How To: Become Healthy, Wealthy, and Wise Through Sustainable Business Practices

You’re an aspiring business person, your life goals are filled with traveling, leisure, early retirement, and success. You want to manage a business, something big, something small, but a thriving business all the same. You have been educated to varying degrees throughout your life and now you are ready for the position of a lifetime, something that will put you in the world of your dreams. Now this sounds great and all, but what will be your endgame? Could you manage a business that promotes profits and environmental degradation over environmental stewardship and social equity? This is the kind of question that you must answer not with spreadsheets or equations, but with philosophical integrity that incorporates the moral foundations of which we have been naturally engrained with. But first we must define some key terms that are imperative towards understanding sustainable business practices.

Catch-per-unit-effort Hypothesis: The assumption of a linear relationship between effort, stock, and harvest.

Net Present Value: The amount of money that if available today would generate the future stream of net income in question.

Total Private Cost: The cost incurred in the production process by the producer, including tax and profit margins that are anticipated.

Total Social Cost: The cost to society as a whole from an event, action, or policy change. Includes negative externalities and does not count costs that are transfers to others.

Natural Dividend: The unearned income from the harvest of renewable resources. As nature and not human industry produces renewable resources, all profits above “normal” profit (included in the total cost) are unearned, and the natural dividend is equivalent to the total return minus the total cost.

 Now that we have defined some key terms we may begin to discuss how managing a business through sustainable practices and a triple-bottom line (planet, people, profit) can lead to a successful long-term business that can make you healthy, wealthy, and wise.

To begin, the size of a business’s waste stream is a key aspect to how sustainable a business really is. Recycling material is one way of reducing your business’s footprint and it has a lot to do with the absorptive capacity. As a business grows their waste stream continues to grow as more resources are necessary for daily operations. So when a waste stream becomes too large it begins to interfere with the absorptive capacity of the Earth, which causes even more problems on the larger scale. With the absorptive capacity shrinking as the waste stream increases it is only logical for a business manager who wishes to continue operations uninhibited by environmental degradation to begin the process of decreasing the waste stream through programs such as recycling. This will ensure that the absorptive capacity levels remain constant and the business’s waste stream will decrease leading to future savings through decreased disposal fees and other positive effects. By recognizing and initiating change in the system it will also affect business profits in a positive manner, by cutting back on the waste stream through recycling a business will see more consumer support from the local population, which will lead to higher profits. Also the absorptive capacity around the area of the business will be thriving leading to decreased costs in environmental degradation mitigation and regulation fees from government environmental regulation policies.

Sustainable business practices can be complex and can lead to a lot of headaches due to the unsupportive nature of a majority of today’s business leaders. One example of the complexities is attempting to use a maximum sustainable yield model with common-property resources such as fisheries. The maximum sustainable yield model is quite complex when incorporated into common-property resources for many reasons. There is the fact that not every business in the fisheries market will practice MSY, for this reason any business that does practice MSY will see that the population of fish will continue to decrease due to fellow competitors exploiting the remaining population for further profit. Another complexity when attempting to practice MSY with common-property resources is the equal distribution of the resource. In the past competitors would simply maximize yields of resources to continuously stay on top of fellow competitors, this led to overshoots of resource exploitation and in the end population destruction. So the complexity is how to equally distribute the resource to all competitors as to continue practicing MSY.

With creative thinking and a mindset of business as UNusual it is possible to create a business that can operate sustainably and profitably, making you healthy, wealthy, and wise all at the same time.

Thank you for your interest, please comment and subscribe.

Onward,

Hayden van Andel