“The unspoken truth is: we cannot continue to conduct business as usual” (Dunphy 2003, p. 2). The world had changed so much from what it was a decade, two decades, three decades, …, a century ago. Much of this change came from the prodigious; some would even say exploitative use of the earth’s resources by businesses in the name of profit. As such, although it took society a long time, corporations are now asked to do its share in ensuring that the planet remain sustainable not only for us, but for generations to come.
In this paper, I aim to define what is meant by the term ‘Corporate Sustainability.’ I hope that by doing so I do my share.
Defining the term ‘Corporate Sustainability’ is accomplished largely by defining sustainability, and with each definition attaching the word ‘corporate.’ First, Dunphy defined sustainability as a result of “[enhancing] the planet’s ability to maintain itself and solve its problems” (2003, p. 4). This means that corporation is said to be engaging in corporate sustainability if its actions contribute toward this enhancement. For the past few years, PepsiCo has been doing its own share: it has focused its environmental sustainability efforts on water, energy and packaging – areas where it believes it can make the biggest impact (PepsiCo 2006 Annual Report).
Castro, on the other hand, presented several concepts on sustainable development. From its beginning, the concept of sustainable development has been contentious, and there has been a constant battle between those who put the emphasis on sustainability and those who put the emphasis on development. He presented the views of radical environmentalists, mainstream environmental economists, radical theorists of ecology and even Marxists. In the end he concluded that sustainable development is still a contested concept (Castro 2004). Monsanto is perhaps one of the world’s biggest agricultural companies, and almost six years ago it announced the ‘The Monsanto Pledge.’ Included in the pledge are.
“Sharing We will share knowledge and technology to advance scientific understanding, to improve agriculture and the environment, to improve crops, and to help farmers in developing countries.
and
Benefits We will use sound and innovative science and thoughtful and effective stewardship to deliver high-quality products that are beneficial to our customers and to the environment” (Monsanto) which encapsulate Monsanto’s dedication to a sustainable development.
It is perhaps because sustainable development is still a contested concept that its corollary concepts such as corporate sustainability are explained in different contexts and value systems. It is precisely from this that van Marrewijk and Werre posited that “a one-solution-fits-all concept of corporate sustainability is not reasonable” (2003, p. 107). This concept is supported by the very definition of corporate responsibility that the two authors presented: “Corporate Sustainability refers to a company’s activities – voluntary by definition – demonstrating the inclusion of social and environmental concerns in business operations and in interactions with stakeholders” (van Marrewijk & Werre 2003, p. 107). Because no two companies are alike, then their responses to social and environmental concerns are also unique as afforded to them by their situations. This view was communicated by van Marrewijk and Were during the Corporate Sustainability Conference in 2002 hosted by the Erasmus University Rotterdam (van Marrewijk 2003, p. 89).
In a study by Hillman and Keim, the relationship among shareholder value, shareholder management and social issue participation was deconstructed. The researches tested the hypotheses that stakeholder management is positively associated with shareholder value creation, stakeholder management leads to improved shareholder value creation, social issue participation is negatively related to shareholder value creation, and social issue participation leads to decreased shareholder value creation (Hillman & Keim 2001). The results of the study supported the four hypotheses. This means that corporations must choose between shareholder value creation and social issue participation. Unfortunately, one of the social issues Hillman and Keim discussed was sustainable development.
Faced by increasing external pressures to be more environmentally conscious, business organisations have turned to accountants for help. As such, corporate sustainability reporting came into play. Ballou, Heitger, Landes and Adams commented on the preponderance of companies reporting to their stakeholders what they have been doing in terms of their impact to the environment:
To create transparent reports that provide accurate and reliable data, as well as a fair picture of overall performance, many companies are now reporting results across the “triple bottom line” of economic, environmental and social performance.
Triple-bottom-line reporting, also known as corporate sustainability reporting (CSR), involves reporting nonfinancial and financial information to a broader set of stakeholders than just shareholders. The reports inform stakeholder groups of the reporting organisation’s ability to manage key risks. Because these interests vary, the type of information varies; however, much of it has to do with the company’s economic, operational, social, philanthropic and environmental objectives (2006).
Griffins and Petrick, on the other hand, chose to defined corporate sustainability by identifying the corporate architectures or organisational design and structures that can generate and institutionalise corporate sustainability. Griffins and Petrick identified three alternative organisational architectures for sustainability: network organisations, virtual organisations, and communities of practice (2001).
Quinn refers to network organisations as “spider web” organisations, noting that they typically have dispersed service nodes (Griffins & Petrick 2001). As such these organisations have much flatter hierarchies which results to the minimisation of formal rules. Individual units obtain more information by acting as a collectivity and can also attain economies of scale and scope as a result of their interconnectedness.
Virtual organisation, on the other hand, “can be seen to be designed on several levels. At one level the virtual corporation can be interpreted as an organisation with a limited life. At first appearances, this does not appear to be a “sustainable practice”. In these cases, the issue is not about sustaining the organisation in terms of longevity, but rather recognising that in the pursuit of sustainability there will be a need for limited term projects – organisations — that will come together to solve or address important issues and disband once they have been addressed” (Griffins & Petrick 2001). Two examples of virtual organisations are eBay and Amazon.
Communities of practice, unlike the first two sustainable organisational structures, are not clearly defined. Brown and Duguid said that communities of practice have amorphous and in some cases fluid structures that form around areas of interest, expertise and or project orientation (Griffins & Petrick 2001). Furthermore, communities of practice have few hierarchies – member status is based on expertise and contribution to the development of leading ideas rather than on position or authority.
van Marrewijk in his paper, Concepts and definitions of CSR and corporate sustainability: Between agency and communion, presented an overview of the contemporary debate on the concepts and definitions of corporate social responsibility and corporate sustainability. His main point, however, is “The right to be and the capacity to create added value equals the duty to be responsible for its impact and to adjust itself to changes in its environment. Without conforming to this principle, organisations ultimately risk extinction” (van Marrewijk 2003).
On another side, corporate sustainability can be viewed as a new and evolving corporate management paradigm. The term ‘paradigm’ is used deliberately, in that corporate sustainability is an alternative to the traditional growth and profit-maximisation model. Wilson said that “[while] corporate sustainability recognises that corporate growth and profitability are important, it also requires the corporation to pursue societal goals, specifically those relating to sustainable development — environmental protection, social justice and equity, and economic development” (2003, p. 1). He further said that sustainable development, corporate social responsibility, stakeholder theory and accountability are the four pillars of corporate sustainability (Wilson 2003, p. 1).
The meaning of sustainability has been around for a very long time. Sustainability posits that private sector companies should not only create economic value and provide goods and services that enhance the standard of living, but that they should also engage actively in mitigating the different environmental and social problems they cause through their activities. In conclusion, businesses organisations are beginning to realise that a prolonged breakdown in social peacefulness and health will affect the economy. With this realisation came the recognition that constructive social relations make good business, and hence society now has corporate sustainability. It doesn’t matter that we don’t have a unified definition and basic concept of what corporate sustainability means yet. What matters it that corporations learn how to give back to the environment where it extracts its raw materials, disposes its wastes, and distributes its products. Perhaps the next step is the creation of standards on the measurement of corporate sustainability instead of the race to that all-encompassing definition.
References
Ballou, B., Heitger, D., Landes, C. & Adams, M. 2006, ‘The Future of Corporate Sustainability Reporting’, Journal of Accountancy, vol. 202, no. 6; pp. 65-72.
Castro, C.J. 2004, ‘Sustainable Development: Mainstream and Critical Perspectives’, Organisation & Environment, vol. 17, no. 2, pp. 195-226.
Dunphy, D. 2003, ‘Corporate Sustainability: Challenge to managerial orthodoxies’, Journal of the Australian and New Zealand Academy of Management, vol. 9, no. 1, pp. 2-12.
Griffiths, A. & Petrick, J. 2001, ‘Corporate architectures for sustainability’ International Journal of Operations & Production Management, vol. 21, no. 12; pp. 1573-1585.
Hillman, A.J. & Keim, G.D. (2001) Shareholder value, stakeholder management, and social issues: What`s the bottom line? Strategic Management Journal; Feb 2001; 22 (2), pg. 125-140.
Monsanto 2007, ‘Our Pledge: The Monsanto Pledge’, Accessed on May 6, 2007, from http://www.monsanto.com/monsanto/layout/our_pledge/monsanto_pledge.asp.
PepsiCo 2006 Annual Report. Accessed on May 6, 2007, from http://thomson.mobular.net/thomson/7/2222/2446/print/print.pdf.
van Marrewijk, M. 2003, ‘Concepts and definitions of CSR and corporate sustainability: Between agency and communion’, Journal of Business Ethics, vol.44, no. 2/3; p. 95.
van Marrewijk, M. 2003, ‘Corporate sustainability conference 2002: The impact of CSR on management disciplines’, Journal of Business Ethics, Vol. 44, No. 2/3; p. 89.
van Marrewijk, M. & Werre, M. 2003, ‘Multiple levels of corporate sustainability’, Journal of Business Ethics, Vol. 44, No. 2/3; pp. 107-119.
Wilson, M. 2003, ‘Corporate sustainability: What is it and where does it come from?’ Ivey Business Journal Online, Mar/Apr, p. 1.
