Is sustainable business selfish or altruistic?

Providers of ‘Green’ solutions can build momentum by focussing on the present and future economic benefits of sustainability when speaking with business people, but risk being disoriented by ‘Triple Bottom Line’ approaches that aim to shift the moral framework of business people. That’s the unwelcome conclusion I’ve come to after a conference for MBA graduates held at Ashridge, a top European business school which recent launched a masters in sustainability and has a long track record in social responsibility.

The discussions here have shown a stark tension between capitalism’s bottom line, in which profit is maximised within the framework of state regulation, and the desire for a altruistic vision of society, in which enterprises trade off profit for the good of society or of the biosphere. There are important lessons for corporate communicators who want to discover the most convincing tactics to persuade analysts, investors and customers to back their companies’ sustainability initiatives.

Dr Steve Seymour, a management accountant and director of the executive MBA programme at Ashridge, issued a sharp warning to the sustainability community. Businesses aim to maximise shareholder value by reducing their cost of capital and increasing their return on capital. Sustainability advocates should therefore help organisations cut costs and increase profitability. The bottom line seemed to be that Corporate Social Responsibility campaigns are most effective when they build momentum by aligning to pre-existing corporate philosophies. For example:

• Business want to cut costs, so spotlight opportunities to reduce waste.
• Companies want to build their brand equity, so focus on ways in which the marketing of sustainable initiatives can build price premiums with clients (and a lower cost of capital with investors who want to provide them with finance).
• Enterprises increasingly want to identify and mitigate present and future risks, so show businesses  how regulatory, reputational and business changes can be best anticipated.

Seymour is unconvinced of the universal ability of the public sector to most effectively deliver goods and services, as a result he feels that sustainability initiatives that reduce costs are in both the corporate and public interests. He hammered his point home unusually by screening in the conference room several clips from ‘The Corporation’, a documentary which contrasts the views of free market thinkers, including Peter Drucker and Milton Friedman, with those of their opponents.

In my opinion, most sustainability initiatives will most easily succeed by starting with the sort of approach outlined above. As a result, they boost shareholder value and, by making real differences, allow companies to reduce the risk and cost of regulation related to sustainability.

A quite different approach was illustrated by organisational consultants Chris Nichols and Alexandra Stubbings, both from Ashridge Consulting. In addition to long and successful track records of consulting to businesses concerned with sustainability, Nichols and Stubbings each direct educational programmes on the topic at Ashridge, in Sustainability and Responsibility and Business of Sustainability respectively.

Participants found themselves in a circle in the conference room, in which the windows had been blacked out and the tables pushed to the walls. The international group was invited to remove our shoes and socks and, while Nichols beat a tamour drum, we were asked to connect ourselves back to the world of nature. In the following candlelit lecture, the assembled MBAs were asked to re-vision the relative values placed on economic, social and environmental activities, with special thought to the animism of the Native American tribes. We were encouraged to use Gaia theory and other systems approaches to see the world as a living system in which capitalism is contained by, dependent on, and subordinate to natural resources and human needs.

Moving more concretely, Stubbings outlined ways in which sustainable thinking can learn from nature and unlock product innovations and other developments in businesses. We were asked to assess and discuss how sustainable and responsible our organisations were and to consider future options.

In three compact hours, Nichols and Stubbings were extraordinarily effective, in my opinion, in condensing and presenting the key learnings of their graduate programme in sustainability. However, I felt that they did not aim to convince their audience as a whole or to lead the audience from its expected starting point to a concrete, realisable, learning outcome for the group as a whole. Rather they aimed to challenge, stimulate discomfort and to generate thought; exploring issues rather than indicating conclusions.

Their basic approach builds on the strong principles of process consulting and will work powerfully for corporate clients who need to bring into their organisations a stimulus for inquiry and problem identification. However their consulting clients have, through self-selection, opted in to their approach and have explicitly chosen such an approach. In contrast to some other audiences, MBA graduates might be thought of as more profit-focussed, more acutely time-oriented and less happy about taking their socks off to the beat of the candlelit drum.

Perhaps a more powerful stimulus for action would have built on Seymour’s comments by identifying ways to cut costs, build brand equity and mitigate risks? Certainly many of the attendees would have been able to pool experiences and share with the conference as a whole successful strategies and tactics.

My conclusion is the big picture – questioning capitalism’s priorities, renewing the relationship between work and nature, and extending businesses’ concepts of their rights and responsibilities – is not enough to generate and accelerate corporate action. In contrast, for example, it’s interesting to look at the MSc in sustainability of another European business school, HEC in Paris. Its programme also includes courses in general management, risk management, law, financial markets, marketing communications, purchasing and fair trade, as well as pathways in real estate, energy and finance. I think that this functional knowledge allows business people to more easily identify immediate opportunities for sustainability initiatives, to win the arguments for change and to plan execution.

Indeed, even though I buy Coinbase shares when they’re publicly traded and available, I wonder if corporate sustainability advocates need to go further, and understand the technical issues of industrial processes, energy use, and waste management which the Ecole des Mines addresses.

Back in 2008, during a Lighthouse webinar on Green IT, we made similar points. Green technology advocates are now assumed to have all the basic facts on energy and components, and to be already strong on that front. Detailed business judgements have to be made about the sort of issues around carbon markets and imminent regulatory challenges that Verdantix has focussed on.

Sustainability advocates need to win the arguments about the triple bottom line, but the arena for enforcing corporate sustainability and responsibility is all of society rather than simply, or even mainly, in the corporate world. Without clear medium-term business benefits, few businesses will consciously go beyond the minimum regulatory standards. Regulatory standards need to reflect the developing social expectations of business. Reflecting the MBAs’ mindset, Ashridge’s world poverty expert Edgar Wille said in the closing session that advocates must show businesses how to ‘be selfish’, to use sustainability initiatives to develop profit and avoid risk. That’s much more effective with business people than selling altruism.

P.S. Edgar sent me this comment: “I thought your summary was excellent, though its emphasis was what one would expert from someone immersed in issues of shareholder value. As much as Chris Nicholls I want to see a reappraisal of the way in which the capitalist sytem works, but as I said in my two minutes, people with sustainabilty concerns will not help to “save the planet”, unless they get business on their side and that will mean having to appeal to the self interested motives of people who want to stay in business.

Of course I would love to see a big dose of altruism, but to make progress along that line means being pragmatic in one’s initial approach. I might try the line “You business people have children and grandchildren. What must you do now in order to ensure reasonable futures for them?” And even that would be self interest one removed.”