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Agriculture, Consumption, and the Triple Bottom Line
As a champion of sustainability, I am often asked, "What does the term 'sustainability' really mean?" People wonder whether environmental sustainability is simply a passing trend, much as they wonder about social responsibility and sustainable development.
There can be no denying the academic debate regarding rapidly rising populations and the negative impacts of industrialization since the 18th century, when Thomas Malthus wrote An Essay on the Principle of Population. But the sustainability movement as it exists today is mostly a modern movement that gathered significant momentum in the post–World War II period.
The post-war consumer boom, along with rapid technological innovation, brought about a dramatic increase in the consumption of resources. Agriculture, too, changed dramatically after the end of World War II. Productivity soared due to farming industrialization; new technologies; mechanization; increased use of chemical pesticides and fertilizers; specialization; and government policies that favored maximizing production. These changes raised concerns about key resources being consumed too rapidly and the overall impact of human activity on the environment.
In the 1960s, environmental awareness grew considerably in the economically developed Northern Hemisphere. As this momentum grew, ecological thinking moved from academia to the mainstream. Rachel Carson's book Silent Spring, published in the United States in 1962, argued that the use of pesticides was killing off wildlife and inflicting damage on humans. An instant top seller, the book did much to alert the public to environmental concerns and is widely credited with kick-starting the environmental movement due to her criticism of the indiscriminate use of chemically based fertilizers, insecticides, and weed killers.
Silent Spring alludes to the impending disappearance of songbirds because of the long-term effects of the chemical pesticide DDT. Carson reported that birds ingesting DDT tended to lay thin-shelled eggs, which would break prematurely in the nest, killing the next generation of chicks. This drove bald eagles, peregrine falcons, and other bird populations to the brink of extinction — populations plummeted more than 80 percent in just one generation. Carson also highlighted the dangers of excessive pesticide use for our food supply, making organic agriculture attractive, as it eschewed the use of most synthetic pesticides.
By the late 1960s, headlines were filled with the efforts of various new organizations as they sought to raise awareness regarding global environmental concerns. Friends of the Earth, founded in 1969, became an international network in 1971 with support in the United States, Sweden, the UK, and France. Greenpeace grew out of the peace movement in the early 1970s Vancouver, and by the late 1970s had spread from Canada to become international in scope.
Throughout the 1970s, environmental science began to find its way into academic curricula, and environmental organizations were being formed locally, nationally, and internationally. In 1972, the Club of Rome, an international think tank, published The Limits to Growth, a highly influential book that modeled the consequences of a growing population on finite resources. It used computer simulations to predict the impact of changes and interaction among key variables, including population growth, pollution, food production, and resource depletion.
In 1987, the United Nations convened the World Commission on Environment and Development, headed by Gro Harlem Brundtland, a former Prime Minister of Norway. The Commission presented their report, Our Common Future (commonly known as The Brundtland Report), which offered the now-famous definition of sustainable development: "meeting the needs of the present without compromising the ability of future generations to meet their own needs." This definition is widely used today to describe what sustainability means.
Business and Sustainability: The Triple Bottom Line
As books like Silent Spring and intergovernmental reports like Our Common Future were having their impact on our understanding of ecology and the effects of human activity, businesses began to look for a new way to measure success beyond shareholder value.
The confluence of environmental, social, and commercial concerns gave rise to the concept of the "triple bottom line" method of measuring sustainable business performance. John Elkington, a leading authority on sustainability and corporate social responsibility, championed the triple bottom line to advance sustainability in business practices. Referring to a company's environmental, social, and economic performance, and the impacts of the company on its internal and external stakeholders, triple bottom line has become the basic matrix for gauging a company's sustainability efforts, measuring:
Profit: economic value created by the company, or the economic benefit to the surrounding community and society.
People: fair and favorable business practices regarding labor and the community in which the company conducts its business.
Planet: use of sustainable environmental practices and the reduction of environmental impact.
Since he coined the term "triple bottom line," Elkington has been in the vanguard of sustainable business. But even prior to this, in 1987, he co-founded Sustain-Ability — part activist, part think tank, and part consultancy operation located in London, which has, over the years, advised businesses like Dow Europe, Novo Nordisk, Procter & Gamble, Starbucks, and Unilever. Sustain Ability brokers consensus, agreement, and détente between nongovernment organizations (NGOs) and leading-edge companies, because both sides have trust and confidence in Sustain Ability's credibility and sincerity. They drove the evolution of the corporate reporting agenda and built a connection to financial reporting and higher regard within the financial community for corporate social responsibility (CSR) reporting. Greenpeace called them "campaigners in pin stripes."
Today Elkington wants most of all — and urgently — to drive transformative change. In his book The Zeronauts: Breaking the Sustainability Barrier, he posits that in order to move from incremental to transformative change, we must embrace wider framings, deeper insights, higher targets, and longer time-scales. This latest book investigates some ways in which leading Zeronauts — a new breed of innovator, entrepreneur, and investor — are determined to drive problems such as carbon, waste, toxics, and poverty to zero.
He believes that what has been an NGO activist agenda is starting to come into the mainstream. "Business is now waking up to the reality that if we carry on using the natural resources of the world unsustainably, they'll quite simply run out," he said in a 2014 interview. "With a burgeoning population, more people are living in poverty than ever before, inequalities are increasing in many parts of the world and unemployment rates are at frightening levels.
"Civil Society alone cannot solve the tasks at hand, while many governments are unwilling or unable to act. While there are myriad reasons we've arrived at this juncture, much of the blame rests with the principles and practices of 'business as usual.'"
Companies must move to initiate breakthrough innovations in their business strategies in response to demographic, environmental, and resource pressures. They must redefine the bottom line to account for true long-term costs throughout the supply chain. In The Breakthrough Challenge: 10 Ways to Connect Today's Profits with Tomorrow's Bottom Line, a book by Elkington and Jochen Zeitz, the authors advocate for chief executive officers (CEOs) to do just that, while highlighting their successes.
Indeed, many corporate CEOs have accepted the premise that sustainability issues are material to the long-term success of their business, and many mainstream investors are also embracing the sustainability agenda. Key drivers of sustainability that are not only reshaping the way businesses and governments operate, but also redefining the value they deliver, include consumer demand for sustainable products and services; stakeholder influence; resource depletion; employee engagement; capital market scrutiny; and regulatory requirements. A sustainable business seeks to combine environmental stewardship and social improvements with financial success. Making commitments on issues such as climate change, resource usage, ethical sourcing, human rights, labor, and community relations has become part of the cost of doing business. Reporting progress on these issues can only improve the company's reputation.
Environmental sustainability refers to the perpetual maintenance of vital human ecological support systems. This includes the planet's climatic system, systems of agriculture, industry, forestry, and fisheries and human communities. Furthermore, it is meeting human needs without compromising the health of natural, physical ecosystems. It involves making decisions and taking actions that are in the interests of protecting the natural world, with particular emphasis on preserving the capability of the environment to support all life. For businesses, environmental sustainability is about making responsible decisions that will reduce their negative impact on the environment. It is not simply about reducing the amount of waste produced or using less energy, but is concerned with developing processes that will lead to businesses becoming completely sustainable — becoming Zeronauts — in the future.
In an effort to meet the demands of their customers, businesses can and do deplete resources and cause damage to a great many areas of the environment. Some of the common environmental impacts include:
removing rainforests and woodlands through logging and agricultural clearing to provide for humanity's shelter, food, and warmth,
polluting waterways with industrial pollutants,
over-fishing of oceans, rivers, and lakes to satisfy the demand for fish,
polluting the atmosphere through the burning of fossil fuels to provide for transportation and energy needs, and
damaging prime agricultural and cultivated land through the use of unsustainable farming practices that feed populations through aggressive agriculture.
Social sustainability, often referred to in the business context as CSR, has been defined as "... the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as well as the local community and society at large." CSR has become a "catch-all" term for good business behavior, a process to embrace responsibility for a company's actions and encourage a positive impact on the environment, consumers, employees, and communities, including corporate giving and philanthropy. Sometimes called corporate citizenship, social performance, corporate responsibility (CR), sustainable business practices, or ethical and responsible business, this activity is essentially a form of corporate self-regulation.
The third element of the triple bottom line, economic sustainability, sometimes referred to as commercial viability, is a more complex picture, the nature of which cannot be fully understood without looking at both the internal and external setting in which an organization operates.
Why is economic sustainability important? For social and environmental purists, the only companies worth having around are the good guys — those who manage the environment responsibly and provide positive socio-economic benefits to the communities in which they're operating. In a sustainable economy, only the best should and will survive. They're the companies that put social and environmental sustainability at the center of their business strategies, while still remaining profitable.
These companies understand the business case for corporate responsibility, and by adopting sustainable practices they attract and retain employees; increase customer loyalty; reduce operating costs (e.g., energy, water); strengthen their supply chain(s); enable license to operate; and fulfill social commitments to communities and to the planet.
Some companies adopt sustainable practices to atone for past environmental mistakes; others are guided by personal convictions of the company's founder or senior executive. Both motivations have created strong CR leaders throughout the business community. These leaders have now established sustainability as a firm business strategy and a key pillar of their brand. And they have addressed the supply chain to ensure their suppliers also adopt the priorities of social and environmental responsibility and philanthropy.
These leaders have a priority to reduce their environmental footprint. They do so by measuring climate impacts while setting specific goals to reduce emissions. In addition, they determine which environmental challenges are the most material for their products and sector — water conservation, waste management, and packaging. They engage in dialogue and partnership with key stakeholders such as local government, community leaders, NGOs, and neighbors. They provide a great work environment for employees and engage them and their customers in CR programs.
Integrating Sustainability into Core Business
How can an organization incorporate sustainability into their core business strategy to become a sustainability leader, attain the same level of value and influence as other key elements of business performance, and use it to drive profitability, innovation, and engagement? Of all the strategies, integrating sustainability into the supply chain may be the most critical, especially for the agricultural industry.
Start at the Top
Ensuring environmental and social responsibility must rest at the top of the organization, with the CEO or business owner assigning clear responsibilities, resources, and leadership roles to address these issues on a day-to-day basis.
There must be a clear definition of what sustainability means for the company, addressing key issues, stakeholders, and spheres of influence relevant to corporate citizenship in the company and the industry. This is a process of materiality assessment based on products, lines of business, and geography, and determining the most important issues facing the business and leveraging them.
This concept comes from materiality in a company's financial reporting, where information is deemed material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements. Materiality in that context relates to the significance of transactions, balances, and errors contained in the financial statements. Materiality defines the threshold or cutoff point after which financial information becomes relevant to the decision-making needs of the users and must be publicly disclosed. In the corporate responsibility realm, this concept relates to what stakeholders believe are the most critical issues for the company and what the firm itself believes are its most critical environmental and societal issues.
Sustainability leaders focus on a narrow set of issues and goals for handling their concerns in a socially and environmentally responsible way — and they track progress. For most wine businesses, the likely material issues revolve around climate change, water reduction, sustainable packaging, and winery design and operations. But much also depends on the region, climatic conditions, the organization's culture, and external factors such as the economic circumstances of the surrounding community (and the community's expectations). Also, distance to market may be a material issue as it relates to energy use and emissions in transportation.
Look at the Supply Chain
As with Starbucks and their focus on coffee growers, examining a company's supply chain offers the greatest opportunities for innovation and bottom-line impact. Start by assessing the supply chain's effect on surrounding communities and the environment in order to design, preferably at the outset, processes with sustainability. Take particular note of those points in the chain that the business can control or influence. This could include raw material sourcing, manufacturing, packaging, warehousing, logistics (transportation and distribution), retail consumption, and post consumption.
Excerpted from "Business of Sustainable Wine"
Copyright © 2017 Sandra Taylor.
Excerpted by permission of Board and Bench Publishing.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
CHAPTER 1 Sustainability Defined: Agriculture, Consumption, and the Triple Bottom Line,
CHAPTER 2 Sustainability in Wine: Organic, Biodynamic, Sustainable, and Conventional Viticulture and Winemaking,
CHAPTER 3 Sustainability Around the World of Wine: A Review of Sustainable Certification Programs by Region and Industry Associations,
CHAPTER 4 Sustainability and the Customer: Educating and Marketing to the Consumer,
CHAPTER 5 Role of the Trade-Distributors, Retailers, and Restaurants: Educating the Crowd,
CHAPTER 6 Social Responsibility to Workers, Community, and Business Ethics,
CHAPTER 7 Measuring Sustainability and Carbon Emissions: Life Cycle Analysis and the Wine Value Chain,
CHAPTER 8 Conclusion: Greener Wines and a Better World,