Contribution to GTI Roundtable "True Corporate Sustainability"
Karl Mannheim defined “concrete utopias” as those that reflected, and so catalyzed action in, the present. “Abstract utopias” are those visions that literally abstract one from the present moment, ultimately neutralizing prospects for change.
The Natural Step’s system conditions Bob Willard sets out are an attempt to ensure a Mannheimian concreteness in systemic thinking—setting system health conditions and then interpolating to grasp the implication for a sub-system, such as business. Setting a global, viable carbon budget and then defining the level of unburnable carbon is another example in today’s heated public debate about stranded financial assets. The UN Sustainable Development Goals, to be launched next year, are another example, albeit one that reflects a messy political consensus rather than an intellectually grounded perspective.
As humans, we conceive of such system conditions, but we at best nudge the system towards health. We know what makes up personal health for example, but we spend our lives grappling with incommensurate and often unpredictable factors that determine our personal health pathways and outcomes. Similarly with business, we try to imagine what constitutes health, struggling with trade-offs with no common currency.
Bob Willard's three-step approach to sustainability offers seductive simplicity until one gets to the social dimension, that is, the people, and start to grapple with the challenges of unequal starting points, incumbent interests, and claims to unequal shares as part of the right to development. At the business level, as the Natural Step has found in its troubled history of addressing equity issues, there are real policy decisions to make as it may not make sense to share the biosphere equally between companies that make online educational material and those providing online pornography.
Business impacts and is impacted by the bigger system, as Willard points out, and can to a degree seek to emulate system health conditions. But such emulation is more metaphor than science, as the system-business dynamic is complex in surprising ways. Who would have thought, for example, that a floor tiles company, Interface, or a company making household products, Unilever, or even for a while an oil company, BP, might have disproportionately positive impacts on the overall system because of its leadership and capacity to move others? Would we credit the floor tile company with greater rights to the biosphere because it persuaded others to reduce their ecological footprint?
Such human-like complications are not a reason for inaction, let alone lowered ambition, and they do not diminish the potential of The Natural Step to inspire and guide. But they do encourage vision and analysis that can penetrate system dynamics as well as required “steady state” conditions. For systems fated to be shaped by humans, such dynamics have to do with leadership and innovation and, crucially, institutions and power.
Metrics are as much about accountability as they are about guiding managerial approaches to sustainability. Accountability is humans’ principal means for civilizing power, that is, of protecting the system and its elements from the predatory, indeed cancerous potential of some of its elements. Accountability is our most profound social invention, without which we would simply not be able to organize—there would be no business, no economy, and no societies. It is humans’ way of seeking an orderly and fairer form of evolution, from the handshake to the hand of god, and from corporate law to democracy itself. Without looking at this stuff, we are in danger of falling into the world of “abstract utopias,” worse than irrelevance as our theories and concepts remove us from the present moment and its associated struggles.
Willard rightly argues that metrics count and need to be aligned to the vision, the goal and the method. What he does not point out is that misalignment of a system’s performance model from its core accountability drivers is a recipe for disaster. Typically, such misalignment leads to the goal giving way to the interests of the accountability agent, explaining why much of our wonderfully conceptualized work with business on sustainability fails in the cradle
Shaping how business embraces sustainability has therefore much to do with accountability innovations. Indeed, sustainability is often framed as a matter of the need for ‘more’ accountability, whereas in fact something different rather than more is needed.
Lurking behind much of the associated debate are the contested merits of intensive and extensive accountability. Intensive accountability provides a narrower basis for any organization to determine its performance model; for example, intensive accountability to the owners of financial capital might embed a core metric focused on risk-adjusted financial returns. If, on the other hand, the basis of accountability is more extensive, such as in the case of many public interest organizations, then the performance model is more complex in having to address multiple objectives. Governance is therefore also more extensively focused, requiring a political process of balancing the interests of many stakeholders.
The modern battle for sustainability, institutionally speaking, can largely be described as a struggle between intensive and extensive accountability. This seemingly obvious point is simply absent from most of our systems thinking, perhaps because constructed accountability is a profoundly human affair that does not lend itself helpfully to a biologically-framed system discourse. This article is an example of this, an interpolated view of the implications for humans of how biological systems work that puts aside the control mechanisms that guide human pathways, values, accountabilities, and markets.
Of course, we do think and act on these aspects in practice. Tactically, sustainability advocates try to squeeze more out of intensive accountability approaches, epitomized by the so-called win-win profit-sustainability landscape. Intuitively, however, most consistently advocate a more extensive accountability, whether it be for business or any other facet of our accountable lives (hence our interest in pluralistic corporate governance approaches such as B Corporations). We need to get clearer on the intensive-extensive accountability debate. My bet is on pluralistic approaches to corporate governance, but we have to grapple with the fact the pluralism comes in many shapes and sizes. We cannot celebrate B Corporations and mutuals run by like-minded folks, and casually reject state-owned corporations, sovereign wealth funds, and the like. Politicizing corporate governance, the essence of extended accountability, is an act of war that will need diverse and often uncomfortable allies. Embracing history’s waves is all the more important as we enter a new era both of state intervention in economic affairs of the revisitation of the historical role of the state in development by largely Asian but also Western writers.
We need to connect the dots between biologically-inspired systems approaches such as those advocated by Willard and others, and the institutional, that is, human, dimensions of system design. We are, after all, shaping the course of our planet as humans not gods, and need to mobilize our best social innovations in pursuit of getting this task right.