For more than 20 years the starting point for any discussion of sustainable corporate activity has been the Brundtland Report. Its concern with the effect which action taken in the present has upon the options available in the future has directly led to glib assumptions that sustainable development is both desirable and possible and that corporation can demonstrate sustainability merely by continuing to exist into the future.
The problem with Brundtland is that its concern with the effect which action taken in the present has upon the options available in the future has directly led to easy assumptions that sustainable development is both desirable and possible and that corporation can demonstrate sustainability merely by continuing to exist into the future (Aras & Crowther 2008b). It has also led to an acceptance of what must be described as the myths of sustainability:
o Sustainability is synonymous with sustainable development;
o A sustainable company will exist merely by recognizing environmental and social issues and incorporating them into its strategic planning.
Both are based upon an unquestioning acceptance of market economics predicated in the need for growth and are based upon the false premise of Brundtland to which we will return later. An almost unquestioned assumption is that growth remains possible and therefore sustainability and sustainable development are synonymous. Indeed the economic perspective considers that growth is not just possible but also desirable and therefore that the economics of development is all that needs to be addressed and that this can be dealt with through the market by the clear separation of the three basic economic goals of efficient allocation, equitable distribution, and sustainable scale.
Concomitantly all corporations are becoming concerned about their own sustainability and what the term really means. Such sustainability means more than environmental sustainability. As far as corporate sustainability is concerned then the confusion is exacerbated by the fact that the term sustainable has been used in the management literature over the last 30 years to merely imply continuity. Thus Zwetsloot (2003) is able to conflate corporate social responsibility with the techniques of continuous improvement and innovation to imply that sustainability is thereby ensured. Consequently the trajectory of all of these effects is increasingly being focused upon the same issue.
There have been various descendents of Brundtland, including the concept of the Triple Bottom Line. This in turn has led to an assumption that addressing the three aspects of economic, social and environmental is all that is necessary in order to ensure not just sustainability but to also enable sustainable development. And all corporations imply that they have recognised the problems, addressed the issues and thereby ensured sustainable development. Let us start with the Triple Bottom Line - 3 aspects of performance:
It is our argument that these conceptions are not just incorrect but also positively misleading through an obfuscation of the key issues and have led to an inevitable outcome of false security. It is therefore time to re-examine the legacy of Bruntland and to redefine what is meant by sustainable activity.
Sustainability and the Cost of Capital
It is recognised in the financial world that the cost of capital which any company incurs is related to the perceived risk associated with investing in that company - in other words there is a direct correlation between the risk involved in an investment and the rewards which are expected to accrue from a successful investment. Therefore it is generally recognised that the larger, more established companies are more certain investments and therefore have a lower cost of capital. This is all established fact as far as finance theory is concerned and is recognised in the operating of the financial markets around the world. Naturally a company which is sustainable will be less risky than one which is not. Consequently most large companies in their reporting mention sustainability and frequently it features prominently. Indeed it is noticeable that extractive industries - which by their very nature cannot be sustainable in the long term - make sustainability a very prominent issue. The prime example of this can be seen with oil companies - BP being a very good example - which make much of sustainability and are busy predestinating themselves from oil companies to energy companies with a feature being made of renewable energy, even though this is a very small14 part of their actual operations.
All businesses15 recognize the business benefits of CSR activity in their reporting. Equally all business recognize that sustainability is important and it features prominently in their reporting. For example an investigation of the FTSE100 companies (see Aras & Crowther 2007a) reveals the following:
Any analysis of these statements regarding sustainability however quickly reveals the uncertainty regarding what is meant by this sustainability. Clearly the vast majority do not mean sustainability as discussed in this chapter, or as defined by the Brundtland Report. Often it appears to mean little more than that the corporation will continue to exist in the future. Our argument is not just that this focus upon such a vague notion of sustainability is misleading and obfuscates the need for a rigorous debate about the meaning of sustainability. Our argument is that this treatment of sustainability is actually disingenuous and disguises the very real advantages that corporations obtain by creating such a semiotic of sustainability.