Yes, business ethics.
Hello, I'm Anthony Day and this is the Sustainable Futures Report for Friday, 7th April. As I've said many times before, it's brought to you without advertising, subsidy or sponsorship. It's my intention to keep it that way and to keep it free, but I do have costs so I'd welcome your help. You can support the Sustainable Futures Report by going to my page at patreon.com/sfr and becoming a patron for as little as $1 per month. That’s about £0.80 or €0.92. If you'd like to contribute more you’ll get more–just hop across to patreon.com/sfr and you'll find all the details. Whatever happens, the Sustainable Futures Report will always be free and always available to everyone, both as a podcast and as a blog here at anthonyday.blogspot.com. That’s where you’ll find links to the topics mentioned in this report.
Last month I was asked to address a group of business students at a local University. I thought it would be a useful recap of the main sustainability issues if I shared my presentation with you today. The slides are up on slide share, http://www.slideshare.net/AnthonyDay10/business-ethics-and-sustainability - the link is on the blog at anthonyday.blogspot.com - but the slides have very few words so you'll need to listen to what I'm saying to get the sense. You are welcome to use this material yourself if you have an appropriate audience. Of course, for a fee I’d always be delighted to come and talk to them for you!
I started my presentation by explaining that business ethics could either be totally altruistic, doing good for other people, or completely self interested. I said that what I thought the students would find is that doing things in an efficient and sustainable way, which is essentially altruistic, would usually give the best business result and serve self interest as well. I then asked, “What is sustainability?” And I gave them a clue by saying that it's not CSR. We’ll come back to that. One student responded that ‘sustainability is living our lives without preventing future generations from enjoying a similar standard of living.’ Correct!
If you want the original 1987 Brundtland definition it’s: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs…”
“What are the issues which go to make up sustainability?” I asked. Silence. Well there is global warming - who’s heard of global warming? Good. And there's energy and water and food and waste and the circular economy. (And there's population and pollution but I forgot to mention those)
How does global warming work? Well, the sun shines on to the earth and most of the light and heat is radiated back into space. But the earth has an atmosphere and the top layer of the atmosphere contains greenhouse gases like CO2 and methane which trap some of the heat. Without that layer we would freeze in the dark and probably fry in the sun. The greenhouse gas layer is what makes Earth the Goldilocks planet. It's not too hot, it's not too cold, it's just right for supporting life. Our problem is that if the greenhouse layer gets too thick the planet it gets too warm. On the face of it that doesn't sound too bad. Who wouldn't want to have longer, hotter summers and warmer winters, especially in northern Europe? Sadly it doesn't work like that. Think not just of more heat but of more energy. More heat can make it very difficult to live in some parts of the world. Temperatures above 45°C (113°F) are becoming increasingly common in Australia, India and other parts of the world. Pastures dry up, the soil blows away and livestock die. Nothing grows. Higher temperatures cause sea-level rise because warm water expands and takes up more space than cold water. Many major cities– New York, London, Singapore, Hong Kong and many others – are at risk from rising sea levels. Warm air contains more water vapour, so when the extra energy drives more intense storms there's more rain to fall. More and more frequently we hear of a month’s rain falling in an afternoon and of communities that once were safe, being flooded out. And when the clouds have dumped the rain and moved on there's nothing left to fall in other areas. When the rains fail, once-fertile plains become desert.
Energy is an issue because so much of our energy, in cars power stations and central heating comes from fossil fuels like gas, coal and oil. Burning fossil fuel releases greenhouse gases like CO2.
Water, as we've seen, is an issue because when the rains fail it causes starvation and refugees. When there's too much water, floods can, in the extreme, cause starvation and refugees. Have a look at the book Let There Be Water, by Seth M Segal. It explains how a very little water can be made to go a very long way and even increase the productivity of agriculture.
What about food? Well, as we heard last week, our choice of diet has an effect on climate change and global warming. Meat-eating, particularly. Cattle consume far more in calories than we gain from eating the meat, they burp significant volumes of the greenhouse gas methane, they produce manure which can pollute land and watercourses and in some parts of the world forests - which absorb CO2 - are destroyed to produce grazing land. Ethical?
And then there’s the issue of waste and the vast volume of resources that we’re tipping into landfill, pouring into watercourses or dumping into the oceans. It can’t go on. One solution is the circular economy. The Ellen MacArthur Foundation is leading on that so I showed one of their videos.
So what is CSR? Traditionally it’s Corporate Social Responsibility, but I think it’s more about Creating a Strong Reputation or even Covering Someone’s Rear. There’s all too often an element of greenwash. Richard Calvert - Strategy Partner at The Thread Team - spoke recently at York University. He complained that organisations often measure their CSR by the money they spend. They don’t treat it like a business project and don’t analyse the outcomes. Some organisations claim to have benefited millions of people, but as he pointed out, if that’s true then the individual benefit is likely to be very, very small. Sustainability guru Bob Willard explains that sustainability should be integrated within every organisation. It’s not an added-on optional extra, it should be part of every decision-making process. He charts the sustainability journey from Pre-Compliance through Compliance and Beyond Compliance to an Integrated Strategy.
I showed a picture of a smartphone. It could be any smartphone - or games console or TV or domestic appliance. Almost everything that uses electricity has some sort of processor built in. And every processor uses rare earth metals. I showed a picture of the Falling Whistles charity website. https://www.fallingwhistles.com Falling Whistles aims to rehabilitate child soldiers who protect the mines in the Democratic Republic of Congo where they extract tantalite, an essential component of electronics. The big children carry guns. The small ones have only a whistle. My point is that any company that uses these materials - conflict minerals - is clearly unethical and its reputation is at risk. In practice most tantalite, from the DRC and other countries, is made into components in south east Asia and it’s the components that the big brands buy. Once the tantalite from all sources is mixed together there’s no direct link back to those mines. But if someone can prove a link, the damage to reputations will be immense. Like the sweat-shop clothing factories which collapsed in Bangladesh or the electronic assembly factories in China where workers had a high level of suicide. Bad ethics is bad business. Ethical procurement is surely a win all round.
Other examples: Greenpeace v HSBC. HSBC was accused of funding companies that destroyed forests and peatlands to make way for palm oil plantations. HSBC fought back hard, but Greenpeace presented evidence and HSBC had to back down to avoid damaging its reputation. I showed a VW badge. “What words come to mind?” I asked. “Scandal” replied one student. VW acted unethically in programming their cars to perform with reduced emissions while on test, but to be far dirtier in normal use. Not much has been done about that in Europe, maybe because VW is a European company, but in the US VW has been fined millions if not billions and forced to pay compensation to VW owners who have seen the value of their cars collapse. Not just damage to VW’s reputation but a very significant financial cost as well.
I showed the logo of a well-known soft-drinks company. Like its competitors, it distributes millions of single-trip plastic bottles. Nothing illegal about that, but consumers are becoming more and more aware of the pollution these bottles cause to the landscape and the seas. Not a problem at present, but almost certainly a problem for these suppliers in the future. A tiny company called splosh that I’ve mentioned before distributes washing up liquid, hand cleanser and washing powder as concentrates, so you never have to throw away the bottle. splosh.com. Is this the future?
Do you remember Litterati? It’s an app which lets you photograph each piece of litter as you pick it up and send the photo, stamped with time and location, to a database in the cloud. It’s been used to prove which companies are causing most litter. At present it’s generally only the consumer who can be penalised for dropping litter, and then only if they’re caught. Apps like Litterati put pressure on businesses to be more ethical, to clean up after themselves or to design products and distribution methods which minimise litter.
The Green Supply Chain
Finally I introduced the concept of the Green Supply Chain. It’s the big companies with the global reputations who have most to lose because they are the ones who will make the headlines if they are caught behaving badly. It may be the fault of a sub-contractor or a company way down the supply chain, but it’s the big brands that will take the heat. That doesn’t mean that your small company doesn’t have to worry. On the contrary, if your company is the unethical weak link in the supply chain your customer will cut you off. You need to be constantly sure that your suppliers are ethical - and your customers too - because you can’t risk being cast aside as part of an unethical supply chain, which could happen even if the bad practice isn’t actually your fault.
Questions? I had three - two of them from teaching staff. By the time I’d finished, the students were chatting in the back row. There was almost no interaction throughout the presentation even though I asked for suggestions and feedback. Am I a dreadful presenter? Are these students the business leaders of the future? If they are, they should surely have been challenging me and putting forward their own ideas. Maybe I shouldn’t have taken for granted that they’re aware that climate change is an issue, that VW has cynically delivered millions of highly polluting cars, that plastic pollution is a serious issue already contaminating the food chain. After all, you probably don’t see much about that on Facebook, Instagram or Snapchat.
Finally, just to prove that my research sometimes does go beyond sober and serious sustainability issues, here's an item from BBKA news, the Journal of the British Beekeepers’ Association. A one-day international cricket match in Johannesburg between South Africa and Sri Lanka was interrupted earlier this year by a swarm of bees invading the pitch. Players dressed in bright pink and blue outfits quickly dropped to the pitch when instructed by the umpire while the bees clustered on the wicket-keeper’s helmet. Chaos ensued as ground staff tried to move the bees, including failed attempts using a wheelie bin and a fire extinguisher! A restart of the match also failed as the bees stood their ground. A local beekeeper, Pierre Hefer, watching at home decided that enough was enough and drove to the ground and collected the swarm. The match resumed after about an hour. Sadly, despite South Africa winning Mr Hefer was not named man of the match.
And that’s it for another week. There will be more - lot more - next week. In the meantime have a look at patreon.com/sfr and see what you think.
I’m Anthony Day.
That was the Sustainable Futures Report.
Bye for now!