TEDxPSU Speech

Ever since the widespread adoption of agriculture, we have been on a quest to improve our lives and explore the world. We cut stones out of mountainsides, channeled water from rivers, chopped down millions of acres of forests, and dug deep into the earth in search of precious metals. We began as scattered settlements which grew into citystates where people gathered to share new ideas. Eventually, these city-states merged into nations where we developed common languages and cultures. Soon, every continent was speckled with human civilizations. We developed more efficient methods of communication and transportation, went through two world wars, and expanded our economies to offer a wide range of products and services. Nations that had more access to resources were able to quickly develop new technologies leaving other nations floundering in the dust. We have come a long way since our beginnings, but it was only until the past few decades that we considered our impact on the planet. Today, the world’s wealthiest nations disproportionally consume resources while the poorest nations barely have enough to sustain themselves. It is in these poor nations where the greatest amount of population growth is expected to occur. If these trends continue, people in developing countries will be unable to meet their basic needs while those in developed nations will consume too many resources and drive the planet away from the ecological balance that is necessary to sustain life. Clearly, humans need to significantly alter their lifestyles in order to confront these challenges.

In wealthy nations, economic systems are built around a single goal: growth. How can businesses earn more profits? How can companies tap into new markets? How do organizations maintain a competitive advantage? The answer to all these questions is the same: use more resources! Kate Raworth argues that this type of growth is unsustainable in her TED talk about big picture economics. She offers the Doughnut Model as an explanation for why businesses cannot continue this pattern of reckless expansion. The Doughnut Model provides a visualization for the environmental and social impacts of big business both in developed and developing countries. Because big corporations require vast amounts of resources in order to support their supply chains, people in developing countries must also sacrifice the resources they need to maintain a decent life. This creates a global economic imbalance because while developed nations enjoy an abundance of products and services, people in developing countries cannot afford these same luxuries. Instead, these people are deprived of their basic needs including: education, access to food and water, and healthcare. On the other end of the spectrum, resource consumption in developed nations has already exceeded the limits of four planetary boundaries. If this unregulated behavior continues, there may be severe environmental consequences. Raworth states that businesses may have to completely change their business models or develop technologies that contribute to a regenerative economy. Some companies are reluctant to pursue this path, and many simply do not know how. This has led some to believe that sustainable business is downright impossible.

Assertions that sustainability is incompatible with business can be found in multiple publications with some going so far as to claim that companies are falsely using sustainability as a platform to expand business operations. One publication, Eco-Business: A Big-Brand Takeover of Sustainability, claims that “[sustainability] is largely about more efficiently controlling supply chains and effectively navigating a globalizing world economy to increase brand consumption,” (Dauvergne and Lister). Companies make commitments to reduce emissions or mitigate waste in their CSR reports with the ultimate goal of attracting investors or increasing their customer base. However, when the metrics reports come out, they show little progress in these areas or even increase their environmental impacts. The book also argues that even if companies reduce the amount of resources used to manufacture products, they still try to sell more of these products in new markets which reverses all of their initial efforts. In short, a lot of companies are failing to meet sustainability targets because they still have the ultimate goal of rapid growth. Even worse is the fact that the companies that did make measurable progress in reducing the impacts of their supply chains have little incentive to share these efforts with competitors. Instead, “almost all big brands have treated their supply chain operations as trade secrets in order to maintain competitive advantages and enhance control,” (Dauvergne and Lister). Corporate leaders that make sustainability commitments may not have their head in the right place, which obfuscates the ultimate goal of mitigating environmental impacts. While some say sustainability is a marketing scheme to enhance profitability, others argue that going fully sustainable is not possible. The book, Winners Take All: The Elite Charade of Changing the World, argues that personal bias interferes with the ability to equally weigh all aspects of a problem. The book states: “When winners...stepped in to solve a problem as they assessed it, using the tools they had and knew how to use, they often overlooked the roots of the problem and their involvement in it,” (Giridharadas). While critics see sustainable business as a ruse or an impossible task, I would like to offer a glimmer of hope. I believe that businesses are already making significant progress, and as more people offer unique perspectives, I believe that companies can develop a holistic approach that truly addresses the roots of sustainability issues.

While some see the exploitative nature of business and the equitable structure of society as separate entities, an article from Harvard Business Review attempts to reevaluate this misconception as it relates to sustainability. The article argues that business and society are interdependent through inside-out and outside-in linkages. Inside-out linkages describe how a company impinges on society through its operations. These can have positive effects, such as providing income and tax revenue, and negative consequences, such as the release of harmful emissions and waste. Society also influences business operations through outside-in linkages. These include public demand for higher wages, safe working conditions, and less polluting processes. Businesses can respond to these pressures by engaging in responsive and strategic corporate social responsibility (CSR). Responsive CSR involves altering value chain activities to respond to the social concerns of stakeholders. This practice is largely a preventative measure against the fiscal consequences of poor stakeholder management. Strategic CSR goes beyond responding to public pressure. This practice uses inside-out and outside-in linkages as a framework for better serving customer needs and creating shared value. The article argues that in order to be successful, “each company must select social issues that intersect with its particular business,” (Porter and Kramer). Because social upheaval and environmental degradation are key issues facing society today, businesses are finding new ways to align their interests in order to better address these problems. The article explains how a business focus on social issues can lead to greater productivity and profitability. By ensuring that employees are adequately cared for, companies can foster an environment where employees actively want to work. The data shows that this improves employee morale, boosts productivity, and generates more profits. However, this mainly applies to employees working at businesses in developed countries. What about the 4 billion people living in extreme poverty around the world? How can businesses elevate their status and bring them into a globalized economy?

Currently, there is an untapped market that companies are only beginning to enter. This market is not governed by the conventional consumer behavior that is observed in developed countries. Instead, the consumers in this market have very little financial resources, no formal education, and limited access to technology and communication with the outside world. Yet, some believe that this market has the greatest potential for growth. The article, The Fortune at the Bottom of the Pyramid, describes how companies are tapping into this market by “creating buying power, shaping aspirations, improving access, and tailoring local solutions,” (Prahalad and Hart). Grameen Bank is providing micro-loans that uplift the economic status of families and local businesses in impoverished communities. Because Grameen charges very low flat fees, most people are able to pay back their loans providing a healthy return on investment. Ruf & Tuf Jeans sells jean components to local tailors at affordable prices. The tailors then sell completed jeans for a huge profit. This stimulates local economies and gives impoverished communities access to international markets. Tech companies such as Solar Electric Life Fund are using microcredit financing to provide poor communities with sustainable sources of electricity. This is especially helpful because it allows these communities to skip inefficient and ecologically harmful processes, such as coal mining. CorDECT is also working to reduce voice and data connectivity costs, which will give poor communities access to telecommunications technology that they could not otherwise afford. All these companies have a central goal in mind: to uplift the economic status of the world’s poorest communities while turning a healthy profit. Their success shows that there is a positive correlation between social improvement and financial performance. This directly contradicts the claim that businesses must sacrifice growth and profits in order to be socially sustainable.

Although companies are finding innovative ways to address social upheaval, a lot of criticism comes from a lack of business focus on environmental issues. The Brundtland Report published in 1987 explained the causes of sustainability issues and laid out a general framework for how to address them. According to the report, many of the world’s environmental issues stem from the uneven development of nations. Developed nations exert a huge amount of pressure on the environment through disproportionate consumption of resources. Businesses are investing huge amounts of financial resources into development of renewable energy technology, but widescale implementation is still in early stages. Therefore, businesses and policymakers are searching for other ways to mitigate the negative effects of extensive resource consumption in developed nations. This challenge is forcing leaders to shift their focus to other areas that have previously been glossed over. The Brundtland Report affirms that “sustainable development is not a fixed state of harmony, but rather a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are made consistent with future as well as present needs,” (Our Common Future). Although the development of sustainable technologies is still in its early stages, businesses and policymakers are finding environmentally friendly solutions by rebalancing the development of nations and uplifting people out of poverty.

The human race has come very far ever since our origins. We found better ways to survive and improve our livelihoods. We learned from our past mistakes and are continuing to recognize areas that need improvement. Today, we are becoming increasingly aware of the social and ecological challenges that we need to solve in order to secure a future for the coming generations. Although some are overwhelmed by the daunting nature of the tasks before us, many organizations are stepping forward to tackle these big issues one step at a time. It is ultimately up to businesses to make the right investments: providing capital for renewable energy research, uplifting impoverished communities, and rethinking the role of business itself. With enough people moving in the right direction, I believe we can create positive and meaningful change.