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Let’s face it, Corporate America has gone green and supposedly that means top-level businesses are making decisions that are more environmentally responsible. This is a good thing because the world is continuing to develop, and as it does this, more people are using more resources because they have more money. It is estimated that 25% of people on earth use 90% of the resources and generate 75% of the pollution.1They can afford to spend more on everything from houses to flights. The question then becomes, how can businesses maximize value out of a given set of resources?
The answer is that a company should focus on its capabilities and its essential resource usage. As an example, a tuna processing plant in Malaysia may specialize in supplying American seafood at a low cost, so the obvious issue becomes distance. It takes energy to transport the tuna. The shipping distance isn’t going to change, time is a factor, and there are probably independent shipping companies involved with other products on board. A sustainable business strategy would be a certain energy or capacity standard at the factory and not with the shipping route. While the business could focus on the shipping lane, it may hurt cost strategies or be out of scope as shipping companies have high bargaining power. This point is specifically relevant because the goal of sustainable business is not to provide luxury services for an elite group but rather a strategy for society as a whole that I’m going to call “aligning sustainability,” which can be scaled.
While there are luxury companies such as Patagonia Inc. that have sustainability programs, it’s important not to focus on these examples because they are luxury companies that provide services to a small quantity of people. Being luxury, they can afford to mark up prices. But poor people can’t afford price mark-ups, so companies supplying generic goods must focus aligning sustainability by maximizing long-term resource usage. If poor countries can't afford their necessities, they die—dramatic but important to consider. They could also revolt, and destroy resources unnecessarily. To Patagonia’s credit, Yvon Chouinard has done tremendous development in the arena of sustainability—literally the goal of using resources at a rate that they can be replaced. He has a great book, called Let My People Go Surfing, that discusses what Corporate America can do to be more efficient.3His park in Patagonia in Southern Argentina practices this mantra. My brother and I took a journey to that area this winter to check things out, and the water was so pure we were drinking it from the stream. Even so, the park was pure because people packed out their trash and left little footprint, and this practice makes somewhere else dirty. I also had to fly there, which took sixteen hours and used a lot of energy. The art of sustainability is to not sacrifice somewhere else, but to make the world cleaner as a whole.
That’s the point of sustainable alignment for business .It’s easy to make an area cleaner but harder to make the world cleaner. Focusing on the latter is true sustainability because the tragedy of the commons truly is present at every step in the process both micro and macro—one company or person may be more sustainable at the cost of another. While it may seem responsible to purchase an organic cotton shirt from Patagonia, or even have them recycle the fabric, the shipping could negate that benefit especially if planes are involved. Maybe a local conventional cotton shirt makes more sense. From a company standpoint, there are plenty of consulting services such as shippingefficiency.org bring to light the benefits in using different energy efficiencies. As companies evolve and determine their capabilities and target market, their sustainability will need to focus resource value maximization for those core competencies. It may not make sense to buy a more efficient ship if building the new ship is going to have more of an overall negative effect on the environment.
To conclude, for those cynics who believe that business is all about shareholder value, they are right. A company owes value to its shareholders above everything else, but what does that mean? In philosophy, I learned that it’s hard to define what people value. Is money everything? Have fun defining money—it’s harder than defining sustainability. Personally, I would rather have a 15% return than a 20% return on investment if that 5% gain meant that my favorite coral reef in the Bahamas or wherever would be sacrificed. Values may vary, but people fundamentally need certain resources so it would foolish to not focus on maximizing their value and use less. I would almost argue that people become more alert toward sustainability as the world becomes flatter because people expand their visible environment. For the first time in history, we can see most places in the world with the click of a button. People tend to care more about what they can see than what they don’t see. In the meantime, companies should focus on their core capabilities, and so should people as they make up these companies. Sustainable alignment is a mindset, and the variables and their contingents have to be considered to determine if resources’ value is being maximized.
References:1. Fingerut, Jon. "Human Populations." SJU Environmental Science. Saint Joseph's University, Philadelphia. Spring 2015. Class Lecture PowerPoint. 2. Greenberg, Paul. Four Fish: The Future of the Last Wild Food. London: Penguin, 2011. Print. 3. Chouinard, Yvon. Let My People Go Surfing: The Education of a Reluctant Businessman. New York: Penguin, 2005. Print.