StartingBloc Part III: Corporate Sustainability

The most recent StartingBloc event took place at the Wharton School on the campus of the University of Pennsylvania. Our topic: Corporate Sustainability. I will outline the meat of a three hour Saturday morning lecture here. NB: I am still deciding whether or not I agree with the points the speaker was trying to make.
Over the past 100 years, no company has been able to maintain market-beating returns for more than 15 years. Also, environmental and social systems are in decline all over the world. Frank Dixon, Senior Advisor of Innovest Strategic Value Advisors asserts that no company is even close to sustainable because of its failure to think systemically. Nearly all human knowledge is derived from the the perspective of the human mind. This is the wrong perspective for human survival and prosperity. Economic and political systems that are developed from a reductionist perspective are inherently flawed because they fail to fully address the total system.
The largest flaw of the Western economic system is the failure to hold firms fully responsible for their negative environmental and social impacts. Failing to hold firms responsible in a competitive market essentially forces them to be irresponsible and unsustainable. This occurs because firms attempting to fully mitigate impacts would probally put themselves out of business (costs would become too high relative to peers). These costs are called externalities that are not included in the price of a product. From a societal point of view, it is inefficient to not incorporate externalities into prices since it is usually much more expensive to clean up pollution than it is to prevent it.
Finally....
Modeling human economic systems after nature would make humanity sustainable. In nature, systems such as forrests grow then level off, forming a sustainable balance with other systems. The idea that a business or a national economy should grow indefiniately in a finite world is unrealistic. A more sophisticated economic system would recognize that firms also have an optimal size. Companies would be rewarded for achieving and maintaining optimal size. Growth beyond this would be penalized.
There was a alot that was talked about at this conference. Some of the other things: the inherent problems with the concept of the discount rate, Western Advertising, and current political and social flaws. Perhaps in the future I will blog about these topics as they related to the discussion. If you would like to know more, leave a comment.