Environmental Sustainability in Business: a Brief History
Sustainable development is, as per the official definition of the WCED, "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". This definition dates 1987, and at that point in time, a new awareness regarding environmental sustainability had been on a steep rise since the early 70s. But can development be sustainable? Are not these two words sort of opposites?
Let's take a step back. Define::sustainability — the ability to exist constantly. Nothing new or eye-opening even for early human beings, who in some shape or form applied the idea of making sure to preserve and not over-exploit basic resources for the future.
In fact, the need for awareness and cautiousness around environmental sustainability and sustainable economic development begins to manifest, even if under the radar, as Industrial Revolutions unfold. Great leaps of economic and social development for the society at large, detrimental impacts on the environment, especially on account of the excessive and uncontrolled exploitation of natural resources that begins to take place during the first (late 18th century) and second (late 19th century) Industrial Revolutions.
The higher state of awareness on environmental, economic, and social sustainability traces back to the early 1970s, when a first significant theory on the impact of intensive economic activities on the environment is published: it's the IPAT framework. This is a formula according to which the “impact” (I) of any group or nations on the environment is given by the interaction of its population size (P), per capita affluence (A —average natural resources consumption per person), and technology involved in supporting each unit of consumption (T).
It is one of the first times in which the environmental impact of economic and human activities is acknowledged: the great inventions and technological progress taken place during the previous years, as pretty much anything in life, do have a trade-off: if you exploit natural resources to the maximum extent possible without caring; if you release any production process byproduct into the environment, you will likely maximize profits and economic well-being, but you will, just as likely, consume the Earth to its limits, which may have tangible consequences at some point in the future.
Until this point in time (the 1970s), businesses and the public opinion, generally speaking, were likely not conscious of the existence of such a ripple effect of economic activities on the environment. From then on, however, there is a sudden change in plans; a conscious awakening towards a human issue that had been neglected for far too long, and that was starting to concretely manifest, at that time, with the energy crises of the 70s.
Two Milestones in Environmental Sustainability
A new wave of intellectual and scientific work was coming. In 1971, economist Georgescu-Roegen publishes the paradigmatic "The Entropy Law and the Economic Process", a book which truly begins to ring the bell to the relevance of thermodynamics and entropy in economic processes.
The Earth, as Georgescu-Roegen points out, is a closed system, in the thermodynamics sense: it can exchange energy but not matter with the rest of the universe. Two natural sources of energy are exchanged by the Earth and available to us: sun radiation and the stock of minerals in the crust of the Earth. These are low entropy, valuable natural resources. And while the former (flow of radiation from the sun) lasts indefinitely and cannot be controlled in any way by men, the rate at which we extract minerals from the crust of the Earth is within humans' control and the stock of minerals present is a scarce resource, which will, at some point, come to an end (the more intensive the extraction of minerals, the fastest the exhaustion of it).
Roegen also argues that the importance of thermodynamics to economics lies in the fact that men cannot create or destroy matter or energy, but only transform it. This indicates that economic processes are transformation processes, rather than production processes,as we usually like to call them. Everything is being transformed, not created or destroyed. Transformation which occurs from natural resources present on earth.
THE LIMITS TO GROWTH — THE CLUB OF ROME
Shortly after the publication of Georgescu-Roegen's work, in 1972, a report that first brought up the concept of environmental sustainability is published: "The Limits to Growth", commissioned by The Club of Rome.
Its aim: to depict a more clear picture around the limits of the Earth's system, and figure out how sustainable it is, in the long run, to keep the levels of the industrial and economic activities in place, at the same rhythm as they were at the time of the study. Is the endless growth attitude compatible with the finite nature of our planet?
The MIT commission comes to the conclusion that, assuming there is no change in growth trends, by 2072 sudden and uncontrollable decline in population and industrial capacity would evidently take place. And it also raises a message of hope and action: the situation can be reversed over time, if taken seriously and strategically acted upon.
““Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs””
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