Toward Sustainable organizations for the 21st Century

Essay by vvasimm December 2010

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Toward Sustainable organizations for the 21st Century

The pursuit of sustainable development and the requirement to make our societies, economies, and systems of consumption and production more environmentally, socially, and economically sustainable will be the dominant challenge for management throughout the 21st century. Concern about the social and environmental impacts of business activity can be traced back throughout history. The use of regulation to limit the social and environmental impacts of business and to punish transgressors can be traced back more than 3,000 years to ancient Mesopotamia. More recently, a key business theme during the 20th century was the growing expectation that businesses should go beyond regulatory compliance in conducting their affairs to demonstrate corporate social responsibility.

During the 20th century, economic expansion was underpinned by two key elements. Philosophically, it was guided by a mind-set strongly rooted in neoclassical economics, which

tended to assume that the physical resources of the planet were unlimited and would not constrain growth;

did not recognize that there may be limits to the planet's ability to absorb waste and pollution;

equated an expansion in economic activity, usually measured as the total quantity of goods and services consumed in terms of gross domestic product (GDP), with concepts such as progress and development; and

treated many social and environmental costs as externalities, which meant that the costs of repairing environmental or social damage associated with producing or consuming particular products were not reflected in the cost structures of producers or the prices that consumers ultimately paid.

In theory, such externalities should be covered through the taxes raised from consumers and producers (among others) by governments. In practice, however, the voting preferences of consumers and the lobbying power of businesses have usually deterred governments from raising sufficient taxes to fully cover the unmet costs of economic...