachs, Nike, Starbucks, and a handful of other sustainability leaders.

So far, so good. But Assadourian displays a limited understanding of sustainable business. He makes a vice out of virtue. Take Starbucks' lobbying effort to strengthen national health care in the U.S. "While this may sound altruistic," he notes, "it's really enlightened self-interest." Fetzer Wine's long-term push to use only organic grapes, Nike's effort to design a "non-toxic recyclable shoe," Citibank's leading-edge environmental policy -- all seem to be done without regard to the potential business value they may create for their companies, stemming instead from a do-the-right-thing strategy, or from NGO pressures. And, by the way, what's wrong with "enlightened self-interest"?

While there are kernels of truth here, Assadourian misses the bigger point: No corporate initiative is sustainable if it doesn't provide some sort of business value -- topline growth, reduced risk, improved quality, enhanced employee retention, customer loyalty, lowered costs, or some other tangible reward.

It's classic NGO-think: That business should move to more sustainable products and processes because it's the right thing to do, regardless of whether it's good business. This is short-sighted, to say the least. Companies simply won't act unless it is in their interests, and the shorter-term the benefits, the better.

I'm not saying this is how it should be, but it's certainly how it is. Over the past two decades, I've watched company "commitments" come and go because they didn't contribute to any measure of business success. I've seen well-meaning environmental managers at respected companies lose their jobs because their programs and plans had no perceived value for the company's customers, shareholders, or other interested parties. I've seen bold company efforts fade away when the activist community responded by saying that whatever the company was doing simply wasn't enough.

Similarly, Assadourian maintains that the rapid growth of corporate reporting on environmental and sustainability initiatives is done "more out of an obligation or as an opportunity to greenwash their operations than out of a desire to hold themselves accountable." This is curious, to say the least. A wide range of companies are harnessing their environmental reporting efforts to gain a fuller understanding of how they do business, then using that knowledge as a platform for doing better. They do these things not out of obligation or greenwash, but -- yes -- to hold themselves accountable, and because it makes for a better-run, more profitable business.

None of this may ever be good enough for most NGOs, but it's a sea change (though not necessarily a SEE Change) from the way business has traditionally been done.

I'll concede that all this must seem bewildering to those in the nonprofit world, who are used to thinking of Business as an Evil Empire. In the past twelve months, General Electric has committed to "Ecomagination," General Motors has made an all-out push for alternative fuels, Wal-Mart said it wants to sell only sustainable seafood, and everyone from Chevron to Duke Power has expressed concern about climate change.

In that light, Worldwatch should be excused for its conventional views on business. In such a topsy-turvy world, activists are understandably confused.

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Comments

I hope that I am alive when these changes come about!


Posted by: Narnia Nerd on 26 Feb 06

Joel unconsciously (or perhaps consciously) assumes that the corporate goal of short-term profitability should trump any wider ethical or social concern, an attitude Assadourian might reasonably term as 'classic neoliberal-think'. In fact the particular way corporate goals have been legally constructed is clearly part of the problem, and the historic decisions which defined them need to be revisited. By refusing to step outside the corporate mindset, Joel has failed to see the implications of Assadourian's comments.

It is clear that corporations, as currently constituted as pure profit maximizers, are disfunctional and antisocial. For a sustainable future society they need to be repurposed, so for example managers are personally and criminally responsible for their more destructive behaviours and their goals extend beyond share dividends and CEO golden handshakes to promoting longer-term benefits for their employees and the wider society.

While companies may do some beneficial things for 'greenwash' PR, they are fundamentally (legally) prevented from behaving ethically until they are reconstituted -- look at what happened to the Body Shop once it went public for an example. Until then, their lobbying and influence on politics are incompatible with a forward-looking society.


Posted by: Toby Kelsey on 26 Feb 06

From skimming this site for the past couple of months, my guess would be that Joel and the rest of the staff are aware of this conundrum. My question is this: What kind of productive efforts are underway to actually restructure corporate charter law, and where can we find them?


Posted by: mike mcghee on 27 Feb 06

I have recently studied a case of a British corporation which fuelled the resource war in the Congo, and which is now a self-described champion of social sustainability. A 'sea change' no doubt. The company hires people like Mr Makower to write about the sea change. But all this won't prevent the NGO's from remaining bewildered indeed and from taking the company to court. Since they have a very strong case and will win, Mr Makowers sea change agenda of pseudo-moderation will lose.

The road from the killing fields to the perverse fantasy of 'corporate social responsability' is paved by people like Mr Makower. Who are fully complicit.


Posted by: Lorenzo on 27 Feb 06

Joel,

Having read that WW article, I was surprised at your comments, so went back and read it again. I encourage you to do so, as I'm afraid you have really filtered it through your own goggles. By my reading, Assadourian has no gripe whatsoever with "enlightened self-interest", in fact he's holding up Starbucks as a positive example.

Phil


Posted by: Phil Mitchell on 27 Feb 06

Okay, why don't I substantiate my remark:
for those who are interested in the criminal behavior of the companies who fuelled the privatized war in the Congo - the deadliest conflict since WWII - and how they suddenly, in less than a year's time, turned from crime gangs to companies who profusely use Mr Makowers vocabulary, please read this report:

Network Wars. An Introduction to Congo's Privatised War Economy.

The companies responsible for massacring hundreds of thousands of people, and who have been found guilty by a UN panel, now all host conferences on "corporate social responsability", seminars on "how raw material extraction and trade can be more closely harmonized with the needs of the local population and the ecosystem", etc... (see page 20). They even sponsor think tanks and companies like Mr Makower's - with the blood money.

All positive results of the 'sea change' which bewilders so many NGOs. Sadly the Congolese don't even have the luxury to become bewildered. They are dead, Mr Makower.


Posted by: Lorenzo on 27 Feb 06

I'm not sure that encouraging more responsible and transparent corporate governance laws and practices, and lauding those steps in the right direction some companies are making towards sustainability are actually at odds with each other.


Posted by: Alex Steffen on 27 Feb 06

And speaking for myself, I think that when a company is involved with crimes against humanity, it *should* be taken to court, and if found guilty, its directors and officers should go to jail for a very long time.

This is a push-pull situation. We should have more and bigger sticks when companies do the wrong thing (support genocidal regimes, bankroll anti-climate obscurist lobbying groups, etc) *and* much beter carrots for the steps companies are making to do better.

The corporation as entity is almost certain to remain a force in our world for the duration of our lifetimes. The question is, under what rule set, and to what end? I suspect the hostility of those in corporate accountability movement to those who are trying to facilitate change in corporations is counterproductive.


Posted by: Alex Steffen on 27 Feb 06

I'm curious if the examples mentioned above (GE, GM, etc.) have any affiliation with the commentator. And does this site have a relevent disclosure policy?


Posted by: occasional reader on 27 Feb 06

Oh, what a wonderful world we will have when GREEN takes over the landscape. (Funny, that's the way it's supposed to be, isn't it?) What about when it takes over the corporate and political landscape? Perhaps we will finally have a redefinition of political ideologies. We could follow the Germans in their near abuse of the term "Democratic" for all of their political parties and divvy up the Green Party into the Green Conservatives, the Green Labor Party, the Green People's Front of Judea, and... the Democrats (they just don't know when to give up). Mudslinging will involve organic mud and "My policy is greener than your policy" and "I'm greener than your thumb" types of rhetoric will replace debates over who started the Internet. Even "Big Business" can be renamed the "Green Machine" as we all think fondly of our childhood and that crazy big wheel that you could spin out on always in one direction causing your front tire to wear so that you rode leaning over all of the time... and all of the activists will have nothing to do, except grow tomatoes.

Now that we have the humor portion out of the way, which is often times sorely missed here on WorldChanging because, rightly so, everyone feels very passionate about the subjects that are debated on this site, but no corporation is going to get it right the first time. Environmentalism was the embryonic stage of Sustainability's baby steps, perhaps even Sustainability's first "Agoo." The Activists will have to postpone their tomato garden as they will have plenty of work for some time to come as each corporation's true nature and continued damage are revealed from beneath their eco song and dance. Rather than post incendiary responses to some of the most important thoughts coming from the Blogosphere that will no doubt help to reshape the world we live in (perhaps even be "world changing"?), be more of a forward thinking world citizen and recognize where we came from, where we are now, and where we will be when our "agoo" changes to crawling, walking, running, etc (you know the whole human birth to death lifecycle metaphor). What will Episode III of the Environmentalism and Sustainability saga be? Stay tuned to WorldChanging, because I guaran-freakin-tee you you will be hearing about it right here.

Thanks for bearing with me as I muddled through my humor-rant, because I truly believe this is a step in the right direction. Only a moment more, then you may be dismissed. Just wait until the mass media actually starts reporting on this stuff. Liberal media bias my ass! All of us here know that's a crock, so let's not mock or judge the subject or it's hosts, and know that the times, they are-a-changin'. C'mon, GM has an E85 fuel ad on primetime for cryin' out loud! It's not the freakin' Susan B. Anthony or the Sacagawea - this is going to work, and it's here to stay. Get on board you nay-sayers and start being proactive. The time for bitching about how nothing will ever work is over. Now's the time to act, SO ACT!


Posted by: Chris Burt on 27 Feb 06

Yes, most of us know how the corporate world really works, but it works that way because it is encouraged to do so by its corporate charter. As long as Government doesn't step in, and make and enforce the rules, it will largely be business as usual. I don't expect companies in general to clean up their act and that's why I support forcing them, or at least incentivizing them to do so.


Posted by: Tom Street on 27 Feb 06

My apologies to Mr Makower for the attempt at making this personal. It's just that if you look at the finality of corporations, and take their essence to the extreme (as is happening in Congo), that one sees the obscenity of those who even think of using a moderate tone in a debate about corporate accountability.
Moreover, I'm sure Mr Makower would agree, many 'CSR' and 'sustainability' consulting people have totally sold themselves out to those corporations. I'm sure we all know of countless cases of people who have been recuperated.
My apologies for the personal tone though.


Posted by: Lorenzo on 27 Feb 06

Lorenzo,

From an activist-cum-fledgling sustainability consultant, I can HONESTLY tell you that not *all* consulting types have been recuperated. Far from it. If I am any kind of representation of many cultural creatives who are trying their damnedest to change the system instead of just nay-saying it, it pays more, in the end, to at least try to engage in corporate change than not.

I am a big fan of David Suzuki and Hubert Reeves. I am a member of Equiterre, my local NGO. And yet, this year, marching in the streets and signing petitions and talking in caf├ęs just didn't "do" it for me anymore. I felt that I could put my business acumen to better use by trying to infiltrate the thinking of levers of corporations than by keeping myself "clean and pure with my like-minded friends. Yes, evil resides in the corps...but so does the power to change things. They've got the money, they've got the clout, but they've also got the sheer human power (and grey matter) to topsy-turve everything from the inside.

Don't get me wrong - I'm not saying it's not something that's risky. And I'm not saying its going to have any kind of real effect in the next 2 or 3 years (and yet...). But in the long term, sustainably, I really believe its the way to go.

NGOs and the doomsday metrics they brandy are necessary for mass consciousness to awaken. But solution seekers are necessary so that polluters become accountable. I think its necessary to work together on this - after all, we're on the same ride, and on the same side.


Posted by: Luce Beaulieu on 28 Feb 06

Dear Luce,

We may be on the same ride, but we are most definitely not on the same side. The fox has never shown he can be trusted to guard the chickenhouse.

a visitor


Posted by: A Visitor on 9 Mar 06



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