Rethinking the resources your organization needs
Introduction
In recent years, there has been more interest in sustainability than ever before. Economic growth that ignores the impact on the natural environment and society is problematic, and consumers and investors are paying more attention to the relationship between corporate activities and issues in the natural environment and society. As a result, many organizations are disclosing information about the impact of their activities on society and the natural environment.
Concerns about sustainability have existed in one form or another since ancient times, no matter how short-term the sustainability may be, and interest in sustainability may not necessarily be something unique to recent times. However, the slogans "sustainability" and "sustainability" have been created, and the time scale associated with these words has been significantly extended. In addition, these words have come to implicitly include not only the sustainability of the economy, but also the sustainability of society as a whole and the sustainability of the natural environment. In this sense, the current widespread concern about sustainability may be the fruition of efforts to redefine and problematize issues that have existed until now.
As a result, various stakeholders of organizations are interested in sustainability, and contributing to sustainability is in some cases a necessary condition for the survival and growth of the organization, making it an urgent management issue that the organization faces. This can be said to be a case of converting sustainability into a short-term issue of survival in order to drive the organization's efforts toward the long-term issue of sustainability. For example, CSR monitoring and ESG investment are typical examples of this.
However, some of the concerns and efforts regarding sustainability may not have evolved significantly from the economically-oriented concerns and efforts that created the sustainability challenges in the first place. In order to achieve sustainability, short-term challenges for organizations are created, which are the expectations and demands of society and stakeholders, and organizations respond to these challenges passively (e.g., environmental and social considerations), and in return, efforts are seen to suppress certain of their own activities (e.g., suppression of efficiency and product functionality). And this suppression of certain activities may create new sustainability challenges and may not be making progress toward sustainability in the true sense.
In other words, in order to address the long-term issue of sustainability, the long-term issue has been reduced to a short-term issue for the organization, but as a result, it may not lead to an initiative that contributes to the realization of long-term sustainability. For example, a familiar example may be the active use of paper straws. The introduction of paper straws can reduce the amount of plastic consumed and potentially lead to a reduction in the amount of plastic waste. Therefore, while paper straws meet the demands of society and stakeholders to be environmentally conscious, they have functional limitations in that they cannot be left in drinks for long periods of time, and it has been pointed out that some customers are not satisfied with the feel of the straws. Is it really appropriate to respond to society's demands regarding environmental issues by using paper straws? It is certainly thought that this will contribute to the survival of the organization in the short term, but is an initiative that is premised on customer dissatisfaction really sustainable in the long term? In addition, while solar power generation, which has been rapidly adopted in recent years, contributes to environmental sustainability, it frequently causes damage to local nature and troubles with local residents, and also creates a new problem of solar panel disposal.
In light of these discussions, it can be said that the current situation, in which long-term sustainability is reduced to short-term issues and then passively addressed, is not significantly different from the past, when long-term sustainability issues such as environmental and social considerations were ignored in order to solve the short-term issue of economic growth.
In light of the above discussion, it may be necessary to reexamine whether the current efforts of organizations and individuals are truly achieving sustainability, how sustainability is perceived in the first place, and what approach can lead to sustainability. In particular, it may be necessary to have a discussion that includes a variety of individuals with different perspectives on sustainability, for example, individuals from a generation for whom the problem of sustainability existed as a given, and individuals from a generation for whom sustainability is merely a newly emerged issue.
The purpose of this article is to provide a basis for this intergenerational discussion by introducing the commonly used triple bottom line and related discussions. The triple bottom line was proposed by John Elkington and presents three pillars of sustainability. It is not only a standard for corporate information disclosure, but has also been used as a framework for discussion in many studies and surveys, and is considered to be a basis for discussion related to sustainability. The triple bottom line often appears in reports discussing sustainability in Japan, and this article will discuss what is needed to achieve sustainability based on this framework.
Introducing the Framework: What is the Triple Bottom Line?
The triple bottom line framework proposes that sustainability consists of the sustainability of the natural environment, the sustainability of human society, and the sustainability of the economy, and that these three sustainability must be achieved in parallel. In other words, it argues that sustainability requires that natural resources are not depleted, that economic resources and the creation of value through them are continuously realized, and at the same time, that the maintenance of social communities and the equal enjoyment of well-being are realized and maintained.
Although the triple bottom line is now widely used, it is often adopted as a formality as a standard for corporate disclosure, and its true essence seems to be overlooked. This can be seen from the fact that John Elkington withdrew the framework in light of this situation. As Isil & Hernke (2017) point out, the triple bottom line does not break down the conditions necessary for sustainability, but the premise of the framework is that mutually reinforcing relationships can be built between efforts toward the sustainability of the economy, society, and natural environment. For example, by establishing a sustainable natural environment, a sustainable economy can be achieved. Through a sustainable economy, a sustainable natural environment and society can be achieved. In other words, it is necessary to pay attention to the relationships between the economy, society, and natural environment, and sustainability is not something that should be broken down into partial issues and tackled separately. Rather, treating it as an individual issue would lead to the hollowing out of the triple bottom line framework.
Challenges: Key barriers to achieving sustainability
As described above, the essence of the triple bottom line is not that sustainability is divided into three issues, but rather that the issues are related to each other and that measures to address each issue must be implemented simultaneously. However, recent research has shown that achieving this is not necessarily easy.
Conflict in institutional logic
This is suggested by research on "institutional logic" and "mission drift" introduced below. It is argued that organizations and groups that aim to contribute to the economy, society, and natural environment have different "institutional logics." Institutional logic is defined as a socially constructed historical pattern of physical practices, assumptions, values, beliefs, and rules based on which individuals organize time and space, give meaning to social reality, and reproduce material things (Thornton & Ocasio, 1999; 2008). Institutional logic determines what is legitimate and appropriate (Lounsbury, 2007; Thronton & Ocasio, 2009). For example, different institutional logics exist in areas where it is appropriate to pursue economic profits, to contribute to the natural environment, and to solve social problems.
Moreover, the institutional logics in these areas are not easily changed, and in recent years it has been pointed out that organizations are faced with multiple, sometimes conflicting, institutional logics (Pache & Santos, 2013). For example, a prime example would be the need to pursue economic profits while preserving the natural environment, or to pursue economic profits while resolving social issues.
Mission Drift
It is not always easy for an organization to meet the multiple demands arising from multiple institutional logics, and it has been pointed out that organizations often fail to balance these demands. For example, the balance and conflict between society and the economy has been discussed in the context of social enterprises. Social enterprises are organizations that attempt to solve social problems while using the efficiency, innovation, and economic resources of profit-making enterprises to solve these problems, and are characterized by the conflict between the social and economic logics that govern the organization (Doherty, Haugh, & Lyon, 2014; Smith, Gonin, & Besharov, 2013). In recent years, terms such as social enterprise, social enterprise, and social entrepreneur have come to be used in Japan, and all of these are concepts that are the same or similar to this definition.
Existing research has pointed out that social enterprises suffer from mission drift, a phenomenon in which organizations lose sight of their original social purpose in the process of pursuing economic profits (e.g. Ebrahim, Battilana, & Mair, 2014). For example, Jones (2007) points out the danger that nonprofit organizations that previously pursued a social mission may become dependent on customers or governments for economic resources in the process of commercialization, and as a result, they must incorporate the intentions of customers and governments into their organizational activities, leading to the loss of their original social mission, and the need to address this (Jones, 2007).
For example, Beisland, D'Espallier, & Mersland (2019) analyzed a microfinance institution, whose social mission is to lend money to the poor, and concluded that as employees gain more work experience in the institution, they tend to avoid providing services to high-risk poor clients. They explain that this mechanism is due to employees learning that there are risks in lending to the poor and avoiding it, as well as the fact that they face practical challenges and difficulties as they gain more work experience, which causes them to lose their previous enthusiasm.
Similarly, in order to achieve a sustainable natural environment, economic profits may be sacrificed, and often the well-being of society as a whole may also be sacrificed. Examples of this are paper straws and solar power generation, which were introduced at the beginning of this article. Since 2012, solar power generation has been promoted with the backing of the government, but the installation of solar panels in local areas has sometimes come into conflict with the well-being and demands of residents, and balancing these two has become a challenge.
Initiatives: A needed approach to sustainability
In light of the above, in order to achieve sustainability, it is essential to resolve the conflicts between society and the economy, between the natural environment and the economy, and between the natural environment and society, and to make the efforts of each mutually strengthen each other. This is often discussed in the context of whether an organization can pursue multiple goals (Battilana & Lee, 2014), and it has been suggested that in some cases the pursuit of one goal may contribute to the pursuit of another goal (Svensson, Ferro, Padin, Varela, & Sarstedt, 2018). For example, it has been said that an organization's economic activities can benefit the natural environment (Svensson et al., 2018) or contribute to society (De Vicq, 2022; Cozarenco, Hartarska, & Szafarz, 2022).
Managing the organization from a long-term perspective
However, in the context of organizational activities, sustainability efforts are generally discussed from the perspective of organizational information disclosure and management of the organizational image, and there does not seem to be sufficient discussion of how to deal with the conflicts that exist between the economy, society, and the natural environment, and how to carry out multiple efforts to reconcile and sometimes reinforce each other. Certainly, by requesting information disclosure on sustainability efforts, it is possible to reduce the long-term issue of the organization's long-term survival to a short-term management issue of the organization's evaluation, which is one of the efforts toward achieving sustainability. This is because short-term management issues are easier to pursue and there is an incentive to pursue them. However, this method does not necessarily address the conflicts that come with achieving sustainability and does not necessarily achieve the coexistence of the economy, the natural environment, and society, and doubts remain as to whether long-term sustainability can be achieved.
In fact, some research suggests that an organization’s long-term perspective is important in sustainability-related innovation and contributes to mitigating conflicts that exist in the triple bottom line (Longoni & Cagliano, 2018). Rather than simply responding to short-term issues, it may be necessary for organizations to proactively take on initiatives to achieve sustainability from a long-term perspective.
Rethinking the resources your organization needs
In particular, it may be necessary to consider the resources required for long-term organizational activities from a long-term perspective and reconsider the resources that are considered important in traditional organizations. Tate & Bals (2018) have constructed a social resource-based view that focuses on social resources such as the continuous pursuit of social missions and social innovation, in addition to the resource-based view that focuses on resources such as technology and services that have been traditionally thought to contribute to the competitive advantage of organizations, which has existed in management research, and the natural resource-based view that focuses on resources such as product life cycles and consideration of environmental impacts that have been discussed in recent years. In particular, Tate & Bals (2018) point out from this discussion that individual elements such as an individual's social mission may be important in the social responsibility of an organization, and propose for subsequent research that analysis focusing on individuals is also necessary. In this way, it will be necessary to first reconsider the resources required by organizations in a way that expands the conventional framework and consider how natural and social resources can contribute to organizational activities.
Social and environmental issues as business opportunities for organizations
In addition, it is also useful to consider how to utilize these resources to solve social and environmental problems through business. Businesses are paid by responding to social needs, and so environmental and social issues are no exception and can be seen as a type of business opportunity (Drucker, 2008). This is what is focused on in organizations and research on social enterprises, social entrepreneurs, and green entrepreneurship. In Japan, the term social entrepreneur has become more common in recent years, and it may be that the idea that social and environmental issues are both threats and opportunities for organizations is gradually being recognized.
Specific measures for the management of organizational human resources
Existing research has proposed more specific ways to balance the pursuit of multiple objectives, and much discussion has been conducted using the concept of a hybrid organization, which is an organization that pursues multiple objectives (or more precisely, an organization that faces multiple institutional logics and has multiple logics). For example, Battilana & Dorado (2010) focus on employee hiring and management to examine ways to pursue multiple objectives sustainably. Regarding hiring, there is the Mix-and-Match Approach, which focuses on the abilities that individuals already possess and hires individuals who have the ability to contribute to the multiple objectives that the organization is pursuing, according to each objective, and the Tabula Rasa Approach, which emphasizes the possibility of individuals being able to actively interact with other individuals and hires individuals who do not necessarily have the experience to contribute to the objectives. Indeed, as is intuitively obvious, the former approach realizes rapid growth of the organization, but it has been pointed out that this approach unexpectedly soon leads to conflict within the organization. On the other hand, the latter approach does not create conflict, and it is possible to build a common identity between individuals, and it has been shown that multiple goals can be pursued in the long term. In addition, with regard to management of how to design an organization's communication, training, promotion, incentive systems, etc., it is argued that if these are designed with a focus on the pursuit of organizational goals, multiple groups with different ideas will be formed, resulting in conflict, but on the other hand, if the focus is on the means of pursuing the organization's goals, a common identity based on those means will be formed, and multiple goals can be pursued sustainably. In other words, it is not necessarily desirable to unite organizational members with a common goal, and it is suggested that it may be desirable to give employees common means and to manage them with a focus on these means.
Inter-organizational collaboration
Also, according to Isil & Hernke (2017), the triple bottom line is based on the idea that sustainability can be reduced to organizational sustainability, i.e., achieving sustainability at each organizational level contributes to global sustainability. However, this is not necessarily a desirable premise. In recent years, research has also reflected the idea that collective efforts by multiple organizations and the coordination of interests and cooperation between organizations are necessary (e.g. Kwong, Tasavori, & Cheung, 2017). For example, collaboration between non-profit organizations, for-profit organizations, and governments would be an example of this. Therefore, when discussing how sustainability can be achieved, it will be necessary to consider how a collection of organizations, rather than a single organization, can achieve sustainability by dividing up roles and coordinating interests, thereby combining multiple different strengths and resources and compensating for weaknesses.
Inheritance and innovation across generations
Finally, to achieve long-term sustainability, it is essential to maintain long-term efforts, and such maintenance will take more than one generation. It is necessary to pass on sustainability efforts and the values behind those efforts across generations. This is important in the sense that problems that have been solved once do not arise again, but above all, it is important in the sense that problems that cannot be solved in the short term can be solved little by little by accumulating new efforts on top of past efforts. On the other hand, each generation will face new challenges from time to time, interpret the past from a different perspective, and foresee a different future than before, and the need to renew efforts will emerge. In the first place, the assessment of what is appropriate and what we should aim for may also fundamentally change. This conflict between inheritance and innovation is also an important issue when considering sustainability.
Therefore, both the inheritance from the older generation, which often holds the power to decide the direction of society, to the younger generation, and the innovation from the younger generation, which often faces new challenges, towards the older generation, are necessary, and these two wheels seem to be indispensable. In that sense, the perspective of the older generation educating the younger generation and the perspective of the younger generation solving the problems left by the older generation through innovation are incomplete, and continuous cooperation and two-way communication between the older and younger generations is necessary.
Although not directly related to sustainability, research on family businesses clearly shows the importance of a balance between innovation and succession. For example, Erdogan, Rondi, & De Massis (2020) argue that while traditions imprinted in an organization shape the organization's identity and ensure its consistency, at the same time, organizations often need to change traditions and achieve change and innovation in order to compete. In response to this paradox, Erdogan et al. (2020) present several examples of how traditions can be maintained or revived while change can be achieved independently or in a manner compatible with tradition.
In conclusion
This article introduced the triple bottom line framework and discussed how sustainability can be achieved based on the framework, as well as some of the challenges involved in achieving it, including the challenges of pursuing multiple objectives simultaneously, inter-organizational cooperation, and inter-generational cooperation.
In my opinion, one of the issues that should be considered at the same time is why sustainability is important in the first place. It is true that the realization of sustainability requires proactive efforts by some organizations and individuals. However, at the same time, it is necessary for all members of society to take an interest in such proactive efforts that overcome the conflicts between the economy, society, and the natural environment, and to support such efforts by forming a perspective of monitoring, evaluation, and expectations of individuals, organizations, and society. For example, it has been pointed out that consumers' awareness of sustainability is low in Japan compared to Europe, and many people believe that the collective awareness of individuals who provide various resources to individuals and organizations has a certain importance in achieving sustainability. However, in Japan, the importance of sustainability is not necessarily agreed upon by society as a whole, and there may be many people who are indifferent. In particular, there may be relatively few individuals who think about sustainability from the perspective of the conflicts between society, economy, and the natural environment. Therefore, it may be necessary not only to take for granted the pursuit of and interest in sustainability, but also to discuss its importance.
The importance of this also needs to be discussed in intergenerational discussions, alongside what sustainability is and what approaches are appropriate to take.
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