Chief Sustainability Officer - Where's the beef Chief...

The 21st century has seen the emergence of a new chief on the block - the Chief Sustainability Officer. A well heeled recruitment consultancy recently produced a report heralding the arrival of the Chief Sustainability Officer (CSO) to the "C suite" along with the emergence of sustainability and corporate social responsibility to the strategic agenda. Sadly the recent spate of high profile resignations US and in UK the imprisonment of former members of parliament for unethical conduct paints a less rosy picture of the importance of social responsibility  amongst the business and political elite.
The concept and use of the prefix "Chief" is a truly American phenomena in the United Kingdom and the Commonwealth the term Director is preferred. Therefore depending on the corporate culture of your organisation Chief Executive Officer or it's British equivalent Managing Director is used to describe the same role.
 The tribe of the corporate suite or "C suite" in the last 20 yeras has undergone an extraordinary expansion of "Chiefs" such as Chief Information Officer average salary £76000 responsible for the development and implementation of information technology strategy within the firm but so also does the Chief Technology Officer average salary £86000 and who can forget the Chief Web Officer. The aforementioned chiefs have emerged through the proliferation of the information technology, internet use and dare I say the lack of insight amongst some Chief Executives Officers in the 1990s to envisage the change being created by a then very young Internet.
Information technology concerns aside the "C suite" has seen it's share of exotic "Chiefs" such as Chief Visionary Officer, Chief Customer Officer and Chief Creative Officer. In terms of their value added contribution to strategic growth the question can be asked Where is the beef chief?
There is a danger that the new chief on the block the Chief Sustainability Officer may go the way of some of the other chiefs a mere title consigned to irrelevance. Sustainability is the key opportunity facing corporations in the 21st century and by nature should be the sole domain of the Chief Executive Officer as the firm's principal strategist. The advent of the Chief Sustainability Officer is an attempt to delegate the sustainability agenda and normalise it's role within existing paradigm of the corporate structure. Sustainability by its very mandate to incorporate the survival of future generations into present economic decisions is by nature inherently disruptive. The dynamics of the corporate structures are not designed to adjust to disruptive change. In order for sustainability to take root in organisations we need more sustainability warriors and champions not any more chiefs. As simple as it may seem lets make the philosophy of sustainability chief in the new capitalist model for the 21st century.

To learn more about Sustainability/CSR visit www.sustainabilitycsr.com

Social Impact Bonds and the death of sweet charity...

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This weekend I was engaged in an intense debate with a well respected practitioner concerning his development of Poverty Impact Bonds on one of the many online social networks in which to which I regularly contribute. 
Poverty Impact Bonds is a sister concept of Social Impact Bonds which is defined by Social Finance "a contract with the public sector in which it commits to pay for improved social outcomes. On the back of this contract, investment is raised from socially-motivated investors. This investment is used to pay for a range of interventions to improve the social outcomes. The financial returns investors receive are dependent on the degree to which outcomes improve". 
It is proposed that investments by private sector entities e.g. Pension Funds in the early stages of a project will yield a return to society via the achievement of a tangible social outcome e.g. school leavers completing five GCSE's the US equivalent of a high school diploma. This lowers the government's overall public sector cost with a proportion of the projected public sector spend on social intervention being rewarded to Social Impact Bond investors. 
Poverty Impact Bonds which is still in its conceptual stage of development will use a similar methodology however its prime purpose will be to direct private investor funding to alleviate child and family poverty.


The use of Social Impact Bonds is being pioneered in the United Kingdom with a pilot project initiated at Peterborough Prison investing £5M from private investors to reduce re-offending rates by 7.5% over a six year period. Investors will receive a payment representing a proportion of the cost of re-offending. This approach to social intervention is supported by esteemed organisations such as the Young Foundation whose track record in the development of innovative approaches in the social sector e.g. The Open University is unquestioned.
In the United States the current administration is proposing to spend $100M on seven pilot projects using Social Impact Bond which they have re-branded as pay-for-success bonds.


The Social Impact Bond model appeals to my rational instincts but I am concerned of the application of market instruments to social issues. I am also skeptical as to its validity as an instrument to measure or reward social performance. Market instruments have not had a marvelous recent history with our recent financial crisis fueled by the use of sophisticated financial instruments such as derivatives which may be applied to Social Impact Bonds as its use is normalized within financial markets. Market forces are by nature impersonal with social intervention by nature involves personalization the two approaches are philosophically independent. 

That aside many charities exist due to the goodwill of volunteers that provide their time and talent to contribute to the greater good of society. In my own case I raise funds for Help for Heroes  a UK based charity that is growing, effective and transparent, established by individuals seeking to relieve the social, physiological, psychological impact of war. Help for Heroes to date has raised over £87M in funding without recourse to financial markets. This has been achieved by identifying a need and capturing the latent energy of the public to commit to an inspirational program. 
This is of course not a new phenomenon the volunteers past and present at the real army the... Salvation Army who save lives every moment via through counselling, shelter and a hot cup of soup since 1860's.


Aristotle in his writings in Politics on the nature of man surmised that rational men do have an invested interest in the greater good of society that transcends the imperative of wealth creation: 


"Again, how immeasurably greater is the pleasure, when a man feels a thing to be his own; for surely the love of self is a feeling implanted by nature and not given in vain, although selfishness is rightly censured; this, however, is not the mere love of self, but the love of self in excess, like the miser's love of money; for all, or almost all, men love money and other such objects in a measure. And further, there is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property."


Being a rational economic man I perceive an underlying danger of the proposed use of Social Impact Bonds will contribute to a withdrawal of individuals seeking to volunteer and spontaneous charitable giving for the following reasons:

1. Is it the intention to monetize the "free labour" of volunteers? 
2. Will individuals who make charitable donations receive suitable ROI if the project is successful? 
3. If therefore the "free labour" of volunteers is now monetised are they not due a ROI for their effort?

Whatever happened to sweet charity...

ISO 26000 Standard - defining good corporate governance

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Public concern over the increasing disparity amongst the rich and poor, gender inequality, human rights, climate change and environmental degradation has elevated sustainability and corporate social responsibility from the realm of public relations to the core of progressive business strategy. The recent BP oil spill in the Gulf of Mexico is testimony to the financial and reputational risk that can befall CEO’s and their organisations that fail to put sustainability at the heart of business decisions.

Historically the International Organisation for Standardisation (known by its French acronym ISO) efforts have been focused on issues surrounding quality, product specification and information technology management. Therefore it was late in understanding the shift in the debate as to the role of business in society from being catalyst of economic growth to also enablers in the development of society as a whole. This concept of the role of business beyond profit making was crystallised in the Brundtland Commission’s definition of Sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. This definition subsequently influenced the development of the “triple bottom line” approach whereby business performance can no longer be viewed exclusively from the lens of economic performance but must also include social and environmental performance criteria as part of any evaluation of its effectiveness (Elkington 1999, Savitz and Weber 2006).

In 2002 sensing the growing need for comprehensive guidance on social responsibility the International Organisation for Standardisation began work on developing the ISO 26000 standard. To ensure that all stakeholders’ views and concerns were included in the developmental stages of the ISO 26000 standard its working group included well known non-governmental organisations such as the Consumers International and the International Organisation for Employers. Support was also enlisted from other sustainability initiatives such as the International Labour Organisation (ILO), the Organisation for Economic Co-operation and Development (OECD) and the UN Global Compact whose sustainability framework established a decade earlier includes over 8700 participating organisations. Well known NGOs such as Amnesty International and the World Wild Life Fund (WWF) International also contributed to the development of the ISO 26000 standard, however both organisations have since refocused their attention to other initiatives.

The ISO 26000 standard builds on the Brundtland definition of sustainable development by defining social responsibility as the responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that

• contributes to sustainable development, including health and the welfare of society
• takes into account the expectations of stakeholders
• is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practised in its relationships

This definition confirms the interconnectedness of social responsibility and sustainability as core operational concepts with the ISO 26000 standard. To incorporate social responsibility and sustainability within its business operations organisations are required to define their priorities in respect of the following core subjects:

• Organisational governance – the systems, structures and processes whether formal or informal by which an organisation makes decisions in regards to social responsibility and sustainability.
• Human rights – are accepted norms regarding the sanctity of life such as civil, political, economic, and social rights which it is implied that an organisation should actively support and respect.
• Labour practices – are policies and procedures regarding the selection, recruitment and retention of labour including subcontractors and their ability solicit the assistance of external bargaining or develop their own bargaining mechanism within the organisation
• The environment – the ISO 26000 standard encourages organisations to review its impact on the environment from a global perspective by improving the its environmental performance using the precautionary approach, sustainable procurement techniques, environmental risk management, climate change adaptation, adoption of clean technology and eco-efficiency programs.
• Fair operating practices – this core subject encompasses the ethical values of the organisation in respect of its dealings with other organisations e.g. competitors, suppliers and government authorities in areas such as anti-corruption and fair competition.
• Consumer issues – are all activities that communicate and reduce risk, improves product performance and longevity, increase sustainable consumption of products and services during all stages of its lifecycle from material extraction, manufacturing, marketing, distribution and recycling or disposal.
• Community involvement and development – are activities in which the organisation participates that strengthens the civic institutions from which the organisation gains its wealth but also builds a bond between the organisations internal stakeholders i.e. owners, shareholders, employees, suppliers, subcontractors and its external stakeholders in the community and the wider society.

The ISO 26000 standard does not provide a prescription for social responsibility by highlights key areas which define corporate social responsibility excellence. Organisations should adapt the standard to suit its size, mission, values, cultural and regulatory environment. This tailored approach ensures that stakeholders are engaged for their opinions using communicative means that are beyond mere consultation on issues regarding the centrality of social responsibility to the organisational strategy but importantly their as stakeholders role in implementing sustainability and social responsibility within the organisation.

The interdependence of each core subject is embodied in the holistic approach to social responsibility and sustainability espoused by the ISO 26000.

The holistic approach to sustainability also implies that any organisation embarking on implementing the core subjects of the ISO 26000 must conduct a gap analysis of its existing performance regarding social responsibility and the requirements of the standard to determine the relevance of the each core subject to the stakeholders within its competitive environment. Therefore also ensuring that the relative emphasis placed by the organisation on each core subject will vary regionally e.g. businesses that operate in Bangladesh and India that are implementing social responsibility may place greater emphasis on issues surrounding Labour practices and Community involvement and development due to the socioeconomic environment that exists on the Indian sub continent.

The organisation having understood which core subjects are relevant to its stakeholders then proceeds to integrate social responsibility into the fabric of the organisation through policy development, the establishment of sustainability targets, sustainability awareness raising campaigns, transparent reporting of the organisational performance in a manner that is timely and balanced.

The use of social responsibility reporting as tool for benchmarking and communicating sustainability performance is another key requirement of the ISO 26000 standard. Recently there has been a proliferation of corporate social responsibility reports by companies in the United Kingdom which has spurred the creation of various reporting schemes such as the Global Reporting Initiative – a voluntary scheme that seeks to measure an organisations sustainability performance facilitating comparisons within and across sectors. The ISO 26000 standard has cross referenced its framework across existing corporate social responsibility initiatives such as the GRI thereby ensuring its applicability to all organisations irrespective of reporting requirements.

Safety and Environmental practitioners are already burdened with the management of ISO 14001 Environmental Management Systems; ISO 9000 Quality Management Systems and OSHAS 18001 Safety Management Systems may view the ISO 26000 standard as an unwelcomed distraction from other technical issues. As with any organisational change initiative senior management commitment and support is paramount as the implementation of social responsibility policies may be in direct competition for resources with other business initiatives at a time where budgets are constrained. Therefore the business case for sustainability and social responsibility must be developed, however despite these challenges using the ISO 26000 standard as a template for implementing sustainability and social responsibility can provide organisations with following benefits:

• No certification costs - the ISO 26000 standard is not yet a certifiable standard
• Easy integration with existing standards e.g. ISO 14001 and OSHAS 18001 using the holistic approach to sustainability social responsibility
• Reduced reputational risk arising from poor labour practices and unethical conduct
• Enhanced brand and product image
• Incorporates the criteria of existing corporate social responsibility schemes such as the GRI and UN Global Compact
• Facilitates good corporate governance ensuring that senior management adopt a long term outlook to decisions making
• Develops and improves stakeholder engagement and building trust with the organisations immediate community
• Improves environmental efficiency and resource use within the organisations supply chain
• Improves organisational safety and builds employee morale
• Facilitates organisational innovation

The parallel concepts of sustainability and social responsibility are evolving areas of management taught and practice, this is reflective in the rather broad approach of the ISO 26000 standard. The ushering of the ISO 26000 on the global stage has not been without its controversy with some nations viewing the new standard as a potential barrier to free trade or a threat to their national sovereignty in terms of its support for human rights. Organisations that do not subscribe to such myopic views will use the framework of the ISO 26000 standard to create new competitive models and produce products and services that not only sustain corporate growth but contribute to the development of society.

UK Employer Charter... A sword of Damocles?

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This week during my daily commute to work I could not help over hearing a lively discussion as to the looming redundancies in the UK public sector. One of my fellow commuters was experiencing some anxiety as to her future in regards to possible redundancies at her workplace which hung over her head like the mythical sword of Damocles. 
Into this atmosphere of anxiety the UK Government launched its Employer Charter  along with other proposals such as the extension of the period from one year to two years within which an employee is entitled to bring an unfair dismissal claim. The Employer Charter and other government proposals are based on the assumption that there currently exists an imbalance in the relationship between the employee and the employer.
This perception is not borne by the following facts: 
Health and Safety

• 152 people were killed in the UK workplace in 2009/2010 
• In 2009/2010 28.5 million workdays were lost to workplace injury or ill health  
• 1.3 million people who worked in 2009/2010 reported illnesses or injuries caused as a result of their current or past work; of this figure 550000 are "fresh" cases
• The UK is yet to convict a CEO/Director for Corporate Manslaughter
• The UK does not explicitly include health and safety as part of a Directors duties

Labour Laws
The plight of agency workers within the UK employment contractual framework is illustrated by the situation of agency workers at the Amazon, Inverclyde facility in Scotland whose work and pay was stopped mid shift leaving agency workers stranded overnight at the site awaiting public transport which resumed the following morning.


Before the UK seeks to develop another charter or one of our banks develops another customer charter should we be implementing the EU Social Charter?
The EU Social Charter adopts a broader social view of the impact of work life on the sustainable development of society. Specifically it enshrines the following following principles that are in direct contradiction to the Employer Charter:

• The Right of the Family to Social & Legal Protection Article 16
• The Right of mothers and children to Social & Legal Protection Article 17

Both articles 16 and 17 are crucial in an socio-economic environment where:

• 60% of men and 40% of women aged between 20 and 24 in England still live with their parents - a catalyst for more student protests as household incomes are strained
• 23% households in the UK are single parent households 
• 50% of single parent families in the UK are classed as poor

Based on the Employers Charter should a single parent or a working parents of households living on the poverty line decide to strike, request flexi-time or holiday due to family obligations the profit imperative of business is the only criteria which matters all other social issues such as the care and welfare of children are irrelevant externalities - primacy of family life is just mere collateral damage. 
The analogy of the Sword of Damocles is apt in this instance as legend states Dionysius a 4th Century BC tyrant seemed to have all the trappings of wealth and luxury, having been ingratiated for his wealth and power by one of his servants Damocles. Dionysius challenged Damocles to live his life for a day to which Damocles readily agreed. Damocles immediately began feasting and enjoying the trappings of power and wealth when suddenly he noticed a sword hanging over his head by a horse's hair. To which Dionysius explained this was what a king's life was like.
For many vulnerable adults single mothers, children and senior citizens who work the Employers Charter will hang like a sword of Damocles over their heads. My advice to supporters of the Employers Charter is to be a single working parent or working parent from a household living on the poverty line for a day and survive by a "horse's hair" from pay check to pay check... above all lets not forget with Valentine's Day just around the corner that Britannia is a woman.

Big Society or Self Preservation Society

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As I discuss with my colleague the collection of funds for Help for Heroes a popular UK charity, I briefly reflect on the potential demise of the " Big Society". Prime Minister David Cameron announced on the 16th July 2010 the beginning of a new era in the social contract between the UK government and its citizens the "Big Society". In his Big Society speech Mr. Cameron envisaged the empowerment of charities, citizens, private businesses and community organisations to innovate, manage and deliver public services. Community empowerment, social action and public service reform underpin the philosophy of the Big Society. David Cameron fully understands that economic stability can only be sustained by social stability so he issued a clarion call for the creation of a new approach to national development the "Big Society".
In the eight months since that famous speech why is the Big Society failing? It is failing in the three main galvanizing areas which the Prime Minister outlined in his Big Society speech Decentralization, Transparency and Financing. 


Decentralization
The Big Society has its own peer Lord Wei ex-McKinsey consultant and Oxford graduate with a desire to finance social change using bonds and mutual funds. The Big Society has its own government office - the Office for Civil Society... herein lies a recipe for red tape.

Transparency
In its inception the Office for Civil Society issued a press release outlining its contribution to the government austerity measures by cutting its budget to the voluntary sector and social enterprises by £11 million. However this openness does not extend to disclosure of operating costs and budgets for either the Big Society project or the Office for Civil Society.

Financing
With government contributions to the voluntary sector falling victim to budgetary cuts; the severity of these measures has as affected some Local Authorities disproportionately one such local authority Liverpool City Council has lost £100 million in area based grants has opted out of the Big Society pilot program and has joined instead the "self preservation society". There is always the option of using Lord Wei's model of  raising bonds and other financial instruments to support financial capital with free social capital or was it the the other way around.

In contrast Help for Heroes a grassroots charity that was established by a HM forces veteran and his wife to provide support to servicemen and women wounded since 9/11 is committed to transparency its financial performance is available on the website's homepage and sustainable financing without exploiting its social capital - a vast network of volunteers which includes celebrities such as David Beckham and Jeremy Clarkson. Help for Heroes is an example of the "Big Society" in action without being political... surprisingly they are not affected by budget cuts.

Food Glorious Food - is the question of food shaping a new world order?

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During the past fortnight we have witnessed the toppling of despotic regimes in Tunisia and the continued crisis in Egypt one of the world's oldest civilizations. In each situation the populace were forced to protest against increasing food prices which subsequently mushroomed into protests of other societal ills ranging from unemployment to basic human rights.
The UN's December bulletin announcing the highest increase in its Food Price Index peaking at 214.8 points fell on the deaf ears of Western donors distracted by annual Christmas and New Year celebrations. This apathy was also fueled by the preoccupation of Western governments with domestic policy austerity measures to the detriment of not only Foreign Policy budgets but also aid programs to Africa, India and Latin America. The UN's Food and Agriculture Organisation estimates that world cereal output will drop by 1.4 percent to 2.23 billion metric tons whilst demand will increase by 1.8 percent to 2.26 billion metric tons thereby creating the first cereal deficit since 2008.
The crisis in global food supply is exacerbated by environmental shocks ranging from floods in Pakistan, Brazil and Australia with drought in Argentina. Lets not forget the case of nuclear armed Pakistan is acute as that country is facing terrorism arising from Taliban insurgent incursions from neighboring Afghanistan and Taliban sympathizers from within its own populace not withstanding flood devastation, population displacement with its consequent food shortages. The  Philippine's one of the world's biggest importers of rice has increased the retail price of rice in December by 8% despite a quarter of its population living on $1.25 a day according to World Bank estimates. To add to Philippine misery its cereal harvests have been decimated by a combination of drought and flooding.
A recent report by Foresight a UK government future's think tank argues for fundamental change to the existing approach by global society to food and the management of the food supply chain. The report unsurprising indicates that the world's food supply chain is unsustainable which has lead to a situation where a billion human beings are hungry, another billion are the "hidden hungry" and of course there are the billion of us who are never hungry. This global disparity has led to flash points which flare in regions within which there already existed social and political tensions concerning issues of disenfranchisement  and distribution of wealth. Especially Tunisia which for the past 30 years has been viewed as a cheap holiday destination and in some cases second home locations for the global middle class or Egypt another popular tourist destination which until recently was hailed in the business press as the "new mecca" for the call center outsourcing industry in each case little regard was given to the social or economic conditions within which the faceless population survived, I think it unlikely that the other leg of the three legged sustainability stool - the environment - was even considered in the strategic planning of multinationals who have invested in Egypt within the past five years - its no wonder civil society has collapsed as there was investment but not sustainable development.
As international middle east "experts" and political strategists ponder on live television the consequences of western inaction from their Cairo hotel studio whilst being fed from the sandwich buffet from the hotel bar I wonder if Egyptian children in villages along the Nile can ask for more dinner .... did I hear correctly did they ask for more?

To learn more about quality, safety and environmental management visit www.sustainabilitycsr.com 

MBA in Sustainability or Sustainability MBA - can sustainability be taught?

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Today I had a cursory Google search for the words "sustainability MBA" which yielded quite surprisingly over a million sites. Since the development of the first MBA program by Harvard University over hundred years ago the content of MBA courses have reflected the changing landscape of business. In my own brief career I have seen the inclusion of quality and lean management principles into the core curriculum which was intended to provide MBA candidates with generalist management knowledge to function effectively as future CEO's and business leaders. The business school fraternity decided to differentiate the MBA "product" by adding specialisms ranging from human resource management to the European MBA without altering the philosophical approach to teaching the subject and science of management which was and still is being dominated by "Friedman fundamentalism" i.e. the role of business is profit making.
Then came the "Dot Com" era when some of my fellow MBA classmates sought to make their fortunes by working for small internet start-ups for little pay but with share options which could yield astronomical returns if the company's IPO was the darling of the investors. In hindsight it seems naive but true but then the bubble burst and we were all given a reality check. As MBA's we rationalized the "Dot Com" bubble with even some bestsellers along the way, if you don't write a book and make a buck then being qualified to act as CEO is not a bad fall back position.
However the lessons of the Dot Com era were quickly forgotten until the Financial Crisis and fall of Lehman Brothers the scene on the evening news of highly sophisticated but dazed MBA's leaving Lehman Brothers, London offices with there belongings in cardboard crates sent warning signals across the global business community.
So the Business Schools again did their market research and re-branded providing course offerings in business ethics, corporate governance, corporate social responsibility and now the MBA in Sustainability, inviting NGOs, green activists and labour leaders to conferences in effect elevating the entire environmental and social activist community to the status of management gurus.
Therefore it can be perceived sustainability has been hijacked by Business Schools as another flavor of the month with no fundamental shift in the philosophical principles being taught to new MBA's. At a recent "sustainability" research conference I attended I inquired if anyone new the carbon footprint of the event only to receive smiles of amazement but strikingly no real answer not even a crude guess.
From an academic perspective we do not know enough about our planet or how human impact from industrialization affects our planet but what we know is that there is a relationship between environmental degradation and human suffering and it is this effect that we must address as MBA's. Therefore it may be considered premature by academia to anoint MBA's with the mantra of sustainability gurus of their organisations. If this premature repositioning of the MBA as a "Sustainability MBA" or "MBA in Sustainability" is a case of I say tomato... you say "toomaytoe" the MBA as a useful qualification may loose some of its appeal to young graduates who may be inclined to pursue post graduate qualifications in environmental sciences.
However I firmly support the efforts by business schools to influence the sustainability agenda through instruction and training in the core MBA program not as a bolt on subject or specialism..... which if the recent sentiments of leading bank officials are a window into the collective conscience of their boardroom, business academia has an enormous challenge.... but then how can you challenge your major patron...