99-039
SUSTAINABILITY AND THE FIRM
Forest L. Reinhardt
Definitions of sustainability at the macroeconomics level focus on the
need to maintain aggregate stocks of natural and man-made capital constant
over time, so that future generations have consumption possibilities
similar to those of the current generation. Similar tests can be applied
at the firm level. To be sustainable, a company must maintain on its
balance sheet an undiminished level of total net assets, measured at their
social costs. It must also pass a similar test when assets are valued at
prevailing private costs. Realistic assessments of a country or firm's
sustainability therefore need to consider its overall economic performance
as well as its environmental performance. By this definition,
sustainability is intimately linked to the fundamental preoccupations of
business managers: productivity, investment, and profit.
BGIE
39 pages
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