Value chain and deep ecology

Posted on October 7, 2011

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There’s a  article in the Harvard Business Review that caught my eye recently (Thanks Dave). It’s by Yvon Chouinard, Jib Ellison, and Rick Ridgeway (Patagonia and Blu Skye).

They ask

“what if externalised costs could be quantified and assigned? What if we could get to the point where the lowest-priced T-shirt was also the one doing the least harm to the planet and society?

They identify trends in business’ relationship with sustainability: Sustainability 1.0 is compliance, 2.0 is strategic focus on value chains, 3.0 (now) is seeing a wholesale “considerations of impact pervade all decision making”.   Sustainability 4.0 won’t be required because, they say,  “sustainability will simply be how business is done”.  (I’m not so convinced by this latter argument, my upcoming book describes a 300+ plus year evolution of the concept, not just a couple of business fad-cycles.  But I digress).

Chouinard and co place great importance on the quantification of ecosystem services: how much would it cost to achieve the same benefits by other means?  They give the example of mangroves in providing erosion control and pest control, fresh water, clean air, and carbon sequestration.

Of course, the bounty of nature is priceless. But the unfortunate effect of our seeing these inputs to well-being as incalculable has been that they are treated as free.

They describe concerted efforts to internalise costs even “values of many aspects of our world traditionally considered priceless are being quantified so that they can be factored into economic equations”.   “Serious progress is being made” they say.

In the second part of the article “funding the high road” they describe the increasing role of sustainable investing:

Socially responsible investing has matured beyond negative screening to become a value-seeking discipline and positive impetus for change.

They talk about how the use of standardised protocols such as the Global Reporting Initiative allows investors to evaluate performance. Despite evidence such as the performance of the MSCI KLD Social 400 index (outperforming S&P 500 over 20 years), “to vote with your dollars has seemed an act of altruism”. Chouinard argues “the tide is turning” – largely due to the risks of exposure through social media and lawsuits.

The third trend is the value chain index – providing an “apples-to-apples comparisons of products on the basis of the impacts that accrue to them at each phase of their journey”. This goes beyond relying on certification of component products that address only a single impact category. Rather they talk of the impact of whole industry developments such the Sustainable Apparel Coalition. This will, the authors argue “usher in a new era of sustainability”.

I applaud these efforts.  Unfortunately I’m not convinced. And the reason I’m not convinced is a nagging thought that this doesn’t play nicely with Deep Ecology.

Arne Næss (1973) described the “Deep Ecology Movement”. Næss argued that ecology should not be concerned with man’s place in nature but rather with every part of nature on an equal basis because the natural order has intrinsic value that transcends human values. Thus we should “not only protect the planet for the sake of humans, but also, for the sake of the planet itself, to keep ecosystems healthy for their own sake”. The “Deep” comes from the deeper and holistic engagement the approach entails – asking why?

This “Deep Ecology” Næss contrasted with “Shallow Ecology movement” that has a focus on a “fight against pollution and resource depletion” and has the central objective of “the health and affluence of people in the developed countries” .

Deep Ecology has eight principles (three general and five derived). The eight principles are:

1. The well-being and flourishing of human and nonhuman life have value in themselves (synonyms: intrinsic value, inherent worth). These values are independent of the usefulness of the non-human world for human purposes.
2. Richness and diversity of life forms contribute to the realization of these values and are also values in themselves.
3. Humans have no right to reduce this richness and diversity except to satisfy vital needs.
4. The flourishing of human life and cultures is compatible with a substantially small human population. The flourishing of nonhuman life requires a smaller human population.
5. Present human interference with the non-human world is excessive, and the situation is rapidly worsening.
6. Policies must therefore be changed. These policies affect basic economic, technological, and ideological structures. The resulting state of affairs will be deeply different from the present.
7. The ideological change will be mainly that of appreciating life quality (dwelling in situations of inherent value) rather than adhering to an increasingly higher standard of living. There will be a profound awareness of the difference between bigness and greatness.
8. Those who subscribe to the foregoing points have an obligation directly or indirectly to try to implement the necessary changes.

Deep ecology’s core principle is the claim that, like humanity, the living environment as a whole has the same right to live and flourish. Thus valuing everything in terms of the cost benefit of human services isn’t just difficult, it’s wrong.

Back to Chouinard and colleagues. They conclude that progress in the three areas – valuing ecosystem services, sustainable investing and a focus on value chains – will result in “the long-sought alignment of a firm’s prosperity with the best interests of the planet (this) seems not only possible but inevitable”. I truly hope so. But I’m left waving a little flag “what about intrinsic value?”.

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Posted in: management