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Environment Magazine September/October 2008

 

March-April 2012

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The Business of Development: Revisiting Strategies for a Sustainable Future

The role of business in sustainable development emerged as an important topic of discussion at the 1992 United Nations Conference on Environment and Development in Rio de Janeiro, Brazil. Agenda 21, an action plan that came out of that meeting, stated that “the policies and operations of business and industry, including transnational corporations, can play a major role in reducing impacts on resource use and the environment.”1 It called for a growing private sector to provide more “employment and livelihood opportunities,” and business leaders were asked to contribute to sustainable development in their strategies and decisions. As the conference returns to Rio in June this year (Rio+20), it is useful to reconsider this recommendation in a contemporary context.

Since the 1992 meeting, the idea of corporate social responsibility (CSR) has become more mainstream, buoyed also by UN attempts to reach out to the business community through initiatives such as the UN Global Compact, in which member companies commit themselves to supporting human and labor rights, good environmental practices, and anti-corruption efforts. At the 2002 Summit in Johannesburg, prominent business leaders and organizations extolled the “business case” for CSR, insisting that proactive efforts toward social and environmental goals would lead to decreased risk and enhanced reputation, and ultimately improved competitiveness.2 The societal benefits of companies' CSR efforts were also emphasised, particularly if implemented in partnership with the state and civil society. As noted by one prominent business leader: “All the best examples of the application of principles of sustainable development involve partnership.”3

The 2002 conference also showcased a movement of nongovernmental and community-based organizations, which criticized big business and what they considered “greenwash,” or intentionally misleading public relations campaigns about CSR that downplayed or even covered up corporate misdeeds. Such critics maintained that business decisionmakers are prone to seek short-term profits at the expense of social and environmental externalities, and that instead of partnerships, more state regulation is required to rein in the profit motive: “Today, in a world that is more unequal, with a small number of transnational corporations dominating each sector and exerting tremendous influence on governments, this concept of ‘partnership and stakeholders’ perpetuates the myth that there is a collective endeavour, and that all players are equal and conflicts of interest can be resolved by roundtables seeking consensus.”4 Many of these critics called for stronger transnational regulations in order to better control multinational corporations in particular.

What is the status of these debates on the eve of the Rio+20 summit in 2012? While still controversial, it seems there is something of a rapprochement between protagonists of a constructive, proactive role for business, on the one hand, and those emphasizing accountability, on the other, with the realization that voluntary business action and state regulation are both required and are often complementary.5 Particularly in the wake of the economic crisis of recent years, prominent defense of free markets or the “efficient market hypothesis” (suggesting that unfettered markets are best able to ensure social progress) has become much less common. Governments are already playing a much more prominent role in their nations' economies in attempts to address debt and currency crises than could have been imagined 10 years ago. But this economic crisis and the global trade imbalances and shifts in economic power that underpin it create a difficult context for the far-reaching transitions required to address structural poverty, habitat destruction, and climate change in coming decades. Governance regimes are required that can regulate against or put a price on social and environmental externalities, while at the same time encouraging and harnessing the entrepreneurial and innovation capacities of business.

Such a broader view recognises that there are important contributions that business can make to developing and implementing innovative solutions to social and environmental problems, motivated by converging societal and business interests – this goes beyond some of the more traditional approaches that emphasise the philanthropic character of CSR, emphasising instead the need to integrate social and environmental issues into core strategies and operations. At the same time, a rigorous system of rights needs to be put in place to curtail socially and environmentally harmful business activities in the absence of shared interests. Fortunately, there have been useful developments in recent years that improve our understanding of mitigation and protecting rights, on the one hand, and innovation and shared interests, on the other. These may even create something of a common platform for business protagonists and critics to engage with each other, in order to also highlight the many important gaps and shortcomings of current corporate sustainability efforts.

Figure 1 provides a schematic map of the predominant narratives on the role of business in sustainable development. They are mapped relative to company size on the y-axis, and their emphasis on either business responsibilities to respect rights or business opportunities to create shared value, on the x-axis. There are three major narratives on this map: (1) the UN framework on business and human rights; (2) the concept of creating shared value; and (3) sustainability entrepreneurship. Through an exploration of these three contemporary narratives, it is possible to see how understanding of the role of business in sustainable development has evolved since 1992 and where some of the gaps and priorities are likely to be at the Rio+20 conference and beyond.

The Business and Human Rights Debate

Safeguarding human rights has always been a fundamental aspect of international sustainable development policy. This link is strengthening as access to environmental resources, including an environment free from pollution, is increasingly framed as a human rights concern. Climate change has been identified as a particularly important threat to human rights,6 linked also to increasing litigation on climate related impacts.7 Furthermore, civil society groups demanding greater corporate accountability have often framed their arguments around human rights, with a prominent point of contention being the extent to which international human rights law applies to private-sector organizations.

Figure 1: Mapping naratives on the role of business in sustainable development.

Figure 1: Mapping naratives on the role of business in sustainable development.

UN attempts to formalize the application of international human rights laws to the private sector in 1990 and 2003 were unsuccessful, in part because business representatives and some governments argued that human rights responsibilities normally given to states should not be extended to the private sector. After the failure of the 2003 attempt, the UN established the position of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises. Each of the incumbent's two three-year terms led to final reports, which were formally adopted by the UN Human Rights Council in 2008 and 2011, respectively. These reports have done much to create a common point of departure in these debates.

The UN framework on business and human rights is based on three complementary pillars:

The first is the State duty to protect against human rights abuses by third parties, including business enterprises, through appropriate policies, regulation, and adjudication. The second is the corporate responsibility to respect human rights, which means that business enterprises should act with due diligence to avoid infringing on the rights of others and to address adverse impacts with which they are involved. The third is the need for greater access by victims to effective remedy, both judicial and non-judicial.8

Contrary to previous approaches, this framework posits that it is not possible to identify a particular set of human rights for which companies should be accountable. Rather, companies need to understand and respond to the fact that they can impinge on all human rights. The core requirement of this framework for companies is due diligence, which “should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”9 This should “cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships.”10 The business responsibility to respect human rights thus also requires a company to use its leverage on other entities that are or may be causing harm. This extends business responsibilities beyond companies' immediate boundaries and into their relationships with suppliers and governments, among others, with potentially significant ripple effects.

Human rights due diligence, suggests the UN framework, can go some ways toward protecting companies from being accused of complicity in human rights abuses.11 It can help companies avoid the legal conditions for complicity, which require “knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime.”12 In addition, it can help companies avoid the perception of complicity, which may be brought about, for example, by the belief that a company is benefiting from the abuses of a third party. There are many examples of multinational companies learning how easily such perceptions can be formed and how those perceptions can significantly affect their operations and reputation.13

The framework also affirms the central role of states in holding companies accountable for human rights abuses through legal and other means. Empirical research underscores the links between state regulation, or the threat thereof, and companies' ostensibly voluntary efforts to improve social and environmental performance.14 However, the framework also criticizes many governments' incoherent approach to implementing their human rights commitments and integrating them into all relevant policy domains, such as trade and investment promotion. It suggests a broad array of policy options governments can use to protect against human rights abuses, some of which go beyond regulation to include consideration of organizational culture in deciding corporate criminal liability and, importantly, support for market-based pressures through mandatory disclosure on human rights issues, for example. The latter recognises that there need not be a tradeoff between state regulation and market-based incentives.

But what about those geographic or thematic areas in which states cannot develop and enforce commonly binding rules? Indeed many parts of the globe may be characterized as such “areas of limited statehood,”15 including but going well beyond the more extreme cases of conflict zones that often experience “the most egregious human rights abuses.”16 Certain policy areas are also more likely to experience limited statehood, including many local and global sustainable development challenges. Globally, climate change is not only the “greatest market failure” ever, but also a profound challenge for nation-states, which bargain as partisan actors and have little ability or incentive to act on behalf of the global collective. Similarly, at the local level, limitations to states hierarchically managing environmental problems and natural resources, such as fisheries, water, or forests, have been well documented. So the notion of “limited statehood” is particularly pertinent to sustainable development and related calls for new forms of governance that may compensate some of the limitations faced by states in hierarchically addressing complex social and environmental problems.17 All the more vexing, then, is the resulting dilemma:

On the one hand, the lower the capacity of the state, the greater is the need for governance through non-hierarchical modes involving non-state actors to compensate for government weakness or state failure. On the other hand, limited statehood implies a weak shadow of hierarchy as a result of which such “new” and non-hierarchical modes of governance are unlikely to emerge and be effective.18

However, there are alternatives to direct state regulation that can also motivate firms to improve their performance. For instance, some multinational companies' home country states have mechanisms for litigation against these companies for alleged human rights abuses even in overseas territories.19 Other pressures relate to consumers and investors worried about the social and environmental impacts of products' supply chains.20 Much of this regulation from afar is premised on increasingly effective mechanisms of nongovernmental organization (NGO) surveillance and the international media.21

Yet even as such information networks become more sophisticated, the distance between boardrooms or newsrooms in London and New York, on the one hand, and villages in the Democratic Republic of the Congo (DRC) or Indonesia, on the other, is difficult to overcome. Companies that are not owned by institutional investors with public sustainability commitments, reliant on prominent banks' loans, or exposed to consumer markets can often fly under the radar of such information networks. For example, there are serious allegations against some mining companies operating in the DRC, many of which are probably unknown to all but the most directly involved stakeholders. Activists are prone to focusing on the well-known companies because they offer more prominent targets, but the risk is that such strategies fail to address the negative impacts of the smaller, lesser known firms.22 In addition, sometimes even well-intentioned campaigns and CSR efforts can have negative unintended consequences, especially if local contexts and people's voices are given inadequate attention.23

Kimberly diamond mine world heritage site, South Africa. In parts of Africa, some companies in mining and other sectors are seeking innovative ways in which to contribute to public deliberation around commonly binding rules and the provision of public goods and services.

Kimberly diamond mine world heritage site, South Africa. In parts of Africa, some companies in mining and other sectors are seeking innovative ways in which to contribute to public deliberation around commonly binding rules and the provision of public goods and services.

Yet there are signs that corporate leaders are becoming more attuned to these risks and that public reporting on sustainability issues is becoming more sophisticated. Pressure from civil society and states for such public reporting has been building since the social accountability movement of the 1970s. It has been strengthened by state rules, such as the U.S. Toxic Release Inventory (first established in 1986) and more recent requirements by some governments for firms to abide by certain transparency standards, often referring to the Global Reporting Initiative's reporting principles and disclosure indicators.24 Such public reporting has often been criticized as greenwash by civil society groups and ignored by investors, and it is still the domain mostly of large, high-profile companies: Bloomberg found that only about one-fifth of the 20,000 companies it collects data on publish environmental, social, and governance data of sufficient quality to be included in its database.25 So it remains to be seen whether sustainability reporting will be taken more seriously in connection with prominent, international moves to more fundamentally integrate sustainability and financial reporting.26 Already there are signs that investors are giving more attention to such nonfinancial information, particularly on high-profile aspects such as greenhouse gas emissions.27 Indeed, a coalition of investors is targeting the Rio+20 meeting with a call for UN member-states “to develop a global policy framework that requires listed and large private companies to integrate sustainability information throughout their annual report and accounts—or explain why they are unable to do so.”28

Beyond pressure from home country governments, consumers, activist groups, and investors, there may also be other reasons for firms to adopt social and environmental standards and even to make proactive contributions to public goods and services. In places where the state does not do so, companies might have incentives to provide public goods in order to maintain or enhance their operating environment and hence their ability to make profits.29 South African and multinational companies' provision of HIV medication to their South African employees and in some cases even their families and communities during a time when the government actively opposed such efforts is a prominent example.

Many companies are recognizing that a dearth of legitimate local government in their areas of operation can become a significant risk to their operation, as well as to their global reputation. In the case of mining in South Africa, for instance, the irony is that some mining companies' historical “divide and rule” tactics have contributed to the difficult local operating environments, in which they now find themselves, with the result that attempts at engaging local communities for the purpose of, say, resettlement are foiled by conflict within the community and between various local and national stakeholders.30 Indeed, in parts of Africa, some companies are seeking innovative ways in which to contribute to public deliberation around commonly binding rules and the provision of public goods and services.31 This is an important arena, in which even ostensibly straightforward expectations to “do no harm” are challenged by severely complex circumstances that require innovative responses.

Shared Value and Sustainability Entrepreneurship

Rights-based approaches and the role of states in securing them address the concern that there is not always a “business case” for companies to integrate environmental and social considerations into their corporate strategies. At the same time, there have been important efforts to improve our understanding of how companies can better integrate environmental and social concerns into their competitive strategy, expanding the scope of what they recognize as their enlightened self-interest. One of the most prominent of these has been the notion of creating shared value, popularised in a recent article by Michael Porter and Mark Kramer.32

This suggests that the purpose of business should not be to just create profit, but rather, to “enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.”33 The popularity of this concept is partly because it recasts the issues fundamentally in terms of corporate strategy, discarding the loaded terminology of CSR:

Creating shared value (CSV) should supersede corporate social responsibility (CSR) in guiding the investments of companies in their communities. CSR programs focus mostly on reputation and have only a limited connection to the business, making them hard to justify and maintain over the long run. In contrast, CSV is integral to a company's profitability and competitive position. It leverages the unique resources and expertise of the company to create economic value by creating social value.34

One dimension of creating shared value focuses on enhancing efficiencies and productivity in the value chain. This builds on the well-established argument that companies can improve profitability by enhancing energy or water efficiency in their production systems and buildings. It includes strategies to create more localized supply chains in order to reduce transport costs and enhance logistical flexibilities. One example: “The British retailer Marks & Spencer's ambitious overhaul of its supply chain… involves steps as simple as stopping the purchase of supplies from one hemisphere to ship to another, [and] is expected to save the retailer £175 million annually by fiscal 2016, while hugely reducing carbon emissions.”35

A gold mine head gear in Johannesburg, South Africa.

A gold mine head gear in Johannesburg, South Africa.

A second dimension is the recognition that social and environmental problems can create opportunities for new products and services. In particular, the policy imperative and consumer pressure for energy efficiency, renewable energy, and related “clean products” has given rise to some notable—and often profitable—corporate strategies. For example, General Electric's revenues from its “Ecomagination” line of products are expected to “grow at twice the rate of total company revenues over the next five years.”36 The notion that environmental stewardship and economic growth can be mutually supportive has also led to the development of national and international ‘green economy’ policies.37 Indeed, the green economy is one of the two main themes of the Rio+20 conference.

Woolworths managers in South Africa set out to develop a program of direct engagement with the farmers in their supply chain to enhance their productivity, focusing in part on irrigation techniques.

Woolworths managers in South Africa set out to develop a program of direct engagement with the farmers in their supply chain to enhance their productivity, focusing in part on irrigation techniques.

In developing countries, the recommendation to reconceive products and markets is also closely related to a prominent argument that large corporations can make substantial profits in marketing to the poor at the “base of the pyramid” (BOP), and that such efforts would contribute to poverty alleviation:

Contrary to popular assumptions, the poor can be a very profitable market—especially if MNCs [multinational corporations] change their business models. Specifically, [the poor are] not a market that allows for the traditional pursuit of high margins; instead, profits are driven by volume and capital efficiency.38

While this notion has resonated with corporate leaders,39 it has been criticized by those who argue that not only may the expectations of profit in low-income markets be exaggerated, but corporate strategies to market to the poor may even increase the latter's dependencies and poverty.40 This has led some of the BOP concept's proponents to suggest a change of emphasis from top-down corporate strategies focusing on poor consumers to the “co-creation” of business models involving poor people as collaborators, recognizing the need to fully embed such business models in their social context.41 It is also uncertain to what degree large corporations are able to develop and implement the kind of innovative business models likely to be required to access low-income populations in a mutually beneficial way.

The third dimension of shared value creation refers to “cluster development,” through which a company proactively improves the social, cultural, and physical environment in which its business is situated. This notion is closely related to the above mentioned phenomenon of companies providing public goods or services that are necessary for the good of the business if the state is incapable or unwilling to provide them. The idea of cluster development can also be extended to consider the broader socioecological system, particularly as a response to climate change. By considering the interactions between companies and the socioecological landscapes in which they operate, conditions for business can be improved while companies are contributing to socioeconomic development and climate change mitigation and adaptation.

A good example is the “Farming for the Future” program of one of South Africa's largest retailers of fresh produce, Woolworths. Concerned about suppliers' reports of declining productivity on farms, and motivated also by a broader corporate commitment to sustainable development, Woolworths managers set out to develop a program of direct engagement with the farmers in their supply chain to enhance their productivity. They based the program on natural farming methods, with a focus on soil-specific composting and irrigation techniques. They also ensured that an agricultural extension program and monitoring service was available to support the farmers. The result has been a notable increase in farmers' productivity and a reduction in the use of pesticides, fertilizers, and irrigation water.42 Given the extent of Woolworths' fresh produce supply chain in South Africa, this initiative will have a profound effect on agricultural landscapes there. Moreover, its impact is likely to go further as farmers adopt their neighbors' practices even if they do not supply Woolworths.

In another telling example of such boundary-spanning innovations, Santam, one of South Africa's main short-term insurance companies, has sought to better respond to increasing climate-change-related risks faced by its policy holders. In a pilot project implemented in partnership with research organizations and the World Wildlife Fund in a municipality with a high incidence of floods and fires, the partnership recognized that rather than just raise premiums (and thus decrease turnover, given the price-sensitive South African insurance market), it was possible to more proactively approach the business of insurance with an explicit focus on the socioecological landscape. One way to do this is to form relationships with farmers and the municipality in order to, for instance, reduce hard surfaces in sensitive areas of the catchment, unblock and extend critical drainage systems, reduce the spread of invasive alien plants, avoid tilling close to streams, and improve estuarine management practices. All of these things function to address environmental concerns while enhancing ecosystem services that reduce the risk and severity of floods (and fires, in part).

Woolworths “Farming for the Future” initiative seeks to increase productivity among South African farmers using natural farming methods, with a focus on soil-specific composting.

Woolworths “Farming for the Future” initiative seeks to increase productivity among South African farmers using natural farming methods, with a focus on soil-specific composting.

The Santam example illustrates again the need and potential for companies to contribute to their broader governance context. However, there are constraints that need to be considered in making this kind of proactive systemwide engagement an obvious strategic choice for companies.

For a start, the capabilities required for this kind of “boundary work”43 are not commonplace in companies, especially in the context of perpetual downscaling in response to economic pressures. In addition, champions of such approaches are likely to confront opposition from their corporate colleagues who worry that while the costs of such initiatives are borne by the company, the benefits accrue to a broad array of stakeholders, and critically this includes competitors. This relationship between the social value created by social entrepreneurs and innovative corporations, and the value that can be captured by them within diverse time frames, deserves more careful attention. Similarly, new approaches to collaboration between competitors are required if we are to develop systemic responses to complex social and environmental problems.44

In sum, large incumbent businesses face inherent challenges in developing innovative business models that address social and ecological concerns, while generating returns to shareholders. Even Porter and Kramer, who are often quite optimistic in their assessment of corporate innovation capabilities, agree that “social entrepreneurs” are often more nimble in “pioneering new product concepts that meet social needs using viable business models [because] they are not locked into narrow traditional business thinking.”45

This brings us to the third narrative included in Figure 1: sustainability entrepreneurship. Diverse kinds of entrepreneurs have become increasingly interested in business opportunities that explicitly seek to address social and environmental issues, because of their social and environmental ideals or because of the potential profit in such opportunities, or both. Some have argued that there are separate forms of such entrepreneurship, depending on whether the focus is either on social or environmental issues.46 But this distinction is likely to be unhelpful and unnecessary, especially in a developing country context, where social and environmental issues are intimately linked. Many entrepreneurs that refer to themselves as either social or sustainable entrepreneurs explicitly seek to address not just one particular category of either social or environmental issues, but try to address a range of inter-related social and environmental concerns.

Indeed, finding innovative ways to link social and environmental concerns can be an important aspect of sustainability entrepreneurs' business models. For example, in Bangladesh, trash piled up on the roads of towns and cities that were unable to collect it. A startup called Waste Concern started collecting the trash because it had developed a process through which the organic components of the trash could be transformed into fertilizer. Because processing the trash prevents it from decomposing, it prevents methane gas from being released into the atmosphere. As a result, the company is able to receive funding from the international carbon market to support the collection and processing of waste. Over and above helping to address the waste problem, Waste Concern contributes to improved agricultural yields, as well as creating safe employment.47

Although small startups have the advantage of flexibility and nimbleness, larger companies can also innovate in similar ways. An example is Daimler Chrysler's Car2Go initiative, a variant of the “car sharing” concept. Car2Go provides flexible, short-term use of a Smart car—one of the company's small and relatively environmentally friendly offerings. Car2Go adresses the social issue of traffic congestion in cities and the environmental issue of pollution, while also creating a market for the company's cars.

While these innovative business models can serve as examples for other potential sustainability entrepreneurs, there are multiple factors influencing the success of similar endeavors at different scales. Every company is enmeshed in a context of predominant technologies, organizational cultures, markets, state regulations, and other institutions, and is at the whim of interrelated issues such as insurance practices, consumer preferences, and contingent circumstances.48 Within this complex of interconnected organizational and institutional phenomena, it is not always easy to introduce new technologies, especially if the incumbent technologies are associated with large capital investments—sunk costs—as is the case with thermal or nuclear energy, for example. So Car2Go is an interesting business model innovation, but it is arguably more incremental and modest than, say, Better Place's efforts to establish the infrastructure required for electric vehicles.50 Safe spaces for trial and error experimentation are vital to innovation, but creating these spaces often requires strong and well-resourced states. The notion of transition management therefore also highlights the important role of states, but “defines that role in interactive rather than directive terms”:

Partnerships are necessary precisely because in many areas solutions are not obvious, but require pooled knowledge, collaborative learning and joint initiatives. And yet the state remains a critical mechanism for taking collective decisions, giving effect to collective choices and mobilising societal resources for societal ends.49

Daimler Chrysler's Car2Go, shown here in Austin, Texas, provides flexible, short-term use of a Smart car—one of the company's small and relatively environmentally-friendly offerings. More far-reaching innovation in the transport sector is at stake in the electric vehicle market, driven by companies like Better Place. Inset: A Better Place Nissan eRogue.

Daimler Chrysler's Car2Go, shown here in Austin, Texas, provides flexible, short-term use of a Smart car—one of the company's small and relatively environmentally-friendly offerings. More far-reaching innovation in the transport sector is at stake in the electric vehicle market, driven by companies like Better Place. Inset: A Better Place Nissan eRogue.

Conclusions: Prospects for Rio+20

What can we expect from the Rio+20 meeting with regard to the role of business in sustainable development? One of its thematic emphases will be on the green economy, so there is a programmed focus on the business opportunities associated with clean energy and resource efficiencies, in particular. We can expect many to highlight the interconnected nature of environmental and social issues, but this ought to go beyond exhortations of identifying synergies and managing tradeoffs, and toward a better understanding of the principles and legalities of environmental rights, especially the right to water.

There will also be much discussion on the transfer of environmental technologies to developing countries. This emphasis will need to bear in mind that innovation is not just of the technological kind, and that innovation in business models and policy frameworks is just as important, if not more so. Furthermore, it is important to remind ourselves that transferring technological innovations from one part of the world to another is fraught with difficulties because of the cultural, natural, and institutional embeddedness of the way technologies are applied and maintained. As in the case of the “base of the pyramid” debate mentioned earlier, it makes more sense to talk of a co-creation effort inspired by the latest technologies and local circumstances.

More broadly, the implementation of new technologies needs to be understood as part of a broader societal transition because of the interlocking nature of technologies, infrastructure, business models, and institutional frameworks. The discussion will need to go beyond efficiency gains achieved or achievable by individual companies, because these will not deliver the scale of changes required: Broader economic transformations are needed that are likely to have geographically disparate “implications for incentive structures, ownership patterns, investment portfolios, the organization of financial markets, and the structure of economic activities and for expectations of economic growth.”51

The Rio+20 focus on the green economy will make it easier to emphasize the positive role of business in sustainable development along the lines of the shared value narrative. Some may see this as an opportunity to downplay the need for business accountability and its responsibility to respect critical rights. But this would be wrong, not only because it would be missing a large part of the bigger picture, as mapped in Figure 1. It would also miss the important links between the requirement that business “do no harm” and the hope that it can innovate and enhance efficiencies.

Corporate contributions to sustainable development are becoming more systematic and comprehensive, but they need to be seen in conjunction with state policies and regulation, not apart. Such regulations can take a variety of forms beyond traditional “command and control” mechanisms to include, for instance, vital impetus to enhanced public reporting and transparency on sustainability issues, as demanded by investors. Enhanced state commitment is critical not only nationally, but also at the multinational level, as evidenced in the increasingly fraught intersection of environmental, social, and trade negotiations. If the sense of urgency among business with regard to the state of the planet is indeed that much greater now, as argued by business and NGO leaders, then this ought to translate into a strong call for more committed and creative state action on sustainable development, including also stronger opposition to those business lobbyists actively resisting such action.

1. United Nations, Agenda 21 (New York: United Nations, 1992), http://www.un.org/esa/sustdev/ documents/agenda21 (accessed 1 December 2009).


2. International Finance Corporation, SustainAbility, and Instituto Ethos, Developing Value: The Business Case in Emerging Economies (Washington, DC: International Finance Corporation, 2002).


3. Mark Moody-Stuart, quoted in Business Partners for Development, Putting partnering to work (London: Business Partners for Development, 2002), 9.


4. TWN/ELCI/D92G (Third World Network/Environmental Liaison Centre International/Danish 92 Group), Dialogue Paper by Nongovernmental Organisations (submitted to the Second Session of the Preparatory Committee [PrepCom2], 2002), www.johannesburgsummit.org (accessed 3 April 2002).


5. R. Hamann, N. Acutt, and P. Kapelus, “Responsibility vs. Accountability? Interpreting the World Summit on Sustainable Development for a Synthesis Model of Corporate Citizenship,” Journal of Corporate Citizenship, 9(2003): 20–36.


6. Hence, for instance, the UN Human Rights Council adopted in 2008 a resolution on Human Rights and Climate Change. See Human Rights Council, Resolution 7/23: Human Rights and Climate Change, http://ap.ohchr.org/documents/E/HRC/resolutions/A_HRC_RES_7_23.pdf. See also M. Robinson, “Climate Change Is an Issue of Human Rights,” The Independent, 10 December 2008.


7 D.A. Grossman, “Warming up to a not-so-radical idea: tort-based climate change litigation,” Columbia Journal of Environmental Law, 1 (2003); E. Posner, “Climate Change and International Human Rights Litigation: A Critical Appraisal”, University of Pennsylvania Law Review (2007).


8. United Nations (UN), Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie: Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, UN Document A/HRC/17/31 (New York: UN, 2011), http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf (accessed 9 December 2011), 4.


9. Ibid, 16.


10. Ibid, 16.


11. Ibid, 17.


12. Ibid, 17.


13. For three examples in the African context, see R. Popper, “Case Study of ABB in Sudan,” presentation to the UN International Learning Network Meeting, Ghana, November 2006; L. Farrell, R. Hamann, and E. Mackres, “A Clash of Cultures (and Lawyers): Anglo Platinum and Mine-Affected Communities in Limpopo Province, South Africa,” Resources Policy, doi: 10.1016/j.resourpol.2011.05.003; P. Kapelus, R. Hamann, and E. O'Keefe, “Doing Business With Integrity: The Experience of AngloGold Ashanti in the Democratic Republic of Congo,” International Social Science Journal 57(s1) (2009): 119–130.


14. In some of our work on this topic, we found that companies had the most committed policies, leadership commitments, and comprehensive public disclosure on those human rights issues that received also direct government attention in terms of regulations or policies: R. Hamann, P. Sinha, F. Kapfudzaruwa, and C. Schild, “Business and Human Rights in South Africa: An Analysis of Antecedents of Human Rights Due Diligence,” Journal of Business Ethics, 87 (2009): 453–473. A similar role for government policy and regulation in ensuring self-regulatory action among companies was also found in a study of firms' environmental practices: J. L. Short and M.W. Toffel, “Making Self-Regulation More Than Merely Symbolic: The Critical Role of the Legal Environment,” Administrative Science Quarterly, 55(3) (2010): 361–396.


15. T.A. Börzel and T. Risse, “Governance without a state: Can it work?” Regulation & Governance, 4(2) (2010): 113–134, 116.


16. UN, note 8, 13.


17. For an overview, see A. Agrawal and M. C. Lemos, “A Greener Revolution in the Making?: Environmental Governance in the 21st Century,” Environment: Science and Policy for Sustainable Development 49(5) (2007): 36–45.


18. Börzel and Risse, note 14, pages 119–120.


19. A prominent example of this, which has received much attention especially in the legal literature, is the Alien Tort Claims Act in the United States; see, e.g., R. Shamir, “Between Self-Regulation and the Alien Tort Claims Act: On the Contested Concept of Corporate Social Responsibility,” Law & Society Review, 38(4) (2004): 635–664.


20. For an analysis of the role of consumer pressure and social movements in private self-regulation, see T. Bartley, “Certifying Forests and Factories: States, Social Movements, and the Rise of Private Regulation in the Apparel and Forest Products Fields,” Politics & Society, 31(3) (2003): 433–464.


21. D. L. Spar, “The Spotlight and the Bottom Line: How Multinationals Export Human Rights,” Foreign Affairs 7(2) (1998): 7–12.


22. Kapelus et al., note 12.


23. F. R. Khan and P. Lund-Thomsen, “CSR as imperialism: towards a phenomenological approach to CSR in the developing world,” Journal of Change Management 11(1) (2011): 73–90.


24. For an overview of governments' mandatory and voluntary standards for corporate sustainability reporting, see United Nations Environment Programme, KPMG, The Global Reporting Initiative, and Unit for Corporate Governance in Africa, Carrots and Sticks—Promoting Transparency and Sustainability (New York: United Nations Environment Programme, 2010).


25. Aviva response to European Commission Green Paper “The EU Corporate Governance Framework” (COM 2011, 164 final); available online via http://ec.europa.eu/internal_market/consultations/2011/corporate-governance-framework/registered-organisations/aviva_en.pdf


26. These efforts are centered on the work of the International Integrated Reporting Committee, http://www.theiirc.org. See also R. G. Eccles and M. P. Krzus, One Report: Integrated Reporting for a Sustainable Strategy (Hoboken, NJ: Wiley and Sons, 2010).


27. R. G. Eccles, G. Serafeim, and M. P. Krzus, “Market Interest in Nonfinancial Information,” Journal of Applied Corporate Finance 23(4) (2011): 113–127.


28. http://www.aviva.com/media/news/13203


29. Börzel and Risse, note 14, 121.


30. For instance, see Farrell et al., note 12.


31. R. Hamann, P. Kapelus, and E. O'Keefe, “Mining Companies and Governance in Africa,” in Governance Ecosystems: CSR in the Latin American Mining Sector, eds. J. Sagebien and N. M. Lindsay (London: Palgrave Macmillan, 2011), 260–276.


32. M. E. Porter, and M. R. Kramer, “Creating shared value: How to reinvent capitalism—and unleash a wave of innovation and growth,” Harvard Business Review 89, no. 1–2 (2011): 62–77. This article's prominence is also evident in the attention it has received in the popular press. Positive reviews were published, for instance, in the New York Times (http://www.nytimes.com/2011/08/14/business/shared-value-gains-in-corporate-responsibility-efforts.html?pagewanted=all), while more critical views were published in The Economist (http://www.economist.com/node/18330445) and The Guardian (http://www.guardian.co.uk/sustainable-business/sustainability-with-john-elkington/corporate-social-resposibility-creating-shared-value). As pointed out in The Economist, the notion of “shared value” is very similar to previously published work; see, in particular, J. Emerson, “The Blended Value Proposition: Integrating Social and Financial Returns,” California Management Review, 45(4) (2003): 35–51; S. Hart, Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World's Most Difficult Problems (Upper Saddle River, NJ: Wharton School Publishing, 2004); and T. London, R. Anupindi, and S. Sheth, “Creating Mutual Value: Lessons Learned From Ventures Serving Base of the Pyramid Producers,” Journal of Business Research, 63(6) (2010): 582–594.


33. Porter and Kramer, note 32, 66.


34. Ibid, 76.


35. Ibid, 69.


36. Ibid, 67.


37. See, for example, the United Nations Environment Programme's (UNEP) Green Economy initiative, http://www.unep.org/greeneconomy, and in particular UNEP, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication (New York: UNEP, 2011).


38. C. K. Prahalad and S. Hart, “The Fortune at the Bottom of the Pyramid,” Strategy+Business 26 (2002): 5.


39. See, for instance, WBCSD (World Business Council for Sustainable Development), Business for Development: Business Solutions in Support of the Millennium Development Goals (Geneva: World Business Council for Sustainable Development, 2005).


40. A. Karnani, “The Mirage of Marketing to the Bottom of the Pyramid: How the Private Sector Can Help Alleviate Poverty,” California Management Review 49(4) (2007): 90–112.


41. London et al., note 32.


42. Simon Susman, Chairman, Woolworths, presentation, 5 December 2011, Durban, South Africa. See also http://www.woolworthsholdings.co.za/investor/gbj/2010/environment/f.asp (accessed 8 December 2011)


43. D. Cash, W. Clark, F. Alcock, N. M. Dickson, N. Eckley, D. H. Guston, J. Jäger, and R. B. Mitchell, “Knowledge Systems for Sustainable Development,” Proceedings of the National Academy of Sciences, USA, 100(14) (2003): 8086–8091.


44. Some of our work has focused on such “co-opetition” in pursuit of improved food security in southern Africa; see R. Hamann, S. Giamporcaro, D. Johnston, and S. Yachkaschi, “The Role of Business and Cross-Sector Collaboration in Addressing the ‘Wicked Problem’ of Food Insecurity,” Development Southern Africa, 28(4) (2011): 579–594.


45 Porter and Kramer, note 32, 70.


46 J. K. Hall, G. A. Daneke and M. J. Lenox, “Sustainable development and entrepreneurship: Past contributions and future directions,” Journal of Business Venturing 25 (2010): 439–448.


47. See http://www.wasteconcern.org


48. J. Meadowcroft, “Environmental Political Economy, Technological Transitions and the State,” New Political Economy 10(4) (2005): 479–498, esp. 486.


49. Ibid., 493.


50. See http://www.betterplace.com


51. T. Jackson, “Societal Transformations for a Sustainable Economy,” Natural Resources Forum, 35 (2011): 155–164.


Ralph Hamann is an Associate Professor and Research Director at the University of Cape Town Graduate School of Business. His research is on organizational and governance responses to complex socioecological problems, with a focus on food security, climate change, and human rights issues in extractive industries.

The author thanks Tamlyn Mawa for her editorial assistance and Lars Coenen, John Fay, Jon Hanks and Vanessa Zimmerman for advice and comments.

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