Competitiveness, sustainability and the environment: towards a “win-win-win” scenario

This paper addresses how domestic firms might enjoy profitability and international competitiveness with fewer harmful environmental impacts than the “winner take-all approach” of neo-classical economics has thus far encouraged (i.e. the use of “limitless” resources to maximise short-term profits). It argues that private firms that either (i) produce material goods or (ii) use physical inputs in supplying services can improve their profitability by increasing their resource productivity. Not only does a positive change in resource productivity mean increased profitability for the individual firm, but it also means a dramatic improvement on the impact of business on the environment--the life support system of our planet-- particularly with regards to climate change (and other forms of pollution) and the depletion of natural resources. Focusing on resource productivity improvements need not be a matter solely for individual firms. There is also an important role for government in promoting resource productivity through its regulatory toolkit, particularly tax policy. This paper explores how income taxes, by adopting a certain kind of tax credit--the Business Sustainability Credit--might help promote increased resource productivity and firm profitability.