Getting my news

I was happy to see my local cable provider (with whom I have love-hate relationship) (ok, who am I kidding, it’s hate-hate.. I really have very little use for cable television) adding BBC World to its channel lineup. For anyone who hasn’t watched, BBC world is a great way to find out what’s going on beyond the typical North American media filters (Iraq this, Afghanistan that, celebrity shocker of the week etc…). No media source is truly objective, but I would venture that compared to what’s out there, the BBC comes pretty close. More importantly, it offers a perspective that differs from a great deal of what we are typically exposed to, challenging us to decide for ourselves.

TVO’s The Agenda had a great program last night on the role of media (both conventional and new media), with some truly intelligent debate and insightful opinions (thank you TVO!). Above all, the importance of media and journalism to providing democratic checks on government was underscored. While new media has provided an unprecedented level of access to information, there was a concern about whether the economics of the medium will be able to support high-calibre in-depth investigative journalism. The counter to this would be that the economics of conventional broadcast media certainly don’t support this- instead they rely on high production values- but let’s face it, networks aren’t all that concerned with the news anyway. New media, by virtue of its ability to give anyone a voice, provides the ability for the collective audience to put the spotlight on things as they happen, leaving the uncovering of news to those who have the most interest in doing so. The choice of what is important then becomes purely democratic… or at least the theory goes. Another consideration is that things like google news alerts are great in bringing together diverse sources of information on a topic, but while this promotes increased immersion in a particular subject, our exposure to other subjects we might not choose to pursue on our own becomes more limited. Thus the defence of newspapers is mounted by people who just love to get their fingers grimy every morning.

As a side-note, a great site that was mentioned on the show has made my bookmarks toolbar: Daylife presents an innovative way to view news items by combining content from various sources and maximizing the visual potential of the on-line medium.

Tata & The Constructed Limits of Social Enterprise

Tata has been in the news recently with its announced acquisition of Corus steel, making it a major global player in the industry. For anyone interested in social enterprise and social responsibility you should definitely take a look at this company. Also, for those who have the time, here is a reflection piece I wrote for a class a week ago.

The Constructed Limits of Social Enterprise

By David Anders

“If the doors of perception were cleansed everything would appear to man as it is, infinite. For man has closed himself up, till he sees all things thru chinks of his cavern.”

- William Blake

The emergence of the concept of “social enterprise” in the curriculum of management studies and in business literature has been perceived as a relatively recent event by much of the business community. However the social utility of business and trade is an essential element of the earliest arguments for market liberalization. In the present dialogue on the social role of business, two different philosophies prevail. One argument, popularly stated by Milton Freidman in 1970, stresses that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game”[1]. This statement is more or less aligned with the prevailing view of traditional western businesses and free-market economists. An alternative view, less celebrated in most business circles, is that all businesses should exist to provide a form of social benefit, and are reliant on an implicit social license to operate. Predominantly associated with NGOs, social activists, and grassroots social enterprises, this argument was criticized by Friedman as “pure and unadulterated socialism”. Groups at different ends of the political spectrum have traditionally been quite divergent on this issue, and as a result, most debates on economic policy and the role of business in society cannot escape political associations. More recently, some convergence between the two camps can be seen to be emerging. Entrepreneurial corporations are recognizing the potential for socially minded enterprises formed at a grassroots level, often in a way that emphasizes cooperation and partnerships, bringing NGOs into the fold as business support structures. NGOs and grassroots organizations are recognizing the potential for profit-based models instead of relying on traditional practices of philanthropy. Nevertheless, few would claim that the interests of today’s powerful corporate entities are fully reconciled with the objective of social enterprise to “maintain or improve social conditions in a way that goes beyond financial benefits”[2]. There exists profound skepticism among business leaders and economists about the potential for the impact of social enterprise carried out by traditional businesses, as well as from the point of view of social activists, who perceive the business models of large companies as remaining fundamentally exploitative.

The Tata Group stands alone as a conglomerate founded on the principle of social enterprise, and as a leader in the development of social responsibility practices. This example appears to offer evidence that a seemingly western business model can create sustainable social value. However, the success of Tata goes beyond developing and institutionalizing social metrics such as the human development index (HDI). Tata’s social conscience exists as an inherent part of its strategy, and is seen not only as a footnote in their annual report (as is the case for many traditional companies), but throughout their operations and their culture. The culture of giving and volunteerism in Tata’s organization has roots that are deeper than visionary leadership and innovative policies. Western companies may argue that Tata’s success is attributable to its business model being uniquely suited to its environment. The surplus of labour, lack of social services, high degrees of corruption and income disparity in India may explain the relative need for social enterprise, but these factors do not adequately explain Tata’s success in both the social and economic arenas. Rather, this has much more to do with the cultural perception, an element perennially overlooked by economists. The culture of Tata as an organization, and its constituencies stems from both the history, and endemic conditions, of India. A unique example is the culture formed around the concept of social enterprise, in the form of the Swadeshi movement, which was a direct response to the economic exploitation of India under colonial rule. The colonial conditions in India were intimately related to the political and economic objectives of not only Britain, but of the British East India Company, which controlled most of Britain’s colonial interests[3]. The establishment and fortification of domestic industry, catalyzed by the Swadeshi movement, allowed India to challenge both the economic influence of the EIC, and the political power of Britain. The Swadeshi movement did more than create an impetus for domestic economic development. It enabled a shift in perception and values that aligned all aspects of economic activity on the basis of nationalistic and humanitarian interests. The emphasis on serving the domestic needs through domestic productivity has a great deal in common with political and philosophical views that predominated in the east. In many western corporations, however, the colonial model of expansion and exploitation of resources is still alive and well.

The business ventures that emerged from Jamsetji Tata’s vision of social enterprise were supplied with legitimacy in their social utility, something that western businesses today have come to lack. They faced the predominant view, still held today that this model would not be economically viable given its environment. 170 years after the creation of Tata, we can see that this perception was flawed. The spirit of the company’s beginnings appears to be very much present in the present day initiatives of Tata, but the company’s position as a growing multinational threatens to blur the positioning of this organization between an inwards-facing eastern philosophy, and an outwards-facing western one. The question of how the company, with values that are distinct from many of the more traditional western counterparts will adapt to growth is the same question facing western multinationals on the road to sustainability. In both cases, there is a required shift in cultural perception not only within business leaders and employees, but in the minds of customers and other stakeholders. Without this, social performance and growth will remain a tradeoff, serving two separate and irreconcilable ideologies. A unified ideology must combine western ideas such as the creation of economic efficiency through competition and open markets as an essential condition for social wellbeing, and eastern imperatives such as social wellbeing as a basis for business strategy, not simply a result of it. It can be argued that Tata’s success this far is in realizing this balance.

The question, as it relates to the western business world is whether today’s multinational companies can be supported by a business model that creates sustainable social value, or is consolidation of global economic power in such companies irreconcilable with the need to address fundamental social issues such as income and resource disparity on a global level? The need to resolve this question can be seen if we consider the ramifications of social objectives in business, and the global economic trends that will shape the next century if international enterprise. The momentum of economic growth in regions such as India and China imply a future position of increased economic leverage in international trade. This realization has already caused significant consternation among western industries and has in some cases, produced a resurgence in economic nationalism. Those who are more sympathetic to the plight of developing nations see the role of international development as one of elevating the standards of living in poorer nations. However, the reality that a global civilization enjoying a western standard of consumption is beyond the carrying capacity of our environment is naively forgotten, or conveniently dismissed. Most people see no conflict in wanting to eradicate poverty, and wanting to better themselves in the process. This echoes the often expressed objective of sustainable business as it is conventionally considered in the west, even by the more progressive standards. Therefore, there is also no connection between the patterns of consumption that feed most established western businesses, and the underlying social problems that social enterprise initiatives attempt to address. So long as companies are measured on a financial bottom line, there is no incentive for them to change this. The shift of western priorities away from individualism and financial agglomeration towards a system of values that promotes the importance of community and the intrinsic rewards of giving back requires a revolution in culture. The implication is inevitable dramatic change in the western way of life, whether it is accepted voluntarily, or involuntarily.

Tata provides a hopeful model of how other companies might reinvent themselves, but the viability of this model is dependent on the acceptance of social betterment as a legitimate purpose for business. A particular system of values allows Tata to succeed economically as a social enterprise, and this system is not so easy to replicate. The stakeholders of business must also reinvent their system of values if sustainable models are to proliferate. However, these values are firmly entrenched in western assumptions and cultural traditions. Despite the ‘export’ of western economics to the developing world, there has been little importing of the supportive values that make social enterprise successful in these areas. In seeking a healthy and sustainable society, western nations share with the developing nations of the world the fact that we still have a long way to go.

 

 

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[1] Friedman, Milton, “The Social Responsibility of Business is to Increase its Profits”, The New York Times Magazine, September 13, 1970.

[2] Dees, Gregory J. and Backman, Elaine, Social Enterprise: Private Initiatives for the Common Good, Harvard Business School, November 30, 1994.

[3] Sachs, Jeffrey D., The End of Poverty: Economic Possibilities for our Time, Penguin Press, 2005.

Between the Lines: Recognizing the middle ground in the SRI debate

Socially Responsible Investing (SRI), championed by specialized research firms such as Innovest, has been promoted as not only fulfillng an ethical and moral role of contributing to sustainable business practices, but also as a way to realize financial returns above those of more traditional market indices. However, there are many on both sides of the socio-policical spectrum who criticize SRI efforts to date, using a variety of arguments, ranging from the fiduciary irresponsibility of decision making based on SRI concerns to the criticism of screening techniques that may be too ‘porous’ (for example letting extractive industries, tobacco companies through). Bleeding Greens will point to companies in an SRI portfolio and point out that few if any represent truly progressive sustainable business models- more often than not they consist of large, successful firms pursuing what are viewed as ‘incremental’ sustainability measures (A look at the JSF and DJSI brings up players such as RBC, BCE, Alcan, Rogers, CNR, RIM, for example). Few financial analysts would consider these selections poor choices in the view of traditional financial analysis, but few environmentalists would jump to defend their contribution to our global sustainability. So is there any real value here, or does SRI amount to greenwashing in the investment market?

The debate can easily rage on, but progress is often not achieved without compromise. Maybe a better way of putting it besides “who is right, and who is wrong”, is “Is there a middle ground that can be found? An agreed on role for SRI that satisfies financial and environmental interests?” For one thing, while most performance indicators of SRI indexes and funds have pointed to increased returns over more mainstream indices, these either rely on backwards analyses (using the flawed reasoning that past performance is an indication of the future), or the tracking of performance since inception, which is often only a few years at most- not necessarily long enough to adequately gauge risk. These claims need to be taken with the same grain of salt as other investment screening tools. SRI theorists argue that at any rate, sustainable practices are in indication of good management practices, such as efficient management of operations, stakeholder engagement etc. Most people on either end of the spectrum are able to give this assertion the benefit of the doubt, but what about the environmental/social performance of these firms? Analyses of these criteria is mostly based on companies’ claims and initiatives. There is not an extensive auditing establishment for these factors as there is for financial criteria. Until we can establish such measures, it will be difficult for SRI to acheive wide recognition for its contribution to sustainability.

While it is quite easy to point to individual firms in an SRI portfolio and remind us that being less unsustainable is not the same thing as being sustainable, SRI proponents will point to the fact that these companies are merely the best on a comparative basis. This point is important, because one of the barriers to adopting sustainable practices seems to be the tendency to view its goals as idealistic, unattainable, and naive. But while sustainability invokes the idea that we can live in a state of harmony with each other and our environment, sustainability goals must be viewed in terms of what we need to do now in order improve our chances of getting there. While we need leaders both in private and public sector to look beyond incremental measures, we must also recognize that the state of the world as it is now was not built up instantly- it was an incremental process. Evolution is a process of incremental changes, sometimes accelerated by singular dramatic events. What we need are some singular dramatic events (for example, legislating a market-based approach to reducing emissions), and be willing to let the process of rewarding those with an advantage in sustainability while punishing those without. SRI is one way to do this, and should be seen as such, nothing more, and nothing less. In the context of the sustainability endgame, where all measures of the triple-bottom line are truly reconciled, SRI will be a meaningless concept- rather, this scenario envisions a world in which, for businesses, positive social and environmental feedback is a condition of financial viability, and only creation of value in all these areas results in the preservation and growth of firm and equity value.

For those seeking a more informative and meatier discussion of SRI, check out this blog.

Another Test for the UN

While it is my intention to leave out dicey political subjects as much as possible, I can’t help but being preoccupied with current events in the sphere of political and ideological conflict. Also, it is a subject with as much relevance to global sustainability as any other that you will find here.

Today’s UN mandated ceasefire in Lebanon represents another test of the organization’s effectiveness in the pursuit of peaceful resolution of conflict. It is difficult to feel hopeful- the UN’s ineffectiveness in situations past, the long and complicated history of middle-eastern politics, and the presence of ideological interests make a strong case for cynicism with respect to the current situation.

This leads to the prevalence of opinion, especially in those to the right of the spectrum, that the only solution to ideological conflict in the middle-east is for Israel, the U.S., and whatever “coalition of the willing” deems fit to participate, to lead a military action to rout out terrorist operatives and their fundamentalist leaders.

So who needs the UN? After all, a multinational force made up of dominant players has the democratic legitimacy and authoritative power similar to a peacekeeping force, without bureaucratic baggage that seemingly results in impotent half-measures when applied to incendiary situations such as currently exist in the middle-east.

The problem with this is that there is a very real need to understand as much as possible all the issues at stake. While debate and disagreement can result in inaction, it is a necessary process for a democratic institution. This inevitably bumps up against the realist viewpoint- which rightly questions to what extent these laudable, but slightly idealistic intentions provide actual utility? How democratic should we attempt to be? In what situations does the pursuit of democracy cause more harm than good?

Is the UN as doomed to failure as was the League of Nations? What are the alternatives? Recent history has already witnessed an expansion of NATO’s mandate of European and North American defense to include the new scope of the global war on terror.

One thing that is needed is a desire for peace. The inclusive nature of the UN attempts to create a forum which defeats unilateral action- something which generally results in one party’s gain and another’s loss, and encourages a multilateral approach with the intent to share the burdens of conflict equally, and to achieve a net reduction in the destruction and loss that would otherwise be incurred.

Is this in itself an ideology? I guess I would say that the UN needs a certain ideological quality to ensure its unity, and in turn its authority in acting on world matters. It is essential to preserve the consultative nature of the UN, especially as the issues become blurry.

A more militaristic organization is a flawed approach. Many of the greatest challenges in the conflict centers of the world today have roots in social and economic conditions that are not ameliorated by warfare. Poverty and lack of education result in the right conditions for fundamentalism and terrorism to gain a foothold. Decades (and even centuries, perhaps) of conflict in the middle-east have at least shown that violent action provokes a violent reaction, and undermines the conditions for internally generated peace and stability. The only occasions where truly constructive rebuilding in the wake of violence has occurred has been through the imposition of externally generated stability (enforced by military control), namely, such as has occurred after the world wars, in which case the scale of destruction was so great as to leave virtually nothing but a clean slate. This is the situation the UN was created to prevent, and we should not forget the possibility of this type of conflict in the future. The right action is to address the roots of these conflicts and attempt to eliminate the global economic imbalances that exist. This is hard for us to do as it entails sacrifice- not only of an economic type, but more importantly of an ideological belief that “we” as western powers are right, that the world should listen to us, and that if they just believed what we did, we could all get along and the world would be a better place. Come to think of it, doesn’t that sound like the kind of ideological fundamentalism that we would supposedly oppose so vehemently?

I humbly propose to you this: Sustainability is the ideology for the 21^st century. Belonging to no one, it represents a secular belief with a moral mandate. It acknowledges that we are all fundamentally fighting for our right to exist in this world, but more importantly may be our ability to do so.

The Selling of Green

An interesting dichotomy exists in the market for “green” products. On one hand, there are products and businesses which serve a direct need for sustainability. Renewable energy in remote areas, medicines targeting third world diseases etc. Largely these products are aimed at a mass market, often in segments referred to as “bottom of the pyramid” markets.

However, there is also a slew of products that are firmly established in the high-end markets. Organic foods, hybrid cars, efficient houses, are all sold at a premium, removing them from the reach of the typical middle and low-end market consumer.

How should we feel about this? Clearly, high end consumers have a larger proportional economic “vote”, but as an aggregate, it is dwarfed by that of the mass markets. One clear advantage is the establishment of the green cachet. Movie stars driving Priuses make it look cool to be green. All this filters down to the collective consciousness as being elements of a desirable lifestyle, and in time, these things may truly become affordable.

Green marketing must walk a delicate line of promoting sustainable alternatives, without feeding the unsustainable culture of consumerism. This is a thought that troubles me from time to time when thinking about my own views about “sustainable capitalism”. Ultimately, it is why I can never fully discount the need for some imposition of regulations on industries and markets, and why I believe most of the best sustainability marketing is done not purely for the business case. At the end of the day, we have to think about, and want to do what we believe is right.

On some level we cannot expect the future to provide us with better things and ways of doing what we already do- we must expect us to challenge to want to do things differently.

Discuss.

The Blood Diamond

A new movie starring Leonardo DiCaprio is set to release in December, and will focus on the conflict in Sierra Leone in the late nineties. The period saw the use of “blood diamonds” to finance warfare. The diamond industry is purportedly very anxious about the potential bad press this movie could cause, and asserts that blood diamonds have been “virtually eradicated”, though the World Diamond Council states that the percentage of conflict-funding diamonds has been reduced from 4% during the war in Sierra Leone to 1% (Source: The Globe and Mail). A 75% reduction is good, but wouldn’t seem to be the same as “eradicated”.

One thing I find interesting is the movement into the mainstream not only of documentary type films on a range of social and environmental issues, but the movement of these underlying themes into mainstream dramas and thrillers. While Hollywood has long been fond of dramatically resurrecting historical events in order to comment on present day scenarios, it has been relatively uncommon to use these vehicles to shed light on more recent events. If this sort of thing is to become “fashionable entertainment”, then maybe we are on our way to recognizing the attributes of social conscience as fashionable as well.

As for the protests of the diamond industry, this is a false threat. If the industry has been so successful in countering blood diamonds, and if the real worry is only that consumers will be ignorant about the initiatives that the diamond industry has undertaken, then the real problem is the failure to leverage these practices as a marketing tool. If “clean” diamonds can’t be marketed as a superior product, then what hope do we really have of completely eliminating conflict diamonds from the marketplace?

De Beers is one of the companies who is worried about reduced demand for diamonds as a result of the film. However, companies such as De Beers should recognize that the real threat lies in the presence of conflict diamonds in the first place, and that only through calling public attention to the issue can companies who are able to provide a “socially conscious” product leverage a competitive advantage by creating categorical demand for their products. Diamond companies who can’t provide a socially and environmentally sustainable product should face tough pressure from consumers. Those who can should get onside and compete.