Sustainability in the Age of Uncertainty - Research Paper Example

Abstract

The concept of corporate social responsibility (CSR) emphasises the places of businesses and other kinds of organisations in the wider society, and, therefore, what they can do in this regard. Sustainability is part of CSR, and it has become increasingly prominent in an era of increasingly alarming climate and environmental patterns. The central premise is business must take both proactive and reactive steps to ensure the sustainability of the natural resources around them, but also reversing the adverse changes in the environment. However, implementing sustainability as a strategy is made difficult by the uncertainties surrounding it, including its definition and scope of implementation. Indeed, implementation is difficult, considering the complexity of the elements involved: organisational culture; the scope of implementation (that is, deciding what to include and what to leave out), among others. This literature review explores what existing pieces of literature have to say about sustainability and the various elements involved. The primary goal is to reveal the sources of uncertainty inherent in attempts to establish and implement sustainable development as a business strategy.

Literature Review

Sustainability in the Age of Uncertainty

Introduction

Sustainability has increasingly become a key strategic factor for every organisation in the modern world. It has become a common term among others such as going green, corporate social performance (CSP) corporate social responsibility (CSR). Together they refer to organisational efforts to enhance their long-term performance economically, socially and environmentally (Galpin et al. 2013: 2; Wales 2013: 43; Khatri 2013: 3). Indeed, an ever-expanding body of literature emphasises the importance of sustainability as a strategic organisational factor, particularly its impact on performance. Regardless, it remains one of the most difficult things for organisations to achieve. This is largely attributable to the uncertainty that surrounds the concept both in theory and practice. The latter has to do with the complexity of factors involving stakeholders and their interests as well as their goals and objectives. This paper explores what existing literature has to say about the uncertainty surrounding the concept, including the complexity of factors and stakeholders’ interests that influence – and often adversely affects – it’s implementation in the real world.

The Importance of Sustainability as a Business Strategy

As noted above, an increasingly ample size of literature continues to underscore the value of sustainability to organisations, particularly toward performance. No doubt, there is good evidence to prove this point. Examples include FTSE4 Good Indexes alongside the corporations named in the Dow Jones Sustainability which have shown superior performances in shares prices than the other companies only listed in the broader indexes” (Galpin et al. 2013: 2). Moreover, companies that belong in the World Business Counsel for Sustainable Development performed better than their corresponding stock prices by 15-25 percent consecutively through a period of 3 years (Galpin et al., 2013: 2-3). Many managers also agree on the benefits of sustainability as a business strategy. In The Economist (2008: 2) survey of business leaders on sustainability, only less than four percent thought it social and environmental sustainability on the part of business a waste of time and money. Ultimately, though, academics and industry leaders share the consensus that sustainability strategy is indeed an important contribution to the long-term success of not only the business but also the communities in which they operate (Lee et al. 2010: 1353).

Despite these known benefits of sustainability, however, business leaders remain uncertain on how to lead and position their organisations to be more sustainable. Galpin et al. (2013: 3) observe that many firms have only seen sporadic successes as a result of isolated efforts of employee teams as well as individual departments that make efforts towards reducing the wastage of water and energy, and the destruction of the environment in products and processes. These efforts are, however, not enough. Many agree that, for a sustainability strategy to remain competitive in the long-term and ultimately work successfully, organisations need to take more systematic approaches (Galpin et al. 2013: 3; Wales 2013: 39; Khatri 2013: 3). Such an approach involves making “taking several steps to build an organisational infrastructure which backs up the creation of sustainable strategies, the institution’s efforts to fully install in place a sustainable strategy” (Galpin et al. 2013: 2).

In theory, this sounds easy. However, in practice, it gets hard because that is where businesses must begin to identify and acquire actual infrastructure. The issue is not just about money, but generally about the complexity of the details involved. In an increasingly uncertain world characterised by a dynamic global marketplace, businesses remain uncertain about the possible impact of their efforts.

The Uncertainty

Businesses leaders’ uncertainty over sustainability strategy may stem from the increasing concern in the world of scientists on if the several existing sustainability assessment instances are truly comprehensive. More specifically, the main concerns over sustainability have to do with the intrinsic vagueness of the concept itself. Besides, as Bohringer and Jochem (2007: 2) point out, sustainable development is ultimate, just like the concept of social justice, an acceptable concept with several varying connotations and interpretations. Another concern is the ability to address social, economic and environmental matters as well as their relations with robust and meaningful efforts (Bohringer&Jochem2007: 2; Ciuffo et al. 2012: 14).

TheConceptualisationof‘Sustainability’

To begin with, the term emerged as business owners, activists and academics debated the role of businesses in society. Many of them pointed out the dangers of unfettered managerial capitalism in which businesses were seen as thriving at the expense of the neighbour society and community (such as by causing major special environmental and economic problems (Blackledge & Knight 2011: 14).As such, there arose intense call for social justice, thereby giving birth to the concept of sustainability as part of the business strategy (Colbert&Kurucz2007: 4; Porter & Kramer 2011: 65).Even then, the understanding of the concept remains elusive.

Wales (2013: 39) explores the various definitions of the term. To Colbert and Kurucz (2007: 4), the term implies keeping the business going, and which they relate to the term ‘future proofing’. The ‘future proofing’ term seems to imply the Charter of Sustainability Committee’s (CDC) definition of the concept as having to do with meeting the needs of the present customers while at the same time ensuring the needs of future generations are not compromised (Wales, 2013: 39). Other definitions emphasise the three-way focus of the term. For example, CIPD (2012: 15) describes sustainability as the feature whose primary objective is to enhance the “economic, societal and environmental framework upon which an economic activity thrives”. Colbert and Kuricz (2007: 5) argue that sustainability implies a simultaneous focus on three key areas of performance: economic, social and environmental performance. Wales (2013: 39) believes that this three-way focus on sustainability relates to the emergence and growth of the idea of ‘triple bottom line'. Generally, these definitions seem to agree on the understanding that sustainability focuses on the long-term creation and preservation of value across three key dimensions: social, environmental and economic capital.

However, even with the clarity of terms used in these definitions – including certain shared understandings – the concept of sustainability remains vague. As already noted above, Bohringer and Jochem (2007: 3) point out that sustainable development is ultimate just like the concept of social justice. It is an acceptable concept with several varying connotations and interpretations. Moreover, there is a lack of not just science-based, but also policy boundaries that can mark thresholds as to what adds and what does not add to sustainable development. In fact, in ordinary situations, there is no surety that the method chosen at the end of sustainability assessment can add to sustainable development in the same manner as formerly stated (Bohringer&Jochem 2007: 3; Ciuffo et al. 2013: 15). There are just no simple answers – if ever there can be – to the questions of the impact of sustainability on the development of the world, which covers not just the ecosystem but also the way that people live now. Connected to this is the question of whether how people live now is the right way to maintain, or whether changes must be to lead to a better world, and changes to allow and which ones to try to stop (Ciuffo et al. 2013: 15). In other words, the question of sustainability is itself an uncertain one, adding to a world that is already characterised by uncertainty across various spheres of life.

This cited vagueness poses bigger problems when it comes to implementation of the concept in actual organisational’ contexts. At this point, new issues seem to arise, which raise even further the level of uncertainty that already characterises the global marketplace but also the implementation of sustainability policies. These include organisational culture.

The Role of Organisational Culture in Sustainable Development

An ample amount of existing literature cites the value of organisations culture in the sustainability strategy development (Schein 2010: 13; Denning 2011: 1; Eccles et al. 2011: 3; Wales 2013: 40). Wales (2013) posits that maybe organisational sustainability has a lot to do with organisational culture than it does with specific policies and procedures. This view is consistent with Schein (2010: 13) that innovative sustainable solutions (socially, environmentally and organisationally) depend on a leader intentionally fostering a ‘culture of sustainability.' Eccles (2011: 3-4) also argued that, although organisations do need to develop sustainability policies, these policies should ultimately be based on an underlying ‘culture of sustainability.' On this respect, these policies should highlight the importance of and commitment to social, environmental and financial performance. In agreement, CIPD (2012: 15) additionally stresses the value of organisational culture when looking to learn organisational sustainability, and they refer to the development of useful traits that influence the strategic decision-making as well as the building of a culture that emphasises desirable behaviours.

The problem with this, simple as it sounds, is that organisational culture is complex. Schein (2010: 21) describes the three main levels of organisational culture. At the first level, there are the visible artefacts and behaviours. These are the tangible and overt organisational elements that those from outside the organisational can easily recognise. The second level consists of the espoused organisational values. These are the stipulated values and behaviours laws that show the manner in which the institution plans to presents itself both internally and externally. Finally, the third level consists of (subconsciously) shared generalisations that influence the behaviours of the members of the institution. Abstract as they may be, these elements are nonetheless embedded and well-integrated into the life of the organisation (Schein 2010: 21; Wales 2013: 40). Atkinson (2012: 33), citing these levels of organisational culture, argues that creating a successful culture of sustainability requires a multi-level approach that focuses on these three levels and the elements within them, and that this effort must be “complemented by operational practices that permeate the entire organisation.”

One can already sense the complexity of the organisational culture that makes sustainability development problematic. Gaplin et al. (2013: 3), for example, argues that the complicated form of organisational culture presents specific problems for managers looking to motivate sustainability levels of the workers. Consequently, this reduces the effect of the organisation on the natural surrounding as well as the ultimate organisational health and success. According to Schein (2010: 17), such an effort may require a diligent effort to change organisational culture, which in turn may require a change of organisational leadership. However, even such ‘diligent’ efforts may fail. All these issues point to the uncertainty of sustainable development at the management level – that is, internally.

Sources of Uncertainty during Implementation

On than internally (that is, organisational culture and policies), another major problem emerges during the implementation process. Particularly, the problem here has to with defining boundaries for what may lead to a more sustainable development (Ciuffo et al. 2013: 13). Scientists have suggested environmental boundaries (Rockstrom et al. 2009: 474; Sverdrup & Ragnarsdottir 2011: 309). However, even where global boundaries may exist, it is still very difficult to assess the extent to which a product, policy or even an organisation can contribute towards its fulfilment. For this reason, some have suggested that the only possibility is to define thresholds at a political level. In this regard, policymakers would take the responsibility of deciding how much each sector should contribute towards globally sustainable goals. In Europe, for example, the European Union came up with the Europe 2020 strategy. However, the governments did not specify further the directives to direct the strategies of national development in a more effective way (Ciuffo et al. 2013: 15). The threshold approach, Polasky et al. (2011: 400) argues, is very important where there exist boundaries which when overlooked can result in serious repercussions. For example, in the case of climate change, there is a directive to maintain the levels of CO2 in the atmosphere at or below the safety threshold of 350ppm (Rockstrom et al. 2009: 475). On the other hand, though, it is not possible to foresee in what ways keeping the CO2 in the atmosphere above the 350ppm threshold will impact the ecosystem. Part of the problem is that the ecosystem is itself a very complex system and a new threshold configuration may not necessarily have the same impact in the future as it has in the present. This is one of the limitations of the threshold approach. Another is that focusing exclusively on threshold may lead to the misguiding view that any “fall below the standard level is safe and increases past it have no significance” (Polasky et al. 2011: 401). Moreover, a great number of the set thresholds tend to veil considerable and difficult uncertainty percentages. As a result, depending on certain defined values could in ultimately end up not living up to expectations.

Another possible source of uncertainty here is the incapacity of the current modelling tools and activities to mimic the world and, therefore, enable the prediction of future trends (Ciuffo et al. 2013: 15). Whatever modelling/simulation approach used – independently of course –the ultimate goal of such a model is to enable an in-depth analysis that helps to understand the manner in which the ecosystem behaves, specifically in response to pressure placed on it by the society (i.e., human activity). This is especially important considering the complexity of the ecosystem, which involves many interrelated subsystems. As it were, no modelling/simulation system, among the ones existing now, can help predict the future, which would help to design effective response strategies. In fact, this is the ultimate weakness of all modelling systems. Saltelli et al. (2008: 11), for example, argues that uncertainty is not just an accident but the very substance of modelling and scientific inquiry. Besides, these modes are limited by the fact that they are developed based on human comprehension (Kay 2011: 1). This is to say that such limitations may be inevitable. To demonstrate the limitations of these modelling/simulation systems, below are some of the uncertainties that still surround climate change and how to deal with it - uncertainty of the likelihood of adverse (or further adverse) effects; uncertainty surrounding the consequences of climate change; uncertainty about – if any – discontinuities; uncertainty over the effectiveness of policy instruments used, among others (Saltelli et al. 2008: 11; Ciuffo et al. 2013: 15). There are no easy or concrete answers when it comes to sustainability, both in the present and the future. In other words, businesses are left with no clear answers as to what their sustainability efforts should look like, and how they will impact the world, among others.

Possible Ways of Dealing with the Uncertainty

The question now arises: now that uncertainty seems inevitable, do businesses give up on sustainable development? The answer is a categorical no. This is because evidence shows that sustainability efforts do indeed have significant positive impact on not just businesses but also communities and societies at large. The answer, therefore, is to find ways to reduce these uncertainties or mitigate their impacts (Ciuffo et al. 2013: 15; Khatri 2013: 51, 107). Ciuffo et al. (2013: 15) suggest a number of ways to deal with some of the uncertainties mentioned. They include improving the models concerning one or other aspects depending on the specific application and stemming from a trade-off between adequacy of model and computing time; and distinguishing between observable and unobservable inputs, which then affect the possibility and cost of reducing uncertainty. Khatri (2013: 51, 107) also makes a number of suggestions, including a hybrid approach to the analysis of uncertainty; and the multi-criteria process of decision-making, among others.

Conclusion

This literature review has focused on sustainable development in an uncertain age. It began from the argument that the global marketplace has become more dynamic and unpredictable – that is, uncertain. Another level of uncertainty was with the concept of ‘sustainability’ and the internal (within the organisation) and external (without the organisation) factors that may be leading to these uncertainties. The literature reviewed here show that the concept of sustainability remains elusive in certain ways. This lack of full understanding poses a significant amount of problems when it comes to implementation. However, more than that this, a major problem has to with the internal organisational factors, such as organisational culture. Poor culture can work against sustainability policies regardless of how good those policies may be. However, even where there may sound culture (that is, the culture of sustainability), culture remains a complex phenomenon (involving many levels), and this can pose significant challenges for managers. Other uncertainties have to do with the scope of sustainability development. In this regard, organisations may not be able to decide what to do by way of sustainability, or they may not know how such an effort may be valuable to the environment or society. Using appropriate modelling tools is just of the many ways to reduce these uncertainties and/or mitigate their impacts.