Over the past few years, I’ve spent a lot of time thinking about the nomenclature that should frame the audience BusinessGreen serves and the corporate trend we cover.
The starting point for this thinking is right there in our name – BusinessGreen, for green businesses. It is a neat summation of both our purpose and audience. It is easy to understand, and it highlights our remit as a business title: as one of my colleagues puts it, “the business comes before the green”.
But the concept of a green business is not without its problems. Many businesses are green in part or are striving to become green, but would understandably hesitate to refer to themselves as fully green. Moreover, there are the historic connotations of a word that remains more closely associated with fluffy bunnies and treehuggers than it does hard-nosed corporate decision-making.
Like women who believe in equal pay and rights but balk at calling themselves feminist, there are plenty of business leaders who endorse the urgent need to build more sustainable business models but would never call themselves green.
Thankfully, there are plenty of alternatives available, but none are without their problems. Sustainability has a nice ring to it and is increasingly popular. It is a bit more suitable for corporate environments than “green”, and is more clearly defined as the pursuit of business models and technologies that are, well, sustainable. But again, the word has been tarnished by overuse and few firms can accurately lay claim to genuine sustainability. One senior executive at a global engineering firm told me recently that they had banned the word, having concluded it was too soft and lacked any meaningful impact.
The resonance of corporate social responsibility (CSR) has similarly been eroded by overuse and greenwashing. Meanwhile, concerns remain that CSR is too easily confined to its own corporate enclave, dismissed in many organizations as a necessary box-ticking exercise that lacks the authority and influence to drive genuine change.
I’m a bigger fan of more tightly defined terms such as low-carbon economy or clean tech. They are much less open to manipulation or misunderstanding, and have a serious corporate edge.
The low-carbon economy is the most effective framing to date for the transition that political and business leaders are striving to engineer, while clean tech is now widely accepted as its own investment category. However, both terms can be seen as too exclusive. The low-carbon economy is necessarily focused on climate change and sidelines the need to develop business models that tackle wider environmental challenges such as ecosystem degradation. Meanwhile, clean tech, by definition, cannot include the green business models that will need to be developed to support new clean technologies.
I similarly like the concept of progressive businesses as a neat summation of firms that understand their environmental and social responsibilities, accept that they have long-term as well as short-term obligations, and appreciate they have a crucial role to play in developing resilient and prosperous economies and societies. The problem is that the word ‘progressive’ has clear left-wing political connotations and is often treated with suspicion, and, in some cases, outright loathing by those on the other side of the political spectrum.
In short, there is currently no clear, concise and accurate moniker for the undeniable transition towards more environmentally and ethically responsible business models that is currently underway at many firms. However, chief executive of the RSA, Matthew Taylor, has put forward an intriguing new candidate with his annual address last week, hailing the emergence of the “enlightened enterprise”.
In a wide-ranging speech that is likely to be one of the most important addresses on the concept of sustainable business delivered this year by a public figure, Taylor argues that businesses should increasingly adopt the enlightenment values cherished by the RSA. He defines these core values as autonomy, universalism and humanism or, more colloquially, freedom, fairness and progress, and argues that they can help shape the emergence of this new breed of sustainable business.
“Put simply, the enlightened company has a mission that goes beyond maximizing size, profit or shareholder value,” Taylor says. “Profit is seen as a way to do more of what the company cares about rather than profit being all that the company cares about.”
This concept will inevitably prove controversial. As Taylor acknowledges, economist Milton Friedman’s belief that any corporate activity that does not focus explicitly on maximizing shareholder value is “fundamentally subversive” remains highly resonant in many boardrooms. But he outlines how Friedman’s stance is being increasingly discredited by growing awareness of the impact of externalities, the value consumers place on corporate ethics, and the extent to which companies rely on “social order, a functioning state and economic stability” to drive profitability.
Taylor backs up his hypothesis by name-checking the growing list of firms he would argue are embracing the concept of “enlightened enterprise”. The list will be familiar to anyone with a passing interest in sustainable business (it includes pioneers such as M&S, DESSO, Interface and B&Q), but it is still impressive to be reminded of how far these firms have moved away from the limited demands of short-term capitalism to instigate investments and initiatives more suited to the environmental challenges they face.
Throughout Taylor’s speech, he stresses an oft-overlooked point, that far from being simply rapacious profit-making machines, businesses are also some of the most effective agents of change in history.
As Taylor puts it: “Businesses don’t simply respond to demand, they shape it.” Or, more specifically: “Car drivers didn’t demand a hybrid engine, or householders a soap powder that worked at a lower temperature, but companies, partly in response to policy incentives, invested in innovation and tapped into a latent demand for products that were both desirable and more environmentally responsible.”
Those business leaders that understand this influence also realize they hold the power to tackle the environmental challenges we face and assure the future of both their businesses and the wider economy. They become enlightened, and as such begin to accept the case for sensible environmental regulation, long-term corporate thinking and business as a force for social progress.
Taylor argues that this trend can be nurtured by establishing corporate responsibility as a core part of all MBA courses, better engaging investors in the importance of looking beyond narrow financial metrics and short-term risks, and improving the often fractious links between the world of business and civil society.
“As I have worked on this speech I have come to the view that the interface between business and civil society locally, nationally and internationally is no less important for the long term and for the world than the interface between national government and civil society,” Taylor confesses.
Inevitably, Taylor’s central hypothesis has the feel of a work in progress. Huge questions remain unaddressed over how economic growth can be continually supported without a fundamental change in how we measure prosperity that enables the transition to some form of solid state economy. Equally, his essentially upbeat message could be accused of underplaying the sheer scale of the environmental crisis we face and failing to emphasize the huge damage irresponsible businesses continue to do.
Moreover, the concept of an enlightened enterprise is unlikely to secure universal approval any time soon. It is one of the tragedies of modern life that the centuries-long enlightenment project is far more controversial than it should be, besieged on all sides by religious fanatics, political ideologues who appear immune to evidence-based policy, and an all-out assault on science.
Enlightened enterprises will continue to go about their admirable work, but there are plenty that prefer to stay in the dark.
But at the same time the enlightened enterprise is arguably a better and more encompassing definition of the historical revolution that is going on in boardrooms around the world than any of the alternatives currently available. A revolution that for decades has seen businesses congenitally opposed to state regulation in all its forms, campaigning vociferously for more demanding environmental rules and targets; a revolution that is delivering one of the most rapid technological transitions since the great industrial age of the 19th century; and a revolution that offers the last best hope of avoiding climatic crisis.
I’m feeling enlightened, are you?
(Source: www.businessgreen.com )