A thoughtful article in the Economist suggests we should be more rigorous with the meaning of ‘sustainability’ in the corporate world, granting it to the broad efforts undertaken by companies like SABmiller and Unilever.
What many companies call ‘sustainable’ measures should be more succinctly termed ‘efficiency’ measures … which, if we really think about it, is what corporations should be doing anyway in the name of just straight-up economic principles. If producing less waste, using less packaging, putting up solar panels and reducing energy use with LED lights is ‘sustainable,’ then of course companies that do this will see a return. Of course they will!
However, the jury arguably is still out on broader, more aggressive moves toward social and environmental responsibility. But companies like SABmiller are undertaking the Big Experiment.
SABmiller is the second largest brewer in the world. Here in North America we’re familiar with the company through products such as Leinenkugel, Molsen, Miller Genuine Draft and Miller Lite. And of course the next time you poo-poo that 40-ounce bottle of Olde English 800, just know that the company producing it is personally bringing experts and facilities to wheat farmers in Rajasthan in northern India to help them reduce water draw from the strained aquifer by 23 percent and water runoff by 40 percent. The company is also increasing its focus on its own customers with road-safety and anti-drunkenness campaigns.
The difference between SABmiller’s approach and other company-centered ‘efficiency’ efforts is the depth of focus outside the company’s own walls. A business can say “we reduced our water use” or “we have reduced our carbon footprint” or even say “we don’t use child labor” but refer only to what is directly from their own operations, which tends to be comparatively small.
The larger environmental and social impacts are often found in the sprawling supply chain and in consumer use.
According to Jane Nelson, director of the Corporate Social Responsibility Initiative at the Harvard Kennedy School, the broader view of social and environmental responsibility is part of a growing trend among businesses.
But therein we find the aforementioned problem: It’s still unclear if there’s a long-term economic benefit to doing business this way. Yes, the first movement toward sustainability helped businesses reduce their costs by way of creating greater efficiency. But will that be so with more diligent attention and action outside the company walls?
In SABmiller’s case the cost of their sustainability efforts, such as teaching basic business skills to a half a million entrepreneurs, may turn out to eclipse the economic benefit. If so, then a broader focus on the social good could conceivably make responsible products more expensive and simply turn people toward the cheaper, more harmful competitor.
However, we’re clearly not dealing with idiots here. The companies embracing broader, more socially responsible activities certainly have the long-term in mind, whether it’s preparing their companies for future legal requirements, staving off government oversight, or simply creating a world where their product is still viable and people can still afford to buy it. We’ll see in the coming decades what comes of these truly ‘sustainable’ practices.