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Dividends, Business & Capitalism: Four Sustainability Paradoxes

Effective communication around sustainability requires integrating disparate ways of thinking.

Submitted by: John Elkington

Posted: Oct 04, 2012 – 12:25 PM EST

Tags: csr, sustainability, social entrepreneurship, sri, leadership

 
Elkington

By John Elkington

Flying back from a stunning trip last month to Cape Town and Johannesburg, organized by the Cambridge Programme for Sustainability Leadership, I read Dan Pinker’s extraordinary book, A Whole New Mind. It argues that we are emerging from an era where our economies operated mainly on the basis of left-brain logic and rationality, we are now heading into a period where right-brain creativity becomes dramatically more important – with the result that tomorrow’s economies will be driven by new minds, integrating both left- and right-brain thinking. 

As the 747 winged across Africa, it struck me that tomorrow’s global economy must also learn to integrate the mindsets of the developed and emerging economies. While other travellers pulled up their blankets and went to sleep, I thought through the implications of Dan Pink’s thesis in the context of the meetings I had just had in the country which supplies the ‘S’ in the BRICS grouping of Brazil, Russia, India, China and South Africa. And several paradoxes came to mind – facts somehow in tension with reality.

The Outsider-In Paradox

The first paradox was the most personal, although all four link back to the way my colleagues and I human brainhave addressed the sustainability agenda. By temperament, I have always been a bit of an outsider – embracing environmentalism in the early 1960s, at a time when the environmental movement was seen by most people as edgy, uncomfortable, even misguided.

But four decades ago I was one of those who began working to bring the environmental agenda into the mainstream, first through governments and then through business and the financial markets.

The Serious-Comic Paradox

The scale of the demographic and environmental challenges we face is no laughing matter, but the second paradox is that humor has a critical role to play in switching on business leaders to the sustainability agenda. True, I can’t remember jokes, but I have long used gentle humor as a way to engage business leaders and audiences. And I was interested to see that Dan Pink sees humor as embodying many of the most striking characteristics of the right hemisphere of our brains, including “the ability to place situations in context, to glimpse the big picture, and to combine differing perspectives into new alignments.”

Pink quotes a Harvard Business Review article by Fabio Sala arguing that, “Humor, used skilfully, greases the management wheels. It reduces hostility, deflects criticism, relieves tension, improves morale, and helps communicate difficult messages.” The effective use of humor, we are told, is an indicator of high emotional intelligence. So that’s encouraging.

The Public-Private Paradox

The third paradox links to capitalism itself. 

When I chose to work with business almost four decades ago, exploring ways in which markets might produce more sustainable outcomes, many environmentalists thought that the only way forward was to get governments to regulate how business operates. The paradox here is that I don’t trust capitalism to address the sustainability agenda without immense external pressures, although I also continue to believe that business is our best hope of making real progress. 

That’s why I helped evolve the green consumer movement in the 1980s, the triple bottom line agenda in the 1990s, and now the Breakthrough Capitalism platform. The third is designed to stretch the organic food consumptionambitions of those who set the market rules – and those whose business it is to obey them, whether or not they choose to do so. 

It is also designed to support the work of those pushing towards radical innovation.  Strikingly, such innovation generally comes from innovators and businesses that move well ahead of the legislation, as is the case with those stretching towards zero-based targets in areas like carbon, waste or toxics.

The Establishment-Newcomer Paradox

And the final, fourth paradox?

Much of our attention has been focused on progress, or the lack of it, in the developed world, in regions like North America, Europe and Scandinavia, and in Asian countries like Japan and South Korea. But history suggests that when we enter periods of transformative change, the new order starts to appear on the edges of the old. Incumbent companies – and incumbent economies – rarely embrace revolutionary change. Which is one reason why there has been growing interest in the work of leading social entrepreneurs in countries like Bangladesh, India and Brazil.

But we should also focus on ways in which mainstream businesses in the BRICS are evolving their sustainability strategies.  This struck me forcefully when we visited companies like Yellowwoods, an investment firm, Transnet, which runs South Africa’s harbours, railways and pipelines, and Nedbank, one of the country’s leading banks which has made a major feature of its environmental credentials.

Transcending Zero-Sum In The Triple-Bottom Line

What impressed me was how many of these companies have embraced the triple bottom line agenda, but pushed it to another level. When we developed the triple bottom line approach in the 1990s, the idea was that business leaders should work out ways to create value right across the three dimensions developmentof economy, society and the environment. Soon, however, the focus switched to how best to make trade-offs between the three types of value, with progress in one area seen as almost inevitably leading to costs in at least one other dimension.

By contrast, a number of the South African businesses we met are focusing on how to extend the idea of “dividends,” which are central to capitalism. Typically, a company pays financial dividends to classes of shareholders, as decided by the board of directors. Now leading companies are concluding that the emphasis should also be on the distribution of social and environmental dividends. 

The idea is seductive, clearly, and essential to the future of sustainable business and economies. But if the focus is to be on the payment of positive dividends across all three dimensions of value, there will be major implications for companies that have publicly embraced sustainability. 

Take Transnet, forcefully committed to sustainability, but with a core part of the business focusing on creating the infrastructure needed to boost national exports of climate-destabilizing coal. As the plane landed at Heathrow, I still hadn’t worked out how to square that circle.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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