ABSTRACT. This paper attempts to bridge businessethics to corporate social responsibility including thesocial and environmental dimensions. The objectiveof the paper is to suggest a conceptual methodologywith which ethics of corporate environmental man-agement tools can be considered. The methodincludes two stages that are required for a shift awayfrom the current dominant unsustainable paradigmand toward a more sustainable paradigm. The firststage is paradigmatic, metaphoric and normative. Thesecond stage is a practical stage, which in turn, isanalytic, descriptive and positive. The method isapplied to common industrial metabolism tools ofecological footprints (EF), environmental life cycleassessment (LCA) and industrial ecology (IE). Theapplication shows that all three tools can be used inbusiness ethics, in particular, when the first stage ofthe method is applied to their use.
There are two important new fields of businessstudies and business strategy that are emergingand that are based on the concept of sustainabledevelopment; corporate social responsibility andcorporate environmental management. In 1987,the so called Brundtland report by the WorldCommisission on Environment and Developmentdefined sustainable development as “developmentthat meets the needs of the present without com-promising the ability of future generations tomeet their own needs” (WCED, 1987). Whilemany authors disagree on the definition, thenotion of sustainability has nevertheless becomethe basis of societal environmental discussion,environmental policy and environmental man-agement. Perhaps we cannot determine thedirection toward sustainability, but we can knowthe general direction away from unsustainabledevelopment. For example, in the ecologicaldimension of sustainability, it is not sustainableto use fossil fuels, because they are non-renew-able. In the social dimension, the present dayworld is not one of equity between the rich andthe poor countries. Sustainable development iscommonly interpreted as simultaneous economic,social and ecological development of societal andeconomic systems.
Sustainable development is the basis of cor-porate social responsibility (Welford, 2002;
On the Ethics of CorporateSocial Responsibility –Considering the Paradigmof Industrial Metabolism
Dr. Jouni Korhonen is the Editor-in-Chief of Progress inIndustrial Ecology – An International Journal (PIE)published by Inderscience Publishers (www.inder-science.com) subject section Energy, Environment andSustainable Development. Dr. Korhonen is theSubject Editor of Journal of Cleaner Production,Elsevier Science, for “Environmental Innovation” andserves as a member of the editorial board of CorporateSocial Responsibility and Environmental Manage-ment, Wiley. He edits a special issue for BusinessStrategy and the Environment on “Business andIndustrial Ecology. Dr. Korhonen has published over 20articles in international scientific journals that apply thereferee practice on industrial ecology, corporate environ-mental management and corporate social responsibilityand is the author (Oliver, Canniff and Korhonen) ofThe Primal, The Modern, and the Vital Center –A Theory of Balanced Culture in a Living Place,a book on cultural philosophy and critique of moder-nity.
Korhonen, 2002, 2003) and corporate environ-mental management (Welford, 2000). This paperattempts to bridge business ethics to corporatesocial responsibility including the social and envi-ronmental dimensions. The objective of the paperis to develop a conceptual methodology with whichethics of corporate environmental management tools can be considered. The method uses the Kuhnianmodel of a paradigm shift and its discussion insustainability (Kuhn, 1962; Ehrenfeld, 2000).
The method includes two stages that arerequired for a shift away from the currentdominant unsustainable paradigm and toward amore sustainable paradigm. The first stage is theparadigmatic, metaphoric and normative stage.The second stage is the practical stage, which,in turn, is analytic, descriptive and positive. Inthe first stage, social construction and challenginghappens, e.g., challenging the current neoclas-sical economics paradigm that neglects sustain-ability (Korhonen, 2002). In the second stage, nomore social construction occurs, and the prac-tical tools and instruments are applied governedby the underlying assumptions and norms thathave been constructed in the first stage. Themethod is applied to tools of ecological footprints(EF), environmental life cycle assessment (LCA)and industrial ecology (IE). These are commonlyused in business responses to sustainability calls,particularly for environmental management. Theapplication shows that all three tools can be usedin business ethics if reflected on the two stagesof the sustainability paradigm shift.
2. On bioeconomics, ecological 2. economics and industrial metabolism
This part of the paper makes the argument thatcurrent research on corporate environmentalmanagement and sustainability in general lacks anethical focus. This is because the origin of thecurrent debate in business strategy and theenvironment, undoubtedly, is in the so called“bioeconomics” or ecological economics schools.In business studies these approaches have beendeveloped under the field of industrial metabo-lism (Ayres and Simonis, 1994; Erkman, 1997).All of these schools of thought are very young,
e.g., industrial metabolism originates in the late1980s. Industrial metabolism is almost entirelyfocusing on the physical flows of matter andenergy. Raw materials and fuels are used inindustrial processes and wastes and emissions arereleased to the environment resulting in depletingresources and scarcity and creating disturbancesand harm to biodiversity or to the ecosystemcapacity to serve as the sink of wastes and emis-sions. The metabolism metaphor has its basis inthe metabolic life of an organism in nature,which takes in food into its digestive systemreleasing wastes as its output.
In ecological economics, the human economicsystem is only a subsystem of the ecosystem(Daly, 1996; Costanza et al., 1997). Theecosystem is a non-growing and materially closedsystem. The subsystem is growing rapidly interms of material and energy use from the envi-ronment and releasing increasing amounts ofmaterial and energy wastes back to nature. Thesubsystem, then, is materially closed. The parentecosystem relies on infinite energy source of thesun. The economic subsystem relies mainly onnon-renewable and emission intensive fossilfuels. In ecological economics, this fundamentaldifference between nature and the economicsystem (Ring, 1997) and the dependence of theeconomic subsystem on the parent ecosystem(Daly, 1996) are seen as the core challenges andfocus points of sustainable development research.
The focus in ecological economics, as opposedto conventional neoclassical economics, is on thephysical material and energy flows, not only onthe abstract monetary flows. The problem is thatmaterial and energy flows in terms of their envi-ronmental impacts are often not known in themarket system of monetary value (Costanza et al.,1998). Ecological economics emphasis onmaterial and energy flows has yielded a widerange of analytical tools and instruments tomeasure and quantify the physical flows of matterand energy within and between industrial systemsand ecosystems.
These material and energy flows tools havebeen used in business strategy and in corporateenvironmental management under the field ofindustrial metabolism (Ayres and Simonis, 1994;Erkman, 1997). The ecological metaphor or
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analogy (see Ehrenfeld, 2003) has opened theeyes of managers to the fact that not only organ-isms in ecosystems, but also industrial firms andeconomic system consumers use input flows ofmatter and energy and produce metabolic wastesand emissions. The general objective is to reducethis throughput flow, because this would seemto reduce the environmental effects of the flows.Tools and approaches such as pollution preven-tion, cleaner production, best available tech-nology, recycling and waste management havebeen developed in engineering communities andused in environmental management systems suchas ISO 14001 standard and EU Eco-Managementand Auditing Scheme that follow the qualitymanagement system philosophy of continuousimprovement. In an environmental managementsystem, engineering or natural science-typemetabolism inventory studies (eco-balances ormass-balances) are first prepared, policy com-mitment of the management board is drawn up,goals, targets and quantitative and scheduledaction-proposals are then suggested and imple-mented with determined responsibilities, control,auditing and follow-up mechanisms that aim forcontinuous improvement and for the repeat ofthe management system steps.
It is straightforward to conclude this part ofthe paper by noting four points. First, thesustainability debate in business strategy is veryyoung, and up to date, mainly focused onthe environmental dimension of sustainability.Second, the origin of the debate is in economics,in the ecological economics or bioeconomicsschools, which emphasize the focus on thephysical flows of matter and energy to includethe largely neglected issue of sustainabilityinto economic monetary analysis. Third, theapproaches and tools used in the business com-munity are gathered under the field of industrialmetabolism, which measures and attempts tocontrol the physical material and energy inputand output flows of industrial firms and othereconomic actors. Finally, because of the abovepoints, i.e., the material and energy flow focus,the ethical debate in corporate social responsi-bility and corporate environmental managementremain, to a large extent, silent.
The next part of the paper suggests a con-
ceptual method for enhancing the study of ethicsin corporate sustainability. The method will thenbe applied to three common industrial metabo-lism tools to show its potential in conceptualterms.
3. The Kuhnian model of paradigm 3. shift and its potential for ethics in3. industrial metabolism
“It might be argued that the word paradigm isone of the most abused and overused wordsin common parlance today” (Ehrenfeld, 2000,p. 234). However, analogously to Thomas Kuhn’ssense of a scientific paradigm (Kuhn, 1962), itcan be useful to consider the dominant socialparadigm (DSP, Ehrenfeld, 1997) of modernityand to reflect the possibility of sustainability orsustainable development on this thinking. Thiskind of philosophy sees that the normal everydayaction of social actors, public organisations,private companies and individuals, is carried outwithin a commonly held set of ideas and prac-tices. This set of beliefs, norms and standard prac-tices constitutes the paradigm of these actors andof various societal institutions. “Another way ofstating this is that a paradigm is or contains a setof structures on top of which social action iscreated, or a vocabulary for describing things,or a story the actors tell about their place in theworld” (Ehrenfeld, 2000, p. 234). DSP rests inthe background and frames the action of socialactors. Thus, it also guides the practice of envi-ronmental policy and the implementation of cor-porate environmental management and the useof the various tools, instruments and measuresin policy and management.
It can be argued that the dominant socialparadigm is not sustainable (Korhonen, 2002).Consider sustainability as something, whichlasts forever and then consider the ecologicaldimension of economic development. There arenumerous reports and documented scientificstudies that support the argument that our wayof life in the Western modernity is moretoward unsustainability than sustainability. Thesedocuments are not discussed here. But it can benoted that we use non-renewable fossil fuels and
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we exceed the ability of ecosystems to bindthe rising levels of carbon dioxide emissions(CO2).
Approximately 80% of the world’s energyconsumption is based on non-renewable fuels(Williams, 1994). We will eventually run out ofthe natural capital of fossil fuels. Similarly, theemission generation resulting from the combus-tion of these fuels for energy is not sustainable.Nature can only bind and assimilate the emis-sions that arise from natural decay of biomass andfrom biomass combustion (if the reproductionrate of the biomass is not exceeded). Natureassimilates biological emissions into its growthand is not equipped to bind fossil fuel originatedemissions. In the current form of economicdevelopment, sustainable ecological developmentis impossible. Accordingly and when put in aprovocative way, the fossil fuel-based industrysimply cannot contribute to sustainability.
Following Ehrenfeld’s development of theKuhnian model of paradigm shift (2000), thereare two stages in the required paradigm shifttoward sustainability and away from current(unintended) unsustainability of the dominantsocial paradigm (see Ehrenfeld, 1997). The firststage is the paradigm stage. The second stage isthe normal practice stage. The first stage is par-adigmatic, metaphoric and normative and closelyrelates to our underlying world view or to thevocabulary with which we interpret the world.The second stage, the more practical stage, isanalytical, positive and descriptive. In the firststage, values, culture and social construction areimportant, while in the second stage, metrics,instruments and practical tools are important. Inthe second stage, no further social constructionor challenging of the norms and goals occurs,rather application of the norms and goals. Inother words, the first stage is the stage of under-lying assumptions or in case of environmentalthinking the stage of “deep ecology” while thesecond stage is much more practical and instru-mental.
From dividing the dominant social paradigmto the above two stages and suggesting that sus-tainable development too requires a change,which includes a change in both of these inter-dependent stages, one can consider the norma-
tive vs. the objective nature of sustainability(Boons and Roome, 2001; see Isenmann, 2003).It seems that few would argue sustainability notbeing a normative principle. It seems to beregarded as “good” to strive toward sustainabledevelopment and very often expressions of“should” or “ought to” are used in relation tostatements of sustainability. On the other hand,some argue that this normative orientationshould not endanger objective or impartial andthorough scientific analysis of the effects ofeconomic systems cause/not cause on nature(Allenby, 1999). Boons and Roome (2001)maintain that sustainability is a human conceptarising from and, if achieved, actualising incultural systems. Therefore, sustainability is anormative concept and one cannot developabsolute objective analysis or “non-normative”analysis. Isenmann (2003) points out that actuallyeverything known by man’s oral or writtenrecord in culture, is based on interpretation,while Oliver et al. (2002) reflect on the workby anthropologists Ingold (e.g., 1993) arguingthat direct perception of the world does not exist,rather we can only participate from within andinterpret the world through participating into itin the everyday. This interpretation is alwaysaffected by values, norms, ideologies or worldviews, i.e., the normative dimension of ourparadigm. Absolute objective analysis seems tovery difficult to achieve in such ethically loadedquestions as those in sustainability.
Sustainable development has an ethical dimen-sion, because ethics is a cultural and normativephenomenon. This ethical dimension can bestudied, in particular, when using the first stageof the above paradigm shift model, themetaphoric or paradigmatic stage. Ethics, ofcourse, has other dimensions in studies on phi-losophy, which are beyond the scope of thispaper. These include questions that relate, e.g.,to issues of existentialism or those dealing withthe life style of Western modernity (Oliver et al.,2002).
The mere quantification of the physical flowsof matter and energy in the second stage of theparadigm shift may neglect the human side of thematerial and energy flows (Cohen-Rosenthal,2000). Therefore, material and energy flow
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analysis may not be the best place to start whenairing ethics in corporate sustainability studies.Material and energy flow analysis has a strongnatural science or engineering orientation. Ofcourse, this is not to argue engineering or naturalscience being “without ethics”. The studies onindustrial metabolism closely related field ofindustrial ecology (IE, Erkman, 1997; Frosch andGallopoulos, 1989; Graedel and Allenby, 1995;Graedel, 1996; den Hond, 2000; Chertow, 2000)go further than industrial metabolism and use themetaphor and/or analogy (although these are notthe same, see Ehrenfeld, 2003) of self-organisednatural ecosystems (Spiegelman, 2003) thatrecycle materials and use waste energy in anetwork of plants, animals and bacteria of fungi.This model is used as a normative should in sus-tainability (Boons and Roome, 2001; Frosch andGallopoulos, 1989; Allenby and Cooper, 1994;Graedel and Allenby, 1995), as a goal of indus-trial systems that are contrasting to this naturalrecycling model and wasteful. But the difficultyto include ethics in corporate sustainabilityremains. The ecosystem is a material and energyflow system and biology or biological ecologytraditionally have not that much to say aboutethics.
Cultural systems rely on culture as the infor-mation storage medium and on the oral, writtenor video record, while natural evolution andfeed-back mechanisms rely on gene as the infor-mation storage medium and information movesmuch more slowly through reproduction(Norton et al., 1997). Humans are capable ofintentional action, while nature is not, does nothave culture and relies on self-organised evolu-tion (Ehrenfeld, 2003). It is very difficult toderive ethical norms from a material and energyflow system and use these norms in fundamen-tally different cultural systems.
To conclude this part of the paper, it can beargued that the simplified Kuhnian-derivedmodel of the two interdependent stages of theparadigm shift reveals that industrial metabolism,material and energy flow analysis or the ecolog-ical economics perspective lack ethical aspects.This is because of the natural science or engi-neering orientation and the direct focus on thephysical flows of matter and energy in the
analysis. It can then be suggested that it couldbe possible to enhance the development of dis-cussion on ethics in corporate social responsi-bility and corporate environmental managementby applying this two stage model to some of thetools of industrial metabolism. This will bestudied next in the remaining parts of the paper.
4. On industrial metabolism tools
In this part of the paper, three tools or instru-ments of industrial metabolism are introduced;Ecological footprints (EF), environmental lifecycle assessment (LCA) and industrial ecosystems(IE). These are among the most commonlyapplied tools in corporate environmental man-agement or sustainability management. After theintroduction of the tools, the above two stagemodel of a sustainability paradigm shift is appliedto these tools to conceptually study the poten-tial of business ethics.
Ecological footprints
“The Ecological Footprint of a specified popu-lation or economy can be defined as the area ofecologically productive land (and water) invarious classes – cropland, pasture, forests, etc. –that would be required on a continuous basis to(a) provide all the energy/material resourcesconsumed, and (b) absorb all the wastes dis-charged by that population with prevailing tech-nology, wherever on Earth that land is located”(Wackernagel and Rees, 1996, pp. 51–52, citedin Andersson and Lindroth, 2001, Italics in theoriginal).
More thorough description and discussion ofthe concept can be found, e.g. in Wackernageland Rees (1997, 1996) who have initiated eco-logical footprint analysis, or with several otherarticles (Andersson and Lindroth, 2001; Ferng,2001; van den Bergh and Verbruggen, 1999). Forthe purposes of this conceptual article, it is suf-ficient to describe the concept in general terms.The ecological footprint (EF) is a physicalmaterial and energy flow measure. EF accountsfor the flows of matter and energy to and from
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a specific economy or activity converted intocorresponding land and water area needed tosupport these flows (van den Bergh andVerbruggen, 1999; Wackernagel and Rees, 1997).EF can be calculated for a given regionaleconomy, for a nation or for an individualperson. It shows, for example, in physical quan-tities, how much of the source and sink functionsprovided by natural capital are needed to sustaina regional economic system.
Consumption of natural capital is determined,for example, needed to food production or trans-portation, infrastructure or industrial productionand then this use of natural capital is convertedinto a one-dimensional measure to show the landarea needed to support the regional economy andits input and output flows. Land categoriesinclude, for example, crop land, pasture and pro-ductive forests. For example, the regionaleconomy uses round-wood input from the local(or from other) forests to produce paper and theCO2 assimilation or binding capacity of thegrowing trees (in the region or somewhere else)for its energy production and consumption (CO2
emission generation). The regional economymay also use fossil fuels. This is converted tobioproductive land. It is possible to measure howbig is the land area required to substitute thefossil fuels with biomass energy (Bicknell et al.,1998).
Ecological footprints of nations, individualpersons or regions can then be calculated andcompared. U.S.A. has a considerably higher EF(ha/person) than many developing countries suchas India. Because of very high consumption percapita, U.S.A. exceeds the bioproductive capacityof its national territory, similarly as many denselypopulated countries such as Bangladesh and Japan(Andersson and Lindroth, 2001). Small ecolog-ical footprints are generally linked to poverty(Andersson and Lindroth, 2001). But it must benoted that although the ecological footprints forsome demographically important countries –Bangladesh, China, Egypt, Ethiopia, India,Nigeria and Pakistan – are low, they still exceedthe nationally available capacity (Andersson andLindroth, 2001).
There are several important benefits that canbe achieved if the ecological footprint concept
and a tool is used to measure the success of envi-ronmental policy and management. First, itprovides the policy maker with a physicalmeasure of the material and energy flows.Although it aggregates qualitatively differentflows, and hence, can reduce information (vanden Bergh and Verbruggen, 1999), physicalmaterial and energy flow studies are important.Monetary measures fail to reflect various scarci-ties in natural capital and in non-market naturalgoods and services, and e.g. biodiversity (seeCostanza et al., 1998). Note that the price of atimber log in the market cannot reflect the roleof the tree as a part of the ecosystem biodiver-sity in the forests, e.g., as a nesting site for birdsand insects etc.
But this is not to argue that monetarymeasures are not needed for studying the costs ofpolicy implementation or of green technologyinvestments etc. (for discussion, see Rennings andWiggering, 1997). This is only to suggest a levelof caution when the monetary measures are useddirectly to determine the value of natural ecosys-tems or natural capital. The human economicsystem effects to nature should be measured withphysical material and energy flow indicators. Inturn, when the costs of environmental policy orcorporate environmental management imple-mentation are considered, monetary measuresmay be important. For example, companies anddecision-makers need to know how much doesa water purification plant, recycling infrastruc-ture or the closing of a landfill cost.
Second, EF may help in determining theability of a regional economic or industrialsystem to adapt to the regional/local naturallimiting factors. This is done by calculating theavailable natural resources and sink capacitywithin the territory and compare this to the levelof use of these resources and services. EF mayalso help in studying the implications of trade forthe regional sustainability, i.e. whether the sourceor sink functions are imported and exportedbetween regions or nations (Andersson andLindroth, 2001). In other words, studies of localand regional self-reliance may benefit from EF.Third, this locality principle of adaptation relatesto equity between regions and between rich andpoor countries, an important concern for
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sustainable development. Fourth, studies thatconsider whether the carrying capacity of aregional economy is exceeded or sustainable yieldachieved are important for the availability ofnatural capital stocks and ecosystem services forfuture generations and future inhabitants of theregional economy. Therefore, the sustainabledevelopment principle of futurity may be betteracknowledged in economic decision-makingwhen using ecological footprint studies.
Life cycle assessment
Environmental life cycle assessment (LCA) hasbecome perhaps the most widely used tool ofpractical environmental policy and industrial orcorporate environmental management. It hasbeen developed for some thirty years and aninternational journal (International Journal of LifeCycle Assessment) has been established. Thereare several international organisations thatdevelop the methodology and organise confer-ences, e.g. Society of Environmental Toxicologyand Chemistry (SETAC) and The InternationalOrganisation for Standardisation (ISO).
LCA is an important tool for decision-makers,public policy planners and corporate engineersand managers. Life cycle analogy alerts us to the“from gradle to grave” approach to the environ-mental impacts and resource use of a specificproduct, e.g. newspaper, a car or a plastic bottle.This means that the entire life of a certainproduct and all of the processes along the lifecycle are studied, not only the traditional focusof environmental management, which still seemsto be the production process. The life cycle isconsidered in terms of its resource and energyuse as well as waste and emission generation.Raw material extraction processes, refiningprocesses, production processes, distribution andtransportation processes, consumption, end-disposal as well as possible recovery, re-use ofrecycling processes should all be taken intoaccount in life cycle philosophy and thinking.In other words, LCA computer models quantifythe material and energy input and outputs fromeach of the processes. These are used to evaluatethe potential environmental effects caused by
these flows. Despite the system boundary has tobe drawn somewhere and the data requirementsfor “a perfect LCA” are enormous making italways incomplete, LCA has been important inextending the conventional approach in envi-ronmental management to an individual processto life cycle wide studies.
Industrial ecosystems
The theory on the concept of industrial ecology(IE, Frosch and Gallopoulos, 1989; Tibbs, 1992;Allenby and Cooper, 1994; Graedel and Allenby,1995; Ayres and Ayres, 1996; Ehrenfeld, 1997;Ehrenfeld and Gertler, 1997; Cote and Cohen-Rosenthal, 1998, Ehrenfeld, 2000; Korhonen,2001a, b, Oyewole, 2001) has become increas-ingly popular in the literature on environmentalpolicy, industrial and corporate environmentalmanagement and environmental engineering.Also a new journal, Industrial Ecology, has beenestablished and the Journal of Cleaner Productionhas adopted the concept as one of its majorthemes and devoted a special issue on industrialecology in 1997. The second journal, Progress inIndustrial Ecology – An International Journal has justbeen launched.
Industrial ecology’s most commonly usedpractical application or tool is usually interpretedas local/regional eco-industrial parks, industrialrecycling networks or “industrial ecosystems”.Here the aim is to facilitate the emergence of alocal/regional material and energy flow networkof companies (and perhaps also other societalactors, e.g. consumers and public organisations)that use each other’s waste material and wasteenergy flows to substitute for virgin resources andfor virgin energy, e.g. for fossil fuels, and reducethe waste and emission generation from thesystem as a whole (waste is used as a resourcewith value). The natural ecosystem analogy isappealing as in local natural ecosystems, organ-isms and species cooperate and adapt to eachother by using waste material and waste energy,i.e. by applying material cycles and energycascades between them. Nature, of course, isdriven solely by the (infinite) solar energy input.Some put it somewhat provocatively that “in
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nature there exists no such things as wastes” (fordiscussion, see Isenmann, 2003).
The idea of a network of material cycles andenergy cascades (residual energy utilisation) thathappens through cooperation and linkagesbetween different firms located in the sameregion can be important for the practice ofsustainability. Material flow analysis and materialflow models (MFM), e.g. substance flow analysis(SFS), LCA or environmental accounting such asbusiness eco-balances have showed the environ-mental benefits that can be gained in an indus-trial ecosystem (for case studies, see e.g., Swarzand Steininger, 1997; Chertow, 2000; Korhonenet al., 2001). These material flow models andanalysis provide quantitative support for theassumption that the inputs from and outputs tothe natural environmental can be reduced if suc-cessfully applying the industrial ecosystemmodels.
What is important is that this practical materialand energy flow approach to networks or toentire systems can lower the risk of problem dis-placement from one part of the system toanother, e.g. from a certain life cycle to another,from production to consumption or from oneform of waste to another. Consider, how indus-trial point source emissions have been reduced inthe industrial world by shifting the problemtoward the more difficult to handle consump-tion emissions and wastes (Anderberg, 1998).Industrial ecosystem can also alert policy makersand managers to the importance of integratingproduction, consumption and recycling activi-ties and processes into a one local system. Thiscan reduce the overall consumption of energyand related carbon dioxide emissions (CO2), notethat often, in the industrial world, production isgeographically separated from end-consumption.In addition, it may be easier to control thematerial flows when they are located in a onesystem than scattered over widespread regions oracross countries.
5. Applying the Kuhnian model to 5. industrial metabolism: Toward the 5. ethics of material and energy flow 5. tools
From the above, we can conclude with threereasons that show the difficulties whenattempting to bring ethics into corporate sus-tainability, corporate social responsibility and cor-porate environmental management studies. First,this is difficult simply because traditionally theonly corporate social responsibility in neoclassicaleconomics-based business paradigm has been tomake profits and compete in the markets(Hussain, 1999; Ahmed, 1998; see Friedman,1962). Second, the task is further complicated,because corporate sustainability has mainly beenconcerned on the environmental dimensionneglecting the other social issues, e.g., childlabour, worker rights, equity between the richand poor nations, community values, women’srights etc. Third, the tools used are usuallyphysical material and energy flow tools, i.e.,industrial metabolism tools.
This part of the paper attempts to take theabove Kuhn-derived paradigm shift model anduse it as a method to consider whether the indus-trial metabolism tools can be applied also forstudying and revealing business ethics and ethicalquestions of corporate sustainability and corpo-rate social and environmental responsibility.Ethics become particularly important, because,nowadays, many companies have already appliedmany of those environmental improvements thatbring them direct and fast economic benefits(Hussain, 1999), i.e., the win-win situations canbecome scarce or seem scarce in the eyes of themanager under pressure from the shareholders tomake profits (Hussain, 1999; see Porter and vander Linde, 1996). Now, as Hussain argues (1999),the manager who wants to put the environmentbefore the economics of the firm or the (tradi-tional) shareholder interest, may need to justifyhis/her position with ethical arguments, e.g.,serving the larger society or all the stakeholdersof the firm.
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Ecological footprints and ethics
It is suggested here that ecological footprints canhave potential also in the first stage in therequired shift toward the sustainability paradigm,in the paradigm stage. This first stage, in partic-ular, can be important in terms of business ethics.Consider the concepts of futurity, equity andlocality. These, more or less, run counter to thedominant characteristics in the paradigm ofWestern modernity or the dominant economicsparadigm of neoclassical economics. Modernityseems to be more orientated toward the condi-tions of mass production and unlimited growth,competition and globalisation. Because EF canhelp to measure, whether the local naturallimiting factors are exceeded or substituted withcheap imports from the developing countries, itcan contribute to the conditions of equity andlocality. It may help to reconsider some of thebasic principles of global free trade, which doesnot seem to be equal if the rich-poor countriesrelations are considered. As noted above, eco-logical footprints may also question the unlim-ited growth paradigm of modernity and ofneoclassical economics. As a physical material andenergy flow measure it may help to actuallyreveal, whether the reproduction rate of renew-ables is exceeded or not in a certain local/regional economy. If the regeneration capacity ofrenewable natural resources is not secured, futuregenerations may have less resources than thepresent generation available to their use. Again,it seems that modern industrial and economicsystems are not taking the futurity principle intoaccount in this respect, note the dependence onnon-renewable fuels.
To conclude this section, it is argued that alsothe first stage in the sustainability paradigmdeserves attention with EF applications. The eco-logical footprint can be used to question ourbasic world view and our basic paradigm relatedto globalisation, free trade, competition orinequality, or unlimited growth and mass pro-duction. Eventually, this can be important formoving beyond mere small and incrementalchanges and achievements in environmentalpolicy and management. Instead of only reducingthe quantity of emissions while at the same time
increasing their toxic contents, i.e., quantity vs.quality, or living a sustainable life in one part ofthe world by importing natural capital intensiveproducts from other parts, the ecosystems andresources of which are depleting, more funda-mental and basic thinking of the cultural condi-tions of modernity can be considered withecological footprint analysis.
Life cycle assessment and ethics
For the purpose of illustrating the potential ofLCA in the paradigm stage of sustainable devel-opment, consider the principles of equity andfuturity (Welford, 1998) and the dominatingsocial paradigm and its emphasis on the condi-tions of competition, mass production and rapidgrowth. The life of a certain product may oftenstart in developing countries, which produce rawmaterial intensive goods. The poor countries mayneed to extract raw materials from their foreststo meet the demand set by the developed richcountries for mass production of a certain indi-vidual key product. This implies that in manycases, because of global trade, the poor coun-tries have to sell the raw material with cheapprices and then buy expensive refined productsfrom the rich countries.
Life cycle of a product extends over nationalborders. LCA can then reveal the relation of richand poor countries and shed light on the prin-ciple of equity. In other words, LCA can showthe possible unequal and unsustainable features ofinternational trade. The economy of poor coun-tries may eventually collapse, because lack ofdiversity in their economy that only focuses oncertain key products and their mass production.Correspondingly, international trade may also putsevere pressures on the natural resources in thedeveloping countries.
Furthermore, the concept of futurity (Welford,1998) illustrates, perhaps the hidden potential ofLCA to serve as a tool that can help to challengethe basic world view and the culture of moder-nity, i.e. to contribute to the first paradigm stageof sustainable development philosophy. Throughuse and consumption, the life of a producedproduct and its environmental effects can extend
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over decades, perhaps over centuries. Many envi-ronmental problems occur decades or centuriesafter the environmental intervention by societalor economic activity has occurred that is thecause of these problems (Ring, 1997). Hence,LCA can serve to help to reveal some of theseeffects as it attempts to study all of the processesin the product’s life, also consumption, end-disposal and recovery, not only the productionprocess. In principle, this can be a contributionto the sustainable development condition offuturity, i.e. taking the future generations andtheir possibilities to have access to naturalresources and ecosystem services into account. Asin the case of ecological footprints, also LCA haspotential in terms of developing business ethicsfor sustainability.
Industrial ecosystems and ethics
For the potential of industrial ecology in thefirst stage of the required paradigm shift towardsustainability, consider the natural ecosystemmetaphor in the concept. But now consider theecosystem metaphor not only in terms of therecycling and cascading material and energy flowmodel, but also in terms of the more structuraland organisational characteristics of ecosystemsand potential “industrial ecosystems” (Korhonen,2000a). The natural ecosystem metaphor providesus with such principles as diversity, interdepen-dency, cooperation and locality (Korhonen,2000a; Ehrenfeld, 2000, 2003). These, again, runcounter to the neoclassical economics paradigmthat seem to support such contrasting notions asmass production, unlimited growth, competitionand globalisation, e.g., note the Friedman’sfamous notion (Friedman, 1962; Hussain, 1999;Ahmed, 1998) that the only social responsibilityof business is to make profits and compete.
Ecosystems are able to sustain themselves(perhaps only observed long-lived or sustainableliving systems, Ehrenfeld, 2000) through diver-sity in species, in organisms, and in their geneticvariance. Instead of mass production and unlim-ited growth (Daly, 1996), diversity seems to bethe building block and the core principle ofsystem development in nature, and natural
resources are rarely overconsumed in anecosystem in a way that we use natural resourcesand endanger ecosystems’ ability to recover.Ecosystem actors adapt to their surroundings, andalthough competition over scarce resources exists,cooperation seems to be more important for thesystem as a whole than competition. Ecosystemscannot substitute for local natural limiting factorswith technology, trade or transportation orimports. They need to rely on the local repro-duction rate of renewable natural resources andon the waste assimilation capacity of their localenvironment.
These metaphors and principles seem to be afruitful source for challenging some of the socialstructures, values, norms and system organisationprinciples of the unsustainable global economicsystem. In other words, the concept of an indus-trial ecosystem can be used also for its potentialin the first stage in the paradigm shift, not merelyas a measurable and quantitative material andenergy flow indicator or tool as with industrialrecycling networks or eco-industrial parks in thesecond normal practice stage. However, this is notto suggest the superiority of the natural analogyor metaphor. It is certainly very attempting to“protect nature by learning from mother nature”,but such an endeavour must be made withcaution. As all other metaphors, IE is only ben-eficial if it can contribute to theory and conceptbuilding or if it can help to achieve somethingconcrete in practice. In the next part we willconsider this question a bit more thoroughly. Itshould also be noted that when challenging thedominant social paradigm of modernity bylooking for sources that are outside this dominantparadigm also other systems or domains thannature can be studied. The natural system is onlya one potential place. Similar sources can befound, perhaps in different cul-tures, indigenouscultures, village cultures, different religions, orarts and sports (Oliver et al., 2002).
The potential of applying the Kuhnian model ofparadigm shift
As with ecological footprints and environmentallife cycle assessment, also the concept of indus-
310 Jouni Korhonen
trial ecology carries with itself important featuresthat can perhaps contribute, not only to thesecond normal practice stage in the sustainabilityparadigm shift, but also to the metaphoric stage,the paradigm stage. It is easy to conclude that thisstage is the place what is particularly importantfor including ethics in corporate sustainabilitymanagement.
With industrial ecology we can conclude thissection by showing what kind of risks may ariseif the two stages in the paradigm shift are notadopted as each other’s complements when thesustainable development policy and managementtools or industrial metabolism tools are used andapplied in policy and in corporate environmentalmanagement (and corporate social responsibility).Consider the industrial ecosystem approach, i.e.the efforts to achieve local/regional recyclingnetworks of industrial (and other societal) actors.While technologies, combustion and incinerationtechniques, production techniques, waste treat-ment techniques and other technical infrastruc-ture for material cycles and energy cascades maybe in place in a certain local industrial system,the recycling network or the “industrialecosystem” vision may still fail or may not beable to sustain itself over long term. This maybe the case if the approach is not extendedbeyond the mere instrumental analysis and quan-tification of physical material and energy input-output flows of the firms in the network.
In principle, we know that recycling can beimportant for sustainable development. But dowe need the natural ecosystem metaphor to tellthis to us? It is argued here, that the strength ofthe metaphor is that it provides us also with moremetaphoric and paradigmatic aspects of recyclingnetworks than consideration of waste manage-ment or energy production techniques. Theserelate, for example, to the culture of the partic-ipating firms in the network. If the culture ismainly one of competition and not toward inter-dependency and cooperation, the advancedmachines and combustion techniques may not beenough for the system to succeed in recycling.Correspondingly, there must be sufficient diver-sity in the actors involved in order to continu-ously find new users for waste flows. If one keyactor departs, the system may fail without suffi-
cient diversity. With diversity, perhaps, certainother actor(s) can fulfil the place of the missingactors and the system can recover and continuethe cooperative recycling activity. Further, if thenatural ecosystem metaphor of locality is nottaken into account, the recycling system may beadvanced in recycling production wastes butexports its products to distant countries, wherethey will eventually result in harmful wastes afterconsumption. This consumes energy and makesthe product life cycle difficult to monitor,measure and manage. The locality principlecould inform us about these environmentallyrisky inter-regional material and energy flows aswell as their implications for equity and forforeign stakeholders and the ethical considera-tions that need to be taken into account.
According to our presentation, the metaphorsof diversity, locality and interdependency belongto the paradigm stage. The material cycles andenergy cascades as viewed from the direct per-spective of physical material and energy flowquantities, in turn, belong to the second stageof the sustainability paradigm shift, the normalpractice stage. Without the practice stage, sus-tainable development will remain as “a meredesired outcome” in various policy statements,and no implementation, and therefore, noconcrete reductions in resource input and wasteand emission outputs of industrial activity will beachieved. On the other hand, without theparadigm stage and the metaphor toward a sus-tainability culture, we may lack a road map thatwould tell us the direction to which the practicaltools and instruments should be applied. Withoutconsidering the cultural aspects of sustainability,ethics will be very difficult to include in corpo-rate sustainability management.
6. What this conceptual argument 6. cannot do?
This paper’s purpose is to air the importantconcern of sustainability in business literature andshow the difficulties to use ethics in the currentdebate. It is obvious, that the industrial metab-olism tools discussed in the paper and in theliterature referred to have little, if any, consider-
On the Ethics of Corporate Social Responsibility 311
ation about ethics when looking at the way inwhich they are currently used in corporate envi-ronmental or sustainability management. Becauseof this, it would not be very practical to use theconceptual orientation of this particular paper inpractical case studies to try and prove the gainsof our suggested approach and method. There isa need for an initial conceptual explorationbefore practical case study testing.
Furthermore, our paper cannot do much inpractical terms, because this is a conceptualpaper. We do not have empirical materials, e.g.,from interviews, participative observation etc,with which the preferences, interests, values andmind-sets of those actors and individuals,managers or environmental engineers, whoactually use the industrial metabolism tools in theeveryday of business, could be considered andstudied. These tasks are challenges for futureresearch. Hopefully, the conceptual attempt inthis particular paper serves the purpose of pro-viding a basis for these more developed and prac-tical studies, with which the success/failure of thesuggested conceptual approach to include ethicsin corporate sustainability management can bemeasured and tested.
7. Conclusion
This paper has attempted to contribute to theemerging fields of business strategy of corporatesocial responsibility and corporate environmentalmanagement. Both these fields are based onthe concept of sustainable development. TheKuhnian model of paradigm shift has been usedto develop a conceptual method with which thepotential for ethics in sustainability managementcould be considered. Accordingly, it has beenargued that sustainability has two stages, theparadigm stage and the normal practice stage.The first stage is paradigmatic, metaphoric andnormative, while the second stage is analytic anddescriptive. In the first stage, culture and socialconstruction are important. In the second stage,metrics, indicators, measures and tools are impor-tant. Most of the environmental policy and cor-porate environmental management tools are usedfor their potential in the second stage. Such tools
include environmental accounting, eco-balances,material flow analysis, substance flow analysis andlife cycle assessment etc.
All of these tools derive from bioeconomicsor ecological economics and belong to the fieldof industrial metabolism studies. Industrialmetabolism studies focus on the physical flowsof matter and energy within and between thenatural ecosystems and industrial systems.The literature referred to in this paper showsthat these engineering and natural scienceoriginated tools for economics and business,have little, if any contribution to the effort toinclude ethics into sustainability managementdevelopment.
We considered three tools or instruments thatare commonly used in industrial metabolism inconceptual terms. Ecological footprints, envi-ronmental life cycle assessment and industrialecology were discussed. The Kuhnian modelfor paradigm shift with its two stages was usedas a method to analyse these tools conceptually.The potential to develop ethics of sustainabilitymanagement lies, in particular, in the firststage.
It has been argued in this paper that the threetools carry with themselves important potentialthat can be used in the first stage in the paradigmshift toward sustainability, the paradigm stage.This implies that such a new way to approachthese tools can also contribute to business ethics.The tools alert policy makers and corporatemanagers to such principles as equity, futurity,locality, diversity and cooperation. Whether weshould use the technical and instrumental toolsof sustainable development also for their para-digmatic and metaphoric potential in corporatesocial responsibility and corporate environmentalmanagement is also an ethical question.
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