Business News

The Global Ethicist

Take it from the top By *Andrea Bonime-Blanc It’s easy to think the reputational buck stops with the chief executive. But even the CEO is accountable to the board, which needs to keep a close eye on more than just the money, says Andrea Bonime-Blanc. The proliferation of scandals involving executive malfeasance that have graced countless global newspapers, book covers and websites in this century alone is mesmerising. It began with Enron, WorldCom and Parmalat at the turn of the century, continued with Siemens, DaimlerChrysler and Boeing, and culminated (one hopes) over the past five years with almost every financial institution on Wall Street and in the City and beyond creating the second worst global financial meltdown in human history. Scandal and malfeasance may be one of the hallmarks of our time, perhaps only second to the massive disruption of the digital media age. In fact the two are linked, as instantaneous communication has contributed to the uncovering and rapid publicising of massive scandals (Libor comes to mind). So, in such a tumultuous world, who is responsible for creating and maintaining an organisation’s reputation? It starts not just at the top – the chief executive – but at the tippy top: the board of directors. For too long, boards have given themselves a pass on this account, often because the board’s chairman is also the chief executive. It is, however, the board (of any form of organisation – for profit, non-profit, academic or governmental) that must hold the chief executive accountable for achieving the proper financial and reputational results. The proverbial ‘buck’ has to stop somewhere. One thing is clear. Sizeable scandals do not originate at the shop floor or the accounting department, they are not schemes concocted by low- or mid-level employees. They are high-level scandals that begin and […]

What does a sustainable organisation look like?

The most frequent introductory question I am asked as a strategic sustainability consultant is: what on earth is that? My simple response is that I help make organisations more sustainable – which is usually met with a fractionally less blank expression than before I replied. The problem we have, in my neck of the sustainability woods, is that most people have been led to think that the only measures of sustainability are energy/carbon and waste; with water perhaps sliding in from the wings making a more recent appearance. Yes of course it is true that understanding these impacts and reducing them is the backbone of a more sustainablebusiness. However, trying to achieve this sequentially looking at each impact in turn, as appears to be the norm, is likely to yield fragmented and unsatisfactory outcomes in our brave new world. The reason is that, like it or not, the resource issues we face in the coming decades will not be solved with tidy little incremental improvements. So whilst it is great to see businesses engaging with the issues, they won’t thank people like me for presenting the tasks through rose-tinted glasses. It’s tough out there and the companies that will survive and thrive are those who look at the whole business; looking at all the issues simultaneously and holistically and then developing a clear plan to resolve them in an integrated way. To some this might seem overwhelming – so isn’t it better to look at one thing at a time and move on to the next issue? Logic might suggest yes; but here’s the rub. Let’s assume your business takes the singular approach. Let’s start with energy. We all know there are some great ‘quick wins’ to be had in areas like lighting, boilers and refrigeration. Let’s assume the estate/facilities […]

Land grabs and fragile food systems

Farmers around the world are having land they’ve worked for generations taken from under their feet. IATP has worked on trade and agriculture for more than 25 years. In all that time, consistently arguing that trade agreements need to respect and promote human rights, not drive a process of globalization that privileges commercial interests and pushes public interests aside. Globalisation enshrined in thefreetrade and investment agreements of the 1990s and 2000s have led to yet another manifestation of commercial interests trampling human rights: land grabs. ‘Land grabs’ is a term coined by the media to describe large-scale purchases or leases of agricultural or forest land on terms that do not serve those already living on the land. There is a large and growing body of literature-academic and more popular-on land grabs. Two forces have contributed significantly to the problem: First, globalisation-more specifically, the deregulation of trade and foreign investment laws, which has greatly eased cross-border capital flows, relaxed the limits on foreign land ownership, and opened markets to agricultural imports. And second, the failures of the international trading system during the food price crisis of 2007-08, which eroded the confidence of food import dependent countries in international markets as a reliable source of food and fed both speculative investment and investment in actual food production. This loss of confidence is compounded by climate change and the resulting destabilisation of weather patterns, which has resulted in less predictable agricultural production. Between 1995 and 2005,Ê90 percent of natural disasters were weather related (floods and droughts as opposed to earthquakes and volcanoes). Climate change is making domestic food supplies less certain and affecting major producers for export, too. The United States lost 40 percent of a record large number of acres planted with maize to drought in 2012. That loss of confidence has […]

Oil Industry climate risks

Oil giants are failing to disclose to investors the risks posed by climate change, a new report finds Major oil and gas companies are failing to tell investors about the full risks related to both climate change and new forms of resource development, according to a damning report from Ceres, an influential Boston-based coalition of investment and public interest groups. The report looks at the first quarter 2011 Securities and Exchange Commission filings of 10 companies – Apache, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Marathon, Shell, Suncor and Total – and grades the quality of disclosures across issues such as deepwater drilling safety, and preparedness for climate regulation. Of 60 climate-related disclosures, it classed only five as ‘good’, with 34 deemed ‘poor or no disclosure’. Of 50 deepwater drilling rates, it says only four were ‘good’, with 29 ‘poor or no disclosure’. None of the disclosures was rated ‘excellent’, meaning even the best companies could do better. Ceres says energy companies have taken on increasingly risky projects, without updating investors of the potential liabilities. The Deepwater Horizon disaster – which cost BP $86bn when including the effect on its share price – showed the potential impact of the new types of exploration, it says. “While companies are making extensive capital investments related to climate change and deepwater drilling that carry material financial risks, they are generally failing to adequately disclose them consistent with SEC rules and growing investor expectations,” the report says. In fact, BP comes out better than most on deepwater disclosure. It gets ‘good disclosure’ marks in four of five categories ÐÊthough Ceres says there is still room for improvement. “Since [Deepwater Horizon] they’ve had 86bn reasons to concentrate very intently on offshore safety, and that’s reflected in their improved disclosure,” says Andrew Logan, director of Ceres’s oil and […]

The power under the ocean

Japan is known to be a country with few natural energy resources. Her current energy self-sufficiency rate is only 4%, although it is normally closer to 20% if nuclear power stations, currently almost all off-line, are included. Japan depends on oil for more than 50% of the energy supply, importing about 90% of it from the Middle East with all the political and security risks to stability of supply involved. Under these circumstances, Japan has been expanding her horizons in the search for sources of energy. Through marine research, the seabed around Japan has started to show the first glimmers of being an unopened treasure chest of potential energy. Methane hydrate, otherwise known as ‘Burning Ice’, is the only energy resource mined in Japan apart from coal. Experimental drilling off the Atumi peninsula ran from February to March this year as part of a national research project. According to the published results, the volume of methane hydrate deposits is estimated to be the equivalent 90 to 100 years of Japan’s natural gas consumption. There are substantial reserves of methane hydrate between 100 to 300 meters from the seabed in the sea off Niigata and around the East Nankai Trough. Developing this field would be the world’s first trial of offshore production of methane hydrate. Japan Oil, Gas and Metals National Corporation (JOGMEC) research organisation under the Ministry of Economy, Trade and Industry has led this project, supported by the deep-sea scientific drilling vessel ‘Chikyu’, operated by Japan Agency for Marine-Earth Science and Technology (JAMSTEC) under Ministry of Education, Culture, Sports, Science and Technology. There are still a lot of issues to be resolved before industrial production can begin, such reduction of mining costs, but the Government has high expectations. The Chikyu research vessel has made a number of other significant […]

Rainy Brain, Sunny Brain

By Elaine Fox $34.99 Random House This is a fascinating, informative and uplifting popular science book exploring optimism and pessimism. The author looks at why some of us are innately optimistic or pessimistic (including notorious extremes such as Michael J Fox), how emotions such as fear, anxiety and pleasure play out in our brains, and – most excitingly – how each of us can ultimately develop a more positive outlook. This is pop science at its most accessible, and while Elaine’s overall message is positive, she’s careful to debunk many of the myths of ‘instant happiness’ or ‘positive psychology’. Daniel Goleman’s Emotional Intelligence or Jonah Lehrer’s How We Decide. So there’s an element of e.g. Barbara Ehrenreich’s Smile or Die: How Positive Thinking Fooled the World, Oliver Burkeman’s Help! how to become slightly happier and get a bit more done

Businesses not adapting to climate change

Companies are failing to develop the resilience they will need to cope with climate change, say two business experts from The University of Queensland. Dr Martina Linnenluecke and Professor Andrew Griffiths of UQ Business School have spent 10 years working with businesses to develop climate change strategies. “Companies should be planning now to safeguard their long-term future,” Dr Linnenluecke said. “Climate change is upon us but the business community has not yet fully considered the implications. “Some firms are reducing greenhouse gas emissions, but there has been little discussion of how to cope with the physical impact of climate change. “Temperatures are gradually rising, but even more concerning is the increase in extreme weather.” Storms, floods and other climate events were likely to be more damaging for businesses than higher temperatures, and few areas would escape the effects. “Even where businesses sustain no direct damage, they are likely to be affected by power cuts or damage to infrastructure,” Dr Linnenluecke said. “With companies increasingly reliant on high-tech systems, any outages can result in large-scale disruption.” Dr Linnenluecke and Professor Griffiths’ book, The Climate Resilient Organization, argues that businesses have two courses of action: reducing greenhouse gas emissions to try to prevent further climate change, and adapting to change. “We say companies need to do both,” she said. “Unless we make attempts to avert climate change, it could become so severe that we will be unable to adapt at all. However, even with the most stringent efforts, we cannot fully avoid the impact. “We will have to learn to adapt to gradual changes, such as the rise in temperatures, and also build the resilience required to be able to recover quickly from extreme weather incidents.” Dr Linnenluecke said companies also should look at how they could take advantage of any opportunities associated […]

Great by Choice Uncertainty, Chaos and Luck

Morten T. Collins Jim/Hansen Random House $60 Following on from the worldwide bestseller Good to Great, Jim Collins returns with another groundbreaking work, this time to ask: Why do some companies thrive in uncertainty, even chaos, and others do not? In Great by Choice – based on nine years of research, buttressed by rigorous analysis and infused with engaging stories – Collins and his colleague, Morten Hansen, enumerate the principles for building a truly great enterprise in unpredictable, tumultuous, and fast-moving times. No mere sequel, Great by Choice distinguishes itself from Collins’s prior work by its focus not just on performance, but also on the type of unstable environments faced by leaders today. With a team of more than twenty researchers, Collins and Hansen studied companies that rose to greatness – beating their industry indexes by a minimum of ten times over fifteen years – in environments characterised by big forces and rapid shifts that leaders could not predict or control. The research team then contrasted these “10X companies” to a carefully selected set of comparison companies that failed to achieve greatness in similarly extreme environments. The study results were full of provocative surprises, such as: * The best leaders were not more risk taking, more visionary, and more creative than the comparisons; they were more disciplined, more empirical, and more paranoid. * Innovation by itself turns out not to be the trump card in a chaotic and uncertain world; more important is the ability to scale innovation, to blend creativity with discipline. * Following the belief that leading in a “fast world” always requires “fast decisions” and “fast action” is a good way to get killed. * The great companies changed less in reaction to a radically changing world than the comparison companies. The authors challenge conventional wisdom […]

Environmentalism Lost and Found

Mainstream environmentalism is preoccupied with giant technofixes – from windfarms to ‘sustainable consumption’ – and pays almost no attention to the underlying cultural reasons why our civilisation is destroying the planet. Somewhere along the way of observing and experiencing the degradation of the planet, environmentalism morphed from being a project designed to protect the wider natural world from destruction by human industry, into a project that exists to protect the lifestyles of middle-class consumers in as ‘sustainable’ way as possible. We are kidding ourselves that we will not have to radically change our ways; if oil, food and commodity prices keep on rising, then localisation will happen, if not for economic rather than simply sentimental reasons. The effects of the 2008 collapse are still playing themselves out, but globalisation is already in retreat. In ten years time, the world will look very different. By acting now, rather than waiting for systems to fail catastrophically and force our hands, the long-term future for renewal can be extremely bright. Ridiculously high land property prices and entrenched land ownership patters are major obstacles preventing an intelligent use of our countryside today, but as a greater majority of the world’s population migrates towards urban living, cities must regenerate and reinvent themselves. But the exciting thing about cities is their dynamism and agility in adapting and renewing themselves, absorbing new ideas and becoming more enjoyable places to live and work. The new element in the mix is climate change, and so all development must now embrace social, economic and environmental sustainability. Consumers have traditionally expected governments to take the lead in protecting the environment, but now they are looking more to the corporate world to take action, rather than individuals with political influence. Increasingly, Asians want economic growth but believe it should be achieved through […]

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