Calls mount to address tension between profit and sustainability

Cambridge and BSR call for major rethink, but Climate Week agenda insists ‘sustainability is a value creator for business and the environment’  

Debate about the trade-offs between sustainability and growth came to the fore this week, after two separate reports highlighted the current incompatibility between the two.

Cambridge University’s Institute for Sustainability Leadership (CISL) published a discussion paper focused on the “need to design out the prevailing tension between profitability and sustainability” in the financial system.

Its authors said it was “time to question the founding ideas and dominant approaches to corporate sustainability”.

“The core of the problem is that none of the target-setting, disclosure requirements and greater visibility of enterprise risk, change the fact that it still remains more profitable in most cases in the short term for businesses to trash the planet than to change,” they argued. 

CISL has been training and educating corporate leaders on sustainability issues since the 1980s. 

Its paper accuses “the majority of businesses, and the ecosystem of advisors and advocates that support them” of contributing to the failures by “creating the impression that we are making good progress, and thereby delaying required radical changes to markets and the policies that frame them”. 

However, it suggests the current economic system is capable of driving the required transformation.     

“We know from the history of industrial and technological revolutions that once unleashed, market dynamics are unstoppable… The fact that markets have not yet delivered for sustainability – beyond limited examples like the increasingly explosive growth of renewables – does not mean that markets cannot deliver, only that we have not yet designed them to do so.”

Meanwhile, another report published this week, also exploring “the mounting tension between growth and sustainability”, argued the current system is not adequate.  

“The rate and scale of production and consumption perpetuated by the current  economic system has become unsustainable, regardless of how resource efficient we become,” warned BSR, a 300-strong network of companies interested in sustainability and corporate responsibility. 

“There is strong evidence that relative decoupling is unlikely to happen in the time frame and at the scale needed, and that absolute decoupling – where economic growth and a total reduction of resource use takes place – is highly unlikely, if not impossible.” 

The report urged “a more fundamental rethink of our economic system and business models,” and suggested alternatives, such as ‘post-growth’ or regenerative economy. 

The two papers come as the UN General Assembly today rubber-stamped a new agreement, which includes a re-commitment to the goals of the Paris Accord for its 193 member countries. 

The ‘Pact of the Future’ covers everything from the future of sovereign debt and development finance, to weapons and space exploration. On the environmental side, it pledges to move away from fossil fuels and do more to protect and restore ecosystems.  

The curtain has also just lifted on New York Climate Week, an annual event that sees  thousands of companies, politicians, NGOs and investors come together to discuss what’s needed to transition to a net-zero economy. 

In contrast to CISL and BSR, the event continues to frame the green transition as a win-win, with its organisers claiming “sustainability is a value creator for business and the environment”. 

“In the year ahead, we must deliver on the provision of capital flows to power our twin plan to protect the environment and spearhead growth,” its agenda states.