Sustainable by Design? Lessons in Circularity from Seventh Generation

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.11

The CSR 2.0 principle of circularity has roots in life cycle assessment, cleaner production, sustainable consumption and cradle to cradle concepts. In The Age of Responsibility, I explore various well-known multinational examples, from Interface’s carpets and Nike’s Considered Design shoes to Coca-Cola’s water neutral initiative and Tesco’s carbon neutral programme.

But there are also smaller, more nimble companies, like Seventh Generation, that are able to go much further, much faster. What can we learn from these companies that are intentionally sustainable ‘by design’?

Seventh Generation, an American household cleaning products business started more than 20 years ago by Jeffrey Hollender, took inspiration for its name and philosophy from the Iroquois Confederacy (a council of Native American Indian tribes), which included the admonition that ‘in our every deliberation, we must consider the impact of our decisions on the next seven generations.’ From the beginning, this meant thinking in a circular way about the impact of their products.

To begin with, this meant swimming upstream. “When Seventh Generation told executives at the old Fort Howard Paper Company that we wanted to market bathroom tissue made from unbleached recycled fibre, they laughed,” recalls Hollender. Despite such early resistance, however, Seventh Generation has remained steadfast in its commitment to ‘becoming the world's most trusted brand of authentic, safe, and environmentally-responsible products for a healthy home.’ And indeed, now has an impressive catalogue of cradle to cradle designed products, and has been doing extremely well, showing strong growth even through the recession.

However, ensuring that Seventh Generation lives up to their promise of authenticity is something that requires constant vigilance. For example, in March 2008, the company was ‘exposed’ by the Organic Consumers Association for having detectable levels of the contaminate 1,4-dioxane in their dish liquid. In fact, Seventh Generation’s product was declared the safest of those available and they had been working with suppliers for more than five years to remove it. They have since eliminated the contaminant completely, but as Hollender later declared: “Our effort was simply not good enough. Our real mistake was to exclude consumers and key stakeholders from our ongoing dialogue about dioxane. In short, we flunked the transparency test.”

Of course, the very foundation of transparency is information and the most basic kind is a full list of product ingredients, which, unbelievably, is not required by US law for household products. Consequently, Seventh Generation launched a Show What’s Inside initiative, which included an educational website and an online Label Reading Guide, downloadable directly to shoppers’ cell phones, which helped them interpret labels at the point of purchase, especially any associated risks.

As Hollender and Bill Breen report in their book, The Responsibility Revolution, not long after, SC Johnson launched a cloned version called What’s Inside. “That’s just what we had hoped for,” declared Hollender and Breen. “When a $7.5 billion giant like SC Johnson puts its brawn behind ingredient disclosure, it’s likely that the rest of the industry will follow, regardless of what the regulators do.”

Despite its green image, Seventh Generation knows that it needs to create virtuous cycles in its social as well as its environmental impacts. As a result, in 2009, the company joined Women's Action to Gain Economic Security (WAGES) – an organisation committed to building worker-owned, cooperatively-structured, eco-friendly, residential cleaning businesses in San Francisco – to launch Home Green Home, WAGES' fourth worker-owned cooperative. This unique social enterprise serves the city of San Francisco and is creating healthy, dignified jobs for women in an industry known for long hours and low pay. The women who own and work in the business earn wages that average 50 percent more than their non-coop counterparts, and receive health care and paid vacation benefits.

In the future, Seventh Generation and WAGES hope to expand the innovative practice beyond San Francisco. Hollender is under no illusions about how far we collectively still have to go. In his Foreword to The Age of Responsibility, he confesses that:

“Corporate responsibility in its present incarnation has been an enormous disappointment at best. It has not lifted people out of poverty. It has not protected the environment. It has not boosted community wellbeing. It has been too little, too late and at most has succeeded in getting some companies to aspire to simply do less damage than they did before. Instead of changing the world, corporate responsibility merely evolved into a baseline requirement in every company’s license to operate. Where it succeeded, it only managed to slow the rate of decay, which is hardly enough to do much more than maintain the status quo.”

And yet, he remains optimistic. “Though much has changed in the last 25 years, one thing hasn’t: Business is still the only force with the reach and resources to do what needs to be done as quickly and efficiently as possible. The hour may be late and the clock loudly ticking but the story of responsible business is not over yet. There’s still room for a happy ending. And the time has come for us to write it for ourselves.”

It is examples like these and many others that show that the principle of circularity is not wishful thinking, but a practical strategy for achieving sustainability and responsibility, economically, socially and environmentally. And together with the other principles of CSR 2.0 or Transformative CSR – creativity, scalability, responsiveness and glocality (touched on in the previous blogs) – these inspiring innovations and bold actions are ushering in the new Age of Responsibility and with it, a new kind of ‘susponsible’ capitalism.

Without a doubt, however, achieving this vision requires change on a scale and urgency that has seldom been witnessed in human history. So the question remains, how do we make change happen? I’ll examine the myriad answers to this in my forthcoming blogs, recommencing in January.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

Myths About CSR in Developing Countries

By Wayne Visser

Part of the Quest for CSR 2.0 series.

Are concepts and models of corporate social responsibility (CSR) developed in the West appropriate for developing countries?

I decided to first tackle this question by setting out what I believe to be Seven Popular Myths about CSR in developing countries. Most of these myths exist as a result of the feeding frenzy that inevitably occurs every time the media has hunted down and sunk its teeth into one or other juicy story of corporate exploitation. They, however, become sustainable because they are spread by whole legions of largely well-intentioned people who have vested interests in promoting their particular brand of the truth about CSR.

The Seven Myths:

1. Economic growth is not compatible with CSR.
2. Multinationals are the biggest CSR sinners.
3. Multinationals are the biggest CSR saviours.
4. Developing countries are anti-multinational.
5. Developed countries lead on CSR.
6. Codes can ensure CSR in developing countries.
7. CSR is the same the world over.

Let’s look at these myths each briefly in turn.

Myth 1: Economic growth is not compatible with CSR: What the Index for Sustainable Economic Welfare and Genuine Progress Index show is that GDP growth and quality of life move in parallel until social and environmental costs begin to outweigh economic benefits. According to this ‘threshold hypothesis’ – coined by Chilean barefoot economist, Manfred Max-Neef – most developing countries have yet to reach this divergence threshold. For them, economic growth and the expansion of business activities is still one of the most effective ways to achieve improved social development, while environmental impacts are increasingly being tackled through leapfrog clean technologies.

Myth 2: Multinationals are the biggest CSR sinners: On the ground in most countries, multinationals are generally powerful forces for good, through their investment in local economies, creation of jobs, upgrading of infrastructure, provision of basic services and involvement in community development and environmental conservation. There are always exceptions, of course, and these should be named and shamed. But they shouldn’t overshadow the overall positive role of big companies in developing countries. The cumulative social and environmental impacts of smaller companies, which operate below the radar of the media and out of reach of the arm of the law, are typically far larger than that of the high profile multinationals.

Myth 3: Multinationals are the biggest CSR saviours: Not only do large companies have limited influence over government policy, but most multinationals, despite large capital investments, provide only a minuscule proportion of the total employment in developing countries. The real potential saviours are small, medium and micro enterprises (SMMEs), including social enterprises, which are labour intensive and better placed to affect local economic development. If the social and environmental impacts of these SMMEs can be improved, the knock on benefits will be proportionally much greater than anything that multinationals could achieve on their own. This is why the work CSR for SMEs by Anahuac University in Mexico and Forum Empresa in Latin America is so encouraging and important.

Myth 4: Developing countries are anti-multinational: Developing countries are often caught in a no-man’s land of under-development in a competitive, monetized, global economy, and the sooner they can modernise and integrate, the better for them. Most often, developing country communities welcome multinationals and their CSR initiatives. This is not the same as saying the developing world should repeat the past mistakes of the developed countries, such as highly polluting industrialisation, nor that multinationals should not be required to be responsible and held accountable. But we should not deny developing countries the dignity of choice, whether it be Unilever products or Coca Cola, both of which have made significant progress on CSR in recent years.

Myth 5: Developed countries lead on CSR: There are countless examples of how developing countries are proving themselves highly adept at delivering the so-called triple bottom line of sustainability, namely balanced and integrated social, economic and environmental benefits. It is actually not surprising, since in developing countries, these three spheres are seldom separable – economic development almost inevitably results in social upliftment and environmental improvement, and vice versa. Whether it is South Africa’s King Code, which encourages integrated sustainability reporting, or A Little World, which uses mobile phone and biometric scanners to bring micro-banking services to the poor in India, a lot of the innovation in CSR is taking place in developing countries.

Myth 6: Codes can ensure CSR in developing countries: The past few years have seen a mushrooming of corporate responsibility codes, standards and guidelines, which developing countries are keen to adopt, if only to satisfy their Western partners. This standardisation trend is both inevitable and necessary in a globalising world—which is desperately searching for an alternative to command-and-control style business regulation in order to satisfy the governance and accountability void which still exists. But this codification tends to measure CSR activities, rather than CSR impacts on the ground. Developing countries need to move rapidly through this Strategic CSR approach in an Age of Management to a more transformative CSR approach in an Age of Responsibility.

Myth 7: CSR is the same the world over: One of the biggest fallacies is that, in a globalised world, CSR can somehow conform to a unitary model. Of course, we need universal principles, like the Global Compact, and perhaps even process frameworks, like ISO 14001. But standardised performance metrics, like those of the Global Reporting Initiative and the numerous sustainability funds and indexes, start to tread on shaky ground. The tendency is for developed country priorities – such as energy and climate change – to receive emphasis and for northern NGO agendas to dominate.

The antitdote to these CSR myths for developing countries is glocality – one of the five principles of CSR 2.0. The term ‘glocal’ – a portmanteau of global and local – is said to come from the Japanese worddochakuka, which simply means global localisation. Or more simply, ‘think global, act local’. The question is, do we see glocality in action, or do we just see corporations in developing countries mimicking the practices of the West?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

The Future Faces of CSR Activism

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.9

The third principle of Transformative CSR, or CSR 2.0, is responsiveness. (We explored creativityand scalability in the last two posts). Some of the most important players in the responsiveness game – especially through cross-sector partnerships – are civil society organizations (CSOs, which I prefer rather than the term NGOs). Reflecting on how this sector is changing in the face of increased calls for responsiveness, I have distinguished 10 ‘Paths to the Future’ for CSR activism. I believe that CSOs acting in the CSR space will increasingly be:

• Platforms for transparency – Undertaking investigative exposes & hosting disclosure forums;
• Brokers of volunteerism – Providing project opportunities for employee volunteers;
• Champions of CSR – Raising awareness and increasing public pressure for CSR;
• Advisors of business – Offering consulting services to business on responsibility;
• Agents of government – Working with or on behalf of regulatory authorities;
• Reformers of policy – Pressuring for government policy reforms to incentivise CSR;
• Makers of standards – Developing voluntary standards & inviting business compliance;
• Channels for taxes – Receiving and deploying specially earmarked tax revenues;
• Partners in solutions – Partnering with business/government to tackle specific issues; and
• Catalysts for creativity – Creating social enterprises & supporting social entrepreneurs.

Let’s explore these ‘future faces’ of CSR activism in a little more detail below, drawing on examples from around the world of CSOs emerging roles.

Platforms for transparency – The role of CSOs as agitators for, and agents of, greater transparency seems set to continue. For example, in Senegal, Benin, and Guinea, CSO intervention has been critical in the development of a free press. And in India, Karmayog allows citizens to report specific instances of bribery and corruption on a live, public website.

Brokers of volunteerism – As companies increasingly see the benefits of volunteerism (greater job satisfaction, productivity, commitment and loyalty), CSOs are increasingly becoming people-brokers, as sources of projects for employee volunteers. For example, the Voluntary Workcamps Association of Ghana (VOLU) coordinates volunteers to help with the construction of schools, reforestation and AIDS campaigning.

Champions of CSR – While some CSOs remain sceptical about CSR, in many countries they are the main agents for promoting CSR. For example, in Iran, a group of CSOs have joined forces with the UNDP to promote CSR through targeted training for managers under the umbrella of the UN MDGs. And in Senegal, CSR awareness has grown mainly due to a CSO called La Lumière in Kédougou.

Advisors of business – A combination of genuine expertise, valuable perspectives and a crunch on funding means that many CSOs are turning to consultancy, working with and advising companies not only on specific social and environmental issues, but also more generally on sustainability and responsibility. For example, in Hungary, as opposed to the traditional role of watchdog, many CSOs engage in consultancy on CSR.

Agents of government – The phenomena of GONGOs (government organised NGOs), GINGOs (government-inspired NGOs), GRINGOs (government regulated/run and initiated NGOs) and PANGOs (party-affiliated NGOs) are becoming more widespread, no longer just seen in China. Even where governments are not setting up or running the CSOs, they are supporting them as key catalysts. For example, Belgian CSOs receive €3 government funding for every €1 they raised themselves.

Reformers of policy – Realizing that the ‘rules of the game’ need to change, CSOs are increasingly getting involved in legal reform. For example, in Indonesia, it was largely due to rising pressure from CSOs that the Law No. 40/2007 concerning Limited Liability Companies was introduced to make CSR mandatory.

Makers of standards – In an effort to raise the bar on voluntary action by companies, many CSOs are developing their own social and environmental codes and standards, then inviting business to comply with them. For example, in Israel, the Public Trust Organisation established The Public Trust Code, covering advertising, transparency, disclosure, service and product guarantees, honesty in contracts and privacy of information.

Channels for taxes – In some countries, the effectiveness of CSOs has earned them the ability to source tax dollars directly. For example, in Mexico, the FECHAC (Federation of the Chihuahuan Industry) is a CSO, set up after devastating floods in 1990, that is funded through a special annual tax on more than 38,000 industries. And in Romania, the 2% Law (in terms of the Fiscal Code) allows citizens to redirect 2% of personal income tax to a CSO.

Partners in solutions – Not only are CSOs collaborating with business more and more, but also with governments and multilateral agencies. For example, in South Korea, ‘Cross Sector Alliance’ is one of 5 approaches to CSR being promoted, while in Africa the New Nigeria Foundation provides a platform for mobilizing non-traditional resources through public-private partnerships. In Turkey, TUSEV promotes linkages between domestic and international CSOs and encourages CSR by putting foreign and domestic firms in contact with appropriate CSOs.

Catalysts for creativity – CSOs are increasingly expected to provide solutions, not just point out the problems, especially by launching or supporting social enterprises. For example, in Bangladesh, BRAC (formerly Bangladesh Rural Advancement Committee) has been crucial in the microcredit movement, and in Singapore, the National Trades Union Congress (NTUC) has 12 social enterprises and 4 related organisations that are owned by more than 500,000 workers.

However the future unfolds, it is clear that CSOs will be a significant player in the new landscape of responsible governance and accountability, both as a counter-balancing force and a partner to governments and business. In fact, I believe CSOs will be the responsive glue that holds society together in the turbulent years ahead.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

Could Less Consumer Choice Be A Good Thing?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.8

So you buy fair-trade or eco-friendly products, and you think that is a good thing, right? Think again. What if so-called ‘ethical consumers’ are the very ones standing between us a sustainable future?

I’m crazy, right? Maybe, but here is why I say it. By creating a premium-priced, niche market for ‘ethical consumption’, companies have been able to present a responsible front to the world, while leaving the vast majority of their products – which are, by implication, less ethical, less responsible, less sustainable – unquestioned and unchanged. At the same time, a small group of usually well-to-do Western consumers have been able to ease their conscience by feeling that they are making a positive difference.

Now let me be clear. I am not against organic or fair-trade or eco-friendly products per se. That wouldbe insane. Clearly, there are groups of producers – usually poor farmers in the Third World – that have benefited from these initiatives. What I am against is the voluntary nature and premium pricing of sustainable and responsible products. The combination of these two factors has ensured that, with one or two exceptions, these products have never gone to scale. As compared with the total and ongoing impacts of mainstream shopping habits, ethical consumption, laudable as it is, has remained marginal at best and totally insignificant at worst.

The UK’s Sustainable Consumption Roundtable says, ‘we know that there is a considerable gap – the so-called ‘value-action gap – between people’s attitudes, which are often pro-environmental, and their everyday behaviors’. We know the ‘value-action’ gap is partly explained by price and availability of alternatives, but there’s something else. Context matters as well.

To illustrate this, Timothy Devinney, author of The Myth of the Ethical Consumer, reports on a very interesting experiment he conducted while researching his book. The experiment took place at a coffee shop in central Sydney, Australia, over a period of several weeks. This coffee shop displayed a large and prominent sign indicating the products available, their prices and active specials. To this was added, quite obtrusively, another special, indicating: We have Fair Trade coffee! No extra charge. Just ask.

Here’s what he found. Unprompted, with only the sign to notify them of the availability of the ‘ethical’ alternative, less than 1% of customers bothered to ask for Fair Trade coffee, even though it was free. “When they prompted customers with a reminder that the ‘ethical’ alternative was available, the number of customers opting for the Fair Trade option rose to 30%. They then went a step further and took the customer’s privacy away: each time the clerk prompted a customer with the Fair Trade option, we ensured there was someone standing next to that person at the counter. In this situation, the number of ‘ethical consumers’ rose to 70%.”

This is a hugely important lesson: If we want to achieve scalability of sustainable and responsible products and services, we cannot leave it to the passive choices of customers. Context is critical, and a little bit of peer pressure goes a long way. But do we really want to resort to public embarrassment to achieve scalability?

The alternative is the trend towards ‘choice editing’. The idea of choice editing is likely to get free-market fundamentalists all in a tizz, but the fact is that manufacturers and retailers choice edit all the time – for example on quality, price, aesthetics and brand. The only difference is now we are asking them to add sustainability and responsibility to their list of criteria.

So who is doing choice editing? Well, outdoor clothing company Patagonia converted to 100% organic cotton in 1996, frozen foods retailer Iceland banned genetically modified food in 1997 and carpet manufacturer Interface has been using only renewable (green tariff) energy since 1998, so it’s not a new idea. The difference is now some of the big manufacturers and retailers are coming on board. For example, Unilever has committed to sourcing 100% of agricultural raw materials sustainably, Sainsbury’s only stocks Fairtrade bananas and Walmart has adopted an organic cotton and sustainable fish strategy.

Let’s look at Walmart in a little more detail to illustrate the point. Walmart set a target to purchase all of its wild-caught fresh and frozen fish for the U.S. market from Marine Stewardship Council (MSC)-certified fisheries by the end 2011. They are also working work with Global Aquaculture Alliance (GAA) and Aquaculture Certification Council (ACC) to certify that all foreign shrimp suppliers adhere to Best Aquaculture Practices standards in the U.S and by 2009, they were already halfway there.

Speaking to the Wall Street Journal, George Chamberlain, president of the Aquaculture Alliance puts the move in perspective: “The endorsement drew attention; Wal-Mart buys more shrimp than any other U.S. company, importing 20,000 tons annually – about 3.4% of U.S. shrimp imports. With Wal-Mart's nod, we went from trying to convince individual facilities to become certified to having long waiting lines.”

Walmart also made a commitment to phase out chemically-treated textile crops. By 2008, Wal-Mart was the largest buyer of organic cotton, with more than 10 million pounds purchased annually. They are also the world’s largest purchaser of conversion cotton – cotton grown without chemicals, but waiting to be certified as organic. Former CEO, Lee Scott, was under no illusions about the ripple effects when he made the strategic choice-editing decision: “Cotton farmers can now invest in organic farming because they have the certainty and stability of a major buyer. Through leadership and purchasing power, all of us can create new markets for sustainable products and services. We can drive innovation. We can build acceptance. All we need is the will to step out and make the difference.”

The question is, since not everyone has the size and economies of scale of Walmart, should we pin our hopes on voluntary choice editing? Or should we be lobbying for a different, and arguably more effective, form of choice editing, namely good, old-fashioned government regulation? The state regulates to ensure the health and safety of products, so why not for sustainability as well?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

The Creative Destruction Revolution

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.7

One of the key theories on creativity is creative destruction. The concept is most associated with Joseph Schumpeter, following his 1942 bookCapitalism, Socialism and Democracy, in which he described creative destruction as ‘the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one ... [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.’

The idea, of course, is much older. In Hinduism, the goddess Shiva is simultaneously the creator and destroyer of worlds. In modern times, the German sociologist Werner Sombart described the process in 1913, saying ‘from destruction a new spirit of creation arises; the scarcity of wood and the needs of everyday life ... forced the discovery or invention of substitutes for wood, forced the use of coal for heating, forced the invention of coke for the production of iron.’ Even Marx and Engels had a go at describing the process in their Communist Manifesto, stating that ‘constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. ... All that is solid melts into air.’

The idea of melting solids is very similar to the metaphor used by sustainability and social enterprise thought-leader, John Elkington, to explain the disruptive changes going on in the world. In an interview with him, he explained: “What happens in an earthquake? The land become thixotropic; what was solid suddenly becomes almost semi-liquid. I think we are headed towards a period where the global economy goes into a sort of thixotropic state. Key parts of our economies and societies are on a doomed path really, and I think that’s unavoidable. I think we’re heading into a period of creative destruction on a scale that really we haven't seen for a very long time, and there are all sorts of factors that feed into it—the entry of the Chinese and Indians into the global market, quite apart from things like climate change and new technology.”

As to what this means for business, Elkington believes that “all of these pressures are going to mobilise a set of dynamics which are unpredictable and profoundly disruptive to incumbent companies, so some companies will disappear. I think most companies that we currently know will not be around in 15 – 20 years, which is almost an inconceivable statement. But periodically this happens and there’s a radical bleeding of the landscape. We’ll find this sort of reassembly going on. Over a period of time we’re going to have some fairly different products, technologies, business models coming back into the West, and I think it’s going to be quite exciting, but quite disruptive.”

We see all kinds of examples of creative destruction in corporate sustainability and responsibility. For virtually the whole of the 20th century, the biggest companies in the world were the oil and motor giants – companies like Exxon, BP, General Motors and Toyota. But the 21st century, with growing concerns over energy security and climate change on the one hand and the rising geo-political and economic power of the East on the other, are ushering in a new era. Already in 2006, the richest man in China was reported to be Shi Shengrong, CEO of the solar company Suntech, and the richest women, Zhang Yin, made her fortune from recycling. A 2010 report published by the Pew Environmental Center found that in 2009, China invested $34.6 billion in the clean energy economy, while the United States only invested $18.6 billion.

This explosive growth was brought home to me when, at an event of the Women In Sustainability Action (WISA) in Shanghai where I was speaking in June 2010, I got talking to a supplier of wind turbines to Europe. Simply put, he cannot keep up with the demand. He is turning customers away because there is already 12 months of orders in the pipeline. Even Germany, an early leader in the clean-technology space, can no longer compete with China in this sunrise industry. It is no coincidence that while Obama’s energy reform bill was being scuppered by the U.S. Congress, Malaysia was creating an Energy, Green Technology and Water Ministry. And while the British company BP was virtually on its knees, in May 2010, the Korean company, Samsung, unveiled an eye-watering investment plan to ‘future-proof’ the company by sinking $21 billion into its green technology and healthcare businesses. It claimed the investment would generate $44 billion in annual sales and 45,000 new jobs by 2020.

Make no mistake – creative destruction is happening. The only question is which companies will survive the sustainability and responsibility purge and surge?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

What can Web 2.0 teach us about CSR?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.6

By May 2008, it was clear to me the evolutionary concept of Web 2.0 held many lessons for corporate social responsibility. At the time, I declared: "The field of what is variously known as CSR, sustainability, corporate citizenship and business ethics is ushering in a new era in the relationship between business and society. Simply put, we are shifting from the old concept of CSR – the classic notion of ‘Corporate Social Responsibility,’ which I call CSR 1.0 – to a new, integrated conception – CSR 2.0, which can be more accurately labelled ‘Corporate Sustainability and Responsibility.’"

The allusion to Web 1.0 and Web 2.0 is no coincidence. The transformation of the Internet through the emergence of social media networks, user-generated content and open source approaches is a fitting metaphor for the changes business is experiencing as it begins to redefine its role in society. Let's look at some of the similarities.

Web 1.0

• A flat world just beginning to connect itself and finding a new medium to push out information and plug advertising.
• Saw the rise to prominence of innovators like Netscape, but these were quickly out-muscled by giants like Microsoft with its Internet Explorer.
• Focused largely on the standardised hardware and software of the PC as its delivery platform, rather than multi-level applications.

CSR 1.0

• A vehicle for companies to establish relationships with communities, channel philanthropic contributions and manage their image.
• Included many start-up pioneers like Traidcraft, but has ultimately turned into a product for large multinationals like Wal-Mart.
• Travelled down the road of "one size fits all" standardization, through codes, standards and guidelines to shape its offering.

Web 2.0

• Being defined by watchwords like "collective intelligence," "collaborative networks" and "user participation."
• Tools include social media, knowledge syndication and beta testing.
• Is as much a state of being as a technical advance – it is a new philosophy or way of seeing the world differently.

CSR 2.0

• Being defined by "global commons," "innovative partnerships" and "stakeholder involvement."
• Mechanisms include diverse stakeholder panels, real-time transparent reporting and new-wave social entrepreneurship.
• Is recognising a shift in power from centralised to decentralised; a change in scale from few and big to many and small; and a change in application from single and exclusive to multiple and shared.

So what will some of these shifts look like? In my view, the shifts will happen at two levels. At a macro-level, there will be a change in CSR’s ontological assumptions or ways of seeing the world. At a micro-level, there will be a change in CSR’s methodological practices or ways of being in the world.

Macro Shifts

The macro-level changes can be described as follows: Paternalistic relationships between companies and the community based on philanthropy will give way to more equal partnerships. Defensive, minimalist responses to social and environmental issues are replaced with proactive strategies and investment in growing responsibility markets, such as clean technology. Reputation-conscious public-relations approaches to CSR are no longer credible and so companies are judged on actual social, environmental and ethical performance (are things getting better on the ground in absolute, cumulative terms?).

Although CSR specialists still have a role to play, each dimension of CSR 2.0 performance is embedded and integrated into the core operations of companies. Standardized approaches remain useful as guides to consensus, but CSR finds diversified expression and implementation at very local levels. CSR solutions, including responsible products and services, go from niche ‘nice-to-haves’ to mass-market ‘must-haves.’ And the whole concept of CSR loses its Western conceptual and operational dominance, giving way to a more culturally diverse and internationally applied concept.

Micro Shifts

How might these shifting principles manifest as CSR practices? Supporting these meta-level changes, the anticipated micro-level changes can be described as follows: CSR will no longer manifest as luxury products and services (as with current green and fair-trade options), but as affordable solutions for those who most need quality of life improvements. Investment in self-sustaining social enterprises will be favored over cheque-book charity. CSR indexes, which rank the same large companies over and over (often revealing contradictions between indexes) will make way for CSR rating systems, which turn social, environmental, ethical and economic performance into corporate scores (A+, B-, etc., not dissimilar to credit ratings), which analysts and others can usefully employ to compare and integrate into their decision making.

Reliance on CSR departments will disappear or disperse, as performance across responsibility and sustainability dimensions are increasingly built into corporate performance appraisal and market incentive systems. Self-selecting ethical consumers will become irrelevant, as CSR 2.0 companies begin to choice-edit; i.e., cease offering implicitly ‘less ethical’ product ranges, thus allowing guilt-free shopping.

Post-use liability for products will become obsolete, as the service-lease and take-back economy goes mainstream. Annual CSR reporting will be replaced by online, real-time CSR performance data flows. Feeding into these live communications will be Web 2.0 connected social networks, instead of periodic meetings of rather cumbersome stakeholder panels. And typical CSR 1.0 management systems standards like ISO 14001 will be less credible than new performance standards, such as those emerging in climate change that set absolute limits and thresholds.

As our world becomes more connected and global challenges like climate change and poverty loom ever larger, businesses that still practice CSR 1.0 will (like their Web 1.0 counterparts) be rapidly left behind. Highly conscientised and networked stakeholders will expose them and gradually withdraw their social licence to operate. By contrast, companies that embrace the CSR 2.0 era will be those that collaboratively find innovative ways tackle our global challenges and be rewarded in the marketplace as a result.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

Can We Break the Spell of CSR Curses?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.5

Looking back, we can see that the 1990s were the decade of CSR codes and standards – from EMAS and ISO 14001 to SA 8000 and the Global Reporting Initiative. But these were just a warm up act compared to the last 10 years, when we have seen codes proliferate in virtually every area of sustainability and responsibility and all major industry sectors. So much so that in the A to Z of Corporate Social Responsibility, we included over 100 such codes, guidelines and standards – and that was just a selection of what it out there.

This spawning of CSR codes and standards is typical of Strategic CSR, emerging from the Age of Management. At its heart, this is the drive to relate CSR activities to the company’s core business (like Coca-Cola's focus on water management) by turning these into formal management systems, with cycles of CSR policy development, goal and target setting, programme implementation, auditing and reporting. All good and well, but where does this leave us?

My belief is that Strategic CSR – like its predecessors Defensive, Charitable and Promotional CSR - has brought us to a point of crisis. Specifically, all these approaches are failing to turn around our most serious global problems – the very issues CSR purports to be concerned with – and may even be distracting us from the real issue, which is business’s role causal role in the social and environmental crises we face. This failure is due to what I have called the three Curses of CSR 1.0, namely that it is incremental, peripheral and uneconomic. Let’s look at these briefly in turn.

Curse 1: Incremental CSR

One of the great revolutions of the 1970s was total quality management, conceived by American statistician W. Edwards Deming and perfected by the Japanese before being exported around the world as ISO 9001. At the very core of Deming’s TQM model and the ISO standard is continual improvement, a principle that has now become ubiquitous in all management system approaches to performance. It is no surprise, therefore, that the most popular environmental management standard, ISO 14001, is built on the same principle.

There is nothing wrong with continuous improvement per se. On the contrary, it has brought safety and reliability to the very products and services that we associate with modern quality of life. But when we use it as the primary approach to tackling our social, environmental and ethical challenges, it fails on two critical counts: speed and scale. The incremental approach to CSR, while replete with evidence of micro-scale, gradual improvements, has completely and utterly failed to make any impact on the massive sustainability crises that we face, many of which are getting worse at a pace that far outstrips any futile CSR-led attempts at amelioration.

Curse 2: Peripheral CSR

Ask any CSR manager what their greatest frustration is and they will tell you: lack of top management commitment. Translated, this means that CSR is, at best, a peripheral function in most companies. There may be a CSR manager, a CSR department even, a CSR report and a public commitment to any number of CSR codes and standards. But these do little to mask the underlying truth that shareholder-driven capitalism is rampant and its obsession with short-term financial measures of progress is contradictory in almost every way to the long-term, stakeholder approach needed for high-impact CSR.

So what we are left with is an approach to CSR which allows each company to set their own voluntary objectives and targets, which appear responsible, but lack the scale and urgency needed to reverse our social and environmental crises. CSR remains peripheral in another sense as well, because it is only a handful of big-branded companies that find themselves in the CSR spotlight. What about the millions of small and medium sized enterprises. By and large, CSR passes them by, despite their collectively bigger impacts.

Curse 3: Uneconomic CSR

Which brings us to Curse 3. If there was ever a monotonously repetitive, stuck record in CSR debates, it is the one about the so-called ‘business case’ for CSR. That is because CSR managers and consultants, and even the occasional saintly CEO, are desperate to find compelling evidence that ‘doing good is good for business’, i.e. CSR pays. The lack of corroborative research seems to be no impediment for these desperados endlessly incanting the motto of the business case, as if it were an entirely self-evident fact.

The rather more ‘inconvenient truth’ is that CSR sometimes pays, in specific circumstances, but more often does not. Of course there are low-hanging fruit – like eco-efficiencies around waste and energy – but these only go so far. Most of the hard-core CSR changes that are needed to reverse the misery of poverty and the sixth mass extinction of species currently underway require strategic change and massive investment. They may very well be lucrative in the long term, economically rational over a generation or two, but we have already established that the financial markets don’t work like that; at least, not yet.

The way I see it, that leaves us with three options for taking CSR forward, which I like to think of as the Parrot, Ostrich and Phoenix scenarios.

The Way of Parrot is to tell it like it is: recognise the limitations of CSR and admit to its primary role as a business tactic for reputation management. The Way of the Ostrich is the status quo: pretend that CSR is working and that more of the same will be enough. The Way of the Phoenix is the transformative agenda: reconceptualise CSR as a radical or revolutionary concept that challenges the intransigent business and economic model and offers genuine solutions to our global challenges. The Way of the Phoenix is what I call Systemic CSR, or Transformative CSR, or CSR 2.0, and is what we are just starting to see rising from the ashes of the previous ages, as we enter a new Age of Responsibility. This rather more positive agenda is what I will explore for the remainder of this blog series.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

Exposing the CSR Pretenders

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.4

Industrialism created a limitless appetite for resource exploitation, and modem science provided the ethical and cognitive license to make such exploitation possible, acceptable, and desirable. – Vandana Shiva

Can Big Tobacco ever be responsible? British American Tobacco (BAT) have engaged in extensive stakeholder consultation exercises and, since 2001, their businesses in more than 40 markets have produced Social Reports, many of which have won awards from organisations as diverse as the United Nations Environment Programme, PriceWaterhouseCoopers and the Association of Certified Chartered Accountants. BAT has also been ranked in the Dow Jones Sustainability Index, the FTSE Ethical Bonus Index and Business in the Community (BITC) Corporate Responsibility Index, and they funded Nottingham University’s International Centre for CSR.

Yet this is the industry where, in 1994, the CEOs of 7 of America’s largest tobacco companies[1] testified before the House Subcommittee on Health and the Environment of Congress, all denying that cigarettes are addictive. They lied under oath. And this is the business that, according to the World Health Organization, kills more than AIDS, legal drugs, illegal drugs, road accidents, murder and suicide combined.’ Of everyone alive today, 500 million will eventually be killed by smoking, and while 0.1 billion people died from tobacco use in the 20^th century, ten times as many will die in the 21st century. Isn’t responsible tobacco an oxymoron?

Of course, it’s not just Big Tobacco. What about Big Oil? This is the industry that set up and funded the Global Climate Coalition (GCC) to lobby against the emerging consensus of climate science and policy development until it was embarrassed into disbanding in 2002. A 2007 report by the Union of Concerned Scientists, entitled Smoke, Mirrors & Hot Air, documented how ExxonMobil adopted the tobacco industry’s disinformation tactics, as well as some of the same organisations and personnel, to cloud the scientific understanding of climate change and delay action on the issue. According to the report, ExxonMobil funnelled nearly $16 million between 1998 and 2005 to a network of 43 advocacy organisations that seek to confuse the public on global warming science.

Or what about BP? In 2000, the company reportedly spent $7 million in researching the new ‘Beyond Petroleum’ Helios brand and $25 million on a campaign to support the brand change. Greenpeace concluded at the time that ‘this is a triumph of style over substance. BP spent more on their logo this year than they did on renewable energy last year’. Antonia Juhasz, author of The Tyranny of Oil (2008), is similarly sceptical, claiming that at its peak, BP was spending 4% of its total capital and exploratory budget on renewable energy and that this has since declined. That’s even before we factor in the Texas City refinery explosion in 2005, or the catastrophic Gulf spill in 2010, or BP’s ongoing investments in the Alberta tar sands. Isn’t sustainable oil a contradiction?

While many of these examples – and I could cite countless more, from automotive, agricultural, chemicals and other industries – are a little more than the familiar toxic mix of old-fashioned dirty lobby tactics, many companies today in engage in far more subtle and seemingly plausible campaigns of misdirection – investing in environmental management systems, producing sustainability reports, and performing supply chain audits. Each of these actions is, on its own merits, laudable and to be encouraged; applauded even. But all too often, they are used as a smokescreen to mask the more damaging impacts and irresponsible practices of business.

Behind these actions lies a pervasive driver. According to the UN Global Compact and Accenture’s 2010 CEO survey, three corporate attributes – brand, trust and reputation – were consistently cited by CEOs as their primary reason for acting on sustainability. Simply put, CSR or sustainability are seen as a means of promotion in an Age of Marketing. As we saw in the BP case, ‘greenwash’ has become one of the popular labels applied to this kind of PR-driven misdirection by companies on environmental issues.

The word was coined by environmentalist David Bellamy in the 1980s and plays off of the concept of ‘whitewashing’ – literally painting over the cracks to cover up inherent faults. In 1999, the Oxford English Dictionary added the term, defining it as: ‘Disinformation disseminated by an organisation, so as to present an environmentally responsible public image; a public image of environmental responsibility promulgated by or for an organisation, but perceived as being unfounded or intentionally misleading.’

Jose Lopez, EVP of Operations of Nestle admits that ‘there is probably out there an environment for pretenders, for the greenwashers. It’s going to get harder and harder to tell apart the greenwasher from the real guy. The reason is, we have a lot of information on what constitutes good sustainability practice,’ i.e. it’s easier to copy apparently credible behaviour.

One classic example was an advert run by Shell which has a picture of a factory with flowers coming out of the smoke-stacks and claiming: ‘We use our waste CO2 to grow flowers’. There was a grain of truth in the claim, as in the Netherlands the company did capture CO2 and use it in floral hothouses. However, since Shell only used 0.325% of its CO2 output in this way, the Advertising Standards Authority banned the advert, following complaints.

As a result of this kind of greenwash, the UK’s Committee of Advertising Practice (CAP) Code, enforced by the Advertising Standards Authority, created a clause for environmental claims in 1995. Since 1998, it has also published a non-binding ‘Green Claims Code’, advising advertisers on how best to make good claims. Despite this, greenwashing complaints, the majority of which are upheld, continue to rise year-on-year. One rather fun, yet informative, publication is ‘The Greenwash Guide’ by Futerra.

Of course, this kind of PR-spin does not only apply to environmental issues. After the launch of the UN Global Compact, companies started to be accused of ‘bluewash’ – a reference to the blue of the UN logo and business using association with the United Nations to appear more responsible than they really are. Likewise, although I haven’t heard the term, I can imagine the ‘redwash’ brush being applied to companies claiming social, community or labour responsibility that masks their real negative impacts on society.

Let’s be clear, I’m not into corporate witch hunts or evil empire theories, but isn’t it time we stop giving credit to industries and practices that tick superficial CSR and sustainability boxes, while doing little or nothing to change the underlying irresponsibility and unsustainability of their industries? Many companies are stuck in an Age of Marketing, with promotional CSR as their modus operandi, and it’s time that we exposed them, so that we can separate the CSR pretenders from the ‘real mccoys’.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

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[1] Philip Morris U.S.A., RJ Reynolds Tobacco Company, U.S. Tobacco, American Tobacco Company, Lorillard Tobacco Company, Liggett Group, Brown and Williamson Tobacco Company

Is Philanthropy a Smokescreen?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.3

“I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man, according to the dictates of my conscience.” —John D. Rockefeller Sr.

The Rockefeller story is a good one to introduce the Age of Philanthropy, not only because of John D.’s iconic status as a tycoon and philanthropist, but also because his life and views on charity embody much of the philanthropic attitudes that still prevail today in business. At the heart of the Age – and its chief agent, Charitable CSR – is the notion of giving back to society. Rather interestingly, this presupposes that you have taken something away in the first place. Charitable CSR embodies the principle of sharing the fruits of success, irrespective of the path taken to achieve that success. It is the idea of post-wealth generosity, of making lots of money first and then dedicating oneself to the task of how best to distribute those riches, by way of leaving a legacy.

In 1970, the respected US economist Milton Friedman published an article in the New York Times Magazine (13 September) entitled ‘The Social Responsibility of Business is to Increase Profits’. In it, he called the ‘doctrine of social responsibility’ a ‘fundamentally subversive doctrine in a free society’ and argued that ‘there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud’. As such, he came to define one end of the spectrum of opinion on CSR: the purist, stockholder (or shareholder) view, a view which was once again given an airing in the Wall Street Journals’ ‘The Case Against Corporate Social Responsibility’ article on 23 August 2010. Despite his hard-line view, Friedman does allow some concessions, saying:

“It may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects. Or it may be that, given the laws about the deductibility of corporate charitable contributions, the stockholders can contribute more to charities they favour by having the corporation make the gift than by doing it themselves, since they can in that way contribute an amount that would otherwise have been paid as corporate taxes.”

Although Friedman calls this ‘hypocritical window-dressing’ when done under ‘the cloak of social responsibility’, he concedes that these practices may be justified if they contribute to shareholders’ interests. Hence, he is setting out an early version of what today is more popularly called ‘strategic philanthropy’ – the practice of social responsibility only when it is aligned with corporate profitability. Three decades later, academics Michael Porter and Michael Kramer have given this concept more structure and credibility – and with considerably less malice directed towards CSR. In their 2002 Harvard Business Review article, ‘The Competitive Advantage of Corporate Philanthropy’, Porter and Kramer argue that:

“Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company’s image through high-profile sponsorships. But there is a more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context – the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company’s long-term business prospects. Addressing context enables a company not only to give money but also leverage its capabilities and relationships in support of charitable causes.”

Without a doubt, strategic philanthropy represents an evolution of more ad-hoc approaches to charity, and there will always be a place for philanthropy in responding to the most urgent and desperate unmet needs of society. Even so, we have to question the appropriateness and effectiveness of philanthropy in addressing the root causes of our biggest global challenges, which have more to do with the Achilles heel of Western capitalism itself, namely the environmentally unsustainable and socially inequitable growth and lifestyles that it spawns. How, for example, does so-called ‘philanthrocapitalism’ address the Western consumption, production and trade practices that are wreaking havoc with the world’s ecosystems and many of the world’s poorest communities? By and large, it doesn’t.

I believe ‘giving back’ after the fact is just a smokescreen, notwithstanding the generosity that it shows and the benefits that result. Would you agree?

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

Is Greed Still Good?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.2

If CSR isn’t working, could it be because it pales into insignificance in the face of a much more pervasive force at work in business and society, namely greed? After all, “greed is good!” So declared the fictional character Gordon Gekko in Oliver Stone’s 1987 film, Wallstreet. “Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms – greed for life, for money, for love, knowledge – has marked the upward surge of mankind.” I wonder if today, nearly 25 years and a $7 trillion global financial meltdown later, we are finally ready to lay this powerful myth to rest?

We have lived through an Age of Greed and come out the other side bruised and battered, disillusioned and angry. But are we any wiser? Ever since the first financial derivatives were traded on the Chicago Mercantile Exchange in 1972 and the casino economy really got going, it seems like ‘greed is good’ and ‘bigger is better’ became the dual mottos underpinning (at least one popular version of) the American Dream. The ‘invisible hand’ of the market went largely unquestioned, despite its self-pleasuring habit. Incentives – like Wall Street profits, traders’ bonuses and CEO pay – became perverse, leading not only to unbelievable wealth in the hands of a few, but ultimately to global financial catastrophe.

With the world still reeling from the ensuing global recession, and threatening to slip into the ‘double-dip’ doldrums, I find myself compelled to ask many difficult questions: Was this, as Lehman Brothers trader Larry McDonald suggests in his book of the same name, just ‘a colossal failure of common sense’? Was it the greed of ‘bad apples’ like Lehman’s CEO Dick Fuld, or the banks and their insatiable bonus-driven traders? Or was it the pervasive culture of greed in Wall Street as a whole? What about the greed of politicians and governments who were happy to benefit from growth-on-steroids? And what about Main Street? Wasn’t the public – we, the people – more than happy to greedily lap up those subprime loans?

All this begs the larger question: Is capitalism itself fundamentally flawed? Are we really talking about endemic greed, built into the free-market system – a system which not only allowed, but encouraged the fantasy of double-digit profit growth and an endless bull market? Will capitalism, with its short-term, cost-externalization, shareholder-value focus always tend towards greed, at the expense of people and the planet? Will the scenario of ‘overshoot and collapse’ that was computer modelled in the 1972 ‘Limits to Growth’ report (and reaffirmed in revisions 20 and 30 years later) still come to pass? Has Karl Marx been vindicated in his critique (albeit not in his solution) that, by design, capitalism causes wealth and power to accumulate in fewer and fewer hands?

Perhaps the trillion-dollar question for me is not whether capitalism per se acts like a cancer gene of greed in society, but whether there are different types of capitalism, some of which are more benign than others. To date, the world has by and large been following the Western, Anglo-Saxon model of shareholder-driven capitalism, and perhaps this is the version that is morally bankrupt and systemically flawed.

Interestingly, a 2010 Pew poll of the American ‘millennial generation’ (currently aged between 18 and 30) showed that just 43% still describe capitalism as positive, while the same percentage now describe socialism as positive. Management guru Charles Handy seems to agree. Speaking to me, he confessed:

I’ve always had my doubts about shareholder capitalism, because we keep talking about the shareholders as being owners of the business, but most of them haven’t a clue what business they’re in. They are basically punters with no particular interest in the horse that they’re backing, as long as it wins.

If we can learn one thing from the Age of Greed, it is that we have immense power to make change happen on a monumental scale, and with lightning speed. Greed has proved to be a high octane fuel in the rocket engine of globalization. But ultimately, it was an economic missile without a moral guidance system. I am under no illusions that the Age of Responsibility will vanquish greed. No doubt, the selfish gene will continue to spark our evolution. And yet, if we are successful, the Age of Responsibility will provide capitalism with that much-needed moral compass and Transformative CSR (more about that later in this series) will provide business with a mission-critical social purpose.

So what do you think, can we collectively give up our greed addiction?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

The Death of CSR

By Wayne Visser

CSR 2.0 Quest Series, No. 1

My opening questions to you are: Has CSR failed? And if it has, should we kill it off before it misleads and distracts too many people from the changes we really need business to make? Or can we reinvent the concept and the practice of CSR?

First let me say what I understand by CSR. I take CSR to stand for Corporate Sustainability and Responsibility, rather than Corporate Social Responsibility, but feel free use whichever proxy label you are most comfortable with. My definition is as follows:

CSR is the way in which business consistently creates shared value in society through economic development, good governance, stakeholder responsiveness and environmental improvement.

Put another way:

CSR is an integrated, systemic approach by business that builds, rather than erodes or destroys, economic, social, human and natural capital.

Given this understanding, my usual starting point for any discussion on CSR is to argue that it has failed. In my book, The Age of Responsibility, I provide the data and arguments to back up this audacious claim. But the logic is simple and compelling. A doctor judges his/her success by whether the patient is getting better (healthier) or worse (sicker). Similarly, we should judge the success of CSR by whether our communities and ecosystems are getting better or worse. And while at the micro level – in terms of specific CSR projects and practices – we can show many improvements, at the macro level almost every indicator of our social, environmental and ethical health is in decline.

I am not alone in my assessment. Indeed, Paul Hawken stated in The Ecology of Commerce in 1993 that ‘If every company on the planet were to adopt the best environmental practice of the ‘‘leading’’ companies, the world would still be moving toward sure degradation and collapse.’ Unfortunately, this is still true nearly 20 years later. Jeffrey Hollender, co-founder and former CEO of Seventh Generation, agrees, saying: ‘I believe that the vast majority of companies fail to be ‘‘good’’ corporate citizens, Seventh Generation included. Most sustainability and corporate responsibility programs are about being less bad rather than good. They are about selective and compartmentalized ‘‘programs’’ rather than holistic and systemic change.’

In fact, there is no shortage of critics of CSR. For example, in 2004, Christian Aid issued a report called ‘Behind the Mask: The Real Face of CSR’, in which they argue that ‘CSR is a completely inadequate response to the sometimes devastating impact that multinational companies can have in an ever-more globalized world – and it is actually used to mask that impact.’ A more recent example was an article in the Wall Street Journal (23 August 2010) called ‘The Case Against Corporate Social Responsibility’, which claims that ‘the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.’

This is not the place to deconstruct these polemics. Suffice to say that they raise some of the same concerns I have – especially about the limits of voluntary action and the ‘misdirection’ that CSR sometimes represents. But I also disagree with many of their propositions – such as the notion that CSR is always a deliberate strategy to mislead, or that government regulation is the only solution to social and environmental problems.

Be that as it may, there are a number of ways to respond to my assertion that CSR has failed. One is to disagree with the facts and to suggest that things are getting better, not worse, as do the likes of Bjørn Lomborg in his Skeptical Environmentalist (2001). That is his and your prerogative. However, I find the evidence – some of which is presented below and which is widely available from credible sources like the United Nations-both compelling and convincing.

Second, you might argue that solving these complex social, environmental and ethical problems is not the mandate of CSR, nor within its capacity to achieve. My response is that while business certainly cannot tackle our global challenges alone, unless CSR is actually about solving the problems and reversing the negative trends,what is the point? CSRthen becomes little more than an altruistic conscience-easer at best; a manipulative image-management tool at worst.

My approach – and the essence of the book – is to say that while CSR as it has been practised in the past has failed, that doesn’t mean that a different kind of CSR – one which addresses its limitations and reforms its nature – is destined to fail in the future. What do you think? Are my arguments unjustified?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.

Original link on CSRwire

Circularity: Towards Sustainable Consumption & Production

By Dr Wayne Visser

Towards the end of the 1980s, a concept called ‘industrial ecology’ emerged. It was popularized in 1989 in a Scientific American article by Robert Frosch and Nicholas E. Gallopoulos, in which they declared: ‘Why would not our industrial system behave like an ecosystem, where the wastes of a species may be resource to another species? Why would not the outputs of an industry be the inputs of another, thus reducing use of raw materials, pollution, and saving on waste treatment?’ Hence, the idea of industrial ecology is that businesses should not only look at the life cycle impacts as individual entities, but rather look for ways in which to link up with other businesses to minimise their impacts. For example, there is a Danish industrial park in the city of Kalundborg where a power plant, oil refinery, pharmaceutical plant, plasterboard factory, enzyme manufacturer, waste management company and the city itself all link together to share and utilise resources, by-products, energy and waste heat.

Another concept that was gaining popularity around the same time was ‘cleaner production’, which resulted in the UNEP Declaration on Cleaner Production in 1998. Later, this evolved into the concept of ‘sustainable consumption and production’, which was defined at the UN’s 2002 World Summit on Sustainable Development as an approach ‘to promote social and economic development within the carrying capacity of ecosystems by addressing and, where appropriate, de-linking economic growth and environmental degradation through improving efficiency and sustainability in the use of resources and production processes and reducing resource degradation, pollution and waste.’

The University of Cambridge Business Primer on Sustainable Consumption and Production (2007) gives an example to underscore the importance of creating more sustainable industrial processes. On average, the report says, a gold wedding ring weighs 6,000 kilograms. The enormous discrepancy between the actual retail product and the remaining weight is explained by accounting for all the materials used and the waste created during the production life cycle of the ring. The gap between a gold ring’s actual, physical weight and its ‘resource weight’ highlights the scale of physical and financial impacts that are associated with the creation of apparently simple, everyday products. The report concludes that ‘the increased cost that results from the difference between sustainable and unsustainable production is not good for anyone. It is not sustainable financially – such low resource efficiency is wasteful and inefficient. And it is not sustainable socially or environmentally – hazardous or damaging waste products are produced systematically, and resources are increasingly depleted.’

Recognising this challenge, the EU government has begun working with business to create ‘product roadmapping’ as a way of systematising what might otherwise be a more organic, haphazard approach to developing products and the policies that support them. ‘Integrated Product Policy’ (IPP) is how government describes conducting life cycle assessments with a view to potential policy interventions. The IPP of the EU, adopted in 2003, aims at reducing the environmental impact of products, instead of specific industries or processes. Two familiar products with diverse impacts were chosen by the EU to demonstrate IPP. One was a mobile phone, put forward by Nokia; the second, a teak garden chair proposed by Europe’s largest retailer, Carrefour. The result of the exercise showed that, for Nokia, energy consumption is the greatest impact, both during manufacture of components and during use – when chargers left on ‘no-load’ consume electricity constantly. It was estimated that, if 10% of worldwide subscribers unplug their chargers once their phone is fully charged, enough energy would be saved to supply 60,000 European homes for one year.

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This is an extract from Chapter 10 of The Age of Responsibility: CSR 2.0 and the New DNA of Business. For more information and ongoing updates, follow the The Age of Responsibility Blog