Unlocking Opportunities through Addressing World’s Greatest ChallengeThe Case of Corporate Sustainability
By Kevin LiPublished October 7, 2019
Economic notions of prosperity – the condition of being successful or thriving – is commonly associated negatively with environmental integrity. It is persistently believed that any business’s attempt to reduce its environmental footprint or to deliver greater impact comes at an additional cost and usually results in expensive transitions, unprofitable operations, and enhanced risks.
Besides practical considerations, this school of thought is also backed by leading economists, such as Nobel Prize winner Milton Friedman, famously arguing that “only people have responsibilities” and that businesses are only required to conform to the basic rules of society. Yet, an observant one would argue that corporations have been slowly populating our newspaper and webpage covers with “unprecedented and unwavering” commitment to social and environmental wellbeing. However, the depressing reality is that despite the past decade’s impressions of seemingly optimistic and groundbreaking progress in private sector sustainability engagement, businesses have failed to deliver the environmental impact at a necessary scale to address our imperative climate challenges.
Driven by human-induced greenhouse gas emission, climate change poses extensive and wide-spread consequences that overshadow the future of humanity. Despite decades of effort in international climate policy, advancement in innovative climate-smart solutions, and increasing awareness and demand for climate actions, the world is still falling short of our pledges to reduce emission. Yet, firms are undertaking minimal initiatives, investing far from enough capital, and delivering, very often, inadequate solutions towards addressing the greatest challenge of the 21st century.
Given a corporation’s immense power to promote growth and prosperity and the dire situation we are faced with, I argue that we must see substantial private sector transformations and improvement in corporate responsibility to decarbonize our economy and avoid the devastating effects of climate change. We must see a shift in the fundamental intentions behind the adoption of sustainability practices to truly impact our environment. For one, businesses must not leverage sustainability promises simply as tools to gain comparative advantages over competing firms. In addition, nor should going green be merely of acquiring reputational benefits or accommodation towards investor and stockholder wishes. I argue that sustainability and environmental considerations must be deeply embedded in the mission and vision of any business.
Businesses must recognize the fundamental and cooperative alignment between economic possibilities and sustainable operations – the associated cost-cutting opportunities and climate-risk mitigating benefits. Nike is a leading corporation in efforts to reduce waste, sell recyclable components, and reuse byproducts like rubber or plastic for product design, which not only satisfies a growing demand for sustainable consumption but also results in millions in annual savings. Its unique approach -- Sustainable Innovation -- tackles climate change and reduces environmental impacts while providing the best products and customer services.
Another is Walmart’s notable decision to switch from cardboard landfilling to recycling in 2009. Rather than paying for the cost of waste shipment to landfills, Walmart sold cardboards to recycling facilities instead, turning a cost into a source of income. Over the years, Walmart has successfully delivered greater company performance through targeting key areas including waste, impact, and energy emission and enhancing the sustainability of operations and value chains.
Today, corporations can step up to play a crucial leadership role in shaping the future of our planet by filling in a blank – the money case for climate action. Innovative thinking and uncovering opportunities will allow sustainability to be closely incorporated into a traditional business’s core mission – to make as much money as possible. How incredible it is, to imagine in the case of societal impact, where cost-smart operational adjustments can produce positive environmental externalities that also help advance our society?
Economic prosperity and environmental integrity can co-exist if the exact path to cooperation can be identified, scaled, and replicated. A sustainable business must identify opportunities, strategize, and implement effective changes to address critical climate issues. From reducing supply chain emissions, committing to renewables, to manufacturing with recycled materials, business must become increasingly innovative and opportunistic in revenue-improving in any industry or sector. A 21st century corporation with the power to induce growth can bring about a new type of prosperity.
Under shifting global landscapes, rigid and traditional definition of the mission and role of corporations might be outdated. What society really demands, at this specific moment, could be an alternative interpretation. In many cases, we have observed corporations being generously backed by nations to benefit from profitable deals and trade agreements signed on important intergovernmental memos. Now, why can’t they be demanded and recognized greater responsibility? What if we say that businesses now follow the lead of people and society? In either case, profitability and operation were never compromised.
In the end, addressing our complex climate challenges requires a collective set of tools and policies. It is possible to achieve global sustainable development and climate action with methods that encompass both to care for our environment and rigorous support for sustainable economic growth. The case of corporate sustainability demonstrates an up-and-coming opportunity that’s both inherently aligned with any corporation’s mission and beneficial to our environment and the future of humanity.