Our Research on Corporate Social Responsibility focuses mainly on the question how companies can at the same time live up to economic expectations while reducing their environmental and social burdens. Efficiency, such as eco-efficiency for the environmental side of sustainability, plays an important role in this context. However, we increasingly recognise through our research that driving eco-efficiency will only address a part of the challenge we face. Put in a rather concise way we wonder, if companies can become sufficiently efficient to be sustainably effective. Efficiency allows companies to better solve the trade off between economic performance and a good environmental and social performance. But will companies be able to increase their efficiency enough to reduce their use of environmental and social resources to a safe level?
The concepts we develop in this field are new but rely on a well-founded tradition. Businesses and business researchers have developed concepts how to deal with economic capital for a long time. While they are very successful they are somewhat restricted in two respects. On the one hand business research tends to focus on a single stakeholder –shareholders. On the other hand business research tends to focus on a single form of capital – economic capital. Both restrictions are incompatible with the aims of Sustainable Development. We therefore broaden existing concepts in both respects – we look at the value companies provide for more than shareholders and the economic, environmental and social resources they require in the process.
A good example is our Sustainable Value concept. Sustainable Value allows us to measure the sustainable performance of companies in monetary terms. Sustainable Value is the first of a new breed of assessment concepts. It assesses sustainable performance in the same way in which investors assess financial performance – by using opportunity cost thinking. Rather than concentrating on the burden the use of environmental and social resources inflicts on society, Sustainable Value looks at the return that is generated. Sustainable Value is therefore value- rather than burden-oriented. In this concept the cost of emitting for example a ton of CO2 corresponds to the return that could have been generated with this ton of CO2 by another company. The additional return a company generates with a resource compared to another company is called its value contribution and is expressed in a monetary unit like £ or €.
Using this approach we can assess the use of different environmental and social resources. Since they are all assessed in monetary terms they are also easy to aggregate to calculate the overall sustainable performance. More information on the Sustainable Value concept can be found on our thematic website.
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