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Profit in need? Business and sustainable development
Nick Robins
SETTING THE COMPASS
Ours is a bewildering age. General Motors, one of the world's largest makers of automobiles – by far the most environmentally damaging and lethal of mass consumer products – is now signed up to the landmark CERES principles of environmentally responsible behaviour, and pledged to the pursuit of sustainable mobility. Royal Dutch Shell and BP, who provide much of the gasoline that powers the car –and together generate climate-changing emissions from their facilities and products equal to those from a large European nation – have also won plaudits for their commitment to sustainable development and renewable energy. The mining industry that processes so much of the materials for the car and carries such a painful legacy of human and environmental exploitation – from colonial Latin America through apartheid Africa to the present day – has commissioned IIED to broker a process of analysis and dialogue to show how the sector can be placed on a sustainable trajectory.
Is this all spin or do these steps show business really moving towards a more sustainable future? Certainly, when IIED was founded 30 years ago, many of the actions that these and other companies are now taking to reduce their environmental burden, become more accountable and deliver positive social benefits, would have been inconceivable. Even today it is often difficult to comprehend what the array of corporate activities – from charitable gestures through independent social audits to new sustainable services – cumulatively signify. This is not simply a problem of measuring impact, but one of fundamental meaning. For the economic, technological and social foundations on which sustainable development has been built up over the past three decades – and thus the role that the private sector should play in its achievement – have been shaken to their core. The Brundtland report of 1987 and the Earth Summit (of 1992) it inspired, essentially saw the state as the primary agent for achieving sustainable development, just as the wave of privatization, deregulation and fiscal retrenchment in both North and South, was overturning these assumptions. Globalization was not mentioned once in the texts of the Earth Summit agreements; Agenda 21 remains the longest unused shopping list in history.
As a result, many within the sustainable development establishment held decidedly naive views about business as the 1990s began, underestimating both its growing dominance and also its inherent weaknesses. Furthermore, the emergence of the knowledge economy and the consequent rise of service sectors such as finance and retail, meant that the equation of business with industry in discussions of sustainable development was increasingly anachronistic. Significantly, this shift from ‘bulk to bytes’ also meant that the inextricable link between growing output and environmental degradation could be broken, with spectacular results in some cases. That consumption was becoming steadily more resource-intensive at the same time was an unwelcome reality that most policy-makers and corporations chose to ignore.
Globally, the information revolution both enabled new areas of the South to benefit from trade liberalization and business outsourcing, while further marginalizing countries and continents dependent on commodities and unskilled labour. The rise of civil society, in part a result of a global process of democratization and in part a response to the inadequacies of both the market and the state to meet social and environmental needs, also challenged the managerialism that dominated so much of first-generation sustainable development. All in all, the apparent consensus reached at the Earth Summit masked a crunching of gears. The old statist approach was certainly passing away, and the UN Centre for Transnational Corporations, the archetypal institution of the fading ‘New International Economic Order’, was closed soon afterwards. A new win-win creed of eco-efficiency was born within the corporate elite, while environmental groups railed against ‘greenwash’ and the corporate co-option of the summit.
Ten years on, the world is perhaps wiser, though still more than a little confused on how business can be a positive force for environmental regeneration, social justice and quality of life. Despite the frequently cited success stories, scepticism remains the norm. Within business itself, many companies continue to exist in a state of denial-unaware, evasive or openly hostile to the changes that sustainable development requires. This situation should shock no one. Business is hardwired to generate profits for shareholders from satisfying consumer wants: it is simply not programmed to deliver the major public goods – clean water, social justice and accountable governance-that sustainable development implies. As Ray Anderson, the inspirational chief executive of US flooring company Interface, wrote in his eco-biography Mid-Course Correction in 1998, ‘I am a plunderer of the earth and a legal thief [and] perverse tax laws, by failing to correct the errant market, are my accomplices’.1
The past decade has shown that companies do have a broad scope for introducing voluntary pro-sustainability actions – especially when prodded by investors, consumers and citizens. But the scope of their contribution ultimately depends on the prevailing frameworks for institutional behaviour and ethical action: global poverty and environmental unsustainability are system faults – and system solutions are what are needed. The world has learnt the hard way, however, that governments frequently do not have the skills, desire or ability to put these frameworks in place – often, of course, after heavy petting from the more Neanderthal reaches of the corporate sector. Getting progress thus means redefining anew the boundaries of responsibility for the state, the corporation and the citizen.
In society at large, the dissonance between the expanding rhetoric of ‘corporate citizenship’, accelerating environmental decline and widening global inequality, has become ever more noticeable. The resulting trust deficit has led both to a crisis for the gradualist gospel of sustainable development – based largely it seems on faith in voluntary business programmes – and a profound intellectual backlash against corporate globalization. Increasingly, it is no longer enough for companies simply to improve their performance on social and environmental matters. The issue is now corporate power and the structural place that business plays in the new global economy. The resistance to genetically modified organisms, for example, is as much driven by opposition to private sector dominance over biological resources as it is by precautionary concerns about potential health effects and ecological disruption. More broadly, the extension of the corporations’ intellectual property rights through the World Trade Organization's TRIPS agreement is widely recognized as facilitating both the theft of biological knowledge from indigenous communities, and the removal of access to essential medicines for some of the world's poorest countries. From this underlying critique has come the protest movement that shook the bureaucratic niceties of global negotiations on trade, finance and the environment at Seattle, Prague and Genoa, forcing an increasingly public questioning of global capitalism and the role of business in the 21st century.
For a new generation of environmentalists and development practitioners, this wider corporate questioning has opened the space for new forms of social innovation, combining market dynamics with accountability and oversight. Particularly for those corporations where brand value constitutes a high proportion of their overall assets –Nestle, Nike, McDonald's, Shell – exposure of poor practices along the value chain can catalyse action to preserve reputation and consumer loyalty. In the first age of globalization during the 19th and 20th centuries, it was trade unions and their allies that led the way in seeking to regulate business access to employees and thereby humanize the workplace. In our own era, non-governmental organizations are emerging as crucial social gatekeepers, seeking to control corporate access to consumers and thereby produce a responsible marketplace.
Whether it is child labour or sustainable forestry, consumer campaigns, often using labelling and certification, have worked with the grain of the market and stimulated action of a speed and scale that would be unthinkable through traditional state regulation – often with troubling side effects. Out of these initiatives and a new appreciation of the dynamics of the post-industrial economy is emerging an embryonic ‘business case’ for corporate responsibility – with ethical investors at the vanguard. Anecdotes and analysis suggest that action that aligns corporations with the values and needs of their communities they affect reduces risks, improves efficiencies, stimulates new innovations and builds resilience. The question is now whether these initiatives are prefiguring new regimes for governing global corporations – or just trimming the excesses of the status quo.
If one were to look for signs of hope in the evidence of 1990s, the evidence would yield the growing numbers of corporate codes, management systems and programmes. But just like governments with their Local Agenda 21s, national policies and sustainability strategies, these preparative efforts have yet to result in a substantive shift in social and environmental outcomes. The array of creative market innovations is simply not breaking through the remorseless global trends that are leading, for example, towards further climatic disruption or intensified impoverishment in sub-Saharan Africa. While there can be undoubted enthusiasm about specific initiatives, the long-term prospects for the shift to sustainable patterns of production and consumption looks bleak: an outlook, perhaps, of tactical optimism and strategic despair. Any change in this picture is going to involve a rethink of business as a social, political and economic force. This poses special challenges for IIED as the Institute enters its early middle age with a growing body of experience at the tactical level of corporate change. To respond to the coming disjuncture facing the corporate sector if the world starts to get serious about sustainability, IIED's business agenda will need to become more strategically focused on how to reshape the corporation for a very different world.
THE WOOING OF BUSINESS
Like many working in this arena over the past three decades, IIED's efforts to understand, advise and ultimately to influence business have often been hesitant and exploratory – necessarily making it up as it goes. From the outset, its founders and early business benefactors viewed IIED as a centre-ground institution: a place to challenge the extremes of conservationist thinking by taking a wider perspective on the imperative for global economic development. This positioning certainly opened up an important arena for independent analysis and debate. But it also left the Institute potentially vulnerable to charges from NGOs that it had ‘sold out’ to the corporate elite, and from companies that it was no more than a ‘fifth column’ for radical environmental and social demands – charges that would echo down the years. Yet, despite the sometimes significant financial donations from companies, the Institute's increasingly aid-focused programmes meant that it was not until the preparations for the Earth Summit that IIED began to grapple seriously with the corporate agenda.
The prompt came from a newly established business group that needed help to prepare its submission to Rio. As far-sighted leaders in the corporate world started to recognize that the groundswell behind sustainable development meant more than just additional pollution control devices, so they sought out a vehicle that could help craft a message both to inspire business to act in more sustainable ways in its own enlightened self-interest, and also help to deflect demands for new regulation and taxes. Encouraged by UNCED secretary-general (and IIED founder) Maurice Strong, the Business Council for Sustainable Development was formed to take on the task. Led by the charismatic Swiss billionaire, Stephan Schmidheiny, who had recently divested the family firm of its asbestos holdings, the BCSD aimed to break with the defensive traditions of the International Chamber of Commerce, the traditional lobby vehicle of global corporations. Established as a leadership group, the BCSD consisted of chief executives from 50 major multinationals – many of whom would be attacked at Rio by Greenpeace and others as some of the world's largest polluters. Connections and clout it had in abundance, but what the BCSD didn't have was content.
Looking back, it is sobering to reflect how few organizations there were only a decade ago that had a mature understanding of sustainable development, and IIED was clearly one of this handful. So in late 1990, IIED was commissioned to prepare a background document, setting out an agenda for the BCSD. So successful was this that IIED was even asked to write the Council's report to Rio. A ‘palace coup’, with the BCSD opposed to the idea of an NGO being so centrally involved, cut this short. But IIED's input into what became Changing Course2 would remain central, if unacknowledged. Richard Sandbrook's strategic input was critical for driving the Council to address the agenda of Third World poverty that business had hitherto been uneasy discussing except in terms of corporate philanthropy. Lloyd Timberlake, with his background on the Brundtland secretariat and the Only One Earth series, ended up ghost-writing the final version when the coup plotters in the secretariat proved unable to deliver a coherent text. I prepared the report's case studies and its chapter on innovation, strategically quoting the then Du Pont chairman Edgar Woolard whose words held a potential probably unrealized by the speaker: ‘in a sustainable economy world needs rather than existing product portfolios will determine which businesses we enter and which we leave’.
On reflection, this input from IIED could be one of the factors that explains much of the novelty of the Changing Course message. The report made clear that reaching sustainable development would require ‘far-reaching shifts in corporate attitudes and new ways of doing business’, including the assumption of greater corporate responsibilities to match new-won rights in the deregulating and privatizing global economy. The book also found a rare honesty that markets must ‘give the right signals’, with environmental costs reflected in the prices of goods and services. Beneath these and other signs of fresh thinking, the old verities of multinational business remained: open markets, free trade and economic growth – and it was, of course, around these that the growing movement to challenge corporate globalization focused, as it became clear that elegant exhortation was never going to guarantee responsible practice or get the prices right.
There was nothing hidden about IIED's next venture among the business tribe. Talking with Erling Lorentzen, a BCSD member and head of Brazilian papermaker Aracruz at the Earth Summit, Richard Sandbrook threw down the gauntlet: vision statements like Changing Course were important, but it was only through detailed sector assessments that the real opportunities, dilemmas and trade-offs inherent in sustainable development would be appreciated. With his company port blockaded by Greenpeace activists for a variety of alleged environmental and human rights abuses, and his key European markets increasingly affected by demands for increased recycled paper content, Lorentzen soon responded and rallied the world's paper industry behind the ‘sustainable paper cycle project’. Essentially an exercise in strategic dialogue and analysis, the project broke new ground as the world's first ‘full cycle global multi-stakeholder’ study, assessing the social, economic and environmental issues from forest management through production to use and disposal.3
The project was always very much a study, with contact and consultation with companies, NGOs and governments focused on trying to enlighten the many areas of considerable disagreement –clear-cutting tropical forests, chlorine bleaching, insufficient recycling and waste – through detached analysis. Although many non-business voices were involved to ensure the independence of the results, the exercise was ultimately driven by the needs of the paper industry, which contributed the bulk of the project's funding. IIED buffered itself from charges of co-option by establishing an arms-length advisory group made up of experts from government, academia and industry, and ensuring that it had full rights to publish regardless of its sponsors’ views. At the time, these conditions were as far as business would go – any further involvement (particularly of its more vocal critics in civil society) was anathema. But the narrowness of its governance base meant that there was little buy-in to the study's final results and much suspicion beside. The paper industry's own fragmentation and inability to organize globally – unlike the chemical sector – also meant that proposals for collective business initiatives fell on stony ground.
But these criticisms – easy with hindsight – should not obscure the achievements. A whole series of popular myths were busted –notably that fibre from tropical forests was a significant raw material for paper in the North. Truly innovative research from the University of East Anglia also exploded one of the industry's favourite claims that the paper cycle was carbon-neutral, pointing to methane leaching from landfills as a major greenhouse negative. Steve Bass's far-reaching work also helped to defuse some of the industry's initial unfounded hysteria against forest certification, a movement rising fast on the back of successful consumer campaigns against old-growth logging. By the end of the process, leaders of well-managed forest companies realized the obvious: certification would simply verify that they were well-managed.
Apart from the process lessons that the project would deliver for the governance of the subsequent mining, minerals and sustainable development initiative, the paper project also highlighted a range of sustainability dilemmas – icebergs that stand in the way of real progress across the development spectrum. Thus, how could the asset-stripping of forest resources be tamed in a world of open markets? How to challenge the apparently unstoppable technological trajectory for ever-larger, cleaner and jobless paper plants that were wholly inappropriate for the economic and livelihood needs of developing countries? But perhaps the largest and most immoveable of these icebergs was industry's deep reliance on the continuing growth in paper consumption as a source of rising profits. While many in the industry would grumble and groan, but eventually accept forest certification and zero chlorine bleaching, there was no room for considering ‘communist’ suggestions that paper itself should be used more efficiently and become more targeted at issues of real need. Out of the window went fashionable ideas of companies thriving by shifting from products to services, and focusing on customers’ real needs rather than just selling more stuff.
The paper project generated a new profile for IIED as a serious player in the fast-expanding world of initiatives around business, corporate responsibility and sustainable development. Just as important, it also legitimized a whole series of initiatives within IIED tackling parts of this vast agenda. Work on forests was always furthest ahead, building on the paper project and its pioneering certification work to explore new areas such as how corporate-community partnerships could be made to work for the livelihoods of the poor, and how the tide of deregulation in forest policy could be tailored to support sustainable practices. Another issue of potentially immense leverage was to explore the design of new market frameworks that would encourage users to pay for the variety of non-market environmental services that forests provide (such as watershed protection). Research into the practical application of economic instruments was an equally important theme during the 1990s – taking cost-internalization out of academe and into industrial estates. In India, collaboration with the Confederation of Indian Industry and Tata Steel was the first project to model the impact of pollution charges on producers that involved business as a key stakeholder throughout the process.
For all its innovative analysis on business practice and market frameworks in the South, IIED was late to appreciate the seismic rumblings challenging the fundamentals of corporate globalization, which first became crystallized in David Korten's When Corporations Rule the World.4 Strangely for an international policy institute focused on environment and development, IIED had played no part in the formation of the World Trade Organization (WTO), which provided the global constitution for the growth of corporate rights, not just in the obvious areas of trade, investment and intellectual property, but also indirectly, over environment and development policies. The scope for corporate enrichment was highlighted in the scandalous case brought by the USA against the EU's banana-import regime. Ramshackle and costly the regime certainly was, but it enabled a certain reciprocity between Europe and its former colonies in the Caribbean, highly dependent on the banana trade. Though the USA did not export a single banana to Europe, the chief executive of one of America's leading banana companies had contributed to President Clinton's election expenses, and so the muscle of the US trade negotiator was successfully deployed on behalf of this very private interest.
Against this backdrop, it was almost by accident that IIED started work on the implications of the trade and environment agenda for businesses in both North and South. In the run-up to the five-year review of the Earth Summit, IIED was invited by the secretariat of the UN's Commission for Sustainable Development to explore the scope for new trade opportunities for developing-country exporters of fairly traded and sustainable goods and services – essentially trying to discover whether there were any ‘lollipops’ for the South in the linkage between trade and sustainability. This was a time of great mistrust and suspicion. With bitter experience of the ability of the industrialized countries to manipulate trade rules to their advantage, the governments of the South were deeply opposed to any attempt to attach environmental or social conditions to their exports, seeing this as a new form of ‘green protectionism’. Northern governments countered with essentially disingenuous claims about the potential win-win benefits of trade liberalization for environmental protection and social welfare, failing to recognize how the concentration of market power in the hands of Northern multinationals meant that very little value added returned to the South from its increasing export activities. The WTO had been the first major test for states to be true to their commitment to integrating environmental and social dimensions into economic policy-making, and the assembled governments of the world failed miserably.
This policy stalemate prompted a wave of independent initiatives that sought to introduce some degree of ‘civil regulation’ to the global marketplace. IIED tried to capture a flavour of these, countering the prevailing denigration of developing-country production standards by profiling pioneering entrepreneurs and communities, and so adding a range of new Southern case studies to the business and sustainability resource. The resulting report, Unlocking Trade Opportunities,5 offered a fresh perspective – pointing to areas of new economic potential for the South, but also highlighting the structural conditions in terms of capacity building and market regulation that would enable these to materialize. Not only was the report one of the few bright spots at the generally dismal Rio+5 summit – no doubt helped along by free gifts of organic cotton T-shirts donated by Patagonia – but it also stimulated a new agenda for promoting sustainable patterns of trade. Careful work with producers on the ground has generated a powerful reform agenda and proposals for a Sustainable Trade Centre to support an equitable ‘co-evolution’ of standards along international supply chains.
THE GREAT TRANSFORMATION
The fundamental place of business in a sustainable world is once again under the spotlight. The 1990s have demonstrated the capacity of business for generating innovative solutions, deploying human and technological resources to produce new partnerships and technologies. But this decade of experimentation has clearly not created the conditions for ‘take-off’ – the irreversible shift of private-sector activities so that they are driven by world needs, respect ecological limits, and are accountable to the communities they affect. IIED now has one of the more creative portfolios of private-sector initiatives –tackling the special challenges facing sectors such as agriculture, mining, forestry and tourism, and expanding the policy and management toolbox to include corporate-community partnerships and new markets for environmental services. Increasingly, the Institute is extending its scope from its primary focus in the developing world to global linkages along international supply chains and the changes required in the North itself.
The nature of the task for the years ahead is of a different kind –to help set the agenda for the transformation of business, as both economic actor and social force. As with the imperial globalization of the late 19th and early 20th centuries, so today's corporate globalization has ushered in a ‘great transformation’ of economic and social structures. What links these two very different eras of globalization is the unifying faith in the self-regulating market. Writing in London in the depths of World War II, the Austrian émigré Karl Polanyi traced the origins of the war to the crumbling of the pillars – notably, the balance-of-power system, free trade, the liberal state and the gold standard – that had supported the era of imperial globalization.6 Polanyi's insight was to recognize that the self-adjusting market was a ‘stark utopia’, which could not exist for any length of time ‘without annihilating the human and natural substance of society’.7 In our own age, the movement for sustainable development is now confronting the same reality: that the global economy is simply not structured to deliver equity or the regeneration of the natural resource base, to ensure the accountability of market actors or the diversity of cultures.
As the capitalist euphoria of the early 1990s fades, as financial crisis extends from the ‘emerging economies’ of Asia and Latin America to the heartlands of Japan and the USA, and as public debate moves from demands for remedial adjustments to a deeper questioning of global capitalism, so the role for think-tanks such as IIED changes too. Taking a proactive stance does not come easily to many Anglo-Saxon think-tanks which see their independence as being equivalent to a position of neutrality between the contesting forces shaping the sustainable development agenda. Such coyness does not affect other organizations, such as Germany's Wuppertal Institut, which has maintained its integrity, but also driven the policy and business agenda – notably around the need for reductions in material use. For IIED, rethinking the fundamental unit of business – the corporation, and its institutional structures and dynamics – would be a creative place to start.
For, despite the mounting body of experience and analysis on the role of business in sustainable development, the capacity of the modern corporation to exist in its present form in a sustainable world has invariably been overlooked. So far, the sustainability movement has only scratched the surface of corporate change, focusing mostly on modifying particular practices, for example, through health and safety or environmental legislation. But beyond this, there are a further five dimensions along which the corporation may need to change to contribute fully to sustainable development: technology, governance, ownership, scale and purpose. These are briefly discussed below.
The sustainability imperative points to a number of areas where the use of core technologies will need to be radically reduced or phased out if ecological limits and equity are to be respected. Nuclear power, fossil energy generation and genetic modification are the three technologies most in the spotlight. To take an example, considerable pressure is now being placed on oil companies to shift towards renewable sources of energy. But as much as companies such as BP and Shell are doing to invest in new sources of energy, the shift away from fossil fuels is a collective endeavour that individual corporations on their own cannot achieve. For established but ecologically obsolete technologies, the challenge is therefore to organize a managed shift –perhaps learning from the experience with the post-Cold-War defence sector – to ensure that changes are used to inspire a positive boost for employment and dependent communities. Here IIED could collaborate with those sections of the labour movement representing workers in vulnerable sectors that have been developing strategies for a ‘just transition’. For emerging technologies, the task is essentially preventive, encouraging governments to re-establish a capacity for foresight and technology assessment, but, unlike the corporatist efforts of the past, to integrate societal perspectives at the heart of the process, for example, through citizen juries.
Environmental and social pressure has brought much innovation to corporate governance in recent years. Companies have set up a range of formal and informal ‘stakeholder dialogues’; a few have even appointed individuals with environmental or social expertise to the board of directors. But the exclusive rights of company directors to decide how sustainability should be managed within the firm remain essentially untouched. Again, there is much to learn from efforts to civilize the corporation in the wake of the first era of globalization –the two-tier management boards in German companies, for example – and how these might be adapted to recognize the interests of stakeholders in an ecological and social market economy. Although so far yielding little from a sustainability perspective, the UK's recent review of company law has shown that many of the answers to corporate responsibility lie in the hidden wiring of the corporation. The exclusive focus of companies on profit maximization on behalf of their shareholders is a related area that requires reassessment. Profit is a necessary goal to generate surplus for re-investment and to reward productivity gains. But sustainable development implies an expanded set of corporate objectives. Many companies are already finding that they need to express this extended mandate through individual mission statements: the task for a policy institute is to establish whether these individual codes of good intent need to be formalized through law and regulation.
In the first era of globalization, public ownership became a key lever for governments to regain control over strategic industries and unaccountable multinational corporations. Central to the new globalization has been the rejection of state property and the promotion of privatization as a critical lever for economic development. Public ownership certainly had many faults – most notably soft budget constraints, political interference and poor customer service. But that does not mean that the question of corporate ownership is now irrelevant for the sustainable development agenda. Experience with privatized utilities across the world suggests that while state ownership has its problems, so does private ownership.
In key areas of collective infrastructure – such as energy, transport and water – new corporate models are required that reflect the value of inherent public goods and social interests. In transport, Australia presents an interesting model, where ownership of the infrastructure remains in public hands, and the state leases its management and the operation of trains to private contractors – a model which the UK could learn from in the wake of the disastrous performance of Railtrack. For water and sanitation, inspiration can be found in Wales, where the privatized Welsh Water has been bought from its US owner by Glas Cymru, an independent, not-for-profit company, accountable to 50 members representing its stakeholders and financed by bonds not equity. As protests grow against the excesses of privatization, great scope exists for institutes such as IIED to contribute to this new generation of mutual ownership.
The issue of scale has long been dear to the ‘green’ movement, lying at the heart of Fritz Schumacher's manifesto against corporate gigantism, Small is Beautiful. But a critical view of the political, economic and social consequences of corporate concentration is also essential for an effective and responsive marketplace. One of the deepest frustrations with the impoverished economic theory supporting today's corporate globalization is the assumption of perfect competition at a time when market opening and privatization is leading to ever-greater agglomerations of corporate power. Assertive anti-trust policy was an essential ingredient in the taming of the corporate ‘robber barons’ during early 20th-century America, and the absence of a global trust-busting agency is one of the biggest holes in today's international institutional architecture. Without this, cocoa farmers will remain at the mercy of multi national traders and processors who retain the bulk of value-added and ensure that the assumed tendency to market equilibrium is distorted. Without effective competition, the negotiating position for developing countries in the face of rival multi national companies, for example, seeking access to oil, gas or minerals, will continue to decline, and with it the ability of their societies to benefit from the use of natural capital. As IIED identified for the paper industry, the current acceptance of increasing economies of scale generates a technological dynamic that ensures little effort is dedicated to developing decentralized production processes that could utilize the developing world's huge labour resources.
Yet for today's consumer capitalism, the sustainability agenda means more than simply restructuring institutional frameworks – it also demands a reassessment of fundamental corporate purpose. Making profit just one of a number of indicators of success is clearly important. But the wider challenge is to recognize the power of business as a social force – not just in terms of creating livelihoods, but shaping lifestyles also. For many on the development end of the sustainability spectrum, questioning the excesses of consumption has often appeared a relatively frivolous exercise compared with the urgent task of eliminating poverty. Globalization has changed all this, with the creation of increasingly common aspirations for material advancement throughout the world, stimulated by the spread of television and advertising. But it is blindingly obvious that these legitimate desires for a better life cannot be met at the current levels of resource use achieved in the post-industrial North: nine more worlds would be required.
Business does not just generate goods and services for sale – it also manufactures the dreams and desires that underpin them. Study after study shows that there is no consistent relationship between national or individual consumption levels and happiness – and yet business strategy remains fixated on encouraging consumers to spend ever more. It is therefore no surprise that corporate branding (remember: a term derived from singeing cattle flesh to mark ownership) has been at the forefront of recent consumer campaigns against the occupation of people's minds by commercial fantasies. Yet, for business, like government, questioning the ethical or environmental basis of consumption is simply not on the agenda – not ‘up for negotiation’ in the words of George Bush senior at Rio a decade ago. The ‘grand dialogue’ that philosopher Amitai Etizioni has called for on the links between affluence, social justice and personal fulfillment has yet to begin.
Here, the capacity of business for social innovation needs to be deployed to a different purpose than perpetuating the cycle of work and spend. Opportunities for green and ethical consumerism certainly exist, but remain limited by awareness and entitlements to a narrow elite. The real zone for business to exert its creativity is in the generation of new lifestyles that rebalance the private, social and public spheres of consumption, curb the excesses of over-consumption among the global middle-class, and transform the material basis of consumption through far greater resource efficiencies. For IIED, this agenda would imply working more in its own backyard to generate a ‘popular case’ for sustainable development – and the new ‘Race to the Top’ project to benchmark the performance of Britain's supermarkets as a way of encouraging consumers to choose those supporting sustainable agriculture and rural livelihoods is a potent example of this. Similar work is also vitally important to generate aspirational ‘low-carbon lifestyles’ to curb the growth in greenhouse gases from private consumption.
By the time IIED collects its ethically invested pension in 2031, these and other transformations yet to be conceived will need to have taken place if we are to have some hope of doing what is so frustratingly possible, yet tantalizingly far away: create an economic culture that rewards enterprise in the service of people and planet, and which earns a modest profit from the needs of current generations and those yet to come.
REFERENCES
1The second edition (Donnelly, A, DB Dalal-Clayton and R Hughes (1998) A Directory of Impact Assessment Guidelines, IIED, London) contains over 800 bibliographic references and abstracts for more than 90 countries and 45 agencies. Also included are country status reports summarizing the legislative and administrative context within which the guidelines operate, and introductory chapters addressing areas of particular interest and current debate.
2Anderson, Ray (1998) Mid-Course Correction, The Peregrinzilla Press,Atlanta.
3Schmidheiny, Stephan / BCSD (1992) Changing Course, MIT Press, Cambridge.
4IIED (Maryanne Grieg-Gran et al) (1996) Towards a Sustainable Paper Cycle, IIED, London.
5Korten, David (1996) When Corporations Rule the World, Earthscan, London.
6Robins, Nick and Sarah Roberts (1997) Unlocking Trade Opportunities, IIED, London.
7Polanyi, Karl (1945) The Origins of Our Time, Gollancz.