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Relationships between Sustainability and Economics

We’ve been discussing aspects of social impacts and sustainability in my last few articles. I’ve recently come across some excellent discussions on the interrelationship between sustainability and economics. The gist of the discussions is that there is not a trade-off between a sustainable business model or sustainable manufacturing and profit – one can minimize the impact to the environment and maximize profit at the same time.

Now, I am not an economist and I am cannot attest to the validity of all the arguments. But, the ones we will review here are logically put forward and seem, to me, reasonable. You can be the judge.

Back in September of 2009 in a posting I referred to a MIT Sloan School- Boston Consulting Group Study on business cases for sustainability.

In that report the results of a survey of corporate executives was presented listing, in order of importance, the “sustainability-related issues” that companies believe will impact their business organization. These included:

– government legislation

– consumer concern

– employee concern

– concern over environmental pollution

– depletion of resources (non-renewable and renewable, like water)

– societal pressures

– global political security

– population growth

– climate change

In fact, in the figure below, from the report, it is clear that economic/business issues are the main drivers for sustainable business plans, starting with improved brand image reputation and increased competitiveness.

A second graphic from the report, below, shows which sectors in which employing sustainability related strategies are seen to be most essential to be competitive. Not surprisingly, the “core industries” like automobiles and commodities are leading with services lagging.

So, companies are paying attention to this.

I recently read an interesting whitepaper by some folks at Enviance. This was forwarded to me by some folks at Enviance I ran into at a meeting on campus. And, one of my former PhD students (Dr. Corinne Reich-Weiser) works with them. Her work for her PhD was featured in a blog posting some time ago as part of a discussion including a “map” of spatial and temporal levels of design to manufacturing to distribution/enterprise effects – this was part of the low hanging fruit series.

The folks at Enviance sent me a paper entitled “Bridging the Gap: A financial approach to sustainability (http://www.enviance.com/resources/wp-bridging-the-gap.aspx). The paper  “explores the gap between sustainability and business goals and how to bridge this gap by leveraging financially oriented analytics to make environmental issues relevant to finance and sales professionals.” This seems like a great idea to me. Putting some numbers on the link between sustainability and business. The paper begin with a description of the problem which they state as – why is sustainability “still so often dissociated from core business goals relevant to a CFO, a Head of Procurement, or a VP of Sales — addressing common roadblocks faced by sustainability professionals.” The paper then proposes a stratify to bridge the “gap” with a financial approach to sustainability. They present an example of a leading aerospace & defense manufacturer.

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2 thoughts on “Relationships between Sustainability and Economics

  1. Dear Dr.Dornfeld,
    Your article that sustainability need not be a trade off is a welcoming development and has given me some insights. I have authored a paper on Sustainability which emphasises that Sustainability will be present ONLY when “I am Sustainable”, a personal attitudinal change based on the Human dimension of Sustainability. A MIT researcher has also commended this paper and I hope that ypu will take alook at it and provide some insights.
    Can I have your email to send it to?
    Thank you.
    Warm Regards
    Dipl.-Ing. Raveendra Nath

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