The power of purpose

Controversial taxi company, Uber, has just launched a new statement of mission to reposition the business.  They follow in the footsteps of others, but beware of the dangers.

uberTechnology is disrupting many businesses.  Enabled by smartphone apps, radical change is coming – and just one example is playing out on the streets of London, where 100,000 private hire vehicles now compete daily with the traditional black cab trade.  Behind it is Uber and its army of self-employed drivers, all part of the new sharing economy. Famously forthright, the London cabbies are still only arguing about this change in their livelihoods, unlike Paris where militant drivers took to the streets.

Uber started out in 2009 as UberCab in San Francisco, and has grown exponentially ever since.  It recently relaunched its corporate branding. Out went the classic U logo and in came flexible treatment in its different markets, built around a new statement of corporate purpose: not a taxi app any more, but all about “creating industries that serve people – Continue reading

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Sugar tax: the cost of failing to listen

The Financial Times reports that shares in AG Barr, maker of Irn Bru, closed down 2.4% following the UK government’s announcement osoda-686984_1280f a tax on sugar in soft drinks, while Britvic, producer of Robinsons squash, fell 1.3%.  Loss of shareholder value in those two companies alone – some £40m.

Compare that to the small amount typically invested in corporate responsibility programmes and the business case for listening to stakeholders and acting correctly becomes overwhelming.  Continue reading

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Managers get it. Do investors?

When owners speak, company bosses tend to listen. So why hasn’t the ethical investment movement had more impact? And now that professional investment managers NASDAQincreasingly understand the issues, will more investors follow?

Back in January the UK-based Investment Association published data showing ethical investment at an all-time high, with funds under management totalling £10.7 billion, having more than doubled in a decade. Time to crack open the champagne? Do investors finally understand that good business practices can enhance long term returns? Will corporate behaviour now improve?

Alas, no. The same data shows that so-called ethical funds are stubbornly stuck at 1.2% of the whole market, a figure that hasn’t moved in 10 years. Continue reading

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Invest or give – what’s the difference?

Let’s take a trip down memory lane and ask whether loans or grants are the right approach to getting results for the community. image3

Last week, the UK social investment bank Big Society Capital published its lending numbers for 2015. The amount going in loans to UK charities and social enterprises is now ramping up fast: £68 million of the Bank’s own money, with twice as much again from co-funders, nearly £200 million in total.

Big Society Capital (BSC) has two aims: supporting finance intermediaries who serve the social investment market, and raising awareness of the whole sector. Its funds come from an arm-up-the-back grab by government on dormant bank accounts – up to £400 million, with a further £200 million directly from the UK’s big four banks over five years. Surpluses generated when loans are repaid mean BSC should become financially sustainable over the long term. Continue reading

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Corporate titans and the fourth industrial revolution

The fourth industrial revolution will see good jobs shredded like never before. Business needs to rethink the economic environment if it is to be sustainable.

Corporate titans from around the world gathered last week for their annual love-in at Davos. Joining them to provide a scattering of stardust was actor Leonardo DiCaprio.

Fresh off the set of his Oscar-nominated film, The Revenant, DiCaprio was praised for the award-winning work of his eponymous foundation in protecting vulnerable wildlife from extinction. Continue reading

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COP 21: The road to hell?

The climate agreement in Paris is being hailed as a triumph. But is it really, and what does it mean for business?

Getting the governments of nearly 200 countries to agree to any one thing is no mean feat. And the climate talks weren’t just ‘anything’. That’s why expectations were low in the run up to COP 21 in Paris.

In the event, the final agreement is at the upper end of expectations. More than 180 countries have committed to cut emissions significantly. They’ve agreed to a five year review or ratchet mechanism for further commitments in future. Their long term goal is for global warming to stay “well below” the threshold of two degrees Celsius above pre-industrial times, so as to prevent run-away climate change. Surprisingly, a 1.5 degree aspiration (“endeavour to limit”) is also included. Continue reading

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Dieselgate: what governments did, didn’t and should now do

Even the most cynical of corporate critics are being surprised at the revelations from Volkswagen. What does it also tell us about the role of governments?

The Volkswagen crisis has been escalating since September, when the company admitted that it had installed so-called ‘defeat device’ software in 11 million diesel vehicles so they appear to meet air-quality standards for nitrogen oxide, a gas which poses a threat to human health. The latest twist came this week when it admitted to understating CO2 emissions for about 800,000 vehicles sold in Europe and overstating their fuel economy.

What started in one market (the USA) just with diesel engines has multiplied: more markets, more fuel types, and more brands, with Audi and Porsche now implicated. So far no other manufacturing groups have been found at fault. However the regulators are circling, while the weakness of their testing is under scrutiny too.

VW’s share price has dropped 40% since September, destroying some €35 billion of shareholder value. Direct costs continue to mount – now estimated at €8.5 billion in fines, compensation and rectification, with unquantifiable long term damage to the brand. In academic circles, proof of the so-called ‘business case’ for corporate social responsibility is much debated; what is surely no longer in doubt is the cost of irresponsible actions.

Aside from annoyed regulators and outraged drivers, others are not letting a good crisis go to waste. For example, Greenpeace is cannily using the affair to drive take-up of electric vehicles – with a specific demand to VW to develop a “mass-market electric car that families can afford”. That’s both smart campaign tactics and astute advice to VW who certainly will need a game-changing story beyond “we’re sorry” if they are to recover their reputation.

And what of governments themselves?

What they did right was pursuing testing and issuing violation notices, at least in America, where the EPA (the US agency to protect human health and the environment) has led the way. It was this action that uncovered the wrongdoing: not VW’s ethics rules or a whistleblower, nor its own sustainability reporting and assurance, nor external scrutiny from the legion of rating and ranking agencies like DJSI.

What governments did not do, at least in Europe, was act swiftly on the available evidence. We’ve known for a decade that the real-life impact of diesel was below theoretical improvements in emissions. In my previous work as a London Assembly member, I was critical of the European Commission which was slow to enforce its environmental directives. I was questioning the London transport authorities as long ago as 2006 on action needed to improve air quality, where diesel was the principal villain. (So external rating and ranking agencies should have known of the problem, if they had gone looking.)

What should governments do now? One thing is to be a lot more inquisitive when their citizens’ health is at risk. Another is to be a lot less trusting about corporate culture that lets bad behaviour go unchallenged, even if one accepts (which I don’t) that it’s all down to a handful of rogue engineers.

Like Watergate before it, Dieselgate can teach us much beyond the specific cause célèbre about underlying corporate systems and a damaging lack of accountability.

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Double-whammy: young women and the potential for progress

With attention focused on the launch of the Global Goals in New York, let’s put the spotlight on gender inequality and how companies can profit from parity.

Among the 17 new sustainable development goals, it’s no coincidence that women are the only demographic group to have a single goal dedicated to them. Goal #5 pledges gender equality, and calls out the role of young women in particular.  That’s because empowerment here will unlock progress on many of the other goals.

Despite some recent improvement on legal rights, the economic disparities between men and women remain stark. To cite just one piece of evidence – from the Food and Agriculture Organization of the United Nations – if women had the same access to productive resources as men (and they comprise 43% of labour force on developing country farms) food yields would rise by 20–30 percent. That’s a lot more mouths fed and families lifted out of poverty.

It’s no surprise then that some companies have made empowering women one of the main pillars of their approach – such as Coca-Cola, under the tagline #5by20. Coke says the role of women is one of the three issues “that will more shape or define the 21st century” than any others. It has committed to enable “the economic empowerment of 5 million women entrepreneurs across the Company’s global value chain by the year 2020”.

Walmart – the world’s largest company by revenue and biggest private employer – has gone further and committed to source $20 billion of products from women-owned businesses in America. Go online in the US and you can select your shopping basket from women-owned suppliers.

Unilever has long recognised that young women – schoolgirls in particular – are a key agent for delivering its health and hygiene programmes such as Lifebuoy handwashing and for meeting its one billion goal. And last year it added a new pillar focused on women’s livelihoods to its legendary Sustainable Living Plan.

Just last month the McKinsey Global Institute took a look at the subject – and put a price tag on the opportunities being missed. Its report, The Power of Parity,  estimates that advancing women’s equality could add $12 trillion to global growth. Actually, that number isn’t even at the top end of its number-crunching estimates. India and Latin America stand most to gain.

And here at Corporate Citizenship, we’ve just published our own advice on what the global goals mean for business, From My World to Our World, the culmination of a 17 week odyssey of analysis in the run-up to the New York launch. If companies want a double-whammy of benefit, focusing on goal number 5 is a great place to start.

This article also appeared at Responsible Business blog

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From my world to our world

The forthcoming SDGs offer opportunities for companies to reframe the debate about the role of business in development.

Itinerant diplomats have long had the last weekend in September pencilled into their diaries for New York, before moving on to Paris in December. Their business? An international deal on climate change before year end, and agreement on a new set of development goals by the end of this month.

The build up to New York started at Rio+20, the UN Conference on Sustainable Development, back in 2012. More than a year ago CC Briefing was commenting on the potential (Global goals, fewer squabbles) I was optimistic that the role of the private sector would be hard-wired into the final formulation. More recently it’s clear that some companies are already seeing opportunities, with Clare Griffin from GSK noting that partnership and innovation will be key, when attention turns from the ‘what’ of the goals to the ‘how’ of delivering them.

For the last three months, my colleagues and I have been examining each of the proposed 17 new sustainable development goals in turn, looking at the implications for business. All the preparation since 2012 has fostered a large degree of consensus among the 193 members of the United Nations, so that the Transforming Our World agenda is now largely settled.

And what are the implications for companies, once those diplomats have signed up their governments? My belief is the framework is clear enough, broad enough and robust enough to create a new standard against which the commitment and performance of business can and will be judged.

For some, that will prove painful, especially if they hold to old notions that the business of business is business and no more.

Others will seize the opportunity to move from focusing on their own preoccupations and priorities towards understanding how their contribution fits the bigger picture – in short, a shift from ‘my world’ to ‘our world’. They’ll still need to work out what they themselves are contributing and what more they can do by working in partnership.

But now they can legitimately say what others must do and what changes are needed, notably governments, if we are to close the gap over 15 years between today’s reality and the promise of the SDGs – a world free from the tyranny of poverty, with life on this planet protected and with peace and justice secured.

That’s not a bad outcome from a long weekend’s deliberation in New York.

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Human rights: help or hinderance?

Many people misunderstand what human rights really mean in the modern economy, and the language we use doesn’t help.

Mention abuse of human rights and most ordinary people will think of Amnesty International, dictatorial governments and appalling torture. So they might wonder why a company would produce a report dedicated to its human rights impacts, as Unilever has just done – the first to be fully aligned with the UN Guiding Principles Reporting Framework launched last year. The more clued up might then think about extended supply chains and wonder about prison and slave labour, and see a connection with governments like China.

Other people might see beyond government abuse and conceive of human rights as all about the individual and their rights. Fed by tabloid scare stories, they might even see human rights as about protecting individuals, like suspected terrorists, over the common good – and think companies like Unilever are in league with the European Court and other “dangerously” foreign tendencies.

Actually, think about human rights in the context of companies and the global economy, and you rapidly come down to money. In fact Professor John Ruggie – who has played a seminal role in the UN Global Compact, in the Millennium Development Goals and latterly as the UN Secretary General’s special representative for human rights – says the need for corporate action on human rights stems directly from the “massive gap” between the power of companies in a global economy and the ability of societies to deal with the impacts that creates.

He argues that markets need a framework of rules in which to operate and for participants to thrive, and that current governance frameworks – public law, civil governance and corporate governance – are inadequate. It’s an important argument, which he sets out on Business Fights Poverty here.

If you doubt that human rights comes down to economics, consider two aspects of recent economic history that created massive abuse. The first is the abolition of slavery, highlighted in a recent BBC programme, Britain’s Forgotten Slave Owners, when the government compensated British slave owners for loss of their ‘property’, to the tune of £17bn in today’s money, whilst the slaves themselves received nothing. The second is colonialisation; comments in May by Indian MP, Shashi Tharoor, during a debate about Britain’s debt to her former colonies, went viral with millions of YouTube views. His economic case for reparations is set out here.

Returning to Unilever’s groundbreaking report on its implementation of the UN Guiding Principles on Business and Human Right, look at the eight issues it identifies as most salient and you’ll soon see the economic drivers – including fair wages, forced labour, land rights and working hours. The report itself covers strategy and policy, moving from compliance to promotion, and charting the path ahead. Well worth a close read by anyone trying to comprehend what this all means to a global corporation.

From slavery to modern international capitalism, human rights comes down to who gets the money and how they go about acquiring it. Don’t let the language stand in your way.

This articles was also published by IMPA ACT

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