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Archive for the ‘money’ Category

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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It is election time here in the USA. To state the obvious – It’s an interesting time to be in the US. It’s even more interesting to watch how business behave during these election cycles. This election is especially interesting from that perspective as the two main parties are very divided on a range of social and economic issues. The emergence of the Tea Party and the right-wing in America begs the question – how do business lean during this election? And what does it tell us about their values?

For me this election raises the question of whether business have managed to really live their values through the political support they give to any specific party. The Republican Party is pitched by most as the business friendly party. The one that will look after the interest of business more than the Democratic Party. Of course this judgement is based on the value that the Republican Party will provide business compared to what the Democratic Party has to offer. Lower taxes, less regulations etc are all seen as Republican Party strengths – and all aimed at the value bottom line of business.

 But what about the values bottom line of business? How does their support of one specific party reflect on the values they claim to stand for? A few examples makes me question whether business takes their values as seriously when it comes to politics as their value bottom line.

Firstly, a number of companies are rightly proud of their ranking as good employers. And some of them are very proud that they are constantly ranked  by the Human Rights Campaign as Best Places to Work. The HRC lists the top businesses that support equality for lesbian, gay, bisexual and transgender employees. Now this is where I am slightly concerned that companies overlook these values when it comes to their political support. Do they take into consideration whether a specific political party of group (like the Tea Party) or a specific candidate support these values they uphold as important to their business? I dare say that not all of them do. Too many of the companies listed on the HRC Best Places to Work are also big supporters of candidates and political parties who do not believe in the equal rights for all their employees. I question whether employees are really the “greatest asset” of a company if that company is willing to sell the rights of their employees for a few dollars more to the bottom line.

Secondly, how about climate change? If your company believes that climate change is real and is a real threat to the long-term sustainability of your business – how can you justify supporting an individual or political group who do not believe that climate change is a threat that needs urgent attention?

This second point comes close to the value argument. The first point of equal rights for your employees is mostly a values argument but climate change is about both values and value. It affects your business sustainability and therefore the value you offer as a business. Maybe the world becomes grey because the business makes a decision between short-term value and long-term value. Tax breaks, subsidies, less regulations etc are all perceived as adding short-term value while climate change is something that will starting to hurt the business in 50 years or so. Like a frog being boiled…

I think that some of the support businesses give to Republican Party candidates and the party itself more out of legacy than anything else. They have always done so and will continue to do so out of habit. The truth is that both parties are pretty business friendly compared to most of the world. The value differences are more marginal than people would like us to believe. For example, businesses are cash flush at the moment, profits on Wall Street is up etc – all under Democrat rule. But like anyone who has a long-standing habit or addiction, businesses will support the Republican Party and candidates “because that’s what they’ve always done”. Not a compelling reason but still a reason.

For some businesses it is a clear-cut reason. If they believe that clean energy or a drive for more renewable and alternative energies will hurt their business they will fight against it. Guess who fights renewable energy more than the other when it comes to political parties? But what about that company who believes that the environment is key to who they are as a company? If you are in the outdoor industry then mountains mean a lot to you. People use your products to go and enjoy nature. So how would you feel if someone mines away that mountain top? Not so good. And how about being in an alliance with a company and/or party who supports mining that mountain top? Be careful who you form alliances with even when you don’t mean to be in a formal alliance. You are who you support and who your candidate supports. You can’t shout for greater action on climate change one day and then support a party or candidate who stands for the opposite. Stick with your values or stick with your value – if you believe they are separate. But please don’t claim to have CSR or sustainability in your DNA and then take actions which completely contradicts your statement.

There are many more of these examples. Companies in the construction industry – are you supporting the party who are providing cash to rebuild America or are you supporting those who say that they should never have spent this money in the first place? Retailers – are you supporting those who want to provide continuous tax breaks for the middle class or those who insist that the richest get the biggest cut or no one gets a cut?

Look in the mirror and ask yourself whether you are willing to trade your values in for a perceived value. History is littered with the easy way out – take the money and forget about the rest.

I don’t have a problem with that. Each company will decide what is best for them. Just do me a favor – don’t sell me CSR snake oil stories of “it’s in my DNA”. Embrace who you are and live it. Be true to yourself no matter what that truth might be.

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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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“Sharing is a special way of caring…” That line comes from that purple dinosaur - Barney. It was sound advice for my oldest daughter when she was still a little thing having her first baby crush on Barney. Barney helped us teach her that sharing what you have is a special way of showing people that you care. Unfortunately Barney isn’t that big anymore and we have to do most of this teaching all by ourselves when it comes to my little one. She get’s the message though as we pass along the Barney wisdom from generation to generation. But not everyone remembers this piece of wisdom. Especially not in these times when banks and other financial institutions are hit hard because of how they pay out bonuses.

Bonus payments will always be a tough nut to crack and will always leave someone unhappy. Each business is different and different people play different roles depending on the company in question. Sometimes it is a difficult pill to swallow when a “generic” senior executive receive a bonus that feels less grounded on the broader effort of everyone at the firm. But I have seen enough companies with dynamic leaders who make the difficult decisions, led companies into growth or out of difficult circumstances, and who owned up to their responsibilities to know that not everyone is truly equal in any company. Even though we would love to think everyone plays an equally important role in a company the truth is that some people play a leadership role for a reason and they should be compensated for that.

However, emphasis on compensation. Each person should be paid according to their role and responsibilities. Bonuses tend to be a broader reflection on how a company and specific department performed, the specific role that an individual played in that performance and how long a person has been with a company – performance, effort and loyalty. It should not be about one single thing – “My department did the best” is not a good enough argument for super bonuses if the company as a whole failed. That’s the problem most people have with the bonuses paid at certain financial institutions. Salary as compensation reflects the role and responsibility and bonuses tend to reflect performance, effort and loyalty (of course these three will also have an impact on long-term salary and promotions.)

What is a fair bonus? Like I said, each company and industry is different. And, to tell you the honest truth, the discussion here is really a theoretical one for me personally. I’ve never worked at a company where the bonus structure has been an issue. It’s always been fair and transparent. It’s also not something that has been a key issue for me from a CSR and Sustainability perspective. My questions from this perspective would typically be about transparency, governance, whether CSR/Sustainability goals played a role in establishing bonuses, how it impacts CSR/Sustainability, employee relations etc. Never really about the actual bonus structure. Maybe I should but there are more important things to focus on from a CSR and Sustainability perspective – and I haven’t worked with banks or other financial institutions that often.

But I do know fairness when I see it. And sometimes this fairness blows me away. This line says it all: “all of them – from the chairman … and the managing director … down to shop assistants and shelf-stackers – get the same percentage payout.” Hang on a minute. You mean they share the bonus pot equally? That’s a bit of a shocker. Must be some small little business somewhere or a bunch of trade unionist running a lunch-time cafeteria, right? No. It’s the John Lewis Partnership. For those who don’t live in the UK, they are a large company (just over $11bn in sales) that owns leading UK retail businesses – Waitrose, John Lewis and Greenbee.  And by “they” I mean all 70,000 permanent staff. That’s why they are called the John Lewis PARTNERSHIP. They all own John Lewis. Still, it’s a pretty novel idea to share bonuses equally.

Most people applauded this but some people commented in The Guardian piece that the actual amount each one got paid should have been the same. I think that is missing the point that each one gets compensated according to his or her role and responsibility and the percentage bonus payment is therefore also a reflection of this. We do, after all, still live in a world dominated by a more or less free market.

I am impressed because it shows more than just a Barney culture of caring. It reflects the view that we either fail together or we succeed together. The essence of a partnership and the essence of the John Lewis ownership structure.

I don’t think most companies can do it the John lewis way. Maybe those owned or bailed out by governments should implement such a John Lewis-styled bonus structure. But the majority of companies are not partnerships and have different masters. The John Lewis example is the extreme but more companies can learn from the basic principle and work to ensure that their bonus structure reflects the basic values - all employees work together to make a company succeed (or help get the company through a tough time) and they should therefore be treated equally. Maybe not exactly equal – my rule of performance, effort and seniority should play a differentiating role. But at the very least there should be some level transparency and equality built in to ensure all good work gets rewarded. Of course it also sends a strong message to all John Lewis workers – let’s pull together to get through the tough times as we will all benefit from an upturn. This way everyone feels ownership of their working world and believe that as long as they work hard and do their best they will be treated fairly. And the outside world will judge the company on how they treat their workers – as equals or not? If it’s greed – is it driven by a top-heavy greed or equally shared? If it is truly about equality and everyone having to do their best for the company – is it reflected in the bonus structure? I think that’s the part that many of the banks and financial institutions just don’t get.

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