t in since its inception.
Pillar three: The economy and its impacts on business
It is at pillar three, the economic pillar, where we find common ground with most businesses. To be sustainable, businesses must make a profit.
Activities that fit under the economic pillar include compliance, proper governance and risk management.
Let’s consider the oil company Shell as an example to explain pillar three.
Often deemed as ‘evil’, oil companies receive a lot of pressure to reduce the use of fossil fuels and switch to renewable sources. Investment in Shell occurs due to the returns Shell brings. But abruptly dropping fossil fuels will mean losing returns and thus investment. The adoption of renewable energy resources, therefore, has to be slow and incremental.
To achieve a successful balance, Shell has set targets to cut its net carbon footprint by 50% by the year 2050. If Shell meets these targets, Shell will have successfully balanced economic factors to meet the environmental climatic demands of being more sustainable.
Gorging on a finite resource to maximize profit has grave environmental and social costs. Yes, profit is vital for corporate success but it cannot be at the expense of the other two pillars. To truly understand why, read the next section of this article.
A model for sustainability: Three-nested dependencies model
There has been some debate over how the three pillars of sustainability interact with one another. The most accurate model proposed is the 3-nested-dependencies model.
This model represents a co-dependent reality between the environment, society, and the economy.
Human society and our economy are wholly-owned subsidiaries of the environment. Neither can prosper in the long-run without prosperous, healthy surroundings. Beyond the environment, economic success is then driven by the exchange of goods and services. This exchange is determined by social constructs and choices that make up a society. Economic success does not come with fragile, poverty-stricken, despondent communities.
In summary, a healthy economy cannot be sustained without a healthy society or environment. From the small-scale economy of a single business, up to the larger-scale global economy, all financial facets are at the mercy of social and environmental factors, and it is the environment that ultimately deals the trump card.
The next part of this article outlines case studies to show the sustainable business model and its interacting three principles, in real-life scenarios.
Case studies for sustainable business
Sustainable business case study one: The collapse of cod fisheries
The year 1993 saw the commercial extinction of the Northern Cod.
Commercial extinction is the depletion of a species population to the point where not enough can be caught and sold to earn a profit.
Technological advances, like ocean-trawling and pinpointing fish using radar and electronic navigation systems, meant the number of fish caught in Canadian catches dramatically rose. Peaking in the 1970s and 1980s, the economic success of Canadian fisheries skyrocketed with the overexploitation of our environmental resource.
This success was, however, short-term.
Negative repercussions soon prevailed in 1992 as the cod species projected towards extinction. The environmental resource was not sustained.
The Canadian cod fisheries consequently collapsed. 35,000 fishermen and fish plant workers lost their jobs in the largest industrial closure of Canadian history. A non-sustained environmental resource resulted in adverse social and economic repercussions. Displaced workers were given financial aid and provided with retraining programs, all at a cost to the Canadian economy.
Sustainable business case study two: 2015 Indonesia fires
In February 2015, 5,000km of Indonesia burned under a thick smog. The vast palm oil monocultures, which provoked this catastrophe, were reduced to ash.
Torching a wonderland rich in endemic species to clear the way for plant monocultures of palm oil had always imposed a hazard. In 2015, which was a warmer year than usual, that hazard sprea