The Real Reason Sustainability is Important for Business

“We focus on sustainability not because we’re environmentalists, but because we are capitalists…”

— Larry Fink, Blackrock CEO & Chairman

Larry Fink’s 2022 Letter to CEOs

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What is a Sustainable Business? 

The epigraph I provided at the beginning of this article is from Larry Fink, Blackrock CEO & Chairman. Blackrock is the world’s largest asset manager, with around 10 trillion dollars under management at the time of this writing. Each year, Fink writes a letter to CEOs, addressing it specifically to the CEOs managing the companies in which Blackrock has invested. Fink shares his outlook on the horizon for business, hoping that he can offer direction for their long-term success and long-term returns for his clients. 

We should clarify early: what Larry Fink thinks is a “sustainable business” and what actually is a sustainable business likely varies widely. 

Fink is no expert on sustainability, no expert on social responsibility, no expert on sustainable and responsible development. As Fink describes himself, he’s a capitalist, and so his know-how is about capital. Fink’s authority (*cough* religion *cough*) is money, not morality, not equality, not producing the fairest, just, and equitable societal outcomes. 

But sustainability in business is more about redefining the purpose of business, redefining what makes a “good” business. Because, given the context of the world we live in today, a good business can’t only be a profitable one. A good business must be a business that’s good for all stakeholders affected. Profitability might be one component of that, but it can’t be the only one. 

We have Adidas withholding $109 million in wages from garment workers during the COVID-19 pandemic. We have Shell refusing any responsibility for polluting the Niger Delta despite publicly reporting 1,010 oil spills in the area since 2011. Or, we have Amazon currently facing a federal lawsuit for using “manipulative and deceptive” tactics to enroll millions of users into their Amazon Prime subscription. 

Some of the world’s most profitable businesses might not be the businesses that are best for the world. 

And so, today, to be a good business, a business must be good for the planet. And it’s this that alludes to why the business case for sustainability falls short of making actual sustainability in business a reality.

For a more granular analysis of what makes a business sustainable, I suggest reading the following: Sustainable Business Practices That Will Make Business Better.

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Is the Business Case for Sustainability Enough? 

How do we expect the right stuff to stick when the going gets tough? It comes down to values. Incredible societal change had only happened throughout history because people had committed to acting with their values in times when circumstances made it most difficult. 

Significant movements and social progress are achieved when people act with a sense of morals, values, and conscience instead of immediate self-interest. Whether that was ending slavery in the U.S., the Civil Rights Movement, or Women’s Suffrage, people who benefited from and had power due to existing inequality and oppression (mostly white men) needed to join those movements, too.

And yes, I’m referencing some of history’s most significant social movements. But isn’t that what’s at stake here? Companies (like Allbirds) claim they are trying to reverse climate change. Or, we have Cotopaxi on a mission to eradicate poverty in the Americas. Then, the B Lab, the nonprofit behind the B Corporation certification, says they are “transforming the global economy to benefit all people, communities, and the planet.” 

Don’t get me wrong, I’d love it if each organization achieved its stated mission, but those are history-altering goals! Does it not require a serious self-assessment to see that our values and sense of morality are up for the task? 

Do you expect someone who doesn’t value a healthy lifestyle to build a steady lifelong exercise habit and eliminate all processed foods from their diet? Of course not. 

Yes, we need to change the habits and actions themselves, but most importantly, we must change that person’s identity and values. For a pattern to become a lifestyle, their values need to shift. 

And so, article upon article will share with you a conventional case for why sustainability is important in business, heck you might even hear the phrase, “There is no market for virtue.” 

After you finish cleaning up my vomit, you can read the following (the business case for sustainability): 

• Attracting Customers — A study conducted by IBM and the National Retail Foundation in 2020 found that 70% of consumers in the U.S. and Canada think it’s important for a brand to be sustainable. Nearly ⅔ of buyers said they would be willing to pay more for a more sustainable product. 

• Attracting a Workforce — 2023 research from Deloitte finds that well over half of Gen Zs and Millennials research a company’s environmental impacts and policies before accepting a job offer. 

• Higher Returns — McKinsey claims that companies that “pay attention to environmental, social, and governance concerns (ESG)” see higher equity returns as sustainable business practices produce greater top-line revenue growth, reduced costs, productivity improvements, and much more. 

So, why doesn’t any of that matter? 

Why shouldn’t we add those arguments to our arsenal as we seek to rally and establish a more significant movement for sustainability in business? 

Because, in those expressed benefits, what we are implying is that still what we value more than anything is how making any “positive change” affects business interests. 

And so, logically, we arrive at the question, if making those changes has those positive outcomes for our business interests, would “looking” like we’re making those changes have the same effect? In both scenarios, we get all the benefits, but in one, we don’t have to do any hard work! 

It’s this logic that has led to “Net Zero” climate commitments from 24 of the world’s largest corporations categorized as “misleading” and “wholly insufficient.” Companies are making important public goals without plans to achieve or change anything. 

This is greenwashing, folks, advertising the appearance of change, or marketing change, while not makin’ a lick of it. And boy is greenwashing a pervasive, nuanced beast, indeed a subject for a future article. 

And this is why we cannot lead in making the case for sustainability in business with the business case; we have to make the moral one. It’s the right thing to do. And subtly, it’s not about valuing sustainability so much as valuing humanity. 

The business case for sustainability won’t make sustainable business a reality—only a bigger case for sustainability will.

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If businesses and business people can, with integrity, lead and say that it’s not okay to take home a profit unless the people and the planet are taken care of first, what could that do for our culture?  

What might be different about the state of our world if businesses said that humanity was the above-all priority, above even profitability?

Business is not the solution for everything. But business can be an excellent solution for many things. As much harm as business does, it’s equally possible that business could do good. 

Serious good. 

Starbucks, with somewhere around 35,000 stores worldwide, has had children as young as eight years old picking coffee beans on their supplying farms. What if that was your child? 

Walmart, which reported over $140 billion in annual profits in 2022, was implicated in the Rana Plaza Disaster, one the deadliest industrial tragedies in history, where as a result of a structural failure of a mismanaged garment factory, 1,134 people lost their lives. What if that was your mother, sister, aunt, or daughter? 

And so no, sustainability is not just about what’s “good for business.” It’s about redefining what’s good business. Because the planet (and people living on it) sort of frickin’ depend on it. And not just at some hypothetical point in the future—people are thriving and suffering by the hand of business as you read these words. 

The Dean Cycons of the world are correct—if a business can’t turn a healthy profit without exploiting people and extracting from the planet, then maybe they can’t be in business.

And so what’s the work from here? 

We must build new beliefs, values, and principles, for what makes good business, for what makes a business, period.

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