While reflecting on some of the events that have transpired over the last decade, it may be no wonder why people have fueled the debate and salience of concepts related to sustainable development. Countless corporate scandals such as Enron and many others pointed out some of the questionable business practices in the modern economy. Also the sub-prime mortgage markets have gained large amounts of negative publicity for their systemic lack of integrity. Not only has this increased contempt with the status quo of the business world, but it has also translates into real implications that affect everyone's lives in one way or another. Many people have had their retirement fund devalued in the stock market or by austerity cuts. Others are can be affected by simply paying higher prices at the gas pump but the interconnectedness of the global economy leaves no life untouched.
This paper questions the role and trajectory of sustainable practices that emerge from the present circumstance. This paper finds that the overall trajectory of sustainable development considerations has been elevated in recent years and most recently has been accelerated even further. Not only is the concept sustainable development increasing in popularity but with the recent wave of social movements that are occurring globally, such as the Arab Spring and the Occupy Wall Street (OWS) movement (Mak, 2011), social consciousness about the roles of public institutions and private organizations in society has crossed a new threshold of salience in modern society.
Sustainable development carries various meanings for various individuals and schools of thought. For some the concept of sustainable development encompasses ecological considerations in dialogue about society and for others it is more focused on social issues and equality. Most models now incorporate both aspects into a more holistic approach to defining sustainable development. One model, the 3Ps, tries to encourage a balance between people, profits, and the planet (Tsai & Chou, 2007). Another model which is actually required in accounting from by regulatory agencies in some companies is the triple bottom line (Norman & MacDonald, 2004).
To be a leader in a sustainable company it requires the consideration of more than short-term profitability. A company who wishes to be successful over an extended duration must consider all the stakeholders which it comes in contact with and identify some mutually beneficial position. For example, a company cannot remain successful for long if they exploit their suppliers for short-term benefits. A factory will not have employees for very long if they do not meet their employees' minimal level of satisfaction. Furthermore the planet's ecosystem cannot continue to support pollution, the use of non-renewable resources, and the emission of greenhouse gasses. Thus a leader who wishes to take a long approach to sustainable development must consider all of these issues when making decisions.
Ethics and Corporate Social Responsibility
Organizations may wish to integrate ethics on a level that goes beyond doing simply what is required of them from a compliance perspective. This is also commonly known as corporate social responsibility (CSR) and is directly related to sustainable development. Maintaining ethical leadership may be instinctively believed by most to be a reasonable aspiration for organizations. However, it is somewhat less clear how corporate profitability is associated with ethical behavior. It is apparent that all of the corporate scandals generally can have devastating consequences to the organizations, but it is far from clear how the unnoticed or lesser offenses may impact a company's success. It is also debated that whether companies that do act ethically gain a competitive advantage for doing so.
CSR is described as a degree of the perception of how well a business meets the expectations of not only the shareholders but also all of the appropriate stakeholders and society in general. Employee perceptions of CSR have been shown to mediate the relationship between ethical codes and job satisfaction (Valentine & Fleischman, 2008). This study seems to indicate that the mere presence of an ethical code may have value to an organization in the sense that it builds employee satisfaction which is link to productivity. Thus any employer who holds employee satisfaction as a priority might consider not only creating an ethical code but also adopting an ethical training program.
CSR is not only studied from the perspective of the employer, but also the consumer's perspective through attitudes and buying patterns. Generally, most consumers are skeptical of CSR marketing messages unless it is a "good fit" (Jahdi & Acikdilli, 2009). A good fit would represent a marketing message that is deemed reliable and credible by the consumer. Thus it is interesting to consider that organizations that are perceived to be lacking in CSR practices might actually have a counterproductive experience with a CSR message. In this case, the message would be perceived as more of a public relations trick than conveying any meaningful dedication to social responsibility.
The overall environment for CSR may not be nearly as risky as trying to solely communicate CSR in a communication strategy. Another study found a positive relationship between corporate social performance and corporate financial performance although many other studies have found other results (Van Beurden & Gossling, 2008). However, this study found that of thirty one previous studies conducted, twenty three found a significant positive relationship, six found no significant relationship, and only two found a negative relationship. Although this certainly does not designate a causal relationship between CSP and CFP, it does seem to indicate that the perception of a company's social performance record does have some value. It may also be because that if companies are to be sustainable in the long run that they must prevent themselves from falling victim to negative publicity which has been detrimental to many companies.
Organizations can implement many various forms of a CSR initiative which can various intentions. For instance some organizations' will focus more on philanthropy and make generous donations to various causes. Others might look at CSR as a risk management strategy to avoid negative publicity or to simply maintain regulatory compliance. Companies have also integrated this message into their total brand strategy and use this as one path of value creation. For example renewable energy companies such as Vestas, who manufactures wind turbines, can gain a premium return in the market since the industry and their business model are both identified as sustainable business practices (Vestas, 2011).
Some CSR programs focus on social issues while other may target environmental issues. For example many companies' will focus on energy efficiency in production to avoid environmental degradation. Some also focus on product safety by using organic or "all natural" materials in production. Social issues that are a common objective for organizations may include providing generic medication to a third world country or providing microfinance loans to the local community. Other social issues that some corporations integrate into a CSR campaign are focused on employees; especially in third world nations. For example many textile producers have agreed that they will refrain from using sweatshop labor and treat their employees with more dignity.
Externalities are costs that are imposed upon individual people or societies that typically go unaccounted for. Such costs are a big part of sustainable development since these are exactly the problems that must be addressed. Some examples of types of negative externalities are readily available by various forms of pollution. Types of pollutants include such items as sight, sound, water, and air pollution. One example of water pollution can be easily demonstrated by the BP's deep sea well disaster in the Gulf of Mexico in 2010 which will have implications for the region indefinitely. Although BP was forced to pay significant costs to the residents it is unlikely the restitution is equal to the actual damage done.