Mazars Denge CEO/SUSTAINABILITY AMBASSADOR

Eight Errors of Formatting

Uncategorized - Dr. İzel Levi Coşkun - April 22, 2019

Since initiating our corporate sustainability efforts at Mazars Denge, I have been reflecting more on the essence and tenets of sustainability as a concept. In fact, I focused my thoughts on how this concept, which describes our responsibility towards future generations and what changes we should make in our everyday lives with respect to this responsibility, may be simplified. My impression from many earlier attempts to explain this topic is that the audience is often predisposed to confusing the term sustainability with continuity. Is it caused by humanity’s inherent sense of being insignificant and powerless over death, as anthropologist and author Ernest Becker argues, and our desire to compensate for this weakness by asserting our superiority over others through the agency of money? Do humans need to embrace capitalism and promote continuous growth to perpetuate their existence and avoid being forgotten? While pondering on these questions, I realized that we are misled at eight critical junctions during academic and professional life, and that our minds’ fixation on continuity is the outcome. In the table below, I have listed the expected, conventional way of doing business on the left column, and what these correspond to from a corporate sustainability perspective on the right. I will try to explain these by going over them one by one.

Short vs Long-term Thinking:

If our aim is to avoid making a negative impact on the lives of future generations, as stated in the definition of sustainability, we unfortunately cannot do so with short-term thinking alone. In fact, based on the understanding that each sustainability goal represents a significant global challenge, we must meticulously consider the future impact and consequences of the steps we take today. For instance, I rarely come upon any annual budget plans for businesses that cover a period of more than five years. Strategies and decisions are also limited to such short time frames.

In comparison, Ricoh set its goal of reaching “zero emissions by 2050” back in 2017, and is already directing its investment decisions accordingly. The five focus areas of this goal include Increased Quality of Living, Zero Carbon Society and Cyclical Economy, which directly relate to sustainable development.

Profit Pressure vs Pressure of Achieving Social, Environmental / Economic Balance

“Is making a profit the sole purpose of existence of businesses?” According to our conventional formatting, the answer is a resounding “yes”.

On the other hand, every business has two other purposes: to serve public benefit, which may be defined as social impact, and to survive. Considering that we devote more than one thirds of our time–not counting weekends and holidays–to the organization we work with, is it reasonable to claim that the organization does not have any impact on or responsibility towards our health, family life, education, and cultural background? Or, if we expand the circle a little further, does it not affect the development of the society by how it does business, its ethical conduct, and the opportunities it offers?

Taking into account specific sustainable development goals such as clean water and sanitation, climate action, life below water, and life on earth, it is particularly evident that businesses cannot ignore their environmental impact in their struggle to survive. As such, contrary to the conventional wisdom, corporate sustainability does not merely exert a profit pressure on the business, but calls on the business to seek economic returns that can be balanced against its social and environmental impact within an institutional organization.

Growth vs Development

Economic growth indicates a rise in revenues obtained through increased production or service provision, and is quantified in monetary terms. Growth is described as the increase in GDP for countries, and in revenues for enterprises. Growth is a quantitative term, while development is qualitative. On a national basis, development includes elements such as investments in women, living standards of the society, quality of education, access to healthcare, reduced unemployment, social security, and preservation–or enhancement–of environmental, cultural, artistic and historical values. From a business standpoint, development or improvement involves institutionalization, efficiency, value added, innovation, and quality among others. Therefore, development is not necessarily dependent of growth, and may or may not lead to it… “The Limits to Growth”, which was originally published in 1977 and updated three decades later, shows in figures the potentially disastrous global scenarios that may come to pass as result of a purely growth-focused approach to economy.

Money as a Measurement vs Money + Other Parameters

As I mentioned, businesses have significant social and environmental impacts aside from their financial outcomes. However, until 10-15 years ago, these impacts were more or less ignored as they were not included in financial statements, and measurements such as carbon footprint are not based on money; whereas today, environmental and social impacts, which are defined as economic externalities, can be scaled via sustainability reports and linked with financial data through integrated reporting.

Today, stakeholders of a business, such as its managers, employees and especially investors take note of parameters other than data that can be indicated in monetary terms when they want to learn more about a company. Realizing this fact, many companies have adopted an integrated reporting format that combines financial and non-financial data. However, the usage of such format is not sufficient by itself to achieve the goals contained in it; as it demands a higher awareness on the readers’ and particularly the consumers’ part. First and foremost, we must understand that there are other, scalable factors other than money that can influence our decision-making, and abandon certain habits that have persisted for centuries.

For instance, financial statements of a business do not include indicators for female executives, per capita carbon emissions, employee engagement, or customer satisfaction, which all directly relate to the sustainability of a business and may affect the decision of an investor or potential supplier with regard to the organization.

Cutthroat Competition with Rivals vs Rivals as Stakeholders

The etymological origins of the word “rival” lie in the Latin word for river “rivus”, and it means “a person using the same river as another”. But how did we start as individuals sharing the same river and end up as contestants in a cutthroat competition to secure more for ourselves at the expense of others? Would the “Global Compact” and its call for action on issues such as the elimination of child labor, fight against bribery and corruption, prevention of human rights violations, and support for efforts that help prevent environmental issues and preserve the environment still be necessary if such competition had not led to violations at the global scale and prove detrimental for all stakeholders involved? Would not we achieve higher levels of development if, instead of a single-minded focus on surpassing and eliminating others, we could see them as stakeholders with whom we can create together, as in the case of “open innovation” projects?

Interests of the Organization Alone vs Interests of the System at Large

I have serious doubts about our prospects of accomplishing the goals of sustainable development by only looking after the interests of a particular organization in all of our actions in parallel with the concept of ethical egoism. On the contrary, sustainable development strives to transform the “single-beneficiary”, consumption-based economic model into a “multi-beneficiary” model that stands to benefit all stakeholders including the nature and the society. In my opinion, this latter model offers an outcome that is a combination of the utilitarian ethics, which aims to provide multiple benefits as a result of a particular course of action in contrast to the one-sided nature of ethical egoism, and care ethics, which underpins the importance of interpersonal relationships based on care and benevolence in the decision. The key difference between these two theories is that, while utilitarianism adheres to generalized ethical principles, care ethics focuses on personal, rather than universal, definition of morality instead. As a result, utilitarianism does not place any emphasis on sentiments, as it bases itself on logic and reason. On the other hand, care ethics take into account interpersonal relationships and the emotions that form part of these relationships. I believe that, by embracing these two ethical approaches, we can get much closer to the core of the 17th Sustainable Development Goal, “Partnership for the Goals”.

Consumption vs Frugality + Derivation

How sustainable is a model that encourages continuous consumption and growth, increasing the material wealth of the enterprise at the expense of stakeholders such as nature and society while destroying the very own resources it relies upon in the process?

As a result of the explosive growth of production in the last 20-30 years, and the subsequent ability to obtain everything in a faster, less “costly” manner, we have begun to see it our right to always seek more. We encourage ourselves on this path, claiming “there is so much more where it came from” and “if I don’t get it, someone else will anyway”, trying to shun the responsibilities placed on our shoulders by reality. Could we remain so obsessively consumptive when we finally realize how sustainability ties us with what we consume?

The electricity we so extravagantly use, the water we carelessly waste, the food we leave on our plates, the paper towels we use by the handful, carbon emissions of the personal vehicles we prefer over public transport; these are all issues we generally ignore and/or externalize during our regular lives. Yet, these are all part of our domain of interaction. The problem is that we always focus on obtaining more while glossing over the core of the problem. Why is there an energy deficit? Why is there a water shortage? Why does the climate change? Why is biodiversity on the decline? Why is poverty and hunger on the rise? The answers to these questions lead us to two actions: The first is “frugality”, which we have so conveniently sidelined in the face of the scale and speed of our need to consume, and the second is “derivation”, a fundamental strategy in nature that we have just recently begun to realize. Personally, I believe that frugality is the first step towards sustainability, and the essence of frugality is the awareness that a great many things we see as abundant are only so due to an increasingly rapid exploitation of resources, which, unfortunately, include the Earth, the air, and ourselves. The derivation approach, on the other hand, calls for a harmonious existence with nature, where the end of every cycle generates value for all stakeholders, as in the example of compost.

Global vs Local

The term global corresponds to the definition “having achieved widespread acceptance at the worldwide level”. [1] The term global company refers to an enterprise that implements the same standards of management across all locations.

Most global companies drive down their costs by taking advantage of economies of scale brought about by their size and global presence, while on the other hand passing along some of their costs, termed external economic factors, to the society and the environment. In doing so, they harm the local, which is already at a substantial disadvantage against the global, by falsely presenting standardization as an indispensable benefit. Standardization at the global scale may be beneficial for enterprises in terms of reducing the effort and cost they need to shape and manage demand for a particular product or service by creating target audiences. Yet, are we aware of how we endanger our future if we harm the local in the course of going global?

I believe that an evaluation of these eight issues, which I interpret as errors of formatting that urge us towards continuity rather than sustainability, along with their opposites may serve as a valid guideline that shows the mindset we need for changing our habits. Enterprises have an important responsibility in the efforts to achieve the objectives set out in the Sustainable Development Goals. We are at a junction, and the path we take from here will determine if we will be able to proudly pass down the one world we share to future generations, as Noam Chomsky often remarks. It is our joint responsibility to build our own awareness and abandon our past mistakes, instead of waiting on others to act on our behalf… At this point, I would like to once again point out to a particular sustainable development goal, the 17th, which may be the most important: “Partnership for the Goals”, as there is but one way to achieve these objectives—by acting together.

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