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Seth's Blog : No such thing as business ethics

Interesting post today from Seth Godin on business v personal ethics:  - could be the missing link?

No such thing as business ethics The happy theory of business ethics is this: do the right thing and you will also maximize your long-term profit. After all, the thinking goes, doing the right thing builds your brand, burnishes your reputation, helps you attract better staff and gives back to the community, the very community that will in turn buy from you. Do all of that and of course you'll make more money. Problem solved. The unhappy theory of business ethics is this: you have a fiduciary responsibility to maximize profit. Period. To do anything other than that is to cheat your investors. And in a competitive world, you don't have much wiggle room here. If you would like to believe in business ethics, the unhappy theory is a huge problem. As the world gets more complex, as it's harder to see the long-term given the huge short-term bets that are made, as business gets less transparent ("which company made that, exactly?") and as the web of interactions makes it harder for any one person to stand up and take responsibility, the happy theory begins to fall apart. After all, if the long-term effects of a decision today can't possibly have any impact on the profit of this project (which will end in six weeks), then it's difficult to argue that maximizing profit and doing the right thing are aligned. The local store gets very little long-term profit for its good behavior if it goes out of business before the long-term arrives. It comes down to this: only people can have ethics. Ethics, as in, doing the right thing for the community even though it might not benefit you or your company financially. Pointing to the numbers (or to the boss) is an easy refuge for someone who would like to duck the issue, but the fork in the road is really clear. You either do work you are proud of, or you work to make the maximum amount of money. (It would be nice if those overlapped every time, but they rarely do). "I just work here" is the worst sort of ethical excuse. I'd rather work with a company filled with ethical people than try to find a company that's ethical. In fact, companies we think of as ethical got that way because ethical people made it so. I worry that we absolve ourselves of responsibility when we talk about business ethics and corporate social responsibility. Corporations are collections of people, and we ought to insist that those people (that would be us) do the right thing. Business is too powerful for us to leave our humanity at the door of the office. It's not business, it's personal. [I learned this lesson from my Dad. Every single day he leads by example, building a career and a company based on taking personal responsibility, not on blaming the heartless, profit-focused system.]

Do City Mayors hold the Keys to the Low-Carbon Economy

CDP Cities 2011 is pleased to announce that 48 cities have disclosed GHG emissions data and reduction strategies in the launch of its first global report.

Click here for the global report 

 

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The Value Of Surveys

View more presentations from Sam Brown

How can companies communicate more effectively with investors on sustainability?

Corporate social media

click here for an investigation into the relationship between business and social media, with 7 real-world case studies

 

Open for Discussion - Part One

The digital revolution presents a golden opportunity for any company wanting to engage with stakeholders on sustainability issues. Consumers, NGOs & Employees are already using a wide range of available social media,

Social media and sustainability share similar histories and future paths - both started out as bottom-up movements, both go against mainstream beliefs and both present the same set of issues when integrating into a company’s DNA / core values. It is unclear with whom the responsibilities should reside, which departments will be involved, and what new position(s) should be created. The truth is that social media and sustainability can be integrated and adopted at every level.

What unites social media and sustainability is their focus on people as individuals. They also put a premium on cultivating long-term relationships based on value and trust as well as on building networks and community. Everyone has a voice and every voice counts. Every voice is its own. Every voice is unique.

The social media ROI debate rages on. Sustainability is equally challenging to measure. While measuring ROI remains a challenge, the fact that ROI exists is not in dispute. Both social media and sustainability are still in their infancy as measurable concepts, possibly because they’re both so new and untested that way.

Sustainability requires doing more with less, constantly learning how to get more out of every pound of material and watt of energy. The creation and communication of this knowledge occurs in social networks of relationships, empowered by social media, which offers brilliant ways for businesses to demonstrate and apply their transparency, and to connect with their stakeholders. How should your company be using social media to engage with stakeholders?

As social media technologies continue to grab share of consumers’ time spent online companies would do well to consider how to tap into the broad reach of these platforms in communicating their progress on sustainability and the environment. Engaging in social media is one way for companies to show transparency about their sustainability – especially for multi-national corporations – to a particular stakeholder group.

As individuals become ever more powerful in ‘streaming’ the information they want and filtering out what they don’t want to hear, any successful green marketing strategy should place digital at its core. But how?

Firstly, businesses need to realise that social media engagement is not advertising – it is “earned” not “paid for”. Seth Godwin (entrepreneur and agent of change ) during the American Express Open Conference highlighted that organisations can earn the privilege by “going out of their way” by doing something for somebody and / or by creating a “worthwhile exchange”.

Secondly, CSR communicators must create content that resonates with particular communities – crafting a credible and interesting narrative that is compelling to their audience, so that they are driven to share within their communities. Then they can create and drive advocacy. Many experts claim the key to success is to be REAL or Authentic – which to me sounds not to unlike the core requisites of stakeholder engagement. Why? Because social media is no different to genuine sustainable business. It most be core to the business and not a bolt on / marketing tool.

Companies that are committed to real, embedded stakeholder engagement have already embraced many of the elements of effective social media engagement. The major challenge to these businesses is not one of content but one of resources. How does an organisation manage the process - which is time consuming and goes against ingrained management concepts and processes?

A key requirement of social media effectiveness is to be ubiquitous. Therefore, mapping internal responsibilities is crucial if your organisation is going to convince its target audience that it is what it says it is. Engaging your company’s story through social media need not be the exclusive domain of the CSR or communications department. As CSR becomes more integrated into the business, having business or functional leaders communicate on embedded initiatives will have a stronger impact, through greater transparency and authenticity – the keys to unlocking social media.

Designing the blueprint for a sustainable business

Which companies do you think have really adopted sustainability and could provide a roadmap for others? ....I am not talking about the companies who say they are green or sustainable but rather those who have genuinely incorporated sustainability into their business decisions / redefined business and governance models / fully engage stakeholders and actively disclose their performance.

Transition to a low-carbon economy

As we embark on a new decade and perhaps a new era – businesses of the future will be defined by their ability to succeed in a new, low carbon economy –  a world where they will have to learn to navigate through the darkness of a stressed economy, resource constraint and increasing regulatory landscape.  In this article we hear from a range of leading industry practitioners who share their thoughts and opinions on this new era for business…

The events of COP15 - Copenhagen have shown to the world that the path to a greater regulatory environment is now inevitable, and only becomes an issue of timing.

It is fair to say that we had all hoped for a different conclusion to the UNFCCC meeting. However, as the dust begins to settle what is encouraging to see is that businesses are not waiting for international governments to agree on a global treaty.

David Walker, Director Environmental Sustainability, PepsiCo was one business executive hoping that international governments would reach an agreement at COP15. ¨I would have preferred an agreement with clear targets and timelines¨, he remarked.  ¨…although it hasn´t accelerated the development of a climate change treaty it hasn´t derailed it either.¨ He added.

Tom Burke, Environmental Policy Advisor, Rio Tinto was another business executive disappointed with the outcomes of Copenhagen. ¨The Copenhagen Accord was a step backwards which could take 2-4 years to restore the lost momentum.¨ Burke feels that this is bad for both business and the environment as it simply prolongs policy uncertainty while adding further complexity for business investment.

¨What really pleased me about Copenhagen was that developing countries had come to listen, and we starting to talk about a numbers¨, stated Walker.  This view was also expressed by Erik Bransdma, Vice President Corporate Responsibility, E.ON who remarked - ¨It is encouraging to see BRIC countries pulling forces together.¨

Foster Deibert, Group Development Sustainability Management, WestLB highlighted the recent commitments from BRIC countries as an ¨encouraging first tick of the Copenhagen Accord.¨ However, he did stress that the ¨jury is still out¨ on whether any significant progress will be made in Mexico.  

¨Many people think the pressure is off business now – although the likelihood is that it has increased¨, added Bransdma. Somewhat paradoxically Bransdma is correct, the onus is on businesses who are now expected to lead and manage stakeholders´ expectations in the absence of clear guidelines.  ¨It is short-term thinking if you believe the pressure is off now following the lack of a global agreement in Copenhagen¨, stated Deibert. ¨Businesses need to realise that the path to increasing regulation has now been set.¨  He added.

Burke agrees with both Bransdma & Deibert, but warns businesses that although the immediate pressure has been removed – be prepared for increasing complexity in the future. 

This view is also shared by Christian Dumas, Vice President Environmental Affairs, Airbus who concurs that COP15  ¨actually decreases and increases¨ the pressures on business.  ¨On one hand some relief that aviation was not finger pointed as the cause of all problems.  While on the other hand the fact that nothing happened will further prompt us to continue to work on our united aviation sector proposal to promote and drive efforts towards carbon-neutral growth and leaves us at the same time in some form of uncertainty as to the future¨, he remarked.

One company that has been very active in developing their sustainability programme is HeidelbergCement.  In 2009 they were involved in numerous cement initiatives facilitated by the WBCSD.  During an interview with Rob van der Meer, Director EU Public Affairs, he expressed his disappointment on the outcomes for their lack of predictability.  Van der Meer, like many, wanted a global framework to remove any confusion and provide clarity. ¨It was disappointing they could not bring it together.¨ He stated. 

Some commentators have suggested that the negotiation process itself contributed to the failure of a global treaty. ¨The climate issue needs a global approach, but possibly not equally involving almost 200 governments¨, remarked Dr. Peter Botschek, Director Energy, Health, Safety & Environment, European Chemical Industry Council (CEFIC).

¨It is clear that the UNFCCC has failed in its role¨, remarked van der Meer.

However, Burke does not share this view who believes that the UNFCCC is the ¨right machinery¨ for taking us forward. 

While Brandsma concludes that Copenhagen showed the limitations of the current inter-governmental negotiation process and that new ideas and approaches are needed to make the process more effective.

Transition to a Low-Carbon Economy

In speaking with many businesses it appears that their transition to a low-carbon strategy has not been put on hold post-Copenhagen. In fact, several remarked how, in the lack of a formal agreement, they will maintain / increase their current efforts in order to work with customers, suppliers, investors, employees who have all demonstrated their commitment to environmental sustainability -  and will continue to do so. 

Many are sensing growth in the business uptake of clean-technologies (such as solar, bioenergy, wind and geothermal).  Many of these technologies are capable of providing robust CBA, which convinces CFOs that this is less about face saving PR and more about making an impact on the bottom line.

Businesses will play a critical role in accelerating the development of the clean-tech sector as it looks to find ways to bridge the gap between R&D and full-scale commercialisation.  A recent study by Ernst & Young, entitled Clean Tech Matters, offers further evidence that the world’s largest corporations are speeding up their adoption of clean-tech products and services to create a competitive advantage through resource efficiency and sustainable growth. 

The report suggests that the economic downturn has done little to blunt corporations’ appetites for clean technologies – in fact, the study shows it may have had the opposite effect. Nearly 55% of respondents indicated that recovering from the current crisis will speed up the implementation of their company’s clean-tech strategy.

So, with or without a binding agreement, demand for renewable energy will continue to grow next year and beyond. The publication, New Energy Finance, estimates that globally, companies and governments will invest $200 billion in renewable energy this year, up nearly 50 percent from $130 billion in 2009 and above the $155 billion invested in 2008.

To see how far companies and technologies have come – despite any real leadership from governments on climate change – suggests will we see continued development in clean tech technologies and increasing commitments from business that helps drives us towards a low carbon economy.

The business implications of Copenhagen will emerge in the months ahead as companies consider what the summit means to their business. However, ask yourself, was the business case for sustainability ever built on the political process?  For many I suspect not, the business case rests on greater efficiency, new market opportunities and increasing levels of transparency / disclosure. 

Social Media & Sustainability

Since consumers, NGOs and employees actively use social media, the digital revolution presents a golden opportunity for any company hoping to engage with stakeholders on sustainability issues.

Check out  my four-part feature on Ethical Corp here