CORPORATE SUSTAINABILITY (ENCYCLOPEDIA)
1. Origin of the concept of Sustainability
The concept of sustainability has recently appeared in the international academic debate. This concept, taken from the studies on environmental ethics and ecology, is more and more often associated to business, drawing the attention to the impact of economic activities on the planet’s natural resources.
The term sustainability derives from the verb “to sustain”, that is “to maintain”, “to endure” (Bologna 2008). In ecology, the concept of sustainability was born in order to put a stop to the policies of economic development, which were adopted above all in more industrialized countries during the last century. In this perspective, the first supporters of “sustainable development” had the objective of fixing some limitations to socio-economic development with reference to the planet’s ecological balances.
The concept of sustainable development emerged during the conference of the United Nations that was held in Stockholm in 1972 regarding human environment, with the aim of offering mediation between economic development and environmental protection (Bologna 2008).
However, one of the first definitions of sustainable development was formulated some years later in a document, entitled World conservation strategy for the living natural resources for a sustainable development, written by IUCN (International Union for Conservation of Nature), UNEP (United Nations Environment Program) and WWF (World Wide Fund for Nature). In this document, development is described as sustainable if it considers the social and environmental effects, apart from the purely economic ones, of the existing resources and if it analyses the advantages and disadvantages of such a debate in a perspective of long as well as short duration (IUCN, ET AL. 1980) 1.
Nevertheless, the most widely quoted definition of sustainability is that of the World Commission on Environment and Development, better known as Brundtland Commission (from the surname of the Norwegian prime minister, also president of the Commission). In the introduction to the report of the Commission, “sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (quoted in Bologna 2008).
Numerous conferences of the United Nations, starting from the Nineties, have contributed to clarify and develop the notion of sustainability. Among all these conferences, we can remember the Conference of Rio on Environment and Development in 1992, the 2000 Millennium Summit, the World Summit on Sustainable Development of Johannesburg in 2002 and the 2005 World Summit of the United Nations.
The notion of sustainability has become the subject of numerous studies in the sphere of social and economic sciences thanks to the impulse given by the United Nations. In this literature, in addition to the aspect linked to eco-efficiency, it is possible to notice a growing consent around the notion of sustainable development that contains elements of economic efficiency and social equity. In this perspective, sustainable development implies the achievement of a quality of life that can be kept for various generations since it is fair from a social point of view, efficient in economic terms and sustainable from an environmental point of view.
2. Sustainability and economic development
In the last few years, in parallel with international developments, a vast literature about the relation between ecology and economic development has emerged. In particular, scholars’ attention has concentrated on two areas of application: international economy and the firm.
As regards international economy, a new area of business ethics has developed, which discusses the relations between economic growth, social justice and environmental impact on a global scale 2. In this perspective, a relevant contribution was offered by Wolfgang Sachs who, with reference to the definition of sustainability given by the Brundtland Commission, explains that the essence of sustainability lies in the “particular relation” that exists between people rather than between people and nature. According to the German scholar, this notion represents the basis for a new ethical approach, which extends the equity principle to human community in a temporal perspective which regards the present as well as the future (Sachs 2001, 2001 a). This approach has peculiar implications on the differences which exist between the countries of the North and of the South of the world: indeed, the imperative of social justice on a global scale cannot underrate the impact that economic development has on the environment and, therefore, on the living conditions of future generations. In this perspective, with reference to the challenges set by global pollution, Sachs asserts that justice has to be meant as something which enables both present and future generations to have an equal right on the heritage of the world’s natural resources.
In this perspective, industrialized countries are asked to work on a structural change of their economy, so that they can enable the other countries “not to be deprived of the resources they are entitled to use” (Sachs 2001, p.126).
A further position in this direction is offered by the scholars of the biophysical approach, who bring the idea of prosperity back to an ecological perspective, capable of including both economic and human development (Adolphson 2004).
With reference to international trade, this approach radically changes the perspective of the exchange which, in opposition to the classical economic orientation based on the idea of the mutual benefit of the exchanges, takes into account nature’s free work of the natural resources invested in production. For this reason, the biophysical theory does not consider as equal the exchanges which take place between industrialized and underdeveloped countries, since the latter sell raw materials whose nature’s free work is not calculated in the exchange (Adolphson 2004).
In addition to international prosperity, a relevant side of literature brought the concept of sustainability back to the firm and its activities. Firms, and especially multinationals, are the engine of the world economy, but they are also responsible for global pollution; this means that it is useless to talk about sustainable development without underlining the firm’s role (Shirivastava 1995). Starting from this idea, some authors have put the CSR approach side by side with “corporate sustainability” with the aim of including in the notion of corporate social responsibility some kind of attention towards ecology. The following section is a description of this approach and it analyses the way in which this approach combines with the traditional stakeholder approach.
3. Corporate Sustainability
The idea of corporate sustainability (CS) emerged in the literature on business ethics in the middle of the Nineties as a consequence of the idea that the investigation on sustainable development should involve firms too.
However, since the very first studies on this subject, scholars started to define the terms and ways to introduce the concept of sustainability into the analysis on the firm. In 1995, a group of authors faced this problem by trying to introduce the ecological perspective into business dynamics. To this end, Starik and Rands suggested a “multilevel or multisystem” approach, capable of including ecological, cultural, political, economic, organisational and individual elements and they highlighted the characteristics of ecologically sustainable organisations with reference to each level (Starik and Rands 1995).
Shrivastava, on the contrary, linked the four aspects of sustainable development (population control, food security, management of natural resources and creation of sustainable economies) to four typical mechanisms of the firm (quality of business management, competitive sustainable strategies, transfer of technologies and control of the impact on the population). In this scheme, ecological aspects are predominant for the firm, more than the other factors such as food security and population control (Shirivastava 1995).
During the same period, other authors focused their attention on the importance of social aspects, which are implicit in the pattern of sustainable development (Schaefer 2004). In this perspective, Galdwin et al. defined sustainability as that process which enables the firm to reach a social development based on “inclusion, connection, equity, cautiousness and security” (Galdwin et al. 1995, p.878). In this definition, sustainability’s social aspects are clearly summed up in the first three elements: inclusion, which involves the possibility of growth for everyone; connection, which indicates the interdependence of the three spheres: economic, ecological and social; and finally equity, which refers to the inter and intra-generational perspective (Galdwin et al. 1995).
Further studies contributed to clarify and develop the notion of CS. In literature, it is possible to see a growing consent about a notion of CS based on an idea of firm’s management which is able to embody three dimensions, the economic, the social and the environmental one (Steurer et al. 2005). The main idea is that the three pillars (economic, social and ecological) are linked one to the other so as to mutually influence themselves.
Figure 1: Three dimensions of CS
However, the relation existing between these three columns is still the object of discussion. In a study of 2002, Dyllick and Hockerts offered a theoretical perspective that could guarantee a sustainable balance between the three firm’s dimensions. In general, a great deal of studies on corporate sustainability focused on the so-called Business Case for sustainable development, which puts the economic dimension at the centre of the relation.
The main focus of such investigations is the concept of efficiency. Eco-efficiency is a concept widely used in CS and it implies the efficient use of natural capital by a firm. In terms of calculation, eco-efficiency introduces a relation between the wealth generated by the firm and its aggregated ecological impact 3.
Starting from the concept of eco-efficiency, the notion of socio-efficiency has emerged in recent years. It describes, in a similar way, the relation between the wealth generated by the firm and its social impact. Therefore, a lot of studies focusing on the Business case bind economic sustainability to the social and ecological efficiency of the firm. However, according to Dyllick and Hockerts, these studies underestimate the importance and autonomy of the two other cases: the Natural Case and the Societal Case 4.
From the Business Case point of view, the concepts of eco-efficiency and ecological sufficiency are a priority as compared with the perspective based on efficiency, while in the business case the attention is turned towards socio-efficiency and ecological equity. The two European authors suggest a new theoretical hypothesis that reconstructs the three cases by recognizing six principles: eco-efficiency, socio-efficiency, eco-effectiveness, ecological equity and ecological sufficiency. The notion of effectiveness, in the ecologic as well as in the social field, overcomes the idea of efficiency in the sense that it takes into account the possible environmental or social impact of all the phases of the life history of the product. The principle of ecological sufficiency refers to the impacts relative to the choices of the population about the products. CS ought to consider the choices of the community in which it acts, coherently with the expected environmental impacts. Finally, the question of ecological equity introduces the theme of the equal distribution of natural capital and of the risks linked to consumerism and industrial production (Dyllick and Hockerts 2002).
3.1 Relation between Corporate Social Responsibility and Corporate Sustainability
The relation between CSR and CS is still a subject of debate in contemporary literature about business ethics.
While CSR focuses on the firm, the concept of sustainability introduces a wider stakeholder notion, which takes into account society as well as the communities that might be directly or indirectly involved in the firm’s activities as well as in those of stakeholders and future generations. In a survey of 2003, Marrewijjk identified three possible interpretations of the relation between CSR and CS. First of all, it was possible to consider CS as an evolution of CSR, that is to say, it introduced a notion of responsibility extended to society as a whole. In this perspective, Marrewijk referred to a group of scholars who focused on the reformulation of the concept of CSR in terms of Corporate Societal Accountability (CSA), where the two terms societal and accountability were aimed at introducing responsibility towards society as a whole.
The second interpretation introduced a hierarchical relation between CSR and CS. To this end, Marrewijk referred to the proposal of some researchers of the Helsinki University of Technology, who considered CS as a “finishing point of the route” which necessarily goes through CSR, considering it as an intermediate stage where firms learn to balance the three economic, social and ecological dimensions.
Figure 2: Profit/Planet/People: relation between CSR and CS (Source: Erasmus University, Wempe & Kaptein in Marrewijk 2003)
Finally, it was possible to consider CS and CSR as synonyms. In this perspective, while it is true that in literature, during the Nineties, there was a discrepancy between the surveys which focused on the ecological dimension and those focusing on the social one, nowadays, the two spheres are intimately related (Marrewijk 2003).
A further contribution to the debate relative to CSR and CS was offered in 2005 by a group of researchers of the Managing Sustainability Research Centre (MSRC) of Vienna. According to these scholars, the theory of CS can be seen as an evolution in a conceptual perspective of the stakeholder theory (Steurer et al 2005, p.267). In literature, it is possible to recognize at least three different perspectives related to the stakeholder theory: the firm’s perspective, the stakeholder perspective and the conceptual perspective. The latter, which is also the latest to be analysed, shifts the attention from the firm and stakeholders to a general and moral foundation, out of the firm itself. This perspective enables the scholars who adopt it to use the general principle of sustainability as a moral filter for the definition of the principles to be followed in the relations between stakeholders. In this sense, the concept of sustainability had a crucial role in the evolution of the stakeholder theory from a conceptual point of view (Steurer et al 2005).
1 It is necessary to note that in the Italian version of the document the term sustainable was translated with the formula “rational and enduring” (Bologna 2008, p.91-2).
2 With reference to this point, see also paragraph 3.3 Environmental ethics applied to business world at the entry Business ethics.
3 The concept of eco-efficiency was formulated for the first time by the World Business Council for Sustainable Development WBCSD in 2000.
4 To this end, it is interesting to note that the title of the article by Dyllick and Hockerts is Beyond the “Business Case for Corporate Sustainability”.
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Editor: Valentina GENTILE
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