By Nardia Haigh.
Many would agree that corporate sustainability has become a buzzword, without actually changing corporate practices all that much. Recent news supports that: BP was found grossly negligent in the Deepwater Horizon disaster; the U.S. tobacco industry continues to rely on pre-teens working in the fields; and Pacific Gas & Electric is under legal scrutiny for allegedly causing a gas explosion due to suspected safety violations. So why aren’t all those sustainability strategies and programs, including new ‘sustainable’ products, the appointment of Chief Sustainability Officers, and the submission of regular sustainability reports, enabling corporations to become more sustainable? And what does it take to change that?
These are some of the key questions that Andy Hoffman and I explore in a paper we recently published in Organization and Environment. First, we ask ourselves what ‘becoming sustainable’ actually means. In his book, Sustainability by Design John Ehrenfeld describes sustainability as “the possibility that humans and other life will flourish on Earth forever”. He shifts our attention away from merely being “less unsustainable” towards actually becoming “more sustainable.” This means creating natural and societal value, rather than just limiting further damage. However, we believe that corporate sustainability practice has not accomplished much in this direction. To be clear, sustainability initiatives – and regulation – have been effective in some ways: they have reduced pollution and waste, improved air and water quality, energy efficiency, and achieved a greater focus on corporate citizenship and social responsibility. But is that all we can do? Aren’t those ‘achievements’ just examples of being less unsustainable?
We argue that in order for businesses to become more sustainable it may take a radically new way of doing business, and see promise in particular in so-called ‘hybrid organizations’. Hybrids can be for-profit, non-profit, or a mixture of the two. They often generate income similar to for-profit models, but at the same time pursue social and ecological missions that are traditionally associated with non-profit organizations. One example is Kiva, a U.S.-based non-profit organization whose mission is to alleviate poverty by facilitating microfinance for people in developing countries who wish to start or grow a business. Kiva uses a crowd-sourcing model, where anyone can visit kiva.org and loan money to people seeking small loans. Kiva also seeks grants, philanthropic funds and corporate sponsorship to fund its activities, and by the end of 2013 had distributed $408 million in loans. As another example, benevola is a UK-based for-profit organization that recruits people for volunteering opportunities based on their skills and talents. The founder Ben Aymé, a former professional recruiter, started this organization after realizing that large corporates are steering people to become “overspecialized” in their skill sets. Instead, Ben set out to create meaningful volunteer experiences by matching the skills of professionals to those required by other hybrid organizations.
So, are hybrid organizations the silver bullet? No, they are not. In fact, hybrids have problems of their own, which we cover in our article (available in Organization and Environment). However, rather than just striving to become “less unsustainable”, hybrid organizations have the potential to become “more sustainable”. This is because they are different from regular business organizations in several ways:
They are more likely to choose to limit their growth in support of their social and/or environmental mission.
They are more likely to subordinate profit as a performance indicator.
They are more likely to engage with social and/or ecological systems on a deep level.
They are more likely to understand the value of nature beyond its utility resource value.
They are more likely to not only reduce negative environmental/societal impact, but actually increase positive impact.
Will hybrids change corporate sustainability practices over time? That is yet to be seen. Hybrids are small relative to dominant corporations. Yet, their number is growing, partly thanks to new legal regulation that protects hybrids from shareholder litigation that traditionally demands the prioritization of shareholder returns. Hybrids have also co-evolved with a growing number of consumers who embrace health and sustainability-centered lifestyles, and who pay attention to sustainability characteristics of products and services when making purchase decisions. From this support base, hybrids might over time be able to develop new viable and sustainable business models that can go way beyond the current orthodoxy of ‘feasible’ corporate sustainability practice. What do you think?