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Archive for the ‘global’ Category

I know… I don’t blog enough around here anymore. Okay, I don’t blog around here at all. Watch this (empty) space. I will be back soon and regular. In the meantime, I do blog over at CSRWire more regularly. See below the latest one over there where I looked into my sustainably made crystal ball and imagined the strange (un)sustainable world of tomorow.

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No, this is not another “looking at 2014” piece. I am more interested in looking a little further ahead. The world we live in has changed dramatically over the last 10 years and there are larger trends changing the world in ways we can hardly imagine.

Imagine, for example, if we somehow had better insight into how transportation will change across the world over the last 50 years. Or how manufacturing will shift away from the U.S. and other developed countries or how the brands we love dissolve into nothing more than grand design houses with limited manufacturing capabilities. Not to mention how technology has changed the world – wish there was an app for all that.

I’m more interested in the mega trends that will shape our world over the next 50 years. What will drive the fundamental change in the way we source, manufacture, interact, communicate, build relationships, sell, transport etc.? In short, here are four mega trends that I believe will change the world of sustainability in a way that makes most of what we think is important today silly and obsolete.

Well, we’re done with the silly season after all…

1. Everything Is Personal

The rise of the individual over the group has in itself become a group activity. The marketplace of people has become so crowded that people are fighting to stand out. We have moved from the Pepsi Generation to the Me Generation. From consumers to individuals. This is already challenging the way brands interact with people, as people want to be known as Jane, Dick and Sipho – the individuals. They want brands to conform to them and not the other way around.

Brands who want to survive must find a way to engage in a conversation – a dialogue – where they are informed as much as what they inform. In other words, get ready to lose control of your brand to save it. As the new Edelman brandshare™ study shows, brands who ignore this new sharing revolution do it at their own cost. By losing control and allowing your own brand to become individualized you will empower individuals to love you, connect with you and advocate on your behalf.

At the same time, you will also lose control of what your brand looks like. Conversations with consumers won’t stop at Likes. They will want to be part of the design process. In many cases, they already are – go design your own Timberland boots or Nike’s today.

This mega trend will also influence how companies implement sustainability across their value chain. As technology and transparency make the world smaller, consumers will be driven toward making everything personal – and leveraging the power to know where their purchases came from, i.e., manufactured, sourced, farmed, etc. It’s already possible – we can trace coffee, wine, water, cocoa and even diamonds to any specific location today. And this is already playing out in the marketplace with sales of fair trade coffee outstripping the sales growth of traditional coffee.

As individuals design their own products they will also have the ability to pick the ingredients and/or materials, enabling them to make ethical choices from the source right through to disposal. As a brand, your ability to control your supply chain will thereby become even more important – because your consumer will drop you if you can’t give her the right goods to make your product.

2. Two Classes

Income inequality is growing faster than ever before. The rich aren’t just getting richer – they are getting richer at a rate that is bad for the U.S. and global economy.

Simply put, income distribution in the U.S. and in the world is unsustainable. This isn’t an ethical issue but a sustainability issue. I am not making a judgment call on whether the rich should or should not own as much as they do or whether CEOs should get paid as much as what they do – I am merely looking at the impact of this fast growing income inequality. The impact hampers economic growth and, as the fall of the Roman Empire showed us, huge income inequalities are bad for countries. Today, the U.S. has a worse level of income inequality than the Roman Empire.

The long-term solution? Either get rid of it or find a way to ignore it.

The problem with the rich in Roman times was that they could not find a way to cut income inequality. They gave a little bit away but never did enough to change the underlying systemic problems and reasons for income inequality. The same is happening today in the U.S. and the world.

Universal health care gives the poor(er) a little bit of breathing space but does not challenge the nature of the economic system and the underlying challenges: an obsession with fast growth, short-term investors addicted to high profit margins irrespective of values, too-big-to-fail industries and companies rewarding high risk takers, and a reward system that encourages investors and business leaders disconnected from long term business and societal needs.

This growing income inequality isn’t just a widening of the gap between the rich and poor but, more importantly, changing the nature of the middle class. The middle class has always been the bridge of hope between the poor and rich but now they are carrying an economic burden beyond their means and fast losing pace with the rich.

The new class system, unfortunately, isn’t between rich and poor but rather those who benefit from the system and those who “hang in there.”

While clearly unsustainable, there is little that can be done within the current economic system to alleviate this trend. The result: people will become even more entrenched in their class, defining their needs and wants according to their economic status – an acceptance of life rather than striving towards a new economic class.

However, this financial divide will also create a different kind of economic and social divide. Where you live, eat and play; what you buy and watch; and who you interact with, will increasingly be decided according to where you fall in this economic divide, creating a need for economic and social systems that can cater to both societies. You already see this with where people shop, what they drive, where they eat, what they watch, buy etc. Expect this trend to increase even faster over the coming years.

Examples can already be seen in the fast growing sharing economy as growing income inequality creates a new economic model that encourages sharing resources for financial gain – aided by developments like the growth of social media and the move toward cities. Uber, Sidecar, AirBnB, etc. allow anyone to start their own business and make it personal – but I bet their target audience isn’t those who buy Ferraris or who stay at the Four Seasons.

It is, in fact, a combination of all these trends that is leading to a major shift in how people are adapting the capitalist system to address their needs – but away from the big business model. And regardless of the outcome, it is clear that the impact will change the very nature of business in years to come.

3. 3D Printing

Like the stories of rock bands, the instant sensation of 3D printing has been 30 years in the making. While, the discussions today are about immediate controversies such as printing guns, the real disruption with 3D printing will be the ability to print stuff we use every single day – it is already printing apparel and footwear and food, and even human organs!

Imagine the future in 50 years when we will be able to print everything we need from our homes or local 3D print locations. Our food, clothes, furniture, even replacement organs and everything in between. The challenge is not the technology but the delivery of the “ink” to the printers. Traditional transportation methods – trucks and trains – won’t be able to keep up with the demand, likely leading to delivery via pipes and cables, much like gas and water today.

While 3D printing has the potential to have significant impact on infrastructure development and transportation, we are decades away from fruition. Today’s infrastructure is not geared toward delivering the world of tomorrow. Expect a transformation of cities and how we live and move around, which will lead to enormous changes across supply chains globally.

With people printing their Levi’s or Timberland’s or even the Big Mac at home, raw materials will be able to skip the middleman – the manufacturer. In other words, 3D printing will complete the move from brands controlling both design and manufacturing to becoming nothing more than design houses.

4. New Generation Gap

The last mega trend is the way social media is changing how we experience information and form relationships. There is a new generation gap between those who see new technologies and social media as an additional way to communicate and interact and those who see it as the only way to communicate.

Social media does not replace personal experiences or the importance of building physical presence to start a relationship – it enhances those relationships. It is an additional way to stay connected with your “network” no matter where they are. And, of course, another way you can consume.

But the younger crowd experiences this new social world differently.

For them the new technology is a natural extension of how they make friends and interact with the world. A snapchat is as good as a handshake. The need for physical interaction is not necessary any more to build trusted relationships anymore.

This is a huge shift in how humans have developed relationships and organized themselves. The suburb of tomorrow has gone digital – a place where people go to be with their own community. And then they step outside (if they really have to) to go to work. Social media, like little else, will change the landscape of tomorrow completely. Mega cities just need to connect to us via wireless. We can order cars through a sharing app. Work is a video away.

In other words, social media confirms the move to the personal and will challenge how we organize our social, economic and political systems.

So what will the world of tomorrow look like? Will it be a world of selfish individuals printing their ideal partners at home in their connected mega city apartment? Or will it be one where the individual is celebrated as making up this new connected world where we share what we can eat and print?

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Something has been bugging me for a while now. It’s not a new issue but something that has been slapping me on the head daily for the last few months more than it has done in the past. Maybe it is the continued economic struggles the world is going through. Maybe it is the Occupy movement. Or maybe it is just me in desperate need of a vacation on my dream island of Kauai. Whatever the reason might be… The question I ask myself is whether we working in sustainability/CSR/Shared Value (or whatever you call it) are dealing with the fundamental challenges the world face today or are we just working on some of the symptoms and applying band-aid to a sickness that needs much more than what we have to offer?

I don’t question that we are doing the right thing for the right reason. We are trying to make this world a little bit more sustainable. We are trying to make companies be more responsible as good citizens of this world. We are trying to prove that good business can be done by doing good. That capitalism with a heart is possible. That money can be made by sharing value with society. That business has a social purpose that it should embrace. Yes, we are doing good work and we are making a difference. But is it enough?

The world is consuming at levels that are unsustainable. We cannot consume the way we have in the past and expect everything to be okay. But the economic system that we live and survive on is based on more consumption. Consumption of products. Consumption of credit. Consumption of energy. More and more of each and everything.

We’ve seen where this has got us so far. The rich are getting richer and the poor are getting poorer. It’s been like a frog being boiled. It’s been a slow squeeze on the middle class and the working class over decades. When the system started running into problems we the people adapted and everyone started to work to pay the bills and buy those things we need – and those things we want. But income didn’t keep up. And slowly the world got into more debt to stay afloat. And then the bubble when kaboom.

The same is true of the environment. We consume so much more crap food, in the West especially, that farming had to change from providing us with food to providing us with GM foods, hormone injected meat, fields of corn for sugar and cereal and everything you can think of, and so much more crap. All because we wanted more and more of this crap food to feed our greed and insecurities. And we manufactured in ways and drove our cars without knowing that slowly but surely we are choking the world and messing with the climate.

And so it goes on. We know how we got here. We got here because we believed we needed things when we really just wanted it. And lines got blurred more and more between need and want. Between necessity and luxury. We consumed and we consumed and we consumed. It worked for a long time. It fed us and made us wealthy – or some of us. And we got addicted to it. Growth, growth, growth. The bigger the better – in what we have and how we looked. We consumed ourselves to a standstill.

But the “system” cannot live any other way. How do we get out of the economic slump? We’re told by consuming more. A key moment for me was when then President  Bush said right after 9/11 that people should go and shop and go on with their daily lives as if nothing happened. Well, something did happen. The same is going on right now. The world is suffering on a societal and environmental perspective. The world is a very different place from 3 or 4 years ago. But we’re told we need to consumer more to get us out this slump.

I always tell my kids and my clients that we can’t expect different outcomes by doing the same thing. The same is so true for us right now. We can’t go on the way we have and expect the outcome to be different. We cannot consume the way we have and expect a different outcome. We cannot do business the way we have and expect a different outcome. We as humans know this when we hit our heads against a wall – we stop doing it and go around the corner. We’re not stupid. Or are we?

So what does this have to do with sustainability? Well, we’re still telling people to consume. Yes, we are telling them “buy this product because it is so much more sustainable”. Energy? We’re not asking people to cut down on their use but rather to use renewable energy. Okay, sometimes we ask them to use less energy but not really to buy less energy using products. Do you really need so many televisions? Do you really need 2-4 cars? Do you really need a house that large? Do you really need spend so much money during Black Friday? No one is advertising asking people to please not buy so much of their products this coming festive season. Very nice of Patagonia to say they want people to buy less but we know they aren’t really saying that they need to grow a little bit less. Or not at all. They still want to grow but hoping that people will buy the slightly more expensive and sustainable product or buy the Patagonia product instead of buying from a competitor.

We in sustainability and CSR are making the world a better place. I don’t doubt that for a moment. If every company does what we in sustainability and CSR want them to do then we will be in a much, much better place. But are we dealing with the underlying weakness of the system or are we delaying the hurt to the next slump? Put it this way. Would the world be in a better economic place if every single product is made in the most responsible way possible? I don’t know – but I think we would’ve been heading to the same problem if we didn’t address the underlying addiction to consumption and growth.

That is really the 3 pillars of sustainability – product, profits and purchase.

Product – how the product is made. Make it as sustainable as possible. Make it by using renewable energy, sustainable sourcing, manufacturing without exploitation etc. Make it the best we can. And make the impact on society and the environment as light as possible.

Profits – do your business to make a profit. No business can live without it. It is at the heart of business. But don’t confuse profits with growth. We’ve become addicted to growth because of the shift in investors from long-term to micr0-term. Not even short-term anymore. That would require a day or a week or two. The majority of investors of today don’t give a damn about the company and what it makes – only about the return they can get in the next 5 minutes, or seconds. And they are holding businesses ransom. We saw this during this recession. Profitable companies laid off workers. How is that for commitment? They didn’t say “we’re struggling on the growth front but still profitable – so we’re going to knuckle down and work, work, work to get out if it but won’t let our people go as long as we are profitable.” No, they let people go because the micro-term investor demanded it. Puh-lease don’t talk to me again about your employees being your greatest asset. Your don’t sell the crown jewels with the first sign of a bit of a struggle.

Purchase – people need to buy your stuff for you to be profitable. But the reality is that we also need to get people to buy less stuff. This is at the heart of the challenge to business. How do you make stuff and sell stuff but make sure people buy less stuff. Guess what… I don’t know.

There is another “P’s” we have to address within the system as well to make the world truly sustainable. Parity…

Parity – we can’t live in a world where so few has so much and so many has so little. It is not sustainable. It. Is. Not. Sustainable. Get it? The gap between the highest earners and the lowest earners are just too wide. The gap between the 1% and the 99% is unacceptable. The gap between the pay of the executive and the lowest paid workers is not good for the company or society. No one is asking for 100% equality in pay. But the gap is just too damn wide. It is greed and nothing more. Any reason given is just snake oil. It is not just and not right. And more importantly, it is not good for business and it is not good for capitalism.

But it goes further than that. The West cannot consume the way they have and allow the rest of the world to slowly die. We live in a global world. The West is the 1% and Africa is the 99%. It is not sustainable. It is capitalism gone bad. It is the dark underbelly of greed. It must stop.

So until then we in sustainability are using band-aid to deal with a much more serious disease – unless we start seriously dealing with all 4 of these P’s – Product, Profits, Purchase and Parity. The challenge is we can’t do this on our own. We need to widen our circle because this means we need to forge new partnerships outside of business to get this right. But that discussion is for another day.

Now I need to get to Kauai to consume some sun.

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Sustainability should be much simpler than what we make it out to be. It’s not very complicated – take actions today that leaves the world in a better or no worse place for future generations. But the devil is always in the details. And this made me think a little of what are the different levels of sustainability. And how the concept of sustainability and the current trends influence business in the future. I’m sure this is way too simple so feel free to chip in and help define the levels of sustainability. These are rough thoughts that was hatched during my daily commute on public transport and therefore very rough…

Why make these distinctions? Because it helps us know how to work with and help each company. They are all very different and needs to be treated differently. Many moons ago I had a client who asked me to help them become “like Timberland”. My response was pretty straight forward – “You know you are an extractive company, right?”

More importantly, it helps us think of the future of sustainability. We know what a sustainable future should or could look like – what role does business play in this future?

1. I don’t do sustainability

There are many companies out there who just plain do not believe in sustainability. They believe in one thing and one thing only – increasing their ROI for the next few days. Even a quarter is a long-term vision for them. They will campaign against anything that asks them to take their impact into consideration – climate change, labor rights, equality in the workplace etc. They will comply to local laws because they have to and not always because they want to. That’s why they lobby and fight against so many of these laws. They will take subsidies without thinking of their own responsibility. They will cut corners where they can – and in most cases stick within the law. They will sell you snake oil and call it green. They’ll do the minimum and think that is the actions of a responsible company. They will use meaningless words and phrases that sound cute but mean nothing like “the business of business is business“. I won’t spend too much time on these companies. Arguing with them is a losing fight. They see what they want to see and nothing we can say or do will make them change their ways. I won’t invest in them and I won’t work with them. There are just too many other companies trying their best and who needs counsel, help and support. Let’s rather focus on those who see the sustainability of their company and the world as linked to their business bottom line. In any case, I don’t believe these companies will survive for long. History shows us that companies that think this way eventually just die a slow death. Eventually society will see them for who they are – in it for themselves and not really part of society.

2. I act responsibly

Of course there are a range of companies who just aren’t sustainable. The nature of their business and/or their current business model means that they can act responsibly but the company itself cannot be seen as sustainable. They must change how they source or manufacture over time to become sustainable. It doesn’t mean that they can’t be good corporate citizens. Many if them are good citizens who act with great responsibility. I see them as the CSR group rather than the sustainability group – a small but important distinction. Let me use an industry as an example. Most companies in the extractive industry just cannot be seen as practicing sustainability. They take stuff from the grounds and can’t replace it. They can’t leave that specific world in the same or better place. It’s a stretch for them to claim that. I worked with a very well respected luxury goods company and they refused to use the word sustainability. When I asked them why their response was “Because we mine diamonds and can’t put it back. And eventually we will run out of diamonds.” When will they run out of diamonds? Who knows! But the principle is right. But they do incredible work – one of my top 5 companies when it comes to CSR. Incredible work. They do everything right when it comes to sourcing their diamonds, adding value in developing countries where they source from, refuse to buy rubies from Burma, lobby against unsustainable mining practices – they tick all the boxes. But the nature of their business means they take full responsibility of their impact and are incredible corporate citizens – just not sustainable. This is in no way knocking them. Many of these companies do incredible work in difficult circumstances and delivers a product we desperately need today (and tomorrow) – we can’t live without them. I am proud to be associated with them and to work with them. So many of them are shining examples of what responsible businesses could and should be doing. Those in the group who practice sustainability can learn from these companies on what true responsibility in communities and supply chains mean and how to measure and reduce your impact in the world.

3. I am sustainable

Sustainability is slowly but surely becoming mainstream. More and more companies are embracing the discipline of sustainability to build a better business for the future. They have practices that highlight what can be done to make business work and help secure our joint future. They source in ways that do not deplete these resources. They take action on their energy use and tackle climate change in action and voice. They treat workers with respect and speak out against injustices. They will help their suppliers to become more sustainable themselves. They will take responsibility for their products and empower consumers to take responsiblity where they have a joint responsibility – such as driving recycling with consumers. These are the companies who are the leaders of today. They believe in values adding value. They know their future business success is tied to the sustainability of the world around them. The way they operate, source and manufacture, ensures they still have the ability to operate this way in future – the resources are replenished to ensure a better or same tomorrow. The world will be a poorer place without them. In so many ways.

4. I help make the world sustainable

This fourth category is the one that bugs me the most. It’s the most challenging and most complex. Maybe I should break it up into more levels of sustainable businesses, but for now I will keep the three distinctions of this group here.

The easy part is identifying those social innovators and entrepreneurs who focus on developing a business solution to a social problem. They are different from group 3 mentioned above because the nature of the products and services of group 3 is not aimed at a social problem but more about the “wants” of people. Most of the purchases of today are not because we need it but because we want it. We think we need a tablet but we don’t really need it, we just want it. A smartphone is a luxury and not a need. How many pairs of shoes do you need versus how many you want? Companies who are in group 3 still sells products in the “want” category but do so by taking responsibility for their actions and impact by making sustainability part of how they source, manufacture and take responsibility for their final product (waste etc). The social innovators focus on creating products and services society needs – new ways to get clean water to the poor, medicine people need to survive, nutritional products aimed specifically at groups in need, renewable energy solutions in challenging environments, energy-efficient cars (it’s more of a need than want if you only have one car!) – and much much more. They link the need of society to new product or service development and build a business around that. In some cases they might be a non-profit but the principle is still providing a tradeable solution to societal needs – micro-financing is a classic example.

Some of the companies in this category falls outside of this social innovation group though. They are still innovators but they actually focus on the want and not on the need. They develop new products and services that still deal with the current consumer behaviour of buying more stuff that is cool. They tap into the pop culture and fashion of the day and gives it a unique spin by giving it a social value over and above the hip new product. Think of TOMS. The product they sell isn’t unique and neither did they bring a product to life that deals with a specific societal need. They tapped into the mainstream consumer market by creating a cool new “I-want-that” product that has a huge societal benefit attached to it. The business model is very unique but the product itself is not. The concept itself is not that unique either. It is a logical evolution of cause marketing coming into maturity. From attaching a cause to a product to the cause becoming central to the product concept development itself.

The 3rd and last group in this category is the one I struggle with the most and my ideas are still only half-baked here so please feel free to rip it apart. But humor me for a moment.

All of these businesses in this group and the other categories still work within the system we know – sell more products and services to consumers. It operates within the current system. The challenges we face as a society today is challenging this system though. The question being asked is whether we can continue to expect these levels of consumption and be a sustainable world? I’m not talking about a narrow definition of sustainable consumption. Sustainable consumption debates have focused on selling more sustainable products and taking responsibility for your product post-consumer- whether it is how they are manufactured or used. The premise remains the same – sell more stuff. Sell stuff to increase ROI by creating new markets or pushing market share.

Is this system itself sustainable though? Can we really expect to build a more sustainable future by maintaining the same credit levels and expecting people to continue to buy more things? Let me give you an example… Are we any closer to sustainability if every single pair of shoes sold in the world now and in the future is made by TOMS? If we buy TOMS at the same rate of growth – does that make the world sustainable? TOMS might have a great business model but the world can’t handle buying at the same level we’ve had over the last 10-30 years – even if it is TOMS…

That is the essence of the challenge for companies – how to change the business model to remain profitable in a world that needs lower consumption levels and somehow keep investors happy. This would be the next level of business and sustainability. But this is a balancing act that is asking a lot…

The honest truth is that I have no clue how we can do this. Like I said, it’s just something that is bugging me at the moment. Somewhere the answer lies and I believe that good businesses, and society in general, will come up with an answer. We don’t have much of a choice as the runaway levels of consumption is not sustainable. And neither is the continuous pressure on the business bottom line via squeezed margins and market share. We’re close to a tipping point.

This goes way beyond the “Shared Value” concept. Shared Value argues we look at where business and society intersects and finding the joint value in that relationship to drive business and societal benefits. But what if the real value is to share less?

I don’t have the answer. But it’s worth exploring the options as doing nothing might not be an option for much longer.

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Everything is green nowadays. It’s the talk of the town. Newspapers are full of the latest green apocalypse heading our way. Bloggers blog green left, right and center – with fonts and pictures to match. Activists are up in arms about green washing and washing our greens. Governments want to govern what green means. The celebs and stars shine their special green glow all over us. Business jockey to out-green each other. And consumers are turning green with envy when the Joneses outdo them with the latest hybrid, organic, recycled, wind powered and turtle free cup of joe.

It’s not a bad thing. Saving our planet before it burns is not a bad idea. Even if it won’t happen in the next year or 50 – depending on who you believe. Having a tree dedicated to you somewhere in the DRC ensures you a retirement spot one day. And some of the ideas even save us some money! Switching light bulbs save us money – even if we can save more by switching it off. Getting 60 MPG is not to be sneezed – especially with the high gas prices. Although most small European cars can do that on flat tires.

But not everyone cares about the changes in our climate or the validity of the latest eco-friendly product. It’s pretty much a worry of the more privileged parts of society – the rich and middle class societies. You don’t switch to CFL lightbulbs if you don’t have electricity. You don’t really care about organic food if you have to worry about where the next meal is coming from. Or worry about renewable energy if you don’t have a roof over your head. But you might become greener even if you don’t care. Governments will continue to green the things we buy. Activist will continue to put on their green campaigning hats. Business will continue to grow and make greener products. And bloggers will continue to out-green each other to be the next Big Green Voice of Authority. All of this will continue to make everything we use and buy greener than before – even if we don’t care or want it.

But green means almost nothing outside of the big markets – mostly in the West. There are bigger issues facing people in places like Burundi, Zimbabwe, Niger and Liberia. They continue to struggle to survive each day. The cheapest bidder always wins when you live off less than $1 a day. And you don’t know if there will be a tomorrow if you live in Malawi or Botswana – HIV, TB or malaria can strike at any time. And who cares about the rainforest if you could be killed by a landmine in Angola or a warlord in the Democratic Republic of Congo. Or care about sustainable farming when you have no food in Somalia.

The number one aim is to survive. If that means eating the last Rhino or chopping down the last tree for firewood – then so be it. Planning for day 2 comes when you manage to get past the survival stage. But this doesn’t mean you are going to start farming in a sustainable way. Or buy renewable energy for your manufacturing plants. Nope, you are now just planning for day 2 – securing tomorrow and competing with your neighbor. India, for example, continues to argue that they will start thinking of their impact on the climate once they are allowed to create as much trash per capita as the US – read: ‘you stuffed up your environment to create wealth, why can’t we?’ The alternative, of course, would be to pay the developing countries to play the game. We know where that debate will end up. They can’t solve trade and aid – imagine eco-aid for sustainability at a large enough global scale…

It is only when you don’t have to worry about might happen to you tomorrow – food, security, health, housing, job etc – that you can start worrying about tomorrow itself. Green debates will remain a rich and western debate and concern – unless we start dealing with these more immediate concerns that the majority of the world population still face day after day.

It doesn’t mean it is right. It’s just the way the world rolls. We can’t talk about sustainability without looking at dealing with poverty, diseases and the quest for survival so many in Africa and elsewhere struggles with each day. We must balance all three pillars of CSR and sustainability to make it work – economic, environment AND social. So often, and too easily, we forget about that third pillar. It’s three pillars to help us focus but it is one single strategy when we implement.

And this is where business plays such a crucial role. They can create and deliver the products to deal with the diseases and hunger, they can advocate and lobby for the political changes needed, and they can invest in countries who need the economic lift and hope for a better future. Governments will play the political game, activists will be crucial in highlighting the problems and help run programs on the ground. But they can’t create wealth, they can only fight poverty. Each one plays a key role. Governments provide the supporting framework, NGOs fight poverty and deliver during these emergencies and business (large and small – multinational and the woman selling fruits in the market) grows the economy to bring a sliver of hope. And in this hope lies the future of sustainability. But we are not there yet.

In the meantime, newspapers will chop down trees to print their green stories, bloggers will use computers and networks created and supported by nonrenewable energy and conflict minerals, activist will spread the word flying all over the world – and push up their emission count, governments will continue to make war over oil, celebs and stars will drive their stretch limos and live in their big houses, business will continue to confuse eco-friendlier with eco-friendly, and consumers… well, they’ll continue to buy what they want. Green or not.

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This post was originally posted on Vault’s CSR Blog - a great resources and a huge thank you to Aman Singh! It was part of a discussion between Alberto Andreu (Chief Reputation & Sustainability Officer at Telefónica)  and I on CSR and Sustainability. He countered with a great post. Great guy and great thinker. It was an honor to have such a constructive discussion with someone like him.

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I am afraid Alberto and I violently agree with each other on the most important aspects of CSR: Where it comes from and where we are today. Where we might not agree as much is whether this is still CSR.

In my view, CSR is not a revolutionary process but one that continues to go through many changes—an evolutionary process. The graphic below is my first attempt to describe this evolutionary process.

Phase 1: Philanthropy

In its initial phase back in the 1970s, CSR was all about philanthropy and what business should do with some of its profits. Small shifts in thinking pushed this early form of CSR forward. Companies became more strategic with philanthropic initiatives and tended to focus on projects in their local communities. This eventually grew into Corporate Social Investment that brought a business sense to philanthropy – focusing on results and outcomes.

 

Phase 2: Globalization Forces Standards

Slowly, globalization started shaping our world more and the impact of business in this globalized world became an increasing focus for activists. From a narrow focus on philanthropy we moved into an era of citizenship. Companies became business players in a globalized world, or, as it became known, Corporate Citizenship.

They started developing standards to manage their risks. This led to the need for global standards – from extractive companies and human rights to how we report on CSR today.

Phase 3: Citizenship-led Cause Marketing

When the term cause marketing was initially floated, CSR became something business could benefit from for the first time. It was a huge shift in how we perceived CSR,– not just risk management. This benefit-based approach brought operations back on the table leading to the development of CSR as a business strategy.

Now, CSR was suddenly not about cutting costs but about increasing profits.

Phase 4: CSR & Sustainability Tied with Future Business Growth

The latest evolution of CSR, or sustainability, has taken this concept of business benefit even further and started looking into the future of business and society—the heart of CSR. Sustainability today looks at finding mutually-beneficial solutions to the challenges we face as society as well as future challenges.

But CSR, even today, is  still about how business can operate profitably within this role as a responsible citizen toward society.

From Reactionary to Risk Management

We have moved from a reactionary model of philanthropy to a crisis-led model in the early stages of globalization to a risk-based model in citizenship to a mutually-beneficial business model in sustainability.

We might have seen our understanding of CSR deepen throughout this evolution but the definition of CSR hasn’t changed much over time—CSR is the way a company manages and communicates its impact on society and the environment.

Many of the individual parts of this evolution (Philanthropy, standards, etc.) remain with us today but these are not the only parts of CSR anymore. We’ve adapted and moved on – keeping the good stuff, improving on them and adding to it.

The world of CSR is very, very different today. But it is still CSR.

An Argument for Terminology: Corporate Social Responsibility Fits Best

While this might be somewhat semantic in nature, it is still an important part of the debate: We should look at the description of CSR itself. Why do we use these very specific three words to describe what we do?

I would argue that the concept is actually a very good description of what we do today. Here’s why:

Corporate implies that this is about business.

  • It not only describes that we are busy with a discipline involving business but goes deeper.
  • It is about profits – how we make them and how we can make more of them today and tomorrow.
  • It is not about charity.
  • It is about building a sustainable business model that will continue to deliver business results for stakeholders – especially shareholders.

Social tells us this is about society.

It is about the impact business has on society and how we can manage this impact to ensure both business and societal benefit.

Even the environmental part of CSR is about society – how we can minimize environmental impact to benefit society in the end of the day.

The new developments in CSR – sustainability – further continue to prove that CSR is about a mutually beneficial relationship between product and service development, and societal value chains.

Responsibility reveals that business does carry a responsibility in this world – to do business in a way that benefits both business and society. Further, this responsibility gives business the opportunity to create new solutions to the needs of society. I would even argue that it is their responsibility to develop these new solutions and benefit by capturing new avenues of sustainable profit.

All three concepts—Corporate, Social and Responsibility—tell us exactly what we do today. CSR is also the perfect reminder of the relationship between business and society, and the responsibility they have towards each other. None of the other concepts proposed today actually tell us what we are doing and what we should be doing.

I say, long live CSR, and may it continue to evolve and change our business world for the better.

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Can you remember the first time the two of you got together. The stolen looks, the uncomfortable moments of silence, the tripping over your sentences, the sweaty palms, the he-likes-me-he-likes-me-not thoughts, the private meetings when no one was looking, the uncomfortable first meal together. Yes, I am talking about stakeholder engagement. Just as with any relationship in the early wooing and courting stage, stakeholder engagement is never easy at the start.

Most companies just don’t know how to talk to activists and campaigners. Hey, make no mistake, activist hardly knows how to talk to companies either. But they don’t need companies to like them as much as what companies need them to like them. Or at least leave them alone and not target them.

Don’t feel bad when they target you. It happens to the best of companies. Sometimes it makes sense and sometimes not. I remember seeing an anarchist kicking a Nike sign at the battle of Seattle in ’99 – while wearing his Nike shoes and top…

But there are a few tips you should follow if you decide to engage and start courting. This is not an exhaustive list. Just a few tips to get you through those first uncomfortable early stages of stakeholder dating.

Firstly, do your homework and find out a bit more about the NGO and what it regards as its ‘bottom line’ – it is unlikely to be financial! I was invited to speak to the global affairs team of a very large pharmaceutical while I was at Oxfam (I headed up the Access to Medicine Campaign for a while). I was shocked to hear that the majority of people at the company thought that Oxfam only worked on health issues. And this happened when Oxfam was in the middle of their Coffee Campaign! Dig around a bit first and find out what the NGO does and what is their mandate. Most of them are registered with a constitution that states what they should focus on and how they should work. This will help you understand whether there is any potential for a longer term constructive relationship – or just a one night stand. Also a good tip when you start dating – know who you are dating. Except if you like blind dates.

Secondly, respect the differences between NGOs by not lumping them all together in the same room for a consultation exercise – NGOs are proud and competitive too. You wouldn’t want them to call a whole bunch of companies together and still expect special treatment just aimed at you. You should respect their differences and treat each one differently. Rather meet each one separately in an environment that works best to put them at ease. Meet them where they feel most comfortable – maybe at their place. Especially if you want to build the foundation for a long-term relationship. And even this should work best for real dates – don’t bring all your prospective dates together in the same room. They might just start sizing each other and you will be left with no date at all.

Thirdly, don’t make the mistake of thinking that you are the only company that is the target of the NGOs campaigning efforts, or that the NGO hasn’t other programs and projects that may have nothing to do with business. Just as with the large pharmaceutical company I mentioned, most NGOs have numerous focus areas and different programs and projects to try and achieve their overall goals. And most large campaigning NGOs have various campaigns going at the same time. They might have one single broad focus, but it plays out in different campaigns and programs. For instance, Greenpeace might be about the environment, but they focus on climate change, oceans, forests, genetic engineering and nuclear issues. So your company might only be a small part of their focus and interest. Same with real life dating. A friendly smile does not mean they want to date. It might just be a friendly smile.

Fourthly, start by talking, learning about each other and building trust rather than starting by expecting ground-breaking strategic partnerships. There might be a few obstacles to overcome – perceptions of what ‘big business’ is all about and a feeling that you want to ‘clean’ yourself by associating with them. Take it easy and just talk. Let them get to know you. Don’t create expectations. Just listen and learn and see where this might take you. Again a good tip for real life dating as well. Don’t ask them to marry you or expect ‘the commitment’ on the first date – it might just scare them off.

Lastly, remember that cash does not necessarily have the same currency as it does when buying products or services from other companies. First and foremost NGOs want to affect change. But they don’t always see money as the way to achieve change. Yes, some of them have huge budgets and operate like multinationals. But they generally have strict guidelines on receiving money from companies. For instance, Oxfam will not accept money from companies that fall within an industry they target in their campaigning. They might not even accept money for travel – never mind for a program. They would rather see you ‘do the right thing’ than pay them to do something. Okay, this one is less relevant for real life dating. Money generally impress prospective dates!

Okay, one more tip. Don’t expect them to agree with you on everything. And don’t make this a prerequisite for your potential relationship. I love my wife to bits. But we only agree 80% of the time. But we don’t let the 20% of the time we disagree define our relationship. No. Focus the relationship on what you have in common and don’t get stuck on the differences. It’s part of being human – we are all different. And the same for companies and NGOs – we are all different. And I learned that I am wrong 20% of the time in any case. Just ask my wife.

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The UK and Europe is so far ahead of the US when it comes to CSR. If I only had a penny for everyone who said this. I hear this almost every single day. And not just from those in England who have a slightly superior attitude when it comes to CSR. I hear it from people here in the US just as often, if not more often. The truth is that we are comparing apples and oranges. Is cricket better than baseball? Only if you are from England. Although you wouldn’t know that from recent results – excluding the Ashes. And you would only like cricket more if you enjoy sitting in the sun and rain for five days and still not get a result. But I digress. They are both ball sports but they are vastly different. They might even share a common history, but that is where it stops.

I’ve noticed small differences as well. In the US companies focus often on what they do in the community – their communities. How you interact and how you support them. Europe tend to focus more on how you run your business in a responsible way – it’s about operations and how you work. The impact is important to both, but in the US you look at your community and their needs first and the way you work in your community might have something to do with the way you operate, but does not have to. In Europe you focus on your role in society through your operations and the impact you have, and then you improve on these. Through these operational changes you will have a more positive impact on society. Both benefits society, but they have slightly different points of departure.

The reason why the community focus is so central in the US is because there is less of a safety net in the US than in most of Europe. People do not expect government to solve their problems or protect them from every single little thing in life. No, people do that themselves and they tend to look after themselves and sometimes after each other. They expect to solve issues themselves. Americans like the idea of less interference by government and more control by themselves in taking responsibility of their own lives. It might have something to do with the open spaces, but Americans do not like people telling them what to do. They want to be masters of their own destiny. Less government and more power to the people.

In the UK and much of Europe there are much more of a reliance on government to interfere in daily life. People expect government to take more control of their daily lives and maintain the rules of how society engage and organize themselves. The rules of engagement. And they want government to identify the common areas of good that will help improve society. Government will tell you what is bad and help you to become better. All that is left for companies to do is ensure they do their best through operations and compliance to government regulations.

That brings me to a second and more important point of difference – regulations and compliance. Corporate behavior is managed through regulations and compliance in the UK and Europe. Everything you do is regulated and not left to the company to try to innovate on their side. Any leadership position you develop is very quickly turned into a government requirement. (Your window of opportunity to show true leadership will stay open for a very short period in this environment). Yes, European companies do some amazingly innovative stuff but just notice carefully how much of that innovation actually takes place outside of their own borders – where they source from or manufacture.

It helps that there is a strong central government in Europe. It makes it easy to push through new regulations. And it is even easier in Europe where the European Commission is hardly held responsible by ‘the people’ and have an almost free ride in bringing in new regulations. No wonder that Europe brought out regulations to define what a banana is – up to the curve needed to be defined as a banana. And I am not joking…

And it is also easy to bring in new regulations in the UK. It is a small island with a central government that runs the rule over everyone. Yes, Scotland and Wales have some autonomy, but the UK is still pretty much ruled from London. It is easy to understand the drive towards more regulations with so much power in the hands of a central government. It is in the nature of government to try to rule their own way. And each new government want to leave behind some kind of legacy. And what is easier than to bring in new regulations that can be sold as ‘for the good of everyone’.

One dynamic that makes this possible in the UK is the level of stakeholder engagement by the government. I was amazed to see how little joint constructive meetings between business, government and NGOs take place in the US. When I lived and worked in the UK it was so different. Regular meetings with all these key stakeholders together – and working together to fight and find solutions. Not over here in the US. It’s about lobbying and individual actions – and at best a few partnerships that will include the usual suspects of progressive companies and engaging NGOs. But not in the same was as over in the UK.

But the regulatory approach is different in the US. States control their own destiny much more than any regional authority in the UK. The federal government does not have the power to control everything. Even taxes are different from state to state. And some states like Massachusetts might regulate more towards the protection of people than those in say Texas, but it is up to each state to decide what is most relevant for their state. Federal government can provide guidelines and try to push through federal laws, but this is generally fought tooth and nail by states. The art of the federal government is to try and keep a balance between inching forward on the regulatory front and encouraging states to take control at a local level. But change happens at state level and not federal level.

This approach allows for companies to take more risk in trying out new practices and to develop a leadership position. They know they can bring in these practices without the danger of it being regulated to death. Yes, it is a fine balance. They still have to tell the truth in advertising and not make claims that can’t be backed, but they can be more risky in taking chances. Over in Europe it is slightly different. The aim of regulations is not to bring best practice into law, but to rather identify the lowest common denominator that could be passed as acceptable behavior by companies. I know, both have a place – best practice and lowest common denominator. In the US they lean more towards the former and in Europe more to the latter. It fits their societal and political needs.

Of course the US does have one thing that ensures that the lowest common denominator is ‘self regulated’. The I-will-sue-you culture. You make one mistake and the consumer will take you to the cleaners. Yes, it is out of control, but it creates an incentive for business to not do something that can harm the public. There are enough lawyers here to ensure that you will get sued. Businesses in Europe can hide behind compliance of law and it is much more difficult to sue someone if they haven’t broken the law instead of suing because they didn’t look after the public interest.

And some of the regulations make the way companies act very different. For instance, both the UK and US have regulations regarding how foundations are run. And these are very, very different. US corporate foundations are not allowed to do any work that can directly benefit the company. This was put in place to ensure that companies do not see this as a way to hide money, and to ensure they spend their foundation money on what is good for society as a whole. Very different in the UK. Much more freedom to be strategic in the way they spend their foundation money. They can spend the money on helping suppliers of the company and still write it off under foundation rules. The unbelievable work the Shell Foundation (UK) has done in development in poorer countries would not be allowed under US rules.

This difference in regulations and the community/operations dynamics also impacts key aspects of CSR – such as stakeholder engagement and CSR reporting. GRI is flourishing in Europe but struggling to find a solid foothold in the US. But it makes perfect sense. Europe is more driven by regulations and compliance and standards such as GRI makes sense. Everyone reports in a structured way following a specific methodology. It makes less sense in the US where there is less regulatory pressure and a greater need to engage their communities and consumers. They target their communications according to the needs of the receiving audience and not the regulatory and NGO audience. And CSR reporting GRI style is not the easiest thing to use when communicating to consumers and communities.

The US also likes rock stars and celebrities more than anything else. Man, their news are pathetic over here – give me the BBC and Guardian please. Every second story is about some celeb and their latest escapade. And that plays out in the way company CEO’s act as well – not empty celebs but the need for visible champions. The CEO and Chairman tend to play a major role in the public view of the company. Bill Gates is Microsoft. Jeff Swartz is Timberland. Howard Schultz is Starbucks. Steve Jobs is Apple. And each one have to make their mark in this world. Not because they want to, but because people expect them to lead from the front – lead the way in how and what they give and the way they run their company. They are the people others look up to and aspire to become. These leaders drive change across all businesses and are needed in a less regulated business environment. They are by default the people who drive real change through their own commitment to making business and society better. Thank God for them.

Less so in Europe. Companies are seen as more important that the individual. A few has made it to the front – Richard Branson as one. But they stand out because they are so different from the rest. The focus tends to be on the company and not the individual who runs it. Yes, they play a role, but the company is seen as less dependent on the CEO and/or Chairman than in the US. Another reason why the UK at least loves splitting this role while the US wants the same person in charge. Two big personalities would be difficult to control in the US.

One area where the US is way ahead of Europe is in communicating their CSR. They tend to focus on the communications part more while Europe tend to focus more on the operational changes. Maybe it is because the European (UK at least) society is more reserved than the US, but it means that Ben and Jerry’s is more respected in the US than Unilever. But in the UK it is the other way around. Of course this can be exploited and can confuse the consumer. A classic example is the current discussions in Washington about ‘green’ advertising and marketing. But the best tend to rise to the top and consumers do know to take things with a pinch of salt.

In short, the US is different because it fits in with the way their society organizes itself compared to Europe. Both approaches have real value. Both approaches will improve the world little by little. Both approaches will have failures and successes. But the one is not better than the other. Just different. Dealing with their own little peculiarities in their society and political systems. Both work. And both fails. But the US is not in any way behind Europe when it comes to the role of business in society. No. They are just different. An US approach won’t last a second in Europe. And a European approach won’t survive a second in the US. The real challenge for them both is to adapt when they are outside their own borders, culture and comfort zone. For example, neither will last long in China or South Africa if they just try to continue working the way they do in their country of origin. New rules and new ways of operating is needed. They have to bring the best of their world and merge it with the societal and political expectation in these new countries. And that won’t be better either. Just better for that specific country.

But the discipline of business in society benefits from this dynamics – bringing different approaches to the table. And it is when these merge and mingle that we move further ahead in this CSR world of ours. Of course there is one approach that works no matter where you are. The South African approach. But I won’t be giving away our secrets just yet. No, I am way to responsible to do something like that.

And don’t get me started on Europe. I use the term loosely. Although they tend to have regulations that cut across the business sector, each country will have its own little peculiarities. Not in my wildest dream will I ever tell an Englishman that he (or she) is similar to the French. Or German. Or Italians. Or any combination of the above. Each to their own. No one is better. Just different and it is up to us to learn a bit from everyone to help us all be a bit better. That’s how we make CSR work – by making it targeted to the needs of each society and their particular needs and the way they organize themselves.

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We can all breathe a sigh of relief – the recession is over! Oops… Actually the recession was over in June 2009 already. So let’s get this party started!

But for some reason the public party hasn’t stated yet. The recession is over but the pain remains for the Average Joe in the street. No jobs being created and a drop in the average wealth of Americans just to rub salt in the wounds. But it’s been bad for everyone, no doubt. And we all did our fair share of suffering during the recession – some more than others. More importantly, companies practiced their responsibility during the recession, right?

A few things have really bugged me during this recession – or whatever you want to call it. It comes down to a simple question of how would a responsible company act during a recession. I’m not convinced that all companies acted as responsible as they should have during these tough economic times.

Firstly, it’s been reported that corporate cash in America is at a record high. The Fed estimated $1.8 trillion in total corporate cash balances in both absolute numbers and as a percent of total corporate revenue. A nice pile of money. And of course there are rational thinking behind it. They have good reasons for keeping the cash. But having a rational reason doesn’t mean it is the right reason. I feel uncomfortable knowing that it was the public money that bailed out so many companies. And that it is public money going into the stimulus that targets businesses of all sizes to benefit. And that people expect the public to start spending to get the economy going again. People are paying for this recession through job losses and rising public debt. My question – what should a company that believes it has a responsibility towards the public do during these times? Should it keep record cash stashed away for when the economy picks up or should it use that money to also help stimulate the economy? It just feels as if all expectations are on the average Joe in the street and the government to lead the recovery while too many businesses sit and wait it out until the economy has recovered. Doesn’t make sense when they always promote the idea that they are the heart of the economy. Really? And when the blood doesn’t flow as fast as you like you decide to stop beating for a while?

I believe a responsible company would acknowledge that they are as much of the problem as all of us – and do as much as the rest of us when trying to dig ourselves out of it. They expect us to start spending to get this economy going. We expect them to start spending as well. You don’t want us to put all our money in the bank right now. You want us to buy new cars, build new houses, buy more clothes, speculate on the market – make the little we have work for the economy. Ditto… We want you to invest in new fleets, upgrade your facilities, keep your workers… Make your money work and make it work now. I’ll do it when you do it. Don’t ask the public to do something you aren’t willing to do yourself. Stop giving us reasons why you are holding the cash. You might have good reasoning but not as good as the reasons why you should make that cash work now. It’s always easier to say why you won’t do something than doing the right thing. And remember, the quicker we get out of this the better it will be for all of us.

Secondly, this thing about those jobs not being created… I am always amazed how companies consistently tell me that their employees are their greatest assets. Really? But you don’t hesitate to “downsize” when the bad times roll? If employees are really the greatest asset that a company might have – how about keeping those crown jewels during tough times? Of course I understand that companies will have to fire workers during really tough times. And we’ve had really tough times. But let’s put these tough times into a bit of perspective.

Of course it makes 100% sense to let workers go when a company is making a loss. Companies cannot exist when not making money. But here is the catch. Many companies didn’t let workers go because of the losses the companies were making but because of lower profits. Many of them weren’t making losses, they were just making lower profits than before. That’s a huge difference. Making a loss means that you might have to close your doors and one of the only ways to save the company is to let a few people go – cut costs. But what if you are still making a profit but just lower than expected? Do you cut your workforce or define a new strategy to you can keep your “greatest asset” and be ready for when the good times kick in?

Maybe you should devise a strategy where you retrain those workers, maybe cut some hours off some of their time, maybe cut the bonuses and pay increases for all workers (including senior staff), invest in strengthening relationships with key customers etc – show your innovative spirit you brag about by finding new ways to keep your workers and stay profitable during tough times. Instead of laying people off you invest in them to be better placed than your competitors when the economy turns for the better? Your workforce will be better, sharper and your relationships stronger. I know a company who did exactly this and guess what? They actually grew at a higher rate than their competitors during the tough times and moved from number 3 in their industry to number 1. I’m just damn glad I work for that company… It helps when you have visionary leadership, your “greatest assets” believe in you as much as you believe in them, and we all work extra hard to make all of us better. Simple strategy? Yes. But it takes leadership to know that.

Maybe that is what a responsible company should be doing during a “slow growth” period. Instead of taking the easy option and letting people go you invest in them and grow your market share. Show you believe in your “greatest asset” as much as what you want them to believe in you. Leadership is defined not by what you do during the good times but what you do during the bad times. Relationships, loyalty, responsibility etc are defined in the same way – by what you do during the bad times and not the good times. The good times are easy but the bad times needs leadership, vision and balls.

But it goes beyond pure leadership. I think trade unions and employees were soft during these the recession as well. Too often they allowed the business side to frame the debate. They allowed business to panic and let workers go without a thoughtful strategy. Also, some companies used the opportunity to streamline their workforce that might not have been possible during other times. Cut human resources costs during the bad times always makes more sense from a risk and reputation perspective than doing it during the good times. Actually, it still comes back to leadership – what it takes to gear a company for the long-term and build a true culture of “great assets”.

You might not be able to create new jobs but you can show your responsibility as a company by not letting workers go during “slow growth” periods. It’s bad for all of us – every business suffered. But keeping your greatest assets intact and polishing them a bit will put you ahead of your competitors when the time comes. And now? Now you will be playing catch-up.

As a third point – the investor excuse. Of course many companies cut their workforce because investors demanded it. Those darn investors… They always want their 20% return each year. Actually, the 20% per year types aren’t really the problem. It’s those 1% week guys that are the problem – they want their money to go in-and-out and have no commitment to any specific business in the long run. So companies are under short-term pressure to show constant growth in returns. And if you can’t do it with growth then you do it by cutting costs. Talk about cutting off your nose…

Investor responsibility has been at the sidelines of CSR for far too long. We just can’t seem to get a grip on them. Maybe it is because we don’t know how to “sell” responsibility to them. Or maybe it is because many of them just don’t care. That’s for another day as Enron, BP etc have made a solid case on why CSR is important for investors… Here is a note for companies – how about you focusing on those who actually do care about you? We do. Us consumers and those workers of yours. We want you to succeed. Investors? The speculators amongst them don’t care about you one dime. What they do care about is the return they get from you in the next week or month. If they see someone better looking? They move on. They act like a 16-year-old who promises you the world as long as they can get what they want – untill they find the next hot one and move on. I’m 40-ish. I’ll stick with you if you promise to stick with me…

Last point on a responsible recession – patriotism. I was in a meeting a few weeks back with some of the best minds around. All of them geared towards helping a great company break through the clutter – they do so much that they create white noise instead of a clear position when it comes to CSR. Anyway, all these values were written on the board that reflected what the company stood for. And then someone said the “A” word – America… They argued that the company should show more pride in them being an American company with American values. Of course my first reaction was … WTF? I did point out that those values written on the board were no different from the corporate values practiced in my country of birth South Africa or the UK – or Europe. Or Japan. Or… The point was that most values are shared by various different cultures and that the differences are marginal not matter how much we like to tell ourselves something different.

But it did make me think about patriotism. The reason why the idea of American values were raised in the meeting was because the people in the room were pretty patriotic – and rightly so, be proud of who you are and where you come from even when you are more or less the same when compared to others. But what does corporate patriotism mean during a recession? Patriotism isn’t something CSR takes seriously but it is something we should look into when a company claims certain values and make claims of patriotism through advertising, lobbying etc. So the question was – what would a patriotic and responsible company do during a recession? Will they fire their fellow Americans? If yes, what does that tell you about their patriotism? Are they “fair weather” patriots who will say the right thing to get attention but then not back it up by action?

If you claim patriotism in some form then your actions should reflect that. Not only should you not downsize when you aren’t making a loss but you should go out of your way to help rebuild your country with the record cash you have in hand. Isn’t that what a responsible patriot will do? Use their resources to help their fellow Americans? Or does patriotism stop at getting people to buy a product made by an American company? Of course “made in” is a completely different story – and so are taxes. But that we’ll leave for another day.

Do I think companies acted responsibly during the recession? Some did and some didn’t. Those who let workers go when they weren’t making a loss lost their right to make the “greatest asset” claim. Don’t expect the same level of loyalty and commitment because you didn’t show it. Those who kept their cash when it could be used more effectively to rebuild the economy weren’t responsible citizens because they expected their fellow citizens to pick up most of the slack. Those who did everything to keep speculators, I mean short-term investors, happy weren’t looking at their long-term responsibility to their own company. Those who beat the drum to get consumer to buy their American products but didn’t put their own money into the game weren’t very patriotic or responsible.

The recession showed, and continues to show, us those companies who truly practice responsibility to themselves and society. Some were caught out while others shared the burden with the rest of us. The recession was good for CSR because it helped us define success of CSR in the toughest of conditions. Some failed and some helped us build a more responsible and profitable corporate world. At the very least the recession showed us the true CSR colors of companies. A good spin or substance…

So tell me – Were you a responsible corporate citizen during the recession? Really?

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Don’t know if you’ve noticed the bit of oil in the Mexican Gulf. Bit of an issue for BP and the oil industry in general. I think enough is being said about the oil spill and the responsibility of companies by the experts – you really don’t need me to add another opinion to this. However, it does remind me that almost every company has an oil spill waiting to happen.

Every company has a big issue they face. Some have more than one. For the oil industry it is price, human rights, sourcing location and environmental impact. For the pharmaceutical industry it is price, intellectual property and access. For food companies – sourcing practices and obesity. Car manufacturers face safety issues. Clothing and show companies know that people are always looking at the working conditions in those far-flung places where their goods are made. Banks… Where do I start….

The point is that all companies will face these issues. It is driven by multiple factors – what is material to your company and what activists (NGO types or investors) highlight and where people want change in behaviour. What’s your biggest issue? Are you even aware of what it is?

There are other big issues that are less well-known within the broader public or even amongst activists. The skeletons in your cupboard. Most companies have these. Those issues you know you where are vulnerable but no one is looking at it at the moment. For instance, people focus on the working conditions in clothing and footwear. We are all aware of it and all responsible companies are trying to do something about it. But tell me, do you use leather? Few people know the way leather gets from cow to shoe. The tanning and dyeing are not something most people think about too much. It’s leather – how bad can it be? I’m lucky that I worked with the footwear unions and business in South Africa for a while. It gave me a bit of first-hand experience. Just go and have a look at how the huge quantities of leather needed for your shoes and clothes are tanned and then dyed. Not a pretty sight… But it’s out there in the middle of nowhere and no one of note campaigning on this. And maybe it isn’t even such a huge issue when looking at the broader impact of companies. But it’s out there – as visible as an oil spill for anyone looking.

It does not have to be the biggest impact – it just needs to be the most visible impact. You think the oil spill in the Mexican Gulf is the worst oil spill ever? Think again. It’s just the worst oil spill in the US and developed world. Oil spills happen daily – we just don’t see it every day because we can’t or don’t want to visit some of the places where our oil is secured from.

So the question for business to ask themselves is how far am I from a disaster hitting me? What is the disaster waiting to happen and will anyone notice? And what can I do now that makes sense. Companies can’t fight every potential disaster – No more than what the Average Joe can prevent every single thing that might go wrong in their day. Things happen no matter how much we try to prevent it. We plan and hope for the best. It is part of living. If we didn’t do that we will all stay at home and eat apples – too scared of being in a car crash, hit by a natural disaster or eat crap and die from obesity. Life is assessing the risks and doing what we think is best. Most of the time it pays off and sometimes it doesn’t. That’s life. But we better be prepared to face life with careful planning and open eyes.

It’s not that companies aren’t trying to do their best to prevent disasters. BP and the companies they worked with did not want this to happen. It just happened. Unplanned.

That’s the challenge – unplanned. What can we do to prevent the disaster from happening? Are you ready? Or ready enough? The reality is that we can’t live a business life without a disaster but the challenge back is that many businesses just do not prepare well enough to deal with disasters. Risk is one thing. Cost and risk combined generally brings us that little bit closer to disasters.

Let’s look at the oil disaster again. Some are arguing that the lack of a safeguard device resulted in this oil spill becoming the disaster it is today. The WSJ (and many others) reported that the Leaking Oil Well Lacked (a) Safeguard Device. I won’t go into the details of what this device does as I am no oil expert, but the argument goes that Brazil and Norway requires oil companies to have this device in place as it chokes off the oil flow in case of an emergency. The US doesn’t require this – and most countries don’t. The oil industry lobbied hard to not have this requirement. The main reason? It adds $500,000 to cost.

It’s easy to look at it now and say that this decision by the US government (under President Bush) and the oil industry was a major mistake. However, responsible companies do not wait to be regulated into best practices – they lead. Without naming the company, I worked with a US company who adopted best practices as required in Australia because they believed it was the best thing to do for the company – and the most sustainable. Responsible companies have to manage the costs that comes with taking in best practices but one great disaster substantially undermines the argument of “too much costs”. How much do you think one single big disaster will cost your company? It’s always difficult to judge the effectiveness and cost argument when nothing goes wrong when you prepared for it though.

But I want to take this one step further – are you truly global?

We talk about those large companies as global because they work across the globe. But the truth is that few companies really are global in practice. They might source from or sell to the globe but they don’t always have the required global systems in place. A responsible company will ensure that their responsibility practices and policies are global. You take what is best in the market and make that global. Not only for preventing oil spills but also when it comes to hiring practices, recognizing human rights, transparency, environmental impact etc. Responsible companies do not go to the “what is legally required” level – they go to “what is required” level. Required by investors, stakeholders, employees and society as a whole. BP should ask themselves where the valve falls. Pharmaceuticals should ask where access or intellectual property rights fall. Food companies should ask where obesity, advertising to children, nutritional information etc falls. Clothing and footwear manufacturers should ask where working conditions, human rights and dyeing falls. Every company should have a heart-to-heart and ask themselves where their major potential disaster(s) fall.

…And companies are still surprised why consumers and activists are tired of green washing? It’s because they know that you are one wrong risk assessment away from a disaster – in the open or in the closet.

What is your oil spill waiting to happen? And what are you doing about it?

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We used to have a saying back in my university days – Activists are like Trotskyist, put more than one in a meeting and you immediately have a split. The fight between activists are not new. They are passionate about changing the world and each one have their own passionate idea of what is best. Values are more difficult to bundle together than value because one deals with passion and the other with the pocket. I’ve written about the number of charities before (So many causes… Too little caring?) but there is something new brewing and it really shouldn’t be much of a surprise. Activists are tackling other activists because of the partnerships some have with companies.

Smaller green activists groups and individuals have banded together to start a campaign to Stop Green Groups From Taking Corporate Cash and are increasingly getting all worked up about the role of  better known environmental NGOs and their relationships with companies. Their main argument is that the relationships these bigger environmental NGOs (called Big Green) have with companies compromises their position and action on environmental issues. They are especially targeting the Environmental Defense Fund because of trustees and some of the relationships they have. However, they are targeting other generally well respected activist groups such as the National Resource Defense Council and the National Wildlife Fund.

The arguments between activist groups who would generally be seen as friendly with each other in public and partners in many alliances are not new. For example, Fairtrade have struggled to keep everyone happy as they expand their influence and partnerships with larger companies. Those smaller companies who have been part of the movement since the start believe that these new partnerships undermine their own legacy of commitment, threatens their business and believe that the larger companies really don’t share their common view of a more ethical trade system. Sometimes it bubbles over into a public debate. For instance, many Fairtrade organizations refused to allow Nestlé to sell Fairtrade products in their markets when Nestlé developed their Fairtrade certified Partnership Blend. But this new development of activists targeting other activists goes to a much more fundamental struggle going for the heart of activism.

Let me give you another example that explains the struggle a bit better. Earth Day…

The NY Times had an interesting piece on how Earth Day has now become a big business. Back when Earth Day started it was all about change and no money was excepted from any company. Today we have almost every company pushing products or messages to tell us how they too are green and that you should join in the fun by buying their product. Instead of red to show your love on Valentine’s Day you can use Earth Day green to show your love for earth – even if it is just for one day a year. Anyway, I digress as this is not about Earth Day and what it means. It is about the fight for the soul of activism.

The article in the NY Times ends with a quote from Robert Stone (independent filmmaker) who said, “Every Earth Day is a reflection of where we are as a culture,” he said. “If it has become commoditized, about green consumerism instead of systemic change, then it is a reflection of our society.” So true. And that is what this fight amongst activists are really about.

It’s about the kind of change activists want. Some activists sees the partnerships with companies as an opportunity to use existing consumer behaviour to drive environmental conciousness and awareness. Use what is in the system to your advantage. Show alternative environmentally friendly products and services that are just as sexy, functional, loveable etc as the regular products that consumers will buy in any case. Use the consumer thirst for more products to get them to buy green products. Use the commoditized world to the advantage of the environment. This way we can have a positive environmental impact through consumer behaviour by tweaking what they buy. To put it bluntly – Use their own greed and want against them. It’s using the system to improve impact.

The old style activists don’t like this approach as it doesn’t ask consumers or companies to make any dramatic changes to their behaviour. It does not ask them to produce any less – only to produce it in a more environmentally friendly way. It’s not asking consumers to stop consuming so much crap – only to consume products that are more environmentally friendly. (And yes, I do believe that we are consuming too much crap in the name of fashion or whatever they are selling us in marketing and advertising.)

These activists want real change in behaviour. Real change in the system that runs the market. They want companies who produce wasteful products that harm the environment to go out of business – not just produce a greener version of that product. They want a trade system that puts the environment and society at the heart of how it operates – and not just as a footnote. They want systemic change. A world that operates on a different set of rules and in a fundamentally different way from how it operates today.

Those two views are fundamentally different. One wants the world to change and the other want to use the way the world operates to have a better impact. It’s not going to go away. The world is becoming more of a consumer society each and every day. The choices activists face on how they try to change or influence this world will increase each day. The fight for the soul of activism is here to stay.

The question is – which group can package and sell it to us best?

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