How ‘sustainable’ is sustainable development in the corporate world?

According to the 2005 World Summit on Social Development, sustainability requires the reconciliation of the three elements of economic, social and environmental endurance. Up until not too long ago, companies externalized costs to society and the environment and took advantage of cheaper and more convenient labour in their restless pursuit of profit.  However, activism and awareness campaigns by NGOs have encouraged consumers to demand more sustainable products and services. As a result, today, many companies proudly advertise their sustainable business practices. The ensuing policies of “corporate social responsibility” (CSR) are in part motivated  by the long-term financial savings sustainable businesses can make; however, they are also a marketing strategy aimed at convincing people that their money is being invested in something that is good for people and the planet.

The Profitability of Sustainability

Different companies have different methods of practicing sustainable development. Some try to go green in their offices, some try to minimize their harmful gas and waste emissions, and some  try to give something back with initiatives like building schools or offering pro bono work. H&M, a Swedish clothing brand, for example, wants “to make more sustainable fashion accessible and affordable to more people around the world” by using environmentally-friendly materials, and Apple Inc, an American technology designing corporation, “[insists] that all of our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes.” EasyJet, a low-budget airline, ….is on a path “towards minimising our environmental footprint both in the air and on the ground” by allowing customers to offset their carbon footprint through an additional fee at ticket purchase and designing more eco-friendly aircrafts.  McDonalds says that “from the start, we’ve been committed to doing the right thing,” by making sure there’s fruit in every Happy Meal, sourcing 99% of its fish from Marine Stewardship Council-certified fisheries,  using LED light bulbs, and other such policies.

Shifting Sectors of Sustainability

While partly motivated by moral, social and environmental opposition to harmful business practices, CSR policies are often primarily attributed to economic benefit. An incentive-led sustainable policy introduced under the title of CSR at times does not curb sustainability but instead shifts sectors of sustainability within the business, prioritizing one aspect of sustainable development over another and thus damaging long term sustainable development.

(Photo credit: H&M)

For instance, campaigns surrounding the marketisation of organic cotton have been hugely successful. According to the Organic Trade Association, the industry grew by 20% between 2007-2008 alone.  In that sense, companies like H&M, the leading retailer of organic cotton in the world, receive a green plus point. However, does this render them all-around sustainable companies? Let’s look at the process. To change a farmer’s technology for them to start producing organic cotton is very expensive; Methods involving pesticides must be converted to more biologically-friendly controls. H&M has little control over raw materials or fabric processing, their job begins at the design level. Therefore, if H&M suddenly demands only organic cotton, it is the farmers who are left with the enormous burden of converting their farming system, or else their contract will be cut. Despite the fact that farmers could potentially earn more money per unit, the high overall production cost might not guarantee them more money in the long run. Also, at the fabric-processing industries, H&M has no way of implementing wage requirements for workers. Thus, their shift to environmental sustainability has effectively led to less social sustainability. Additionally, all cotton production, including that of organic cotton, has negative implications for the environment in that it consumes enormous quantities of water. Despite this, H&M was placed 67th on Corporate Knight’s 100 Most Sustainable Corporations 2012 list.

Companies need to follow their products all the way to the source of the production process, and make sure that every step along the way is sustainable—economically, environmentally, and socially—for it to be called ‘sustainable development’. Similarly, service industries should be aware of where they are investing their time and money. Using sustainability as a marketing strategy is simply not enough.

How can companies be convinced to do more?

There is an abundance of sustainability rating websites out there, but unfortunately they are not easily accessible. Many require you to pay for reports, or are simply not clear enough for the average Joe to know what the numbers mean. Or, as demonstrated with the organic cotton example above, the ratings themselves do not reflect the true nature of the sustainability efforts afoot. Meanwhile, companies’ own reviews are often misleading and naturally don’t reflect their negative impact on the environment and society.

If rating websites became more accessible, companies would perhaps be motivated to reform their policies at the risk of losing informed customers, but the reality is that few consumers actually make the extra effort. However, there are several organizations working with companies trying to convince them that true sustainability matters for their own survival. Forum for the Future, for example, has helped food industry businesses such as PepsiCo and others see the advantages in sustainable habits for the long-term (see our previous post). WWF’s Sustainable Food Lab fosters partnerships between small-scale farmers and large corporations to offer assistance and improve green agricultural practices. Also, Fairtrade and various organic certifiers have offered incentives for companies to produce more sustainable products. A way to improve this system would perhaps be to devise a certification that has both social and environmental requirements. Ultimately, it not only a question of certification, but it is in the company’s best interest to re-assess their own definitions of sustainable development for both financial and moral reasons.

Do you know of any businesses that truly aim towards sustainable development?  Leave a reply below.

Carolynn Look is a research and communications intern with INESAD.

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One comment

  1. Businesses that truly aim towards sustainable development

    Ola Carolynn,

    Siguiendo este vinculo encontraras 10 “Case studies” y un analisis general sobre este sujeto (Publicado por Fundacion Reye Baudouin, en Brusellas). Pero es escrito en francès…

    Atentamente,

    Michel Cordier
    30-11-2012

    Pequeño resumen:

    Le futur au quotidien. Entreprise et développement durable Dix études de cas et 100 conseils pratiques pour entreprendre durablement en Belgique (2002).

    Entreprendre dans une optique durable, c’est chercher à concilier des préoccupations économiques mais aussi écologiques et sociales. Outre une présentation générale de cette conception de l’entreprise du 21e siècle et la définition de quelques concepts clés, l’ouvrage contient dix témoignages d’entreprises qui se sont engagées dans cette voie ainsi qu’une foule de conseils pratiques.

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