Monday, 1 June 2020 IMS HomepageHome

Balancing Economic, Political and Social Factors in Decision Making

Prof Colin Coulson-Thomas*

Disruptive technologies, new business models, shifts in opinion and other discontinuities can complicate corporate and public sector decision making. Certain challenges can also impact upon a variety of economic entities and, along with related opportunities, can do so differently. The inter-related nature of multiple challenges has created a need for complex problem solving competences, the use of more multi-disciplinary, multi-location and multi-organisational projects and teams, and the systems thinking required to analyse and understand difficult and interdependent issues (Coulson-Thomas, 2018). This article looks at environmental challenges and some questions posed by climate change. It considers the issues they raise for business and other leaders who may need to balance contending economic, commercial, social, political and technical factors when determining responses.

Business and other human activities continue to pollute the environment and concentrations of C02 and other long-lived greenhouse gases continue to increase (UNEP, 2019).  Given the nature and scale of these challenges and their impacts, collective responses and collaborative and international action may be required, which along with the possibility of differing opinions within certain stakeholder groups are complicating factors for decision makers. Success may depend in part upon the extent to which the objectives and priorities of commercial and public sector decision makers and the activities of regulators are aligned and compatible. For directors it may require an understanding of collective decision making involving companies that may be competitors. For politicians it may involve the acknowledgement of limits and the advocacy of alternative lifestyles and new priorities.

Corporate and public decision makers face multiple and inter-related challenges, some aspects of which could be re-positioned as opportunities. With them come new risks, such as the cyber security challenges that accompany digital technologies. Against a background of rising public expectations, changes of direction and transitions are required from current growth trajectories to new business models and zero-carbon operation in a race against time to halt global warming (Stern, 2007; UNEP, 2019). The changing nature of work and new patterns of work complicate labour economics, while the sharing and barter economies pose other analysis issues (Sundarajan, 2016). The efficient and effective use of scarce resources is still required, but the focus needs to shift to shortages of water, energy efficiency and reducing the use of fossil fuels. In relation to climate change, while the benefits of strong and early action may outweigh the costs of inaction, decision makers face a justification challenge in view of the large sums involved and the need for a collective response (Stern, 2007).

Economic and Political Decisions and Wider Society

The legitimacy of both economic and political systems can depend upon trust and checks and balances to prevent the abuse of market and/or political power. It can also reflect whether or not they can cope with major challenges. Current and future directors and other corporate leaders may need to engage in more imaginative ways with wider society (Browne et al, 2015). A key finding of The Harvey Nash / Alumni Board Report 2016/17 (2016) is that business needs to impact on broader society: “Businesses need to make a fair financial return on their activities, but they also have a responsibility to drive positive social outcomes, including wealth creation, societal well-being and benefit, as a by-product of their activities”.

Where once Francis Fukuyama (1992) regarded western capitalism and its associated political and social systems as having triumphed over Soviet communism, in 2019 at a G20 meeting Russian President Vladimir Putin suggested it was western liberal democracy that had failed. Where there is a deficiency of trust, can business itself rebuild trust through more responsible business leadership or will exclusion lead to the growth of both right wing parties and those on the left of the political spectrum who favour Government intervention and re-nationalisation? Will fragile situations in some parts of the world be exacerbated by further migrations caused by inequalities and/or climate change? Are we at a tipping point that might lead to further polarisation?

As an allocative mechanism capitalism has advantages over command economies, for example in that when taking economic decisions people can vote with their money as and when they wish to according to their personal requirements and preferences as opposed to when taking political decisions through elections when a range of issues are conflated together and relative degrees of support cannot be registered (Friedman, 1992). Some people appear schizophrenic. They don’t seem to like the consequences of their economic decisions in the marketplace, and vote politically for re-distributive taxation policies.

Winners and Losers

When decisions are taken and subsequent changes occur, invariably some may gain while others may loose. Where innovation occurs, does more thought need to be given to the social consequences of what Schumpeter (1942) termed “creative destruction”? Economic, political and social factors are often difficult to balance and reconcile. For example, given finite resources is further growth in developed countries desirable and can one have prosperity without growth (Jackson, 2016)? Where will the balance be struck between state involvement and control, and public-private collaboration in the pursuit of UN Sustainable Development Goals (United Nations, 2015)?

There are intergenerational differences to recognise and address (Twenge and Campbell, 2008). In countries where young people face particular challenges, whether finding a job or acquiring a home, there may be a risk of inter-generational conflict (Robbins and Wilner, 2001). Younger generations can be especially concerned about the longer-term implications of environmental degradation and climate change which are likely to bite during their lifetimes. They may engage with teachers and others on the left of the political spectrum who espouse anti-business views? Who is going to put the case for business if business leaders are not engaging in both word and deed with younger generations?

A wide range of business activity can benefit the young, not to mention the contribution of business and those it employs to funding education and other public services (Cowen, 2019). Technical and vocational education has been used in certain developing countries for addressing employment and poverty issues in rural areas (King & Palmer, 2007). Future job prospects in many contexts are increasingly dependent upon entrepreneurship. The concerned young should be seen by responsible business leaders as potential allies in the drive to transition to less environmentally damaging business models. In addition to building trust with younger generations who are worried about their futures, a more responsible business focus upon sustainability might actually improve financial returns (Clark et al, 2014).

Spreading Public Concern

Pressures on the environment are not new issues (Brundland Report, 1987). However, in a variety of locations around the world public protests are involving groups that may not have hitherto resorted to direct action. Young people in various parts of the world are sufficiently worried about consequences of climate change that will bite in their lifetimes to walk out of school. They have been called “the climate generation” or “generation change” for “rising up to save its future” and they call for greater commitment to transformative change (Maynard, 2019). Adult protesters have blocked roads and bridges in London even though Government action has been taken and the UK’s share of global greenhouse gas emissions is only a little over 1%. The challenge from protesters is that despite ambitious targets even more needs to be done. Will a tipping point be reached at which such actions trigger sufficient public pressure to cause more determined Government and corporate action (Gladwell, 2000)?

The scale of environmental damage from emissions that pollute drinking water to the plastic found in the world’s oceans, and the accelerating destruction of eco-systems, is alarming. For many corporate stakeholders the number one longer-term issue, and an increasingly urgent one, is protecting the environment and climate change. Are directors and other decision makers doing enough in relation to the environment and climate change? Whatever they do, might it not be enough or quickly enough from both an activist and a concerned citizen’s perspective? Will perennial suggestions such as the introduction of a price for carbon emissions be acceptable when zero carbon is the objective (Coase, 1960; Stern, 2007)?

Some decision makers hesitate for fear of incurring a finite and short term cost and being disadvantaged vis-à-vis commercial competitors or political rivals in order to obtain a longer-term and general benefit  However, the likely cost of delaying adequate responses in a range of inter-related areas is escalating (Stern, 2007 & 2015; UNEP, 2019). With many business leaders seemingly continuing along an unsustainable “business as usual” path of growth and development, discontent with elites is growing (Stern, 2019). Younger people seem particularly concerned about business conduct, with one survey finding millennials believe that impacts upon society and the environment should be a top priority (Verschoor, 2018). Inaction may alienate this group upon whom the future of businesses will increasingly depend, while further delay also incurs the risk of falling behind wider public opinion.

Consequences of Inaction

The consequences of failing to get to grips with the root causes of problems are all around us. Rapid urbanisation and the associated sprawl, congestion, waste and pollution that have resulted mean that the transformation of cities and conurbations has become the key to improving the quality of life for large numbers of people (James et al, 2015). Environmental pollution is a major source of danger to human health and that of the planet, while the disposal and discharge of waste also has a negative impact on eco-systems and our health (UNEP, 2019). In relation to India, perhaps nothing better illustrates the gulf that can exist between the rhetoric of expressions of concern and the reality of what happens on the ground than the flows of raw sewage and industrial effluents into the waters of the Ganges and the enigma and paradox of the most sacred being among the most polluted (Sen, 2019).

Fresh and usable water supplies in relation to growing demand are a serious problem in various parts of the world (Gleick, 2014). Many fresh water eco-systems are also degrading. Water has been particularly significant for the history and development of India and surrounding countries (Amrith, 2018). The Puranas advise conduct to prevent atmospheric and water pollution (Renugadevi, 2012). The various impacts of climate change, whether upon meltwater flows into rivers or monsoons, also have consequences for large numbers of people, many of whom are in coastal areas and vulnerable to cyclones and storm surges. Imaginative, affordable and urgent mitigation is required.

The per-capita availability of fresh water is decreasing with population growth and it also mobilizes and amplifies risks to human health and the environment caused by human activity (UNEP, 2019). In many regions there is a growing shortage of water and much of what exists is polluted. The problem is being exacerbated by climate change. It is particularly acute in some urban areas such as Bengaluru, while in rural areas it is driving some farmers to suicide. Competitive struggles to obtain and control supplies of oil have led to greed, rivalry and conflict (Auzanneau, 2018). Will disagreements over access to water lead to war?

Global Requirement for Action

Lord Stern (2015) has asked: Why are we waiting?  Flows of polluted air and water cross national borders and the consequences of global warming, reduced biodiversity and many degraded eco-systems do not recognise them. The interconnectedness of systems, the history of our planet and the millennia for which the consequences of current activities such as the burning of fossil fuels may last, suggest hundreds of thousands of future generations may pay a price for our inaction (Crane, 2018). How should one take account of the interests of future generations in corporate and public decision making? Do current priorities, decision making practices and governance arrangements, and the functional and departmental structures of corporate and public organisations act as barriers to the rapid adoption of the various actions needed to address the challenges we face and seize related opportunities?

Most, if not all, areas of corporate operation and Government are either already or may soon be affected by climate change. Business and public leaders need to take responsibility. It cannot be delegated to one function or department when all of them are impacted and may need to contribute to an effective response. Because of the scale of both challenges and opportunities, increasingly collective action, collaborative leadership, creative strategies and more than incremental change are required. In areas and locations where urgent action is needed, lengthy discussion of the costs and benefits of cooperation, and whether to take the initiative or wait, need to be replaced by a sense of urgency and crisis management.

If decision makers are unaware of wider public concerns, or if they share them, what is holding them back? Are they overly cautious, uncertain of how to address a combination of inter-related issues, or afraid of the downside risks of taking the initiative while discounting the possible benefits of being a first mover? Are boards and many Governments overlooking the human, social and environmental consequences of current approaches to growth and development (Raworth, 2017)? Are there too many unnecessary and general corporate and public programmes, while their unintended consequences are being ignored? Should decision makers focus more on reality rather than sustain the illusion of innovation and progress (Erixon and Weigel, 2016)? How many of them have the courage to come clean?

Requirements for New Measures

Do more decision makers need to adopt alternative approaches, or could they address certain undesirable consequences of current operations by redefining corporate or public purpose, excellence, quality, performance, productivity and success, for example in terms of reducing environmental and resource footprints and addressing climate change (Coulson-Thomas, 2019b)? Do decision makers need to view more matters through an environmental or sustainability lens, for example questioning whether assets relating to damaging activities should be depreciated more quickly and their replacement accelerated?

Reviews of corporate purpose and business models in the light of wider considerations and the interests of a broader range of stakeholders over a longer time horizon could involve a shift of emphasis from materialistic growth and its quantitative indicators to sustainable and more inclusive growth and experiential and quality of life factors (Coulson-Thomas, 2019b). If more than incremental change is required, there may be an increased requirement for decision makers to understand the requirements for stimulating creativity, enabling innovation and supporting entrepreneurship (Coulson-Thomas, 2014h, 2015c, 2017a & b). As expectations rise, progress may be required in each of these areas. Different assessment criteria may need to be employed at each stage of the path from a creative idea through a resulting innovation to the entrepreneurial initiative that brings it to the marketplace.

In relation to the built environment, are the approaches adopted by planners and developers too incremental and overly focused upon adaptation and mitigation of the impacts of climate change, rather than the design and creation of more imaginative approaches to urban living and new models of cities (Dobraszczyk, 2019)? In regard to patterns of living and sustainable land management in rural areas, are there alternatives to the current use of this finite resource and the urban-rural divide (UNEP, 2019)? During transition, rather than methodically revise various processes and indicators it may be more important to revisit certain key ones more frequently. Decision and assessment criteria could give a higher priority to sustainability.

In relation to innovative solutions, both quantitative analysis and qualitative judgements may be required. For example, one could count ideas, patent applications or registered patents, or the number of new offerings brought to the marketplace, but their quality and relevance to desired outcomes might vary greatly. Measuring the impacts of innovation is an issue for Governments and policy makers as well as for business leaders (Al-Mubaraki et al, 2015). Unexpected events can frustrate users of trend lines when discontinuities occur in time series data. This is particularly so in dynamic situations. A move to a new business or public service model may require a rebasing of some indicators, while others may no longer be relevant.

Assessing Costs and Benefits

Many officials have needed to be methodical and pay attention to detail. Today it may be more important for them to also see the bigger picture, be aware of what is happening around the area they are operating in or examining, and be agile and flexible. For example, there are availability, perception, cost, infrastructure and other issues that those seeking to produce and market electric vehicles need to address (Bennett et al, 2016; Berkeley et al, 2018). A wider perspective can also involve ensuring that those who are impacted by decisions have a voice and exercises to assess engagement, involvement and participation. Again, qualitative as well as quantitative assessments may be needed, for example to ensure that particular vested interests or highly motivated and vocal minorities do not have a disproportionate influence.

One needs to ensure that significant benefits are not overlooked. Reducing the flow of oil, chemical, plastic and other pollutants into rivers and the oceans can both improve the quality of life and open up new leisure opportunities for urban and coastal communities. It can also represent a cause that engages stakeholders. Early mover advantages also need to be included in analyses. Early adoption of environmentally friendly activities and offerings by some can exert a social influence upon others to follow their lead (Axsen et al, 2013).

Power generation with fossil fuels is a major contributor to global warming. For countries, sustainable and affordable energy can also be a security issue (Farah, 2015). Could more be done to encourage energy efficiency and diversification? When trying to increase impact, some activities and their related costs and benefits are easier to control than others. Certain activities may be prescribed by law or required to ensure compliance with applicable regulations. Areas to concentrate upon could be those that are important in terms of their potential impacts and where there is sufficient freedom of maneuver to make a difference.

Are more eco-sensitive and cost-effective sustainable energy and infrastructure options and solutions available? More attention should be given to life-time costs when some decisions are taken. Clean energy transition strategies should embrace the disposal and/or recycling of solar panels. The decommissioning of nuclear power stations and the cost of treating and storing nuclear waste illustrate the consequences of turning a blind eye to future costs that are difficult to estimate. Ignoring them can impose an unwelcome burden on future generations, as is the case with the disposal of thousands of offshore oil and gas platforms (Rowe, 2019).

Leadership Requirements

In uncertain and challenging times, the practice of leadership may need to change (Coulson-Thomas, 2019a & b)? Are new leadership approaches, priorities and styles required? We may need to address the purpose of corporate leadership and how business value and social outcomes can be aligned (Ahluwalia, 2015; Kempster et al, 2019). Whether addressing inter-related challenges relating to the environment, sustainability and climate change or pursuing the many opportunities that accompany them, is more than the leadership of individual organisations needed? Are collective and collaborative responses and a more collaborative capitalism required to achieve sufficient impact (Ahluwalia, 2015; Coulson-Thomas, 2014c)?

Should culture change be a leadership priority as suggested by the UK’s Financial Reporting Council (FRC, 2016)? In relation to climate change, it is questionable whether culture in the sense of deeply held attitudes, beliefs and values can and should be changed, and even if it were possible whether desired changes of conduct, focus and/or priorities could be achieved in the available timescales (Coulson-Thomas, 2015a, b & c). Greater openness to collaboration by corporate and public decision makers would be welcome. Where changes of behaviour are required these can be achieved by means other than culture change, for example by appropriate performance support (Coulson-Thomas, 2012a & b, 2013, 2014a, b, d, e & f, 2015a & b).

Differing opinions within leadership teams on the nature and timing of action to address environmental issues can lead to division and the risk of polarisation. Might these be exacerbated by differing views on the possible and likely consequences of the exponentially increasing costs to future generations of slow and inadequate responses to the challenges of climate change? Debates in some corporate and public boardrooms are prolonged by the difficulty of obtaining independent, objective and multi-disciplinary advice and assessing the impact of a mix of environmental and other policies. Evaluation can require expert opinion and a mixture of quantitative and qualitative approaches (UNEP, 2019).

Governance Requirements

Environmental governance and the role boards can play in weighing contending factors and aligning the needs of society with successful and sustainable business requirements deserves a higher priority (Ahluwalia, 2015). Are traditional board and governance practices capable of handling a collective response to a complex and longer-term challenge such as climate change? Related issues are whether appropriate action in relation to sustainability might be more likely if governance arrangements were improved, and for companies whether this could create better than average or expected financial performance (Clark et al, 2014).

Directors should be listening leaders who are alert to stakeholder concerns and their interests should be taken into account when board decisions are made (Coulson-Thomas, 2014g). In the UK the Financial Reporting Council has been consulting on proposed revisions to the UK Stewardship Code focused on how effective stewardship can deliver sustainable value for beneficiaries, the economy and society (FRC, 2019). Signatories are expected to take material environmental, social and governance (ESG) factors into account. Where a mix of policies and actions are required that cross organizational boundaries, how can their formulation and implementation be governed and differences between parties addressed?

At a national level, policy instruments and governance may also need to be reviewed and a more systematic and comprehensive approach to both a top-down and bottom-up assessment of policy effectiveness adopted (UNEP, 2019). Public governance transformation could be a key to greater innovation (Torfing and Triantafillou, 2016). Increasingly, stakeholders may expect environmental and climate change issues to feature more prominently in corporate mission statements, priorities, objectives and strategies, and to be reflected in business, excellence and operating models and risk management, investment and other practices.

UN Sustainable Development Goals (SDGs)

The United Nations (2015) SDGs represent a possible starting point for the discussion of collaborative action involving leaders of both private and public sector organisations, as they embrace both environmental challenges and requirements for social transformation. They could be the key to formulating shared objectives, rebuilding trust and aligning business, regulatory and intervention strategies. Although both social and technical innovation may be needed to address SDGs, bottom-up and local approaches are occurring and encouraged by the UN Environment Programme (UNEP, 2019). For some decision makers, accepting wider responsibilities and addressing the challenges involved may require a change of perspective. For educational institutions it could mean more multidisciplinary programmes to explore individual, organisational and collaborative approaches to both tackling climate change and achieving SDGs (Jenkins and Stone, 2019).

A former President of Ireland has described the impacts of climate change as fundamentally unfair (Robinson, 2018). Some people are affected much more than others through no fault of their own and some of those who are least influential are at greatest risk. Lord Stern (2019) believes that the pursuit of a zero-carbon economy will generate strong and inclusive growth that can result in a more acceptable climate and assist the delivery of SDGs. Are sector strategies required? For progress towards their achievement to be better monitored, do SDGs need to be grouped and a more concise and quantitative set of targets agreed (UNEP, 2019)?

Accepting wider and collective responsibilities may require a review of corporate investment models and decision making practices. Are social and environmental as well as financial costs recognised? Are business strategies aligned with environmental and other dimensions of SDGs? There may be externalities to assess and internalise, whether the costs of natural and man-made disasters or the benefits of eco-innovation. Applications of decision and performance support could increase awareness and help employees, customers, supply chain partners and others to understand the consequences of different options and make more sustainable choices (Coulson-Thomas, 2012a & b, 2013)?

Problems as Arenas of Opportunity

In city and urban areas integrated and more sustainable sanitation, sewerage and solid waste management solutions are sought (Coulson-Thomas, 2019b). Coping with hazardous and e-waste, mitigating noise, vibration and air pollution, recycling and generating energy from waste also represent significant areas of opportunity. The development of climate resilient and water-sensitive smart cities represents a prime arena for public-private collaboration in the development of new models of sustainable urbanisation and collective action to improve air quality, transportation and working and living environments. Are companies and some public bodies and their strategies contributing enough to improved air and water quality, pollution and waste reduction, climate mitigation and sustainable urbanization in relation to what is required (James et al, 2015)? Will peer pressure encourage collective agreement when public and private organisations explore possibilities (UNEP, 2019)?

There are opportunities for individuals and organizations and the agricultural, industrial and domestic sectors to use water more efficiently by reducing waste and increasing recycling and reuse. The oceans offer opportunities ranging from inshore fish farming to offshore deep ocean mining. Fish already provide over 3 billion people with over 20% of their dietary protein and a higher proportion in some areas of food insecurity (UNEP, 2019).

There are many opportunities for innovation and contribution to national strategies to meet voluntary obligations under the Paris Agreement (2015). Corporate and public commissioners as well as architects and planners could be more proactive in using satellite and other technologies and data on environmental trends to influence the design and construction of the built, operating and living environment (Jackson, 2018). A variety of technical and potential solutions are available in this and other arenas (Hawken, 2017). Greater energy efficiency and a more sustainable supply of affordable and eco-sensitive energy could help to both improve the quality of life and tackle climate change.

Seizing Opportunities While Addressing Problems

For many organisations, the transition to clean energy, more efficient devices, energy diversification and continuing innovation should result in greater security of supply and improved cost-effectiveness. Progress in energy efficiency and transition to low-carbon energy sources is continuing, but is still not sufficient to achieve Paris Agreement (2015) targets (UNEP, 2019). While the major sources of CO2 and other greenhouse gas emissions may be known and potential solutions identified (Hawken, 2017), do more decision makers need to understand obstacles and barriers to adoption and implementation and find ways of overcoming them, either by individual or collective action? Do problems and opportunities need to be considered together so that strategies can be developed that address both?

Sustainable development can be a source of competitive advantage for companies (Pop et al, 2018). Are enough of them undertaking sustainability and opportunity audits? How can their pursuit of opportunities be coordinated with public bodies whose remit may concern particular aspects of certain problems? Government, regulatory and collaborative action involving the industrial, construction and other sectors could be the key to increasing water supply by interlinking rivers, replenishing water tables, desalinating sea water and improving fresh water eco-systems. More joined up approaches are required. How might corporate and political strategies be better aligned (Bleischwitz, 2004)? Who or what could be the catalyst to bring together potential public and private sector collaborators?

Lord Stern (2019) believes the policies required to unlock a new, sustainable and inclusive model of growth can be identified and the finance and technology required to make a rapid start is available. Will green banking and further innovation fill any remaining gaps? What is holding us back from more imaginative and determined action? Within boards, is there the will and leadership to respond to growing public concerns with corporate and collaborative action? Might fiscal incentives and statutory intervention help? Within markets, could alternatives to compulsion facilitate, prompt and support desired changes of behaviour (Thaler and Sunstein, 2008; Coulson-Thomas, 2012 a & b, 2013)?

Ensuring Better Coordination

Environment and climate change related uncertainties are multifaceted and widely shared. In one survey undertaken for the UN Global Compact, almost all CEOs of global companies felt that sustainability should be considered when thinking about corporate strategy and operations (Perrott, 2014). Individuals, large and small companies, the Government, regulators and a variety of public bodies all have their part to play. How their efforts are coordinated at local, national and international levels can be the key to success, but how many organisations can contribute the programme management and other skills required?

Boards can be critical in recognizing concerns, initiating debates and engaging stakeholders. They can provide leadership by prioritizing and main-streaming environmental, sustainability and climate change concerns and by adopting and implementing green growth business models, strategies and policies (Coulson-Thomas, 2019b). Many boards need to better connect with local leaders and contribute to bringing about change in cities in which their companies operate (Hochadel, 2017). They could be pioneers within sectors such as green banking, insurance, energy, design, construction, education and infrastructure. How many of them will provide the leadership required and embed collaboration into corporate strategy?

In relation to certain SDGs further innovation is needed (UNEP, 2019). Sustained innovation by larger companies can be a challenge for directors and senior management in view of the need to carefully balance different requirements and run existing businesses as well as create new ones (Pisano, 2019). What should the role of boards be in kick-starting action to develop, test and scale up alternative approaches and models? How could they better engage with scientific expertise and innovators? How can MSMEs, entrepreneurs and regulators help in developing green market solutions? In some areas, is it already too late for start-up entrepreneurial businesses to achieve the scale needed for a global impact? How can MSMEs and large companies work together to address this conundrum (Coulson-Thomas, 2019c)?

Ensuring Collaborative Responses

Appropriate collaboration can be effective (UNEP, 2019). That between individuals can extend the environmental benefits of the sharing economy (Sundarajan, 2016). International action has reduced the harm caused by ozone-depleting substances and certain chemicals, but in many areas more needs to be done (UNEP, 2019). Collaboration can be voluntary or forced. Governments, utilities and infrastructure providers can have an important role to play in coping with the macro effects of lots of individual decisions, for example in providing incentives for the recharging of electrical vehicle batteries to occur at times that can be accommodated by available power supplies. Will they be able to work together? Will any public intervention be thought through, flexible and affordable to those affected?  

Consistency and the avoidance of conflicting priorities, policies and interests are important. For certain organisations there may be a paradox in that processes designed to ensure that activities and conduct are responsible and ethical might actually inhibit innovation that would benefit the environment (Baucus et al, 2008). Do some boards need to devote more effort to ensuring that environmental and other objectives are aligned, resulting initiatives are not in conflict and reward and promotion policies support desired behaviours? The criteria used to justify sustainability considerations may need to be reviewed (Schaltegger et al, 2012).

Decision makers need to ensure that obstacles to progress, including psychological barriers that limit climate change mitigation and adaptation, are identified and addressed (Gifford, 2011). This is especially true of the more creative solutions (Catmull and Wallace, 2014). Sometimes so many barriers may be found that decision makers can face a challenge in determining which to address first (Berkeley et al, 2018). Tackling a sufficient combination of them to achieve progress may require a flexible programme plan that coordinates the contributions of a number of departments, working parties and projects. How should boards ensure organisations have access to the creative, scientific and entrepreneurial skills needed to collaborate and participate in networks of relationships and collective action?

More Responsible Leadership

In relation to the environment, bold and collaborative corporate leadership has been called for by the President of India’s Institute of Directors (Ahluwalia, 2015). Whether or not and when more effective collaboration might occur is uncertain. Embracing such uncertainty has been described as the essence of leadership (Clampitt and DeKoch, 2015). Socially responsible business leadership may require more collaborative capitalism (Coulson-Thomas, 2014c).

Collaboration can be crucial for extending the circular economy. In addition to social impact, organisations that act responsibly may find it easier to attract and retain the people they require to refresh their human capital and implement their environment, climate change and other strategies. Other things being equal, graduates are more likely to want to join organisations that are environmentally conscious (Hanson-Rasmussen et al, 2014). Companies that focus upon sustainability also have a lower staff turnover (Pop et al, 2018).

There could be multiple pathways to achieving environmental improvements within SDGs. The use of different model-based scenarios may help in their identification (UNEP, 2019). Will decision makers commit the resources required for them to be developed? Evidence suggests that there may be more synergies than trade-offs, which offers the prospect of a virtuous spiral of increasing economic, social, political and other benefits for those who make the effort (Stern, 2019, UNEP, 2019). Synergistic collaboration and the exercise of environmental leadership may be with the grain of ESG investor and other stakeholder opinions. It might simultaneously achieve multiple objectives, rebuild trust and inter-generational rapport, benefit damaged eco-systems and ensure a more sustainable future.

Public and Private Sector Collaboration

From a business perspective should the political system now be regarded as a potential threat? Could further, costly and restrictive intervention and inappropriate control prevent the diversity and innovation that is needed to cope with challenges such as the environment and climate change? Alternatively, should more business leaders become involved with politics? If they do not do so, are they sleep walking towards a significant curtailment of basic freedoms to create, innovate, develop and supply that entrepreneurs have enjoyed? One can recognise criticisms of large corporations, while at the same time putting counter arguments, for example that true monopolies are relatively rare and where they exist may be the result of Government regulation (Cowen, 2019).

Fredrik Erixon and Bjorn Weigel (2016) suggest that in Western economies innovation is being hampered by government regulations and corporate practices.  Ideally, corporate and political policies should evolve together (Bleischwitz, 2004). While appreciating the advantages of markets and certain drawbacks of regulation, Adam Smith also recognised the self-interests of entrepreneurs (Smith, 1776). While companies can make a contribution towards growing an economy that works for a broader range of interests Government action is also required (Flanders, 2016). Governments launch some initiatives to support business and others that aim to modify their behaviours and prevent negative outcomes, such as health and safety legislation. A number of Governments have introduced measures to help public and private organisations, and the public in general, to adjust to new sustainability requirements (Bithas and Christofakis, 2006).

The negative environmental consequences of the continuing growth of cities suggests that improved public-private collaboration is required (Newman, 2006). The extent to which companies might work with public bodies and are seen as potential collaborators rather than as a cause of certain social problems will depend upon how directors define corporate purpose and the extent to which politicians and City leaders see them as a necessary element of solutions. The purpose and perspective of many if not most boards in the public and private sectors should now embrace the planet as a whole (Woodwell, 2016).

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Note: This article draws upon the author’s Theme Paper for the 21st World Congress on Environment Management and Climate Change (Coulson-Thomas, 2019b). This annual event is organised by India’s Institute of Directors: https://iodglobal.com/21st-wcem-2019.html

Author

Prof. (Dr) Colin Coulson-Thomas, President of the Institute of Management Services, has helped directors in over 40 countries to improve director, board and corporate performance. He leads the International Governance Initiative of the Order of St Lazarus, is Director-General, IOD India, UK and Europe, chair of United Learning's Risk and Audit Committee, Chancellor and a Professorial Fellow at the School for the Creative Arts, Honorary Professor at the Aston India Foundation for Applied Research, a Distinguished Professor and President, Council of International Advisors at the Sri Sharada Institute of Indian Management-Research, Visiting Professor of Direction and Leadership at Lincoln International Business School, and a member of the advisory board of the Aravind Foundation and ACCA's Governance, Risk and Performance Global Forum.

An experienced chairman of award winning companies and vision holder of successful transformation programmes, Colin is the author of over 60 books and reports. He has held public appointments at local, regional and national level and professorial appointments in Europe, North and South America, Africa, the Middle East, India and China. He was educated at the London School of Economics, London Business School, UNISA and the Universities of Aston, Chicago and Southern California. He is a fellow of seven chartered bodies and obtained first place prizes in the final exams of three professions. He obtained the CSR Lifetime Achievement Award at the 2018 CSR Leadership Summit. Details of his most recent books and reports can be found on: http://www.policypublications.com/

Abstract

Complex and inter-related challenges and related opportunities that impact upon multiple stakeholders present particular problems for decision makers who have to balance economic, political, social, technical and other factors. Public and stakeholder concern over the environment and climate change and its impacts add to the pressure upon them. They raise a variety of questions that corporate and public decision makers should address, including the adequacy of leadership and governance, contribution to the UN’s Sustainable Development Goals, the alignment of business and social priorities, objectives and desired outcomes and the nature, scale and timing of required responses. More attention should be given to the requirements for effective collective action, coordination and collaboration, and the creativity, innovation and entrepreneurship and responsible leadership needed for integrated, sustainable and inclusive local, national and international responses.

Publication

Published in Politieconomy –The International Research Journal of Political Economy [ISSN: 2348-3091] an international research journal published by Sri SIIM Research Press. The citation is: Coulson-Thomas, Colin (2020), Balancing Economic, Political and Social Factors in Decision Making, Politieconomy (The International Research Journal of Political Economy), Vol. 5 Combined Issue 1st & 2nd, December 2019-May 2020, pp 1-18

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