edie's Sustainability Leadership month continues, and today it's Forum for the Future founder-director Jonathon Porritt's turn to pen an exclusive thought leadership opinion piece, offering an eye-opening insight into the future of corporate sustainability.
Disruption will come partly through the need to avoid runaway climate change, and partly through the increasingly urgent need to reinvent capitalism
Tracking back to the mid-1990s, the current model of corporate sustainability has proved to be remarkably resilient.
The constituent elements of that model are pretty well understood these days, with company strategies led by a ‘business-case rationale’ (rather than values-led), and based on integrated ESG approaches; there’s a strong emphasis on carbon, water and waste, but far less on biodiversity; a traditional balance between risk management (including reputational risk), and new business development; there are usually lots of warm words about consumers (though they usually result in very little traction), a broad acceptance of the need to be ahead (but not too far ahead) of relevant regulation, and a big investment in measuring and reporting.
Beyond that, one can detect today a growing enthusiasm for collaboration, both within and between sectors. And some commentators also point to a growing ‘business voice’ in global conferences and policy-making.
It’s difficult to assess the net beneficial impact of all that corporate activity over the last 20 years, and even harder to distinguish between that which would have happened anyway (because of regulation) and that which is genuinely ‘beyond compliance’. But on the whole, you’d have to say the world is a better place as a result of all that corporate sustainability activity.
But is that model any longer fit for purpose? A number of companies today highlight what they call their VUCA environment: volatile, uncertain, complex and ambiguous. I’d like to upgrade VUCA to VUCADD – and add ‘dramatically disrupted’.
That disruption story will come partly through the need to avoid runaway climate change, and partly through the increasingly urgent need to reinvent capitalism.
The climate disruption is now much better understood. More and more companies are committing to ‘science-based targets’, based on the need to restrict the average temperature increase by the end of the century to no more than 1.5C. And this one really couldn’t be simpler: either we do manage to do what’s needed to stay within that threshold (in which case our energy economy – and hence the economy at large – will be totally disrupted), or we don’t (in which case the lives of more and more people will be more and more disrupted by extreme climate shocks).
The reinvention of capitalism is rather less simple! But the recent ‘shocks’ to the political establishments in both Europe and the USA have led many to predict a period of intensive political turbulence, during which the hegemony of today’s dominant neo-liberal orthodoxy will be challenged more and more robustly. That may just sound naïve given that, in one of the cruellest political travesties of the modern age, huge numbers of the ‘left behind’ in both Europe and the USA have chosen to throw in their lot (for all sorts of reasons) with precisely that part of the political establishment that has prospered so obscenely at their expense. But such a surreal conflation cannot last very long.
There are significant implications in all of this for business leaders. The first generation of corporate sustainability operated more or less within the prevailing political and economic framework of the time. That left companies with a lot of room for manoeuvre, but there were clear limits beyond which they chose not to reach - on things like shareholder supremacy, for instance, fiduciary duties, going along with globalisation, hurdle rates for investments, outsourcing, executive remuneration, taxation and transfer pricing, the Living Wage, or even doing things because they’re the right thing to do – even if there isn’t an immediate business case to justify them.
Which means there have been very few CEOs or chairs of boards who’ve spoken out against the structural deficiencies in the current capitalist model. Which means, in turn, that those business leaders are now directly identified, through their silence and through their massively inflated salaries, with an inherently unfair and unsustainable system.
It seems reasonable to assume that the next generation of corporate sustainability will be fundamentally transformed by these two dramatically disruptive forces. And that has to be a good thing, with the world and so many of its people still in such pain and strife.
Jonathon Porritt is founder-director of not-for-profit sustainability organisation Forum for the Future, and an eminent writer, broadcaster and commentator on sustainable development
Source: http://www.edie.net/
