Beyond the Bottom Line

Integrating Sustainability into Business and Management Practice

Milenko Gudic, Tay Keong Tan, Patricia M. Flynn

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000160925
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Beyond the Bottom Line: Integrating the UN Global Compact into Management Practice is the first book to look at how the Ten UN Global Compact Principles and the sustainability agenda can be incorporated into business practice. The UN Global Compact is the largest corporate sustainability initiative and, with over 12, 000 participating organizations, provides a major influence on global business sustainability practices. Its mission is to guide organizations in how to (1) do business responsibly by aligning their strategies and operations with Ten Principles on human rights, labour, environment and anti-corruption; and (2) take strategic actions to advance broader societal goals, such as the UN Sustainable Development Goals, with an emphasis on collaboration and innovation.

This new book addresses head-on some of the most persistent managerial challenges faced by businesses and organizations today. To what extent are businesses able to practice responsible management with regard to the Ten Principles of the UN Global Compact? How can managers of organizations comprehensively and pragmatically address the risks and responsibilities concerning these complex and changing issues in their policies and practice? It also offers a platform for academics to confront some of the most intriguing intellectual challenges on this topic.

Section 1
Conceptual and Practical Rationales

1

Prosocially Centered Leadership Creates Global Stewards

Timothy Ewest

Houston Baptist University, USA

The increasing concerns over social, environmental, and economic problems are most often met with limited action by global communities and national businesses. Consumption of the planet’s resources and increasing social problems continue to outpace progress against them (Monfreda et al., 2004; International Forum for Human Development, 2006). National and global communities are generally slow in taking responsibility for the world’s social, environmental, and economic problems, partly due to their significant investment in existing global trade systems. And, with many or most of these systems based in whole or in part on profit-focused free-market principles, many people see free markets as the initiating cause of social and environmental problems worldwide. The present state of ambivalence by numerous organizations and communities around the globe has led many to ask, “Who will take responsibility for a world that is facing social, environmental and economic issues, which lead to community and ecosystem breakdown?” (Palazzo and Scherer, 2008, p. 734).

Yet, economic growth, driven and framed by free-market principles, has been vital to increasing the living standards of millions of individuals around the world. For example, the employment of free-market principles in China, absent any aid, brought 280 million people out of poverty (Appleton et al., 2010), although this growth has simultaneously resulted in severe environmental and societal degradation (Tilt, 2013; Xu, 2014). Alternatively, well-designed programs such as The Millennium Development Goals, which endeavored to use charitable contributions from developed countries to help support growth in developing and underdeveloped countries, has been considered by many to be still emerging (Gaiha, 2003). Do these two orientations need to stand in opposition to each other? Is it possible for organizations, and those that lead them to be profitable and simultaneously help improve or at a minimum not create or worsen social and environmental issues?

This chapter considers the importance of leadership as a central and vital resource to address global social, environmental, and economic problems, and underscores the importance of leadership to any conversation concerning how organizations are to successfully practice responsible global management (Lawrence and Beamish, 2012). Yet, with so many important leadership theories, it is difficult to determine which theory is best suited to guide and develop global leaders who are able to balance organizational financial sustainability (profits) with environmental and social concerns. One possible answer is to begin with a notable commonality among most leadership theories, that being they inculcate the importance of ethical behavior (Johnson, 2011; Kanungo, 2001; Trevino et al., 2003).

Ethical behavior, or others-directed behavior, however, is motivated by a specific set of human values, and these are the motivation behind all prosocial behavior (Rokeach, 1973; Schwartz, 1994). This chapter explores how prosocial leadership can be used to strengthen and reframe our understanding of leadership. The chapter argues that prosocial leaders are best suited to embrace and fulfill the UNGC principles and that prosocial leadership provides a perspective that helps leaders to balance profits and sustainability, and ultimately act as global stewards who take responsibility for the world’s economic and social issues. The chapter concludes with possible approaches and alternative strategies for developing prosocial leadership, both within and outside the classroom.

The Interconnectedness of Global Communities

Organizations and the individuals that lead them arguably have little incentive to abandon profitable methodologies that result in wealth creation and directly contribute to raising society’s standard of living. The result is that there is still considerable weight given to the belief that organizations, specifically businesses, have as their primary responsibility profit maximization (Friedman, 1970). This belief is problematic for societies, economies, and the environment since it does not consider the systemic connections between society, the environment, and self-interested organizations’ negative impacts from business operations — that is, negative externalities, which are byproducts, or outputs an organization has on its surrounding environment, such as pollution, gentrification, or worker displacement. The reality of environmental degradation was predicted by Hardin (1968) as the coming tragedy facing the natural environment if unfettered access to natural resources continued. Specifically, he warns of the elimination or degradation of some commonly accessible natural resources if there is a continuance of unlimited consumption of these natural resources, wherein everyone has free access to take as much as they need, and give little thought to how the environment will be sustained (Berry, 2015). For example, the global whaling industry, which sought to meet the demand for whale oil beginning in the 17th century and concluding in the early 20th century, decimated the Baleen, Bowhead, and Right whale populations (Daniel, 2010). One proposed solution to this conflict of interests is to institute economic systems and national or international polices that mandate limited resource use, with what has become recognized as a Global Commons (Feeny et al., 1990). Anecdotally, the issues surrounding the Commons represent the nature of the modern problem: self-interest and independence verses an interconnected global community.

The reality is that the interconnectedness of communities worldwide has created a Global Commons (Nordhaus, 1994), and correspondingly the challenge has shifted from fostering a locally engaged citizenship to one that is global. It is clear that in today’s increasingly pluralistic and globalized world, priorities and strategies must change. Barber (2002) calls for a redefinition of “citizen” to indicate: “The person who acknowledges and recognizes his or her interdependence in a neighborhood, a town, a state, in a nation, and today, in the world” (p. 27). More directly to the point of this chapter, Tichy et al. (1997) apply the idea to corporations, asking these organizations to consider their global citizenship, which “recognizes businesses as key players in building active responsive communities” (p. 36). Organizations that are good global citizens, like Starbucks, have initiatives that recognize their interdependence with their local and national communities through community-improvement projects as well as their international interdependence through specific initiatives to ensure their international suppliers are paid fairly and are raising coffee crops sustainability (Sanford, 2011).

Recognizing the active roles and impacts corporations play in society and communities makes good business sense. In many instances, it is in the best interest of organizations to watch, plan for, or reverse ongoing resource degradation. For example, degradation of fish stocks has led to the collapse of the fishing industry in portions of the world and resulted in regulation of numerous fisheries. The degradation of Alaskan fish stocks, for instance, was met with regulation to maintain fish stocks and thus preserve the positive economic impact of fisheries (Layman et al., 1996). The types of issues and the corresponding consequences for organizations depend upon the market in which organizations compete, as well as the environmental resources upon which they depend. For example, a car manufacturer that ignores or averts greenhouse gas emissions standards may be met with new governmental regulations (e.g., Volkswagen). Or a cosmetic company that uses phthalates in production may run the risk of lawsuits or brand image loss (e.g., L’Oreal). But, for all organizations, it should be apparent that if managers ignore an organization’s connection to the environment and society, it may ultimately jeopardize financially sustainable operations and/or threaten increased profits (Laszlo, 2008; Werther Jr. and Chandler, 2010).

But citizenship, even if it abides by the aforementioned definition, does not ensure these “aware or knowledgeable citizens” will take responsibility for global issues where there is no apparent connection between the organization and the wider environment. What if connections between the organization and the aforementioned global environmental and social issues are not apparent, and resolution of these issues will involve personal and/or organizational cost? Do the individuals who lead these organizations have personal core values that prioritize concern for social and environmental global issues enough that they will effectively guide their companies in addressing these issues?

For example, the connection between local regulatory practices in Detroit and the Great Garbage Patch in the Pacific Ocean may not be readily apparent. Yet, local policies may be partially responsible for allowing water companies to take unlimited amounts of water from public sources, as in the case of Nestle Co. in Michigan. Nestle is allowed, via local policy, to take unlimited amounts of public water, generating sales of plastic water bottles, some of which end up in the Pacific Garbage Patch (Webb, 2009). In this case, the water bottling company’s management and local municipal policies may ignore the water bottling company’s delayed impact on, and interdependence with, the ocean. And, if the local plant manager or municipal administrator acted to address this issue, it could be at a professional cost and possibly local community financial expense. The ideas surrounding citizenship are important for initially conceptualizing the responsibilities leaders and their organizations have within communities where there is no apparent direct connection with the larger environment and the broader society.

Stewardship

The concept stewardship was first used in popular business literature by Peter Block in his book Stewardship (1993) to define taking responsibility for oneself and for governance of institutions. Similarly, stewardship has been developed as an academic theory (Davis et al., 1997; Haskins et al. 1998; Hernandez, 2008; 2012) stressing both corporate social responsibility and the importance of individual leadership. Hernandez (2008), whose work is seminal in the academic field of stewardship theory, states:

Stewardship is defined here as the attitudes and behaviors that place the long-term best interests of a group ahead of personal goals that serve an individual’s self-interests. It exists to the extent that organizational actors take responsibility for the effects of organizational action on stakeholder welfare. The issue of balance is a keypart of taking personal responsibility (...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction Beyond the Bottom Line: Integrating Sustainability into Business Practices—Milenko Gudić, Tay Keong Tan, Patricia M. Flynn
• Section 1: Conceptual and Practical Rationales
• Section 2: Organizational Challenges and Strategies
• Section 3: Country-Specific Considerations
• Section 4: Accelerating the Pace of Change
• Concluding Remarks and Looking Ahead
• About the Editors