Sustainability and Social Responsibility are nowadays seen as important business values to embrace, which is a good thing in itself. It may be, however, that organizing the worldwide business community to take this on systemically may be in fact not only the most promising means to deal with issues such as climate change and human suffering, but also a means for a wave of major new business opportunities that go well beyond just Green Tech and well-meaning community “givebacks”.
A unique three-day virtual conference on the subject of Sustainability as it relates to Information and Communications Technology (“The SmartICT Conference”) just concluded yesterday in cyberspace. That conference, which I wrote about in an earlier blog entry (“The Important Conference You Can’t Go To”), featured presentations from experts in a variety of information technology areas. For those that are interested, the excellent presentations from that conference have been archived and will still be available to view for the next several months.
Although the final tallies of those that attended have not been made public, I am sure it included many good corporate citizens and also more than a few “Green Tech” visionaries in attendance. Each of which was looking to apply the learnings there to lower their corporation’s overall energy consumption and systemic carbon footprint, using the latest breakthroughs in “telepresencing”, Smart Grids, and advanced technologies for data centers such as virtualization.
All good, indeed, with bottom line profitable benefits while making for a greener overall world if executed well.
At least on the surface, we have indeed come a long way from legendary economist Milton Friedman’s famous (and some would say even notorious) 1970 statement in an essay in the New York Times that “The Social Responsibility of Business is to Increase Its Profits”. He later of course shortened that to an even more famous quote: “The Business of Business is Business”.
But how far have we really come? Unfortunately, maybe not that far at all, at least according to McKinsey Quarterly’s just-published global survey of “How Companies Manage Sustainability”.* As their top-level survey summary says, while over half of the world’s corporate executives see “Sustainability — the management of environmental, social, or government issues — [as] ‘very’ or ‘extremely’ important”, only 30% of those same executives actively seek ways to either “invest in sustainability” or “embed it in their business practices”. [All quotes were taken directly from the McKinsey survey article.] And — sadly — those same executives say the number one reason they are working on Sustainability is for “Maintaining or Improving [their] Corporate Reputation”. Not because it is good for the planet or those of us whose ancestors might need a place to stay sometime.
Okay. So maybe Business does not get it completely, and maybe Milton Friedman’s 40 year-old conclusion has passed on to the current generation of Corporate Leaders more than we realize. What about governments, who have some power to mandate that corporations act differently, or all of us as individuals?
Again, on the surface, governments do seem to be getting the message and are trying to make a difference. They ask for important bipartisan studies of the world’s various problems and make quite a bit of noise especially on human rights, corporate ethics, and environmental issues on a regular basis.
One of the most impressive of such studies in recent years was a 2006 700-page report developed under the leadership of economist Sir Nicholas Stern for the government of the United Kingdom. In it he first noted that if we as a human species take no actions on carbon emissions worldwide that there is a 75% chance that worldwide temperatures will rise by 2 to 3 degrees Celsius over the next 50 years. That could mean rising sea levels with over 200 million people having to move just because of that alone, extreme weather patterns will become far more common, crop yields will decline, water will become even more of a precious resource around the world, and up to 40% of the world’s species might become extinct.
Stern’s report did not just stop there, however dramatic those environmental conclusions are. He had the wisdom (and also what some would describe as the audacity) to describe the economic impact of such climate change on the world. As just a few of his conclusions:
- Just the presence of the increased Extreme Weather could reduce the world’s GDP by up to 1%.
- If the 2 to 3 degrees Celsius temperature rise happens, GDP could drop by as much as 3%. If the number went to 5 degrees Celsius, the GDP could drop by 10% worldwide.
- In the worst case scenarios described above, global consumption per head would drop by 20%.
If just one company “ruled” the business world, you can be sure they would take some serious action when faced with a 20% drop in revenues over time. And even if the numbers are not completely right, you would think this would shake up a few corporate board members around the world just from considering the impact to their own personal stock portfolios alone.
And a single worldwide government would realize they had to take action too, both to protect their citizens from harm as well as to keep their own economies thriving. At least you would think so, provided there was a least a little embedded wisdom to help them on their way.
Sadly again, this is not the case, in part precisely because there is no one super-wise company or government overseeing all of this.
In spite of now many reports concluding things as serious as those in Stern’s report — and worse — governments around the world continue to argue inside their own Parliaments and Houses of Congress and with other governments over precisely what must be done. Major climate change summits come and go but produce little more than suggestions, proclamations, and recommendations.
Conventional politics means protecting your own turf and on a short-term basis as well, it seems. If there is any question of that, witness the massive pollution China is producing at the same time as it grows faster than anyone else. So much so that nearby production plants had to be shut down to allow the air to clear enough for athletes to compete in the last summer Olympics; volunteers were also recruited in large numbers to manually clear the algae and other growths that come with polluted waters along the China coast at the same time.
So if government and business cannot get themselves organized on this, what about organizing the individual citizenry itself, maybe in new ways? Perhaps NGOs, non-governmental organizations such as the Sierra Club, Greenpeace and others acting on behalf of individual citizens might be able to make a difference, but in the end they are limited by their funding, the breadth of their impact, and the unfortunate “Tower of Babel” challenge of having way too many small groups working all on slightly different objectives.
And as for human individuals themselves, they represent an even more scattered group than the NGOs, with even less depth of understanding of the issues. Some of course make the point even more strongly in the way they describe the limitations of the individual, such as how the U.K.’s respected newspaper “The Guardian” referred to the situation in their recently-published article, “Humans are too stupid to prevent climate change”. It featured an interview with James Lovelock, the creator of the world Gaia hypothesis.
Among the many memorable quotes from that interview was the following: “I don’t think we’re yet evolved to the point where we’re clever enough to handle a complex a situation as climate change.” He went on to blame “human inertia” and democracy as two of the major reasons why nothing meaningful was getting done to deal with this situation. Lovelock also said he felt only a major catastrophic event, such as the calving of a major glacier in Antarctica, might enough to divert us from our current lemming-like path to destruction. As result of all that, Lovelock indicated he felt that adaptation measures, such as building seawalls to protect against rising waters, might be the only courses of action we as a species would end up considering seriously and on a large scale.
I myself am not so pessimistic to believe that individuals, NGOs, and governments cannot engage more fully to deal with the massive issue of Climate Change. I may be naive, but I personally believe that the more those three collective powers engage with the problem of Sustainability and Climate Change, the close we will get to a “tipping point” where human inertia will slowly but inevitably begin to change its direction.
Where I do agree with the pundits, however, is that such a change might take longer than we have available to us. So where does that leave us — or me — in what we need to do?
What I think is in fact the most powerful course of action is to come back full circle to where I started this essay with business itself as perhaps handling the rudder that just might be able to turn this ship around. Business in fact represents what has been described as the most widespread social organizing force in the world, even before religion (though I am sure I will get a few letters from that comparison). As Sir Nicholas Stern also noted, business on a grand scale has a lot to do. And the largest businesses, such as Wal-Mart and Google, have tremendous power both directly (in Wal-Mart’s case) and indirectly through the power of information (in Google’s case) to cause even the biggest of governments to take heed. If they so wish, they also have the collective organized leadership capacity to cause even bigger change.
If they want to, of course.
And is this last pronouncement possible? Some would say yes, especially under the leadership of forums such as the Clinton Global Initiative (CGI), which has produced significant measurable commitments to specific Environmental, Corporate Governance, and Socially-Responsible change, often on a grand scale that individual stakeholders, governments, and even corporate boards could not make on their own. Coming up on its sixth year, the CGI forum, with its unique blend of corporate, NGO, and individual leadership to deal with such causes, seems to making a major difference in everyone’s lives. Where else could the leaders of Wal-Mart and Virgin Airlines come together to launch major systemic Sustainable Change initiatives?
That said, once again we cannot just leave it up to one forum or one group of companies. In spite of Friedman and absolutely in spite of thousands of corporate boards and management teams across the world, I believe every business has the responsibility to step up to the challenge of Sustainability in a big way. And, further, business may in fact be the first category of social organization to actually realize the critical importance of taking on such a responsibility.
As in any such serious change, they will likely take this on first for their own long-term survival. It is possible also that they may invest in such businesses because, as the McKinsey survey indicates, it will enhance their corporate reputations. In the long run, though, I believe they will take it on for the same reason as they have any other major strategic initiative. It will be because it is the right thing to do for their company.
And yes they will also do it because by taking this on their company will be able to do something uniquely and strategically significant for the sustainability of the world.