Has shopping become more transparent?

A radical transparency about the ecological impacts may yet emerge from these efforts — and many in the business world are paying attention. A recent article in Harvard Business Review proclaims that sustainability has become an essential business strategy and the key driver of innovation. To be sure, there are large numbers of companies who resist — but they may yet join in, if markets shift toward brands that are more transparent about ecological footprints, creating a compelling business case.

via Radical transparency could lay bare the eco impact of our shopping | Environment | guardian.co.uk.

Corporate Social Responsibility: needed or bad?

Aneel Karnani writes in The Case Against Corporate Social Responsibility (MIT Sloan Management Review):

[I]n cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.

Irrelevant or ineffective, take your pick.

As many of the commenters of the post point out this argumentation provides an excuse for corporations to do nothing rather than a constructive proposal forward to aligning social problems with entrepreneurial interests wherever possible.

The role of companies in addressing society’s problems is presented as a black and white issue: profit interests are either aligned with or contrary to social welfare. But why are profit and public interests aligned in some cases and in others not? Is it just a matter of waiting for sufficient consumer demand to create viable markets, or do we not rather have to ask how demand is created? It is as if markets appear out of nothing and sometimes are aligned with and sometimes contrary to public welfare; as if no marketing campaign has ever been successful to influence people’s shopping behavior. Executives and shareholders seem to live in a world that is separate from that of consumers and just wait for the latter to express new desires to fulfill.

And why should consumers not prefer products and services produced in ways that do not risk the lives of employees?  Why should consumers not want products that do not harm ecosystems, biodiversity, or the livelihoods of people (e.g. fishermen after the BP spill in the Gulf of Mexico)? Does it really all just boil down to financial cost and return as Karnani suggests?

He writes: “Executives are hired to maximize profits; that is their responsibility to their company’s shareholders.” Why do we assume that shareholders now and always will want to maximize short-term financial return? Is it (short term financial gain) inscribed into our genes, so that we cannot possibly place other goals above it? What about the growing investments in green and socially responsible companies where return is still lower than in many companies without such goals? What about people paying premiums for products and services they could get cheaper but at the expense of workers, the environment, or their own health?

Besides, who decided that executives are only hired to maximize profits? I found (interestingly, on the same page under related articles) a post from 2002 called Beyond Selfishness by Mintzberg, Simons and Basu. The post describes how corporate executives themselves moved in the mid 1990s from a view that corporations had economic and social responsibilities to one that made maximum return and “the shareholders the bottomline”.

The point is not that large corporations can or should be the ones solving all our problems, but that they, too, shape societal consensus and norms just like any other actor – and probably more than most given their financial strength and ubiquity. Companies, especially popular brands, do have the power to influence consumer behavior and thus demand. In this sense, CSR initiatives can play an important role in pushing the boundaries of consumers and shareholders towards more long-term thinking and sustainability. This in turn can create new markets and drive new types of investments. And even greenwashing can have positive effects: a company that publicly states goals to reduce emissions or to treat workers better (even with no intention to comply), can more easily be held accountable for (and shamed into) reaching them by others.

Mintzberg et al. write “that concern for others is [not] suddenly going to replace self-interest, but that there has to be a balance between the two.”

I believe that to achieve this balance is neither the responsibility of “the government”, nor of civil society organizations, nor of “the corporation” alone, it is the responsibility of all citizens… consumers, employees, activists, shareholders and executives alike.

We are not alone in the world: Lessons from traveling through Brazil

It is incredibly hard to get back to blogging after all this time, but for much of the time I did not update this blog, I have had a great excuse: I was traveling through the Northeast of Brazil and blogged about it elsewhere (that is Nanda – my wife – did most of the writing and I gave comments, helped translate to English and took photos).

In brief, the trip had a dual purpose: The main goal of Suficiente (enough in Portuguese) was to decide how we want to live our lives and to find inspiration for possible life projects. The second was to find a place where we would invest in setting this project up. I do not want to do a big summary here – our ideas and stories can all be seen and read at full length at http://suficiente.org/ – but rather share some things I learned during the trip:

Unfortunately, nature is a luxury good in many places either because too little is left or because you have to be rich to afford experiencing it.

Most coastal communities in Northeast Brazil seem to take one of two paths to tourist development. Either they go for mass tourism with lots of concrete, preferably directly on the beach, or they are going for the upper class tourists, in which case they take very good care of scenery and surroundings.

The mass model is not just plain ugly, but too small investments in waste management and water sanitation systems of these tourist towns pollute the water and soil, mangroves and forests have to give way to gated communities, resorts and high-rise buildings, and thousands of tourists trample on coral reefs and other attractions nature has to offer… in short many coastal ecosystems end up degraded or even destroyed.

The luxury model on the other hand seems to be very effective in protecting the environment, yet at another price: “Normal” tourists, who cannot afford the high price tags are effectively excluded. In other words nature’s riches are maintained for the benefit of rich tourists and the companies that enclosed the natural resources, earn a lot of money.

Both models see the local population as resources or as a disturbance, and in not too few tourist towns you will find fairly large shanty towns right next to 5-star resorts.

Yet, we have also seen attempts to build a different kind of tourism, a third way so to speak.

North of Maceió in the state of Alagoas a few small pousadas (guesthouses) offer high level services, but do so with an eye on environmental and social development of the region. They actively reach out to the local population, offer education, and participate in local environmental and social projects. With this, the group aims to develop the region as a tourist destination for all types of tourists and to give the local population economic opportunities without compromising the resources they all depend upon: the beaches and the beautiful surroundings.

In São Miguel do Gostoso (Rio Grande do Norte), local folks in their twenties and thirties are leading several NGOs to ensure that the touristic boom turns into better lives for them, their parents and children, and does not end in more poverty and drug abuse as in so many other tourist destinations.

These initiatives also show that environmental projects do not lead to any change if they are not taking into account the social context and vice versa.

Another such example is the work done in Tamandaré in Pernambuco on coral reefs. After several years of protection and research, it has become more and more difficult to convince local fishermen to stay out of the protected area, as fish stocks have recovered and promise much higher fishing returns than anywhere else (or many other activities). Recently the project team together with a few members of the local fishers’ association have created a new organization which helps fishers to exploit the riches of the marine reserve by guiding tours with boat and snorkel as well as acting as the guards for the reserve, instead of fishing. Of course this process is not without conflict and many discussions, but both parties have realized that they can only guarantee the reefs and fish stock if they deal with both protecting nature and guaranteeing the fishers’ livelihoods.

All of the people we talked to had stories to tell of how working with others has made the difference. Natureza Bela, an environmental NGO in the South of Bahia had a rather bad start but turned into a very successful and innovative organization when they established a consortium with various organizations, who are now applying for projects and funds together instead of competing. This consortium managed to set up the first certified carbon sequestration project via reforestation in Latin America.

That working together motivates, inspires and simply works better than fighting alone and against each other was also evident from all the other discussions we have had.

The biggest lesson of all is that change starts in each of us. Big projects, rules and policies may help, but ultimately, we all have to decide for ourselves what we need to lead a happy and fulfilled life. And maybe what we need is not the latest cellphone or a big car, but watching the moon rise or sitting together with friends.

Just as we had the chance to step back, watch and reflect on our trip through Brazil, I challenge you to do the same – not necessarily traveling, but maybe just in a bar around the corner over a beer with some friends.

Change the paradigm

A couple of days ago I went to a seminar by Leonardo Boff, a leading figure in the liberation theology movement and recipient of the Alternative Nobel “Right Livelihood Award” in 2001. He now thinks and writes about ecology and spirituality and calls for a paradigm shift for humanity to find back to living with nature instead of just using it.

His talk was very inspiring and underlined the need for an approach that is not just rebuilding our economic system, but that changes some fundamental characteristics of it. Given the extractive logic of the “maximize profit” model, an interesting comparison he made stuck in my head:

[Economic] growth behaves like cancer cells. They grow and grow until they have destroyed the whole body.

Sustainability is the better business model

Amazing case for sustainability in business on TED.

Ray Anderson tells the story of how he set out to change the economic model that governed his company Interface (and still governs most businesses).

The dominant industrial model is extractive, linear (take – make – waste), abusive, focused on labor productivity, dependent on fossil fuels. In this model environmental impact (I) is generated by people (P), what they consume (their affluence – A) and how it is produce (the technology – T). Paul and Anne Ehrlich summarized this as:

I = P x A x T

Realizing that he had the power over the way his products are made, Ray started working since 1995 to change that formula for Interface to

I = (P x A)/T, so that technology decreases the impact instead of multiplying it.

Towards the end of his talk he then goes a step further to advocate that affluence expressed by a capital A denotes an end in itself, and should instead be a small ‘a’ that is a means for happiness, thus changing the formula to

I = (P x a)/(T2 x H)

Great vision! Watch the video to hear the numbers of how this model made his company not only reduce a lot of its impact (they aim for 0 impact by 2020) but also much more competitive.