What’s your view on sustainable business? Are you a BlueSky-er (everything’s going swimmingly well), a SilverLining-er (making progress, but not there yet) or a DarkCloud-er (oh what rubbish, we’re still on course to be doomed .. dommed I tell you!)
I think I hang around the DarkCloud sentiment more than anywhere else. It’s not that I don’t believe it’s possible to have a sustainable and commercial economy, its just that the pace of change is so horribly slow its difficult not to get despondent from time to time.
Which is why a recent report brought a smile to my frown and, dare I say, gave me a rare SilverLining moment.
The report came from the Massachusetts Institute of Technology’s Sloane School of Management and is entitled Sustainability: The ‘Embracers’ Seize Advantage.
It’s headline statistic is that over the past year the number of companies increasing their commitment to sustainability more than doubled and only 3% of companies now believe sustainability is a load of old tosh.
Like any good report (and this is a good one!) there then follows a whole bundle of other commentary and statistics which are well worth poring over. However, the thrust of the report is that a clear pack of “embracers” has now broken away from the “cautious adopters” and they are reaping the benefits of their leadership position.
So what has made these people leaders, and how can others emulate them? Here are some those answers from the report which brought me the biggest smile:
Businesses can talk about sustainability at executive level and impose all sorts of top-down initiatives .. however it’s only really going to happen if sustainability is grown from the bottom of an organisation upwards, with employees identifying and implementing ways in which the business moves to a sustainable footing.
Aside from nurturing a culture of imagination this also brings about a democratisation of a corporate workplace which, in far too many places, is run more like a military operation than a civilian one. The social change of this approach could be very far reaching.
… and if there’s no way of measuring it, invent it. A key aspect of sustainable business is reporting on what is material to a company’s operations. Emissions, water and waste are common to all, but these should be considered the bare minimum.
This is one of the biggest black holes in business sustainability at present. True leaders will already know what is vital to their business: it’s just a question of measuring and reporting it. This is turn is wrapped in transparency and can only lead to a better understanding of companies by investors, clients and customers alike.
Just because something cannot be measured in financial terms doesn’t mean to say it shouldn’t be valued. Biodiversity is one of the great examples of this, but there are many other cases in point ranging from the hoary old work life balance through to social cohesion. Businesses should value these impacts now, while the means of measuring them financially are still being developed.
However, it may be possible to over analyse many of these things. The case for a good work life balance should be greater than its financial bottom line, and I seriously doubt a meaningful financial statement on biodiversity will ever be possible. That shouldn’t stop businesses valuing them .. they just have to make the leap that that “value” is not necessarily financial.
Set meaningful targets: ones which cause stretch but which are not infeasible. And if there is a problem be straight about it, don’t wait for a solution before announcing the problem, and don’t try and brush anything under the carpet.
Transparency is another huge shift on corporate culture waiting to happen. After decades of style-over-substance marketing this should reverse the process and allow all stakeholders to build a true view of the companies with which they’re engaged.
However, to retreat from the SilverLining a little, this last point in the report was headlined “Try to be authentic and transparent”. Why try? As one of the world’s most recognisable green leaders would say “Do, or Do Not. There is no Try”.
And that’s how companies become sustainability leaders.
Picture Credit: http://www.flickr.com/photos/wonderlane/2062184804
The US’ National Wildlife Federation (NWF) is not what you would normally call a firebrand organisation.
That’s not to say it’s supine, but it’s probably best thought of as more middle of the road than otherwise. Founded in the early 1930s by Franklin D Roosevelt, has a membership of 4 million (approximately 13% of US citizens) and publishes some of the most widely read nature magazines in the US.
However a month ago the NWF nailed its economic colours to the mast very firmly and unanimously passed an AGM motion calling upon the US government to abandon GDP as a measure of the economy.
This is huge. The only other national or international environmental group I know to have called for an end to the use of GDP is Friends of the Earth, and that was over a decade ago. Not Greenpeace, not WWF. Not the Sierra Club.
The reason it’s huge is because mainstream environmentalists have long accepted the argument that economic growth is good for the environment. This is through the notorious trickle down system whereby big money gains by corporations will (through some kind of wizardry) bring about better environmental protection.
Now, one of these organisations has finally stuck it’s neck out and said “er, no”. This strikes at the heart of the idea that capital growth is per se good for the environment. And in these days of financial collapse, sustainability and increased environmental protection, this is a big thing indeed.
Why, you may be asking, is GDP such a bad thing?
The answer is because it wants money to be spent and doesn’t care how. It’s a measure of monetary throughput, not results. For example, crime is good for GDP. For every crime which is committed security systems are bought and the police are involved; lawyers, judges and prison officers may also be employed, giving further rise to economic activity.
Think about BP and the Deepwater Horizon disaster and you get the idea. It was someone’s responsibility to ensure operations were safe, but because that had to be balanced by the drive to maximise financial returns something went wrong. Ultimately local businesses have been driven to the wall, but I’ll bet my bottom dollar local GDP actually rose because of the cleanup spend in the area. That’s how GDP works.
As Eric Zencey puts it so well in an article for the Centre for the Advancement of a Steady State Economy, GDP only measures monetary expenditure, nothing else. So, for example, if you hang your washing outside to be dried by the sun and wind you are being economically inactive. But if you buy a tumble drier and then purchase electricity whenever you use it you become an economic consumer. Environmental activity will never be good for the economy unless it generates money, and that’s a bad place to be.
This leads us neatly back to the NWF. To their credit, they didn’t propose a new index for the US to measure its economic activity by. That’s not their job. What they have done is pointed their finger at what’s wrong with the GDP system and called for the US government to fix it.
Will the US Government respond? I doubt it very much. Allowing a country’s economy to be measured by anything other than monetary expenditure strikes at the very heart of capitalism, and the US is simply not yet ready to do that.
An idea of how damaging GDP alone is can be seen in a 2006 New Economics Foundation / Friends of the Earth analysis of the Happy Planet Index (HPI) (PDF). This shows that countries such as Tunisia, Yemen and Morocco are leaders in the Middle East and North Africa while economically friendly countries such as Qatar, the UAE and Kuwait are the bottom of the list.
This is not a political statement: it’s simply pointing out that wealth alone doesn’t make the planet happy.
Through the NWF, over 10% of the US has decided GDP isn’t good for the economy … the government ought at at least wake up, listen, and respond. If they don’t then the economic woes of the US will simply get bigger, because justifying a deficit on the grounds that it will bring greater profit is like me continuing to dig a hole on the grounds that the pile of earth I’m building up will one day be the tallest building in the world.
In other words: it’s stupid.
We’re all used to hyperbole these days.
Journalists use it to grab their readers’ attention (“Freddie Starr Ate My Hamster”); marketeers use it to grab consumers’ attention (“Guinness For Strength”) and children use it to seriously annoy their parents (“But Muuum, eeevvvrrryyyyone has one!”).
Similarly, claims to be the world’s first are either so niche or so mundane that they’re unimportant. However, that doesn’t mean to say that once in a while they’re not true.
“I imagine we are the first international consultancy to be born out of social media,” Akhila Vijayaraghavan, Founder and Director of the Green Den Consultancy (GDC), tells me. I think she’s right, and the groundbreaking nature of GDC probably goes way beyond just CSR.
Like many people taking the lead in sustainable business , Akhila’s background is varied and fast developing. Five years ago she completed a degree at the University of Glasgow in Molecular and Cellular Biology before working in climate change and environmentalism for The British Council and Greenpeace.
It was during this time that she started to look at CSR and the seed that became GDC was first planted in a blog which had “no real purpose than to vent some frustrations and bring some issues to the spot-light”.
“I knew I wanted to make a change – specifically I wanted to work with small/medium sized businesses from ground up,” elaborates Akhila. “When I started tweeting a year ago and exchanging ideas with people … I reached the conclusion that I did have a valid business model. After that, GDC gathered steam.”
From there, GDC has now launched as what Akhila first envisioned: “I wanted to bring together a bunch of consultants with the same goals to work on local projects with a global outlook …We are remote-based, with different academic and cultural backgrounds but at the end of the day we speak the same language (ie. sustainability).”
It’s this latter point which makes The Green Den such a groundbreaking initiative. It’s not a traditional company working in one sector or one geographic location. While it’s core team all specialise in CSR, they’re spread across India, the US and Europe with competencies as varied as environmental law, the built environment, quantitative research and public private partnerships.
“The Western world comes with a different set of challenges and the Eastern bloc is a different ball-game altogether,” Akhila explains. “We cover many industries and specialities that will be very beneficial to multi-dimensional businesses. Some of us are more economy oriented and other of us are more scientific oriented … we are more flexible and are able to understand our customers’ problems and needs better.”
Features on the overlap between CSR and social media are becoming more and more commonplace, and with good reason: social media enables the direct staff, customer and client “peer to peer” communication which CSR demands.
However, GDC goes beyond this. It was quite literally born in the Twitterverse when like minded people from around the world started to discuss issues and exchange ideas. So, not only is profit orientated “business as usual” coming to an end, but so is the whole way companies are established and operate. In Green Den Consulting we can see this future, and it looks really rather good!
I wanted to headline this “EU Mandatory CSR Confirmed” .. but the trouble is I can’t confirm it.
The European Coalition for Corporate Justice (ECCJ) released this statement last week:
Last week, (the EU) confirmed in the Single Market Act that they would address non-financial disclosure by private companies through a legislative proposal, due before the end of the year.
This is the clearest sign yet that the EU is preparing to make non-financial reporting mandatory. The trouble is, I cannot find a source closer to the EU than the ECCJ for the story.
At the beginning of April the EU released 12 priorities for the Single Market Act (which is due to be issued by the end of the year). This didn’t directly address non-financial reporting … instead it contained this intriguing priority:
8. Social entrepreneurship
As well as legitimately seeking financial profit, certain businesses also choose to pursue the general-interest objectives of social, ethical or environmental development. This sector generates growth and employment. To encourage this, we need to take full advantage of the formidable financial tool which is the European asset management industry. We will propose a European framework for mutual investment funds, so as to amplify the effect of the existing national initiatives by offering these funds the opportunities provided by the Single Market.
… which brings us pointing more in the direction of SRI and sustainable stock exchanges than disclosure rules. However, another priority also catches my eye:
11. Regulatory environment for business
Businesses still too often view the Single Market as an area of constraints, not of opportunities. Their lives must be simplified by reducing regulatory and administrative constraints. To achieve this, the Commission is therefore proposing a simplification of the accounting Directives as regards financial reporting obligations, and a reduction of the administrative burden, especially for SMEs.
Now, I wonder whether the EU is preparing the way for integrated reporting proposals; lifting the burden of financial reporting but broadening the scope to include non financial metrics?
To be honest, this would surprise me. I favour integrated reporting as an end goal, but I don’t believe non-financial reporting is anywhere near mature enough yet.
However, this appears to be the way the EU is thinking. It’s probably motivated by this consultation on non-financial disclosure (PDF) which found that only companies and standard setters supported the status quo and EVERYONE supported integrated reporting.
In other mandatory CSR news, it appears India hasn’t quite given up on its proposal that a mandatory minimum of 2 percent of corporate profits be spent on CSR .
This was it’s intention at the start of the year, but in the face of overwhelming business opposition it had to retrench and opt for a “pay or explain” model under which companies who don’t spend at least 2 percent of profits are obliged to explain why not.
Now the Indian government has introduced new proposals which will force the mining sector to spend at least 2 percent of its profits on CSR projects. This is ontop of proposals which demand that mining companies share 26 percent of their profits with a mine’s local community!
Quite where India is going with this I’m not sure (and am not the best person to comment). However, it’s clear that there are moves afoot in some of the world’s largest economies to make CSR mandatory. And that can only be a good thing.
Picture Credit: http://www.flickr.com/photos/robdeman/2390666040/sizes/s/
Have you heard? It’s despicable. It’s what gives corporate social responsibility (CSR) and sustainability a bad name. It’s a travesty. It’s bloody minded. It should be condemned. It MUST be condemned.
I’m talking about Chevron’s decision to drop its lawsuit against Steven Donziger, the lawyer who represented the Amazonian indigenous people in their long running pollution suit against Texaco (now part of Chevron). You still don’t know what I’m talking about? OK, here’s a big brief synopsis…
Texaco goes into the Amazon. Drills for oil. Makes a huge, ecologically damaging mess. So far there’s nothing controversial in what I’ve said, but then comes the next bit. Texaco pays money to the Ecuadorian government to clear up the mess on their behalf and considers its hands washed clean of the issue (1992). Then Texaco is bought by Chevron (2001).. so the issue becomes Chevron’s.
Sitck your fingers in your ears and go laa laa laa. Years of twists and turns leave Chevron and the Amazonian population still slugging it out and finally in 2010 an Ecuadorian court determines that Chevron ought to pay $9 billion to clean up the mess. Case settled? No .. not yet…
Chevron filed papers in a US court alleging a massive racketeering conspiracy against the Amazonian people. The papers name several people as masterminds of this conspiracy, including Steven Donziger, their attorney, who was supposed to be the conspiracy’s mastermind.
And now Chevron drop their allegation against Donziger.
So we’re left with a conspiracy without a mastermind! To ordinary person this would be ridiculous. Like carrying on a government without a Prime Minister or President, or a company without a CEO. But not to Chevron. Oh no. They can allege a massive conspiracy without saying who was creating the conspiracy. Weird, but true.
To cut a long story short, Texaco played games about the pollution they created for a decade and then Chevron played games for another decade after they bought Texaco. We’re now around 25 years since they issue was first raised. Yet Chevron take no responsibility for their actions. Or rather, they say they’ve paid money to the Ecuadorian government and when it’s suggested they didn’t pay enough, they shrug and say “that was the deal”.
This is not responsible behaviour.
What’s more, when you look at Texaco and Chevron’s behaviour in the courts it’s perfectly obvious that they’re trying to avoid responsibility through all possible legal means. Which bit of that sentence do you want to give emphasis to.. AVOID RESPONSIBILITY or ALL POSSIBLE LEGAL MEANS ? Ultimately, the company’s strategy is about protecting the board’s collective arse and maximising profits for the shareholders. Stakeholders are nothing. For Chevron, these are still fuzzy coloured people with feathers in their hair ….
While this cloud hangs over Chevron they can never be considered a responsible company, and the more they protest the greater their sin (ahem!) becomes. Their PR firm should have told them to fold long before now, because all they’re doing is damaging their reputation.
But reputation is another story entirely.
By Clare Melford, CEO of the International Business Leaders Forum (IBLF)
In one of the most dramatic pictures of earthquake and tsunami-hit Japan, a man is shown to pick his way through wreckage and over downed cables on his way to another shelter. He is not looking for his family, but for the 50 employees of the company he built and ran that was literally swept away. He wants to restart his business as soon as possible – if he can find enough of his workers alive.
This, and countless other stories like it about the devastation from Japan’s recent natural disaster, demands a compassionate response from global citizens. However, it is also a chance for the business community to offer real tangible help in the face of humanitarian disaster, whether or not they have been directly affected by such events.
The private sector can offer a range of support to those businesses affected by natural disaster. Immediately, most companies would typically donate cash often via a disaster relief fund such as the Disasters Emergency Committee (DEC), who in this case have stated that the expertise of their member agencies is “primarily in responding to disasters in poorer developing countries where the kind of help required after a disaster is quite different from in a developed country”.
However, Japan, the third richest economy in the world, is fortunate to have sufficient financial resources and a government efficiently leading the disaster response.
For instance, entrepreneurs may need mentoring, office space and back-office support to get back on their feet. The easier it is to start a business, the quicker the livelihoods of those who have survived can be restored. Larger companies affected by disaster may need bridging loans or restructured payment terms from their suppliers. They might require quick restocking to restore lost goods or logistical support to replace destroyed road, rail and other transport mechanisms.
As with all natural disasters, swiftness of initial response is of the essence, and this is just as true for the response of business helping other organisations in affected areas. Speed is much easier to achieve if the response comes from memory rather than invention.
Companies can (and some already do) plan what their response can be. They already have disaster response plans for their own operations, so it is not a big step to have a response plan for disasters affecting others. And in our increasingly interconnected world, the very concept of the “other” has become ambiguous.
When the dust has settled, businesses can still have a huge impact on helping society recover from natural disaster. Those that have operations in regions frequently affected by natural disasters can work with governments and civil society to build skills and practical responses to protect their customers, suppliers and employees when the time comes.
Many businesses already engage with governments in public policy dialogue to ensure that effective and joined up plans and preventative measures are in place ahead of time. Even in Japan, there is room for improvement as demonstrated by the unfolding nuclear power station events.
Throughout all their spheres of influence, from core business to public policy, businesses have a key role to play their part with other sectors of society in helping prevention, protection and recovery from natural disasters.
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