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While some marginalized communities have always recognized and respected the interrelationships among all parts of the earth’s ecosystem, it was not until the 1960s that several events catapulted sustainability onto the world stage and caused many business owners to think about the influence their decisions had on their employees, the environment, and their communities. Oil spills in pristine waters that killed marine life, the unrestrained use of harmful pesticides, unexplained rates of cancer in specific neighborhoods, and rivers on fire led to a wakeup call that perhaps generating profits at all costs might not be the only path to success. Actions by the United Nations drew attention to the emerging global threat of environmental degradation. Slowly, the United States and other developed nations promulgated environmental legislation to monitor and control corporate behavior.

As the sustainability revolution began, so did the entrepreneurial revolution. Attention turned away from billion-dollar global corporations to the many advantages of job creation, creativity, and innovation found in entrepreneurial startups. It was natural that these two disciplines would merge because the sea change caused by sustainability created a multitude of opportunities for new venture creation addressing needs for new products, services, business models, and processes. And so companies moved away from the Wall Street trader Ivan Boesky’s 1980s assertion that “Greed is good” to a more balanced view that economic profit can co-exist with social and environmental interests. Indeed, business can be used as a force for good!

A landmark decision made by the Business Roundtable in 2019 refuted Milton Friedman’s claim that corporations satisfy the needs of society by generating profits and, in turn, may legitimately address the needs of stakeholders such as employees, suppliers, customers and society, in addition to the owners or shareholders of the firm.

The business case for sustainability emerged as firms realized its many benefits including employee productivity, employee hiring and retention, company brand and reputation, cost savings, and customer satisfaction, to name only a few. Over time, the sustainable value proposition of companies such as Seventh Generation and Danone became a key driver of competitive advantage in the marketplace. The green market was growing exponentially, and there were abundant entrepreneurial opportunities to cash in.

As the sustainability market grew, it became important to understand how to measure progress with quantitative metrics. Sustainability strategies and goal setting became important. The Global Reporting Initiative (GRI), B Corporations, and a number of other certifications became available as conduits through which companies could monitor and report progress on sustainability initiatives transparently. In 2015, the United Nations replaced the Millennium Development Goals with the seventeen Sustainable Development Goals, which are becoming the benchmark for measuring sustainability performance.

An important part of understanding sustainability is adopting a systems view of the firm. Organizations are embedded in a system of interdependent groups or institutions. Those groups or individuals which influence or are influenced by the firm are called stakeholders. However, internally, firms consist of a network of interdependent parts whether they be functional (accounting, finance, marketing, production, etc.) or other elements (strategy, structure, systems, staff, etc.). In order to effectively executive and maintain a sustainability strategy, all stakeholders should be involved in the process. Additionally, all internal key elements of a firm need to address sustainability issues. “Embedded” sustainability is preferred over “bolt on” sustainability that is isolated or detached from the total organization.

In this Skill, we review the alignment of people, planet, and profit and how firms can address all three objectives effectively. We discuss the business case—the value proposition—of sustainability strategies. We examine the importance of goal setting and the usefulness of GRI, B corporations, and other certifications in monitoring the achievement of sustainability goals. Finally, we delve into the systems view of the firm, both externally and internally, and how effective implementation needs to involve all stakeholders of the company.

Further Reading

Carson, R. (1970). The silent spring. Fawcett Publications, Inc.
Blackburn, W. R. (2008). The sustainability handbook: The complete management guide to achieving social, economic, and environmental responsibility. Environmental Law Institute.
Gittell, R., Magnusson, M., & Merenda, M. (2014). The sustainable business case book (Version 1.0). Flat World Knowledge, Inc.
Hawken, P. (2010). The ecology of commerce: A declaration of sustainability. Harper Business.
Hitchcock, D., & Willard, M. (2006). The business guide for sustainability: Practical strategies and tools for organizations. Earthscan an imprint of Taylor & Francis Group.
Laszlo, C., & Zhexembayeva, N. (2011). Embedded sustainability: The next big competitive advantage. Taylor & Francis.
Meadows, D. H., & Wright, D. (2008). Thinking in systems: A primer. Chelsea Green Publishing.