Menu
Home
Log in / Register
 
Home arrow Accounting arrow Corporate Governance and International Business
< Prev   CONTENTS   Next >

5.8. Summarising Sustainability

To summarise, sustainability requires a radical rethink and a move aware from the cozy security of the Brundtland definition. Aras & Crowther (2009) therefore reject the accepted terms of sustainability and sustainable development, preferring instead to use the term durability to emphasize the change in focus.

The essential features of durability can be described as follows:

o Efficiency is concerned with the best use of scarce resources. This requires a redefinition of inputs to the transformational process and a focus upon environmental resources as the scarce resource.

o Efficiency is concerned with optimizing the use of the scarce resources (ie environmental resources) rather than with cost reduction.

o Value is added through technology and innovation rather than through expropriation;

o Outputs are redefined to include distributional effects to all stakeholders

5.9. ISO 26000

In 2010 the new standard ISO 26000 was introduced. This standard is concerned with social responsibility and sustainability and offers guidance on socially responsible behavior and possible actions; it does not contain requirements and, therefore, in contrast to ISO management system standards, is not certifiable. Although this standard by its current concept is just a collection of previously existed and globally agreed codes and principles, however there is a hope for its progressive movement to more specific requirements and procedures for implementation internationally. In this document it is emphasized that effective governance should be based on incorporating the principles of social responsibility where these principles are accountability, transparency, ethical behaviour, respect for stakeholder interests, respect for the rule of law, respect for international norms of behaviour and respect for human rights into decision making and implementation.

This document is quite different to the previously existing and well known codes of governance known as the Anglo-Saxon model of governance. We have already explained the latter and other codes of governance in previous chapters. Actually the Anglo-Saxon model which has led directly to the notion of a free market as a mediating mechanism and the acceptance of the use of power for one's own end, in true utilitarian style, has caused the loss of a sense of community responsibility which removed any sense of social responsibility from business. According to a socially responsible code of governance, all organizations should put in place processes, systems, structures, or other mechanisms that make it possible to apply the principles and practices of social responsibility.

According to ISO FDIS 26000, an organization's decision-making processes and structures should enable it to:

o Develop strategies, objectives, and targets that reflect its commitment to social responsibility;

o Demonstrate leadership commitment and accountability;

o Create and nurture an environment and culture in which the principles of social responsibility are practiced;

o Create a system of economic and non-economic incentives related to performance on social responsibility;

o Use financial, natural and human resources efficiently;

o Promote a fair opportunity for underrepresented groups (including women and racial and ethnic groups) to occupy senior positions in the organization;

o Balance the needs of the organization and its stakeholders, including immediate needs and those of future generations;

o Establish two-way communication processes with its stakeholders, identifying areas of agreement and disagreement and negotiating to resolve possible conflicts;

o Encourage effective participation of all levels of employees in the organization's social responsibility activities;

o Balance the level of authority, responsibility and capacity of people who make decisions on behalf of the organization;

o Keep track of the implementation of decisions to ensure that these decisions are followed in a socially responsible way and to determine accountability for the results of the organization's decisions and activities, either positive or negative; and

o Periodically review and evaluate the governance processes of the organization. Adjust processes according to the outcome of the reviews and communicate changes throughout the organization.

5.10. Conclusions

The two key components of sustainability and sustainable development therefore are efficiency and equity. But efficiency needs to be redefined to prioritize the efficient use of environmental resources rather than the efficient use of financial resources. And equity requires as a minimum the satisfying of all stakeholders, and not merely the provision of returns to owners and investors. These are the prerequisites for sustainable development.

Recycling is of course an integral part of the discourse of sustainability as far as environmental issues are concerned. The concept of recycling applies equally to corporate sustainability in terms of the recycling relationship with each stakeholder. By this we mean that a sustainable corporation needs to invest in all of its stakeholders in order to maintain and improve relationships between the company and its stakeholders but that the investment in stakeholder relations is returned to the company through being recycled. So a stakeholder who is well treated both receives benefit from the company and returns benefit to that company. For example employees will work better when they receive better conditions; similarly suppliers will reciprocate the receipt of good conditions while customers will pay a premium for quality. This can be considered to be renewable performance.

5.11. References

Amba-Rao, S. C. (1993); Multinational Corporate Social Responsibility, Ethics, Interactions and Third World Governments: An Agenda for the 1990s; Journal of Business Ethics, 12, 553-572.

Aras G & Crowther D (2007b); Sustainable corporate social responsibility and the value chain; In D Crowther & M M Zain (eds), New Perspectives on Corporate Social Responsibility, 109-128

Aras G & Crowther D (2007a); Is the global economy sustainable?; in S Barber (ed), The Geopolitics of the City; London; Forum Press, 165-194

Aras G & Crowther D (2007c); What level of trust is needed for sustainability? Social Responsibility Journal 3 (3), 60-68

Aras G & Crowther D (2008a); Governance and sustainability: An investigation into the relationship between corporate governance and corporate sustainability; Management Decision, 46 (3), 433-448

Aras G & Crowther D (2008b); The social obligation of corporations; Journal of Knowledge Globalisation 1 (1), 43-59 Aras G & Crowther D (2009); The Durable Corporation: Strategies for sustainable development; Aldershot; Gower Daly H E (1996); Beyond Growth; Boston, Ma; Beacon Press

Hart S L & Milstein M B (2003); Creating sustainable value; Academy of Management Executive, 17 (2), 56-67

Jacobs, M. (1991); The green economy - environment, sustainable development and the politics of the future; Pluto Press: London

Marsden C (2000); The new corporate citizenship of big business: part of the solution to sustainability; Business & Society Review, 105 (1), 9-25

Spangenberg J H (2004); Reconciling sustainability and growth: criteria, indicators, policy; Sustainable Development, 12, 76-84

WCED (World Commission on Environment and Development), Our Common Future (The Brundtland Report), Oxford University Press, Oxford, 1987

Welford, R. (1997); Hijacking environmentalism - corporate responses to sustainable development; London: Earthscan

Zwetsloot G I J M (2003), From management systems to corporate social responsibility; ; Journal of Business Ethics, 44 (2/3), 201-207

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Philosophy
Political science
Psychology
Religion
Sociology
Travel