The environment, stupid
James Carville, a political strategist who worked for 42nd US President Bill Clinton, came up with what has often been quoted as “It’s the economy stupid”. The slogan needs punctuation to achieve its full effect. The Clinton campaign for President of the United States in 1992 focused on an economic recession. It was effective. President Clinton ended an era of Republican Presidents that began with Ronald Reagan in 1981.
From a governance perspective, the 1990s was the decade of John Elkington’s “Cannibals with Forks: The Triple Bottom Line of 21st Century Business” that invited the investment community to consider not only financial but also environmental and social factors when considering the success of a business enterprise or investment.
The connection between that decade’s focus on triple bottom line and the current decade’s embracing of environmental, social and governance (ESG) standards and reporting is the evidence of a positive correlation between social responsibility and financial performance as per the 2006 work of Michael Barnett and Robert Salomon (Beyond Dichotomy: The Curvilinear Relationship between Social Responsibility and Financial Performance).
This positive correlation has empowered civil society, governments and multinational corporations to take heed of the impact that global business has on the planet and on all its inhabitants. We celebrate World Environment Day on 5 June each year to provide all these parties the opportunity to take stock of the global policies and agreements of cooperation that seek to ensure sustainable business practices in every participating country.
The environment, stupid.
A cynical view of the application of ESG to all global business is that those who benefitted the most from polluting the planet, in the name of economic progress, are applying a standard that they never had to contend with. Is human economic activity destroying the planet? No. It is not. It is destroying humanity. Planet Earth has survived several ice ages and dramatic climate change events occasioned by meteor strikes and apocalyptic climate events over billions of years. 300,000 years ago, humanity, as we understand it today, appeared. We have only had the capacity for language for 50,000 years.
Climate change activists glue themselves to the freeway or sabotage sporting events or hold school strikes. This isn’t for the sake of the Amazon rainforest in Brazil; it is because climate change is a threat to the survival of our species. It has always been a threat. A basic understanding of gardening will show you how delicate the balance is between water, soil nutrients and sunlight. Indigenous “gardens” seem to have a way of looking after themselves without the same intervention. Our planet can sustain life as we understand it in a beautiful harmony. In equilibrium. This equilibrium is being disturbed by human behaviour.
It therefore serves humanity to take heed of this behaviour and rectify it for the sake of sustaining humanity on this planet. We should all consider what tools we have at our disposal to ensure that this happens. The most obvious is to ensure that there is a common goal and common understanding of what behaviour is damaging and to work together through various governance networks to alleviate it. Transparency and improved reporting on environmental governance that aligns with COP21 or the Paris agreement, and the UN 2030 sustainable development goals are a great starting point.
Rather than seeing ESG as an exercise in minimum compliance, it is sensible from a sustainability and humanist perspective to embrace the enlarged definition of a successful firm to include these factors. Environmental governance is not only good business; it directly influences the sustainability of human endeavour on this planet. The environment, stupid.
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