Let’s begin with a simple premise: the world and the global economy are increasingly complex and interdependent. Navigating that complexity requires creative and innovative strategic thinking and care in understanding the causes and effects of organizational behavior. Organizations that have incorporated sustainability into their management routines tend to be careful and conscious of their actions. Sustainability is a means toward the goals of organizations, not self-justifying principles of an ideology of “correct behavior.” When I first started to define sustainability management around 2008 and 2009, I was focused on environmental sustainability. I now view that as a subfield of sustainability management, which today includes issues such as management and staff diversity, transparent organizational governance, and the organization’s impact on its surrounding community or communities.
The notion of diversity and inclusion as an ideology rather than as a management principle relates to how diversity is defined and conceptualized. For people motivated by ideology, diversity is the goal itself and is self-justifying. Diversity is pursued because it is right and ethical. I have sympathy for this view because I consider exclusion based on race, religion, ethnicity, or national origin to be unethical. However, in management terms, diversity is utilized to ensure the organization’s staff and management bring a wide variety of perspectives to the organization’s work. Merit is still sought in recruiting the team, but the definition of merit is broadened to ensure the people hired have different lived experiences. Diversity is a means and not an end.
Similarly, a concern for environmental impact is also utilized as a cost-cutting measure to save the costs of resources like energy and water and to reduce the risks of environmental liability. As I wrote this past May:
“But by any measure, the vision of integrating environmental concerns with routine management is beginning to become a reality. The symbolic era of greenwashing is giving way to a widespread understanding that environmental sustainability is not a fringe concern but a more central element of management. On a more crowded and economically developed planet, our human population is making demands on our ecosystems and resources. Those facts of economic life are changing cost structures and making renewable resources more cost-effective. Technologies like artificial intelligence and robotics are making resource reuse more practical.”
But perhaps the most telling indication of the growth of sustainability as a fundamental management principle is a recent study of corporate management effectiveness conducted by the Drucker Institute of the Claremont Graduate School. The highlights of the study appeared in a recent piece by Rick Wartzman and Kelly Tang of Bendable Labs in the Wall Street Journal. According to Wartzman and Tang:
“All sorts of companies from different industries have been staffing up to help their customers meet carbon-emissions and waste-reduction targets and comply with a welter of environmental regulations, as well as ensure that they meet their own climate goals and that their supply chains aren’t disrupted by extreme-weather events and energy shortages. What’s notable is that, according to our research, these businesses are generally better managed than those that aren’t dedicating the same level of resources to such matters. Our findings are derived from a measure of corporate effectiveness created by the Drucker Institute at Claremont Graduate University. The institute’s statistical model, which rests on the core principles of the late professor and author Peter Drucker, forms the basis of the Management Top 250, an annual ranking produced in partnership with The Wall Street Journal… In our most recent analysis, we wanted to determine whether there was a connection between the number of climate-related jobs that a company has, relative to the size of its overall workforce, and how well-managed it is by our reckoning… In all, we use 34 metrics to evaluate how companies perform, using standardized scores with a typical range of 0 to 100 and a mean of 50, across five areas: customer satisfaction, innovation, social responsibility, employee engagement and development, and financial strength. These categories then roll up into a score that indicates a company’s total effectiveness. Drucker defined effectiveness as “doing the right things well.”
In this view, sustainability is an element of management effectiveness. There is an undeniable ideological current in some versions of sustainability management, and that is what has generated the reaction against what right-wing ideologues term “woke management.” This is related to climate extremists who spray paint artwork, chain themselves to coal-fired power plants, and work to shame people who fly in private planes or work for fossil fuel companies. In this sense, environmental concern is utilized to attack people seen as an enemy and as a form of power politics rather than as an effort to genuinely seek a method to reduce the environmental impact of economic production. When sustainability is seen as an element of effective management, it is simply a form of careful production that seeks to ensure that the negative impacts of production are minimized, and positive impacts maximized.
Of course, to do this, management must develop and utilize scientific expertise on environmental damage. The science of toxicology, ecology, air and water pollution, or climate can’t be ignored or wished away. It must be included in management decision making just as data on market share, revenues, expenses, and earnings before interest, taxes, and amortization (EBITA) is utilized by management. Environmental impact needs to be understood because just as the number of sustainability employees relates to organizational effectiveness, an understanding of an organization’s environmental impact is a crucial piece of information that enables an organization to understand its vulnerability to environmental risk.
Community impact is also a critical element of organizational sustainability. Each community an organization operates in is different, and some organizations are better at navigating difficult environments. For example, there are 19 Costcos in New York City but no Walmarts. Walmart is the largest American retailer. Although it has over 4,700 stores, they have not penetrated New York City’s political environment. Similarly, despite the support of New York State’s then-Governor (Andrew Cuomo) and New York City’s then-Mayor (Bill de Blasio), Amazon was unable to locate its HQ2 in Long Island City, Queens. Community leaders objected to one of the world’s richest companies receiving a $3 billion subsidy to locate in New York City and the deal was killed. Eventually, and to many positive reviews, Amazon converted the old Lord and Taylor retail building on 5th Avenue to a workspace for 2,000 creative and management staff and has quietly built up its New York presence over the past several years. It appears they have learned some lessons about the complexity of New York’s political environment and how to operate effectively in that environment. Amazon wants to be in New York City because of the talented labor the city attracts. Costco seems to have figured it out a while ago, while Walmart remains on the outside.
Management requires more sophistication because the world has become more crowded and complicated. We are deluged by information because the cost of computing and communication continues to be reduced, and our need for information seems limitless. Managers need information to measure the conditions they must navigate. In fact, as complexity grows, we are even looking for means of augmenting human intelligence with artificial intelligence. This is a sharp contrast from the middle of the 20th century when we counted inventory by hand, recorded it on column pads, and calculated it on adding machines with rolls of paper that printed our results. Today, we use bar codes, smartphones, computers, and algorithms to count what we’ve sold and project what we should order. Management must be constantly aware of changing markets and conditions, and organizational behavior is expected to be capable of rapid change.
ESG ideology and other forms of principled advocacy play an important role in the world but should never be confused with pragmatic, goal-seeking sustainability management. Companies may reduce the visibility of ESG and DEI initiatives due to political blow-back, but the essential importance of sustainability to effective management needs to be understood. Writing on this issue in 2023, I observed that:
“The attack on an ill-defined concept called “woke” public policy has now been extended to attacking managers and investors who have the “nerve” to pay attention to a company’s environmental footprint, organizational governance practices and social and community impact. In my view, a company managing with these issues in mind is practicing sound management. The way I see it, “woke” is simply being awake and aware of the world we live in. Opposing such awareness is simply sticking your head in the sand and sleepwalking through a complex, rapidly changing world economy. Those are your choices: being awake or falling asleep.”
Sustainability management is a requirement of effective management. Its opposite is sloppy, careless, shortsighted, and ineffective management. Political leaders and pundits can pretend that the world is not getting warmer, but business leaders do not have the luxury of indulging in ideologically induced fantasy.
Views and opinions expressed here are those of the authors, and do not necessarily reflect the official position of Columbia School of Professional Studies or Columbia University.
About the Program
The Columbia University M.S. in Sustainability Management program offered by the School of Professional Studies in partnership with the Climate School provides students cutting-edge policy and management tools they can use to help public and private organizations and governments address environmental impacts and risks, pollution control, and remediation to achieve sustainability. The program is customized for working professionals and is offered as both a full- and part-time course of study.
