Monday, April 27, 2015
Sustainability Lends Legitimacy to Profitability
To be viable a business must be profitable. This is the overarching concern of any business, however, the pursuit of profit must be understood in a wider context. Sustainability offers an alternative model that reinforces the mutual interdependence of business and society.
There was a time when profits were perceived as a social good in and of themselves. The argument behind this failed philosophy was that businesses contribute to society by providing jobs and paying taxes. This is the premise put forth by the economist Milton Friedman. Friedman may have won a Nobel Prize but the business philosophy that permeated the seventies and eighties fostered deep mistrust. It led to the veneration of wealth for its own sake and it has brought civilization to the brink of its own ruin. Such business philosophies are not only morally bankrupt they invite environmentally and socially calamity.
It is true that there is value in a profitable business. It generate returns for shareholders, jobs for people and taxes for governments. However in purely profit driven business models wealth pools at the top of the pyramid and rarely percolates down in significant quantities.
The trickle down theory must be acknowledged for what it is, a festering lie that has corrupted the economics of capitalism. It strands wealth at the very top and leaves everyone below to fight for the crumbs that fall off the table.
This pure profit philosophy contributes to the growing disparity between rich and poor. This in turn breads highly unproductive social tensions. Even worse such a business model threatens the entire planet and all the life forms that depend on it. A close examination reveals that the unadulterated pursuit of profit is a threat to corporate self interest.
Relating profit to wider environmental and social factors sustainability offers a better way of doing business. By factoring so called externalities profits can contribute to environmental and social betterment.
Philanthropy and environmental off-sets are part of a sustainable business model. Forward thinking businesses go even further than charitable giving and social investment. While there are costs associated with such approaches there are also powerful dividends. Such a model builds trust, engenders loyalty and improves the reputation of a brand in the process.
Business is often described as parasitic, but a purely profit driven approach is far worse as parasites do not usually kill their hosts.
Sustainability offers an interdependent business model that is symbiotic (ie mutually beneficial). By benefiting ecosystems and society profitability is legitimized. This is an enduring business model that is premised on shared value.
Posted by Richard Matthews