In it together

Back in 1928, publication of The Yellow Book – the report of a party inquiry “Britain’s Industrial Future” – provided the basis for Lloyd George’s 1929 general election programme “We can conquer unemployment!”. It put the party firmly in the camp of an interventionist economic strategy, with John Maynard Keynes as its intellectual lodestar. With the Great Depression ranging, the party firmly rejected laisser-faire liberalism.

Come 2004 and the Orange Book -subtitled Reclaiming Liberalism and edited by David Laws and Paul Marshall – challenged what some were calling nanny-state liberalism. It promoted choice and competition and argued that the Liberal Democrats needed to return to an older heritage, to ‘reclaim’ economic liberalism.

Since then, the term ‘Orange Book liberals’ has come to denote those seen as on the right of party, comfortable in a coalition with Conservatives. That said, many of the actual contributors – including Vince Cable, Chris Huhne, Susan Kramer and Steve Webb – would no doubt contest that stereo-typing of their views.

Fast forward to today, and the condition of our country and the challenges we face are markedly different to a decade ago. Following the global economic slowdown – triggered by a financial crash due in part to light regulation – those arguing for less state oversight have gone strangely quiet. With the defining feature of public services now one of cuts and deficit reduction, few are still arguing that choice and competition are the most important political or economic priorities.

However this is not a call for a return to Yellow Book liberalism. The global economy today – and Britain’s role within it – is fundamentally different to 85 years ago. Population has risen from just 2 billion then to reach 7 billion today, and rising. Demand for raw materials, energy and food is pushing up prices. Indeed a barrel of crude oil is nearly $100 today, compared to $20 as recently as when the Orange Book was written.

In short, the finite limits of our planet are better understood – as are the threats to life as we know it from severe weather and rising sea levels. The question now is how Britain, a small economy dwarfed by the likes of Brazil, India and China, can prosper and share any fruits of economic growth fairly.

The party – and our country – needs a new approach: one based on building a sustainable economy and a fair society by placing respect for the natural world at the centre of our policy making. What that vision of green liberalism looks like is set out in The Green Book – published next week.

The Green Book: New Directions for Liberals in Government, edited by Duncan Brack, Paul Burrall, Neil Stockley and Mike Tuffrey, is published by Biteback.

This article first appeared in LibDemVoice

Why Moya Green is right, and Vince Cable wrong (for once)

Those pantomime villains of the British mid-market tabloids – the Brussels eurocrats – are at it again.

This time they are trying to get a better gender balance in the boardrooms of publicly listed companies across the continent through the use of mandatory quotas. British business minister Vince Cable MP has joined counterparts in nine other countries to argue for voluntary efforts to be given more time. But Royal Mail chief executive Moya Greene has come out in favour of the mandatory route.

Vince Cable is right about many things – the need for a UK industrial strategy, for ‘long-termism’ in the City, for Plan A Plus to boost skills and competitiveness rather than relying solely on austerity, and much more besides. But on gender balance, it just isn’t working.

The overall percentage of women on FTSE100 boards is only inching up, to about 15% in total. This figure includes non-executives; the number of executive directors, those who actually run the firm, is stuck at 6%. Natural justice says this is wrong, but does it really matter to business and governance?

Of course it was always a little simplistic to say the financial crash would have been avoided if more of the testosterone-fuelled big banks had had some diversity at the top, although the hunting-in-pack mentality sure played a role. Nonetheless the business case for diversity is very clear.

Back in August this year, Credit Suisse looked at more than 2,500 companies and found that those with at least one woman on the board have enjoyed faster growth – 26% more since 2005- than all male led companies. They also have 4% higher return on equity.

Now, I do understand the argument that, if quotas are imposed, any woman then appointed risks the (no doubt unstated) accusation that she got the job for reasons other than merit. Frankly, there are plenty of highly talented women who can prove that wrong, the culture will change and pretty soon the quota can be relaxed.

However, if a mandatory quota is too much of a blunt instrument, how about a rule requiring investors to intervene, so that an all-male board has to be specially approved by a vote at the AGM? How about a special levy on the boardroom bonuses of those men, since they are damaging their companies’ growth prospects by keeping the door firmly closed?

And here’s a link to our own ideas on women in business here at Corporate Citizenship.

Whatever the right way forward, it’s clear that waiting isn’t working.

What can the differing reactions to recent corporate wrong-doing teach us about new approaches to inclusive business?

Much in the headlines these last couple of months has been the continuing woes of British banks.  Barclays is the most spectacular, with both chairman and chief executive falling on their proverbial swords having admitted misconduct over setting LIBOR.  Almost as shocking was previous poster child, Standard Chartered, after breaking American money-laundering rules for Iranian customers.

Along with damaged reputations, the immediate penalty was hundred million dollar fines from US regulatory authorities: $160 million in June for Barclays and $340 million in August for Standard Chartered.

Little noticed, meanwhile, was another battle between a British-based company, GlaxoSmithKline, and US regulators, which resulted in fines 10 and 20 times as much, for wrong doing lasting two or three times as long.  In July GSK coughed up fully £3 billion, after pleading guilty to mis-selling anti-depressant drugs, and settling claims about overcharging US health programme Medicaid and kickbacks to doctors to prescribe their medicines.  GSK CEO, Andrew Witty – recently knighted rather than fired – expressed “regret” and reaffirmed his determination to change the culture to “put patients first”.

Any fair reading would say the banks’ behaviour pales in comparison with such systematic wrong doing for so long on something so sensitive as patients’ health.  Yet the public outcry around GSK has been muted, to say the least.  Why is that?

One might say it’s because the banks are forming a pattern in the media.  But actually, fellow pharmaceutical company, Pfizer, was massively fined in 2009 and Abbott Laboratories likewise, only months before Glaxo. These stories were also poorly reported.

One reason, I believe, is that banks have done a bad job in explaining the essential role they play in keeping our savings safe and the wheels of the world economy moving.  Bankers are seen as greedy and self-serving, not paragons of prudent virtue.

Contrast that with pharmaceutical companies: intuitively we know they are the ‘good guys’, inventing miracle drugs, helping eradicate appalling diseases and keeping us healthy.  We tend to overlook their huge profitability and occasional lapses in conduct.

It’s only a theory, but it links to the theme running through our analysis this month around ‘inclusive business’.  Our writers describe how some companies are examining their business models to find ways of including poor and marginalised people.  In so doing, they renew and reinvigorate their corporate purpose and remind audiences of their inherently beneficial contribution.  As Miriam Turner from Interface says, it’s about moving from ‘stop doing harm’ to ‘start doing good’.

If my hunch is right, the key to good headlines is a ready understanding of why your company is a good thing, really.  And inclusive business can help.

This article first appeared in Corporate Citizenship Briefing

If innovation is to answer the big sustainability challenges we face, all of us need to be genuinely involved in making the change.

A sure-fire marketing trick to boost a flagging brand is to reformulate the product (a little) and then heavily promote it as “new”. Usually it works a treat. Next time you are watching commercial TV, just count the number of ads that plug “new” features.

The technique has been adopted with relish by politicians too – Bill Clinton successfully positioned himself as a New Democrat in the 1990s, while the German Social Democrats’ “Neue Mitte” and “New” Labour’s third way in the UK proved effective, at least for a while.  Modest changes, heavily promoted.

Behavioural scientists tell us that novelty is a powerful driver, something that appears hard-wired into how we humans strive to survive and evolve. Simply put, new things stimulate and attract us.

On the other hand, resistance to major or rapid change is another powerful feature of human behaviour traits. In marketing, the failure of New Coke is a text book case study of the dangers of changing things too much and too aggressively.

It seems we only like things a little bit new – which may explain why the scale of transformational change needed to address the huge global sustainability challenges is proving so hard to achieve.

In different ways our guest writers this month both address newness.  Sony’s Magdalena Wasowska says new ways of thinking are just as important as actual technological innovation. From We Impact in China, Joe Oliver says new social enterprise models offer a third way between traditional state corporations and purely private enterprise.

So what is the answer to this conundrum of us liking newness while resisting change?

One way forward lies in working together to find solutions. Sony’s One Planet Ideas, IBM’s online Innovation Jam brainstorm and Unilever’s Sustainable Living Lab are all recent examples of corporations using new technology to crowd-source innovative ideas through collaboration.

Kick the tyres to test the roadworthiness of most corporate sustainability strategies and you’ll find they largely depend on product or process innovation. Certainly most business growth strategies rely on fundamental reengineering if they are to be viable in a resource-limited world.

But transformation on this scale isn’t easy.  Indeed, as the saying goes, you can’t teach an old dog new tricks. Certainly, you increase the chances if those implicated are truly involved in developing and implementing the change.

Not so much “Be the change you want to see” (apologies, Mahatma Gandhi) as “Invent the change you want to be”.

This article first appeared in Coroprate Citizenship Briefing

Examining the outcome of Rio+20, I can see signs of optimism for the future.

Opinions certainly differ. Todd Stern, the US chief negotiator, called June’s Rio+20 Earth Summit “a strong step forward”. But Greenpeace’s Kumi Naidoo said it was a failure of epic proportions.

Call me cynical, but these responses were scripted in advance. Campaigning NGOs have to describe these things as a betrayal – they have members to motivate, funds to raise, a perfect world to create. Governments have to declare these things a success – they have voters to impress, elections to win, a complex world to manage pragmatically.

So what’s an honest assessment?

The people who should feel most disappointed are the progressive governments who came in good faith, seeking to push forward coordinated global action through negotiation. Despite the thousands of hangers-on, it was actually an intergovernmental conference.  But this was no repeat of last December’s COP17 conference in Durban on climate change. There, EU ministers triumphantly brokered a deal between the developed and developing world by haggling over the text through the night.

Here, pragmatic countries in Europe and in the G77 who wanted to get commitments on sustainable development were frozen out by the agreement in advance between the big beasts like the USA and China. The NGOs were hoping this process would at least get commitments added to the draft text on policing of international waters. To that extent, both are right to be disappointed.

So why be positive?

First, it shows that action can’t wait for massive coordinated international agreements. Now progressive companies and pragmatic NGOs know they have to work together, topic by topic, agree about the problem, demonstrate the solutions, and then go to governments to say ‘here’s what you must do through the power of the state to roll it out’. A good example is the deforestation commitment made by consumer goods companies that the US government has said it will now take forward.

Second, the sheer mass of initiatives launched and commitments made, albeit timed for the conference, demonstrates the breadth and depth of what is going on around the world in all three sectors. Most encouraging is the Natural Capital Declaration on pricing the ‘free’ resources taken unrenewably from the natural environment.

Third, the proposal for a set of worldwide sustainable development goals to replace the Millennium Development Goals after 2015 will go forward. Sure, flesh was not put on the bones of the idea and it will be tough to get agreement first on the scope and then on meaningful targets. However this time companies will be part of the process, unlike the government-led MDGs.

Whatever the disappointments, Rio+20 has surely left no one in doubt that economic growth has to be socially beneficial and environmentally sustainable. The fact there’s a process going forward with companies involved, however messy, is surely worth celebrating.