Climate change & COP 15 - Part 3: Leadership response

What we need, therefore, is to strengthen the societal context – though increased public awareness and customer activism – and the market context – through stronger public policy and price incentives. This is what leadership author Manfred De Vries calls the architectural role of leaders – and that is what we see the world’s leaders here in Copenhagen striving to do: to redesign the ‘rules of the game’.

Beyond the societal and market context, however, we also need to enable individual leaders to emerge – both as strategic navigators at the helm of their organisations, and as embedded catalysts at all levels of organisation and society.

We may ask: what types of leaders are we looking for to take us through the climate crisis? There are many theories on leadership styles and traits, but it seems to me that we will need all kinds of leadership to emerge. Times of crisis do call for heroic, charismatic leaders, but quiet, servant leaders are equally needed.

Many leadership traits will come into their own in the years ahead, as climate change intensifies and we transition to a low-carbon economy. We will look to leaders with an ability to craft a compelling alternative vision in the midst of business-as-usual, to think systemically about solutions in the midst of reactionary politics, to call for action in the midst of inertia and to foster hope in the midst of despair.

The good news is we do not have to wait for these leaders to be born. We at CPSL firmly believe – and we are supported by modern leadership research in this – that leaders are made, not born. For 20 years, we have been nurturing leaders to take on the sustainability challenge. Now their time has come, and we start to see them stepping forward, through initiatives like the Corporate Leaders Group on Climate Change and the 1,000 CEOs that have committed themselves and their companies to the Copenhagen Communiqué.

It is true that it will not be easy; nor will all who tackle the challenge, succeed. But that is the challenge of leadership.

I started by saying that we need extraordinary leadership for extraordinary times, and I quoted Unilever CEO, Paul Polman. Now, I would like to end with something else he said, because I believe it captures some of the essence of what it means to be a leader for sustainability. He says, “I hope that the word integrity comes into that. I hope the word long-term comes into that. I hope the word caring comes into that, but demanding at the same time.”

Climate change & COP 15 - Part 2: Leadership crisis

This crisis in trust is closely linked to a crisis in leadership.

A McKinsey survey of global executives found that while three quarters (74%) say the CEO/chair should take the lead on socio-political issues (such as climate change), only half (56%) say the CEO/chair is taking such a lead. What’s more, less than 1 in 10 (8%) think that companies are championing environmental and social causes out of genuine concern.

In the US, almost a third (27%) of executives claim not to be playing any leadership role on public issues like climate change, and only 14% claim to be playing a direct, active role. And yet, almost half (44%) of US executives feel their peers should be taking a leadership role public issues, with only one-seventh believe they are actually doing so.

So much for the numbers; what are the implications for leadership? The same McKinsey survey may give us a clue: Of those who claim not to be playing any role in leadership on public issues, 71% cite ‘business reasons’, while of those who say they are playing a role, 64% cite ‘personal reasons’. This suggests that – in order to have transformational leadership on climate change – we need to look at both the business ‘rules of the game’ and the role of individual leaders.

Interestingly, this conclusion dovetails nicely with the leadership research coming out of academia, which emphasises importance of both the context for leadership and the individual traits of leaders.

Part 3 - The leadership response

... follows tomorrow

Climate change & COP 15 - Part 1: Extraordinary times

In the midst of the UN Climate Negotiations in Copenhagen, I want to talk about leadership, because I believe this climate agenda – and the wider sustainability agenda – will succeed or fail depending on the quality of leadership that emerges - not only this week, but over the coming decade.

Extraordinary times

Let me begin with something that Unilever CEO, Paul Polman, said in a recent interview. He said that “part of leadership is to look reality in the eye”.

Well, at an event such as COP 15, I hardly need remind anyone that the reality we face on climate change is extremely serious. Not only is the problem potentially catastrophic, but the solution requires nothing short of a second industrial revolution.

This is not a problem we can incrementally manage our way out of. It is a crisis that requires extraordinary leadership – the kind of leadership that creates transformational change on a scale and with an urgency that the world has seldom ever seen before in peace time.

Not only do we face this extraordinary challenge, but our trust in the ability of society’s institutions to deliver the solutions is at an all time low. The latest Edelman Trust Barometer (2009) shows that nearly two-thirds of the public (62%) trust corporations less than they did a year ago. In the US, only 38% said they trust business to do what is right—a 20% plunge since last year—and only 17% said they trust information from a company’s CEO.

Part 2: Crisis in leadership

... follows tomorrow

Reflections on "The Top 50 Sustainability Books"

On 8 December 2009, I spoke at the launch event for my new book - The Top 50 Sustainability Books - at Heffers bookshop in Cambridge. At the end of this 3 year project, it is both a relief and a triumph to see the book in print - and it looks great, even if I say so myself! :)

One of the comments by our bookshop host was that they were surprised (and delighted!) that the 50 books were so diverse. That is certainly true, and there were some surprises even for us - books like A Sand County Almanac and The Dream of Earth were not even on our radar screen before we conducted the poll among the Cambridge alumni (on which the list is based).

In addition to this, I had three main reflections that I touched on in my brief talk, largely based on the

interviews I did with around 30 of the authors:

1. Worldviews - It was very clear that the books said much more about the authors' worldview - the lens through which they see reality - than the actual 'facts' of sustainability. Someone like Paul Ehrlich (The Population Bomb) was very pessimistic, while Jeffrey Sachs (The End of Poverty) was very optimistic.
2. Stories - I soon realised that the books mostly represent stories - possible futures that the authors' have imagined, based on their own culture, knowledge, experience, etc. Whether we buy into 'The Limits to Growth' or 'When Corporations Rule the World' story depends on where we are at in our own journey, as much as the authors'.
3. Hope - Finally, I deliberately asked them all where they derive their hope from, and almost without exception, it was the inspiration from people who are working tirelessly and selflessly to solve social and environmental problems.

Two anecdotes about the late Donella Meadows stick with me (as told by her ex-husband Dennis). On her door, she had a quote that said: If I die tomorrow, I would still plant a tree today. And when people used to ask her if we have enough time to solve our global problems, she would always say: Yes, precisely enough time, if we start today!

To me, these capture the spirit the lies at the heart of sustainability. It is an optimism built on making a difference; an attitude of action for hope.

For more information on the book, see here.

CSR Gives Companies a Competitive Edge

This is a translation of an interview for Capital newspaper in Armenia, conducted when I was recently there delivering training (hosted by the UNDP/Global Compact, British Council and Eurasia Partnership Foundation) on CSR and Marketing. The interviewer was Habeth Madoyan.

Question: Mr. Visser, it is no secret that labour is cheaper in developing countries than in the developed world. Developing countries have weaker legislation on environmental issues, which gives them a kind of competitive edge in attracting foreign investment. Wouldn’t the promotion of CSR in a developing country deprive it of this edge?

Developing countries do have advantages as far as labour is concerned. To some extent, business and capital will go to those places where costs are less or standards are lower. That is why we need a system of CSR standards.

An interesting piece of research on Responsible Competitiveness, which covers 108 countries, has been published. This research shows that those countries where CSR is embedded in business and the government, and is also reflected in civil society, have a greater competitive advantage. In these cases, the link between responsibility and competitive advantages is always obvious.

So if developing countries have advantages based on lower costs, but do not have responsibility, then over time they will inevitably lose their competitiveness.

I think that, over the short term, it is possible to have economic growth without taking standards into consideration. But today, the CSR sector is seeing the integration into business of standards on quality, environmental issues and work conditions. So it is possible to sell a bad quality product at a cheap price and get to economic growth that way. But that is not a long term solution, because it leads to only short term economic growth.

After all, developed countries need more products of good quality. Their demand for responsible and ethical goods is constantly increasing.

Question: How should CSR standards and principles be introduced to developing countries?

The first path is through multi-national companies. In developing countries, they often use the same CSR principles and standards which are part of their operations at headquarters. This leads to the introduction of responsibility from developed countries to the developing world.

I think there is some pressure from the governments of developing countries too. China, for example, is saying that if the world wants it to become more responsible, then the world has to transfer the knowledge and technology necessary for this, preferably for free.

Today there is an interesting tension between the developed and developing world especially around the issue of climate change. The West has no moral right to tell developing countries that they cannot develop and grow or produce more and copy that which they have done. The West has no moral right to do this because it has already been on that path.

If the West is asking developing countries to adopt a new model of development and to produce cleaner, socially responsible and ethical products, then it should be ready to help them financially, through training and providing technology. Only through this kind of support does the West gain the right to demand a new model of development.

Question: How can one find the middle path between CSR and profit maximisation?

It is quite difficult to find the point of perfect balance between these two. Developing countries often find themselves faced with this problem. But it is necessary to seek and find the opportunities which allow cost reduction through steps aiming at environmental management. These are new business solutions that everyone is looking for today.

But in order to find these business solutions, it is important to have a strong system of governance, a well established civil society as well as pressure from the international community. In these cases, avoiding environmental issues could end up being more costly for companies.

One has to ask a simple question – what costs will I be facing ten years from now, if I avoid solving environmental issues today?

Economists have calculated that the money spent on climate change issues today could account for only about 1% of the world’s GDP. But if we leave avoid those issues now, then the costs could come to 20% of global GDP. This is the logic that we need to explain to our business community – by avoiding these expenses now you face much larger costs over a long term.

A few developing countries are bringing forward the concept of “environmental justice”, i.e. they are linking social issues to those of the environment. Their governments are coming up with legislation which encourages companies not only to spend on social issues. They demand that companies implement environmental programmes as well.

After all, it is the poorest layers of society that bear most of the ill effects of a polluted environment and it would be only fair for companies to deal with environmental issues as well.

Question: In our country, there are cases when companies are very active in philanthropy. Many people think that this is a “cheap” marketing ploy. How can one differentiate between them and draw the line between Marketing/PR and charity?

One first needs to understand the concept of strategic philanthropy. This is the theory of American academic Michael Porter. He says that companies should be involved with the philanthropy that deals with their area of business directly.

When a company works in agriculture, its philanthropy could be linked to food security issues. When that company is Coca-Cola, then its philanthropic work should involve water issues. In those cases, it is less likely that philanthropy will be used as a PR or marketing tool, because in reality it helps the business itself.

Corporate Social Responsibility is a much broader concept.

CSR is not about how a company spends the money it makes, but rather about how it makes that money. The weaker the link between CSR and the company’s main business, the higher the probability that it is being used for PR or marketing purposes.

There are a number of initiatives in the CSR industry that help us avoid these issues. One of these is the Global Reporting Initiative and its Sustainability Reporting Guidelines. These are very similar in nature to accounting standards. Accounting methods and standards are similar for all companies.

Through these, companies present their social activities, such that society also gets a chance to see and evaluate them. This would make it difficult for companies to use CSR as a PR or marketing tool.

Question: In your opinion, how will the global economic crisis affect CSR? Should we expect companies to lower their standards?

I think this question is linked to the last one. Those companies which are dealing only in philanthropy will suffer during the economic crisis. In these cases, philanthropic activity will lessen. Those companies which have strategic CSR will be less likely to reduce costs.

Coca-Cola will not be inclined to reduce its expenditure on water issues. They know that if the water situation worsens, the company would have serious problems.

Some time ago, that company had faced a conflict situation in India. They were accused of wasting water reserves there. It was not true, but that was the impression that people had there.

Coca-Cola is a huge consumer of water and, according to the people, they were responsible for water issues. That led to the problems for their brand reputation. But I don’t think that the crisis will affect the standards of those companies which have strategic CSR and ethical operations in any way; that is their way of working.

On the other hand, I think that a lot depends on the stage at which CSR is in a specific company. We may begin to see a tendency where companies that have well developed CSR gain additional competitive advantages in times of crisis.

That is natural – they have implemented a number of social programmes and so have a greater share of the public’s trust, which means better conditions of business for them.

The CSR Media Boom: We Got What We Deserve

Having just spent a morning reading the latest issue of Time magazine (one of my favourite mags, when I get a chance to read it), it really got me thinking about how far the world has moved since I started out in my CSR/sustainability career nearly 20 years ago.

20 years ago, finding credible media coverage on environmental or social responsibility was like hunting for a needle in a haystack. Now CSR/sustainability issues are the haystack. For example, in this week's Time, there are stories on:

• The President of the Maldives and his Cabinet holding an underwater meeting to urge UN leaders to pass climate change legislation in Copenhagen in December
• California's "new gold rush", namely its scramble to be the world's clean-tech leaders, making the state "America's future"
• Research showing how the least healthy cereals do the most marketing, i.e. questioning the ethics of advertising & greenwash
• How jellyfish are taking over in overfished, fertilizer polluted areas of the sea and "shifting from a fish to a jellyfish ocean"
• How China is fast becoming the world's largest alternative energy markets - including hydro, solar and wind power.
• Booming barter schemes - including the Barter Card - that allow cashless exchange during the recession (a movement long advocated by so-called "new economics" types)
• And how "our obsession with gross domestic product is unhealthy - and misleading" (another pillar of the new economics and sustainability movements)

I remember Stuart Hart, Chair in Sustainable Global Enterprise at Cornell and author of "Capitalism at the Crossroads", joking with me last year that "we got what we deserved", meaning that we were crying for change all those years, and now we have so much that it's hard to keep pace.

That's true. My inbox is awash with daily CSR & sustainability stories - no longer tucked away in specialist publications, but making headlines on the front pages of the world's conservative business and news press. Quite simply, the social and environmental challenges - and solutions - have become so dramatic that "green is the new black", so to speak.

Now the challenge for those of us working in the R&S (responsibility and sustainability) space is to separate the wheat from the chaff. Which issues being reported are noise and which are genuine breakthroughs? Which solutions are peripheral chatter and which are scalable game-changers?

Whichever way you look at it, this is an exciting time to be in the thick of the R&S revolution. It's a privilege to be part of making a real difference in the world - at a time when nothing less will do. And yes, Stu, it's what we deserve, in more ways than one.

CSR for SMEs: Lessons from Mexico

In a country where more than 95% of businesses are micro-enterprises, how do you make CSR relevant? Well, you start by replacing the corporate C with an enterprising E. In Mexico, as in all of Latin America, CSR translates as RSE - Responsabilidad Social Empresarial, or Social Responsibility for Enterprises.

You also figure out how to turn social, environmental and ethical responsibilities into a business model, rather than a peripheral add-on. This is what the IDEARSE Centre for Enterprise Sustainability & Responsibility at Anauhuac University has done, as part of the government's SME Accelerator programme (Aceleradora de Negocios IDEA-Anáhuac).

I had the chance to learn more about this pioneering programme at the 7th International CSR Conference in Mexico City on 9 October 2009, hosted by COMPITE in partnership with IDEARSE, among others, where I was delivering the keynote address on "The Future of CSR".

The IDEARSE Acceleration Business Model - which strives to support businesses growth through a CSR business administration model that develops competitive advantage - is based on 6 principles: Self regulation (governance), human rights, stakeholder engagement, labour responsibility, environment (eco-efficiency) and social & community impact.

Working with this framework, IDEARSE takes SMEs through an 18 month process of establishing baseline performance, completing a CSR diagnostic, doing a gap analysis, coming up with an action plan, executing it, establishing a new baseline, evaluating impacts and writing up the case study. To date, 76 SMEs have been taken through the process.

What is the result? SMEs that scored an average of 23% on IDEARSE's comprehensive CSR diagnostic before the intervention almost doubled their CSR performance to 43%. Some of the biggest improvements were on self regulation/governance (17% to 48%), process improvement (26% to 47%) and stakeholder engagement (32% to 52%).

Importantly, improvements also show up on the bottom line. The SMEs in the Acceleration programme showed a 30% annual sales growth, and 19% growth in employment, creating 675 new jobs (pre-financial crisis). This is an iterative model, so once the first round of actions have been implemented, the cycle is repeated, leading to continuous improvement.

In developed countries, we have become arrogant about being leaders in CSR. But I believe that many of the most interesting and important innovations - like the IDEARSE Business Acceleration Model - are happening in developing countries. To give another example, Mexico is one of the only countries I know that has a national certifiable CSR standard.

It is time to recognise that CSR is no longer a standardised, Western concept. It has globalised, and as it has done so, it has diversified to meet the needs of the countries, cultures and communities where it finds itself. This is good news. We must hang onto universal CSR principles, but learn to let go of any pre-conceived ideas of what CSR must look like in practice. For to really change the world, CSR first has to become a grassroots movement.

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For more information about the IDEARSE Business Acceleration Model, contact Jorge Reyes-Iturbide on jreyes@anahuac.mx.