Healthy Business, Healthy Planet?

The case against green companies is hard to prove

What is an environmentalist to do? Life used to be so simple. We knew who the bad guys were: large corporations like General Electric and Walmart that were leading the world toward inevitable collapse. The environmentalist’s job was to publicly shame them and to insist on governmental regulation for the public good. Simple.

Those were the good old days.

Today, things are not so easy. The black hats have been reinvented as white hats. Corporations that were formerly thought of as the baddest of the bad—companies such as Shell (which earned the wrath of activists for its activities in Nigeria), GE (which polluted the Hudson River with PCBs), Walmart (responsible for the growth of consumerism, car culture and the decline of small towns), Nike (accused of using child labour at its factories) and Nestlé (of the infant formula in Africa debacle)—have been reinvented as paragons of environmental virtue. It is like The Return of the Night of the Living Dead, with the zombies coming back as fresh-faced college football players and cheerleaders.

Into this confusing mess strides Eco-Business: A Big-Brand Takeover of Sustainability by Peter Dauvergne and Jane Lister. The bias of the book is apparent right from the beginning, from the title, in fact. It will be about unmasking a co-opting, a takeover, perhaps even a hijacking. And indeed, through much of the first chapter, “The Politics of Big-Brand Sustainability,” the authors promise to show the real motivations behind the paragons of the new era of eco-business: “As this book will reveal, much of what big brands are doing involves defining and using sustainability as a business tool in ways that are actually increasing risks and adding to an ever-mounting global crisis.” Ah, finally, someone who can see through the thin disguise of these corporate charlatans. Perhaps now we can go back to the simplicity of the good guys and the bad guys.

The problem is that, on the whole, the book goes on to do a very different thing from what it promises. The authors are fond of making statements to the effect that eco-business—sustainability as a core business practice—has a malevolent face that is often hidden. But for a book that is unearthing this shadow side of global business, much of it is given over to incredible facts that seem to suggest the very opposite thing: that many corporations are having remarkable success in reducing their own environmental footprints. The book is full of examples of corporations that have made real meaningful ecological commitments and seen them through: from Nestlé sourcing its coffee from sustainable suppliers to Walmart’s single-minded determination to reduce greenhouse gas emissions from its operations, to Unilever working with World Wildlife Fund to found the Marine Stewardship Council as an oversight body to validate sustainable fisheries and fishery practices. It is odd then to hear the authors return to their default position that these corporate actions hide more nefarious intentions that have the potential to set back the cause of sustainability. The authors often end their chapters on these dark notes, as they do in Chapter 5: “Walmart’s decision [to introduce healthy foods to its stores], like other eco-business efforts, could well do some good … Yet, although big brand eco-business as a governance lever for change offers some prospects, it also has significant limits and many worrisome consequences.”

The principle problem with the book, then, is that it does not provide enough evidence to support its own central thesis. The “worrisome consequences” are poorly documented compared to the many vivid examples of eco-business doing some good. And so the critique ends up being a hint, a suggestion, but never more than that.

The book’s principle case against eco-business seems to boil down to the fact that businesses are motivated primarily by money, not by environmental sustainability. When corporations are reducing energy costs, or water costs, or greenhouse gas emissions, they are really motivated to squeeze costs out of their supply chain, get more control over their suppliers and increase profitability. When they support sustainable agriculture, what they really want to do is get control of their supply chain and ensure they have sufficient quantity and quality of products to sell. And all the while they are doing this to ingratiate themselves to consumers and sell them more stuff.

A secondary critique is that governments and non-governmental organizations are giving over too much power to eco-businesses to set the environmental agenda, watering down the goals of sustainable development in the process and providing insufficient oversight over the corporate behemoths.

While these are reasonable critiques, up to a point, they are really more critiques of business in general than they are critiques of eco-business in particular. If one accepts that businesses are established for the purpose of making profits for their shareholders, and that in doing so they will try to market their brands to consumers, influence regulators and mute their critics—if we accept this as a general truth of business, as I think it is—then the specific claims against eco-business seem muted. In the end Dauvergne and Lister’s central point, it seems to me, can be summarized as such: even when eco-businesses talk about environmentalism, they are still in the end primarily motivated by the goal of making money. While this is true, I am not convinced it is really salient. To me a more valid critique of eco-businesses would be to show how they are no better than businesses that do not commit to any ecological principles. On this more important comparison, the authors say surprisingly little.

The question is not whether eco-business can save the world. The more germane question is whether eco-business is on the whole a positive or a negative trend. And on this ground, the authors’ own examples generally promote the view that eco-business should be embraced. And Dauvergne and Lister provide very few examples of how an environmental initiative by a corporation has actually resulted in a negative outcome. They imply negative outcomes from eco-business by citing general examples: the world’s use of energy is growing dramatically; we are consuming more and more products, leading to more waste. But it is not clear to me, and not demonstrated in this book, why these general truths should be laid at the feet of eco-business. In fact, most of the specific evidence in the book itself seems to lead to the opposite conclusion to the one Dauvergne and Lister have reached, namely that we should encourage more businesses to move in the direction of GE, Walmart and Unilever.

Moreover, business is only one part of the larger solution to the world’s ecological challenges, and can only be effective within a broader ecosystem that includes strong government regulation and an effective civil society. The book seems to argue—again without much evidence in my view—that the strength of governments to regulate environmental problems is being eroded by the power of large global corporations. I do not see that. If anything, it strikes me that eco-business makes it dramatically easier for governments to bring in environmental legislation, because legislators know they will not face a monolithic opposition by business. Many businesses are likely to line up in support of sensible environmental legislation, particularly those corporations that have staked their public reputations and “brands” on the notion of sustainability. It becomes very difficult for those companies that have publicly committed to a sustainability agenda to oppose positive environmental legislation.

A further argument the authors make—that NGOs have been co-opted by large global corporations—is also not well substantiated. In fact, the book lists a number of instances where NGOs have worked effectively with corporations and criticized them, too. One example is Greenpeace’s complicated relationship with Nestlé. Greenpeace has been an active and loud critic of Nestlé, while partnering with it in developing greener refrigerants and praising it for its work in minimizing tropical deforestation. The book quotes the chief executive officer of Greenpeace speaking to this nuanced relationship: “No NGO remains a permanent friend or has a fixed position with regard to a company like Nestlé.” In fact, one could argue that the commitment of large corporations to environmental goals gives NGOs more power over large businesses. As large companies like Nestlé, Unilever and Walmart have committed to environmental goals, they rely more than ever on the third-party support and approval of environmental groups. Without that support, the companies will never reap the full rewards of their large investments into environmental positioning. And the companies remain vulnerable to attacks by environmental groups if they fail to live up to the standards they have set for themselves. So while there is a potential risk that partnerships between corporations and NGOs could compromise NGOs and make it harder for them to attack or criticize their partners, in my view it is more likely that the corporations will go out of their way to ensure that they are not open to criticism for failing to live up to the objectives they have set for themselves.

This is not to say that all corporations that embrace environmental goals see them through. The book notes several examples where corporations did not achieve the goals they set for themselves. For example, by 2011 IKEA was still only auditing 16 percent of its global wood suppliers, and in 2009 Dell came under criticism for failing to meet its own commitment to phase out certain dangerous plastic components from its computer products. But the question the authors avoid is whether on balance we would prefer to have businesses that are committed to ecological goals rather than businesses that are not, even if they do not always succeed in achieving their self-imposed targets. The book’s own evidence suggests we would.

A primary point of this book may be that we should remain vigilant and hold corporations to high standards. This is a fair argument, and a useful one to be sure. But this is true of all corporations, eco-business or not. In the end, all businesses must rely on a basic social licence to operate, and society has a strong interest in ensuring that their activities are on the whole beneficial

Surprisingly, the authors only once mention the author/thinker who, to my mind, has done the most to understand the complicated link between business and environment. Here I am referring to Michael Porter, a business professor from Harvard University. It was the Porter hypothesis, now more than 20 years old, that turned the old relationship between business and sustainability on its head. The Porter hypothesis advanced the counterintuitive premise that environmental regulation can actually increase the profitability of companies through something he called the innovation effect. Essentially, Porter felt that environmental legislation, when it was properly framed, pushed companies to find efficiencies in order to reduce their footprint; often this led to unexpected operational improvements—and sometimes to entirely new business models and ideas—that actually increased the firm’s profitability. This premise of course upset the previous dictum that all environmental regulation comes at the expense of economic growth. By turning this axiom on its head, Porter showed a new way for business and government to work together for their mutual benefit, and for the benefit of society and the world. It is amazing that even two decades later Porter’s remarkable hypothesis remains largely unknown to the general public. It is unfortunate too, as a broader awareness of his ideas might unlock new opportunities for government and industry to work together to increase economic activity while reducing environmental damage.

The authors of Eco-Business have shonea light on the interesting relationship between business and the environment, and this is a worthy objective. Those who are interested in the subject will likely enjoy the book, for it does provide numerous interesting examples of the activities of large eco-businesses that have a tremendous impact on the world we live in. But the book falls short of its stated objective to clearly identify the risks of eco–business. On two points Dauvergne and Lister are absolutely right: our ecological problems are continuing and in fact growing, and business itself will not be able to solve these problems on its own. Indeed, we should continue to strengthen the government and civil society oversight that is necessary to ensure that our natural capital is protected. At the same time, though, as we hold businesses to high standards in their stewardship of the environment, we should also be ready to support them when they legitimately try to do the right thing, even if it is also profitable for them to do so.