Sustainability as Self Interest

sustainability

HBR’s article suggests that because a firm’s self-interest and profitability derives from a value chain within an economic ecosystem, then the sustainability of that ecosystem justifies heightened investment.

Large firms have a huge number of interactions and dependencies with the environment.  Because the effects of those dependencies on profits are hard to predict, and could be substantial, investment in sustainability for them probably makes sense.

But only if the firm is profitable.  Quantifiable direct connections between sustainability and self-interest gets fuzzy fast.  Quantifying a level of investment will be more gut than calculation.  And it’s easy to see how sustainability investment will become mere PR when profits are falling.

For companies deriving value directly from the environment (big agriculture, e.g.), sustainability investments are probably just common sense requiring no extra theory or justification.

For smaller firms that aren’t directly providing sustainability services or products, sustainability may find a place in mission and core-value statements, but that’s about it.  Smaller firms must necessarily focus on direct value chains, so encouraging employee volunteerism is probably about all they can afford.

Another exception would be fully vertically integrated firms — they are out of fashion these days, at least in the West, but are still widespread in the developing world.  Vertically integrated firms live within a cloak of self-interest with largely internal value-chains.  Anyone trying to promote sustainability in the developing world will be familiar with the problem.

My guess is that sustainability investments will remain a rich-world nice-to-have for some time to come.  Or, worse, like BP’s marketing before and after the Deepwater Horizon disaster…

David Brian Ward

David Brian Ward
David Brian Ward’s career spans 30 years of experience as an entrepreneur and leader of software innovation and implementation at firms large and small. Mr. Ward founded Telegraph Hill in 2010 with the goal of providing leading edge software development and technical management teams leveraging open source technologies to fast-growing companies grappling with technical, data and security debt.

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