Sustainability
Includes profitability

John Ikerd ... Profit is an Essential Part of Sustainability

Burgess COMMENTARY
My comment:

John Ikerd has made a valiant attempt to sort out the key relationship between economic activity and corporate organization and impact on people, place and planet. For me, he uses the conventional wisdom that a viable business organization has to be profitable ... and of course, this is true in a world where everything is judged by money profit performance. I argue that social valueadd would be a much better measure than money profit, and the financing of economic activity should be based on ability to produce social valuadd rather than simply making money profit for investors.

Profit is an Essential Part of Sustainability

What does sustainability mean? John Ikerd offers us a common sense approach:

The common definitions of social responsibility often leave out one critical dimension of sustainability: the necessity for profitability and economic viability. A sustainable business must be able to meet some of the basic needs of people in today’s economy without compromising opportunities for those of future generations to meet their needs as well. In a sustainable economy, profits are the rewards for meeting the needs of people today while economic viability is the reward for being able to meet the needs of people in the future. All economic value is derived from either natural or human resources. An economy creates nothing; its productivity ultimately depends on nature and society. A business that depletes the productivity of its natural and human resources is not economically viable over time. However, a business must also survive economically in the present if it is to have the capacity to maintain its productivity and value to society into the future.

That said; the sustainability of an economy does not depend on the economic sustainability of any single business any more than the sustainability of a community depends on any single person. Living things, by nature, are renewing and regenerative, which are the only concepts of sustainability we know. Nothing lasts forever. The corporate organizational structure has greatly expanded the potential lifespan of business organizations. However, once a corporation has fulfilled its legitimate purpose in meeting the needs of people, it must renew and regenerate itself or it will ultimately fail. If it is able to persist in spite of its lack of legitimate purpose, it becomes a detriment to the economy and to society. It makes little difference in a sustainable economy whether an individual business survives or dies. As long as a business does its part in meeting the needs of people today without compromising opportunities for those of the future, it’s a sustainable business. Categories: Uncategorized | Leave a comment Leave a Reply