Chapter 10: Transforming Corporations

Erik Assadourian

There has been a volatile and long-standing debate about whether it is a corporation’s duty to become more sustainable and socially responsible beyond complying with the law, or whether its sole duty is to legally maximize profit, no matter the long-term societal cost. Ultimately, the assessment drives home the point that there is little choice: either corporations become more sustainable and responsible, or the quality of life on Earth—and corporations’ bottom lines—will inevitably decline. (See Box 10-1, p. 172.) Ecosystem deterioration will intensify many of the risks and costs of doing business: it will make key resources and ecosystem services, such as fresh water and climate regulation, less available; it will heighten regulatory oversight; it will alter customer and investor preferences; and it will jeopardize the availability of capital and insurance.

While the business sector must become more responsible and lead the drive to make society sustainable, without the right incentives and pressures, corporations will not do this quickly enough. Consumers, citizens, and employees must support corporate leaders who step up to the challenge, and punish those who do not. Such basic actions as deciding which bank to have a savings account in, which shoes to buy, which companies to work for, and which political efforts and candidates to support will help reshape the market. But to succeed, these incremental efforts will need to be supported by aggressive actions by NGOs, policymakers, and savvy business leaders—actions that will make all corporations recognize that their long-term financial success depends not just on pursuing the bottom line, but on doing so in a socially and environmentally responsible way. (See Figure 10-1, p. 187.)

Special Focus, China & India

Box 10-2: Corporate Responsibility in India and China, p. 178

Erik Assadourian is a Staff Researcher at the Worldwatch Institute with expertise in global security, consumption, corporate social responsibility, sustainable communities, and cultural change.