Sustainability Issues and Economic Models

Sustainability

• The modern definition of sustainability is that humans should utilize resources to fulfill current needs, without hindering future generations from meeting their own needs.
• The "Brundtland Report" (1987) introduced this wider definition.

Sustainability Issues

• Sustainability encompasses political, social, cultural, environmental, and economic concerns
• The "Quadruple Bottom Line" is a framework for measuring a company's social and environmental performance in relation to ethical and sustainable business practices.
• There are 33 unique definitions of "corporate sustainability," as identified by Meuer et. al. in 2019.

Economic Models

• The traditional model of economics is purely based on growth, without considering ecological boundaries.
• GDP is a flawed measure of success, as it does not factor in quality or consequence of quantity.
• "Donut Economics" proposes a "sweet spot" where human needs are met within ecological boundaries.
• The city of Amsterdam is trialing a donut economics model.

Sustainability Strategies

• Companies have started to embrace "Corporate Social Responsibility" (CSR) in an attempt to balance stakeholder needs.
• The "Friedman Doctrine" (1970) argues that CSR is socialist and hypocritical, as the sole responsibility of a company is to maximize profit.
• "Planetary Boundaries" (2022) is a framework that sets ecological limits to avoid environmental catastrophe and ensure human well-being.
• The "Sustainable Development Goals" (SDGs) outline 12 social priorities for a sustainable and prosperous future.

Sustainability Principles

• Weak sustainability: The assumption is that natural capital (natural resources) can be substituted by human-made capital.
• Strong sustainability: The assumption is that natural capital is irreplaceable and should be preserved.

Examples of sustainability models

• Weak Sustainability
  • Companies make voluntary commitments like setting targets or pledges without actionable enforcement.
  • Example: Woodside claims to have reduced emissions by 11%, but their claims are misleading because they are based on using carbon offsets.
• Greenwashing is the practice of making a company's practices appear environmentally friendly when they are not.
  • Example: Coca Cola's paper and plant bottles perpetuate single-use culture and promote false solutions to the problem.
  • The Australian Competition and Consumer Commission (ACCC) found that 57% of Australian businesses were potentially using greenwashing tactics.

Jevons Paradox (Rebound Effect)

• The phenomenon where increased efficiency leads to increased consumption, negating the benefits of efficiency gains.
• For example, technological advances in fuel efficiency do not always result in energy savings, because fuel consumption often increases as a result of decreased costs.

Sustainability Principles

• Precautionary principle - Prevention is better than remediation when dealing with potential environmental problems.
• Polluter pays principle - Those who pollute should bear the financial costs of their pollution.
• Sustainability principle - Systems should be in equilibrium, meaning resource consumption and emissions should be within the Earth's carrying capacity.