Cluster III — Chapter 37

The Role of Business

¹ Sustainable Wellbeing Research Group, Swansea University, Wales ² International Institute for Industrial Environmental Economics (IIIEE), Lund University, Sweden ³ Centre for Enterprise, Environment and Development Research (CEEDR), United Kingdom

Keywords: business models, business responsibility, business to customer relationship, corporate sustainability, transparency

On this page

Definition
History
Different Perspectives
Application
Further Reading

Definition

A rapid reorientation away from perpetuating unsustainable lifestyles and toward facilitating sustainable consumption would require businesses to utilize their far-reaching influence as a positive force for sustainability. This will have to go beyond greenwashing practices and prioritization of short-term profit orientations that too often perpetuate unsustainable consumption. Here, we suggest that the role of businesses in promoting sustainable consumption lies not simply in changing product offerings, but also in leveraging their influence on consumers’ lifestyle practices more broadly, ensuring that these align with long-term sustainability ambitions and, importantly, planetary and social carrying capacities (see Doughnut Economy).

In practice, businesses need to transcend short-termism to promote sustainable consumption and shift from mere ecoefficiency to comprehensive ecosufficiency, engaging customers in co-creative processes that encourage sustainable lifestyles. We underscore the necessity for businesses to move beyond superficial changes to products and processes to foster sustainable consumption and sufficiency. This will require businesses to redefine their roles to become enablers of sustainable living and drivers of socio-ecological change toward sustainability.

History

In the 19th and early 20th centuries, a belief emerged that business activities could drive economic development, which would automatically lead to societal improvement. Prominent business thinkers such as Peter Drucker championed this view, establishing it as the foundation for businesses’ license to operate. During the pre-World War II period and early Cold War years, economists like Friedrich Hayek and Milton Friedman redefined the role of business in society. Advocating for free markets as the most efficient way to allocate resources and improve society, they promoted limited state intervention and unrestrained self-interest as an engine of economic progress, laying the foundation for neoliberalism. They asserted that the primary responsibility of businesses was the pursuit of profits, suggesting that broader social benefits would result from the “trickle-down” effect of economic activity. Profits, in turn, were generated by continuously selling more products and services to consumers.

Consequently, most businesses have perpetuated unsustainable consumption levels among their customers to ensure they comply with capitalist growth demands, with far-reaching implications for both people and the planet. Indeed, businesses have tactically employed product design, advertising, and marketing techniques to influence individuals to consume more and ensure short-term gains. These approaches have been instrumental in generating new “needs” (often conflated with “wants”), keeping customers in a state of perpetual dissatisfaction to maintain constant spending and unsustainable consumption (see Hedonic Treadmill). Here, the still-dominant growth-driven practices present significant obstacles for businesses that promote sustainable consumption and sufficiency, as they must navigate a landscape where desires are constantly being reshaped and elevated.

With greater consumer awareness regarding social and environmental sustainability and simultaneous changes in legislation, the 21st century has seen a shift in business perspectives and practices. Businesses have increasingly tried to balance their unsustainable practices (e.g., via corporate philanthropy and Corporate Social Responsibility) and communicate their environmental and social impacts with greater transparency through standards and reporting initiatives (e.g., ISO standards and Environmental and Social Governance approaches). Alongside these efforts, diverse organizational forms are emerging – such as cooperatives, ecosocial enterprises, and B Corporations – that aim to balance profit with purpose and are committed to creating a positive impact for stakeholders, communities, and the environment (see Box 37.1).

Box 37.1. Example of a business accreditation in the environmental domain

Introducing BCorps: In recent years, more profound discussions have emerged within society regarding the role of businesses in economies. One prime example is the emergence of BCorps that draw on a mix of different approaches. To become BCorp accredited, businesses need to demonstrate their performance in key areas such as ethical business practices and innovation of sustainable products. Their popularity reflects a growing shift toward considering the (longer-term) impact of business practices on all stakeholders, one that considers internal actions, consumer engagement and education as important in an attempt to promote the structural and social conditions necessary to encourage responsible consumer behavior and sustainability more widely.

Different Perspectives

In an influential article by Donaldson & Walsh (2015), the authors invite readers to reflect on the role of business with the prompt: “Law is to justice, as medicine is to health, as business is to _____”. Unsurprisingly, responses differ widely. This remains the case when contemplating the role of business in sustainable consumption. Some (still) argue that it is not the responsibility of businesses to address why and how (much) people consume, while others suggest that businesses should merely focus on sustainable products and supply chain management following ecoefficiency principles. These approaches may change what people consume, but not necessarily how much. Hence, while valuable for changing consumption patterns, these approaches have so far failed to reduce consumption levels.

Addressing consumption levels is the emergent discussion on post-growth and degrowth approaches for business. These approaches have gained popularity since the early 2000s, driven by critiques of consumer societies in Europe and the lack of significant progress in environmental and social sustainability. They advocate for “living well with less” (i.e., sufficiency). In a degrowth economy, businesses are in a state of contraction and may need to downsize. In contrast, in a post-growth economy, some businesses may find themselves in a steady state or are simply not expected to grow in size or efficiency, among others (see Steady-State Economy). While a more detailed introduction to either concept goes beyond the purpose of this entry, it is worth noting that it is an emerging field and neither approach rejects growth outright, usually distinguishing between quantitative and qualitative growth.

In this context, businesses are exploring alternative ways with a more holistic, long-term focus to create value for consumers without exceeding planetary boundaries, overconsuming natural resources, or depleting ecosystem services. A promising example are sufficiency-oriented businesses that have emerged, questioning the necessity of perpetual growth and the sustainability of expansionary business logic. These businesses are driven by environmental concerns, aspirations for better work-life balance, and a desire to conduct business based on sustainable (i.e., socio-ecological) values with sufficiency in mind rather than the values of investors or venture capitalists (Soulis & Mont, 2024). While creating tensions for conventional growth-oriented businesses, the role of social and environmental justice and equity (rather than just profit) becomes increasingly important in the post-growth discourse when limited resources must be used to satisfy the (consumption) needs of a growing population (see Climate Justice).

Application

The different perspectives on the role of business in the transformation to sustainable consumption are reflected in both the various roles that consumers play and in how businesses apply distinct communication and marketing approaches to engage consumers in (eco)efficiency, shift, and sufficiency strategies.

The (eco)efficiency approach is a management strategy that aims to create more goods and services while using fewer resources and reducing waste and pollution. Moreover, customer communication centers on educating consumers about the environmental impacts of the products they purchase thus helping consumers make more environmentally sound choices without necessarily altering their overall consumption levels.

In the shift approach, the focus moves beyond mere information and seeks to encourage changes in consumer behavior (see Behavior Change). Here, businesses shift to alternative business models such as reuse, renting, leasing, and sharing, which help increase product durability (see Sharing Economy). Communication strategies emphasize how products can be used and maintained over long periods, for example, repaired rather than replaced (see Repair). The shift approach fosters lifestyle changes and a wider, cultural change where consumers value longevity, quality, and the continued use of products in an attempt to move away from a “throwaway mentality”.

The sufficiency approach is the most transformative, as it directly challenges existing norms of consumption (see Social Norms). Here, business marketing and communication aim to question the need for high levels of consumption and to encourage consumers to critically assess their purchasing habits. Businesses following a sufficiency approach seek to de-legitimize mass production, promoting the idea that less is more. This involves moderating sales tactics, avoiding discounts and seasonal promotions, and refraining from aggressive marketing campaigns that creatively invent new consumer wants (see Advertising). The communication focuses on demand reduction strategies. Consumers are encouraged to prioritize needs over desires, fundamentally shifting the way they think about products and engage with consumption.

The varying levels of consumer engagement across these strategies require businesses to develop new capacities and skills. In the efficiency approach, businesses must become adept at providing relevant information and transparency about their products. In the shift approach, they need to create systems that support repair, reuse, and thus overall circularity, and longer product life cycles, promoting alternative modes of provision. For businesses pursuing a sufficiency strategy, the challenge might be even greater, as they must not only shift their marketing approach but also radically transform their business models. This requires decoupling profit from both the environmental impacts and the volume of products sold, transitioning to a model that values sustainability and reduced consumption over perpetual growth. As an approach that aims to make a large-scale, meaningful difference, it will need to involve the active influence of the customer to consume better through transparent, co-creational processes. Take the UK outdoor brand Finisterre’s Wetsuit Project, which developed a biodegradable wetsuit in collaboration with their local community and customers, aiming to promote circularity while supporting social causes.

In essence, businesses need to become sustainable market-driving, not market-driven (cf. Mont et al., 2025). Not to creatively invent new consumer wants but to satisfy actual environmental and societal needs. By leveraging their unique capabilities to influence people’s lifestyles and underlying behaviors, businesses can drive the much-needed transition toward sustainable consumption and broader sustainability.