Home                Contact Us                 Our Work                Our Team

Both of these from the world's best business/internal news magazine www.economist.com 

THE “magnificent seven” ride again. But beware, they might bump into the “glass ceiling”, or, worse, fall victim to “carpet-bombing syndrome”. This collection of clichés, laced with breathless examples of consultancy-speak such as “triple bottom line” and “blended value”, are intended to draw attention to a new study of “corporate sustainability” reporting by big firms, published on November 18th. Entitled “Trust Us”, it has been co-written by a consultancy, SustainAbility, which counts such companies as Ford and Shell among its clients, and the United Nations Environment Programme. A SustainAbility consultant, Oliver Dudok van Heel, preaches that its mission is to make companies behave responsibly, “for the sake of present and future generations.”

Firms are falling over themselves to compete for an ethical Oscar. For the record, this year's magnificent seven—those with the best scores for social policy and environment reports—are the Co-Op Bank, Novo Nordisk, BAA, British Telecom, Rio Tinto, Shell and BP. The glass ceiling is a coded way for the authors to say that these reports have not improved in quality since the first such survey was carried out in 2000. However, since then, the authors chastise, they have gained 45% in volume and now measure, on average, a frightening 86 pages apiece—hence the reference to carpet bombing.

The aim of sustainability reporting—to determine if a firm trades “fairly”, protects the environment and so on—may be relatively new, but the tone of this report is thoroughly Victorian, a sort of schoolmasterly “could do better”. And herein lies a serious concern.

Pervading the report is the sense, increasingly widespread nowadays, that companies are inherently immoral unless they demonstrate that they are the opposite—in effect, guilty until proved innocent. Yet, even allowing for some recent corporate scandals and the odd crooked chief executive, most law-abiding companies do good simply as a by-product of their pursuit of profits—as Adam Smith first proclaimed over 200 years ago. In its rush to sell clients advice on how to buff up their ethical image, SustainAbility glosses over the fact that the likes of Wal-Mart employ thousands of staff worldwide and also deliver goods cheaply to consumers.

Being loudly ethical is, claims Mr van Heel, good business (for his clients, not just his consultancy) because it cheers up investors, workers and customers. Clearly, some big companies are willing to humour him, and neglect to take issue with some of the nonsensical claims made by social activists against them.

Splashing out on a big report may keep activists off a company's back. But although sucking up to politically correct lobbyists might seem a small price to pay to keep them quiet, in reality it can reinforce the feeling that companies have a case to answer—escalating criticism, and perhaps helping to create a climate in which heavy regulation becomes politically acceptable. The danger is that those bosses who believe that these reports are basically harmless, and that the main cost of producing such door-step-sized volumes is only a few trees, may find that it turns out to be much higher.

CAN environmentalists learn to love loggers? The World Bank certainly hopes so. It has just unveiled a new forestry policy that embraces a controversial but promising approach to conserving the rainforest: sustainable harvesting.

After unrelenting criticism from non-governmental groups, the agency adopted a policy a decade ago that sharply curtailed lending for forestry. That pleased some radical greens, who wanted an outright ban on all lending to logging companies. It even suited some senior bank staff just fine—since they were tired of being abused by environmentalists, they were happy to divert money instead into uncontroversial areas such as education. The snag was that deforestation continued in the developing world—even faster, some argued, because the agency had walked away from the industry and left it to the real baddies. Even the World Bank's internal-audit department heaped scorn on that approach.

Now, says the bank, it will start lending seriously to forestry again. However, the companies and countries involved must adhere to a code of good behaviour: clear-cutting and over-harvesting are out; low-impact logging and “sustainable use” by local people are in. The aim, the bank says, is to improve “the livelihoods of some 500m people living in extreme poverty, who depend on forests, while improving the environmental protection of forests in the developing world.”

Could a flood of money benefit the world's rainforests? Optimists think that sustainable harvesting will “crowd out” the unsustainable kind. Maybe. But money alone will not do much, argues Frances Seymour of the World Resources Institute, a think-tank in Washington, DC. She reckons that lack of clear property rights, murky licensing arrangements and outright corruption—rather than lack of money—are what drives deforestation in many poor countries.

Moreover, seemingly unrelated policies, such as those offering subsidies for agricultural expansion or road-building, can often make even the most virtuous forestry policy irrelevant. If the bank is to do much good for the rainforest, concludes Guillermo Castilleja of the WWF, an activist group, it must be willing to use its influence in national capitals to push countries and companies towards greener policies overall, not just in forestry. The message seems to be getting through. As Ian Johnson, the World Bank's vice-president for the environment, puts it, “what happens outside the forest is at least as important as what happens inside.”

Home                Contact Us                 Our Work                Our Team