Corporation: an ingenious device for obtaining individual profit without individual responsibility.
Ambrose Bierce penned this definition sometime between 1881, when he began a weekly newspaper column, and 1906, when a version was published in The Devil’s Dictionary. This period was also the high tide of the Robber Baron era in the US, when the words “corporate” and “responsibility” seemed barely compatible. For example, John D. Rockefeller’s Standard Oil empire controlled around 90% of the oil market until it was disbanded for breaching anti-trust legislation in 1911. Businesses exploited their legal freedoms to keep wages low and profits high. Safety was not a priority and children were put to work in the mines, mills, and factories. The first UK Factories Act protecting children was passed in 1833, but several riveters and their child assistants were said to have been accidentally sealed into the double hull of Brunel’s Great Eastern steamer, launched in 1859.
Attitudes changed, partly through legislation and partly because of the paternalism of tycoons who lived their Christian (often Quaker) values — Cadbury, Rowntree, and Lever among them. These became companies that decided it was good business as well as good morals to sell trustworthy products — an early example of the famous “win–win” where business benefits by doing the right thing. William Hesketh Lever, who built a fortune selling affordable soap, provided houses and leisure facilities for his workers near Liverpool in the UK. His Port Sunlight Village, founded in 1888, became synonymous with responsible business values.
Product safety was seen as the responsibility of the purchaser and occupational safety the responsibility of the worker. But gradually the public became outraged at finding sawdust and slaughterhouse workers’ fingers in their ground beef, and governments legislated. The first Sale of Goods Act protecting consumers in the UK was passed in 1893. In the US, the Pure Food and Drug Act began to protect consumers from adulterated food in 1906.
Trade unions also gained legal status towards the end of the 19th century and tougher labour laws reined in employers’ freedoms. The first environmental legislation also appeared during this period — the UK Alkali Act was passed in 1863 and Yellowstone became the first US national park in 1872. But the environment remained exposed to exploitation by ever-expanding economies hungry for natural resources.
During the first half of the 20th century the emphasis was on tightening labour laws and consumer protection. Government action was the priority, rather than corporate activity. It was in the 1960s that US economist Milton Friedman developed his famous (and controversial) concept that: “the business of business is business”.
When the environmental movement took off in the 1960s, corporations were not the first target. But pressure groups began to change their aim when it became obvious that legislation was not the full answer. Companies also became an easy target when they were involved in chemical disasters such as Seveso in Italy, or when their discharges caused US rivers to catch fire.
With labour issues covered by trade unions and legislation, consumer issues became more prominent with the rise of activists such as Ralph Nader in the US. In the UK, social issues also rocketed to prominence in the early 1980s after riots highlighted the threat to business from social deprivation and a lack of wealth distribution. Business in the Community was formed in 1982 to harness the tradition of Port Sunlight-style paternalistic concern towards mending Britain’s broken cities. In the US, however, the environment remained the most significant corporate sustainability issue, fuelled partly by the growth of intergovernmental activity.
The first intergovernmental gathering to tackle the issue was the 1972 Conference on the Human Environment in Stockholm. In 1983, the UN put together a Commission to report on why the developing world was not developing and the environment was not being protected. This World Commission on Environment and Development (also called the Brundtland Commission after its chair, the Norwegian then Prime Minister Gro Harlem Brundtland), reported in 1987. It championed the concept of sustainable development, introducing the now standard definition: “progress that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
A year later, the World Meteorological Organization and the UN Environment Programme (UNEP) created the Intergovernmental Panel on Climate Change (IPCC) to assess the science related to climate change. Since then IPCC has issued six assessments based on the work of author scientists around the globe.
Few observers realised that this idea of meeting the needs of the present — a present in which billions of people lack basic necessities — made sustainable development a radical concept. Many politicians and business leaders in Europe, Canada, and parts of Asia and Latin America became excited about this neat way to join environment and development concerns: economic growth in ways that do not rob future (bigger) generations of resources such as fresh water, topsoil, clean air, fish, and trees.
In the political vanguard were unlikely environmentalists Margaret Thatcher and George Bush senior. Better known for “small government” doctrine, both leaders made significant sustainability interventions. In her 1988 speech to the Conservative Party annual conference, Thatcher declared: “It’s we Conservatives who are not merely friends of the Earth — we are its guardians and trustees for generations to come… No generation has a freehold on this earth. All we have is a life tenancy — with a full repairing lease”. Echoing Thatcher in 1990, George Bush told the IPCC: “We know that the future of the Earth must not be compromised. We bear a sacred trust in our tenancy here and a covenant with those most precious to us — our children and theirs”. While few environmentalists celebrated either politician’s track record in office, the lyrics of Dylan echoed, the times they were a-changin’.
Further evidence of change came with the UN Conference on Environment and Development (the Rio “Earth Summit”) in 1992. The Earth Summit spawned the Conference of Parties (COP) and the launch of the UN Framework Convention on Climate Change.
Business began to engage seriously with sustainability post Rio. The conference was midwife to the Business Council for Sustainable Development, which subsequently married the environmental group from the International Chamber of Commerce to form the World Business Council for Sustainable Development (WBCSD). Also in 1992, Business for Social Responsibility (BSR) formed in the US to help companies be better citizens. By this time, Business in the Community in the UK had already established Business in the Environment, in 1989.
The 1990s were the decade of globalisation, the internet, and the rise of ethical consumerism, including socially responsible investment (SRI). Television began to broadcast gory details of what companies were doing in African river deltas and Asian sweatshops. Consumers began to realise they could make a difference, encouraged by ethical brands like Ben & Jerry’s and The Body Shop.
The three legs of sustainability — environmental, social, and economic — came together in the anti-globalisation movement. Riots in Seattle in 1999 formed around the World Trade Organization (WTO). But the main targets were the multinationals that were allegedly destroying the environment, exploiting workers, and causing economic havoc in developing countries.
Companies, under increasing pressure from consumers, investors, and others to disclose how their practices impacted the environment and society, began publishing sustainability reports. While helpful, this created a dilemma. How were stakeholders to evaluate and compare company practices, impacts, and risks? In July 2000, the UN again stepped in, launching the UN Global Compact (UNGC), a set of nine (now ten) guiding principles related to human rights, labour, the environment, and anti-corruption. The goal was to work with company leaders to get them to adopt sustainable and socially responsible policies, and to report on implementation.
A UNGC report arguing that environmental, social, and governance considerations should be factored into companies’ financial decisions first used the acronym ESG in 2004. Although it would be another decade before the term would become common boardroom-speak, it eventually gave investors and companies a way to split the complexities of sustainability into three manageable pillars.
By the end of the decade, companies could no longer opt out of corporate sustainability (CS). In 2010, nearly a billion people were on Facebook and Twitter and other social media — with the rise of these platforms, news of corporate disasters travelled faster, and backlash became more immediate. When three million barrels of oil seeped into the Gulf of Mexico following the BP oil rig explosion in 2010, over 700,000 people joined a “Boycott BP” Facebook group. Three years later, the Rana Plaza garment factory collapsed in Bangladesh, killing over one thousand workers. Consumers in more than 100 countries took to social media using #whomademyclothes to demand answers from brands. The anniversary of the collapse became Fashion Revolution Day — a signal to companies that the industry was indeed in need of a revolution.
Consumers and investors alike were holding companies to higher sustainability standards. Failure to meet their expectations carried quick penalties. When news broke in 2015 that Volkswagen was lying about its vehicles’ emissions, tens of thousands of tweets about the scandal flooded Twitter within a week. Within months, the company’s share price had fallen by nearly half.
Pressure on politicians increased. In September 2014, hundreds of thousands of demonstrators joined the People’s Climate March through New York City — the largest climate change march in history, with similar events in 156 countries. Governments took note. In 2015, 196 countries signed the Paris Agreement, a UN climate treaty legally committing its signatories to limit global warming to well below two degrees Celsius. Within two years, the Science-Based Target initiative (SBTi) and the Task Force on Climate-related Financial Disclosures (TCFD) provided the frameworks for industry to align with the Paris goals.
In 2018, 15-year-old Greta Thunberg skipped class to sit outside the Swedish parliament alone, holding a sign that said: “SCHOOL STRIKE FOR CLIMATE”. She returned every week, joined by more friends, teachers, and parents. Within a year, Greta had mobilised over four million people — many young — to march in climate protests in over 90 countries. By 2019, she’d become a regular invitee to UN climate talks. Leaders were listening.
Social issues rose up the agenda. In 2017, the Me Too movement was catalysed by reports of sexual abuse by film producer Harvey Weinstein. Millions took to the streets in the global #MeToo march to say “enough” to sexual harassment and misogyny. Then in 2020, a Minneapolis policeman killed African American George Floyd during an arrest — captured live on video by a bystander. Over 15 million Americans and others around the world marched in support of the Black Lives Matter (BLM) movement. Together, #MeToo and BLM sparked a global conversation on sexism and racism in corporations that complacently thought they were free from prejudice. Ever since, diversity and inclusion have been high on the corporate agenda.
In 2020, COVID-19 forced governments and corporations to look inward to protect their populations and employees from the virus and its economic impact. After fighting the pandemic, governments started battling each other over clean tech leadership using carrots and sticks.
In the US, Joe Biden’s Inflation Reduction Act offered a gargantuan green carrot with $369 billion of funding to attract energy security and climate change investment — targeting a 40% reduction in emissions by 2030. The EU’s Green Deal — a roadmap for a climate neutral Europe by 2050 — includes a raft of CS regulatory sticks, such as the 2023 Directive on Green Claims and the extensive Corporate Sustainability Reporting Directive (CSRD). Fearing a debilitating surge of green investment migration to the US, the EU quickly offered €250 billion of financial incentives, including tax breaks for investment in net zero technologies within the EU.
Sustainability’s brief history has taught us that interest among governments and corporations comes in waves, driven by science, events, and public opinion. What then are the prospects for CS as we head for 2030 and beyond?
Despite mixed signals from politicians, the underlying forces of change make us optimistic. Businesses have never been more aware of sustainability issues and most are committed to change — for good business reasons. Investors have decided that CS impacts the future value of their targets and are using their influence accordingly. Employees actively seek to work for companies with strong social and environmental principles. And in many areas, innovative technologies are beginning to solve long-standing sustainability problems.
We remain — as we have for over 25 years — fully committed to support our clients in channelling the forces of change to make a better, sustainable future for all.
