I’ve been thinking a lot about legal issues and the impact on CSR. As I’ve written my past two posts, CSR Debate and Legal Doesn’t Equal Sustainable, there has been yet another issue that has come to mind.
If the legal framework defines acceptable business practice, it is only an incremental step to see legal consequences as an acceptable cost of doing business. So if the fine for breaking the law is outweighed by the commercial benefit, then it makes sense to break the law and pay the fine. Adding a component of risk assessment, and assuming you only get caught and found guilty a small percentage of the time, can make quite a compelling commercial equation for a company to knowingly break the law.
It is often quoted that there is no such thing as standing still in business. A company that sees only legal construct as defining good and bad is on this logical pathway to self destructive behavior. So what should we be doing instead?
Businesses should view following the law as only the minimum we need to do. Ethical companies and the executives within them should be staying well on the safe side of the law. Whiter than white should be the legal related objective, supported by an ethical approach that aspires to exceed and perhaps even to lead the legal definition of right and wrong. And, through our business dealings, our vendor engagement processes and our employment approach from the highest levels down, we should let our business partners and colleagues know that flying close to the wind with regard to the law is not an acceptable business or personal practice. That way we become the check and balance on each other’s ethics and we embark on an upward spiral into mutually supportive business relationships and public trust.
In his recent column in The Financial Times, Stefan Stern implied that it is okay for businesses to employ child laborers and pursue environmentally unsustainable activities so long as it is within the law and it is in the interests of being competitive. He seems to also invoke the words of Sir Terry Leahy, chief executive of Tesco (the UK’s leading retailer) as implying Sir Terry would be in agreement.
Having been a product manager with a clear set of P&L objectives in previous roles, I am fully aware of the business imperatives of cash and profit. However, I do not see the mismatch that Stefan observes between CSR and what managers have to do every day of the week. As I see it, every CSR initiative should have a clear and commercially compelling objective, whether it is employee retention, risk mitigation, customer loyalty, cost reduction or others. Additionally, every manager should be worrying not only about today’s profit but about tomorrows and next year’s profit too. Using up a resource faster than it is being replenished might deliver short term returns, but will compromise tomorrow’s business.
That isn’t to say that there isn’t sometimes a short term disadvantage when one company acts responsibly and its competitors act irresponsibly. I recall a negotiating game from my early training in management that demonstrated that if individual parties work together for the common good then all end up better off. But if either tries to undermine the other’s trust to gain at the other’s expense, both end up worse off. In the CSR world that is where leadership and common standards come in.
Contrary to Stefan’s views, I think our current recession demonstrates we need to be thinking more rather than less about the longer term implications of our decisions in the business world. To characterize CSR as do-gooders and “babies, dolphins and forest” is a disservice to the debate and will ultimately lead us to the lowest common denominator
Rather than Sustainability in Advertising, I should have titled my previous post Sustainability in Product Advertising.
The contrast is particularly evident if you look at the corporate level advertising in the Washington Post on Inauguration Day yesterday, targeted I am sure at the new Administration. There are many more corporate adverts than product adverts and they feature sustainability credentials much more heavily. For example, Nordstrom (Scholarship Program), Exxon Mobil (energy, environment and poverty), Lockheed Martin (national security and economic stability), Energy Tomorrow.org (energy availability), Monsanto (water and irrigation), IBM (environment, health, food…).
I am wondering if the focus on sustainability in corporate advertising, relative to the lower weighting in product advertising indicates a perception on behalf of companies that consumers really don’t care much. Or does it indicate that companies perceive that government cares a lot? Leadership in this area should come from companies and government equally, so on balance I think it is a good sign. Hopefully, consumer awareness will continue to grow in response.
The group, of which BT is a member, is a collaboration of leading corporations and the World Resources Institute.It is dedicated to building corporate markets for green power. Our goal is to develop corporate markets for 1000 MW of new, cost competitive green power by 2010.
The agenda included a tour of the progress made with BT's solar installation (see the latest here) and a roundtable where members share and learn from each other's experiences and discuss pursuing collaborative projects in the green power space. It was interesting to compare this collaborative approach with the competitive approach presented by the X-Prize Foundation. The Foundation is planning a suite of future prizes in the energy and environment space.
The two approaches are complementary. The collaborative approach of the Green Power Market Development Group lends itself to the development of markets and commercial scaling up of tried and tested technologies. The higher risk, but higher reward competitive approach of the X-Prize will stimulate creativity, out of the box thinking and ultimately the breakthroughs we also need. It will be interesting to watch the initiatives that result from both paths.
The 2008 results of the Dow Jones Sustainability Index came out on September 6th. BT is the Global Super Sector Leader for the Telecommunications sector of the Dow Jones Sustainability Index. For eight years running. And it is a grand sounding title if ever I heard one, per the supporting commentary on BT from the DJSI team.
Criteria for the award cover economic, social and environmental sustainability dimensions. Of the 12 primary criteria, BT was the lead company in the sector on only four, so we cannot rest on our laurels as that leaves 8 criteria where at least one other company in the sector is ahead of us – just not the same company for each criterion.
In fact, I recall from last year that the DJSI commentary mentioned the competition was heating up (my words not theirs) and other players were narrowing our lead. This is all healthy competition, of course, because it means that the industry is forging ahead on sustainability. But, if sustainability is aligned with business benefit (and I believe it is), then it is a competitive advantage, too, and we want to stay ahead of our competitors.
On that note, I don’t see any American headquartered companies in the telecommunications sector. I assume that means they didn’t apply, but I don’t know why that would be. I see plenty in the technology sector including Cisco, Dell, HP, Intel and IBM (Intel is the Super Sector Leader).
I'll be discussing this report and the impact of ICT on the environment on September 24 at the European-American Business Council's Smart Energy Panel on Green ICT in Washington, DC.
I am always suspicious of companies that quote their "emissions avoided" as the primary measure of their environmental achievements, i.e., "If we hadn’t done this or that then our emissions would have been so much worse."
As supplementary information to reduced emissions, avoided emissions can be a valuable measure to help employees, customers and other stakeholders understand the relative contribution of energy reduction activities.
We do this at BT (mosske.blogspot.com). Our absolute emissions have been reduced from 1.2 M to 0.6M tonnes CO2 since 1996. In fact, last year we avoided 97k tonnes CO2 through our use of teleconferencing and about 50k tonnes through encouraging telecommuting. That helps employees really understand the contribution they are making to the whole, when they avoid traveling for a meeting and attend by teleconference instead – and that understanding is a great motivator. But, what really counts is the 0.6M tonnes CO2 absolute emissions. The avoided number is meaningless without the absolute reduction achieved. So, next time you see a company quote an achievement in terms of "avoided," look for the absolute number and, absent that, don’t give the avoided number any credence.
So, what does that have to do with "fat-free?" It reminds me of the claims I sometimes see on food stating, "95% fat-free." It’s the emissions that count, just like it’s the 5% fat that counts. The 95% avoided, while perhaps technically accurate, only tells half the story!
