25 August 2020

Dr Sukhbir Sandhu
Dr Sukhbir Sandhu

Balancing economic, environmental, and social sustainability presents one of the most significant strategic challenges confronting businesses, governments, and societies today.

On July 29, UniSA Business hosted Businesses Cannot Succeed on a Failing Planet to present the latest research by Dr Sukhbir Sandhu, Senior Lecturer in Sustainability and Ethics, on how leaders need to urgently reimagine businesses and shift the conversation from recovery and growth to sustainable development.

In the webinar, Dr Sandhu spoke of the opportunity COVID-19 has provided to pause and reflect on our collective response to how we are impacting the environment and society, as individuals, members of society and members of organisations.

She shared her research on the role of consumers in driving corporations to be environmentally responsible, the factors that encourage the uptake of reusable cups, and how sustainability managers can have more impact.

Dr Sandhu also spoke of the shift within Business Schools required to move from the teaching of business for the purpose of generating profits, to businesses factoring in the economic value of the environment into its equations, and referred to the commitment that UniSA has made to the United Nations Principles for Responsible Management Education (PRME) and to the sustainable development goals.

You can view the recording of the webinar here.

Prior to the webinar, many questions were received that could not be answered during the 45-minute broadcast. Dr Sandhu has instead provided answers to these questions below:

 

Q1. Businesses are complex, like humans. Many do good, but also some bad, like Nestle.

I agree. Nestle’s baby milk scandal is notorious (in 1970s Nestle was accused of getting third world mothers hooked on baby milk formula, which is less healthy and more expensive than breast milk. Nestle was also accused of failing in its responsibility to provide clear instructions on using safe boiled water to prepare infant formula milk). But in the last few decades, Nestle has been more active in social and environmental sustainability. My research explores this phenomenon of “poachers turning gamekeepers”.

As you rightly state, reality is complex. On the one hand, businesses can (and often do) lead to immense negative impact on society and environment. On the other hand, businesses harness our best and brightest minds. They can be (and often are) a force for good. Businesses are sources of remarkable innovations that can lead to social and environmental sustainability. There are of-course both heroes and villains in the story of business. As informed stakeholders we can choose to strengthen one and weaken the other. Our choices matter.

 

Q2: Can sustainable development be achieved by the private sector without the backing of the governments?

Sustainable development needs all three actors to come together: private sector, government and society. Without a concerted effort from all three actors, trying to achieve sustainable development is like the curse of Sisyphus (a Greek mythological figure who was condemned by the gods for eternity to repeatedly roll a boulder up a hill only to have it roll down again once he got it to the top). In our research we explore the effect of regulations on businesses in civil law versus common law countries. You may find the results interesting (and even provocative!).

 

Q3: Do you believe that Indigenous knowledges have a role to play in these [sustainability] issues? Why and how?

Definitely yes! Indigenous knowledge can play a big role in helping us achieve sustainable development. A culture does not survive for more than 65,000 years without being sustainable.

As one illustrative example, in my recent work I state that with Australian fire seasons shifting due to climate change (the fires are now starting earlier and burning for longer) we need to systematically tap into indigenous expertise on how to manage bushfires. Forest fires have always been a part of Australia’s ecology (and indeed some native trees even need the bushfires to disperse their seeds). Indigenous people have thousands of years of accumulated knowledge about when and how to back burn and this “ancient wisdom of the land” should be leveraged through involving indigenous elders and hiring indigenous rangers to develop systematic back burning schedules (so not an ad hoc reliance but a systematic partnership).

 

Q4: Do you think it is leadership that drives the business' culture of sustainability and ethics, or culture that drives leadership?

My response is both. In our research, we find that it may start with leadership driving sustainability and ethics in their business. But once sustainability and ethics are embedded across different functions (e.g., production, marketing, procurement) it is not easy to uproot these sustainable and ethical initiatives, even after a change of leadership. Once sustainability and ethics become embedded in functional areas, culture starts driving leadership. (It is a similar phenomenon to what Churchill said about architecture: “we shape our buildings and afterwards our buildings shape us”).

 

Q5: Ethics are quite complex to explain and enforce. We should be more proactive by promote environmental respect, instead of ethics?

I agree. Ethics are complex to explain and enforce. On a more positive note, an ever-increasing body of research tells us that the need for ethical behaviour is innate (and has a stronger evolutionary basis than we have previously acknowledged). Research also tells us that it may well be in our selfish interest to be unselfish! So, yes ethics are complex. But then most meaningful things are complex. And environmental respect is underpinned by a deep understanding of complex ethical principles. Isn't it?

 

Q6: Failing planet, does that mean natural disaster or referring to the present pandemic?

Failing planet, in my talk, referred to an acknowledgement of the dependence of business on environment and society. You cannot have a flourishing business when environmental ecosystems and societies are collapsing.

But the COVID-19 pandemic also influences this conversation. In many ways COVID-19 can be viewed as a dry run for the impending climate crisis. Neither the pandemic, nor climate change are constrained by national boundaries. Both these crises affect the poor and vulnerable disproportionately. And both demand resurgence of responsible and trusted governments. The pandemic has painfully demonstrated that the foundations of our economic prosperity and wellbeing are precarious. The pain from climate change, while it is slower to arrive, will last much longer, and perhaps forever change civilization as we know it.

 

Q7: Given large businesses are appearing to follow basic CSR initiatives, will SMEs get involved whilst no legislation exists?

Sustainability in small and medium enterprises (SMEs) is often driven by a strong sense of place (connection with the local communities they serve). Regulations, in any case, can only be a part of the answer. Regulations are based on problems that have occurred not predictive of problems that may occur. Also, it is simply not possible to regulate everything. Compliance with the law can be seen only as a starting point for progressing sustainability principles. Many SMEs, with their stronger ties to local communities, are driven to corporate social responsibility (CSR) by the desire/need to exist harmoniously with their stakeholders.

 

Q8: Has this pandemic has made us realize about a collective sustainable future leading to greater participation and assimilation?

I agree. COVID-19 has shown what governments can do when they are called upon to act for greater good. The pandemic has also bought out the human goodness and shown how individuals are willing to endure unexpected and hard changes to their lives, to ensure that the more vulnerable can be protected. It has also awakened many people, across the world, to the beauty of a forgotten rhythm – that of a gentler, slower, less demanding pace of life. The appreciation and benefits for this less intrusive way of life may yet prove to be more enduring. The pandemic shows us a way forward for collective sustainable future leading to greater participation and assimilation.

 

Q9: How could the Corporations Act 2001 be amended to give effect to the planetary boundaries framework?

Planetary boundaries already make an (indirect) appearance in Principle 7 of Corporate Governance in Australia (Recognise and manage risk – a listed entity should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks.…). Principle 7, for example, comes in play when coal companies are required to deal with decarbonization risks (and have to consider risks of stranded assets and asset impairment).

In Australia organisations can choose to be B Corp certified. Certified B corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. In 35 US states organisations can choose to be Benefit Corporation. There is a difference though between being B Corp certified and a Benefit Corporation. The B Corp certification is a third-party certification administered by the non-profit B Lab, based in part on a company's verified performance on the B Impact Assessment. The Benefit Corporation is a legal structure for a business. Benefit Corporations are legally empowered to pursue positive stakeholder impact alongside profit. Some companies are both Certified B Corporations and Benefit Corporations.

 

Q10: How do we create sustainability and ethical liability if we are consistently pushing to cheaper?

For a long time, we have believed that it costs more to be an environmentally and socially sustainable business. But now there is resounding evidence that it does not have to cost more to be sustainable and ethical. You can be green and profitable. But there is a catch. Businesses can be green and profitable in the long run. Environmental and ethical initiatives often do not show returns in the short-term quarterly reports, but the benefits become clear in the long-term. The business case for sustainability demands a focus on long-term thinking. 

 

Q11: How important do you think measurement by businesses is to help their entities and society move towards attainment of the SDGs?

Measurement is important. Measuring keeps us on track and provides perspective. But for the attainment of sustainable development goals, it is important to remember that the achievements may not be visible in short-term quarterly report measurements. Sustainability initiatives need a long-term thinking. It takes time to establish sustainability initiatives and embed them within businesses. So yes, measurement is important but so also are the timescales of our measurements.  

 

Q12: How is the role/responsibility of government public service different to businesses?

A role in public service, by definition, ensures a commitment to a wider set of stakeholders. It is, therefore, often easier to initiate a commitment to sustainability initiatives in public service (as these issues are within the mandate). Of course, the challenges in other stages of the sustainability journey will persist (and are likely to be similar to challenges confronted by private businesses). You may find our research (on how to progress sustainability initiatives across different stages) helpful (acknowledging that the first hurdle might be more easily overcome in public service).

 

Q13: Is the promotion of economic growth in the SDGs compatible with a sustainable future?

My position is that we need to acknowledge the difference between linear exploitative growth and sustainable development.  We cannot grow indefinitely on a finite planet. We need to shift the focus from linear growth to sustainable development. 

 

Q14: Leaders lack a clear understanding of how to embed this into daily decisions, culture – what practices are the most effective?

Our research has a clear message: organizations where leaders provide a broad overall commitment to sustainability, but do not rigidly specify or formalize sustainability initiatives, provide the best conditions for sustainability initiatives to flourish. Such organisations enable both top-down and bottom-up championing and provide the right conditions to launch and progress innovative social and environmental initiatives. 

 

Q15: Our sovereign capability in clean energy is world leading, how can we transition faster to low cost clean energy from SA?

This is the right time to be asking this question. The pause offered by the pandemic provides a unique opportunity to re-examine our collective response to low cost, clean, renewable energy. With renewable energy becoming more reliable each year, this reset point in our economies might just be the right time to decarbonize. The proceeds from decarbonization can help us accelerate the infrastructure required to successfully deal with the climate crisis (such as climate proofing homes and businesses in coastal areas affected by rising sea levels). After the global financial crisis in 2007-2009, many national governments had issued financial stimulus to kickstart economies. Tesla emerged from one such stimulus loan in the US. Both the federal government and the South Australian government should seriously consider earmarking a decent fraction of their proposed stimulus payments to encourage business action on low cost, clean, renewable energy.

 

Q16: Would increasing population (to maintain wealth) also decrease poverty and permit societal support for all?

If population keeps increasing there is a trade-off in wellbeing. In my opinion gender equality is one of the most effective ways of dealing with excessive population growth. Across the globe, we find that when women are educated and equal partners in work and life, they exercise greater control over their reproductive choices and have fewer number of children.

 

Q17: What are the 9 planetary boundaries and how were they determined/established?

The nine planetary boundaries are:

  1. Stratospheric ozone depletion
  2. Loss of biosphere integrity (biodiversity loss and extinctions)
  3. Chemical pollution and the release of novel entities
  4. Climate Change
  5. Ocean acidification
  6. Freshwater consumption and the global hydrological cycle
  7. Land system change
  8. Nitrogen and phosphorus flows to the biosphere and oceans
  9. Atmospheric aerosol loading

Here is more information about how the planetary boundaries are established.

 

Q18: What can small start-ups do now to become as socially, economically and environmentally sustainable as possible for the future?

Our research suggests that organisations who want to progress social, environmental and economic sustainability should provide a broad overall commitment to sustainability, but should not rigidly specify or formalize sustainability initiatives. Start-ups are not burdened by established institutional norms and can provide the conditions for sustainability initiatives to flourish at a much faster pace (compared to more established organisations). Our research also suggests that organisations (including start-ups) should enable both top-down and bottom-up championing to provide the right conditions to launch and progress innovative social and environmental initiatives.

 

Q19: What do you think are the main United Nations Sustainable Development Goals that universities should focus on?

This will vary based on the stage of the sustainability journey that any given University is currently at. UniSA Business, in the main, is focussed on the following Sustainable Development Goals:

  • Goal 4: Quality Education
  • Goal 5: Gender Equality
  • Goal 12: Responsible Consumption and Production

 

Q20: What is the current biggest social and ethical challenges of face COVID-19?

COVID-19 has imposed huge economic and emotional cost. As nations slowly limp out of the lockdowns, they are walking into the impacts caused by shrinking economies. Many nations are predicting that their Gross Domestic product (GDP) will fall by nearly 50%. The pandemic also has a huge emotional cost, especially for the more vulnerable people forced into lockdowns. We have not yet started dealing with the full ramifications of the economic and emotional misery caused by the pandemic, especially to the poor, the elderly, and those who lost their livelihoods and/or loved ones.

The pandemic has also revealed some hard truths. The pandemic has painfully demonstrated that the foundations of our economic prosperity and wellbeing are precarious. If we continue subjecting climate change to the current uncoordinated, piecemeal, ‘too little too late’ response, the climate change crisis will likely strike a death blow to these already shaky foundations.

 

Q21: What role can businesses play in furthering SDG12?

Sustainable development goal 12 focuses on responsible consumption and production. My research says that businesses have a big role in promoting and supporting responsible consumption and production. While consumers can make a difference through their responsible purchasing decisions, this need to be in partnership with businesses who will actually be producing and manufacturing those sustainable and responsible options.

 

Q22: Why isn't population one of the planetary boundaries?

The nine planetary boundaries are the processes that regulate the stability and resilience of the Earth system. The planetary boundaries provide a safe operating space for humanity. Population impacts and is impacted by these boundaries. But population is not, by itself, a biophysical and biochemical regulatory process. The planetary boundaries are the fences within which humanity can continue to develop and thrive for generations to come. But crossing these boundaries increases the risk of generating large-scale abrupt or irreversible environmental changes.  

 

Q23: What advice do you have for ensuring Boards and Management engage positively and proactively on these issues? Are there any good examples you can share?”

The boards that engage positively and proactively on sustainability issues adhere to both the letter and the spirit of principle 3 and principle 7 of ASX corporate governance.

  • Principle 3: Instil a culture of acting lawfully, ethically and responsibly
  • Principle 7: Recognise and manage risk. A listed entity should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks.

Such boards ensure diversity in organisations and a commitment to long-term thinking. This is important because sustainability initiatives often yield returns in the long-term and are not responsive to quarterly reporting. One good example is the Unilever board that enabled the previous CEO Paul Polman to steer Unilever in the sustainability direction.

 

Q24: How do we ensure that the post Covid global recovery is based on sustainability principles rather than being dictated by Friedmanesque economic beliefs?

The pause offered by the pandemic is providing a unique opportunity for governments, businesses and societies to re-examine our collective response to sustainability principles. With renewable energy becoming more reliable each year, this reset point in our economies might just be the right time to decarbonize. The proceeds from decarbonization can help us accelerate the infrastructure required to successfully deal with the climate crisis (such as climate proofing homes and businesses in coastal areas affected by rising sea levels). After the global financial crisis in 2007-2009, many national governments had issued financial stimulus to kickstart economies. Tesla emerged from one such stimulus loan in the US. Both the federal government and the SA government should seriously consider earmarking a decent fraction of their proposed stimulus payments to encourage business action on renewable energy.

For businesses, the pandemic presents a unique opportunity to rethink the way the engage with their workforce. Do businesses really need all their energy guzzling offices buildings? Do they really need their employees to commute to work every day? Is international travel as necessary as we have always believed it to be? This might be the pause that forces us to collectively examine our taken for granted assumptions. As a society can we start thinking about the difference between growth and development? Do we have to continue down the path of resource intensive, polluting, incessant growth that is making us and our planet sick? Can we use the pause caused by this pandemic to reflect and act on sustainable development? The pandemic has forced us to exercise muscles we did not know existed. Let us not allow this crisis to go waste.

 

Q25: Is there an Australian Business Roundtable (lobby group to impact government policy) where businesses discuss stakeholder capitalism and the social purpose of businesses?

The Business Council for Sustainable Development Australia (BCSD Australia) is one example. It is “the national peak body representing forward-thinking companies and organisations that are working towards the transition to a sustainable Australia” (BCSD, 2020).

 

Q26: I am a young employee in a large organisation. I have gotten them to make some more sustainable choices at a store level, but how would I go about doing this on a broader level? How can I encourage my company to consider their own environmental impact?

I am thrilled to learn that you have been successful in getting your organisation to make more sustainable choices at a store level. Our research (Have Impact at Every Stage of the Sustainability Journey) provides helpful advice on how to go broader. When organizations first start on their sustainability journey, they often do not have a clear plan. We suggest that at this stage, employees interested in championing sustainability, should focus on “materiality” (identifying the social and environmental issues that pose the most risk to their organization). In the next stage they can focus on building collaborations on sustainability initiatives across different functions. And if they want to have even broader impact, we suggest a focus on co-opetition: simultaneously competing in some areas and cooperating in other areas. Collaboration is powerful, and partnerships with traditional competitors are needed for meaningful action on sustainability. Collaboration across a sector creates faster and more fundamental positive change.  

So, what does it mean for you? At the start, you may need to actively shape your job (sometimes called job crafting) and clearly communicate the business case for addressing social and environmental risks. We also advocate setting up cross-functional teams or committees quite early on. And finally, to continue making a meaningful difference, you must be prepared to go beyond your company’s boundaries and work with your counterparts in other organizations. Our research tells you how.

We are also happy to engage in a research partnership and help your organisation develop a roadmap to a more sustainable future. If this is of interest to your organisation please get in touch.

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