1 Introduction

Key concepts in sustainability and business

What is this book about?

If you are someone who opened this book because you are curious about what
sustainability is and are wondering how to be more ‘sustainable’, you have prob-
ably already taken the important first step of recognizing that some of what is
going on around you is not sustainable. You might be also aware of the fact
that at the same time that you are picking up that fair trade coffee brand from
the supermarket shelf, or putting a piece of used paper in the recycling bin, the
person next to you might be picking up a generic brand of coffee (because it is
cheaper) or throwing a piece of paper in the mixed rubbish bin. Perhaps you
question how much extra income your purchase really generates for the coffee
farmer in Guatemala – would it be enough to feed his entire family? Perhaps you
wonder how much recycled paper will be actually produced from your contribu-
tion? Perhaps you just feel good thinking that you are doing good deeds. After
all, sustainability starts with good intentions.
Maybe what really matters to you are cool gadgets, nice clothes, and eve-
rything that money can buy. Maybe what you want has nothing to do with
sustainability. For now, let us at least hope that you find an interesting tidbit or two
in this volume that you can take with you wherever your yet-to-be-defined path
will lead. Perhaps, since money means power and influence, your ambition to be
important may be best met by this opportunity to change the world.
Perhaps your interest in this volume is sparked by the opportunity of doing
something that is relevant in today’s globalized world through future-orientated
innovation. Perhaps this whole ‘sustainability’ thing will be your golden ticket
to self-actualization and living a fulfilling life as a global citizen leading change.
Perhaps you are a business student and an environmentalist at heart. What
does sustainable business have to do with the spotted owl you are trying to pro-
tect from the urban development? Perhaps this book will help you to acquire the
vocabulary and corporate communication skills necessary to compel people to
understand how special that bird is.
Maybe you are frustrated at the thought that while some nice vegans sit in a
mini-circle singing Kumbaya in an attempt to inspire world peace and harmony
with nature, most people in rich countries would rather watch the reality TV star
4 Key concepts
Kim Kardashian expose part of her body, or shop till they drop, or play Candy
Crush Saga. Maybe this book can make you realize how to make a difference in
the world of indifference. Maybe you could learn how to make the entertainment
industry and game design serve higher purposes.
Perhaps you are a community leader in a small town who wants to organize
popular support to force a nearby factory to reduce harmful effluent to the adja-
cent lake or river. You hope that this book might give you practical tips on how
to involve local entrepreneurs and businesses in finding local solutions.
Or maybe you are thinking of big global solutions to problems like poverty, and
what businesses can do to address social inequality. You have realized that with-
out decoupling human well-being from increased consumption, environmental
sustainability might be all but impossible to achieve. While the conventional
wisdom of combining social, economic, and ecological interests is widely advo-
cated, this book takes a more critical approach. We assume that the awareness of
certain bottlenecks allocates corporate leaders a bold and even revolutionary role
in transition toward sustainability.
There you have, in a nutshell, what this book is about. This book will
tackle big questions: Can poverty reduction be decoupled from economic
growth and increase in consumption of natural resources? If the alterna-
tive path to economic development cannot be found, how can raising the
standard of the living avoid potentially catastrophic impacts on the global
ecosystem? How do we define what constitutes decent and acceptable quality
of life? Since the future generations are not born yet and non-human spe-
cies cannot speak for themselves, how can intergenerational and ecological
justice be democratically addressed? How do businesses balance what is right
with what is profitable?
This book will explore interdisciplinary approaches to doing business sustain-
ably, with particular emphasis on tacking the ‘big issues’. These issues include
tackling justice between present and future generations, and justice between
species, as well as great sustainability challenges associated with production and
consumption. This book serves as a guide for disruptive innovation towards eco-
logically benign models of production, particularly Cradle to Cradle and circular
economy, in business and beyond.

Brief definition of sustainability

Before we address environmental, social, and economic issues in relation to
business and consider how each of us, teachers, students, business people, politi-
cians, and activists can contribute to a better future, we first need to ask: what
is sustainability?
We are facing many daunting problems that have not been seen before. These
problems range from climate change to biodiversity loss, from social injustice to global
poverty. Current estimates put more than a billion people below the poverty line
(The World Bank n.d.). According to International Union for the Conservation
of Nature and United Nations Environment Programme (UNEP), human
 Introduction 5
population and consumption growth, conversion of pristine areas to agricultural
land, climate change, and pollution have a devastating effect on the environment.
We recognize that these issues might not be solvable using the same approach, yet
they are interconnected through the concept of sustainability.

Sustainability is the capacity to support, maintain, or endure; it can indi-

cate both a goal and a process. Sustainability can be maintained at a
certain rate or level, as in sustainable economic growth. It can also be
upheld or defended, as in sustainable definitions of good corporate prac-
tice. Sustainable economic growth (associated with consumption of natural
resources) and sustainable ecosystems might be mutually exclusive.

In ecological studies sustainability describes how biological systems remain

diverse, robust, and productive over time, a necessary precondition for the well-
being of humans and other species. Sustainability has come to be linked with
the environment and a better way to structure our societies, companies, and our
daily lives in order to protect the long-term future of our planet and the ability of
future generations to thrive.

Figure 1.1 Child in the woods (source: Helen Kopnina)

6 Key concepts
We can distinguish between different types of sustainability. Social sus-
tainability is often conceived in terms of sustaining the well-being of people.
Environmental sustainability refers to sustaining nature or natural resources. The
two are intricately interlinked, due to the fact that human welfare depends on the
sustainability of the environment.

Evolution of sustainability thinking

The Organisation for Economic Co-operation and Development (OECD) was
created in 1960 to promote the highest levels of sustainable economic growth and
drive the global economy toward the twin goals of increased employment and
higher standards of living. This was challenged by the concept of the limits to eco-
nomic growth. The Club of Rome, an influential think tank that brings together
the world’s leading scientists and politicians, has produced The Limits to Growth
report (Meadows et al. 1972). The report demonstrated that an economy built on
the continuous expansion of population, resulting from fewer deaths due to lower
child mortality and longer lifespans, as well as increase in material demands, is
fundamentally unsustainable.
Based on the uncanny correlation between escalating rates of population,
economic growth and environmental degradation, international governments,
corporations, and citizens were called upon to address global population growth
and increasing consumption. The United Nations Conference on the Human
Environment highlighted that civilization is exhausting the resources upon
which its continued existence depends. Global awareness of environmental issues
increased dramatically in the wake of the conference, as did international envi-
ronmental policy and corporate involvement in decision-making. Sustainability,
as we know it today, has emerged in response to growing social and environmen-
tal concerns in conjunction with ethical issues such as the birth of civil liberties,
human rights, and the environmental protection movement.
However, despite global awareness of sustainability challenges, the message
of the Limits to Growth report proved to be unpalatable to political leaders and
increasingly demanding consumers. The limits are rarely discussed as absolute but
as mediated by more efficient technologies, business, and social organizations.
Sustainability has been re-defined as the integration of the environmental, eco-
nomic, and social dimensions. In business, these objectives came to be known as
the triple P – People, Planet, and Profit.
The sustainably prosperous society idea is based on the ecological moderniza-
tion theory, which states that enlightened self-interest, economy, and ecology
can be successfully combined to ensure future growth and development (Mol and
Sonnenfeld 2000). It is believed that during early industrialization, economies
use material resources more intensively until a threshold is reached after which
materials are used more efficiently and thus less intensely – a belief known as the
Environmental Kuznets Curve (EKC) hypothesis. EKC assumes that economic
growth and technological development will reduce environmental degradation.
 Introduction 7

environment

society

profit

Figure 1.2 Sustaining economic growth

However, this is highly disputable. The lifestyles of developed countries’ citi-

zens are by no means sustainable as material saturation level is high. Ecological
modernization tends to downplay the essentially insatiable appetites of an
increasingly global consumer class (Washington 2015). Expanding the ‘eco-
nomic pie’ to include the most dispossessed will inevitably require even more
natural resources to be consumed. Despite the widely assumed advantages of the
‘balanced’ approach to harmonizing social, economic, and ecological interests,
environmental challenges and ethical issues associated with animal welfare have
intensified. Many national diets involve a massive consumption of meat, par-
ticularly in the US. Meat consumption is also an indicator of globalization, or
‘Westernization’, and has increased significantly among the more affluent classes
in India and China. Even the Japanese are now eating more red meat than ever
before. Cattle farming occupies more and more land, displacing wild species, and
Concentrated Animal Feeding Operations (CAFOs) have turned billions of farm
animals into nothing more than edible ‘products’.
Thus, sustaining prosperity forever on a planet of limited resources without
exhausting these resources, destroying wilderness or sacrificing animal welfare to
the needs of food production is impossible. Even if wilderness and animal welfare
concerns are abandoned, it is questionable how long social and economic systems
can be sustained in an ecologically devastated world. Thus, rather than seeing the
environment as one of three equal pillars of the triple bottom line, it is a founda-
tion upon which society and profit are dependent. Without the healthy planet,
no social or economic system can be sustained.
 profit

society
environment

Figure 1.3 Environment sustaining both society and economy

Figure 1.4 Our beautiful planet (photo by ”André Kuipers www.flickr.com/photos/

astro_andre/ with permission of WWF Karin Gerritsen)
 Introduction 9
Business sustainability
This book will link corporate responsibility to environmental sustainability. We
shall speak of business in a broader sense, including organizations that can be
characterized by their ‘business-like activities’.

A business can be described as a commercial enterprise, company or

firm involved in the trade of products and services to customers for profit.
Businesses are predominant in capitalist economies and are usually pri-
vately owned; in socialist economies businesses are more frequently
state-owned. Businesses may also be operated as not-for-profit enterprises.

There is a clear distinction of purpose between profit, non-profit, and social

enterprises. While commercial businesses are normally concerned with maxi-
mizing profits, or otherwise ensuring the highest possible sales turnover in
products or services, non-governmental organizations (NGOs) are more con-
cerned with furthering their wider social agendas. The term NGO came into
use in 1945 in response to the need to differentiate in the UN Charter between
participation rights for specialized intergovernmental agencies and those for
private international organizations.
It is important to outline here which objectives these broadly defined ‘busi-
nesses’ serve in relation to sustainability. In business, there are different terms
that people use to refer to or relate to sustainability: ‘industrial ecology’, ‘cor-
porate social responsibility’ (CSR), ‘business ecology’, ‘Cradle to Cradle’, ‘green
capitalism’, ‘eco-efficiency’, ‘social and environmental responsibility’, the ‘triple
bottom line’ (‘People, Profit, Planet’), and many others. As governments moved
away from command-and-control regulation in favour of more market-based
approaches, multinational corporations (MNCs) or transnational corporations
(TNCs) have become key players in world commerce. Businesses can actually
lead positive change by gauging people’s commitment to social or environmental
protection. In pre-empting government regulation, many rich Asian businesses
were able to clean up through emissions standards and road-congestion pric-
ing (Clifford 2015). For example, Singaporean building companies and private
construction sectors have made about a fifth of the total building stock energy-
neutral within just a few years, with the aim of having four-fifths of buildings
certified as green by 2030, with annual savings of $1.26 billion. At times business
efforts supersede government policy. For example, Esquel, a Hong Kong textile
company, assisted Chinese cotton producers in Xinjiang to finance water-saving
drip-irrigation systems.
Recognizing that some corporations constitute economies that are signifi-
cantly larger than the gross domestic products (GDPs) of poorer countries, the
economic power and importance of corporations in shaping global policy can-
not be ignored. Increased awareness has encouraged and empowered civil society
to play a more active role in the regulatory process, and motivated MNCs to
10 Key concepts
increase transparency by including relevant details in their public reporting on
their operations. Greater business accountability and public access to information
means that CSR activities become more important. CSR can involve incurring
costs that do not provide an immediate financial benefit to the company, but do
instead promote positive social and environmental change.
Governmental, commercial, and non-profit stakeholders were involved in the
ongoing implementation of the protection of biodiversity plans. The Earth Summit
in Rio de Janeiro in 1992 set a precedent and established a framework for con-
ventions that were to focus on climate change and biodiversity, identifying basic
aims, principles, norms, institutions, and procedures for action. During the Summit,
the MNCs presented themselves as part of the solution rather than the problem,
bringing a business perspective to this high-profile political gathering. MNCs were
no longer managed by governments, but had evolved into ‘valued partners’ and
‘stakeholders’ formulating global policy on own terms (Ainger 2002: 21). Both
governments and MNCs were to share the task of positing the legal and politi-
cal underpinnings of sustainable development. The World Business Council for
Sustainable Development (WBCSD) now routinely compiles recommendations on
industry and sustainable development. The UN Sustainable Development Solutions
Network (SDSN) accentuates innovation, management skills, and corporate
finance as major providers of solutions to sustainability challenges.
The International Organization for Standardization (ISO) founded in 1947
covers technology and business operations such as ISO 14001 for environmental
management systems, EMS 9000 for quality management, and 50001 for energy
management systems. The Global Reporting Initiative (GRI) provides all com-
panies and organizations with a global sustainability-reporting framework.
The effectiveness of multi-level stakeholder involvement in tackling a range
of problems is presently hotly debated as businesses are driven to develop sus-
tainability practices to advance their own interests following criticism. However,
leading businesses are also considering taking on larger challenges, addressing
the root causes of unsustainability. The most strategically significant CSR efforts
have shifted from combating symptoms and promoting own products (for exam-
ple, by giving away ‘free’ water bottled in plastic in polluted areas) to investing
in cleaning contaminated water sources. Investment in education, contraception
and family planning (www.pathfinder.org/projects/corporate-social-responsibility-
family-planning/) makes a larger difference than ad hoc corporate charity.
‘Sustainable business’ can mean literally sustaining an existing business model
over time (even if its operations are environmentally unsustainable or unethi-
cal). It can also mean working to minimize or eliminate negative impacts. In this
book we shall refer to sustainable business as business that engages positively with
sustainability issues.

Why do business sustainably?

While it was feared that MNCs would always put profit first and hold no allegiance to
any particular place, community or environment, businesses started moving towards
greater environmental and social accountability. One of the factors that contributed
 Introduction 11
to corporations turning toward sustainability was mounting pressures from NGOs
and changes in consumer or even shareholders’ preferences. Its shareholders have
pressured Royal Dutch Shell into a more pro-active approach tackling climate
change (Carrington and Mommers 2017). Thus, being sustainable can be good pub-
lic relations (PR). In making their business sustainable, businesses give credibility to
their actions, and, in a way, attest that their operations can be trusted by suppliers
and customers as well as setting an example for their competitors.
Some readers might feel that businesses merely want to convince the public
that they are conscientious. Consequently, we can think of sustainability as ‘hype’
that businesses have learned to use to their benefit. There are many examples of
green-washing companies that have supposedly committed to sustainability, such
as Coca-Cola, chastised for using hydrofluorocarbon (HFC) refrigerant gases; or
Pepsi, criticized for dumping plastic waste.

Green-washing describes an individual or business promoting something

as sustainable – either business as a whole or an initiative, product or
activity while actually continuing to operate in socially and environmentally
damaging ways. Some of the companies improve one small part of their
operation, without the needed overhaul of the entire mode of operation.

Many companies, partially in response to resource constraints in their own

industry, and partially in response to pressures from public and environmental
groups, have actually served as pioneers of change. Despite the failures of interna-
tional political summits to address such pressing environmental issues as climate
change and the loss of biodiversity, some MNCs have voluntarily increased their
investments in sustainability measures. Pepsi, Coca-Cola, and Shell have recently
made large steps in significant reduction of their carbon footprint.
Significantly, being sustainable makes obvious commercial sense, with
improved energy efficiency and waste management strategies enabling compa-
nies to save billions on their bills. According to the Carbon Disclosure Project
(CDP), an organization that collects information on the greenhouse gas (GHG)
emissions from over 500 large companies, the majority of emissions-reducing
investments have paid off in a short period. Thus, businesses can literally ‘sustain’
their resources (for example, by taking back products and materials).
In a resource-constrained world, companies can create new opportunities for
making a profit by developing products that reuse or recycle valuable materials or
enable consumers to use less. For example, Unilever, a giant Anglo-Dutch com-
pany with more than 300 factories across the world, started selling products in
Asia specially designed for the resource-constrained future, including detergents
that clean well at low temperatures with little water. Another Asian company,
CLP Holdings, one of the region’s largest energy companies, has been one of
the dominant foreign investors in Chinese renewables (The Economist 2015).
Sustainable business can be good business, as many MNCs have demonstrated.
12 Key concepts
Some businesses choose to be sustainable in order to prevent government
intervention or policies that might restrict their operations. They use sustain-
ability measures to forestall legislation or to avoid persecution and litigation (e.g.
polluting industries or poor working conditions). Fearing external restrictions,
many businesses prefer to be pioneers of reform, innovators, rather than drag-
ging their feet until being shamed into compliance either by public boycotts or
by governmental regulation. On the other hand, businesses sometimes welcome
legislation that levels the playing field by preventing their competitors from less
cost-intensive but more unsustainable practices.
Those who are less disenchanted with human nature would find the above-
mentioned reasons inadequate to explain the goodwill that many businesses show
in ‘cleaning up their act’. More optimistic readers would point out that the ulte-
rior motives detract from the true motivation of sustainable business. Simply put:
it is the right thing to do. Perhaps if all the external incentives were removed,
businesses would still choose to be sustainable.

Social and economic sustainability: linking business and society

Business has, in fact, become part of society, and CSR has grown in prominence.

Figure 1.5 What links business and society? (source: Engelbert Fellinger)
 Introduction 13
The link between business and social responsibility is not always a straight-
forward one. Social sustainability is often conceived as well-being and includes
physical, social, and emotional needs as well as health or the subjective percep-
tion of happiness. Well-being can be seen as context-specific, and sensitive to
cultural diversity and societal autonomy. There is a universally shared definition
related to basic human needs, such as food and shelter.

Social sustainability refers to issues concerned with social equality,

poverty, and problems associated with justice. Equity considerations are
primary in order to have the resources to reduce poverty and increase
well-being in developing countries.

The European Environment Agency (EEA) defines sustainability as a concept

and strategy enabling sufficient delinking of the ‘use of nature’ from economic
activity needed to meet human needs to allow it to remain within carrying capac-
ities; and to permit equitable access and use of the environment by current and
future generations.

Economic sustainability is linked to well-being in relation to financial

indicators such as GDP and is characterized by underlying economic
approaches to the range of social issues attempting to capture the val-
ues embedded in human and natural capital.

In the crudest sense of the term, economic sustainability is about sustaining

the continued growth of the global market-based neo-liberal capitalist economy.
Economic sustainability can be seen as a combination of five different capitals: nat-
ural, social, human, financial, and manufactured. In the Sustainable Livelihoods
Framework (SLF), social challenges, such as poverty, can be addressed through
accessing a range of these livelihood capitals, something that businesses are well
positioned to do as they have access to all these resources.
It is often assumed that economic growth is the key component of poverty
reduction as a ‘rising tide raises all boats’ (the more money to go around in soci-
ety as a whole the more it will trickle down). Many businesses have embraced
this assumption, arguing that their operations help to raise overall income levels.
Economic growth can lead to expanding governments’ tax base, creation of new
job opportunities, and increasing wages. Overall, economic growth is believed to
14 Key concepts
improve people’s quality of life by increasing expenditure on healthcare, educa-
tion, and public services (Rosling 2006). Furthermore, per capita income has
been positively related to increasing life expectancy.
However, critics have noted that the relationship between economic growth
and global employment is weakening. In fact, economic growth may be increas-
ing in countries where redistributive policies are few and inequalities are already
high (Ravallion 2006). There may be a reduction in absolute poverty, but also a
lessening of global employment and income equality over time. Economic growth
often involves the export of unsustainable economic practices, goods, and ser-
vices to all corners of the globe (Washington 2015). Basically, unsustainable
consumption will, in the long run, exacerbate poverty and inequality as the strug-
gle for scarce resources intensifies. Economic growth has been closely connected
to, for example, unsustainable levels of CO2 consumption, which in turn lead to
livelihood insecurity and, thus, poverty (The World Bank 2015). While inclusive
economic growth is advocated as a solution to income inequality (Keeley 2015),
some economists who think in the long term advocate ‘degrowth’ (O’Neill 2012;
2014) or steady-state economy (Daly 1991). These approaches seek to reduce or
stabilize production and consumption of goods and services in the aggregate
while simultaneously recognizing the need for social redistribution. Following
this, sustainable business can largely contribute to economic sustainability if they
embrace a future beyond growth (Czech 2016) by adopting progressive business
models based on circular economy, sharing or collaborative economy.
It is not always clear what businesses should do – or can do – to be sustain-
able in economic (self-sustaining) and social and environmental terms. Through
investment, regulative policies, or public initiatives supported by forward-looking
businesses, a major shift in the global economy can be expected. There are many
hopeful signs already, as discussed in Solutions section.

Environmental sustainability: linking business and environment

At its most basic, the environment helps to sustain businesses by providing raw
materials. In a more profound way, humans cannot do without the environment and
businesses for obvious reasons cannot do without both. Failing to consider the envi-
ronment in business operations disregards the very foundations upon which human
industry is based. Much of the literature on environmental (un)sustainability shows
that the biggest threat to the environment at the moment is industrial development
and unrestrained economic growth. The greatest environmental threats include cli-
mate change, pollution, deforestation, and ecosystem decline, as well as, in economic
terms, resource scarcity.
Climate change is one of the largest challenges we face. The primary inter-
national body for monitoring and promoting action to address climate change is
the Intergovernmental Panel on Climate Change (IPCC). Recent IPCC reports
state that GHG concentrations have increased due to human activity. The main
driver of change in corporate strategy was the adoption of the Kyoto Protocol
in 1997. This event spurred the development of new regulations and increased
 Introduction 15
pressure from NGOs urging companies to take appropriate steps to address GHG
emissions. However, despite the companies’ pledges to address their emissions,
global GHG have dramatically increased.
Simultaneously, there has been a massive acceleration in the rate of species
extinction. According to a Millennium Ecosystem Assessment (MEA) report,
humankind has increased the rate of extinction by about 1000 times the fos-
sil record rate. Over the past 50 years, humans have changed ecosystems more
rapidly and extensively than in any comparable period of time in human history,
largely to meet rapidly growing demands for food, fresh water, timber, fibre, and
fuel. This has resulted in a substantial and largely irreversible loss in the diversity
of life on Earth. In addition, approximately 60 per cent of the ecosystem services
it examined are being degraded or used unsustainably, including fresh water, cap-
ture fisheries, air and water purification, and the regulation of regional and local
climate, natural hazards, and pests (UNEP).

Eco-efficiency
Sustainability is often discussed in terms of eco-efficiency. Eco-efficiency seeks to
reduce the unintended social and environmental impacts consequences of pro-
duction and consumption.

Eco-efficiency refers to the idea of doing more with less. Compared

with early industrial products, modern alternatives are able to generate
more value by being produced on a much larger scale with less impact
and using less material.

The OECD definition of eco-efficiency is ‘the efficiency with which ecologi-

cal resources are used to meet human needs’ and represents it as a ratio of output
divided by the input. The output includes the value of products and services pro-
duced by a firm, sector, or economy as a whole. The input typically refers to the
sum of environmental pressures generated by the company or the economy as a
whole. The WBCSD defines eco-efficiency as being ‘the delivery of competitively-
priced goods and services that satisfy human needs and bring quality of life, while
progressively reducing ecological impacts and resource intensity throughout the
life-cycle to a level in line with the Earth’s estimated carrying capacity’.
Eco-efficiency can also be seen as a quantitative management tool that ena-
bles the consideration of life cycle environmental impacts of a product system
alongside its product system value to a stakeholder (Klöpffer 2014). The advan-
tages of eco-efficiency to most business operations are widely recognized: valuable
materials are saved and retained by the manufacturer, including human and natu-
ral resources. In business terms, eco-efficient production is a major opportunity to
enhance a company’s competitive position in the market.
16 Key concepts
However, despite good intentions, efficient use of resources still supports the
endless spiral of production and consumption. The American architect William
McDonough and the German chemist Michael Braungart have claimed that
eco-efficient strategies still tend to support the cradle-to-grave trajectory. For
example, recycling practised today is mostly downcycling, where materials are
reused to make products of lower quality using energy and chemicals. Eco-
efficiency only works to perpetuate the wasteful system, allowing fossil fuels or
plastics, for example, to last longer. Making a system that pollutes and gener-
ates waste more efficient will only prolong unsustainability, tinkering at the
margins of the problem without addressing the root causes (McDonough and
Braungart 2002).
While eco-efficiency and technological innovations can allow more people
to have a smaller impact on the planet, industrial development requires con-
stant growth. The rebound effect (or Jevons paradox) is a consumer response
to the introduction of new eco-efficient technologies. Eco-efficiency tends to
offset the beneficial effects by actually increasing consumption of the suppos-
edly guilt-free products. For example, clever marketing leads consumers to keep
buying newer models of electronic devices assuming that they are ‘greener’, thus
driving the need for new products.

Introducing Cradle to Cradle and circular economy

Cradle to Cradle (C2C) and the circular economy frameworks add environmental
and social value through closed loop production. This radically different system
of production supports an endless cycle of material regeneration where nothing
gets wasted.

Cradle to Cradle (C2C) considers not just minimizing the damage, but
proposes how depletion of resources can be avoided by adhering to a
cyclical ‘waste food’ principle.

This principle is well illustrated by the metaphor of the cherry tree that
produces ‘waste’ (berries, leaves, etc.) that actually serves as food for other
species and soil. Industry, on the other hand, follows a one-way, linear,
cradle-to-grave manufacturing line in which products are created and even-
tually discarded. Unlike waste products from natural systems, the waste from
human industry is not ‘food’ but often poison. Thus, the end products of natu-
ral and industrial production are very different: a wealth of cherry blossoms and
a pile of toxic waste.
As will be discussed in Chapters 10, 11, and 12, biodegradable materials (bio-
logical nutrients) and non-compostable materials (technical nutrients) should be
fully reused in circular systems. The long-term advantage of eco-effective systems
supports an endless cycle of material exchanges that mimics nature’s ‘no useless
waste’ nutrient cycles.
 Introduction 17

Eco-effectiveness focuses on the development of products and indus-

trial systems that maintain or enhance the quality and productivity of
materials rather than depleting them.

Thus, eco-effectiveness addresses the necessity for fundamental change in the

way products and waste are currently produced. This implies that industry faces
a new range of opportunities and challenges of supporting circular economy – in
product design, material and supplier choice, transportation and producer respon-
sibility for the production and waste stage. In business practice, C2C certification
is based on step-by-step control over material health, material re-utilization,
renewable energy, water stewardship and social fairness (www.c2ccertified.org/
get-certified/product-certification).

Box 1.1 World Economic Forum Report

On the one hand, globalization in recent decades has helped to lift hun-
dreds of millions out of poverty. But on the other hand, the ever-increasing
extraction of resources and economic activity has placed increasingly
unsustainable pressures on the environment upon which we all depend.
The World Economic Forum Report noted this paradox, stating that in
recent years an estimated 450 million people had been lifted out of pov-
erty. But in the same period, about 21 million hectares of forest had been
lost, 9.1 billion tons of municipal solid waste was generated and some 50
billion tons of fossil fuels were consumed. . . So, how can responsible busi-
nesses compete for this prize in the decades to come without damaging the
planet and putting greater pressure on scarce resources? With interest in
the circular economy gaining ground, we may see more and more compa-
nies exploring this option.
Source: http://forumblog.org/2013/01/the-case-for-the-circulareconomy/

The Ellen MacArthur Foundation has propelled the application of circular

economy at business level.

The circular economy model uses the functioning of ecosystems as an

exemplar for industrial processes, emphasizing a shift towards ecologi-
cally sound products and renewable energy.
18 Key concepts
What links business, ethics, and sustainability?
Sustainability is often connected to ethics, as both imply that one should
act within governmental law (adhering to regulations and policies that con-
trol business) and conventional law (adhering to the prevailing standards
accepted by society). Every day, business executives confront practical ethi-
cal issues – both within their companies and in their dealings with suppliers,
clients, competitors, government agencies concerned with corporate regula-
tions, and the public. However, sustainability and ethics in business are not
the same as running a household – in fact they involve global dimensions
and big ethical questions. While sustainability deals with concrete environ-
mental, social and economic challenges, it is also ultimately intertwined with
ethical concerns about environmental degradation as well as gender and
racial equality, human rights, and poverty.
Business people aspiring to be ethical or to act sustainably may be expected to
adhere to the same standards of behaviour in business as they would in their pri-
vate lives. Just as one does not leave rubbish in the middle of one’s house or force
one’s children to do heavy work, so are business people expected to fulfil their
responsibilities in their business activities. However, Milton Friedman (2007)
has proposed that the ‘business of business is business’ and sustainability is for
governments, charities, and NGOs. The maxim ‘business is business’ implies that
since a company’s aims are purely commercial, sustainability will be accepted
only if there is a good financial case for doing so.
There are many organizations that deal with ethics in business, such as the
Global Council on Business Conduct, the Society for Business Ethics, and the
Ethical Consumer. Normally, in business we speak of normative ethics, distin-
guishing between prescriptive and descriptive ethics. Prescriptive ethics prescribe
norms and standards urging moral improvements. Descriptive ethics describes
what business people think is right and wrong, clarifying and analysing ethical
beliefs rather than changing them. In this book, we shall lean toward descriptive
ethics, although sometimes we shall openly state our own beliefs on what we
think is right or wrong.

How to do business ethically and sustainably

Some decisions on how to act in business will come naturally. As resources become
scarce they become more expensive, serving as a direct driver for conservation
strategies in manufacturing. As such, efficient production, including longevity
and cycling, is a rational strategy for manufacturers. Some other decisions, while
well intentioned, might miss the mark as sustainability is not straightforward.
Once you realize that sustainability itself involves many paradoxes, the ‘right’
course of action for business becomes a bit hazy. The relationship between sus-
tainability and ethics is not always straightforward (Blowfield 2013: 50). Poverty
reduction through increased resource consumption actually deepens environ-
mental sustainability challenges by putting increased pressure on planetary
resources (Daly 2016). Recognizing this complexity this book differs from other
 Introduction 19
books on sustainability, in that it does not advocate quick-fix solutions but calls
for critical thinking.
Sometimes what seemed so obviously ‘good’ (for example, organic cotton)
may not be environmentally sound (organic cotton may use more water and land
than genetically modified cotton). A similar case can be made for the biofuels
favoured by European countries on the premise that they reduce GHG emissions.
Biofuel crops can actually increase emissions and cause biodiversity loss, as well
as create competition for agricultural land for food production (Phalan 2013).
Where does that leave sustainable energy companies?
While cautious to recommend any easy win-win solutions, there are many
different ways in which business and sustainability can be indeed mutually ben-
eficial. This is based on the condition that business decisions are well informed
and motivated by consideration beyond mere profit. However, many decisions
will depend on your own critical faculty to see challenges as well as possibilities,
and to use your own head and heart to distinguish between what is sustainable or
ethical and what is less so.
You need to maintain a healthy skepticism, constantly questioning concepts,
products and technologies that appear to be green and fair on the surface. Your
ability to discern and navigate these contradictions and to keep yourself well
informed of the global context of sustainability choices is crucial. Last but not
least, you should retain your imagination, goodwill, and ability to work towards
combining business and sustainability in the most inspired, illuminating, and
innovative ways. This is what we hope this book will help you do.

Chapter organization
Each chapter includes case studies, key terms, discussion questions, the end of
chapter summaries, and class activities. The book is divided into four sections.
Aside from this chapter, Part I, Key concepts, contains Chapter 2 on business
ethics. This chapter links sustainability and ethics, introducing Corporate Social
Responsibility (CSR). This chapter also discusses corporate citizenship, human
rights, and labour issues including pay and working conditions. Chapter 2 also
discusses environmental ethics and animal welfare issues.
Chapter 3, in Part II, Critical evaluation: key challenges, is devoted to the dis-
cussion of climate change, loss of biodiversity, pollution and waste. This chapter
addresses causes and explanations of these challenges, including industrialization,
population growth, and unsustainable production and consumption. Chapter 3
concludes with reflection on the role of business in addressing environmental
sustainability challenges. In the same section, Chapter 4 focuses on social and
economic challenges, including poverty, economic development, and inequal-
ity. These challenges are placed in the context of neo-colonialism, population
growth, and sustainable development. The role of business and the World Business
Council for Sustainable Development (WBCSD) is discussed. Following this,
Chapter 5 discusses key challenges for making sustainability a reality with specific
focus on paradoxes of sustainability. This chapter poses a number of choices, such
20 Key concepts
as progress or a return to roots? Degrowth or post-growth? These questions are
placed in the context of practical corporate challenges, including critique of the
cradle-to-grave production method. Chapter 5 also critically discusses ‘sustain-
able’ consumption and the rebound effect. It concludes with the discussion of
ethical challenges such as intergenerational justice and biospheric egalitarianism
Part III, Globalization, technology, and new trends in business, starts with
Chapter 6, Globalization and business. This chapter addresses different schools
of globalization thinkers and the relationship between globalization and sus-
tainability. Globalization is also discussed in relation to medical, agricultural,
manufacturing, and digital technology. Chapter 6 also discusses theories of
development and innovation, including the Environmental Kuznets Curve, eco-
logical modernization theory, and post-material value theory, briefly outlining
their critique and its significance for business operations. Chapter 7 discusses
strategic change for sustainability, including competitive advantage, knowledge
management, and creativity and innovation. This chapter particularly focuses
on Corporate Visioning and ‘Talking the Walk’ initiatives. This is followed by
discussion about how green marketing and customer engagement as well as
responsible advertising can increase brand value and sustainability. Chapter 8,
Human resource management, green jobs, and a green economy discusses human
resource development in the context of sustainability. This chapter also addresses
the topic of acquiring ecological self-knowledge and continuing professional
development, discussing UN Principles of Responsible Management Education
leading to the objective of expanding green jobs and eco-entrepreneurship.
Part IV, Solutions, opens with Chapter 9, Creating sustainable business
practice, which discusses government regulation and policy, including the
Polluter Pays Principle, the Precautionary Principle and the Extended Producer
Responsibility. The topics of environmental management systems and sustain-
able supply chain management are introduced. The chapter closes with the
discussion of ecolabels and corporate reporting and Global Reporting Initiative
(GRI). Chapter 10, New strategic thinking, discusses structural opportunities for
sustainable consumption, singling out consumer choice editing as one of the most
effective regulative options. This chapter aids understanding of sustainable con-
sumption through a discussion of environmental impacts and actions. Further,
business and NGO cooperation are discussed, as well as opportunities for green
and ethical investment. Chapters 10 and 11 illustrate how industrial ecology,
biomimicry and particularly Cradle to Cradle (C2C) frameworks promise to
reform the entire system of production. Chapter 12, Towards a circular economy,
builds upon these frameworks and outlines how business operations can move
from optimizing existing models to revolutionary change. The circular economy
is discussed in connection with the concept of disruptive innovation. In assessing
progress towards circularity, this chapter also reflects on the risk of returning to
business-as-usual and offers practical and realistic ways forward. In conclusion,
this chapter reflects how various sustainability frameworks have a potential to
decouple resource consumption from the economy and address the most salient
ethical and sustainability issues for business.
 Introduction 21
Case study: Patagonia – ‘don’t buy this jacket’
Can global production be decoupled from resource (over)consumption? One
way to do it is suggested by Patagonia, an outdoor equipment company. The
ad ‘Don’t Buy This Jacket’? was published in The New York Times in 2011.
Patagonia wrote:

It’s time for us as a company to address the issue of consumerism and do it head
on. The most challenging, and important, element of the Common Threads
Initiative is this: to lighten our environmental footprint, everyone needs to
consume less. Businesses need to make fewer things but of higher quality.
(Patagonia 2011)

Customers need to think twice before they buy.

Ironically, this add seems to have promoted more consumption PBS (2015).

1 How can Patagonia’s philosophy be applied to other aspects of society beyond

clothing?
2 If a company is advocating for people to buy less but still seeking new cus-
tomers, can it really be called anti-consumerist?
3 Do you think Patagonia’s business model is sustainable? Should other com-
panies follow suit?

Key terms
Business ethics, business sustainability, the circular economy, Cradle to
Cradle, eco-efficiency, economic sustainability, environmental sustainabil-
ity, limits to growth, social sustainability, sustainable development, the triple
bottom line.

Discussion questions
1 What do you think are the greatest challenges to sustainability?
2 Do you think poverty should be the central focus of sustainable development?
3 Considering that the wealthiest nations historically have profited from
industrialization, should poor nations have the right to rapid economic
growth even if that leads to increased GHG emissions that exacerbate
climate change?
4 Is it fair for the rich nations to pay for climate mitigation and adaptation?
5 Should population growth be treated as sustainability issue?
6 What do you think is more realistically achievable: curbing consumption
in the countries already used to the high level of consumption or stabilizing
global population? What do you think businesses can do to achieve both of
these objectives?
7 Is poverty reduction a moral imperative or a sustainability issue?
22 Key concepts

Figure 1.6 World population prospects (source: World Bank)

End of chapter summary

This chapter described what sustainability and sustainable business are, explain-
ing both conventional uses of the terms, such as triple bottom line, as well as
transformative approaches, such as Cradle to Cradle and a circular economy.
This chapter has traced the evolution of sustainability, both as a concept and as
a practice, as well as introduced the main stakeholders involved in the sustain-
ability enterprise, with particular focus on business.

Class activity: identifying companies with the most impact

Identifying companies with most impact on social and environmental sustainability

(For full instructions, see the eResource.)