Environment and business: doing away with discourse

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Due to their intrinsically qualitative and spontaneous nature, the effects of voluntary actions are difficult to measure and even more difficult to evaluate. There is no doubt that it is essential for each objective and constraint of sustainable development to be interiorized: how can we imagine a world where the power of coercion (physical or economic) is constantly required? In this context, ethical actions can only be encouraged, whether they are carried out by citizens or businesses, and even if certain hind thoughts hide behind the most honorable declarations of intention […].

Numerous companies claim to be greener today than in the past because they are concerned with their reputations and the potential damage that can ensue from an environmental or health scandal. Regardless, ethical conduct by an economic agent cannot be condemned on the grounds that it happens to support its own interests. On the contrary even: today, sustainable development is faced with the challenge of reconciling the two points of view. Furthermore, it is equally certain that governments will only alter their decisions and choices in favor of sustainable development if pressured by their electors. Initiatives and voluntary commitments are thus precedents that can leave widespread consequences, and then inspire a broader policy afterwards. When HSBC, one of the world’s leading banks, establishes an extensive assessment of greenhouse gases it emits directly or indirectly, and invests millions of dollars to reduce them, it is “setting the example” […].

It can even be thought that the well-known mechanisms of emulation and mimetic rivalries play a major role in the ongoing shift. In this regard, the “fashionable” factor will be substantial. Once it becomes “trendier” to drive a car that produces less greenhouse gases and completely “outdated” to drive an immense 4×4, some headway will have been made (even if objectively, it will take much more than this). Lastly, the “citizen’s commitment”, driven by public or private campaigns, is a good way to understand environmental issues through actions.

However, it is more than doubtful that private interests and general interest will converge spontaneously. If this were the case, it would suffice to leave it up to the market for CSR to become standard practice. Winning across the boards, this model would stand out: who would refuse a “soul supplement” that yields at least as much as self-interested behavior? The majority of economists remain skeptical, believing that voluntary mechanisms can only produce limited effects for several reasons.

Economic agents, households or companies, even those that are dedicated, only have limited individual and even collective knowledge of environmental issues. In general, they have marked preferences for such or such problem they are active in, but may be oblivious to such or such other problem. The example of waste is typical. An “exemplary” citizen will try to be careful with ordinary waste but may be negligent with batteries or the disposable of electronic products. Yet, toxic waste is probably more problematic than ordinary waste.

Citizens cannot know all of the collective consequences of their individual acts and even less the importance of altering certain behavior that can be dangerous, even deadly for humanity if accumulated. Therefore, it is necessary for an authority to raise awareness within the population. Scientists master the information through initiatives on climate and biodiversity but have no legitimacy to influence behavior. As such, it is the role of political figures to do so.

Voluntary commitments run up against the inevitable conflict between general and private interests. A company can portray itself as “virtuous” if it is not incompatible with the expected level of financial performance and especially its economic survival. It is clear that this is a key problem today given the intensity of international competition that literally prohibits companies from uselessly losing flexibility by “diverting” resources that “do not create value”. Similarly, individuals will sometimes have to make choices counter to their convictions and commitments because the cost of complying with these commitments is too high for them or their families. […].

More abstractly speaking, the “price” information of a given product is known to all consumers of this product, which is not the case with most other information such as ethical information that would allow them to make an enlightened choice. It is therefore critical that the price carries the values of the society because it is the only data that is comprehensively widespread.

Lastly, social and environmental responsibility is still in its initial stages and despite stable growth, Socially Responsible Investment (SRI) remains a modest element in the financial world. We have seen that it is impossible to declare that CSR behavior leads to better financial performance or that SRI generates more results than others. These models therefore will not spontaneously become an imposing force by themselves in the short term. The “planet is burning” and deadlines are approaching however. Thus it is clearly up to the public powers (local, regional, national and international) to develop economic mechanisms and incentives that will allow for a better alignment of individual interests and general interest. It is only from the synergy between public instruments and private initiatives that we can expect sustainable development to succeed.

Environnement et entreprise : en finir avec les discours

Dominique BOURG, Alain GRANDJEAN, Thierry LIBAERT

April 2006

P 108-110 “scope and limit of voluntary actions

Village mondial

This article was used with the generous permission of the publisher.

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