Sustainable Capitalism

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"Before the crisis and since, we and others have called for a more responsible form of capitalism, what we call sustainable capitalism: a framework that seeks to maximize long-term economic value by reforming markets to address real needs while integrating environmental, social and governance (ESG) metrics throughout the decision-making process.

Such sustainable capitalism applies to the entire investment value chain—from entrepreneurial ventures to large public companies, seed-capital providers to institutional investors, employees to CEOs, activists to policy makers. It transcends borders, industries, asset classes and stakeholders.

Those who advocate sustainable capitalism are often challenged to spell out why sustainability adds value. Yet the question that should be asked instead is: "Why does an absence of sustainability not damage companies, investors and society at large?" From BP to Lehman Brothers, there is a long list of examples proving that it does.

Moreover, companies and investors that integrate sustainability into their business practices are finding that it enhances profitability over the longer term. Experience and research show that embracing sustainable capitalism yields four kinds of important benefits for companies:

• Developing sustainable products and services can increase a company's profits, enhance its brand, and improve its competitive positioning, as the market increasingly rewards this behavior.

• Sustainable capitalism can also help companies save money by reducing waste and increasing energy efficiency in the supply chain, and by improving human-capital practices so that retention rates rise and the costs of training new employees decline.

• Third, focusing on ESG metrics allows companies to achieve higher compliance standards and better manage risk since they have a more holistic understanding of the material issues affecting their business.

• Researchers (including Rob Bauer and Daniel Hann of Maastricht University, and Beiting Cheng, Ioannis Ioannou and George Serafeim of Harvard) have found that sustainable businesses realize financial benefits such as lower cost of debt and lower capital constraints.

Sustainable capitalism is also important for investors. Mr. Serafeim and his colleague Robert G. Eccles have shown that sustainable companies outperform their unsustainable peers in the long term. Therefore, investors who identify companies that embed sustainability into their strategies can earn substantial returns, while experiencing low volatility." (


Sustainable Capitalism in a contradition in terms

From an interview of Chris Williams, by IV Online magazine : IV449 - June 2012 :

"What are your views on what is called sustainable capitalism?

"As Paul Hawken, who is actually an advocate of this, said, it’s a contradiction in terms. Actually, he said it about green capitalism, sorry. You cannot have a sustainable capitalism, because every year every capitalist entity has to grow larger for reasons that I mentioned earlier. There is this constant dynamic of growth that if they’re not growing, then they die. We see the economy today. What’s the conversation about? We need to go back to growth. Every nation on the planet needs to have 2 percent or 3 percent growth. Otherwise what happens? We fall into a tailspin of unemployment, layoffs, cuts to social spending—obviously not the military budget—but everything else. So without that growth the system starts falling apart. Capitalism is literally a system that is based on the maxim “grow or die.” So the idea that in any way that could be sustainable or that they could somehow care about the resources that they put in or the waste that goes out is an impossibility, I would argue. They don’t even see resources as anything but a free lunch: they take something free from the environment and then they put it back in as waste. They don’t pay for that stuff.

I infer from that, then, that you are perhaps skeptical of tinkering around the edges, cosmetic changes such as recycling.

You could put me in the skeptics camp. I’m not against recycling, but I think it’s important to recognize that it’s the first thing that we’re told to do. And there’s a reason for that. Because it takes it away from the product itself and says the product is okay, it’s fine. The problem is with you as a consumer and an individual. You are the problem because you don’t put it in the right receptacle. This evades the whole question of why was that thing made in the first place and why was it made of plastic. There’s nothing wrong with plastic. For example, people often talk about plastic water bottles, which is a $100 billion-a-year industry. Plastic is an amazing material. It lasts virtually forever. So why would you make disposable things out of plastic? It should be illegal. Really, it should be illegal.

Yes but these are panaceas that are being served up. If you do these things, if you drive the right car, things will be hunky-dory.

Absolutely. I think the idea is very much ideological—that we feel good about recycling, that we take the spotlight away from the production and we focus on consumption, and if we do that, then everything will be okay. However, if you look at waste, only 2.5 percent of all waste is domestic, that is, what all of us produce. So even if we could magically get rid of all of that, that would still leave the 97.5 percent of industrial and agricultural waste. It would be irrelevant, in other words. Apart from the fact that plastic cannot be really effectively recycled in the first place, which is why even if you put it in the recycle bin, 95 percent of it never is. So that would be the last thing that you should do, not the first thing. The first thing should be to look at the production process, and then match things to their function. Then we can go from there and talk about, at the end, if we really can’t do anything, if we can’t reuse it again, or maybe we should never have made it in the first place—that’s a radical idea— we should then think about how could we best recycle it.

You can expand that to any kind of argument about this tinkering around the edges and the focus on that. Every time capitalism messes something up, it doesn’t try and correct that problem, it just tries to sell you something else. So the food system has become so toxic now that they invented another subset of the food system called organic food. What was wrong with the first stuff ? What did you do to that to make it so bad that we have to go and pay more money, if we can afford it, to get organic food? You can replicate that on any number of levels. The food crises, the various food scandals. People may remember swine flu a couple of years ago, where they’ve concentrated the animals in such horrendous situations, totally unhealthy, that they’re diseased, they’re incubators for disease. So during the outbreak, what did they do? Did they think, “You know what, we really need to regulate these corporations so they treat these animals more humanely?” No. They just said, “No, we’ll sell them sanitary masks, and then that will be fine.” So they just are constantly figuring out new ways. So if we accept that paradigm, that there’s something else that we should buy, then we’ve already fallen into their trap.

During the Bush period, it was easy to kind of explain what was going on. These were people with close ties to the oil and gas industry. Yet, as you point out, Obama has followed basically the same template and has expanded and increased drilling permits, and has opened up the Arctic.

It was very easy to blame George W. Bush. In some ways Obama has got away with more than Bush could have got away with in his wildest dreams. Certainly on civil liberties, I think you could say that Obama has been worse than George W. Bush. And I think there’s an argument to be made on ecological issues that the same is true. If you think about the worst environmental disaster in US history, in 2010, the Gulf oil spill. Obama had supermajorities in both houses of Congress and a massive amount of public support at that time. He could have done anything, but he didn’t. In fact, he left the clean-up to the criminal who carried it out in the first place, BP. So this is clearly not about changing Democrats for Republicans.

I also think it’s important to remember, all of the best environmental laws that we’ve got on the books—the Clean Air Act, the Clean Water Act, etc.—came about under the presidency of a right-wing Republican egomaniac called Richard Nixon, who had already caused colossal environmental devastation, not to mention mass murder, in Southeast Asia. Why did he decide that now was the time to protect the water and the air? Because there was a massive movement on the streets that demanded it. So that’s really the answer. I don’t think it’s about the politicians; it’s about what we do on the streets and how organized we get." (

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