If we wish to stimulate the creation of new companies capable of solving problems in new and increasingly sustainable ways, at least part of our solution is clear. We must simply apply the necessary social pressure to highlight the weaknesses of the incumbents. It is the history of capitalism that the new emerges from the shortcomings of the present.
This post, then, is a precursor to one about a way in which we can begin to create that pressure to bring about a more authentic form of reporting by corporations on their true environmental impacts.
But first, we must dismantle the framework of perception that passes for what we currently understand as corporate disclosure on the environment.
I've complained about the inadequacy of companies' sustainability reporting endeavours here at Accelerated Sustainability and in the piece published in the journal of Chartered Secretaries Australia that you can download here but I'll recap on what I believe to be its greatest shortcoming.
We live in an age of spin. Public relations has become the force that drives our relationships with companies, social organisations, the political establishment to create what we see and our understanding of what is true in the world.
Yet much of what corporations present to us as truth is in fact nothing more than a well worked out and defensible position which is impenetrable simply because without good cause the media lacks the time, motive, or force with which to bring the myth down. And if the media can't do it, it is going to take extraordinary effort on the part of individuals or even committed activist organisations to begin to bring a well prepared corporation to heel. Or at least, that's the way things used to be.
Sustainability claims are part of the myth a well prepared corporation perpetrates. Let me give an example.
A visitor to the site of brewer Lion Nathan (now owned by the Japanese brewer Kirin) will see that it displays its commitment to sustainability proudly on its home page, and its alcoholic product featured in situations in which people drink too much as being ones of "sociability". This all looks good, even if it is a complete nonsense.
Yet in a story that appeared in The Australian Financial Review of on October 28, 2009, entitled "Drink giants face $500m recycling bill", its representative, the beverage industry lobbying operation, came out in force to stop federal government plans for a drink container recycling scheme, claiming the proposed levy would cost the industry nearly $500 million a year.
The company opposed a national 10¢ rebate on bottled and canned drinks. "Container deposit legislation carries a huge cost to consumers and the community for marginal additional environmental benefit over kerbside and public-place collection," its spokesman, James Tait, said.
What is this industry, however, other than a huge waste-generation machine, whose product's value in use represents but a fraction of the time ultimately bound up in its creation, packaging, distribution and destruction.
Nonetheless, it remains cheaper to claim sustainability than to back it up with deeds.
Because it costs money to create a sustainability report, such documents are, similarly, an act of corporate fraud. They are created only by companies that have something to hide and are well enough resourced to want to do so. They are a constructed corporate reality designed to picture a profit-maximising business as an feeling entity confessing to its - minor - sins, and they portray it as faithfully working on building its contribution to society.
But because sustainability reports are voluntary documents - there is no law mandating them, no set of regulations controlling their content, no individual body to haul them to account for the mistruths they perpetuate, their mistruths and their purposeful omissions - companies can say what they like in them.
And because they are paying for the privilege, those documents will be produced by professionals who ensure their appearance will appeal to readers, and that they will say exactly what the corporation wants its audience to believe.
Sustainability reporting is cheaper than change.
Even in a big company in which the senior executive body is a committed to far-reaching change, it takes a lot of effort to turn it around and to transform the way it works.
Economist Reginald Coase won a Nobel prize for his 1937 exposition in 'The Nature of the Firm' of the "transaction costs" that determine how and why companies exist. Put simply, a company comes into being when the cost of communication between its various agents is lower when organised in its corporate form than it would be for a grouping of individuals to accomplish the same task.
When you look at the complexity and resources required to run any successful modern business of scale, you can understand this, and how hard it would be for you and I to attempt to compete against it as individuals.
But you can also understand how, once such an organisation has invested huge effort and expenditure on refining its processes to maximise profit, how difficult it is, even with a committed management team, to unpick its logistics once they become fundamental to the way the business works.
It is likely that those in control at many companies would like to act more sustainably (and we can quibble over definitions at a later time), or at minimum make their operations more environmentally benign. Not all humans are evil, after all, and most executives have families to whom they would like to pass on a better world.
But the intractability of an organisation's processes and the nature of the behaviours for which its bonus-earning senior executives are really rewarded represent the biggest and most obvious barriers to real sustainability. This is the same in any organisation driven principally by the imperative of shareholder returns. People don't like to risk scrambling their golden eggs.
For an organisation to behave sustainably - say, minimising its environmental footprint by monitoring the toxic content and production methods of what it buys from suppliers; creating the reward structures that engender worker enthusiasm for doing the right thing in its own workplace; using human ingenuity to construct processes that deliver innovative breakthroughs that not only reduce its material load but grow the bottom line, sustainably - takes real effort and imagination on the part of managers from top to bottom.
That's why it's easier for a few people within a big company to get busy on the glossy report. And if they don't like an inconvenient fact, well, just whipping out a sentence that no reader will notice because few indeed will give a damn about what is included let alone spot the omission, then deleting a line and rejigging the design of a page is infinitely cheaper than reorganising the processes that gave rise to the inconvenient fact in the first place.
If there is a crime in corporate sustainability reporting, it is one that can presently not be controlled by any stronger force than notions of morality alone. It is that despite our vague awareness that almost all business has an impact on the environment in some way, the companies that choose to report should be permitted to decide unilaterally on which of their environmental impacts they will report, and on which they won't. Such is the nature of the smokescreen that their reports typically answer questions that no one is asking.
But things are changing. Sustainability reporting's decaying form belongs in the past, in the age of a one-way media propped up by the corporate megaphone. But as its own players are now discovering to their increasing cost, the media is no longer a one-way channel.
The internet brings new channels and new hope. If its capacity for cross-pollination of wisdom between peers now makes it hard, if not impossible, for corporations to block negative messages the crowd wishes to share, it is going to get harder. The concerned audience now has the tools to erect its own framework of demands as to the ways in which companies will be required to report on their environmental conduct. And if for no other, for this reason alone, the future of sustainability reporting looks nothing like its past.
Breakthrough technologies - the internet itself, Google, Craigslist, YouTube, iTunes, iPhone and likely next the iPad - are often hailed as being "disruptive" because they unpick the ways in which business has been conducted in the past to create opportunities for a host of new competitors.
In the post-industrial era (most articulately heralded by Peter Senge in his 'The Necessary Revolution', an excerpt from which you can find here, the future of our environment and, indeed, the health of our civilisation, lies in the rise of organisations that are more agile and transparent, and better able to do their business without dumping on anyone else's patch.
These businesses will emerge in the gaps we highlight from our closer social investigation of the true environmental impacts of the incumbents. They will prove truly disruptive, if simply because incumbents built on wasteful ways are even less likely to be able to respond to new forms of sustainable management practice than they are to simple threats posed by new and nimble technology.
These organisations will be less dependent on the stonewalling of professional spin, will have authentic sustainability management and reporting woven into the fibre of their beings, and will be capable of delivering value where bigger competitors can't tread.
If we wish to give rise to this new order, one of our principal challenges is to create the holes into which existing corporations can dig themselves. And that, with guidance, should not prove too hard.
Remember, even the most faceless of corporations comprises human beings. They dislike change. And that makes them fundamentally vulnerable.
Let's bring it on.
