We're using up our Earth!

Humanity's Ecological Footprint is over 23% larger than what the planet can regenerate. In other words, it now takes more than one year and two months for the Earth to regenerate what we use in a single year. We maintain this overshoot by liquidating the planet's ecological resources. This is a vastly underestimated threat and one that is not adequately addressed.

It is fascinating stuff, showing that around 1988 we started using up more resources that the Earth generates each year and that North America uses up 8 times more resources, per person, than Asia Pacific. The UK's footprint (in hectares per person) has gone from 4 to 5 in the last 40 years; even though its capacity has stayed almost constant around 2. China's footprint has doubled from 0.8 to 1.6, whilst its capacity has been getting smaller relatively quickly (down from 1 to 0.8).

The good news is that technology can save our problems; but due to market imperfections, it is unlikely to -will we, since it is the only other option, be able to reduce our global footprint instead, to solve the problem? It seems unlikely, bearing in mind the impact of fast growing developing countries -though if the developed countries could halve their ecological footprint it would make a massive difference. Anyone for behaviour and lifestyle change?

Compromise

-or Balance, either are key elements in Sustainable Development. 1 interesting example is about energy, since around 20-30% of energy is lost in transmission; hence the interest in personal energy sources.

This is especially useful in developing countries where there is no infrastructure to distribute energy, but, for example, also relevant for developing countries. Since we will (eventually) roll out hydrogen powered cars, we will need to roll out a network of hydrogen providers (i.e. filling stations). What if each individual could make their own hydrogen, with a system that came with their car, when they bought it? It would save on time and money and resources to install these distribution systems. However, it might be much more efficient to make the hydrogen in a big facility, rather than in many many (individually owned) smaller ones. I guess the solution varies for each product or service, but it is an interesting conundrum.

The owner is not the user

This is a major problem that society is still trying to overcome. A typical example is that when a building company builds a house it wants to build the house that it can make the most profit on, through selling it. It has an incentive to source cheap materials, if this does not effect the value of the house -or it might want to source energy inefficient materials, because there is no incentive for it to use energy efficient materials. Why? Because the person who buys the house will be the one who will be paying the energy costs!

A possible solution to this is PSS -Product Service Systems, which sounds complicated, but is really just the idea of not selling someone a product that, once sold, no longer is related to the seller; but instead, selling a service which includes that product plus extra services. The seller can make more money on an ongoing basis from the extra services related to the product and, as will be attached to the product for longer will have an incentive to ensure its performance is, well in this case, environmentally friendly, as this will affect its service revenue/contract. It also means that the seller can easily retrieve the product afterwards and re-use it in some way; and the seller is motivated to do this, and can easily do this.

PSS seems to be a win-win, but is not as easy as it sounds; leading to extra complexity, extra costs (although potentially, extra value) and greater risk (for the seller to have to support an ongoing commitment) but it can really motivate the seller to be more sustainable!

Own but don't possess

What if you wanted to own something but did not need to actually have it in your possession? Maybe you can save energy and resources by not having it in your permission. The best example is of a bank that needs to have gold reserves in order to have assets and protect its currency, but actually it probably never needs that gold.

It could buy the land the gold is in, but save on actually extracting the gold. Just by knowing it owns the gold (which could be extracted if required) could be enough. An interesting idea indeed, that is applicable elsewhere.

Leverage points

Another aspect of Systems theory centres on identifying key aspects of a system which not only allow you to be able to make a difference to this aspect, but subsequently have an impact on other elements in the system.

Of course, this means you need to be careful about how changing 1 aspect of the system impacts upon other elements; but if you can identify an early aspect of the system and change that, great leverage can be achieved. It is risky, but it could be rewarding. Seek out those leverage points and apply some leverage, but be careful about what happens!

Fixes that fail

1 of the learning points of Systems theory is that often, in response to a problem a 'fix' is undertaken that is not actually the right 'fix' -it has been created without enough attention (or knowledge) to other elements in the system. Thus the 'fix' does not solve the actual problem, but often makes the problem worse by accidentally increasing the impact of another aspect of the system which continues to work restricting the attempted solution. The solution failed, because it was just a fix and not a real solution.

Real solutions need careful analysis of the problem; causes and effects; consequences of the actions involved in the system and an understanding of knock-on effects. This is a crucial aspect of poverty reduction when programs are not integrated or fail to make a difference because it was the wrong solution in some way. Take your time, analyse the problem, test the solution. Don't be left embarrassed by creating a 'fix that fails' -create a real solution!

Are Leadership skills transferable?

Maybe not. Apparently there are 3 aspects of leadership: personal leadership skills, relational leadership skills and contextual leadership skills. The point being that personal leadership can be transferred along with the leader, but the relational skills the leader has will depend on those who the leader must related with or to -with different people, the leader may not be effective. Similarly, the ability to lead varies in contexts especially different cultures. Cultures may or may not be country based, but of course, can vary between organisations too -and that could be the big killer and the major hindrance of leaders successfully leading other organisations, other than their current one.

Spread good ideas

The biggest problem about poverty reduction is a lack of knowlege about how to reduce poverty and a lack of education about aspects of poverty -hence the poor often lack health knowledge or education or ideas to improve their economic efficiency (i.e. knowledge to improve crop yields etc). Many NGOs work in concentrated areas to make a difference through an integrated, long-term approach.

This is great, but maybe it would be more efficient to work in disparate villagers and trust (or facilitate) other villages to learn from the NGO's actions in 1 village, in order to replicate it. This does of course require a visible improvement in poverty and a clear link with the cause; which the nearby villagers can learn from. Peer education on a village/geographic level could be a great way of quickly and efficiently spread education about how to individually act to reduce your own poverty. The Millennium villages concept has adopted this idea.

Consumers drive responsibility

Is it consumers that are driving responsibility, through requiring safe products made in a responsible way? This does play a significant role, in which case are B2C (Business-to-Consumer) companies more responsible than B2B (Business-to-Business) companies?

I understand that eventually B2Bs sell to consumers, and that consumer's requirements will work themselves up the supply chain to force B2Bs to be responsible, but in reality this is doubtful. However, if CSR is just commonsense, then maybe there is no difference, as any buyer of a product (be it a consumer or a business) will demand the same from the seller. However I would be interested in comparing how responsible B2B companies are compared to B2C companies.

A company's 'community'

It is often hard to define the community around the company -yes a company should be a good neighbour to its community, but a better word than community is influence. A company should do good within its sphere of influence which is wider than 'community' and therefore better for society, but it is also easier to identify a company's sphere of influence (through mapping) and where the leverage points are to make a difference in that sphere.

Market Intelligence

Fundamental to R&D, marketing, sales and more; yet how good is our market intelligence? CSR helps with principles to listen more, speak less; talk, understand, question, analyse and then it is possible to get useful market intelligence. Understand the current market, understand new (potential) markets, understand the trends affecting all markets; all of this helps to improve product and service identification and sale but also helps give the market what it wants, which is a key responsibility of business!

The most improtant stakeholder cannot speak

The natural environment is what all of us rely on for our existence, so it is quite important to know what it thinks, what it is up to, what's affecting it, how it relates to us. But, it cannot speak, and environmental NGOs/Charities may be able to stand up for the environment, but they do not really know what it needs, what its state is and what it wants to say. Of course, they should continue to try to communicate with the environment through research as much as possible, and to try to listen to the signals the environment gives off. This way, they can do their job as best as possible -and they need to, we are really not listening to the environment; instead we are suffocating it!

Risk and Opportunity

I fundamentally believe that CSR is about companies behaving responsibly; why would they do this? Simple: to reduce risk and find new opportunities. Those risks and opportunities can be related to PR, employees, sales etc etc. Though many companies like the word 'opportunity', others might not really understand the word 'risk', a good way of expressing this is to explain that it is all about trying to "pre-empt potential blindsides". In business, there is always something that will unexpectedly come up and affect you. It is necessary to try to anticipate these and act to mitigate their impacts.

Hence the importance of stakeholder dialogue so a company is more in touch with its stakeholders and able to better predict future 'blindsides'. It is crucial -start engaging today!

Transparency is...

...a swimming pool with clean water, where you can see the ends, see the floor, see who else is in it.

...not a muddy lake where you do not know how deep it is, what attackers lurk within in etc.

A great mental picture which has many lessons for the real world. think them through in more detail.

Another urban way!

Urban areas can be green, they can include biodiversity, they can involve circular, planned systems which are designed to increase the quality of life for all living things in the city. Urban development is not just roadworks, slums, pollution, overcrowding or high prices.

But, which is more common? Why -is it because of a lack of knowledge, a lack of ability, a lack of money, or (as i suspect) just because of a lack of will. It is time for people to stand up and make the changes we need to see in our society. Those building and selling such properties must be pressurised to take action, and must be willing to take action.

Business's convening power

A NGO with x million approaches the government for a partnership and is rebuked, but if they partner with a company who foots the x million they will be accepted, due to the clout that the company has. Why? Well it is not just brand or connections, but because governments recognise how important companies are through their FDI investments, job creations, technology transfers and so on.

It is clear business has this important convening role and this should be utilised as much as possible.

The purpose of business...

(not an easy answer, but here is one answer:)
Make sustainable profits in sustainable ways.

How? Need to define 'sustainable ways', which is different for each company, and translate that for each individual's job role and evaluation criteria.

But is 'profits' necessary? In today's society with the current ownership structure, yes. Since pension funds, and the whole banking system is dependent on generating dividends to then give back to society, indirectly, or to re-invest. However, potentially profits are not necessary, when a company is privately owned, collaboratively owned and so on. There is a trend for this, but how important will it become?

Culture vs Human Rights

What do you do when cultural sensitivity is in contrast with human rights? do you abide by the local culture (i.e. not promote women) or do you support women's rights?

It seems that there are many examples of 'international human rights' being in contrast to local traditional norms and cultures. Similarly, since values are so crucial to people and to organisations, how do you deal with contrasting and conflicting values? Do you impose values on others (surely not!) or what?

Migration

Migration is often unplanned, but actually it is also, often planned, or at least encouraged. Since the importance of remittances has now been well recognised in contributing to a developing country's economic growth, international migration is often encouraged, despite the brain-drain consequences.

Internal migration is also often encouraged as a solution for those whose geographical location restricts their ability to escape poverty. But, of course, migrants are often mistreated and exploited. Furthermore, how is migration related to outsourcing and the whole freedom of work/movement issue? It seems that migration is actually the opposite of outsourcing. Instead of sending work to poor people to do it, the poor people come to the rich countries to do it (or replace 'countries' with 'cities' for internal migration). Is there a correlation of any kind? Which is better -migration or outsourcing? How are the drivers different and what is a more successful way of reducing poverty?

Urbanisation -good or bad for SD?

Urbanisation is traditionally seen as a disaster for SD. Unplanned urban expansion causes diverse environmental and social problems which previously did not exist -and the problems are exacerbated due to their ability to spread quickly or just become more significant due to the numbers of those affected.

But, maybe urbanisation can be an opportunity? It is easy to reach out, within a city, to those in need, quickly. It should be easier to plan and control development. It should be easier to solve problems in an urban environment. Evidently it is not, and there needs to be more work at a city and government level to see urbanisation as an SD solution and to plan it thus.

Who owns natural resources?

The discussion on ownership of natural resources is not one with an easy answer, but it is one that is becoming more important as energy (which comes from natural resources) becomes a greater issue; not just the supply of energy, but related issues of energy security, renewable energy etc. Water is also a big, big issue and one that will get even bigger. It is also related to energy, since hydro-power can be an effective method of generating electricity, often in developing regions which can benefit from the electricity and the income; since those areas might not have any other resources.

If you build a dam to generate electricity, you create unmeasurable impacts upstream (through needing to flood certain areas and destroy biodiversity or relocate residents) and even greater impacts downstream where the river's flow and composition is altered which affects those who rely on the river for food, to flood their fields, for transport, for drinking or even for their own electricity. These are just the problems affecting people directly, let alone the other biodiversity related impacts. So who owns the rights to use a river, especially if that denies others those same rights?

Public health -the public's responsibility?

I've mentioned before how it seems that individuals are losing their responsibility and nowadays it is up to companies and governments to help/tell people how to live their lives responsibly. In a health context this is more extreme: if a person wants to be fat and eat junk food and not do exercise it is surely up to them. They need to make informed choices, for sure; once a government (or a company) has made the relevant information available, why should they still be involved?

Well, moving past this kind of health topic to ones of public health, like SARS or avian flu or HIV/AIDs, one can see that increasingly companies are having to play a much greater role; in a supporting role to gvernments to help governments deal with these kinds of crisese. Why? Because they will be affected -as with any CSR issue- they will start to be impacted through a lack of employees, customers etc. But where is the impact? This involvement is purely a risk management investment. But how many investments must companeis make in risk management? What companies can afford these investments and should they be bearing these costs, probably disproportionately?

Climate Change affects those who did not cause it

So what does this mean? An acceptance of this fact might help for a start, but that won't happen. Money to help those who need it could be provided, through traditional aid or disaster relief public fundraising campaigns, but this will likely happen after a disaster which is, of course, too late. Some extra aid money is bein provided to help those countries deal with any extra possible disasters and prevent them. Otherwise a market-based system will be needed, like the CDM (Clean Development Mechanism), which allows polluters to pay others to reduce their pollution, since it is probably cheaper and easier for others to reduce their pollution (or not become polluting). Though CDM is not working effectively right now it is a great experiment and we have to hope it will have some impact and continually get better.

Problems with strategic CSR

One aspect of Strategic CSR is when a company uses its core competencies to help society; such as trained staff or (customised) products. But it is easier to just write a cheque and give some money. Not only is this quicker and require less time from the company (as well as being simpler, since companies are not development experts) but normally it just requires 1 or 2 people to sign off on the contribution.

If you want to, say, develop a new toilet that is suitable for people that lack suitable toilets, you do not need to just talk to PR or Finance, you need to talk to Sales and Marketing, R&D and HR... in fact you need an internal project team that is committed to this (and thus more than just the CSR person!) and able to do this. Part of the ability issue is whether the company allocates these people to the project. This project may be great in many ways, but it is most likely not going to be as profitable as targeting rich people and selling them toilets (though, in the long-term it might be). So, a) how to build this consensus and commitment to this idea throughout the organisation that you need to deliver this project successfully, and b) how to get them committed to the project, compared to the other priorities the company has?

Corporations helping community or vice versa?

I fully believe that business can be the solution to poverty. The process is simple:
1. Identify the problem
2. Identify the solution (technological, training etc)
3. Innovate to provide the solution to the problem.

Point 2 is actually quite easy, and there are already solutions to almost every development challenge, be it finding water, preventing HIV/AIDs etc. Point number 3 is where the challenge lies. So far government has failed to provide the solution in most developing countries for various reasons (money, ability etc). Can business do better? Well they also need to overcome problems, such as providing the solution cheap enough, ensuring there are qualified people to distribute and provide the solution, ensuring the solution is suitable to local needs and so on.

If a company can do that, great. Companies can profit from helping the community. If they do that, then there is a clear motive for business to invest money in helping raise awareness of the problem, the need for their solution and their proposed solution (possibly through NGO partners).

This is the issue: when does this become unethical? Health companies already understand this uneasy balance when they go to doctors to tell them about their solution to a health problem. This means the doctor will use that product to solve the problem, but is it actually the right or best product -or just the only product the doctor knows about? How to stop the doctor accepting bribes for distributing that product and not another one? Will the patient lose the trust of the doctor knowing how closely associated the doctor is to the company (and companies often havea lack of trust)?

For me, working in an NGO, where we have the trust of the community, we would gladly like to (and already do, to some extent) promote certain products (and sometimes subsidize them) -in fact we are keen to help companies understand the problems and help them develop a solution, but where is the line between promoting something that will help solve a problem and becoming (in effect) a distributor for the company? How does this affect the trust the community has in us, if they link us so closely to a company?

Upcoming posts

Over the next week I will be posting based on some thoughts from the conference I am attending; there will be many (but short!)!

Has Development failed?

This article questions whether the theory of 'development' as proposed by the UN, World Bank and IMF mostly, has failed. The article makes sense but has a ridiculous notion of development, only focusing on those 3 organisations who though shoot above their weight in some developing countries regarding their influence on policies, really have very little impact at all because they only worked at the governmental level until recently.

Development in its modern sense is about government -yes, in theory good governments lead to their citizens creating their own development by operating in a peaceful society which respects rights and gives the freedom to make the most of the market. Unfortunately most governments in impoverished countries are not like this, and trying to change those governments has (as history has shown) only made things worse. Stability and peace is the most important requirement for development. It would be nice to have functioning education, healthcare etc.. or even a functioning market, but without these, it is necessary to help create them.

If governments cannot create them, then other actors must and this is whether civil society comes in: NGOs, trade unions, co-operatives and of course, individuals. Of course there is a role for business/entrepreneurship too. Development is about all of these actors, and it is not failing; it is struggling to be efficient in overcoming the government deficiencies, the market deficiencies and the instability most developing countries are in.

Secondly development as seen by grass-roots organsiations, individuals themselves, and now even by the UN/IMF/WB is now seen as the opposite of what the article describes: it is about bottom-up, empowerment, skill provision, access to markets and so on. It is about partnership between different societal actors and it is about, eventually, reforming those limiting factors -especially government, through a gradual process. It takes time to educate citizens, train teachers or health workers, or create distribution channels for medicines, credit etc.

Once countries have skilled empowered citizens, they will inevitably be able to enter government or create new (capable) governments. If the WB/UN/IMF model has failed, that is really of little significance to development now, as those actors are now so minor. Much more important are civil society actors, entrepreneurs and 'foundations'. Development has barely even started yet... but in the last decade or more, it is sure that there are enough cases of it working in different ways in different countries to prove it can work. Just give all those actors the chance to do their bit and it will work, from the bottom-up.

Unfortunately development takes a long-time. That must be accepted. Unfortunately there are bad people doing bad things which is continually restricting development's potential. That must be accepted and worked around. There are many exciting examples of development taking off -explore the nextbillion.net, ashoka.org and hundreds more organisations that are connecting technology, people and organisations to create more success and scale-up successes to create greater impact.

‘Strategic’ CSR in China

Why should a company ‘do’* CSR? Because it is in its own benefit to do it.

What CSR should it ‘do’? That which benefits the company the most.

The word strategy always sound good, and in a CSR sense, it means doing something that is of maximum, long-term, benefit. Strategic CSR is not, necessarily a strategy in itself, but a commitment leading to a direction identifying certain areas a company will focus on which will improve itself and society (either at the same time, or at a later date). Thus an investment in staff makes it easier to attract new staff, reduces staff turnover (and hence recruitment costs), increases staff morale and productivity etc. An investment in the supply chain improves partnerships with suppliers, increases their efficiency, reduces risks from being associated with suppliers who break the law etc.

In the last few years, a new are has developed focusing on strategic CSR within a company; normally including a team crossing the functions of sales, marketing, research & development and corporate affairs. The objective: to develop products that fulfill a societal need, and to deliver that product to those who need it, profitably. Simple examples would be a company that makes soap that has tremendous hygiene benefits. Thus by improving the distribution a company can get soap to more people who need it and by reducing costs poorer people can afford it. It might not be easy to do either of these, but it can be possible and should be attempted because if it can be done, sales can be increased.

Many multinational companies are now focusing on this area; though not so much in China (as they are still obsessed with the higher margin middle and upper class customers), but i am sure it will be an area to watch for more. Interestingly though, China’s very open capitalist market economy has led to many companies employing these kinds of strategies anyway, without having a dual goal of helping society AND making a profit. They just want to make a profit; but the side-effect is to help society. It is easy to buy things like soap in even the most remote areas of China.

What is next, is the products and services that are harder to distribute en masse and harder to profitably sell to the poor; such as water purification systems, education, sanitary toilets, advanced farming tools, good quality roads and so on. The list of possible products and services the poor do not have in China, but need to improve their lives is a long one. The challenge is to develop a needs-based product, get it to customers and sell it to them profitably (yet at a price they can afford -or possible along with micro-loans).

China, with a huge market offers significant opportunities to do this by achieving economies of scale and scope. It is, of course, also a country with 20 million people in absolute poverty and around 200 million in poverty -second only to India. However China also offers numerous challenges, such as Intellectual Property Rights and logistics. The challenge to entrepreneurs (and of course, current businesses) out there is look for the needs that poor people have and try to serve that need profitably.

*I dislike the use of the word ‘do’ but ‘do’ is the simplest word that everyone will understand. To explain how to ‘do’ CSR is not possible in a simple blog post; though use of the word ‘do’ does imply something very simple, it is indeed definitely not.

Not Zimbabwe again

A topic I have not touched for a year or more; orginally writing about how the West should be ashamed for not doing something about a country that is constantly getting worse. Well, finally, as the problem has got worse, some other African countries have been forced to do something. Not because they really want to help of course, but because the problem is so bad that at least a third of Zimbabweans have fled their own country, many to South Africa. The migration is having such an impact on South Africa it has been forced to at least acknowledge the problem and started to apply some pressure.

The pressure makes no difference; Western countries ignore the problem; Zimbabwe gets worse. Inflation at 3,000% was bad, now it is above 15,000%. Prices triple every month. Salaries double every 3 months... an imbalance that means poverty is just getting worse and worse -a vicious cycle has taken hold leading to worse health problems and worse educational facilities. How can this cycle be broken? Even if Mugabe falls, even if the transition to a stable leadership could be relatively smooth (which would be a first through out the World), how long will it take to recover? to rebuild, to retraing, to re-attract talent...

But first we need to convince our governments to do something. To get rid of Mugabe and his cronies and try to help Zimbabwe find itself a decent leadership. Then we can think of trying to help. The future is not good. If anything it is, unfortunately, a case of how bad can a dictator mess up a country, before it actually self-implodes? It seems, regrettably, like we might be finding out in the next year. At least something might change soon -but only because the situation is so bad. And what do we do about it?

Macro Micro-finance

The greatest problem for countries to trade their way out of poverty is lack of infrastructure, especially roads. Even if the government funded the big main roads throughout the country, and the government maintained them, what about the small roads connecting through to the villages? Well if we presume that these small roads are only used by the villagers themselves to transport goods out of the village, or into it, then the villagers could pay for and maintain the road. They have free labour to some extent (in the off-season) and only need the materials/expertise (though we are talking simple roads here).

If we believe that improved roads really will help the village trade and increase their income, why not lend them money to build the road and get them to pay it back over time; once their incomes go up. The loan would be guaranteed by the whole village as they all have a stake in it. This idea of collaborative, group-ownership, lending model might work. The returns might not be great; and the loan would have to be paid back over quite a long time, as the initial cost is quite high -but it could still be profitable, and the primary purpose is to utilise funding more effectively in ways to support development.

Now, once the road is built, villagers' incomes increase and so they can become traditional microfinance clients, and this can be much more profitable.