Thank you all for your insightful and stimulating comments. As context for my response, I am on a core team that is working on a Future-Fit Business Benchmark project to accomplish what my article suggests is necessary. Our intent is to define the level of performance required on 15 to 20 key environmental, social, and governance indicators for a company to be a truly sustainable business that is fit for the future. We are defining science-based attributes of a company that creates net positive environmental, social, and economic value throughout its value chain, contributing to the possibility that the business, society, and the environment will flourish on our finite planet forever. We are two years into our project and have drafted the benchmark. Before releasing Version 1.0 next year, we will engage experts and sustainability leaders to help us get it right.
Manuel Escudero quite rightly points out that the intent of the UN’s Sustainable Development Goals for national governments is aligned with the intent of our Future-Fit Business Benchmark goals for business. I agree with him that aligning private sector and public sector sustainable development goals is necessary but far from sufficient. To make a difference, the ambitious science-based goals must be collaboratively embedded in the measurement, management, recognition, and reward systems of both public-sector institutions and private-sector companies. Defining the necessary performance goals is the easy part; embedding them in society’s institutions is the Holy Grail of all of us who care. We need to work together to make this happen—quickly.
Simon Zadek raises the wicked problem of accountability. It requires us to revisit the role of a for-profit business in society. For years, companies have prided themselves on externalizing and outsourcing their negative impacts. The Future-Fit Business Benchmark posits that a company is “extensively” accountable for its environmental and social impacts throughout its value chain—that is, throughout its upstream supply chain as well as its downstream customer chain and ultimate end-of-life disposal of its products. An oil and gas company is accountable for downstream carbon emissions from cars when drivers use its fossil fuels, just as a retail company is accountable for human rights violations in its upstream suppliers’ sweat shops in Asia. The resulting overlapped and shared accountabilities motivate several organizations to deploy their resources to mitigate sources of the largest negative ecological and social footprints in their mutual value chains. I agree that many of today’s business models will need to be redesigned to reflect this accountability, as does the B Corp business model. (In the interest of full disclosure, I am a certified B Corp.)
Alan Willis echoes Escudero’s question about how to embed the Future-Fit Business Benchmark into today’s flawed, unsustainable business models. We can’t wait for a better global governance system to materialize and force it to happen. We need important stakeholders like customers, investors, governments, and talented employees to demand that companies adopt strongly sustainable business models, or else these stakeholders will vote for companies that do with their wallets, capital, regulations, and feet. These stakeholders must be more sustainability literate if their combined efforts are to be an unstoppable megaforce, energized by an optimistic, shared, sustainability-informed vision of the world they want for their children and grandchildren. To accelerate sustainability literacy in society, we are considering developing additional future-fit benchmarks for municipalities, universities, and civil society organizations as companion sequels to the future-fit benchmark for business.
Stuart Hart acknowledges the need for companies to embrace Schumpeter’s creative destruction and reinvent themselves. Paul Gilding echoes this point in his latest Cockatoo Chronicle blog post, “The Global Energy Market’s Moment of Truth.” In it, he says that “reassuring companies that sustainability is good for all businesses is outmoded and not helpful. We have moved into an era of win/lose rather than win/win, and with that, sustainability is shifting from ‘environmentalists vs. business’ to ‘business vs. business.’ Taken together, this means we need to change the way we talk and think about climate change and business. Sustainability is not good for many businesses—in fact it means they’ll have to go out of business. This is what sustainability at its core is all about—things that are unsustainable will stop.” In the business jungle, it is survival of the most future-fit.
Finally, Mark McElroy questions whether The Natural Step’s (TNS’s) system conditions adequately allow for planetary boundaries associated with vital natural, social, and human capitals. Although the original TNS system conditions don’t use the language of “capitals” or “stocks and flows,” we have explored ways that they can. In fact, we express many of the issues that arise when system conditions are violated by companies as devaluations of natural, social, or human capital. The TNS principles reinforce the fact that we need to live off the interest of these capitals, rather than eating into the capitals themselves. McElroy is uneasy about whether the TNS framework is useful at a company level. For years, the TNS system conditions have been used successfully with municipalities and companies around the world. In addition, we have expanded the original four system conditions to a new level of detail to enhance their usefulness at a business level. He is quite right when he says that we rely heavily on his context-based sustainability (CBS) lens and his fair-share methodology in determining algorithms for the goals for each key performance indicator in the benchmark. Happily, we have found that the TNS framework and McElroy’s CBS framework are wonderfully synchronistic.
As an initiative for collectively understanding and shaping the global future, GTI welcomes diverse ideas. Thus, the opinions expressed in our publications do not necessarily reflect the views of GTI or the Tellus Institute.