When is sustainability more than just efficiency?

Posted in: Comment, News and Updates

The Economist's Schumpeter blog recently carried an article "A new green wave" which suggests that "a few pioneering businesses are developing sustainability policies worthy of the name."   Really?, you might think.  Is that news?  Surely this has been going on for years?  What about the much trumpeted Plan A, for example,

The point Schumpeter makes is that many corporate sustainability plans are modest – little more than adhering to current regulatory norms and attempts at greater efficiency, in terms, for example, of energy savings, cutting waste, and streamlining logistics – which, the blog argues, should be being done anyway.  Quite.  These are the no-brainers which increase sales and profits, and enhance shareholder value in the immediate term – or, if you're a university, help institutional margins, and bring PR (and, on a good day, even educational) value.

But, Schumpeter says that these are evidence of efficiency (not sustainability) policies and plans because they have little actual effect on the environment or social equity.  That is, as the Economist might have said but didn't, they do nothing to restore natural or social capital.  This seems a good test, and is a point I find myself making now and then.

Schumpeter says that none of this puts "sustainability at the heart of what the firms do".  The purpose of the blogpost was to identify firms that are starting to go beyond this limited point and which are part of "a new wave of sustainability plans" where targets relate, not just to the company, but to suppliers and customers, and are about society at large and not just the environment.  Another test, I think.

In all this, sustainability is becoming "a core part of their strategy" and not just a "green way to cut costs".  Schumpeter says that whilst these new policies may not pay for themselves in the immediate term, they do act to boost the long-term fundamentals of a company (or university).  Still, you can see why they are marginalised by ultra-cautions, nervous managers – and by those whose minds are fixated by the tyranny of quarterly data – or, dare I say, annual national student survey (or green league) scores.

The column ends with this:

The first wave of sustainability rewarded itself.  The new wave will not do that.  It is more akin to investing now to have a licence to operate in future, when consumers, lobbyists and regulators will be ever more demanding about the way firms behave.  That does not mean the new wave will not reward its adopters.  But it will boost their long-term competitive position, rather than their short-term profits.  Unlike the rewards of the superficial first wave, those of deeper sustainability could take years to sink in.

It seems obvious to me that all this applies as much to universities as to other businesses, although we might have to adjust the language a little.


Posted in: Comment, News and Updates


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