It is the job of a government to govern its people. Whether it takes place democratically or not, government performs a mixture of leading and following, with leaders becoming popular and/or successful when they manage to judge a public mood and then act to implement policy which reflects or anticipates it. Sometimes this might mean public opposition for a while, followed eventually by acceptance that the politician did the ‘right’ thing for the prosperity of some majority. For promoting ‘sustainable’ prosperity, reform to the economy and society should be ‘win-win’ in the long-run, but may involve unpopularity for politicians and pain for citizens in the shorter term.
As mentioned in an earlier entry, in economic terms, unsustainable activity involves market failure due to externalities. These can be ‘internalised’ through taxes or regulation so that individuals, businesses and other organisations pay the ‘correct’ price. The latter should promote greater sustainability. It is the proper job of governments to enforce taxes and regulations. Unfortunately these can slow economic growth if they are set at too high or too stringent a level. Businesses can potentially relocate production abroad to avoid these new costs. This can lead to calls for international taxes and regulation to ‘level the competitive playing field’. On the other hand, a growing awareness of and demand for sustainability among consumers can see them switch to buying from ‘well-behaved’ companies, no matter where they locate, negating the effects of businesses avoiding new costs. Increasingly, it may offer a competitive advantage to be ‘good’ and to be seen to be so. Enter Corporate Social Responsibility (CSR).
CSR, as businesses seen to be going ‘good’, shows that governments can be behind the curve in promoting sustainability. Sometimes it seems to be little more than simply a public relations exercise in which firms dress up what they are already doing as sustainable and ethical. In other cases, it leads to real changes in business practice and in the best of all possible worlds, greater economic efficiency and higher profits go hand in hand with the changes. A firm may cut costs by shrinking its carbon footprint and economising on energy use. I mentioned a theoretical example in which CSR creates competitive advantage in my October entry. So individual firms and industries can potentially lead the way.
Individual consumers can also ‘lead’, or more accurately, stimulate, the promotion of a sustainable society and economy. Quite simply they can buy the products and services they perceive to be sustainable. As citizens, individuals can support political parties and policies that promise to create a more sustainable economy. This then requires a new awareness to be effective. Companies may lie in promoting their products as being green. Politicians can fail to implement promises. So it can sometimes be difficult for individuals to contribute to sustainability. But in demanding socially responsible business practice and government policies, they can certainly help.
I would also argue that the behaviour of the three actors considered above interacts in a holistic fashion. Individuals, as both citizens and consumers, can demand new policies and practices from government and business, and vote and consume accordingly. Businesses can act more sustainably and thereby give governments some idea of what policies may promote both efficiency and the social good for the long term. They can also set new benchmarks for business practices, such that individuals demand such practices in the future. Finally, governments can lead the way and implement new policies which guide the overlapping categories of business, industries, citizens and consumers in new directions of behaviour. A combination of these directions of causality is likely to operate in reality. Clearly everyone can make a difference.