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  1. 1. ECM December - January FINAL_Layout 1 09/12/2011 13:02 Page 50 50 C-suite Q&A Ethical Corporation • December 2011 – January 2012 Jochen Zeitz, CEO, Sport & Lifestyle, PPR and executive chairman, Puma Traditional accounting is no longer adequate Jochen Zeitz is chief executive of the Sport & Lifestyle Group within the French clothing and luxury goods group PPR, and he is PPR’s chief sustainability officer. He is also executive chairman of PPR-owned Puma, having served 18 years as chairman and chief executive. In 2010, he introduced an ambitious sustainability plan at Puma that aims to reduce carbon emissions, energy and water use and waste by 25% by 2015. Zeitz talked with Ethical Corporation’s Steven Wilding. Additional reporting by Oliver Balch. Jochen Zeitz, PPR and Puma orn in 1963, Zeitz has a degree EC: Puma has set itself tough JZ: Traditional accounting is no B in international marketing and finance from the European sustainability targets for 2015. What’s your thinking behind these? longer adequate for the challenges that we face given the planet’s Business School. On being finite resources and levels of appointed chairman and chief JZ: First of all, we want to be more environmental degradation. As executive of Puma in 1993, he efficient in terms of reducing our corporations, we need to start inter- became the youngest chief execu- impact on the planet. So we have nalising these impacts. That’s the tive of a public company in German targets for reducing Puma’s CO2, reason we’ve created what we call history. energy, waste and water consump- Now we can an EP&L [environmental profit and Among numerous awards, he tion by 25% by 2015. It’s not all visualise the loss] account. We can overlay this has been named strategist of the about efficiency, though. We want with our normal financial year for three successive years by to be more effective too. That impact we are accounting. The basic idea is to the Financial Times. He speaks requires innovating through our having on the value our environmental impact six foreign languages, including products and services, as well as environment in and our use of nature’s services in Swahili. through our production processes. monetary terms. Until now, nobody Zeitz also invented and oversaw We’re trying to find new sustain- dollars and has ever had to pay for these. Now, the introduction of an innovative able solutions rather than just being cents we can visualise the impact we are environmental profit and loss more efficient with what we’re having on the environment in account, first published by Puma in already doing. dollars and cents. That enables us to May 2011. He has since announced start mitigating [our impacts] and that an environmental profit and EC: How do you convince your to find solutions that minimise loss account will be implemented investors of the value of sustain- Puma: these costs. across PPR’s Luxury and Sport & ability? environmental Lifestyle brands by 2015. footprint EC: It’s a bold experiment. How JZ: It’s something that can also Total turnover: €2,706m accurate would you say the final Ethical Corporation: PPR counts a stimulate sustainable growth, not Total environmental valuations are? number of high profile brands just growth per se. In that sense, impacts: €145m within its portfolio. How are you sustainability is part of the story we Core operational JZ: It’s obviously a process and trying to integrate sustainability are constantly telling investors. Not impacts: €8m we are the first to do it. Our across all of these? everyone believes this is the right Supply chain impacts: methodology is very clear and way to go, but as a corporation we €137m we are transparent with our Jochen Zeitz: Every one of our want to be part of a new paradigm Tier 4 (raw materials) methodology. In terms of the final brands has a clear vision in mind: to – a paradigm that moves towards a impacts: €83m figures, we’ve been very conserva- contribute to a more sustainable sustainable way of doing business. tive. So far the feedback has been Greenhouse gas business model. My role is to That’s fundamental to Puma’s incredibly positive. People seem to emissions: €94m engage a framework for imple- strategy – as well as PPR’s – and in believe this is the right way to go. Land use: €137m menting sustainability for all the long run we think it will be The EP&L also opens up our our brands, as well as supervising good for our business. Air pollutants: €11m approach for discussion with other its implementation. This is some- Waste generation: industries and with other compa- thing that I am personally very EC: Puma has taken a lead in trying €3m nies. That helps us to evolve much focused on, together with my to cost out its environmental Source: Puma EP&L and improve our methodology. PPR Home team. [PPR Home is impacts. What’s the motivation for (November 2011) Let’s now hope that others will PPR’s sustainability initiative.] this? follow suit. I
  2. 2. ECM Feb_Layout 1 01/02/2012 11:03 Page 50 50 Columnist: Toby Webb Ethical Corporation • February 2012 NIKADA/ISTOCKPHOTO.COM Emerging markets Top tips for developing economies Toby Webb suggests ten lessons for large companies expanding their sustainability programmes into high-growth markets Lesson one: Corporate responsi- environmental protection to child bility and sustainability issues are education, and often forget they have vastly different around the world. taken hundreds of years and vast This is true even in Europe. There wealth to develop. Expectations, remain huge differences in priori- particularly around behaviour, are Fast movers can be winners ties, for example, between richer, partly governed by them. Yet by northern Europe and eastern and comparison they barely exist else- lobbying influence can often be southern Europe, where many basic where. This has consequences, both easily focused where it can have institutions remain under-resourced. for how companies are expected to most impact. Partnerships with Outside the EU, India is as different behave, and how they might respond NGOs and measurement of the from China as it is from the UK. to play a role in filling this gap. results will always make a greater Everything is local and culture counts. Lesson six: Stakeholders are difference than simply donating Lesson two: Global principles unpredictable. Issues can escalate cash and hoping for the best. with local implementation are the very quickly. Myriad modern Lesson nine: The greener agenda only way large companies can examples demonstrate this is true. is understood and often consumers operate successfully and sustain- Getting the government onside does are less sceptical than in the west. ably. Flexibility for business is not mean your project or investment When HSBC/Climate Group research in essential. The fine balance is between is safe if stakeholder engagement is stakeholder 2010 found that 57% of Chinese global principles and maintaining failing. Vedanta in India, Asia Energy voices and surveyed said climate change is the consistency with both corporate in Bangladesh and Newmont in Peru biggest issue they worry about. values and local expectations. are all cases that demonstrate how protests hit There is often a myth that stake- Lesson three: The world is more quickly stakeholder reactions can shut government holders in emerging economies do left-wing than the UK and US. This down big business operations. When not care about the environment. is often hard to understand for UK stakeholder voices and protests hit popularity, This is totally untrue. They are on companies, and particularly those government popularity or cause corporate the frontlines of pollution, water from the US. Most democracies are major social unrest, corporate influ- influence wanes shortages and climate change. But much more like those of western ence wanes very quickly indeed. they often have less capacity to act Europe than they are the US. This Lesson seven: Culture counts. very quickly or influence. Don’t confuse aware- means a very different set of expec- Local knowledge is essential. An indeed ness and perceived powerlessness. tations. Most notable is the executive in London does not neces- Lesson ten: Get ready for a paradigm that the role of business is sarily understand what people in bumpy road ahead. Global business to serve social structures, not the Yorkshire are thinking. The same is = global complexity. It’s clear the other way around. true of your managers in emerging large companies, now developing Lesson four: Governments are economies. Just because your office in global policies and targets, are just unpredictable on sustainability the capital says it understands what’s beginning to think about how these issues. This is becoming clear to happening in the regions does not will play out on the worldwide stage western companies. This does not just simply make it so. Localised informa- of their operations and sourcing apply to sustainability issues. China, tion is vital to understanding capabilities. One thing is very clear: for example, rules by dictat, and emerging stakeholder risk. there is a difficult path ahead, and companies had better get in line with Lesson eight: Agendas are only consistent research, awareness, the latest pay rise, transparency or mixed, but skills, education and monitoring and stakeholder engage- five-year plan expectations, and fast. jobs are always number one. If there ment will assist firms to navigate to Lesson five: Institutions as we is one common theme that unites lower risk and greater opportunity know them often do not exist. The disadvantaged stakeholders, it is the in emerging countries. I importance of institutions is perhaps basics of life. This does not mean a the most undervalued area within philanthropic focus on giving to Toby Webb is founder and chairman of Ethical the field of global responsibility education projects will maximise Corporation, and chief executive of Stakeholder thinking. We take our essential insti- societal contributions: it won’t. But it COLUMNIST: Intelligence, a research and training firm. tutions for granted, from does mean corporate financial or TOBY WEBB He blogs at
  3. 3. ECP /Nyu: g : q m x vb_Lo.y t r/2//64e 4622//26M 22e 38//a od: /56 30 Columnist: Brendan May Ethical Corporation • November 2011 CLUMPNER/ISTOCKPHOTO.COM NGOs and big business Too close for comfort? Campaigners can wield great power by working with rather than against the companies they want to influence. But they must always stay in control, says Brendan May his issue’s feature on WWF palm oil progress in south-east Asia T explores the fine line NGOs must tread when engaging with big are but a few. And some of the loudest and most valuable endorse- companies. WWF is not alone in ments have come from Greenpeace. finding itself attacked by those Never in exchange for cash, but in Arm’s length is sometimes more effective who believe the conservation exchange for visible progress. movement is at risk of “selling out” Some NGOs settle for less, transparent about the decision- to the extent that it will no longer be participating in tokenistic projects. making process governing which effective. Others act like public relations firms companies it will engage. It should Big global NGOs are particularly – the more money you pay the publish its decisions and the vulnerable here, as Conservation more time and the more senior the reasoning behind them. It should International discovered when one person you get handling your also publish decisions to refuse a of its admittedly junior representa- “account”. This won’t do. corporate engagement. There must tives was taped being rather too not be any perception that working cosy with journalists posing as exec- Transparent objectives with one company in a sector is utives from an arms firm. In order to be a business consul- an “exclusive” arrangement that As with so many things, much of tancy, you either have to be Collaboration bars an NGO from working with the debate boils down to money. It transparent about the fact you’re between NGOs competitors. isn’t engagement per se that bothers out to make money – nothing and business is There must be full transparency critics, it’s the financial transaction wrong with that – or you have to set on financial agreements between that can come with it. Not to very clear boundaries about what critical in the NGOs and companies. This is the mention the apparent endorsement you will and won’t do. Many effort to tackle only way to combat the shroud of that can be “bought”, often in business consultancies themselves cynicism and doubt that endangers exchange for little fundamental do this, so why not NGOs? the planetary big NGOs’ reputations. change in business practices. A possible blueprint a big NGO crisis Partnerships must come with This is one of the strongest argu- might consider to govern its corpo- clear conditions. Recently, Sky TV ments for independent certification rate relationships could be as follows. ran green washing advertisements programmes. Although many Any engagement on a product for Asia Pulp & Paper while dissenters of eco-labels refuse to or issue must be part of a bigger promoting a partnership on rain- accept it, you cannot buy a Rain- process of systemic change across forest conservation with WWF. forest Alliance or Marine the whole company. There needs to Either the ads or the partnership Stewardship Council logo, because be a long-term commitment to should have gone. certification is an arm’s length better performance in the round, Collaboration between NGOs assessment process, with practice including the abandonment of and business is critical in the effort measured against robust standards. unsustainable business practices. to tackle the planetary crisis. Yet even certification systems The NGO must be able to walk Engagement is essential, not least must be careful not to be seen to be away at any point and have clear because government is so funda- piecemeal, allowing a logo on one and published criteria for doing so. mentally useless on so much of the product line while the rest of a Otherwise their credibility has no sustainability agenda. But increas- business carries on pillaging as usual. foundation. We don’t hear enough ingly vocal questions about how Can NGOs ever be effective stories about NGOs walking away. engagement happens are risking a engagers of business without taking The NGO, as well as the return to old debates about the corporate shilling? The Green- company, must report regularly on whether to engage at all. It’s up to peace experience suggests they can. progress, citing real and measurable the NGOs who choose to work with Some of the most significant achievements, as well as failures. business to stop that happening. I sectoral changes have come about The NGO should identify through Greenpeace campaigns. no-go sectors. If there are none, it Brendan May is founder of The Robertsbridge Soy and cattle in the Amazon, tuna should explain why. COLUMNIST: Group, UK chairman of the Rainforest Alliance companies raising their game and The NGO must be fully BRENDAN MAY and a contributing editor to Ethical Corporation.
  4. 4. ECM Feb_Layout 1 01/02/2012 11:02 Page 9 Ethical Corporation • February 2012 EthicsWatch 9 Open access Apple has come out fighting in the face Analysis: partnerships leader and the follower are in the same sector. of criticism of working conditions in its This helps competitors keep pace,” he says. supplier factories, which are mainly Partners in located in Asia. In mid-January the company published a list of 156 facili- sustainability Now for the big boys ForestEthics now has Wal-Mart and US super- ties that provide most of the market giant Safeway in its sights. Both “burn components that go into its products. By Stephen Gardner an enormous amount of gasoline and diesel to The list was published alongside Businesses and campaign groups are rising move their products in huge trucks all over Apple’s supplier responsibility report, above the risks to work together towards North America,” Sanger says. Persuading them which details the 229 supplier audits common goals to change their ways could have a real impact the firm carried out in 2011, the viola- on demand for tar-sands-derived fuel. trategically driven business-type partner- “Because of the corporate sector’s public influ- tions it found of its code of conduct, covering workers’ rights, and environ- mental and ethical standards, and the S ships between companies non-governmental organisations are on the andence and buying power, when large brands take action on environmental or social steps Apple took to rectify problems. rise. Recent research from C&E Advisory, a problems in their footprint, they can help to Apple also said it would let US group sustainability consultancy, found an increase ofbring about practical solutions,” Sanger adds. the Fair Labour Association inde- 10% in such partnerships over the preceding Mauricio Lazala, deputy director of NGO pendently assess the standards of its 12 months, while other types of partnerships the Business & Human Rights Resource Centre, suppliers. Apple’s move showed its declined. says such partnerships are “not necessarily a “commitment to greater transparency”, Business-type partnerships are defined as natural collaboration”. He says such initiatives the Fair Labour Association said. NGOs and companies working together to “require extra efforts on behalf of both the improve corporate practices, or for DAN_PRAT/ISTOCKPHOTO.COM Shoe shop floor social business development – An Indonesian factory producing sports partnerships for greater corporate shoes for Nike has agreed to settle up responsibility, in other words. They with workers for 600,000 hours of contrast with other partnerships, unpaid overtime run up over two such as cause-related marketing, years. The settlement, worth $1m to the simple endorsement or workers at the PT Nikomas plant, was sponsorships. finalised after extensive negotiations Two recent examples illustrate between the factory and the Serikat the trend. First, American NGO Pekerja National trade union. The ForestEthics has worked with victory is partial because workers have banana giant Chiquita to eliminate probably been doing unpaid overtime from its vast transportation fleet fuel for much longer, but Indonesian law derived from Canadian tar sands. only allowed the union to claim for the Tar sands produce “the dirtiest oil on past two years. Nike said it “commends Earth”, the campaigners say, and it Chiquita looking for cleaner energy sources the factory on their action plan and was pushing Chiquita to join other efforts to correct inadequacies”. companies pledging to steer clear of it. The NGOs and the companies” because of their company has now put in place a policy to work different cultures and objectives. There are also Greener skies with ForestEthics to trace its fuel supplies back risks. Some NGOs might “consider that a Flights into, out of and within the to source, and sever links with tar sands crude partnership would undermine the credibility of European Union are likely to be refineries. any subsequent campaigning they undertake in marginally more expensive in 2012 Second, Greenpeace and Facebook have relation to that company or sector ”, and due because of a requirement that agreed to collaborate on a project to switch the diligence is necessary. airlines participate in the EU social network’s data centres to renewable But companies and NGOs recognise that emissions trading system (ETS). energy. The agreement comes in the wake of a each has assets that can produce benefits when Participation means airlines will be two-year campaign to persuade Facebook to combined in partnership, and ultimately both given emission quotas, and must “unfriend coal”, during which Greenpeace have the same objective, which is to operate have enough carbon credits to cover mobilised 700,000 supporters to message, poke effectively within sustainable constraints. them. Most credits are given to and generally pressurise Facebook into Business-type partnerships can be “win- airlines for free but some have to be changing its ways. win”, Sanger says. ForestEthics wants bought on the carbon market, and The campaigns both focused on single, high- companies to “adopt a model of continuous ticket prices will rise as airlines pass profile companies with emblematic value. improvement” in ethical terms. “As long as the the costs on. Lufthansa, for example, ForestEthics director Aaron Sanger says that company continues to make adequate progress, has said it expects the scheme to cost creating such examples can motivate other we will support that progress; and as long as it €130m in 2012, translating into a companies. “It is important for all companies to the company insists on continuing destructive surcharge of €3-€10 for long-haul follow leadership examples, especially if the activities, we will work to change them.” I flights.
  5. 5. Published on Ethical Corporation ( investment: Uncomfortable truthshighlighted by HendersonPosted by Rory Sullivan [1] on Jan 10, 2012The closure of Henderson Global Investors SRI research team raises questions about investmentincentives and motivesIn a recent article [2] for Ethical Corporation, Mike Tyrrell set what he saw as the challenges for thesocially responsible investment (SRI) industry resulting from Henderson Global Investors’ decision toclose its highly regarded SRI research team.Tyrrell’s conclusions were essentially optimistic: that Henderson’s decision was an isolated one(rather than one that had a implications for the wider responsible investment industry), and that wecan rely on responsible investment industry to respond appropriately.While there is much that is compelling about this argument, I am not swayed by his optimism. Myview is that Henderson’s decision actually exposes a set of uncomfortable truths about theincentives for responsible investment, and is likely to tell us much about the real motivations ofinvestors.Incentives for responsible investmentOne of the most common complaints – which is often stated in private but rarely publicly – in theresponsible investment industry is that clients (be they asset owners, IFAs, individual investors) paylimited attention to the SRI activities of their investment managers.Generally, the complaint goes, they offer limited reward for those that do an excellent job ofintegrating environmental, social and governance issues into their investment processes, to thosethat proactively engage with the companies on environmental, social and governance issues, or tothose that offer high quality SRI (or ethical) funds.In fact, the pressures tend to be all in the other direction. There is consistent downward pressure onfees, there is limited explicit consideration of responsible investment factors in investment decisions,and there is limited weight assigned to responsible investment factors inappointment/reappointment decisions. Taken together, these pressures send a signal to investmentmanagers that responsible investment is really not valued by the market.Henderson’s reasoning Were these the realities that Henderson Global Investors encountered? It would be hugely valuableto know what the decision hinged on.Was it primarily about Henderson’s positioning and strategy – where it sees the greatestopportunities going forward, for example. Or was it about operational and resourcing issues –didHenderson’s feel it could add more value to its investment processes through hiring non-SRIspecialists). Or was it about the economic realities of running high quality SRI funds – eg how muchdemand is there for such products, and what does the cost base of such funds look like versus thefees that accrue?Specifically, if it is Henderson’s view – based on one of the most impressive track records in the Cityof London in this area – that the market demand for SRI funds is limited or that the costs associatedwith running such funds outweigh the revenues that such funds can generate, these are hugelyimportant lessons for the responsible investment industry as a whole.Industry response
  6. 6. Published on Ethical Corporation ( Thus far, the response to Henderson’s decision has been predictable: a number of “ethical IFAs” have criticised Henderson’s decision and some have even threatened to move their investments to other investment managers. But, as we all know, there is a significant difference between rhetoric, which is cheap, and action, which may, depending on transaction and other costs, be significant. The questions that investors – both individual organisations such as asset owners, other investment managers and IFAs, and industry groups such as the UN-backed Principles for Responsible Investment – should be prepared to answer are: What are your views on Henderson’s decision? How exactly does Henderson’s decision affect your willingness to invest in (a) Henderson’s SRI funds, (b) Henderson’s other investment products? What changes have you made to your or your clients’ portfolios as a result of Henderson’s decision? If you have moved money out of Henderson’s funds, how much has actually been moved? Of course, this call for transparency is unreasonable. There is no requirement for investors to make this kind of information publicly available (apparently it would undermine the ability of markets to function effectively), and voluntary disclosures never seem to provide this sort of specificity.  This problem is recognised by the Principles for Responsible Investment. Its new signatory reporting framework, which all PRI signatories will be required to report against, is likely to ask questions about how responsible investment-related factors are considered in manager appointment and reappointment processes. This will be in the requests for proposals that are issued, in the contracts that are awarded and in the manner in which investment managers are monitored. The reporting framework also encourages respondents to provide examples of how they have taken these issues into account. A major contribution These comments should not be seen as a criticism of Henderson’s decision. I agree with Mike Tyrrell that we should acknowledge the major contribution that Henderson Global Investors has made to the development of SRI over the past decade, and that we should also allow them the right to make the decisions that they see as in the best interests of their business. Where I disagree with Tyrrell is that the responsible investment industry will respond appropriately. Henderson’s decision provides us with a huge opportunity to dig more deeply into the incentives (or lack thereof) for investment managers and other actors to invest time and resources in responsible investment. This is not yet another call for transparency for transparency’s sake. Rather, it is that we have assumed there is a compelling case for responsible investment and that key actors will take action if/when needed. Henderson’s decision provides us with a real opportunity to test that assumption. If this assumption is not correct, we need to consider how to design rewards and incentives that strengthen the business case for progressive action in this area. Dr Rory Sullivan is an internationally recognised expert on corporate responsibility, climate change and investment-related issues. He is strategic adviser, Ethix SRI Advisers, a senior research fellow at the University of Leeds and a member of the Ethical Corporation Advisory Board. Links: [1] [2] by TCPDF (
  7. 7. Published on Ethical Corporation ( news roundup – February 2012 Posted by EC Newsdesk [1] on Jan 31, 2012Moves from BASF, Apple, Nike and all the latest from other brands in corporate responsibility thismonthIn the pipelineMeanwhile, a controversial plan for a pipeline to send Canadian oil to the Texan Gulf Coastreceived a setback in mid-January when the US president, Barack Obama, denied arequest for a permit. Obama rejected the Keystone XL scheme on a technicalityrelated to a deadline imposed by Congress, and project promoter TransCanada said itwould file a new permit request. There has been widespread opposition to the scheme,including from the American Sustainable Business Council, which said in January that it wouldincrease highly polluting oil production from Canada’s tar sands, and would mainly benefit oilcompanies that would profit from the refining and re-export of the oil. Investment in clean energywould make much more sense, according to the council.Global wish listThe United Nations Rio+20 conference in June – the follow-up to the historic 1992 Rio EarthSummit – will prioritise discussion of 15 broad-ranging issues, according to the conferenceorganisers. The list amounts to a summary of the mega-issues that humanity must deal with if theworld is to be put on a sustainable path, and may give an indication of the areas in whichconventions and commitments might be signed at the conference. The priority issues are chemicalsand waste, cities, climate change, education, energy, food security, forests and biodiversity, genderequality, green jobs/social inclusion, land degradation and desertification, mountains, naturaldisasters, oceans and seas, sustainable development and production, and water. The topic list wasdecided on following a consultation process that included input from business groups.Soy sourceThe Netherlands is backing its pledge to import only responsibly produced soy by 2015 witha €7m scheme that will help farmers in South America gain Round Table on Responsible Soycertification. The money is provided by business groups and the Sustainable Trade Initiative. If theNetherlands is to keep its promise, the amount of certified soy it sources annually will have to risefrom about 500,000 tonnes in 2012 to 1.8m tonnes. Holland is Europe’s biggest soy importer. Thecrop is used in foods and household products, and in cattle feed, but soy production has beenassociated with deforestation, expropriation of lands, and exploitation of workers.Catalogue of catastropheNatural catastrophes cost humanity a record sum in 2011, according to data published byinsurer Munich Re. At $380bn, the economic havoc wreaked by disasters smashed the previousrecord of $220bn in 2005. The most expensive events were earthquakes in New Zealand in Februaryand Japan in March, and extreme flooding in Thailand during the rainy season, which causedextensive and prolonged disruption, including to about a quarter of the world’s computer hard drivecomponent supply. The overall number of events classified as natural disasters was down on 2010,but the overall trend is steadily upwards, driven by more frequent weather-related disasters.Bitter harvestGerman chemicals giant BASF has said it will close down its plant biotechnology business inEurope – because Europeans don’t want genetically modified crops. The company said that BASFPlant Science would relocate to Raleigh, North Carolina, where it would “concentrate on theattractive markets for plant biotechnology in North and South America and the growth markets in
  8. 8. Published on Ethical Corporation ( Asia”. In Europe, “the majority of consumers, farmers and politicians” continued to resist GMOs, according to the company. The move to the US will cost 140 European jobs. Greenpeace said BASF would also find problems outside of Europe, with “China, India, the Philippines, Thailand and elsewhere” also placing limitations on GM cultivation. Green groups attacked Green groups are killers of good energy projects and threaten to undermine Canadian energy exports, the Canadian minister of natural resources, Joe Oliver, has said in a scathing open letter. According to Oliver, Canada’s system for approving projects such as pipelines that would allow energy exports to Asia needs an overhaul because it is full of loopholes that can be exploited by organisations with a “radical ideological agenda”. Environmental campaigners “attract jet-setting celebrities with some of the largest personal carbon footprints in the world to lecture Canadians not to develop our natural resources”, Oliver says. If that fails, they will “take a quintessential American approach: sue everyone”. Canadian opposition MPs and groups such as Greenpeace have criticised the remarks, saying that they served the interests of oil companies. Open access Apple has come out fighting in the face of criticism of working conditions in its supplier factories, which are mainly located in Asia. In mid-January the company published a list of 156 facilities that provide most of the components that go into its products. The list was published alongside Apple’s supplier responsibility report, which details the 229 supplier audits the firm carried out in 2011, the violations it found of its code of conduct, covering workers’ rights, and environmental and ethical standards, and the steps Apple took to rectify problems. Apple also said it would let US group the Fair Labour Association independently assess the standards of its suppliers. Apple’s move showed its “commitment to greater transparency”, the Fair Labour Association said. Shoe shop floor An Indonesian factory producing sports shoes for Nike has agreed to settle up with workers for 600,000 hours of unpaid overtime run up over two years. The settlement, worth $1m to the workers at the PT Nikomas plant, was finalised after extensive negotiations between the factory and the Serikat Pekerja National trade union. The victory is partial because workers have probably been doing unpaid overtime for much longer, but Indonesian law only allowed the union to claim for the past two years. Nike said it “commends the factory on their action plan and efforts to correct inadequacies”. Greener skies Flights into, out of and within the European Union are likely to be marginally more expensive in 2012 because of a requirement that airlines participate in the EU emissions trading system (ETS). Participation means airlines will be given emission quotas, and must have enough carbon credits to cover them. Most credits are given to airlines for free but some have to be bought on the carbon market, and ticket prices will rise as airlines pass the costs on. Lufthansa, for example, has said it expects the scheme to cost it €130m in 2012, translating into a surcharge of €3-€10 for long-haul flights.  Links: [1] by TCPDF (
  9. 9. ECM Feb_Layout 1 01/02/2012 11:03 Page 33 Ethical Corporation • February 2012 Columnist: Peter Knight 33 IVELINRADKOV/ISTOCKPHOTO.COM Letter from America Strategic cathedrals of confusion Sustainability strategising is all very well, but it needs to be properly focused, argues Peter Knight f the economy smiles kindly on that deconstructs the problem and I America this year, expect a rash of sustainability strategies as more provides a diagnosis. Only when you know the extent of the problem can companies engage with the issue. you can work out what needs to be But the problem is that what poses done (your actions) to find a solution. The right strategy can be game changing as strategy is often nothing more than Approach – Before you make sloganeering. This is because strategy your action list, you need to decide company cannot grow unless it is much like love: a word widely used on how you will approach the tackles the negative impact of ever- to create cathedrals of confusion. necessary actions. This is your style, increasing consumption. A so-called sustainability strategy your attitude, your principles that GE’s Ecomagination, while could be as follows. will govern the way you implement highly imaginative and effective, is • An operational strategy that your actions. more of a marketing umbrella than ensures your business contributes Defining your approach is a true strategy. Ecomagination – as to sustainable development. This important because it helps you with IBM’s Smarter Planet – should be the real thing. implement the actions, especially successfully tackles the problem of • A marketing strategy to comm- when things get rough. For example, market perception by bundling unicate your sustainability efforts your diagnosis could be that you are A true related product lines under a to a mass audience. Slogans are losing market share because you sustainability snappy brand. But there is no important here, like Ecomagination have the wrong product lines to strategy will strategy to deal with the intractable and Smarter Planet. meet changes brought on by, say, problems of adapting the company • A stakeholder communications rising energy costs. This could mean be difficult to to a sustainable path. This in no way strategy – a plan to ensure that certain lines will have to be differentiate diminishes the value of a branded influencers (eg NGOs, investors, dropped, and with them go jobs. bundle, but it would be wrong to raters/rankers, policymakers) are Your approach – your principles – from a good pass these marketing ideas off as well informed about your will define how you deal with those business sustainability strategies. sustainability efforts. job losses, and will help you remain strategy US companies – even during the • A sustainability reporting strategy resolute in implementing your recession – have made great strides in – a plan that defines how, and planned actions. recognising the business importance how thoroughly, you report on Action – Only after you have of sustainability. Steadily increasing your sustainability performance. completed your analysis, diagnosed numbers of significant companies are • None of the above, but merely a list the problem and agreed on your now world-class sustainability of vague sustainability promises approach do you create your reporters and are starting to make a branded as a strategy. actions. This is when you set your bigger play in their marketing long-term goals, short-term targets communications about sustainability. When talking strategy it pays to and plans to create the change that It is looking likely that the US be clear what you mean by the is needed. So many “strategies” are economy will actually grow a little word. For clarity, a strategy contains simply arbitrary lists of actions this year. With the American natural three essential and related elements, without the context of the analysis bent to big things up, we could see a the Triple A: analysis, approach and and diagnosis. rash of sustainability “strategies” action. A true sustainability strategy will launched in the coming months. Analysis – A strategy tackles a be difficult to differentiate from a But it is likely that most of these problem. How do we revise insurance good business strategy. For example, “strategies” will be little more than algorithms to accommodate climate DuPont and Dow see the demands marketing feel-good concepts: slogans change? How do we expand without of sustainability shaping their for a better world. Let’s hope for more decoupling growth from the negative markets and determining their than that. I impact on the planet? product offerings. Unilever ’s These are very big problems. Sustainable Living Plan goes to the Peter Knight is president of Context America. That’s why the first step in heart of its business and diagnoses COLUMNIST: developing a strategy is deep analysis the problem as one where the PETER KNIGHT
  10. 10. ECM Feb_Layout 1 01/02/2012 11:03 Page 46 46 Review Ethical Corporation • February 2012 Sky Bigger Picture Review 2011 Elephant-sized cloud in the Sky By Peter Mason Sky reports impressively, if avoiding any mention of its company chairman ou will search in vain for mention of James challenges during 2011. For example, we discover Y Murdoch within the 117 pages of UK television company Sky’s latest corporate responsibility that there was a rise in employee absence figures during 2010-11, but we are offered no interpretation, report, even though he is chairman of BSkyB (which discussion or comment other than that Sky “will seek trades as Sky). to address this in the coming year”. Snapshot To be fair, the Bigger Picture Review covers the year to June 30 2011, a period that did not fully Easy ride? Follows GRI? Yes, GRI embrace the unsuccessful investor initiative to oust More evidence of Sky giving itself an easy ride Content index published Murdoch over concerns that his links to the phone- emerges in the environment section, where the for the first time this year. hacking scandal at News Corporation would damage review describes the company’s 10 green targets C (self-declared). BSkyB’s reputation. But a more ambitious as “very challenging”. Figures in the data Assured? Yes, for community organisation may have bitten the bullet and at least section suggest otherwise. Sky has set itself a target and environmental data. alluded to the affair. of a 20% increase in energy efficiency by 2020 on a Materiality analysis? Yes It will be interesting to see how Sky tackles the 2008-9 baseline, yet it has already comfortably Goals? Yes subject in next year’s report, if at all. Looking at this exceeded that figure – with eight years to go. It Targets? Yes, but mainly year ’s document, the suspicion is that it will be wants to cut CO2 equivalent emissions by 25% on the environment. brushed under the carpet. by 2020, yet had already made reductions of 19% by Stakeholder input? Yes Why does this feeling arise? Sky has been mid-2011. Seeks feedback? Yes producing generally commendable reports since The over-riding sense that Sky would rather not Key strengths? Good 2002, yet one gets the sense that it would always look too critically in the mirror takes away from what structure, clearly presented rather accentuate the positive than contemplate is in many aspects an impressive report. As one and well written. anything of a negative hue. This is a common and would expect from a broadcaster, information is well Chief weakness? Lacks a understandable corporate trait. But unfortunately presented, nicely illustrated, clearly written for the warts-and-all approach. the tone of Sky’s report suggests the relentless most part, and almost entirely jargon-free. It’s an Pleasant surprise? positivity is underscored by a degree of self- easy read. Impressive amounts of data. satisfaction. The PDF version hangs together well, even if its web counterpart is rather less cohesive and tends Influence outreach towards duplication of information. Aside from the This is partly evidenced by the opening statement of written material there is plenty of useful data – chief executive Jeremy Darroch, who proclaims including a helfpul snapshot of performance against confidently that “with our own house in order” Sky key financial indicators. now needs to focus its attention on influencing the Throughout, there is a clear sense of what Sky Sky needs to ask behaviour of others. Even if this rightly recognises wants to achieve and how it wants to get there, aided that as a UK and Irish broadcaster, one of Sky’s key and abetted by a sensible framework articulated early questions about contributions is the persuasion it can wield through in the document. In many places the review sets out whether it is really its programming and community efforts, it sounds the business case for making social and making the great dangerously complacent. It may also explain why the environmental improvements very clearly. Bigger Picture Review gives only brief attention to It also ably demonstrates that there is much for progress it seems some areas of potential impact that deserve more Sky to be proud of. The company has racked up some to think it is consideration. impressive achievements, and a corporate There is, for instance, just one brushstroke responsibility report is of course the right place to paragraph on responsible gambling, even though showcase these. Sky, through its Sky Bet subsidiary, is now a major But Sky should leaven this information with more player in the UK’s sports betting market. And there is self-examination. It needs to ask questions about nothing of any note on the journalistic standards of whether it is really making the great progress it Sky’s news coverage, despite the debate raging on seems to think it is making, and to look more deeply this – not least because of News Corporation’s for potential problems hiding around the corner. If it Peter Mason is client director failings. can do this then it will improve its reporting at Context. This air of “all is well, don’t worry” extends to the immeasurably. It might even pluck up the courage to review’s treatment of various setbacks and mention Mr Murdoch. I
  11. 11. ECM December - January FINAL_Layout 1 09/12/2011 13:01 Page 27 Ethical Corporation • December 2011 – January 2012 Columnist: Peter Knight 27 Letter from America Small is hitting the bigtime Peter Knight says straitened circumstances might inadvertently lead the average American to a more sustainable lifestyle t the New York cupcake chain itable monsters that epitomised the A Melissa you won’t find any of the monster cakes popularised in American dream. This attitude changed dramatically following the Sex and the City. Melissa makes General Motors and Chrysler colourful cakes no larger than a bailouts. Ford survived without J-Lo’s watching her footprint chocolate truffle – perfectly formed government money, largely micro-cakes that sell for a dollar because it was better connected to trend to big drinks – or “gulp” sizes. each and can be consumed in one, its markets and had smaller, more In government, both state and swift, guilt-free mouthful. fuel efficient vehicles to offer a cash- federal, small is definitely trending Melissa is not alone, merely ahead strapped nation facing ever-higher big. Under relentless pressure from of the culinary fashion curve, which gasoline prices. fiscal conservatives, libertarians and started with something called “small One of the best-selling domestic the far-right Tea Party, legislators are plates”. Conventional American cars is the Chevy Cruz that appeals trying to cut the size of government, restaurants used to pride themselves to commuting drivers who have to and in so doing, shrink the deficit. on serving jumbo portions. A chef ’s cover considerable distances. The Small government is hot at the salad, for example, contained so recently launched Chevy Sonic has moment, and calls for it to get much, much finely chopped iceberg lettuce received wide acclaim because it Past excesses much, smaller play very well in that even a hungry goat would looks good, has a bit of zip and is have battered Peoria. Presidential contender Rick demand a doggy bag. well appointed inside. All those the economy and Perry’s now famous brain freeze High-end chefs came up with attributes were lacking from earlier, during a TV debate was triggered by the wheeze of small plates, a sort of ghastly small-car offerings from GM. Americans are his inability to remember the three tapas arrangement that forced you shrinking their departments of federal government to buy lots of individual dishes in Low-emission diva that he was promising to cut. order to have a moderate meal. The And guess who is selling the Fiat consumption A nation eating smaller portions practice – excellent for the waistline 500 in television ads? Jennifer simply to get by from smaller plates, driving smaller but terrible for the wallet – is firmly Lopez. In the old days, this super- cars while drinking smaller Cokes, embedded in US cities. star diva would not have been seen and being ruled by a smaller govern- But the question is how will small in anything smaller than a Range ment sounds rather sustainable. But plates play in Peoria? This saying – Rover, the essential blacked-out unfortunately the slimming of the equivalent of the Man on the transport for urban pop stars. But America has got nothing to do with Clapham Omnibus in the UK – now we can watch J-Lo driving her the realisation that the world’s emerged during the variety era when Fiat back to her old ’hood where she dominant economy should really troupes would travel from New York and the itsy-bitsy 500 are adored by reduce the size of its bloated envi- to Chicago, stopping to test their acts the street kids. ronmental footprint for the greater in this Illinois manufacturing town A Fiat 500! In America! In the good of the planet. That could be the situated in the agricultural heartland ’hood! Truly A-mazing. consequence but it’s not the impetus. of the mid-west. Reflecting this social acceptance Small is big in America because On a recent visit to Peoria I asked of small from a totally different angle past excesses have battered the about the fortunes of a newish is the national icon of Coca-Cola, economy and Americans are “locavore” restaurant – specialising which proudly advertises its smaller- shrinking their consumption simply in locally sourced products – that portion drinks, or what it calls its to get by. The good news is that this had been favourably reviewed in “mini can”. You can now get 7.5- will benefit the environment while the Wall Street Journal. Apparently ounce (220ml), 90-calorie serving of helping the nation adapt psycho- it is doing very well, but diners note Coca-Cola, Cherry Coke, Sprite and logically to playing a smaller role in that the delicious portions are Fanta Orange. This shift was a the world. Make mine a single. I disturbingly small. response to pressure from the health Cars are shrinking too. Detroit lobby, which is concerned about the Peter Knight is president of Context America. used to hate small cars, much role of sugary drinks in obesity. The COLUMNIST: preferring the thirsty, more prof- drive to small reverses an earlier PETER KNIGHT