 SustainAbility, Inc. released an interesting report today which, “[demonstrates the] potential for next-generation partnerships to positively impact socio-economic and environmental challenges.” The report, Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems, is available for download on the firm’s website. Though the report is free, you have to register (painlessly fast) in order to complete the download.
I skimmed the report this morning and will give it a thorough run-through later today. So far, however, it looks like a great read. Here is a high-level snapshot of the main findings of the report:
- Social entrepreneurship is on a roll
- The potential for breakthrough solutions is considerable – and growing
- The field is growing, but still relatively small
- Money remains the main headache
- Financial self-sufficiency is seen as a real prospect within five years
- There is a real appetite to partner with business
- Beware blind spots (risk of over-focus)
- For real system change, we must focus on government and public policy
More thoughts on the report later…
 TAGS: Sustainability | Entrepreneur | Business | CSR | Social Enterprise | Ethics
 A press release on Canada News Wire mentions that Honda has been, “honoured (sic) by leading publications in Canada and the U.S. for its environmental and corporate social responsibility.” What I found most interesting about the release was not that Honda was named as one of the ten companies receiving honors, but that Toyota, the often-praised ‘leader’ of the pack in environmentally friendly cars, was not on the list. Odd, eh?
A look at the areas in which Honda excelled might shed some light…
“Honda was recognized for its hybrid technology and fuel-efficient cars, its innovative and sustainable manufacturing facilities, and for its aggressive program to significantly reduce energy consumption at its manufacturing sites. Honda was also recognized for eliminating hazardous substances from its production proves and reducing emissions, material waste and energy use. Honda also scored high for corporate governance and corporate social responsibility.”
Switching out “Honda” with “Toyota” would surely still read accurately, right? I certainly think so, and the vast majority of people that are exposed to positive press about Toyota would most likely agree.
So what is the end result? Are we to assume that Toyota is not actually the hybrid-leader the media likes to present? Should we question the validity of the rating methods used to award Honda a top-ten spot? I think we should adopt both viewpoints but also acknowledge one vary glaring reality–substitute “Chevrolet,” “Ford,” “GM” or most any other major auto manufacturer for “Honda” in the above statement, and it will most certainly feel jarring. If you read the above citation with one of those companies listed instead of Honda, perhaps you would assume that it was a joke, or a typo, or even the result of swaths of money being exchanged by Big Auto and Big Media. I would probably have the same reaction.
The bottom line is that both Honda and Toyota, though they are still far from perfect, are really ahead of the pack. True, there are other auto companies coming up with very innovative solutions regarding fuel efficiency and hybrid or alternative fuel, but they simply lack the mass coverage that Toyota has so far enjoyed.
It is hard not to be cynical of giant corporate CSR efforts, but at the end of the day, maybe a strong effort to push other companies into gear is critical to creating substantial long-term improvements. For now, I say congratulations Honda. Keep up the good work.
 Just a quick post to direct your attention to the current print or online edition of the Economist. The leading article, though covering a somewhat stale topic, is well written and insightful (big surprise there…). Take a gander at the online version: Globalisation and the Rise of Inequality: Rich Man, Poor Man. A few passages I found interesting are noted below.
On wage disparity:
“Since 2001 the pay of the typical worker in the United States has been stuck, with real wages growing less than half as fast as productivity… If you look back 20 years, the total pay of the typical top American manager has increased from roughly 40 times the average—the level for four decades—to 110 times the average now.”
On globalization:
“When the jobs going abroad are not whole assembly lines, but bits of departments, how exactly do you pick out the person who has lost his job to globalisation from the millions of people changing jobs for other reasons? And, hardhearted though it may sound, most of the gains from trade and technology alike come from the way they redeploy investment and labour to activities that create more wealth. That, like all change, can be painful; but it is what makes a country richer. A policy locking people into jobs that could be better done elsewhere is self-defeating.”
A suggested solution:
“Instead, the way to ease globalisation is the same as the way to ease other sorts of economic change, including the impact of technology. The aim is to help people to move jobs as comparative advantage shifts rapidly from one activity to the next.”
 Though little time has passed since the closing of 2006, I am just now beginning to reflect on the meaningful and powerful events came to pass during the year. My personal life was certainly packed to the brim with amazing milestones and events including my first full year as a father, an eye-opening trip to China and then another one from one coast of the US to the other, and the completion of my MBA studies.
2006 proved also to be an important year for many of the issues I follow, including the socially responsible investing (SRI) movement. At a time when the public’s knowledge of SRI and related issues such as business ethics, corporate social responsibility (CSR), and renewed concern in corporate governance, seem to be rapidly increasing, so too has its level of related cynicism.
While much progress has been made in bringing greater focus on such issues in the business world and society at large, those critical of the merits of each issue seem to find ample evidence of companies touting their new CSR or ethics programs, yet not practicing what they preach. Nonetheless, along with the inevitable negativity (justifiable and not) comes a host of notable examples of these initiatives actually creating positive change in society.
Social Funds compiled a list of the top five SRI stories of 2006, and all are well worth reviewing. My top pick would be split between the United Nation’s launch of the UN Principles of Responsible Investment (which I blogged about here and here), and Muhammad Yunus being awarded the Nobel Peace Prize.
 Though it appeared below the fold in the Boston Globe’s business section this morning, I feel the recent news that China has unblocked Wikipedia to be very important. In case you missed the details, here are a few articles that provide relevant background:
The news is significant for a number of reasons. The lowering of information control, in a country where specific politically-charged content is monitored and accordingly suppressed, is certainly a compelling story on its own merits. However, there is something larger that cropped up as a result of this event: validity that holding a firm line on ethics can actually work.
“The news appears to vindicate [Wikipedia founder] Wales’s tough stand against Internet censorship. He has said that Wikipedia will not remove articles about subjects regarded as controversial by the Chinese government, such as the 1989 Tiananmen Square massacre.” [Boston Globe]
While the profit-focused decision makers at Google, Yahoo!, Microsoft, Cisco, and other notable multinationals, chose to bend to the Chinese government’s censorship initiatives, Wikipedia held its ground. Executives from the noted companies that chose to prioritize profits, over aiding the control of information access and personal freedom, frequently made the argument that it would be better to have some presence in China rather than none at all. In other words, at least the citizens can search for information using Google, albeit censored, than not with Google at all.
“But major American Internet companies like Yahoo Inc., Google Inc., and Microsoft Corp. have voluntarily censored the Internet content they offer in China, in exchange for the right to do business there. The censorship has been denounced by politicians and human rights groups. The companies reply that it’s better to provide some Internet services to China’s 1.3 billion people than to be frozen out of China altogether.” [Boston Globe]
Curiously, Wikipedia didn’t seem to come to the same conclusion. Censorship of its content was not an option. Whether from a relaxation in control, changing censorship policies, or perhaps a sinister plot to alter entries in China’s favor (as the Boston Globe article sensationally hypothesizes), the country has decided to allow its citizens unfettered access to the Free Encyclopedia.
Corporate executives and shareholders take note…
 B.L. Ochman from EthicsCrisis.com asks a very important and valid question: Are Corporate Ethics Codes Bunk? The short article is an interesting read and points out a few of the major shortcomings of most Ethics Codes:
“Building codes, health codes, fire codes have teeth. Violating them results in legal penalties. But nothing at all seems to happen to those who violate corporate or association codes of ethics, not even a slap on the wrist. If corporate ethics codes are to hold any meaning, they’ll need the force of law behind them. Otherwise. what’s the point?”
I think the statement that ‘nothing at all seems to happen’ is a bit too general, but the point is still quite fair. For Ethics Codes to have any real power or deterrence, clear repercussions must be specified and carried out in the event of a violation.
Often corporations start out with a lot of momentum–they draw up a comprehensive Code of Ethics, issue a press release, and pat themselves on the back. A few weeks go by and though the Code is now posted on the corporate website and available for the whole world to download and peruse, knowledge of its existence within the corporation quickly gets pushed to the side. Perhaps a violation prompts a reference to the Code, but following its corresponding instructions seems like an awful distraction to an already busy workday. Employees start to look the other way, and business as usual returns to business pre-Code.
Critical to the success of implementing an Ethics Code in a corporation is the level and depth of upfront training provided to employees, strength of subsequent and consistent ethics audits, and the extent of support for the initiative from the corporation’s leadership.
Just a quick pointer to one of Michael Standaert’s recent posts: Is CSR Really Taking Shape in China?
I tend to shudder at catchy phrases such as “internet bubble,” “web 2.0,” or “Ajaxified,” but I was unable to come up with a better term for how I have begun to visualize the next level of corporate structure than “Corporation 2.0.” This may not be a new concept, just perhaps a bit more concise and repackaged. After chewing on the moniker for a few days, and cycling through dozens of mental and sketched-out diagrams, I’ve simplified the concept down to the rather elementary doughnut diagram that follows:
Out With the Old…
The old corporate model, more or less, revolved around profit maximization. Profits at any cost, it often seemed. More mature corporations would tend to have a fairly solid corporate governance system in place, but typically lacked any kind of corporate social responsibility initiative or a formalized Code of Ethics.
In With the New…
Times are changing and there is a building consensus that corporations and their profits should be held to a higher standard. Corporation 2.0 is at the intersection of business and social responsibility. In short, as I see things, instead of simply pushing to achieve profit maximization, Corporation 2.0 combines a strong showing from each of the following disciplines to instead generate “ethical profits”:
- Business Ethics;
- Corporate Governance; and,
- Corporate Social Responsibility.
This is most likely not a startling concept to anyone that follows the noted issues, but perhaps the visual links between the three and ethical profits is helpful to view in such a manner. What the diagram strongly conveys to me is that without one of the three key pieces, the corporation will not be able to generate ethical profits–it is only through a strong showing from each of the three that ethical profits can be realized.
For instance, imagine a company with strong and consistent corporate governance, but that lacks a formal Code of Ethics. Without the code, how do employees and stakeholders evaluate ethical dilemmas? For that matter, do they have any idea what the company believes is ethical or not? Without such formal ethical guidelines, can the company truly generate ethical profits?
On the other hand, a strong showing from all three guarantees that the company is generating ethical profits. With strong corporate governance, stakeholders and employees are ensured that the proper checks and balances are in place and functioning correctly. A solid foundation of business ethics described by a formal Code of Ethics makes clear what is acceptable or not, and provides a guide for dealing with any ethical breaches. Strong corporate social responsibility initiatives ensure that the company is taking into consideration such issues as the environment, human rights, and community involvement.
I am hopeful that we will see more and more corporations moving toward the pursuit of ethical profits and I look forward to the day that I start pondering what Corporation 3.0 will look like.
 The bad news continues: Hewlett-Packard Spied on Writers in Leaks [NYT]
Here is a clip from the article:
“The company said this week that its board had hired private investigators to identify directors leaking information to the press and that those investigators had posed as board members — a technique known as pretexting — to gain access to their personal phone records.
“In acknowledging Thursday that journalists’ records had also been obtained, the company said it was apologizing to each one. ‘H.P. is dismayed that the phone records of journalists were accessed without their knowledge,’ a company spokesman, Michael Moeller, said.
“In an interview Thursday about the state’s criminal investigation of the Hewlett-Packard matter, Attorney General Bill Lockyer said, ‘A crime was committed.’ But he added: ‘It is unclear how strong the case is. Who is charged and for what is still an open question.’”
And then more specific information regarding the investigators spying on journalists:
“CNET said Thursday that phone records of two of its reporters, Dawn Kawamoto and Tom Krazit, had also been obtained. It said access to Ms. Kawamoto’s records had been gained from the same Internet address used by the person who accessed the phone records of Mr. Perkins. A caller used the last four digits of her husband’s Social Security number to establish an online account with AT&T to view the records. Access was gained on one date, in late January 2006, it said.
“A CNET spokeswoman, Sarah Cain, said: ‘These actions not only violated the privacy rights of our employee, but also the rights of all reporters to protect their confidential sources.’”
Dr. Cornwall (The Entrepreneurial Mind) made an excellent post about character a week or so ago that I just came across. I have long felt that strong business ethics form the foundation for everything else in business (be it incorporating corporate social responsibility, green initiatives, etc.) and that you can’t accomplish the ‘down the road’ goals without forming a solid ethics base first. A great CSR program means little if your company is dotted with dodgy back-room ethics.
Dr. Cornwall’s post also touches on the duality of character, acting one way at work and another outside of work. I find it fascinating that many people seem to have two personalities (one for employees, bosses and peers, and another for family) and may never understand why such a dichotomy is so prevalent. I strongly believe in consistency of character and really like the way Dr. Cornwall explains the potential conflicts that may arise from dabbling with questionable ethics:
“The truth is, however, that every act, every decision we make, in some way shapes our character. If we act a certain way once, we are more likely to do it again. This is true for good behaviors as well as bad behaviors. If we lie to customers as part of our everyday business, we are more likely to lie to our employees. And if we lie at work, we are more likely to lie to our families and friends.”
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