Force For Good

New Year resolutions and The Future We Want

January 19, 2012

The New Year is the time of new beginnings, and our resolutions are the commitments we make to new goals and possibly even new visions. So why not reflect on what kind of future we want?

The power of visions for the future

In 1939-40, during the Great Depression, General Motors created a dynamic and positive vision of what America could be in 1960: a highly car-centred society with automated highways and vast suburbs. The vision was presented on the exhibit Futurama at New York World’s Fair to show the world 20 years into the future, and it made such a deep impression that it has shaped urban development in the United States over the past 70 years.

An updated version, Futurama II, was presented at New York World’s Fair in 1964-65, this time depicting life 60 years into the future. Scenes included an Antarctic ‘Weather Central’ climate forecasting centre, a ’Hotel Atlantis’ for underseas vacationing, desert irrigation and land reclamation, building roads in the jungle and a City of the Future. The exhibit proved to be the most popular with more than 26 million people attending the show in the two six-month seasons the Fair was open. Once again the exhibit was sponsored by General Motors.

On June 1, 2009 the credit crisis closed General Motors, which is now owned by the United States Treasury and Canadian governments, a symbolic mark of the end of the industrial era. Today it is time for a new vision.

The Future We Want

One project is already working on offering a vision of what the future will look like, guided by principles of sustainability. It is The Future We Want™, facilitated by William Becker, former executive director of the US Presidential Climate Action Project, and supported by a wide range of project partners and advisors leading the field of sustainability and climate change research, including UN’s Global Compact network.

William Becker – who is also among the endorsers of my book The New Pioneers – recently told me about the three stages planned for the project:

1) A global conversation using crowd sourcing and social media, in which people from around the world express their ideas for what a sustainable future would be.

2) An exhibit at the 2012 Earth Summit in Rio that depicts these ideas using videos, computer animations and other advanced communications technologies.

3) Worldwide dissemination of these products in several different formats from educational curricula to apps, and a web page that provides toys and tools for professional planners to engage the public in sustainable community development decisions.

William Becker also told me that, ‘we’ve found that creating a realistic yet hopeful vision of the future is an idea taking hold in many different parts of the world and by many different groups. We hope to become a portal through which policy makers, designers, planners and lay citizens can connect with and participate in these efforts.’

Why not kick-start the New Year by sharing your vision for a sustainable future through The Future We Want™ ? – and in the meantime I wish you a prosperous and sustainable 2012, I look forward to sharing it with you. Happy New Year!

This blog post was originally published in The New Pioneers.

Tomorrow's Value

December 2, 2011

LEADING business people have been discussing the future of their companies and the role they play in the communities they serve in a series of lectures to explore the theme “Tomorrow’s Value”.

The lectures, which have been produced in collaboration by CIMA and Tomorrow’s Company, were designed to explore, question and probe fundamental questions of what is value, what has value, and why it is so important.

A lecture was held at Herbert Smith LLP in London, given by Joe Garner, head of UK retail and deputy chief executive officer of HSBC.

He told the audience: “Acting with integrity means acting with hope, fairness, courage, kindness... being guided not just by rules, or popularity, but by principles and values. It is – ironically – these very values that actually do underpin the workings of the business world.

“I doubt I could prove it, but I work on the assumption that improving customer service, in time, improves profitability. It is my firm belief that by making business decisions that are guided by principles such as trust, care, fairness as well as strength, courage and determination we create a truly sustainable financial performance.”

The series then moved to Mumbai. “Success through corporate sustainability – strategy, leadership and reporting” brought business leaders from across India together to create tomorrow’s agenda for sustainable business at a pioneering event hosted by Tata.

Keynote addresses were given by R. Gopalakrishnan, director, Tata Sons Ltd, and Kishore Chaukar, managing director Tata Industries Ltd.

They stressed the need for organisations to look beyond short-term profits and revenues, focusing instead on the real future and wider purpose of business.

Mansion House was the venue for the lecture “Health, Business and Society”, which saw David Brennan, chief executive of AstraZeneca, talk about the critical importance of building trust so that business can play a full role in developing solutions to prevent, control and treat disease.

He said that he hoped initiatives being made by the pharmaceutical company “will allow us to move the debate on from a narrow focus on price and profitability to how we can secure shared value for society as a whole.

And to gain acceptance of the view that successful biopharmaceutical innovation creates value for shareholders, but also brings real benefits to patients and the communities we serve” “Investing in Stewardship”, saw Paul Abberley, chief executive of Aviva Investors, join CIMA and Tomorrow’s Company at their annual parliamentary reception at the House of Lords.

CIMA chief executive Charles Tilley rounded off the recent events by calling for less regulation and more supervision in order to create long-term sustainable businesses.

For further information on the series, please visit our Tomorrow's Value Lecture series page or www.cimaglobal.com/Thought-leadership/Tomorrows-Value-lecture-series/ . For latest news check #TomorrowsValue on Twitter.

This article was originally published on CIMA's Financial Management page. Click here to view it.

Building sustainable businesses

December 1, 2011

There is a real competitive advantage to be gained by companies who set out to build sustainable businesses, explains CIMA’s Victor Smart.

That's the message that is coming loud and clear from the top of the corporate food chain.

At a recent CIMA and Tomorrow's Company event at Herbert Smith, Jo Fox, director of ‘The bigger picture’ at BSkyB, touched upon the need to bypass ‘greenwashing’. Jo commented that she has more than 700 KPIs, including a responsibility to ensure that 86% of the company views their employer as environmentally responsible.

She also revealed that the firm is now making around half of employees' individual objectives relate to their personal values and behaviours at work. How you get results really matters.

And at CIMA's annual President's Dinner, guest-speaker Peter Voser, chief executive of Shell, stressed profit and acting responsibility can, and must, go hand in hand. Shell assesses sustainable development as a measure of performance. To help determine annual bonus levels for the most senior executives, 20% of the scorecard is based on sustainability performance – KPIs include safety, energy efficiency and water usage.

Public trust in businesses may have dropped to a worrying level, yet the best businesses are clearly beginning to embrace the values challenge. They have moved on to the point that how they contribute to the bottom line is reflected in executives' remuneration packages. In other words, behaviours and ethics at work are being rigorously performance managed. That is a significant step foward.

We saw with Lehman Brothers that the board was flying blind. They didn't understand how money was being made, that it wasn't remotely sustainable, or that results had become all that mattered within the team. The hard lesson is that in corporate life the culture always prevails.

Hopefully the culture is changing.

Victor Smart is head of profile and communications at the Chartered Institute of Management Accountants (CIMA).

Gail Purvis has also reported on a recent report from CIMA that reinforces the key role accountants will have to play in greenhouse gas reduction.

This blog was originally featured on AccountingWeb and you can view it here.

India – the land of opportunity & opportunity for cooperation

November 11, 2011

Financial Times Q&A with Mark Goyder and Kai Peters on the future of the company

October 13, 2011

Q&A: What is the future of the company?

To coincide with the launch of the new four-part FT series on The Future of the Company, Kai Peters, chief executive of Ashridge, the leading UK business school, and Mark Goyder, founder director of Tomorrow’s Company, answered readers’ questions. The best were selected and answered, below. There is also an online video of Mark in discussion on this topic with Stefan Stern, director of strategy at Edelman, Michael Skapinker, assistant editor of the Financial Times and Daniel Garrahan, also of the FT.

How much do you think the future of the company rests in India and China?

Simon Boxall, Portsmouth

Mark Goyder One might also ask, is it more India or more China? And, also, does the future lie with the listed company? Arguably, the company of the future will be a family or private business, as it is predominantly today. Obviously, demographics and finance are hugely on the side of Asian companies. You just have to look at the numbers of companies from emerging companies in the FT Global 500.

But... the company of the future will be a global construct. The company of the future may originate in one country, but in time it will cease to be identified as such. In fact the global listed companies now emerging from China and India will shape our world. However, they will also be competing in a global marketplace. Some recent work we did brought home to me a simple truth: a global company is not only competing in a global market for customers and capital. It is also, ultimately, about competing in a global marketplace for admiration.

It is one thing to build powerful manufacturing and service companies in the B2B world. Before you can do the same in the consumer world, however, you have to build enduring brands. Brands are built on trust, and trust is built on meeting wide stakeholder expectations. Chinese and Indian companies that prosper are the ones that understand this. But how many global consumer brands have they built?

Kai Peters As an academic, or perhaps as someone who has too much time on his hands, I often ask myself what the role of a company is. The best I can come up with is that having many people under one roof allows for the joint creation of scale. The academic view is around transaction costs: is it more trouble to outsource than to do things under one roof? So — who is really big? In the west, it would be Walmart and the NHS. In the east, one looks to the Indian railroads and to many of the Chinese state-owned enterprises.

Antonio Borges, who used to be at Insead, has pointed out that in the east, they can still look west to see what to do: there is still imitation or at least organisational guidance on how to organise. In the west, we are exploring much more. This is harder, as there is not really a guide to what we should be doing. That said, what we seem to be doing is decreasing scale: much more outsourcing, independent research labs, etc, etc. It seems ultimately to be more efficient. So, companies will be everywhere in the future, but the larger ones will be in China and India and those in the west will be, in my opinion, numerous but generally smaller.

Given how much email has changed the way companies work in the past 15 years, what do you think will be the next big development in company communications?

Martin Watson, Tunbridge Wells

Mark Goyder The paradox of email is that, while it has made conversations like this one possible, it has also been used as a wall behind which many of us hide when we avoid talking to one another. Business is about meeting human needs. All businesses ultimately meet human needs through having relationships. Frederick Reichheld and other researchers have shown the very strong correlation between healthy employee relationships and healthy customer relationships. The Sears research published a few years back showed how this flows through into profitability.

The technology that has come after email has been far more “convivial” to use the term invented by the great Ivan Illich. Technologically, the next big development will be to use social networking in ways that enable individuals and groups to better come together and solve problems — often without travelling.

But ultimately, the development I long for is to recognise that the best communication technology of all is face to face. When I was a personnel manager in a paper manufacturing site of 1,000 people I spent the first hour of every day walking around and talking to people, so that I knew what was going on. Naively, I would like a return of that style of communications.

Kai Peters Surely we will reach the point of ubiquitous communications access within the foreseeable future. At present, frustrating 3G coverage, grinding Wi-Fi or paid-only access remain a big challenge. I expect that these issues will disappear and that we will have permanent access to our network needs using the same technologies that we are accustomed to: phones, emails and web access.

Speculating about the subsequent wave is much more fun. A recent headline noted that a woman thought that Amazon recommendations were better at suggesting what she wants for her birthday than her husband was – evidently he missed the boat completely. Therefore there is something in artificial intelligence that is appealing for organisations. No doubt video calling will also become useful – although some of the work we have been doing indicates that a proper phone call where the participants are concentrating is much more effective than video conferencing because visuals can easily distract.

My own private area of speculation involves human computer interfaces. Kevin Warwick at the University of Reading is already implanting chips into himself. I suggest that in our lifetimes we will be able to add technology to ourselves as additional memory, as thought-activated phone calls, for example. While one may consider these ideas a bit off the wall, early examples already exist if one looks around.

To what extent will employees working longer and retiring later help or hinder companies in the years to come?

David, Hull

Mark Goyder It will be more help than hindrance. It will force employers to have a continuing conversation about performance. It will introduce the potential for more flexible arrangements, because I anticipate many people over statutory retirement age will want to work part time. It will capture more experience inside companies. It could even drive more younger people into starting their own businesses because the path to promotion in the classic big company is less to be relied on. Ideally, it should challenge employers to think more laterally. More annual hours contracts, perhaps? More scope to negotiate a retraining that helps the mature employee to contribute more without having to leave the organisation. All assuming the employer knows how to create a culture in which the question is “What can I contribute?” not “What are my rights”…but that leads us on to another story!

Kai Peters First of all, it will surely help companies, especially if they have final salary pension schemes. Paying out from 60 or 65 with a life expectancy of 90-plus is very expensive. Given that there are presently predictions that 50 per cent of the children born this year will live to be over 100, we need to be realistic about how to be financially secure for our lifetimes. From the company perspective, we will surely face the trade-off between youthful exuberance and energy, and wisdom from experience. If we get it right, we are in good shape; if we do not we will have youthful frustration combined with older workers blocking mobility and potentially innovation. Overall, I am positive. Certainly in the business school in which I work, experienced colleagues make tremendous contributions.

What is the place of corporate governance in the 21st-century?

David Clark, Leeds

Mark Goyder There are two kinds of corporate governance. There is the box-ticking, compliance stuff. And there is the living breathing accountability stuff. The first is a huge and growing overhead, albeit one that companies have brought on themselves by their failure to do the second. The second is about keeping the company honest.

The company is a living system. Employees are its lifeblood. Strategy is the brain and measurement and communication the central nervous system. Culture is the DNA. Leadership and continued entrepreneurial energy are its soul and spirit. Governance and accountability are its rhythms and disciplines, like exercise, a means of keeping this living organism fit and lean.

Leadership gives a company energy. Governance assures its honesty.

Kai Peters There are, it seems to me, two points to raise here – the first is about “official” corporate governance, and the second is about “practical checks and balances”. From the official side, I firmly believe that organisations need people on the board who are respected and who know about the industry. While it is theoretically a nice idea to be fashionable and have outsiders/customers or a “man/woman off the street” to provide an additional perspective, the reality is that organisations are complicated, and making sense of what they do without depth of knowledge does not work.

On the second point, one comes to something that I’ve written about that can perhaps best be termed “the world is watching”. The immediacy and depth of technology means that external supervision of organisations is greater than ever. Whether it is Wikileaks or Twitter, the public has inordinate power to keep an eye on what organisations are doing. Certainly, this external scrutiny delivers better results than the ever increasing levels of reporting through Sarbanes-Oxley or equivalent.

My son is just about to graduate from university in the UK and keeps talking about becoming an entrepreneur. What advice would you give him in this current economic climate?

Nigel, Manchester

Mark Goyder I recently heard a professional piano teacher say that by the age of five it is too late to become a professional pianist. Fortunately, the opposite is true of entrepreneurs.

I would advise him to achieve his goal indirectly – gather experience, volunteer, if necessary, in the organisation he most wants to learn from, and pay off debt/build up financial reserves, if possible. Identify what he really cares about and what he is really good at. I doubt, unless he is a Richard Branson, that he knows that yet – and if he does he is probably already practising as an entrepreneur.

Most entrepreneurs would also testify to the loneliness of it all. If, in the course of gathering that experience, he meets someone else he thinks he could work with to build a business, I would give him five times more chance of success. I started Tomorrow’s Company in my 40s. Only afterwards did I see that the ideas had been slowly building in my head since I was 17.

Oh, and try writing your own obituary – as recommended by Stephen Covey. It really is a powerful exercise!

Kai Peters While it is altogether feasible to think up a super idea from scratch, most successful entrepreneurs exploit market imperfections in markets they know something about. The question thus arises, whether there is an area he feels comfortable enough in to have something to offer the market. Young people have oodles of energy and are well aware of new trends and needs. Their challenge is to get the business part right. Those with more experience will see that there is an opportunity to cherry-pick niches in established business areas, especially where incumbents are large, slow, and – sorry to say – often previously state-owned. Low-cost airlines, courier services and gaps in education have all been very lucrative.

In my experience, I have found executive MBA students to be more entrepreneurial than full-time MBA students for that reason.

For your son? If he has an idea, and you are willing to welcome him back home to keep his fixed-costs down, he should go for it. In my opinion, there is no such thing as failure. He will learn a lot and hopefully do well. If the idea does not work, he will have learned a lot, kept himself going for a while, and will simply move on to the next bright idea. Best of luck to him.

I find it incredibly annoying when colleagues claim to be “working from home” when, in fact, they are doing no such thing. Is this arrangement going to become the norm? Because I sincerely hope not.

Robert, Bristol

Mark Goyder One of the best definitions I heard of a company’s culture is that it is what people are doing when the boss is not around. You obviously work in a low trust environment. I suggest you seek out a place where people feel committed to the purpose and don’t look over each other’s shoulders. It has a better future. And you will have better blood pressure!

Look at a company like John Lewis. When the company asked the partners in one of their stores a few years ago what they would change, they replied “abolish the lunch hour”. The partners thought it was ridiculous that when most customers are in the store, most employees are off duty. So they changed to having a morning and afternoon breaks.

Kai Peters Guilty as charged – I am working from home right now. Had two meetings this morning in London, am home in the afternoon and am heading out again for a fancy dinner.

The challenge you are pointing to is actually quite profound. In the past, we, as employees, did work where the inputs related to the outputs – manufacturing, service industries where you had to be there. Now, with many of us in knowledge industries, inputs are not a good guide – but we do not really know how to measure outputs.

The second angle is also a challenge. I would suggest that many of us are always sort of working – technology means we answer emails at ridiculous times during the week. We also ponder work questions in unlikely places. It has been suggested that much innovation happens in the “B’s”: in the bed, bath and bus – when we actually have thought time.

All that said, I am afraid that I also have some trouble with the concept – even if saying that seems to contravene dozens of UK and EU laws!

This exchange was originally featured on the Financial Times website. View it in its original setting here.

Organisational cultures are no accident - create one, or it will be established by default

October 4, 2011

'UBS $2bn rogue trader shock' proclaimed last week's headlines, the reverberations will be felt for some time to come. It's really hard to comment on the specifics without knowing much more, but it certainly gets you thinking: about the impact of behaviours and cultures, the costs and benefits of getting these right, and therefore the potential value of a respected, high performing HR function, operating at the heart of business performance, leadership and governance.

There is real comfort that UBS has a strong balance sheet so the systemic impact from this incident, however mind boggling the numbers, will surely not be same as other recent examples in the financial sector.

We should however avoid the rush to easy judgement about the importance of organisational cultures being a sufficient mitigation, at least in general terms, given what I know of UBS and its continental European sensibility, sense of heritage and longevity: UBS is an institution more than it is a company or business.

People there will, I suspect, be hurting and reflecting deeply. At least that's the growing evidence when you talk to people in senior positions in banks and financial institutions generally. In a few weeks’ time we have Joe Garner (Head of UK Retail and Deputy CEO of HSBC plc) giving a Tomorrow's Value lecture, which is also part of the Lord Mayor's Initiative - Restoring Trust in the City. HSBC is of course one of the few major banks 'we' have not had to rescue.

Having talked with Joe and others at HSBC for some time, you get a real sense of a values based business. Of course things can go wrong, but that values based culture gives a greater sense of awareness of when something feels risky and needs deeper consideration. In the words of Stephen Green, just because it's legal does not make it right. But more than that, it probably won't make it profitable, especially in the longer term.

Such a culture is no accident. Indeed Sir John Egan, who will shortly be giving the first in the series of CIPD/Tomorrow's Company 'tomorrow's adaptive organisation' roundtables with HRDs and others, puts it, if you don't seek to create a corporate culture, one will be established by default, of perhaps even greater impact for the unintentional consequences it may have.

Back to the banks: what is striking is the intensity of work being done by HR leaders with very senior support within the industry and across the professions to reshape policies and practices across the sector. There's a sense of moral purpose driving this effort fuelled by a determination that 'never again' will public bail outs be needed: the road to recovery clearly has a cultural component.

You know what, I recently talked with a very senior banker who was calibrating how best to respond to the felt need of their staff to 'be proud' to be a banker. This is significant, the pendulum has swung too far, proud professionals who truly have felt shunned, and come up with a whole set of ways of describing what they do to avoid using the 'b' word, are re-finding their voice, as well they should.

A while back, an example like UBS, whatever the rights or wrongs, would have been a further reason to keep heads down, but not anymore. We need to ask much more specific and basic questions, and to keep focus despite the ‘telephone’ numbers involved.

Was there a disconnect between what the dominant culture called for vs the perceived or actual demands being placed at the unit level? Was this compounded by performance and reward incentives? Was there an inability to communicate and manage which led to actions being taken without the knowledge of those accountable, or their capacity to intervene.

It may well be the mix of hard and soft incentives and behaviours which needs to be better understood. Indeed we are working on a major project with Aviva Investors and UNEP FI, together with BLP, Korn Ferry and PwC, with exactly this focus. What's striking is, other than in pockets, how little of this work appears to have been done.

Future solutions won't be able to entirely end such disturbing examples because, in investment banking in particular, the numbers are astronomical, and some risk at least is inevitable. Hence the needs for capitalisation and some form of structural 'firebreak'. But what they can do is to establish the understanding which will build stronger and more resilient cultures, embedded in strong professional standards, and reinforced by effective practices and leadership behaviours, actions and rewards.

They can also do something else - build a greater understanding of what's gone wrong, what can be done, and of the role of next generation HR to be an active part of creating those solutions.

Tony Manwaring, Chief Executive, Tomorrow’s Company

This blog was originally featured on the CIPD website. View the article in its original setting here.

The Forecast: Winter of Discontent, Chance of an American Spring

September 21, 2011

When House Speakers John Boehner said last week that his relationship with President Obama is like a conversation between "people from two different planets", he identified a disconnect that extends well beyond the House and the White House.

We are two Americas headed for collision. New York Mayor Michael Bloomberg touched upon it with his recent warning about the rising frustration of young people who have graduated college but cannot find jobs. The riots in Cairo could happen here, the mayor said, and he's correct.

Several factors that triggered the Arab Spring are present in the United States today, including crony capitalism, political corruption, poverty and the unmet aspirations of the young. In neighborhood after neighborhood, and in home after repossessed home, the American dream is in shreds while the gap between rich and poor has become a canyon.

Watch for trouble if Republicans in Congress remain adamant this fall about protecting corporations and high-net-worth individuals from tax increases, while cutting programs that benefit the middle class and provide a safety net for the poor.

How polarized is our economy? Let's start with Mayor Bloomberg's point about the young. Matthew Klein noted in the New York Times that one in four Egyptian workers under 25 were unemployed when the revolution began there. Last July, the same percentage of young people was unemployed in the United States -- the highest jobless rate of any age group in America.

Unemployment is even higher for minority youth. The National Urban League reports that more than one-third of America's minority youth are unemployed. The average unemployment rate last July was 39 percent for urban African-American youth and 36 percent for Hispanic youth.

The impact can be profound. A survey in the United Kingdom found the psychological impacts for young people who cannot find work include panic attacks, depression and self-loathing. Other research indicates that when young people are unable to find employment, they suffer lower wages and higher risk of joblessness for years to come.

An analysis of youth uprisings in Egypt or Tunisia, published by Bloomberg Businessweek, could apply equally to the United States:

"In each of these nations, an economy that can't generate enough jobs to absorb its young people has created a lost generation of the disaffected, unemployed, or underemployed -- including growing numbers of recent college graduates for whom the post-crash economy has little to offer... While the details differ from one nation to the next, the common element is failure -- not just of young people to find a place in society, but of society itself to harness the energy, intelligence, and enthusiasm of the next generation."

Klein writes:

"The millions of young people who cannot get jobs or who take work that does not require a college education are in danger of losing their faith in the future. They are indefinitely postponing the life they wanted and prepared for; all that matters is finding rent money...The uprisings in the Middle East and North Africa are a warning for the developed world."

Evidence of polarization goes well beyond our young. The average pay for CEOs in the U.S. is 185 times higher than the average worker's salary. Average income is $31,244 for households in the bottom 90 percent of the economy, compared to $27 million for households at the top of the economy (one hundredth of one percent).

It is increasingly obvious the opportunity society is rigged against most Americans. William Dornhoff, the sociology professor who wrote Who Rules America?, quotes this revealing analysis by an investment manager who works with wealthy clients:

"Unlike those in the lower half of the top 1%, those in the top half and, particularly, top 0.1%, can often borrow for almost nothing, keep profits and production overseas, hold personal assets in tax havens, ride out down markets and economies, and influence legislation in the U.S. They have access to the very best in accounting firms, tax and other attorneys, numerous consultants, private wealth managers, a network of other wealthy and powerful friends, lucrative business opportunities, and many other benefits...

In my view, the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability. The odds of getting into that top 0.5% are very slim and the door is kept firmly shut by those within it...

(T)he bottom line is this: A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. I am not optimistic."

While Speaker Boehner and his colleagues warn against new taxes, some of our biggest corporations pay little tax or none at all. Earlier this year, Sen. Bernie Sanders (I-VT), identified the top 10 "tax-dodging corporations". He found that Exxon Mobil made $19 billion in profits two years ago, but received a $156 million tax rebate from the IRS. The Bank of America made $4.4 billion in profits last year, but received a refund of nearly $2 billion. (Bank of America also received a federal bailout of nearly $1 trillion. Now its officers are considering cutting as many as 10,000 jobs.)

Other big companies that Sanders found paid no taxes in recent years are General Electric, Chevron, Boeing, Valero Energy, Goldman Sachs, Citigroup, ConocoPhillips and Carnival.

As for political corruption, there is no hiding the fact that big money controls Congress -- a situation bound to get worse due to the Supreme Court's decision to abolish limits on corporate campaign contributions. One example: A recent poll showed nearly 60 percent of Americans want to repeal taxpayer subsidies for oil companies. Congress has refused. Senators who blocked a vote on subsidy reform earlier this year reportedly received five times more money from the oil and gas industries than Senators who wanted a vote.

As we have seen from the Middle East to London, and in some of America's poorest neighborhoods, a citizenry that is disenfranchised and suppressed by a system feels no loyalty to that system -- no obligation to sustain it, or even to obey its laws. That's when things get ugly.

Will that happen here? If Republicans remain adamant against tax increases for the richest corporations and families in our country, the underclass may conclude it is not represented in a Congress whose members are paid $174,000 a year ($223,500 for Boehner), whose median net worth is more than $900,000, and whose pensions and health-care benefits are secure.

The way to avoid class warfare is class compassion. For the sake of discussion, think how the social and political dynamic would change in the United States if we saw these developments:

Following Warren Buffett's example, America's high-net-worth individuals form a "Shared Sacrifice Coalition" and urge Congress to increase taxes on the rich. The Coalition quickly grows to include most of the 8,000 Americans who made more than $10 million in 2009.
Americans in the top 1 percent of income launch a "Close the Gap" campaign. They pledge to tithe 10 percent of their gross income to bootstrap programs for workers in the bottom 25 percent of income, for young people entering the workforce, for veterans returning to the workforce, and for long-term unemployed Americans who need new skills to remain employable.
Led by Apple, which is sitting on $76 billion in cash, big companies pledge to "Bet on America" with job-producing investments from the nearly $2 trillion they've been holding on the sidelines of the economy.
To further reduce the federal budget deficit -- and their own vulnerability to the escalating impacts of global climate change -- CEOs, the National Association of Manufacturers and the U.S. Chamber of Commerce put their full weight behind a revived carbon cap-and-trade bill. They insist that carbon revenues, estimated by the Administration two years ago to be $645 billion over 10 years, be used for three purposes: to reduce the government's red ink, to increase federal investment in clean energy research, and to hold middle and lower-income families harmless from higher energy prices.

These are fantasy scenarios. But in the real world, it's the kind of "we're all in this together" citizenship that would help restore an opportunity society.

We need transparent fairness in our tax and political systems, a sense of social responsibility by those most blessed with wealth, and compassion for those who want to work for their share of the American Dream, but cannot.

Follow William S. Becker on Twitter: www.twitter.com/sustainabill

This blog entry was originally available on the website of the Huffington Post. See it in its original setting here.

Future-proofing needs collaboration, innovation, education and inspiration

September 14, 2011

Make no mistake, the transformation from a firm of the past to a firm of the future is challenging, especially while operating amid of a perfect storm of social, economic and environmental volatility. Successful transformation requires courage, not fear. The more we understand and explore our own business environments and wider business ecosystems (as well as our own inner motives and values) the more we find pathways for success – learning through doing, growth through experience, success through failure. Looking around us in nature and human nature, we find enablers to assist us; catalysts which aid and optimise the transformational journey. Four primary catalysts for transformation are: collaboration, innovation, education and inspiration. Let's explore each in turn:

Collaboration

There has been much written recently about collaboration and co-operation. In fact, this coming decade has been referred to as the decade of co-operation, a time when business executives recognise the power of collaboration and co-operation over competition. It is a myth that nature has evolved over millions of years of combat and competitive struggle; more its evolution is down to networking and partnerships.

Of course there has been, and always will be competition in life, yet evolution benefits far more from collaboration than it does from competition. So does our business environment. We are witnessing a shift in mentality and behaviour from the past approach of "dog eat dog" competition between businesses, business units, and employees to the future approach of collaboration across multi-functional teams, departments, organisations and business ecosystems: interconnectedness rather than separateness, collaboration rather than competition.

Collaboration encourages the transcending of traditional boundaries used to atomise and separate teams, departments, business units and organisations; it interconnects artificial separations in business, encouraging sharing, creativity, empowerment and innovation.

The more we recognise the interconnectedness of the business environment – viewing it as a web of interdependent relationships within interconnected business ecosystems – the more we realise that collaboration (not competition) is key to our resilience and survival in these volatile times. In nature, which has been dealing with dynamic change for over 3.8bn years, we find it is the species that collaborate and interconnect more with their respective ecosystems that are more resilient to changes in their environment; the ecosystem they live in becomes more resilient the more interconnected the stakeholders are within that ecosystem. Ditto for business.

"Cooperation is the architect of creativity throughout evolution, from cells to multi-cellular creatures to anthills to villages to cities. Without cooperation there can be neither construction nor complexity in evolution."

Martin Nowak with Roger Highfield, Super Co-operators.

An example to illustrate this shift in business mentality is the evolution of supply chain management to value chain management to business ecosystem resilience. Rather than treating an organisation as a supplier that needs managing and controlling, we treat the organisation as a partner within an ecosystem where synergies are created that benefit the whole as well as the parts. Rather than viewing supplier management as a linear chain, we view it as a web of interconnected relationships within a vibrant business ecosystem.

Another example to illustrate this shift is the evolution in approach of human resource management to employee engagement to stakeholder empowerment. Rather than treating the employee as an asset to be managed and controlled, we treat the employee as a stakeholder within a community of differing, interdependent stakeholders empowered to create synergies through mutually beneficial relationships with other stakeholders.

Such collaboration between stakeholders significantly improves creativity enabling sharing between people with diverse perspectives on a problem. This helps embed a culture more open to dynamic change. It is the openness of connections across, within and beyond the organisation that drive the opportunities for value enhancement and builds strategic resilience from the ground up for the organisation and the business ecosystem within which it thrives.

If any stakeholder seeks to undercut, exploit or compete in some way, the value of the relationship is undermined, in turn reducing the opportunity for synergies and the resilience of the business ecosystem and so the resilience of the contributing stakeholders within that ecosystem. Of course, such collaboration requires trust, mutual understanding and shared values.

Innovation

Increased market volatility brings with it the need to create, develop and adapt new products and services under time-pressured conditions. In short, innovation is a critical success factor for the future – organisations able to innovate effectively, time and again shall win out over organisations that struggle to adapt. Innovation is fundamental to evolution in all walks of life, not just in business, but for all living species. The good news is human nature is opportunistic and curious by nature; it is in our genes to seek out new and better ways of operating.

The firm of the future creates the conditions conducive for creativity by building a culture that facilitates, empowers, unlocks and supports people's creative potential; an organisation that encourages people to overcome fears and inhibitions, where the work dynamic is of constant evolution, where failure is not criticised but embraced for what it is – an opportunity to learn, adapt and evolve.

Of course, collaboration greatly helps innovation by sharing the burden across a wider group of stakeholders. In nature, organisms evolve best within diverse groups of interconnected specie and likewise, in business an organisation's ability to innovate improves with collaboration amongst a diverse stakeholder group. While economies of scale may bring the benefits of lower unit cost of production, economies of scope bring benefits of increased synergies through greater connections, hence improved innovation. Balancing the benefits of economies of scale with the benefits of economies of scope is crucial for the survival of the firm of the future.

Education

Embracing new approaches to ways of operating is facilitated through an understanding and trust in what, why and how change affects the stakeholders and their respective communities. Ensuring all stakeholder communities are engaged, aware and educated in this transformational journey will greatly optimise the transformative process. A deeper understanding and a greater sense of belonging is needed, rather than just being aware of the upcoming changes we need to empathise with what it means, why it is happening and how it affects the ecosystem of stakeholders involved.

This deeper understanding not only helps the transformation within the department or wider organisation, but also across the interconnected network of stakeholders which the organisation is part of – its business ecosystem.

By educating individuals to a level where there is a true understanding of the values and direction of the transformational journey, these individuals become proponents for change. They are able to educate the other stakeholders they interact with as part of their daily business. The understanding of the transformation, the why and how of it, becomes viral if it is grounded in trust and truth. Hence, the values of the organisation need to deeply resonate with the stakeholders, to strike a chord of belief beyond the goal of short term profit maximisation.

Keeping stakeholders in the dark or only partially aware will only come back to haunt and in turn water down the effectiveness of the transformational journey. This does not mean to say that complete clarity of where the organisation shall be in one or two years time from now is needed, it is more that people truly understand the reasons for change, the drivers for transformation and the value-set of the organisation.

The transformation is more about the journey than the destination, with plots on the course helping to steer a path through choppy water, whilst remaining open and flexible to changes in wind, swells and tide. A firm of the future has a culture that is rooted in values, where leadership is values-based and where the awareness of right and wrong behaviour is second nature. Organisations that encourage the right mentality, by living and breathing their values, ensure that openness, awareness, acceptance and motivation for transformation follow.

Inspiration

We are entering uncharted waters. We are on the cusp of major transformative change, socially, economically and environmentally. Few business leaders have witnessed volatility of the likes we are now faced with. It is as if we are walking in a dark forest at night with only candle light to illuminate a path ahead of us. The candle light allows for vision which brings comfort that our steps ahead are not too perilous, keeping us moving forward even if we are weary and fearful.

Inspiration can come from any and all of us – whether it a visionary CEO committing to zero-emissions by 2020, a new sustainable product line exceeding revenue expectations, a neighbouring plant successfully implementing new sustainable technologies, or a colleague taking time out from a pressing schedule to brainstorm with another in a time of need.

We do not have to be inspired by visionaries or great leaders. In these transformational times, we need to inspire ourselves and the ones around us by simply walking-the-talk and being true to the values of the organisations and communities we serve. The more we look for examples of inspiration within our own business ecosystems, the more we find, and in turn the more we inspire ourselves to be the change we want to see.

Giles Hutchins is global director for sustainability solutions at Atos, and co-founder of BCI: Biomimicry for Creative Innovation

This article was originally published on the Guardian website and can be found in its original setting here.

Firms of the future - business inspired by nature

September 5, 2011

Those bold enough to embark on a journey of dynamic transformation are most likely to succeed in volatile conditions

The economic, social and environmental volatility now facing business means organisations having to operate in a dynamically transforming landscape.

The nature of change itself is transforming. Organisations are now increasingly exposed to dynamic change: change upon change upon change – while dealing with one change, another affects us, then another, and so on. This dynamic change upsets the traditional business paradigm we have been working to over the last few decades. It is no longer appropriate to simply manage change through traditional change management methodologies or manage risk through tried and tested risk management techniques. We need to look deeper in dealing with these increasingly challenging times as we transform our organisations from firms of the past to firms of the future.

Paradoxically, inspiration for the current pressing challenges is all around us in nature. Nature has been dealing with dynamic change for over 3.8bn years, and the more we explore nature's ways the more we find inspiration for operating in a dynamically changing business environment.

Our understanding of nature has evolved over the last few decades, from viewing it as a battleground of competition to one of dynamic non-equilibrium, where an order within chaos prevails due to unwritten natural patterns, feedback loops, behavioural qualities, interdependencies and collaboration within and throughout ecosystems. The more we grapple with the challenges our businesses now face, the more we realise that nature's patterns and qualities inspire approaches and qualities for our own evolutionary success in business and beyond.

Biomimicry for Creative Innovation (BCI), a collaborative of business transformation specialists which I helped co-found, has developed a set of business principles for the firm of the future originating from the life principles developed by the Biomimicry Institute in the US. The principles are aimed at creating conditions in business conducive to collaboration, adaptability, creativity, local attunement, multifunctionality and responsiveness; hence, enhancing the evolution of organisations from rigid, tightly managed hierarchies to dynamic living organisations which thrive and flourish within ever-changing business, socio-economic and environmental conditions.

Organisations that understand how to embed these principles from nature into their products, processes, policies, and practices create greater abundance for themselves and their business ecosystems in times of rapid change; flourishing rather than perishing in volatile conditions.

Organisations inspired by nature are resilient, optimising, adaptive, systems-based, values-based, and life-supporting. Let us explore these principles.

Resilient

The more resilient an organisation is, the more able it is to successfully deal with disturbances and volatility. Hence, business resilience is fast becoming the holy grail for businesses in these volatile times. The more diverse, decentralised and distributed a business ecosystem, the more able it is to seek out opportunities and capitalise upon a changing business landscape.

By way of example, UK brewery Adnams recently shifted their focus from a few product lines and customers to increasing the diversity of products and their customer base. The shift towards a greater variety of products and customers led to investment in adjacent markets. During this business transformation, Adnams also invested in its employees, ensuring they became more empowered to make decisions locally, reducing the need for overly burdensome centralised management. These changes have significantly increased Adnams resilience, leaving them far better equipped to deal with market volatility and seek out new opportunities.

In nature, we find resilience in almost all flourishing ecosystems. Take a forest which maintains different development stages within its ecosystem. Some parts of the forest are in a state of rapid growth or re-growth, while other parts are maturing, and yet others are fully mature and ageing. There is continual cycling through these stages, with disturbances (such as fire, flood or storm damage) driving release of resources which, in turn, lead to reorganisation and regrowth, akin to new products being launched and new ways of working being introduced. By maintaining constant cycling at different time and space scales, the forest is able to flourish during short-term disturbances as well as long-term change. Diversity is key to nature's success.

Optimising

Whilst maximisation brings benefit of economies of scale through lower unit cost of production, in nature we find optimisation through economies of scope brings different benefits through improved cross-fertilisation and species interaction (akin to improved interactivity across traditional department and organisational boundaries). Maximisation is driven through homogenising, scaling up, atomising, industrialising and reducing complexities within a specific business function, system or process; optimisation is driven through enhanced connections, interactivity and interdependencies across different business functions, systems or processes.

Economies of scale rely on mass production which can reduce the potential for synergies in an organisation; reducing the variety of products curtails creativity and innovation, can lower staff engagement levels and ultimately weaken the company's overall resilience. Economies of scope realise benefits by unlocking synergistic win-win relationships and positive virtuous cycles, increasing co-creation through increased interconnections across the wider business ecosystem. This increases the system's overall resilience and improves the ability to optimise. It is not that maximising or economies of scale are not good, it is more that a harmony of the two approaches needs to be found, thus ensuring the best delivery of services or products in any given market at any given time.

In nature, we see that the ability for organisms to co-operate, optimise and synergise within their environment is fundamental to their successful evolution. In fact, the more we explore nature the more we realise that life is not a competitive struggle but an interwoven interplay of co-operative partnerships. In nature, economies of scope are fundamental for adaptation and survival as it is species that have multiple synergistic interconnections within their ecosystem that co-create resilient ecosystems more able to survive dynamic change.

Adaptive

In the words of Charles Darwin "it is not the strongest species that survive, nor the most intelligent, but the ones most able to adapt to change".

Unilever is undertaking significant adaptation across its business not just in the way it sources, produces and distributes products but also in the way it engages stakeholders across its entire business ecosystem. It is adapting its approach to business to become fit for purpose for the environment that it operates in.

General Electric is another good example of a company that is adapting and transforming its business strategy towards products and services that enhance the sustainability and long-term value of its customers and wider stakeholder community.

Adaptation is enhanced when the organisation (individuals and communities of stakeholders) finds it easier to let go of the old and embrace the new. For example, geese when they fly in a V-formation rotate leadership to ensure that at any given point in the journey, it is always fit for purpose. Leadership that empowers and encourages adaptation will help ensure success in firms of the future.

Systems-based

Whilst reducing complex problems, projects or production lines into small, manageable chunks has the advantage of simplifying management and control, it can reduce the interconnections and interdependencies between activities that give rise to synergistic value enhancement.

Business, like nature, is lit up by interconnections and relationships that find success by being both system-focused and self-focused. Whatever the organisation (or organism) does to benefit itself should also benefit the system; in benefiting the system it also benefits itself.

Fungi provide an interconnected web of life in the soil beneath our feet, breaking down plant waste and stones into food for plants, in so doing, feeding the plants while also gaining food from them, completing the circle of life. Scientists have often been baffled by how certain species grow in certain conditions within their natural habitat, say a forest, but when put in the same conditions in a laboratory fail to survive. Recently, through radioactive tracing of nutrient flows, scientists have worked out that in the soil, through fungi, nutrients from one part of the forest, – where perhaps there is more sunlight, for example – are fed to plants in another part. The fungi distribute and share nutrients between different parts of the ecosystem as the health of the overall ecosystem benefits the whole, the parts and in turn the fungi. It is in the fungi's interest to be part of a healthy, resilient ecosystem, just as it is in the organisation's interest to be in a healthy, vibrant business ecosystem and social community.

Values-based

As the need increases to continuously change, let go of old ways, seek out opportunities and embrace the new, values become the core from which consistent good business behaviour is rooted. Hierarchies of management and control slow down the ability for organisations to adapt. Rather than controlling the workforce, a firm of the future empowers the stakeholder community to take decisions locally, based on the core business behaviours set down by the values and culture of the organisation. Hence values-based leadership becomes a differentiator for those organisations best able to transform towards a firm of the future.

Life Supporting

Sustainability is fast becoming embedded into business best practice. Life supporting goes beyond traditional sustainability and corporate responsibility – measuring, monitoring and reducing the negative effects of the business. It is about creating the conditions conductive for life; encouraging behaviours, products and services that seek to enhance the wellbeing of those within the business ecosystem. Some organisations are already transforming towards zero emissions (for example, Puma and InterfaceFLOR), yet there is neither rhyme nor reason why business should be limited to that zero goal. Reaching for net positive value creation where business relationships, products and services are mutually beneficial for the stakeholders, society and environment within which they operate is the true ambition for the firm of the future.

Of course that transformation is a journey not a destination. These business principles help shape the direction of the journey, yet there is no ideal business model or perfect way of operating; it is about finding the right way at the right time for the market conditions. The future is bright for those organisations and individuals bold enough to embark on a journey of dynamic transformation in the face of increasingly perilous market conditions.

Giles Hutchins is global director for sustainability solutions at Atos, and co-founder of BCI: Biomimicry for Creative Innovation

Manchester United's float and the issue of shareholder voting rights

September 2, 2011

So Manchester United are to float 30% of their shares on the Singapore Stock Exchange to capitalise on Asian interest in the club.

But they are going to operate a dual share structure. For every voting share there will be a non-voting share. You can invest, but they don’t want your shareholding to give you much control.

In the UK we don’t like dual share structures. If you invest you should be entitled to have a vote in electing the board and deciding the fate of the company.

And yet….while the tidiness of one shareholder one vote may be fair, it does not do much for stewardship. Companies need the certainty of having some constant, solid blocs of ownership. Too many shareholders owning a handful of shares do not feel it is worth the bother to get involved. If no-one gets involved the risk is the board do what they like, pay themselves what they like, and generally commit the three deadly sins of corporate governance which I once described as Greed, Sloth and Fear (of market reaction)

Some people are arguing that investor stewardship, which we badly need to keep companies on track, will only work when shareholders who have held shares for a longer time receive rewards either through an enhanced dividend or through enhanced voting rights. Both are solutions that involve treating some shareholders differently, as Manchester United plan to do.

So, in footballing parlance, this is a game of two halves. Dual voting rights may expose minority investors to abuse by dominant majority owners. But perfectly level playing fields of one shareholder one vote expose companies to investor indifference and a stewardship deficit.

That’s one of the issues we need to tackle as we take the tomorrow’s stewardship agenda forward.

The next question to think about might be: “what proportions of a listed company’s investors need to be stewardship investors?” In order to give a company some stability to enable it to tackle the long term issues of people, reputation, and responsible stewardship?

But that’s for another discussion!

Sustainability Practitioner, Subject-matter Expert or Gunslinger?

August 22, 2011

Sustainability Practitioner, Subject-matter Expert or Gunslinger?

Recently I was drinking an organic fair-trade soy latte while chatting with a long-time sustainability consulting colleague of mine who asked me what I thought about the sustainability consulting shops that were popping up all over the place. The short answer – I couldn’t be happier. For one thing, for sustainability old-timers like me, it further validates the relevance and need for the sustainability consulting marketplace. For another, it breeds competition and innovation, which I love. Moreover, I figure, the more people there are making noise the more people will be busy justifying the business case for sustainability, which is quite helpful. The long answer is a wee bit different, and the focus of this article. It is the wild west of sustainability consulting right now – awareness is high, but comprehension is low. There are sustainability practitioners (knowledgeable and qualified), subject-matter experts (knowledgeable in one or two areas that fall under the sustainability umbrella) and gunslingers (armed with the lingo but not the knowledge).

Time to provide a little clarity and guidance to companies trying to assess which of these characters to engage. What is a Sustainability Practitioner? It is from the definition of corporate sustainability that the practice of sustainability extends – or at least should extend. Corporate sustainability is a business management approach that identifies, mitigates and capitalizes on the past, present and future impacts of a corporation’s actions and decisions. It is an approach that champions transparency, inclusion and value-creation over closed, exclusive value-depletion. A sustainability practitioner should not just understand this approach but give it life in a corporation. A sustainability practitioner understands the interactions between environmental, social, cultural, economic and governance issues and how each fits into the corporate mission and strategy. The sustainability practitioner knows how to help a company enhance its corporate value - that means helping the company grow and protect its profit and share price while helping it preserve and protect natural and social capital.

Now I ask you, the corporation, are you getting all of this help – or are you just getting a service aimed at addressing some of the issues that have been stuffed under the sustainability umbrella? There are many - climate change, energy efficiency, reporting, community relations and donations, among others. But just because someone can help address one or two of these issues does not mean that person is a sustainability practitioner. Subject-matter experts can decode an issue and provide discreet solutions, but do they keep the broader corporate context and strategy in mind in order to ensure economic sustainability for the company? Gunslingers, those gifted salespeople familiar enough with sustainability lingo to appear credible, can sound the part but often do more harm than good.

Do I Need a Sustainability Practitioner? Now, for the sake of the argument, let us say you are a corporation looking for sustainability services, such as benchmarking, risk management auditing, policy authoring, corporate reporting, data management, stakeholder partnering, and so forth, how do you determine whether you need a sustainability practitioner? To figure this out, you need to ask yourself three basic questions:

• Does my initiative have implications that might affect the corporate strategy or reputation?

• Will approvals from the C-suite or management team be required?

• Will employees from more than one area within the company be required to weigh in on the project or product?

If you answered yes to any of the above, then a sustainability practitioner should be your first and only stop. But even if you answered no to all of the above and think a subject-matter expert would suffice, keep in mind that sustainability practitioners can do not only the subject matter expert work but also provide value-added services that come only with breadth of knowledge and experience a sustainability practitioner holds.

How do I Know if I am talking to a bone fide Sustainability Practitioner? Determining whether a person is a sustainability practitioner can be a challenge - the acronyms are many and can get confusing - I mean, ESG, CDP, CR, SD, CSO, NFI, KPI - yikes! You can enhance your chances at separating the wheat from the chaff by asking these key questions and assessing how well the answers match the “ideal answers”:

Question 1: Can you explain the difference between Corporate Citizenship, Corporate Responsibility and Corporate Sustainability?

• Ideal Answer 1: A sustainability practitioner will most likely walk you through the sustainability continuum without the use of too much jargon, citing Citizenship as a donation scheme, Responsibility as a tactical approach to reporting on stakeholder issues, and Sustainability as a strategy for collaborative stakeholder engagement and issue management. Beware those who say that they are all the same.

Question 2: Is corporate sustainability the same as sustainable development?

• Ideal Answer 2: Sustainable development is a philosophy – meeting the needs of the present without compromising the ability of future generations to meet their own needs – whereas corporate sustainability is a management approach that transforms the philosophy of sustainable development to practice. As above, beware those who don’t understand this critical distinction.

Question 3: If I was to hire a sustainability practitioner, where in my organization does that person belong?

• Ideal Answer 3: The best place to house a sustainability practitioner depends on the corporation’s motivation and the issues it is trying to address. If the issue is stakeholder relations, such as Greenpeace hanging a banner from your headquarters, communications or corporate affairs might make a good home. If the issue is greenhouse gas reduction perhaps engineering, energy management or another operational department would be the right place.

Beware those who volunteer a “perfect fit” as there is no such thing. A sustainability practitioner is the ultimate cross-enterprise professional whose services touch all corners of the corporation. Though there are certainly other helpful screening questions, these are a good place to start.

Now What? So, if you are a corporation in need of sustainability services, know whether you require a sustainability practitioner and if you do, you can now more readily wade through the consultants in the field, including the now detectable gunslinger, and make the right pick for your corporate needs.

Nelson Switzer is President and Chief Sustainability Officer of Asherleaf Consulting Inc., a multi-disciplinary sustainability advisory firm based in Toronto, Canada. Nelson is a leader in strategic sustainability and innovation. Nelson is a sought-after speaker on the topic of sustainability and provides pre-eminent advisory services to corporations, governments and not-for-profits around the world.

Ray Anderson – A tribute

August 15, 2011

Many have been greatly saddened and feel a tremendous sense of profound loss with the news of Ray Anderson’s passing.

One of my most memorable moments at Tomorrow’s Company was being at Tallberg with Ray, together with my dear friend Dianne.

It is therefore a real honour to publish these words of remembrance from Dianne for Ray:

http://www.forceforgood.com/Blogs/Ray-Anderson-%E2%80%93-A-tribute-from-Dianne-Dillon-Ridgley--504/1.aspx

Ray Anderson – A tribute from Dianne Dillon-Ridgley

August 15, 2011

The outpouring for Ray has been so warm and fitting for all that he did and so many that he touched. I hadn't really thought about how many "overlaps" we had until I got numerous requests from groups all over the world for comments to post on Ray. In addition to being on the Interface board for almost fifteen years, Ray and I were on the Second Nature board together as well as The Natural Step-US and the PCAP (Presidential Climate Action Project). We were on the US delegation during one year's CSD at the UN, as well as for UNGASS in 1997. We were at Tallberg together in '09 for Tomorrow's Company and several times at GLOBE in Vancouver. Of course it all started with the PCSD (President's Council on Sustainable Development) under President Clinton. There are too many other events and conferences to count, from USGBC, to IQLA at the UN, from CHEP to the Upper Chattahoochee River Keepers or last year when Ray became the first man to receive the WNSF "Businesswoman" of the Year award-that's right WOMAN!. He REALLY changed my life, which is exactly what he said he intended to do when he asked me to join the Interface board. When he was the keynote speaker for the National Council on Science and the Environment a few years back, he said we have to shake up the status quo on education...Ray always knew when it was time to shake things up!

At Ray's funeral in Atlanta yesterday Paul Hawken and Ray's older daughter, Mary Anne Lanier both gave moving and loving tributes. We (Interface) will be having a larger memorial service on the 29th of August and currently it's my understanding that it will be broadcast or at least web available. It will be in La Grange, GA in the "RCA" building. Tony Cortese of Second Nature has posted a loving tribute as have so many organizations and especially young people that Ray touched. If anyone would like, I invite you to post your thoughts, feelings or wishes on the Interface Remembrance page.www.raycandersonblog.com

Currently I am in Jackson Hole, WY, having left Atlanta late afternoon to get her Thursday night, The Denver-Jackson flight cancelled for mechanical reasons so I had to overnight in Denver, taking the 06:00 am flight up to Jackson. I was even more tired, sad and lost with waves of grief that still come and go, as when I read his obituary in the NYT while on my flight..........

As daylight continued to break there was a grey mist over purple tinged low peaks, we then made the big turn and it took my breath away ....at Interface we have been "climbing Mt. Sustainability" as the quest of "Mission ZERO", to by 2020 not only be a corporation that does no harm, but to actually be RESTORATIVE.

In the various pieces and notes I have written, in all the stories and metaphors I have been trying to find the right one to remember/honor and describe Ray. Well there it was.....the flight continued to turn, following the Snake River, twisting at the feet of the great beauties, the Tetons themselves.

As the rays of the sun broke over the peaks I knew exactly how I would think of Ray from now on, lost to his flesh which had fallen away, Ray is a mountain himself; his spirit and presence is eternal, ancient, majestic, imposing and of breath taking beauty. At that moment I realized this is the perfect way to move past the tears and sorrow, to welcome the day, to welcome each tomorrow and to embrace the future. It is exactly what Ray would want us to do as we continue to "change the world"!

Peace, Dianne

Transformational times call for transformational change

August 1, 2011

Businesses must transform into firms of the future by embedding sustainability, creating value for themselves, their communities and the ecosystems in which they operate.

A "perfect storm" of economic, social and environmental factors is making the business landscape increasingly volatile. The pace of change is faster and only set to increase. To succeed, business needs to become more agile, creative, alert, spontaneous and responsive. In short, it needs to learn to operate in completely new ways.

The changes call for businesses to operate in ways more akin to living systems. Living systems learn and adapt; they are not structured and working in silos; they don't stifle learning and agility. Businesses that operate in these ways are bottom-up, decentralised, interdependent and multi-functional; they feature self-organising units.

Put simply, the business models and management approaches that served us well in the past are no longer fit for purpose in a context where dynamic change is the new norm. Organisations that are able to let go of old business paradigms, having the courage to embrace new ways of operating while dealing with the pressing short-term issues of today, will be the ones that can weather the storm. Other organisations, fearfully clinging to practices that are no longer fit for purpose for our times, will struggle to cope with the level of change ahead.

You could say we are in a decade of creative destruction and reconstruction. Organisations that get it are adapting and evolving, and those that do not will perish or be acquired. Bold firms of the future are starting to unlock the creative potential of their own workforce, their partners and the communities they serve. In so doing, they are initiating virtuous cycles of collaboration, innovation and value for all stakeholders.

Dawn Vance, global supply chain director at Nike, puts it succinctly: "Organisations have three options: 1, hit the wall; 2, optimise and delay hitting the wall; 3, redesign for resilience – simultaneously optimising existing networks whilst embracing disruptive innovation and working collaboratively with partners."

It is this "redesigning for resilience" which drives the transformation from a firm of the past to a firm of the future. The firm of the future is one that:

• Drives transformation through value-based leadership and stakeholder empowerment using education, innovation, inspiration and collaboration as catalysts

• Encourages synergies across its business ecosystem, engaging with multiple stakeholders in open, transparent ways

• Harnesses the power of social networks; uses crowd sourcing, co-creation, open-source collaboration platforms and transparent branding for differentiation

• Evolves ecological thinking to invent new ways of operating and generating value for every stakeholder within the community it serves.

The pressure for change is increasing all the time. Well-publicised forward-thinking organisations are already making headway on transformational journeys; and it is a journey rather than a destination.

Becoming a firm of the future is not about designing the right business model and implementing it; it is about understanding the ethos, ethics and environment that will allow the organisation, individuals and wider stakeholder community to best flourish, adapt and evolve. It is an emergent journey, a journey that encourages diversity in approaches and outcomes, one where it is good to make mistakes, even fail, as it generates learning to move forward in a more resilient way.

Some visionary business leaders are already taking the first steps on the transformational path for themselves and their businesses. It requires great courage to break rank from a paradigm that is so ingrained in our business mindset and redesign for resilience in the face of pressing short-term pain.

Transformational times call for transformational change. Businesses that wish to thrive and survive in these volatile times must transform themselves from firms of the past to a firms of the future. A firm of the future embeds sustainability to its core and, in doing so, generates value for itself, its communities and the ecosystems in which it operates. A firm of the future is a business inspired by nature, functioning like an adaptive living organism, thriving within ever-changing business and socio-economic systems, resilient to disruptions and interdependent within the largest ecosystem of all – Earth.

Giles Hutchins is global director for sustainability solutions at Atos, and co-founder of BCI: Biomimicry for Creative Innovation.

Stewardship Lessons from News Corp (part two)

July 22, 2011

The radio was on in every room as my wife and I installed ourselves in our new home yesterday. I was moving house as the select committee interview of Rupert Murdoch and his son James unfolded.

Apart from the foam pie commentators today are concentrating on who knew what when.

Most of them are missing the two main points which screamed out from the hearing, especially in the testimony of Rupert Murdoch.

As leader and manager it is your business to know how people are behaving in your business. Even when all is going well. It is your business to check. And when you get clear warnings that things are going wrong, it is your business to investigate. If you delegate that to others you are abdicating your leadership. And if people don’t of their own accord tell you when things are going wrong, you have set the wrong tone.

News International may have had an ethics code. But they did not appear to place a leadership priority on how people behave. The best leaders are vigilant in watching behaviours. They make heroes of people who not only achieve targets, but who by their actions live out the company’s values.

Not the Murdochs. Rupert did not know that a CEO of subsidiary company of his had admitted paying the police for stories. He did not know that a senior reporter in that company had, in the words of a judge, been guilty of blackmail. He did not know that a Parliamentary Select Committee had described senior managers of the company as being guilty of collective amnesia. He did not know that it had paid out over three quarters of a million pounds to a victim of illegal phone hacking.

As the hearing went on I asked myself this question. What were experienced non-executive directors of News Corp doing to check on the behavioural audit trail which is a such key part of good governance? Why didn’t they heed the warning signs from parliamentary reports and court cases? Why did they accept a decision to outsource ethical oversight to the police, the press Complaints Commission and a City Law firm?

In the UK and continental Europe at least most directors now say the right words – it is about behaviours, not compliance. In the USA and in large parts of the investment world, clever people continue to stumble over ethical landmines because they continue to believe that all they need to know about a company’s performance and value can be found in the numbers, not in its character.

And for those of us who care about stewardship, it is time to ask every fund manager handling our money what steps they take to assure themselves that shareholder value is being protected from the kind of ethical negligence that was evident at News International. .

It is easy to be wise after the event. It is important to be constructive and recognise that good governance is not all about stopping people doing things. Boards need to balance risk management with innovation, safety and enterprise.

We need our companies to focus on performance and we need them to take risks. In all the hoo-ha we mustn’t forget that the invention of BSkyB as a business was an extraordinary breakthrough in which Rupert Murdoch took huge risks. And that James Murdoch took Sky in radically new directions – for example by facing up to the challenge of climate change and the huge role a broadcaster could play in mobilising its viewers to make a difference. Sky have won many awards for this but we have known at least since 2002 that directors must follow behaviours as well as results. Non-executive directors everywhere, take note.

Mark Goyder is Founder Director of Tomorrow’s Company

Stewardship Lessons from NewsCorp

July 13, 2011

In 2002 I wrote “Lessons from Enron”. It was story of power, fear and greed by the people at the top of the company. The non-executives who were there to hold them to account failed to restrain it.

People close to the operation knew there was much that was smelly. Brave whistle-blowers tried to draw attention to the problems but were slapped down.

Does any of this sound familiar this week?

There are differences, of course.Enron was listed company with dispersed shareholders. News Corp is a hybrid, with listed status but family control through preferential voting structures.

In Enron the performance pressures led to fraud and corruption. In News Corp they led journalists and executives to break the law, invade personal privacy, ignore the industry’s codes of practice and pay police for information. How much their managers then covered up this wrongdoing is still emerging.

We know some of the conclusions.

Every time there is a shareholder value disaster, somewhere behind it lurks a culture of fear.

As I argued 9 years ago in lessons from Enron, independent directors will only be effective if they follow what I call the “behavioural audit trail”. This means insisting first that a company states its values and second poking their noses in where they may not be welcome to ensure that the company’s managers practise what they preach.

Stewardship investors will insist on asking questions to satisfy themselves that directors are following the behavioural audit trail.

This is not rocket science. The best non-executives and the best investors do ask these questions. The trouble is that there are many more who lack the imagination or the understanding or the energy to feel the pulse of the organisation. They think this is all “soft stuff”, which “takes their eye of the ball”.

As I wrote then, until we realise that this soft stuff truly is the hard stuff, we will continue to pay the price in corporate irresponsibility and shareholder value.

That’s why we need stewardship investors who do have the experience and the commitment to hold company boards to account on the soft stuff and the hard stuff.

I could do worse than repeat the agenda I set out then and rename it “lessons from News Corp” – especially the bit at the end about journalists!

“…Boards

You are the company’s ethics and risk committee. Clear your agenda so that there is time for the serious examination of corporate values and the gap between what is preached and what is practised in your company. It may tell you more than the report of the audit committee. Ask repeatedly what kind of behaviours and what kind of managers get on round here? Do the answers fill you with confidence? If not, dig deeper.

…Institutional shareholders

Re-examine your time horizons. What kinds of performance are you rewarding and how durable is it? Are you incentivising people to boost the share price without regard to the future? Challenge the remuneration. Is it one-dimensional? If it is, how can you be sure that you are getting real or cosmetic improvements?

Question CEOs about the kind of atmosphere and culture they seek to create in their companies. See if they are managing the risks that go with big rewards for performance. You are right to invest a lot of credibility in CEOs and teams who deliver what they promise. But how much do you trust the earnings reported to you? What about cash and what about the underlying health of key relationships in the business? Are you encouraging a game of presentation, rather than underlying substance?

…Pension trustees

Question the more active of your fund managers. What are they doing to promote the underlying health of the businesses they invest in and to manage the risk around values, culture and governance? How are they rewarded? Are they encouraging an approach that delivers expected numbers at the expense of building value for the future? Is this what you want?

…Company secretaries

Open up the AGM. Encourage awkward questions as an insurance policy and a sign that the CEO and Chairman of your company are role models for open behaviour.

… the Remuneration Committee

Is your approach to performance one-dimensional? If it is focussed on total shareholder return - over what timescale? How are you protecting tomorrow’s shareholders against today’s creative accounting? Where in the remuneration system are you sending signals that results are not to be achieved at any price to the values and integrity of the organisation?

…Business Journalists

How often do you ask the CEOs you profile about the things they are doing to ensure the business is still robust in ten years time? Do you ask them about the ethos of the business? Is the emphasis exclusively on performance and the next few quarter earnings? What about following the behavioural audit trail? Do you talk to employees and customers and look at the underlying health of the organisation that is expected to continue delivering these results?”

Passivity no longer an option

July 6, 2011

I am reading more and more stories about listed companies that are taking shareholders for a ride.

Last month the story was ENRC (Eurasian Natural Resources Corporation).

This is a big company with majority owners from Kazakhstan which was listed and immediately admitted to the FTSE 100.

The minute this happens ordinary punters with their tracker funds or just their life insurance policies are dependent on the decisions made by the board.

Now respected independent directors Sir Richard Sykes (who chaired the Tomorrow’s Company restoring Trust inquiry 2003-4) and Ken Olisa have resigned, because they are not happy that the majority owners are treating minority shareholders like you or me fairly.

But we are powerless because the authorities have let them list here without imposing more stringent conditions.

In today’s Financial Times comes more reason to worry.

It seems many Chinese companies are bypassing American regulation by doing a reverse takeover – letting themselves be “taken over “ by American companies which are existing “shell companies”.

All this makes it more important than ever that we, as individual investors, start getting more active. Tracker funds are very appealing on the basis that your investment is spread, at low cost, across the whole index. But what if it is becoming too easy, in Europe and the USA, for companies to be admitted to the index.

There are lots of ironies in this situation. One is that it is the much maligned hedge funds that have started “short-selling” the fraudulent companies causing their share price to collapse.

The other is that the very same thing that we need in our stock market – getting larger, concentrated holdings so that shareholders have a long term interest in the company – are also the things that can be abused and threaten us when a solid stake becomes a controlling stake and minority shareholders lose out.

Nothing is simple in stewardship. No form of ownership is perfect. That’s why we have to hold all of them accountable by insisting that the funds in whom we invest our money are going to stand up for stewardship.

We as customers need to start letting the index funds know that we will stop putting our money their way if they are uncritical about who is allowed to be in the index. That should then put pressure on the London Stock Exchange whose index has such obviously weak entrance conditions.

Mark Goyder, 5 July 11

System change - lessons from the past

July 4, 2011

System change – lessons from the past

The abolition of the slave trade

From the inception of the slave trade in the early 16^th century up to the early 19^th century some 11million slaves were transported from West Africa to the Caribbean or the Americas.

The countries involved were Portugal, Spain, France, Holland and Britain. The practice played a major economic role for these countries involving a triangular trade, made up of exports to Africa, (iron goods, weapons and textiles) slaves out to the West Indies and the Americas, sugar tobacco, and spices back to Britain and the other countries involved. The trade was a major source of prosperity to Liverpool, London and Bristol. It provided a powerful stimulus to the shipbuilding and shipping industries

Slave-owning planters, and merchants who dealt in slaves and slave produce, were among the richest people in 18th-century Britain. Profits from these activities helped to endow All Souls College, Oxford, with a splendid library, to build a score of banks, including Barclays, The Tate Gallery and to finance the experiments of James Watt, inventor of the first really efficient steam engine.

Merchant bankers, heavily involved in the slave-based trades, extended vital credit to the early cotton manufacturers of its Lancashire hinterland. In 1772 the trade was described as ‘the foundation of our commerce, the support of our colonies, the life of our navigation, and the first cause of our national industry and riches’. In 1783 William Pitt stated that it provided 80% of Britain’s income from overseas

Abolition was seen as inconceivable. The slave trade was a ‘taken for granted’ pillar of the nation’s commercial life.

The case for abolition was countered by the argument that If Britain abolished it the resultant gap in the trade would be taken up by her competitors, France, Spain and Portugal. (The same argument is used today in opposition to any tightening of regulations relating to such things as hedge funds or derivatives trading).

However, in the second half of the 18^th century, intellectual and moral arguments against begin to appear, for example, Montesquieu’s, L’esprit des Lois (1748); Rousseau’s, The Social Contract (1762); Adam Smith’s, The Wealth of Nations (1776); and William Paley’s, Moral Philosophy (1789).

In 1783 public opinion in Britain was shocked by the incident of the voyage of the Zong. This ship was sailing westwards with a cargo of slaves when the ship’s captain feared that he would not have enough water on board to last the voyage. To conserve water for the crew he threw some hundreds of slaves overboard. This came to light when, on arriving back in Britain, he claimed on the ship’s insurance for loss of cargo.

The leaders

Thomas Clarkson
Thomas Clarkson's involvement with the abolitionist movement began in 1785, when he won first prize for a Latin essay competition, entitled ‘Is it lawful to make slaves of others against their wills?' The research for his essay opened his eyes to the nature of the slave trade and he was horrified at the way enslaved Africans were treated.

A red haired man who stood over 6 feet tall, he spent his long adult life working to abolish the Transatlantic Slave Trade and slavery itself. Born in Wisbech, Cambridgeshire in 1760, the eldest of 3 children of the local headmaster and minister, he studied at the local grammar school and then St John's College, Cambridge.

Clarkson met other people, particularly the leading Quakers, who wanted to stop the slave trade. His essay, published by Quaker publishers in 1786, was read by many people and Clarkson became well-known. In May 1787, Clarkson and 11 other men set up the Society for Effecting the Abolition of the Slave Trade and persuaded William Wilberforce MP for Hull, to speak for them in Parliament. As a result, a Parliamentary investigation into the slave trade was set up. With his brilliant speeches in the House of Commons, it was Wilberforce who came to be most associated with the campaign for the abolition of slavery, but it was Clarkson who provided him with a continuous supply of evidence for the speeches.

During his life, he was to travel 35,000 miles around Britain, observing, finding witnesses, interviewing, making notes and assembling evidence about the evils of the Slave Trade. He went to the major slave trade ports of Bristol, Liverpool and Plymouth in 1787 and 1788, realising as he did so that his task was not only enormous but also dangerous. In Liverpool he had a lucky escape when he was attacked by a gang of sailors who'd been paid to kill him. In Manchester he gave a powerful speech, using many examples from his research to show how cruel the slave trade was. In France, in 1789, he tried to persuade the new French government to abolish the trade and he received more threats and abuse.

In an effort to gather hard facts about the slave trade, Thomas Clarkson visited many ports and went aboard the trading vessels. One of the first African trading ships Clarkson visited was called the ‘Lively'. It was not a slave ship but its cargo had a powerful impact upon Clarkson. The ship was full of beautiful and exotic goods: carved ivory and woven cloth along with produce such as beeswax, palm oil and peppers. Clarkson could see the craftsmanship and skill that would have been required to produce many of the items. The idea that their creators could be enslaved was horrifying. Clarkson bought samples from the ship and started a collection that he added to over the years. The collection included crops and spices and raw materials, along with the intricate goods produced with them, and was kept in a large box.

Thomas Clarkson noticed how pictures and artefacts were able to influence public opinion, more than mere words alone, and quickly realised that the contents of the chest might reinforce the message of his anti-slavery lectures. He used the contents to demonstrate the skill of Africans and the possibilities that existed for an alternative humane trading system. The 'box' became an important part of his public meetings, providing an early example of a visual aid.

A medallion was designed depicting a kneeling slave and the words ‘Am I not a man and a brother?’ These were successfully sold in aid of the campaign. Society ladies had them made in gold and wore them on their gowns.

Despite the growing support around the country for the abolition cause, the first Bill introduced in 1791 was heavily defeated. Clarkson continued his travels, both collecting evidence and speaking out in public meetings, encouraging the setting up of local abolition groups and the boycotting of West Indian-grown sugar. But the constant travelling, long hours and another defeat in Parliament, in 1792, exhausted Clarkson and he withdrew from the fight, and took up farming.

In 1804 Clarkson, again became active in the anti-slavery campaign and in 1807, the slave trade was finally abolished in the British Empire, although slavery was still legal and slaves were not freed. For the rest of his life, Thomas Clarkson continued to campaign against slavery. He travelled to France in 1814 and 1815 to persuade the French to abolish the trade and enlisted the support of Tsar Alexander 1, ruler of Russia, for abolition

In 1823, a new group was formed, supported by Clarkson and Wilberforce that aimed to abolish slavery. Clarkson, aged 63, went on another national tour, covering 10,000 miles, in order to raise support for the cause. Finally, in 1833, theSlavery Abolition Act was passed, which gave all slaves in the British Empire their freedom. £20,000,000 compensation was paid to the slave owners (the amount today would be about £1.2billion) and existing slaves had to work for their former masters for six years, as ‘apprentices’ with no pay.

Wilberforce

William Wilberforce was born on 24 August 1759 in Hull, the son of a wealthy merchant. He studied at Cambridge University where he began a lasting friendship with the future prime minister, William Pitt the Younger. In 1780, Wilberforce became Member of Parliament for Hull, later representing Yorkshire. His dissolute lifestyle changed completely when he became an evangelical Christian, and in 1790 joined a leading group known as the Clapham Sect. His Christian faith prompted him to become interested in social reform, particularly the improvement of factory conditions in Britain. He was persuaded by Clarkson to lobby for the abolition of the slave trade and for 18 years he regularly introduced anti-slavery motions in parliament. The campaign was supported by many other members of the Clapham Sect and other abolitionists who raised public awareness of their cause with pamphlets, books, rallies and petitions.

In May 1788 Charles Fox initiated the first parliamentary debate on the issue. He denounced the "disgraceful traffic" which ought not to be regulated but destroyed. He was supported by Edmund Burke. With the support of Wilberforce a bill to regulate conditions on board slave ships was laid before parliament. The legislation was initially rejected by the House of Lords, but after William Pitt threatened to resign as Prime Minister, the bill passed 56 to 5 and received royal assent on 11th July.

Wilberforce marked his own formal entry into the parliamentary campaign on 12 May with a closely reasoned speech of three and a half hours, using its evidence to describe the effects of the trade on Africa and the appalling conditions of the middle passage. He argued that abolition would lead to an improvement in the conditions of slaves already in the West Indies, and sought to answer the economic arguments of his opponents. For him, however, the fundamental issue was one of morality and justice.

The lessons for system change today

The slave trade was supported by very powerful vested interests at every level of society, from the landed gentry who owned vast estates in the New World, through the merchant bankers, the mill owners, the shipping interests, through to the sailors and others at the bottom of society who in one way or another owed their livelihoods to it. It was an extremely long-established practice dating back hundreds of years, not just in Britain but in all the European maritime nations. Opposition to its abolition was fierce, even to the extent of attempts on Thomas Clarkson’s life. Yet in the end it was abolished.

The phrase ‘in the end’ is appropriate. From the start of Clarkson’s campaign to the abolition of the trade it took 24 years of intensive campaigning both at the political level and up and down the country. It required consistent, totally dedicated leadership, both within Parliament and in society at large, by charismatic leaders willing to dedicate their whole lives to the cause. To succeed, the abolitionists needed to rouse the conscience of the mass of the people, and to do so they used communication techniques equal to those of any of today’s PR companies.

To bring about needed change in the operation of the market system so as to ensure its sustainability will require leadership of equal calibre. That leadership needs to be of two kinds: intellectual leadership that will demolish those economic theories that have underpinned the failings of the market, and moral leadership that persuades people that social and economic justice and a sustainable form of capitalism are worth making sacrifices for. It will require patience; significant change may take many years. Yet time is short; the next system failure of the financial system may be catastrophic. And, as in the case of slavery, the support of the mass of the people must be engaged.

Philip Sadler

June 2011

The Summer of Stewardship

June 24, 2011

So the summer of stewardship is under way. We have launched our new report ‘Why Stewardship Matters’ which shows how the ordinary person can start to insist on stewardship from the people who supply financial services.

Vince Cable meanwhile has launched the review into short-termism. He has created a review led by the respected Professor John Kay. In setting its terms of reference he has picked up nearly all the issues Tomorrow’s Company has asked him to, including a fresh look at the responsibilities of asset owners and managers. Or as we put it, the demand side and the supply side of stewardship.

Now we need ordinary savers to feel empowered. You and I can send signals to insurance companies, fund managers and pension funds to say we want them to be effective stewards. From next week you will find a new part of this site dedicated to creating stewardship momentum, with resources that help you ask the right questions of the financial services companies with whom you deal.

The Financial Mail on Sunday is carrying a feature on stewardship this weekend, so if you are a Mail on Sunday reader, welcome to this site. Stewardship is the golden thread that binds savers, citizens investors, companies and society together in a positive approach to creating wealth for us all. You are now helping us sew that golden thread!

Defending the Atmosphere, Part 2

June 20, 2011

In response to a lawsuit that argues greenhouse gas emissions are a “public nuisance”, three of Congress’s most active opponents of responsible climate policy filed a brief with the U.S. Supreme Court last February. Rep. Fred Upton, Rep. Ed Whitfield and Sen. James Inhofe told the Justices it is inappropriate and unnecessary for courts to get involved in America’s climate policy.

Upton chairs the House Committee on Energy and Commerce; Whitfield chairs the House Subcommittee on Energy and Power; and Inhofe is the ranking member of the Senate Committee on Environment and Public Works. All three are prominent Republican opponents of climate action, working among other things to scuttle EPA’s authority to regulate greenhouse gas emissions.

To be fair, it’s not just Republicans who are blocking Congress from acting against climate change. Nineteen Democrats in the House voted for Inhofe’s and Upton’s bill to strip EPA of its regulatory authority. Several Senate Democrats also voted for the bill, including Sen. Joe Manchin of West Virginia, who complains “EPA’s overreach is destroying jobs in my state and all over the country” (for an excellent report on Congress’s effort to “repeal climate science”, see Remapping Debate).

If the courts agree to consider the “iMatter” movement’s atmospheric trust lawsuits (see Part 1 of this post), here are some of the arguments we can expect from opponents of climate action, whose delicate phrasing makes inaction sound like action. The italicized portions are direct quotes from the brief that Upton, Whitfield and Inhofe filed in the public nuisance lawsuit, American Power v. Connecticut:

Argument: The courts don’t have to act because members of Congress have been actively involved in the legislative process relating to climate change policies and regulations.

Reality Check: By “actively involved in the legislative process”, the three Republicans mean opponents are using the process to block meaningful action on climate change. So far, they’ve been successful.

Argument: Members of Congress have strong institutional and policy interests in preserving Congress’ plenary role in determining climate change policy for the nation.

Reality Check: In other words, members of Congress want to maintain control of climate policy so they can protect the interests of the coal, oil and nuclear industries, which contribute handsomely to reelection campaigns.

Argument: Plaintiffs are asking the Court to become involved in political and public policy matters that are being resolved by the Legislative and Executive branches of government.

Reality Check: Climate policy is not “being resolved”, unless “being resolved” means making sure there is no national climate policy at all. While the evidence and impacts of climate change are increasing in the United States and worldwide, there is no prospect that Congress will pass a bill limiting greenhouse gas emissions anytime soon. As for action by the Executive Branch, the three Republicans and their colleagues are trying to block it. At the same time they argue climate policy is being resolved, their brief complains the Obama Administration has “unleashed a torrent of greenhouse gas regulations” and has “engaged in frenetic regulatory activity”.

Argument: The courts needn’t worry because the United States is engaged in two decades of Congressionally authorized international climate change policy negotiations.

Reality Check: Due in large part to opposition in Congress and the last Bush Administration, two decades of international negotiations have not produced an effective treaty to combat climate change. It was opposition in the U.S. Senate that prevented the United States from becoming party to the Kyoto Protocol, in which other nations committed to reducing their carbon emissions. The United States has not yet fulfilled its obligations under the one climate treaty the Senate did support – the United Nations Framework Convention on Climate Change signed by President George H.W. Bush 14 years ago.

Argument: The climate actions the Obama Administration has taken over the last two years may well exceed the authorities Congress has vested in the Executive, and are at a minimum extremely misguided.

Reality Check: The actions the Obama Administration has taken so far to cut America’s greenhouse gas emissions are based on sound science and are designed to protect the security of the American people. What’s more, the Administration has been carrying out the environmental protection laws instituted by past presidents and congresses. That’s hardly “misguided”. On the other hand, Congress’s willful denial of the substantial observational and scientific evidence of global climate change is an abdication of the government’s responsibility to protect the health and welfare of the American people.

Argument: Extensive Congressional hearings have examined the broad range of economic issues associated with proposed “solutions”, including their impact on energy prices, markets household incomes and American competitiveness…

Reality Check: Examining issues is not the same as resolving them. Hearings in the current Congress have been used to mock climate science and to raise fears a clean energy economy would hurt families, workers and the economy. In reality, unmitigated climate is what will cause incalculable damages to American lives, property and the economy, leading to massive increases in federal spending. Clear and consistent policies to create a clean energy economy, on the other hand, would have positive economic impacts, including a boost to American competitiveness in the growing international market for low-carbon energy technologies. According to Pew Charitable Trusts, worldwide investments and financing in the clean energy sector have grown 630 percent since 2004, but the “U.S. competitive position in the clean energy sector is deteriorating.” The United States has slipped from the world leader in clean energy investments in 2008 to third place today.

Argument: The Legislative and Executive Branches are doing their jobs in a way that the Constitution envisions.

Reality Check: In the Senate, climate-related legislation has been blocked by a rule that requires 60 votes just to debate, let alone pass, a bill. The Constitution envisioned that a simple majority would be sufficient to pass the nation’s laws.

Argument: Climate change involves extremely complex, highly charged policy questions that are purely political in nature.

Reality Check: Responsible climate policy is not “purely political”, although opponents have tried to make it so. Climate policy is question of risk: If it’s possible that the majority of the world’s climate scientists are correct in concluding that unmitigated climate change will be catastrophic, how much of that risk will Congress force upon the American people, present and future? And as the iMatter lawsuits will assert, climate protection is a fiduciary obligation, not a political question.

We don’t know what the courts will rule on these questions, but we do know that any judge who reads the newspapers can see through the claim that Congress is handling the climate issue. If I were arguing these cases, I’d contend that the balance of power the Founders intended between the three branches of the U.S. government should be used to protect the American people from abuses of omission as well as commission.

Prof. Wood makes the case more eloquently:

The judicial role is to compel the political branches to meet their fiduciary obligation through whatever measures and policies they choose, as long as such measures sufficiently reduce carbon emissions within the required time frame. The courts’ role is not to supplant a judge’s wisdom for a legislature’s approach, but rather to police the other branches to ensure fulfillment of their trust responsibility in accordance with the climate imperatives of nature.