Stakeholders and Sustainability: An Evolving Theory

Kevin Gibson
Published online: 27 June 2012
Springer Science+Business Media B.V. 2012
Abstract This conceptual article has three parts: In the
rst, I discuss the shortcomings of treating the environment
as a stakeholder and conclude that doing so is theoretically
vague and lacks prescriptive force. In the second part, I
recommend moving from broad notions of preserving
nature and appeals to beauty to a more concrete analytic
framework provided by the idea of human sustainability.
Using sustainability as the focus of concern is signicant as
it provides us with a more tenable and quantiable standard
for action, as in the case of carbon offsets and development
of measures such as the United Nations Sustainability
Indicators. In the nal section, I draw on notions of stew-
ardship to suggest that stakeholder management has a
positive responsibility to promote sustainability.
Keywords Stakeholder Sustainability Environment
Nature Responsibility Management
Introduction
Concern about the environment has become an integral part
of the business literature and practice. Many major cor-
porations have integrated environmental issues into their
mission statements, and spend considerable sums on pres-
ervation and remediation efforts (Mirvis et al. 2010; Snider
et al. 2003; Rondinelli 2004).
My thesis is that sustainability concerns should be
embedded in stakeholder theory rather than being treated as
a marginal issue. To establish this, I will rst critically
assess claims that the environment should be a stakeholder.
Next I will consider the notion that regard for the envi-
ronment ought to be a necessary background condition for
doing any business at all, and consequently stakeholder
theory has no particular advice to add. In response to both
these views, I contend that we should drop references to the
environment in general, and instead concentrate on sus-
tainability in terms of human values. Unlike general
exhortations to preserve the environment, sustainability
offers a specic gauge of the positive and negative effects
of business practice. After considering some objections, I
then argue that because stakeholder managers should have
an other-regarding attitude, they have an obligation to
pursue sustainable corporate strategies in order to avoid
diminishing available resources for human wellbeing.
Adopting this view will have signicant implications for
both management theory and action.
In an inuential 1991 article, Managing as if the Earth
Mattered, James Post presented a case where the local
manager of an American company in Mexico City faced a
dilemma. SEDUE, the Mexican environmental protection
agency, had ordered the plant shut down for a day because
air quality had deteriorated to emergency levels. At the
same time, the manager realized that these calls are rou-
tinely ignored by other companies, with the support of both
business leaders concerned about efciency and unions
whose workers would be sent home without pay. The
article is accompanied by a drawing of a biblical shepherd
gure looking over both skyscrapers and a pastoral scene
with the thought bubble Finding a balance between
industry and life sustaining systems (Post 1991, p. 37).
The case and the picture present two elements of a
discussion that has subsequently become dominant but
conceptually cloudy by endowing stakeholder status to
K. Gibson (&)
Departments of Philosophy and Management, Marquette
University, Milwaukee, WI, USA
e-mail: kevin.gibson@marquette.edu; kevin.gibson@mu.edu
1 3
J Bus Ethics (2012) 109:1525
DOI 10.1007/s10551-012-1376-5
mean, variously, nature, the environment, or the
earth. For example, Post (1991, p. 37) says:
To whom, and for what, is the modern corporation
accountable?Each attempt to extend corporate
responsibility to meet the expectations of new
stakeholders forces a reassessment of corporate
accountability and practiceThe analysis of stake-
holders that is so easily organized for most problems
is radically different when earth itself is a stakeholder
and the stake is nothing less than planetary
survival.
My contention is that the image Post presents ultimately
obscures discussions about the most signicant issues
facing corporate attitudes to the environment and dimin-
ishes the power of stakeholder analysis. Freeman and
Reichart (1998) have described this sort of view as the
Incompatibility Thesis Mindset, insofar as it suggests
that capitalism and market approaches are incompatible
with concern for the environment. When this view is
married with stakeholder terminology, it gives the
impression that the environment is a stakeholder whose
interests have to be balanced against other competing and
exclusive claimants in a zero-sum fashion: that is, if we
attend more to environmental concerns then business is
likely to become less efcient.
First, I will briey discuss the claim that the environ-
ment can be a stakeholder. Following Phillips and Reichart
(2000), I argue that the notion is conceptually vague and
impractical. They conclude that the natural environment
merits stakeholder consideration only instrumentally
based on obligations due legitimate stakeholders such as
local communities (Phillips and Reichart 2000, p. 195). I
agree that managers should care about the environment as a
reection of human interests, although I want to extend the
idea of the affected community from the immediate and
local to potentially all humanity, and, further, suggest that
the language of sustainability serves to clarify the issues at
hand. Finally, I suggest that stakeholder managers should
play a leadership role in promoting sustainability.
The Environment as Stakeholder
The term stakeholder came into prominence with work by
Freeman (1984), when he challenged the prevailing view of
managerial capitalism by saying that managers bear a
duciary relationship to those who have a stake in or claim
on the rm. Although Freeman himself has not made the
claim, the idea that the environment can be considered a
stakeholder is attributable to a loose interpretation of his
original denition of stakeholders as any group of indi-
viduals who can signicantly affect or be affected by an
organizations activities (Freeman 1984). Thus, Starik
(1995, p. 216), for example, says that the current anthro-
pocentric denition of the concept stakeholder may be
expanded to any naturally occurring entity which affects
or is affected by organizational performance. In another
case, Mitchell et al. (1997) suggest that the natural envi-
ronment is a potential stakeholder of an organization, and,
as Kolk and Pinkse (2007, p. 371) note, It is clear that the
natural environment forms a stakeholder if it is affected by
corporate activity. Taking the denition even further, if
the term environment includes the atmosphere, hydro-
sphere, lithosphere, ecosystem processes and all human and
non-human life forms (Driscoll and Starik 2004, p. 56),
then it becomes necessarily self-verifying that they are all
stakeholders, since any activity at all on earth will affect it
in one way or another.
Initially, it appears that by understanding stakeholders in
this way Starik (1995) and Driscoll and Starik (2004) make
a category mistake, as in Ryles classic case where a visitor
to Oxford is shown various buildings but complains that he
cannot nd the University, not realizing that the University
is a collective term for the community of colleges (Ryle
2008, p. 16). In the situation presented by Post (1991), the
stakeholder manager has to balance the interests of man-
agement and unions on the one hand against those of nature
on the other. Surely, though, Post is using shorthand
placeholder statements here, so that the SEDUE is not
actually guarding nature or the environment so much as
the interests of the populationthat is, people. If the smog
continues, then the local population will be harmed, and
costs incurred through deteriorating health and wellbeing.
The regulations requiring a shutdown in fact act as a proxy
for the general welfare of humans. Moreover, they are
determined by a political process representing collective
choices about the trade-off between wealth and wellbeing,
and we can easily imagine a democratic society that
chooses to forego environmental welfare in favor of eco-
nomic development.
Thus what is really going on in the case is that the
manager is faced with a choice about which kind of human
satisfaction is to be favored: one which gives a signicant
benet to select groups for which he has duciary duties, or
a more general human interest in clean air. In this context,
nature is a hypostatization, where we endow an abstract
concept with concrete status, in the same way as the claim
that the budget forces us to let you go looks like an
outside force is at work, although in reality, it cloaks
human acts and human choices.
As a case in point, let us examine an often-cited dataset
generated and categorized by the research rm KLD (Hill-
man and Keim 2001; Bartkus and Glassman 2008). In an
inuential article, Bendheim et al. (1998) looked at
ve groups of stakeholders: community, shareholders,
16 K. Gibson
1 3
consumers, employees, and the environment. Following
Starik (1995), they proposed as follows:
The environment ought to be given primary stake-
holder status because companies depend on it in such
a way as to not reduce its potential for replacement
and renewal (Bendheim et al. 1998, p. 309).
They found that companies routinely treated environ-
mental concerns more poorly than the other categories, and
concluded:
The scores for the environment are the lowest on
averageperhaps highlighting the fact that there is
no direct voice for the environment (as there tends
to be for other stakeholders) and environmental
groups that do exist tend to lack power to bring about
change in private corporations (Bendheim et al. 1998,
p. 326).
At rst glance it seems as if the same measures can be
used for both the environment and the other stakeholders.
However, the signicant difference is that the rst four
groups are collections of people. Thus, the studys metrics
assessed litigation costs associated with plant closures as a
negative, and philanthropy as a strength when looking at
the community category; the effect on shareholders was
shown by the returns on investment. The data for
employees consisted of costs related to dealing with unions
and legal penalties for safety violations as negative indi-
cators, compared to prot sharing, generous benets, and
joint decision making as positive ones; and product recalls
were contrasted with products and services that benet the
economically disadvantaged in the area when generating
data for consumers. These seem like reasonable ways of
quantifying a rms commitment to various stakeholder
groups.
However, it is not evident that the environment itself
emerges as a stakeholder on the basis of the way the data are
organized. When Bendheim and her colleagues looked at
the environment, they highlighted liabilities for hazardous
waste and regulatory problems, production of ozone-
depleting chemicals, high levels of legal emissions, and
production of agricultural chemicals as areas of concern,
while they regarded environmental remediation income,
pollution reduction, use of recycled materials, and conser-
vation projects as positive indicators. In each of these cases,
the activities have been framed in terms of whether or not
they constituted violations of the law, which is something of
a oating target as legal standards vary across time and
communities. For example, a company that legally dumps
toxic chemicals in an African country with lax rules might
not register on this scale. In contrast, many rms use the law
as a moral yardstick, and hence a rm that pollutes up to
legal limit, but not beyond, would be censured by this
analysis, although the regulations may reect the popular
will in a democracy. Moreover, the production of chemicals
in itself is not egregious; there may be cases where fertil-
izers and insecticides enable agriculture to ourish in areas
where it would be impossible to do so without their help.
Conversely, income from remediation may simply indicate
that the company has branched out into an innovative area,
not necessarily that it is committed to environmental con-
cerns. Similarly, the use of recycled material could be a
prudent strategic choice by management.
Hence while the authors claim that these actions dem-
onstrate a given corporate attitude to the environment, it
seems that we could reasonably recharacterize them on a
more human scale, perhaps in terms of, say, a corporate
stance on compliance with external regulation, a strategic
decision about sourcing raw materials, or taking advantage
of opportunistic new markets. Although the researchers
consider nature to be a stakeholder, when we parse out the
corporate actions that are used to assess environmental
responsibility, it turns out they could just as easily be
described as strategic choices that affect human stake-
holders, such as regulators, suppliers, or consumers.
As Orts and Strudler (2002) have persuasively argued,
even if we concede that nature is a stakeholder, it does not
automatically follow that it has unitary interests, or there
would be agreement on how we should interpret what is the
best for it and advocate accordingly. For example, as
Callicott (1980) has shown, the interests of animals can
clash with those of the land, and if we want to reduce the
suffering of sentient creatures, then perhaps humans should
intervene in some way. In Wisconsin, for instance, deer are
plentiful, and if we were to shield them from predators or
starvation to prevent suffering, the population would
increase and lead to overgrazing of the land and consequent
starvation. Similar problems arise with the ethics of
farming, in that rearing animals is unnatural in the sense
that we are engineering animals and putting them in arti-
cial surroundings for our own ends.
The same holds true when we consider ora. The plant
kudzu is an invasive species which increases nitrous oxide
levels and ground level ozone. There are signicant ques-
tions about whether an environmental ethic would treat it
as a precious part of nature that ought to be preserved or as
a danger to the ozone layer that should be destroyed.
Similarly, tearing up old growth forest creates subsequent
opportunistic growth of younger trees of different species,
and we have to ask which should be favored. Nor does
nature provide clear messages: Brown grass on a golf
course in Las Vegas could be an indication that it has an
interest in being watered, or alternatively could simply
mean that it does not belong there. A marshy area infested
with mosquitoes may be improved by drainage, but we
have to recognize that articial changes are a result of
Stakeholders and Sustainability 17
1 3
humans assigning values, not that nature presents us with
any obvious intrinsic interests.
The concern here is that when humans advocate for
nature, they will usually employ an implicit normative set
of assumptions about what constitutes a desirable outcome.
For example, Starik (1995, p. 216) says:
Treating non-human nature as one or more stake-
holders would provide some organizations a different
and, hopefully, a more enlightened perspective from
which to manage their relationships with their
respective natural environments. [Emphasis added]
Further, Stead et al. (2004, p. 22) suggest that environ-
mental awareness should be allied to certain politically
desirable states:
The economic dimension of sustainability also
involves the need to create for posterity an ecologi-
cally balanced and socially just system that provides
humans with the goods, services, economic justice,
and meaningful employment necessary for a high
quality of lifethe rapid entropy associated with
high economic growth rates is not sustainable over
the long run. [Emphasis added]
In sum, argumentspurporting to show that the envi-
ronment, as broadly understood, is an independent stake-
holder and therefore deserves consideration by business
managersare not persuasive. As Phillips and Reichart
(2000) conclude, the stakeholder framework does not
underwrite direct duties, but rather allows some stake-
holders to promote values they support. For example, local
communities may qualify as stakeholders, and the com-
munity members may advocate for, say, businesses to
lower pollution levels.
In the next section, I will examine the claim that man-
agers have a general responsibility to the environment.
While sympathetic to this view, I conclude that any such
duties should be based on resource preservation rather than
an intuitive or aesthetic sensibility.
The Background Duty to the Environment
When Orts and Strudler (2002, p. 226) critique the concept
of considering the environment as a stakeholder, they make
the positive suggestion that we consider regard for nature
to be a background condition for any business:
Our general point remainsjust as every rm has a
moral responsibility to obey the law, so too every
rmhas a moral responsibility to do the right
thing with respect to the natural environment,
regardless of its human stakeholders.
These baseline duties, such as regulatory compliance or
maintaining healthy and safe working conditions, will be
endorsed by all moral theories, and so they conclude that
duties to the environment are an obligatory part of doing
business.
There is a second element to their claim that is more
contentious, though. In order to work out what the duties to
the environment are, Orts and Strudler (2002) appeal to the
individual aesthetic values of managers. As I understand it,
this would be in line with a perspective that takes beauty to
be an inherent quality of nature existing independently of
human valuers, but is accessible to those with aesthetic
discernment. They say:
Environmental management must include an appre-
ciation of ethical value of the natural environment,
including esthetic, cultural and historical value.
These dimensions of ethical value are not easily
measured but to try to balance ethical values con-
cerning the natural environment in a framework of
human interests cannot be done. Questions about the
value of nature cannot be answered purely in terms of
human interests any more than can such questions as
Is this a piece of great art? or Is this mathematical
proposition true? (Orts and Strudler 2002, p. 227).
On reection, Orts and Strudlers (2002) two questions
appear different in kind. Mathematical propositions are
subject to rational assessment and critical tests where
predicted results can be proven. Art is much trickier. Orts
and Strudler (2002) do not attempt to explicate their aes-
thetic theory in their article but seem to draw on work
associated with Moore (1989), who believed that there
were multiple facets to happiness, including the apprecia-
tion of beauty. He felt that beauty was a non-natural
property that could not be fully described, but inherent in
objects. Accordingly, we might consider a piece of art or a
person to be beautiful, and we know it when we see it, but
it is impossible to dene precisely. Although Moore
believed in inherent values and acknowledged the difculty
in conrming a statement such as This is great art, he
nonetheless thought that we could rene our sensibilities,
and that beauty served to enhance human welfare. Hence,
he held that the question of whether an object is great art,
can, in fact, be translated into statements about human
interests.
A more recent attempt to prove that values exist inde-
pendent of human judgment has been put forward by
Richard and Val Routley (1980), with the famous last
man argument. Roughly, the argument asks us to imagine
that the world is decimated, and one dying individual is the
sole remaining sentient creature. The person destroys all
the geological and biological examples of great beauty, and
justies doing so by noting that, as there will be no one
18 K. Gibson
1 3
around to appreciate them, it makes no difference. We are
then asked to judge his actions. If we respond by saying
that his actions are wrong regardless of humans being there
to appreciate nature, then this is held to demonstrate that
there is such a thing as inherent value.
The claim turns out to be less convincing than it rst
appears, since the thought experiment is not actually
devoid of human valuers: we as the observers are making
judgments, and thus the story does not prove, as supporters
might suggest, that there are values which exist indepen-
dently of humans. Moreover, as Jamieson (2008) has
shown, the concept of inherent value can be ambiguous.
One of the several ways we use the term is to assert that
something is of moral concern, not just that it possesses
some mysterious quality. Thus, we sometimes use the
phrase that animals or natural sites have inherent value to
show that they ought to be included in a discussion (e.g.,
unspoiled vistas are valuable), but it does not necessarily
follow that we can extend that claim of consideration to the
statement that these things possess value in and of them-
selves. This is not to deny that many, if not most, people
might agree on the beauty and majesty of a vista such as
the Grand Canyon or the undesirability of oil-soaked
waters, beaches and seabirds from a break in a pipeline.
The point is that when Orts and Strudler (2002) advocate
environmental duties, we need to bear in mind that the
standards of aesthetic value they appeal to are human social
constructions.
To be fair, Orts and Strudler (2002) acknowledge that
values need to be balanced. Their resolution is to have the
participants think seriously about the consequences for
the natural environment. For example, a company should
incorporate aesthetic, cultural, and historical values with
traditional bottom-line concerns, so that companies and
communities make thoughtful trade-offs. The knotty
problem with their terms, though, is that they do not tell
how a manager should quantify those values, especially as
they argue that it is impossible to assess aesthetic concerns
within a framework of human interests.
It is also important, I believe, to not trivialize or caricature
the approach, since the position may in fact reect the
general vagueness of ethical prescriptions overall. Yet for
our purposes, we can see that the move to a general admo-
nition to regard the environment in business decisions begs
questions about environmental valuation and priorities.
Consider the case of interstate highways in America. A
century ago, travel was relatively limited, but at the same
time, there was relatively little pollution from automobiles.
Today, road travel is easy and quick, but the amount of
pollution has increased. However, it remains an open
question as to whether we would trade places with our
forebears, since many of us prefer the convenience of cars
at the price of slightly dirtier air. Similarly, take the case of
traveling to Las Vegas from a distant city in the USA. An
airline provides a service that people are willing to pay for,
and ying will cause pollution in the atmosphere. Cus-
tomers are aware of this, and are willing to tolerate it in
exchange for the convenience travel affords. In general, the
carbon emissions are not offset, and thus, the market
effectively hides the true cost of the pollution levels,
although we could fairly easily make the carbon offset
calculation and incorporate it into the cost of travel if there
were the political will to enact such regulations. Las Vegas
is something of an articial city, sustained by water piped
in from distant locations, and cooled by mechanisms which
release yet more heat into the surrounding area. Yet there is
no general outcry against the environmental degradation
the city causes: indeed, it has been one of the fastest
growing areas in America (Christie 2007).
It appears, then, that the way we treat the environment is
often judged normatively, but there is no universal agree-
ment about the standards involved or how managers should
weigh environmental factors against others, such as con-
sumer demand. If we take the case of heritage sites, for
example, it turns out that up to two-thirds of respondents
(and often up to 90 %) regularly say they are not willing to
pay anything at all to preserve cultural and historical sites
(Pearce et al. 2002). Based on this information it would be
reasonable for a manager to argue that, given consumer
demands, economic progress should outweigh aesthetic
considerations. Developers of major highways in Los
Angeles, for example, apparently gave human convenience
a greater priority over esthetic concerns (or perhaps had a
modernist aesthetic favoring functionality); the notion of
beauty can be very much in the eye of the beholder. Thus,
idea of a factory in a pristine rural landscape could be very
appealing to an impoverished farmer.
In short, the move that Orts and Strudler (2002) make to
preserve environmental concerns by appealing to the
esthetic sense of managers is nebulous and overly depen-
dent on individual sensibilities. It is therefore desirable to
establish a less subjective unifying principle, even at a
fairly abstract level.
Human Sustainability
If we look again at some of the scholars in this area, it
turns out they have actually blended the notions of envi-
ronmental interests and sustainability. In Christopher
Stones (1972) seminal article Should Trees Have
Standing? for example, he endorses a form of universal
consciousness as a desirable change in our attitude toward
the environment, but it is actually manifested using the
traditional legal concept of remediation. For instance, he
suggests:
Stakeholders and Sustainability 19
1 3
One possible measure of damageswould be the cost
of making the environment whole, just as, when a
man is injured in an automobile accident; we impose
upon the responsible party the injured mans medical
expenses. Comparable expenses to a polluted river
would be the cost of dredging, restocking with sh,
and so forthConsider, for example, an oceanside
nuclear generator that could produce low cost elec-
tricity for a million homes at a savings of $1 a year
per home, but through a slight heating effect threa-
tened to kill off a rare species of temperature sensi-
tive sea urchinsone compromise solution would be
to impose on the nuclear generator the cost of making
the ocean whole somewhere else, e.g., reestablishing
a sea urchin colony elsewhere, or making a somehow
comparable contribution (Stone 1972, pp. 476, 478).
Similarly, Driscoll and Starik (2004, p. 62) move,
almost imperceptibly, from talking about a natural contract
with the biosphere, to the way managers change focus
from rm-centered to eco-sustainability. They conclude
that nature ought to be a stakeholder because of the
inherent interdependency between the global economy
and the global ecology (Driscoll and Starik 2004, p. 69).
That is, we need to care about nature, but only insofar as it
is instrumentally valuable for humankind. In Posts article,
he is concerned about the fate of the earth, but similarly
concludes that our main worry is whether we are facing a
loss of human welfare. What emerges, then, is that these
authors have an implicit view of environmental responsi-
bility in terms of what may benet or hurt people. Human
welfare will be harmed by diminishment of resources
overall. Therefore, a more explicit version of their view
reveals an underlying concern for sustainability in terms of
human wellbeing, and hence we could drop the language of
responsibility to the environment in favor of making sus-
tainability the locus of moral discourse.
Stakeholder Theory and Human Sustainability
So far my argument has been fairly negative: regarding
nature as a stakeholder in its own right seems rhetorically
powerful but conceptually lacking. In addition, utilizing a
general principle of environmental concern to undergird
management attitudes begs questions about balancing pri-
orities based on personal aesthetic judgment. Next, I turn to
more positive claims based on sustainability and stake-
holder theory.
Stakeholder theories rely on various foundational moral
approaches. Phillips (1997), for example, bases his analysis
on notions of fairness and reciprocation. Central to most
interpretations of the theory is the idea that stakeholders are
interdependent and can forge symbiotic relationships.
Stakeholder awareness is essentially, in Senges (1990)
words, other directed. Thus, a rm ought to recognize
the local community by virtue of the benets it has
received from its host. Following Wicks et al. (1994) the
future of business leadership is likely to lie in a collabo-
rative approach that involves inclusion and cooperation
with various stakeholder groups.
Here I want to take a far more expansive view of
community than Phillips (1997). He restricts his analysis to
benecial acts that ought to be reciprocated, such as tax
breaks given to a company by a town that subsequently
imply some obligation on the part of the rm. However,
when it comes to environmental issues, I see no reason to
consider any particular action as local, since all actions are
likely to have some effect on total welfare. For instance, in
Posts (1991) example of the smog in Mexico, the effects
are probably far-reaching, and even if they are small they
may be cumulative. Thus, the plant managers decisions
are partially responsible for climate change or other effects
on people in distant lands. The point is that when it comes
to planetary sustainability, the whole global population is
likely to be affected by business decisions, and therefore
ought to be considered under a stakeholder approach.
Moreover, a minimal ethical obligation under any classic
theory will be to avoid unnecessary harm. This would
allow for the use of resources, and even their destruction if
there were available substitutes. Combining these ele-
ments, then, results in a moral prescription for businesses:
at least, to desist from diminishing the available resources
(e.g., clean air or the ozone).
At this point, I will make a constructive proposal by
moving to a third approach that reasserts the role of stake-
holder theory. It involves two crucial distinctions: First, we
should abandon talk about the environment and talk
about human sustainability, which is, in principle, quanti-
able. Second, managers should acknowledge a minimal
moral principle of avoiding unnecessary harm. Combined,
these elements will give managers a workable normative
principle to deal with environmental questions, especially
when seen through the lens of stakeholder theories.
It is easy to see that diminishment of natural resources
over time without invention or discovery of substitutes will
likely lead to shortages, especially given a growing global
population and heightened material aspirations. However,
under the principle that people need not live at a subsis-
tence level, there is no imperative to restrict production or
consumption unless it results in overall depletion. Use and
even destruction are morally permissible as long as there
are appropriate substitutes available through recycling,
remediation, or innovation. Thus, there would be plural
moral bases for maintenance, perhaps best summed up by a
version of Rawlss difference principle, to the effect that
20 K. Gibson
1 3
anyone may benet from use of natural resources as long as
no one is made worse off (Rawls 1971, p. 68).
The proposal has several virtues. It is principled, and
gives us a standard by which we can measure our decisions
rather than having to rely on vague recommendations to
support the environment. It is based on metrics such as
carbon offsets or pollution control, which are assessable. In
effect, this view provides a middle ground between envi-
ronmental protectionism and exploitation, based on a
general principle of resource sustainability.
Reliance on sustainability as the key value will be
neutral about the type of use that we make of the envi-
ronment and agnostic about the merit of any given decision
as long as the available resources of the earth are not
diminished. In a contentious example, we might imagine
that we could power vehicles using whale oil, and a con-
certed whale oil industry might be created, but more along
the lines of farming than ocean shing. While the merits of
using sentient creatures for human convenience might be
debated, the principle would allow the industry to prosper
as long as the population of whales was not reduced.
Explicit in my proposal is an anthropocentric point of
view that rejects intrinsic values, or values that do not
originate as human judgments. This is not to deny that
there are some things that we value very highly, sometimes
more than we value our own lives (e.g., when activists put
themselves at risk to protect hunted animals). The con-
trasting view, the so-called deep ecology, will claim that
nature has value in and of itself. However, as noted with
Orts and Strudler (2002) above, there are difculties in
determining the origin and articulation of any such values
(see also Dorf 2001).
Furthermore, human-centered sustainability implies that
a company would have no obligations to ora or fauna that
may be affected, unless they impinge on human welfare. In
aquafarms, for example, the company may have duties to
remediate the salinated ground water or to compensate
the community to make sure humans are not harmed by the
presence of the industry. We could imagine that the
farming might affect the local insects, with the result that
disease bearing mosquitoes become more of a problem, in
which case stakeholder management would see a reason-
able argument for intervention. On the other hand, if there
were a species perhaps like ticks or kudzu the presence or
absence of which had a negligible effect on the human
population, then the company would not have to protect
them based on a purported claim that nature, as broadly
interpreted, was being harmed.
Contrary to some theories, life under my analysis only
has instrumental value, and humans assert it (contra e.g.,
Rolston 1989). Thus, a yew tree may be valuable for its
medicinal qualities, or vultures may benet us indirectly by
scavenging. On the other hand, it would be acceptable to
kill and consume purpose-bred chickens. Similarly, the
value of habitat would be determined in human terms.
None of this is to deny a principle of conservation, in the
sense that ora and fauna should be assumed to have value
to humans unless they can be shown otherwise. Never-
theless, the locus of consideration remains human welfare.
The principle would allow consumption, but it would
require that any resource either be maintained or replaced
with a substitute. Thus, if we could get power from sea
water, there would be no prohibition on using it as long as
we did not diminish the various other ecological functions
of the oceans such as carbon sinks, home for aquatic ani-
mals, and so forth. Using sustainability as a yardstick for
corporate environmental responsibility will not make dif-
cult issues easy or resolve conicting interests. Yet it does
give us a principled decision procedure, although it will
always be tempered by the limits of the available metrics.
Measurement
Using sustainability indicators has the promise of showing
the extent to which business activity is depleting overall
resources. For example, Ray Anderson, CEO of Interface, a
major carpet manufacturer, had an epiphany when he
realized that, in order to create a billion dollars worth of
product, his company had extracted 1.224 billion pounds of
material from the earths natural stored capital, and of that
about 800 million pounds was either coal, oil, or natural
gas that was burned up in the process (Anderson 1999).
Developing appropriate metrics to gauge optimal human
welfare is by no means unproblematic. On the other hand,
using sustainability as a basis for decisions at least puts
such concerns on a rational footing. For instance, the
concept of accounting for the production and remediation
of carbon dioxide production has become commonplace
(Carbon Trust 2011). Over 30,000 rms worldwide now
subscribe to standards such as the United Nations System
of Integrated Environmental and Economic Accounting
(United Nations et al. 2003) and the International Organi-
zation for Standardizations ISO 14000 family of require-
ments (International Organization for Standardization
2004), both of which allow benchmarking and quantiable
decisions about sustainability (Peglau 2007). In a similar
vein, John Elkington (2004) and his colleagues have
developed metrics to assess the nancial, social, and
environmental impacts of businessthe so-called Triple
Bottom Line (see, e.g., Elkington 2004; Hubbard 2010).
The Center for Sustainable Organizations (2011) has
introduced the concept of a social footprint to advance
conventional indicators (Kleine and von Hauf 2009; Center
for Sustainable Organizations 2011). Moreover, some
accounting rms now offer social and environmental
Stakeholders and Sustainability 21
1 3
auditing services, for example, Cap Gemin Ernst &
Youngs Value Creation Index (Funk 2003). Such auditing
mechanisms have limitations, to be sure (see, e.g., Russell
and Thomson 2008), but at the same time, represent an
industry in its infancy, and at least provide some means to
weigh choices on a rational and defensible basis.
Some Objections
There are three likely objections to making sustainability
the main focus of environmental responsibility for man-
agers. The concept of sustainability may not capture all that
is valuable about the environment; sustainability calcula-
tions reduce environmental concerns to cost/benet anal-
ysis; and assigning values will be subject to interpretation.
It is sometimes said that some natural and cultural
objects are literally priceless, and hence cannot be given a
market value. In the same way, in the same way as we
would nd it odd to put a price on love, the argument goes
that there are some things which are so precious that they
ought to be preserved no matter what.
The argument has great appeal, but we should note two
points. One is the fact that some things are very difcult to
quantify, such as the value of a heritage site or a colony of
sea urchins. Yet that is not to say that it is impossible to
make ranked decisions based on sophisticated techniques
such as contingent valuation or choice modeling. In con-
tingent valuation, people are asked to put values on hypo-
thetical trade-offs, along the lines of how much would you
be prepared to pay to preserve spotted owls from extinc-
tion? and in choice modeling, respondents rank a set of
possible outcomes, which allows researchers to determine
authentic preferences. Even in a case such as designating an
area as a wildlife preserve, we still make ordered trade-offs,
which are essentially quantied rankings of human welfare,
and they will always be subject to revision.
Recall that in the earlier discussion of intrinsic value, the
term might mean that something is worthy of moral con-
sideration, and not always that it is literally priceless. Thus,
it makes sense to say that in many ways, human life has
innite value. At the same time, though, we routinely make
decisions that have actually put a monetary amount on life:
whether they are decisions about allocating health care
funds or how much compensation a court would award for
a wrongful death. That is, we can perfectly reasonably say
of human life, or the environment, that it has innite value
while at the same time making quantitative decisions about
them (see, e.g., Mills and MacLean 1992).
Orts and Strudler (2002) make a similar point in their
article when they note there are signicant problems with
reducing the analysis of harm to cost/benet calculations.
They illustrate it using the notorious Pinto case where
juries awarded large damages after learning that the Ford
company had made a nancial calculation that had put a
dollar gure on the suffering and death of potential burn
victims and weighed it against the cost of xing a design
problem. Nevertheless, while the moral issue in the case
has often been interpreted as one of doing a cost/benet
analysis on human life, the actual problem may not have
been the methodology but instead getting the gures right.
That is, businesses do have to make decisions, just as
municipalities have to when weighing the costs of install-
ing trafc lights against the potential for accidents. The real
issue, it seems to me, was not that Ford made a cost-based
calculation, but instead that they put an unrealistically low
price on human life which resulted in misleading economic
signals. In brief, we should not confuse poor projections
with a poor decision procedure.
Moreover, following Amartya Sen, we can say that
rational choice theory ought to include notions of self-
interest, sympathy, and commitment (Sen 1977, 1985;
Peter and Schmid 2005). Sen describes sympathy as the
benecial feeling that comes about from incorporating
others welfare into our choices (social psychologists have
used the term social utility for this effect). Commitment
refers to decisions where there is no obvious link to our
personal welfare; for example, activities that fail to provide
benets and may even create losses. Sens (1977) charac-
terization demonstrates that there is grounding in actual
economic activity that may be other-directed. Conse-
quently, the metrics involved in sustainability calculations
will be more than a simple cost/benet analysis. By inte-
grating sympathy and commitment, any calculation will
have to take account of harm to others, including negative
externalities or the overall reduction of resources.
An associated objection is that in moving from a general
duty to the environment to a human-centered focus on
sustainability we will likely lose something: we may make
misguided decisions which will deprive future generations
of an invaluable and irreplaceable resource. For example,
the Burrup peninsular in northwestern Australia has over
300,000 petroglyphsstone etchingssome dating back
over 10,000 years. Recently it has been the site of indus-
trial development, including a fertilizer factory that pro-
duces urea and ammonia, and it is estimated that a quarter
of the images have been destroyed by construction and
pollution (Bird and Hallam 2006).
Certainly, some resources will be at risk under the
principle of sustainability, and some managerial decisions
will be deleterious to the environment. Recall, though, that
it is not the case that anything goes, since the threshold of
acceptability would be whether current benets would
deprive not only current but also future generations of
resources that have no substitutes or adequate remediation.
Hence, the Australian petroglyphs may be highly valued,
22 K. Gibson
1 3
but are not of innite valueperhaps it turns out that many
petroglyphs are repetitious and artistically insignicant
and thus not inviolate as long as the sustainability condi-
tions are met.
Individuals and groups could advocate for the social
utility of resources at risk (Loewenstein et al. 1989). For
instance, those who favor preservation of Australian petro-
glyphs could make the case that they are a unique resource
that could be lost forever, and future generations would be
poorer for the loss. There are also models that could incor-
porate the desires of those without nancial clout and use
political and transnational standards to establish a standard
of heritage sites that are deemed valuable. For example,
Faucheux and OConnor (1998) conclude that economic
models will always be incomplete and will have to be sup-
plemented by value-based dialogue. These lacunae need not
necessarily be pernicious, though, as long as there is an
overarching commitment to sustainability by all parties.
Admittedly, assigning values to the environment in any
form will involve judgment calls that are inevitably open to
interpretation, and the demand to maintain the extant
resource levels will be somewhat vague because of the
difculties in creating appropriate metrics. In addition,
psychologists repeatedly tell us that we are inclined to
ignore negative information, and interpret data that favors
immediate and personal interests, as well as underestimate
our drain on common resources and the amount it would
take to replenish them (Messick and McLelland 1983;
Bazerman and Watkins 2004). Overcoming these biases
will require moral imagination and a realistic understand-
ing of the ecological threats we face.
Ultimately, the question may boil down to whether there
are any adequate alternatives to the principle of sustain-
ability, such as free markets or regulation informed by
panels of experts. Yet a persistent difculty is that pre-
valent current business strategy tends to treat resources as
if they are not signicantly reduced by consumption, like
Lockes (1980, Sect. 33) vision of someone harmlessly
drinking water from a river, whereas the evidence shows
that under market capitalism as currently practiced, world
resources are indeed being depleted (Hart 1997). In the
absence of innite resources, untrammeled depletion can
be considered harm to those who no longer have the
opportunity to enjoy them (see, e.g., Freeman and Reichart
1998). The minimal stance of maintaining the available
resource pool at least provides a potentially quantiable
principle undergirded by the general moral imperative to
do no unnecessary harm. Another way of putting this is to
consider ourselves as stewards of our shared planetary
resources. This does not mean that we abandon private
property, but rather when we realize that there are common
and enduring human interests, we should look to a model of
stewardship instead of consumption.
The basic principle of stewardship is drawn from
notions of tenancy governed by the legal term usu-
fructliterally, use of the fruit. The concept underwrites
the fact that it is acceptable to use and make prot from
property belonging to someone else or held in common so
long as the property is not depleted, and these principles
form the basis of tenancy and trusteeship. Thus, someone
who rents an orchard is entitled to the fruit from the trees,
but the land has to be maintained to ensure future crops.
Similarly, established law says a mill may use a river as a
resource, but cannot reduce its capacity for use by others.
As Carol Rose (1994) suggests, in contrast to traditional
notions of private property dominant in recent history,
these laws promote values of moderation, proportionality,
responsibility to others, and prudence. Existing ideas of
property rights can easily accommodate approaches that
see the world in terms of stewardship and preservation of
resources for future generations, since the conceptual
framework of use while maintaining the underlying
resource is already in place.
Toward Stakeholder Leadership
The challenges of sustainability have to be confronted
urgently, given the trend of economic development to
deplete the earths resources and the rapidly emerging
markets in China, Brazil, India, and Russia, among others.
A generalized duty for businesses to act responsibly toward
the environment as a background condition has the risk of
being interpreted locally, and often in the form of miti-
gating pollution (Bansal and Kistruck 2006). In addition, if
a business has a neo-classical view of property rights, there
is no moral prohibition on acquisition, use and disposal of
materials without regard to the depletion of global
resources overall.
All things considered, the issue of sustainability ought to
be an underlying principle of business practice. Thus, the
appropriate leadership will necessarily incorporate a moral
sense, concern for others, and a wide vision about the
future of the planet: in short, stakeholder leadership.
Following Wicks et al. (1994), the future of business
leadership concerning the environment is likely to lie in a
collaborative approach that involves inclusion and coop-
eration with various stakeholder groups. Maak and Pless
(2006, p. 103) develop this insight when they maintain that
role of leadership is:
To build and cultivate sustainable and trustful rela-
tionships to different stakeholders inside and outside
the organization and to coordinate their action to
achieve common objectives (e.g., triple bottom-line
goals), business sustainability and legitimacy and
Stakeholders and Sustainability 23
1 3
ultimately to help to realize a good (i.e., ethically
sound) and shared business vision.
To this end they believe leaders should take on multiple
roles: a steward of values and resources; a good citizen; a
servant to others; a visionary who provides inspiration and
perspective with respect to a desirable future; and a coach
who can bring together people from multiple backgrounds
to realize a common vision.
Conclusion
In this article, I have suggested that describing managements
task as balancing the interests of the environment as one
stakeholder among many is initially attractive but ultimately
lacks conceptual clarity or prescriptive power. On the other
hand, suggesting that managers have general duties to the
environment has its own set of difculties. My proposition is
that we discard general talk of the environment, and instead
focus onthe more tangible idea of human sustainability. Doing
so will give managers a more denite standard for decisions
involving nature and social values. As a nal point, the
emphasis on sustainability implies that moral managers should
adopt a broad stakeholder approach that takes a leadership
stance in face of the pressing and universal demands that
economic activity places on our limited common resources.
Although there are differences in our conceptual
frameworks, I agree with Post (1991) in believing that
sustainability is the prime issue confronting business today,
and his concluding comment remains as compelling now as
when he wrote it:
One hundred years ago, business was on the verge of
dening a scientic way to manage enterprises.
Today, we stand at the edge of another transforma-
tion, in which the planet imposes the boundaries
within which efciency and abundance are under-
stood. It is a time of both promise and consequence.
The promise is that we will nd an environmentally
sustainable path into the twenty-rst century. The
consequence of not doing so, as Churchill said of
defeat, unthinkable.
Acknowledgments The author is grateful to the organizers of the
3rd Bergamo-Wharton Joint Conference on Stakeholder Theories, and
the useful comments of anonymous reviewers who have helped in
shaping the nal form of the article, as well as invaluable assistance
from Elizabeth Lentini. Financial support was provided from the
Marquette University Way-Klingler Faculty Research Fellowship.
References
Anderson, R. (1999). Mid-course correction: Toward a sustainable
enterprise: The interface model. White River Junction, VT:
Chelsea Green Publishing.
Bansal, P., & Kistruck, G. (2006). Seeing is (not) believing:
Managing the impressions of the rms commitment to the
natural environment. Journal of Business Ethics, 67, 165180.
Bartkus, B., & Glassman, M. (2008). Do rms practice what they
preach? The relationship between mission statements and
stakeholder management. Journal of Business Ethics, 83,
207216.
Bazerman, M. & Watkins, M. (2004). Predictable surprises. Boston:
Harvard Business Review Press.
Bendheim, C. L., Waddock, S., & Graves, S. (1998). Determining
best practice in corporate-stakeholder relations using data
envelopment analysis: An industry level study. Business and
Society, 37(3), 306338.
Bird, C., & Hallam, S. J. (2006). Archaeology and Rock Art in the
Dampier Archipelago: A report prepared for the National Trust
of Australia (WA). Retrieved August 20, 2011, from http://
www.burrup.org.au/.
Callicott, J. B. (1980). Animal liberation: A triangular affair.
Environmental Ethics, 2(4), 311338.
Carbon Trust. (2011). Carbon footprinting. Retrieved Jun 19, 2011, from
http://www.carbontrust.co.uk/cut-carbon-reduce-costs/calculate/
carbon-footprinting/Pages/carbon-footprinting.aspx.
Center for Sustainable Organizations. (2011). The social footprint
method. Retrieved Jun 19, 2011, from http://www.sustainable
organizations.org/the-social-footprint.html.
Christie, L. (2007). The fastest growing U. S. cities. CNN Money.
Retrieved August 17, 2010, from http://money.cnn.com/2007/
06/27/real_estate/fastest_growing_cities/.
Dorf, R. C. (2001). Technology, humans and society: Towards a
sustainable world. San Diego, CA: Academic Press of Elsevier.
Driscoll, C., & Starik, M. (2004). The primordial stakeholder:
Advancing the conceptual consideration of stakeholder status for
the natural environment. Journal of Business Ethics, 49, 5573.
Elkington, J. (2004). Enter the triple bottom line. In A. Henriques & J.
Richardson (Eds.), The triple bottom line: does it all add up?:
Assessing the sustainability of business and CSR. London, UK:
Earthscan.
Faucheux, S., & OConnor, M. (1998). Valuation for sustainable
development: Methods and policy indicators. Northampton, MA:
Edward Elgar Publishing.
Freeman, R. E. (1984). Strategic management: A stakeholder
approach. Boston: Pitman Publishing.
Freeman, R. E., & Reichart, J. (1998). Toward a Life centered ethic
for business. Society for Business Ethics/Business Ethics Quar-
terly?: The Rufn Series, 2, 143158.
Funk, K. (2003). Sustainability and performance. MIT Sloan
Management Review, 44(2), 6570.
Hart, S. (1997). Beyond greening: Strategies for a sustainable world.
Harvard Business Review, 75(1), 6676.
Hillman, A., & Keim, G. (2001). Shareholder value, stakeholder
management, and social issues: Whats the bottom line?
Strategic Management Journal, 22(2), 125139.
Hubbard, D. (2010). How to measure anything: Finding the value of
intangibles in business (2nd ed.). Hoboken, NJ: Wiley.
International Organization for Standardization. (2004). Environmen-
tal Management SystemsRequirements with guidance for use.
ISO 14001:2004, Geneva: International Organization for
Standardization.
Jamieson, D. (2008). Ethics and the environment: An introduction
(Cambridge Applied Ethics). Cambridge: Cambridge University
Press.
Klein, A., & Hauf, V. (2009). Sustainability-driven implementation of
corporate social responsibility: Application of the integrative
sustainability triangle. Journal of Business Ethics, 85, 517533.
Kolk, A., & Pinkse, J. (2007). Towards strategic stakeholder manage-
ment? Integrating perspectives on sustainability challenges such
24 K. Gibson
1 3
as corporate responses to climate change. Corporate Governance,
7(4), 370378.
Locke, J. (1980). Second treatise on government. Indianapolis, IN:
Hackett Publishing.
Loewenstein, G., Thompson, L., & Bazerman, M. H. (1989). Social
utility and decision making in interpersonal contexts. Journal of
Personality and Social Psychology, 57(3), 426441.
Maak, T., & Pless, N. M. (2006). Responsible leadership in a
stakeholder societyA relational perspective. Journal of Busi-
ness Ethics, 66, 99115.
Messick, D. M., & McLelland, C. (1983). Social traps and temporal
traps. Personality and Social Psychology Bulletin, 9, 105110.
Mills, C., & MacLean, D. (1992). Risk analysis and the value of life.
In C. Mills (Ed.), Values and public policy (pp. 9197). Orlando,
FL: Harcourt Brace Jovanovich.
Mirvis, P., Googins, B., & Kinnicutt, S. (2010). Vision, mission,
values: Guideposts to sustainability. Organizational Dynamics,
39(4), 316324.
Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory
of stakeholder identication and salience: Dening the principle
of who and what really counts. Academy of Management Review,
22(4), 853886.
Moore, G. E. (1989). Principia Ethica. Cambridge, UK: Cambridge
University Press.
Orts, E. W., & Strudler, A. (2002). The ethical and environmental
limits of stakeholder theory. Business Ethics Quarterly, 12(2),
215234.
Pearce, D., Mourato, S., Navrud, S., & Ready, R. (2002). Review of
studies. In S. Navrud & R. Ready (Eds.), Valuing cultural
heritage: Applying environmental valuation techniques to
historic buildings, monuments and artifacts. Cheltenham:
Edward Elgar.
Peglau, R. (2007). Worldwide number of ISO 14001 Certication.
Solution for Corporate Risk Management. Retrieved June 19, 2011,
from http://www.ecology.or.jp/isoworld/english/analy14k.htm.
Peter, F., & Schmid, H. B. (2005). Symposium on rationality and
commitment: Introduction. Economics and Philosophy, 21, 13.
Phillips, R. (1997). Stakeholder theory and principle of fairness.
Business Ethics Quarterly, 7(1), 5166.
Phillips, R., & Reichart, J. (2000). The environment as a stakeholder?
A fairness-based approach. Journal of Business Ethics, 23,
185197.
Post, J. E. (1991). Managing as if the earth mattered. Business
Horizons, 34(4), 3238.
Rawls, J. (1971). A theory of justice. Cambridge, MA: Belknap Press
of Harvard University Press.
Rolston, H. (1989). Environmental ethics: Duties and values in the
natural world. Philadelphia, PA: Temple University Press.
Rondinelli, D. (2004). Creating a vision for environmental respon-
sibility in multinational corporations: Executive leadership and
organizational change. Journal of International Business Edu-
cation, 1, 522.
Rose, C. M. (1994). Given-ness and gift: Property and the quest for
environmental ethics. Environmental Law, 24(1), 131.
Routley, R., & Routley, V. (1980). Human chauvinism and environ-
mental ethics. In D. S. Mannison, M. A. McRobbie, & R.
Routley (Eds.), Environmental philosophy (pp. 96189). Can-
berra: Research School of Social Sciences, Australian National
University.
Russell, S. L., & Thomson, I. (2008). Accounting for a sustainable
Scotland. Public Money and Management, 28(6), 367374.
Ryle, G. (2008). The concept of mind. Whitesh, MT: Kessinger
Publishing.
Sen, A. K. (1977). Rational fools: A critique of the behavioral
foundations of economic theory. Philosophy & Public Affairs,
6(4), 317344.
Sen, A. K. (1985). Goals, commitment and identity. Journal of Law
Economics and Organization, 1(2), 341355.
Senge, P. (1990). The fth discipline: The art and practice of the
learning organization. New York: Doubleday of Bantam Dou-
bleday Dell Publishing Group, Inc.
Snider, J., Hill, R. P., & Martin, D. (2003). Corporate social
responsibility in the 21st century: A view from the worlds most
successful rms. Journal of Business Ethics, 48(2), 175187.
Starik, M. (1995). Should trees have managerial standing? Toward
stakeholder status for non-human nature. Journal of Business
Ethics, 14, 207217.
Stead, W. W., Stead, J., & Starik, M. (2004). Sustainable strategic
management. Armonk, NY: M. E. Sharp Inc.
Stone, C. D. (1972). Should trees have standing?Towards legal
rights for natural objects. Southern California Law Review, 45,
450501.
United Nations, European Commission, International Monetary Fund,
Organisation for Economic Co-operation and Development and
World Bank. (2003). Handbook of national accounting: inte-
grated environmental and ethical accounting 2003. United
Nations, European Commission, International Monetary Fund,
Organisation for Economic Co-operation and Development and
World Bank. Retrieved August 30, 2010, from http://unstats.
un.org/unsd/envAccounting/seea2003.pdf.
Wicks, A. C., Gilbert, J. D. R., & Freeman, R. E. (1994). A feminist
reinterpretation of the stakeholder concept. Business Ethics
Quarterly, 4(4), 475497.
Stakeholders and Sustainability 25
1 3
Copyright of Journal of Business Ethics is the property of Springer Science & Business Media B.V. and its
content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's
express written permission. However, users may print, download, or email articles for individual use.