Business Thought

Environment: Non-permanence| Creating the Virtuous Organization

As businesses shift away from a shareholder primacy model toward a comprehensive stakeholder doctrine, deeply considering the environment becomes a mandate. Research over the last 20 years has indicated that while defining stakeholders can be challenging, there is ample reason for virtuous organizations to consider the natural environment as a stakeholder for strategic, moral, and ethical reasons. Research aside, some of the shocking consequences of environmental neglect, missteps, and even illegal activity at the hands of business have been documented for the public in the media. Water pollution, contaminated air, culmination of waste, and interrupted ecosystems can harm both human stakeholders and the voiceless biodiversity that is so critical to sustaining communities and businesses. 

Different people and organizations consider the environment a stakeholder for different reasons, but harmonious across all these perspectives is an understanding that current and future generations of people are impacted by what society takes from and puts into the earth. In a world where the ramifications of climate change play out in increasingly dramatic ways upon both resources and people, virtuous businesses shrewdly recognize their role in impacting or being impacted by such environmental shifts and subsequently take into consideration both the upstream and downstream influence they can have. 

Businesses are already implementing strategies that consider environmental impact, including building LEED-certified facilities, incentivizing employees to use public or active transportation, diving deep into the supply chain and partnering with vendors to change manufacturing or sourcing issues, or working on eco-friendly initiatives through corporate responsibility and philanthropy efforts. Often these efforts are undertaken because of external pressure or to compensate for the businesses’ negative environmental impact. 

A virtuous organization actively implements corporate environmental sustainability practices not just because of external pressure from watchdogs or consumers, government regulation, or market recognition for environmental innovation, but because they consciously give environmental considerations a place at the table. This may be complicated because the environment is – by most definitions – outside of individuals and organizations (and thus voiceless), but a virtuous organization performs due diligence to discover how it can minimize its negative impact and contribute to environmental sustainability efforts at all levels of organizational activities. 

From an organizational longevity standpoint, the availability of environmental resources and the presence and wellness of future generations should be of utmost interest.

Without either resources or future customers, organizations cannot survive, and, as previously discussed, virtuous organizations have a sustainability philosophy because of the value businesses can create. Both organizations and individuals desire permanence. Organizations and individuals value durability and resilience, and want to know that things they have made won’t just dissolve or disappear. 

But it’s the permanent machine-made things that clutter the planet. It’s the permanent synthetic products that no longer cycle with the rest of the planet through the delicate ecosystems that rely on the constant construction and deconstruction of energy and matter. It’s permanent things that disrupt the flow of air, water, sunlight, and sometimes even life itself. 

For this reason, non-permanence is thought of as a central principle of environmental responsibility. For any action – using trees from a forest, paving through a wetland, mining copper, creating plastics, dumping wastes, creating products and byproducts – the virtuous organization asks a single question: Can this be undone? 

Upstream harm generally results from irreparably harming, transforming, or destroying a resource, either by taking too much or by using damaging processes. In general, the remedy is to cause less permanent damage, either by replenishing resources, taking less of the resource, or preventing actions that will cause irreparable harm. 

Reducing harm upstream might be as simple as switching providers or coaching a vendor on more ecologically sustainable practices. Consider as an example all the packaging and carbon emissions that come from large scale online retail distributors. If a company relies on products from an online retailer, they could reduce environmental harm upstream by requesting that the order parts be shipped together, not in separate packages with separate trips. Decreasing harm upstream means knowing the supply chain. Understanding the products, processes, and outputs of vendors, and ideally even vendors’ vendors, is essential to determining how an organization can reduce harm. 

Downstream harms generally result from the production of products or byproducts that are either relatively permanent, and therefore harmful upon accumulation, or immediately damaging regardless of their level of permanence. Of course, the worst cases of downstream harm are those situations in which products or byproducts are both permanent and damaging. 

Ways of mitigating downstream harms can occur by either reducing the amount of harm caused by a product or byproduct, by reducing its permanence, or by reducing its quantity. In some cases, focus on reducing the quantity of downstream effects can also reduce upstream effects, as in the case of combustible fuel consumption where decreasing the quantity of fuel burned can both reduce emissions and reduce depletion of non-renewable resources. 

Another consideration for some companies is the issue of overproduction and overconsumption. In a consumer world, individuals and organizations often produce, purchase, and/or consume more than they need to. Consumption is another avenue for causing environmental harm. However, it seems impossible to suggest that companies should encourage their consumers to consume less. But several companies in the clothing industry have already started doing just that. From returns and donation programs to clothing repair services, many businesses have already successfully addressed issues of overconsumption. 

The challenge for organizations is to prevent themselves from thinking in terms of tradeoffs and zero sum games. Instead, such tensions can be thought of as maximization problems that culminate in an opportunity to innovate. 

It is up to virtuous organizations to rigorously and honestly assess their environmental impact and innovatively and courageously adopt ecological standards for operations, manufacturing, and distribution within their sphere of influence, perhaps going beyond regulation-level requirements. Organizations that do not take the time to align their organizational mission and vision of the world with self transcendent, environmental concerns may not realize that such alignment is possible. Like with prosocial initiatives, environmental initiatives can provide value that far outweighs the dollar contributions of their efforts. 

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