Beyond the Status Quo: How Corporate Sustainability Can Become a Reality

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?

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5 thoughts on “Beyond the Status Quo: How Corporate Sustainability Can Become a Reality

  1. Thanks for the article! It is time for corporations and other organizations around the world to do pure good rather than horrific damage with tainted image like what the ones mentioned in the article of BP, the other two and even Monsanto, Syngenta, Fast Food or Big Food Companies, Wall Street have been know for. Seriously, it has always been questioned what is CSR or Sustainability with these types of evil corporations known for doing such bad and how does it make sense for them to do bad to society and have their employees volunteer in charitable activities or donations which doesn’t make sense.

    I love the idea of Social Enterprise and feel this hybrid of earning profit while also doing good like nonprofits is ideal.

    On the other hand, with the rise of hybrid organizations, wonder how they can never get caught into being a Multilevel Marketing Agency or Networking Agency which has sought such a bad. lasting reputation and is known for being pyramid schemes no matter what with such drive into profit-making and sales pressure tactics despite people first met of these agencies will say they don’t do such and uptalk. I personally wish MLMs or NMs were banned over the world as the model doesn’t seem ethical and people engaging in such have been brainwashed. Just wanted to share.

    http://www.quackwatch.com/01QuackeryRelatedTopics/mlm.html

    http://www.vandruff.com/mlm.html

  2. Thanks for the article! B Corps (http://www.bcorporation.net) are a step in the right direction to addressing some of these issues I think. Notably providing a legal framework for corporations to define profit as encompassing social and environmental value creation as well as monetary returns. Using the power of business for good by measuring impact and adhering to standards of practice and transparency in activities. No tool for measurement is perfect but it’s a start.

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  4. Nardia, I like the idea that hybrids might be better equipped than regular business (or non-profit?) organizations to come up with ‘sustainable solutions’ combining economic, social and environmental value creation. Knowing one particular example of a hybrid pretty well – impact sourcing service providers – I can confirm that their ongoing exposure to multiple, often conflicting stakeholder demands pushes them to work out feasible solutions that might satisfy both business clients and community stakeholders. But here is my point: Isn’t that just a matter of ‘satisficing’ (i.e. satisfying to the extent that a particular stakeholder is ‘ok’ with it)? For example, in order to satisfy social funding, wouldn’t most hybrids longer-term just hire one of those professional writers to ‘make up stuff’? Or to fulfill their social mission, wouldn’t they just try to frame whatever they do towards local communities and alliance partners in such a way that it sounds ‘social’ or ‘impactful’? What I mean is: Why would hybrids, in the end, not act like any other organization facing multiple stakeholders? Why would they engage more deeply with social/environmental matters than ‘necessary’ (from an organizational standpoint)? Or wouldn’t that eventually depend on how sophisticated STAKEHOLDERS (rather than just hybrid organizations) become about these issues?? Well, comments welcome! 🙂

  5. thanks, Nardia, good post and congrats on the article! You mention John Ehrenfeld, he has written that sustainability is a systems-level, even planetary level concept – so doesn’t make much sense to say that an individual company is sustainable, rather question is about sum total of our economic activities, resource use and dumping garbage and CO2 back into air.

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