Economic Sustainability

What is it about?

Definition/Description The definitions of economic sustainability are various depending on the approach and sustainability label used. In the inside approach, economic sustainability is interpreted either from the perspectives of very weak or weak sustainability. The former stresses how organizations stay in business looking at the issues of corporate turnover and brand reputation and considering these to be at the heart of economic sustainability (Doane and MacGillivray 2001). The latter links the concept with productive efficiency and economic growth (Foladori 2005). Within a business context, this means using the assorted assets of the company efficiently to allow it to continue functioning profitability over time (BusinessDictionary 2018). Economic growth may take place at the expense of natural resources, ecosystem services, or welfare if the total capital stock is maintaining through time (Turner 1993). In the outside approach, it is looking first at the economic impacts an organization has on society emphasizing thus strong sustainability position. Economic sustainability is understood as economic development without any loss of ecological or social sustainability. Economic capital cannot grow at the expense of natural or social capital. Economic sustainability means the allocation of resources over time (Markulev and Long 2013) and also intergenerational equity (Anand and Sen 2000). It emphasizes a production system which offers the highest level of well-being for current and future generations (Markulev and Long 2013) without compromising future needs (Basiago 1999). Economic sustainability, as one of the sustainability pillar (Elkington 1994), is necessary to maintain the natural, social, and human capital required for income and living standards.

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Photo by 2H Media on Unsplash

Photo by 2H Media on Unsplash

Why is it important?

Summary According to the term triple bottom line, sustainability depends on the balance between the three pillars: environmental, social, and economic. Environmental sustainability focuses on maintaining the quality of the environment, social sustainability strives, e.g., to ensure human rights and equality, and economic sustainability is important when maintaining the natural, social, and human capital required for income and living standards. Complete sustainable development is not easy to achieve, while a certain pillar of sustainable development becomes sustainable, others can become unsustainable, especially with regard to environmental sustainability, on which the overall capacity of development depends. The definitions of economic sustainability are various depending on the approach and sustainability label used. In the inside approach, economic sustainability is interpreted either from the perspectives of very weak or weak sustainability. From the perspective of very weak sustainability, “…economic sustainability is the ability of an economy to support a defined level of economic production indefinitely.” The core idea is how organizations stay in business. Weak sustainability links economic sustainability with productive efficiency and economic growth. Thus economic sustainability means the use of various strategies for employing existing resources optimally so that that a responsible and beneficial balance can be achieved over the longer term. In the outside or stakeholder view, “strong sustainability” position is emphasized. According to it, economic sustainability means that economic systems support sustainable social and environmental outcomes, where economics is the process through which humans create social and environmental outcomes. On the background of various definitions and views about economic sustainability are different values among individuals and societies. Full agreement has yet to be reached.