Business Responses to Sustainable Development

Within a broad spectrum of action and inaction, many businesses remain reactive and defensive about their environmental and social impacts and responsibilities. Most companies worldwide have hardly begun to respond seriously to the many challenges implied in the concept of sustainable development. A number of individual companies, industry sectors and informal business alliances are, nevertheless, slowly beginning to redress this situation.

Despite mixed reviews at the time, the Rio Summit proved to be a watershed in the business response to sustainable development. While disagreements remain over what the concept really means, both theoretically and practically, there is general acceptance that sustainable development challenges us to understand and act upon ecological, social, economic and political issues in an integrated manner (Aina and Salau, 1992). The emergence of sustainable development as a new policy idea offered business an opportunity to enter the environmental debate as a legitimate participant. As noted earlier, many NGOs dismissed initiatives such as the BCSD’s Changing Course. Despite its limitations, this initiative represented a major break with the past, when most businesses had at best ignored environmental issues, or done the legal minimum, and at worst had actively attempted to undermine environmental arguments.

This is not to say that there were no relevant corporate responses to environmental issues before Rio. The first stage of a constructive business response began in the 1970s, when a number of leading companies in North America and Western Europe initiated programmes aimed at reducing or preventing industrial pollution. The second stage of business response to environmental problems came in the wake of a number of high profile environmental disasters, including the Union Carbide chemical release in Bhopal, India (1984) and the Exxon Valdez oil spill in Prince William Sound, Alaska (1989). Consequently there was a proliferation of voluntary codes of conduct and “above-compliance” initiatives from industry. For example, in the mid-1980s the Canadian Chemical Producers Association introduced Responsible Care, and in 1990 the American Petroleum Institute launched its Environmental Mission and Guiding Principles. By establishing these and many other schemes, industry wanted to prove to its critics that it was capable of developing common standards and expertise in environmental management (UNCTAD, 1996).

The second stage, or self-compliance agenda, remains the dominant paradigm of environmental management. Some argue that it is promoting sustainable development by allowing flexibility in addressing environmental issues and by creating incentives for environmental innovations (WBCSD, 1997). However, self-compliance has been criticized by both environmentalists and academics for not going far enough and for being used by industry as a means of discouraging new environmental legislation or threatening to replace existing regulations (Welford, 1997; FoE-UK, 1995).

In our book In the Company of Partners, we argue that the business response to sustainable development needs to move to a more ambitious third stage:

If we are serious about meeting the needs of the present without compromising [those of] the future, we believe that... business must work together with other sectors to build a radically new sustainability agenda which encompasses environmental protection, global equity and social justice (Murphy and Bendell, 1997:90).

In the following section, we consider how NGOs in different sectors and geographical settings are responding to the sustainable development challenge and how their relationships with business are evolving in the process.