Path towards the ‘Sustainable’ World !
By: Anshul Pandey
Tags: My Thoughts, Business, Capitalism, Shared, Society

Sustainability is one of the foremost concern that humanity faces today. Stuart Hart in his book, Capitalism at Crossroads discusses about some of the frameworks that can be used to develop sustainable strategies.

Hart also discusses about how Worlds are in collision and how money economy is encroaching on nature’s economy and making undeniable and many a times not so welcoming changes in local markets/culture. Later he suggests how corporations can obtain real benefits by building a balanced sustainability portfolio. However, all these efforts require a holistic view of the scenario and any reductionist approach would not solve the problem in the longer term.

I would like to argue that since we are trying to fix the externalities created by the businesses, we need to focus on fundamental premises on which the businesses are built, since we inherit the business frameworks from times when sustainability was not an issue. Going back in time, during the imperial era, all the imperial powers were focussed on extracting as much resources from occupied territories to bring wealth back home, without paying any attention to the local communities and environmental impact. In fact many bigger corporations that exist today were found during the pre world war era.

Businesses today are defined by their ability to make profits. Profits as we know today is measured in terms of monetary performance. Given that we need to re look how we conduct business, we may need to redefine our definition of profit (which is actually inherited from imperial times and before). New definition of value(profit) might include not only economic value but ‘societal value’, encompassing all the three economies(money economy, traditional economy and nature’s economy). Michael Porter, professor at HBS terms this as ‘shared value’, while Umair, a blogger at HBR, in his book ‘The New Capitalist Manifesto’ termed this as ‘thick value’. The idea is essentially the same, unless we redefine the basic premise to do business, we cannot change the outcome beyond a certain threshold. It would require more fundamental rethinking of the pillars of business.

However to do that and make businesses believe that they are actually creating value, we need to come up similar complex mathematical models and metrics to keep track of ‘value’ created by corporations and any benefits that can be extended to them.

Making businesses choose more green strategies and create new technologies and efficient processes seems to me that they still lack the vision of the future. This is because, though they are trying to change how a particular business functions, but zooming out of the picture, still doesn’t fundamentally change the business scenario, where profits are primarily driven by economic benefits and which augments human behaviour of greed.

Measuring economic profit is a well established science. However, it is really cumbersome to come up with any generic model to measure ‘societal value’ as it may depend on geographies and local culture. This would create some non-deterministic calculations of profit which corporations are inherently opposed to, since they work better in deterministic world defined by proper laws. Therefore to solve the problem of sustainability it is important to develop frameworks that provides a metric based approach to measure ‘societal value’ without undermining the current economic benefits to the corporations.

To conclude, I believe, to be able to measure the ‘value’ created by businesses and disseminate that information to the stakeholders can bring about change in the way businesses function, and wipe out the problem of sustainability, as we know it today.