Originally published on the Faculty of Business & Economics at The University of Melbourne’s Newsroom. Reposted with permission.
Have you heard of the three pillars of sustainability? Academics of the faculty share their research and insights regarding sustainability and how business and economics can contribute to the issue at hand.
Majority of people may be unaware that sustainability is impacted not only by environmental factors, but economic and social too. This is known as the ‘three pillars of sustainability’.
"Understanding the short-term effects can have long term consequences, and we need to be thinking about long term resource allocation such that we can continue to thrive as a civilisation." - Dr Ben Neville
Dr Neville is an advocate for sustainability and is involved in the university’s fair trade steering committee, and is a member of the sustainable investments framework steering group. He believes that it is important for corporate decision makers to be progressive as they have the main power to direct resources.
Corporations are a complex grouping of people with different views, potentially making waves and trying to change the organisation from within. This sparked Dr Neville’s research into social intrapreneurship – a process where internal change agents incite positive social disruption. As corporations become more open to sustainability issues, intrapreneurs are getting a voice, enabling them to make changes.
"Embracing change and recognising the business opportunities in becoming sustainable is the way forward." -Dr Ben Neville
Dr Greg Nyilasy, Senior Lecturer at the Melbourne Business School, echoes this. “Ethics comes first. And then, the good news is: corporations who are ethical also benefit with sustainable practices as they can hedge themselves against future litigation and regulations, safeguarding their reputation and profitability as an added benefit”.
He explains, Volkswagen’s emissions fraud is not just environmental damaging, but also a threat to social sustainability. By green washing (portraying themselves as more sustainable), consumers are vulnerable to false information, which can be difficult to correct even after refute. What is green may not be cheap. The compromise of being a more ethical consumer needs to be recognised.
"I think all consumers and companies are ethically obliged to be sustainable." -Dr Greg Nyilasy
Trade-offs are also evident in economic sustainability. “To what extent should countries like India and China trade-off growth for clean air and clean water?” asks Dr Leslie Martin, Lecturer at the Department of Economics.
Dr Martin discusses her research on the impact of industrial policies on environmental outcomes, revealing that reducing trade barriers has potential benefits. This encourages investment in new cleaner capital; removes inefficient firms due to increased domestic competition; and reallocates market share towards greener firms.
Discussing the track record these countries have had in implementing environmental regulation, she describes recent work in India. Research showed that changes in the price of coal (in part due to changes in regulation in freight) led smaller companies, that are unresponsive to most environmental regulation, to reduce coal use.
Dr Martin is working with colleague Dr David Bryne to research electricity and water utilities, gaining an understanding of how to effectively promote conservation. They design and implement large-scale field experiments to uncover how consumers form good and bad habits; identifying who responds well to nudges and price incentives; who doesn’t, and why.
"To effectively encourage conservation, we need to better understand consumer behaviour." -Dr Leslie Martin
To effect real change in attitudes, multiple stakeholders need to be engaged. To assist consumers, Dr Nyilasy suggests creating an architecture of choice that nudges people towards a healthier and greener consumption behaviour. Stocking ethical products or placing them at eye level on shelves are efficient methods to creating better defaults.
Dr Neville identified the reinterpretation of directors’ duties as a change he would welcome. It has long been interpreted as maximising profits in the short term with little regard for how those profits were made. However, “Majority of shareholders are human beings who do not want to profit from slave labour or the planet’s destruction”. He suggests creating sustainable profits that does not harm others or reduce the ability to profit in the future.
"Every BCom student needs to understand sustainability challenges, it's going to affect every business and individual." -Dr Ben Neville
Students are encouraged to explore subjects like Business Ethics and Environmental Economics, which will help them think about concrete and effective actions towards sustainability.
The University's Sustainability Plan for 2017-20 sets pathways for the University's longer term sustainability objectives, including a transition to carbon neutrality by 2030. Solar photovoltaic (PV) panels having been installed at sites around the University's main campuses, including The Spot building (banner image).
I wrote this article in 2018 as an intern at the Faculty of Business and Economics, The University of Melbourne. It remains a highlight.
Big thanks to Tessa, former-manager-now-friend who guided me in my writing and career; and Amber, who supported this repost.