The great tragedy of environmentalism and sustainability, is the politicization of the two subjects over the last three decades. The Big Spill is only the latest example of our broken two party system’s approach to problem-solving in the environmental realm. Split into factions, our Congress and media have found it convenient to be pro-B.P. or pro-everything else. Very few in politics, either in the committee rooms or in front of the cameras, seem to be pro-solution any more.
But what is sustainability really? Is it a part of some communist conspiracy, is it a bad idea by well-meaning but naive environmentalists, or is it the future of good business? For years, U.S. business theory has been grounded in the teaching that earning profit is the number one moral responsibility of any business. The notion has been part and parcel of business school teaching for decades, and is ingrained in the mindsets of most of today’s top managers. Increasing shareholder value is the mantra that is still preached in schools and lower level management meetings across America. At first blush, it would appear that changing that mindset is an impossible task; but there is a common ground emerging.
It is called stakeholder theory, and it is changing the way many managers conduct their affairs. Stakeholder theory includes all of the folks who have an interest in the successful operation of a business. Beginning with the owners and/or shareholders, stakeholders also include the customers, employees, and members of the communities where the firm operates. When a firm considers the effects and benefits of strategy on all of its stakeholders, the math changes in regards to pollution and waste. How a firm earns a buck, becomes just as important as earning the buck itself. What this mindset does, is allow firms to consider costs of operation they had previously externalized: costs like the full economic value of a potential oil spill.
Externalities, those costs that firms routinely pass on to the communities they operate in, are still paid for. These costs are born directly by consumers via taxes in support of government action. When the costs are not covered directly, they are charged against another account entirely; the very world we live in. Climate change is the most critical of these uncollected charges, but there are many others. The most obvious and uncontroversial is the decline happening in many U.S. fisheries. Without limits on catch and fishing grounds, the breeding populations of many essential species will be destroyed. The inability, someday soon, to catch fish for U.S. food production, is an externality whose payment will come do eventually.
There is then, some support for regulatory control of externalities, but real change must come from the marketplace. A stakeholder approach to doing business helps. Firms like Dow have adopted a zero emissions goal, and are relentlessly pursuing its accomplishment. Theirs is a major change in philosophy for a heavy polluter, a change that will pay dividends in the future as other firms copy Dow’s successes. Beyond stakeholders, the notion of efficiency becomes key to the ethic of sustainability. Efficiency is an element of old conservative ideals regarding the running of a business (and a big reason why fighting sustainability for conservatives is not a native position).
The simple math is; if you purchase 100 units of resource, and produce 40 units of saleable goods, then you have 60 units of waste. Waste is what we call pollution; be it solid waste for a landfill, hazardous waste for an expensive specific receptacle, heat loss from a building, chemical emissions, or untreated waste-water. Using the principles of Total Quality Environmental Management can allow firms to eliminate large portions of those 60 wasted units. That is what Dow is trying to do, and it is making them money, while it helps the environment.
Sustainability is available to smaller firms as well. It begins with recycling containers and efficient light-bulbs, and can extend all the way to solar panels and smart electric management systems. Paired with a real national focus on clean energy sources, sustainability is a business ethic that can reduce costs now, and save the planet later. And for the political naysayers out there, all of those gray-water processing systems, solar panels, wind turbines, and smart-grid elements will take millions of workers, employed by thousands of small contractors, to assemble. This is work enough for a generation of Americans eager for a job and motivated to leave an energy independent and clean America to future generations.
The Rational Middle is listening…