2.1 Books and the struggle for sustainability
Since 1760, the application of the steam engine has led to the industrialization of Western societies and the emergence of mass production in factories. Besides the enormous technological progress, production efficiency and upscaling of industrial business, this has led to several societal challenges, including urbanization, pollution on a large scale and social inequality (Trinder, 2013; Dimanov, 2024). Also referred to as ‘the social question’ (Vercherand 2014), this was a pressing issue in the 19th and early 20th century. Thereafter, industrialization led to – more or less – similar effects elsewhere in the world (e.g. Angotti, 1996; Baloch et al., 2018; Liang and Wang, 2019). In various groundbreaking works, critical novelists and science fiction authors foreshadowed the devastating effects of large-scale industrialization.
2.2 Some groundbreaking novelists and science fiction writers (1760–1987)
Charles Dickens was one of the first British writers to highlight the social and environmental challenges that came with industrialization. In novels such as Oliver Twist (1838), A Christmas Carol (1843) and Hard Times (1854) he famously criticized the unequal distribution of the means of production and the poor and polluted living conditions of workers.
Charles Dickens
Another critic of the social question in the US was Upton Sinclair. In his book The Jungle (1906) he focusses on the corrupt behaviour of those who are in power in both government and the (mass production) food business industry. In preparation for his novel (first published in the socialist newspaper ‘Appeal to Reason’), Sinclair worked undercover in a meatpacking plant in Chicago. In his novel, he describes the cruel treatment of animals, the poor (and even dangerous) food safety standards, and the exploitation of workers in the industrialized meat industry.
Upton Sinclair
In the industrialized countries, the so-called ‘social question’ was slowly resolved during the 20th century by increasing protection of workers through labour laws, democratization of the industrialized countries, and the founding of labour unions. In the long term, the positive effects of industrialization also became visible, with technological developments and scientific progress that would – amongst other things – lead to the reduction of pollution effects, and better healthcare and mobility (Trinder, 2013).
One way or another, the technological shockwave stirred by the steam engine, and its resulting mass-manufacturing, was a warning: technology had side effects that were not only positive, but could also be dangerous or counterproductive. Not only for people, but also for our (living) environment. It is perhaps not surprising that the science fiction genre thrived alongside large-scale industrialization. Authors explored the possible future effects of a world with advanced technology. Most notably, the ‘godfathers’ of the genre – H.G. Wells and Jules Verne – already fantasized about what the world would look like if technology worked in a destructive or unethical way. H.G. Wells warns us about bioengineering, and shows us a world in which we can artificially alter human or animal bodies. In the character of Dr Moreau we find the typical ‘mad scientist’ who changes animals into men (and thereby acts as some sort of God), with disastrous, unethical and inhumane effects (The Island of Doctor Moreau, Wells, 1896). In his famous novel The Time Machine (1895), Wells shows us a utopian future made possible by advanced technologies, and a raw-dystopian beneath-the-surface necessary to maintain these techniques. And in The World Set Free (1914), Wells explores the possibility of weapons of mass destruction (including the atomic bomb), and warns us about the desire use massive amounts of energy. And consider also Jules Verne’s works. In all his books, he warns us of the environmental consequences of new technologies (Evans, 1988). In The Child of the Cavern (Les Indes noires, 1877), Verne raises the question of what would happen if all the coal were used up and exhausted by humankind. In both The Begum’s Fortune (Les Cinq cents millions de la Bégum, 1879) and Paris in the Twentieth Century (Paris au xxe siècle, 1863), Verne sketches a grim image of the future, including dystopian and heated places, all caused by technologies that turned out to have a destructive long-term effect. The latter work was even rejected by Verne’s publisher due to its overly dystopian tone of voice, and subsequently put aside by the author. More than a century later, in 1994, it was published as a ‘lost manuscript’.
H.G. Wells
Jules Verne
Interestingly, both Wells and Verne also imagine a future in which human beings use technology for good and are able to master our planet with sustainable and innovative technologies. Whereas, in the book The Purchase of the North Pole (Sans dessus dessous, 1889), Verne warns about the risks of terra-forming technologies, he is more positive about ‘cultivating the environment’ in The Mysterious Island (L’Île mystérieuse, 1875), where the main characters transform from shipwrecklings to colonists, deploying their technological skills to survive and cultivate most of the island, and using water as a power source (the coal of the future). And then we have the electrical submarine in Twenty Thousand Leagues Under the Sea (Vingt mille lieues sous les mers, 1870), where the Nautilus is used for marine research. Wells also shows us different future utopias in which humankind is able to control other species and the planet’s environment through technology. In books such as A Modern Utopia (1905), Men Like Gods (1923), and The Shape of Things to Come (1933), Wells shows us an optimistic view of technology, suggesting that, hypothetically, men should be able to overcome the threat of extinction by mastering ‘mother nature’. His ultimate idea and solution for governing our planet in a meaningful way is to strive for a world government. In his historic work The Outline of History (1919–1920) he explores the idea of the ‘United States of the World’ (a term that he also coined in his earlier work).
Such viewpoints reflect Enlightenment thinking, in which the idea prevailed that mankind could control the environment through technology. It needs to be noted here, however, that both Verne and Wells developed a darker view on technology when they grew older. Wells in particular was deeply moved by the events of the two world wars, which changed his perception of humankind’s relationship with technology. This resulted in a grim societal reflection in his last book Mind at the End of its Tether (1945) in which he predicts climate change, amongst other things. With despair, he describes our natural habit of ‘race suicide by gigantism’ through aggression and greed (Chapter V). He then continues (in Chapter VIII):
The writer sees the world as a jaded world devoid of recuperative power. In the past he has liked to think that Man could pull out of his entanglements and start a new creative phase of human living. In the face of our universal inadequacy, that optimism has given place to a stoical cynicism. The old men behave for the most part meanly and disgustingly, and the young are spasmodic, foolish and all too easily misled.
In later science fiction, technological pessimism was explored in more detail, in particular in the so-called ‘new wave’ of science fiction from the 1960s onwards. So we have seen plenty of examples in which authors warn us about technology ‘gone wrong’, resulting in biohazards and environmental destruction (Roberts, 2016). Perhaps Frank Herbert’s Dune series is one of the first works to widely explore the theme (although the desert-like planet Arrakis was not a result of a manmade disaster). Since the ’70s in particular, destructive pollution as a result of manmade technologies, such as nuclear wars, failed terraforming and corporate greed, are central themes. Books like The Sheep Looked Up (John Brunner, 1972), The Lathe of Heaven and Always Coming Home (Ursula K. le Guin, 1971 and 1985), Parable of the Sower (Octavia E. Butler, 1993) are classics in this respect.
later science fiction
2.3 From science fiction to science and politics (1962–1987)
While in science fiction, authors have warned us about the environmental effects of technological progress, red flags were also being raised gradually in both science and politics.
One of the first was Rachel Carson, a marine biologist, whose groundbreaking book Silent Spring (1962) addressed her grave concerns regarding the widespread use of dichlorodiphenyltrichloroethane (DDT) and other pesticides in the agricultural sector. The use of these pesticides led to a maximization in efficiency in agriculture. Carson postulated that the effect on biodiversity loss and human health were being ignored by the industry (and politics). She was able to combine hard-core scientific insights with an eloquent and activist writing style (using chapter names such as ‘elixirs of death’, ‘rivers of death’, ‘the human price’, etcetera). Her work concluded as follows:
the ‘control of nature’ is a phrase conceived in arrogance, born of the Neanderthal age of biology and philosophy, when it was supposed that nature exists for the convenience of man. The concepts and practices of applied entomology for the most part date from the Stone Age of science. It is our alarming misfortune that so primitive a science has armed itself with the most modern and terrible weapons, and that in turning them against the insects it has also turned them against the earth.
Rachel Carson
Carson’s ideas led to quite a lot of resistance in both the industry and politics (Beijl, 1992). She was attributed all kinds of labels (‘bird lover’, ‘cat lover’, ‘fish lover’, ‘nun of nature’, and ‘priestess of nature’) and was criticized for favouring the interest of insects above the well-being of thousands of malnourished human beings who would have a better life as a result of more efficient agriculture. The United States Department of Agriculture (USDA)’s Agricultural Research Service even published a film (Fire Ants on Trial) in support of the use of pesticides to convince people of its usefulness and necessity. In Carson’s view, this was ‘flagrant propaganda’.
Her work is often considered a starting point for the environmental movement in the U.S.A. and elsewhere in the world, and created a widespread awareness around the safety of food production and food consumption as well as environmental well-being (Lytle, 2007). In the U.S.A., eventually, environmental laws were significantly revised, and a ban on the use of DDT was introduced. The effects of the book still resonate in the debate around environmental well-being and agricultural technologies (Epstein, 2014; Arp, 2023).
At the global level, after the Second World War and most certainly after the Cold War, the prevailing macro-economic model was that of neo-liberalism, with a strong focus on free trade (i.e. lowering trade barriers and creating a level playing field for business) and economic growth. Amongst others, the United Nations (UN) aligned Bretton Woods institutions (World Bank Group, the International Monetary Fund and the World Trade Organization, formerly known as the General Agreement on Tariffs and Trade (GATT)) would put the neo-liberal mindset at the core of its work, to stimulate a global economy that would raise countries from the ashes of WWII. Increasingly, however, the effects of industrialization and (global) trade on the environment became more visible and problematic. At the UN level, this led to various landmark gatherings to discuss environmental issues as a result of human interference. One of the first to be held was the United Nations Conference on the Human Environment, in Stockholm in 1972. Despite being boycotted by the Warsaw Pact countries and not welcomed by the informal ‘Brussels Group’ (including Britain, the US, Italy, Belgium, the Netherlands and France), the conference resulted in the Declaration of the United Nations Conference on the Human Environment (the Stockholm Declaration). I n this declaration some pressing issues were addressed, and countries would attempt to solve them in line with the 26 Principles therein. These included the rapid exhaustion of natural resources, the unequal distribution of non-renewable resources, the serious consequences of pollution (including ocean pollution), the weak position of developing countries in these challenges, and the threat of weapons of mass destruction.
Stockholm Declaration
In the same year, the Club of Rome published its computer-simulated analysis, using the World3 computer model, in a book called The Limits to Growth (1972). The analysis involved a forecast of the development and interaction between the variables of population, foodproduction, industrialization, pollution, and consumption of non-renewable natural resources. The conclusion was alarming: if humankind continued in the way they were evolving, the limitations of growth would be reached within at least a century.
Club of Rome
More than a decade later, the principles set forth in the Stockholm Declaration had not been met, which led to the setting up of the UN World Commission on Environment and Development, later known as the Brundtland Commission (named after its chairperson, the Norwegian Gro Harlem Brundtland). The famous Brundtland report, Our Common Future (UN, 1987), was a milestone in global sustainability thinking. In this report, the authors emphasize the risks that come with exhausting natural resources, and that natural resources are limited. They also identify poverty reduction, gender equality and redistribution of wealth as key features in strategies for environmental preservation. In general, the idea is that poverty stands in the way of sustainability, and need to be tackled alongside. This also means that economic growth must be balanced with ecological sustainability. The Brundtland report has been a continuous source of inspiration for governmental policies in the field of sustainability, and is at the core of sustainable business strategies (Schubert and Láng, 2005).
Brundtland report
2.4 The emerging role of business (1969–2002)
In the post-World War period, it was not only governments and global institutions such as the UN that were confronted with the harmful effects of technology on the planet’s environment. Increasingly, the role of the private sector was put on the agenda, and businesses were called on to take their share of responsibility in achieving sustainable development.
John Ellington is one of the pioneers in sustainable business and corporate social responsibility. In his famous book Cannibals with Forks (1997) he coins his main ideas on the role of business in this discourse. In Elkington’s analysis, the sense of urgency concerning sustainability did not gradually evolve but was rather triggered by so-called ‘shockwaves’. He labels them as ‘limits, ‘green’, and ‘globalization’.
The first shockwave, ‘limits’, were triggered by the notion that there are limits to growth. The idea was greatly inspired by Rachel Carson’s Silent Spring, and coincided with the Stockholm Declaration and the Club of Rome report The Limits to Growth. The peak of this shockwave was around 1969–1973 and was met with strong resistance and strident lobbying by the private sector against environmental laws.
limits
A second shockwave was labelled ‘green’ and was triggered by various ecological disasters, including the Bhopal gas tragedy (1964), the nuclear disaster of Chernobyl (1986) and the Exxon Valdez oil spill (1989). In the Exxon and Bhopal cases in particular, the slow and responsibility-avoiding responses of the respective companies involved – Exxon and Union Carbide – attracted negative media attention, which led to a wider debate about the responsibility of the corporate sector regarding the affected people and their environment. This triggered a response in environmental law-making in which the notion was felt that reducing pollution and the use of natural resources was not enough. The invention and use of more sustainable technologies and production processes needed to be encouraged. Also, amongst businesses, there was a change of focus. Instead of merely obeying the law and ticking the ‘ethics’ box, a discourse evolved in the private sector in which the urge was felt to take a broader responsibility than before, and the idea emerged that sustainable entrepreneurship could be a unique selling point and therefore a way to compete. The peak of this shockwave was around 1988–1990.
green
A third shockwave was ‘globalization’. Increasingly, the role of international financial institutions was critically assessed. The lowering of trade barriers led to large-scale global trade, but also to large ‘regulatory competition’. In other words, states (in particular those with vulnerable economies and/or instable state structures) could compete with more flexible rules in the field of environmental protection or human rights. Product chains had become complex and long distanced. This led to the optimization of production costs, but at the expense of the environment or human well-being. Multinational corporations were called out for pollution and poor labour conditions within their product chains in developing countries. Notorious examples are the Shell scandal in the Niger Delta (in the noughties), or the collapse of the Rena Plaza Building in Bangladesh involving many multinational garment brands (2013). This shockwave peaked around 2002.
globalization
Ellington’s central idea built on the idea that a business should not merely focus on making profit as a single bottom line, but should also report on social wealth creation and environmental responsibility. This notion was introduced by Freer Speckley in 1981 (Spreckley, 1981), and later rephrased by John Elkington as the ‘triple bottom line’: a business should act according to three bottom lines: People, Planet and Profit (3Ps).
One of the key ideas of Triple Bottom Line thinking is that profit is not the only goal. This also has an effect on how a business defines and relates to its stakeholders. From a strategic business perspective, R. Edward Freeman evolved his theory on strategic management in the early ’80s, for the most part in tandem with Elkington’s development of the Triple Bottom Line (although both authors are in completely different academic circles and do not actively refer to one another’s work). In essence, Freeman argues that concepts such as ‘corporate social responsibility’ or ‘triple bottom line’ are not per se useful concepts. Instead, he has a rather pragmatic, managerial approach: in the preface to the 2010 edition of his core work (1984) he argues:
I believe that the central characters (…) must be companies and their customers, employees, suppliers, communities and financiers. Other groups such as NGOs, governments, unions etc. may also be important to particular businesses. The idea that one of these groups (financiers, for instance) always has priority over others, simply misses the main contribution of business and capitalism. Business works because the interests of all of the stakeholders can be satisfied over time. It is the intersection of these interests which is central to effective and sustainable stakeholder management.
In other words, Freeman’s central point is that from a strategic point of view a business should move away from a shareholder approach (with a sole focus on the financial interest of the financiers of a business), and instead be driven by a stakeholder approach in order to achieve sustainable corporate success. A central question then is how to define business stakeholders and their interests. In general, stakeholders could be defined as those individuals or groups that can affect or are affected by the company’s decision-making (see Freeman, 1984; see also Crane et al., 2019: 59–65). In earlier models, shareholders were presented as relatively strictly separate groups that included mostly shareholders, suppliers, customers and employees. Later, governments, competitors and civil society were added to the list (Freeman, 1984). However, such ‘lists’ do not necessarily do justice to the business and societal reality a company finds itself in. First of all, stakeholders amongst themselves interact and have fluid interests that are context dependent. Second, stakeholders are mostly translated to ‘groups of people’. The environment is therefore barely a direct stakeholder (at most it is represented through NGOs or governments) while it is the one and only supplier of natural resources. To solve this, stakeholder approaches are increasingly being transformed into a full network model that not only maps out the various stakeholders, but also shows how these stakeholders in turn are related to their own stakeholders and how their interests interact (Rowley, 1997). Increasingly, we see models in which the environment is recognized as one of the primary stakeholders of a business (Jacobs, 1997; Phillips and Reichart, 2000; Madsen and Ulhøi, 2001; Haigh and Griffiths, 2009).
network model
2.5 Economic policies, business models, technology and sustainability (2002–2024)
Alongside the increased urgency of environmental issues we see new ideas from various academic disciplines on (interrelated, but too often separately discussed) economic policies, business responsibility and the role of technology/innovation.
2.5.1 Grim, grimmer, grimmest: crises, global warming and disruptive technologies
Since the start of this century, several crises have triggered an increasingly heated debate about the desirable shape and form of our economies, the responsibility of the business sector and the role of technology. Some of these crises are clearly identifiable and can be pinpointed on a timeline, such as the financial crisis around 2008 and the COVID-19 pandemic in 2019–2022. Others are ongoing, such as manmade global warming, and the adversarial effects of disruptive technologies.
2.5.1.1 The financial crises (around 2008)
financial crises
At the end of 2007, global financial markets collapsed. The disaster started in the United States of America, with – among other things – the large-scale (and risky) lending of subprime mortgages and the sharp decline of real estate value. This resulted in a chain reaction across the world that brought entire countries to the brink of bankruptcy and had a negative impact on huge numbers of people. The financial crisis was attributed to the widespread immoral behaviour of financial institutions and companies and the failure of governmental supervision. This resulted in an ethical discussion about responsible banking, responsible investing, responsible accounting and responsible supervision. In addition, the way in which governments and financial institutions must (be able to) supervise the financial markets, and in particular the way in which companies should take responsibility in this regard, shot to the top of the agenda (Foster and Magdoff, 2009; Westbrook, 2009).
2.5.1.2 The COVID-19 pandemic (2019–2022)
COVID-19 pandemic
In late 2019, the Corona virus (COVID-19) raged throughout the entire world, resulting in many deaths, lockdowns, and social and economic disruption. The pandemic affected the business world and the business world affected the way the pandemic could be ended, which led to new unexplored ethical challenges. Technology played a central role here on multiple levels. On the one hand, the pandemic had a disruptive effect on (especially) SMEs in certain branches (Belitski et al., 2022), e.g. tourism, restaurants, the arts. On the other hand, it led to a sudden growth of other industries (e.g. ICT and multimedia businesses) and above all the flourishing of big tech (Fernandez et al., 2020), whose inventions were crucial in the new ‘working from home’ reality.
And last but not least, the pharmaceutical industry played a key role in developing vaccines that could ‘open up’ the world again. This also led to ethical discussions on various levels. How safe are quickly produced vaccines? Can companies make use of their patent rights when they lack the capacity to produce enough vaccines quickly? How powerful/how much influence does the pharmaceutical industry have in deciding how vaccines are distributed across the globe, and to what extent can profit be a priority in these decisions? (Mucchielli, 2020; Binagwaho et al., 2021)
2.5.1.3 Ongoing global warming a s a result of manmade climate change and its consequences
global warming
Since 1988, the UN Intergovernmental Panel on Climate Change (IPCC) has been assessing the worldwide (peer-reviewed) science related to climate change, with written reports on the climate status of our planet, and discussions on future scenarios. Since the first report in 1990, these future scenarios become grimmer and more undesirable by the year. The Earth is gradually heating up as a result of manmade global warming. Manmade global warming is for the most part caused by the use of fossil fuels/greenhouse emissions, especially in industrialized regions. These alarming reports were core to the adoption of the Kyoto Protocol (1997) and the Paris Climate Agreement (2015) with the aim of reducing greenhouse gas emissions, as well as development agendas such as Agenda 21 (1992), the Millennium Goals (2000) and the Sustainable Development Goals (SDGs) in 2015. While these initiatives are essentially addressed to States, and UN Member States are its signatories, the corporate sector increasingly uses these goals as yardsticks for their own business performance. For instance, the Sustainable Development Goals address multiple challenges that directly relate to business performance, such as SDG 12 (responsible consumption and production). The SDGs are widely used, and not only by governments (Abhayawansa et al., 2021; Bexell and Jönsson, 2019) and companies (Rashed and Shah, 2021; Kumi and Kumi, 2021); and the 2030 Agenda for Sustainable Development emphasizes that governments, businesses and civil society have a joint responsibility to contribute to the realization of the SDGs.
2.5.1.4 Disruptive technologies that led to sudden societal changes
disruptive technologies
In the post-WWII era, we have seen the societal and economic transformation from industrialization to digitalization. At its centre is the rise of information technology, and so this transformation is referred to by some as the information age, or digital revolution. These technologies greatly influenced the way we communicate, do business and look at the world. Inventions such as the home computer (1969–1989), the world wide web (internet) (1989–2005), social media and smartphones (2005–2020), profoundly changed multiple aspects of daily life. Increasingly, the power of tech companies became a major concern, with only a handful of corporate organizations owning (and deciding on) the world’s digital infrastructure. Since 2010, but especially since 2020, new major technologies have once again been driving fundamental changes, and even further this time round. At the core is Artificial Intelligence (AI) and – perhaps to a lesser extent – Extended Reality (an umbrella term for Augmented and Virtual Reality technology), and in the near future, the effects of Quantum Technology are to be expected. When considering AI, the wide and accessible use of Large Language Models (LLMs) has had a particularly tangible effect on people’s lives and has become a subject of moral concern in its own right (e.g. Felten et al., 2023).
When we consider these digital developments, matters about privacy, consumer autonomy, intellectual property and equality are high on the agenda (McAfee and Brynjolfsson, 2017; Van Dijk et al., 2018; Eubanks, 2019; Wernaart, 2022). Such issues relate to social challenges and citizens’ rights. However, these digital developments also affect environmental issues in many ways, as we can see elsewhere in this book. Digital innovation is considered both a solution (e.g. Biswas, 2022) and a problem (e.g. Tamburrini, 2022) where environmental sustainability is concerned. However, this has long been an underrepresented theme in the general discourse on new technology and responsible innovation (Al-Khouri, 2013; Lichtenthaler, 2021)
2.5.2 Economic models that challenge unlimited growth
To address the concerns that relate to the effects of unlimited growth and unsustainable industries, various macro-economic ideas and models were created to rethink the (neo)-liberalist mindset that coincided with industrialization.
The purpose of economic growth in particular is challenged from multiple perspectives. A first aspect is that of capital and income, as advocated by the famous economist Thomas Piketty. In short, he concludes that interest on capital usually grows faster than the average economy can grow. This will always lead to a growing income gap in the longer term (with some historical exceptions), leading to economic instability with disproportionate wealth in the hands of the few. The idea that economic growth is beneficial to all is therefore an erroneous reasoning if governments do not interfere. He emphasizes the necessity to redistribute wealth, e.g. through higher and worldwide taxes on capital and progressive income taxes (Piketty, 2014; 2021). With these conclusions, he argues against some of the important concepts we find in neo-liberalism, which is usually characterized by free markets and limited governmental interference.
Thomas Piketty
Piketty’s work has a strong focus on social justice, and not so much on environmental sustainability. Kate Raworth’s so-called ‘donut economy’ has both. In this model, the donut is used as a physical metaphor for the desirable size of our economies. The outer side of the donut represent the limits of our planet (the ecological ceiling), and the inside represents the economic minimum that is required to provide all people with an adequate living standard (the social foundation). Somewhere between these two extremes, our economies can develop. This is called a safe and just space for the economy. Economies that are below the social foundation represent a shortfall, whereas economies that are beyond the environmental ceiling represent an overshoot (Raworth, 2012; 2017).
Kate Raworth
Whereas Piketty and Raworth are not per se against economic growth as such (as long as it leads to a fair distribution of wealth, or fits within the donut), some economists argue that growth is no longer necessary. In ‘The Economics of Arrival’, Katherine Trebeck and Jeremy Williams (2019) hold that some economies are simply ‘grown up’ and people need to learn how to live in these grown-up economies rather than continuously striving for even more growth.
Katherine Trebeck and Jeremy Williams
Some authors even introduce the concept of ‘degrowth’, the main idea being that economic growth is no longer a means to an end, but rather social well-being and ecological sustainability, for which, usually, economic degrowth is required.
Serge Latouche advocates degrowth in his famous book ‘Farewell to Growth’ (2009). He proposes the 8R model that can help in rethinking our economy: re-evaluate, relocalize, reduce, reconceptualise, restructure, redistribute, reuse and recycle. In short, it means we need to re-evaluate our perception of wealth: this is not the same as money, but instead includes well-being and happiness. Also, we need to produce locally (and not globally), and product chains need to be designed in such a way that they naturally lead to the reuse and recycling of these products. Also, we need to strive for a fair redistribution of resources.
Serge Latouche
Jason Hickel (2020) also advocates degrowth. In a nutshell, he argues that capitalism always leads to the exploitation of people and our planet, and is therefore not a useful economic model. He proposes a radical change in the way we think about our economies. Amongst other things, he proposes valuing things based on their usefulness rather than a price that is a result of supply and demand. This would require some systemic changes in our economies. For example, he suggests that a company should not focus on sales amounts but instead on duration of use of their products; we should shift our focus from ownership to usership, make sure that destructive industries no longer have a right to exist, redistribute resources and wealth in a fair way, stop advertisements, and stop food waste.
2.5.3 Business models and responsible technology
As mentioned in Section 2, there was a growing notion after WWII that the private sector was a problem for sustainable development, and could also be part of the solution. We have seen the Triple Bottom Line model of John Elkington, and the Stakeholder or Network Approach triggered by the works of R. Edward Freeman. But how do we put such ideas into practice? How do we organize companies not only around profit-making, but also around positive social and ecological impact? Countless models have been introduced ever since it was suggested to organize businesses in a more sustainable manner, and use and develop technologies with a positive social and ecological impact.
These models, however, have been developed from different academic corners, and as such result in a rather scattered approach. Also, the warning voiced by macroeconomist Milton Friedman in the late sixties resonates to this day: ‘the social responsibility of business is to increase its profits (Friedman, 2007, originally published in the New York Times Magazine, 1970). Or, in more popular wording: ‘the business of business is business’. In his work, Friedman advocated a no-nonsense shareholder approach whereby he argued that if businesses were to do something beyond the making of profit it would lead to spending someone else’s money (that of the shareholders) to a goal in the general interest. This would lead to a hidden and undemocratic tax, and, above all, it is not in the nature of a business to do something beyond making profit. So, with a scattered academic approach and the profit-driven nature of a business, one of the greater risks here is that of ‘greenwashing’ (d e Freitas Netto et al., 2020).
greenwashing
2.5.3.1 Accountancy and finance: integrated reporting
Each business must give an account of its financial achievements. In most legal systems, there are fixed rules and regulations for annual financial statements for private and public limited companies, and slightly more flexible rules for other business forms, such as (general) partnerships, sole proprietorships and foundations. In 2010, various ways of so-called ‘external cost accounting’ or ‘integrated reporting’ were introduced. The central idea is to broaden the scope of the materiality principle. This principle in accounting embodies the idea that an annual report should contain all necessary information so that its stakeholders can properly assess the performance of a company. Increasingly, this is understood more broadly than financial performance only, and company performance regarding social and ecological impact are incorporated in the annual reporting.
Case 1.1
Integrated reporting and sportswear
Puma, a German sportswear company, was one of the frontrunners in integrated reporting. In their 2010 annual report, Puma not only provided accounts for their financial achievements, but also calculated the social and environmental costs of their production processes. In this report, Puma calculated that for each € 100 of sales, the societal and environmental costs were € 6.70. This way of calculating costs could lead to more – and product chain wide – insights into societal and environmental impact. It was concluded that most of this (negative) impact was caused in the supplying countries, and not per se in the sales environment. This could lead to specific policies to improve and mitigate this negative impact.
One of the landmark initiatives was driven by the German-based company Puma, as we can see in Case 1.1. Increasingly, other businesses undertook similar initiatives, and various approaches and methods were introduced, including the review of business achievements against the Sustainable Development Goals (SDGs). Also, on a global and regional scale, various initiatives and methods were developed to stimulate integrated reporting of businesses, such as the Carbon Disclosure Project and the Global Reporting Initiative for companies, and the UN System of Environmental Economic Accounting for national industries.
In Europe, integrated reporting is now considered obligatory for so-called public-interest entities. These are usually listed companies, credit institutions and insurance undertakings, and some other (sometimes nationally designated) organizations, such as – in some countries – pension funds or investment companies. Since the adoption of the Corporate Sustainability Reporting Directive,1 these organizations are obliged to report according to European Sustainability Reporting Standards.2 This means that they have to report on risks and opportunities that relate to social and environmental aspects of the business, as well as their impact on these social and environmental issues.
In the literature, there is a feisty debate about the actual impact of integrated reporting (Stubbs and Higgins, 2014; Brown and Dillard, 2014), and some parties raise the concern that methods of integrated reporting (or the data that is used) are usually unclear or random, which easily leads to companies drawing desirable conclusions, rather than having a serious and measurable impact on social and environmental issues (Beske et al., 2020). In other words, the chosen method and dataset can heavily influence the ‘greenness’ of a business, and therefore lead to ambiguous conclusions (e.g. Fay, 2012; Murtha and Hammilton, 2012).
2.5.3.2 Business transition and sustainability
Earlier in this chapter, we introduced Elkington’s triple bottom line. He defined the necessary prerequisites and transitions to become a truly sustainable private organization. Elkington observed various revolutionary dimensions that would be indispensable for a sustainable capitalism transition, and that could lead the private sector away from unlimited and unsustainable growth. The first dimension is a shift from compliance to competition. A sustainable and successful business organization can no longer sustain itself by merely complying with legislation. Instead, as a result of consumer demand and green investment policies, social and environmental responsibility are part of a business case to create unique selling points that lead to more competitiveness. A second dimension relates to values. Elkington observes that societal values changes and keep changing. This also means that what society expects from business is not based on rigid and fixed values but rather changes over time. In his observation, businesses can no longer take values for granted, but need to put effort in their societal value alignment. This means, for instance, the permanent consultation of NGOs and other social organizations. A third dimension relates to transparency. Businesses need to open up and can no longer operate as separate, closed units in society. Driven by new information technologies, the communication channels of businesses have changed dramatically, and/or demand – as a result of the previously discussed changing values – more open insights into the intentions, strategy, mission and vision of a business. A fourth dimension relates to life-cycle technolog y. Whereas companies would normally focus production processes on products, a shift is required from product to function. A business does not produce gasoline, but is rather ‘in’ the mobility industry. This would mean that innovation is focussed on functionality, which opens the possibility to innovate sustainably, and aim for products and services that have a long or endless life cycle through recycling and reuse. In other words: production from cradle to cradle instead of cradle to grave. A fifth dimension relates to partnerships. The network and alliances of business organizations are changing. Unusual or unexpected collaborations emerge and are necessary for a networked sustainability revolution: NGOs, governments, business and education (quadruple helix) that work together and tackle societal challenges. A sixth dimension relates to time. On the one hand, (information) technologies allow us to communicate and respond within seconds to things happening anywhere in the world. This applies to e.g. social media, the way money is invested and circulated in a global financial market, the speed of online marketing and the way news and media respond to actualities. So, time is – as Elkington puts it – ‘wider’. At the same time, our actions and our technologies have an increasing long-term impact that stretches far beyond a couple of years, but extends to generations ahead. One of the main issues here is global warming as a result of manmade climate change. This means that time has another dimension: time is not only wide, but also ‘long’. Companies need to be able to deal with both concepts of time, but have the tendency to focus on the immediate, wide, concept of time. A shift is necessary to also be able to oversee and understand the (very) long-term consequences of business decisions (think of the use of microplastics or PFAS). The last dimension Elkington observes relates to the way business organizations are governed. Corporate governance needs to shift from exclusive to inclusive governance. By this, he means that triple bottom line thinking should be incorporated in the business DNA and its governance. When sustainable issues are considered a separate issue from standards business processes, they remain an exclusive ‘extra’ on top of business as usual. As a result, a business organization will not be able to make the necessary transition towards a sustainable organization. Instead, sustainability should be at the core of decision-making processes in the boardroom, and the driving value in the product and supply chain organization.
competition
values
transparency
life-cycle technology
partnerships
corporate governance
Eventually, such dimensions should encourage business transition to so-called ‘corporate honeybees’: these are regenerative companies with a high societal impact. In contrast, ‘corporate caterpillars’ are degenerative (unsustainable) organizations with a low impact. ‘Corporate locusts’ are degenerative companies with a high impact, and ‘corporate butterflies’ are regenerative companies with a low impact. Businesses need to transform into regenerative businesses, and preferably organizations with a high impact. These are characterized by a sustainable business model, a clear set of ethical guidelines, strategic sustainable management of natural resources, a capacity for sustained heavy lifting, powerful symbiotic partnerships, sustainable production of natural, human, social, institutional and cultural capital, and the capacity to help transform other businesses in their supply chain into regenerative organizations (Elkington, 2004).
corporate honeybees
2.5.3.3 Business processes and technology development
The revolutions around industrialization and digitalization have led to major challenges in production processes. When production capacity, driven by technology, is scaled up massively, linear production processes lead to the exhaustion of basic materials, and pollution caused by waste and fossil fuels. Digital services (especially AI-based services) and processes become more widespread and require an unprecedented amount of energy, which needs to be produced and stored. In both cases, production processes that are part of a linear economy are unsustainable and will have to come to an end one way or another: either because the basic resources that are required are exhausted because they are non-renewable, or because the waste that is caused by the production and consumption of the product has nowhere to go. Various models are used to encourage the move towards a circular rather than a linear economy. In short, a circular economy is driven by the assumption that waste no longer exists. The more eco-efficient production and consumption processes are, the more circular the economy becomes. Back in 1979 already, a model was proposed by the Dutch politician Ad Lansink (later referred to as ‘the ladder of Lansink’ or ‘the waste pyramid’) that could form a blueprint for more sustainable waste management. With some variations, the waste pyramid is now a worldwide model used for classifying sustainability levels in production and consumption processes. The pyramid is composed of three parts. At the top is ‘prevention’. The prevention of producing is always better than producing something. Avoid the use of products, and if you use them, use them only when really needed. Smart technology in smart houses that lead to energy saving are examples. The second part deals with the reuse or recycling of products. In many cases, the product lifetime is not the same as the actual period of use of a product. It therefore makes sense to organize our businesses in such a way that a product is reused with the same purpose until the economic lifespan is ended. Models around a sharing economy are good examples in which reuse forms a central part of the collective sharing and consumption of products and services (Cheng, 2016; Puschmann and Alt, 2016; Hossein, 2020). Recycling differs from reuse insofar as in recycling, waste equals basic materials. In other words, energy or product elements are used again to form new products with a different purpose. Recycling can be upcycling, when the process leads to an increase of value, and downcycling when it leads to a decrease of value. These approaches resonate in the famous work Cradle to Cradle (McDonough and Braungart, 2002), in which the authors suggest an economy without waste. Production processes should be design (or redesigned) in such a way that waste per definition forms the new basic materials for new products, so that there is an endless circular production cycle. This would prevent the exhaustion of basic materials, and pollution as a result of incarnation or disposal. These latter are the last stage of the waste pyramid (the bottom) which focusses on waste. Sometimes waste is incarnated for energy recovery, adding an extra loop in the process before waste is disposed of (mostly in the form of CO₂ emissions). Incarnation and waste disposal are the last two steps on the waste pyramid.
prevention
recycling
Elements of the waste pyramid are now used in the R-hierarchy, R-ladder or 10Rs model . This model is slightly more detailed and categorizes sustainability strategies in the design phase, consumption phase, end-of-life or return phase, and loss of resources phase. In the design phase, there is a focus on refuse, rethink and reduce (in the waste pyramid this would be similar to the prevention phase). The focus is on smarter product use and smarter manufacturing processes, leading to less or no use of basic materials. In the consumption phase, there is a focus on life extension strategies through reuse, repair, refurbish, remanufacture and repurpose. In the end-of-life or return phase, there is a focus on creative material application through recycling and recovering. The last phase is the loss of resources through incarnation or disposal.
10Rs model
The approaches proposed around ‘cradle to cradle’, the waste pyramid and the 10Rs model have a strong focus on environmental issues and how to innovate more sustainably. Other approaches have a broader reach and integrate multiple values in the design processes of new products and services. Such approaches are often labelled value-sensitive design (Friedman and Hendry, 2019), human-centred design (Kurosu, 2009; Shneiderman, 2022) or moral design (Wernaart, 2022). What they have in common is that they involve methods to internalize external (societal) values in design processes. Design processes in organizations tend to have an inward focus (Isil and Hernke, 2017); the integration of societal values at the start of design processes can help in aligning societal values and organizational values. This is a particularly useful approach when technology is complex, and its societal impact is difficult to predict.
2.5.3.4 MNOs and chain responsibility
chain responsibility
Multinational organizations (MNOs) typically operate in a multitude of countries. These countries may have different trade rules, making it worthwhile to strategically organize the business activities in such a way that the MNO maximally benefits from the most favourable rules that are available. The globalization movement after the Second World War (as discussed in section 2) helped on the one hand to create global markets with countless possibilities and positive effects on economies. At the same time it opened the doors for questionable practices among MNOs. A typical example is that of trade deflection, where the MNO enters (with its products and services) a free trade zone in the country with the lowest tariffs to trade. Another example is that of tax avoidance, w here MNOs are registered in countries with the most favourable rules on taxation, optimizing their financial results by paying the lowest possible tax rate on profits.
trade deflection
tax avoidance
When states deliberately compete with the flexibility of their rules and regulations to attract more businesses, this is called ‘regulatory competition’. Some countries are famous for their mild tax regimes, and are labelled ‘tax havens’ (e.g. Wier, 2022). Such practices are usually met with criticism, where the negative consequences of not paying enough tax are pointed out. Regulatory competition does not only focus on tax and tariffs, but can also be applied on social and environmental issues (Stark, 2019). For instance, in the garment industry there is a long tradition of MNOs outsourcing the production of clothes to countries with flexible rules on employee rights and environmental laws (e.g. Gahlot and Singh, 2024). A similar tradition exists in the IT industry (e.g. Cai et al., 2022).
regulatory competition
MNOs are confronted with the challenge to take chain responsibility. This usually leads to industry self-regulation, where MNOs adopt private rules that are imposed on the entire product chain to guarantee a certain level of environmental and human rights protection. The SDGs are frequently a key concept used to review business practices in the entire product chain. On the one hand, this leads to the private regulation of industries beyond the scope of individual lawmakers. On the other hand, it sometimes gives rise to chain regulation that is not always feasible to all the businesses that are part of it, especially if they are small and lack the resources to comply with the rules imposed on them by the large multinational organization that is at the top of the product chain.
chain responsibility
2.6 Future challenges
The role of business organizations in green transitions is substantive, both as a hindering factor, and as potential part of the solution. From various academic corners and applied practices we see the emergence of models and approaches that may help business organizations to live up to societal expectations and contribute to the shift towards sustainable economies.
There are some main challenges that we need to overcome to make these models and approaches truly meaningful and to optimize their functioning.
moral decoration
First, there is the risk of ‘moral decoration’. Popular frameworks such as the Sustainable Development Goals, or the triple bottom line, are deeply incorporated in managerial language. There is sometimes a thin line between sustainable claims and marketing. It is not without reason that in 2021, John Elkington withdrew his 3P model. He was disappointed by its misuse, and held that the systemic change he envisioned triggering with his model had scarcely been accomplished. Instead, his model was being misused as a means to green- and social washing rather than improving business performance in the field of social and ecological values.
Another challenge lies in the language that is used around sustainable issues. When we consider the language of law, we speak of fundamental rights and principles, or processes. When we speak in a managerial language, we speak the language of business models and accountancy. When we speak the language of technology and programming, we speak the language of maths or IT. For instance, it is hard to translate fundamental rights to AI programming, or make sure a business model is in alignment with public values. The bridging of these language gaps is deeply underexplored, and deserves much more attention if we want businesses to contribute to a more sustainable world.
language
Last but not least, technology is in the hands of a limited number of large multinational companies that are at the top of large supply chains in both physical and digital products and services. Due to their global or near global business activities, they are beyond the reach of national legislatures, and due to the lack of serious competition, it is unlikely that other businesses, consumers or even governments can use their buying power to enforce moral or sustainable behaviour. This leads to a power gap in our globalized society that can stand in the way of sustainable development, since the choice to become a sustainable and responsible business organization has to come from within that organization, which might feel like an unnatural response in a profit-driven entity.
multinational companies
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Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) no. 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting
Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards