Heresy is a controversial or novel change to a system of belief that conflicts with established dogma. Sustainability has become the subject of dogma and hocus pocus; it is time for an heretical view.
Business sustainability is defined in confused corruptions of what has become the painful platitude of profits, people and planet. The alliteration aggravates rather than ameliorates.
As the word sustainability has rolled through the confusion of environmentalism, corporate governance codes and the media it has gathered so much conceptual baggage that it has been rendered unfit for (just about any) purpose. We are enduring a period of a major exogenous, but man-made shock to the survival of companies. Our fight for our companies’ survival has resulted in a diversion. A risk we now face is post COVID-19 diversion to preparation for the next 100 year (unknown). When sanity prevails we shall be at risk of being diverted from THE major risk to business: endogenous decline and the inevitable demise of the corporation
First, it is useful to define sustainability so that it means what it is meant to mean for centuries.
tr.v. sus·tained, sus·tain·ing, sus·tains
1. To keep in existence; maintain.
2. To supply with necessities or nourishment; provide for.
from Latin sustinēre : sub-, from below; see sub- + tenēre, to hold
The word carries the notions resilience and endurance in the face of exposure to potentially destructive energy … and an optimistic view includes the corollary of an ability to “bounce back” to a flourishing state, not mere existence.
Consider a business organisation as a human social system that is part of but subordinate to and dependent upon society. In its turn, society is contained within, subordinate to and dependent upon the natural environment. There is dynamic interaction between these systems … systems within systems, a recipe for the kind of mess in which complexity doyens delight.
Human social systems are purposeful. A purposeful system is one that can act with intent: it can set goals and produce a variety of chosen outcomes in different ways. Social systems can learn, adapt and create.
Somewhat paradoxically, the environment upon which social organisations are dependent is not purposeful; it is limited in that it is a state-maintaining system subject to entropy. So, while environment is superior in the hierarchy of containment (it contains society), it is subordinate to the human social system within it: by commission or omission, society may and does disturb the dynamics of the environment. The environment is not purposeful; it is adaptive and its creativity dependent upon the very few random accidents with a successful outcome (i.e. evolution).
So, let’s return to the notion of sustainability qua sustain-ability. In order for a business (system) to endure it must be resilient against a few potentially sources of destructive energy:
- Endogenous decline (organisational entropy) which is the common to all human systems. Just as cells seem to be pre-programmed to die (apoptosis), so it would seem that human social systems, such as companies, also are pre-programmed to die (organisational apoptosis is a useful metaphor). This accounts for 95% of cases of organisation decline and death.
- Exogenous disasters, either environmental or societal, e.g. the 2004 Boxing Day earthquake near global lockdown. These events are uncommon, accounting for less than 5% of cases of organisation decline – but they may cause mass extinction of corporations.
- Environment exhaustion refers to the decline in natural resources and the consequences of damage to the environment that strain and diminish its state-maintaining ability. This cause of corporate decline is currently uncommon but may also one day cause mass extinction of corporations inter alia. The damage may be irrecoverable n the short term and this matter deserves attention at all levels of society.
Businesses are purposeful. Therefore, they may set for their organisations purposes that are directed at internally determined integrity and also at their relationships with society and the natural environment. Every organisation comprises three interconnected basic subsystems its social system, its value creation system and its governance system. All of these are also dynamically connected to the organisation’s external environments, business, social and natural.
So what does this mean to a board of directors and its role in sustainability? It means that the governance system of the business must ensure that all three subsystems strive individually and together the organisation strives to ensure that the business is resilient and endures the three main destructive threats. It is a drive towards the maintenance of organisation integrity. In this context, integrity means nothing more than wholeness – a whole that is more than the sum of the parts. Therefore, a board should ensure that congruent philosophy, policies and practices and in place so as to maximise the resilience of the organisation to dis-integration while allowing the freedom to take considered risks in pursuit of the organisation’s socio-economic purpose. It is in this context that so-called integrated practices and reporting have real meaning.
Finally, there is a moral dimension to the causes of organisation decline. While human and juristic persons have individual rights, they also have the obligation no knowingly to infringe on the rights of others now or in the future. The custodians of juristic persons (such as directors) have a moral obligation to try to maintain the integrity of the organisation with which they are entrusted and It is the good and right to be a mindful and caring corporate citizen.