A Tale of Two Copenhagens

By Aron Cramer, President and CEO

This week’s World Business Summit on Climate Change left me feeling both optimistic and pessimistic about the chances of delivering a successor to the Kyoto treaty at the COP15 conference back here in Copenhagen in December.

To quote the Ian Dury song from the 80s, here are my “reasons to be cheerful…one, two, three.”

1. Unlike several years ago, this is truly a global effort, with the two biggest emitters clearly in the game. The fact that executives from China Mobile and CNOOC—one of the three big Chinese oil companies—so seamlessly fit into meetings like this underplays the enormity of the development. China is present, and while China Inc. does not always see the world as others do, it is part of the discussion, which is essential. So too is the United States. American participation was not as numerous as one would expect, possibly owing to the holiday weekend. But if there was one question on everyone’s mind, it was, “how serious is the Obama administration?” And it is clear that things are moving in a positive direction, with the U.S. as a full participant in the negotiations to come.

2. Governments in general have adopted the rhetoric of the low-carbon economy. Listening to European Commission President José Manuel Barosso is like walking into any room at the BSR Conference. Same with UN Secretary General Ban Ki-Moon. While it is a big leap from talking about a low-carbon economy to actually building one, political leaders are devoting increasing amounts of their time and advocacy to the topic. Again, a big change from several years ago.

3. And perhaps most significantly, several business leaders are investing time and resources in positioning themselves to transition their enterprises to be fit for a low-carbon world. At a small dinner in Copenhagen, the CEOs of Unilever and Novozymes led a discussion about how they are changing their value chains to reduce emissions. Make no mistake—they see a better bottom line as one outcome. Equally so, however, Paul Polman and Steen Riisgaard are demonstrating real leadership within their companies, and by example, for others. And they are not alone in digging into the new world they aim to shape.

But there was another Copenhagen, and it offered reason to temper enthusiasm.

There continues to be altogether too much pride taken in small initiatives taken by individual companies, and the opening plenary featured lots of credit taking for initiatives that are not exactly game changers. And when Adam Werbach of Saatchi & Saatchi S suggested that some CEOs might not match their words with actions (a very reasonable claim, in my view), Martin Sorrell of WPP fired back a blistering response that led me (and many I spoke with) to think Sir Martin doth protest too much…

In the final analysis, the real dilemma is in getting an agreement that tackles an immensely complex task effectively. The Unilever-Novozymes dinner featured a lively debate about the role of regulation as opposed to markets and innovation. The fascinating thing about the debate is that ideology was not the driving factor in people’s positions. Rather, there were questions about which subjects could be handled through markets and which needed regulation.

Björn Stigson of the World Business Council on Sustainable Development made a strong case, for example, that efficient buildings would only come through smart policy mandates. Others focused their attention on changing consumer behavior through pricing. In fact, both are correct, and this raises the stakes on policymakers and business to make the right choices.

In the final analysis, this Copenhagen was just a warm-up act for the negotiations that will take place in the same convention hall in December. Like an exhibition basketball game, there was lots of reason for optimism this May—but some pretty grueling practice sessions needed to win the championship come the end of the year.

Finding Ourselves at a Crossroad

By Diane Osgood, Ph.D., Vice President, CSR Strategy

Where are we? Are we out of the recession? Are we into a depression?

The contradictory and incomplete economic data we currently have provides ample reason to feel uncertain about where we stand in the global economy. This nebulous data feeds our vacillating moods as we search for touchstones—scanning for clues from recessions past or confirmation that we are truly in a time of “reset”.

Recently a small and diverse group* gathered in San Francisco to determine what even the latest and greatest GPS can’t do for us: tell us where we are right now.

We devised a simple matrix to plot our location points (see image). On one axis is a continuum of perspective: Are we looking at the past for solutions, or are we truly embracing that this is a new economic era? On the other axis is a continuum of how we treat the physical boundaries of our planet. At one extreme is a pure utilitarian approach in which the earth is here for our exploitation and consequences to the planet remain externalities to our decisions. At the other extreme is the Gaia Theory, which views the earth as a living organism, capable of shaking our pesky human species off her surface if we continue to provoke the long list of abuses: climate change, biodiversity loss, ocean acidification, etc. The Gaia perspective leads to a need for strong action that brings about a low-carbon economy, regulation of natural resource use, and forced integration of the “true cost” of that usage into our accountability.

So where are we, right now? Smack in the middle.

We are neither ready to fully jump into the unknown of a new economic reality, nor are we really convinced deep down that this is ‘just like 1929’. Yet we understand at some (perhaps unconscious) level, that we need to start treating the planet like the good hostess she is. After all, it’s been an almighty party.

But right now, as a collective conscious, we are on the fence. Sitting tight. Waiting. For what?

* The following people participated in developing this concept:

• David Abernethy, Institute for International Studies, Stanford University
• Lesley Evers, Graphic Recorder
• Elina Lanchulev, Deloitte
• John Kao, Institute for Large Scale Innovation
• Pam Kramer, ITP International
• Scotty McLennan, Office of Religious Life, Stanford University
• Diane Osgood, Business for Social Responsibility
• Sean Randolph, Bay Area Council Economic Institution
• Darla Spiers, Institute for Large Scale Innovation
• Tom Singer, Psychoanalyst

Human Rights: Now Is the Time

By Faris Natour, Director, Research & Innovation

As I read the latest report from John Ruggie, UN special representative on business and human rights, his chapter on the economic crisis and its relevance to the business and human rights debate immediately caught my eye.

In this report—an update on his mandate’s current effort to operationalize the Protect, Respect, and Remedy Framework proposed last June—Ruggie answers the question whether this is the right economic environment for states and companies to worry about human rights challenges with an emphatic “yes”.

I agree wholeheartedly; now is the time for governments and business to put in place systems that ensure better protection of human rights around the world. Why? Ruggie lists three broad reasons:

1. The global economic crisis affects poor communities disproportionately and puts human rights, especially economic and social rights, at even greater risk.
2. The governance gaps and failures that helped cause the current crisis also play a role in the human rights dilemmas involving business.
3. The Protect, Respect, and Remedy Framework seeks to help address some of these underlying causes.

Yet which specific business case arguments can help managers establish policies and processes for human rights in these difficult times? Two are worth mentioning in this context: First, the economic crisis brought with it a loss of public trust in companies. Proactively managing human rights impacts—and thus demonstrating respect for human rights globally—will likely be necessary for companies to regain that trust and to retain their social license to operate.

Second, the possibility of being complicit in human rights violations presents a material risk to companies. Legal costs associated with fighting allegations of complicity in court can be substantial. Reputational damage can be significant for companies that increasingly depend on the strength of their brand. In tough economic times, putting strong systems in place that minimize these risks is a smart investment.

You can read more about the intersection of business and human rights in our latest issue of Leading Perspectives.