Sustainable Business, also important for the business itself

We all know about the problems of the earth’s boundaries: The population is growing and aging from 7 billion people today headed up to 9 billion people in 2050, We use and consume natural resources faster than ever before, Emissions – one of the main causes of climate change – keep increasing and the loss of biodiversity is bigger than ever before.[1] All these problems are clearly enviromental and social issues. But more important, they are economic issues. To become a sustainable economy – which means an “economy consisting of businesses that can survive shocks because they are intimately connected to healthy economic, social and environmental systems” [2] – people must understood that making progress towards a more sustainable society is not only needed for human well-being and enviroment but also for economy. To be more presicely: the business sector. Especially because our society is constantly focused on growth. But if we go on like this there is no place for a sustainable economy: an economy that can survive shocks and will be healthy in fifty years from now.
Why? And what economic theory explains this? That’s where this blog is about.

The economic theorie that explains the urgency for the economic sector to become sustainable, is also known as the phenomena decoupling. Decoupling means an absolute or relative reduction of enviromental pressure (that means resource use and damage is declining)  on global scale, while the economy is still growing ( GDP is rising). It is not an easy job to finish, namely the economy is dependent on these natural resources such as materials, water and land. Decoupling is nessecary to become a sustainable society and to become an sustainable economy .[3] This phenomena as described above is shown in the next figure.

Decoupling

 

But why is it so important for the economy and its businesses? Well the problem lies in resource availability. Resource extraction increased in the last 20th century by a factor of 8 (This number have not been so high ever before). [3]  A sustainable economy needs these resources to perform. This performance is an indicator for growth in the economic sector, and economic growth seems the most important thing in society ( if we have to believe the newspapers). So decoupling is not only essential for the environment, but also for the economy.Besides an economy can better perform when there is social and enviromental balance.

 

 

How do we want to achieve this decoupling?  Like Kristina Persson, Sweden’s “Minister for the Future” said that decoupling is not only possible – but a must for all countries to achieve. That’s why decoupling has to be stimulated by regulations – provided by governments. But more important, like Paul Hawken states in his book ‘The ecology of commerce’: ‘Businesses and industries are one of the major culprit on causing the demolition of the biosphere, but they are the only institution that is large enough, pervasive enough and powerful enough to lead human kind out of this mass. And I agree. We need these businesses to transit into sustainable businesses. Therefore more attention and stimulation is needed in this sector. This is the only sector that can turn the economy into a sustainable economy. Therefore sustainable business is also important for the business itself.

 

 

 

[1] Nordhaus W.D. , ‘A Review of the “Stern Review on the Economics of Climate Change” ’, Journal of Economic Literature Vol. 45, No. 3 (Sep., 2007), pp. 686-702

[2] Lexicon, ‘’sustainable business definition’, http://lexicon.ft.com/Term?term=business-sustainability : visit 14-1-2015

[3] UNEP, ‘Decoupling natural resource use and enviromental impacts from economic growth’, International resource panal 2012

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3 thoughts on “Sustainable Business, also important for the business itself”

  1. Very interesting blog, indeed we live in a society where economy rules, and economy works in a focus of infite growth assuming we have infinte resources. This is a mindset we need to change, starting changing economical mindset of a whole society.

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  2. Wouldn’t you say that decoupling is only possible if we would have a better division of capitalism/welfare/wellbeing/rich vs poor? A recent headline said that the top 62 of the richest people in the world have as much as half of the entire world population, which 2 years ago apparently was only 85 of the rich (I just googled for the exact number and found this out). Economy cannot become sustainable until it is more about giving instead of getting. And with the current aftermath of the crisis in the major capitalist developed countries, I do not see opportunities for a grand sustainable (world) economy. I can only agree that this kind of paradigm shift at best will start with smaller companies and ideas to spillover into bigger shifts.

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  3. Decoupling is on a global scale indeed necessary. However, this doesn’t mean that a small business benefits from sustainability. To be sustainable as a business takes time, effort and knowledge. Therefore, it is strange that a sustainable business is defined on the basis of a definition on a higher level (global), while this doesn’t say anything about the endurability of a company (regional). If sustainability is defined as a characteristic of a business to sustain, then the global definition is not useful in the SME-context.
    The main aim for a company is to make profits within boundaries of the law. Therefore, governments should make the rules that take care of a sustainable future. Within the companies, HUMANS are working. Humans should for themselves face themselves in the mirror and question their labour. In this way, sustainability is not only good for the business, but also a necessary outcome.

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