Gracious growth: Managing the trade-off between corporate greening and corporate growth

29th March 2022

By Tazeeb Rajwani, Professor in International Business and Strategy, Surrey Business School.

 

Sustainable business practice has moved out of the footnotes in Corporate Social Responsibility reports and by-lines in shareholder statements to become not only key indicators of the long-term prospects of a business but also a new operational ethos. And yet the trade-off between corporate greening and corporate growth — that is, the arduous issue of obtaining growth while being really sustainable – is a significant challenge. For decades, it has been assumed that the more a corporation can expand, the more profitable it will become. Consider the phenomenal growth rates of Coca-Cola, Microsoft, Amazon or Alibaba to see how the ability to grow aggressively has been critical for a company to become a leader in its field.

Nonetheless, an increasing portion of society is now more concerned than ever about how sustainable the current status quo is and the impact of the relentless pursuit of environmentally degrading growth. Consequently, research focused on Corporate Social Responsibility (CSR) attempts to reshape and transform business thinking through concepts such as ‘corporate citizenship’ and ‘shared value’ – a new form of capitalism where companies enhance their competitiveness while advancing communal socio-economic welfare.

Take for example the recently published study of leading luxury fashion brand, Brunello Cucinelli. The study introduces the idea of ‘gracious growth’, a management approach which enables the green-growth trade-off and directs businesses in the pursuit of substantial rather than symbolic sustainability. It provides ideas that can help business leaders enhance their organizations’ economic and environmental performance while also avoiding the legitimacy risks associated with greenwashing.

This ‘gracious growth’ approach, coined by the founder Brunello Cucinelli, positions the company as a custodian of creation – setting sustainable and fair objectives for growth and profit. It also means that the economic value produced for shareholders is in equilibrium with the value created for society and the planet. Instead of one-off large CSR initiatives driven by profit-orientated publicity, it concentrates on making value chain activities truly sustainable, allowing companies to focus on profitability while also acting as genuine custodians of the environment.

With gracious growth, sustainability is treated as a product. But unlike traditional products whose values are reflected in price tags, this sustainability is valued by the extent of harmony it creates in earth’s ecosystems. Consequently, gracious growth emphasizes modest expansions, generating profits but respecting humanity and protecting the natural world.

There is no doubt about the importance of sustainability when organizations are under pressure to usher in a new era of ecosystem-friendly operations. However, questions remain concerning the legitimacy of company sustainability measures when it comes to growth ambition. Gracious growth may offer the answer to these questions, by supporting environmental balance, innovating, reorganising, and humanising business. In creating the ‘gracious growth’ idea Brunello Cucinelli may provide a blueprint to move us away from sustainability as a fad and towards a future where true sustainability may be achieved.

To access the full paper, read “Gracious growth: How to manage the trade-off between corporate greening and corporate growth”, Organizational Dynamics, https://doi.org/10.1016/j.orgdyn.2022.100895