Sustainability Is Just a trend
Renewable-energy and green-business initiatives deliver little real value and will fade soon. Pro or con?
Pro: No Credible Evidence
You usually only know something’s a fad in retrospect, after a number of unsustainable businesses fail in the marketplace. But when it comes to the renewable energy industry, it’s hard to tell whether certain companies or technologies are fads or innovators, because the government is plying them with subsidies that shield them from market competition.
Venture capitalists try to avoid fads, but they also know that taking some risks with emerging technologies can pay off. They’re doing it, however, with private money and have no incentive to allocate capital on a whim. When government tries to play venture capitalist, it does so with taxpayer money and has less incentive or ability to get it right.
The government’s track record at picking winners in energy markets has been dismal. Take the failed taxpayer-funded experiment with “synthetic fuels” in the 1970s. More recent were government efforts to jump-start the hydrogen fuel-cell automobile and the quest to find a cleaner-burning coal. All petered out due to each project’s economic infeasibility—but only after spending billions of taxpayer dollars.
Until the energy market is left to innovate in all sectors—renewable and nonrenewable—without government trying to steer the flow of capital, it’s hard to know whether renewable energy sources can be a real long-term solution. We should trust the markets to determine the best way to reach that goal, not government planners.
Con: Many Benefits Now and Later
For businesses—the mighty corporations—sustainability has meant a lot of different things over the past five decades. From a strictly regulation-driven compliance “issue,” sustainability has traveled as a concept through years of debatable dialogue on climate change, the set lifetimes of our energy resources, and myriad definitions.
In fact, a recent report by Accenture noted that of 766 chief executives interviewed, 93 percent believed that sustainability will be “important” or “very important” in the future success of their companies.
Today, thousands of companies are releasing sustainability reports as an exercise in introspection and future improvement. The next frontier, as many indicated—including Lord Michael Hastings, KPMG’s corporate citizenship director, and Maggie Kohn, Merck’s CSR (corporate social responsibility) director—at the 2011 Net Impact Conference.
And here’s why: Sustainability offers organizations a wide enough platform to shift from a linear obligation restricted to shareholders to a multiple stakeholder model. Further, looking at business growth through the sustainability lens allows for consistent customer loyalty, a viable social license to operate, and a vibrant environment, all of which lead to competitive edge.
This is not lost on corporations.
As Sally Jewell, a former commercial banker and the current CEO of the conservation-minded outdoor equipment maker REI, said, “There is no mission without margin and no margin without a mission.”
If being financially successful isn’t a trend, figuring how to be so while replenishing your resources and maintaining your very raison d’être certainly cannot be, either.
