02/27/2006 09:06 pm ET Updated Dec 06, 2017

Next Steps for the Business Community

The Worldwatch Institute has taken on the corporate establishment in the March-April issue of its monthly magazine, Worldwatch. As you'd expect from Worldwatch, it's a clear-eyed view of the greening of companies. But it also points up the relatively myopic perspective that nonprofits typically have of business.

The article, "Next Steps for the Business Community" (downloadable in PDF for a fee), begins with a description of SEE Change, a dubious sustainability initiative launched last September by the Business Roundtable to "promote better business and a better world." SEE Change, notes author Erik Assadourian, a Worldwatch Institute staff researcher, is a "celebration of sustainable growth, a term essential to a business model in which corporations depend radically on consistent quarterly rises in profits to keep shareholders from fleeing." But, he notes, "under the current business model growth will never be sustainable."

It's time for the business community to be honest. Instead of snazzy new public relations initiatives, corporations need to truly lead the charge in creating a sustainable economy. Production systems must be redesigned to imitate natural systems so that waste products become sources of "nutrients" (feedstocks), not sources of pollution. Corporations will have to become transparent and lay out specific long-term plans to achieve sustainability. And because this transformation will need the help of governments, corporations will need to redirect their vast political influence from lobbying for laws that enhance only short-term returns (often at the expense of society) to pushing for reforms that advance society's -- and their own -- long-term interests.

In making his case, Assadourian covers a lot of well-worn turf: the quest for "eco-effectiveness" over "eco-efficiency" promulgated by William McDonough and Michael Braungart; the conversion of oncologist Swedish Karl-Henrick Robert that led to creation of The Natural Step (a nonprofit business framework that recently closed its U.S. office, having failed to gain traction); and the efforts by BP, Goldman Sachs, Nike, Starbucks, and a handful of other sustainability leaders.

So far, so good. But Assadourian displays a limited understanding of sustainable business. He makes a vice out of virtue. Take Starbucks' lobbying effort to strengthen national health care in the U.S. "While this may sound altruistic," he notes, "it's really enlightened self-interest." Fetzer Wine's long-term push to use only organic grapes, Nike's effort to design a "non-toxic recyclable shoe," Citibank's leading-edge environmental policy -- all seem to be done without regard to the potential business value they may create for their companies, stemming instead from a do-the-right-thing strategy, or from NGO pressures. And, by the way, what's wrong with "enlightened self-interest"?

While there are kernels of truth here, Assadourian misses the bigger point: No corporate initiative is sustainable if it doesn't provide some sort of business value -- topline growth, reduced risk, improved quality, enhanced employee retention, customer loyalty, lowered costs, or some other tangible reward.

It's classic NGO-think: That business should move to more sustainable products and processes because it's the right thing to do, regardless of whether it's good business. This is short-sighted, to say the least. Companies simply won't act unless it is in their interests, and the shorter-term the benefits, the better.

I'm not saying this is how it should be, but it's certainly how it is. Over the past two decades, I've watched company "commitments" come and go because they didn't contribute to any measure of business success. I've seen well-meaning environmental managers at respected companies lose their jobs because their programs and plans had no perceived value for the company's customers, shareholders, or other interested parties. I've seen bold company efforts fade away when the activist community responded by saying that whatever the company was doing simply wasn't enough.

Similarly, Assadourian maintains that the rapid growth of corporate reporting on environmental and sustainability initiatives is done "more out of an obligation or as an opportunity to greenwash their operations than out of a desire to hold themselves accountable." This is curious, to say the least. A wide range of companies are harnessing their environmental reporting efforts to gain a fuller understanding of how they do business, then using that knowledge as a platform for doing better. They do these things not out of obligation or greenwash, but -- yes -- to hold themselves accountable, and because it makes for a better-run, more profitable business.

None of this may ever be good enough for most NGOs, but it's a sea change (though not necessarily a SEE Change) from the way business has traditionally been done.

I'll concede that all this must seem bewildering to those in the nonprofit world, who are used to thinking of Business as an Evil Empire. In the past twelve months, General Electric has committed to "Ecomagination," General Motors has made an all-out push for alternative fuels, Wal-Mart said it wants to sell only sustainable seafood, and everyone from Chevron to Duke Power has expressed concern about climate change.

In that light, Worldwatch should be excused for its conventional views on business. In such a topsy-turvy world, activists are understandably confused.