Worth more alive than dead: Our biodiversity challenge - Part 2

In essence, what we need is the equivalent of "The Stern Review on the Economics of Climate Change", for biodiversity. And happily, that is exactly what we are getting. TEEB - The Economics of Ecosystems and Biodiversity - is working to put a cost on the loss of ecosystem services and biodiversity loss, and to recommend policy actions.

What TEEB needs to prove - much like the Stern Review - is that the cost of inaction is not only real, but also enormous. Fortunately, this argument is getting a boost from the crescendo on climate change. And more specifically, the links between deforestation and climate change. Tropic deforestation accounts for about 20% of annual greenhouse gas emissions.

So the challenge becomes, how do we make forests worth more alive than dead? The answer, championed by Brazilian Congressman Marcio Santilli, is "compensated reduction". In other words, paying developing countries not to chop down their forests. Thankfully, this idea is starting to gain political traction. It is a win-win on climate and biodiversity.

And it is people like Sino-Australian Dorjee Sun that are showing us how to turn a good idea into a practical reality. 32-year old Sun - a dot.com millionaire by age 30 - now runs Carbon Conservation, which brokers rain-forest-carbon-credit deals. In 2008, he brokered the world's first commercial deforestation-avoidance project, with Merill Lynch paying to protect 1.9 million acres of Indonesian jungle, for credits that it will trade on the international carbon markets.

We all know that we can't - nor would we want to - put a price on everything. But the sad fact is that unless we put a price on biodiversity and ecosystem services - our very life support system - we are in danger of self-destruction. There is an African saying, "the revolution will eat its children". Let's make sure the "market revolution" does not devour our natural inheritance.

Worth more alive than dead: Our biodiversity challenge - Part 1

One of my enduring critiques of the CSR movement is that it has failed to have a dramatic impact on some of the biggest global challenges we face. Despite all the CSR reports and ISO management systems, many things are getting worse, not better. This is indisputable when it comes to biodiversity loss. It is not exaggerating to say that we are causing the sixth mass extinction in the history of planet earth.

I always have to pinch myself when I present figures on this - WWF's Living Planet Index, which tracks populations of 1,313 vertebrate species, has gone down 30% since 1970. Just think about that. We have lost a third of the world's vertebrates in just one generation! According to the Millennium Ecosystem Assessment, 60% of our ecosystems are degraded.

The reason is that nature - as it is currently measured and valued - is worth more dead than alive. Which of course makes no sense at all. It's what Herman Daly and John Cobb Jr, in their book "For the Common Good", call "when to kill the goose that lays the golden egg". We have known for a long time that nature has an economic value, but it hasn't been factored into markets.

In 1997, a team led by environmental economist Robert Costanza estimated the economic value of 12 ecosystem services to be $33 trillion, nearly double world GNP at the time. And yet these same services (and many others) are given a value of zero, by default, in most of our economic and investment decisions. It is true they are free, but only while they continue to function.

When the bee colonies started collapsing in the United States in 2007, the 'free service' of pollination suddenly started to look frightfully expensive - approximately $14.6 billion a year more expensive, according to some estimates. What we need, therefore, is a game-changer. Something to radically alter the debate, to change the way we think about biodiversity.

The Three Curses of CSR: Curse 3 - Uneconomic Role

Curse 3: Uneconomic CSR

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! And indeed, the lack of sympathetic 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 Three Curses of CSR: Curse 2 - Peripheral Status

Curse 2: Peripheral CSR

Ask any CSR manager what their greatest frustration is and they will tell you: lack of top management commitment. This is ‘code-speak’ for saying 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.

The reason Enron collapsed, and indeed why our current financial crisis was allowed to spiral out of control, was not because of a few rogue executives or creative accounting practices, it was because of a culture of greed embedded in the DNA of the company and the financial markets.

Joel Baken (author of The Corporation) goes so far as to suggest that companies are legally bound to act like psychopaths. Whether you agree or not (and despite the emerging research on ‘responsible competitiveness’), it is hard to find any substantive examples in which the financial markets reward responsible behaviour.

The Three Curses of CSR: Curse 1 - Incrementalism

Why has CSR failed so spectacularly to address the very issues it claims to be most concerned about? This comes down to three factors – the Three Curses of CSR, if you like:

Curse 1: Incremental CSR

One of the great revolutions of the 1970s was total quality management, conceived by American statistician W. Edwards Deming, perfected by the Japanese and 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. No surprise, therefore, that the most popular environmental management standard, ISO 14001, is also 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 of 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 to follow ...

The Low Carbon Revolution: It’s Closer Than You Think

A few days ago, the UK government announced its Low Carbon Transition Plan, which will revolutionize the British economy. A few weeks ago, the Corporate Leaders Group on Climate Change launched its Copenhagen Communique, calling for a bold global policy deal. Less than a month ago, the US house of representatives voted to bind the world's largest economy to cutting carbon emissions by 17% from 2005 levels in 2020 and 83% in 2050. The revolution is here! Let's look at these harbingers of change in a bit more detail.

The implications of the UK's plan, announced by Ed Miliband on 15 July, are that Britain will cut its greenhouse gas emissions to 34% below 1990 levels by 2020. Among other things, this means that the UK will move from 5.5% renewable energy today to 30% in 2020, with an additional 10% coming from nuclear and clean coal. That's 600% growth in just 11 years, creating 400,000 new green jobs.

The Copenhagen Communique was launched on 29 June by the Prince of Wale's Corporate Leaders Group on Climate Change, which is convened by the University of Cambridge Programme for Sustainability Leadership (www.cpsl.cam.ac.uk) . The Communique, expected to be signed by 500 of the world's largest companies across all G20 countries, calls for "an ambitious, robust and equitable global deal on climate change that responds credibly to the scale and urgency of the crises facing the world today", including "a reduction of 50-85% by 2050" of greenhouse gases.

In addition to establishing a cap and trade system that is the heart of the 1,200-page US climate bill, the measures approved by the house would require power companies to produce 15% of their electricity from wind and solar energy. This starts to turn Obama's campaign rhetoric - to reduce climate-altering carbon dioxide emissions by 80% by 2050, and invest $150 billion in new energy-saving technologies - into action.

All this is happening before the crucial Copenhagen multi-lateral talks in December. The message is clear: progressive business and governments have seen the writing on the wall, and are not waiting for the bureacrats to catch up. Nobody should be holding their breath. The low-carbon revolution is well underway. The only question now is who will be the winners and losers. Smart governments and companies are betting on first-mover advantage.

Pandora's CSR Box: The Case for Banning CSR

I participated in a strategy session on CSR/sustainability this week and was left wondering if we CSR specialists are our own worst enemy. Would more progress be made if we banned CSR? Would we be better off if we never used the C-word again? What if we substituted “CSR” with “risk management” or “new business development”?

Let me explain what I mean. By having a CSR function, or department, or profession or career, we have created a neat little box for mainstream business to put CSR-related activities into - the CSR report, the ethics code, the supply chain audit. That has some advantages - there is a focal point, people to get things done - but at what cost?

The problem with boxes is that people often don’t think (or act) outside them. If environmental quality, or human rights, or health and safety, or stakeholder engagement is something that gets assigned to the CSR-box, there is a very real danger that everyone else feels they have been absolved of responsibility.

Not only that, the CSR-box mentality suggests that social, environmental and ethical challenges can be solved by thinkering at the edges of business, rather than reforming the core. If the current financial crisis teaches us anything, it is that we have to fundamentally change the way we do business. The current model is broken.

But what are the chances that business will change voluntarily? The answer is: extremely good! In fact, it is inevitable. That is because the issues we are dealing with - the breakdown of ecosystem services, the erosion of morality and the disintegration of social justice - are not marginal issues. They are business deal-breakers.

Put another way, the issues CSR is trying to tackle are business risks. If fish stocks collapse, or communities stay poor, or we have catastrophic climate change, or corruption is endemic - these undermine the ability for business to prosper. They undermine the enabling conditions for business - resource availability, political stability, and clear rules and ethics.

So when I say there is a case for banning CSR, I don’t mean stopping CSR-related efforts, or firing CSR professionals. I mean changing the language of CSR and raising the CSR game - to the level of strategic risk and opportunity. This is not about greenwash and moral high ground. This is about competitive survival and future markets.

Business will not (and should not) do CSR only because it is the right thing to do. Business should do CSR because it will go out of business if it doesn’t and it will be more successful if it does. And if it just calls that approach “good business sense” or “risk management” or “strategic investment”, rather than “CSR”, so much the better.