Corporate Eye

How Much Sustainable Business Is Just Hot Air?

Photo ManipulationIn one of those quiet relaxing moments when I wasn’t haring after one person or another, I settled down to read the World Business Council for Sustainable Development’s (WBCSD) July report Business and Development: Challenges and Opportunities in a Rapidly Changing World.

Something unsettled me about it and I found myself wondering how much of WBCSD’s work is geared towards creating sustainable business, and how much concerns businesses taking advantage of sustainability for their own ends.

The phrase which really got me thinking was the first key conclusion:

… business cannot succeed in countries that fail. Stable and prosperous societies make for better business opportunities.

This is a statement of orthodoxy these days, but I’m not entirely sure it’s true.  There are plenty of terrific business opportunities in failing states: some may be distasteful and others highly illegal, but that doesn’t stop them from being businesses or driving economic growth.

Furthermore many of the world’s largest corporations operate within unstable and poor countries, often in partnership with a kleptocracy which is keeping the country in that condition.  You can say that a company should remain apolitical, but in that case statements like this shouldn’t be made from the sidelines.

This may seem like hair-splitting, but if the premise for an argument is flawed then surely your conclusions will be as well?

Is there such a thing as a sustainable risk?

I had to chew quite hard on the second key point before I understood it properly.  It says:

by developing a better understanding of and proactively addressing socio-economic and environmental concerns, companies will be able to better manage their risks and thereby underpin their license to operate, innovate and grow

There are very few businesses which talk about the license they have in this way: meaning a license through social contract, rather than regulatory concession.  In addition, proactive decision making must always be applauded within the current environmental circumstance: better to batten the hatches down now, before the storm hits.

However, I cannot help but worry about the term “risk”.  “Risk” these days seems to invariably be qualified by “acceptable”, as in “there are flaws in our oil drilling operation but we believe the risks posed are acceptable and so won’t spend money on reducing those risks because that will eat into our profits.”

Rather than manage or mitigate risks, perhaps companies should concentrate on *eliminating* them?  It may not be as profitable, but would it be more sustainable, in business, social and environmental terms?

Hey chaps .. there’s an untapped market over here!

It was the third and fourth key points which really worried me though.  Taken together they read:

developing inclusive business models for doing business with low-income communities will help companies … to sustainably meet the needs of growing populations in developing countries

This is “bottom of the pyramid” talk, and it’s a concept I find very troubling for two key reasons:

  • targeting the world’s poor with unadulterated consumerism will not necessarily alleviate their poverty, it will just provide them with perishable goods upon which they then have to spend a greater proportion of their almost non existent (in comparison) income; in other words, it creates a new income stream.
  • there are two sides to the sustainability coin: one says that the planet is running out of resources to support a booming humankind, the other is that there are too many people on the planet for its resources to support.  If it’s sustainable for a business to consume more resources by selling its products to a growing population in the developing world, then I’m a monkey’s uncle.

Reinflating the same economic bubble

I don’t mean to do a hatchet job on the WBCSB or Bottom of the Pyramid (BoP), but on the evidence I’ve seen to date I believe the establishment of a sustainable business model has yet to happen.

Instead what we’re seeing is a lot of businesses trying to change their operations to become more sustainable: i.e. leaner in terms of resource usage and waste generation, and more philanthropic in terms of their profit sharing initiatives.  This doesn’t make them sustainable businesses though, it just means they’re doing normal business more sustainably.

Sadly I therefore have to reach the conclusion that most of what we read about sustainable businesses is nothing more than hot air, designed to re-inflate a sagging global economy by identifying new markets and income streams for tired old business concepts to take advantage of.

Which is not a happy thought for a rainy Friday morning like this.

Picture Credit: Photo Manipulation by Jamie Ivins under Creative Commons Attribution No Derivatives License.

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A former CTO, Chris has a broad and varied background. He’s been involved with blue chips, consultancies & SMEs across a wide variety of sectors and has worked in Europe, the Middle East and Australia. In 2007 he decided to combine his knowledge of business and IT with his passion for all things sustainable and has been busy writing ever since. However, his greatest ambition remains to brew the perfect cup of coffee.