Why do companies have an easier time setting sustainability goals than achieving them? Modern corporations create astonishing wealth and innovation, but they have so far struggled to transform themselves to operate within the sustainable boundaries of natural resource systems, such as the atmosphere, forests, fisheries and soil systems.
In 2014, the New York Declaration on Forests saw a coalition of 52 companies, 66 nongovernmental organizations, 42 national governments, 9 financial institutions and 43 other actors set goals of cutting global deforestation in half and restoring millions of acres of land by 2020. But the rate of global deforestation increased by 43% from 2014 to 2018, compared to 2001-2013, and the coalition met only 20% of its land restoration goal.
A 2016 Bain & Company analysis of 300 corporate sustainability efforts found that only 2% achieved their goals.
Why is achieving corporate sustainability so hard?
Let’s focus on two barriers to corporate sustainability related to research I’m doing as an Erb Institute postdoctoral research fellow. First, we still haven’t settled on a definition of corporate sustainability, frustrating our ability to set achievable sustainability goals. Second, we still haven’t closed the longstanding knowledge gap between business and nature. Modern corporations excel at solving economic and innovation problems. If companies engage more deeply on eliminating these two barriers, achieving sustainability goals will become as common as setting them.
What is corporate sustainability?
We lack an agreed-upon definition of what makes a company sustainable. Some view sustainability as a journey toward improved operations and responsibility. Others equate corporate sustainability with sustainable development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” (UN World Commission on Environment and Development (UNWCED), Report of the World Commission on Environment and Development: Our Common Future, 1987)
While the journey metaphor highlights the importance of transformation, it must eventually reach a sustainability destination. While sustainable development shifts corporate mindsets toward the longer-term consequences of wealth generation, uncertainty about future generations’ needs complicates using it to label firms as sustainable or unsustainable.
I argue that we need a definition that recognizes the tangible limits of natural resource systems that firms use to source natural resource inputs and to dispose of waste.
Common sustainability definitions like sustainable development recognize limits but view them as ultimately inconsequential. “The concept of sustainable development does imply limits—not absolute limits but limitations imposed by the present state of technology and social organization on environmental resources and by the ability of the biosphere to absorb the effects of human activities.” (UNWCED, emphasis added)
Viewing limits on corporate use of nature as relative rather than absolute reflects a longstanding knowledge gap between business expertise, based on concepts of margins and efficiency, and natural science expertise, based on system dynamics. Achieving corporate sustainability goals requires narrowing that gap by dropping the business concept of efficiency from corporate sustainability initiatives and instead recognizing absolute limits on resource systems and how those limits affect systems.
Narrowing the business-nature knowledge gap
Business practitioners have knowledge gaps about nature, and conservation practitioners have knowledge gaps about business.
Business people often lack knowledge about natural systems necessary to set feasible goals that recognize nature’s limits. And environmentalists often lack business knowledge necessary to set feasible goals that recognize how businesses could successfully operate within nature’s limits.
Part of my research examines how to define corporate sustainability in a way that narrows the business-nature knowledge gap by combining business operations and natural system limits. My work develops an ecosystem-based definition of corporate sustainability. For firms to be sustainable, they must: 1. Identify every natural resource system on which they depend, either for sourcing natural resources or for disposing of waste. 2. Ensure that each natural resource system is either stable or improving. A firm is sustainable only if all systems it uses are stable or improving. Even a single degrading system means the firm is not sustainable. Because the Earth’s atmosphere is currently degrading due to continued carbon emissions, no firm is currently sustainable.
I call this approach the corporate ecochain, because it combines business knowledge captured by the supply chain concept with nature knowledge captured by the ecosystem concept.
Companies struggle to achieve sustainability goals because they struggle to set goals that match business knowledge to how natural systems work. The New York Declaration on Forests goals drew on business knowledge about how to address sustainability through partnerships. However, the declaration ignored how forest system sustainability works: All consumers from a forest must cooperate to reduce consumption below the system’s limit. The declaration did not include all users of global forests, so it was not very feasible from the start.
In contrast, a corporate ecochain approach would see each company assess which forest systems it needs, and the productivity of each system. If any system was degrading, the company would then work with all consumers from that system to reduce consumption below the forest’s limit.
Achieving sustainability goals requires a different approach to the natural resource systems companies depend on. Companies that wish to achieve corporate sustainability must identify all ecosystems they use, recognize the consumption limit on each system, and work with all system users to stay within the system’s consumption limit.