Sacred Headwaters #35: Corporate Sustainability
Corporate sustainability is a big industry and a big part of many businesses, and it has been since long before the rise of "net zero." Do these efforts actually do anything good? Can they?
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Issue #35: Corporate Sustainability
After the last issue about net zero targets, a reader reached out and asked, “What can we do about this? How do we stop big corporations from lying through their teeth and using what was originally a good thing to do such bad things!?”
This is, of course, the big question. I responded and said that there’s no point worrying about companies using climate targets to greenwash themselves because that was, essentially, inevitable, and that it’s better to focus on governments: if national targets are robust, transparent, and sufficient (big ifs), then they will trickle down through policy into forcing corporations to change in transformative ways.
My response was based on the assumption that the current global political and financial structures that define businesses and the environment in which they operate make it impossible for even the most well-meaning business to “do good,” and that any appearance of good is actually — like unrealistic net zero targets from oil companies — a tool delay more meaningful structural action. I’ve alluded to this in other issues, including issue #22 on fossil fuel companies where I compared climate denial with big tobacco, the opioid industry, and Roundup / Monsanto. These aren’t isolated bad actors: they’re a pattern that won’t stop until we address the underlying causes. I also wrote about potential approaches to address those causes in issue #10, “Generative Economic Models,” exploring whether or not there are ways within the status quo economic system to develop models of business and asset ownership that actually challenge the governing paradigm.
So when I responded, I had all that in mind. But corporate sustainability is a huge field, capturing many brilliant and undoubtedly passionate people who are genuinely trying to do good work. Whether or not that work ends up being valuable, it’s unfair to the tremendous effort that’s been put in to write it off without a bit more interrogation, and one can also hope that while the last thirty years of corporate sustainability have failed to move the needle on any planetary boundary, perhaps there are ways the approach could be changed for the better. So I thought I’d take this issue to explore corporate sustainability beyond the lens of “net zero” commitments and dive deeper into the multi-decadal world of businesses trying, some genuinely and some not, to be good corporate citizens.
The Next Phase of Business Sustainability (25 minutes)
Andrew J. Hoffman, Professor of Sustainable Enterprise at the University of Michigan.
This piece opens with an assessment of how business sustainability has worked to date and how ubiquitous this form of sustainability has become. Hoffman calls this “Sustainable Business 1.0,” or “Enterprise Integration:” the idea is to become “less bad” without any kind of fundamental change. We see this all the time, and it’s even built right into things like the idea of reducing carbon emissions. Businesses aim to reduce emissions, material footprint, deforestation, etc., within the bounds of their existing business model. Of course, as Hoffman goes on to explain, despite the ubiquity of these practices in the business world, we’re still actively transgressing multiple planetary boundaries and have shown no real signs of improvement. (Apparently planetary boundaries have been rebranded as “‘key performance indicators’ of the planet” by the world of business academia). So: Sustainable Business 1.0 has failed, what’s next?
Hoffman argues that businesses are uniquely positioned as actors who can transform the markets themselves; he comes armed with a number of examples such as how electric vehicles (and their distributed battery capacity) may revolutionize the energy grid, how companies like Ford are positioning themselves as “mobility providers” rather than vehicle producers, and how Intel apparently helped shape supply chain reporting requirements in the 2010 Dodd-Frank Act. In many ways, Hoffman’s examples prove the opposite point for me: while Ford may be publicly announcing its intent to become a mobility provider, it also lobbied the Trump administration (alongside Toyota and GM) to roll back efficiency standards on cars. If there is to be a market transformation from private vehicle ownership to innovative, shared mobility services (like, you know, public transit) — which there should be — are we really to believe that it will be led by the companies that deliberately created the culture of private vehicle ownership, and more recently, the devastating boom of SUVs?
Interesting sidenote: in the comments section of this article, there are two from Gina McCarthy who is now US President Biden’s “White House National Climate Advisor.”
The Complicity of Corporate Sustainability (15 minutes)
Auden Schendler. Thanks to a reader for pointing me towards this piece.
Schendler has worked in business sustainability for the past thirty years. He was, for a long time, a true believer: he thought businesses could operate sustainably within the bounds of profit motivation and shareholder value. “Doing good by the environment was not only environmentally responsible, it was good for the bottom line.” But Schendler found the same thing as Hoffman: after 25 years, very little has changed, especially on one of the most critical axes, climate. In this article, he explores how even genuine and inspiring corporate sustainability work — major emissions cuts, etc. — “wouldn’t even dent the climate problem.” The way he sees it, it’s similar to the individual action problem: by focusing corporate sustainability on the footprints of each company, alone, are we distracting ourselves from the bigger issues of power, particularly that of the fossil fuel industry? Schendler thinks so, and in this excoriating piece he argues that those participating in sustainable business practices are complicit in the crimes against humanity perpetrated by the fossil fuel industry and its associated powerful interests.
So if corporate sustainability is actually a weaponized distraction in service of fossil fuel interests…what do we do? Schendler calls for us to look at the corporate role in climate policy differently: businesses should be activists fighting to overthrow the governing paradigm.
The question isn’t the traditional query of business classes: “How can business profit from being green?” but “How can business be part of, even instigate, beneficial social and political revolution?” The irony is that we know it can be done because the fossil fuel industry has been wildly successful in doing the exact opposite.
Again, the parallels here to individual action and responsibility are very strong: changing your lightbulb, while obviously a good thing, does nothing to change global power dynamics, even en masse. Becoming an activist does.
25 Years Ago I Coined the Phrase “Triple Bottom Line.” Here’s Why It’s Time to Rethink It. (5 minutes)
John Elkington
Schendler isn’t the only person someone deeply embedded in the business sustainability world who is having second thoughts. John Elkington created the “triple bottom line” (3BL) concept in 1994, something that’s become an important component of business sustainability work in the decades since. The idea, basically, is that instead of looking at profit and loss to establish your business’s “bottom line,” you look at “social, environmental, and economic impact” — three bottom lines instead of one. Elkington’s goal when he created this was apparently transformative — a movement to create some new form of capitalism that could operate within planetary boundaries. You’ll see on his company website a call for “regenerative capitalism.” Unfortunately, he now recognizes that 3BL and the sustainability frameworks that followed it have settled comfortably into the existing extractive form of capitalism and utterly failed to spur the transformation he hoped for, and in this article, he issues a “recall” on 3BL as a management concept. He sees the potential for hope in the spread of B Corps, and emphasizes that a few outlier businesses have taken a transformative approach to 3BL, including Novo Nordisk, a Danish pharmaceutical company that is non-profit owned.
Patagonia’s Anti-Growth Strategy (10 minutes)
J. B. MacKinnon
Patagonia. Rapidly growing niche outdoor apparel company, or transformative business model rooted in corporate activism and deeply held environmental values?
Patagonia is a company I often point to as an exception to the rules. It is a privately held company, though it’s been a B Corp since 2012, and it regularly does things that seem counter to its business goals: ad campaigns like “Don’t Buy This Jacket,” repair facilities, and more make it seem like it’s really trying to challenge the need to always sell more, the growth imperative built into capitalism. On the other hand, as exhibited by the plethora of business school case studies that focus on Patagonia, those marketing campaigns are good for business: they drive sales growth. In this piece, MacKinnon explores this paradox with a healthy dose of skepticism. Is their growth “good growth,” or is it actually anathema to the values they purport to hold (which include a distaste for economic growth)?
I think much of what Patagonia has done over the last five years (since this article was written) has demonstrated that whether or not their growth is “good growth,” they are still a revolutionary example. Schendler chastised business sustainability for being focused on corporate footprints and failing to look at bigger structural issues; Patagonia is active in those issues, accurately self-branded as “The Activist Company.” Is this activism good for their business? Yes, it largely seems like it has been, but at the same time, much of it is geared towards driving necessary and transformative changes in our society. The B Corp legal designation is itself transformative, but it doesn’t fully explain Patagonia’s journey, especially given the designation’s relative recency, so we’re left with two big questions: is Patagonia really an exception to the rule, and if yes, how can it be replicated?
You can peruse some of Patagonia’s more recent work in their Annual Benefit Corporation Report.
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