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Why Is There Still Green In My Funds?

The green message needs some honing to go mainstream

By Marc Stoiber

This article is based on a speech I presented to the Canadian Socially Responsible Investment Forum June 20, 2011.

About two months ago, Joel Makower posted a story titled ‘Green Marketing Is Over.’ Makower believes green marketing as we know it has failed us – the great green consumer revolution simply hasn’t materialized, and green products continue to limp along as niche players.

All this, despite growing evidence that green products are hitting the mark as far as price and quality are concerned. It’s perception that’s killing them.

Nowhere is this more true than in socially responsible investing. Look at index after index, and you see SRI funds that consistently outperform their non-‘green’ counterparts. It’s easy to see why, if you consider companies incorporating sustainable and socially responsible practices are generally also innovative and forward-thinking in other areas – which tends to lead to better returns.

Cliff Feigenbaum, publisher of Green Money, believes that SRI is gaining wider market acceptance, but still remains niche. As he told me, it’s migrated from values-based personal investors to become part of much larger institutional portfolios – but only as a minute part of these portfolios. It seems the big portfolios include SRI funds to simply tick off the ‘green’ box for trustees and shareholders.

So what can we as marketers do to change the perception of green funds to simply good funds? For answers, I turned to a number of great new studies.

Getting It Right Is The Exception

At last month’s Sustainable Brands conference, I had the opportunity to sit down with James Cerruti of Brandlogic. His company just released a new study tracking the sustainability actual vs. perceived performance of 100 leading global corporations. The study is more interesting because the perception scores came from investors, students and supply chain partners.

Although some companies did put out a sustainability message consistent with their actions, the majority were either unacknowledged in their actions, laggards in both actions and words, or getting unfair credit for their less-than-stellar performance.

If professional investors couldn’t tell the green companies from the not-so-green, how could the rest of us hope to find, and invest in them?

Start Marketing To The Majority

Another illuminating study was released at Sustainable Brands by OgilvyEarth. As Freya Williams, one of the study’s authors, told me, green marketers are still busy preaching to the deep green choir, or trying to convert the defiant unbelievers – while bypassing the huge (66%) majority of consumers who would be willing to give green a chance.

If you look at SRI marketing today, this isn’t immediately apparent. Values-based pitches have taken the back seat to performance, and windmills are slowly fading from the front pages of prospectuses.

But we’re still pigeonholing SRI marketing, albeit more subtly. Among the violations Williams highlighted, there were at least 5 that SRI marketers regularly engage in. They include:

It isn’t easy being green – Why are green investments still presented as a separate category? Why do we spend a disproportionate amount of time explaining their green credibility? Why can’t we simply put a seal of approval on them, to assure consumers they perform, and fit the ethical bill.

Green is confusing – So what are they calling SRI anyway? In the last while, I’ve heard ethical funds, sustainable funds, responsible funds, and more. If we can’t agree on a name, heavens knows we won’t be able to convey a clear message. Personally, I like what Paul Herman has created – the Human Impact Profit index, or HIP. Definitely a better emotional message than 'responsible', and if you break down the acronym, easy to understand.

Green is the new pink – I understand that appealing to female investors is lucrative. But by making a pitch aimed at feminine values, you isolate yourself from 70% of the population – men, and women who like ‘cool’ men’s products vs. ‘girly’ women’s products.

Green costs – Lead with the personal profit benefit, and you won’t go wrong. Balance the personal profit benefit with the values benefit, and you’ll introduce niggling doubt that your fund is a jack-of-all-trades, and master of none. Which translates into lower returns.

Green is suspicious – 73% of consumers prefer a green cleaner from a big company whose name is synonymous with bleach, over a green cleaner whose maker is green from head to toe. Why? Because we all want the reassurance of going with the tried and true. In SRI, that means pushing the reliability of the master brand, instead of trying to carve off a niche for our specific green funds.

Learnings

The above watch-outs give us a good idea of our ongoing missteps in marketing SRI.

Potentially the most valuable learning we can take away is that we need to distance ourselves from our pitch – get outside the jar. We may believe that our marketing is squarely aimed at pitching performance, but a step back might reveal we’re still engaging in limiting behavior.

If you’ve been with your company for more than six months, chances are you’re inside the jar. In that case, get some fresh eyes from outside to look at your work. It’s well worth the green.

About Marc Stoiber

Marc Stoiber is a creative director who helps clients build resilient, futureproof brands. He writes on the subject for journals like Huffington Post and Fast Company, in addition to speaking at conferences around the world.

This post originally ran on Huffingtonpost.com.

Readers: How can the messaging around green be improved? Share your ideas on Talkback!

This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.

Boards in a Time of Crisis

The phone hacking scandal in the UK raises questions about the role of its corporate board.

By Lucy P. Marcus

What role does the board play in times when a company is involved in a crisis that has an impact on the community?

I don’t mean “brand management” or “reputation management”. I mean cases like the one we are seeing now with the News of the World hacking scandal in the UK, or last year with the BP oil spill, where real people are harmed and whole communities are affected.

News International decided to close the News of the World. It is a bold gesture, but it does not negate the need for a larger look at the way the company runs and the way the board operates.

This issue was left to fester for too long. It escalated to the point that a dramatic choice had to be made. The board needs to take a long hard look at itself.

As independent directors on the boards of companies our job is to help the companies navigate and be successful. Part of that is calling the company to task if something it is doing is harming the long-term stability of the company, and, I would argue, is beyond ethically acceptable business practice. We should not simply be automatons with only dollar, pound, euro or yen signs. If an organization is caught up in a spiral of bad or unethical behavior we as directors need to be people who step up and challenge the manner in which a company is doing business.

I realize that News International’s board is perhaps not the best demonstration of good corporate governance, with so many inside executive directors in the balance, not a lot of diversity (there is only one woman), and the independent directors including amongst their ranks an opera singer and Marc Hurd formerly of HP. I would ask the board of News International, and particularly the independent members: what are you doing about the News of the World hacking scandal? I’d genuinely like to know.

About Lucy P. Marcus

The founder and CEO of Marcus Venture Consulting, Lucy P. Marcus currently serves as the non-executive chair of the Mobius Life Sciences Fund and as a non-executive director and chair of the board audit committee of BioCity Nottingham. She is a fellow at the University of Cambridge’s Judge Business School and a member of the board of IE Business School. She is a prolific writer on global economic trends and best practices for corporate governance, venture capital, entrepreneurship, biotech, cleantech and women in business, and regularly speaks on these topics to diverse audiences around the globe.

Follow Lucy P. Marcus on Twitter: @lucymarcus

Readers: What should News International’s board be doing about the phone hacking scandal in the UK? Share your thoughts with Talkback!

NGOs dissatisfied? Fine with me…

New Guiding Principles for Business and Human Rights are just out from the U.N.

By Christine Bader

Last month, the U.N. Human Rights Council unanimously endorsed the Guiding Principles for business and human rights. Despite overwhelming support of the principles from many previously-opposed camps -- business lobbyists and socially responsible investors, trade unions and corporate law firms -- a number of civil society groups expressed disappointment with the Council’s decision.

Human Rights Watch lamented the absence of “a mechanism to scrutinize how companies and governments apply these principles.” The Child Rights Information Network believes that due attention hasn’t been paid to -- you guessed it -- children’s rights.

Having served as an advisor to the effort to develop the principles since 2006, part of me would prefer to see hugs and high-fives all around at the culmination of years of hard work. But NGOs are right to keep pushing for more.

The Guiding Principles were developed through six years of intensive consultation and research led by John Ruggie, the U.N. Secretary-General’s Special Representative for business and human rights. Even before the Council’s final endorsement, a wide range of stakeholders had already begun applying Ruggie’s work in recent years: NGOs in their advocacy reports, governments in policy reviews, investors in public statements, companies in sustainability reports and impact assessments.

This is largely due to the inclusive and pragmatic approach that Ruggie took throughout his mandate. He held consultations all over the world, from meetings of hundreds of participants to small expert gatherings to an online forum that attracted thousands of visitors. Many of the participants in those fora saw their input reflected as Ruggie’s work evolved, and therefore felt ownership over what he produced. In addition, pilot projects road-tested principles while they were in development, ensuring their utility.

But there are still people being hurt every day by corporate activity that urgently need greater protection. The Guiding Principles don’t suddenly solve all of the world’s problems; rather, they’re meant to serve as a common foundation for all that is needed next, including sector-specific guidance, capacity building, and ongoing multi-stakeholder dialogue.

Most NGOs will never claim victory and put their feet up. The New York Times recently wrote about a few exceptions to the rule, nonprofits that are close to achieving their goals and plan to shut their doors.

But groups that aim to protect the world’s most vulnerable people will never be able to call it a day. The human rights campaigners that are turning their attention to companies (as opposed to their traditional target of governments) will be in business for as long as, well, business is in business. There are a number of companies proactively exploring how to embed human rights in their operations, but they are very much in the minority.

Even if a milestone like endorsement of the Guiding Principles is considered a victory, it’s within the context of a much longer journey. Occasional acknowledgment of how far we’ve come would seem appropriate, but in any case the role of human rights NGOs is to continually move the goalposts, to keep all of us working towards a better world.

Expecting NGOs to be satisfied would be akin to believing The Onion article, “Corporation Reaches Goal, Shuts Down”, which began: “After 18 years of striving, Dell Computer finally reached its long-stated goal to be the worldwide leader in computing systems Monday and promptly ceased operations.”

There’s always more to do. Our work is just beginning.

About Christine Bader

Christine Bader just completed her term as Advisor to the United Nations Secretary-General’s Special Representative on business & human rights. The views expressed here are her own.

Readers: Check out the Guiding Principles, then tell Talkback what you think of them.

This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.

Zero Net Emissions With Economic Growth? Europe’s Greenest City Shows the Way

Originally posted on the CSRwire website.

By Francesca Rheannon

Växjö, Sweden has been able to slash its carbon footprint by a third while nearly doubling its GDP.

Summer is houseguest time out here in the Hamptons. So it was that I recently found myself hosting a young friend from Sweden – in the U.S. as a Visiting Artist with a New York dance organization -- and her parents, who were here to visit her on their very first trip to the States. Not only did I have the pleasure of hanging out with some terrific houseguests, but I also ended up learning a lot about how one small Swedish city is showing the world how to go carbon free – without sacrificing robust economic growth.

My friend’s mother, Sohie Kim Hagdahl, is the environmental coordinator for Växjö (pronounced VEK-shuh), a city of some 82,000 inhabitants in southern Sweden that was awarded the Sustainable Energy Europe award by the EU in 2007.

Sohie told me that Växjö was an early pioneer in sustainability, starting in 1980 with a renewable energy district heating plant. The city began its green adventure in earnest in 1996, when town councilors decided -- on a unanimous vote -- to free their town of dependency on fossil fuels. By 2007, 54% of the city's energy consumption was based on renewable energy sources. By 2010, per capita carbon emissions had been cut 34% from 1993 levels.

This means that a citizen of Växjö contributes only 3 tons of CO2 to the atmosphere per year -- way below the global average. (In the U.S., it’s 22 tons; in Germany, 12.) The city believes it can get carbon emissions down by 55% by 2015 and is making good headway toward its goal of becoming totally free of fossil fuels by 2030.

(And Växjö sees sustainability and CSR going hand-in-hand: it has also been certified as a “Fair Trade City” since 2008, with more than half of products bought by government, residents and businesses sourced from ethical companies.)

The city is staying on target by deploying a range of strategies. These include public projects, private/public partnerships, and encouraging behavior change on the part of city residents, all focused on three areas: boosting the use of renewables in housing and transportation, improving energy efficiency of buildings and residences, and making the transportation system itself “fossil fuel free.”

Renewables: Ninety one percent of Växjö’s building heat is sourced from a district biomass plant that uses waste wood from forestry operations. District heating is cheap and convenient, making it wildly popular. To boost adoption, the city gave subsidies to convert home heating systems to district heating, as well as to install solar panels. And the city’s suburbs are now being added to the system.

Efficiency: Plucking the low-hanging fruit of energy efficiency started in 1994 with the municipal government installing more efficient street lighting, followed by increasing energy efficiency in local public hospitals and clinics. In 2003 the city instituted guidelines for building contractors that mandated energy efficient construction in buildings on public lands. Then new public housing was built, with energy efficiency designs and smart energy meters so residents could monitor their energy use and also get suggestions on how to use less. In 2008, the city partnered with local developers to start building superefficient passive houses without heating systems, warmed only by body energy and appliances.

Transportation: Biodiesel and biogas powers city buses – and in 2007, Växjö opened its first filling station (open to the public) using biogas made at the municipal sewage treatment plant. Citizen buy-in for a carbon free transport system is supported by abundant bicycle paths (the goal is to increase bike traffic by at least 20% by 2015 compared to 2004,) free parking for environmentally friendly cars -- and city subsidies to buy them. Taxi routes were re-designed to be more fuel efficient. The city hopes to increase the use of mass transit by 20% by 2015 -- and decrease CO2 omissions from transportation by at least 30% and 100% by 2030.

None of this would be possible without the enthusiastic participation of the city’s residents and businesses (which include such big companies as Volvo and Staples.) Companies participate in the municipality’s climate commission, along with Linneaus University. 81% of city inhabitants consider themselves to be environmentally aware. Behavioral change is promoted by the city’s energy-saving campaign (headed up by Sohie Kim Hagdahl) that includes contests for school students, Växjö’s "Little Green book" guide for sustainable consumption, and a series of annual events to highlight sustainability. Energy counseling is available free of charge to residents

Despite all its accolades and recognition, Växjö isn’t resting on its laurels. Plans for the future include making 45% of food purchased in the city organic and/or locally produced by 2015; bringing small-scale wind power to multi-story buildings; increasing supplies of biogas from food waste; expanding green areas in the city; providing district AC/cooling sourced from renewables; creating business ventures to export environmental technology; and exporting its climate-friendly model to other cities (like sister city, Duluth, Minnesota.) Växjö also coordinates the EU’s SESAC project, established in 2005 to build sustainable energy systems in a number of European cities.

Växjö’s model of economic growth goes to show, that with international, national and municipal support and collaboration by city residents and businesses, getting to zero net emissions is not only possible but can be done right now. All it takes is the political will to do it.

About Francesca Rheannon

Francesca is CSRwire’s Talkback Managing Editor. An award-winning journalist, Francesca is co-founder of Sea Change Media. She produces the Sea Change Radio’s series, Back to The Future, and co-produces the Interfaith Center of Corporate Responsibility’s podcast, The Arc of Change. Francesca’s work has appeared at SocialFunds.com, The CRO and E Magazine, and she is a contributing writer for CSRwire. Francesca hosts the nationally syndicated radio show, Writers Voice with Francesca Rheannon.

Readers: What can other cities learn from Växjö's sustainability success? Tell us on Talkback!

When the People Lead

History teaches us that ordinary citizens can – and do -- change the course of history.

By David Korten

Through word and deed, the early American colonists who refused to accept the authority of a distant British monarch and his rapacious chartered corporations created a political imperative. Ultimately the formal political leaders we now call the founding fathers were forced to issue a Declaration of Independence and raise an army or risk being swept aside. The people led; the leaders followed.

The idea of ordinary citizens leading the way to liberate the United States and the world from the grip of the Wall Street–Washington axis might seem a naive fantasy. We, however, live in a unique historical time in which seemingly impossible transformations of unjust and deeply destructive relationships of power occur on a global scale with breathtaking speed and inspiring regularity.

An advantage of reaching my elder years in this historically unique time is that I have been witness, sometimes at close hand, to events that have fundamentally shifted global relationships. My lifetime has spanned the liberation of India from rule by the powerful British Empire, the collapse of the Soviet Union and the dismantling of the Berlin Wall, the end of apartheid in South Africa, and the People Power Revolution that brought down the Marcos dictatorship in the Philippines. All came quickly and were achieved through largely peaceful means.

From my vantage point as an Air Force officer assigned to the Office of the Secretary of Defense in the Pentagon as the Vietnam War began to wind down, I witnessed from inside the military establishment the beginning of the defeat of the world’s most powerful military by an ill-equipped but determined ragtag army of Vietnamese peasants. Attempting to resist the will of a determined people is futile, no matter how many guns and how much money the colonizing power has at its disposal.

I have also been witness to the dramatic changes brought by the civil rights, women’s, and environmental movements in little more than a half century.

On a visit to the South with my parents in my early teens I rode a bus in Miami in which “colored” people were confined to the last rows. It was beyond imagination that I would live to witness millions of whites weeping tears of joy over the landslide election of a black president.

Fran, my wife, was warned by her father when she went off to college that if her grades were too high, no man would marry her. She had a straight-A average when I met her. I married her anyway — a smart choice, as it turned out — but assumed without question that she would follow me without complaint and subordinate her career to mine. Years later, she was the primary wage earner and I happily and productively followed her path from the U.S. to Asia and back again, fashioning my career to fit hers.

As a participant in the citizen portion 1992 UN Earth Summit in Rio, the author of When Corporations Rule the World, and a founding member of the International Forum on Globalization I was on the front lines of the birthing of global civil society as it developed in tandem with the Internet as a tool for citizen organizing on a global scale in defense of democracy and popular sovereignty. It began with a tiny group of Third World activists centered in Penang, Malaysia.

In 1994, when I was writing When Corporations Rule the World, there was still virtually no public awareness that trade agreements were being used to facilitate the global consolidation of corporate power beyond democratic accountability. I was part of a small group that launched a largely below the media radar public education campaign. In 1999, a powerful and interlinked global civil society announced itself to the world with the historic Seattle World Trade Organization protest.

Inspired by its success in Seattle, global civil society subsequently mobilized millions of people in massive protests wherever corporate elites met with national political leaders and bureaucrats to negotiate away the people’s rights, The abuse of multi-lateral trade agreements was thwarted and the WTO never recovered.

In 2001, the movement energy began to shift from resistance to a proactive effort to build the institutional foundations of a planetary system of locally self-reliant and rooted economies that function in balanced relationship to their local ecosystems.

Now, through word and deed, global civil society is building the institutional foundations of a New Economy. Millions of people of every color and every cultural and religious identity are sharing ideas and inspiration and growing the political power to awaken our formal leaders to the imperative to get on board or risk being swept aside.

About David Korten

David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, the Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine and co-chair of the New Economy Working Group. This New Economy 2.0 blog series is co-sponsored by csrwire.com and yesmagazine.org based on excerpts adapted from Agenda for a New Economy, 2nd edition.

About New Economy 2.0

Visionary economist David Korten introduces a national conversation series, New Economy 2.0, on CSRwire Talkback based on his acclaimed book, Agenda for a New Economy, 2nd edition. For the next several weeks, Korten will summarize the main points and key lessons of each chapter of his book, leading from a dissection of what went wrong in the “phantom wealth Wall Street economy” to the presentation of a vision of a world of real wealth Main Street economies that support strong middle class societies, honor real market principles and work in partnership with Earth’s biosphere.

New Economy 2.0 envisions an economy in which life is the defining value and power that resides in people and communities. It contrasts with the popular New Economy 1.0 fantasy of a magical high-tech economy liberated from environmental reality and devoted to the growth of phantom wealth financial assets.

This exciting, new series is co-published by CSRwire and YES! Magazine.

The arguments presented here are developed in greater detail in Agenda for a New Economy available from the YES! Magazine Web store.

Readers: Share your inspirations for the power of the people to make positive change. Tell us on Talkback!

#Democracy #local #local economy #New Economy #New Economy 2.0 #Wall Street

Accounting for Sustainability: A Charge to Professionals and Students

Guidance on reporting for students and sustainability professionals.

By Martha Woodman, MBA I’ve got a simple formula for you: sustainable business practices + reporting = continued improvement and growth = better business and a better world. How do I know? For more than 20 years I taught college students about accounting. That changed in 2001, under the guidance of an inspirational colleague. Now, I’m excited to teach students not only about accounting, but about how accounting plays a key role in analyzing business’s effect on the environment. It’s an exciting time to be in the numbers world. Yet, accounting and the environment is not a well-defined field. It’s very new, in much the same way that sustainability reporting is still young. We’re all still learning. Fortunately, academia and organizations, like the Global Reporting Initiative, provide thought leadership in this space, for there are significant challenges present: first and foremost, cost and inclusion of sustainability reporting within a larger financial report. For some companies, doing is more important than incurring the cost for reporting. For others, like Green Mountain Coffee Roasters (GMCR), reporting is a codified corporate practice. GMCR points to reporting as a tool that helps the company run its business better by not only helping it identify areas for improvement, but enhancing communications with employees to provide them with a greater understanding – and proof – of the company’s mission and vision. Reporting is imperative, allowing companies to benchmark progress to show how engaging in sustainable business practices is beneficial to the triple bottom line. Likewise, reporting reveals when a strategy needs to be changed, a program revisited, a practice further explored for optimization. Reporting helps us get at the answers. My charge to students and sustainability professionals is this: Educate yourself and then act. Here is grounding guidance to get you started: Know How to Report. There are two areas for reporting: 1) Internal reporting to a company’s internal teams, whereby there is discussion on how a company is spending money and the environmental impacts of those decisions; and 2) External reporting to investors, suppliers, and other users of information; Socially responsible investing, a subset of the external investor audience, is a growing field with $3 trillion invested and managed in 2010 (Source: SRI). Investment reporting goes to institutional investors.

Get Started. You know you want to start measuring and accounting for your efforts, but where do you go next? The Global Reporting Initiative has a very useful reporting framework for people looking to begin the process – a starting place that can be built upon in the future. You may also want to look to forerunners in the reporting space: Ben & Jerry’s, Patagonia, Seventh Generation, and Timberland. Go Beyond Voluntary. Financial reports are required; CSR and sustainability reports are voluntary, which begs the question: why would a company choose to report on information that isn’t required, especially when there is a cost? As corporate transparency becomes a more urgent issue among consumers, we will see reporting become a cost of doing business – a practice companies must engage in to stay competitive and maintain open conversation with internal and external audiences. (A recent report by Cone found that 85 percent of people indicated they would consider switching to another company’s products or services because of a company’s negative corporate responsibility practices. Determine What to Report. It’s important to set goals and measure them, such as reducing one’s carbon footprint, waste water, toxic emissions, employee retention and social impacts. Choose what makes sense for your company and what reflects your corporate values. For example, Alcoa measures how many trees it plants every year and reports on aluminum recycling efforts. Account for Externalities. What about environmental and social costs that are not incurred by the company? Environmental pollution and public health matters for example. Who pays for those? Some companies internalize the costs, and pass it on to the customer. This is a strategic decision that you need to make. Let Your Company Values Inform Your Social Investing. As I mentioned, socially responsible investing is an exciting and growing space. Ask yourself: What would you screen funds for? The term SRI has a lot of different interpretations and there are hundreds of them, which makes it the perfect test of your business’s values. Engage in a Third Party Audit. For information to have value, it has to have authenticity. The best way to do so is to be externally validated or audited. This is still a new practice in the US. In England, accounting firms are involved in validating CSR. I’m proud that one of my Sustainable Business Program graduates, Brendan LeBlanc, is leading the way in this space in the US through his firm LeBlanc and Associates. Get Schooled. There is huge job potential in the sustainability reporting space. In fact, our UVM School of Business commencement speaker was an investment banker who spoke to the potential of this field. Get in on the ground floor. I welcome readers to the Sustainable Business Program at UVM, where we discuss and analyze reporting in-depth. I look forward to the next chapter of sustainability reporting. I know it’s a key part of the equation for a better business world. I hope you will put that equation into practice. About Martha Woodman Ms. Woodman joined the UVM faculty in 1984 as an Assistant Professor. In 1988 she became Assistant Dean Director of Student Affairs and Lecturer and returned full time to the classroom in 2002. Ms. Woodman earned her BSBA from the University of Kansas, MBA from the University of Missouri-Kansas City, and left the University of Oregon ABD. Prior to moving to Vermont she taught at the University of Oregon and Washington State University. Her teaching interests are in the areas of Financial, Managerial and Cost accounting, as well as the emerging field of Accounting and the Environment. To learn more please visit University of Vermont Continuing Education on LinkedIn at http://www.linkedin.com/company/the-university-of-vermont-continuing-education/products.

Talkback Readers: How does reporting affect sustainable business practices? Tell us on Talback!

#academia #sustainability #sustainability reporting

Beyond branding: CSR as a tool for competitiveness and productivity

Corporate social responsibility provides competitive advantage in an evolving business environment.

By Tatjana de Kerros

The current economic and social climate in the UAE has put competitiveness, sustainability and responsible business at the top of the agenda. Whilst corporate social responsibility (CSR) practices have been controversially associated with improving brand recognition and enhancing a company’s reputation, this has neglected CSR’s potential of improving efficiency, productivity and market orientation. Rather, having a CSR strategy embedded within a business model not only serves in gaining a competitive advantage by increasing reputational appeal; but responds to changing stakeholder demands in an evolving environment.

The Dubai Chamber and PepsiCo launched the first comprehensive study of CSR and corporate governance in the UAE, finding 42% of respondents believe CSR increases productivity. However, 66% of companies in Dubai cited that a lack of awareness and financial resources prevented them from taking part in CSR initiatives.

Furthermore, another study, “Consumers View of Corporate Social Responsibility in the UAE” conducted by the Dubai Chamber in 2009, revealed only 48% of small and medium enterprise (SME) leaders were aware of CSR; a clear contrast to customers, of whom 55% said they would be more likely to be loyal to a company that is socially responsible.

Generally, SMEs refrain from taking part in CSR initiatives due the belief it requires large financial endowments, creates time and knowledge constraints and adds pressure on an already strained workforce. Small business owners should be made aware that, in reality, CSR does not have to be an add-on coming at extra cost and wasting valuable resources.

Rather, if CSR is integrated within the overall business strategy, it can be incorporated as a cost-advantage, which emulates the core competences of the business. If an SME focuses on the value it already has (i.e., products, services or business processes), CSR can be successfully operationalised in organisational values and codes of conduct without having to implement a radical and costly transformation.

In truth, SMEs have a better ability to initiate and scale responsible business practices than large companies. Their size allows them to be more responsive and flexible to market changes – there is less bureaucracy and more fluid decision-making.

Changing perspectives

CSR induces a direct engagement with stakeholders, be they suppliers, customers, competitors or society at large. It provides an opportunity to manage stakeholder relations strategically and harmonise multiple interests and priorities. In a survey conducted by the Sustainability Advisory Group, 65% of regional executives believe CSR is about “minimising negative and maximising positive impacts” – and not about community investments. They also stated CSR was implemented to attract new customers, draw and retain best employees and foster innovation within the workplace.

The concept of CSR needs to shift from actions relating to corporate philanthropy and cause-related marketing to solutions that involve creating economic value in a way that promotes social value. The success of a venture can only be determined by optimising long-term financial performance, understanding consumer needs, as well broader influences that determine the business environment. Ignoring new market structure trends will create internal costs within the organisation that are much more costly than responsible business practices. CSR initiatives do not need to be fragmented and can be achieved through new operating methods, utilising available technology and devising new management approaches.

Creating assets

What are the economic benefits of embodying a CSR strategy at the core of the business model, and how can SMEs implement this without having to concede to trade-offs? How will it add value, open new market opportunities and drive growth?

First, CSR promotes innovation within the organisation. By seeking to add value, it requires a change in the manner in which the business is run. Fostering innovation can be achieved through strong leadership and management, investing in human capital, improving reporting and communication and engaging in strategic partnerships. The more an organisation develops innovation capacity, the more it will be able to add value to the market.

Second, investing in human capital produces difficult-to-trade assets, such as knowledge and trust, which can give a business its competitive advantage and foster an entrepreneurial culture. It also boosts organisational performance, as employees are provided with an opportunity to learn and align themselves with organisational goals.

But before targeting a variety of issues on the social agenda, it is easy to forget customers are at the heart of the business. They drive growth, sales, reputation and market-orientation. The first social responsibility of a business is to provide customer value through the provision of quality, safety and consistency. Being customer-oriented increases the ability of the organisation to respond swiftly to market changes and what influences customer needs. And, this in turn greatly reduces risk and volatility, does not require an overhaul of business strategy, and customer orientation becomes a key part of CSR initiatives.

Lastly, there is no point for businesses to act socially responsible if there exists no awareness towards CSR activities. Creating awareness is the duty of all stakeholders – the public and private sector, as well as consumers, media and non-profit agencies. Communication is key, and the difficulty to communicate with stakeholders has been one of the main deterrents to embedding CSR practices in the region. Businesses need to develop the internal skill sets to communicate their CSR activities through, for example, better reporting, auditing and transparency.

Consumer data in the UAE shows annual reports or other forms of company information are regarded as very credible sources relating to CSR activities and most will turn to online sources of information such as a company’s website. Most importantly communication is a reminder that the business exists within a community, and that responsible practices can have a multiplier effect, benefiting the business environment as a whole.

Through cooperation, partnerships and communication, organisations can use their CSR efforts to improve the business environment in which they operate, aligning economic and social goals to develop sustainable, long-term prospects. CSR has gone beyond branding; it is now a tool for increased productivity that cannot be separated from the competitive context.

Note: This article has appeared on CSR Middle East.

About Tatjana de Kerros

Tatjana de Kerros is an independent research analyst and consultant, specialising in entrepreneurship and private sector development for the GCC region. Her clients include scholars, entrepreneurial support programmes and multinationals, and she is currently consulting for Sacha Orloff & Co for CSR intrapreneurship projects in the region. She is also the founder of The Entrepreneurialist, a blog that provides commentary and analysis on entrepreneurial initiatives in the GCC, and aims to bridge the knowledge and practice gap and foster collaboration, action-orientated solutions and best practices.

Talkback Readers: Where do you see good examples of CSR – those that go beyond branding? Tell us on Talback!

#Business #CSR #Dubai #Environment #Middle East #UAE #communication #competitive advantage #corporate social responsibility #employee engagement #CSR reporting

Vampire Tax Havens: The Secret Drain on the Global Economy

Originally posted on the CSRwire website.

By Francesca Rheannon

Offshore tax havens are starving economies of the capital needed for productive investment and saddling governments with crippling deficits.

The headlines scream it every day: city, state and national budgets are being cut, cut, cut. Citizens are up in arms, outraged that needed government services are being eliminated, wages and pensions slashed and the national patrimony sold off. The poor in "developing" countries are getting poorer and the funds to repair aging infrastructure or adapt to climate change are drying up. A "silver tsunami" of boomers turning 65 is heading our way while politicians threaten to shrink government support for medical care for the elderly - if not eliminate it entirely. And young people are seeing their future dry up and blow away in the wind.

There's not enough money, our leaders say and shrug their shoulders in helplessness. This kind of voodoo economics conveniently forgets there are actually two sides to a financial balance sheet - spending and income - even when it comes to government budgets (like any other budget).

It's worst in the U.S., where a Congress dominated by mathematically-challenged right-wing extremists is holding the world economy hostage over lifting the debt ceiling by refusing to entertain the merest hint of raising tax revenues to balance the budget. As the New York Times reported Tuesday, Republican leader Mitch McConnell "dug in deeply against proposals for new tax revenue, suggesting that the deal should be struck mainly by cutting spending. New taxes, he said, would harm the economy."

It's precisely the fact that governments are losing their will and power to tax corporate profits that underlies the fiscal crisis so many find themselves in. In 2008, the GAO reported two-thirds of companies, both domestic and foreign, doing business in the US paid no taxes whatsoever, while raking in corporate sales to the tune of $2.4 trillion.

And why are they losing the will and power to do so? A deeply illuminating new book by British author Nicholas Shaxson, Treasure Islands, provides the answer: because fully a quarter (or more) of the globe's business is being conducted in the shadowy world of offshore tax havens, robbing governments of revenue, transferring huge portions of the national wealth from poor countries to private bank accounts in the rich countries, and sticking middle class and lower income taxpayers everywhere with the burden of keeping public services afloat.

Adding insult to injury, when the casino economy that is getting fat from offshore profits crashes, the taxpayer is tapped to bail it out. As we find out from Shaxson's book, Citigroup has 427 tax haven subsidiaries; Morgan Stanley is next with 273. Yet when the financial house of cards they built imploded, they made sure big government saved their bacon.

Contrary to the common notion that offshore tax havens are for drug and gun smugglers, "spies, petty criminals or celebrity tax dodgers," the big users of what Shaxson called "secrecy jurisdictions" are the banks and other financial institutions.

The tax revenue heist happens in a variety of ways. One is the "magic of transfer pricing," as Shaxson calls it, which allows profits to escape detection by national governments. One example of this came to light in the 2007 case against GlaxoSmithKline. According to one writer, "The investigations carried out by Internal Revenue Service found that the American subsidiary of GlaxoSmithKline overpaid its UK parent company for drug supplies during 1989-2005 period, mainly its blockbuster drug, Zantac. These overpayments were meant to reduce the company's profit in the US and thereby its tax bill. The IRS charged Europe's largest drug company for engaging in manipulative 'transfer pricing.'"

The secrecy fundamental to tax havens violates a core principle of CSR: transparency. But we hear little complaint about offshoring from the CSR community.

Possibly it's because so many of us rub shoulders with those who benefit from the offshore economy - whether we are connected to NGOs working with multinational corporations or big financial institutions, or working to expand the reach of CSR in the corporate community, or working as CSR officers in corporations themselves. Citigroup is part of the Ceres network; Morgan Stanley is on the Dow Jones Sustainability Index. Or possibly because business people everywhere have bought the anti-tax and anti-regulatory mantra.

But, as Shaxson says, the tax havens that shelter corporate profits are "acting as berserkers in the global economy, forcing other nations to engage in the competitive race to the bottom and in the process cutting swaths through the tax systems and regulations of nation states, rich and poor, whether they like it or not."

Where will we get the money for a Marshall Plan for the Planet? Every dollar or euro or rouble that remains offshore in these tax havens is money that is lost to fostering the development of a clean, green global economy or helping poor countries to adapt and develop in an environmentally sustainable manner. With human civilization running out of time to tackle mitigation and adaptation to climate change, it's time to drive a regulatory stake into the vampire's heart - and put finance capital to the service of the world's citizens once again.

About Francesca Rheannon

Francesca is CSRwire's Talkback Managing Editor. An award-winning journalist, Francesca is co-founder of Sea Change Media. She produces the Sea Change Radio's series, Back to The Future, and co-produces the Interfaith Center of Corporate Responsibility's podcast, The Arc of Change. Francesca's work has appeared at SocialFunds.com, The CRO and E Magazine, and she is a contributing writer for CSRwire. Francesca hosts the nationally syndicated radio show, Writers Voice with Francesca Rheannon.

Talkback Readers: Is there a way to tax the flow of capital going offshore? Tell on Talkback!

#global economy #tax havens #taxes #CSR #offshore capital #transparency #Nicholas Shaxson #book

Democracy’s Epic Moments

The colonists created the new institutions they needed in spite of Britain’s rule.

As part of the New Economy 2.0 series

By David Korten

The parallels between the independence movement that liberated thirteen colonies on the east coast of what is now the United States and the emerging independence from Wall Street movement are both revealing and instructive, as I wrote in Agenda for a New Economy:

As the economies of Britain’s thirteen colonies on the eastern seaboard of North America began to grow in their production of real wealth, their prosperity attracted the attention of the British Crown, which sought to increase its take through new taxes and the grant of a tea monopoly to the East India Company, in which the king held a financial interest.

In the years following World War II, the policies of the Roosevelt New Deal created a prosperous middle class and flourishing Main Street businesses growing the real wealth of their local communities. Main Street’s prosperity attracted the attention of Wall Street, which used its political and economic power to assume the role of colonial overlord and increase its take by charging interest rates and fees; asserting monopoly control of intellectual property rights, markets and resources; and accelerating its creation of phantom wealth financial assets to expand its claims against the real wealth produced by others.

As the threat to their liberty and prosperity became evident, the colonists mobilized in resistance to the British Crown. Some colonists formed local resistance groups, with names such as Sons of Liberty, Regulators, Associators, and Liberty Boys, to engage in acts of non-cooperation such as refusing to purchase and use the tax stamps that the Crown demanded be applied to all colonial commercial and legal papers, newspapers, pamphlets, and almanacs.

The New England merchant class given to slave trading and piracy had no reservations about evading import taxes by adding smuggling to their business portfolios. When the Crown decided to assert its authority over the Massachusetts Supreme Court by paying its judges directly from the royal treasury, the people responded by refusing to serve as jurors under the judges.

Other colonists formed Committees of Correspondence, groups of citizens engaged in sharing ideas and information through regularized exchanges of letters carried by ship and horseback. These committees linked elements of diverse citizen movements in common cause across the colonial borders that had long kept them divided.

As the Wall Street threat to their liberty and prosperity became clear, the people began mobilizing in resistance. They formed organizations with names like Art and Revolution, Direct Action Network, Indigenous Environmental Network, the Institute for Local Self-Reliance, the International Forum on Globalization, National Farm Workers Association, Public Citizen, Rainforest Action Network, the Ruckus Society and United for a Fair Economy. They created Internet forums to engage in sharing ideas and information and unite movements in common cause, reached out even across the national borders that had long kept them divided. In alliance with similar groups in other nations, they mobilized millions in global demonstrations that regularly disrupted the international meetings in which the rich and powerful gathered to circumvent democracy, rewrite the rules of commerce to remove restrictions on the consolidation of corporate power and negotiate their division of the spoils.

The colonists also undertook initiatives aimed at getting control of economic life through local production. They boycotted British goods and subjected merchants who failed to honor the boycott to public humiliation. Artisans and laborers refused to participate in building military fortifications for the British. Women played a particularly crucial role by organizing Daughters of Liberty committees to produce substitutes for imported products.

Local Main Street businesses, workers and consumers undertook initiatives aimed at getting control of economic life through local production and the patronage of local business. They organized farmers’ markets, food co-ops, “local first” campaigns, local investment funds and credit unions and consumer boycotts of big-box stores and the products of corporations that harm the environment and pay substandard wages. They campaigned for state banks. Local businesses formed national alliances like the American Independent Business Alliance, the Business Alliance for Local Living Economies and Transition Towns. Local chambers of commerce disaffiliated from the corporate-dominated national Chamber of Commerce and joined these new alliances. New organizations like Americans for Financial Reform, the New Economy Network, the New Economy Working Group and a New Way Forward formed to mobilize popular support for new rules to break up the big banks and hold financial institutions accountable to the public interest.

Because economic democracy and political democracy necessarily go hand in hand, the New Economy movement is an essential leading edge of this next phase in the larger human struggle to liberate ourselves from cultural and institutional chains of Empire. Wall Street is a formidable foe, but so was Britain. At the time of the rebellion, it was the most powerful empire on Earth. Fortunately, the advantage in any such struggle ultimately lies with a motivated and organized citizenry.

About David Korten

David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group and a founding member of Business Alliance for Local Living Economies (BALLE).

About New Economy 2.0

This exciting, new series is co-published by CSRwire and YES! Magazine.

The arguments presented here are developed in greater detail in Agenda for a New Economy available from the YES! Magazine Web store.

Talkback Readers: Do we need a new Independence Movement? What forms of resistance do you think it should create? Give us your feedback on Talkback!

#Democracy #local #local economy #Empire #Wall Street #New Economy #New Economy 2.0 #independence #real wealth #Main Street

Resilient Cities Will Be Sustainable Cities

Experts gather in Bonn to share ideas on urban responses to climate change.

By Philip Monaghan

In the spirit of the theme of the conference I attended in Bonn (Resilient Cities: 2nd Annual World Congress on Cities and Adaptation to Climate Change), I was pleased to overcome the shock and surprise of Icelandic volcanic ash cloud and an e-coli food outbreak to share my latest research insights with 500+ delegates from local government and global finance from around the world.

In the same week of the news that record-breaking CO2 emissions put the world on fast track to irreversible climate change, I and other delegates noted the gathering marked a tipping point in a key debate to tackling climate change.

Convened by ICLEI-Local Governments for Sustainability with UN-Habitat, the premise to the gathering is, in summary, that cities account for both more than half the world’s population and carbon emissions, a footprint which will increase with urban-rural migration; however international climate negotiations to date have failed to grasp this and have instead focused their deal-making on nations or sectors; yet whilst these deals have stalled, city mayors from Mexico, Tanzania, The Philippines and elsewhere have the vision and appetite to step in where others fear to tread. But to lead to more tangible action on the ground requires re-thinking the way the World Bank and other global financiers select projects and partners to fund.

Given this, it was refreshing and fascinating hear details of the new report, Arc 3: Climate Change and Cities; First Assessment Report of the Urban Climate Change Research Network, focusing on how to manage risks associated with hazards (e.g. heat waves), vulnerability (e.g. % poor) and adaptive capacity (e.g. resources). Taking India’s megacities such as New Delhi as a case in point, one measure – perhaps unsurprising in light of recent events in Japan – is to harden power plants against severe storms or quakes. Another intervention is the regulation of settlement growth in flood plains.

Whilst all very informative, the most inspiring thing was the sheer intellect, charisma and appetite for change from city leaders from the developing and emerging economies who were fired up to challenge the way people think. As Didas Massaburi, Mayor of Dar es Salaam summed it up in Bonn, “poverty and the environment are twins, and their parents are ignorance.” That is good enough for me.

About Philip Monaghan

Philip Monaghan is a writer, strategist and change manager in the fields of economic development and environmental sustainability. He is the acclaimed author of the books Sustainability in Austerity (2010) and Hard to Make, Hard to Break (forthcoming 2012).

Talkback Readers: Do you have examples of how cities are adapting to climate change? Share them on Talkback!

#sustainable cities #climate change #world leaders #sustainability #climate #resilient cities #Environment

Verging on the Sustainable?

Sustainability pioneer John Elkington reports back from sustainability’s new frontier.

By John Elkington

When I recently had dinner in San Francisco with Joel Makower of GreenBiz, he blamed me for pulling him into the sustainability space over 20 years ago. (In the late 1980s, he translated our best-selling Green Consumer Guide into the American version.) Having just attended the London version of Joel’s brainchild VERGE, a rolling, invitation-only roundtable forum that kicked off in Shanghai and ended in San Francisco the following day, I feel quite proud. This was one of the most interesting events I have been to in a while – spotlighting key trends and opportunities at the intersection between energy, information, buildings and vehicles.

Early in the history of the sustainability movement, we tended to focus on the risks associated with individual products, technologies, companies and sectors. But now, as the focus shifts to solutions, the spotlight is on emerging areas of overlap between on-the-face-of-it-unrelated sectors.

The London VERGE event brought together companies like Atkins, Autodesk, BT, Cisco, IBM and SAP. Held at the Royal Society, founded in 1660 and with an impressive oil painting of Sir Isaac Newton staring down on the proceedings with what looked like interest, around 40 CEOs, COOs, CIOs and leaders from the world of government and civil society explored the accelerating convergence between sustainability-oriented sectors.

I found myself sitting next to Mike Barry, award-winning Chief Sustainability Officer of UK retail giant Marks & Spencer, whose Plan A (“because there is no Plan B”) has garnered much praise and several awards. More importantly, as Mike told the gathering as one of half-a-dozen ‘Firestarters’, Plan A made a net profit for M&S of £100 million in 2010. All part of the transition from an era when five CSR professionals “tried to ensure the group did less bad” to a future when every employee is an agent of change.

“Does the VERGE concept resonate?” Mike asked later in the morning. “Absolutely! Convergence is our No. 1 challenge.” The new technologies and business models being given a run around the track that morning will be key to shifting mainstream companies towards sustainability. M&S, for example, aims to achieve zero carbon targets in the decade 2020-2030, but is acutely aware of how much there still is to do. “We are perhaps 10 percent along the metaphorical journey to sustainability,” Mike concluded.

One interesting technology I was briefed on while in San Francisco is the latest version of the GoodGuide app, potentially providing consumers with a huge flow of tailored information on the performance of products, brands and the companies behind them in key areas of interest—whether that be animal welfare, obesity or climate change. There now seems to be a good chance that Amazon will adopt the approach, so we can opt to see the relevant data for everything we buy online, alongside the performance of competing products, brands or suppliers.

But the focus of VERGE was on the convergence of IT with infrastructure, underscoring the messaging we have seen recently from IBM’s Smarter Planet campaign and companies like GE and Siemens. But there remain real challenges here. One participant recalled going up the world’s tallest skyscraper and finding that all performance data were recorded by hand! Even where Amazon-like flows of data are now generated, IBM ‘Master Inventor’ Jim Fletcher noted they are being very narrowly used. “The buildings are talking” he said,” but no-one is listening.”

If sustainable cities are to be anything like a reality, and if regions like Europe are to reach their decarbonization targets, we must learn to listen, understand and act. If I heard it right, one key message of VERGE was that, with trillion dollar markets and our ecological future now at stake, we will.

Don’t expect most politicians to take the lead, yet. They are still in the “What can I open today? What can I announce today?” frame of mind, noted one leading figure who works very close in to government.

But one factor that will give them little choice in the matter as to whether or not to think longer term is that the time-scales involved in these new infrastructures are dramatically more extended than those we used during the New Economy. It may be a while before copies of the Clock of the Long Now are installed in the White House or No. 10 Downing Street, but chances are we are all going to have to play a longer game.

About John Elkington

John Elkington is Executive Chairman of Volans and Non-Executive Director at SustainAbility. He blogs at JohnElkington.com. And at guardian.co.uk/sustainable-business/sustainability-with-john-elkington.

Talkback Readers: What examples of the convergence toward sustainability do you know? Share them on Talkback!

#sustainability #sustainable #CSR #corporate responsibility #convergence #VERGE #opportunities

Building Successful Non-Profit Boards

Being a board member is a responsibility, not a sinecure.

By Elmira Bayrasli

The possibilities of the boardroom, board director Lucy P. Marcus believes, should aspire to the ideals that legendary medieval English King Arthur created at his famous table. There, knights gathered in effort and equality to erect a vast empire that changed history.

Change is one of the incentives driving individuals to join boards. Armed with good will and intentions and a collection of applicable skills to help entrepreneurial ventures, multinational corporations and non-profits catapult to success. It is this intention that has taken New York-born and UK-based Marcus to throw her passion behind sitting on boards as well as writing about best practices for boards and advising entrepreneurs, corporations and non-profits on how to develop strong boards. Board development, Marcus notes, is surprisingly something many entrepreneurs, who are so focused on their respective innovations, treat as an after thought. The situation is similar at non-profits. As a life-long member of this field, that caught my eye.

“People need to think of non-profit board seats as a deep responsibility and a job that requires due care and attention,” Marcus says. She believes this because at a non-profit there is so much at stake. To begin, the very cause of the organization is at stake as is its survival. That’s a higher ethical imperative than just ensuring the health of the organization’s bottom-line. “A non-profit board is looking after the governance of the organization and safeguarding its mission,” Marcus says, and “as a board member, I feel this responsibility even more keenly, as it is even more critical in difficult economic times and where headlines are creating doubts in the minds of donors and stakeholders.”

Ironically, although they don’t generate revenues, the bottom-line is just as important to non-profits as it is to for-profits. Their sustainability is dependent on it. Hence, Marcus points out, many are compelled to elect board members without serious thought to all the things board members can bring to a boardroom. Unlike for-profit boards where members get compensated, non-profit boards, particularly in the U.S., require members to fund raise on behalf of the organization. This is good and bad.

Fundraising is good where you can find a person to sign on to a non-profit’s mission and campaign on its behalf. Yet, the need to fund raise also runs the risk of building a board that is focused only on numbers and not the governance or long term development of the organization.

Marcus points out there is “real value to having different skills” on non-profit boards. Whether in finance, marketing or human resources, individuals asked to join a non-profit board should bring added value to the institution – and its staff. Because the majority of non-profits bootstrap their operations, taking care to “minimize overhead,” they often make do with a small staff that is expected to juggle several responsibilities, few of which they are experts in.

Non-profit board members can provide mentoring to an organization’s staff. Matching the skills of board members to staff and mentoring is something that should be part of a non-profit board member’s responsibilities. Interestingly, Marcus points out they are responsibilities rather than obligations. By mentoring staff, a non-profit board member gets the chance to see the inner workings of the outfit, add value to the operation and at the same time establish good will among a team.

The launch of a non-profit is another challenge of building a non-profit board. Unlike established Fortune 500 companies that hire and fire CEOs, non-profits, like start-ups, often exist because of a particular individual. Marcus notes there is a delicate balance to be had between the CEO and the board. The challenge is ensuring the board does not see this individual as infallible or as a secretary. A non-profit CEO must “execute on a plan that they can be held accountable for,” and a board member must not micromanage on that execution, but still must keep a close eye on the governance of the organization.

You can follow Lucy Marcus on Twitter @lucymarcus.

Note: An expanded version of this article has appeared on the Forbes website.

About Elmira Bayrasli

Elmira Bayrasli writes and works on economic development issues. She is the Director of Communications at the Peace Dividend Trust. From 2006 – October 2010, she was the Vice President of Policy & Outreach at Endeavor. She is writing a book about entrepreneurship and development. Elmira tweets @endeavoringE.

Talkback Readers: Are you (or have you ever been) on a board? What tips on being a good board member can you share with Talkback?

#CEO #CSR #board members #board room #corporate governance #non-profit #non-profit board #sustainability #jobs

Sustainable Value Creation

CSR is no longer about risk mitigation and "doing no harm;" it's about shared value creation.

Originally posted on the CSRwire website.

By Elaine Cohen

CSR is not what it used to be. Long gone are the days when managing your carbon emissions and contributing to the community were good enough. Today, the talk is about sustainable value creation. But is this a realistic objective for most companies?

CSR is no longer about risk mitigation and "doing no harm." It's no longer about being a responsible corporate citizen, paying taxes, developing employees or reducing carbon emissions. This kind of CSR activity may be a necessary stepping stone to sustainability but its return is limited. There is only so much money you can save by reducing your water consumption and only so many stakeholders you can appease by expanding your community outreach. The real prize is when the corporation moves beyond CSR.

According to the Committee for Encouraging Corporate Philanthropy (CECP), an international forum of business leaders focused on raising the level and quality of corporate philanthropy, CEOs are "looking for competitive advantage and sustainable profitability in new ways". They are finding it in Sustainable Value Creation (SVC). A new report just published by CECP and Accenture, "Business at its Best: Driving Sustainable Value Creation," confirms the importance of this shift in business thinking and offers a route to achieve it.

Sustainable Value Creation is defined as "a core business strategy focused on addressing fundamental societal issues by identifying new, scalable sources of competitive advantage that generate measurable profit and community benefit." It's about redirecting business efforts in a way that both makes money and empowers communities. An example appearing in the report is Pepsico's support for corn-farmers in Mexico to improve the quality of corn supplied to Pepsico while creating economic benefits for small farmers and raising local community living standards. Another is Novartis's establishment of a system of health educators in rural India to support improved access to medicine. Another is S.C. Johnson's Community Cleaning Services (CCS) program in Africa, teaching locals how to clean public and shared lavatories. This last example may not sound all that sexy but it builds business and provides local economic growth and health benefits.

The SVC concept was not invented by CECP or Accenture. Michael Porter and Mark Kramer developed the Shared Value concept and framework with Nestlé, summarized in a report published in 2006, the Nestlé concept of CSR as implemented in Latin America (2006), which influenced Nestlé's sustainability strategy in a fundamental way from that point forward. Nestlé issued its first annual global Shared Value Report in 2007 and now offers prizes to those who create Shared Value and runs a blog to share insights and practices. Porter and Kramer's article, published in the Harvard Business Review in January 2011, "Creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth" has been hailed by many as iconic and cites examples from Google, IBM, Nestlé, Unilever and Walmart.

What CECP’s report contributes to the concept of sustainable shared value is less about 'what' and more about 'how'. It suggests an explicit framework for understanding the societal and business benefits of Sustainable Value Creation and a roadmap of R's: (recognize, recalibrate, research, repeat, rewire and reinforce) as a direction for action. The approach was developed based on the experiences of several CEOs. Margaret Coady, CECP's Director, told me: "Our objective was to help close the gap between vision and action. At present, the vision is clearer than the path to achieve it. We wanted to provide tools, with a focus on role of the CEO as the leader of change in the organization, to help create sustainable value. We see this as a further piece in the process of creating a portfolio of actions which fuse with corporate strategy, building on the best of the core business mandate requiring value creation for shareholders, CSR practices and corporate philanthropy."

In "Business at its Best," 26% of CEOs interviewed say SVC requires new models for measuring business value, which include societal metrics. This is some challenge. Margaret Coady says "companies need to adopt the mindset of seeing communities as customers and engage in research which enables measurement of impacts. The key thing is that this cannot be done alone. Companies have to engage with partners to do this effectively."

Ultimately, though, this report still stops short of a comprehensive guidebook and the practicalities of getting started may still elude many companies. One of the hardest things about SVC, according to those CEOs interviewed, is identifying an initial set of societal issues that link to competitive advantage. This report is intended to familiarize companies with a methodology for mapping the right issues to focus on.

But is SVC just pie-in-the-sky? Globalization has enabled corporations to grow into pseudo-countries with an unprecedented scale of impact on society and environment. In return, corporations must act to safeguard our future and, in doing so, their own. Combining this with their business interest is a great vision, but how many will truly be able to make the seismic shift from responsibility to sustainability? With some exceptions, many companies have barely embraced the former and most companies are struggling with the challenge of defining their own measurable impacts on society let alone their impacts in society.

Most companies have on boarded sustainability without changing their core business model. For all but the largest companies, SVC might still be light years away. It is doubtful companies can leap into SVC without first managing and optimizing their internal operations and sustainability practices. Margaret Coady agrees that doing so provides the necessary authenticity for enduring partnerships, which are key to SVC success. Therefore, while the CECP roadmap may inspire, it may well be way beyond the reach of many.

About Elaine Cohen

Elaine Cohen is a Sustainability Consultant and Reporter at Beyond Business and blogger on sustainability reporting and author of CSR for HR: A necessary business partnership to advance responsible business practices.

Talkback Readers: How can companies effectively create sustainable shared value? Share on Talkback!

#sustainability #CSR #SVC #shared value creation #shared value #corporate responsibility #sustainable #CECP report #business

Double Choke Point: Demand for Energy Tests Water Supply and Economic Stability in China and the U.S.

The cords of energy demand and water supply are tightening around the world's two largest economies.

Originally posted on the CSRwire website.

By Keith Schneider, Circle of Blue

The coal mines of Inner Mongolia, China and the oil and gas fields of the northern Great Plains in the United States are separated by 11,200 kilometers (7,000 miles) of ocean and 5,600 kilometers (3,500 miles) of land.

But, in form and function, the two fossil fuel development zones -- the newest and largest in both nations -- are illustrations of the escalating clash between energy demand and freshwater supplies that confront the stability of the world's two biggest economies. How each nation responds could have profound implications for their domestic energy and food markets, and for economic stability across the globe.

Both energy zones require enormous quantities of water -- to mine, process and use coal; to drill, fracture and release oil and natural gas from deep layers of shale. Both zones also occur in some of the driest regions in China and the U.S. And both zones reflect national priorities on fossil fuel production that are putting enormous upward pressure on energy prices and inflation, say economists and scholars.

In the 15th and final chapter of Choke Point: China, and the last article in its year-long Choke Point project, Circle of Blue today reports on energy production and resource scarcity trends that threaten to tilt the economies of China and the U.S. By insisting on developing new sources of carbon-based fuels that are drawn essentially from the desert, both nations are testing the limits of their national water reserves and challenging the capacity of other important economic sectors -- agriculture, large metropolitan regions, major manufacturers -- to use much less water.

"To what degree is China taking into account the rising cost of energy as a factor in rising overall prices in their economy?" David Fridley asked in an interview with Circle of Blue. Fridley is a staff scientist in the China Energy Group at Lawrence Berkeley National Laboratory in California. "What level of aggregate energy cost increases can China sustain before they tip over?

"That's where China's next decade is heading -- accommodating rising energy costs," he added. "We're already there in the United States. In 13 months, we’ll be fully in recession in this country; 9 percent of our GDP is energy costs. That's higher than it's been."

Indeed, given the different economic circumstances that grip both countries -- one soaring and the other in a serious slump -- they nevertheless view energy production as the top national priority. Growth and development at such a scale demand innumerable resources, and, in both nations, the central idea guiding energy development is to generate as much as possible. As a result, the water needs of Chinese and American energy producers take precedence over any other economic sector.

"The United States confronts the same kind of resource conflicts as China," Fridley said. "There are increasing expectations of confrontation over water as a factor in energy production."

Read the entire Choke Point: China series at Circle of Blue.

About Keith Schneider

As Senior Editor, Keith manages the Circle of Blue news desk and participates in multimedia story development reporting, editing and production. He is a nationally-known journalist, online communications specialist and environmental policy expert. Keith was a New York Times national correspondent for over a decade, where he continues to report as a special writer on energy, real estate, business and technology. Before joining Circle of Blue, Keith was media and communications director at the US Climate Action Network and communications director at the Apollo Alliance. Keith developed one of the first independent online news desks as the founder and executive director of the Michigan Land Use Institute. A sought-after public speaker on the role of original reporting and online communications in the public interest, Keith is a regular contributor to the Times, Yale Environment 360, Grist Magazine and other prominent news organizations. You can read his personal website at Modeshift.org.

Talkback Readers: Share your comments, concerns and questions about the Choke Point series on Talkback!

#Choke Point: China #Circle of Blue #water news #water #energy #energy demands #China #u.s. economy #sustainability

CSR in the WikiLeaks Age

Originally posted on the CSRwire website.

By Francesca Rheannon

WikiLeaks revelations aren't just about politics but also about how well corporate practices conform to stated CSR goals.

The news broke several weeks ago the suppliers of several major U.S. apparel companies had convinced the Obama Administration to kill a plan by the Haitian Parliament to raise the country's minimum wage.

According to U.S. State Department cables furnished by WikiLeaks to the Haitian weekly, Haïti Liberté and reported on by The Nation, contractors for Levi-Strauss, Fruit of the Loom and Hanes "worked in close concert with the U.S. Embassy when they aggressively moved to block a minimum wage increase for Haitian assembly zone workers, the lowest-paid in the hemisphere."

Haitian lawmakers passed an increase in the minimum wage to 62 cents per hour in June of 2009. But the factory owners refused to go along, limiting the wages instead to 31 cents per hour, an increase of nine cents. To back them up, they recruited the heavy-handed support of the U.S. State Department, which pressured then Haitian President René Préval to get the Parliament to step back from the wage increase.

It seems to have worked. The minimum daily wage for Haitian workers in the textile industry was set at about $3 a day, while workers in other sectors were entitled to $5 a day. Moreover, as Cathy Feingold, Director of International Affairs for the AFL-CIO, told CSRwire, workers are working on a piece-rate basis, so they have to work at a very high intensity in order to make that minimum -- something the ILO has condemned. (The U.S. Embassy complained the $5 per day minimum for non-textile workers "did not take economic reality into account.")

Not that either wage is able to support a family in Haiti, where food prices have been skyrocketing. In January of 2010, a small bag of rice cost $3.50, more than the entire daily wage of a Haitian textile worker. The Nation cited a 2008 report finding that it would take $12.50 a day to support basic living expenses for a Haitian family.

Ryan Chittum takes a look at that "economic reality" for the textile companies. As he wrote in the Columbia Journalism Review:

Let's do a little math. Haiti has about 25,000 garment workers. If you paid each of them $2 a day more, it would cost their employers $50,000 per working day, or about $12.5 million a year.

Zooming in on specific companies helps clarify this even more. As of last year Hanes had 3,200 Haitians making t-shirts for it. Paying each of them two bucks a day more would cost it about $1.6 million a year. Hanesbrands Incorporated made $211 million on $4.3 billion in sales last year, and presumably it would pass on at least some of its higher labor costs to consumers.

Or better yet, Hanesbrands CEO Richard Noll could forego some of his rich compensation package. He made $10 million package last year. He could pay for the raises for those 3,200 t-shirt makers with just one-sixth of the $10 million in salary and bonus he raked in last year.

If I were the CSR officer (or head of corporate communications) for Hanesbrands, I'd be going "ouch!" upon reading that statement. And Levi Strauss & Co., which has a robust reputation for CSR, came back swinging. The company "vehemently denied" the allegations in a statement released on its website, saying:

"Levi Strauss & Co. did not lobby the Haitian government against raising the minimum wage -- nor did we ask anyone to do so on our behalf. Upon learning of the allegations, we immediately reached out to our contractor in Haiti. Its management has assured us the reports are inaccurate and that the vendor did not lobby against raising the minimum wage."

It wasn't long before the Haiti WikiLeaks flap erupted that my employer, CSRwire, published a press release from Levi-Strauss that turned out to be pertinent to the issue of workers' welfare. Titled, "Levi Strauss & Co. Announces New Terms of Engagement for Its Global Supply Chain; Company CEO Insists We Must Partner with Factories to Empower Workers," the release laid out the company's plan to "move beyond compliance" to "help make employees' lives better by supporting programs for their workers that align with UN Millennium Development goals."

Among the UN Millenium Development goals are to eradicate extreme poverty and hunger, in part by achieving decent work for all. (Another goal is to halve the "proportion of people whose income is less than $1 day” by 2015, but in light of food and fuel inflation – and the statistics about what constitutes a living wage in Haiti and other poor countries -- that goal is revealed as being pitifully inadequate.)

Levi Strauss CEO announced the program at the CERES annual conference. Read from the classic CSR standpoint, it is exemplary. And, as I noted above, Levi-Strauss itself has a stellar reputation as a responsible corporate actor.

In a phone call to the company to get comment on the WikiLeaks-Haiti allegations, this reporter was told, after going through the State Department cables themselves, in addition to talking with the supplier, Grupo M, Levi Strauss didn't have "any evidence that our supplier did anything wrong." Moreover, I was told, Grupo M is "the only supplier in the Haitian textile industry with a collective bargaining agreement; the company has been paying much higher than the minimum wage for years."

Whether or not the other companies mentioned by The Nation, Hanesbrands and Fruit of the Loom, can claim the same innocence as Levi Strauss in the affair -- a Google search did not turn up responses from those companies -- it seems that Levi Strauss has taken seriously its responsibility to do due diligence and ensure accountability in this particular case.

But, as the Levi Strauss representative told me, "There will always be problems in the supply chain, but the more important thing is not only to address the problems but to invest in the long term infrastructure that will give workers tools to improve their lives."

Exactly. But what does that mean? The company pledges its commitment to "empowering workers" to help that happen. It names educating workers on financial literacy, HIV-AIDS, maternal health and a host of other important concerns.

But equally important will be making sure that workers are empowered on the factory floor, to ensure not only that the robust health and safety standards Levi Strauss requires are followed, and also wages and benefits are raised to a truly sustainable standard for workers.

While the union workers who produce the goods for Levi Strauss are making better wages than most other textile workers in Haiti, are their wages high enough to provide a decent living standard in a country where health care and education are privatized -- and expensive? Where food prices are going through the roof?

Cathy Feingold told me Levi Strauss has been "a model in Haiti," but the wages paid to the workers employed by Grupo M are still "low." In fact, a report just released by the AFL-CIO showed it would now take $29 a day to provide a living wage for a Haitian family.

In the Age of WikiLeaks, it will take due diligence and forward thinking -- "going beyond compliance," as Levi Strauss & Co. put it -- to keep a company's CSR reputation from becoming sullied. It will take real worker empowerment and a commitment to ESG standards that can ensure true sustainability for every worker, their family and their community.

About Francesca Rheannon

Talkback Readers: In the WikiLeaks Age, can companies afford not to be good corporate citizens? Tell on Talkback!

#CSR #WikiLeaks #Levi Strauss #corporate social responsibility #wages #Haiti #jobs #MDG #supply chain

United We Stand; Divided We Fall

Left and right need to unite to defend the interests of the majority.

As part of the New Economy 2.0 series

By David Korten

From the beginning of history, Empire’s rulers have maintained their power by sowing fear, mutual suspicion and division to prevent those who bear the burdens of their rule from uniting against them. On the political right, anger is directed against government. On the political left, it is directed against Wall Street corporations.

Each blames the other for America’s decline and the economic distress of working families, thus diverting attention from the deeper truth. Corporate money, perks and the revolving door between Congress and lobbying firms have corrupted the political process. As a consequence, Wall Street and Washington are both running out of control and united in the pursuit of agendas that grow the power and privilege of the few at the expense of the many.

Whether the blame lies more with Wall Street or with Washington is largely beside the point. The bottom line is a Wall Street-Washington axis that has stolen our money and country, denies us our rights, undermines national security and threatens the future of all our children, irrespective of political orientation.

Two events following the 2008 financial meltdown so focused attention on the power and dysfunction of the Wall Street-Washington axis that the establishment propaganda machine that keeps us divided came near losing control. They demonstrate the potential for a broad popular transpartisan political alliance

One was the government bailout of Wall Street. Virtually no one outside of Wall Street was happy about government taking money from struggling taxpayers in order to give it to Wall Street bankers so they could reward themselves bonuses for crashing the economy.

The other was the Supreme Court decision in Citizens United v. the Federal Election Commission that gave corporations carte blanche to buy elections. Follow-up polls reported the Supreme Court’s decision was opposed by 80 percent of Americans, including 76, 81 and 85 percent of Republicans, Independents and Democrats, respectively – a truly extraordinary consensus in this time of political division.

I come from deeply conservative roots and distrust any concentration of unaccountable power. As the author of When Corporations Rule the World, my view of the unconscionable abuse of corporate power is on public record. I also recognize the profound truth of Paul Hawken’s observation in The Ecology of Commerce that it is big business that creates the need for big government to constrain the excesses and clean up the messes. What we now have, however, is big government aligned with big business to facilitate the excesses and reward those who create the messes. It is a disastrous arrangement against which the vast majority of conservatives and liberals should be united.

Conservatives are correct on a key point liberals tend to overlook; the federal government is too big and intrusive. The Patriot Act, which passed with a large bipartisan majority, is an abomination against democracy and foundational American ideals. We do have a public spending problem. The public debt owed to foreign nations and Wall Street bankers is unsustainable and a threat to national security.

Taxing the poor to pay for subsidies to powerful corporations and squandering our national treasure on unwinnable wars that have no point other than to fuel corporate profits is unconscionable. Health insurance programs designed to benefit insurance and pharmaceutical companies need to be restructured to reduce costs and improve services.

We spend too much on safety net programs that would not be necessary if we rolled back ill-conceived trade agreements that facilitate outsourcing and the global bidding down of wages and benefits and required corporations to pay employees a living wage with basic benefits. It is absurd to tolerate the Federal Reserve giving Wall Street banks virtually free money to loan back to U.S. taxpayers at a market interest rate.

There is good reason for outrage against both big business and big government. We must respond, however, from a place of love, national unity and sense of possibility rather than a place of fear, anger and division. When consumed with anger, our reptilian brain takes control. Our capacity for nuanced critical thought is diminished and we easily succumb to manipulation by propagandists and advertisers. Note the ease with which Wall Street billionaires feed and manipulate the anger of Tea Party members to mobilize them in support of campaigns that support Wall Street interests at the expense of their own.

If those on each side of America’s deep political divide could see the merit in the arguments of those on the other, we might come together as a powerful citizen alliance. We could break up concentrations of Wall Street power, get money out of politics, end senseless wars, achieve an equitable distribution of wealth, downsize government and hold politicians accountable to an authentic popular will. That is an agenda that principled conservatives and liberals should all be able to get behind.

About David Korten

About New Economy 2.0

This exciting, new series is co-published by CSRwire and YES! Magazine.

The arguments presented here are developed in greater detail in Agenda for a New Economy available from the YES! Magazine Web store.

Talkback Readers: What are the points liberals and conservatives can agree and work together on? Share your opinions on Talkback!

#New Economy #New Economy 2.0 #big government #big business #Wall Street #real wealth #sustainability #conservatives #Liberals

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