We Only Write about What Exists

I recently attempted to edit the English Wikipedia corporate sustainability page to say corporate sustainability does not have an established definition. An editor rejected this statement because, “We don’t begin articles by saying they don’t exist.”

The academic literature suggests corporate sustainability doesn’t exist. Montiel & Delgado found seventeen definitions of corporate sustainability in academic articles. Bansal & Song traced the concept’s shifting meaning over three decades, most recently converging with corporate social responsibility.

We remain in a situation where it seems sustainability means whatever the speaker wants it to mean. A more academic way to say this is that the definition remains “contested.”

The Unpacking Industry is Booming

There’s nothing new or wrong with contested definitions, except when a concept matters. A good deal of academic and other writing exists solely to promote a definition of a contested concept or to review multiple definitions. Let’s call this industry the “unpacking industry,” because writing and conversation in this industry sometimes motivates itself by a need to “let’s unpack that.”

The problem with packing and unpacking the corporate sustainability concept since its origins in the 1970s is that it matters whether companies are or are not sustainable. But matters to whom?

What Does Profit Mean?

Imagine if we treated corporate profitability the same way we treat sustainability. Imagine hundreds of academic articles, each advancing its own claim about what it means for a firm to be profitable. Or reports by nonprofit organizations and consulting firms debating major developments in profitability frameworks, commitments, and standards.

Profitability is not a contested concept because whether a company is profitable matters. It matters so much that we created a global regulatory apparatus called public accounting to independently verify corporate profitability claims. Consider if we had applied the popular self-governance framework: no accounting industry or regulations, just trusting firms to voluntarily disclose their profitability information.

We don’t rely on trust for profitability because we saw how badly investors could be deceived by companies without oversight on financial information. The Securities and Exchange Commission (SEC) in the United States was created to protect investors from companies by requiring firms that accept capital from investors to also accept oversight to protect those investros from financial deceipt and fraud.

Yet corporate sustainability languishes without definition. Why?

Who Benefits from Sustainable Companies?

Corporate sustainability resists definition because we have not clarified the stakeholder who most benefits from companies being sustainable.

The definition of profitability protects investors. Clearly identifying the stakeholders harmed by financial deceipt and fraud clarified what needed to be included in the definition of corporate profit: return on capital. Investors give firms capital and expect a return. Profitability, then, must capture whether a firm provides investors a return on their capital. See Levy’s work on the historical development of the modern definition of profit.

The definition of corporate sustainability protects _____________. How you fill in that blank is probably related to who you think benefits from corporate sustainability. Until there’s agreement on that, on who benefits, corporate sustainability will remain a contested, and largely meaningless, concept.

And that’s great for generating content.

References

  • Bansal P, Song H-C. 2017. Similar But Not the Same: Differentiating Corporate Sustainability from Corporate Responsibility. Academy of Management Annals 11(1): 105–149.
  • Levy J. 2014. Accounting for Profit and the History of Capital. Critical Historical Studies 1(2): 171–214.
  • Montiel I, Delgado-Ceballos J. 2014. Defining and Measuring Corporate Sustainability: Are We There Yet? Organization & Environment 27(2): 113–139.