august / september 2005 andrea and jim fruchterman · 07 july bombings in london sometimes history...
TRANSCRIPT
Radar August / September 2005 The Social Enterprise Issue
Sergey KostinThe Way HomeUkraine
Victoria HaleOne World HealthUS
Satish KumarSchumacher CollegeUK
Andrea andBarry ColemanRiders for HealthUK/Africa
Jim FruchtermanBenetechUS
Safia MinneyPeople TreeUK/Japan
Jed EmersonBlended ValueUS
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Radar August / September 2005 Contents
The Social Enterprise IssueWhether from impassionedindividuals, small grassrootsorganisations or innovativeprojects within large companies,social enterprise involves adiverse mix of people,approaches and impacts. Howcan we combine the very bestaspects of each? Will we reach asynthesis, a mixing of the �valuepalette� with strong dashes ofcreativity, innovation, co-operation and transparency? Orwill the reality always be thatsocial enterprises are amulticoloured pick-and-mixaffair of inspiring, but isolated,success stories?
RadarPublished by SustainAbility,Radar provides foresight, insightand intelligence on the latestdevelopments in the corporateresponsibility agenda. To receiveRadar you can either:
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� phone or [email protected]+44 (0)20 7269 6900
EditorialJohn Elkington
04 The Future�s Here
Social EnterpriseYasmin Crowther
06 Who Dares Wins!
Head to HeadJohn Elkington
08 To Sell or Not to Sell?:Andrew WhitleyRory StearCraig SamsNeil Makin
LeadershipKavita Prakash-Mani
12 Capturing Local Emotion
13 Business Headlines
Social EnterpriseJohn Elkington
14 The Value Palette
Change AgentsPamela Hartigan
18 Riding the Davos Trainto Porto Alegre
SustainAbility ReportJodie Thorpe
20 The Power of Influence
ReportingMark Lee
21 Lessons inAccountAbility
PerspectiveJeff Erikson
22 Energy: Red Hot Topic
Resources24 Websites25 Books
Change AgentsGeoff Lye
26 There�s No Saying Noto the Yes Men
The Big IdeaJodie Thorpe
28 Gleneagles: Taking Stock
SustainAbility30 Publications31 About Us31 Contact Details
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Radar August / September 2005 Contents
Radar is produced by SustainAbility sixtimes a year. If you have questions orcomments about Radar, please contactthe editor.
Editorial TeamSeb BeloeFrances BuckinghamYasmin CrowtherJohn ElkingtonLynne Elvins
EditorLynne [email protected]
DesignRupert [email protected]
ProofingSusannah [email protected]
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26 Geoff Lye�Relatively small resources can be marshalled and multiplied through the creative exploitation of globalized media.�
08 Head to Head�I think of what Green & Black�s CEO William Kendall once said: �Heaven help us if ethical trade is only left to small organisations!��
18 Pamela Hartigan�The World Economic Forum in general, and Davos in particular, provided an unprecedented opportunity for showcasing the work of practical visionaries.�
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Radar August / September 2005 Editorial
The Future�s HereJohn Elkington
John [email protected]
�How would you shut down London?�a leading insurance expert asked Geoff Lyeand I at a major risk conference some timeago. Our answers are best left unrecorded,but terror attacks against the city�s publictransport system were undoubtedly top ofmost Londoners� minds when our globalteam convened there in July. There is littlechance that such attacks will long dentLondon�s tremendous resilience, but whatabout SustainAbility�s own long-termresilience as markets evolve? Our gathering� planned well before the attacks �reviewed progress, discussed futurestrategy and agreed a number ofsignificant management changes. Thefruits of that work should become clearin the coming months.
Meanwhile, terrorism apart, there are manyways in which William Gibson�s dictum aboutthe future is true of our own field. �The futurehas already happened,� he said, �it just isn�tvery well distributed.� So part of our ongoingpurpose is to look for those leading indicatorsof change and to help leading companiesrespond. As this issue of Radar shows, al-Qaeda are not the only ones trying todistribute their view of the future.
In one of the most hopeful trends of recentyears, a new breed of social entrepreneurs isemerging. As the focus shifts from awarenessbuilding to market solutions, we have alsostarted to pay greater attention to the worldof social enterprise.
Not that we should be blinded by the potentialof social entrepreneurs. They are one part ofan increasingly complex ecosystem of change.Geoff Lye looks at the Yes Men on page 26,one example of the media-savvy NGOskeeping up the pressure for change.Governments, too, have critical roles to play.As Jodie Thorpe argues (page 28), the G8summit in Gleneagles made real, significantprogress on such issues as aid, debt, trade andclimate change.
Business, however, is likely to be pivotal.Jeff Erikson explores the implications of oilprice trends for the energy sector on page 22,while our ongoing work on corporate lobbyingis highlighted on page 20. But many optimistsfind it difficult to imagine a future in whichtoday�s best corporate efforts potentially addup to global success. While it�s great newsthat General Electric now has its�Ecomagination� initiative, most bigcompanies take ages to turn around.
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07 July Bombings in London
Sometimes history seems to go into freeze-frame. Within hours of the bombings, mye-mail inbox was full of queries as to thesafety of the SustainAbility team (all safe andwell) from such places as Switzerland, Brazil,California, Japan, China and Nepal.Intriguingly, several expressed total disbelief atthe destruction visited on our home city � areaction I sadly found impossible to share.Ever since 1995�s Aum Shinrikyo sarin gasattack on Tokyo�s metro, attacks on othersubway systems seemed simply a matterof time.
A world pushing towards ten billion peopleand ever more concentrated in megacities willincreasingly depend on mass transit systems �and be increasingly vulnerable to terrorism,whose own sophistication can only grow.Forecasting such horrors, however, is the easypart. The real question is what can we do tominimise the risks and, where that fails, todeal with the inevitable consequences?JBE
Radar August / September 2005 Editorial
Market realities powerfully constrain thecapacity of most big companies to drivechange, particularly what the economistJoseph Schumpeter termed �creativedestruction�. As I argued in 2001�s TheChrysalis Economy, such changes typicallycome from outside the system. The WrightBrothers were bicycle makers.
That�s why I began to spend more time in theworld of social enterprise. Since 2002, I havebeen involved with the Schwab Foundationon Social Entrepreneurship and the WorldEconomic Forum in this area � and am writinga book on social enterprise with PamelaHartigan, Managing Director of the SchwabFoundation (page 18).
As context, we argue that whereas the 20th-century economy was pretty much two-colour,focusing on black (profit) and red (loss), the21st-century economy will requireentrepreneurs and businesses to operateacross a broader spectrum of value creation(page 14). This is something that socialentrepreneurs are experimenting with.Kavita Prakash-Mani looks at the picture inthe emerging economies on page 12, YasminCrowther ponders the implications for bigcompanies (page 06) and we also addressthe question of what happens when socialentrepreneurs choose � or are forced � tosell to larger players (page 08).
Boiling down the messages in this issue to justa few bullet points, innovation, enterprise andscale are up there in lights. GE�s venture is arare corporate initiative that is innovative,entrepreneurial and has the capacity to scale.Elsewhere, most CSR programmes are notinnovative � nor are they entrepreneurialenough to ensure scaling.
That�s why the spotlight is shifting toinventors, innovators, entrepreneurs,investment bankers and venture capitalists.And I would now add politics, in the senseof politics as the art of the allocation ofscarce resources.
Tomorrow�s political leaders will have todemonstrate extraordinary levels of visionand courage. That�s why I have such respectfor London�s Mayor, Ken Livingstone. His bolddecision to introduce London�s congestioncharge scheme symbolises the role thatpoliticians must play. What follows is part ofthat emerging story. And London, which hasalso won the bid to host the 2012 OlympicGames, will be (alongside Beijing andVancouver) a place to watch. Over the nextseven years it could even become � if therecan be such a thing � the Global Capital ofSustainability. JBE
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Radar August / September 2005 The Social Enterprise Issue
Who Dares Wins!Yasmin Crowther
Yasmin [email protected]
Entrepreneurship is what you need tocreate an enterprise � social or otherwise.It�s one of those words rather like�creative� or �musical�, attributes onefeels one either has or hasn�t� andrather envies those that have. Sayingthat, I suspect creativity andentrepreneurship have much in common,and that we each have more of it thanwe know, should we be brave enoughto look.
When I met Chris Murrin of What If? somemonths ago, she talked about creativethinking and I asked what she meant. Shesaid that if a challenge is to get from A to Band you know the answer, you don�t needto be creative. But if you don�t know theanswer, that�s where creativity comes in.Social entrepreneurship (SE) is surely this� identifying a need that isn�t met andinnovating a solution.
My brother, Mark Crowther, is a HarvardMBA graduate and mainstream entrepreneurin New York. I spoke to him about hisexperience of SE and its relationship withtraditional entrepreneurship. �Business schoolstypically define SE as non-profit. This statusgives access to reduced tax rates andgovernment contracts.�
I asked if there had been much interest in SEamong his peers at Harvard. �Definitely, it�s amandatory part of the MBA, and there�s anAnnual Business Plan Competition, whichintroduced a dedicated SE tract some yearsago to meet student demand.�
Could we stretch the traditional businessschool definition of SE out of non-profit,I asked, and could some mainstreambusinesses be seen as types of hybrid SE?We talked about Pfizer and Shell and howthe social worth of those businesses seemedto have corrupted over time � in perceptionat least.
Many scientists go to work in pharmaceuticalsto find a cure for cancer or the like, but I recalla taxi driver once describing Pfizer to me as�making money from sick people�. SimilarlyShell might describe itself as about mobility,warmth and energy security, but today wehear as much about pollution and corruption.
We talked of my brother�s own experienceas the founder and publisher of Urban ClimberMagazine and now as group publisher ofvarious sports magazines, including TheSurfer�s Path. With a global readership of over60,000, The Surfer�s Path is for-profit and alsohighly focused on the environmental agendacentral to any surfer � one of the most activistcommunities around.
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Radar August / September 2005 The Social Enterprise Issue
Survey of Social Enterprises Across the UK
Social enterprises generate £18 billion inannual turnover and employ over 775,000people in the UK according to findings by theDepartment of Trade and Industry. The SmallBusiness Service: Survey of Social EnterprisesAcross the UK showed that social enterprisesare diverse, in size and sector. Almost a quarter(23%) are in London, but they operate in everyregion of the UK and they represent around1% of the UK�s businesses.
Other findings included:
� Around half of social enterprises receivegrants, donations and subsidies (whichaccount for 12% of income) and over 82%of turnover is from trading income.
� Over 50% of social enterprises are locatedin the 40% most deprived areas and play arole in urban regeneration. Most socialenterprises exist to help particular groups ofpeople either through employment orproviding goods and services.
� The most common groups helped are thosewith disabilities, young people, the elderlyand those on low incomes. Nearly a quarterhad environmental objectives.
The full report can be downloaded from:www.sbs.gov.uk
The magazine describes itself as �printed on100% post-consumer recycled paper usingnon-GMO soy-based inks� and tackles issueslike post-Tsunami humanitarian aid toIndonesia.
The Surfer�s Path attracts advertising frombrands like Reef, Patagonia, Oakley andQuicksilver, and has just initiated TheGreen Wave Awards � with SustainAbility �encouraging these brands to communicatetheir contribution to sustainability moreactively. Mark warmed to the idea of hybridSE, and talked particularly of Yvon Chouinard,the founder of Patagonia, who�s putsustainability at the heart of his businesswith real impact: �It�s a type of SE that pays.�
After I put the phone down, I thought again ofShell and Pfizer, and whether there were sometypes of SE to be found under their auspices.Could an investment in renewables be seenas SE, or just a type of sophisticated risk andreputation management? Similarly with Pfizer�swork on developing country diseases � is itjust the price they pay to continue their tradein more lucrative lifestyle medicines for theWest? If so, does it matter as long as somegood is done?
Whatever your conclusion, it does seem thatSE isn�t just about the activity � althoughthat�s central � but also about the intent.Social entrepreneurs are fundamentallymotivated by more than profit or conventionalsuccess � it�s a deeper values-basedsatisfaction and passion that sustains them.
As my brother said, �Nurturing an enterprise islike nurturing a child. You don�t quite want itto leave home.� But as in life, maybe that�sinevitable, the point at which an enterprisegoes to scale and bucks make the difference,when values take a back seat and �profit�drives decisions above all else (see page 08).
This must be part of any social entrepreneur�sdilemma � to be part of an educational andregulatory framework that nurtures SE withall its passion, and enables it to go to scale,without having to �sell its soul� to grow. If thiswas possible, well, who wouldn�t dare try outthe crazy idea that just might change theworld? YC
The Surfer�s Pathwww.surferspath.com
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Radar August / September 2005 Head to Head
To Sell orNot to Sell?John Elkington
John Elkington talks with socialentrepreneurs and others about whathappens when the time comes to sellthe business.
John Elkington One of the toughest momentsany entrepreneur faces is when the timecomes to consider whether to �sell out�.For example, I was at the Ben & Jerry�s boardmeeting in the US when they decided theywould have to sell out to a larger player. It wasan excruciating period for the founders, BenCohen and Jerry Greenfield. But if the socialenterprise sector is to work well as anincubator of future businesses, themechanisms of investments, mergers andacquisitions will have to be considered.
While thinking this issue through, I spokewith Pamela Hartigan, who runs the SchwabFoundation for Social Entrepreneurship(page 18). She says that it is �rare� amongthe social entrepreneurs she works with tosell, indeed she knows of at least one whoconsidered it and then �decided not to pursueit�. But they�re a very particular type of socialentrepreneur. And it�s interesting how oftensuccessful social entrepreneurs didn�t thinkabout selling on when they started out. Oneof the first social entrepreneurs � althoughthat wasn�t the term then � I came across hassince been a long-standing friend, Andrew
Whitley. Originally a BBC Russian Serviceproducer, he created The Village Bakery in1976. They were very unusual at the time inthat they based the entire business on organicmethods, renewable energy and artisanalmethods. But the real challenges began whenthey were discovered by a major supermarketchain in 1991. As Ben & Jerry�s found manyyears later, the process of scaling up was agruelling process, but � Andrew � was aneventual sale always part of the business plan?
Andrew Whitley I usually describe the VillageBakery as a paradoxical example of brandsuccess through serial business failures! Ididn�t have a business plan, indeed I didn�tknow what one was for the first ten years ofmy �business� career. I had no particular endgame in mind. The decision to sell was ineffect taken for me when my then wifeindicated that she wanted to leave thepartnership, both business and personal. Sothe choice was between giving up the wholething and selling enough of it to generatesome cash, while allowing me to remain inthe business.
John Tough times.
Andrew Yes. The first stage, 1994 to 1995,involved a long search for investors whoshowed any inkling of understanding what the
John [email protected]
www.village-bakery.com
www.freeplay.energy.com
www.wholeearthfoods.com
www.greenandblacks.com
www.cadburyschweppes.com
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Radar August / September 2005 Head to Head
business was about. I eventually found threepeople who did, the folk behind the successfulPhileas Fogg brand, and they acquired 66% ofthe shares. But then they were bought out �pretty much over my head � by a local bakery,Bells, in 1998, with my share dropping to24.9%. The second stage, 2001 to 2002,involved a difficult negotiation in which itseemed that the majority shareholder wantedto engineer my exit for nothing. I took legaladvice and consulted people like RachelRowlands of Rachel�s Dairy, Lizzie Vann ofOrganix Brands and Craig Sams of Whole Earthand Green & Black�s.
John But you eventually settled and thebusiness has maintained many of the originalcharacteristics. What advice would you giveto someone starting up today as a socialentrepreneur?
Andrew Find a way of achieving adequatecapitalisation before you start, so you cancushion against temporary dips in profitabilitycaused by a determination to stick to yourprinciples.
John It�s interesting, this tension betweenstaying small and the need to scale. While wewere researching this issue of Radar, I visitedInnocent Drinks and interviewed one of the
founders, Jon Wright. They are trying to getinto supermarket giants like Tesco, but are upagainst bigger companies like Ocean Spray,Tropicana and PJ�s, owned by PepsiCo. Theysay they don�t want to sell out, but it�s hard toscale up without getting money fromsomewhere.
One social entrepreneur who has recentlygone through an IPO (Initial Public Offering)process is Rory Stear of Freeplay Energy. Hestarted out in the field of wind-up radios inthe mid-1990s and now says he wantsFreeplay to be �the best in the world atharnessing human energy�. But � Rory �what were the financial options when itcame to think about scaling up?
Andrew Whitley Neil MakinRory Stear Craig Sams
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Radar August / September 2005 Head to Head
Rory Stear Unlike many other socialentrepreneurs, we always intended to seekexternal investment � and, eventually, totake the business public. In the early days,we had sold slices of the business to investorslike Anita and Gordon Roddick and GE PensionTrust. But any investor wants to know whattheir �exit� is going to be. And any entrepreneurhas a number of options in this area.
They can go for a trade sale, selling out toanother company. They can try a managementbuyout. Or they can go public using an IPO,the first sale of stock to the public.
Our problem was that our first-round investorswere tired and over the years we haddeveloped an impossibly complicated capitalstructure, with some investors effectivelyhaving the power of veto on what we did.The IPO helped straighten that out. And it�san unfortunate fact of business life that oftenthe people who make the real money out of abusiness are the second-round investors.
John Have you seen the financial marketsresponding to your efforts?
Rory When we started trying to raise capitalin 1996, none of the big investment banks hada renewable energy analyst. Now not a singleone doesn�t.
John And if you were offering advice to awould-be social entrepreneur?
Rory I agree with Andrew. Try to make sureyou have enough capital from the outset,or you end up being driven by the deals.
John Craig Sams has sold at least two socialenterprises, Whole Earth, now part of KalloFoods, and organic chocolate makersGreen & Black�s, now part of CadburySchweppes. Craig, was selling always partof the game?
Craig Sams Yes, but previous attempts hadn�tbeen successful. We offered Whole Earth toHeinz in 1996, thinking it the perfectopportunity for them. But they went with theirown brand. The decision to sell Green & Black�sbecame inevitable when William Kendall andNick Beart made an offer of cash and sharesretention. Encouraged by my father and mywife (Jo Fairley, co-founder of Green & Black�s)I agreed, and we were into the venture capitalstage. Everyone had invested in a businessplan that showed an exit in five years or so.
John And the benefits of being part of CadburySchweppes?
Craig We dreamed that we would sell to a bigchocolate company, but Cadbury Schweppesexceeded our wildest dreams. We have longleveraged the production and processingpowers of others, but now with CadburySchweppes we have the global reach ofa multinational and can make strategicdecisions without being constrained byshort-term cost issues.
John And what about from the other side ofthe table? Let�s ask Neil Makin, External AffairsDirector at Cadbury Schweppes, what was thethinking on the Green & Black�s purchase?
�It�s an unfortunate fact of business life that often the people who make the real money out of a business are the second-round investors.�
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The Global Entrepreneurship Monitor(GEM)
The GEM research programme is an annualassessment of the national level ofentrepreneurial activity. The 2004 study,launched in May 2005, clearly showed thatlarge numbers of people are engaged inentrepreneurial endeavours around the world.Based on a sample of 34 countries, GEMestimates that 73 million adults are eitherstarting a new business or managing a youngbusiness of which they are also an ownerand the average level of entrepreneurialactivity was 9.3% (one adult in 11).
The level of activity among the 34 countriesranged from about 1.5% of adults in Japan(one person in 70) to 40% of adults in Peru(one in two people), with higher overallactivity in low-income countries. Individualswere also found to participate for two mainreasons: they either start a new business toexploit a perceived opportunity or they arepushed into entrepreneurship because allother options for work are either absent orunsatisfactory. Over 97% of individuals werefound to be either �opportunity� or �necessity�entrepreneurs.
The full report can be downloaded from:www.gemconsortium.org
Radar August / September 2005 Head to Head
Neil Makin Well, we were impressed at howGreen & Black�s had managed to maintaingrowth. I met Craig Sams some time ago, in hisrole at the Soil Association. It was clear thenthat we shared some mutual interests. CadburySchweppes had also bought a 5% stake inGreen & Black�s some time ago, so you couldsay we had been following them from within.
John So, what do Green & Black�s bringto Cadbury Schweppes?
Neil Green & Black�s is reinforcing ourcommitment to all parts of the ethical supplychain. Green & Black�s are a beacon at one endof that. It�s a flag pole for us all to walk around.We�re particularly interested in harnessing theideas and passion that the Green & Black�steam bring to our business. Coupled with ourdistribution and marketing we will be able tohelp them to grow and to reach new markets.
John Can the Green & Black�s brand valuescontinue even when owned by a largemultinational?
Neil Absolutely � we wouldn�t want to buythese companies if we were going to destroytheir brand. With our Bournville Quakerforefathers, we have something of a socialand ethical heritage already.
We were a little surprised by the reaction ofsome of the media, who argued that CadburySchweppes was trying to buy ethicalcredibility. Whenever I hear such argumentsI think of what Green & Black�s CEO WilliamKendall once said: �Heaven help us if ethicaltrade is only left to small organisations!�
John It�s great to hear of an acquisition thatseems to be working well. But, Craig, withhindsight, what advice would you offerearly-stage social entrepreneurs?
Craig The same advice as Andrew and Rory.Capital is wonderful stuff. I was alwaysconstrained by being undercapitalised andused each successful product as a cash cowto fund the next. Whole Earth peanut butter,for example, was what kept Green & Black�sgoing in the early days.
John And how carefully did you vet biddersfor your businesses? Would you have soldGreen & Black�s to Nestlé, for example?
Craig I�d have had plastic surgery and goneto live in Uzbekistan if it had been Nestlé!JBE
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Radar August / September 2005 Leadership
Capturing LocalEmotionKavitaPrakash-Mani
Kavita [email protected]
Rural Women Technology Centrewww.ashoka.org/fellows/viewprofile3.cfm?reid=96800
Will job and wealth creationalongside technology transferresult in poverty reduction?If it does, the businesscontribution to developmentis clear. If not, how canbusiness help in reducingpoverty? One answer is forcompanies to look to thosesocial entrepreneurs whowork directly with the fourbillion global �poor� to helpthem develop bottom-upsolutions to meet their needs.
One such example can be foundin Dr Vibha Gupta, who runs theRural Women Technology Centrein India. As the name suggests,the aim is to develop appropriate,small scale, women-friendlytechnologies and to train ruralwomen in their use.
This is not about providing acommerically viable trainingservice. The project empowerswomen to improve their dailylives as well as starteconomically productiveenterprises.
The technologies include small-scale processing units for thingssuch as food preparation, handmade paper production and therepair of household goods andappliances. On top of this,women are taught how to applyfor subsidies and sell, display andstore finished products. Thefocus is on servicing rural needsrather than tapping the urbanmarket.
All this is achieved through ahighly dedicated technical teamof mechanical engineers, healthworkers, doctors, mechanics andvolunteers. And as a way toensure commitment from theparticipating women, they arerequired to pay for their tools.
To date 5,000 women haveparticipated in the programmeand about 50 other internationalorganisations have made useof the training and technology,giving testimony to the successof this holistic solution.
With the core aim of povertyreduction, rather than marketdevelopment, it feels obviousthat these grassroots effortsachieve far more than corporate-led approaches. The impacts arelong-term, far reaching andoften intangible. But howeverpowerful the results may be,the scale of these efforts isalways constrained by resourcelimitations and reach. This iswhere the role for largerbusinesses should not beunderestimated.
Some companies are exploringnew strategies such asaddressing the �base of thepyramid� (see Radar Dec 04/Jan05) or buying into socialenterprises. But arguably whatbusiness does best is developnew technologies, competenciesand markets. If we are to reducepoverty, it will need the spirit oflocal emotion and theengagement of individuals, butthe need for business investmentand growth must not be over-looked. KP
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Radar August / September 2005 Business Headlines
Europe Can Cut Energyby 20%The European Commission saysthat Europe could reduce, by asmuch as one-fifth, the amountof power it uses by 2020, if itbecomes more energy efficient.As well as aiding the fightagainst climate change, betteruse of energy would assist theEU in reducing its dependenceon imported oil and gas, saving$73 billion annually.
http://europa.eu.int/comm/energy/efficiency/index_fr.htm
Shell Paves the Way inNatural GasShell is set to step up itsinvestment in ten multibillion-dollar projects which will see thecompany producing more naturalgas than crude oil within thenext ten years. It will transformShell into a global gas player. Theenergy group has alreadyinvested $1 billion inrenewables.
http://business.timesonline.co.uk/article/0,,9072-1665450,00.html
Top Companies for DiversityBlack Enterprise magazinestudied 120 companies to findthe best diversity initiatives.The top 30 include EastmanKodak, McDonalds�s Corp, IBMand FedEx Express. Companieson the list outperformedcompetitors in four key areas:supplier diversity, multiculturalrepresentation on their boardsof directors, senior managementpositions held by ethnicminorities, and the percentageof ethnic minority groups intheir total workforce.www.blackenterprise.com
Lending EthicsBritish banks have again comeunder fire for �irresponsible� and�predatory� lending. The BBC TVprogramme, Real Story, foundthat Lloyds TSB staff failed to fileproper paperwork in 104 cases,despite staff being aware that�affordability was doubtful�. Theconsumer group Which? said,�Normally we�re very happy withthe Banking Code but it isn�tgoing far enough.�
http://news.bbc.co.uk/1/hi/programmes/real_story/4111609.stm
Asia�s ShameAccording to a recent reportby the International LabourOrganisation (ILO), Asia is theworld�s undisputed forced labourhub. The report highlights 22different examples of forcedlabour, ranging from slave labour,work carried out under duressand victims of the sex industry.www.ilo.org/public/english/bureau/inf/pr/2005/22.htm
Brazil Pressures Drug Companyto Cut PricesBrazil is targetingpharmaceutical companies,including Abbott Laboratories,in a campaign to lower priceson HIV/AIDS drugs. The country�shealth minister warned AbbottLaboratories that Brazil mightbreak the company�s patent onKaletra and manufacture theHIV/AIDS drug in a state ownedplant in Rio de Janeiro if it failedto decrease the price. Abbottofficials maintain that withouta return they will be unable todevelop other drugs andtreatments.www.business-humanrights.org/Categories/Individualcompanies/A/AbbottLaboratories
Communicating GlobalCompact CommitmentThe United Nations GlobalCompact Office announced theresults of the first phase of apolicy requiring corporateparticipants to disclose progressin implementing the GlobalCompact�s ten principles. TheCommunication on Progresspolicy requires that participantsdevelop an annual disclosurewithin two years of joining theGlobal Compact initiative. Theexecutive head of the GlobalCompact said that the initialresults on communications are�encouraging as they representthe beginning of a long-rangeprocess.� Among the key resultsfor the 977 companies was that98% of the 73 �Financial TimesGlobal 500� companies producedCommunications on Progress fortheir stakeholders, via annual�sustainability� or financialreports.www.unglobalcompact.org/content/NewsEvents/cop_pr.htm
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Radar August / September 2005 The Social Enterprise Issue
The Value PaletteJohn Elkington
John Elkington tries a thought experimentto highlight different forms of valuecreation, whether by multinationalcorporations or social entrepreneurs.
One unexpected result of a speech I gaveearlier in the year at Berkeley�s Haas Schoolof Business was a request from the CaliforniaManagement Review (CMR) for an article onour latest thinking. I asked two colleagues tohelp: Seb Beloe, SustainAbility�s Director ofResearch & Advocacy, and Jed Emerson, whocoined the term �Blended Value� and is amember of SustainAbility�s Faculty. Theoriginal idea: to map the journey from a singlebottom line through multidimensional valuecreation (captured by our triple bottom lineconcept) out to the emerging agendas aroundblended value. But the project mutated alongthe way, throwing up a more colourful way oflooking at value.
So, first, an admission. I have long beenfascinated by the history and symbolism ofcolour. Hardly surprising, given the key rolethat colour played in the last century. Filmswent from black and white to Technicolor andbeyond. Synthetic colours were developed anddeployed in profusion.
John [email protected]
But one reaction, as the colour spectrumexploded, was that some artists restricted theirpalettes to stand out from the crowd: Picassohad his �Blue� period; Piet Mondrian painted inprimary colours; Mark Rothko plunged intoblack-on-black.
Business, too, was minimalist. HQ lobbiesmight have sported boldly coloured canvases,but when it came to balance sheets corporatethinking was restricted to just two colours:black (profit) and red (loss). Those servedcapitalism well, particularly as it went head-to-head with the various shades ofcommunism, the �Reds�. But recent years haveseen attempts to spur new ways of looking atthe Value Spectrum. We have had energeticdiscussions around expanded (or �new�) singlebottom lines, double bottom lines, triple,quadruple and even quintuple bottom lines,and so on up the scale of complexity.Sometimes � and increasingly � theunintended result of this growing complexityhas been corporate (and citizen) bafflement.
So where might all of this be headed? As wedeveloped the CMR article, I decided to try a�thought experiment�. I tried to imagine a worldin which corporations � like many insects �could perceive a very much wider spectrumof value, in this case symbolised by colours.
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Radar August / September 2005 The Social Enterprise Issue
They might see the value equivalents ofprimary colours, secondary colours (mixes likeblue-green), auxiliary colours (black, brown,grey, violet) and even infra- and ultra-colours.
The next step was to ponder how businesspeople might tailor and test their businessmodels, strategies, products, service offeringsand communications in the light of a muchwider Value Spectrum. My answer: the ValuePalette. Its purpose is to stretch thinking � andto help identify areas of risk and opportunity.
The Value Palette has three main colourcomponents: Black (symbolising theincreasingly global �Black Economy�, whichis almost totally antithetical to blended value),the Value Wheel (where different shadesrepresent different forms of value) and White(representing fully blended value). The Wheel,in turn, has three main components:transparency (sitting at the centre), the basicset of six colours, and the outer �mixing zone�,symbolised by rainbow colours, where ValueBlends are created and marketed.
The value palette
The mixing zone
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Radar August / September 2005 The Social Enterprise Issue
GreenLinked with renewal, nature, growth, theenvironment, fertility, stress reduction andcomfort; in some cultures green can stand fornaïveté, instability, randomness or misfortune.And in the US one obvious link is to�greenbacks�. The so-called greening of politicsand economies has proceeded fairly rapidly inrecent decades, as successive pressure wavesimpacted governments, business and financialmarkets. As a result, huge new opportunityspaces are opening up. And even �Red�products will need a dash of �Green�.
RedUsed for warning signals, red representsmasculinity, risk, aggression, fire, blood, warand, ultimately, risk. �Red ink� is also a problemin business. But red also holds many positivemeanings, including energy, action,competition, heat, passion and people-basedpolitics. The �Red Economy� is high-energy andpowerfully competitive, ranging from Formula1 racing to action-packed feature films. Anyproduct or service offering lacking a dash of�Red� risks being seen as low energy,disengaged, boring.
We plan to explore the Value Palette�spotential implications and applications infour areas: �Balance Sheets� (corporateaccountability, accounting, reporting andassurance), �Boards� (the area of overlapbetween the corporate governance andsustainability agendas), �Brands� (all theconversations a company has with itsconsumers, customers and investors) and�Business Models� (how value and wealthare created).
But one thing is already clear. General Electricrecently caused a stir with its Ecomaginationinitiative, designed to jump GE to a $20 billionshare of global clean technology markets by2015, demonstrating that Green and Gold(i.e. financial returns) can meld. But most bigcompanies still struggle to develop successfulValue Blends. By contrast, social entrepreneurshave one huge advantage � they mimic therainbow by weaving multiple strands of valuecreation into their business models from theoutset. JBE
Let�s look at just four colours: Red, Green,Grey and White:
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Radar August / September 2005 The Social Enterprise Issue
WhiteThe long-term goal of the blended valuecommunity is represented by White, signalingthe ultimate 100% Value Blend. Most of usmay remember the experiment where youwhirl a spinning top painted with the fullspectrum � and the colours blur to white.White, however, can be a mixed blessing. Seenby some as elegant, a symbol of peace, purity,cleanliness and birth, others may see it as cold,clinical and sterile. Something to aim for, likesustainability itself, but likely to be as rare aspink diamonds for some time to come.
GreyTraditionally, grey symbolises maturity,security, reliability, intelligence, modesty,dignity and conservatism. Now the ageing ofdeveloped world populations is injecting astrong element of �Grey� (or �Gray�) into politicsand markets. Elderly populations are expandingat around 2% a year. By 2050 there will bemore people over 60 than under 15. But eventhose going after the �Grey Economy� will riskfailure if they forget to add dashes of �Yellow�(youth markets) and �Green� to their offerings,particularly as the Baby Boomers retire.
Social entrepreneurshave one huge advantage� they mimic the rainbowby weaving multiple strandsof value creation intotheir business modelsfrom the outset.
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Radar August / September 2005 Change Agents
Riding the DavosTrain to PortoAlegrePamela Hartigan
In January 2002, Joe Madiath, a socialentrepreneur, founder of Gram Vikas inOrissa, India, was on his way to attend theWorld Economic Forum�s Annual Meetingfor the first time. Landquart, the usuallysleepy Swiss town where Davos-boundtravellers change trains for the finalmountain trek, was now alive with anti-globalization protesters, surrounding thetrain as it stopped to let off its passengers.But on seeing Joe, the protesters weretaken aback. Dressed in his usual Indian�kurta pajama�, he did not look like a Forumparticipant. He looked more like one ofthem! To confirm this, one fellow thrust aplacard into Joe�s hand. It read, �F**K WEF�.
A year before, Joe would have happily wavedthe placard in the air and joined the march.But now he wasn�t so sure. Since beingrecognised by the Schwab Foundation as oneof the world�s outstanding socialentrepreneurs, Joe had mixed feelings. TheFoundation had been created by KlausSchwab and his wife, Hilde, and Klaus, asmost know, is the founder and architect of theWorld Economic Forum.
The World Economic Forum has become thepremier global multi-stakeholder platform thathas brought the world�s leaders from manysectors together to work on changes at themacro level.
But it was increasingly clear to Klaus and toHilde that they needed to find a mechanismto identify people who had discovered practicalsolutions to social, economic andenvironmental problems at the local level,innovative solutions that had been shownto work to transform people�s lives and thatcould be adapted to solve similar problemsaround the world.
The Schwabs wanted to set up a way todisseminate their accomplishments so otherscould support them or emulate theirapproaches. Together with the facilitatingstructural supports at the macro level, thosemicro level innovations could improve thestate of the world and the state of thepeople in it.
And so they had set up the Schwab Foundationfor Social Entrepreneurship to build thecommunity of outstanding socialentrepreneurs and others interested inpromoting social entrepreneurship, leveragingsuccesses of social entrepreneurs to achievewider impact for the public good.
The Forum in general, and Davos in particular,provided an unprecedented opportunity forshowcasing the work of practical visionariessuch as Joe. Joe faced his first Forumexperience with great hope and greattrepidation.
Pamela Hartigan
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Radar August / September 2005 Change Agents
But it was hope that compelled him to switchthe �F**K WEF� placard with one that read�Eliminate global poverty and hunger�. Davosmight just prove to be the right place to start,he thought, joining the protesters � at leastuntil the crowd dispersed.
Four years later, what has been the effect ofintegrating the Foundation�s community of84 accomplished social entrepreneurs into theactivities of the World Economic Forum?
Jim Fruchterman, founder and CEO ofBenetech, which he playfully describes as�high tech non-profit on purpose�, is one of theSchwab Foundation�s outstanding socialentrepreneurs. He has been participating in theForum�s activities for over three years. �The fitwith the business executives at the core of theForum is solid,� he notes. �Social entrepreneursstrongly believe in treating our constituentsmore like customers rather than as recipientsof charity. People in the non-profit sectorfrequently ask me about Davos, and whetherI have raised a lot of money by attending.My response is that is not why socialentrepreneurs value their involvement inthe WEF. It is about the exchange of ideasamong individuals, about learning new thingsand discussing challenging problems thataffect society as a whole, not just thebusiness sector.�
Javier Gonzalez, founder of abcdespañol� a low tech method for addressing illiteracy �another Schwab social entrepreneur �remarks �I have been surprised about theenthusiasm we social entrepreneurs receivewhen we chat one on one with Forummembers. My task at the Forum isn�t to single-handedly save the world, but to be a catalystto encourage more people to think abouthumanity�s larger needs, and either to becomesocial entrepreneurs themselves or to activelyengage in supporting the social entrepreneurswho have dedicated themselves to makinga real impact.�
Safia Minney, founder of People Tree, aFair Trade high fashion social venture(featured in Radar Dec 04 / Jan 05), has adifferent take on it: �Many business leadersneed to be educated, having little contactwith the real world. Social entrepreneurs needto help inform their decision-making. At oneof the Davos sessions, I heard a charmingCEO suggest that to improve people�s health,everyone should have a gym in their home.Another CEO proposed to build �smarttechnology� into microwavable meals sothey could �talk to the ovens about the lengthof cooking times�. Where have thesepeople been?�
After five years, social entrepreneurs havebecome invaluable participants not only atForum events such as Davos and Forumregional meetings. They are also involvedyear round in Forum task forces focusing onhealth, the digital divide, water and education,for example, ensuring that the discussion andproposals are based on grounded truth ratherthan on the kinds of suggestions made bySafia�s two CEOs. But they do much more thanthat � they are leaders who encourage otherleaders to act, they inspire them, and they areready to hold them accountable. PH
The Schwab Foundationwww.schwabfound.org
Gram Vikaswww.gramvikas.org
Benetechwww.benetech.org
People Treewww.ptree.co.uk
abcdespañolwww.abcdespanol.com
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Radar August / September 2005 SustainAbility Report
The Power ofInfluenceJodie Thorpe
Many surveys published in thelast few years highlight thelow level of trust in globalcorporations � which areseen to wield both a great dealof power and the potential toabuse it. This mistrust ismanifested in different ways �from the cynicism surroundingthe acquisition of smaller socialenterprises to the fears thatopaque dealings withgovernment over public policyare inevitably against theinterests of wider society.
Our most recent report,Influencing Power: Reviewing theConduct and Content of CorporateLobbying, addresses this latterpoint. In a joint effort with WWFUK, the report assesses and ranks100 of the world�s largestcompanies on the transparencyof their lobbying, and the degreeto which reported activities alignwith core business values.
Five years ago, SustainAbility andGovernment Policy Consultants(GPC) published Politics andPersuasion, which made the then
bold claim that a company�slobbying and public policyactivities should be linked to theircorporate responsibility (CR)practices. Our recent researchreveals that some 50% (51) ofour sample are providing at leastsome degree of transparencyaround lobbying activities �indicating substantial progress.However, most companies strikean over-whelmingly defensivetone � asserting their right tolobby and their positions oncertain issues.
We characterise this defensivestyle as consistent with a �secondgeneration� approach to CR. Here,the main driver is riskmanagement, and transparencyand consistency in lobbying arepromoted primarily as a way ofminimising reputational risk to thebusiness. In contrast a �thirdgeneration� approach would viewCR as a strategic differentiator andrecognise the potential forlobbying to help drive strongersocial and environmental policyframeworks in support of businessactivities.
While this three-generation modelis clearly a simplification of acomplex reality, with companiesoften taking different approachesat different times, it illustrates anincreasingly strategic approach tothe interface between CR andpublic policy activities. A fewcompanies show indications ofevolving this approach, such asthe support IBM and Philips give towaste recycling, or the very publicstance that the Corporate LeadersGroup on Climate Change takes inencouraging Tony Blair to pursuemore aggressive policies onclimate change.
However, these initiatives, whilewelcome, are largely underminedwhere other lobbying activitiesreflect a first or second generationattitude � such as the allegedinconsistency between BP�sposition as a member of theCorporate Leaders Group and itslobbying activities in WashingtonDC. It is unlikely that BP is anexceptional example �highlighting that the shift towardstransparency, consistency andthird generation lobbying is onlyjust beginning. JT
Influencing Power:Reviewing the Conduct andContent of Corporate Lobbying
Available to download:www.sustainability.com
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Radar August / September 2005 Reporting
Lessons inAccountAbilityMark Lee
As corporations have learnedover the last decade, and associal enterprises will find asthey mature and stakeholdersseek greater understandingof their motivation and impact,NGOs do not escape the needto be transparent andaccountable. Peeking outsidethe for-profit arena for lessonsapplicable to corporatereporters, I could not resistlooking at AccountAbility (AA)� whose very mission is�promoting accountabilityfor sustainable development�.So, how does their reportingstack up?
The AccountAbility Accounts2003-2004 were launched inJune this year. It is not a triplebottom line report presentingperformance information interms of economic, social andenvironmental impacts � insteadthe AA Accounts report againstAA�s strategic goals and �enablers�.While better corporate reportssometimes eclipse the Accounts,AccountAbility�s work representsa significant commitment toreporting and contains a variety ofbest practices.
Context and CommitmentsThe Accounts don�t present asenior management statementand fail to outline informationsuch as turnover/funding. Still,the report provides enough detailthroughout that readers can gleana great deal of context from thewhole. The report is informedby the AA1000 Framework andAssurance Standard and theGRI Guidelines, but is not inaccordance with either atthis time.
Management QualityAA discloses all major elementsof strategy and explains changesin strategy which have evolvedsince the last report. There isample evidence of AA�scommitment to fosterorganisational accountability.Companies would do well to equalAA�s clear understanding andpresentation of their roles inbuilding sustainable societies.
PerformanceThose who find it hard to discussgood and bad aspects ofperformance take note � AA�sself-assessment is frank andthorough, with key performance
indicators and targets offeredfor each performance element.Stakeholder views are included,and AA discloses how stakeholderopinions of performance changedsince the last report. AA alsoprovides numerous targets forfuture performance.
Access and AssuranceThe Accounts are highly accessible� language is clear, text is notcrowded and graphs are easy tointerpret. In short, the reportprovides sufficient informationfor stakeholders to make informedjudgements. On assurance, AA isjust getting started, but the reportstates where they are going. AApromise�s a pending multi-stakeholder assurance process,which will result in an assurancestatement in the next report.
If some find this short critique tookind, remember the goal was tomine AA�s report for best practices.While I found AA�s report credible,the experience underscored thatorganisations in all sectors havework to do to ensure reports areinteresting, useful and appealingto stakeholders. ML
Mark [email protected]
AccountAbilitywww.accountability.org.uk
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Radar August / September 2005 Perspective
Energy:Red Hot TopicJeff Erikson
Jeff [email protected]
The reality of the big-business landscapeinvolves a whole series of immediatepressures, and they don�t necessarilyprovide a landscape where social enterprisecan feature highly. As oil prices rise to $60per barrel and gasoline remains well over$2 per gallon in the US, the future of fossilfuel is of increasing importance inAmerican politics, to public relations andto profits. Here we look at just some of theimplications this presents for the energysector and the sustainability agenda.
The bid by the China National Offshore OilCompany (CNOOC) to purchase Unocalgenerated a flurry of activity in Washington.Some members of Congress expressed seriousconcern about the deal and bills have beenproposed alternatively to require a nationalsecurity review, or impose an outright banon the deal. Others, including Federal ReserveChairman Allan Greenspan and TreasurySecretary John Snow, have warned against�protectionism�. Meanwhile, both Chevronand CNOOC have mobilised their lobbyists andpublic relations machinery to press their case(see page 20). While the outcome (at the timeof writing this looks as if it will go in favour ofChevron, without Congressional intervention)likely will have little impact on either theavailability of oil or the price Americans payfor it, the response in Washington reflects the
importance that energy security and Chinaplay in America�s future.
A comprehensive federal energy policy, on theother hand, would have a significant impacton the US energy picture. Congress has triedand failed to pass a comprehensive energy billin each of the last four years. Will it be anydifferent this time around? President Bush hassaid he wants a bill he can sign beforeCongress recesses in August. The House andSenate have passed differing versions of anenergy bill, which now go to committee forreconciliation. Many environmentalorganisations have criticised both versions,stating that they weaken environmentalprotections and provide billions of dollars insubsidies to the oil and gas industry, whilethe American Petroleum Institute has declaredsupport for both bills. The Senate version ofthe energy bill includes incentives to increaserenewable energy, and both versions of the billinclude incentives to construct nuclearpower plants.
A step in the right direction to address climatechange? Perhaps, but don�t expect the WhiteHouse to take up leadership on the issue.Going into the Gleneagles G8 summit (seepage 28), it was clear that the US was notaligned with its G8 partners on climate changepolicy. The agreement which emerged from the
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Radar August / September 2005 Perspective
summit did not surprise, omitting anyreference to solid reduction targets. Whileon the surface it appears the Bush positionprevailed, US media coverage of the issueof climate change continues to grow. Theadministration�s position is slowly moving froma sign of strength and alignment withbusiness, to a liability: yet another indicationof Bush�s intransigence and willingness toignore facts in favour of ideology.
Meanwhile, business is taking action on itsown � or at least talking about it. Three of theworld�s four biggest oil companies havelaunched ad campaigns in the US discussingthe future of energy. In early July, Chevronlaunched a series of ads and a website (whichSustainAbility played a role in developing)intended to generate discussion (perhaps evenaction) about dilemmas and solutions to theenergy challenges the world faces. BP hasreinvigorated its �Beyond Petroleum� campaign,posing dilemmas to customers, such as �wouldyou give up your car for a clean environment?�.And ExxonMobil�s new TV spots state that �theworld needs more energy and less greenhousegas emissions� (though ExxonMobil is stilldeeply committed to a fossil fuel future, asits CEO recently proclaimed renewables�inconsequential� for now and for theforeseeable future).
Southwest Airlines a couple of years agoanticipated a run-up in oil prices (perhapsseeing the convergence of a growing China,constrained refining capacity, conflict in theMiddle East and concern over climate change)and entered into hedge contracts to lock inlower fuel prices.
How good a decision was that? The hedgingprogramme saved $196 million in the secondquarter, and promises more of the same � asfar out as 2007, nearly half of Southwest�s fuelpurchases will be locked in at $31 per barrel.A great example of how energy foresight canbenefit the bottom line.
Are all the stars aligned? Hardly. GM�s Hummerrecently had its best sales month ever, andeven though SUV sales across allmanufacturers are down more than 10%from last year, SUVs are still outselling hybridsalmost nine to one. But as talk of energysecurity, peak oil and global warmingincreases, so value at stake will increasefor companies large and small. Wise businessleaders will ensure they understand how theenergy picture is developing, and where thereal risks and opportunities lie. JSE
The Double Bottom Line Project Report
The Double Bottom Line Project, co-directedby the Research Initiative on SocialEntrepreneurship (RISE), has released the firstcatalogue of methods that for-profit and non-profit social ventures and enterprises can useto assess the social impact of their activities.The catalogue analyses the feasibility andcredibility of nine methods and providesexamples of each of them in use.
By conducting in-depth interviews withfunders that attempted to document, defineand report on the non-financial performanceof their activities, the catalogue includes detailof the methods used, as well as how eachmethod has been applied by their specificorganisation or fund. The findings given arenot based on theory but on the reportedexperience with costs and challenges.
It is a snapshot of current practice, whichthe authors believe allows some interestingcomparisons and lessons to emerge.
The full report can be downloaded from:www.riseproject.org/reports.htm
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www.ashoka.com
Founded by Bill Drayton, a formerMcKinsey & Co. consultant andassistant administrator at theEnvironmental ProtectionAgency, Ashoka�s mission is toshape a citizen sector that isentrepreneurial, productiveand globally integrated, and todevelop the profession of socialentrepreneurship around theworld. Ashoka invests in leadingsocial entrepreneurs bysupporting the individual, ideaand institution through allphases of their career. Theirvision is that of a global societythat is able to respond quicklyand effectively to socialchallenges everywhere.
www.pbs.org/opb/thenewheroes/
Hosted by Robert Redford, TheNew Heroes is a TV series thataired on the PBS channel in theUS during June and July. It toldthe dramatic stories of 14 socialentrepreneurs from all corners ofthe globe who, �against all odds,are successfully alleviatingpoverty and illness, combatingunemployment and violence,and bringing education, light,opportunity and freedom to poorand marginalized people aroundthe world�. The website hasdetails of the 14 people featuredalong with links and informationon social entrpreneurship.
www2.gsb.columbia.edu/socialenterprise/
The Social Enterprise Program atColumbia Business School in theUS aims to inspire and prepareleaders who create social valuein business, nonprofit andgovernment organisationslocally, nationally andinternationally. The Programsupports a broad range ofactivities that help exposestudents to the breadth anddepth of social enterprise, helpstudents develop a perspectiveon how to apply business skillsto social enterprise endeavours,and help align personal andprofessional values to navigatecareers that result in socialbenefits to a broader community.
www.skollfoundation.org
Jeff Skoll was the first employeeand first president of eBay.He went on to create the SkollFoundation in 1999 to pursuehis vision of a world where allpeople, regardless of geography,background or economic status,enjoy and employ the full rangeof their talents and abilities.The resulting mission for theFoundation is to advancesystemic change to benefitcommunities around the worldby investing in, connecting andcelebrating social entrepreneurs.Among their activities was thelaunch of the Skoll Centre at theSaïd Business School, OxfordUniversity, creating aninternational MBA programmein social entrepreneurship.
Radar August / September 2005 Resources / Books 24< > Contents
The Profit of Peace:Corporate Responsibilityin Conflict RegionsKarolien Bais and Mijnd Huijser
Worldwide about 60,000multinationals work in over70 conflict regions. They operatein regions where social unrest isharshly repressed, whereoutright fighting takes place orwhere civil war has recentlyended. Whatever the attitude ofmultinationals, they influenceconflicts or are themselvesinfluenced by them. This bookexamines how multinationalscan use their core businessobjectives to promote peaceand stability in conflict regionsand what role � if any �business has in diplomacy.
Greenleaf PublishingISBN 187471990X
Societal Learning and Change:How Governments, Businessand Civil Society Are CreatingSolutions to Complex Multi-Stakeholder ProblemsSteve R. Waddell
Building on the traditions ofindividual and organisationallearning, Waddell suggests thatthe challenge is to createlearning societies and processes.By taking a stakeholderengagement and issue/opportunity-centric strategy,the book aims to make it easierto solve differences. It does thisby identifying sources of tensionand opportunity and describesthe processes of buildingrelationships that can producemutual rewards.
Greenleaf PublishingISBN 1874719934
Presence:Human Purpose and theField of the FuturePeter Senge, C. Otto Scharmer,Joseph Jaworski and Betty SueFlowers
Described by SustainAbilityFaculty member Diane Osgoodas �the most important bookI�ve read for my career� this bookdemonstrates the implicationsof deep personal values oncorporate identity and structure.Sprinkled with case studies fromHP, Nike, the Gap and VisaInternational, it pushes peopleto go deeper, pause longer andconnect to the world in orderto create meaningful change forthe companies in which we workand the lives we lead.
Society for Organizational LearningISBN 0974239011
How to Change the World:Social Entrepreneurs and thePower of New IdeasDavid Bornstein
A key text for anyone interestedin social entrepreneurship,Bornstein profiles ninechampions of social changewho developed innovativeways to address needs theysaw around them. Theseextraordinary stories highlighta massive transformation andshows, as the title suggests,that with determination andinnovation, even a single personcan make a surprising difference.
Oxford University PressISBN 0195138058
Radar August / September 2005 Resources / Books 25< > Contents
Radar August / September 2005 Change Agents
There�s No SayingNo to the Yes MenGeoff Lye
Geoff Lye looks at how companies areincreasingly vulnerable to new campaigningtactics.
During the morning of the 20th anniversaryof the Bhopal tragedy, I took a call from afriend who�d just heard the lead news item onthe BBC - that Dow Chemical had accepted fullresponsibility for the continuing health andcontamination problems and had set up a$12 billion fund to �fully compensate thevictims�swiftly remediate the Bhopal plantsite�. Still reeling from the significance of thismove, I took another call � this time from theproducer of BBC World who was on duty whenthe story was first run. He�d heard a radiointerview on Bhopal I�d given the previous dayand wanted to know what I made of the latestturn of events.
I explained that I was completely thrown bythe news and that it was difficult to reconcileDow�s clear and consistent denial of any legalor moral liability for the Bhopal tragedy withthis total reversal. As we spoke, I was pullingup a Reuters release based on the BBC�s story.Reading it, I commented that I had hadextensive contact with Dow on this issue andhad never come across the spokespersoninterviewed � Jude Finisterra.
�What�s more,� I said, thinking aloud, �thatname looks distinctly suspicious: acombination of Jude (Judas, as I thought,though St Jude as the patron saint of theimpossible was the real inspiration) and theLatin for �end of the world�.
The momentary silence at the other end spokevolumes. Within an hour the story was pulled;within the day, the BBC was running apologiesand denial statements from Dow and theDeputy Director General had been appointedto lead a high level inquiry into how they couldhave been victim to such a major hoax.(No doubt at least in part as a result of thisevent, the BBC issued new guidelines to newseditors two weeks ago, requiring accuracy totake precedence over speed.)
Behind the hoax was a tiny organisation calledthe Yes Men � essentially two individuals whooccupy nothing more than cyber offices tocampaign against what they see asunprincipled businesses and globalization.Their main targets to date have been theWTO and Dow Chemical, who attracted theirattention because of the Bhopal legacy issuesbut is now targeted by them more broadly.
Geoff [email protected]
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Radar August / September 2005 Change Agents
Without debating here the ethics of the hoaxesperpetrated against the BBC and others, thetactics of the organisation behind them signala novel and very sophisticated campaigningapproach. The hoax interview was not a one-off. Dow has long been a target of the Yes Menstarting with the Dow lookalike websitereferenced above � impossible to distinguishfrom the real thing until you read the contentcarefully. The copy style and tone is so�corporate� as to lull many a reader intobelieving it to be real. Dow�s attempts to closethe site down have failed in spite of whatwould appear to be clear breaches of copyright.
More recently, the Yes Men were unwittinglyoffered a platform at a London conference ofinvestors to present Dow�s Acceptable Riskmodel, which offers investors a means ofassessing how many injuries and deaths canoccur on a project without impactingprofitability. Outrageous? Unbelievable? Seethe clip on the Yes Men site showing investorshanding over business cards for their free trialof what they clearly believed was a genuinepiece of Dow software!
Although the BBC hoax caused a $2 billiondollar reduction in market capitalisation ofDow in the German stock market within 25minutes, the stock price had fully recoveredin three hours. But anyone seeing the BBC
interview and hearing the Dow correctionwould inevitably be left hearing Dow dissociateitself from the continuing major health andenvironmental issues in Bhopal. The legalreality � which Dow maintains gives them noresponsibility at all for any ongoing issues inBhopal � at this point is largely irrelevant.With the combined weight of AmnestyInternational, Greenpeace and internationalstudent campaigns gunning for Dow, it is hardto see how denial is a viable forward strategy.
As we point out in our latest report, TheChanging Landscape of Liability, issues areincreasingly being tested not in the courts oflaw (though Dow is facing serious attack theretoo) but in the court of public opinion. Manybusiness leaders feel that the �moral liability�that can accrue in this court has nolegitimacy.
We argue that, fair or not, when stakeholdersperceive a company to be acting irresponsiblythey can punish them directly (e.g. throughproduct boycotts or hampering employeerecruitment) or indirectly (eg shareholderresolutions and loss of goodwill). We highlighthow the emergence of �moral liability� presentspotentially huge risks to companies which seerisk management simply through the lens ofcompliance.
What can we learn from all this? First, thatrelatively small resources can be marshalledand multiplied through the creativeexploitation of globalized media including theweb. Second, that even though the legal caseagainst these sorts of campaigns is probablystrong (though Yes Men�s legal friends contestthat), action by a company to stop themcompounds the issue and fuels its publicity.But third, and probably the most fundamental,is the underlying issue which has triggeredthese and other similar campaigns � whethera company can or should be held accountablefor legacy and other issues which their lawyersand accountants have consigned to history.
In this new age of global transparency, instantcommunications and rapidly changingexpectations of corporate accountability, oldmodels of risk and reputation managementare in need of a major overhaul. GL
The Yes Menwww.theyesmen.org
WTO spoof websitewww.gatt.org
Dow lookalike websitewww.dowethics.com
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Radar August / September 2005 Governance
Gleneagles:Taking StockJodie Thorpe
Jodie [email protected]
The first week of July, during which theG8 summit in Gleneagles took place, didnot unfold quite as its leaders, theprotestors or the people of the UnitedKingdom had anticipated.
On the positive side, the Make Poverty History(MPH) campaign got more support thanplanned when 225,000 people descended onEdinburgh � over twice the number expected.Yet the campaign had less press coverage thanhad been hoped � overshadowed as it was bythe Live8 concerts and apparently less press-worthy than the violence of a handful ofanarchists at their �Carnival for FullEnjoyment�. The entire summit and its variousprotestors were in turn entirely overshadowedby the four bombings in London on 7 July.
The attacks were �particularly barbaric�, in thewords of UK Prime Minister Tony Blair, takingplace as they did �when people are meetingto try to help the problems of poverty in Africaand the long-term problems of climatechanges in the environment�. So, shiftingattention back to the summit, what wasachieved (or not) at Gleneagles and whatshould we make of it?
Our review is on the next page but Tony Blair�sassessment was that although �inevitablysome will be disappointed with aspects of theG8 summit . . . on any realistic basis . . . therewas progress.� Certainly, if we suspend disbelieffor a moment and accept the commitments ofthe world�s leaders to double aid, cancel 100%of multilateral debt, act with resolve andurgency on climate change and end farmsubsidies, and presuming this happens withina reasonable timeframe, the conclusion mustbe that serious progress can be made.
However, we have been here so many timesbefore, and the track record on these types ofcommitments is, frankly, abysmal. Much moreeffort will likely be needed to be directed bothtowards keeping pressure up on world leadersand on engaging new constituencies, sharingthe issues, understanding their points of viewand bring their voices into the debate. JT
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Radar August / September 2005 Governance
G8 reviewAid
ResultThe G8 committed to double aidto Africa from approximately$25 billion per year (2004) to$50 billion by 2010, whileoverall aid worldwide will doubleto $100 billion.
AnalysisOnly a portion of this is new aid,much of it will be tied, and itcould take five years beforemuch of it is available. Fewconcrete commitments weremade to increase the qualityof aid.
Track recordThe overall level of aid fromthe world�s most industrialisedcountries continues to fall wellshort of the 0.7% GDP targetset 35 years ago.
G8 reviewDebt
ResultResultResultResultResultThe G8 affirmed thecommitment already madeby the G8 finance ministers,backing the principle ofcancelling 100% of the debtowed to multilateral institutions.
AnalysisIn reality, the debt relief packageis just $1 billion this year, versusthe $10 billion a year estimatedto be necessary to eradicateextreme poverty. Only somedebts of some countries to somemultilateral institutions will becancelled.
Track recordDespite the debt reliefcommitments made by worldleaders at the time of the Jubilee2000 campaign, so far only 18countries of the 52 on theJubilee 2000 list have receivedsome debt cancellation.
G8 reviewTrade
ResultThe G8 pledged to end farmsubsidies, considered one of themajor barriers to developingcountries gaining fair accessto northern markets.
AnalysisDespite this pledge, no targetdate was set.
Track recordThe World Trade Organisation�s(WTO) Uruguay Round of tradetalks committed countries totrade liberalisation in agriculture,including reduced domesticsupport and improved marketaccess by 2000. Progress wasminimal and the issue is back onthe agenda of the current DohaRound, creating deadlockbetween the EU and US on theone hand and developingcountries on the other. Thedeadlock contributed to thecollapse of the Cancúnministerial meeting, withhopes now pinned on HongKong in December.
G8 reviewClimate Change
ResultA consensus was reached thatrecognises that climate changeis real, partially caused byhuman activity, and that urgentaction is needed.
AnalysisWhile some hailed as progressthe formal acknowledgementby the US that climate changeis real, and the involvement ofIndia and China (set to becomemajor emitters of greenhousegases) no concrete actions wereset. The lack of any emissionsreduction targets makes thecommitment to �act with resolveand urgency� ring rather hollow.
Track recordWhile the Kyoto Protocol wasfinally brought into force earlierthis year, and some countriesmay be on track to meetreduction targets, the world�slargest emitter, the US, remainsresolutely outside the Kyotoprocess.
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Radar August / September 2005 The Social Enterprise Issue
Gearing Up:From Corporate Responsibilityto Good Governance andScalable SolutionsRussian translation
Launched in June in Moscow, aswell as being available at the UNGlobal Compact meeting in StPetersburg, we are grateful to theAssociation of Managers forundertaking the translation andhosting the Moscow event. Wealso thank the United NationsInformation Centre in Moscowfor helping facilitate the process.
Free to downloadwww.sustainability.com
The Changing Landscapeof Liability
The issue of past, current andpotential liabilities has exercisedboards of large companies fordecades. This report makes thecase that the landscape ofliability � and within it the risksfor companies and to shareholdervalue � is changing andchanging rapidly. It explores theevidence, maps the changes andattempts to guide business withthe help of case studies tonavigate new and unchartedterritory.Free to downloadwww.sustainability.com
The 21st Century NGO:In the Market for ChangeSpanish translation
The English version of The 21stCentury NGO was launched inWashington DC in 2003 andcontinues to be among our mostpopular publications. We aregrateful to the Avina Foundationand to the Fundación Ecología yDesarrollo for making thisSpanish translation possible.
Free to downloadwww.sustainability.com
Influencing Power:Reviewing the Conduct andContent of CorporateLobbying
Influencing Power follows onfrom our 2000 publication,Politics and Persuasion, whichmade the then bold claim thatcorporate responsibility practicesshould be explicitly linked witha company�s lobbying and publicpolicy activities. The reportadvocates the shift to a �thirdgeneration� approach whichviews corporate responsibilityas a strategic differentiator.
Free to downloadwww.sustainability.com
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Radar August / September 2005 The Social Enterprise Issue
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With offices in Europe and the US, we workwith leading companies, NGOs and influencersaround the world. Representing over tennationalities, our multi-disciplinary teamworks to clear rules of engagement to achievetraction and change.
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Radar August / September 2005 The Social Enterprise Issue
Nic FrancesEasy Being GreenAustralia
Dr Vibha GuptaRural Women Technology CentreIndia
Jamie OliverFifteenUK
Wu QingRural WomenChina
Bunker RoyBarefoot CollegeIndia
Craig SamsGreen & Black�sUK
Tim SmitThe Eden ProjectUK
Rory StearFreeplay EnergyUK
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