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EC – Analysis Pack April 2014 PRINT 30 percent Discount_Layout 1 07/05/2014 18:33 Page 1

"Had we taken
adequate security
provisions?
Regarding
horsemeat, yes"
In the two years since Sainsbury’s launched its
20x20 sustainability plan, the UK retail sector has
had to deal with the horsemeat scandal and come to
terms with ever-more engaged and informed
consumers, armed with Twitter accounts. How
much progress has the UK’s second largest retailer
made in those two years, and what are the high-
lights of the 20x20 plan’s latest update? We ask the
man at the top.
Ethical Corporation: Recently there seems to have been
a continuous catalogue of scandals affecting the food retail
sector. Do you feel you always have to be on your guard?
Justin King: It’s never been any different. Social
media means things happen more quickly now. But
we can react more quickly too – and we are kept in
touch with customers better. A few years ago we’d
hear about a developing problem once we’d had a
few letters about it. But now people can react to a
Twitter feed, and we can respond and solve the
problem.
EC: Having customers with Twitter accounts must have
radically changed your communications strategy. How do
you keep up?
JK: We had a coffee machine blow up in a
store – from a manufacturing error. I happened to
be in a board meeting at the time and I received a
message from my son saying he’d heard about an
explosion at one of our stores. Then as I put my
phone down, the news came to us from a colleague,
and I was able to say that I already knew! Someone
in the store had seen what had happened, tweeted
it, and then it had been re-tweeted until my son had
spotted it. Luckily no one was seriously hurt but this
shows how quickly we need to react to these things.
EC: Talking of quick reactions, when the horsemeat
scandal broke did you know that there was none in your
supply chain?
JK: Well, you can’t test every beef burger. I look
at it this way: you live in a street, and one of
your neighbours gets burgled. You then say to
yourself, have I taken adequate security provisions?
And our answer in the horsemeat problem was yes.
Then, as you find out how that house was broken
into, you begin to ask questions to make sure that
your arrangements are as good as they can be. But
as we’ve been testing for DNA and for country of
origin for several years, we could be confident that
we were in as strong a position as we could be.
A second point is that the problem was in a raw
material – recovered meat – that we don’t use as we
don’t think our customers would think it was
acceptable in a beef burger.
Thirdly – and this was the area where no one
could be 100% confident – is the problem of
potential cross-contamination. If your products are
coming from a factory where someone else’s
contaminated products have been processed then
cleaning regimes may not necessarily save you.
CEO interview: Justin King, Sainsbury’s
Values that add value
By Ian Welsh
Shortly before personally launching the recent update to Sainsbury’s ambitious 20x20
sustainability targets chief executive Justin King spoke to Ethical Corporation
SAINSBURY’S
2 Strategy and management Ethical Corporation • December 2013-January 2014
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Strategy and management 3Ethical Corporation • December 2013-January 2014
There is always the possibility of microscopic levels
of cross-contamination. But consumers are more
concerned about the actual ingredients in products
[than microscopic levels of DNA].
In the end none of our products were affected.
EC: What do your customers want you to do now?
JK: For us, it’s pleasing that our systems have
proved robust and that our supply choices have
been validated. Our suppliers should be congratu-
lated that there was no cross-contamination into our
products.
We need to be able to show our customers that we
have been asking the right questions before an issue
becomes a problem for them. It’s the actions you take
when they are not forced upon you that most give
customers confidence. So our customers asked us
“you were checking, weren’t you?” and we were
able to say “yes, we’ve been doing so for 10 years”.
EC: Your sustainability targets are ambitious. What was
the reasoning behind them?
JK: The reason we created the 20x20 targets is that
we felt as a business that we were doing quite a lot
in terms of sustainability but that we needed a
clearer destination in mind.
If targets are too far off then they don’t galvanise
you into action now. Or they are so big that they
seem impossible to achieve. On the other hand, if
you can plan out how you are going to get there
then they can’t be that stretching. We have given
ourselves time to develop new ways of working –
simply doing more of the same wasn’t going to be
enough.
EC: You are now developing your own certified sustain-
ability standards. Why do you feel you have to do this?
JK: One of our commitments – sourcing with
integrity – is that all of our major raw materials will
be sourced to an independently verifiable standard
on sustainability.
There are a number of standards that are well
recognised by consumers that work well in certain
product areas – good examples are Fairtrade for
coffee, tea and bananas, or Marine Stewardship
Council for fish. And we’ve taken leadership posi-
tions – we are already the biggest Fairtrade retailer
in the world, and the biggest MSC retailer in the UK.
But the existing standards don’t cover all the
bases. If we wait until 2020, many of the materials
we source still won’t have an independent verified
standard.
EC: So what you are doing is filling in the gaps?
JK: Yes, but we also want to challenge the existing
standards. As a participant in so many, we think that
they can go further. Fairtrade, for example, has an
opportunity to be about more than just a fair price.
In fact, it is already. But consumers don’t yet fully
understand that it’s about more than just a fair price
– there are wider issues about ethical treatment of
employees around safety, for example.
The principle means that we need to work with
other parties to develop the standards – something
we will announce over the coming months.
EC: Is this about bringing certification to scale? A big
problem for some other standards is that there isn’t
enough certified produce to meet demand.
Sainsbury’s 20x20 plan
Launched in 2011, the 20x20 plan details 20 stretching
sustainability commitments Sainsbury’s will work to
achieve by 2020.
The commitments are spread across five “values”:
• Best for food and health
• Sourcing with integrity
• Respect for our environment
• Making a positive difference to our community
• A great place to work
The commitments cover issues including lower salt
levels
in food, zero waste to landfill, an absolute 30% reduc-
tion in carbon emissions and sourcing “key raw
materials” sustainably. Sainsbury’s has announced the
development of a new independent sustainability
standard that will certify raw materials that are not
covered by existing schemes.
"We need to
show we have
been asking the
right questions
before an issue
becomes a
problem"
Be a step ahead, but no more
SAINSBURY’S

JK: Our starting point is scale. When we decided to
go to 100% Fairtrade bananas in 2007, we realised
that it would require 70% of all bananas certified as
Fairtrade at that time. So we worked with partners to
convert the entire crop from the Windward Islands
to Fairtrade. It changed the system – meaning that
the incremental cost of being Fairtrade came down.
EC: What about 2050? Given the climate predictions –
not least from the Intergovernmental Panel on Climate
Change – for later in the century, how are you securing
your supply chain beyond 2020?
JK: There isn’t anything that we will do differently in
the next five to 10 years that would change on the basis
of thinking about 40 years ahead. We believe that, in
the foreseeable future, supply chains will not continue
automatically to present to us products of the quality,
sustainability and affordability that the consumer
demands today. And we need to make the right invest-
ments now. It’s no good arriving at 2025 and saying, if
only we’d thought to start the journey back in 2013.
None of the big issues are necessarily imminent, but
there are reminders of how close they are.
For example, in 2008 Thailand and India
temporarily banned the export of basmati rice, for
domestic reasons, so there was none coming from
these countries to the UK. Because we had a tight
supply chain into Italy, which is the other place you
source basmati rice, we were able to sell it throughout
the period of the export ban. Now if you had said in
2006 that you wouldn’t be able to source basmati rice
in two years’ time from Thailand and India, everyone
would have said “I can’t imagine the circumstances
in which that would happen”, yet it did.
EC: So you are thinking further ahead, but 2020 is the
convenient target?
JK: Yes it’s close enough that we have had to start
doing things now, and far enough away so that we
can set stretching targets but not ones that are so
impossible to achieve that we can’t even begin to
think about how to achieve them.
EC: What do your customers think?
JK: In terms of communicating with customers, if
you say that we’re setting targets for 2030 they’ll
think that we’re not being serious – kicking into the
long grass – or they think there isn’t need for action
now. The first product we stopped selling was ray
because we only source from fisheries that are on a
journey towards sustainability and there are not
any for rays. I got a letter from a customer who was
seriously saying “as we all know ray is going to be
extinct soon anyway, I’d like to eat it until it is”. But
if we do something now we can bring about a
different outcome. When people believe that an
outcome is inevitable they take less action now, not
more.
EC: So is the answer to carefully lead your customers?
Can you go too fast?
JK: We mustn’t get too far ahead of our customers.
Salt reduction is an example of this. All the evidence
is that if you take too much salt out, customers will
simply add back in more than you removed. Five
years ago we took our bread to an industry-leading
position on salt and our customers stopped buying
our bread with low-salt and started buying other
bread that had more salt than ours had in the first
place. The net effect, initially, was that our
customers consumed more salt. So you can be
a step ahead but you can’t be in a different place
altogether. n
"We mustn't get
too far ahead of
our customers"
4 Strategy and management Ethical Corporation • December 2013-January 2014
More sustainable fish on the slab
SAINSBURY’S

Novo Nordisk Annual Report 2013
Integrated reporting in good health
By Hayley Morgan
Pharmaceutical giant leads the way not only with its sustainability but also with its reporting
tested approach that is engaging to a varied audience.
Novo Nordisk has a wealth of engaging stories to tell,
particularly around its symbiotic operations in
Kalundborg, Denmark. But the report’s concise edito-
rial content is focused on performance, not filler.
It was a challenging year for Novo Nordisk, which
received a warning from the US Food and Drug
Administration, experienced a safety scare around
multiple products, and underwent a major product
recall. Despite these problems, its sales increased by
12% and operating profit by 15%.
These conflicting performance markers are
addressed in letters from the chairman and CEO and
a four-page section titled “A question of trust”, which
delves into the pharmaceutical industry’s ongoing
struggle to balance financial performance with social
responsibilities. The article is a clever way to address
controversy specific to their performance, while
connecting it to wider governance issues, and runs
alongside an image of a stack of books with titles that
are the stuff of PR nightmares, such as “Bad Pharma”
and “Deadly Medicines and Organised Crime”.
Perhaps a risky way to discuss risk, but daring and
effective.
While the editorial style of the “Our business”
section is engaging, the creativity of the subsection
titles confuses the contents page and makes navi-
gating an otherwise well-organised report more
challenging than it should be. In previous years,
performance highlights spanning five years were
immediately detailed; this year the reader must
navigate through performance summaries and the
2014 outlook first.
More confusingly, while the financial, social and
environmental statements are provided in the second
half of the report, the narrative around how these
markers were achieved are hidden in the “2013
performance and 2014 outlook” section at the front.
This forces the reader to use the search function to
find comprehensive detail of specific activity. Having
foregone a separate GRI index, a clear navigation at
the front end of the report is particularly missed.
Heralded as the most sustainable company in the
world by Corporate Knights, Novo Nordisk’s corpo-
rate publications are released with a degree of
expectation. While the packaging of the 2013 annual
report is not the most ground-breaking or creative,
the quality of disclosure goes a long way to
confirming that the company continues to impress
long after Sampras laid down his tennis racket. n
Danish pharmaceutical giant Novo Nordisk
published its first environmental report in 1994.
Twenty years on – and 10 years into integrated
reporting – its 2013 annual report reflects decades of
sustainability leadership.
Readers are invited to complete a survey on the
quality of the reporting. While it’s unlikely that Novo
Nordisk has been inundated with comments, it’s an
unusual feature that shows openness to critique.
Novo Nordisk is the world’s largest insulin
producer, providing products to more than 24 million
people globally. This narrative is illustrated with
bright, candid photographs of diabetes patients and
Novo Nordisk employees, which (refreshingly for a
pharmaceutical company) avoid obvious pathos.
As in 2012, the 2013 report cover echoes a magazine
layout, featuring snappy headlines such as “Is obesity
a disease?” and “One size doesn’t fit all”. But this
report is decidedly not a magazine. Its data-driven,
content-heavy 116 pages span financial, social and
environmental performance and strategy, following
AA1000APS (2008) principles, International Integrated
Reporting Council (IIRC) guiding principles, and
Global Reporting Initiative (GRI) G3 guidelines. This is
the first year since 2007 that Novo Nordisk has inte-
grated its GRI report into its annual report.
Integration can mean more cohesive and clear
reporting. It can also mean the opposite. With so
much information to cover, providing a snappy narra-
tive throughout the report would make it
overwhelmingly long, and difficult to navigate. Novo
Nordisk’s report is undeniably dense, and fewer than
30 of its more than 100 pages are used to feature case
studies and illuminate strategy and risks beyond pie
charts and technical summaries.
Well pitched
Divided into four key sections, the second, “Our
business”, is the most engaging. This section reflects
the magazine theme hinted at in the cover, in looks
and structure. Key details, like the company’s triple
bottom line business strategy, regional presence,
research, risks and targets are interwoven into
thought-provoking articles. These articles cleverly
balance scientific detail appropriate for an industry
reader while avoiding technical jargon that would
alienate a curious stakeholder.
Providing a human interest angle to otherwise dry
information – for example, a two-page piece on the
complexity of insulin production – is a tried and
Snapshot
Follows GRI? Yes, G3.1
Assured? Yes, by PWC.
Materiality analysis? Yes.
Assessment process described
but no matrix provided.
Goals? Yes
Targets? Yes. Long-term
financial, social, and
environmental.
Stakeholder input? Yes.
Detail of company reputation
with external key stake-
holders.
Seeks feedback? Yes
Key strengths? Magazine
format brings strategy, KPIs,
and targets to life.
Chief weakness? Contents
page lacks detail. Graphics
and presentation do not
reflect sophistication of the
report.
Pleasant surprise?
Technical articles engaging
and easy to understand.
Hayley Morgan is a consultant at
Context Europe.
hayley.morgan@
contexteurope.com
www.contexteurope.com
Novo Nordisk has
a wealth of
engaging stories
to tell
Review 5Ethical Corporation • April 2014

Briefing: North America6
Water is another
area where
companies get
an "F" for effort
Looking back, pundits might frame sustainable
business in North America in 2014 as “the best of
times, the worst of times”.
On the side of doom and gloom we have plane-
tary conditions; if the globe were an automobile,
nearly every warning light would be flashing. And
thus far, neither scientific forecasts of our predica-
ment nor actual extreme events – from droughts to
storms – have prompted powerful action by either
the US or Canadian governments or companies.
Instead, according to the just-released State of
Green Biz 2014 report by Green Biz executive editor
Joel Makower, North American business has
continued to “tinker” with “incremental changes to
their products and operations”. Makower doesn’t
pin all the blame on corporations – political leaders
haven’t measured up, and neither have consumers,
who collectively seem to demonstrate little concern
over the fate of the planet’s environment, or its
ongoing social ills.
Two recent petitions are telling. When Canadian
pop star Justin Bieber was arrested for reckless
driving, 200,000 Americans signed a petition
demanding the US president, Barack Obama,
deport Bieber. At the exact same time a petition to
investigate how a company released toxic chemicals
into the state of West Virginia’s water supply
couldn’t get far past 500 signatures.
Environmental and social progress by companies
could be classified as “stalled” right now, Makower
says. It’s the twin demons of short-termism – that
addiction to short-term profit and return for share-
holders that infuses public companies from top to
bottom – and lack of a widely accepted alternative
vision for how business can be as good for people
and the planet as it is economically successful.
Bad news first
Short-termism has led top North American compa-
nies to maximise profits before anything else, and
very successfully. US companies, for example, are
right now sitting on a record $1.7tn in cash. The 2013
Climate Counts study of 100 top companies’ climate
commitments found that less than half were setting
goals deemed adequate to limit climate change
effects to even “tolerable” levels.
Nowhere is this tension between short-term
profit and long-term outcomes more deeply felt
than in the traditional Canadian industries of
energy and mining, with tar sand exploitation the
current hot issue for how to damage the environ-
ment, increase carbon emissions, and not win public
trust, while simultaneously generating new and
needed economic windfall.
Water is another area where companies get an
“F” for failure. Multinational leader Coca-Cola has
seen the wisdom of water-conservation and
resilience around water, and behemoth retailer Wal-
Mart views water management as a coming issue of
focus. But overall, US companies’ water efforts are a
trickle rather than a flood.
Water use is coming to the public’s attention,
albeit slowly. In the US, there has been a recent
media spotlight on water use in the fast-growing
business of fracking – hydraulic fracturing to extract
oil and natural gas. Increased transparency around
water is necessary, experts say. The need is not just
for disclosure of North American companies’ water
Canada and the US
Best of times, worst of times
By April Streeter
Global problems that squeeze businesses’ ability to operate are accelerating, but so too are some
companies’ readiness to make transformational change
CHRISTOPHEBOISSON
Ethical Corporation • March 2014

use but also transparency about the ways compa-
nies make deals with water suppliers, in order to
avoid the label of “policy capture”, or muscling in
on water policy.
Energy is a slightly brighter spot. There is a
growing list of US and Canadian companies, big
and small, using 100% green energy for their opera-
tions. Oregon-based Intel uses 3bn kilowatt-hours
of green power annually. Likewise, tiny Copper
Door Coffee Roasters in Colorado gets all of its
yearly 1,000kWh from wind power.
In addition, energy efficiency and management
– making existing resources go further – is the
most-productive method of satisfying future
energy needs, says the Natural Resource Defence
Council. It’s also an extremely popular area of
sustainability initiatives – in 2014, for example, the US
financial services sector will allot 71% of its sustain-
ability spending – $1.3bn – to energy management
initiatives.
Another good sign is investment banking firm
Goldman Sachs describing renewable energy as
having a “transformational moment” and contin-
uing its $40bn of planned investments in the sector.
That’s not enough, however. If US department of
energy calculations showing fossil fuel use projec-
tions are true, the US and Canada are losing the race
to convert to low carbon economies in time to keep
global warming below the Intergovernmental Panel
on Climate Change’s 2C limit. The headlong devel-
opment of natural gas and oil in North America
must take a big helping of blame. As Michael Klare,
a professor of peace and world security studies at
Hampshire College, argues: “The gravitational pull
of carbon is immensely powerful.”
Large investors are growing wary of the
continued rush to develop fossil reserves, which is
bringing the issue of stranded assets to the fore. In
preparation for 2014’s round of shareholder resolu-
tions, Exxon-Mobil and Chevron are among the oil
companies that have investors asking for a lot more
detail on their thinking around fossil development
and climate change.
If the world moves steadily to tax or put a price
on carbon, how many of these companies’ fossil
assets will lose value and be stranded? Conversely,
if the world doesn’t move and we face the worst
warming scenarios, investors want details on how
companies plan to adapt and at what price.
Ryan Salmon, senior manager of the oil and gas
programme at Boston-based Ceres, sums up the
debate: “Is it more resilient and economically feasible
to develop the assets and adapt to climate disrup-
tions over the longer term? Fossil fuel companies
have their own views of the future based on their
forecasts for supply and demand. But I don’t think
anybody is saying these issues are not legitimate.”
Salmon adds that Exxon has already responded to
investors with “constructive” discussions.
Chasing ‘big pivot’
Pessimists in the sustainability world have the
sinking sensation that corporate efforts are too little
and possibly too late to deal with the globe’s
pressing and acute climate and resource problems.
The optimists, however, point to the many large and
small companies in the US and Canada that are
aware of and working on the big problems.
“The best businesses understand that the world
is changing rapidly and they need to get ahead of
7
Large investors
are growing wary
of the continued
rush to develop
fossil fuels
Briefing: North AmericaEthical Corporation • March 2014
Canada – fast facts
Area:
9.98m sq km
Population:
34.6m (2013)
GDP:
$1.47tn (2012)
$42,300 per capita
GDP composition:
agriculture 1.7%;
industry 28.5%;
services 68.9%
Export partners:
US 74.5%;
China 4.3%;
UK 4.1%
(2012)
Import partners:
US 50.6%;
China 11%;
Mexico 5.5%
(2012)
Electricity generation
by source:
fossil fuels: 31.8%;
nuclear 9.2%;
hydro 54.8%;
other renewables 4.2%
9.98m km2
34.6m (2013)
GDP
$1.47tn (2012)
$42,300 per capita
I services 68.9%
I industry 28.5%
I agriculture 1.7%
I hydro 54.8%
I fossil fuels: 31.8%
I nuclear 9.2%
I other renewables 4.2%
US
CHINA
UK
11%
MEXICO
CHINA
US
GDP
composition
4.1%
4.3%
74.5%
50.6%
5.5%
Electricity
generation
by source
Source: CIA World Factbook

that change,” says Aron Cramer, chief executive of
the non-profit Business for Social Responsibility. “At
the same time the scale is so big and so broad, they
need to collaborate with other companies, work
with stakeholders, engage with experts, find solu-
tions, and achieve systemic change – and the
challenges are so huge.”
Huge challenges need not be overwhelming.
Many would say it’s about setting good goals and
moving relentlessly toward them.
But sustainability expert and author Andrew
Winston has a different take. Incrementalism, he
says, has not taken us far enough fast enough, and
the whole idea of sustainability has become siloed
inside companies. This necessitates what Winston
calls the “big pivot” (which is also the title of his
forthcoming book).
The recent example of US giant drugstore chain
CVS suddenly announcing that it would stop selling
8
The effort to pivot
to transformative
change has to
come from the top
Briefing: North America Ethical Corporation • March 2014
tobacco products was a pivot, Winston says. The
decision may prove to be detrimental in the short
term to the company’s bottom line but allows the
CVS brand to be in line with its ultimate mission of
supporting consumers’ health. CVS’s stock rose on
the news.
“It’s hard to make the case any longer that there
are limitless materials for companies to draw on.
Thus, the scarcity challenge is what companies are
going to face most along their value chains,”
Winston says. “There’s no single action that creates
a big pivot. It’s the sum of the actions that will make
your company resilient and able to cope with rising
prices and weather extremes.”
Sustainable supply chains
Making supply chains more sustainable continues
to be a big task at many North American companies.
This work can be satisfying and fruitful, but is not
without pitfalls. In January, Intel announced a mile-
stone in releasing its first microprocessors free of
conflict minerals. This move took millions of dollars
and untold man-hours of investment, and helps the
company in upcoming compliance in May 2014 with
a section of the Dodd-Frank legislation on financial
reform and consumer protection.
Intel got much positive press, because the
mining of these minerals (especially tin) in African
countries is a topic currently on the radar. But
resource certification expert Bill Quam says the “bag
and tag” certification process in Intel’s supply chain
work on conflict minerals may have inherent weak-
nesses because it starts from the smelter and not
from the mine. He argues that companies need to be
careful when making statements about conflict
North American company representation 2010 2013
GRI reporters 256 537*
DJSI world industry group leaders 0/19 2/24
CDP responses 441 457
CDP disclosure leaders 2/12 29/60
Global Compact participants 171 353
PRI signatories N/A 139
United States – fast facts
Area:
9.93m sq km
Population:
316m (2013)
GDP:
$16.2tn (2012)
$51,700 per capita
GDP composition:
agriculture 1.1%;
industry 19.2%;
services 79.7%
Export partners:
Canada 18.9%;
Mexico 14.0%;
China 7.2%
(2012)
Import partners:
China 19.0%;
Canada 14.1%;
Mexico 12.0%
(2012)
Electricity generation
by source:
fossil fuels 75.3%;
nuclear 9.7%;
hydroelectric 7.6%;
other renewables 5.3%
9.93m km2
316m (2013) GDP
$16.2tn (2012)
$51,700 per capita
I services 79.7%
I industry 19.2%
I agriculture 1.1%
I fossil fuels 75.3%
I nuclear 9.7%
I hydroelectric 7.6%
I other renewables 5.3%
CANADA
MEXICO
CHINA
14.1%
CHINA
CANADA
MEXICO
GDP
composition
7.2%
14%
18.9%
19%
12%
Electricity
generation
by source
Source: CIA World Factbook
*2012 data as many 2013 reports are not yet published or included in GRI statistics.

minerals. Quam says the impor-
tant thing for Intel and its
competitors is to “keep putting
pressure on the upstream to be
more transparent”.
One thing that hasn’t changed
in chasing sustainability, Andrew
Winston says, is that the effort to
pivot to transformative change
has to start at the top.
Beyond that, Winston and Aron
Cramer agree that, in addition to
top leadership, it is partnerships
that are driving big changes. If as a
society we do switch towards a
clean-energy-driven and sustain-
ably-designed-products economy,
Winston hopes we won’t even
need the terms “corporate social
responsibility” or “sustainability”
any longer.
“Over time, I hope we get rid of
all the buzzwords and merely call
it good business. Managing our
mega changes, whether you call it
sustainability or not, will be core to the business – and
[integrated] into how we design, make and sell
products and services – not managed off in an organ-
isational silo,” he says.
Of course, partnering for progress in the social
and environmental aspects of sustainability isn’t
new. Ceres, for example, now has 25 years of trying
to integrate sustainability into capital markets and
championing the Global Reporting Initiative to
companies. Meanwhile, a partnership of a different
kind, a memorandum of understanding signed in
January 2014 between the Sustainability Accounting
Standards Board and the International Integrated
Reporting Council looks like it will cause some
creative disruption to GRI’s stature with US compa-
nies this year.
One difference in recent partnerships is the
unique solutions corporations are producing, and the
all-inclusiveness they are aiming for. McDonald’s has
made the bold goal of starting a switch to sustainable
beef in 2016. Just defining sustainable beef is a chal-
lenge, let alone creating supplies of thousands of
tonnes of hamburger meat. McDonald’s and its
partners all along the beef value chain are now
tasked first to craft a real definition of sustainability,
working with the Global Roundtable on Sustainable
Beef, and then to figure out how to take action.
Another important partnership is Canada’s Oil
Sands Innovation Alliance, working to accelerate
environmental improvement in Canada’s oil sands
industry. Cosia’s chief executive Dan Wicklum says
the alliance is a “fundamental redefinition” of
collaboration because of the strong governance
structure created and the scope of participating
companies’ contributions. Cosia may not polish the
oil sands industry’s image to all stakeholders, but
already it is showing tangible environmental
technology innovations.
Gathering inequality
During a recent Twitter chat between sustainability
professionals and companies, some top new predic-
tions included continuation of the expanding role of
partnerships; growth in the number of companies
integrating environmental and social goals into
their strategic planning and budgeting; increasing
pressure from social media on companies’ trans-
parency; and competition between reporting
standards and guidelines such as GRI, SASB and
IIRC.
Only hinted at was how growing inequality in
North American, and particularly US society, is a
problem companies are seeing rise in importance.
Inequality might be one of the “sneaker” issues going
forward. The west coast city of San Francisco is an
epicentre, as inequality widens between tech-sector
millionaires and the rest of the local population left
out of that boom. Big buses that freely shuttle Google
employees from Silicon Valley up to the city every
day have become a flashpoint for the tension.
In A Tale of Two Cities, as with all great literature,
there’s a struggle between opposing forces. In the
world of North American business sustainability,
the struggle is between the capitalism of yesterday
and that of tomorrow, with innovation as the
ultimate plot-twisting device.
In spite of the challenges and setbacks, there’s a
pervasive idea here that technology and innovation
will save us, reforming capitalism sufficiently to
usher in a kindler, gentler era. n
9
Growing
inequality in
society is a
problem
companies are
seeing rise in
importance
Briefing: North AmericaEthical Corporation • March 2014
Big brands becoming protester focus
GETTYIMAGES
April Streeter is an associate
with One Stone. A Certified B
Corporation, One Stone has a
global team offering sustainability
consultancy and communications
expertise, based in Stockholm,
Edinburgh, Sydney, Portland and
Washington DC.

Corporate responsibility cheat sheet
By Oliver Balch
Ethical Corporation’s analysis of the latest reports and data
Business case under
scrutiny
Fewer than a third of large companies
claim to be making a profit from their
sustainability programmes, down from
around two-fifths in 2010. A survey by
MIT Sloan Management Review and
the Boston Consulting Group finds
the same proportion (32%) are
breaking even, while 11% are losing
money. A surprisingly high 25%
appear not to know either way.
Now in its fifth year, the annual
Sustainability and Innovation Global
Executive Study identifies employee
health as the most important social
issue facing companies.
As for the environmental and economic
fields, the 5,300 executives and
managers that responded to the survey
picked out energy efficiency and
competitiveness as priority themes.
The findings reveal some worrying
mismatches. While 88% of respon-
dents agree that climate change is real,
only 9% fully believe their companies
are prepared for the consequent risks
(with an additional 25% “somewhat
agreeing”). Likewise, 70% of respon-
dents believe sustainability is
important or very important for their
businesses, yet only around half think
their companies are adequately
addressing the issue.
http://sloanreview.mit.edu
Wind tops Spain’s
energy mix
Wind has emerged as the most impor-
tant source of power generation in
Spain’s energy mix. At 23% of all
energy produced, the output of
Spain’s wind farms outstrip that of its
coal-fired (14%) and combined cycle
(9%) power stations. Nuclear (21%) is
the second most important source of
electricity in the country, while hydro-
electricity now represents a credible
14% (compared with 8% in 2012).
Spain’s grid operator Red Electrica
De Espana estimates that the introduc-
tion of renewable energy during 2013
has reduced carbon dioxide emissions
in the electricity sector by 23% to 61.4m
tonnes per year. Renewables now
account for 42.4% of Spain’s electricity
generation. The wind sector achieved a
new maximum of instantaneous power
of 17.056 MW on 6 February 2013.
www.ree.es
Boardroom balancing
act
Women now make up one-fiftvh of
FTSE 100 boards, according to figures
from Professional Boards Forum
BoardWatch. Although it’s the
highest figure recorded, the UK’s
largest companies will need to
increase the proportion by five
percentage points (equivalent to
50 seats) to hit the government’s
2015 target. Women now make up
one-quarter of non-executives
directors, although the figure
plummets to 7.2% for female
executive directors.
A major concern remains the lack
of women at the very top, with only
four female CEOs in the UK’s largest
100 companies (Royal Mail, Easyjet,
Burberry and Imperial Tobacco).
Currently 36 companies have 25% or
more female board members, with 13
having 30% or more. The highest
performer is brewer Diageo (with
44%), followed by Capita (40%) and
Royal Mail and Unilever (36% each).
The ratio drops for the FTSE 250,
which boasts only 15% women direc-
tors (comprising 19% non-executive
directors and 5% executive directors).
One-fifth of the UK’s largest 250
companies still have all-male boards.
www.boardsforum.co.uk
Cheat sheet10 Ethical Corporation • February 2014
Corporate insights
Emissions heading upward, BP says
Energy company BP predicts that carbon emissions will jump by 29% over the
next two decades. Its recent Energy Outlook report anticipates a 41% increase
in energy consumption by 2035. The vast majority (95%) of the projected rise in
energy consumption is expected to occur in non-OECD countries.
Energy use in these countries will grow at 2.3% per year during 2012-
2035, compared to 0.2% per year in the case of OECD countries, the oil
major states. While reliance on coal is expected to fall, fossil fuels over all
are still projected to comprise 81% of the energy mix by 2035, a 5% drop on
2012 figures. In terms of power generation, renewables such as hydro and
solar will increase from their current share of 5% to 13% come 2035.
www.bp.com
UK rail passengers happy
The passenger satisfaction rate on the UK rail network hit 85% in 2012-13,
Network Rail reports. Train punctuality, meanwhile, registered at 90.9% for
the same period, marginally down on the 91.6% rate achieved the previous
year. The company’s carbon emissions – its own, not those of rail
companies – dropped by 4,185 tonnes of carbon dioxide equivalent to a
total of 303,078 tonnes CO2e.
Clifford Chance’s patchy pro bono record
Law firm Clifford Chance gave on average 18.4 hours of pro bono work per
lawyer during 2013, the company’s corporate responsibility report reveals.
Lawyers in the firm’s American offices gave substantially more of their time
(47.4h), followed by the UK (29.4h). Figures for Asia Pacific (7.7h), central and
eastern Europe (7h) and western Europe (7.3h) are markedly lower.
www.cliffordchance.com
Fewer than
a third
of large companies claim
to be making a profit from
their sustainability
programmes
Women now make up
one-fifth
of FTSE 100 boards
Renewables account for
42.4%
of Spain’s electricity
generation

Wetlands withering
in China
China’s wetlands have shrunk nearly
9% since 2003, new figures show.
Asia’s largest economy is home to
more than one-fifth of the world’s
population, but only 6% of its
freshwater resources. According to
China’s State Forestry Administration,
the world’s most populous country
has lost 340,000 sq km of wetlands
over the past decade – an area larger
than the Netherlands. China has
earmarked $660bn to invest in
water security projects over the
next decade.
english.forestry.gov.cn
US companies
‘must do more’
Over nine in ten US citizens say
companies should implement more
sustainability practices, while 63%
think that they should “actively
pursue” such practices. The findings,
in a survey by Hill & Knowlton
Strategies, also reveal that only
about one-third of the US public
believes companies are doing more
to combat climate change than they
were a decade ago. The findings
suggest an appetite for information
among US citizens, however,
with 62% interested in learning
what companies are doing to
improve energy efficiency.
The most trustworthy means of
companies doing this is via third
party organisations, say half of
those interviewed.
Workforce overlooked
in climate cuts
The rising cost of energy means
92% of workers in the UK are
concerned about their domestic
energy bills, but only 47% have given
any thought to the cost burden faced
by their employer.
Employers are missing a trick.
Engaging their workforce around
energy efficiency could save UK
businesses £300m per year, the Carbon
Trust estimates. The biggest single gain
could be in reducing air travel: a 5%
reduction in work-related flights would
translate into £128m in savings (plus a
1.5m-tonne reduction in carbon emis-
sions). At present, however, fewer than
one in four employees have ever been
asked to help save energy at work, and
only 13% say their employer offers
incentives to workers that take steps to
reduce energy consumption. Three-
fifths of employees say they would
be more likely to save energy at work if
they were praised, with a similar
number admitting that they would
be equally motivated by financial
rewards.
www.carbontrust.com
Foot-dragging in
Hong Kong
Companies listed on Hong Kong’s
Hang Seng Composite Index are
dragging their heels to a worrying
degree on climate change. Only 26
of the 216 listed companies analysed
by Carbon Care Asia currently measure
their carbon footprint. Only five had
clear targets, meanwhile. The poorest
performers were small-capitalisation
firms, with a mere 3% measuring
their emissions.
www.carboncareasia.com
Asia shining in solar
power
The Asia-Pacific region is predicted
to account for around half of all
new solar photovoltaic generating
capacity in 2014, according to the
industry research group Solarbuzz.
The vast majority (95%) of the 23GW
in anticipated new generating
capacity is expected to come
from five countries: China, Japan,
India, Australia and Thailand.
The projected capacity gains mark
a 35% increase on the 18GW added
in 2013. According to the Chinese
Bureau of Energy, China alone aims
to install 12GW in 2014, with 8GW
to be installed on rooftops, and the
remaining 4GW on the ground.
www.solarbuzz.com n
Cheat sheet 11Ethical Corporation • February 2014
Organisation snapshots
Big risks in year ahead
Severe income disparity is the most likely risk currently facing the planet,
according to the World Economic Forum. On a scale of 1 (least likely) to 5
(most likely), respondents to the WEF’s Global Risk 2013 report gave the
issue as 4.22 rating. Next on the list are chronic fiscal imbalances (3.97),
rising greenhouse gas emissions (3.94), water supply crises (3.85) and
mismanagement of population ageing (3.83). Income disparity also topped
the ranking as the risk with the highest potential impact (4.04).
Interestingly, water supply crises climb into second place in impact
terms (3.98), while chronic fiscal imbalances drop to third (3.97). Also in the
top five risks by impact is the diffusion of weapons of mass destruction
(3.92) and the failure of climate change adaptation (3.90).
www.weforum.org
Clean tech requires $1tn a year
What’s the bill for fixing climate change through clean tech? Christina
Figueres, the United Nations’ climate chief, reckons a cool $1tn a year
should do it. Global investment in clean technologies is currently around
$300bn. According to Figueres, the world’s biggest pension funds and other
asset owners invest less than 2% of the funds under their control in clean
energy infrastructure. This compares with about 10-15% directed towards
coal and oil.
Global Compact axes 107 firms
The Global Compact expelled 107 companies in the last six months of 2013
for failing to submit a communication of progress report, the United
Nations-backed initiative announced. The expelled companies comprise
about 2% of the 4,416 required to submit such a report over this period.
During the same six months, 707 new companies joined the Global
Compact.
www.unglobalcompact.org
China’s wetlands
have shrunk nearly
9%
since 2003
The Asia-Pacific
region is predicted to
account for around
half of all new solar
photovoltaic generating
capacity in 2014
A 5% reduction in
work-related flight
would translate into
£128m
in savings

12
Fair shares
Women could take 40% of board-
rooms seats in European Union listed
companies by 2020 if a vote of the
European parliament is anything to
go by. The parliament in November
backed the plan by 459-148 with 81
abstentions. Under the law, compa-
nies would have to ensure that at
least four in 10 of their non-executive
directors are women, or put in place
transparent selection procedures to
show that they are not denying
women positions because of their
gender. Companies that do neither
could be sanctioned. However, the
law is not final. EU member state
governments must agree to it, and
they have not yet made up their
minds.
Ripple effect
Greenhouse gas emissions are not the
only factor that might make the
world’s fossil-fuel reserves unex-
ploitable, according to a report from
consultants Wood Mackenzie and
the World Resources Institute. Key
reserves might also be at risk because
of water shortages. The report found
that half of US shale gas reserves are
in areas of “medium to extremely
high baseline water stress”, with coal
mining in China and oil production in
the Middle East facing similar short-
ages. Energy industries consume
about 15% of global freshwater
reserves. Wood Mackenzie’s Sondra
Scott says: “With the United Nations
predicting a 40% shortfall in global
freshwater by 2030, the energy
industry is under increasing scrutiny
from the government and public on
how it uses freshwater supplies.”
Analysis: Sochi Olympics
Fair games?
By Oliver Balch
Sponsors of the Winter Olympics have
mostly offered a dangerously weak
response to damaging stories in the
run-up to the Sochi games
Excitement is brewing in Sochi. A building
site for much of the past year, the Russian
city is now nearing readiness for February’s
Winter Olympics.
Like all global sporting events, the run-up
to the games has had its hitches. Fears of a mild
winter prompted a stockpiling of artificial
snow. A suicide bomber along the coast
sparked security concerns.
But beyond the usual teething problems,
these Olympics seem to have attracted a pecu-
liarly large volume of bad news. Russia’s
stance on gay rights is perhaps the most
obvious. A law passed in June 2013 banning
homosexual “propaganda” earned the country
worldwide condemnation. This was followed
by the arrest of 30 Greenpeace activists two
months later on piracy charges, which black-
ened the country’s dubious human rights
record even further.
Despite the XXII Winter Olympics being
billed as the most expensive games on record,
with a reported budget of $50bn, migrant
workers are said to have gone unpaid in some
instances. In other cases, there are reports of
them having their passports confiscated and
having to endure 12-hour working days.
Environmental concerns
Claims that the games are destroying the envi-
ronment have also plagued preparations.
Contractors are accused of dumping construc-
tion waste illegally, for example, leading to
landslides as well as polluted water sources.
Green groups maintain that a new road and
high-speed railway into Sochi have perma-
nently damaged the nearby Mzymta river.
Environmental campaigners working to raise
awareness of these issues, meanwhile, have
faced police detention.
This litany of bad news raises serious issues
for the event’s corporate sponsors. “Corporate
sponsors have a huge stake in making the Sochi
games the celebration of fair play and human
dignity that all Olympics should be,” says Minky
Worden, director of global initiatives at Human
Rights Watch (HRW). The US-based campaign
group has written to all the major sponsors of
the games calling them to “speak up”. Few,
predictably, have so far chosen to do so.
To their credit, three of the event’s biggest
sponsors – Coca-Cola, Dow Chemical and
General Electric – have at least agreed to meet
with HRW. A further five have offered written
responses, including McDonald’s, Procter &
Gamble and Panasonic. According to HRW, all
eight companies have expressed concerns over
the gay propaganda law to the International
Olympic Committee.
That’s certainly welcome, but it falls short of
an open call for the Russian government to
repeal the law. As for the other alleged abuses
surrounding the games, not a word.
Naturally, global companies are wary of
becoming embroiled in controversy. They
guard their reputations carefully. In the furore
currently surrounding the Winter Olympics,
therefore, most revert to type and seek to cast
themselves and their brands as apolitical.
Coca-Cola perhaps goes furthest in publicly
declaring that it does “not condone human
rights abuses, intolerance or discrimination of
any kind anywhere in the world”.
Others, such as Panasonic, prefer to focus
on the “feel good” factor of the games. The
statement “sport is a human right” is as polit-
ical as the Japanese electronics brand is
prepared to get. Hardly words that will worry
the Russian president, Vladimir Putin.
The Olympics’ band of corporate sponsors,
who cough up a reported $100m each for a four-
year cycle of marketing rights, clearly want to
remain tight-lipped. Fair enough. Sport, for
them, is all about projecting an upbeat image.
Even so, they would do well to lobby the
relevant authorities behind the scenes.
As long as there’s downbeat stories
attached to Olympic events, their reputations
will be in the firing line.
All roads lead to Sochi in February
LONNYG/ISTOCKPHOTO.COM
Stressful energy source
ISTOCKPHOTO
EthicsWatch Ethical Corporation • December 2013-January 2014

Analysis: management structures
Is the future
holacratic?
By Stephen Gardner
No job titles and blurred lines of
responsibility. Might holacracy catch on?
It has been around since at least 2007, and the
principles underpinning it date back to the
1960s, but it has only now hit the big time.
Holacracy is a theory of organisations that
does away with job titles and instead distrib-
utes responsibility among self-governing
circles. The Amazon-owned online retailer
Zappos recently became
the largest company to
switch to the system. Its
1,500 people will
complete the transition
by December 2014.
Behind holacracy is
the idea that work should
be organised around
tasks, rather than around
the functions within a
company. The best way
to get tasks done is to
trust teams to organise in
the way that suits them
best. Tasks are delegated
to “circles” of people,
which are free to self-
govern – as long as they
get the work done and
fulfil the requirements of the upper circle that
delegated it to them.
New rules
Holacracy has been codified by US software
entrepreneur Brian Robertson. The rules are set
out in a Holacracy constitution that purports to
be written in plain English but reads otherwise,
advising, for example: “A Linked Entity may
add to or amend its Cross Link Role through its
own due governance process, and such Role
shall further inherit any Accountabilities
required on such a Role by a Policy duly
operating upon the Linked Entity.”
Nick Osborne, a certified holacracy
practitioner at Agile Organisation in the UK,
says that in a holacratic organisation “the power
is in the rules of the constitution” rather than in
the hands of individuals. Holacracy is a “third
way” between a hierarchical structure and a flat
structure. It can in principle be scaled to any
size of organisation and makes life more
interesting for employees because they can
“switch in and out of roles more flexibly”.
According to Zappos, productivity should
rise because holacracy “enables employees to
act more like entrepreneurs and self-direct their
work, instead of reporting to a manager who
tells them what to do”. Osborne cautions,
however, that transition to holacracy is not easy.
Companies should expect to lose some workers
who find “it doesn’t work for them” – giving up
on a hard-earned job title can be tough.
The system has also been criticised as
too inward-looking. Removing job titles and
giving more flexibility might be great for
internal morale, but it could also make it harder
for customers to know whom they should
speak to. Osborne says that to counter this,
holacratic companies can publish a roll-call of
responsibilities, with details of to whom tasks
have been assigned at any one time.
Steve Denning, a consultant and author on
organisations, says the risk for a holacracy is
that it becomes “an inwardly focused, but
transparent, organisation” that leaves it to the
customer to find out who has a particular
responsibility. If the self-governance system
turns into death by committee, “the
combination of inward-focus plus complete
transparency may thus be fairly lethal, as
customers will be able to see very clearly that
their needs, wants and whims are not
being systematically attended to, and will
move their business to a firm that is more
responsive”.
Fortunately for companies everywhere,
Zappos has volunteered to be the holacracy
guinea pig. Its experience will enable the
system’s effectiveness to be judged.
EthicsWatch 13Ethical Corporation • February 2014
Millennial thinking
Millennials – people born between
1980 and 2000 – have a different set
of workplace values from their more
profit-driven elders, according to a
survey by Deloitte. Millennials believe
overwhelmingly that innovation is the
key to business growth, and that
corporate success cannot be judged on
the basis of profits alone, with only
35% considering the purpose of
business to be to generate profit.
The main challenges millennials
in business expect to face are resource
scarcity, inflation and ageing popula-
tions. Although most millennials
(60%) say they work for innovative
companies, in some countries there
are gaps between aspirations and the
extent to which innovation is fostered
in reality, leaving millennials poten-
tially frustrated. The biggest gaps exist
in Australia, France, South Africa
and South Korea, Deloitte says.
Trust me, I’m a
corporation
The proportion of people saying that
they trust corporations appears to have
stabilised at about 58%, according to
the 14th annual Trust Barometer from
PR consultants Edelman. High trust
levels of 70% or more are seen in
emerging markets including China,
India, Indonesia and Mexico, though
consumers there tend to trust foreign
corporations from countries such as
Germany and Sweden rather than
home-grown brands. Developed
economies are much more cynical
about business, with trust scores of
only 43% in France, 41% in Ireland
and 38% in Spain. The most trusted
sectors are technology and automo-
tive, while the least trusted are media
and banks. In line with previous
Edelman results, NGOs are more
trusted than businesses, scoring 64%.
But trust in government has plunged
– only 44% of those surveyed think
they can rely on their political leaders.
Traditional office roles can be counterproductive
WAVEBREAKMEDIA
JACEKCHABRASZEWSKI
Not just about the profits, dude

Strategy and management14
ALPHASPIRIT
Ethical Corporation • February 2014
Leadership
risk includes
the misuse,
mismanagement
or abuse of the
organisation's
coffers
The World Economic Forum has just published its
Global Risks 2014, a very useful snapshot of risks
confronting governments, companies and other
stakeholders. Though it targets large systemic risks,
in this and other risk assessments there is, however,
a gaping hole: the risk of leadership and culture
failure.
In the 1980s there was Drexel Burnham Lambert
and the savings and loan scandals. At the turn of the
century we saw Enron, WorldCom, Adelphi and
Tyco, to mention just a few. Most recently we
witnessed the probably most systemic and
widespread series of scandals of them all – the global
financial meltdown of the past half-decade.
What is a common denominator that runs through
all of these scandals? Is it a breakdown in internal
controls? A lack of proper laws and regulations?
Ineffective board oversight? A poor executive team
without a vision? A general counsel, internal audit or
chief financial officer asleep at the wheel?
They may all have played a role. However, a
closer look may take us to another level of risk we
don’t talk about much: the failure of leaders, the risk
that leaders have the wrong motivations and
incentives, the risk that motivations other than the
common good of the enterprise are driving CEOs,
their hand-picked executive teams and their rubber-
stamping boards, to allow excess, short-termism and,
in the worst cases, illegal behaviours.
But it also goes beyond leadership. It goes to the
culture of the organisation. And it may even go to a
systemic culture in an entire sector. It is a culture that
instead of encouraging a race to the top encourages
a race to the bottom. This can best be seen in the
financial sector over the past two decades.
But it also happens in other sectors. Look at the
construction industry, especially in developing
countries where the use of the cheapest labour
possible without consideration for health, safety and
basic labour rights has given rise to a new form of
modern day slavery. Look at the retail industry and
the supply chain nightmares that have come to light
through tragedies such as Rana Plaza.
So the answer to the question of what is the least
discussed and potentially most devastating risk is the
risk of leadership and culture failure.
Let’s break that down. Leadership risk is the risk
that the top leaders of an organisation misuse,
mismanage, abuse or outright loot the coffers of the
organisation they owe fiduciary allegiance to.
Extreme examples of this risk are unfortunately not
uncommon: Milliken, Skilling, Fastow, Ebbers – these
are merely those who have been found to have
plundered or otherwise abused their positions of
power for personal gain.
Quiet but guilty?
What about the CEOs, CFOs and other executives
who have not been investigated, prosecuted and
found guilty of any crimes or civil violations? Maybe
they’ve been forced out of their positions quietly or
in disgrace (and then frequently found another
willing corporate home). The names here are many
as well: look at the turnover on Wall Street and
global financial sector – especially global bank
leaders who have been in the cross-hairs of prose-
cutors though often not directly investigated,
prosecuted or convicted.
The GlobalEthicist
The biggest risks nobody talks about
By Andrea Bonime-Blanc
The failure of leaders and the business cultures they encourage can have devastating consequences
COLUMNIST:
ANDREA
BONIME-BLANC

15
Ultimately, it is the
board of directors
that is accountable
for recognising or
preventing risk
Strategy and managementEthical Corporation • February 2014
Leadership risk is therefore the risk of a top
executive either engaging in direct criminal or civil
legal violations or engaging in unethical or
borderline practices that may come back to haunt not
just him or her but the entire organisation. This is a
form of reputation risk.
So, what then is “culture risk”? We have all heard
and read about the importance of tone at the top, the
fact that the culture of an organisation is largely
determined by its leader setting the parameters for
business strategy, business plans and performance
incentives. Leaders set the tone not necessarily by
what they say but by what they do. Culture trumps
compliance every day of the week. Culture and how
we do things is way more important than written
policy and codes of conduct and what we say about
how we do things.
Culture risk is the risk that the culture that
suffuses an organisation is the culture of a leader
who is more narcissist than true leader, more self-
enriching than steward of his/her company;
someone who may a) not be true to the principle of
legal compliance, (b) not be living up to common
ethical behavioural standards, or c) be driven by a
performance incentive stricture that encourages
overly risky or even illegal behaviours.
Close links
Why are leadership and culture risk so closely inter-
related? Every leader, especially when it comes to
corporations, brings their own personal style, expe-
rience, expertise, history, values (or lack thereof),
and approach to strategy, business planning and
performance management. This personal package
carries a lot of weight and allows the CEO to stamp
the organisation with his/her way of doing things.
This way of doing things then becomes part of the
pervasive culture.
So, what can we do about leadership and culture
risk?
First, recognise it. Executive teams and boards
need to recognise that these are critical and material
risks to any organisation.
Second, prepare for it. Preparation entails dealing
with this danger practically and on several levels:
• Developing balanced and traceable performance
and incentive structures.
• Deploying a code of conduct programme that is
not a toothless tiger, that is properly resourced,
positioned and measured.
• Having a robust speak-up culture within the
organisation that allows for problems to rise to the
top (rather than be suppressed at all levels).
Third, take ownership. Ultimately, it is the board
of directors that is accountable for recognising,
preparing for and preventing this type of risk. As the
body that ultimately oversees the CEO’s hiring,
performance and firing, pay package, incentives,
performance, strategy and risk management, the
Dr Andrea Bonime-Blanc is chief
executive of GEC Risk Advisory,
a global governance, risk and
reputation consultancy to boards
and the C-suite. She is chair
emeritus of the Ethics and
Compliance Officer Association,
a member of Ethical Corporation’s
editorial advisory board,
a programme director at the
Conference Board and a life
member of the Council on Foreign
Relations. @GlobalEthicist
board needs to look
out for and develop
checks and
balances on the
risk of leadership
and culture failure.
No one else but
the board has this
power or ability
(unless you count
government regu-
lators or investi-
gators or hostile/
activist investors/
shareholders). Other executives are usually beholden
to the CEO. The general employee population will act
in accordance with the incentives they are given and
the culture they perceive (rather than are told about).
No set of beautifully printed or digitally deployed
values will ever trump the way things actually get
done in an organisation.
It is the responsibility of the board to deal with
leadership risk by:
• Properly vetting and selecting the CEO in the first
place.
• Setting clear parameters on the performance and
incentives of the CEO.
• Properly gauging the performance management
system the CEO has put in place for the executive
team and the rest of the organisation.
• Understanding the connection between perfor-
mance management and financial and other
results.
• Not being afraid to discipline or dismiss the CEO
when circumstances dictate.
The board should deal with culture risk by:
• Seeing the results of periodic culture surveys (or
demanding culture surveys if the organisation
doesn’t do them).
• Having certain key executives report to the
board periodically (in addition to the chief
auditor): the head of ethics and compliance; the
head of human resources; the head of corporate
responsibility; the head of risk management.
• Delving into the employee population and the
organisation itself from time to time by visiting
facilities, talking to mid- and lower-level staff, and
generally kicking the tyres.
• Engaging in meaningful executive sessions with
key members of management.
Human nature is such that we will never
eliminate egregious behaviour or actions that seeks
to cut or even slice through corners. However, when
boards do their jobs and hold their CEOs
accountable, the rarely considered but material risks
of leadership or culture failure will be addressed,
understood, ameliorated and perhaps even
prevented. n
Robust communication channels vital throughout your organisation
KIRSTYPARGETER

Strategy and management16
Joe Jimenez, Novartis
Link sustainability
to success
Joe Jimenez, CEO of pharmaceutical
multinational Novartis, speaks to Ethical
Corporation about corporate innovation
and the importance of a sustainable
business approach
How do you link sustainability and
corporate responsibility to your business
strategy? You do a lot of good work, but how
do you mainstream it in the business?
Corporate responsibility has always been and
will continue to be a core part of our business
strategy. We focus our corporate responsi-
bility efforts in two areas: expanding access to
healthcare and doing business responsibly.
We’re applying our expertise in science and
innovation – for example our new malaria
compound KAE609. We are also pioneering
new, sustainable business models, such as our
social ventures initiatives, to help improve
quality of life for those with limited resources.
We are committed to carrying out our
commercial activities with integrity and do so
by upholding the highest ethical standards.
We also aim to conserve natural resources
and limit our impact on the environment.
We’re reinforcing our efforts by integrating
and aligning our corporate responsibility
activities across the company with targets
and metrics we report in our annual report.
Investors care; investors don’t care. We hear
conflicting views. Which stakeholders tell
you they do care about sustainability and
corporate responsibility, and how do they
demonstrate this?
We live in a global economy where corporate
responsibility is not just a “nice to have” – it’s
an expectation. Our customers expect it, our
patients expect it, our associates expect it,
and increasingly, our investors are expecting
it. There’s growing evidence that links corpo-
rate responsibility and sustainability
activities to positive business performance.
Despite the current challenging economic
environment where long-term projects can
be the first to get cut, nearly a third of multi-
national companies are saying that
sustainability is critical to their ability to do
business. Corporate responsibility is more
than just the right thing to do – it also makes
good business sense.
How has John Ruggie’s business and human
rights framework changed how you do
business?
The Guiding Principles and other frameworks
championed by the UN such as the Global
Compact have helped shape corporate
thinking and behaviour. They give us a foun-
dation that is aligned with our values and they
help us sustain a culture that both furthers
business growth and protects and promotes
human rights. We make a point to continu-
ously review our policies and our conduct to
make sure we’re doing our part – and we’re
making good progress. For example, we were
able to secure a living wage for all Novartis
associates [employees] around the world,
making us one of the first companies to do so.
How do you make sure intrapreneurial sustain-
ability and corporate responsibility projects
become real business lines? Can you give us
examples of how you seek out internal
innovation?
We try to foster a culture of innovation and
creativity, and this includes how we
continue to improve as a more responsible
and sustainable company. To encourage
idea-sharing, we recently held our first
company-wide digital global brainstorm
where associates discussed topics that are
important to our business, including corpo-
rate responsibility. One of the questions
raised was, “We’re reaching 1.2 billion
patients each year with Novartis products,
but many people still don’t have access to
quality healthcare. How can we help?” We
heard from associates around the globe who
offered ideas on everything from leveraging
mobile to improve access to creative ways to
improve distribution in remote areas.
Are companies going to have to become much
more vocal – and take action – on public policy
issues in the coming years than in the past?
Healthcare costs have grown faster than
GDP for 50 years, and at the same time
demand for healthcare globally is rising. As
a result, governments and other payors are
aiming to cut spending by shifting their
resources to solutions that deliver the most
cost-effective real world outcomes. Part of
the solution is policy reform, but another
important piece is for the private sector to
develop new commercial models that focus
on delivering positive patient outcomes,
instead of just focusing on the transaction of
selling a medicine. We’re applying new
approaches such as risk-sharing pricing
models which link payment to patient
outcomes as a result of treatment. We also
have integrated care programmes which
use a broader and more holistic model that
consider solutions “beyond the pill” to
improve overall health, such as physical
rehabilitation and medical counselling. And
Novartis’ social ventures are unique
business models that help expand health-
care access in the developing world. We
work with local governments, non-profit
organisations and others to help improve
local infrastructure, strengthen distribution
channels and build local capabilities while
still making a profit. This ensures the
sustainability of this approach. n
Jimenez: customers and investors expect corporate sustainability
Ethical Corporation • February 2014
Novartis: fast facts (2013)
Net sales: $57.9bn
Net income: $9.3bn
R&D spend: $9.9bn
Employees: 135,000
Medicines reach 1.2 billion people annually

Social
intrapreneurs
challenge their
organisations,
challenge the
status quo to
develop
commercially
attractive
sustainable
solutions
In a recent Ethical Corporation essay – A view from
the crossroads, published in October 2013 – David
Grayson highlighted the need for “much more
transnational, cross-sector collaboration if we are to
tackle the urgent sustainability challenges which
now loom, Everest-like, before us”.
To achieve this goal will require engaging the
creative powers of people in business, as well as the
public and not-for-profit sectors, on a large scale in
order to create a “tipping point” – described by
Malcolm Gladwell in his best-selling book of the
same name1
– for widespread action to address social
and environmental goals. Gladwell argues that ideas
spread through the existence of specific “types” who
“tip” human behaviour in particular ways – sales
people, connectors (brokers) and mavens (individ-
uals able to see meaning, patterns and the big
picture from seemingly random information).
Business leaders interested in helping sustain-
ability practices reach a “tipping point” would do
well to tap the talents of such individual types in
their organisations and the extended cross-sector
networks through which they operate.
Intrapreneur opportunity
Beyond simply increasing the number of people in
their companies engaged with sustainability issues,
business leaders may wish to improve the quality of
that engagement as well. Those who want to move
beyond compliance or risk-mitigation in managing
their social, environmental and economic impacts
(corporate responsibility) and also systemically find
business opportunities (corporate sustainability)
need to engage the full range of their employees’
talents.
Almost certainly, among these employees will be
a small number who will have entrepreneurial ideas
that will simultaneously add value to the company
and contribute to sustainable development; and
who will be prepared to take the initiative – often in
their own time. We call these people social intrapre-
neurs: people within a large corporation who take
the initiative for innovations that address social or
environmental challenges while creating commer-
cial value for the company.
They are looking to create what Harvard strategy
guru Michael Porter describes as “shared value”.
Typically, social intrapreneurs are going against the
grain. They are challenging their organisation, ques-
tioning the status quo to develop and implement
commercially attractive sustainability solutions.
Hence another description: corporate provocateurs.
Often, at least initially, their intrapreneurial activity
is not part of their job. This is why some social
intrapreneurs talk of their day job and the job that
they do in their spare time: “moonlighting” for their
own employer.
Social intrapreneurs are responsible for, among
other things, the creation of microinsurance
products (Allianz); the start-up of a business unit
within a global parcel delivery corporation to
improve operational efficiency while ameliorating
climate change impacts (DHL); the reduction of an
international brewing company’s production costs
to improve competitiveness in developing countries
through partnerships with local growers (SAB
Essay
Creating a tipping point for social
intrapreneurism
By David Grayson, Melody McLaren, Heiko Spitzeck
There is an opportunity for a multistakeholder approach that can promote better sustainable
business practices through social intrapreneurism
Strategy and management 17Ethical Corporation • February 2014
ORLANDOFLORINROSU

Miller); micro-energy projects within a major
energy generation corporation to boost productivity
and address poverty in developing countries
(EON); ethically produced sustainable product
lines at a landscape paving company (Marshalls);
and the development of a commercially viable
business unit within an engineering consultancy to
address sustainable development (Arup). All these
projects exemplify “corporate social opportunities”
– corporate initiatives that create both commercial
and societal benefit (Grayson and Hodges, 2004)2
.
Over the past two decades, social entrepreneurs
such as Muhammad Yunus and his Grameen bank
have been heralded for creating social benefits
based on business thinking. During this time an
international architecture to raise awareness of, and
support for, social entrepreneurs and social enter-
prise has emerged, thanks to the pioneering work of
a number of individuals and organisations.
Prominent among these have been Bill Drayton
and the Ashoka Foundation he created; the Avina
Foundation; Klaus Schwab, founder of the Davos
World Economic Forum, through whose Schwab
Foundation social enterprise has featured at the
WEF; Jeff Skoll and the Skoll Foundation, which in
turn has created the Skoll Centre for Social Enter-
prise at Oxford’s Said Business School, and the
annual Skoll World Forum on Social Enterprise; and
John Elkington and Pamela Hartigan, with their
book The Power of Unreasonable People (2008).
It has taken more than two decades for social
entrepreneurism to be widely recognised. It took
Yunus’s Grameen Bank more than 20 years to reach
seven million customers. Compare that to M-Pesa, a
mobile payment system launched by two social
intrapreneurs at Vodafone in Kenya, which reached
17 million people within the first four years. If we
want to scale good ideas quickly, promoting social
intrapreneurism makes sense. Is it possible for the
socialisation of the idea of, and development of
good practice in, social intrapreneurism to be
accelerated?
Sales force
One of the factors driving increased awareness of
social entrepreneurism was the interest of the
Schwab Foundation and discussion of the topic at
the World Economic Forum. Already, social
intrapreneurism has been discussed in Davos in
2013 and in the WEF China 2013 meeting. Undoubt-
18
If we want to scale
good ideas quickly,
promoting social
intrapreneurism
makes sense
Strategy and management Ethical Corporation • February 2014
Could social intrapreneurs build on the work of entrepreneurs such as Muhammad Yunus?

edly, regular further discussion in such forums,
where many of the global elite and global opinion-
formers – an ideal “sales force” for promoting a
“shared value” ethos – meet to share and develop
ideas, would help to speed up awareness-raising as
participants and journalists covering the event
spread the messages they have heard. This is
starting to happen with regular coverage in blogs
and media such as Guardian Sustainable Business,
Fast Company, Forbes and the Huffington Post.
A few individual consultancies and corporate
responsibility coalitions are starting to help compa-
nies to explore how to create an enabling
environment. This process could be accelerated if a
group of leading multinational companies could be
persuaded to commit publicly to social intrapre-
neurism, and to a joint action-learning programme
where they would share their experiences and chal-
lenges and explore potential solutions for creating
an enabling environment for social intrapreneurism
in their own organisations.
Such an action-learning research club would
carry greater credibility and profile if it were co-
ordinated by a high-profile organisation such as the
WEF; one of the leading corporate responsibility
coalitions such as Business for Social Responsibility
or the World Business Council for Sustainable
Development; leading business schools; or a global
consultancy.
Ideally, such collaboration would optimise the
latest online information and communications tech-
nology to facilitate the capture, storage and retrieval
of good practice; and the emerging learning would
be made publicly available via the internet and
subsequently through capacity-building training
programmes for corporate heads of learning, talent
development, innovation, HR, strategy, new
business development and others. Already CSR
Europe has teamed up with Ashoka and the BMW
Foundation to raise awareness of, and capacity for
supporting, social intrapreneurism among their
corporate members and national CR coalition
partners.
‘Connector’ events and networks
Connecting innovative companies and individuals
committed to cultivating, supporting and promoting
social intrapreneurism through networks and coali-
tions can play a powerful role in creating a “tipping
point” for social intrapreneurism.
Ideally, in parallel with this awareness-raising
and capacity-building for companies, there would
be increased promotion to potential social intrapre-
neurs themselves. This could be through further
competitions and award schemes like the League of
Intrapreneurs.
There are now about 50 Impact Hubs with a
further 50 expected to be operational by 2015. More
Impact Hubs around the world could be running
courses and clubs for social intrapreneurs. Student
organisations such as Aiesec, Oikos International
and Net Impact, and student-run conferences such
as Emerge (hosted at Said Business School, Oxford)
and the annual Doing Good and Doing Well Confer-
ence on responsible business at IESE (Barcelona)
could be profiling social intrapreneurs regularly.
Net Impact and Oikos International are global
student networks aiming to bring sustainability into
management education. Aiesec also has some
interest groups on sustainability. Their alumni are a
natural source of social intrapreneurs as their
members are convinced that business can be used as
a positive force for good, and many of them are
looking for careers with positive impact. At their
universities they have already learned change-
making skills in trying to convince university
administration to integrate sustainability into the
courses they offer.
Net Impact has several professional chapters for
alumni. It is possible some of these individuals may
be aspiring or emergent social intrapreneurs. Apart
from encouraging them, Net Impact might profile
such members to inspire others.
By making social intrapreneurism a regular
theme of their conferences, publications and activi-
19
A few
consultancies
and coalitions are
helping companies
create an enabling
environment
GETTYIMAGES

20 Strategy and management Ethical Corporation • February 2014
ties, student organisations such as Oikos Interna-
tional and Net Impact could further raise awareness
of the idea of social intrapreneurism, build networks
and potentially create learning collateral that local
chapters could use. Members could also be
suggesting social intrapreneurism as a topic for
classes, to their faculty. The world’s business schools
could be including courses on social intrapre-
neurism in their MBA and specialist masters
programmes, as well as in specialist executive lead-
ership programmes.
Supporting individuals
Being a social intrapreneur, especially in the early
stages, can be very lonely. Capturing and dissemi-
nating more practical advice and tips like the
League of Intrapreneurs Cubicle Warrior Toolkit,
and creating more peer-to-peer learning and
support networks like the League of Intrapreneurs
Lab and Aspen Institute’s First Movers programme,
and sharing curriculum and case-studies online,
could also accelerate adoption of social intrapre-
neurism.
Many of the social intrapreneurs and their
projects we have met have teamed up with external
partners such as NGOs that have been crucial to
their success. For these external partners, social
intrapreneurs can be another route to increase their
own impact substantially and to extend their reach.
Gib Bulloch – a leading social intrapreneur who
founded Accenture Development Partnerships writes:
Most large charities or NGOs will have tens if not
hundreds of thousands of supporters each giving $10,
$20, $50 or more each month as part of their commit-
ment to a cause they are passionate about. Some will
work in the public sector, some in the non-profit sector.
But many will work in the corporate sector. And of
them, a handful may even be latent social intrapre-
neurs – people who are well networked internally.
Who know the rules of the corporate and when to bend
or even break them. They know that influence doesn’t
always mean you’ve memorised the hierarchy of an
organisation chart. They know how to cut corners to
get things done and are willing to take career risks for
a cause they are passionate about. The smart NGO
CEO will consider less about chasing philanthropic
dollars – more about how to mine their donor database
for the latent social intrapreneurs – the herds of latent
“Trojan horses” residing deep undercover in the corpo-
rate world, awaiting a cause and a call to action.3
Imagine a group of innovative social enterprises
and charities either individually or as a consortium
offering some tailored, experiential management
development placements with them for selected
high-flyers from their corporate partners and other
multinationals. Or those same social enterprises and
charities with entrepreneurial ideas related to their
core mission, using social media to help them talk
directly to supporters working in relevant multina-
tionals and encouraging them either to take up the
ideas themselves or find co-workers who might
relish such an intrapreneurial challenge.
Imagine too a “dating service” for social intrapre-
neurs and external partners (NGOs, international
development agencies etc) working in the social
intrapreneurs’ areas of interest: a model suggested
by Meg Jones who works for the International Trade
Centre, a joint agency of the UN and the World
Trade Organization, mandated to help SMEs in
developing countries achieve export success.
NGOs might consider identifying and targeting
their members/supporters working for multina-
tional companies and encouraging them to explore
social intrapreneurial ideas relevant to the work of
the NGO.
NGOs might also work with existing corporate
partners to run experiential learning programmes like
the GSK Pulse or IBM Citizenship Corps that might
stimulate social intrapreneurs within the corporate
partners. Indeed, NGOs may already be working
with key individuals in their corporate partners who
might have, or be encouraged to develop, social
intrapreneurial ideas, with the help of the NGO.
International development agencies have long
recognised that it is better to teach a community to
fish than to give them fish, and that, therefore,
business and broader economic development is
fundamental to sustainable development. Indeed,
engaging business more systemically has been one
of the major themes of discussions on the Sustain-
able Development Goals which will follow on from
the Millennium Development Goals in 2015.
Providing early-stage funding to support proof
of concept, as the DfID Challenge Fund did for
Vodafone’s hugely successful mobile money M-Pesa
service in Kenya, could be an effective way of fast-
tracking economic development. Do agencies like
US AID already have a funding mechanism that
could potentially be used to support social intrapre-
neurs? Are there any existing, effective promotion
mechanisms to bring such a fund to the attention of
potential applicants?
Developing ‘mavens’
We recognise this is a fast-developing field and one
that would benefit from further research. As
researchers ourselves it might be seen as special
pleading to recommend further research. However,
we do believe that the proposed efforts to raise
awareness, promote, capacity-build and share
emerging good practice about and for social
intrapreneurs will be greatly enhanced if accompa-
nied by action research. There are a number of
researchers internationally who might be invited to
help refine and develop a relevant research agenda,
perhaps under the auspices of the Academy for
Business in Society.
How might a supporting architecture for social
intrapreneurism develop? Imagine a world in which:
The world's
business schools
could be including
courses on social
intrapreneurism
Gib Bulloch

light-touch coordination and strategic direction of
efforts to go further and faster. Could an existing
international foundation extend its remit to
promote social intrapreneurism? Alternatively, is
this a ready-made opportunity for a high-net-worth
individual looking to achieve positive societal
impact at scale, to create a new venture to promote
social intrapreneurism as, for example, the Skoll and
the Schwab Foundations have promoted social
enterprise?
To create the “tipping point” we seek, our
imperative is clear: we need to bring together
sales people, connectors and mavens for social
intrapreneurism. n
1 Gladwell, Malcolm, (2000) The Tipping Point: How Little Things
Can Make a Big Difference. London: Little Brown.
2 Grayson, D, and Hodges, A, (2004) Corporate Social Opportunity:
7 Steps to Make Corporate Social Responsibility Work for your
Business. Sheffield, UK: Greenleaf.
3 Bulloch, Gib (2013) Harnessing the Herd – Could Social
Intrapreneurs represent a “Trojan Horse” strategy for charities.
Business Fights Poverty (March 24, 2013).
http://community.businessfightspoverty.org/profiles/blogs/gib-
bulloch-harnessing-the-herd
• Corporate responsibility coalitions run awareness-
raising and good practice sharing for member
companies; and potentially include a social
intrapreneur category in any CR awards
programmes they might run.
• Business schools teach social intrapreneurism as
part of any change-maker courses they might run
for MBA students; and offer master-classes and
executive education programmes in creating an
enabling environment for social intrapreneurism.
• Social innovation Impact Hubs and equivalent
centres around the world offer development
programmes and peer support to aspiring and
new social intrapreneurs.
• The League of Intrapreneurs or a similar grouping
develops as an open-source, online centre of
excellence, offering case studies, how-to advice,
signposting to further help, match-making to
potential social intrapreneurial “buddies” and access
to online and face-to-face training programmes.
• International development agencies are willing to
consider co-funding viable social intrapreneurial
proposals and pump-prime capacity-building
initiatives.
Each of these things could happen organically.
There are, however, opportunities to provide some
21
International
development
agencies have
long recognised
that it is better to
teach a community
to fish rather than
to give them fish
This call to action is adapted
from “Social Intrapreneurism
and all that Jazz” by David
Grayson, Melody McLaren and
Heiko Spitzeck, to be published
by Greenleaf Publishing in
March 2014.
Innovation and cooperation breed business success and development opportunities

22
The 2013 UN Global Compact/
Accenture CEOs survey finds
that while 93% of business leaders see
sustainability as a real challenge to
the future of business and 78% see it
as a route to business growth and
innovation, more than two-thirds
think that business is not doing
enough to address global sustain-
ability challenges.
The explanation for this contradic-
tion is the lack of a business case. Only
a third of the 1,000 respondents
believe that they have found a
business case for sustainability. A large
majority of CEOs (83%) are of the
view that more effort is required by
regulators to provide the necessary
enabling environment. Clearer policy
and market signals to support green
growth were demanded by 85%.
According to the Sloan MIT 2013
Management Review, published in
December 2013, business faces
problems at several levels. These
include a worrying gap between
perception of the sustainability
challenges and business’s response
or preparedness.
Take climate change, for example.
At a personal level, 88% of respon-
dents believe climate change is real
and 79% judge it to be a risk to polit-
ical and social stability. Turning to the
business implications, well over half
believe that climate change is a risk to
their business. Only a third, however,
believe that their company is
prepared for climate change risk.
Looking at the social, environ-
mental and economic pillars of
sustainable development as a whole,
a similar pattern emerges: 70% of
executives think that sustainability
issues were either “significant” or
“very significant” but only half of
respondents assessed that their
firms were “largely” or “fully”
addressing these issues.
On the question of whether their
company has developed a “clear
business case” or “proven value
proposition” for its approach to
sustainability, nearly two-thirds of
respondents in the Sloan/MIT study
replied in the negative.
Based on annual findings since
2009, the Sloan/MIT data suggests
that only a third of companies (37%
in 2013) believe they have identified
a business case – a figure similar to
that found by Accenture.
Tipping point
Both studies support the conclusion
that while some companies have
been able to harvest the low-
hanging fruit, it appears that (as the
Sloan/MIT report puts it) a “crucial
inflection point” has been reached,
where companies are unable to
move to the next level without help.
The Sloan/MIT report recom-
mends more industry-led measures.
All the evidence, however, suggests
that we have long since reached the
limits of what voluntary action
alone can achieve. The limited
business-wide uptake and impact of
most voluntary standards speaks
for itself.
We will not have a business case
for sustainability unless it is hard-
wired into the regulatory landscape.
At the macro-level, two main changes
are required across the board.
Firstly, there now needs to be a
more open, sustained and positive
debate in support of regulation.
Here, the need to align short-term
human behaviour with long-term
human interests must be paramount.
Business and media share a
responsibility for helping design a
mix of carrot and stick regulations
based on measurable positive sustain-
ability impacts, and for taking the case
to the public of the need for some-
times tough and expensive measures
to safeguard our common future.
The narrative that “we can’t
afford it” is a nonsense that must be
challenged, including by the finan-
cial sector. With all the evidence
suggesting that it will cost us more
to adapt to collapsing and changing
natural systems than to avert those
disasters, it is time for business (and
not just the insurance industry) to
give a value to the assets at risk and
to define how the business case for
a green and sustainable economy
can be made.
Secondly, reporting of environ-
mental, social and governance
performance needs to be made the
norm and expectation, not the
exception. Sustainability won’t be
mainstreamed until it is made a
conscious part of the business,
whether as an incentive or an obli-
gation. Recent progress on this by
the EU is encouraging.
This means that all large organi-
sations must be required to measure,
assess and disclose their sustain-
ability policies and impacts, and
how they plan to respond to
emerging sustainability challenges.
Equally, institutional investors and
ratings agencies should be required
to take this information into account.
And in all these matters, it is in
business’s interests to lead rather
than be forced to follow. n
Paul Hohnen is an Amsterdam-based consultant
who advises, speaks and writes on global
sustainable development issues. He is an asso-
ciate fellow of Chatham House and a member of
the Ethical Corporation advisory board.
By invitation: Paul Hohnen
Smart rules will spur
business action
A better regulatory environment is required to help companies to hit
sustainability targets, says Paul Hohnen
Clear regulatory signals please
We have long
since reached
the limits of
what voluntary
action alone
can achieve
IVCANDY
BY INVITATION:
PAUL HOHNEN
Strategy and management Ethical Corporation • March 2014

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