In the Carbon MBA we share one or two modules with other masters courses and Sustainable Consumption is one of them. It's a great module as business approaches engage with more community and grassroots approaches. The majority on the course from other masters appear, at first glance, anti-big business. Perhaps they see me as anti-grassroots!
This week, businesses, particularly multi-national companies, were under scrutiny for not caring about the environment, labour rights and ethics. We were treated to the story of stuff which reaffirms all the stereotypical negative stuff about businesses. You know the sort of thing: they slash and burn forests, make workers work too hard and pollute the environment.
It's good to be challenged, but we mustn't get lazy and just be anti-business. What struck me in the class debate was the poverty of clarity in criticisms of business practices, yet at the same time people demanded that there should be high levels of transparency from MNCs. MNCs should be transparent, but lets argue on what we know not what we think we know. For example, some argued that marketing and advertising were evils that created unsustainable consumption. If it's that easy then a few marketing campaigns will change the behaviour of individuals and reduce emissions - bingo - we have solved climate change. Hmmm...It's not as simple as that is it?
Wal-Mart - the largest supermarket in the world with over $400billion in revenues - has launched a supply chain sustainability index. It's not perfect and there are critics, but it's an enormous job and pushes those in the supply chain to do the same. VW-Audi are pursuing their PowerTrain Strategy to make all their models electric or bio-fuel. What's interesting is that Wal-Mart's customer base are not the organic/muesli/liberal type, more the Joe the plumber. Equally, not all car manufacturers are adopting VW-Audis strategy. With both companies, there's an element of saving money, gaining a competitive advantage and more profit or simply doing the right thing.
So, some businesses are ahead of the customer and government. Some need to do more - a lot more. But all businesses whether they are limiteds, plc's, co-ops or public sector have to run so that they pay their way and balance the books or make a surplus. It's not profit that is differentiating which businesses follow sustainable practices. It's the people running them. If we can influence them, then changing a billion dollar industry is going to have a big impact.
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Hi Ben, thanks for this great post, I can understand your frustration with general anti-corporate sentiment, for sure. And there's no doubt that some firms are indeed leading the way and crying out for government regulations to push them harder. But I was struck by your comment 'all businesses have to pay their way and make a surplus', and I wonder if this is part of the problem, rather than an immutable fact of life? If the market prices on which those decisions are made are wrong - ie because they externalise social and environmental costs - then following the profit incentive is still sending businesses and consumers down a dead-end street. How do you think businesses would respond if we had full-cost pricing? Would that be enough to redirect the market in a sustainable direction? Or do we need cultural/ethical changes too?
ReplyDeleteGill, thanks for this.
ReplyDeleteExternal costs should be internalised without question. However, we can debate what are external costs so I'm mainly assuming environmental external costs here. Regardless of the economic system firms, co-ops or the public sector institutions have to try to balance their books and, should they wish to expand, create a surplus. They can only do this be being customer focused. It doesn't mean that they can't innovate and lead consumers.
For most goods and services market pricing (with external costs internalised) is a good mechanism for allocating resources. For goods and services that produce positive externalities like health and education require government intervention to overcome equity issues.
For me, there are three issues: will the government internalise externalities? Ultimately, they will, I hope, through solidarity rather through a disaster forcing them to work together. We need campaigners - businesses and grassroots - to lobby the government to ensure they move in the right direction.
Second, big businesses, if they change, will have a huge impact. At the Carbon Show 09 Plenary in London leaders were saying that although their energy use is £1billion their value chain is £20billion's worth. Huge figures and they felt the weight of responsibility for this. Campaigners need to engage business to ensure they understand their impact. Being anti-business will be counter productive. Here, the ethical movement will prevail, in my view.
Finally, we need pioneers and innovators. Things like the transition towns movement may lead to mainstream adoption. We need to be open minded and treat such movements as innovative. This may be where cultural changes are required.
I guess, I'm sitting the in middle ground of sustainability. I don't think we can radically change capitalism, but we can radically change our way of consuming, but that still means growth.