Business

Submitted by Arthur Dahl on 4. June 2011 - 23:53
e-learning centre on sustainable development

IEF SUSTAPEDIA
AN ENCYCLOPEDIA OF SUSTAINABILITY

Heading: Economy    Topic: Business


There is an endless debate about the role and responsibility of business for sustainable development, including such things as corporate social and environmental responsibility (Dahl, 2002). Some argue that the only job of business is to make wealth, and sustainability is a government responsibility. Part of the problem is institutional. The modern business corporation as a legal entity is responsible only for making profits for its shareholders. While governments usually legislate other responsibilies like worker safety and environmental protection, these only apply at the national level and multinational corporations escape from these legislative requirements. With careful accounting, they can even avoid national taxation and thus their contribution to common services and wealth redistribution. This makes it difficult to define a clear framework for business contributions to sustainability. Individual companies can make an effort, but this can put them at a competitive disadvantage with less responsible businesses or with countries where standards are lower.

More fundamentally, there is no moral or ethical framework of values for corporations, but only whatever individual corporate managers feel in good conscience they should apply. Business entities are fundamentally amoral.

However, even in the absence of basic institutional change, much can be done to make gradual progress. A recent survey of the attitudes of business leaders towards environmental and social responsibility showed that those in the most competitive economies were also the most responsible in their thinking (Dahl, 2004). In particular, business leaders considered good governance, as demonstrated in strict environmental regulations fairly enforced, increased their competitiveness. Strong regulations allowed companies to compete in meeting their regulatory obligations, giving a competitive advantage to companies that innovate and increase their efficiency in environmental performance. They also created new market niches for environmental services. The survey showed a strong correlation between economic and environmental performance. While increasing wealth helps to fund environmental measures, high environmental performance and economic competitiveness went together and were not in conflict. Countries that were politically averse to environmental controls in order to favour the business sector were relatively less competitive than those that gave environmental protection and sustainable development a high priority. It is thus possible to demonstrate to business that efforts for sustainability are to their advantage.

One area of structural change that would help businesses to be more sustainable would be to redefine the balance of rights and responsibilities between capital and labour. Instead of the present Western system where management represents the shareholders (capital) and labour unions are outside in a conflictual relationship, a moderate legal framework should both protect the capitalists from large losses and ensure that the labourers do not become needy, protecting the rights of both so that strikes become unnecessary. Workers should also be shareholders in the company and receive a share of the profits( 'Abdu'l-Bahá, 1936). This would automatically ensure more attention in the company to social sustainbility while increasing the motivation of all employees.


REFERENCES AND SOURCES

'Abdu'l-Bahá. 1936. Foundations of World Unity. Bahá'í Publishing Committee, New York.

Dahl, Arthur. 2002. The Challenge of Sustainable Development and Prosperity. Paris, European Baha'i Business Forum, 2002. http://www.ebbf.org/publications/english/publications013.html

Dahl, Arthur. 2004. The competitive edge in environmental responsibility, p. 103-110. In Michael E. Porter, Klaus Schwab, Xavier Sala-i-Martin and Augusto Lopez-Claros, The Global Competitiveness Report 2004-2005. World Economic Forum. Palgrave Macmillan, Houndsmill, UK and New York.

Article last updated 29 June 2006


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