Corporate Sustainability – The holy grail of capitalism?

Here is another part of my academic career. This paper was for my "organizational change for sustainability" class. I am only posting the Intro, the first part of my paper and my personal notes, because the main part is only a summary of the book: Organizational Change for Corporate Sustainability: A Guide for Leaders and Change Agents of the Future, by Dexter Dunphy, Andrew Griffiths, Suzanne Benn (http://www.amazon.com/Organizational-Change-Corporate-Sustainability-Understanding/dp/0415393299/ref=sr_1_2?ie=UTF8&qid=1329237665&sr=8-2)

have fun reading :)

Introduction:

Sustainability has become one of the biggest trends worldwide over the last 30 years. Waking up to the reality of our problems a lot of people demand “more sustainability” from corporations, government and society as a whole. Many corporations jumped on this train and started to look at how they could change and adapt their business practices to be more sustainable in their actions.

The Holy Grail, similar to sustainability now, plays a different role everywhere it appears. In most versions of the legend the hero must prove himself worthy to be in its presence. In the early tales, Percival's immaturity prevents him from fulfilling his destiny when he first encounters the Grail, and he must grow spiritually and mentally before he can locate it again. In a later telling the Grail is a symbol of God's grace, available to all but only fully realized by those who prepare themselves spiritually, like the saintly Galahad.

(Source: http://en.wikipedia.org/wiki/Holy_Grail)

The Sustainability Phase Model

In their introduction, Dunphy, Griffiths and Benn pose the question of whether corporations are evil. They argue that it would be simplistic and naïve to portray corporations as evil by nature, but that it is important to “exercise collective control over the way in which they operate”. Thus it is important to define their role within society, their social and environmental responsibility, and their accountability. They think that “the core of this debate can be summarized as the argument about whether the role of the corporation is simply to create financial wealth for its owners, or to contribute to the well-being of a wider range of stakeholders, including the community, the environment and future generations.”

(p. 7, 8)

The Authors present a phase model to make comparisons between organizations and their commitment and practice towards sustainability. The model also describes a set of steps that organizations take in progressing to sustainability.

These steps are:

·      Rejection

·      Non-responsiveness

·      Compliance

·      Efficiency

·      Strategic proactivity

·      The sustaining corporation

All phases are described in terms of their attitudes towards human sustainability and ecological sustainability. This gives the reader an idea of the journey an organization theoretically goes through, on its way to more sustainable practice.

Figure 1: http://www.emeraldinsight.com/content_images/fig/0430230105001.png

1.     Rejection
Employees and subcontractors are regarded as a resource that can be exploited and the environment is regarded as a free good to be exploited. Pro environmental action is seen as a threat to the organization.

2.     Non-Responsiveness
Financial and technological factors dominate business strategies to the exclusion of most human resource management. The ecological environment is not considered to be a relevant factor in strategic or operational decisions. Environmental risks, costs, opportunities and imperatives are seen as irrelevant or are not perceived at all.

3.     Compliance
The emphasis is on compliance with legal requirements in industrial relations, safety, workplace standards, and so on. Financial and technological factors dominate business strategies, but the company seeks to comply with environmental laws to minimize the firm’ potential liabilities from actions that have adverse impact on the environment.

4.     Efficiency
There is a systematic attempt to integrate human resource functions into a coherent HR system to reduce costs and increase efficiency. Poor environmental practice is seen as an important source of avoidable costs.

5.     Strategic Proactivity
Skill mix and diversity are seen as integral and vitally important aspects for the business, and intellectual and social capital are used to develop strategic advantage through innovation. Proactive environmental strategies supporting ecological sustainability are seen as strategic business opportunities to provide competitive advantage. The organization seeks competitive leadership through spearheading environmentally friendly products and processes.

6.     The sustaining corporation
The organization accepts responsibility for contributing to the process of renewing and upgrading human knowledge and skill formation in the community and society as a whole and is a strong promoter of equal opportunity, workplace diversity and work-life balance as workplace principles. The organization becomes an active promoter of ecological sustainability values and seeks to influence key participants in the industry and society in general. Nature is valued for its own sake.
(p. 24-26)

.....

Personal Note

Writing this paper was extremely hard for me, for reasons that I cannot really explain. There is some kind of inner blockage that is hindering me to accept the reality the authors are creating. Even though their model seems to be logical and they obviously have enough experience to showcase their points, there is still something wrong for me. Something on an intuitive level is telling me that this is not working. Even though I am aware that this book is geared towards a specific market of corporate CEOs and change agents, and I fully recognize the good intentions behind it, I strongly believe that it is not going far enough.

It seems to me that their belief that the system can be changed in an incremental way, which is what their model seems to describe, does not work. It seems that the fundamental beliefs that build their logic will not hold up.  Their model still lies on the assumption of infinite growth, a basic and fundamental problem within the capitalist system. There is no such thing as infinite growth, and therefore every competitive system that is based on this assumption, whether it is integrating sustainability or not, is doomed to fail in the long term.

The second logical flaw is the assumption that at the heart of every business lays profit. The idea of profit has created a mousetrap in which our current system is trapping itself. By looking for profits, we forget to see what the original purpose of business is. The creation of value for the greater good is the real, original purpose for business. Looking back thousands of years, groups gathered together to create things of value that could not be created by one person alone, to generate more value for the greater good of everyone. If this seems altruistic, or unrealistic to you, imagine living in a tribe in the jungle, and creating a field to grow crops so that everyone in the tribe could eat and prosper. Now imagine the whole world being this tribe.

It might seem like a good idea to try and change the system. It might seem like its worth the time and energy to look at the existing model and see where you can change it, tweak it and adapt it. If you take a step back though, you will see that this system has brought itself to a point where little changes, and lofty visions are not enough anymore. The incremental path of change is over. This system needs drastic change, and that is what is missing in their book: The boldness to propose changes that are outside of what exists right now. In the words of Buckminster Fuller: "You never change things by fighting the existing reality.  To change something, build a new model that makes the existing model obsolete."

We are at a point where we need a new model, one that is not based on the assumptions of infinite growth, exploitation of the environment and the generation of profit as the central motivation. A model that takes into account the inherent drive of humans for good, that acknowledges that we are all in this together, and that the biggest goals are to create a world worth living for everyone on this planet. This certainly is not going to happen by slowly transforming corporations into sustainable corporations, because the only thing they “sustain” is their inherent need for profit and exploitation.

It seems to me like we are in a very similar situation as it was in France at the time of the French revolution, where it was not enough to change and adopt the system. A new system needed to be created, to replace the old one. The absolute monarchy that had ruled France for centuries collapsed in three years. French society underwent an epic transformation as feudal, aristocratic and religious privileges evaporated under a sustained assault from radical political groups, masses on the streets, and peasants in the countryside. Old ideas about tradition and hierarchy – of monarchy, aristocracy and religious authority - were abruptly overthrown by new Enlightenment principles of equality, citizenship and inalienable rights. This process went on for the next 50 years, going back and forth in a power struggle between democracy and monarchy, but finally ended in the establishment of the first modern democracy in Europe. Even thought this process caused a lot of pain, suffering and death, it liberated the world and caused the next level of evolution for mankind.

(Source: http://en.wikipedia.org/wiki/French_Revolution)

I believe that we are at a very similar point of time. This society needs to reinvent itself and completely transform into something new; shed the old skin of corporate capitalism and be reborn in a new form.  We can see now the initiation of this shift, with economists predicting the break down of our current model, people demonstrating on streets and public spaces all over the world and scholars creating new models of existence. I don’t know how this model is going to look, but if we are to survive, it has to be radically different from what we currently have. The ideas range from global non-monetary, resource based economies to small community self-sufficiency, to spiritual enlightenment theories. It seems that, like Perceval, the corporate world, in its quest to find the holy grail of profit and sustainability, does not dare to ask the right question, and therefore is doomed to fail.