The Unholy Marriage Between Crony Capitalism and Sustainability

How does business solve a global problem like plastic pollution - usually, it doesn't.

In a marketplace littered with crony capitalism is this what passes as corporate sustainability these days?

According to Kelly Cramer, lead of How2Recycle at the Sustainable Packaging Coalition:

“We are thrilled that  Johnson & Johnson Consumer Inc. is joining the movement of hundreds of brands embracing standardized recycling labeling with How2Recycle. By telling people exactly how to recycle their packaging, Johnson & Johnson is empowering parents to take proper action while making their lives easier.”

Every Little Bit Does NOT Help

Is this really how low the bar has dropped for a sustainability announcement in 2018? Is Johnson and Johnson so seduced with their own PR messaging that they’ve come to believe that this action is in any way commensurate with our planet’s environmental challenges? In the era of climate change (IPCC Special Report) and unprecedented plastic pollution, it’s hard to imagine a company doing less. And for those who say that every little bit helps, I disagree. It doesn’t help when a corporation responds to a crisis in this way and makes it sound like an important step. It lulls us into a state of complacency, and rather than standing up and voicing our concerns with what appears to be a serious lack of engagement, we are quiet, believing that someone else is on the job taking care of the problem.

Newsworthy

If enhancing wellbeing was a legal requirement of our business model rather than letting the free market decide how best to maximize earnings, imagine how profound an impact this industry could have. Imagine if it chose to switch from plastic to glass which is endlessly recyclable and if they developed a deposit and collection system (like Ontario Canada where the Beer Store has a 96% bottle recovery rate) where all bottles could be reused rather than discarded to wreak havoc on the environment and human health. Imagine if it publicly challenged another industry that has a single use plastic problem like the bottled water/soda industry, to join them on their journey to reduce social and environmental harm. Now that would be newsworthy. (Global recycling of plastic is around 9%)

Every Child Knows What’s Fair

Our system is broken – societal wellbeing is mostly absent from large companies’ decision making. Oh, there are some small gestures here and there and some companies are better at it than others, but the incentive to change operations and rethink business models in this era of plastic pollution, ecosystem degradation and climate change is insignificant (or simply too long term) compared to the vast financial benefits of turning a blind eye and keeping the gravy train rolling along.

Once a product (or service) and its “delivery container” has served its purpose, much of the cost of garbage collection and processing as well as the damage to ecosystems, biodiversity and human health, magically disappear for the corporation. Both up and downstream, pollution and waste are essentially free and social exploitation is mostly overlooked. The resulting mess is left for society to cleanup – a society that had no say in the choices made by private business and did not share in the profits of the company.

By any rational standard this is monumentally UNFAIR. Every child learns at an early age that they are responsible to clean up their own mess but in the era of neoliberalism and crony capitalism, these lessons have seemingly been forgotten. Corporate friendly governments have made it easier for companies to operate with fewer regulations and have shielded them from legal repercussions of social or environmental harm caused by greed or incompetency. Corporations, shareholders and the top 0.1% have never been happier – crony capitalism has delivered vast wealth. And best of all for the so-called “elites”, society has been seduced into thinking that governments are inefficient and clumsy when it comes to solving problems and that social and environmental problems are best solved using market solutions. (Anand Giridharadas explores this issue in his book, “Winners Take All: The Elite Charade of Changing the World.”)

We have reached a new low in proclaiming that business is part of the solution when it comes to environmental and social harm. But, for the sake of argument, let’s allow the staunch market capitalist, free of any government regulation, a chance to tackle the ocean plastic problem?

Market Capitalism in Action

The first question a good capitalist always asks is, “What is the business opportunity?” The next step is to flush out some of the key issues. Let’s assume the two people involved in the discussion are named Donald and Mickey.

Donald: Mickey, do you know anything about this ocean plastic issue?

Mickey: I think fish are dying and waterways are clogged with plastic which degrades into tiny pieces and poisons fish. I’ve also heard that when the plastic degrades it releases CO2 which contributes to climate change AND the tiny pieces of plastic can also enter into human water supplies. Besides that, I think our customers are growing concerned that we might be contributing to this problem. I’ve heard that some of them are looking at our competitors who are exploring how to address this issue.

Donald: Have we done the numbers on how many customers we might lose?

Mickey: It’s hard to say. Often what people say in a questionnaire/interview is different than when it comes to putting their money on the table. All things being equal, people still seem pretty conditioned to seek out the lowest price.

Donald: Are there any regulations on the horizon that will require us to change our business practices?

Mickey: None that I know of. In fact, thanks to our consistent lobbying efforts, most political contacts agree that business is the most efficient way to solve these problems. So for the time being government should leave us alone.

Donald: Now onto some of the bigger issues, how would moving away from plastic packaging affect our operations and shareholder returns? Would we need to spend a lot of time finding new suppliers and retooling?

Mickey: It’s possible that our short term costs would rise which would likely affect our short term profitability. And yes, we would have to find new suppliers, change some of our operational procedures and maybe retool somewhat. We would likely gain some positive PR but it’s very hard to quantify. Some of the other literature that I’ve read tells me that our employees would feel better about working for us and we might experience lower turnover. One last thing, there is a movement to make investing more “responsible” but the movement is rather weak and most companies can get by by signing a charter or by joining some vague industry commitment for changes that won’t kick in for at least 5-10 years.

Donald: It doesn’t sound too urgent and it all sounds like a quagmire to me. Put together a report and we’ll talk about it with our board at the next meeting in 6 months. And can you please get me a bottled water from the fridge?

Mickey’s Meeting notes:

There’s no incentive to act immediately and there would likely be negative impacts to our earnings. Benefits of PR are difficult to quantify. The responsible investing movement is still quite weak and we can make some small industry commitments which won’t cost anything and keep us in good standing for the time being. Let’s wait and see what happens with our competitors. Let’s get some answers from our political contacts on whether this is something that we will need to address anytime soon. And find out whose campaign we should fund to slow this whole anti-plastic business down.

Conclusion

This is how market (crony) capitalism solves a problem like ecosystem destruction, biodiversity loss and broad health impacts. It doesn’t. Without a clear business case or strong regulations, business will stall and delay. They will look to place the responsibility for their mess on government and society and kick the problem down the road. If they do take any action, (for most companies) it will be the simplest and least costly approach. 

This is precisely why every global ecosystem on our planet is in decline. Not every problem has a market solution. Regulation is necessary when the market is ineffective at protecting our collective wellbeing.

If corporations can’t act for the best interests of society, then we need to push them in that direction. We need to make them responsible for their own mess, like a child.

You can follow Brad on twitter @bradzarnett