The Uninvited
Proxies for Nature and Future Generations need a place at the table
There is an adage in corporate crisis management that goes something like this: You don’t get to decide whether your company is in a crisis, your stakeholders do.
That means that regardless of how much control you might have over a situation, what your constituents think, and how they might act based on those assumptions, likely trumps your confidence. You might believe the outrage is not equal to the threat. However, you need to respond in ways that manage the expectations of both your stakeholders and your own objectives.
If that is the case, then we might ask Nature or The Future, from their perspectives, whether our current challenge with climate change, biodiversity loss and resource scarcity constitutes a crisis, since both have a stakein the outcomes. It’s not as crazy as it sounds, has precedent, and could be a way to engage in more effective sustainability in society.
As a starting point, modern sustainability practice lacks the voices of these two critical audiences and stakeholder theory – a mainstay communications strategy in managing day-to-day business growth, markets and overall stability – is broad enough, and creative enough, to include them.
With scant exception, modern sustainability only takes care of real time stakeholders. Slow transitions to renewable energies from fossil fuels minimize the cost and inconvenience to present-day stakeholders without fully accounting for the cost and inconvenience to future stakeholders, who must deal with global warming from human enterprise. Resource extraction, driven by overconsumption by this generation of stakeholders, pays little or no respect to the finite reserves of nature’s capital.
The classic definition of stakeholder, as defined in the early 1980s works of Edward Freeman, is “any group or individual who can affect or is affected by the achievement of the organization’s objective.”
Explains Freeman more recently: “The 21st Century is one of ‘Managing for Stakeholders’. The task of executives is to create as much value as possible for stakeholders without resorting to tradeoffs. Great companies endure because they manage to get stakeholder interests aligned in the same direction.”
Categories like employees, customers, regulators, competitors and vendors rank as stakeholders who need tending. In execution, “stakeholder relations” means understanding their concerns, addressing their needs, and ensuring that they remain loyal to the brand. Happy stakeholders are a boon to business, perhaps even viral success. Unhappy stakeholders can strike, boycott and vote with their wallets.
Importantly, there are many other variants of the stakeholder definition, and in the 1990s, academics began to extend the definition beyond people.
In 1995, Mark Starik, then a professor of strategic management at George Washington University, asked, in all seriousness, Should trees have managerial standing? in a paper thatvcalled the lack of recognition of nature as a stakeholder a serious omission. Another study, from 1997, points to the aftermath of the 1989 Exxon Valdez oil spill in Alaska as an early example of nature gaining stakeholder status.
In modern sustainability practice, this translates best as materiality assessment, a well-known sustainability tool that can measure business impacts through stakeholder expectations – though Nature and The Future are notably absent.
In 2013, KPMG and its colleagues produced the report Identifying natural capital risk and materiality, which asks an important question: “Could the definition and understanding of the concept of materiality be evolving to incorporate new issues, inclusive of more stakeholders, and over greater time horizons? A company taking a longer view when assessing its material issues will be more likely to identify natural capital as a material issue.”
In society, we accept the need for proxies and advocates. An advocate can speak for a child in official proceedings, thereby ensuring that the child’s rights are observed and best interests maintained. Who speaks for Nature and The Future?
“We borrow environmental capital from future generations with no intention or prospect of repaying,” asserted the UN’s original sustainable development document called Our Common Future in 1987. “They may damn us for our spendthrift ways, but they can never collect on our debt to them. We act as we do because we can get away with it: future generations do not vote; they have no political or financial power; they cannot challenge our decisions.”
Extending stakeholder theory to include nature and future generations puts sustainability squarely into an existing business process that would be done anyway.
Asking what nature or the future might “think” about a business implication brings materiality to a new level that perhaps changes the priorities and the direction of present-day operations. The implications for both strategy and sustainability become much clearer when key stakeholders, like the planet that creates our wealth and the future generations with less and less a share of it, are at the table.