The Four Steps To Corporate Sustainability–M.S. Srinivasan & O.P Dani

[Chartered Secretary, Journal of Institute of Company Secretaries of India, September 2011]

Key Perspectives: The Challenge of Sustainability; The Four-fold Path; Compliance: The Legal Approach; The Ecological Efficiency; The Total Process Sustainability; Integral Attunement; Rethinking Our Attitudes to Nature

The corporate world is the greatest offender of the environment because it is the largest consumer of natural resources and one of the copious polluters of the environment.  So business has to ungrudgingly bear the responsibility for repairing the damage it has wrought on the environment.  However, in our modern age, business is the most innovative and dynamic organ of the society and better equipped in terms of resources, technology, organization, skill and global reach to tackle the challenge of sustainability.  So business has the responsibility as well as the potentiality to lead humanity and earth towards a sustainable future.  This article present a four-fold path to corporate sustainability viewed in a holistic and integral perspective.

1. The Challenge of Sustainability

Sustainability will be the most crucial and decisive factor of the third millennium.  Many of us in the corporate world are not aware how serious the situation is.  The scientific opinion is almost unanimous that our present human civilization is facing an extremely challenging ecological crisis.  According to many scientist and environmentalist irreversible damage was done and is still being done to the environment with disastrous consequences.  As the environmentalist, George Monbiot points out:

“Quietly in public, loudly in private, scientists are saying, its over.  The years in which more than 2°c of global warming could be prevented have passed, the opportunities squandered by denial and delay.  Now we must adopt to what Nature sends our way, if we can.” (1)

If we have to survive as a race, it requires immediate and urgent action with a sense of moral and spiritual responsibility to our race and our planet, without any commercial motives.  As James Martin, a leading authority on the economic and social impact of technology warns.

“We must learn to live within our planets means and do it quickly.  If we are not able to do it, Earth may become a roasted planet with tundra, inhabitable only by a small number of humans-probably near the poles.” (2)

So sustainability is a matter of survival of our human race and every positive step we take in this path is a contribution to the future of our planet.  The present ecological situation is not perhaps as hopeless or irreversible as some of the scientific opinion believes.  There is what is called the “butterfly effect” in climatology.  According to this concept, a small, insignificant event can lead to a massive result like that of a great storm.   So, a critical mass of small, cumulative actions in harmony with the laws of Nature can lead to a massive positive response from Nature.  And as we have said earlier, the corporate world has the resources and the competence to unleash this butterfly effect.

2. The Four-fold Path

The concept and practice of sustainability have to be viewed in a deeper and broader perspective than the predominantly legal or technological approach to the problem.  In this integral perspective, the path of sustainability may be viewed in terms of the following four stages:

1. Compliance
2. Ecological Efficiency
3. Total Process Sustainability
4. Integral Attunement

These four stages represent a progression in attitudes, understanding and comprehensiveness but not necessarily interms of practices, which may overlap and telescope between various stages.  For example if government regulations or rating agencies insist, the practices of the second stage of ecological efficiency may be part of the first stage of compliance.  Similarly, the practices of the second stage may become an integral part of the third.

 3. Compliance: The Legal Approach

The first step is compliance, which means adherence to the national or local regulatory laws on environment or some environmental rating agencies.  This approach is predominantly legal.  Those firms or managements who stop at this stage don’t have any clear understanding of or commitment to sustainability.  The attitude of the company which stops with compliance (which we may call as the “Compliancer”) is something like this: “I am not sure about this sustainability business.  But there are government regulations and nowadays investors insist on it.  So let us do what the Government or the rating agencies want us to do and get some valid certifications which will impress the investor.”  Or else the complaincer may take one more step and do some token environmentalism like tree planting as a public relation exercise.  Even if the complaincer recognizes the importance of sustainability, his actions may not go beyond some legal or symbolic gestures.

4. The Ecological Efficiency

However, the complaincer may take one more step forward if he finds sustainability efficient and profitable.  Many of the environmental practices like energy efficiency, resource conservation and waste recycling are not only ecological but also cost-effective.  For example Tata Steel recycles its grease and oil waste by converting it into fuel for the blast furnace, thereby saving a tidy sum of fuel cost.  As R.S. Sharma, chief of environment and public health of Tata Steel states, “There is here a clear business sense.  You improve the environment and it directly improves your bottomline.”  (3)

Similarly with other practices like energy efficiency or resource conservation, which means progressive reduction in the consumption of energies and resources like coal, oil, water, electricity.  These practices also save money and enhance efficiency.  Thus, in this stage the main emphasis is on reconciling bottom line objectives with environmental goal.  The attitude of the efficient environmentalist is somewhat like this, “I am interested in sustainability because while contributing to the environmental cause it also improves my bottomline.

5. The Total Process Sustainability

This third stage requires firm and long-term moral commitment to sustainability that goes beyond bottomline.  There are three aspects to Total Process Sustainability, which may be abbreviated as TPS.  The first step is to make the practices of the earlier efficiency stage, like waste recycling, an integral part of company culture, education and training programmes, pursuing them with continuous improvement and constant innovation, with an added emphasis on renewable resources.  As Anita Roddick of Body Shop, a company well-known for his social and environmental policies and practices, states:

“We place ever-increasing emphasis on renewable resources and infinitely recyclable components for our machinery and transportation.  This will mean driving towards zero emission of pollutants─not just of our own wastes but those of our suppliers and their suppliers too.”(4)

This brings us to the second task, which is to make a conscious effort not only at energy or resource conservation but also gradually replacing non-renewable energies and resource with renewable energies and resources.  This may be a very long-term goal which we may not able to achieve in the near future.  But it has to be held as an ideal towards which we can move progressively through incremental steps.  We must note here that in this stage the inner attitude and motive behind these tasks must change from compliance or efficiency to a total uncompromising commitment to sustainability.  The practices like waste-recycling are done not for its impact on the bottomline but for the sake of preserving the ecological balance of our planet.  The bottomline goals must become a secondary and incidental byproduct.

The third task may be called as Environmental Impact Management through environmental auditing and inventing sustainable alternatives.  Every material, process or product is assessed for its impact on the environment and a conscious effort is made to eliminate or minimize their harmful effect on the environment by replacing the harmful and less green by less harmful and more green things or process.

For example Canon, the Japanese maker of Cameras and photocopiers, has engraved the principle of sustainability into its research and development policies.  Since batteries are always an environmental hazard, Canon is now testing flexible amorphous solar cells to be replaced in camera shoulder straps which could provide energy without affecting the environment.  As metals are difficult to recycle when combined with plastics, all metals have been eliminated from Canon Cameras, copiers are being redesigned in such a way that most of their parts can be reused; all lead has been eliminated for its well-known toxicity.  Cannon claims these steps are only the beginning.

There are not many companies which are in this stage and advancing in it because the path is not easy, but challenging.  When a company embarks on this journey, beginning with environmental auditing, it may find almost every material it uses is a polluter of the environment and therefore has to be replaced with more environmental-friendly materials.  As Yuon Chouinard, founder of Pantagonia, a pioneer in sustainable managements, describes some of the challenges involved in the journey towards sustainability:

“At the same time that we were making these long-term plans, we began an environmental audit to investigate the impacts of the clothing we make. The results are still preliminary, but to no one’s surprise the news was bad. Everything we make pollutes. Synthetics like polyester and nylon, because they are made from petroleum, are obvious villains, but cotton and wool are no better—-.   Other than shutting down the doors and giving up, what Patagonia can do is to constantly assess what we are doing. With education, choices open up, and we can continue to work toward reducing the damage we do. In this process, we will face tough questions that have no clear-cut answers. What good does it do to make an organically grown T-shirt if the price is so high that no one buys it except rich people who just add it to their ongoing disposable clothes collections? Should we add a bit of synthetic fiber in a cotton fabric if it makes a pair of pants last twice as long? Which is better to use, toxic chemical dyes or natural dyes that are less colorfast and fade?” (5)

 However, the well-known management Guru C.K. Prahalad sounds a hopeful and optimistic note on sustainability.  According to Prahalad, sustainability will be the main source of competitive advantage and the key to achieve this competitive edge through sustainability is Innovation.  Those companies which are able to tackle the challenge of creating cost-effective, customer-centric and sustainable product through creative innovation will be the leaders of the future.  In his article on corporate sustainability published in Harvard Business Review, Prahalad and his coauthors state:

“Indeed, the quest for sustainability is al­ready starting to transform the competitive landscape, which will force companies to change the way they think about products, technologies, processes, and business models. The key to progress, particularly in times of,­ economic crisis, is innovation. Just as some internet companies survived the bust in 2000 to challenge incumbents, so, too, willsustain­able corporations emerge from today’s reces­sion to upset the status quo. By treating sustainability as a goal today, early movers will develop competencies that rivals will be hard-pressed to match. That competitive advantage will stand them in good stead, be­cause sustainability will always be an integral part of development.” (6)

However this ideal of Total Process Sustainability has to be a continuous, progressive and planned effort moving step by step towards a long-term goal.  Each company must evolve a rolling plan and strategy, with short-term and long-term targets matching its size and available resources and expertise in each stage of the path.  For example a company may ask what are the polluting materials which it can replace with greener alternatives in the next five years, assess its implications interms of cost, profitability or competitiveness and arrive at a firm decision.  This may involve a certain amount of sacrifice of short-term profit for a long-term goal.  But such sacrifices never go in vain.  For as Prahalad has pointed out, sustainability is a crucial factor that will determine the competitive advantage of firms in the future.  And from a deeper perspective, a sacrifice made for the sake of sustainability will forge good karma for the firm because it is an act which is in harmony with the laws of Nature. And such acts of good karma will have its positive material consequences in the long-term.

 6. Integral Attunement

However in an integral perspective even total process sustainability is not the highest ideal.  There can be a one more step forward towards integral attunement with Nature. The corporate approach to sustainability is predominantly managerial and technological.  But for creating a sustainable corporation or institution there must be a more integral cultural attunement to the laws and ways of Nature.

The modern environmentalism is based on attunement with the laws of physical Nature.  But according to most of the ancient wisdom-traditions of the world, Nature is not only physical but also has a psychological and spiritual dimension.  So in an integral perspective, the highest ideal of ecology and environment is an integral attunement to Nature in all the dimensions of her universality.  We must try to understand the wisdom of Nature in managing her creation and learn to tune our whole life to this greater wisdom of Nature.

 6.1  The Wisdom of Nature

The modern ecology studies mainly the physical and biological Nature.  But some of the insights and principles of ecology reveal the universal wisdom of Nature in managing her creation.  They are probably reflections in the physical plane of similar laws in the psychological and spiritual dimensions of Nature.  Fritjof Capra, physicist and system theorist, in one of his writings on corporate sustainability gives the following list of principles which he calls as the Principles of Ecology:

1. Interdependence: All members of an ecosystem are interconnected in a web of relationships, in which all life processes depend on one another.
2. Ecological Cycles: The interdependencies among the members of an ecosystem involve the exchange of energy and resources in continual cycles.
3. Energy Flow: Solar energy, transformed into chemical energy by the photosynthesis of green plants, drives all ecological cycles.
4. Partnership: All living members of an ecosystem are engaged in a subtle interplay of competition and cooperation, involving countless forms of partnership.
5. Flexibility: Ecological cycles have the tendency to maintain themselves in a flexible state, characterized by interdependent fluctuations of their variables.
6. Diversity: The stability of an ecosystem depends on the degree of complexity of its network of relationships; in other words, on the diversity of the ecosystem.
7. Coevolution: Most species in an ecosystem coevolve through an interplay of creation and mutual adaptation.
8. Sustainability: The long-term survival of each species in an ecosystem depends on a limited re­source base. Ecosystems organize themselves according to the principles summarized above so as to maximize sustainability. (7)

 Elaborating further on the implications of these principles for corporate sustainability, Capra explains:  “A sustainable business organization will apply this principle to co­operation and partnership along product cycles and in countless other ways, both internally within the company and industry-wide. Here we encounter again the basic tension between economics and ecology that we need to overcome. Economics deals with quantity, competi­tion, expansion; ecology deals with quality, cooperation, conservation. The general shift from domination to partnership is an essential part of the shift from the mechanistic to the ecological paradigm.” (8)  In otherwords., a human organization or community can reach the highest level of sustainability, when its entire corporate life, its culture and values, strategy, systems and structures, process, technology and the material, energy and information flows are organized based on the principles of ecology described earlier.  Here there is a whole new world and a vast domain for study, research, exploration and application.  In this article we can only examine a few indicative suggestions.

 6.2  The Principles of Sustainable Management

When we examine the ecological principles listed by Capra in a holistic perspective, we can see that Nature sustains and manages her creation predominantly through mutuality, cooperation, partnership and flexible adaptation.  This doesn’t mean that there are no competitions or struggle in Nature. There is an element of competitive struggle in the biological and animal kingdom of Nature.  The old Darwinian biology considered this struggle for survival as the primary law of Nature.  But the new biology has discovered that competitive struggle is only a secondary or subordinate element in an over arching foundation of cooperation or partnership.  A mutually sustaining or complementing partnership is the nature of relationship which binds organisms in Nature.

The other important discovery of New Biology is Co-evolution.  Organisms in Nature evolve together along with the environment through a complex network of mutual interaction.  The old Darwinian biology thought that the evolution of individual organisms in Nature is entirely shaped by environment.  But the new biology has found that in biological evolution the influence and interaction between the organism and the environment is not one sided but mutual; not only environment shapes the evolution of organisms but also the organisms shape the environment.  What are the implications of these new discoveries of life-sciences for sustainable management? There has to be a strategic shift from individualism and competition to teamwork and partnership both within the organization and also with its interaction with the larger environment. The central strategic query of sustainable management has to be, how to achieve sustainable wellbeing and progress of the larger whole of life by partnering with other stakeholders of the organization like the employees, customers, suppliers and the community and also, wherever necessary, with competitors, in a mutually beneficial and complementing partnership.

The other ecological principle relevant to management is flexible adaptation to the changing environmental condition.  The sustainable organization must have a flexible structure which can respond quickly and effectively to the changing needs of the customer or the environment.  Nature maintains her balance by what is called in ecology and system theory as “negative feed-back loops,” which detects and corrects unsustainable disturbances and restores balance.  A sustainable organization should also have feedback systems for detecting, monitoring, and correcting deviations in all the vital functions or parameters which determine the long-term viability of the organization like for example in ethics and values, customer satisfaction, performance standards.

And finally the principle of diversity.  Nature never promotes monoculture. A rich, harmonious and complex diversity is the main characteristics of the creativity of Nature.  A sustainable organization should also promote such a rich diversity especially among its “human resources” and in all its creative self-expression in life.  A rich diversity of temperament, capacities and way of looking, thinking or working together in a mutually complementing manner for the realization of common purpose is the path which can maximize organizational sustainability and also creativity.

6.3  The Path to Psychological Sustainability

However, modern biology and ecology studies only biological Nature.  But according to eastern spiritual tradition neither Nature nor Man is merely a biological organism.  A human being is in its essence a consciousness, a psychological and spiritual being.  And what is the universal source of this consciousness? It is not Universal Matter but the Universal Consciousness of Nature.  In otherwords, we derive our consciousness, our psychological and spiritual being from the corresponding dimensions of the universal consciousness of Nature.  If integral attunement or harmony with Nature is the highest aim of sustainable development then this attunement must happen not only at the physical or biological level but also at the psychological and spiritual levels of human being and the universal Nature. Just like there are laws of physics and biology governing the ecology of physical and biological Nature, there are laws of consciousness governing the psychological and spiritual dimensions of humans and Nature.  The path to our psychological and spiritual sustainability lies in attuning our inner being or consciousness to the laws or ecology of the psychological and spiritual dimensions of Nature.

But how to do this? Here comes the importance of the ethical and spiritual principles and practices discovered by the spiritual traditions of the world, especially Indian yoga.  What are modern sciences of physics, biology and ecology to physical and biological Nature, ethics and spirituality are to the psychological and spiritual dimensions of Nature.  What are modern ecological practices like recycling to our physical sustainability, the path of Indian yoga is to our psychological and spiritual sustainability.

 7. Rethinking Our Attitudes to Nature

This brings us to one more factor which is mostly ignored in the modern environmental movement.  It is our attitudes to Nature.  Our success in this formidable task of sustainable evolution depends very much on how we conceive Natures.  If we look at Nature as an inanimate energy or a living force but without consciousness or intelligence which has to be “saved” by our human effort, then the task becomes hopelessly difficult.  On the other hand if we look at Nature as a living conscious Force and a universal Power with a divinity within her, who can respond to human effort and aspiration, then there is hope and the possibility of a bright and luminous future.  In this perspective Nature doesn’t need human beings to save her.  In comparison to the universal might, wisdom and largeness of Nature, we humans are ant-like creatures.  Our human ego, with its puny intelligence and force cannot save Nature.  On the contrary we have to call upon Nature to save us through our thoughts, feelings and actions which are in harmony with her laws─ material, psychological and spiritual.   If we are able to do it, then Nature will respond to our aspirations and effort with her universal compassion, wisdom and force and not only save us from calamity but carry us safely to our highest fulfillment and perfection.  But if we obstinately refuse to live according to the laws and limits of Nature and cling to infantile attitudes, we will perish as a civilization.  There are legends of such civilizations which disappeared because they went against the divine plan and wisdom which guides the steps of Nature.  If we fail as a civilization, that will not stop Nature from moving forward with her evolutionary march with alternative possibilities.

 References:

1. George Monbiot, ‘It’s Time to Fix the Nature Crunch,’ The Hindu, October 30, 2008.
2. James Martin, ‘The Meaning of 21^st Century’ Riverhead Books, p.134.
3. R.P. Sharma, Carbon Wealth, Business Today, December 14, 2007
4. Anita Roddick, Business as Unusual, Anita Roddick Books, p.74
5. Yuon Chouinard, ‘The Next Hundred Years,’ Steering Business Towards Sustainability, ed. Fritjof Capra and Gunter Pali, Response Books, p.181-90
6. C.K. Prahalad, Ram Nidumulu and M.R. Rangaswami, ‘Why Sustainability is Now the Key Driver of Innovation,’ Harvard Business Review, September 2009.
7. Fitjof Capra and Gunter Pauli, ‘The Challenge’, Steering Business Towards Sustainability, p.5
8. Ibid, p.5-6