Are growth and sustainability two opposing worlds?

By Institute for Social Innovation

This article is based on knowledge insights by David Murillo

The logic behind the current economic system is to promote business ideas that generate some kind of economic return. In this context, the market alone is not enough to generate sustainability. 

“Without any ethical barriers or regulatory frameworks to regulate the market, promoting sustainability would only seem possible when there is an expected return,” warns Esade Associate Professor David Murillo in an article published in Harvard Deusto.

How can sustainability be introduced into an economic model which, as of today, still mistrusts any practice that goes against the shareholders’ interests?

Who is going to pay the companies that, for example, want to reduce inequality or tackle the overexploitation of natural resources?

For many companies, the response comes hand in hand with business philanthropy and above all, corporate social responsibility, along with shared value.

Businesses need to go beyond, but also against, the logic of the market

“The problem usually emerges when this solution is implemented and businesses start looking for a formula that combines sustainability with profits and returns,” explains Murillo.

Can we correct global problems without restricting financial gains?

Planet profits
Photo: Markus Spiske/Unsplash

To address this challenge, Murillo says individuals and businesses need to go beyond, but also against, the logic of the market: “Unfortunately, business responses based exclusively on market logic may also be compatible with tax evasion and tax havens.”

An example of this challenge, the author warns, is the sustainability of Spain’s national budget. "The payment of corporate tax in Spain is still only half-way to the 50,000 million euros levied in 2007."

Unfortunately, business responses based exclusively on market logic may also be compatible with tax evasion

The problem worsens when sustainable business solutions are used in favour of tax avoidance. What is the use of business ethics if this comes with tax, labour or environmental erosion?

To break this pattern, the world needs real pioneers: individuals and companies that go beyond – and also against – traditional market logic, companies such as Patagonia, Certified B Corporations and other enterprises that base their business models on the common good.

But this is no easy task. “We must radically change the way we measure business impact if we want new companies that strive for the common good to proliferate,” says Murillo.

What is the use of business ethics if this comes with tax, labour or environmental erosion?

The author calls for a radical transformation of the current way of understanding business success: “We must promote a zero-tolerance culture against tax fraud, labour exploitation and the exploitation of natural resources. We must also face an uncomfortable question: how are those who champion responsible growth going to be positioned in this new transition towards a more sustainable future?"

In his book The great transformation, Karl Polanyi described the historical clash between social and economic forces. Murillo is of the opinion that only by joining these two levers will total harmony be achieved.

"In the long run, only those companies that are based on a social contract and create value on a global scale will be sustainable and socially accepted."

But for this future to become a reality, citizens and organisations must embrace two critical conditions: activism and hope.

Sides are already being taken. Those who claim not to be interested in this debate, Murillo says, is because they have already taken sides and precisely not the side of sustainability.

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