ABSTRACT. This paper offers directions for thecontinuing dialogue between business ethicists andenvironmental philosophers. I argue that a theory ofcorporate social responsibility must be consistent with,if not derived from, a model of sustainable economicsrather than the prevailing neoclassical model of marketeconomics. I use environmental examples to critiqueboth classical and neoclassical models of corporatesocial responsibility and sketch the alternative modelof sustainable development. After describing someimplications of this model at the level of individualfirms and industries, I offer an ethical justification ofthe sustainability alternative that is derived fromthe same values that underlie traditional marketeconomics.

This paper offers directions for the continuingdialogue between business ethicists and environ-mental philosophers. I hope to focus thatconversation onto a topic that is critical to eachfield: corporate social responsibility in the ageof sustainable economics. While a longer-rangechallenge is to work out the specific ethicalimplications that a shift to sustainable economicswould have for individual firms and industries,this paper is more programmatic. Here, I seekonly to lay the conceptual groundwork for sucha project and suggest directions for future work.

An adequate account of corporate environ-mental responsibility should do two things: it

should address the entire range of environmentaland ecological issues affected by business deci-sions in a way that might actually turn the tideof environmental and ecological deterioration;and it should be capable of influencing businesspolicy. It seems to me that much of the workdone by business ethicists to date fails the firstcriterion; much work done by environmentalethicists fails on the second.

A brief consideration of the present economic,population and ecological realities suggests theimportance of integrating these fields. Considerthree relevant facts. First, a significant percentageof the world’s population live at or below aminimal level of subsistence. One quarter of theworld’s population live in industrialized countriesand they consume 80 percent of the world’sgoods. To meet just the simple needs andminimum demands of the other 75 percent ofthe world’s population, significant economicactivity is necessary over the next few decades.One estimate holds that a fivefold increase inenergy use and a five-to-tenfold increase ineconomic activity would be required over thenext 50 years to bring the standards of living forthe present population of developing countriesinto line with that of people in the industrializedworld.1

Second, even conservative estimates suggestthat during these fifty years world population willdouble, bringing the total world population toover eleven billion people.2 Thus, economicactivity needs to increase minimally by ten-to-twentyfold to bring the standard of living of theactual world population in fifty years into linewith that enjoyed by people in the industrial-ized present.3

Finally, we must recognize that the only source

Corporate EnvironmentalResponsibility

Joe DesJardins

Journal of Business Ethics

17: 825–838, 1998.© 1998 Kluwer Academic Publishers. Printed in the Netherlands.

Joe DesJardins is Professor and Chair of the PhilosophyDepartment formed jointly by The College of St.Benedict and St. John’s University. He is co-editor, withJohn McCall, of Contemporary Issues in BusinessEthics now in its third edition from WadsworthPublishing, and author of Environmental Ethics, alsopublished by Wadsworth.

for this economic activity, ultimately, are thenatural resources of the planet. The threestandard factors of production – natural resources,capital, and labor – all derive from the produc-tive capacity of the earth. In simple terms, rawmaterial, energy, and food are the essentialelements of all economic activity. Yet, the pro-ductive capacity of the earth is already undersignificant stress. For example, one estimatesuggests that if the world’s population in fortyyears consumed nonrenewable mineral and petro-leum resources at current U.S. rates, theseresources would last fewer than 10 years.4

These three factors – deep world-widepoverty, increasing population growth, andlimited resources within an already threatenedecosphere – raise a serious economic and moraldilemma. Significant economic activity will benecessary to meet the basic needs of an increasinghuman population, yet economic growth itselfis responsible for much of the environmentaldegradation which already jeopardizes the possi-bility of meeting even present needs. It wouldseem that continued economic growth alone willnot resolve this dilemma.

Nevertheless, much of the work being doneby business ethicists continues to operate withinthe paradigm of neo-classical economics. For themost part, corporate social responsibility isderived from the role that business plays withina demand-driven economic system. Most main-stream views on corporate social responsibilityhold that responsible business activity flows fromthe nature of the economic system in whichbusiness operates. On this view, firms and indus-tries are society’s tools for attaining the ethicalgoals of a market-driven economy; namely, thesatisfaction of those social demands that getexpressed in the market.

Since economic growth is an assumed goodwithin this economic system, standard views ofcorporate social responsibility implicitly presup-pose the moral legitimacy of economic growth.For example, the classical model of corporatesocial responsibility argues that economic effi-ciency and obedience to the law is sufficient forsatisfying moral responsibility. Neoclassicalmodels argue that once minimal moral con-straints are met, economic efficiency should

remain the primary measure of the social respon-sibility of business.

In contrast, if any consensus has emergedamong environmental philosophers, it is thatunrestrained markets and economic growth areecologically and ethically deficient. Economicsustainability, in which a qualitative under-standing of “development” replaces the morequantitative conception of “growth,” provides amore acceptable economic vision according tomany environmental philosophers. Economicgrowth, and the unrestricted consumer demandthat drives it, is, on this view, a primary causeof environmental and ecological deterioration. Atpresent, it seems incapable of meeting the basicneeds of billions of people and, given continuedpopulation growth, continued reliance oneconomic growth to solve social problems issurely unwise. Thus, to the degree that main-stream views on corporate social responsibilityassume the ethical legitimacy of economicgrowth, they rest on a serious environmental, andethical, mistake.

In this paper I argue that a theory of corpo-rate social responsibility must be consistentwith, if not derived from, a model of sustainableeconomics rather than the prevailing neoclassicalmodel. I use environmental examples to critiqueboth classical and neoclassical models of corpo-rate social responsibility. Next, I sketch thealternative model of sustainable development andits implications at the level of the firm andindividual industries. Finally, I suggest how ajustification for this alternative can be derivedfrom the same values that underlie growth-basedmarket economics.

The critique of classical model

The classical model of corporate social responsi-bility is succinctly captured in this shortquotation from Milton Friedman, perhaps its bestknown defender:

there is one and only one social responsibility ofbusiness – to use its resources and engage in activ-ities to increase its profits so long as it stays withinthe rules of the game, which is to say, engages in

826 Joe DesJardins

open and free competition, without deception orfraud.5

The rationale for this view clearly follows fromthe role of corporations within a free marketeconomic system. Corporations are organized toprovide the most efficient means for producinggoods and services and thus for satisfyingconsumer demand. In an open and competitivemarket, the prices of goods and services areestablished by the willingness of consumers topay for them. Willingness to pay, in turn, is ameasure of how much value a consumer placeson the particular product. Thus, in general, anincrease in profits is evidence that goods andservices are going to those people who mostvalue them. Profits, therefore, are the measureof how efficiently a manager is using resourcesto meet consumer demand; increased profitreflects the most efficient use of resources insatisfying consumer demand. Indeed, the justifi-cation of managerial authority lies in the fact thatmanagers have the experience, knowledge, andskills to arrange resources to most efficiently meetconsumer demand.

The classical model of social responsibilitydenies that business has any direct environmentalresponsibility. The classical model sees business ascooperating with society in attaining the envi-ronmental goals freely chosen by consumers inthe marketplace. Business serves these environ-mental goals not by taking on any special envi-ronmental responsibility, but by fulfilling itsfunction within a free market economic system.

Philosophical challenges to the classical modelare well-known and a full review is unnecessaryhere. We need mention only three that are par-ticularly relevant for environmental concerns.

First, a variety of market failures demonstratethat markets offer no guarantees of successfullymeeting society’s demands. Externalities such aspollution and resource depletion, and goods forwhich no pricing mechanism exists, such as thesurvival of an endangered species or the scenicbeauty or historical significance of a landscape,provide examples where market failure leads toenvironmental destruction.

A second challenge points out that businessinterests on the “micro” level of individual firms

and industries are not always identical to the“macro” level goals of the market. One way inwhich a corporate manager can maximize profitsis to lobby government to protect the particularfirm or the particular industry from marketforces. The savings and loan bailout, importtariffs, farm price supports, and countless otherexamples of government subsidies demonstratethe divergence of business and market interests.On-going debates over below-market sales forgrazing and timber rights on public landsthroughout the American West are perhaps moreenvironmentally relevant examples. In all of theseexamples the business goal of profit maximiza-tion (or, more to the point, survival) is incom-patible with the market goal of optimalsatisfaction of consumer preferences.

The upshot of this is that there are noguarantees that the interests of individual busi-nesses or of particular industries will overlap withthe good of society. The environmental implica-tions of this is should be apparent. Even assumingthat society’s interests are captured by the market,it is too risky to assume that these interests willalways be served by the unrestricted self-inter-ested decisions of corporate managers. Thisassumption is particularly risky when irreversibleenvironmental decisions are made, as when, forexample, habitat is destroyed, wilderness devel-oped, species extinguished, or nonrenewableresources used. Further, this risk seems evenmore dangerous when we recognize the immenseinfluence that business has in shaping the polit-ical agenda.6

A final challenge raises a more general andfamiliar problem with the ethical goal of freemarket economics. Ultimately, the classical modeltakes as its most fundamental ethical goal themaximum satisfaction of those individual prefer-ences that get expressed in markets. The “goodof society” that Friedman identifies as the goalof Smith’s invisible hand is simply the satisfactionof consumer preferences. But given that humanpreferences can include those that are both sillyand immoral, we cannot assume that themaximum satisfaction of preferences is an ethicalgoal. As Mark Sagoff has convincingly argued,there is no reasonable, non-question begginganswer to this question.7 We have little reason

Corporate Environmental Responsibility 827

to assume that there is a moral content to theparticular preferences expressed in the market.Depending on what people in fact prefer,maximally satisfying preferences could turn outto produce vacuous, trivial, immoral, or unjustresults.

The environmental implications of this chal-lenge are enormous. For the entire range of issuesin which economic growth competes withenvironmental or ecological ends, the classicalmodel necessarily locates corporate responsibilityon the side of economic growth. In this respect,economic growth is simply another phrase forincreased satisfaction of consumer preferences.Whatever one thinks about any particular issuethat clashes with economic growth – issuesranging from wilderness protection to conservingbiodiversity, from global warming to the moralstatus of animals, and from energy conservationto pollution control – it is dangerous to assumethat satisfying consumer preferences is in prin-ciple the morally justified goal or that it willproduce environmentally benign outcomes.

The neo-classical model

While the problems with the classical model arewell-known, it remains firmly embedded incontemporary culture. In response to many ofthese problems, revised versions of the classicalmodel now dominate discussions of corporatesocial responsibility within the field of businessethics. According to Norman Bowie, “somethingof a consensus has emerged in the past ten yearsregarding the social responsibility of business.”Bowie refers to this “neoclassical” model ofcorporate social responsibility as holding thatcorporations ought to seek profits while never-theless obeying a “moral minimum.”8

This moral minimum is interpreted in differentways by different versions of the neoclassicalmodel. Bowie favors “avoiding harm” as themoral minimum. Others might argue thatbusiness has the obligation to fulfill its socialcontract with society, or that business has ethicalresponsibilities to a variety of stakeholders, orthat business ought to respect the moral rightsof employees and consumers.9 With this focus on

a “moral minimum,” the neoclassical model seeksto overcome the obvious ethical deficiencies ofthe classical view.

Bowie’s views are representative of the neo-classical revisions of the classical model. His viewson business’ environmental responsibilities, forexample, offers answers to the three challengesmentioned above. Bowie suggests that govern-ment regulation has a legitimate role in cor-recting market failure. Thus, the law steps in toimpose obligations on business where marketsfail. To counter the possibility that business mightuse its political influence to set the environmentalagenda, Bowie argues that business has a specialobligation “to avoid intervention in the politicalprocess for the purpose of defeating or weakeningenvironmental legislation.”

Most importantly, to insure that the workingsof the market will have moral content, Bowieinterprets the moral minimum as includingprotection of individual health, safety, and basicfreedom.10 The point of establishing a moralminimum is to exempt some goods from theutilitarian trade-offs that typify markets. Somethings are so valuable that we morally ought notto sacrifice them even if doing so would resultin a net increase in overall satisfaction.

This neoclassical approach has the decidedadvantage over the classical model of providinga genuine moral limit on the pursuit of profit.A moral minimum is incorporated into the “rulesof the game” and becomes part of standardbusiness practice. Of course, this minimumestablishes constraints upon managerial practice.Managers are not free to do just anything in theirpursuit of profit. But, economists have longrecognized that all markets operate within con-straints, the physical limits imposed by natural,scientific laws being the most obvious. Theclassical model of corporate social responsibilityincorporates further legal constraints, as well asprohibitions against fraud and coercion, as partof these limits. The neo-classical model simplyexpands this to include moral constraints as well.Thus, the mark of a skilled manager is optimizingprofits within the constraints established by therules of the game.

From an environmental perspective the neo-classical model seems capable of offering signif-

828 Joe DesJardins

icant protection of the natural environment.Environmental concerns need only be integratedwithin the moral minimum to become part ofbusiness’ social responsibility. The challenge isto develop an account of environmental respon-sibilities that is sensitive to a wide enough rangeof environmental and ecological concerns yetplausibly within a “moral minimum” that can stillmotivate business compliance.

However, on Bowie’s own view no directenvironmental responsibilities fall within themoral minimum. Bowie believes that there needsto be trade-offs between environmental harmsand the utility of the goods and services producedby business. Further, he argues that finding thisbalance is best left to the “social consensus” thatemerges through the competitive workings of themarket.11 But, this is to say that environmentalconcerns are outside the moral minimum sincethat minimum exists precisely to prohibit suchtrade-offs between moral and economic ends.

My biggest hesitation with this model lies withits continued reliance on consumer demand insetting environmental limits to business conduct.Economic growth, understood as continuedsatisfaction of whatever preferences get expressedin the market, remains an implicit value of theneoclassical model. However, we have strongevidence to suggest such unconstrained demandwill not resolve the dilemma created by poverty,population growth, and environmental destruc-tion. I wish to argue that significant environ-mental considerations, like other significantmoral responsibilities, must be incorporatedwithin the moral minimum and thus serve as areal moral limit on both business activities andconsumer demand.

Neoclassical alternatives

The neoclassical model of corporate socialresponsibility nevertheless does hold greatpromise. Since it is developed out of standardmarket economics and thus assumes the legiti-macy of the “profits-through-growth” paradigm,this model is attractive on practical grounds. Itcan generate significant social responsibilities forbusiness without asking for heroic sacrifices. It

is plausible to think that environmental concernscan be incorporated into the moral minimum.A variety of strategies might be taken to meetthese goals.

One strategy would be to argue that naturalobjects like animals and trees have moralstanding. In this way, the well-known views ofPeter Singer, Tom Regan, or Christopher Stonemight be incorporated into the neoclassicalmodel by restraining the pursuit of profit in thename of animal suffering, animal rights, or therights of trees and other natural objects.

This seems to be the strategy taken by W.Michael Hoffman in a recent essay.12 Like Bowie,Hoffman argues that the moral minimum shouldbe understood in terms of the harm principle,but unlike Bowie he suggests that this principleshould include harm to nonhumans. Hoffmansupports a biocentric (or “life-centered”) ethicsin which all living beings have intrinsic value andtherefore have moral standing. However, thisversion of biocentric ethics is problematic onboth practical and environmental grounds.

There are serious practical difficulties for thestrategy of incorporating a biocentric ethics (anyethics which extends moral standing on the basisof life) into the moral minimum. Taken literally,a deontological biocentric ethics would prohibitall forms of economic activity. “Do not harmliving things” as a moral minimum wouldprohibit not only most forms of business activi-ties, but most forms of human activity as well(what would we eat?). A consequentialist bio-centric ethics (“minimize harm to all livingbeings”) is more plausible, but still would requireimpossibly difficult calculations before acting.

Of course, biocentric ethics need not be ofthese extreme versions. Hoffman and otherdefenders of this approach suggest developmentof some criteria for rank-ordering the interestsof living things.13 Nevertheless, working out sucha hierarchy of interests (as would be required byeither the deontological or consequentialistversion) and using this hierarchy to restrainbusiness activity strikes me as prohibitivelyimpractical. Does the human interest in skislopes outweigh the life interests of trees, or theunobstructed habitat interests of deer? Would itmatter if developers were building an exclusive

Corporate Environmental Responsibility 829

housing development rather than a ski slope?Would it matter if they were building low-income housing? or a farm?14

More importantly, I suggest that this biocen-tric approach will fail both criteria introducedat the start of this paper. It will be unlikely tohave significant influence on business policy,and it does not address a wide enough range ofenvironmental issues.

Despite some success of laws such as theEndangered Species Act and those regulating theuse and treatment of animals in research and foodproduction, I think that the political realities aresuch that this strategy is not likely to providemore than a token limitation on economicgrowth. To influence business decisions effec-tively, the biocentric approach must assume thatmanagers and policy makers will be motivated byappeals to the interests of such things as plantsand animals. Frankly, I think this unlikely tohappen. Rather, effective policy should appealto the interests, albeit long-term, of humanbeings.

But even assuming that we could developsome practical biocentric guidelines for corpo-rate social responsibility, it is not clear to me thata biocentric ethics will prove environmentallyadequate. Three challenges suggest why a bio-centric approach is ecologically incomplete.

First, a strict biocentric view will have diffi-culty identifying the beneficiary of some respon-sibilities. Let us use the well-know Exxon Valdezcase and follow a biocentric suggestion that wegrant legal standing to individual living things.Let us also assume that the rights of many livingbeings have been violated by the negligentoperation of the oil tanker. To whom, therefore,would Exxon owe compensation for theseharms? Since the living beings whose rights havebeen violated are dead, they are unable to benefitfrom any restoration program.

Of course, a plausible suggestion is that in suchcases the species or ecosystem should be compen-sated in the form of restoration and replanting.That is, a more holistic or “ecocentric” ethicswould identify both the harms and the benefi-ciaries in terms of systems rather than individ-uals. Unfortunately, a biocentric ethics wouldneed a concept of life broader than ones typically

used in order to integrate species or ecosystemsinto its consideration.

A second challenge raises a similar point.There is no guarantee that preventing harm toindividual organisms will provide ecologicalbenefits. In fact, there are examples whereprotecting the interests of individual living organ-isms harms rather than protects the ecosystem.The familiar example concerns the over-popu-lation of deer which has disastrous consequencesfor many local habitats. The point is that indi-vidual organisms, including humans, are part ofcomplex ecological communities. These com-munities involve an intricate balance of inter-dependencies. For many environmentalists,maintaining the equilibrium within naturalecosystems should be the primary goal of anenvironmentally sound ethics.15

The third challenge is that a biocentricapproach can tend to neglect important envi-ronmental issues like resource depletion,ecosystem destruction, and wilderness preserva-tion. At best, the biocentric approach viewsecosystems as habitat in which morally consid-erable beings live. While I would not defend atotal preservationist view, something more needsto be said about the value of ecosystems, habitat,and wilderness.

The point of these challenges is to suggest adifferent strategy for incorporating environmentalconcerns into the moral minimum. This strategywould argue that a more holistic and ecologicalperspective is environmentally preferable to theindividualism implicit in the biocentric approach.On this view, the moral minimum would needto incorporate avoidance of harm to ecosystems,rather than merely to individual living organisms.This ecocentric approach can be tied to humanself-interest since without a healthy ecospherehuman well-being is threatened. It also providesa broader and more satisfactory environmen-talism.

We can draw three general conclusions fromwhat has been said so far. First, models of cor-porate social responsibility that rely on standardversions of market economics and economicgrowth will likely prove environmentally andeconomically inadequate in the near future(taking a cue from Dr. Suess, we might call this

830 Joe DesJardins

the “Lorax Principle”). Second, theories ofcorporate social responsibility that diverge toomuch from market economics are unlikely to beconvincing in the present context. To have anyhope of directing corporate policy, ecologicalprinciples must be tied to the (long-term) self-interest of business. It has been all too easy forenvironmental positions to be dismissed asbeyond the fringe. Finally, environmental respon-sibilities will be incomplete unless they includemore holistic and ecocentric perspectives.

Corporate social responsibility and sustainable development

The alternative that I suggest holds that businesshas a moral responsibility to insure that itsactivities be ecologically sustainable. We can saythat the household’s “nomos” must be broughtinto line with its “logos”. The “moral minimum”that constrains economic activity should includeecological sustainability. I argue that the sustain-ability alternative can provide ecologically soundand practical guidance. Business remains free topursue profits within the rules of the game;but the rules must be changed to include theobligation to leave natural ecosystems no worseoff in the process.

As mentioned earlier, all markets operatewithin constraints, the physical limits imposed bynatural, scientific laws being the most obvious.The classical model of corporate social responsi-bility incorporates legal constraints while theneo-classical model includes moral constraints aspart of these limits. The sustainable developmentmodel seeks to combine the natural constraintsestablished by ecological laws with minimalmoral constraints placed upon business activity.

In light of the poverty-population-environ-mental destruction dilemma, the rules of thegame must be adjusted to insure that theeconomic system (and the firms and industriesthat operate within it), fulfills its social function.Since humanity still requires significant economicactivity to provide for the basic needs of anincreasing population, the rules must be changedto transform this activity from unrestricted growthto development.

It should be noted at the outset that “sustain-ability” and “sustainable development” are con-troversial ideas within ecological circles, beingjudged not “deep” enough by some environ-mentalists. Sustainable development presupposes,after all, the legitimacy of using natural objectsand other living beings as resources for humanends. Thus, defenders of animal welfare/rights,as well as supporters of a preservationist ethic forwilderness areas and ecosystems, are suspicious ofsustainable development. Deep Ecologists andSocial Ecologists likewise would argue that sus-tainable development continues to concentratetoo much power in the hands of too few cor-porations. Nevertheless, as a basis for corporateenvironmental responsibility, sustainable devel-opment offers the best hope for meeting the twocriteria of adequacy mentioned at the start of thispaper. Sustainability can be understood in sucha way that it can address a wide enough rangeof environmental and ecological issues. It alsocould turn the tide of environmental deteriora-tion in a way that has a reasonable chance ofinfluencing business policy.

One simple statement of the concept ofsustainability comes from the World Commissionon Environment and Development. Sustainabledevelopment “meets the needs of the presentwithout compromising the ability of futuregenerations to meet their own needs.”16 If weaccept this as a moral principle limiting businesspractice, then business would have an obligationto avoid harming the ecosphere, understood asthe interdependent community of living organ-isms and their non-living physical environment.Business activity would be considered as harmingthe ecosphere when it uses resources at unsus-tainable rates or creates wastes that cannot beabsorbed by the ecosystem.

Economist Herman Daly is perhaps the best-know defender of sustainable economics. OnDaly’s view, the distinction between “develop-ment” and “growth” is at the heart of sustain-able economics.

To grow means “to increase naturally in size by theaddition of material through assimilation or accre-tion.” To develop means “to expand or realize thepotentialities of; to bring gradually to a fuller,

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greater, or better state.” When something grows itgets bigger. When something develops it getsdifferent. The earth ecosystem develops (evolves),but it does not grow. Its subsystem, the economy,must eventually stop growing, but can continue todevelop. The term “sustainable development”therefore makes sense for the economy, but onlyif it is understood as “development withoutgrowth.”17

To develop this model further we need toanswer several questions. What does it mean tosay that some activity is ecologically sustainable?What would it mean to say that business has aresponsibility to avoid harming the ecosphere?What reasons can be given to include thisresponsibility within the moral minimum?

If we consider the dilemma mentioned at thestart of this paper, we can gain an insight intothis sense of economic development. Significanteconomic activity will be necessary to meet thebasic needs of an increasing world populationover the next few decades. Yet, it would seemthat this needs to be a type of economic activityunlike the growth that has characterized modernindustrialism. On the other hand, in a world ofeleven billion people, it is unrealistic to thinkthat humans can return to some non-industrial,ecologically benign economy. Nor is it reason-able to move towards a command economy inwhich business and industry are directed to meetconsumer needs before satisfying preferences.

The solution to this dilemma requires a robusteconomy of a qualitatively different type: aneconomy that strives to meet basic needs whileconstrained by ecological realities. In short,economic activity that “meets the needs of thepresent without compromising the ability offuture generations to meet their own needs.”Following Daly, we can call such economicactivity “development” to contrast it with theunrestricted activity of “growth.”

By connecting economics to ecology, thesustainability model is preferable to the biocen-tric alternatives described previously. Individualelements of an ecosystem (plants, animals, non-living natural objects) can continue to be usedas economic resources; they do not have moralstanding, or rights, as individuals. Moral consid-eration should be given to the system. individual

elements of an ecosystem can be used for humanends as long as the system itself remains stableand healthy.

Of course, “sustainability” is problematicwhen applied to ecosystems. All ecosystemschange over time, including fairly radical changesover the long term. Individual ecosystems arecreated, develop, decline, die. Hence, changerather than stability would seem a more appro-priate characteristic of ecosystems. But how doesone sustain change and how does change provideethical norms? What is needed is an account ofecosystem well-being that is well-grounded inscientific understanding and yet fertile enough toprovide reasonably clear normative guidance.What is it that we are trying to “sustain” andwhy should we value is it?

Developing a full account of ecological sus-tainability is beyond the scope of this paper.Nevertheless, I think we could defend someminimal conditions for ecosystem well-being, notthe least of which is the ability to sustain diverseforms of life over time. Two important elementsof sustainable development involve the scale andthe rate of ecological change. Ecological changethat is too rapid, to wide-spread, and too uncon-trolled will jeopardize the ability of an ecosystemto sustain diverse life over time.

In general, the implication is that business maycontinue to seek profit by converting naturalresources to meet the demands of the market.This model continues to appeal to rationalself-interest as its motivating consideration.Significant economic activity is required in orderfor business to meet the needs of an increasinghuman population in an already ecologically-stressed world. Entrepreneurial opportunitiesabound. However, business has the obligation touse resources at appropriate rates and compen-sate ecosystems for the loss of productive capacitycaused by its activity. A helpful image forunderstanding these responsibilities is to thinkof natural resources as capital. Our economic goalshould be maximum sustainable yield in whichwe live off of the income generated by thatcapital without depleting the investment itself.

More specifically, as we move from level ofeconomic models towards the level of responsi-bilities for specific firms and industries, we

832 Joe DesJardins

should adopt three general normative principles.First, renewable resources ought not to be used at ratesthat exceed the system’s ability to replenish itself.Agriculture and forestry are two industries thatwould have clear responsibilities in this respect.But any business that uses plant, animal, air andwater resources (i.e., most businesses) must insurethat these resources are being used at sustainablerates. Failure to do so would require reparationfor these harms.

The well-known case of Pacific Lumber illus-trates this principle. For over a century, PacificLumber was operated as a family-run business,managing its timber reserves on a policy ofsustained yield. This policy provided a stablesupply of timber and stable profits over the long-term. However, it proved not to be profitableenough.

In 1986, financed by $900 million in DrexelBurnham Lambert junk bonds, corporate raiderCharles Hurwitz took control of the companyin a hostile takeover. To repay these debts, a moreaggressive management style was required. Therate of timber harvest was increased, clear-cuttingtechniques used, replanting projects abandoned,and old-growth forests were opened to harvest.The long-term results were tragic both ecologi-cally and economically.

Ecologically, thousand-year-old trees were cutfor the short-term profits of present shareholders.Clear-cutting this timber caused significanterosion and pollution. Habitat for many species,including the infamous spotted owl, wasdestroyed. While present shareholders reapedimmediate profits, increased harvests meant thatlong-term profits were lost as these assets weredestroyed. Workers, as well, were harmed whenthe company’s pension plan was terminated torepay the debt from the leveraged buy-out. Onecan only conclude that greed, and not goodbusiness sense, motivated the change from thepolicy of sustained yield.18

Second, non-renewable resources can be used onlyat the rate at which alternatives are developed or lossof opportunities compensated. Industries that rely onnon-renewable resources, ranging from wilder-ness areas to fossil fuels, would have an obliga-tion to insure future opportunities to obtain thebenefits of these resources. Humans value such

resources both intrinsically and instrumentally.The political realm is the proper place fordeciding which resources should be preservedand protected for their intrinsic value. But whensuch resources are used to produce goods andservices, business has a responsibility to use theseresources appropriately. Once used, we cannotrecover these resources; but we can compensatefuture people for the loss of these resources byinsuring that these future people have equalopportunities for using (but not using up) theseor similar resources. Industries that rely on non-renewables have an obligation to compensate forthe loss of productive capacity that would followany use of non-renewable resources.19 (Thisprinciple might also provide a basis for arguingthat if some “resources” are irreplaceable, e.g.,endangered species, wilderness areas, historicmonuments, then an outright legal prohibitionto their use is necessary.)

Finally, wastes and emissions should not be gener-ated at rates that exceed the capacity of the ecosystemto assimilate them. Waste and inefficiency are morethan just economic wrongs, they are moral andenvironmental wrongs as well. Use of recycledmaterials in production, producing goods thatcan be recycled, and recycling by-products ofproduction would be clear responsibilities.Indeed, the responsibility to take back a productafter its consumer use, e.g., recycling used cars,should also be a part of business’ responsibilities.Again, internalizing these costs would be a sig-nificant means for accomplishing this goal.

We can go on to sketch a wider range of morespecific responsibilities that comply with thesegeneral obligations. First, all external costs shouldbe internalized. Disposal costs for automobiles,for example, should be a part of the initial price.As it does within neoclassical economics, priceshould play a major role in shaping consumerdemand. Obviously, we also have the responsi-bility to conserve resources. Restoration of anecosystem to its former productive capacityshould be part of this moral minimum. Researchand development aimed at finding ecologicallybenign products and production techniques isanother responsibility. For example, utility com-panies should make a substantial investment forsolar energy research and should encourage

Corporate Environmental Responsibility 833

conservation. Again, internalizing the costs ofsuch activities would make present prices moreaccurately reflect true costs. In general, researchand development aimed at providing present andfuture people with an equal opportunity forattaining a decent life should accompany any useof nonrenewable resources.

In summary, industries ought to be modeledon ecosystems.

In such a system the consumption of energy andmaterials is optimized, waste generation is mini-mized and the effluents of one process – whetherthey are spent catalysts from petroleum refining, flyand bottom ash from electric power generation ordiscarded plastic containers from consumerproducts – serve as the raw material for anotherprocess.20

Obviously this is just a sketch and much workneeds to be done to fill in the details. Forexample, would this model sanction the destruc-tion of a swamp for a housing development? Partof the answer would depend on what one meansby an ecosystem, part would depend on ourunderstanding of just compensation, part woulddepend on the specific ecological facts of thearea. My hope is that working out these detailswould become the future direction of appliedbusiness ethics.21 Perhaps it is time we de-empha-size the concern with traditional issues likedeceptive advertising and conflicts of interest andturn to the details of ecological responsibilities.How, in short, can business meet the increasingdemands of a developing world and of an increas-ingly large future population in ways that do notthreaten the productive capacity of the naturalecosystem?

Sustainable development and justification

The final challenge to this alternative is toprovide an ethical justification for this model. Itis important to note that a variety of rationalesare available for this approach. Among environ-mentalists, one might develop arguments basedon the intrinsic value of the natural world (apreservationist approach), or upon more pru-dential reasons (the conservationist approach). In

what follows, I will sketch justifications thatmight be developed through an examination ofthe values underlying economic markets.22 Myhope is to provide a rationale that is not inci-dental to business interests and thus provide somemotivating reasons of managerial ethics.

As a first step we should answer the criticalchallenge that would arise from both classical andneo-classical models of corporate social respon-sibility: sustainable development may very wellbe an attractive moral goal, but it is a responsi-bility that belongs to consumers and government,not to business. Business is, after all, merely a toolfor attaining those social goods chosen by citizensthrough the legitimate political means of marketsand law. Even if the economic model of sustain-able development were justified, this would nottranslate into ethical responsibilities at the levelof firms and industries.

But to say that consumers and governmenthave these responsibilities is not to deny thatmanagement has them as well. Any “moralminimum” implies moral responsibilities on thepart of all relevant moral agents. Consider howthe prohibition against fraud and coercionfunctions within the classical model of corpo-rate social responsibility. Fraudulent or coercivetransactions frustrate the maximum satisfaction ofconsumer preferences (happiness) and violatefreedom of choice. Even Milton Friedman doesnot leave the enforcement of these prohibitionsto the social consensus that emerge from markets.These constraints upon managerial prerogativeare part of the “rules of the game,” insuring thateconomic markets will attain their goal.

I argue that we should understand the eco-logical constraints of sustainable development ina similar manner. These, too, should become partof the “rules of the game,” functioning as moralconstraints upon managerial authority andnecessary to insure the successful operation of theeconomy over the long-term.

This challenge to sustainable development alsounderestimates the influence that business has inshaping consumer demand. Consumers don’tmake their demands in a marketing and adver-tising vacuum.

Most importantly, however, is the recognitionthat business decisions are, least partially, respon-

834 Joe DesJardins

sible for much environmental and ecologicalharm. Business managers have significant latitudein seeking to satisfy consumer demand. This,after all, provides the rationale for managerialauthority. It would be disingenuous for manage-ment to defend managerial prerogatives andexpertise and then deny responsibility for theresults of those decisions by claiming that theywere merely “responding to the demands of themarket.” Thus it does make sense to say thatbusiness itself must share the moral responsi-bilities derived from the goal of sustainabledevelopment.

Next, we need to address the justification forthe economic model of sustainable development.Historically, markets receive their moral justifi-cation from two sources: they tend to promoteindividual freedoms and they tend to be efficientmechanisms for producing and distributingeconomic goods and services. We can call thesethe liberal and utilitarian rationales. A plausiblejustification for the sustainable developmentposition outlined above can be generated fromboth accounts. I conclude that market activitiesthat violate the goals of sustainable developmentas sketched above also violate the demands ofliberal and utilitarian justice.

There is, of course, a healthy diversity amongliberal conceptions of justice, ranging fromlibertarian to more egalitarian accounts. Most ofthis divergence arises from competing interpre-tations of the proper balance of liberty andequality. Nonetheless, we can focus on somegenerally agreed upon conditions of justice.

First, liberty can be understood as being freefrom coercion. Take the case of the armedgunman as a paradigm example of an assault onliberty. In this case, the range of available choiceshas been significantly limited (although somechoices do remain) by having certain basic goods(my health and my life) threatened by the actionsof others. Defenders of the free market argue thatthis economic system, better than any alternative,promotes individual liberty. In an ideally com-petitive market, no individual is ever placed insuch a coercive position. Minimally, individualsare always free to sell their labor to earn themoney they need to secure basic goods.

Equality is the second essential feature of

liberal justice. According to market defenders it,too, is served by the workings of a competitivemarket. I will follow Ronald Dworkin in takingequality as a right to equal concern and respect.

This is the right, not to an equal distribution ofsome good or opportunity, but the right to equalconcern and respect in the political decision abouthow these goods and opportunities are to bedistributed. Suppose the question is raised whetheran economic policy that injures long-termbondholders is in the general interest. Those whowill be injured have a right that their prospectiveloss be taken into account. . . . They may notsimply be ignored. . . .23

Defenders of the market will argue thatmarkets offer the best insurance for protectingthis right to equality. The best guarantee that theinterests of every individual will be representedis to allow individuals to represent their owninterests. An open market does this better thanany alternative.

In light of these considerations, I suggest thatbusiness activities which violate the principles ofsustainable development compromise both theliberty and equality of countless individuals whoare not presently represented in market decisions.This includes not only distant future generations,but also our own children and grandchildren aswell as the billions of presently living people whohave no voice in international markets.

We might take guidance from the Lockean“proviso” to understand how non-sustainablebusiness activity threatens liberty. Locke arguedthat the personal appropriation of property wasjust provided “enough and as good” was left incommon for others. The creation of money andthe resultant ability to sell one’s labor seemed, forLocke, sufficient to guarantee liberty to individ-uals who come after those lucky enough tosecure the original acquisition of property.

But note that current trends of both popula-tion and resource use virtually guarantee thatpeople in the near future will be unable to selltheir labor in order to attain “enough and asgood.” Present business activities which useresources at unsustainable rates severely limit thechoices available to people in the near future.Our actions place these people in a fundamen-

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tally coercive position by limiting their choicesin ways that threaten them with significant harm.

Many present business activities also compro-mise the equal respect of individuals living in thenear future. By using resources at rates that areunsustainable, by wasting resources, and by failingto pursue research and development of alterna-tive resources energetically, we are simplyignoring the interests of our children and moredistant descendants. We are directly denying theirequal moral worth.

The second major ethical justification of themarket rests with more utilitarian considerations.I have already mentioned the challenge whichsuggests that the preference utilitarianism implicitin market goals in fact do not necessarily makethem ethical goals at all. However, assuming thatsome version of a utilitarian justification can bedeveloped, a plausible case can be made that onlysustainable economic activities can hope tomaximize the overall good.

Numerous problems confront utilitarian cal-culations of the near term consequences of ouractions.24 For the sake of this argument, let usgrant the utilitarian approach the benefit of thedoubt and assume that we calculate such things.A few relatively uncontroversial assumptions willdemonstrate that the present ideal of economicgrowth will not maximize overall happiness intothe near future. We have seen these assumptionsbefore.

1. world population continues to increasedramatically;

2. all economic activity depends upon naturalresources;

3. natural resources presently are used at ratesthat are unsustainable.

We can thus envision two curves, one chartinggrowing consumer demand (the satisfaction ofwhich, as hypothesized, is necessary for happi-ness), and the other charting the supply of naturalresources which are the raw material of produc-tion. The demand curve is rising, the supplycurve is falling. Eventually these curves willintersect and the prospect of future happiness willdecline accordingly. As a result of our presentactivities, markets will no longer be capable ofmaximizing happiness. Since this is one alleged

ethical goal of the market, these present activi-ties are unjustified within the rules of the marketgame.

The utilitarian case is more complicated thanthis simple point suggests, of course. Oneresponse could point out that markets are justi-fied by producing the most efficient use ofavailable resources. Whatever resources areavailable to future people, the market will bejustified because it is the most efficient means fordeveloping and distributing these resources.Thus, future people will be as happy as they canbe, given available resources, if they hold to theprinciples of the free market. Or, following thefinancial practice of discounting future value andBentham’s calculation concerning uncertaintyand remoteness, it might be argued that we needto discount the happiness of future people inpresent calculations. Or, assuming that presentand future happiness are of equal value, it stillmight be argued that the amount of happinessresulting from present activities will outweigh thefuture loss of happiness.

It seems to me that these responses are plau-sible only because they assume that we are facedwith what would be essentially a zero-sumcalculation. It is our present happiness vs. theirfuture happiness and the consistent utilitarianmust make the appropriate trade-offs. When weuse resources, future people won’t get them; ifwe conserve resources for them, we lose out.

But the point of sustainable development isthat economic development is not a zero-sumgame. Used appropriately, natural resources cansatisfy both present and future interests. Nodoubt we would have to change some of ourpresent practices and recognize that we need notsatisfy every desire (e.g., all of the conveniencesof a “throw-away” society), but we would not be“reduced” to subsistence living either. Thus ona sustainable economic model (living off of theinterest rather than the capital), we can assurereasonably high levels of happiness into the indef-inite future. On any version of utilitarianism, thissurely is the most justified alternative.

Accordingly, business practices that do notdeplete natural resources insure the long-termsatisfaction of consumer demand. To the degreethat this is a legitimate utilitarian goal of market

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economics, these activities are what is requiredof the socially responsible business.

Conclusion

The strength of the classical model of corporatesocial responsibility is that it derived business’ethical responsibilities from within the institutionof market economics. Ethical responsibilities werepart of the “rules of the game” and thus had anapparent legitimacy to the business community.The weakness of this model is that it did notseem to incorporate adequate moral limits onbusiness activities.

The neoclassical model had the advantage ofplacing substantive moral requirements ofbusiness activities. However, it is difficult tointegrate significant and substantive environ-mental concerns into the moral minimum asunderstood on standard versions of the neoclas-sical model.

I have sketched a version of corporate socialresponsibility that places substantive moral limitson business activity as it affects the naturalenvironment. I have also argued that the ethicaljustification of these limits can be derived fromthe value assumptions of market economics.25

Notes

1 Jim MacNeill, “Strategies for SustainableDevelopment”, in Managing Planet Earth (ScientificAmerican, 1990), pp. 109–123.2 Present estimates suggest that the rate of popula-tion increase is one billion people every 9–10 years.The doubling to 11 billion in fifty years is “conser-vative” in the sense that it assumes, contrary to trends,that the rate of increase will remain constant. 3 Herman Daly points out that there are twoimportant reasons why doubling the populationwould require significantly more than a doubling ofeconomic activity to meet constant demand. First,allowance must be made for the tremendous capitalaccumulation that would be necessary to transform allthese resources into final products. Second, themineral and energy resources needed for such growthwould need to come from increasingly less accessibleand low grade deposits; we’ve already taken the readily

accessible and cheap iron, coal, oil, aluminum,uranium, timber, etc. See Herman Daly, “SustainableGrowth: An Impossibility Theorem”, reprinted inValuing the Earth, edited by Herman Daly andKenneth Townsend (Boston: MIT Press, 1993), pp.267–273.4 Robert Frosch and Nicholas Gallopoulos,“Strategies for Manufacturing”, Managing Planet Earth,p. 98.5 Milton Friedman, Capitalism and Freedom (Chicago:University of Chicago Press, 1962), p. 133.6 Environmental economists, of course, are aware ofthese problems. Ingenious techniques and suggestionsfor pricing non-market goods, internalizing exter-nalities, discounting future values, and for establishingproperty rights for unowned goods are some of themethods used to overcome market failures. For aninsightful analysis of these issues, see Mark Sagoff TheEconomy of the Earth (New York: CambridgeUniversity Press, 1988), especially Chapter Four.7 Mark Sagoff, Economy of the Earth (New York:Cambridge University Press, 1990).8 Norman Bowie, “New Directions in CorporateSocial Responsibility,” in Business Horizons ( July–August 1991), p. 56. Bowie’s own views aredeveloped in Business Ethics (Englewood Cliffs, NJ:Prentice Hall, 1982) as well as in the second editionof that book, written with Ronald Duska (1990).Bowie applies this thinking to environmental mattersin “Morality, Money, and Motor Cars”, Business,Ethics, and the Environment: The Public Policy Debate,edited by W. Michael Hoffman, Robert Frederick,and Edward Petry, Jr. (New York: Quorum Books,1990), pp. 89–97.9 The former view is best represented by TomDonaldson, Corporations and Morality (EnglewoodCliffs, N.J.: Prentice Hall, 1982) and more recently inThe Ethics of International Business (New York: OxfordUniversity Press, 1989). One of the earliest statementsof the “moral minimum” in this context is JohnSimon, Charles Powers, and Jon Gunnemann, “TheResponsibilities of Corporations and Their Owners,”in The Ethical Investor: Universities and CorporateResponsibility (New Haven: Yale University Press,1972). For a version of the latter, see JosephDesJardins and John McCall, “A Defense of EmployeeRights”, Journal of Business Ethics (Fall 1985). 10 Norman Bowie, “Morality, Money, and MotorCars,” pp. 91–95.11 “Morality, Money, and Motor Cars,” pp. 92–93.12 W. Michael Hoffman, “Business and Environ-mental Ethics”, in Business Ethics Quarterly, Vol. 1no. 2 (April 1991), pp. 169–184.

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13 Besides Hoffman, see Donald VanDeVeer,“Interspecific Justice”, People, Penguins, and PlasticTrees, edited by Donald VanDeVeer and ChristinePierce (Belmont, CA: Wadsworth Publishing, 1986)pp. 51–66; and Paul Taylor, Respect for Nature(Princeton, NJ: Princeton University Press, 1986)especially chapter 4.14 Two interesting attempts to provide principledmeans for resolving such conflicts are DonaldVanDeVeer, “Interspecific Justice”, Inquiry, Vol. 22,no. 1–2 (summer 1979) and Paul Taylor’s discussionof “priority principles” in his Respect for Nature,Princeton University Press (Princeton, NJ, 1986).15 Perhaps the best known examples of such anecocentric challenge to a biocentric and animal rightsapproach are: J. Baird Callicott, “Review of TomRegan’s The Case for Animal Rights”, EnvironmentalEthics, Vol. 7 (1985) pp. 365–372; Callicott’s “AnimalLiberation: A Triangular Affair”, Environmental Ethics,Vol. 2 (1980) pp. 311-328; and Mark Sagoff, “AnimalLiberation and Environmental Ethics: Bad Marriage,Quick Divorce”, Osgoode Hall Law Journal, Vol. 22(1984).16 World Commission on Environment andDevelopment, Our Common Future (New York:Oxford University Press, 1987).17 Herman Daly, “Sustainable Growth: An Impossi-bility Theorem”, op. cit., pp. 267–268.18 For an ethical analysis of the Pacific Lumber case,see Lisa Newton, Watersheds: Classic Cases inEnvironmental Ethics (Belmont, CA: WadsworthPublishing, 1993), chapter 5; and Lisa Newton, “TheChainsaws of Greed”, Business and Professional EthicsJournal, Vol. 8, no. 3, pp. 29–61.19 An early version of this argument was offered byBrian Barry, “Intergenerational Justice in EnergyPolicy”, in Douglas MacLean and Peter Brown (eds.),Energy and the Future (Totowa, NJ: Rowman andLittlefield, 1983).20 Frosch and Gallopoulos, “Strategies for Manu-facturing”, p. 98.21 For examples of how this work might develop inmanagement, see Paul Hawken, The Ecology of

Commerce (New York: Harper Collins, 1993), RogeneBuchholz, Principles of Environmental Management(Englewood Cliffs, NJ: Prentice Hall, 1993) and W.Edward Stead and Jean Garner Stead, Management fora Small Planet (Newbury Park, CA: Sage Publications,1992). Of the three, Buchholz offers the mostphilosophically refined account of the relevant ethicalissues. 22 For convenience, I will ignore the intricacies ofthe debates concerning future generations and limitmy concern with the interests of people living in thenear future. Roughly, I would take this to mean thenext 50 years or so and to include the interests ofmillions of people presently, or soon to be, alive whoare not represented in present markets.23 Ronald Dworkin, “What Rights Do We Have?”,in Taking Rights Seriously (Cambridge: HarvardUniversity Press, 1977), p. 273.24 I have in mind here problems like the “disap-pearing beneficiaries,” average vs. total happiness,expected utility vs. actual consequences, and theargument from ignorance. For a review of some ofthese problems as they relate to environmentalconcerns, see my Environmental Ethics: An Introductionto Environmental Philosophy (Belmont, CA: WadsworthPublishing, 1993), chapter four. 25 Versions of this paper were read to the Society ofBusiness Ethics and the Society for Philosophy in theContemporary World. I wish to thank Leslie Francis,John McCall, and Patricia Werhane for their helpfulcomments on those occasions. This paper was alsomuch improved by the helpful suggestions of ananonymous reviewer for the journal. An early versionof this paper appears in Contemporary Issues in BusinessEthics, Joseph R. DesJardins and John McCall, eds.(Belmont, CA: Wadsworth Publishing 1996).

College of Saint Benedict,Department of Philosophy,

MN 56374,Saint Joseph,

U.S.A.

838 Joe DesJardins