The Environment as a Stakeholder? A Fairness-Based Approach1
ABSTRACT. Stakeholder theory is often unable to distinguish those individuals and groups that are stakeholders from those that are not. This problem of stakeholder identity has recently been addressed by linking stakeholder theory to a Rawlsian principle of fairness. To illustrate, the question of stakeholder status for the non-human environment is discussed. This essay criticizes a past attempt to ascribe stakeholder status to the non-human environment, which utilized a broad definition of the term “stakeholder.” This paper then demonstrates how, despite the denial of stakeholder status, the environment is nonetheless accounted for on a fairness-based approach through legitimate organizational stakeholders. In addition, since stakeholder theory has never claimed to be a comprehensive ethical scheme, it is argued that sound reasons might exist for managers to consider their organization’s impact on the environment that are not stakeholder-related.
1. Introduction Stakeholder theory has emerged as one of the primary modes of thought in organizational ethics (Boatright, 1994; Brenner and Cochran, 1991; Carroll, 1993; Clarkson, 1995, 1994, Robert A. Phillips is a Visiting Assistant Professor at Georgetown University. His previous publications have appeared in Business Ethics Quarterly and Teaching Business Ethics, among others. His research interests include stakeholder theory, management and ethics. Joel Reichart is an Assistant Professor at Fordham University. His previous publications have appeared in Business Ethics Quarterly, Perspectives on Ecological Integrity, and The Ethics of Consumption. His research interests include environmental and organizational ethics, sustainable development, rational choice and game theory.
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1991; Donaldson and Preston, 1995; Evan and Freeman, 1993; Freeman, 1994, 1984; Freeman and 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, as with any framework, it has a number of problems as it is often conceived of by some scholars. One glaring shortcoming is the problem of stakeholder identity. That is, the theory is often unable to distinguish those individuals and groups that are stakeholders from those that are not. This inability to distinguish stakeholders from nonstakeholders threatens the very meaningfulness of the term. An example of theoretical uncertainty caused by the problem of stakeholder identity is the status of the natural environment within a stakeholder framework. That is, is the natural environment a stakeholder? Mark Starik (1995) has argued for the affirmative. However, according to recent work on the moral foundations of stakeholder theory (Phillips, 1997),2 it is less clear that such a case can be convincingly made. In this essay, we will briefly describe the relevant details of a fairness-based stakeholder theory, describe Starik’s work on the stakeholder status of the natural environment, argue that the natural environment is not and cannot be a stakeholder, and demonstrate how the natural environment may, nonetheless, be accounted for from within a fairness-based stakeholder approach. We turn first to a description of the relevant details of a fairness-based approach.
Journal of Business Ethics 23: 185–197, 2000. © 2000 Kluwer Academic Publishers. Printed in the Netherlands.
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2. Obligations & fairness One criticism that has been leveled at stakeholder theory is that it fails to make reference to a normative justificatory framework (Donaldson, 1989). This problem is addressed by founding stakeholder theory on obligations based on a principle of fairness. Derived from John Rawls’s “principle of fair play,” the principle of stakeholder fairness states that: Whenever persons or groups of persons voluntarily accept the benefits of a mutually beneficial scheme of cooperation requiring sacrifice or contribution on the parts of the participants and there exists the possibility of freeriding, obligations of fairness are created among the participants in the cooperative scheme in proportion to the benefits accepted (Phillips, 1997).
The operative terms for current purposes are “obligations” and “voluntarily accept.” Why are these terms so important? “Obligation,” as the term is used here, carries a somewhat technical meaning and hence bears a brief analysis (see Hart, 1955; Simmons, 1979). An obligation is characterized by the following four conditions: 1. An obligation is a moral requirement generated by the performance of some voluntary act (or omission). 2. An obligation is owed by a specific person (the “obligor”) to a specific person or persons (the “obligee[s]”). 3. For every obligation generated, a correlative right is simultaneously generated. 4. It is the nature of the transaction or relationships into which the obligor and obligee enter, not the nature of the required act, which renders the act obligatory. Taken in order, the first condition is vital in discussions of stakeholder theory because stakeholder status, if it is to be meaningful, must indicate some degree of moral consideration from the organization and its managers over and above that due all humans qua humans. This additional moral consideration arises from the voluntary, obligation generating act of cooperatively creating and accepting benefits or goods of some kind.
The voluntary omission in the first condition refers to, for example, the failure to speak under conditions where one’s silence indicates consent. A meeting where the leader says, “We will meet Monday at 5:00 unless there are objections” is an occasion when silence or omission means having consented to the meeting and having created an obligation to be there. The second condition, similar to the first condition, indicates that an obligation implies a specificity of the parties involved as opposed to a duty that is due all. Both the first and second conditions can be contrasted with “duties” which are owed by all to all just by virtue of being humans. In the case of obligations, however, there are specifiable acts that create the obligations and specific parties to the obligations. This should not be misunderstood as a requirement of methodological individualism. That is, it should not be read as excluding collective entities from being either obligors or obligees. The “specific person or persons” conditions is to be contrasted with the “all people” nature of duties, rather than with “groups of people.” The third condition is rather straightforward. The creation of an obligation also creates a right on the part of the obligee to fulfillment of the obligation. Rights are also, however, correlative with duties owed to all. As such, to avoid confusion, there will be very little discussion of rights in the current essay. Fourth and finally, the existence or non-existence of obligations is not based on content of the obligation but the obligating act itself. For example, I am under no obligation to not murder you (although I obviously have a duty to not murder you and you have a right not to be murdered) unless I state, “I hereby promise to not murder you” at which point I incur the obligation. Note that it is not the nature of the act of murdering that created the obligation, but rather the nature of the act of promising. The preceding discussion of the nature of obligations is important for two closely related reasons. First, the distinction between obligations and duties described by the first two conditions help to respond to the problem of stakeholder identity – the problem raised and exemplified by the forthcoming discussion of the stakeholder
The Environment as a Stakeholder? A Fairness-Based Approach status of the natural environment. Secondly, obligations of the type described provide the backbone for a fairness-based stakeholder framework from which claims of stakeholder status for the natural environment will be analyzed. It is to the fairness-based approach that we now return for a description of those parts of the model that bear on the current topic. As the principle above indicates, obligations of fairness arise when individuals and groups interact for mutual benefit. However, it is not simply the fact of having benefited that creates the obligations. Humans may have interactions with any number of people, groups, objects, or ideas on a given day. Rather, it is the voluntary acceptance of benefits that is the obligation generating act. To borrow an example from Robert Nozick (1974), it would create no obligation on my part if someone were to go by my house and throw books into my living room. I may like the books, but I have undertaken no effort to interact with the book-thrusters, the benefits were not cooperatively derived, and I did nothing by way of voluntary acceptance of the benefits. Therefore, I have no obligations to reciprocate (e.g., pay for the books) or cooperate in any way. Most (possibly all) business transactions, on the other hand, are characterized by cooperation, mutual benefit, and voluntary acceptance of benefits. As such, obligations of fairness create an adequate and instructive foundation for a stakeholder theory of organizations. Such a foundation addresses the criticism that stakeholder theory makes no reference to a normative justificatory framework, and provides a point of reference from which to resolve the problem of stakeholder identity. In other words, a fairnessbased approach to stakeholder theory is able to answer the question, “Who are and who are not stakeholders?” One controversial candidate for stakeholder status is the natural environment. Does the natural environment merit the additional moral consideration concomitant with stakeholder status? It bears mentioning that obligations of fairness are reciprocal. That is, while the organization has obligations to its legitimate stakeholders, those stakeholders also voluntarily accept benefits from
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the organization and hence have obligations to consider the well-being of the firm. This may appear problematic as the goals of the two may tend to oppose one another – for example, the firm uses the resources of the local community to produce its goods and services while the community is (presumably) interested in maintaining as much as possible of its natural resources. However, such conflicts are common within stakeholder theory. Indeed much of what the theory concerns is the distribution of limited resources among a finite set of entities with often conflicting interests. As in all such situations, the managerial challenge is to find a middle ground between the interests of the legitimate stakeholders. Determining the extent to which the natural environment is to be considered one such legitimate stakeholder is among the goals of this essay. Mark Starik replies in the affirmative and it is to his arguments for such that we now turn.
3. The natural environment as a stakeholder Mark Starik (1995) has written that the nonhuman natural environment merits stakeholder status and has argued against three reasons for the historical omission of the natural environment as “one or more stakeholders.” His arguments are suggestive of why the problem of stakeholder identity is, in fact, a problem for stakeholder theory in general. Hence, it will prove helpful to analyze his arguments in favor of stakeholder status for non-human nature. Starik arranges his essay around three answers to the question, “Why hasn’t non-human nature been considered a stakeholder?” His first answer is the rather obvious and tightly circular, “ ‘Stakeholder’ status has been restricted to humans only.” Starik’s goal is to give a brief discussion of a number of definitions of the term stakeholder and point out the fact that, with two exceptions, the natural environment has been excluded from the definition. In response to this shortcoming, Starik suggests 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 does business. Managers, therefore, are obliged to understand the stakeholders in the firm’s environment and their relationships to the firm” (p. 210; Starik’s emphasis).
Starik here plays on the dual meanings of the term environment. Whereas Wood is discussing environment in the sense of the social contexts within which business operates, Starik means this type of environment as well as the natural, nonhuman ecological environment. Thus, he emphasizes “environment” in order to show that the natural environment is inclusive of both meanings of the term. Starik is, of course, correct in connecting the natural environment with the business environment. Nature provides a great many of the constraints on, and possibilities for not only business life, but indeed on all aspects of human existence. The question we must ask, and indeed the problem of stakeholder identity itself, is “What is the necessary connection between something’s existence as a constraint on business and that thing’s status as a stakeholder?” One solution is to appeal to the standard definitions of stakeholder, as Starik does. The natural environment “affects” the firm. Since affecting the firm is, on some definitions, a sufficient condition for stakeholder status, the natural environment and everything in it is one or more stakeholders. However, this only serves to push the question back a level. That is, what is it about an entity’s ability to affect the firm that qualifies it as meriting stakeholder status? Further, if anything that affects or can affect the firm qualifies it for stakeholder status, then what is excluded by this definition? Starik’s second answer is that “The ‘stakeholder’ idea has been an exclusively politicaleconomic concept.” That is, non-humans do not and cannot wield the necessary political and economic power to have their “voices” heard by the firm. In response Starik suggests that, in fact, the natural environment does possess economic value and political “voice” that “can be heard continuously throughout the natural environment
for all humans to heed or appreciate . . .”(1995, p. 210). Furthermore, even if nature does not have the appropriate political “voice,” it may nonetheless qualify as a stakeholder on the “affect or affected by” criterion. He suggests a similarity between the natural environment and historically disenfranchised groups such as “slaves, indigenous peoples, women, minorities, the homeless, abused children, and political prisoners” who, although having no political voice, would nevertheless qualify as stakeholders on his account. The majority of Starik’s argument regarding the political-economic essence of non-human nature deals with how non-human nature goes beyond being solely a political-economic entity. That is, there are ethical and legal facets of nonhuman entities that, Starik implies, strengthen the case for stakeholder status for them. Starik (1995) invokes the language of “obligations” to make his arguments: One well-known stakeholder proponent (Carroll, 1993) . . . has developed the moral legitimacy aspect of stakeholder management, in which those human individuals and organizations to whom an organization is morally obligated are included as stakeholders. If this ethical aspect of stakeholder management is credible, the development of environmental ethics implies that the natural environment also can be considered as one or more stakeholders of organizations. The environmental ethic of wise stewardship of natural resources, for instance, implies that organizations are morally obligated to respect non-human nature’s bounty and limits (Leopold, 1949), and, therefore, its role as a potential stakeholder of these organizations (p. 211).
On this view, then, the ethical attributes of stakeholder theory, in conjunction with an appropriate environmental ethic, bolster the case for the environment as one or more stakeholders. Starik’s final answer to the question, “Why hasn’t non-human nature been considered a stakeholder?” is that non-human nature already has human beings acting as proxies on its behalf thus making unnecessary stakeholder status for non-humans. The existence of organizations that advocate for the environment, such as the Environmental Protection Agency and
The Environment as a Stakeholder? A Fairness-Based Approach Department of the Interior as well as the Sierra Club and the National Resources Defense Council and others, renders stakeholder status for the natural environment redundant or unnecessary. Starik suggests, however, that human proxies for the non-human environment are necessary but not sufficient. A common laborer’s stakeholder interests, for instance, might be represented by herself as well as a number of other proxies, such as her management, union, government, etc. Thus, we see the feasibility of having one stakeholder represented by a multitude of groups. Furthermore, given the decline in quality of many natural environments, the current number of groups representing the nonhuman nature is “apparently not sufficient to protect non-human nature’s ‘stakes’ ” on Starik’s view. Furthermore, the contentiousness among the groups that are ostensibly proxies for the natural environment diminishes the effectiveness of the human proxies. Hence: the continued human-caused environmental deterioration of the planet appears to call for all organizations to consider as stakeholders as many natural environment entities as possible (1995, p. 212).
This summarizes Starik’s arguments in favor of stakeholder status for the natural environment. In the next section, these arguments are analyzed both on their own merits and from within a fairness-based approach to stakeholder management.
4. Problems with the natural environment as a stakeholder Recall Starik’s quotation from Wood that, “Managers, therefore, are obliged to understand the stakeholders in the firm’s environment and their relationships to the firm.” The important thing to point out is that, even in this passage, the business environment and stakeholders are distinct constructs. Wood distinguishes the business environment from stakeholders in the firm’s environment. Even granting Starik’s assertion that the natural environment is an important part of
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a firm’s business environment, this does not lead to the conclusion that the natural environment is therefore one or more stakeholders. Surely the presence of an entity within a firm’s business environment cannot create moral obligations in addition to those duties that exist prior to any form of business interaction. For if this is the case, then everything that exists within the business environment also merits stakeholder status. For example, terrorists might potentially exist within a firm’s business environment and interact with the firm by instigating some sort of illegal activity, such as hijacking an airplane. Yet to assert that terrorists are therefore organizational stakeholders, and as such are deserving of the additional moral consideration corresponding to stakeholder status, is a dubious conclusion that many theorists are chary to make. However, this is a conclusion that one seemingly must accept on Starik’s view given that the hijackers exist within the firm’s environment. What of Starik’s claim that things in the business environment (and hence things in the natural environment as the latter is a part of the former) can affect the firm and therefore the natural environment is definitive of a stakeholder? This is precisely the problem of stakeholder identity. An entity’s ability to affect the firm is, at best, an inadequately discriminating criterion for establishing moral obligations, as stakeholder theory must surely do. There can be neither additional moral consideration demanded, nor obligation created, merely based on one entity’s ability to affect another. Your ability to run over my dog, thus grieving me deeply, could hardly mean that I have a moral obligation to consider the effects on you of my future actions above and beyond the duties I owe you qua human. If all stakeholder status means is that I have duties to consider the effects of my actions on all humans, what does calling someone a stakeholder add to one’s status as a human? For that matter, why do we need a theory of stakeholder management at all if, given that any individual can potentially affect the firm, we can merely equate the term “stakeholder” with “human?” It therefore appears possible for “stakeholder” to lose all significance under the “can affect” criterion. What Isaiah Berlin said of freedom we might
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now say of stakeholders: “The meaning of this term is so porous that there is little interpretation that it seems able to resist” (1969, p. 15). Stakeholder theory, divorced of all particular meaning, risks similar intellectual perforation. But, in the preceding paragraph, the talk is of duties to that are owed to others qua human beings. This is the point of the second prong of Starik’s argument. That is, the assumption that the non-human environment is not a politicaleconomic entity suggests not only that it is not a stakeholder, but that indeed it cannot be a stakeholder. It is the language describing human duties to each other that precludes consideration of the natural environment as a stakeholder. Does, however, excluding an entity from stakeholder status imply that that entity is therefore excluded from all moral consideration? Surely not; yet this is the approach taken by Starik. For example, he writes: However, even if many current organizations do not pay credence to the fact that non-human nature has a “voice”, that may be still not be [sic] a sound reason to exclude nature from consideration as one or more stakeholders of organizations (1995, p. 210; Starik’s emphasis).
Here we are once again confronted with the problem of stakeholder identity. It is not incumbent upon the theorist or manager to come up with reasons to “exclude” or not exclude a particular group from stakeholder status. Rather, it is the job of Starik and other stakeholder theorists to suggest reasons for inclusion of an entity as a stakeholder group. Again, we may grant Starik the suggestion that the non-human environment merits moral consideration without further concluding that, therefore, the non-human environment is one or more stakeholders. In this same context, Starik goes on to suggest that the non-human environment is an entity “beyond a solely political-economic one.” Since the stakeholder concept has evolved such that it now embodies “ethical, socio-emotional, legal, and physical connotations” (p. 211; Starik’s emphasis), and the non-human environment can be said to manifest similar characteristics, the non-human environment must be a stakeholder. The fallacy
of this argument is clear. Simply because two things exhibit similar characteristics does not necessarily mean that the two are identical. A manager’s relationship with her spouse has moral implications, as does her relationships with her subordinates. Both types of relationships have ethical, socio-emotional, and legal aspects, but it is absurd to suggest that, therefore, her spouse is her subordinate or vice-versa. It is quite possible that both stakeholder theory and organizational relationships with the natural environment have all of the connotations attributed by Starik above. It does not follow, however, that one is therefore a subset of the other. Starik also leans heavily once again on the “can affect” part of the historical definition of a stakeholder in making this argument. The inadequacy of this criterion as argued above is only compounded if we expand our conception of stakeholder identity to encompass the natural world, which of course would also include human beings. Why should we espouse a theory of stakeholder management if all living entities, inasmuch as they can affect the firm, must fall under the obligatory umbrella of managerial consideration? The term “stakeholder” risks becoming even more porous. Finally, what of Starik’s claim that human proxies for the natural environment are necessary, but not sufficient? Part of the problem with the sufficiency of human stakeholder proxies, on Starik’s account, is that these groups often spend a lot of time arguing among themselves thus “leading to less than ecologically-supporting compromises.” This hardly looks like an argument for the creation of more such groups. Indeed, if the groups that currently exist “have experience [sic] significant internal strife and resource limitations” (p. 212), then would not having more of them increase the contentiousness and further stretch the already thin budgets of the extant groups? The argument in this section, and indeed much of the essay, can be summed up in the following passage: . . . the continued human-caused environmental deterioration of the planet appears to call for all organizations to consider as stakeholders as many natural environment entities as possible (p. 212).
The Environment as a Stakeholder? A Fairness-Based Approach Thus, it is the deterioration of the planet that ultimately justifies stakeholder status for the natural environment on Starik’s account. Additionally, the natural environment represents as many entities as possible, and the needs of these stakeholders are to be considered by all organizations in making their decisions. This suggests that practically every living being within the purview of the organization should be considered a stakeholder. This is the problem of stakeholder identity run amok. People, or non-human entities for that matter, cannot be deemed stakeholders simply because they have problems that theorists hope to resolve. Neither the homeless, the chronically unemployed, the politically oppressed people of China, nor the members of the endangered species list are stakeholders of any, let alone all, organizations merely because their lives are less than ideal. This is not to say that one ought not sympathize with the plight of these disaffected groups concomitant with their status as moral patients. We are arguing, however, that the additional moral obligations associated with stakeholder status; i.e., obligations of fairness that are created through the voluntary acceptance of the benefits of a mutually beneficial cooperative scheme, may be absent. Hence, the application of stakeholder status to these groups, based on their less than ideal existence, is unacceptable. We have suggested above that the natural environment does not itself qualify as a stakeholder. However, this is not to say that stakeholder management is unable to account for the concerns of non-human entities. There are at least two ways in which the environment may merit attention from both within a fairness-based approach and without. First, the environment may be important to other groups who themselves do, in fact, qualify as legitimate stakeholders. Second, the environment may merit moral consideration of its own very much apart from its stakeholder status. We will take each possibility in turn below.
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5. The natural environment and legitimate stakeholders It is probably clear from the preceding that, on a fairness-based approach to stakeholder theory, only humans can be organizational stakeholders. This is because only humans are capable of generating the necessary obligations for establishing stakeholder status. Only humans are capable of the necessary volition in the acceptance of benefits of a mutually beneficial cooperative scheme. Does stakeholder theory, then, have nothing to say concerning the degradation of the natural environment? Given the possible existence of intrinsic values in the natural environment, one might rightly ask how a fairness-based stakeholder approach would incorporate those values into the body of the theory. How is the “voice” of nature heard if the only stakeholders of consequence are human beings? Before answering these questions, it should be noted that stakeholder theory has never claimed to be a comprehensive ethical scheme in that there are myriad moral considerations that simply do not fall within the purview of stakeholder obligations. Neither has it claimed to be a comprehensive theory of environmental ethics. As Max Clarkson (1994) has written, “Stakeholder theory should not be used to weave a basket big enough to hold the world’s misery.” Just as promise-keeping, though a moral precept, is not exhaustive of morality, so too is stakeholder theory not exhaustive of ethics, even within organizational contexts. Though a powerful framework for deriving and interpreting many ethical issues in organizations, stakeholder theory nevertheless exists within a backdrop of social and moral rules and mores that also dictate behavior both inside and outside the organizational and managerial frame of reference. Included among the actions that do not receive a great deal of attention within stakeholder theory (or indeed within any obligation, duties or rights based moral theory) are considerations of supererogation. There are an infinite number of actions one could take that, although not morally requisite, would certainly qualify as morally commendable. Hence, even sans stakeholder status, there are actions that are morally
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prohibited, such as murder or theft, as well as actions that are morally praiseworthy, and this regardless of the stakeholder status of the potential object of the action. The arguments outlined in the next section for an imperative of environmental ethics are all suggestive of non-stakeholder based reasons for conserving the earth’s natural resources, preserving bio-diversity, valuing nature in itself, etc. Stakeholder explanations are, therefore, unnecessary for the conclusion that managers ought to consider the ramifications of their decisions on the nonhuman environment. Stakeholder theory addresses exclusively the concerns of legitimate stakeholders as defined by the principle of stakeholder fairness. However, these legitimate stakeholders may have myriad interests. As such, a firm’s managers must be sensitive to these interests due to stakeholder obligations. If among the interests of these legitimate stakeholders is a concern for non-human nature, then the firm has obligations to consider the impacts of its operations upon the environment in its decision making. Consider the local communities within which an organization operates. Local communities are axiomatic stakeholders. Further, organizations benefit voluntarily from this cooperative interaction with their communities. As such, according to the principle of stakeholder fairness, the organization and its managers have an obligation to consider the needs, interests and concerns of their local communities. Since a substantial portion of a community’s needs and interests is the health and integrity of that community’s natural environment (see Colburn et al., 1996), the organization has an obligation, not to the non-human natural environment itself, but to the community within which it operates, to safeguard communal well-being through the implementation of ecologically sound, and environmentally salutary, policies and operations. To briefly illustrate the application of this approach, various community members adhering to a Christian stewardship ethic might feel a “mutuality of belonging” to the environment, where humans are considered “holy creatures living among other holy creatures in a world that is holy” (Berry, 1994, p. 99). God created all
beings in nature, therefore, all beings are holy in some sense; i.e., all beings possess inherent value on Berry’s view. By taking the interests and concerns of the Christian steward seriously and acting accordingly, the organization presumably acts as if they also implicitly recognize the holiness of nature, regardless of whether they actually believe as the Christian does. In more general terms, by taking the needs and concerns of those communal stakeholders that ascribe inherent value in nature seriously, the organization, regardless of their particular beliefs, implicitly recognizes the inherent value of the non-human environment. Similar arguments follow for the consideration of the environment through an organization’s other stakeholders. Not only are these stakeholders members of various local communities within which an organization resides, but they may also have personal interests and concerns about the natural environment apart from communal interests. The organization practicing stakeholder management therefore would consider the non-human environment in reference to the obligations existing between them and these other stakeholders. That the “voice” of the environment is being heard through obligations relating to environmental concern can be seen in the policies of many “socially responsible” firms. For instance, The Body Shop (1996) references an anthropocentric environmental approach in their environmental policy statement, which reads: The Body Shop’s goal is to meet the needs of the present without compromising the ability of future generations to meet their own needs. Our commitment to best practice in environmental management underpins our longer term goal of full sustainability (p. 26).
This language is nearly identical to that of the World Commission of Environment and Development (1987) that many credit with defining the meaning of sustainable development from an anthropocentric view. Other firms that incorporate the language of sustainability into their policies include Stonyfield Farm and sustainable agriculture, Shaman Pharmaceuticals and sustainable harvesting of medicinal plants by
The Environment as a Stakeholder? A Fairness-Based Approach indigenous populations, and Working Assets and sustainable energy production. In addition, there exist many firms whose environmental approach might be said to recognize inherent value in non-human nature. Mail order retailer Real Goods (1997), for instance, uses the language of sustainability and inherent value in their mission statement which states that, “Real Goods is in business to provide knowledge and products to redirect the world toward a sustainable future where all living things are recognized as interconnected” (p. 1). Finally, and perhaps exemplifying the fairnessbased approach most succinctly, Tom’s of Maine acknowledges in their Statement of Beliefs that “both human beings and nature have inherent worth and deserve our respect” (Chappell, 1994, p. 32). This belief statement is operationalized, however, through the communities within which Tom’s of Maine operates as evidenced by the portion of their Mission Statement which reads: To address community concerns, in Maine and around the Globe, by devoting a portion of our time, 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 organization will necessarily be dependent upon the environmental worldview of the employees and, in particular, upon that of the founder and/or upper management who set the ethical foundation of organizational policy. For Tom’s of Maine this policy is expressly operationalized through the various relevant stakeholders; namely, communities and other human stakeholders. This section has discussed, as did Starik, the notion of stakeholder proxies. That is, Starik discusses the need for more human representatives as proxies for the natural environment and the current section discusses accounting for non-human nature in managerial decision making due to the likelihood that it will be a concern of the local community or other relevant stakeholder group. Inasmuch as there are many entities representing the interests of others on the two accounts, it is important that we be
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clear on how the current account differs from Starik’s. On Starik’s version, the human representatives of non-human nature represent the interests of nature itself. Putting aside the notorious difficulties in determining just what these interests may be (a problem alluded to by Starik himself in his discussion of dissension among environmental groups), Starik’s notion assumes what he intends to demonstrate (i.e., that the environment ought to be considered a stakeholder). This would be an implication of stakeholder status for the natural environment and not an argument in favor of such status. This is in contrast to the approach taken here. The representational configuration suggested here takes the notion of proxies one step further. Having established who are the legitimate stakeholders to a particular firm using the principle of stakeholder fairness, we move to determining what the interests of these stakeholders are. Positing that among these interests may be a concern for the health and integrity of their natural surroundings, we find the natural environment to be an appropriate object of stakeholder consideration, not due to the existence of stakeholder obligations to the natural environment itself, but due to the interest in the environment of, for example, the local community. In short, Starik’s notion suggests that managers are obligated to heed the concerns of environmental groups as proxies for the “nature” stakeholder, whereas on the account presented here manager’s may be obligated to consider non-human nature due to the interest in nature of one or more legitimate (human) stakeholder groups. This brings up a point in need of clarification. Environmental activists groups are not themselves stakeholders per se. This in not to say that such groups cannot be a stakeholder if they engage in an appropriately reciprocal scheme of cooperation. But, since the ability to affect the firm is an inadequately discriminating criterion for creating obligations necessary in determining stakeholder status, and since the organization will have obligations to protect the cooperative stakeholder effort from threats to its viability and interests as a whole, it becomes acceptable
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(though a last resort) for the organization to take a hostile approach towards some activist groups if this is the only means available for maintaining a just cooperative scheme. To illustrate, it obviously becomes a question of whether, in fact, the activist group in question represents the interests of a local community stakeholder – and it is a notoriously difficult matter ascertaining aggregate communal interests. It seems apparent, however, that a recent move by People for the Ethical Treatment of Animals (PETA) to have the town of Fishkill, NY change the name of their town represented neither the interests of the community itself, nor any other legitimate stakeholder to our knowledge. The “voice” of the natural world is therefore heard by the organization through the obligations of fairness created when one is identified as a stakeholder. Consequently, the “voice” of nature can be heard through the individuals and groups that are ubiquitously counted among the organization’s legitimate stakeholders. An interesting possibility is that an organization’s legitimate stakeholders have no interest in attending to the environment. It is quite possible (e.g., in developing nations) that all or most legitimate stakeholder groups of a given organization have an interest in aggressive environmental degradation as a means to economic advancement.3 Such a possibility is not ruled out on the fairness-based approach. That is, if the legitimate stakeholders of an organization have no interest in minimizing the environmental impact of the organization’s operations, there is no basis within a fairness-based stakeholder framework for attending to environmental concerns. This does not, however, preclude other normative moral arguments being proposed regarding duties of organizations and individuals to the natural environment. Rather, it is that there is no basis within stakeholder theory for accounting for the natural environment in the circumstance described. There may, however, be other reasons, apart from stakeholder status, for a manager to be concerned about the natural environment. It is to these reasons that we now turn.
6. The natural environment and moral consideration On a fairness-based approach, it might appear as if stakeholder theory values the natural environment only from a so-called strongly anthropocentric (human-centered) perspective. Strongly anthropocentric theories claim that only the felt preferences of human beings count morally and nature, therefore, has only instrumental value. This is contrasted with environmental ethics that are based on “weak” anthropocentrism which might argue that the only values that exist and need to be recognized are those where “all value countenanced . . . is explained by reference to satisfaction of some felt preference of a human individual or by reference to its bearing upon the ideals which exist as elements in a world view essential to determinations of considered preferences” (Norton, 1994, p. 157). The “weak” perspective acknowledges the necessity, possibilities and constraints of living in harmony with the cyclical workings of the natural world, and prescribes actions that reflect ecological concern. Other anthropocentric environmental ethics might argue that humans have obligations to provide a basic, livable environment for future generations of humans (see Feinberg, 1980; Baier, 1990), or that the environment should be preserved for aesthetic reasons (Sepänmaa, 1993). In general, what all of these theories have in common is that they ultimately ascribe values to nature in reference to duties owed by humans, to humans. Since these theories derive their sense of value from human beings only, and since fairness-based stakeholder theory is limited to obligations existing between extant humans, the fairness-based approach must therefore be anthropocentric. This approach would be problematic, according to some, because it does not morally consider non-anthropocentric environmental values; i.e., the values inherent to nature itself. Some environmental philosophers argue that values exist in nature that should be recognized and respected apart from, or in addition to, those derived from human beings. For example, Holmes Rolston, III (1994) discusses values that exist in nature without human derivation that are too numerous to mention here. For these
The Environment as a Stakeholder? A Fairness-Based Approach theorists, the natural environment ought not be damaged, not due to the effects of such damage on the relevant human population, but because the non-human natural environment and its component parts merit some sort of moral concern in and of themselves. As such, objects and entities in nature are just as worthy of moral consideration as human beings. One point of contention is where the line should be drawn determining moral consideration. Two frequently cited environmental ethics base their arguments for moral significance on sentience (Singer, 1975, 1985) and consciousness (Regan, 1983). For these theorists, what counts morally are those beings that possess some relevant capability that is also possessed by humans. Or perhaps the correct unit of analysis is interconnected ecosystems (Eckersley, 1992; Westra, 1994), of which humans are merely one part. Kenneth Goodpaster (1978) makes quite persuasive arguments for the moral considerability of non-humans. He argues that, “Nothing short of the condition of being alive seems to me to be a plausible and nonarbitrary criterion [for moral considerability]” (p. 310; see also Taylor, 1986). He contends that the capacities of sentience, consciousness or rationality are, at best, vagarious parameters for ascribing moral considerability. What is interesting about Goodpaster’s approach is that he does not argue for the rights of non-humans, nor even that non-humans merit the same degree of moral considerability as humans. Instead, he argues that non-humans merit some sort of consideration in moral decision making by virtue of being alive. In conclusion, we turn to the question of whether human stakeholders alone can be said to provide sufficient “voice” to the non-human environment, presumably because human proxies for the environment are too subjective. Recall Starik’s quotation that nature’s “ ‘voice’ can be heard continuously throughout the natural environment for all humans to heed or appreciate . . .” (1995, p. 210). In making his argument, Starik refers to various environmental ethics such as ecofeminism and aesthetics, legal approaches, and the environment’s sheer physical power (natural disasters). Yet, ecofeminism emphasizes “felt experience” in making the argument that
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one can “care for” the environment in an feminist moral sense (Warren, 1990), and it has been questioned whether this reliance on “felt experience” cannot itself be considered merely a subjectively aesthetic sense of appreciation for the environment (King, 1991). Whose felt experience should be heeded here? Upon viewing the Grand Canyon; the aesthete might see the sheer beauty and awesome majesty of the sight, the Christian steward might see the all-giving, allpowerful hand of God, and the strictly anthropocentric developer might see a financially lucrative reservoir that could provide water, electricity and recreational opportunities. Which is the correct vision? Aesthetic theories of environmental ethics might suffer from similar subjectivity. Furthermore, legal concepts through which the “voice” of nature can be heard seem to offer no reason against a fairness-based stakeholder theory. Incorporation of environmental protection into law merely adds force to legitimate stakeholders, namely, local, state and national governments. Christopher Stone (1974), who is a strong proponent of granting legal rights for the environmental entities, suggests that proper protection of these entities be accomplished though the creation of a legally recognized guardianattorney. In other words, said “suitable protection” is accomplished through the creation of a possible legitimate legal entity. Starik’s work has provided a great deal of fodder for consideration by stakeholder theorists. One suggestion of this essay is that Starik reverses the nature of the proxy relationships between the firm and the natural environment. Whereas Starik wishes to see human groups acting on behalf of the natural environment, we argue that, at least from the perspective of stakeholder theory, the natural environment merits stakeholder consideration only instrumentally (Donaldson and Preston, 1995) – based on obligations due legitimate stakeholders. Local community interest in the natural environment was suggested as an example of how the environment may be accounted for from within a stakeholder framework. Finally, it was argued that none of the preceding rules out the possibility that the natural environment may merit other kinds of moral
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consideration. While non-human, natural entities may merit moral consideration of other sorts, such entities do not merit the status of organizational stakeholders. Notes 1
A previous version of this paper was presented at the 1997 Meeting of the International Association of Business and Society. We wish to thank Jeff Lenn, Mark Starik, Jean Stead, Ed Stead, R. Edward Freeman, Patricia Werhane, and three anonymous reviewers at the Journal of Business Ethics for helpful comments on earlier drafts. 2 There is a handful of articles concerning the moral foundations of stakeholder theory including Burton and Dunn (1996), Clarkson (1994), and Donaldson and Preston (1995). 3 We wish to thank an anonymous reviewer for suggesting this important possibility.
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Robert A. Phillips School of Business, Georgetown University, Washington, DC 20057, U.S.A. E-mail:
[email protected] Joel Reichart Graduate School of Business Administration, Fordham University, Faber Hall, 3rd Floor, Bronx, NY 10458-9993, U.S.A. E-mail:
[email protected]
