Book Review

Steering Business Toward Sustainability, (New York, NY: United Nations Press) Written by Capra, Fritjof and Gunter Pauli (1995)

Reviewed by: Charlotte Coultrap-Bagg, December 2008

Summary

“Steering Business Toward Sustainability” edited by Fritjof Capra and Gunter Pauli (published by the United Nations University Press) is a compilation of case studies discussing a variety of new approaches needed for us to move toward sustainability. The case studies (11 in total) focus on the role that business will play in this transition but also touches on the role of society, media, government, and education. The case studies are grouped into the following categories: 1) education; 2) incentives; and 3) implementation.

Capra and Pauli provide an overview to introduce the reader to the subject material. They begin by discussing the systemic problems linking environment and society that we face and introduce the concept of sustainability, particularly in business, as a way to address these issues. They suggest that we need a new paradigm that takes a holistic world view which they define as “seeing the world as an integrated whole rather than a dissociated collection of parts” (p 3). By focusing on the whole earth, this view takes on a “deep ecology” perspective, integrating humans and nature.

Capra and Pauli go on to discuss the need for ecological literacy so that we can better understand ecology. They note that the ecological principles of interdependence and the cyclical nature of most ecological processes. Their argument is that incorporating these principles into business has significant implications for business. Firstly, interdependence shifts the focus from objects onto relationships. Secondly, to be sustainable, industry needs to create cyclical patterns to use up waste generated through manufacturing and other processes. Other ecological principles relevant to sustainable business include: energy flow, partnership, flexibility, diversity, coevolution, and sustainability (i.e., dealing with a limited resource base and an extended time frame). As a result, business alone cannot solve these challenges—all sectors of society must cooperate.

In addition to the world’s ills, business today needs to find another “value-added” component. In the 1970’s, when conserving energy was a critical issue, business focused on productivity. In the late 1970’s, after the second oil crisis, business turned to quality as a way to gain a market edge. In the early 1980’s, the key was providing goods and services “just-in-time.” As labor was outsourced in the late 1980’s, business saw service as the way to succeed which was replaced in the 1990’s with the idea of re-engineering (i.e., starting from scratch). Now, as customers demand that companies excel in all of these areas, a new edge is needed. Capra and Pauli suggest that sustainability can offer companies an added edge and, at the same time, help drive society toward sustainability.

The introduction also includes a case study stating that NGOs provide a way for civil society to drive the necessary change in our world view. NGOs can act by pressuring governments, using media and public opinion to affect businesses, and educate the public about issues so that the public can help drive change. The case study also brings up issues of neocolonialism and notes how developed countries exploit developing countries for natural resources at very low prices while the developing countries are left to deal with the social and environmental costs imposed by this “neocolonialism” of multinational corporations.

Education

The first case study discusses the need for revamping business education. The main point is that executives need to agree that we are facing an environmental and social crisis and understand that technology alone is not the solution in order to address these problems. Because economic theories do not recognize the idea of limiting our growth and aim to maximize benefits only without considering non-economic factors, business contributes to our current world view. The chapter concludes by making recommendations for the improvement of curriculum, including: interdisciplinary study to emphasize business in the larger system, increasing ecological literacy so students understand the impacts  of companies, and incorporating natural resources into accounting and economics theories/models.

The second case study addresses steps companies need to take internally. Companies can take three approaches to sustainability: 1) assume that ecology/sustainability will become a trend and use this as a way to gain a market edge; 2) take no action; or 3) wait and see where the market goes before taking action. The case study goes on to discuss practical strategies for moving towards sustainability. Firstly, companies need to engage their customers to see what they want and what their concerns are vis-à-vis sustainability. Secondly, companies need to increase their ecological literacy and incorporate ecological concerns to the strategic business level. Also important is the development of metrics and benchmarks to measure progress internally and relative to other companies. Fourth, companies need to engage in systemic planning, taking into account the company’s connection with society and the future. Finally, individual and collective learning through changes in business school curriculum and in-house training programs will help raise the ecological awareness of executives and managers.

The next case study discusses the growing use of information by civil society to pressure corporate change. The case study points to the increasing use of the Internet as a cheap and instantaneous mode of information sharing. Awards and government reporting have also increased the visibility and availability of environmental performance data. However, self-reported data is not completely trustworthy. NGOs can play a key role in collecting and disseminating data. Finally, the authors note that data availability and dissemination still need to be improved.

The final case study argues that media can and needs to play a role in helping to rebuild communities which contemporary media has destroyed by fragmenting societies. The author suggests that the media can re-connect people by shifting from a market orientation to a community orientation. As a result, the author concludes that “a true community by its very nature will influence business in the direction of sustainability” (p 92).

Incentives

“Incentives” begins with a discussion on the role of German government and how Germany could use market mechanisms (e.g., waste tax) to improve the environment. The case study emphasizes that cooperation among government, industry, science, and society is critical to encourage the development of environmentally friendly goods and services. Finally, the case study concludes that OECD countries must take the lead on meeting international commitments for greenhouse gas reductions and help ensure sustainable development in developing countries.

The second case study discusses ecological tax reform to encourage the internalization of negative environmental externalities. The author argues that taxing labor and income actually discourages working. Instead, natural capital should be taxed to reduce its consumption, increasing industrial efficiency. Through ecological tax reform, the economy of scale will become more sustainable, allocation will become more efficient, and distribution will become more equitable.

If no ecological tax reform occurs, new management strategies will be needed and the next case study introduces a revised idea of fiduciary responsibility. The authors argue that fiduciaries take a narrow view in part because they are very removed from the social and environmental consequences of their decisions. By incorporating these concerns into investments, financial institutions can play a significant role in encouraging the integration of sustainability into business considerations.

Implementation

The first case study suggests that technology is linked to our values, so to become more environmentally friendly, we must alter our values; technology will then become very useful in pursuing sustainability. The suggested changes to industry include: zero-emissions production systems (which have the added benefit of helping to cut costs); focusing on front-end solutions to avoid waste-related regulations; and re-inventing industrial clusters which, once pollution is reduced, can be relocated in inner cities, revitalizing urban areas. The second case study describes living machines which use a collection of carefully selected organisms to perform a variety of tasks (e.g., produce food and treat wastes). Not only will the use of living machines reduce our dependence on energy-intensive technologies, it will help us live more in tune with nature.

The final chapter, by the founder of Patagonia, discusses Patagonia’s evolution from small, niche company to a much larger organization. Although the founder and his wife could have sold the company, they have decided to stay in business as a model of sustainable business for other companies to emulate. Because they realize that Patagonia’s clothing has environmental impacts, the company is continually trying to improve its practices and ensure that its products are long-lasting so they do not need to be replaced.

Pros/Strengths

Several of the case studies were successful in providing actionable steps to take toward sustainable business. In particular, the case study on “The Learning Process Within Corporations” (by Oscar Motomura) was very strong in that it described specific strategies and activities related to education, benchmarking, and collaboration among companies for helping executives move toward sustainability. Another strength of the book is that it touches on all aspects of society that are needed in moving toward sustainability (government, NGOs, business, media).

Cons/Weaknesses

A major weakness of this book today is that it was published in 1995 and is somewhat out of date. One major missing point is the discussion of global climate change and its implications for business. The omission of climate change is not the fault of the contributors or editors—it was just less of a sustainability issue in 1995. The case study, “Educating the Executive and Students,” notes that at this time, business school (Stanford) curriculum never touched on issues of sustainability. Now, with the growing trend in sustainable MBA programs, this point is still relevant but not as critical. Finally, Capra and Pauli chose the wrong case study to include in the introduction section. As discussed above, the case study is a discussion of how NGOs need to drive the change towards a new world paradigm. Given that this book is titled “Steering Business Toward Sustainability,” I think a case on the role a company is playing in moving toward sustainability would be a more fitting introduction.

Conclusion

This book can help raise a reader’s awareness to the variety of issues around sustainability and business. For the Erb student, however, this book does not introduce many new concepts outside of the questions we have already raised in the Erb seminar.  Keeping in mind that the book is over ten years old and thus is outdated in terms of its case studies, it would provide a good introduction to the average person who wants to learn more and think more about sustainability.

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