July is ending with a swirl of corporate social responsibility/sustainable development big ideas and actions with serious long-term implications.
First, it was auto companies defying their U.S. president on key environmental issues. Then, in rapid order, came a major international consumer company planning to sell off is brands that “hurt the planet or society”; and a successful financier promoting corporate governance undermining shareholder primacy.
Ford, BMW North America, Volkswagen Group of America and Honda have made an environmental deal with California, and 13 other states have indicated they will sign on. Essentially, the companies are committing to auto emission standards that set an average fleet mileage goal of 52.5 miles per gallon by 2025. President Trump’s plan would lower the goal to 37 m.p.g.
A New York Times editorial on these decisions “When the Polluters Are Cleaner Than the Government”emphasized a few points of particular interest to advocates of corporate social responsibilities, including this presumption.
“In a remarkable retort on Thursday … Ford Motor Company and three foreign automakers — which together represent 30 percent of the American market – announced that their interests lie more with the planet, or at least with those who care about saving it, rather than with the president.”
However, on a more realistic plane, and with reference to the essentials of sustainable development, this:
“Is some of this automotive environmental embrace driven as much by profit potential as by concern over climate change? Probably, and that would be a good thing. If sustainability produces a good return on investment – as it should – then corporations would be irrational to ignore it.” [Emphasis added]
A few days later: “Unilever warns it will sell off brands hurt the planet or society” – that The Guardian headline is supported with these excerpts:
“Unilever [a long time champion of sustainable development ] has warned that it will sell off brands that do not contribute positively to society… Alan Jope, Unilever chief executive… ‘Can these brands figure out how to make society or the planet better in a way that lasts for decades?’ … Unilever points to the success of its trophy sustainable brands … which are growing much faster than the rest of the business.”
And in the category of big, provocative ideas this inflammatory headline for a serious suggestion that binding ethical rules be incorporated into companies’ by laws: “A plan to take on ‘Sociopaths in the Boardroom”
According to New York Times columnist Andrew Ross Sorkin, former financier Jamie Gamble is proposing “that every company devise a set of ethical rules to be part of their bylaws , a move that would potentially open them up to shareholder lawsuits should they fail to stick to those rules.” These rules — admittedly with serious potential unintended consequences – would relate to relationships with employees, communities, customers, environment and future generations.
This may surprise a few folks: “Shareholder primacy” is a relatively new concept in capitalism. That’s according to the highly-respected Professor Mervyn King, former Judge of the Supreme Court of South Africa. Last year, in an address tracing the evolution of corporate governance over the centuries, here’s what he said about court decisions in the early 20th century: “Shareholders were [then] given primacy of place in regard to all other stakeholders involved in the business of the company: suppliers, creditors, financiers, employees, advisers, etc.”
Of course, shareholder primacy is now well entrenched in corporate law, strategies and tactics.
But with ideas such as Benefit Corporations, questions of how a company pursues profits – and the ranking of stakeholder interests – is gaining attention within the corporate social responsibility/sustainability community.
This week was quite illustrative.
Excerpts from The New York Times report on the Amazon reskilling program
What was business leaders’ role in President Trump’s abrupt flip on imposing tariffs on Mexico?
First, the response was right in the crosshairs of classic issues management:
Prioritize action on oncoming issues by how much they can affect your organization and by how much your organization can affect the outcomes.
But it was also a premier example of such success measured by relevance, immediacy, scale and impact.
An Axios report-analysis may have summarized it best.
Business “freak out” spurs plans to tame Trump on trade
Key excerpts:
“Trump’s blunt use of presidential leverage … appears to have caused an unintended side effect: U.S. business leaders have begun urgently discussing strategies to claw back [presidents’] virtually unchecked trade powers … Trump’s threat to impose rising tariffs … sparked a widespread panic in the U.S. business community and turned their conversations in an unprecedented direction, these sources said.
“John Murphy, who runs international policy at the Chamber of Commerce, tweeted, ‘In the space of a few hours … more than 140 business and agricultural organizations signed (the) statement opposing tariffs on goods from Mexico.’
Quoting another top industry source involved, Axios reported this analysis:” I think you’re going to see a longer term business community effort to help Congress reassert its authority on tariffs.”
Elsewhere this week on the spectrum of brands taking stands, the increasingly divisive abortion issue generated a somewhat different model. More than 200 CEOs of companies across the country published, in effect, a workplace manifesto in a Monday New York Times full page advertisement:
” Don’t Ban Equality” “It’s time for companies to stand up for reproductive health care.”
Two distinguishing characteristics here, as compared to the business-vs.-Mexico-tariffs campaign:
In taking this stand on a highly controversial issue, the signatories explicitly channeled what they interpreted as employee and customer interests and values on “equality” (relevance); and they bonded with national issue-oriented organizations:
“We the undersigned, employ more that 108,000 workers and stand against policies that hinder people’s health, independence, and ability to fully succeed in the workplace …
“Equality in the workplace is one of the most important business issues of our time … Restricting access to comprehensive reproductive care, including abortion, threatens health, independence and economic stability of our employees and customers. Simply put, it goes against our values, and it’s bad for business. It impairs our ability to build diverse and inclusive workforce pipelines, recruit top talent across states, and protect the well-being of all people who keep our business thriving day in and day out.”
Business leader support for the Don’t Ban Equality campaign was facilitated by issue-oriented national organizations including Planned Parenthood Federation of America, NARAL Pro-Choice America, The America Civil Liberties Union and Center for Reproductive Rights.
The spectrum of business leaders taking on major socio-economic issues in the public forum — as well as their strategies and tactics — appears to be expanding.
That is the admittedly debatable position espoused — with impressive, if lonely, logic — by Martin Sandbau, Economics Commentator at The Financial Times https://on.ft.com/2KuP2BF
Still, he may be on to something. Something epic, in Europe, the U.S. and well beyond:
“When future generations look back on the political upheavals of the last few years … most will have forgotten the crumbling two-party system of social democrats and mainstream conservatives that dominated the western democracies since the 19th century.”
He is referring, primarily, to the political parties of Europe over that time. And he’s betting heavily on the momentum generated by last month’s European elections that saw Greens parties “scale new heights across northwestern Europe … This Green wave gives parties making climate change their top priority a strong hand at the European level and in the national politics of more than half the EU’s populations. Enormous consequences hinge on how they yield that influence.”
Mr. Sandbau believes that the future potency of the Greens’ central policy – called a “just transition” to a low-carbon economy – will cause tremors, and possibly even demise, for the established geopolitical order. Rationale: “That is because environmental policy lands right in the middle of the fault line between those who support and those who oppose liberal democracy and the rules-based international order.”
A heavy lift. But not easily dismissed. The Greens answer to critics, especially those from the left: “The Greens are alert to this challenge”; according to Mr. Sandbau, their central strategy: “combine carbon pricing and similar taxes with radical redistribution to favour the vulnerable.”
In the U.S. the climate change issue is rapidly becoming a central element in the already-launched
2020 presidential campaign.
The concept of a “Green New Deal”- in various iterations, but essentially pursuing environmental sustainability with massive public infrastructure investment – appears to be getting traction among Americans. And it may well be a central element for an emerging Democratic Party 2020 platform.
“The Green New Deal Has Already Won”
The New York Times: “Democratic pollsters say that in surveys and focus groups, climate change often emerges as the second most important issue to the party’s primary voters, following health care — a departure from previous presidential campaign cycles when the environment was sometimes an afterthought.”
The Republican Party, burdened with President Trump’s characterization of climate change as a “hoax”, is currently on its back foot in responding to a broadening base of interest in the issue.
It may be no surprise that many millennials and members of the “X generation” — demographic “inheritors of the earth”– have a special interest in addressing climate change. But more impressive, perhaps, is the recent wave of support for action in the international business community. Leaders in corporate management and investment alike are stirring into action.
Among recent relevant headlines:
“Companies See Climate Change Hitting Their Bottom Lines in the Next Five Years”
“Europe leads $31tn charge on sustainable investing”
Mr. Sandbu is well aware of how his prophecy “represent[s] huge policy transformations”:
“A carbon dividend would radically change the way we use tax systems, essentially combining drastic tax increases on carbon use with a universal basic income. A Green New Deal worth its salt would require a regime change in terms of governments’ willingness to invest.
“This is a tall order but a just climate transition requires nothing less. If anyone can achieve it, it is Europe’s Green parties (directly or by encouraging bigger parties to steal their policies). If they do, they will have changed world history, defeating both the ecological and political threats to liberal capitalism.”
A very tall order. Still …
“The strength and speed of staff unrest has come as a stunning development …
“Companies in all sectors need to start regarding employees as their most significant interest group.”
That’s a striking conclusion of a new Business for Social Responsibility analysis of today’s — and tomorrow’s — workforce: “Exploring employee activism: Why this stakeholder group can no longer be ignored” .
The report reflects the evolution of a contemporary workforce far different from that of earlier generations — a workforce that reflects the epic changes in society via globalization, technology and politics. And, if current sociological research is correct, a workforce with important characteristics that will be enforced as millennials increasingly join the ranks.
Many employers have already had to face petitions, demonstrations, “strikes” and, perhaps most important, public embarrassment as employees question company strategies and tactics. The not-button issues range from climate change, gender equal opportunity and immigration to benefits for contract workers and, as some employees see it , questionable company relationships with the military, media and the “security community”.
And all this in the age of the many demands for transparency and retribution for alleged sexual harassment in the workplace.
So, key observations in the BSR report are especially timely:
“…one of the most significant trends … is the emergence of employees as a newly empowered and vocal stakeholder group with an unprecedented ability to impact a company’s strategy and reputation … it would be a big mistake for companies in other industries [other than issues already being addressed in the technology sector] to overlook the potential for employee activism …
“Employees are speaking out on questions that relate to company values and investment decisions, and they [are] calling out hypocrisy when and where they see it …
“Indeed, employee activism can inspire other stakeholders to act. When close to 7,000 Amazon employees signed a petition calling for the company to adopt a more ambitious approach regarding climate change, the drive gained plenty of publicity. The petition was supported by … the two biggest proxy advisors to institutional investors. Even though the resolution was voted down, employee activism is increasingly likely to generate civil society campaigns and trigger shareholder activism …”
“Today’s employees are empowered to dissolve traditional boundaries — both physical and knowledge-based — between companies and the societies in which they operate. Management should respond with a robust, strategic approach to stakeholder engagement, placing their own employees squarely at the center of the effort.”
Stakeholder engagement indeed.
Depending on the day, hour and mood of the American President, we are now in a U.S.- China trade war — or not.
But there’s much more than trade at stake in this confrontation. It may well foreshadow tectonic shifts in global geopolitical power.
The Economist has just summarized it quite well:
“Fighting over trade in not the half of it. The United States and China are contesting every domain, from semiconductors to submarines and from blockbuster films to lunar exploration. The two superpowers used to seek a win-win world. Today winning seems to involve the other lot’s defeat … it is hard to say where commerce ends and national security begins…
“It is a kind of cold war that could leave no winners at all…The potential for catastrophe looms”
The staid, right-of-center Economist does not throw wordslike “catastrophe” about easily – or often. In this case it has taken a very measured assessment of an epic development in global geopolitics — the rise of a major new competitor challenging a well-entrenched leading global power.
It’s happened many times in world history. And it usually does not end well. The vast devastation and loss of many millions of lives in the two twentieth-century world wars still resonate.
Recognizing this looming global upheaval The Economist counsels great caution: “Even if China and America stop short of conflict, the world will bear the cost as growth slows and problems are left to fester for lack of co-operation … Such an agenda demands statesmanship and vision. Just now these are in short supply…
“China and America desperately need to create rules to help manage the rapidly evolving era of superpower competition. Just now, both see rules as things to break.”
This twenty-first century superpower confrontation is addressed on a still greater scale by Oxford University Professor Peter Frankopan in his new book on “the dramatic and profound changes our world is undergoing right now — as seen from the perspective of the rising powers of the East..”
“The New Silk Roads The Present and Future of the World” . Without neglecting the obstacles China faces in its pursuit of increased global influence, Professor Frankopan nevertheless provides a timely and compelling, if controversial,”wake-up call” on that country’s progress ad plans.
A few of his insights that may prove startling for many readers –
” [British General, summer 2018]: ‘We are living in an era of ‘constant competition about the evolving character of warfare … energy, cash, corrupt business practices, cyber-attacks, assassination, fake news, propaganda — and good old fashioned military intimidation’ are all being used as weapons.
“What constitutes a weapon no longer has to go ‘bang.’ “
———–
” … there are also underlying economic challenges that go far beyond the US-China trade relationship — [the present US-China] dichotomy is shaping the twenty first century.
” Yan Xuetong, foreign policy expert: ‘We are moving away from a state in which international norms are led by western liberalism to a state in which international norms are no longer respected.’ “
————
“The old world has suddenly woken up to the new world has been forming for decades … those most incentivized to apply the brakes are those with the most to lose – namely the West … now want a return to ‘normal’ and expect newcomers to take up their old positions in the world order.
“This does not sound promising for billions of people across Asia in particular.
“We are already in the Asian century.”
Ironically, the ultimate power of public opinion may eventually prove decisive in what may be becoming a tectonic shift in global power and influence. “Ironically” because for centuries the U.S. and China have been at opposite ends of the freedom of speech/freedom of the press spectrum and its political influence in societies.
Today, that keystone of a liberal, democratic society is in duress in the United States and is likely to be so at least until the 2020 presidential election. In China, a one-party autocratic society, public opinion, especially among younger adults, is neverthless finding its way to the surface.
A New York Times report this week is instructive
“To Many Chinese, America Was Like ‘Heaven’. Now They’re Not So Sure” :
” ‘ Thirty years ago, a lot of people [in China] thought that going to the United States was like going to heaven,’ said Liu Peng, an education consultant in the eastern city of Qingdao. ‘But now people think the United States is falling behind while China is growing ‘…
” ‘ The older generation of Chinese both respect and fear the United States, we were brought up to think America was superior and we were the underdog’ said Wang Xiaodong, a nationalist writer. ‘But the perspective of young Chinese is different. They don’t respect you. Nor are they afraid of you.”
Its name: “The Christchurch Call”, channeling the March 15th terrorist attack in Christchurch, New Zealand.
Purpose: Global crack down of online extremism that feeds horrific extremism.
Leading countries are for it. So are Amazon, Facebook, Google, Microsoft and Twitter.
Who isn’t supporting “The Christchurch Call”? The United States, according to The New York Times: “Trump Administration Balks at Global Pact to Crack Down on Extremism” . Citing free speech protections, the US government asserted, “the best tool to defeat terrorist speech is productive speech.”
Huh?
That position came in the wake of another U.S. isolationist decision this week, this one on the urgency of controlling international plastic waste: “Governments agree to treat plastic waste like toxic chemicals”
Excerpt from Responsible Business:
“At a summit in Geneva, around 180 nations agreed to amend the Basel Convention, which regulates how hazardous waste is moved across borders and disposed of, to include plastics. The amendment means that the global trade in plastic waste [estimated at 100 million tons in the oceans] will need to become more transparent and regulated, in order to prevent it from leaking into seas and other ecosystems.
“The USA, the world’s largest exporter of plastic waste opposed the move.”
From The New York Times article on The Christchurch Call (but also relevant to the administration’s plastics waste decision — and others — as well):
“Dipayan Ghosh, (an Obama administration privacy policy expert) said the absence of the United States from the accord showed that it was ceding tech regulation to other nations.
“That the U.S. is a no-show to such an important meeting indicates a shocking lack of concern about the tremendous harms perpetuated by the internet, including terrorism and killing.
“Further, our lack of participation will reinforce the intellectual divide between Americans and the rest of the world.”
New Zealand Prime Minister Jacinda Ardern, understandably an architect of The Christchurch Call, at its signing meeting in Paris: “The social media dimension to the attack was unprecedented, and our response today with the adoption of The Christchurch Call is equally unprecedented.
“We have an agreement here that involves both tech companies and countries. In the past we have had either one or the other.”
Brad Smith, Microsoft president, suggested that the agreement — and the companies’ new nine-point plan addressing extremist and violent content — might be seen as a part of the tech industry’s broader shift away from self-regulation: “Now you see a clear reaction and, in some cases, rejection of that.”
If he is correct, perhaps The Christchurch Call will some day be seen as a big boost for public-private collaboration on social issues — as well as a seed for effective overall regulation of the internet.
