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Blog by Wayne Visser
First published as an International Sustainable Business column for The Guardian
There are flowers to fit every occasion. But if you are celebrating World Water Week (26-31 August), you might want to think twice. A single rose – grown in Kenya, as many of the world’s cut flowers are – takes around 10 litres of water to produce, with the so-called water footprint, or virtual water export, of Kenya’s floriculture industry having more than doubled over the past 15 years, mostly to supply the Netherlands (69%), the UK (18%) and Germany (7%).
This notion of virtual water – the water embedded in the things that we trade – is gaining visibility as awareness of our global water crisis increases. I remember first getting to grips with the idea a few years ago when I interviewed Fred Pearce, author of When the Rivers Run Dry, for the University of Cambridge Top 50 Sustainability Books project. According to his calculations, to get us through the day, it takes about a hundred times our own weight in water.
Of course, water footprints are not the only impacts we find in our global supply chains. There are issues of labour rights, climate change, transparent governance, biodiversity loss and economic development, to mention but a few. The challenge is to manage and minimise the negative impacts. This is where I believe the example of Kenya’s cut-flower industry can help us to tease out some hard-won lessons, starting with the story behind the Horticultural Ethical Business Initiative (HEBI).
The seeds of the HEBI process were sown in November 1999 when local civil society organisations mounted a successful campaign against workers’ rights violations in Cirio Delmonte, one of Kenya’s largest pineapple growers. The success of this campaign raised concerns in the flower industry, prompting stakeholders to develop the Kenya Standard on Social Accountability and a Voluntary Private Initiative to oversee its implementation.
However, the real impetus for HEBI came from the pressure exerted by transnational alliances of NGOs and consumer groups. The Kenya Women Workers Organisation (KEWWO) was funded by the UK-based Women Working Worldwide (WWW) to gather evidence of the Ethical Trade Initiative Base Code violations. Their report catalogued various unacceptable conditions, from pesticide poisoning to sexual harassment and rape, and spurred a campaign dubbed Produce Safely or Quit. At the same time, the Kenya Human Rights Commission issued a three month ultimatum to flower producers to improve working conditions, failing which they would go international in their campaign.
When the Ethical Trading Initiative (ETI) was alerted to these serious labour rights violations in 2002, several of their corporate and NGO members visited Kenyan flower producers. In fear of losing their most significant market, Kenyan stakeholders came together for the first time to lay the groundwork for the formation of HEBI. What I find particular interesting is that the Horticultural Ethical Business Initiative (HEBI) did not arise from a vacuum of voluntary codes. On the contrary, there were already seven different international ethical codes being applied. However, they seemed to lack effectiveness and credibility.
What made HEBI both necessary and different was the need to involve all stakeholders. As academic experts Catherine Dolan and Maggie Opondo put it: “In contrast to the Fresh Produce Exporters Association of Kenya, the Kenya Flower Council and the Voluntary Private Initiative, which were locally initiated attempts to protect the image of the industry in overseas markets, HEBI was a product of direct Northern involvement. While ETI and WWW only performed a facilitative role in the process, they were nonetheless pivotal to the establishment of a locally owned multi-stakeholder process.”
Today, according to ETI, there is still a lot of work to be done and plenty to criticise, but changes to the audit process and the purchasing practices of ETI members have led to a number improvements for workers in Kenya. For example, there are now more permanent contracts, establishment of worker welfare and gender committees, better provision of protective equipment, stricter pesticide controls and extensive improvements in housing. Furthermore, more women now have access to day-care facilities and there is general acceptance that pregnant women should have light duties.
Most encouragingly, Kenya’s convoluted and painful journey to creating their multi-stakeholder sector code has set a benchmark for other standards, like the Roundtable on Sustainable Palm Oil (RSPO), to learn from and emulate. It has also inspired complementary programmes like The Floriculture Sustainability Initiative, part of the Dutch Sustainable Trade Initiative (IDH), which aims to accelerate and up-scale sustainable trade by building impact oriented coalitions of front running multinationals, civil society organisations, governments and other stakeholders.
So, yes, flowers do have footprints. But perhaps, if we learn from Kenya’s experiences, we can lighten the tread and ensure those footprints are heading in a more sustainable direction.
Please choose your top sustainability leaders from the list below (you can select up to 10 individuals, and only vote once). The list was generated from a call for suggestions during Phase 1 (February-June 2012) and is closed.
A sustainability leader is an individual thought-leader who you believe is having a significant impact by inspiring more sustainable (social, economic, environmental & ethical) thinking and action in the world.
Bringing Admission, Ambition & Pragmagic to CSR
Part 13 of 13 in Wayne Visser’s Age of Responsibility Blog Series for 3BL Media.
What is the most effective CSR/sustainability strategy – to scare or to inspire? How do you get the balance between sharing the bad news (i.e. the state of the world) and the good news (i.e. the innovative solutions)?
Betty Sue Flowers, co-author of Presence, told me that ‘if you attempt to scare people with the enormity of the problems, the tendency is simply to give up. And so when you dispirit people, when you remove the spirit, you also remove the capacity to change.’ This is a common refrain – and indeed a dilemma. We can’t deny the severity of the crises that we face, and yet we can’t paralyse people with fear.
Jonathon Porritt, author of Capitalism as if the World Matters, told me, ‘I’m impaled on this every day of my life at the moment. What do you do? I think we still owe it to reality and to integrity in any communications process to share the empirical reality. But how you come out of that without leaving people spread eagled with despair and just utterly disempowered?’
Porritt elaborates, saying, ‘We’re trying to create these upbeat, opportunity driven wish lists about what would happen if businesses seized hold of this set of opportunities here, and started to do things completely differently over there, and if politicians started to construct societal and economic responses based on a world not on growth hormones. But then you look at the scale of their responses and you set it against the scale of the analysis, and of course it looks frail. It looks insubstantial in terms of where we need to be. So I think the mechanisms we’re using are the only ones available to us, but we haven’t got it right yet. Whether we can get there building, building, building gradually over a period of time or whether we need some shocks in the system to accelerate the emergence of that positive energy, that for me is still a hard one to call.’
Jorgen Randers, co-author of the original 1972 Limits to Growth report and author the recently released book 2052: A Global Forecast for the Next Forty Years, is equally ambivalent. Speaking to me, he reflected, ‘Are scare tactics better than carrots? There are groups pursuing both avenues. I think I’ve moved to thinking that having a positive view has a stronger motivational force than scare tactics. But then you can ask the question, is it possible to come up with sufficient carrots to make society act? And it looks as if some support from some scare tactics or some of the disasters would help.’
The 21st Century Living project, undertaken by Acona in conjunction with Homebase and The Eden Project, may provide some answers. Based on an 18 month study of 100 households in the UK, the findings showed that most people will act, given the right tools and information specifically for their needs. ‘The data say clearly that environmental values are not a good predictor of action. The message we got back was clear: we can get on with cutting our environmental footprint without having to win the battle for the long-term soul of the nation. Don’t browbeat people, don’t frighten them – just show them where they are wasting money and resources and they will change themselves. Frame the topic like this and everyone is interested – young and old, wealthy and poor, green or not.’
Like all of us in the CSR/sustainability field, I have also been grappling with the issue of whether it is best to scare or inspire. In my case, however, this was also critical in a post-apartheid South Africa that was in the grip of pessimism after the euphoria of its political miracle had evaporated and the massive challenges of social upliftment became clear. This was the subject of my book, South Africa: Reasons to Believe, in which my co-author and I concluded that there are two basic ingredients to being positive. The first is to recognise that our pessimistic views are skewed by unbalanced media reporting. We have to remember that our mental state is determined by what we focus on. It’s not that the media is lying; it’s just that they are painting a picture of the world that is highly selective. They are like manic-depressive artists patching together a collage, using bits and pieces of real events, most of which happen to be dark or disturbing. So, we need to start exposing ourselves to more of the positive news stories, in order to get a more balanced perspective of what is going on around us.
The second ingredient to being positive is to recognise that our attitude influences the world around us, for better or worse. The neutral scientist in the white coat is a myth – he/she does not exist. The observer and the observed are not separate; they are always inextricably linked. Everything we think, or believe, or value, changes the world around us. It even affects our physical health. Attitudes are like lenses that colour what we see. But they are also like yeast in bread – they have a very real, visible effect on the outcome of whatever we are trying to make work, whether it is a family, a business, a nation, or even a whole planet. This is not just a philosophical point. Optimism comes from actively engaging with life’s challenges.
Relating this back to the theme of this blog series, namely CSR 2.0 and the Age of Responsibility, I always suggest that companies use a simple dual test. The difference between a CSR 1.0 and a CSR 2.0 company is the depth of their admission and the scale of their ambition. Interface founder, Ray Anderson, concedes in his book Confessions of a Radical Industrialist not only that today’s economic system is broken, but that he and his company are part of the problem. He is able to see himself as a ‘plunderer’ (his word) – not through malicious intent, or even greed, but by failing to question the true impacts of business on society and the environment. As Alcoholics Anonymous will tell you, admission is the first step to recovery. Unfortunately, most companies stuck in the Ages of Greed, Philanthropy, Marketing and Management are all still in denial, thinking that either there is no problem, or it’s not their problem, or that it’s a problem to benefit from, or that it’s only a minor problem.
The Age of Responsibility is not just about admission though; it’s also about ambition. As far as I can tell, Interface was the first major company to set the BHAG (big hairy audacious goal) of zero negative impact, as well as going beyond ‘no harm’ to also become a restorative business – to genuinely make things better and leave this world with a net-positive balance. Today, there are others like Walmart (zero waste, 100% renewable energy) and Unilever (double the business, halve the environmental footprint). I believe it is only such audacious goals that can lift the triple curses of incremental, peripheral and uneconomic CSR.
As Robert Francis Kennedy reminds us: ‘There are those who look at things the way they are, and ask why. I dream of things that never were, and ask why not?’ We need more pragamatic dreamers, business leaders who practice what brain-mind researcher and author Marilyn Ferguson calls ‘pragmagic’. Will you be one of the pragmagicians of CSR and sustainability? For all our sakes, I really hope so! Help us break the spell of irresponsible business and unsustainable capitalism.
By Dr Wayne Visser
Part 12 of 13 in Wayne Visser’s Age of Responsibility Blog Series for 3BL Media.
Margaret Mead once said, ‘The only person who likes change is a wet baby’, to which Hunter Lovins added ‘and the baby squalls all the way through the process.’ So change is never easy, especially on the big issues of sustainability. In thinking about this, I have found Richard Beckhard and David Gleicher’s Formula for Change rather useful: D x V x F > R. This means that three factors must be present for meaningful organisational change to take place. These factors are:
D = Dissatisfaction with how things are now;
V = Vision of what is possible; and
F = First, concrete steps that can be taken towards the vision.
If the product of these three factors is greater than R (Resistance), then change is possible. I have seen sustainability change efforts fail for all four reasons. Deep-seated resistance often exists because the benefits of the status quo to those in power are considerable. Sustainability initiatives, especially if they are integrated into the core business, are often seen as extra burden. For instance, an operations manager of a plant really doesn’t want the extra hassle of collecting emissions data for a sustainability report, or subjecting his staff and facilities to an audit.
Most often, I think, the dissatisfaction that we may feel with the state of the world or the company’s actions really isn’t widely shared enough. Jonathon Porritt, author of Capitalism as if the World Matters, after many years in the sustainability game (he started the UK’s Green Party and chaired the government’s Sustainable Development Commission among other things), told me: ‘Looking at people all over the world today, rich and poor world, they are not remotely close to a state of mind that would call for anything revolutionary. There’s no vast upheaval of people across the world saying, “This system is completely and utterly flawed and must be overturned and we must move towards a different system.” There isn’t even that, let alone an identification of what the other system would look like.’
Likewise, on creating a compelling vision, Porritt concludes that ‘we have not collectively articulated what this better world looks like – the areas in which it would offer such fantastic improvements in terms of people’s quality of life, the opportunities they would have, a chance to live in totally different ways to the way we live now. We haven’t done that. Collectively we’ve not made the alternative to this paradigm, this paradigm in progress, work emotionally and physically, in terms of economic excitement. We’ve just not done it.’ Taking first steps is something companies are generally much better at, especially picking the so-called ‘low hanging fruit’. But the reason these steps so often don’t get beyond the pilot or peripheral stage is because the other two factors – dissatisfaction and vision – are not strong enough.
Another way to think of change in a structured way is Peter Senge’s concept of the learning organisation, popularised in his book, The Fifth Discipline. He described the five interrelated disciplines as follows: ‘Systems thinking [the fifth discipline] needs the disciplines of building shared vision, mental models, and personal mastery to realise its potential. Building shared vision fosters a commitment to the long term. Mental models focus on the openness needed to unearth shortcomings in our present ways of seeing the world. Team learning develops the skills of groups of people to look for the larger picture that lies beyond individual perspectives. And personal mastery fosters the personal motivation to continually learn how our actions affect our world.’
In a follow-up book, Learning for Sustainability, Senge, together with co-authors from the Society for Organisational Learning, apply the fifth discipline model to sustainability. In particular, they emphasise connecting the inner and outer work that needs to be done: ‘Connecting the inner changes in how we manage and lead with the outer effects our organisations have on larger systems; connecting the inner changes in mental models and personal visions with the outer changes in management culture; and connecting the inner changes in who we are as human beings with how we act and interact.’
In seeking to create change for sustainability, Senge and his colleagues once again emphasise the interconnected nature of all change processes, and the critical role of business: ‘There has never before been a time when the social, ecological and economic conditions that challenge political leaders in any one part of the world have been so interwoven with what is occurring in so many other places. This phenomenon has arisen through the ever-growing web of interconnectedness spun by institutions, especially multinational corporations. Collectively, these organisations determine what technologies are created and how they are applied around the world: which markets develop and which are largely ignored. These institutions determine who benefits from the world economy and who does not.’
Given the interconnectedness, the key to change, believes Senge, is collaboration. To illustrate his point at an MIT Sustainability Summit 2010, Senge asked the question: What would it take to get rid of disposable cups? Who would have to work together to eliminate disposable cups? The answers suggested include everyone from Starbucks and its competitors to paper manufacturers, food service providers, recyclers and municipal governments. To make real headway on really tough sustainability issues is a ‘massive undertaking in collaboration’. What’s more, the parties that need to collaborate often aren’t naturally inclined to.
Senge concludes that a good guy/bad guy mentality can be a barrier to such collaboration. ‘You’ve got to wake up and say “We’re all part of the system”. You know who is causing the destruction of species? You and me. You know who’s causing the huge waste problems around the world? You and me.’ Once you become more open-minded to this possibility, then you can look for collaborative solutions. ‘Look for small steps of things you can do together with people with whom you traditionally would never have cooperated — and do something useful, no matter how small.’
By Dr Wayne Visser
Part 11 of 13 in Wayne Visser’s Age of Responsibility Blog Series for 3BL Media.
About 2.4 billion people live in water-stressed countries, according to a report by the Pacific Institute. Water demand in the next two decades will double in India to 1.5 trillion cubic meters and rise 32% in China to 818 billion cubic meters, according to the 2030 Water Resources Group. China is home to roughly 20% of the world’s population, but has only about 7% of the world’s water. That means there are around 300 million people living in water-scarce areas. According to a World Bank report, water scarcity and pollution reduce China’s gross domestic product by about 2.3%.
When I interviewed Fred Pearce about his book, When the River Runs Dry, he told me that, for the average Westerner to get through the day, it takes about a hundred times their own weight in water – that’s every day; not every year, every day. The water used is mainly to grow the things that we eat. Pearce gave me some of the facts and figures: To grow a kilogram of wheat takes about a ton of water, a kilogram of rice takes more. Once you start feeding grains to livestock to produce meat and dairy products, the numbers are even higher. To produce enough meat for one hamburger takes about 10,000 litres of water, which is about 10 tons. If you are a vegetarian you are not doing too much better because it typically takes 4,000 litres of water to produce one litre of milk.
That’s for food. What about drinks? Coca-Cola sells 1.5 billion beverages a day in over 200 countries and uses about 2.5 litres of water to produce one litre of its products. The company received its water wake up call in 2002, when residents of Plachimada, a village in India’s southern state of Kerala, accused the company’s bottling plant there of depleting and polluting groundwater. Two years later, the local government forced Coke to shut down the plant. In 2006, their situation got worse when a New Delhi research group found high levels of pesticides in Coca-Cola and PepsiCo’s locally produced soft drinks, resulting in several Indian states banning their products. Coke denied any wrongdoing, claiming that bore-hole water fed farming was mainly responsible for lowering the water table and that the pollution claims were unsubstantiated. However, the public perceptions battle had already been lost.
Speaking to Time magazine in 2008, Jeff Seabright, the company’s vice president of environment and water resources, admitted that Coke had mishandled the controversy. ‘If people are perceiving that we’re using water at their expense, that’s not a sustainable operation,’ he said. This realisation resulted in a serious shift in Coke’s strategic positioning of its CSR towards tackling water as priority number one. ‘It’s great that companies used to hand out checks for scholarships or to clean up litter,’ said Seabright, ‘but increasingly the real relevance is using the company’s core competence to address issues that are of societal concern.’ And for Coke and the communities in which it operates, the concern is water.
Coke realised that it needs to be seen as part of the solution, not part of the problem. As a result, it has put resources into water at an unprecedented scale. In 2007, the company announced it would spend $20 million over five years to help the WWF preserve seven of the world’s major rivers. It also set up the $10 million Coca-Cola India Foundation, which began installing over 4,000 rainwater harvesting programmes and providing clean drinking water to 1,000 schools across the country. More significantly, in June of the same year, CEO Neville Isdell flew to Beijing and pledged that his company would become ‘water neutral’, saying, ‘Water is the main ingredient in nearly every beverage that we make. Without access to safe water supply, our business simply cannot exist.’
Coke uses the term ‘water neutral’ to describe the ratio of ground water usage by any user as against the quantity put back into nature. It is a contentious topic and not everyone believes it is possible. But the scale of Coke’s ambition – and indeed the progress it is making towards its targets – is going a long way to advancing the CSR 2.0 circularity agenda. Speaking in 2009, Coca Cola India’s Director of Quality and Environment, Navneet Mehta, said: ‘Our target is to neutralise all ground water usage by the company in India by the end of the current calendar year and become water neutral for all products and processes by 2012.’ Mehta reported that the company had already achieved a replenishment level of 82% on its annual ground water usage in India and that their ground water usage ratio had improved over 42% between 1998 and 2008.
The second largest beer manufacturer in the world, SABMiller, has also been working hard on understanding their water footprint, and launched a joint-report with WWF-UK in 2009 called ‘Water Footprinting: Identifying & Addressing Water Risks in the Value Chain’. The report reveals that in South Africa, the total water footprint is equivalent to 155 litres of water for every 1 litre of beer, while in SABMiller’s Czech operation the overall water footprint is significantly smaller at 45 litres of water to every 1 litre of beer. In both cases, the vast majority of this (over 90%) comes from the cultivation of crops, both local and imported.
Efforts like these of Coca-Cola SABMiller are being supported by the Water Footprint Network, which launched its Water Footprint Manual in 2010, covering a comprehensive set of methods for water footprint accounting. It shows how water footprints can be calculated for individual processes and products, as well as for consumers, nations and businesses, and includes methods for water footprint sustainability assessment and a library of water footprint response options. It’s time for us all to make less of a splash – either we ‘drop down’ our water consumption, or we ‘dry up’ our very source of life.
By Dr Wayne Visser
Part 10 of 13 in Wayne Visser’s Age of Responsibility Blog Series for 3BL Media.
One of the ways the business case is determined is that each region, country or community has a different combination of CSR drivers. I will start with the five typical CSR drivers that are local (or internal) drivers, namely pressures from within the country or community.
1. Cultural tradition
In many countries and regions, CSR draws strongly on deep-rooted indigenous cultural traditions of philanthropy, business ethics and community embeddedness. For example, in a survey of over 1,300 small and medium-sized enterprises in Latin America, Antonio Vives found that the region’s religious beliefs are one of the major motivations for CSR. In Asia, a study by scholars Wendy Chapple and Jeremy Moon reached a similar conclusion, namely that ‘CSR does vary considerably among Asian countries but that this variation is not explained by [levels of] development but by factors in the respective national business systems’. And in Africa, I have found that the values-based traditional philosophy of African humanism (ubuntu) is what underpins much of the modern, inclusive approaches to CSR on the continent.
2. Political reform
CSR cannot be divorced from socio-political reform processes, which often drive business behaviour towards integrating social and ethical issues. For example, the political and associated social and economic changes in Latin America since the 1980s, including democratization, liberalization, and privatization, have shifted the role of business towards taking greater responsibility for social and environmental issues. Likewise, more recently, the goal of accession to EU membership has acted as an incentive for many Central and Eastern European countries to focus on CSR, since the latter is acknowledged to represent good practice in the EU.
3. Socio-economic priorities
CSR is typically shaped by local socio-economic priorities. For instance, while poverty alleviation, health-care provision, infrastructure development and education may be high on many developing country agendas, this stands in stark contrast to many Western CSR priorities such as consumer protection, fair trade, green marketing, climate change concerns, or socially responsible investments. Stephen Schmidheiny questions the appropriateness of imported CSR approaches, citing examples from Latin America where pressing issues like poverty and tax avoidance are central to CSR, but often remain left off of international CSR agendas.
4. Governance gaps
CSR is frequently seen as a way to plug the ‘governance gaps’ left by weak, corrupt, or under-resourced governments that fail to adequately provide various social services (housing, roads, electricity, health care, education, etc.). Academics Dirk Matten and Jeremy Moon see this as part of a wider trend in developing countries with weak institutions and poor governance, in which responsibility is often delegated to private actors, be they family, tribe, religion, or increasingly, business. A survey by WBCSD illustrates this: when asked how CSR should be defined, Ghanaians stressed ‘building local capacity’ and ‘filling in when government falls short’.
5. Crisis response
Crises often have the effect of catalyzing CSR responses, albeit mostly of the philanthropic kind. For example, the economic crisis in Argentina in 2001 marked a significant turning point in CSR, prompting debates about the role of business in poverty alleviation. Similarly, Hurricane Katrina in the USA and HIV/AIDS in South Africa had the effect of galvanizing CSR. The examples are endless, be they the industrial accidents of the 1970s and 1980s (Seveso, Bhopal, Exxon Valdez), the environmental and human rights fiascos of the 1990s (Shell, Nike, McDonald’s) or the corporate governance and natural disasters of the 2000s (Enron, Katrina, Sichuan).
The rest of the CSR drivers are more global (or external) and tend to have an international origin.
6. Market Access
The flipside of the socio-economic priorities driver is to see these unfulfilled human needs as an untapped market. This notion underlies the now burgeoning field of ‘bottom of the pyramid’ (BOP) strategies already discussed. CSR may also be seen as an enabler for companies in developing countries trying to access markets in the developed world. For example, a survey of CSR reporting among the top 250 companies in Latin America found that businesses with an international sales orientation were almost five times more likely to report than companies that sold products regionally or locally.
7. International Standardisation
Codes are frequently a CSR response, especially in sectors where social and environmental issues are deemed critical, such as textiles, agriculture or mining. Often, CSR is driven by standardisation imposed by multinationals striving to achieve global consistency among its subsidiaries and operations in developing countries. For example, a study by Wendy Chapple and Jeremy Moon in Asia found that ‘multinational companies are more likely to adopt CSR than those operating solely in their home country, but that the profile of their CSR tends to reflect the profile of the country of operation rather than the country of origin’.
8. Investment Incentives
The belief that multinational investment is inextricably linked with the social welfare of developing countries is not a new phenomenon. However, increasingly these investments are being screened for CSR performance. Hence, socially responsible investment (SRI) is becoming another driver for CSR in many countries. Often, this is as a result of global SRI funds and indexes, like the Dow Jones Sustainability Index and FTSE4Good, but the influence of regional and national SRI instruments is also on the rise, with Brazil and South Africa among the first to go glocal in this respect. In addition, there are sector-based indexes emerging, like the ICT Sustainability Index launched in 2008.
9. Stakeholder activism
In the absence of strong governmental controls over the social, ethical and environmental performance of companies in some countries, activism by stakeholder groups has become another critical driver for CSR. In developing countries, four stakeholder groups emerge as the most powerful activists for CSR, namely development agencies, trade unions, international NGOs and business associations. These four groups provide a platform of support for local NGOs, which are not always well developed or adequately resourced to provide strong advocacy for CSR. The media is also emerging as a key stakeholder for promoting CSR
10. Supply chain integrity
Another significant driver for CSR, especially among small and medium-sized companies, is the requirements that are being imposed by multinationals on their supply chains. This trend began with various ethical trading initiatives, which led to the growth of fair trade auditing and labelling schemes for agricultural products. Later, poor labour conditions and human rights abuses resulted in the development of certifiable standards like SA 8000. Major change has also been achieved through sector-based initiatives such as the Forest Stewardship Council and more recently, through the ‘Wal-Mart effect’, involving choice editing to source only from sustainable and responsible suppliers.
To conclude, the art of finding a ‘glocal’ business case is to determine which of these 10 incentives and pressures are the strongest and most applicable to the local context.
By Wendy Wilder
The Case of Viyellatex
What do we really mean by sustainable supply chains? How are suppliers in developing countries practicing responsible business?
Although the answer varies by country and company, many companies in Bangladesh are going beyond the traditional notion of CSR as philanthropy and are making significant contributions to social development in ways that enable business success and economic growth.
One company I had the privilege to visit while in Bangladesh is Viyellatex, a ready-made garments manufacturer that supplies leading UK retailers. The company’s approach to corporate sustainability is to “ensure growth, expansion and profit by being socially and environmentally responsible”.
The company’s social programmes reflect a belief that a healthy and educated population is needed to develop society. Viyellatex embraces responsible business throughout the organisation and the surrounding community.
In the nearby community, Viyellatex plans to open a school for 30 physically handicapped children this summer. The school will be named Bikash, which means ‘to blossom’ in Bangla. To me, this symbolises responsible business at Viyellatex – enabling employees and community members to grow their capacity.
Nearby, Viyellatex, USAID and Save the Children run seven schools for pre-school children, each in the centre of a local community. At one school I visited, 30 children with big brown eyes sat quietly in a circle listening to the teacher and practicing their ABCs. As with all kids, they like going to school to play games and, as an afterthought, to learn new things. The intent is to give these kids a foundation for learning and to encourage parents to send their children to primary school.
To encourage growth among its employees, Viyellatex provides training and social benefits to all employees, including an on-site medical centre and crèche to encourage women to remain in the workforce while upholding family responsibilities.
Inside the clean, brightly-lit factory, I met physically handicapped workers, two of whom recently won an award sponsored by Marks & Spencer for their achievements. This forms part of a larger partnership with The Centre for the Rehabilitation of the Paralysed (CRP) to provide training and employment for people of all abilities.
To me, suppliers such as Viyellatex are not only providing education and employment opportunities, they are slowly influencing change within society, helping people to see the value of education, and the contribution both men and women of all abilities can make to their personal growth as well as that of the nation.
Among a population of 161 million people, an estimated 55 million are below the age of 14 and an estimated 51 million are women between the ages of 15 and 64 (CIA World Factbook, 2012). This demonstrates significant potential for social and economic development of Bangladesh if more women and children are given opportunities similar to those offered by Viyellatex.
By Désirée Tennant
By the people, for the people
The relationship between formal volunteering and self-reported health and happiness are well documented (1, 2). For the HR and OD practitioner, a best case scenario implies optimal employee health, happiness and resilience translating into employee loyalty and engagement, sustainable high performance, reduced absenteeism, and, lest we forget, employees that turn out as model citizens in civil society contributing to its robustness. Right?
But are CSR divisions collaborating with HR/OD divisions on this aspect? In the world of ‘who’s producing the best CSR report’, enter the new rivals of, ‘who’s got the best corporate well-being strategy, or happiness index’? My question is, ‘Are we looking at the correlation between the two’?
A typical menu of health offerings included in a UK corporate wellbeing strategy, in the name of corporate ‘duty of care’ to its own employees may include medical insurance, health screening, health cash plans, employee assistance programs, dental plans, gym memberships, vaccinations and cycle to work schemes (3). Other employee well-being benefits may extend to health screening and awareness days, free fresh fruit, walking odometer fitness initiatives, occupational health services, stress management training, healthy canteen options and nutritional advice, physiotherapy, stop-smoking support and various insurances (personal accident, long term disability and critical illness).
Trawling through various documents from the UK, employee volunteering fails to make an appearance in the increasingly popular corporate wellbeing strategies. Surely this is an opportunity lost and a gap in CSR practices. The latent potential in these connections is enormous, both for the individual employee, the corporate culture, the communities / beneficiaries themselves and the CSR agenda itself. Here is my hypothesis: if volunteer-employees and prospective community stakeholders co-evolved a ‘best-fit’ strategy, not only would the community remain empowered but the employee would feel a sense of community and contribution to their employer’s CSR agenda. The result would be reciprocal well-being.
The Business Well-being Network’s annual report asks the question, ‘How many organisations extend their CSR strategies to include supporting resilience – and aim to send resilient people out into the world?’ (4) Surely, this is the responsible thing to do, both for the employees’ well-being and for the community as a key stakeholder? The same report does point out, however, that, ‘we do not yet understand how people, groups and organisations interact with and contribute to a “Resilient Society”.’
What has become interesting are the apparent expectations from Generation X and Generation Y for greater meaning in their work. To use part of Fairlie’s definition, we are talking about ‘life meaning, purpose, and coherence [including] generativity or service to others.’ (5) Hence, involving employees in volunteering is a way not only of forming collaborative community partnerships and advancing the CSR agenda, but also of improving job satisfaction and meaning in life.
Mark Williamson from Action for Happiness concludes that ‘proponents of sustainability would be wise to embrace this new focus on wellbeing too, for it brings something crucial that the environmental movement has long been lacking: a positive and hopeful vision.’ (6) I think he is right and we already see signs of the shift, with happiness and wellbeing likely to be in the global discussions on sustainable development at the Rio+20 conference this June.
References
- Borgonivi, F. (2008) Doing well by doing good. The relationship between formal volunteering and self-reported health and happiness. Social Science and medicine 66, 2321-2334
- New Economics Foundation (2008) Foresight project on mental capital and wellbeing.
- Simply Health’s engaging employees through health and wellbeing report (2011). Retrieved on 9 April 2012 from http://www.simplyhealth.com
- Well-being, good work and society-time for change (2011/2012).The business well-being network annual report. Retrieved on 9 April 2012 from http://www.robertsoncooper.com
- Fairlie, P. (2011) Meaningful Work, Employee Engagement, and Other Key Employee Outcomes : Implications for Human Resource Development, in Advances in developing human resources 13 (4) 508-525
- Mark Williamson in The Guardian, Sustainable Business on “The serious business of creating a happier world: The first ever United Nations conference on happiness reflects a growing momentum to redefine our notion of growth. But will happiness gain a place at the top of the world agenda? Retrieved on 12 April 2012 from http://www.guardian.co.uk/sustainable-business/united-nations-happiness-conference-bhutan?newsfeed=true
By Sandra Naigeon de Boer
At first glance corporate social responsibility (CSR) and tax have not much in common. Taxation is hardly debated in CSR literature but there are many reasons why it should be. Here are three of main reasons by tax is a critical CSR issue.
Reason 1: The notion of citizenship is at the very centre of CSR and taxation. Political history of the modern state shows that citizenship starts with the due payment of taxes. Legal tax avoidance practices, not to mention tax evasion, have emerged in the context of globalisation and challenge the implicit social contract between businesses and society. Tax avoidance both erodes the ability of the state to fulfil its public interest role and weakens its political legitimacy.
Even the most well known defendant of the shareholder model, Milton Friedman, would have agreed with this argument. The corporation cannot and should not replace the state in providing social services and infrastructure. As Reuven Avi-Yonah, Professor of Law at the University of Michigan shows, no matter what view of the corporation one takes, the idea that corporate managers should seek to minimize tax liability by all means remains inconsistent with CSR[1].
Reason 2: The world is facing daunting challenges such as the global financial crisis and achievement of the Millennium Goals for Development. Despite the fact that taxation stands at the centre of our modern economic and social equilibrium, most corporations regard it as a burden to be avoided, rather than as a major economic contribution to society. As a result, a large proportion of businesses engage in sophisticated accounting practices, such as transfer pricing, designed to lower their tax liability.
Aside from undermining the financial capacity of nation states, such practices impede the potential impact of the private sector on development and poverty reduction. There is no doubt that taxation is the best way to both finance development and enhance democratic accountability. Christian Aid estimates that tax avoidance costs developing countries $160 billion every year.[2] Considering that the fiscal crisis of the OECD states endangers the maintenance of $120 billion in foreign development aid, tax avoidance practices are clearly corrosive to development.
Reason 3: CSR is a systemic notion commonly defined as the way businesses manage their activities in order to maximize their positive impacts on society. Although a responsible corporation ought to be responsible in all its activities, when it comes to taxation, some corporations become schizophrenic. The current financial crisis and recent tax scandals have triggered stakeholders’ interest in tax issues. Increased transparency in tax reporting is the subject of ongoing debates within NGOs as well as governments. Faced with reputational risks, companies are under fierce pressure to rethink their tax approaches and align them with their CSR practices.
These reasons should be sufficient to convince CSR advocators to join the very few pioneers who have pointed the social irresponsibility of corporate tax avoidance, such as John Christensen from the Tax Justice Network or Richard Murphy described by the Guardian as an ‘anti-poverty campaigner and tax expert’. The time has come to make tax the next hot topic on the CSR agenda. Don’t get me wrong, the point is certainly not to disregard mainstream CSR, but rather to shed light on a forgotten yet fundamental corporate responsibility issue.
By Nishant Tiwari
Energy is a basic need for us all. Whatever we do in our daily life, energy is involved. Today, more than 85% of the world’s current energy is supplied through fossil fuels (oil, coal, natural gas, petrol and diesel). But what will happen in a few decades when these traditional sources of energy are in decline? Meanwhile, energy demand is increasing at 1.6% per year – driven largely by developing countries – with more than third of this growth expected to come from coal. By 2030, the world will demand 45% more energy.
The question is: How do we move away from dependency on fossil fuels and towards more sustainable sources like solar, wind, biomass and biofuels (ethanol), while still meeting the expanding energy needs? One of the current challenges with renewable energy is that it tends to be fairly inefficient – power is lost between generation and transmission. New materials for conductors and transformers are therefore a key area for improvement. A tried and tested method is Combined Heat and Power (CHP), where excess heat from power generation is used to heat homes and buildings, rather than released to the air as ‘waste’ steam. This principle of channelling excess energy to good effect is also used in hybrid cars.
The UK government has committed to increasing the proportion of energy from renewable sources. This will enhance the security level of energy supply and create various opportunities for investment in technology innovation. For example, if wind plants are established for generating power, other industries will be required to manufacture windmills, suitable generators and boosters.
Similarly, Australia has a Clean Energy Regulator, which has taken significant steps towards promoting a clean energy future, including introducing a carbon pricing mechanism, renewable energy target and carbon farming initiatives. Also in India, the government supports funding and accessibility of small scale renewable energy generation, such as biomass plants and stop dams. At the same time the big brand in power, BHEL, uses solar power for lighting in their plants and townships.
The World Energy Council (WEC) established the concept of the 3 As of energy sustainability: Accessibility to modern, affordable energy for all; Availability in terms of continuity of supply and quality and reliability of service; and Acceptability in terms of social and environmental goals. These 3A’s underpin their scenarios of energy policies to 2050. In terms of progress to date against the 3 As, the Africa region is lagging, Europe leads and Asia is mid-way to achieving the targets.
This suggests that it is time for the world to be bold on sustainability energy policy. As Franklin D. Roosevelt said, ‘The only limit to our realisation of tomorrow will be our doubts about today.
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