He was packing his belongings, closing the hut. The sacks with the corn were still on the table along with the dust from the soil outside. At least that’s what it had been before the absence of rain had turned the ground into concrete. The last drop of water it had touched had been the tears of his children. They didn’t want to leave, but they had to. In the city there would at least be work, there was certainly none here. That’s why he was closing up the hut. He was leaving too, to find work. But the corn sacks were still on the table. Everything else was stored away. These needed a special place, way back, safe and secure. With all the hunger, these could not be touched. All belongings had been sold for food, the livestock was gone. But the sacks with the seed, they were sacred. Without them there would be no next year, no future.<\/p>\n\n\n\n
It may sound like it, but this is not supposed to be a teary-eyed story. It shows what sustainability is all about. I do seminars on its current business acronym ESG twice a year. When we do the introduction round, I ask participants what’s in it for them when it comes to sustainability. I usually get one of two reactions. Half of the room is laser-focused on ESG reporting standards and regulations. The other half cringes at the word “sustainability” \u2014 it’s too Greenpeacey, too political, too soft, not a real business topic. Both are missing the point of what it’s all about. The same thing the farmer already knew.<\/p>\n\n\n\n
\nThe Board Room Version: Sustainability is not an ethical discussion. It’s a principle of resource management. The distinction matters because one requires value alignment, the other just arithmetic. Every resource your business needs has a regeneration rate: workforce, customers, suppliers, natural inputs. Your management time horizon is probably shorter than most of those regeneration cycles. The historical response to resource depletion has almost always been displacement \u2014 find another source \u2014 rather than management. Displacement works if the new resource has a higher or comparable regeneration rate. If it doesn’t, displacement becomes liquidation of stock. 79% of executives surveyed by McKinsey and CPPIB said they felt pressured to demonstrate strong financial performance within two years or less. The regeneration cycle of almost every resource that matters is longer than that. Carlowitz coined the term in 1713 and created the three-step program. He was a German mining administrator trying to solve wood shortages. His program applies to this day: use what you have more efficiently, find alternatives where the resource is being depleted, invest in regenerating the supply before you need it. Your job as a manager is not to save the planet. Your job is to make the math work for the resources you are working with. Sustainability is not hugging trees, it’s good business practice.<\/em><\/p>\n<\/blockquote>\n\n\n\n
One early strand of the idea appears with Quesnay and the Physiocrats \u2014 no, that’s not a punk band. It was a movement active roughly from the 1750s onward in France. Fran\u00e7ois Quesnay, a royal physician, published the Tableau \u00c9conomique in which he described an early model of economy as a circular flow. In it the source of wealth is nature \u2014 land, soil, harvest, and so on. The economy is then understood as an activity that is not just concerned with producing stuff out of nature, but also has to circulate in a way that it can go on year after year. All surplus \u2014 especially the financial one \u2014 in the economy comes from the land itself. So in order to continue growth, nature has to be preserved. Although that was an extreme view since it rejected all value coming from production, it was the first attempt to create an economic model that was not above nature but thought of it as a basis.<\/p>\n\n\n\n
At about the same time, both in England and Germany, forestry had a more practical problem. Wood had been the main construction material for centuries \u2014 as well as source for heating and cooking. By the late 1600s the large ship construction efforts in England and mining operations in Germany were showing signs that the natural stocks of wood were running low \u2014 meaning they went full Saruman on the forests. Both countries independently needed to solve the problem. Two people and two books are important here. In England it was John Evelyn and his \u201cSylva; or, A Discourse of Forest-Trees and the Propagation of Timber in His Majesty’s Dominions” in 1664, and in Germany it was Hans Carl von Carlowitz and the “Sylvicultura oeconomica” in 1713. Both solved the problem intellectually, but we will concentrate on Carlowitz because his ideas had a lot more impact \u2014 until this day, actually. <\/p>\n\n\n\n
While Evelyn was a scientist working for the Royal Society, Carlowitz was a mining administrator in Saxony. He had a good education, studied law and public administration, and \u2014 quite common for a young nobleman \u2014 a Grand Tour, a kind of study journey taking him to London, Paris, Rome and many more. He had not trained in forestry but came from a family of foresters. In 1708 he was given a crisis mandate: Saxony’s mining was running out of local wood and prices at the time were rising. He was supposed to find a solution. So he wrote a book. And that is the birth of the term sustainable \u2014 Nachhaltigkeit \u2014 as we know it today: \u00ab\u2026 da\u00df es eine continuirliche best\u00e4ndige und nachhaltende Nutzung gebe \/ weil es eine unentbehrliche Sache ist \/ ohne welche das Land in seinem Esse nicht bleiben mag.\u00bb \u2014 that there be a continuous, constant and sustainable use, because it is an indispensable thing, without which the land may not remain in its being. <\/p>\n\n\n\n
Carlowitz designed a three-step practical program that is not unlike what we still use today. Efficiency first \u2014 use the resource better, meaning use less to achieve the same effect. Substitution second \u2014 find alternatives to the resource if possible. And third, regenerate \u2014 invest in the future of the resource. In the case of wood that was reforesting, and there is a lot of that in the book. But more generally he had not just the core sustainability idea, he had the full program. He realized that sustainability had to do with three topics: resource management, social equity \u2014 he named food and sustenance for all, and that the common good was more important than the prince’s treasure \u2014 and also intergenerational responsibility. He even criticized short-term thinking in the book. The book is quite amazing as a historical source \u2014 don’t try to read it though, the German with way too much Latin influence is a real pain to read. Go find some secondary text \u2014 Grober’s “Die Entdeckung der Nachhaltigkeit” for example. <\/p>\n\n\n\n
What makes this so amazing is that Carlowitz has the full sustainability definition in his book on forestry 250 years before the Brundtland Report from 1987, which is today considered to be the definitive one: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” But the idea was from 1713.<\/p>\n\n\n\n
Since then, the idea has expanded, most of the time without thinkers even knowing of Carlowitz. Adam Smith in 1776 used sustainable thinking writing about economics in general. Productive labor must reproduce the capital it used plus a surplus, or next year’s output shrinks. This year’s output must fund next year’s activity at the same or greater level, or the system is not sustainable. <\/p>\n\n\n\n
Marx applied it to labour in 1867. Labor power \u2014 you know, people working \u2014 must be reproduced. The workforce has a regeneration rate as every natural resource does \u2014 meaning there need to be new humans born and grow up to eventually become workers. He criticized the factory system because it was depleting that resource by pulling women and children into production, cannibalizing the household function that reproduced the next generation of workers. That sounds very anti-feminist \u2014 and it is, but that was the time \u2014 and a very cold observation \u2014 and it is too. Look, whatever you think of his politics, that whole passage in “Capital” does not contain any political or ethical argument, it is pure resource logic, backed by factory inspector data.<\/p>\n\n\n\n
Hicks in 1939, in his famous formal definition of income, wrote that it is maximum consumption during a period while remaining as well off at the end as at the beginning. That means you cannot consume your capital base and call it income. That is not income. That is liquidation. This is exactly what was happening in the big shareholder maximization movement from the 1970s until today. And it was Hicks applying the principle of sustainability to capital and income.<\/p>\n\n\n\n
Hobfoll in 1989 used it in psychology in his conservation of resources theory. People try to obtain, protect and rebuild the resources they need to function. Stress occurs when these resources are threatened, lost, or invested without return \u2014 you know, in the case of a culture that consistently asks more than it gives back. These resources have a renewal cycle \u2014 breathing, meditation, time off work. But too much or too intense work can overwhelm the cycle. A company that burns through attention, trust, competence, and customer goodwill is not sustainable. It is liquidating its own future. That is Hobfoll’s individual framework \u2014 the organisational application is mine, but the logic holds.<\/p>\n\n\n\n
The same logic applies to customer relationships. Dr\u00e8ze and Bonfrer showed in 2009 that maximising value from individual customers \u2014 extracting as much as possible now \u2014 produces a smaller and less profitable customer base than treating the customer pool as a renewable resource to be cultivated.<\/p>\n\n\n\n
The basic idea can be found everywhere. But why is it then such a problem today to apply it? One of the reasons is that there was something called the Marginal Revolution in the 1870s that did not attack sustainability directly but attacked what value is in economics. Independently from each other, some writers came up with the brilliant idea that the objective value of a product \u2014 based on resources and labour \u2014 is not really important in economics. The only important thing is the price that somebody is willing to pay for it. So if the resource or the labour is not important anymore, the question “is the resource actually still here next year?” became unimportant. Price detached from the source of the product was the only measure. This is one reason the principle of sustainability went underground: once price becomes the only visible signal, the resource base can disappear from view.<\/p>\n\n\n\n
Until politics and ecologists \u2014 and even companies \u2014 rediscovered it in the second half of the last century. Since the 1960s the worsening state of the environment has become more apparent. The Club of Rome, the UN in the Brundtland Report, the environmental conferences, and eventually the Sustainable Development Goals acted on a clear need. Sustainability became an environmental idea. A multitude of NGOs were founded and do great and important work in that area. Eventually the word also appeared in other areas. We saw it appear in marketing as something meaning durable or of good quality \u2014 a sustainable jacket \u2014 or products having some sort of connection with recycling or with the practice of offsetting environmental impact. The misuse of terms is of course not new. Humpty Dumpty has already said: \u00abWhen I use a word it means just what I choose it to mean.\u00bb Alice replies: \u00abThe question is whether you can make words mean so many different things.\u00bb To which Humpty Dumpty counters: \u00abThe question is which is to be master \u2014 that’s all.\u00bb Whoever controls a word controls its meaning. The problem is that almost everything that fellow says is totally stupid. <\/p>\n\n\n\n
Words do have meaning and they are important. Sustainability comes from the Latin sustinere \u2014 to hold up from below \u2014 structural support if you want. The German Nachhalt means what you hold onto when everything else gives way. And that’s from one of the first dictionaries \u2014 Campe’s W\u00f6rterbuch der deutschen Sprache, published between 1807 and 1811. Two languages, different images, same concept: load-bearing capacity under pressure. And we discover something which should also be clear from the development of the concept. The core logic is not first of all political, ecological or ethical. Those layers can be added, and often should be. But the basic principle does not need them. It only needs arithmetic: do not consume a resource faster than it can regenerate. Sustainability has always been rooted in business and resource management. Carlowitz was a mining administrator. Evelyn was responding to a naval supply crisis. The physiocrats were analysing agricultural productivity. Smith and Marx were writing about industrial production systems. Hicks was defining capital accounting. Hobfoll was writing about occupational psychology. And there are many more \u2014 like Dr\u00e8ze & Bonfrer who wrote about customer relationship management. Every serious formulation of the concept comes from someone trying to solve a resource problem in a production system. The ethical and political versions came later \u2014 often for good reasons. But they also made managers forget that the basic version was much simpler. So you have been sold a version of the concept that obscures its original meaning and, more importantly, complicates its application and use. Brundtland requires an ethical commitment to future generations. The sustainability triangle requires political balancing of three domains. Religious stewardship requires a theological premise. Only the forestry definition \u2014 don’t cut more than grows back \u2014 requires no ethical premise. Just arithmetic and a time horizon longer than this year’s harvest.<\/p>\n\n\n\n
It’s always been about adding up the numbers. Like in one of the most important sustainability tools, the displacement strategy. The historical response to resource depletion has almost always been displacement \u2014 exchanging one resource with another \u2014 rather than management of consumption. When Venice depleted its forests and imported Hungarian timber it was displacing local wood with foreign wood. England replaced timber with coal as a heating source. The problem with displacement is that it depends on the regeneration timescale of the substitute. Wood to coal: negative swap \u2014 you replace a resource with a decades-long regeneration cycle \u2014 wood \u2014 with one that takes millions of years \u2014 coal. Coal to solar: positive swap \u2014 you replace a non-renewable stock with a flow whose regeneration rate exceeds any conceivable consumption rate. Displacement works until the regeneration timescale of the substitute exceeds the human planning horizon \u2014 as with coal or oil. At that point you have stopped managing a resource and started liquidating a stock.<\/p>\n\n\n\n
This can also be applied to other business areas: replacing skilled workforce with cheap outsourced labor, squeezing suppliers past their resilience threshold, maximizing short-term customer extraction \u2014 these are all displacement strategies. They work until the stock has been used up because you have not taken into account the regeneration rate. And when they stop working, the infrastructure to do it differently has usually been dismantled. The numbers do not add up. It’s not just unsustainable, it’s not logical.<\/p>\n\n\n\n
The reason why this is so important is the application part I referred to earlier. By taking sustainability to a global level \u2014 with the Club of Rome, Brundtland, and the climate conferences \u2014 it has made the application of sustainability as a business practice harder in the heads of company managers. Don’t get me wrong, the global discussion on sustainable or environmentally friendly development is real and necessary. Some issues have to be \u2014 also, and really importantly, also not exclusively \u2014 tackled on an international or national level. But the scope shift from the individual forest to the planetary system broke the connection between sustainability and the company-level decision. Companies look at global targets and boundaries and think: nothing to do with my quarterly numbers. And that is not true and it is also not complicated. The connection is simpler than the global framing suggests.<\/p>\n\n\n\n
Your job as a manager is not to save the planet. Your job is to make the math work for your own resources. Every resource your business depends on has a regeneration rate. Your workforce: how long does it take to develop genuine capability? Your customer base: what is the natural renewal rate if you stop actively depleting loyalty? Your supplier relationships: how long to rebuild after you’ve squeezed them past their limit? Your natural resource inputs: what happens when the supply chain can no longer deliver at current extraction rates? The management time horizon of most organizations \u2014 two years, per 79% of executives in Barton & Wiseman 2014 \u2014 is shorter than the regeneration cycle of almost every resource that matters.<\/p>\n\n\n\n
Carlowitz’s three-step needs to be applied to any resource: first use what you have more efficiently. Then find alternatives where the original resource is being depleted. Then invest in regenerating the supply before you need it. That’s not environmental strategy. That’s resource management. Without it you’ll be out of business in the long run. And although Carlowitz was writing about forestry, sustainability is not about hugging trees, it’s just good business practice, baby.<\/p>\n\n\n\n
It’s really not that complicated or hard. The work just needs to be done. Best without somebody forcing you to do it. Because this is what responsible people do. We think about the consequences of our actions. So sustainability is really what business will look like when it finally grows up.<\/p>\n\n\n\n
On this one there is no more to explore, just to do it.<\/p>\n\n\n\n
Are you part of the problem or part of the solution? \u2014 LinkedIn<\/p>\n\n\n\n
Don’t just take it from me, here is some good stuff to read:<\/p>\n\n\n\n
Grober, Ulrich. \u201cDie Entdeckung der Nachhaltigkeit\u201d. Kunstmann Verlag, 2010.<\/p>\n\n\n\n
King, Andrew A., and Michael J. Lenox. “Does It Really Pay to Be Green? An Empirical Study of Firm Environmental and Financial Performance.” Journal of Industrial Ecology 5, no. 1 (2001): 105\u2013116.<\/p>\n\n\n\n
Porter, Michael E., and Claas van der Linde. “Toward a New Conception of the Environment-Competitiveness Relationship.” Journal of Economic Perspectives 9, no. 4 (1995): 97\u2013118.<\/p>\n\n\n\n
Mazzucato, Mariana. The Value of Everything: Making and Taking in the Global Economy. PublicAffairs, 2018.<\/p>\n\n\n\n
Power, Michael. The Audit Society: Rituals of Verification. Oxford University Press, 1997.<\/p>\n\n\n\n
Dr\u00e8ze, Xavier, and Andr\u00e9 Bonfrer. “Moving from Customer Lifetime Value to Customer Equity.” Quantitative Marketing and Economics 7, no. 3 (2009): 289\u2013320. https:\/\/escholarship.org\/uc\/item\/70t6b7r8<\/p>\n\n\n\n
Barton, Dominic, and Mark Wiseman. “Focusing Capital on the Long Term.” Harvard Business Review, January\u2013February 2014.<\/p>\n\n\n\n
Hobfoll, Stevan E. “Conservation of Resources: A New Attempt at Conceptualizing Stress.” American Psychologist 44, no. 3 (1989): 513\u2013524. <\/p>\n\n\n\n
Lewis Carroll, Alice’s Adventures in Wonderland, 1865<\/p>\n","protected":false},"excerpt":{"rendered":"
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