We need a realistic, fact-based approach to sustainability

Sustainability – as usually packaged by regulators, the media, and business schools – combines environmental, social, and economic objectives. The complex interplay of all three is seen to be both achievable and desirable. But this is based on three questionable beliefs.  

The first is that being sustainable can go hand in hand with being profitable. But it is hard, if not impossible, to find a sound business model that does not transfer the costs of sustainability to external stakeholders, be they customers or shareholders. 

The second is that stock markets reward sustainability and environmental friendliness. However, there is ongoing debate about what’s behind the observable premium at which sustainable companies trade, and a sustainability bubble exists in which returns are driven by investor demand, not by fundamental changes in company behavior. 

The third belief is that the world would be a better place if companies incorporated sustainability in their…