Tag Archives: Sustainable development

Institutions and Sustainability


I
nstitutions, whether political, social or economic ; set the context for individual and group behaviour and are meant to provide the resources individuals need to survive. How people act and live is shaped in large part by the social structures in which they find themselves.[1] Social Justice and Rewarding Courage,  is in part , a matter of ensuring that these institutions through its instruments of intervention and action do in fact satisfy basic human needs.

Many structural forces which are characterized by exploitation and lack of innovation tend to create a system in which people become trapped in a particular social situation. Structural violence often results, in the form of power inequity, poverty, and the denial of basic human rights. Basic human needs go unmet, and groups suffer from inadequate access to resources and exclusion from institutional patterns of decision-making.[2]

Many sustainability professionals are fearful about the scale of the challenges facing the world, but this uncertainty can help generate the energy required for courageous action. While the desire to concentrate on finding practical solutions is understandable, it makes sense at the same time to also recognise and step towards our deepest fears, which can feel akin to taking a leap into a bottomless abyss.[3] Former US President Bill Clinton illustrated some of the nuances of uncertainty and sustainability in his talk at University of Oxford in 2012. Bill Clinton said that the most important change that needs to happen to confront the sustainability challenges of our age is to raise the consciousness of the world’s population. He said it was a good thing that we did not know for sure whether the calamitous cocktail of climate change, resource scarcity, ecosystem degradation and population growth would lead to an end of civilisation as we know it.[4]

Creating Shared Values with Institutions

When the expression “sustainable development” was coined in the report of the World Commission on Environment and Development in 1987, it was defined as “… development to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). From a legal perspective, sustainable development has been defined as “a comprehensive economic, social and political process, which aims at the sustainable use of natural resources of our planet and the protection of the  environment on which nature and human life as well as social and economic development depend…” (International Law Association, 2002).

The task of identifying a common framework for institutions to be effective in leading the path to sustainable world order is not easy. One important observation that could be drawn from available literature is that Institutions of any kind , now have to create shared values to achieve this task. Michael Porter and Mark Kramer has talked about creating shared value in business and corporate strategy in their award winning article in Harvard Business Review.[5] The article talks about purpose of corporation to be creating shared value and how to achieve that. In recent years business increasingly has been viewed as a major cause of social, environmental, and economics problems.

The question is how to transform the institutions to be being in virtuous circle of sustainable development. In this essay I propose a framework to which institutions should look into to bring that change and create shared value. The three wings of that change would be the following:

Sustainability and Education: Fostering organizations for sustainable economics and management .

Fostering Innovation : Fostering a culture of Innovation that is centred around driving business models  which bring in societal change.

Rewarding Courage: A focus on rewarding courage to stay the course in the times of adversity and uncertainty and even to take discomfort.

Three_pillars

Exhibit 1:  Three Pillared Framework for transforming the Institutions

Sustainability and Education

Education is a prerequisite for promoting the behavioural changes and providing all citizens with the key competences needed to achieve sustainable development. Education and training should contribute to all three axes of sustainable development, namely:

The Social perspective – education and training strengthen social cohesion by investment in human capital;

The Economic perspective – education and training contribute to building a knowledge society based on sustainable economic growth; and,

The Environmental perspective – education and training are crucial for changes in citizens’ behaviour on issues such as: consumption, transport, use of sustainable energies, etc.

Knowledge, Values, and Education are fundamental to all the changes that have been considered is a major transformation of human awareness. This shift in attitude and thinking, which is already underway, involves a new intellectual understanding One of the key initiatives that many universities around the world has taken,  is to foster student organizations who acts as agents for sustainability to bring in curricula change and motivate the academic and student community for sustainable development. One such organization is oikos , which with its chapters around the world is increasingly creating awareness on sustainability and coming up with tangible deliverables to bring in the change. My personal experiences as President of a oikos local chapter in New Delhi has been immensely fruitful in terms of generating a knowledge bank in the university and spreading the word on sustainability . While doing so there have been many instances when we were able to partner with a variety of organizations to create projects which would in future keep generating insights in the area of sustainability. Institutions today need to realize the fact that education right from the very beginning of one’s formal education and  has to absorb the true values of sustainable development.

If the positive changes and are to continue and intensify, the driving force will be an awakened, concerned, and mobilized global civil society. Governments and corporations will respond to voter and consumer demand, and a vibrant global people’s movement could inspire endless variations on the theme of sustainable development.[6]

Fostering Innovation

It has to be now understood well by all kinds of Institutions that the next phase of innovation lies in the fact that new business models need to be driven for societal change and not economic value added. In fact economic value should be drawn by designing new products and services which can bring societal change in turn generating economic value. Creative thinking has always been integral for improving well-being. (Lemelson – MIT Program, 2003 )

As the world’s largest democracy, with a diverse population of more than one billion, India has become a key testing ground for sustainable development. Most of the media attention has been focused on the country’s pockets of urban, English-speaking university graduates who are “piggybacking,” capitalizing on the Internet and decreasing telecommunications costs to capture hundreds of thousands of software and customer service jobs from overseas, at a fraction of American or European wages. The high-tech start-ups of Bangalore have been heralded in the press. Corporations such as GE and IBM have even opened R&D centres there, employing PhD-level engineers who are helping to invent and improve info tech, biotech and nanotech.[7] There are various case studies available similarly for China[8] and Africa[9] which talk about Innovation for Sustainable Development.

The proposed framework envisions a world where Science and Technology work more directly for social justice, poverty alleviation and the environment. This requires innovation which is transformative – reshaping social and power relations to allow innovation in new directions. It means innovation for sustainability, paying attention to ecological integrity and diverse environmental and social values. It means that the benefits of innovation are widely and equitably shared, and not captured by narrow, powerful interests. It means encouraging open and plural forms of innovation pathway – social and technical; high tech and low tech; those which are currently hidden, as well as those which are more commonly recognised. It means organising innovation in ways that are networked, distributed and inclusive, involving diverse people and groups, including those who are poor and marginalised. As a result, this is a world where all feasible directions for scientific, technological and wider social innovation are discussed as matters for legitimate political argument, just as in other areas of public policy. It is a world where scepticism over some particular innovation pathway can no more be excluded as indiscriminately ‘anti-innovation’ than opposition to any specific policy is generally ‘anti-policy’.  It is a world where a deliberate diversity of innovation pathways flourish and interact. What is needed is nothing short of a vigorous new critical glob al politics of innovation.[10]

Rewarding Courage

The recent global financial crisis and ensuing recessions placed a premium on strong, effective and “sustainable” leadership. Although people tend to measure wealth in terms of the dollar value of a portfolio, we believe it is better to measure wealth in terms of the real spending that the portfolio can sustain over the entire life of the obligations served by the portfolio. Sustainable spending[11], is an expression used  to gauge this true value of a portfolio. Jim Garland used the term “portfolio fecundity,” to describe much the same concept.[12]

Many people felt jubilation at the peak of the tech bubble, because they felt so wealthy. And they were—as long as they were inclined to liquidate their holdings and spend before the market lost its euphoria. If they were still investing (e.g., for some future retirement), those new purchases bought precious little yield! Reciprocally, people felt panic and dismay at the 2009 trough of the financial crisis, because they felt as if their assets had been wiped out. And they were—if they intended to liquidate and spend their assets immediately. But, for the buy and-hold investor, their real income was higher than at the 2007 peak!

Focus should be on creating enough incentives to rebalance into higher yielding assets after they’ve cratered, presumably funded from assets that have performed much better, we can systematically ratchet our sustainable spending ever higher. This ground is amply explored in asset allocation literature. Indeed, the essence of Tactical Asset Allocation (TAA) is an effort to rebalance into investments when they become most uncomfortable, and are therefore priced with a superior risk premium, to reward those who are courageous enough to invest at such times.

Much of these incentives has to come from the policy makers of the world. Rebalancing into the most feared and loathed stocks, and out of the most beloved high-fliers, requires courage—even if we get a “raise” almost every time we do it! Andrew Ang of Columbia labels this “countercyclical investing.” He calls on long-term investors to institutionalize this kind of contrarian behaviour.[13] If we have the courage to do this, even though it creates discomfort and goes against human nature, it far better aligns our investments with the long-term obligations that they are intended to serve.

Institutionalizing a focus on sustainable spending, as a basis for gauging our investments over time, can help give us the courage to stay the course in adversity and even to take on more discomfort when it is most profitable—and most frightening—to do so.


[1] E. Franklin Dukes, “Structural Forces in Conflict and Conflict Resolution in Democratic Society,” in Conflict Resolution: Dynamics, Process, and Structure, ed. Ho-Won Jeong. (Vermont: Ashgate Publishing Co., 1999), 159.

[2] John Paul Lederach, Building Peace: Sustainable Reconciliation in Divided Societies. (Washington, D.C., United States Institute of Peace, 1997), 83.

[3] Jo Confino , For sustainability leaders, embracing uncertainty can be rewarding, The Guardian (July 2012)

[4] Jo Confino , Live blog from Oxford University: Day two on food, water and energy for all, The Guardian (July 2012)

[5] Michael E. Porter and Mark R. Kramer, Creating Shared Value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review (January- February, 2011)

[6] Steven C. Rockfellar, Vision, Courage and Sustainability, The GEA Conference for a Sustainable Future (October 2003)

[7] William Bulkeley,  IBM to export highly paid jobs to India, China, page 1, Wall Street Journal, page 1, (December 15, 2003.)

[8] “China’s Second Wave: Country is Now Poised to Flood World Markets with High End Products Like Cell Phones and Autos,” by Jehangit Pocha, The Boston Globe, Page D1, January 2, 2004.

[9] Innovation for Sustainable Development , Local Case Studies from Africa, United Nations DESA, New York (2008)

[10] STEPS Centre (2010) Innovation, Sustainability, Development: A New Manifesto, Brighton: STEPS Centre

[11] Arnott, Robert D(2004) Sustainable Spending in a Lower-Return World, Financial Analysts Journal, vol. 60, no. 5 (September/October)

[12] Garland, James P., 2004, “The Fecundity of Endowments and Long-Duration Trusts,” Economics and Portfolio Strategy, September 15.

[13] Ang, Andrew, and Knut N. Kjaer, 2011, “Investing for the Long Run,” November 11. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1958258.

Bibliography

INTERNATIONAL LAW ASSOCIATION (2002) Legal Aspects of Sustainable Development. Fifth and Final Report of the International Law Association’s New Delhi Conference, London: International Law Association.

INVENTION AND INNOVATION FOR SUSTAINABLE DEVELOPMENT (November 2003)  Report of a workshop sponsored by the Lemelson-MIT Program and LEAD International,  London , THE LEMELSON-MIT PROGRAM, School of Engineering, Massachusetts Institute of Technology 

WORLD COMMISSION ON ENVIRONMENT AND DEVELOPMENT (1987) Our Common Future. Oxford: Oxford University Press.

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