Businesses have the power to lead the way in transforming the economy on a sustainable path
Of the 200 largest economic entities on earth, 157 are businesses. Given their size and global reach, they have the power and influence to transform the economy on a sustainable path, so are they leading us in the right direction?
Traditionally, a company’s sole responsibility has been to maximize profits for the benefit of its shareholders. The Influential Business Roundtable (BRT), which represents the CEOs of 192 of America’s most influential companies, epitomizes this mantra. In 1997, they declared in their formal statement of corporate purpose that “the highest duty of management and the board of directors is to the shareholders of the corporation.”
Strategies and decisions focused on maximizing revenue and reducing costs. The social or environmental impact of doing business was externalized and viewed as just that: the impact of ‘doing business’. In 2008 alone, it is estimated that his 3000 companies, the largest in the world, caused her $2.2 trillion in environmental damage. The United Nations argues that one-third of profits are lost when these externalities are internalized as costs of doing business. If you can set aside the morally, socially and environmentally questionable nature of their behavior and leave the costs to governments and society to deal with, why not?
In 2019, things started to change. The BRT has made fundamental changes to its corporate purpose statement. Instead of pursuing only the interests of our shareholders, the statement states, “Each of our stakeholders is essential. We are committed to providing value to all of them.” This is the result of a growing awareness within the business community of the need to adapt priorities to complement the prevailing social sentiment. With a growing awareness of the consequences of “doing business”, companies that appear to be focused purely on maximizing shareholder value risk damaging their reputations.
The triple bottom line (TBL) underpins this reorientation of companies. TBL is a “sustainability framework that examines the social, environmental and economic impacts of companies”. This concept consists of “three p’s”. People, Earth, Profit. The TBL “intends to measure the financial, social and environmental performance of a company over a period of time. Only the company that creates the TBL takes into account all the costs necessary to do business .”
The idea is that costs that were traditionally externalized are now internalized by the firm. Recognizing the full cost of those impacts allows companies to focus on increasing social value and reducing environmental impact. The TBL grew in influence and spawned various offshoots. Corporate Social Responsibility (CSR) and Environment, Society and Governance (ESG) are two concepts built on TBL that enable companies to maintain profitability while creating social and environmental value. It’s an idea.
A sustainable approach is gaining ground and becoming the new normal for business. This new practice is reflected in the number of companies that now dedicate a section of their annual report (traditionally focused on financial performance) to their sustainability initiatives.we are now a company No Adopting a sustainable approach has been questioned. We feel like we are in the middle of a transformation, but looks can be deceiving.
The fact that oil companies are taking a ‘sustainable’ approach shows where we are. Shell is committed to becoming net zero by 2050. ExxonMobil claims: This includes mitigating the risks of climate change. ‘ How do oil companies mitigate the risks of climate change if their products play such a significant role in triggering the climate crisis?
Oil companies’ embrace of sustainability is a form of double-speak known as greenwashing. Greenwashing is all about increasing the green certification of products and brands, but if we dig a little deeper, these companies continue to do business as usual. standing in They are lip service to the idea of being sustainable, but oil companies cannot become sustainable unless they stop selling oil. In other words, it will no longer be an oil company.
They are working hard to create an image of change, but behind the scenes they are at the forefront of climate denial. They know better than anyone that their products are responsible for increasing the concentration of greenhouse gases in the atmosphere.of Suspicious Merchant, Naomi Oresquez, and Eric Conway reveal how interest groups created campaigns to spread misinformation to foster suspicion among people. Like tobacco companies before them, oil companies have funded denial campaigns to protect their interests.
This campaign of denial is damaging because it justifies the continued use of fossil fuels and slows the transition to the renewable energy sector. Instead of acknowledging that oil cannot be part of the sustainable economy of the future, they continue to stick with it and fight for relevance. And they’re not just funding climate change denial. The five largest oil and gas companies listed on the stock market spend about $200m (£153m) a year on lobbying to slow, control or block policies to tackle climate change. I am doing Very little in the spirit of TBL.
Oil companies aren’t the only ones to become proficient practitioners of greenwashing. Banks are on the sustainability bandwagon. One of his most profitable products sold by banks is credit cards. Credit cards are inherently unsustainable, just like fossil fuels. They trap people in debt cycles with devastating social consequences. At the same time, it allows people to consume beyond their means, fostering consumerism that increases their environmental impact.
In addition to this, the Paris Climate Agreement signed in 2015 heralded a new dawn of emissions reductions. Since then, 60 of the world’s largest banks have funded fossil fuel companies with his $3.8 trillion. Banks continue to lend to fossil fuel companies because they are confident of their return on investment. In short, they prioritize profits over the environmental or social impact of funding these companies.
Banks do not acknowledge these discrepancies in their sustainability reports. So far, they have no plans to stop funding oil companies. Because you will benefit from doing so. And I have little intention of encouraging governments to create laws that ban credit cards.
Coca-Cola, the world’s largest manufacturer of single-use plastic bottles, produces 3 million tons of plastic containers each year. That’s 108 billion bottles. But the company’s head of sustainability, Bea Perez, said he has no intention of moving away from single-use plastics (which are known to be harmful to the environment) because consumers prefer them.
No matter how you look at it, oil companies fighting for relevance, banks offering credit cards to fund oil companies, or beverage companies that continue to use single-use plastics are compatible with creating a sustainable world. I don’t. And this is just the tip of the iceberg. Many industries and markets profit from creating negative social value or damaging the environment. But TBL, CSR, or ESG have not made clear what a sustainable society would look like living within environmental limits, so companies that are unsustainable by design might fall for the concept. . Importantly, they can appear to be a large part of sustainable societies when in fact they are emblematic of the problem.
Glossy sustainability reports hide an unpleasant truth. Under the surface, not much has changed. Each company still adheres to the same rules of the game. They still compete and put profit before social and environmental well-being. The problem is that corporations have too much influence in determining the rules of the game. to force them to work in Because only the most blindly optimistic would imagine that corporations would do so of their own accord. dictate what to do? So they seem to continue to dictate the rules of the game. Meanwhile, the environmental impact continues to grow and we continue to run at breakneck speed toward disaster. As long as shareholders are happy, this seems like a perfectly acceptable situation.