ABSTRACT. Stakeholder theory is often unable todistinguish those individuals and groups that are stake-holders from those that are not. This problem ofstakeholder identity has recently been addressed bylinking stakeholder theory to a Rawlsian principle offairness. To illustrate, the question of stakeholderstatus for the non-human environment is discussed.This essay criticizes a past attempt to ascribe stake-holder status to the non-human environment, whichutilized a broad definition of the term “stakeholder.”This paper then demonstrates how, despite the denialof stakeholder status, the environment is nonethelessaccounted for on a fairness-based approach throughlegitimate organizational stakeholders. In addition,since stakeholder theory has never claimed to be acomprehensive ethical scheme, it is argued that soundreasons might exist for managers to consider theirorganization’s impact on the environment that are notstakeholder-related.
1. Introduction
Stakeholder theory has emerged as one of theprimary modes of thought in organizationalethics (Boatright, 1994; Brenner and Cochran,1991; Carroll, 1993; Clarkson, 1995, 1994,
1991; Donaldson and Preston, 1995; Evan andFreeman, 1993; Freeman, 1994, 1984; Freemanand Evan, 1990; Hill and Jones, 1992; Jones,1995; Mitchell, Agle, and Wood, 1997; Phillips,1997; Phillips and Bezold, 1996; Rowley, 1997;Wicks, Gilbert and Freeman, 1994). However, aswith any framework, it has a number of problemsas it is often conceived of by some scholars. Oneglaring shortcoming is the problem of stake-holder identity. That is, the theory is oftenunable to distinguish those individuals and groupsthat are stakeholders from those that are not. Thisinability to distinguish stakeholders from non-stakeholders threatens the very meaningfulness ofthe term.
An example of theoretical uncertainty causedby the problem of stakeholder identity is thestatus of the natural environment within a stake-holder framework. That is, is the natural envi-ronment a stakeholder? Mark Starik (1995) hasargued for the affirmative. However, accordingto recent work on the moral foundations ofstakeholder theory (Phillips, 1997),2 it is less clearthat such a case can be convincingly made.
In this essay, we will briefly describe therelevant details of a fairness-based stakeholdertheory, describe Starik’s work on the stakeholderstatus of the natural environment, argue that thenatural environment is not and cannot be a stake-holder, and demonstrate how the natural envi-ronment may, nonetheless, be accounted for fromwithin a fairness-based stakeholder approach. Weturn first to a description of the relevant detailsof a fairness-based approach.
The Environmentas a Stakeholder?
Robert A. PhillipsA Fairness-Based Approach1 Joel Reichart
Robert A. Phillips is a Visiting Assistant Professor atGeorgetown University. His previous publications haveappeared in Business Ethics Quarterly and TeachingBusiness Ethics, among others. His research interestsinclude stakeholder theory, management and ethics.
Joel Reichart is an Assistant Professor at FordhamUniversity. His previous publications have appeared inBusiness Ethics Quarterly, Perspectives on EcologicalIntegrity, and The Ethics of Consumption. His researchinterests include environmental and organizational ethics, sustainable development, rational choice and gametheory.
2. Obligations & fairness
One criticism that has been leveled at stakeholdertheory is that it fails to make reference to anormative justificatory framework (Donaldson,1989). This problem is addressed by foundingstakeholder theory on obligations based on aprinciple of fairness. Derived from John Rawls’s“principle of fair play,” the principle of stake-holder fairness states that:
Whenever persons or groups of persons voluntarily acceptthe benefits of a mutually beneficial scheme of coopera-tion requiring sacrifice or contribution on the parts ofthe participants and there exists the possibility of free-riding, obligations of fairness are created among the par-ticipants in the cooperative scheme in proportion to thebenefits accepted (Phillips, 1997).
The operative terms for current purposes are“obligations” and “voluntarily accept.” Why arethese terms so important? “Obligation,” as theterm is used here, carries a somewhat technicalmeaning and hence bears a brief analysis (seeHart, 1955; Simmons, 1979). An obligation ischaracterized by the following four conditions:
1. An obligation is a moral requirement gen-erated by the performance of some volun-tary act (or omission).
2. An obligation is owed by a specific person(the “obligor”) to a specific person orpersons (the “obligee[s]”).
3. For every obligation generated, a correla-tive right is simultaneously generated.
4. It is the nature of the transaction orrelationships into which the obligor andobligee enter, not the nature of therequired act, which renders the actobligatory.
Taken in order, the first condition is vital in dis-cussions of stakeholder theory because stake-holder status, if it is to be meaningful, mustindicate some degree of moral considerationfrom the organization and its managers over andabove that due all humans qua humans. Thisadditional moral consideration arises from thevoluntary, obligation generating act of coopera-tively creating and accepting benefits or goods ofsome kind.
The voluntary omission in the first conditionrefers to, for example, the failure to speak underconditions where one’s silence indicates consent.A meeting where the leader says, “We will meetMonday at 5:00 unless there are objections” is anoccasion when silence or omission means havingconsented to the meeting and having created anobligation to be there.
The second condition, similar to the first con-dition, indicates that an obligation implies aspecificity of the parties involved as opposed toa duty that is due all. Both the first and secondconditions can be contrasted with “duties” whichare owed by all to all just by virtue of beinghumans. In the case of obligations, however,there are specifiable acts that create the obliga-tions and specific parties to the obligations. Thisshould not be misunderstood as a requirement ofmethodological individualism. That is, it shouldnot be read as excluding collective entities frombeing either obligors or obligees. The “specificperson or persons” conditions is to be contrastedwith the “all people” nature of duties, rather thanwith “groups of people.”
The third condition is rather straightforward.The creation of an obligation also creates a righton the part of the obligee to fulfillment of theobligation. Rights are also, however, correlativewith duties owed to all. As such, to avoid con-fusion, there will be very little discussion ofrights in the current essay.
Fourth and finally, the existence or non-exis-tence of obligations is not based on content ofthe obligation but the obligating act itself. Forexample, I am under no obligation to not murderyou (although I obviously have a duty to notmurder you and you have a right not to bemurdered) unless I state, “I hereby promise to notmurder you” at which point I incur the obliga-tion. Note that it is not the nature of the act ofmurdering that created the obligation, but ratherthe nature of the act of promising.
The preceding discussion of the nature ofobligations is important for two closely relatedreasons. First, the distinction between obligationsand duties described by the first two conditionshelp to respond to the problem of stakeholderidentity – the problem raised and exemplified bythe forthcoming discussion of the stakeholder
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status of the natural environment. Secondly,obligations of the type described provide thebackbone for a fairness-based stakeholder frame-work from which claims of stakeholder status forthe natural environment will be analyzed. It isto the fairness-based approach that we nowreturn for a description of those parts of themodel that bear on the current topic.
As the principle above indicates, obligations offairness arise when individuals and groupsinteract for mutual benefit. However, it is notsimply the fact of having benefited that createsthe obligations. Humans may have interactionswith any number of people, groups, objects, orideas on a given day. Rather, it is the voluntaryacceptance of benefits that is the obligation gen-erating act.
To borrow an example from Robert Nozick(1974), it would create no obligation on my partif someone were to go by my house and throwbooks into my living room. I may like the books,but I have undertaken no effort to interact withthe book-thrusters, the benefits were not coop-eratively derived, and I did nothing by way ofvoluntary acceptance of the benefits. Therefore,I have no obligations to reciprocate (e.g., pay forthe books) or cooperate in any way.
Most (possibly all) business transactions, on theother hand, are characterized by cooperation,mutual benefit, and voluntary acceptance ofbenefits. As such, obligations of fairness create anadequate and instructive foundation for a stake-holder theory of organizations. Such a founda-tion addresses the criticism that stakeholdertheory makes no reference to a normative justi-ficatory framework, and provides a point ofreference from which to resolve the problem ofstakeholder identity. In other words, a fairness-based approach to stakeholder theory is able toanswer the question, “Who are and who are notstakeholders?” One controversial candidate forstakeholder status is the natural environment.Does the natural environment merit the additionalmoral consideration concomitant with stakeholderstatus?
It bears mentioning that obligations of fairnessare reciprocal. That is, while the organization hasobligations to its legitimate stakeholders, thosestakeholders also voluntarily accept benefits from
the organization and hence have obligations toconsider the well-being of the firm. This mayappear problematic as the goals of the two maytend to oppose one another – for example, thefirm uses the resources of the local communityto produce its goods and services while the com-munity is (presumably) interested in maintainingas much as possible of its natural resources.However, such conflicts are common withinstakeholder theory. Indeed much of what thetheory concerns is the distribution of limitedresources among a finite set of entities with oftenconflicting interests. As in all such situations, themanagerial challenge is to find a middle groundbetween the interests of the legitimate stake-holders. Determining the extent to which thenatural environment is to be considered one suchlegitimate stakeholder is among the goals of thisessay. Mark Starik replies in the affirmative andit is to his arguments for such that we now turn.
3. The natural environment as a stakeholder
Mark Starik (1995) has written that the non-human natural environment merits stakeholderstatus and has argued against three reasons for thehistorical omission of the natural environmentas “one or more stakeholders.” His arguments aresuggestive of why the problem of stakeholderidentity is, in fact, a problem for stakeholdertheory in general. Hence, it will prove helpfulto analyze his arguments in favor of stakeholderstatus for non-human nature.
Starik arranges his essay around three answersto the question, “Why hasn’t non-human naturebeen considered a stakeholder?” His first answeris the rather obvious and tightly circular,“ ‘Stakeholder’ status has been restricted tohumans only.” Starik’s goal is to give a brief dis-cussion of a number of definitions of the termstakeholder and point out the fact that, with twoexceptions, the natural environment has beenexcluded from the definition.
In response to this shortcoming, Stariksuggests that the natural environment is, in fact,a business environment. Quoting Donna Wood(1990), Starik (1995) writes:
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She identified the “stakeholder principle” as “(a)company’s stakeholders are affected by its actions,and stakeholders can affect the way a company doesbusiness. Managers, therefore, are obliged tounderstand the stakeholders in the firm’s environ-ment and their relationships to the firm” (p. 210;Starik’s emphasis).
Starik here plays on the dual meanings of theterm environment. Whereas Wood is discussingenvironment in the sense of the social contextswithin which business operates, Starik means thistype of environment as well as the natural, non-human ecological environment. Thus, he empha-sizes “environment” in order to show that thenatural environment is inclusive of both meaningsof the term.
Starik is, of course, correct in connecting thenatural environment with the business environ-ment. Nature provides a great many of the con-straints on, and possibilities for not only businesslife, but indeed on all aspects of human existence.The question we must ask, and indeed theproblem of stakeholder identity itself, is “Whatis the necessary connection between something’sexistence as a constraint on business and thatthing’s status as a stakeholder?”
One solution is to appeal to the standarddefinitions of stakeholder, as Starik does. Thenatural environment “affects” the firm. Sinceaffecting the firm is, on some definitions, asufficient condition for stakeholder status, thenatural environment and everything in it is oneor more stakeholders. However, this only servesto push the question back a level. That is, whatis it about an entity’s ability to affect the firm thatqualifies it as meriting stakeholder status? Further,if anything that affects or can affect the firmqualifies it for stakeholder status, then what isexcluded by this definition?
Starik’s second answer is that “The ‘stake-holder’ idea has been an exclusively political-economic concept.” That is, non-humans do notand cannot wield the necessary political andeconomic power to have their “voices” heard bythe firm.
In response Starik suggests that, in fact, thenatural environment does possess economicvalue and political “voice” that “can be heardcontinuously throughout the natural environment
for all humans to heed or appreciate . . .”(1995,p. 210). Furthermore, even if nature does nothave the appropriate political “voice,” it maynonetheless qualify as a stakeholder on the “affector affected by” criterion. He suggests a similaritybetween the natural environment and historicallydisenfranchised groups such as “slaves, indigenouspeoples, women, minorities, the homeless,abused children, and political prisoners” who,although having no political voice, wouldnevertheless qualify as stakeholders on hisaccount.
The majority of Starik’s argument regardingthe political-economic essence of non-humannature deals with how non-human nature goesbeyond being solely a political-economic entity.That is, there are ethical and legal facets of non-human entities that, Starik implies, strengthenthe case for stakeholder status for them. Starik(1995) invokes the language of “obligations” tomake his arguments:
One well-known stakeholder proponent (Carroll,1993) . . . has developed the moral legitimacyaspect of stakeholder management, in which thosehuman individuals and organizations to whom anorganization is morally obligated are included asstakeholders. If this ethical aspect of stakeholdermanagement is credible, the development of envi-ronmental ethics implies that the natural environ-ment also can be considered as one or morestakeholders of organizations. The environmentalethic of wise stewardship of natural resources, forinstance, implies that organizations are morallyobligated to respect non-human nature’s bountyand limits (Leopold, 1949), and, therefore, its roleas a potential stakeholder of these organizations(p. 211).
On this view, then, the ethical attributes of stake-holder theory, in conjunction with an appro-priate environmental ethic, bolster the case forthe environment as one or more stakeholders.
Starik’s final answer to the question, “Whyhasn’t non-human nature been considered astakeholder?” is that non-human nature alreadyhas human beings acting as proxies on its behalfthus making unnecessary stakeholder status fornon-humans. The existence of organizationsthat advocate for the environment, such asthe Environmental Protection Agency and
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Department of the Interior as well as the SierraClub and the National Resources DefenseCouncil and others, renders stakeholder statusfor the natural environment redundant orunnecessary.
Starik suggests, however, that human proxiesfor the non-human environment are necessarybut not sufficient. A common laborer’s stake-holder interests, for instance, might be repre-sented by herself as well as a number of otherproxies, such as her management, union, gov-ernment, etc. Thus, we see the feasibility ofhaving one stakeholder represented by a multi-tude of groups. Furthermore, given the declinein quality of many natural environments, thecurrent number of groups representing the non-human nature is “apparently not sufficient toprotect non-human nature’s ‘stakes’ ” on Starik’sview. Furthermore, the contentiousness amongthe groups that are ostensibly proxies for thenatural environment diminishes the effectivenessof the human proxies. Hence:
the continued human-caused environmental dete-rioration of the planet appears to call for all orga-nizations to consider as stakeholders as manynatural environment entities as possible (1995,p. 212).
This summarizes Starik’s arguments in favor ofstakeholder status for the natural environment. Inthe next section, these arguments are analyzedboth on their own merits and from within afairness-based approach to stakeholder manage-ment.
4. Problems with the natural environmentas a stakeholder
Recall Starik’s quotation from Wood that,“Managers, therefore, are obliged to understandthe stakeholders in the firm’s environment andtheir relationships to the firm.” The importantthing to point out is that, even in this passage,the business environment and stakeholdersare distinct constructs. Wood distinguishes thebusiness environment from stakeholders in the firm’senvironment. Even granting Starik’s assertion thatthe natural environment is an important part of
a firm’s business environment, this does not leadto the conclusion that the natural environment istherefore one or more stakeholders. Surely thepresence of an entity within a firm’s businessenvironment cannot create moral obligations inaddition to those duties that exist prior to anyform of business interaction. For if this is thecase, then everything that exists within the businessenvironment also merits stakeholder status.
For example, terrorists might potentially existwithin a firm’s business environment and interactwith the firm by instigating some sort of illegalactivity, such as hijacking an airplane. Yet toassert that terrorists are therefore organizationalstakeholders, and as such are deserving of theadditional moral consideration corresponding tostakeholder status, is a dubious conclusion thatmany theorists are chary to make. However, thisis a conclusion that one seemingly must accepton Starik’s view given that the hijackers existwithin the firm’s environment.
What of Starik’s claim that things in thebusiness environment (and hence things in thenatural environment as the latter is a part of theformer) can affect the firm and therefore thenatural environment is definitive of a stakeholder?This is precisely the problem of stakeholderidentity. An entity’s ability to affect the firm is,at best, an inadequately discriminating criterionfor establishing moral obligations, as stakeholdertheory must surely do. There can be neitheradditional moral consideration demanded, norobligation created, merely based on one entity’sability to affect another. Your ability to run overmy dog, thus grieving me deeply, could hardlymean that I have a moral obligation to considerthe effects on you of my future actions above andbeyond the duties I owe you qua human. If allstakeholder status means is that I have duties toconsider the effects of my actions on all humans,what does calling someone a stakeholder add toone’s status as a human? For that matter, why dowe need a theory of stakeholder management atall if, given that any individual can potentiallyaffect the firm, we can merely equate theterm “stakeholder” with “human?” It thereforeappears possible for “stakeholder” to lose allsignificance under the “can affect” criterion.What Isaiah Berlin said of freedom we might
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now say of stakeholders: “The meaning of thisterm is so porous that there is little interpreta-tion that it seems able to resist” (1969, p. 15).Stakeholder theory, divorced of all particularmeaning, risks similar intellectual perforation.
But, in the preceding paragraph, the talk is ofduties to that are owed to others qua humanbeings. This is the point of the second prong ofStarik’s argument. That is, the assumption thatthe non-human environment is not a political-economic entity suggests not only that it is nota stakeholder, but that indeed it cannot be a stake-holder. It is the language describing humanduties to each other that precludes considerationof the natural environment as a stakeholder.Does, however, excluding an entity from stake-holder status imply that that entity is thereforeexcluded from all moral consideration? Surelynot; yet this is the approach taken by Starik. Forexample, he writes:
However, even if many current organizations do notpay credence to the fact that non-human naturehas a “voice”, that may be still not be [sic] a soundreason to exclude nature from consideration asone or more stakeholders of organizations (1995,p. 210; Starik’s emphasis).
Here we are once again confronted with theproblem of stakeholder identity. It is not incum-bent upon the theorist or manager to come upwith reasons to “exclude” or not exclude aparticular group from stakeholder status. Rather,it is the job of Starik and other stakeholdertheorists to suggest reasons for inclusion ofan entity as a stakeholder group. Again, wemay grant Starik the suggestion that thenon-human environment merits moral consid-eration without further concluding that, there-fore, the non-human environment is one or morestakeholders.
In this same context, Starik goes on to suggestthat the non-human environment is an entity“beyond a solely political-economic one.” Since thestakeholder concept has evolved such that it nowembodies “ethical, socio-emotional, legal, andphysical connotations” (p. 211; Starik’s emphasis),and the non-human environment can be said tomanifest similar characteristics, the non-humanenvironment must be a stakeholder. The fallacy
of this argument is clear. Simply because twothings exhibit similar characteristics does notnecessarily mean that the two are identical. Amanager’s relationship with her spouse has moralimplications, as does her relationships with hersubordinates. Both types of relationships haveethical, socio-emotional, and legal aspects, butit is absurd to suggest that, therefore, her spouseis her subordinate or vice-versa.
It is quite possible that both stakeholder theoryand organizational relationships with the naturalenvironment have all of the connotations attrib-uted by Starik above. It does not follow, however,that one is therefore a subset of the other. Starikalso leans heavily once again on the “can affect”part of the historical definition of a stakeholderin making this argument. The inadequacy of thiscriterion as argued above is only compoundedif we expand our conception of stakeholderidentity to encompass the natural world, whichof course would also include human beings. Whyshould we espouse a theory of stakeholder man-agement if all living entities, inasmuch as theycan affect the firm, must fall under the obliga-tory umbrella of managerial consideration? Theterm “stakeholder” risks becoming even moreporous.
Finally, what of Starik’s claim that humanproxies for the natural environment are necessary,but not sufficient? Part of the problem withthe sufficiency of human stakeholder proxies, onStarik’s account, is that these groups often spenda lot of time arguing among themselves thus“leading to less than ecologically-supportingcompromises.” This hardly looks like anargument for the creation of more such groups.Indeed, if the groups that currently exist “haveexperience [sic] significant internal strife andresource limitations” (p. 212), then would nothaving more of them increase the contentious-ness and further stretch the already thin budgetsof the extant groups? The argument in thissection, and indeed much of the essay, can besummed up in the following passage:
. . . the continued human-caused environmentaldeterioration of the planet appears to call for allorganizations to consider as stakeholders as manynatural environment entities as possible (p. 212).
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Thus, it is the deterioration of the planetthat ultimately justifies stakeholder status forthe natural environment on Starik’s account.Additionally, the natural environment representsas many entities as possible, and the needs ofthese stakeholders are to be considered by allorganizations in making their decisions. Thissuggests that practically every living being within thepurview of the organization should be considered astakeholder. This is the problem of stakeholderidentity run amok. People, or non-humanentities for that matter, cannot be deemed stake-holders simply because they have problems thattheorists hope to resolve. Neither the homeless,the chronically unemployed, the politicallyoppressed people of China, nor the members ofthe endangered species list are stakeholders ofany, let alone all, organizations merely becausetheir lives are less than ideal. This is not to saythat one ought not sympathize with the plight ofthese disaffected groups concomitant with theirstatus as moral patients. We are arguing, however,that the additional moral obligations associatedwith stakeholder status; i.e., obligations offairness that are created through the voluntaryacceptance of the benefits of a mutually benefi-cial cooperative scheme, may be absent. Hence,the application of stakeholder status to thesegroups, based on their less than ideal existence,is unacceptable.
We have suggested above that the naturalenvironment does not itself qualify as a stake-holder. However, this is not to say that stake-holder management is unable to account for theconcerns of non-human entities. There are atleast two ways in which the environment maymerit attention from both within a fairness-basedapproach and without. First, the environmentmay be important to other groups who them-selves do, in fact, qualify as legitimate stake-holders. Second, the environment may meritmoral consideration of its own very much apartfrom its stakeholder status. We will take eachpossibility in turn below.
5. The natural environment and legitimatestakeholders
It is probably clear from the preceding that, ona fairness-based approach to stakeholder theory,only humans can be organizational stakeholders.This is because only humans are capable of gen-erating the necessary obligations for establishingstakeholder status. Only humans are capable ofthe necessary volition in the acceptance ofbenefits of a mutually beneficial cooperativescheme. Does stakeholder theory, then, havenothing to say concerning the degradation of thenatural environment?
Given the possible existence of intrinsic valuesin the natural environment, one might rightly askhow a fairness-based stakeholder approach wouldincorporate those values into the body of thetheory. How is the “voice” of nature heard ifthe only stakeholders of consequence are humanbeings? Before answering these questions, itshould be noted that stakeholder theory has neverclaimed to be a comprehensive ethical schemein that there are myriad moral considerations thatsimply do not fall within the purview of stake-holder obligations. Neither has it claimed tobe a comprehensive theory of environmentalethics. As Max Clarkson (1994) has written,“Stakeholder theory should not be used to weavea basket big enough to hold the world’s misery.”
Just as promise-keeping, though a moralprecept, is not exhaustive of morality, so too isstakeholder theory not exhaustive of ethics,even within organizational contexts. Though apowerful framework for deriving and interpretingmany ethical issues in organizations, stakeholdertheory nevertheless exists within a backdrop ofsocial and moral rules and mores that also dictatebehavior both inside and outside the organiza-tional and managerial frame of reference.Included among the actions that do not receivea great deal of attention within stakeholdertheory (or indeed within any obligation, dutiesor rights based moral theory) are considerationsof supererogation. There are an infinite numberof actions one could take that, although notmorally requisite, would certainly qualify asmorally commendable. Hence, even sans stake-holder status, there are actions that are morally
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prohibited, such as murder or theft, as well asactions that are morally praiseworthy, and thisregardless of the stakeholder status of the poten-tial object of the action. The arguments outlinedin the next section for an imperative of envi-ronmental ethics are all suggestive of non-stake-holder based reasons for conserving the earth’snatural resources, preserving bio-diversity,valuing nature in itself, etc. Stakeholder expla-nations are, therefore, unnecessary for the con-clusion that managers ought to consider theramifications of their decisions on the non-human environment.
Stakeholder theory addresses exclusively theconcerns of legitimate stakeholders as defined bythe principle of stakeholder fairness. However,these legitimate stakeholders may have myriadinterests. As such, a firm’s managers must be sen-sitive to these interests due to stakeholder oblig-ations. If among the interests of these legitimatestakeholders is a concern for non-human nature,then the firm has obligations to consider theimpacts of its operations upon the environmentin its decision making.
Consider the local communities within whichan organization operates. Local communities areaxiomatic stakeholders. Further, organizationsbenefit voluntarily from this cooperative inter-action with their communities. As such,according to the principle of stakeholder fairness,the organization and its managers have anobligation to consider the needs, interests andconcerns of their local communities. Since asubstantial portion of a community’s needs andinterests is the health and integrity of that com-munity’s natural environment (see Colburn et al.,1996), the organization has an obligation, not tothe non-human natural environment itself, butto the community within which it operates, tosafeguard communal well-being through theimplementation of ecologically sound, and envi-ronmentally salutary, policies and operations.
To briefly illustrate the application of thisapproach, various community members adheringto a Christian stewardship ethic might feel a“mutuality of belonging” to the environment,where humans are considered “holy creaturesliving among other holy creatures in a world thatis holy” (Berry, 1994, p. 99). God created all
beings in nature, therefore, all beings are holy insome sense; i.e., all beings possess inherent valueon Berry’s view. By taking the interests andconcerns of the Christian steward seriously andacting accordingly, the organization presumablyacts as if they also implicitly recognize theholiness of nature, regardless of whether theyactually believe as the Christian does. In moregeneral terms, by taking the needs and concernsof those communal stakeholders that ascribeinherent value in nature seriously, the organiza-tion, regardless of their particular beliefs,implicitly recognizes the inherent value of thenon-human environment.
Similar arguments follow for the considerationof the environment through an organization’sother stakeholders. Not only are these stake-holders members of various local communitieswithin which an organization resides, but theymay also have personal interests and concernsabout the natural environment apart fromcommunal interests. The organization practicingstakeholder management therefore would con-sider the non-human environment in referenceto the obligations existing between them andthese other stakeholders.
That the “voice” of the environment is beingheard through obligations relating to environ-mental concern can be seen in the policies ofmany “socially responsible” firms. For instance,The Body Shop (1996) references an anthro-pocentric environmental approach in their envi-ronmental policy statement, which reads:
The Body Shop’s goal is to meet the needs of thepresent without compromising the ability of futuregenerations to meet their own needs. Our com-mitment to best practice in environmental man-agement underpins our longer term goal of fullsustainability (p. 26).
This language is nearly identical to that ofthe World Commission of Environment andDevelopment (1987) that many credit withdefining the meaning of sustainable developmentfrom an anthropocentric view. Other firms thatincorporate the language of sustainability intotheir policies include Stonyfield Farm andsustainable agriculture, Shaman Pharmaceuticalsand sustainable harvesting of medicinal plants by
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indigenous populations, and Working Assets andsustainable energy production. In addition, thereexist many firms whose environmental approachmight be said to recognize inherent value innon-human nature. Mail order retailer RealGoods (1997), for instance, uses the language ofsustainability and inherent value in their missionstatement which states that, “Real Goods is inbusiness to provide knowledge and products toredirect the world toward a sustainable futurewhere all living things are recognized as inter-connected” (p. 1).
Finally, and perhaps exemplifying the fairness-based approach most succinctly, Tom’s of Maineacknowledges in their Statement of Beliefs that“both human beings and nature have inherentworth and deserve our respect” (Chappell, 1994,p. 32). This belief statement is operationalized,however, through the communities within whichTom’s of Maine operates as evidenced by theportion of their Mission Statement whichreads:
To address community concerns, in Maine andaround the Globe, by devoting a portion of ourtime, talents, and resources to the environment,human needs, the arts, and education (p. 33;emphasis added).
The point we are making here is that the “voice”of nature that is heard internally by the organi-zation will necessarily be dependent upon theenvironmental worldview of the employees and,in particular, upon that of the founder and/orupper management who set the ethical founda-tion of organizational policy. For Tom’s of Mainethis policy is expressly operationalized throughthe various relevant stakeholders; namely, com-munities and other human stakeholders.
This section has discussed, as did Starik, thenotion of stakeholder proxies. That is, Starikdiscusses the need for more human representa-tives as proxies for the natural environmentand the current section discusses accountingfor non-human nature in managerial decisionmaking due to the likelihood that it will be aconcern of the local community or other relevantstakeholder group. Inasmuch as there are manyentities representing the interests of others onthe two accounts, it is important that we be
clear on how the current account differs fromStarik’s.
On Starik’s version, the human representativesof non-human nature represent the interests ofnature itself. Putting aside the notorious diffi-culties in determining just what these interestsmay be (a problem alluded to by Starik himselfin his discussion of dissension among environ-mental groups), Starik’s notion assumes what heintends to demonstrate (i.e., that the environmentought to be considered a stakeholder). Thiswould be an implication of stakeholder status forthe natural environment and not an argument infavor of such status.
This is in contrast to the approach taken here.The representational configuration suggested heretakes the notion of proxies one step further.Having established who are the legitimate stake-holders to a particular firm using the principleof stakeholder fairness, we move to determiningwhat the interests of these stakeholders are.Positing that among these interests may be aconcern for the health and integrity of theirnatural surroundings, we find the natural envi-ronment to be an appropriate object of stake-holder consideration, not due to the existenceof stakeholder obligations to the natural envi-ronment itself, but due to the interest in theenvironment of, for example, the local commu-nity. In short, Starik’s notion suggests thatmanagers are obligated to heed the concerns ofenvironmental groups as proxies for the “nature”stakeholder, whereas on the account presentedhere manager’s may be obligated to considernon-human nature due to the interest in natureof one or more legitimate (human) stakeholdergroups.
This brings up a point in need of clarification.Environmental activists groups are not themselvesstakeholders per se. This in not to say that suchgroups cannot be a stakeholder if they engage inan appropriately reciprocal scheme of coopera-tion. But, since the ability to affect the firm isan inadequately discriminating criterion forcreating obligations necessary in determiningstakeholder status, and since the organizationwill have obligations to protect the cooperativestakeholder effort from threats to its viabilityand interests as a whole, it becomes acceptable
The Environment as a Stakeholder? A Fairness-Based Approach 193
(though a last resort) for the organization to takea hostile approach towards some activist groupsif this is the only means available for maintaininga just cooperative scheme. To illustrate, it obvi-ously becomes a question of whether, in fact, theactivist group in question represents the interestsof a local community stakeholder – and it is anotoriously difficult matter ascertaining aggregatecommunal interests. It seems apparent, however,that a recent move by People for the EthicalTreatment of Animals (PETA) to have the townof Fishkill, NY change the name of their townrepresented neither the interests of the commu-nity itself, nor any other legitimate stakeholderto our knowledge.
The “voice” of the natural world is thereforeheard by the organization through the obligationsof fairness created when one is identified as astakeholder. Consequently, the “voice” of naturecan be heard through the individuals and groupsthat are ubiquitously counted among the orga-nization’s legitimate stakeholders.
An interesting possibility is that an organiza-tion’s legitimate stakeholders have no interest inattending to the environment. It is quite possible(e.g., in developing nations) that all or most legit-imate stakeholder groups of a given organizationhave an interest in aggressive environmentaldegradation as a means to economic advance-ment.3 Such a possibility is not ruled out on thefairness-based approach. That is, if the legitimatestakeholders of an organization have no interestin minimizing the environmental impact of theorganization’s operations, there is no basis withina fairness-based stakeholder framework for attendingto environmental concerns. This does not,however, preclude other normative moral argu-ments being proposed regarding duties oforganizations and individuals to the naturalenvironment. Rather, it is that there is no basis within stakeholder theory for accounting forthe natural environment in the circumstancedescribed. There may, however, be other reasons,apart from stakeholder status, for a manager tobe concerned about the natural environment. Itis to these reasons that we now turn.
6. The natural environment and moralconsideration
On a fairness-based approach, it might appear asif stakeholder theory values the natural environ-ment only from a so-called strongly anthro-pocentric (human-centered) perspective. Stronglyanthropocentric theories claim that only the feltpreferences of human beings count morally andnature, therefore, has only instrumental value.This is contrasted with environmental ethics thatare based on “weak” anthropocentrism whichmight argue that the only values that exist andneed to be recognized are those where “all valuecountenanced . . . is explained by reference tosatisfaction of some felt preference of a humanindividual or by reference to its bearing upon theideals which exist as elements in a world viewessential to determinations of considered prefer-ences” (Norton, 1994, p. 157). The “weak” per-spective acknowledges the necessity, possibilitiesand constraints of living in harmony with thecyclical workings of the natural world, and pre-scribes actions that reflect ecological concern.Other anthropocentric environmental ethicsmight argue that humans have obligations toprovide a basic, livable environment for futuregenerations of humans (see Feinberg, 1980;Baier, 1990), or that the environment should bepreserved for aesthetic reasons (Sepänmaa, 1993).In general, what all of these theories have incommon is that they ultimately ascribe values tonature in reference to duties owed by humans, tohumans. Since these theories derive their senseof value from human beings only, and sincefairness-based stakeholder theory is limited toobligations existing between extant humans, thefairness-based approach must therefore be anthro-pocentric. This approach would be problematic,according to some, because it does not morallyconsider non-anthropocentric environmentalvalues; i.e., the values inherent to nature itself.
Some environmental philosophers argue thatvalues exist in nature that should be recognizedand respected apart from, or in addition to,those derived from human beings. For example,Holmes Rolston, III (1994) discusses values thatexist in nature without human derivation thatare too numerous to mention here. For these
194 Robert A. Phillips and Joel Reichart
theorists, the natural environment ought not bedamaged, not due to the effects of such damageon the relevant human population, but becausethe non-human natural environment and itscomponent parts merit some sort of moralconcern in and of themselves. As such, objectsand entities in nature are just as worthy of moralconsideration as human beings.
One point of contention is where the lineshould be drawn determining moral considera-tion. Two frequently cited environmental ethicsbase their arguments for moral significance onsentience (Singer, 1975, 1985) and consciousness(Regan, 1983). For these theorists, what countsmorally are those beings that possess somerelevant capability that is also possessed byhumans. Or perhaps the correct unit of analysisis interconnected ecosystems (Eckersley, 1992;Westra, 1994), of which humans are merely onepart. Kenneth Goodpaster (1978) makes quitepersuasive arguments for the moral consider-ability of non-humans. He argues that, “Nothingshort of the condition of being alive seems to meto be a plausible and nonarbitrary criterion [formoral considerability]” (p. 310; see also Taylor,1986). He contends that the capacities of sen-tience, consciousness or rationality are, at best,vagarious parameters for ascribing moral consid-erability. What is interesting about Goodpaster’sapproach is that he does not argue for the rightsof non-humans, nor even that non-humans meritthe same degree of moral considerability ashumans. Instead, he argues that non-humansmerit some sort of consideration in moraldecision making by virtue of being alive.
In conclusion, we turn to the question ofwhether human stakeholders alone can be said toprovide sufficient “voice” to the non-humanenvironment, presumably because human proxiesfor the environment are too subjective. RecallStarik’s quotation that nature’s “ ‘voice’ can beheard continuously throughout the natural envi-ronment for all humans to heed or appreciate. . .” (1995, p. 210). In making his argument,Starik refers to various environmental ethics suchas ecofeminism and aesthetics, legal approaches,and the environment’s sheer physical power(natural disasters). Yet, ecofeminism emphasizes“felt experience” in making the argument that
one can “care for” the environment in anfeminist moral sense (Warren, 1990), and it hasbeen questioned whether this reliance on “feltexperience” cannot itself be considered merelya subjectively aesthetic sense of appreciation forthe environment (King, 1991). Whose felt expe-rience should be heeded here? Upon viewing theGrand Canyon; the aesthete might see the sheerbeauty and awesome majesty of the sight, theChristian steward might see the all-giving, all-powerful hand of God, and the strictly anthro-pocentric developer might see a financiallylucrative reservoir that could provide water,electricity and recreational opportunities. Whichis the correct vision? Aesthetic theories ofenvironmental ethics might suffer from similarsubjectivity.
Furthermore, legal concepts through whichthe “voice” of nature can be heard seem to offerno reason against a fairness-based stakeholdertheory. Incorporation of environmental protec-tion into law merely adds force to legitimatestakeholders, namely, local, state and nationalgovernments. Christopher Stone (1974), who isa strong proponent of granting legal rights for theenvironmental entities, suggests that proper pro-tection of these entities be accomplished thoughthe creation of a legally recognized guardian-attorney. In other words, said “suitable protec-tion” is accomplished through the creation of apossible legitimate legal entity.
Starik’s work has provided a great deal offodder for consideration by stakeholder theorists.One suggestion of this essay is that Starik reversesthe nature of the proxy relationships between thefirm and the natural environment. WhereasStarik wishes to see human groups acting onbehalf of the natural environment, we argue that,at least from the perspective of stakeholdertheory, the natural environment merits stakeholderconsideration only instrumentally (Donaldsonand Preston, 1995) – based on obligations duelegitimate stakeholders. Local community interestin the natural environment was suggested as anexample of how the environment may beaccounted for from within a stakeholder frame-work. Finally, it was argued that none of the pre-ceding rules out the possibility that the naturalenvironment may merit other kinds of moral
The Environment as a Stakeholder? A Fairness-Based Approach 195
consideration. While non-human, natural entitiesmay merit moral consideration of other sorts,such entities do not merit the status of organi-zational stakeholders.
Notes
1 A previous version of this paper was presented atthe 1997 Meeting of the International Association ofBusiness and Society. We wish to thank Jeff Lenn,Mark Starik, Jean Stead, Ed Stead, R. EdwardFreeman, Patricia Werhane, and three anonymousreviewers at the Journal of Business Ethics for helpfulcomments on earlier drafts.2 There is a handful of articles concerning the moralfoundations of stakeholder theory including Burtonand Dunn (1996), Clarkson (1994), and Donaldsonand Preston (1995).3 We wish to thank an anonymous reviewer for sug-gesting this important possibility.
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