Saturday, January 31, 2009

CSR reflections on Davos (Day 3)

When the biggest news item is the (lack of) mobile phone ettiquette displayed by British Prime Mininster Gordon Brown, I begin to question the value of blogging about Davos Day 3. But then, at least his opposition party leader, David Cameron, revived yesterday's "quest for a new capitalism" theme, calling for "capitalism with a conscience".

Cameron urged businesses not to ignore the interests of society in the pursuit of profits, saying it's time for wealth to be distributed "more equally". Now, I don't blame you if you're pinching yourself. No, you're not dreaming, and yes, this is from the same conservative party that brought us free-market spin-doctor, Margaret Thatcher.

Cameron's call on Day 3 was the exception however (that was Day 2's theme - try to keep up David!). Most of the talk and twitter on Day 3 was about protectionism - dire warnings that this is precisely what led to the Great Depression in the 1930s and tut-tutting by German Chancellor Merkel about America's auto-industry bale-out, which is Protectionism with a big P - protectionism of the $25 billion variety.

They may be right, but this is a bit of a tough sell on a world still fighting the runaway fires of neoliberal capitalism. What's more, it is precisely managed protectionism that has helped sustain China's rise to prosperity, while neither America or Europe has been prepared to forfeit their perverse agricultural or fossil fuel subsidies.

But before I head off on a tangent ... the day was not totally devoid of CSR-related themes. Al Gore was seen looking much cheerier than usual, assuring us that Obama's commitment to a post-Kyoto deal on climate change is real. Let's hope Obama gets further with his good intentions than Gore did during his term as Vice President.

(I remember Gore at a two day training event organised by the University of Cambridge Programme for Industry in 2007, when asked what he would do differently if he was in the White House today, he said, I would be President, not Vice President! Well, he's got the next best thing - the ear of Obama).

Denmark's Prime Minister, Anders Fogh Rasmussen, politely asked rich and poor countries alike to commit to big cuts in greenhouse gas emissions, ahead of year-end talks on a new climate treaty that he will host in Copenhagen. Ironically, the worldwide economic collapse may be good news for the climate, at least in the short term. Remember how Russia's emissions went into freefall along with their economy in the early 1990s?

The messages out of Africa were sadly familiar, but no less true: Kenyan Prime Minister Raila Odinga criticised Zimabwe's Robert Mugabe for allowing 3,000 people to die of cholera and African leaders for not taking a unified stand against him. He admitted that corruption on the continent must be reigned in, but so too must Western companies exploiting Africa's resources.

Amazingly, there were still a few brave, intrepid banking honchos pleading the financial industry's case. HSBC chairman Stephen Green said that banks must not be "demonized" over the financial crisis. "Banks have clearly done things wrong. Some of the practices did not contribute, by any reasonable standards, to human welfare." 

Thanks for the apology, Steve, but you won't get off the naughty-step that easily! Besides, if I'm not wrong, most of your mates are now working for the politicians. So we'll let you know how we feel about the banks - demonic or otherwise - when next we place our democratic votes. 

Which makes me wonder ... could we be witnessing a shift from CSR to CNR - from corporate social responsibility to corporate national responsibility?

Friday, January 30, 2009

CSR Reflections on Davos (Day 2)

A year after Bill Gates famously called for a new model of "creative capitalism" at Davos, it seems that business (especially the banks) took him a bit too literally. Of course, Gates didn't mean creative loans and hedge fund activities, but his speech stands in stark contrast to this year's "crisis capitalism" mood.

Despite Tony Blair's reassurances that "the free enterprise system has not failed, the financial system has failed", the most consistent refrain echoing through the chilly corridors of the World Economic Forum on Day 2 was that capitalism needs bringing back into line. The adolescent years of free market rebels without a cause are over. (I wish I believed them!)

On Day 1, all eyes seemed to be on the bankers. On Day 2, the stakes were raised and the US was in the spotlight. A number of delegates were talking about the failure of US-led capitalism and even Bill Clinton was nodding. When asked about Wen Jiabao's thinly veiled criticism of America over the crisis, he said: "The Chinese premier was right: It all started in the United States."

Somewhat incongruously, Valerie Jarrett, speaking as President Obama's representative in Davos, told delegates that his message can be conveyed in one word: "responsibility". That's encouraging but not terribly helpful. What does it mean? Maybe the test will literally be "the ability to repond" by policians and CEOs. Too little too late some say, but watch this space.

One place to start, according a WEF report released is clean energy investment, which they claim needs to more than triple to $515bn (£360bn) a year to stop greenhouse gas emissions reaching levels deemed unsustainable by scientists. At least that's a message Obama seems to be taking on board.

At a corporate level, at least one good news story of response-ability emerged. US firm Tupperware Brands Corp said it is unlikely to lay off staff or cut costs. Chief executive Rick Goings admonished that "the last thing to cut is your talent." Let's hope other CEOs are listening, although I seriously doubt it.

The annual Philanthropic Lunch, with its predictable crowd of Bill-spotters (including the Gates and Clinton varieties), seems to me a bit like a doing a band-aid dance at a chainsaw massacre party. At least it produced a pearl from Gates - philanthropy is fun and fulfilling! Well, if anyone would know, its the world's biggest philanthropist ever, right?

Then again, wouldn't it be better to improve capitalism as a system, so that we don't need to rely so much on uber-philanthropists' need for a warm-fuzzy endorphine fix? Why don't we give responsible capitalism a try first, and then we can talk about something a bit more creative after that? How about it - do we have a deal, Bill?

Wednesday, January 28, 2009

CSR Reflections on Davos (Day 1)

It's fair to say that if you're prone to depression, Davos is not a good place to be this year. Not only is the economic outlook gloomier than ever, but it is also snowing heavily "thus forcing everybody to dress in silly boots and bear-like coats that automatically strip even 'masters of the universe' of a bit of their dignity", as BBC Radio 4 Today programme presenter Evan Davis noted.

So what have we learned so far? Here are 5 points that I took away from today:

1. GROWTH - The IMF is expecting the global growth rate for 2009 to fall to 0.5%, meaning growth per capita will be negative. The issue of resilience is key. For example, Rahul Bajaj, chairman of Indian car manufacturer Bajaj Auto, says India's domestic demand has made it more resilient than many countries. Should this be part of nations' responsible competitiveness strategies in future?

2. JOBS - The ILO says as many as 51 million jobs worldwide could be lost this year, pushing the world's unemployment rate to 7.1% by the end of 2009, compared with 6.0% in 2008. Could it be that the biggest CSR issue in 2009 will be around job retention and responsible approaches to redundancy?

3. SPECULATION - Stephen Schwarzman, chairman of the leading private equity company, the Blackstone Group, says that 40% of the world's wealth was destroyed in last five quarters. "It is an almost incomprehensible number," he says. "Business will be very different." Can the casino economy ever be compatible with responsibility, and will we be able to tame it?

4. TRUST - Companies are viewed as less trustworthy than a year ago and consumers want governments to play a greater role in business, according to a poll by Edelman. "Business really has to work its way back. It has to re-earn the trust of its broad sets of constituents," says CEO Richard Edelman. "I think we have moved from a shareholder society to a stakeholder society, and that has massive implications." I hope he's right!

5. CHARITY - South African Finance Minister Trevor Manuel notes that overseas development aid to Africa is suffering: "Already, we are some $240bn (£167bn) short of the commitments made at [the 2005 G8 summit in] Gleneagles." Surely, we can expect corporate philanthropy to suffer in equal measure?

I think WEF founder, Klaus Schwab, best sums up the challenge we face: "We have now a mass crash and we have to figure out first how we help those injured by it. Secondly, we have to find out what rules we need for the future in order to avoid this happening again." 

Finally, former UN Secretary-General, Kofi Annan, continues to be the conscience of the world, when he says: "We need to ensure the poorest in the planet - who will be hardest hit by the financial crisis - are not forgotten." A timely reminder for what should be the central concern of CSR in the coming months?

Tuesday, January 27, 2009

Obama moves beyond climate spin

"It's a little bit funny, this feeling inside" ... We are so used to being disappointed by politicians that the world seems a little out of joint when they actually meet or exceed our expectations.

Yesterday, in what he described as "first steps", Obama directed the Environmental Protection Agency (EPA) to reconsider the Bush administration's denial of a 2007 request by California and 13 other states to implement strict new limits on tailpipe emissions that contribute to global warming. He also directed the Department of Transportation to follow through on Congressional legislation to raise existing fuel economy standards on new cars and lorries by 40 percent beginning in 2011.

Admittedly, it is still very much the honeymoon period for Obama, and every president has their 100-day plan to impress. Even so, Obama's choice to act swiftly on climate change is heartening. A number of things seem significant about his announcement:
  1. Obama has turned environmental NGOs into his allies - he practically had them queing up to sing his praises, from the Environmental Defense Fund and the Pew Center on Climate Change to Greenpeace.
  2. Obama has cross the party divide and made the environmentally progressive Californian governer Schwarzenegger into an ally as well, which bodes well for the future.
  3. Obama has virtually accused his predecessor (and the oil and motor industry lobby) of climate change denial, saying "my administration will not deny facts; we will be guided by them".
  4. And finally, Obama has made a bold declaration that "America is ready to lead" on climate change. Given their current position as laggards, they will have to cover a huge amount of ground in the coming 12 months to give that statement any substance.
The months and years ahead - especially Obama's promise to introduce a cap-and-trade system and the world's hope that the US will play a productive role in reaching a post-Kyoto deal - will give us plenty of opportunity to test (and no doubt criticise) Obama's commitment. But for now, I think we should relish the winds of change blowing - they don't come too often.

Tuesday, January 20, 2009

What Obama's inauguration speech means for CSR?

Having just watched the inauguration of Obama, it is hard not to feel that we have just witnessed a geopolitical (perhaps even a psycho-spiritual) shift. But what will this mean for corporate sustainability and responsibility?

The speech was notable from a CSR perspective in a number of ways:
  1. Obama's acknowledgement of the irresponsibility of capital markets and the need to regulate them, which should lead to some reigning in of "casino capitalism";
  2. Obama's repeated mention (twice I think) of the need to invest in renewables (although I also noticed the "harness the soil" comment, which presumably means fossil fuels);
  3. Obama's emotional identification with the marginalised populations of the US and the world, which should lead to a prioritisation of social issues; and
  4. Obama's clear desire for America to demonstrate its leadership in the world, including in the area of climate change, which should lead to progress in the post-Kyoto deal.
Then again, as one BBC commentator pointed out, Obama needs to convince us all that he is not just good at words, but at actions as well. The next 100 days will, I believe, give us a much clearer picture of Obama's likely influence on the global CSR agenda.

(For those interesting in something a bit more creative on the subject, I have written a new poem about Obama's inauguration, which is posted here:

Tuesday, January 13, 2009

Reminder: CSRI Masterclass and The World Guide to CSR

Just two quick reminders: 

1. CSR MASTERCLASSES: There are still places available for the CSR International Masterclass I - Introduction to CSR Theory and Practice - running on Friday 23 January and repeated on Saturday 24 January

2. WORLD GUIDE TO CSR: The deadline for applications from potential contributors (who wish to write on CSR in a particular country/region) is this Friday, 15 January. A list of available countries & regions is available.

More information on both is on:

Thursday, January 8, 2009

Usury and the Credit Crunch

Historically, "usury" is term given to the charging of (excessive) interest. For over 4,000 years, it has been repeated condemned and criticised by religious, philosophical and economic traditions. This is summarised in a paper by Wayne Visser and Alastair McIntosh of Scotland’s Centre for Human Ecology, published  as "A short review of the historical critique of usury” in the journal, Accounting, Business & Financial History (1998, 8:2, pp. 175-198). Early in 2009, following requests from Muslim scholars to reprint and translate the article, the authors added the following postscript. The full piece can be read at

POSTSCRIPT ON THE CREDIT CRUNCH, 2009: The global so-called “credit crunch” (defined as “a severe shortage of money or credit”) is generally considered to have “started” on 9 August 2007 when disturbing figures from the French bank BNP Paribas raised the cost of credit and awoke the financial community to the wider seriousness of the situation (see the BBC’s detailed timeline at

Underlying this had been a rise in US interest rates between 2004 and 2005 from 1% to 5.35%, resulting in high levels of default at the “sub-prime” end, which is to say, the high risk end of the housing market. Because mortgage lenders had sold on their debts via hedge funds to other financial institutions, the consequence of irresponsible lending spread contagiously through banking systems, especially in the West, as house prices started to fall and the real estate asset value underpinning the loans became negative.  When BNP Paribas told its investors that they would not be able to draw money out of two of its funds owing to a “complete evaporation of liquidity” it was the start of a domino effect, forcing governments to step in and avert potentially catastrophic runs on major banks.  

From the perspective of our paper on usury which we now revisit more than a decade after its first publication in 1998, we find it instructive to reflect on how far such problems can be laid at the door of an interest-based banking system. Full consideration of this is beyond our current scope, but in this postscript we will confine ourselves to making three brief observations.  

First, the credit crunch was a consequence of the preceding credit bubble inevitably bursting. In certain Western countries, including Britain and America, governments had deregulated financial agencies to an extent where irresponsible lending became normalised. For example, in Britain, through until 2008, it was easy for people to get mortgage loans on property of 120% of the property value with few questions asked. Property prices were rising sharply, the global economy was booming, and traditional banking caution was thrown to the wind. People re-mortgaged their homes to pay off credit card debts that carried very high rates of interest, and which had been sold to them by aggressive marketing. People had started to believe that ever-rising house values and continuing economic good times would generate property values that would continuously outstrip their liabilities. Far from failing to dispel this notion, leading lenders exploited it. City staff were rewarded with massive “fat cat” bonuses based on the size and quantity of loans made. Concerns about their overall quality of lending portfolios were silenced through hedging – the selling on and spreading out of risk on speculatively buoyant markets.  

While everybody played the game and interest rates remained low the system appeared to be working. It met investor expectations with high rewards. But as US interest rates rose in a necessary effort to counteract the economic knock-on effects of house price inflation, the consequences of having bought into a usurious and greed-driven system started to hit home. Loan default rates reached the point of crisis. Those who were able to see it coming, mostly the wealthy and well-advised who had a greater variety of financial options open to them, were able to bail out in time. Those who had been caught with little option if they wanted to buy a house to live in were squashed – leaving many young families now struggling to pay off debts as their house values fell into negative equity. As the media rightly observed, Wall Street’s gains are Main Street’s losses, with the negative externalities of financial speculation passed on to society as a whole.  We might learn from this that an economics that canonises greed lays in store catastrophic weaknesses that will eventually hit the poor hardest. 

Our second point is that globalisation, whilst creating massive new economic wealth from deregulated trade, has reduced resilience in the world financial system. Fire walls between different countries’ economies that were held in place by measures such as controls on foreign currency transactions substantially fell away in the years that followed the “new right” economics of Reagan and Thatcher. Enabled by computerised production planning and stock control, new notions of just-in-time commercal supply systems profitably maximised economic efficiency. But there was a hidden cost. It also reduced the resilience that slack allows in highly interdependent chains of supply. Without slack, supply networks, like the socio-ecological systems on which they depend, become brittle. They become prone to breaking rather than bending when placed under stress. And for a monetarily based economic supply system, a bank running out of liquidity is like a car suddenly losing its oil. Devoid of lubrication the engine grinds to a sudden halt. That was why, in 2008, governments were left with no option but to bail out the banks.  

This loss of resilience is what distinguishes the current situation from the bank crashes of the 1920s. Back then, society and especially its food production was less industrialised. People lived closer to the land. Most essential services such as food production were local production for local consumption. But today, essential chains of supply are long, often global, and therefore subject to international market and financial vagaries. A glimpse of the consequences of such dependency can be seen from what happened in Britain in September 2000 when fuel tanker drivers went on strike. Within five days, panic buying emptied some supermarket shelves and the media carried sporadic reports of fighting at the checkouts. The Blair government, fearing civil unrest, capitulated. Applied to the situation in 2008, we might ask much more unrest might have broken out if bank failure had resulted in the sudden loss of financial lubrication with its consequent immediate knock-on effects?  

We might learn from this that the risks are too high for governments to wash their hands of regulating modern economies. Unfettered free markets expose the very fabric of civil society to the law of the jungle on a bad day. Overly deregulated markets can only be transient phenomena, like handing out free pizza. Because of their abstract nature based on confidence – the word means “faith together” – financial markets are all the more volatile. The brazenness by which financial engineers or rather, marketeers, tried to spread risk by creating derivative “products” driven ultimately by mortgage interest rates and their effect on property values reveal a massive collapse of responsibility. That collapse happened because faith shifted from having direct equity connection to tangible assets onto abstract financial connections that could be many times removed and diluted from the reality on the ground. Such derivatives had become ships of fantasy. Devoid of anchors, they drifted fecklessly with no bearings on the landmarks of reality until the rocks struck.  

Our third observation is that many people ask whether the “credit crunch” (the term sounds disarmingly like a packet of breakfast cereal, with a free gift inside) signals the “end of capitalism”. On the contrary, we consider that it represents only a cyclical spasm in the process by which capitalism periodically restructures itself in a crash that most hurts the weak. The consequence of job losses and repossessions in the housing market are that the relatively disadvantaged, many now saddled with negative equity, will be forced long term to work harder to pay off debts, including their share of the national debt that will manifest in tax rises. As such, the creditors – many from their offshore tax havens - retain and reconsolidate a grip that they would not have had if their involvement in the process had been through risk-shared equity holdings, as with Islamic banking principles. These investors will, in future, be the people who find themselves in a position to buy up repossessed (which is to say, bankrupt) housing stock, and thereby strengthen their arm in future as rentiers to those who have lost out. The relatively poor will be forced to work yet harder on a treadmill that damages family life and with it, weakens the future fabric of society.  

Capitalism can be understood at many different levels, from honest trade and entrepreneurialism all the way to its advanced Anglo-American casino version. In the latter, the role of money undergoes a shift. It changes from its primary role as a means of recording and lubricating exchanges of goods and services. It takes on second order abstract qualities of being speculative. Here money alone generates more money, and the principle of usury – defining it as the lending of money at real positive rates of interest (i.e. rates greater than what is needed to cover inflation and risk) – is the inner wheel driving the system.  

Although we believe capitalism in one form or another is here to stay, the "credit crunch" may go down in history as the most serious challenge yet to financially speculative advanced capitalism. Henceforth electorates and their governments should give more determined consideration to the oligarchic principle of allowing so much power and latitude to shareholders and their financial analysts whose investment motivation is purely to ‘play the market’.  

2009 will probably mark the point at which the pendulum starts to swing back to more carefully and strongly regulated financial markets. As it turns out, this approach is entirely consistent with the philosophy of the iconic economists Adam Smith (who was after all a ‘moral philosopher’) and John Maynard Keynes (who warned against the dangers of speculative activities). Ironically, these are often cited by neoliberal market fundamentalists in support of their ideological deregulatory stance. Any of us who have knowingly participated in usury-related casino economics share the responsibility for what has happened. Whilst neither of the current writers is a Moslem, we cannot help but be reminded of the Islamic hadith that states: “The taker of usury and the giver of it and the writer of its papers and the witness to it, are equal in crime.” To put it in the language of other Abrahamic religions, we have worshipped at the shrine of Mammon, the god of wealth. Mammon has now transmogrified into Moloch – the fire-filled hollow stone god of the Hebrew Bible. Into his lap the children were reputedly sacrificed … and that, in the name of idolatrously seeking future economic prosperity.  

Through the lens of such metaphor the “credit crunch” must, like the “climate change crunch”, be understood spiritually, or in terms of deep values. It is our consumer greed that has driven the problems now faced. Whatever our religious background if any, the crises of present times can be seen as a spiritual, or a values-based wake-up call. As such, modernity may still have something to learn from the ancients.  

Alastair McIntosh & Wayne Visser

Tuesday, January 6, 2009

CSR Masterclass - Earlybird Discount Until 9 January

On Friday 23 January (and repeated on Saturday 24 January), Prof Wayne Visser, CEO of CSR International and co-editor of The A to Z of Corporate Social Responsibility, will be teaching the first CSR International Masterclass in London on "An Introduction to CSR Theory and Practice". 

A 10% Early Bird Booking Discount applies until this Friday 9 January. Please email for a registration form or more information.

More information on the course, as well as the other Masterclasses can be viewed at An outline of the course contents is as follows:

      • A short history of CSR

      o Pre-history (before 1850)

      o Early history (1850-1950)

      o Modern history (1950-present)

      • Underlying concepts

      o corporate social responsibility, corporate social responsiveness, corporate social performance, social enterprise

      o environmental management, sustainable development, triple bottom line, sustainability, five capitals, cradle to cradle

      o business ethics, corporate citizenship, corporate governance, stakeholder management, bottom of the pyramid (BOP)

      • The business case for CSR

      o Instrumental research

      o Anecdotal evidence

      o The moral case for CSR

      • CSR standards and codes

      o Social and labour standards

      o Environmental, health and safety standards

      o Corporate governance standards

      o Sector-based standards

      o Socially responsible investment standards

      • The future of CSR

      o Trends in CSR

      o CSR in developing countries

      o The emergence of CSR 2.0

Happy New Year & Dates for the Diary

2009 will be an exciting year for CSR International. I will let you know in the coming weeks how you can get involved and benefit from CSR International's knowledge, data and networking services. Meanwhile, here a few highlights of what is to come, so that you can put the dates in your diary.


Friday 9 January - Deadline for 10% Earlybird discount on CSR Master Class I on 23 or 24 January (Introduction to CSR Theory and Practice) - see for more details. Contact for a registration form.

Friday 15 January - Deadline for the 2nd Call for Contributors to the World Guide to CSR - see for more details. Please forward to whoever may be interested. Send your applications to write a CSR country/regional profile to

Friday 23 January - CSR Masterclass IIntroduction to CSR Theory and Practice - see for more details. Please forward to whoever may be interested. Contact for a registration form.

Saturday 24 January - CSR Masterclass IIntroduction to CSR Theory and Practice (Repeat) - see for more details. Please forward to whoever may be interested. Contact for a registration form.


Thursday 12 February - CSR International official LAUNCH PARTY! London, 6-9 pm. More specific details to follow. Space is limited. Register your interest to attend with

Friday 13 February - Deadline for 10% Earlybird discount on CSR Master Class II on 27 or 28 February (International Perspectives on CSR) - see for more details. Please forward to whoever may be interested. for a registration form.

Friday 27 February - CSR Master Class IIInternational Perspectives on CSR - see for more details. Please forward to whoever may be interested. Contact for a registration form.

Saturday 28 February - CSR Master Class IIInternational Perspectives on CSR (Repeat) - see for more details. Please forward to whoever may be interested. Contact for a registration form.


Thursday 12 March - CSR Networking Meeting (London) - 6-9 pm. More specific details to follow. Space is limited. Register your interest to attend with

Friday 13 March- Deadline for 10% Earlybird discount on CSR Master Class III on 27 or 28 March (International Perspectives on CSR) - see for more details. Please forward to whoever may be interested. for a registration form.

Friday 27 MarchCSR Master Class IIICreating Change Through CSR - see for more details. Please forward to whoever may be interested. Contact for a registration form.

Saturday 28 MarchCSR Master Class IIICreating Change Through CSR (Repeat) - see for more details. Please forward to whoever may be interested. Contact for a registration form.

I look forward to meeting you at one of our events in the near future. Remember, from February, we will hold a CSR Networking Meeting in London on every 2nd Tuesday of the month.

All the best for 2009.