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J Bus Ethics (2012) 109:1525 DOI 10.

1007/s10551-012-1376-5

Stakeholders and Sustainability: An Evolving Theory


Kevin Gibson

Published online: 27 June 2012 Springer Science+Business Media B.V. 2012

Abstract This conceptual article has three parts: In the rst, I discuss the shortcomings of treating the environment as a stakeholder and conclude that doing so is theoretically vague and lacks prescriptive force. In the second part, I recommend moving from broad notions of preserving nature and appeals to beauty to a more concrete analytic framework provided by the idea of human sustainability. Using sustainability as the focus of concern is signicant as it provides us with a more tenable and quantiable standard for action, as in the case of carbon offsets and development of measures such as the United Nations Sustainability Indicators. In the nal section, I draw on notions of stewardship to suggest that stakeholder management has a positive responsibility to promote sustainability. Keywords Stakeholder Sustainability Environment Nature Responsibility Management

Introduction Concern about the environment has become an integral part of the business literature and practice. Many major corporations have integrated environmental issues into their mission statements, and spend considerable sums on preservation and remediation efforts (Mirvis et al. 2010; Snider et al. 2003; Rondinelli 2004). My thesis is that sustainability concerns should be embedded in stakeholder theory rather than being treated as

K. Gibson (&) Departments of Philosophy and Management, Marquette University, Milwaukee, WI, USA e-mail: kevin.gibson@marquette.edu; kevin.gibson@mu.edu

a marginal issue. To establish this, I will rst critically assess claims that the environment should be a stakeholder. Next I will consider the notion that regard for the environment ought to be a necessary background condition for doing any business at all, and consequently stakeholder theory has no particular advice to add. In response to both these views, I contend that we should drop references to the environment in general, and instead concentrate on sustainability in terms of human values. Unlike general exhortations to preserve the environment, sustainability offers a specic gauge of the positive and negative effects of business practice. After considering some objections, I then argue that because stakeholder managers should have an other-regarding attitude, they have an obligation to pursue sustainable corporate strategies in order to avoid diminishing available resources for human wellbeing. Adopting this view will have signicant implications for both management theory and action. In an inuential 1991 article, Managing as if the Earth Mattered, James Post presented a case where the local manager of an American company in Mexico City faced a dilemma. SEDUE, the Mexican environmental protection agency, had ordered the plant shut down for a day because air quality had deteriorated to emergency levels. At the same time, the manager realized that these calls are routinely ignored by other companies, with the support of both business leaders concerned about efciency and unions whose workers would be sent home without pay. The article is accompanied by a drawing of a biblical shepherd gure looking over both skyscrapers and a pastoral scene with the thought bubble Finding a balance between industry and life sustaining systems (Post 1991, p. 37). The case and the picture present two elements of a discussion that has subsequently become dominant but conceptually cloudy by endowing stakeholder status to

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mean, variously, nature, the environment, or the earth. For example, Post (1991, p. 37) says: To whom, and for what, is the modern corporation accountable?Each attempt to extend corporate responsibility to meet the expectations of new stakeholders forces a reassessment of corporate accountability and practiceThe analysis of stakeholders that is so easily organized for most problems is radically different when earth itself is a stakeholder and the stake is nothing less than planetary survival. My contention is that the image Post presents ultimately obscures discussions about the most signicant issues facing corporate attitudes to the environment and diminishes the power of stakeholder analysis. Freeman and Reichart (1998) have described this sort of view as the Incompatibility Thesis Mindset, insofar as it suggests that capitalism and market approaches are incompatible with concern for the environment. When this view is married with stakeholder terminology, it gives the impression that the environment is a stakeholder whose interests have to be balanced against other competing and exclusive claimants in a zero-sum fashion: that is, if we attend more to environmental concerns then business is likely to become less efcient. First, I will briey discuss the claim that the environment can be a stakeholder. Following Phillips and Reichart (2000), I argue that the notion is conceptually vague and impractical. They conclude that the natural environment merits stakeholder consideration only instrumentally based on obligations due legitimate stakeholders such as local communities (Phillips and Reichart 2000, p. 195). I agree that managers should care about the environment as a reection of human interests, although I want to extend the idea of the affected community from the immediate and local to potentially all humanity, and, further, suggest that the language of sustainability serves to clarify the issues at hand. Finally, I suggest that stakeholder managers should play a leadership role in promoting sustainability.

The Environment as Stakeholder The term stakeholder came into prominence with work by Freeman (1984), when he challenged the prevailing view of managerial capitalism by saying that managers bear a duciary relationship to those who have a stake in or claim on the rm. Although Freeman himself has not made the claim, the idea that the environment can be considered a stakeholder is attributable to a loose interpretation of his original denition of stakeholders as any group of individuals who can signicantly affect or be affected by an

organizations activities (Freeman 1984). Thus, Starik (1995, p. 216), for example, says that the current anthropocentric denition of the concept stakeholder may be expanded to any naturally occurring entity which affects or is affected by organizational performance. In another case, Mitchell et al. (1997) suggest that the natural environment is a potential stakeholder of an organization, and, as Kolk and Pinkse (2007, p. 371) note, It is clear that the natural environment forms a stakeholder if it is affected by corporate activity. Taking the denition even further, if the term environment includes the atmosphere, hydrosphere, lithosphere, ecosystem processes and all human and non-human life forms (Driscoll and Starik 2004, p. 56), then it becomes necessarily self-verifying that they are all stakeholders, since any activity at all on earth will affect it in one way or another. Initially, it appears that by understanding stakeholders in this way Starik (1995) and Driscoll and Starik (2004) make a category mistake, as in Ryles classic case where a visitor to Oxford is shown various buildings but complains that he cannot nd the University, not realizing that the University is a collective term for the community of colleges (Ryle 2008, p. 16). In the situation presented by Post (1991), the stakeholder manager has to balance the interests of management and unions on the one hand against those of nature on the other. Surely, though, Post is using shorthand placeholder statements here, so that the SEDUE is not actually guarding nature or the environment so much as the interests of the populationthat is, people. If the smog continues, then the local population will be harmed, and costs incurred through deteriorating health and wellbeing. The regulations requiring a shutdown in fact act as a proxy for the general welfare of humans. Moreover, they are determined by a political process representing collective choices about the trade-off between wealth and wellbeing, and we can easily imagine a democratic society that chooses to forego environmental welfare in favor of economic development. Thus what is really going on in the case is that the manager is faced with a choice about which kind of human satisfaction is to be favored: one which gives a signicant benet to select groups for which he has duciary duties, or a more general human interest in clean air. In this context, nature is a hypostatization, where we endow an abstract concept with concrete status, in the same way as the claim that the budget forces us to let you go looks like an outside force is at work, although in reality, it cloaks human acts and human choices. As a case in point, let us examine an often-cited dataset generated and categorized by the research rm KLD (Hillman and Keim 2001; Bartkus and Glassman 2008). In an inuential article, Bendheim et al. (1998) looked at ve groups of stakeholders: community, shareholders,

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consumers, employees, and the environment. Following Starik (1995), they proposed as follows: The environment ought to be given primary stakeholder status because companies depend on it in such a way as to not reduce its potential for replacement and renewal (Bendheim et al. 1998, p. 309). They found that companies routinely treated environmental concerns more poorly than the other categories, and concluded: The scores for the environment are the lowest on averageperhaps highlighting the fact that there is no direct voice for the environment (as there tends to be for other stakeholders) and environmental groups that do exist tend to lack power to bring about change in private corporations (Bendheim et al. 1998, p. 326). At rst glance it seems as if the same measures can be used for both the environment and the other stakeholders. However, the signicant difference is that the rst four groups are collections of people. Thus, the studys metrics assessed litigation costs associated with plant closures as a negative, and philanthropy as a strength when looking at the community category; the effect on shareholders was shown by the returns on investment. The data for employees consisted of costs related to dealing with unions and legal penalties for safety violations as negative indicators, compared to prot sharing, generous benets, and joint decision making as positive ones; and product recalls were contrasted with products and services that benet the economically disadvantaged in the area when generating data for consumers. These seem like reasonable ways of quantifying a rms commitment to various stakeholder groups. However, it is not evident that the environment itself emerges as a stakeholder on the basis of the way the data are organized. When Bendheim and her colleagues looked at the environment, they highlighted liabilities for hazardous waste and regulatory problems, production of ozonedepleting chemicals, high levels of legal emissions, and production of agricultural chemicals as areas of concern, while they regarded environmental remediation income, pollution reduction, use of recycled materials, and conservation projects as positive indicators. In each of these cases, the activities have been framed in terms of whether or not they constituted violations of the law, which is something of a oating target as legal standards vary across time and communities. For example, a company that legally dumps toxic chemicals in an African country with lax rules might not register on this scale. In contrast, many rms use the law as a moral yardstick, and hence a rm that pollutes up to legal limit, but not beyond, would be censured by this

analysis, although the regulations may reect the popular will in a democracy. Moreover, the production of chemicals in itself is not egregious; there may be cases where fertilizers and insecticides enable agriculture to ourish in areas where it would be impossible to do so without their help. Conversely, income from remediation may simply indicate that the company has branched out into an innovative area, not necessarily that it is committed to environmental concerns. Similarly, the use of recycled material could be a prudent strategic choice by management. Hence while the authors claim that these actions demonstrate a given corporate attitude to the environment, it seems that we could reasonably recharacterize them on a more human scale, perhaps in terms of, say, a corporate stance on compliance with external regulation, a strategic decision about sourcing raw materials, or taking advantage of opportunistic new markets. Although the researchers consider nature to be a stakeholder, when we parse out the corporate actions that are used to assess environmental responsibility, it turns out they could just as easily be described as strategic choices that affect human stakeholders, such as regulators, suppliers, or consumers. As Orts and Strudler (2002) have persuasively argued, even if we concede that nature is a stakeholder, it does not automatically follow that it has unitary interests, or there would be agreement on how we should interpret what is the best for it and advocate accordingly. For example, as Callicott (1980) has shown, the interests of animals can clash with those of the land, and if we want to reduce the suffering of sentient creatures, then perhaps humans should intervene in some way. In Wisconsin, for instance, deer are plentiful, and if we were to shield them from predators or starvation to prevent suffering, the population would increase and lead to overgrazing of the land and consequent starvation. Similar problems arise with the ethics of farming, in that rearing animals is unnatural in the sense that we are engineering animals and putting them in articial surroundings for our own ends. The same holds true when we consider ora. The plant kudzu is an invasive species which increases nitrous oxide levels and ground level ozone. There are signicant questions about whether an environmental ethic would treat it as a precious part of nature that ought to be preserved or as a danger to the ozone layer that should be destroyed. Similarly, tearing up old growth forest creates subsequent opportunistic growth of younger trees of different species, and we have to ask which should be favored. Nor does nature provide clear messages: Brown grass on a golf course in Las Vegas could be an indication that it has an interest in being watered, or alternatively could simply mean that it does not belong there. A marshy area infested with mosquitoes may be improved by drainage, but we have to recognize that articial changes are a result of

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humans assigning values, not that nature presents us with any obvious intrinsic interests. The concern here is that when humans advocate for nature, they will usually employ an implicit normative set of assumptions about what constitutes a desirable outcome. For example, Starik (1995, p. 216) says: Treating non-human nature as one or more stakeholders would provide some organizations a different and, hopefully, a more enlightened perspective from which to manage their relationships with their respective natural environments. [Emphasis added] Further, Stead et al. (2004, p. 22) suggest that environmental awareness should be allied to certain politically desirable states: The economic dimension of sustainability also involves the need to create for posterity an ecologically balanced and socially just system that provides humans with the goods, services, economic justice, and meaningful employment necessary for a high quality of lifethe rapid entropy associated with high economic growth rates is not sustainable over the long run. [Emphasis added] In sum, argumentspurporting to show that the environment, as broadly understood, is an independent stakeholder and therefore deserves consideration by business managersare not persuasive. As Phillips and Reichart (2000) conclude, the stakeholder framework does not underwrite direct duties, but rather allows some stakeholders to promote values they support. For example, local communities may qualify as stakeholders, and the community members may advocate for, say, businesses to lower pollution levels. In the next section, I will examine the claim that managers have a general responsibility to the environment. While sympathetic to this view, I conclude that any such duties should be based on resource preservation rather than an intuitive or aesthetic sensibility.

These baseline duties, such as regulatory compliance or maintaining healthy and safe working conditions, will be endorsed by all moral theories, and so they conclude that duties to the environment are an obligatory part of doing business. There is a second element to their claim that is more contentious, though. In order to work out what the duties to the environment are, Orts and Strudler (2002) appeal to the individual aesthetic values of managers. As I understand it, this would be in line with a perspective that takes beauty to be an inherent quality of nature existing independently of human valuers, but is accessible to those with aesthetic discernment. They say: Environmental management must include an appreciation of ethical value of the natural environment, including esthetic, cultural and historical value. These dimensions of ethical value are not easily measured but to try to balance ethical values concerning the natural environment in a framework of human interests cannot be done. Questions about the value of nature cannot be answered purely in terms of human interests any more than can such questions as Is this a piece of great art? or Is this mathematical proposition true? (Orts and Strudler 2002, p. 227). On reection, Orts and Strudlers (2002) two questions appear different in kind. Mathematical propositions are subject to rational assessment and critical tests where predicted results can be proven. Art is much trickier. Orts and Strudler (2002) do not attempt to explicate their aesthetic theory in their article but seem to draw on work associated with Moore (1989), who believed that there were multiple facets to happiness, including the appreciation of beauty. He felt that beauty was a non-natural property that could not be fully described, but inherent in objects. Accordingly, we might consider a piece of art or a person to be beautiful, and we know it when we see it, but it is impossible to dene precisely. Although Moore believed in inherent values and acknowledged the difculty in conrming a statement such as This is great art, he nonetheless thought that we could rene our sensibilities, and that beauty served to enhance human welfare. Hence, he held that the question of whether an object is great art, can, in fact, be translated into statements about human interests. A more recent attempt to prove that values exist independent of human judgment has been put forward by Richard and Val Routley (1980), with the famous last man argument. Roughly, the argument asks us to imagine that the world is decimated, and one dying individual is the sole remaining sentient creature. The person destroys all the geological and biological examples of great beauty, and justies doing so by noting that, as there will be no one

The Background Duty to the Environment When Orts and Strudler (2002, p. 226) critique the concept of considering the environment as a stakeholder, they make the positive suggestion that we consider regard for nature to be a background condition for any business: Our general point remainsjust as every rm has a moral responsibility to obey the law, so too every rmhas a moral responsibility to do the right thing with respect to the natural environment, regardless of its human stakeholders.

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around to appreciate them, it makes no difference. We are then asked to judge his actions. If we respond by saying that his actions are wrong regardless of humans being there to appreciate nature, then this is held to demonstrate that there is such a thing as inherent value. The claim turns out to be less convincing than it rst appears, since the thought experiment is not actually devoid of human valuers: we as the observers are making judgments, and thus the story does not prove, as supporters might suggest, that there are values which exist independently of humans. Moreover, as Jamieson (2008) has shown, the concept of inherent value can be ambiguous. One of the several ways we use the term is to assert that something is of moral concern, not just that it possesses some mysterious quality. Thus, we sometimes use the phrase that animals or natural sites have inherent value to show that they ought to be included in a discussion (e.g., unspoiled vistas are valuable), but it does not necessarily follow that we can extend that claim of consideration to the statement that these things possess value in and of themselves. This is not to deny that many, if not most, people might agree on the beauty and majesty of a vista such as the Grand Canyon or the undesirability of oil-soaked waters, beaches and seabirds from a break in a pipeline. The point is that when Orts and Strudler (2002) advocate environmental duties, we need to bear in mind that the standards of aesthetic value they appeal to are human social constructions. To be fair, Orts and Strudler (2002) acknowledge that values need to be balanced. Their resolution is to have the participants think seriously about the consequences for the natural environment. For example, a company should incorporate aesthetic, cultural, and historical values with traditional bottom-line concerns, so that companies and communities make thoughtful trade-offs. The knotty problem with their terms, though, is that they do not tell how a manager should quantify those values, especially as they argue that it is impossible to assess aesthetic concerns within a framework of human interests. It is also important, I believe, to not trivialize or caricature the approach, since the position may in fact reect the general vagueness of ethical prescriptions overall. Yet for our purposes, we can see that the move to a general admonition to regard the environment in business decisions begs questions about environmental valuation and priorities. Consider the case of interstate highways in America. A century ago, travel was relatively limited, but at the same time, there was relatively little pollution from automobiles. Today, road travel is easy and quick, but the amount of pollution has increased. However, it remains an open question as to whether we would trade places with our forebears, since many of us prefer the convenience of cars at the price of slightly dirtier air. Similarly, take the case of

traveling to Las Vegas from a distant city in the USA. An airline provides a service that people are willing to pay for, and ying will cause pollution in the atmosphere. Customers are aware of this, and are willing to tolerate it in exchange for the convenience travel affords. In general, the carbon emissions are not offset, and thus, the market effectively hides the true cost of the pollution levels, although we could fairly easily make the carbon offset calculation and incorporate it into the cost of travel if there were the political will to enact such regulations. Las Vegas is something of an articial city, sustained by water piped in from distant locations, and cooled by mechanisms which release yet more heat into the surrounding area. Yet there is no general outcry against the environmental degradation the city causes: indeed, it has been one of the fastest growing areas in America (Christie 2007). It appears, then, that the way we treat the environment is often judged normatively, but there is no universal agreement about the standards involved or how managers should weigh environmental factors against others, such as consumer demand. If we take the case of heritage sites, for example, it turns out that up to two-thirds of respondents (and often up to 90 %) regularly say they are not willing to pay anything at all to preserve cultural and historical sites (Pearce et al. 2002). Based on this information it would be reasonable for a manager to argue that, given consumer demands, economic progress should outweigh aesthetic considerations. Developers of major highways in Los Angeles, for example, apparently gave human convenience a greater priority over esthetic concerns (or perhaps had a modernist aesthetic favoring functionality); the notion of beauty can be very much in the eye of the beholder. Thus, idea of a factory in a pristine rural landscape could be very appealing to an impoverished farmer. In short, the move that Orts and Strudler (2002) make to preserve environmental concerns by appealing to the esthetic sense of managers is nebulous and overly dependent on individual sensibilities. It is therefore desirable to establish a less subjective unifying principle, even at a fairly abstract level.

Human Sustainability If we look again at some of the scholars in this area, it turns out they have actually blended the notions of environmental interests and sustainability. In Christopher Stones (1972) seminal article Should Trees Have Standing? for example, he endorses a form of universal consciousness as a desirable change in our attitude toward the environment, but it is actually manifested using the traditional legal concept of remediation. For instance, he suggests:

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One possible measure of damageswould be the cost of making the environment whole, just as, when a man is injured in an automobile accident; we impose upon the responsible party the injured mans medical expenses. Comparable expenses to a polluted river would be the cost of dredging, restocking with sh, and so forthConsider, for example, an oceanside nuclear generator that could produce low cost electricity for a million homes at a savings of $1 a year per home, but through a slight heating effect threatened to kill off a rare species of temperature sensitive sea urchinsone compromise solution would be to impose on the nuclear generator the cost of making the ocean whole somewhere else, e.g., reestablishing a sea urchin colony elsewhere, or making a somehow comparable contribution (Stone 1972, pp. 476, 478). Similarly, Driscoll and Starik (2004, p. 62) move, almost imperceptibly, from talking about a natural contract with the biosphere, to the way managers change focus from rm-centered to eco-sustainability. They conclude that nature ought to be a stakeholder because of the inherent interdependency between the global economy and the global ecology (Driscoll and Starik 2004, p. 69). That is, we need to care about nature, but only insofar as it is instrumentally valuable for humankind. In Posts article, he is concerned about the fate of the earth, but similarly concludes that our main worry is whether we are facing a loss of human welfare. What emerges, then, is that these authors have an implicit view of environmental responsibility in terms of what may benet or hurt people. Human welfare will be harmed by diminishment of resources overall. Therefore, a more explicit version of their view reveals an underlying concern for sustainability in terms of human wellbeing, and hence we could drop the language of responsibility to the environment in favor of making sustainability the locus of moral discourse.

Stakeholder Theory and Human Sustainability So far my argument has been fairly negative: regarding nature as a stakeholder in its own right seems rhetorically powerful but conceptually lacking. In addition, utilizing a general principle of environmental concern to undergird management attitudes begs questions about balancing priorities based on personal aesthetic judgment. Next, I turn to more positive claims based on sustainability and stakeholder theory. Stakeholder theories rely on various foundational moral approaches. Phillips (1997), for example, bases his analysis on notions of fairness and reciprocation. Central to most interpretations of the theory is the idea that stakeholders are

interdependent and can forge symbiotic relationships. Stakeholder awareness is essentially, in Senges (1990) words, other directed. Thus, a rm ought to recognize the local community by virtue of the benets it has received from its host. Following Wicks et al. (1994) the future of business leadership is likely to lie in a collaborative approach that involves inclusion and cooperation with various stakeholder groups. Here I want to take a far more expansive view of community than Phillips (1997). He restricts his analysis to benecial acts that ought to be reciprocated, such as tax breaks given to a company by a town that subsequently imply some obligation on the part of the rm. However, when it comes to environmental issues, I see no reason to consider any particular action as local, since all actions are likely to have some effect on total welfare. For instance, in Posts (1991) example of the smog in Mexico, the effects are probably far-reaching, and even if they are small they may be cumulative. Thus, the plant managers decisions are partially responsible for climate change or other effects on people in distant lands. The point is that when it comes to planetary sustainability, the whole global population is likely to be affected by business decisions, and therefore ought to be considered under a stakeholder approach. Moreover, a minimal ethical obligation under any classic theory will be to avoid unnecessary harm. This would allow for the use of resources, and even their destruction if there were available substitutes. Combining these elements, then, results in a moral prescription for businesses: at least, to desist from diminishing the available resources (e.g., clean air or the ozone). At this point, I will make a constructive proposal by moving to a third approach that reasserts the role of stakeholder theory. It involves two crucial distinctions: First, we should abandon talk about the environment and talk about human sustainability, which is, in principle, quantiable. Second, managers should acknowledge a minimal moral principle of avoiding unnecessary harm. Combined, these elements will give managers a workable normative principle to deal with environmental questions, especially when seen through the lens of stakeholder theories. It is easy to see that diminishment of natural resources over time without invention or discovery of substitutes will likely lead to shortages, especially given a growing global population and heightened material aspirations. However, under the principle that people need not live at a subsistence level, there is no imperative to restrict production or consumption unless it results in overall depletion. Use and even destruction are morally permissible as long as there are appropriate substitutes available through recycling, remediation, or innovation. Thus, there would be plural moral bases for maintenance, perhaps best summed up by a version of Rawlss difference principle, to the effect that

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anyone may benet from use of natural resources as long as no one is made worse off (Rawls 1971, p. 68). The proposal has several virtues. It is principled, and gives us a standard by which we can measure our decisions rather than having to rely on vague recommendations to support the environment. It is based on metrics such as carbon offsets or pollution control, which are assessable. In effect, this view provides a middle ground between environmental protectionism and exploitation, based on a general principle of resource sustainability. Reliance on sustainability as the key value will be neutral about the type of use that we make of the environment and agnostic about the merit of any given decision as long as the available resources of the earth are not diminished. In a contentious example, we might imagine that we could power vehicles using whale oil, and a concerted whale oil industry might be created, but more along the lines of farming than ocean shing. While the merits of using sentient creatures for human convenience might be debated, the principle would allow the industry to prosper as long as the population of whales was not reduced. Explicit in my proposal is an anthropocentric point of view that rejects intrinsic values, or values that do not originate as human judgments. This is not to deny that there are some things that we value very highly, sometimes more than we value our own lives (e.g., when activists put themselves at risk to protect hunted animals). The contrasting view, the so-called deep ecology, will claim that nature has value in and of itself. However, as noted with Orts and Strudler (2002) above, there are difculties in determining the origin and articulation of any such values (see also Dorf 2001). Furthermore, human-centered sustainability implies that a company would have no obligations to ora or fauna that may be affected, unless they impinge on human welfare. In aquafarms, for example, the company may have duties to remediate the salinated ground water or to compensate the community to make sure humans are not harmed by the presence of the industry. We could imagine that the farming might affect the local insects, with the result that disease bearing mosquitoes become more of a problem, in which case stakeholder management would see a reasonable argument for intervention. On the other hand, if there were a species perhaps like ticks or kudzu the presence or absence of which had a negligible effect on the human population, then the company would not have to protect them based on a purported claim that nature, as broadly interpreted, was being harmed. Contrary to some theories, life under my analysis only has instrumental value, and humans assert it (contra e.g., Rolston 1989). Thus, a yew tree may be valuable for its medicinal qualities, or vultures may benet us indirectly by scavenging. On the other hand, it would be acceptable to

kill and consume purpose-bred chickens. Similarly, the value of habitat would be determined in human terms. None of this is to deny a principle of conservation, in the sense that ora and fauna should be assumed to have value to humans unless they can be shown otherwise. Nevertheless, the locus of consideration remains human welfare. The principle would allow consumption, but it would require that any resource either be maintained or replaced with a substitute. Thus, if we could get power from sea water, there would be no prohibition on using it as long as we did not diminish the various other ecological functions of the oceans such as carbon sinks, home for aquatic animals, and so forth. Using sustainability as a yardstick for corporate environmental responsibility will not make difcult issues easy or resolve conicting interests. Yet it does give us a principled decision procedure, although it will always be tempered by the limits of the available metrics.

Measurement Using sustainability indicators has the promise of showing the extent to which business activity is depleting overall resources. For example, Ray Anderson, CEO of Interface, a major carpet manufacturer, had an epiphany when he realized that, in order to create a billion dollars worth of product, his company had extracted 1.224 billion pounds of material from the earths natural stored capital, and of that about 800 million pounds was either coal, oil, or natural gas that was burned up in the process (Anderson 1999). Developing appropriate metrics to gauge optimal human welfare is by no means unproblematic. On the other hand, using sustainability as a basis for decisions at least puts such concerns on a rational footing. For instance, the concept of accounting for the production and remediation of carbon dioxide production has become commonplace (Carbon Trust 2011). Over 30,000 rms worldwide now subscribe to standards such as the United Nations System of Integrated Environmental and Economic Accounting (United Nations et al. 2003) and the International Organization for Standardizations ISO 14000 family of requirements (International Organization for Standardization 2004), both of which allow benchmarking and quantiable decisions about sustainability (Peglau 2007). In a similar vein, John Elkington (2004) and his colleagues have developed metrics to assess the nancial, social, and environmental impacts of businessthe so-called Triple Bottom Line (see, e.g., Elkington 2004; Hubbard 2010). The Center for Sustainable Organizations (2011) has introduced the concept of a social footprint to advance conventional indicators (Kleine and von Hauf 2009; Center for Sustainable Organizations 2011). Moreover, some accounting rms now offer social and environmental

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auditing services, for example, Cap Gemin Ernst & Youngs Value Creation Index (Funk 2003). Such auditing mechanisms have limitations, to be sure (see, e.g., Russell and Thomson 2008), but at the same time, represent an industry in its infancy, and at least provide some means to weigh choices on a rational and defensible basis.

Some Objections There are three likely objections to making sustainability the main focus of environmental responsibility for managers. The concept of sustainability may not capture all that is valuable about the environment; sustainability calculations reduce environmental concerns to cost/benet analysis; and assigning values will be subject to interpretation. It is sometimes said that some natural and cultural objects are literally priceless, and hence cannot be given a market value. In the same way, in the same way as we would nd it odd to put a price on love, the argument goes that there are some things which are so precious that they ought to be preserved no matter what. The argument has great appeal, but we should note two points. One is the fact that some things are very difcult to quantify, such as the value of a heritage site or a colony of sea urchins. Yet that is not to say that it is impossible to make ranked decisions based on sophisticated techniques such as contingent valuation or choice modeling. In contingent valuation, people are asked to put values on hypothetical trade-offs, along the lines of how much would you be prepared to pay to preserve spotted owls from extinction? and in choice modeling, respondents rank a set of possible outcomes, which allows researchers to determine authentic preferences. Even in a case such as designating an area as a wildlife preserve, we still make ordered trade-offs, which are essentially quantied rankings of human welfare, and they will always be subject to revision. Recall that in the earlier discussion of intrinsic value, the term might mean that something is worthy of moral consideration, and not always that it is literally priceless. Thus, it makes sense to say that in many ways, human life has innite value. At the same time, though, we routinely make decisions that have actually put a monetary amount on life: whether they are decisions about allocating health care funds or how much compensation a court would award for a wrongful death. That is, we can perfectly reasonably say of human life, or the environment, that it has innite value while at the same time making quantitative decisions about them (see, e.g., Mills and MacLean 1992). Orts and Strudler (2002) make a similar point in their article when they note there are signicant problems with reducing the analysis of harm to cost/benet calculations. They illustrate it using the notorious Pinto case where

juries awarded large damages after learning that the Ford company had made a nancial calculation that had put a dollar gure on the suffering and death of potential burn victims and weighed it against the cost of xing a design problem. Nevertheless, while the moral issue in the case has often been interpreted as one of doing a cost/benet analysis on human life, the actual problem may not have been the methodology but instead getting the gures right. That is, businesses do have to make decisions, just as municipalities have to when weighing the costs of installing trafc lights against the potential for accidents. The real issue, it seems to me, was not that Ford made a cost-based calculation, but instead that they put an unrealistically low price on human life which resulted in misleading economic signals. In brief, we should not confuse poor projections with a poor decision procedure. Moreover, following Amartya Sen, we can say that rational choice theory ought to include notions of selfinterest, sympathy, and commitment (Sen 1977, 1985; Peter and Schmid 2005). Sen describes sympathy as the benecial feeling that comes about from incorporating others welfare into our choices (social psychologists have used the term social utility for this effect). Commitment refers to decisions where there is no obvious link to our personal welfare; for example, activities that fail to provide benets and may even create losses. Sens (1977) characterization demonstrates that there is grounding in actual economic activity that may be other-directed. Consequently, the metrics involved in sustainability calculations will be more than a simple cost/benet analysis. By integrating sympathy and commitment, any calculation will have to take account of harm to others, including negative externalities or the overall reduction of resources. An associated objection is that in moving from a general duty to the environment to a human-centered focus on sustainability we will likely lose something: we may make misguided decisions which will deprive future generations of an invaluable and irreplaceable resource. For example, the Burrup peninsular in northwestern Australia has over 300,000 petroglyphsstone etchingssome dating back over 10,000 years. Recently it has been the site of industrial development, including a fertilizer factory that produces urea and ammonia, and it is estimated that a quarter of the images have been destroyed by construction and pollution (Bird and Hallam 2006). Certainly, some resources will be at risk under the principle of sustainability, and some managerial decisions will be deleterious to the environment. Recall, though, that it is not the case that anything goes, since the threshold of acceptability would be whether current benets would deprive not only current but also future generations of resources that have no substitutes or adequate remediation. Hence, the Australian petroglyphs may be highly valued,

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but are not of innite valueperhaps it turns out that many petroglyphs are repetitious and artistically insignicant and thus not inviolate as long as the sustainability conditions are met. Individuals and groups could advocate for the social utility of resources at risk (Loewenstein et al. 1989). For instance, those who favor preservation of Australian petroglyphs could make the case that they are a unique resource that could be lost forever, and future generations would be poorer for the loss. There are also models that could incorporate the desires of those without nancial clout and use political and transnational standards to establish a standard of heritage sites that are deemed valuable. For example, Faucheux and OConnor (1998) conclude that economic models will always be incomplete and will have to be supplemented by value-based dialogue. These lacunae need not necessarily be pernicious, though, as long as there is an overarching commitment to sustainability by all parties. Admittedly, assigning values to the environment in any form will involve judgment calls that are inevitably open to interpretation, and the demand to maintain the extant resource levels will be somewhat vague because of the difculties in creating appropriate metrics. In addition, psychologists repeatedly tell us that we are inclined to ignore negative information, and interpret data that favors immediate and personal interests, as well as underestimate our drain on common resources and the amount it would take to replenish them (Messick and McLelland 1983; Bazerman and Watkins 2004). Overcoming these biases will require moral imagination and a realistic understanding of the ecological threats we face. Ultimately, the question may boil down to whether there are any adequate alternatives to the principle of sustainability, such as free markets or regulation informed by panels of experts. Yet a persistent difculty is that prevalent current business strategy tends to treat resources as if they are not signicantly reduced by consumption, like Lockes (1980, Sect. 33) vision of someone harmlessly drinking water from a river, whereas the evidence shows that under market capitalism as currently practiced, world resources are indeed being depleted (Hart 1997). In the absence of innite resources, untrammeled depletion can be considered harm to those who no longer have the opportunity to enjoy them (see, e.g., Freeman and Reichart 1998). The minimal stance of maintaining the available resource pool at least provides a potentially quantiable principle undergirded by the general moral imperative to do no unnecessary harm. Another way of putting this is to consider ourselves as stewards of our shared planetary resources. This does not mean that we abandon private property, but rather when we realize that there are common and enduring human interests, we should look to a model of stewardship instead of consumption.

The basic principle of stewardship is drawn from notions of tenancy governed by the legal term usufructliterally, use of the fruit. The concept underwrites the fact that it is acceptable to use and make prot from property belonging to someone else or held in common so long as the property is not depleted, and these principles form the basis of tenancy and trusteeship. Thus, someone who rents an orchard is entitled to the fruit from the trees, but the land has to be maintained to ensure future crops. Similarly, established law says a mill may use a river as a resource, but cannot reduce its capacity for use by others. As Carol Rose (1994) suggests, in contrast to traditional notions of private property dominant in recent history, these laws promote values of moderation, proportionality, responsibility to others, and prudence. Existing ideas of property rights can easily accommodate approaches that see the world in terms of stewardship and preservation of resources for future generations, since the conceptual framework of use while maintaining the underlying resource is already in place.

Toward Stakeholder Leadership The challenges of sustainability have to be confronted urgently, given the trend of economic development to deplete the earths resources and the rapidly emerging markets in China, Brazil, India, and Russia, among others. A generalized duty for businesses to act responsibly toward the environment as a background condition has the risk of being interpreted locally, and often in the form of mitigating pollution (Bansal and Kistruck 2006). In addition, if a business has a neo-classical view of property rights, there is no moral prohibition on acquisition, use and disposal of materials without regard to the depletion of global resources overall. All things considered, the issue of sustainability ought to be an underlying principle of business practice. Thus, the appropriate leadership will necessarily incorporate a moral sense, concern for others, and a wide vision about the future of the planet: in short, stakeholder leadership. Following Wicks et al. (1994), the future of business leadership concerning the environment is likely to lie in a collaborative approach that involves inclusion and cooperation with various stakeholder groups. Maak and Pless (2006, p. 103) develop this insight when they maintain that role of leadership is: To build and cultivate sustainable and trustful relationships to different stakeholders inside and outside the organization and to coordinate their action to achieve common objectives (e.g., triple bottom-line goals), business sustainability and legitimacy and

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K. Gibson

ultimately to help to realize a good (i.e., ethically sound) and shared business vision. To this end they believe leaders should take on multiple roles: a steward of values and resources; a good citizen; a servant to others; a visionary who provides inspiration and perspective with respect to a desirable future; and a coach who can bring together people from multiple backgrounds to realize a common vision. Conclusion In this article, I have suggested that describing managements task as balancing the interests of the environment as one stakeholder among many is initially attractive but ultimately lacks conceptual clarity or prescriptive power. On the other hand, suggesting that managers have general duties to the environment has its own set of difculties. My proposition is that we discard general talk of the environment, and instead focus on the more tangible idea of human sustainability. Doing so will give managers a more denite standard for decisions involving nature and social values. As a nal point, the emphasis on sustainability implies that moral managers should adopt a broad stakeholder approach that takes a leadership stance in face of the pressing and universal demands that economic activity places on our limited common resources. Although there are differences in our conceptual frameworks, I agree with Post (1991) in believing that sustainability is the prime issue confronting business today, and his concluding comment remains as compelling now as when he wrote it: One hundred years ago, business was on the verge of dening a scientic way to manage enterprises. Today, we stand at the edge of another transformation, in which the planet imposes the boundaries within which efciency and abundance are understood. It is a time of both promise and consequence. The promise is that we will nd an environmentally sustainable path into the twenty-rst century. The consequence of not doing so, as Churchill said of defeat, unthinkable.
Acknowledgments The author is grateful to the organizers of the 3rd Bergamo-Wharton Joint Conference on Stakeholder Theories, and the useful comments of anonymous reviewers who have helped in shaping the nal form of the article, as well as invaluable assistance from Elizabeth Lentini. Financial support was provided from the Marquette University Way-Klingler Faculty Research Fellowship.

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