Jim Brumm: Long-Term Thinking for a Short-Sighted World

This announcement might come as a surprise to some of you but I decided to integrate SustainabilityForum.com into my larger community called TheEnvironmentSite.org.

The new site is a very popular community of sustainability and environmental enthusiasts from across the globe. I took over the website from a friend about 6 months ago and recently finished the first stage of redevelopment of this site.

The issue I had over the last few months following the redevelopment was that I had a lot of similar content on both sides and I was spending a lot of time each day updated both sites with content that was much alike.

I therefore had to make a difficult decision on how to change this. TheEnvironmentSite.org has a very active discussion forum and that is why I decided to keep this community and move all of the bloggers and contributors I have on SustainabilityForum.com over to the new site and have them contribute to the main blog.

The new TheEnvironmentSite.org will therefore focus on the following main areas: Sustainability, Environment, Corporate Social Responsibility and jobs and internships as well as useful guides about all of these topical areas.

I very happy to say that all my bloggers have agreed to participate in the new site so you can be sure to read  the same quality posts and topics that are similar to those of this site.

Here are the links to the equivalent and newly created forums on TheEnvironmentSite.org

Main Blog and Page:
http://www.theenvironmentsite.org

Introduction Forum
http://www.theenvironmentsite.org/forum/introduce-yourself/

Environment and Sustainability News Discussion Forum
http://www.theenvironmentsite.org/forum/environmental-sustainability-new...

Corporate Responsibility Forum
http://www.theenvironmentsite.org/forum/corporate-responsibility-forum/

Climate Change Forum
http://www.theenvironmentsite.org/forum/climate-change-forum/

Jobs and Internships
http://www.theenvironmentsite.org/forum/job-offers-internships-across-gl...

Sustainability and Environmental Guides

http://www.theenvironmentsite.org/green-living-guides/

Please feel free to join our new community. There will be a lot going on and I am sure you will not regret it. :-)

I've been discussing Bottom of the Pyramid (BoP) development with JK for a month or so. JK is a journalist, currently travelling around Africa and reporting upon how businesses are bringing development to local communities.

JK's reporting on the BoP economy is undoubtebly Good Stuff, but I remain almost stubbonly sceptical about the long term benefits BoP engagement can bring and how it will lead to the alleviation of poverty. I do not wish to to damage JK's wonderful BoP project with negative reportage, so until he gives his go ahead for me to name him, I won't.

In the meantime, this blog is a reply to the last email I recieved from JK. In this email he asked:

...if the poor aren't being FORCED to buy these products (meaning they are making their own decision to purchasing it), and it is giving them a true benefit (like clean water, which can prevent many many diseases and issues that in turn cause more of a financial burden than new filters or service), then I really see it as a mutual benefit

As I needed an minor essay to explain my thinking, I thought why not turn it into a blog. So here it is..

a) being FORCED to buy something is a tricky area to engage in. As a UK home owner and a car driver I am FORCED to buy buldings insurance and car insurance. For sure, I get to choose who I buy them from, but I have no legal recourse not to buy insurace on these two most significant purchases. However I'm not legally obliged to have a clean water supply to my house, yet if I don't have one I could be arrested for child abuse. FORCE is a very difficult word and shold be treated as such;

b) is BoP really "giving them true benefit"? We need to think very carefully about our definition of benefit and not make any assumptions. It's here that my real problem with BoP begins.

Many BoP businesses are funded through loans from their local bank. The money those local banks have to lend doesn't appear out of nowhere ... usually its origin is the World Bank, the European Development Fund, the China Development Bank, etc etc

Bringing clean water to places is undoubtedly a huge benefit, but is doing so at the expense of long lasting debt a price worth paying .. does it alleviate poverty at the bottom of the pyramid, or compound it?

Second of all, when money gets involved our perspectives change and we start to try and justify why we make money.

For example, a few years ago I waded through Microsoft's community / sustainability / responsibility report & online content (yes, waded is the right word .. there really was an awful lot of it). One thing which stuck out was how the company said it was helping to promote and support cutural diversity by ensuring its products were available in a whole heap of different languages and dialects.

Utter rubbish. It was trying to shift more units and so was trying to reach out to smaller and more niche markets. This is common business practice when you've saturated your primary market. It may have the result of supporting local languages and dialects but its certainly not the motivation.

The same holds for all the companies which are starting to wave the BoP banner and say "we do BoP, aren't we wonderful!". No. You're a bunch of greedy capitalists who have cottoned onto the fact that there is a huge market of nearly two thirds of the World's population who you can sell to if you drop your price low enough.

Neither of these criticisms hold true for the many many many grassroots businesses which are springing up at the bottom of the pyramid, which is one of the reasons I'm sensitive about JK's identity. But I see alot of western companies talking abut BoP as a new market, somewhere new to speculate and exploit.

In other words, this is old fashioned capitalism all over again.

The froth is beginning to show and soon the bubble will start to inflate. Chances are it will grow and grow and then finally burst. When it does burst will it have brought the people at the bottom of the pyramid any lasting benefits? Will it have helped them out of poverty? Will it have enhanced their culture, or stamped on it with a western heeled financial jackboot?

I remain very worried and, as I said before, stubbornly sceptical. Which is a shame, but unfortunately very true.

Picture Credit: The Fortune At The Bottom Of The Pyramid by oneVillage Initiative under Creative Commons Attribution Share Alike License. Trimmed by Chris Milton.

What do companies look for in a Chief Sustainability Officer? According to a new report, you must be visionary and a strategic thinker.

And, if you can "prioritize and plan, communicate and motivate, and delegate and direct," even better.

Conducted by Footprint Talent, an Atlanta-based corporate social responsibility recruitment firm, and WAP Sustainability, the survey titled "The State of The CSO: An Evolving Profile," polled 254 CEOs, HR chiefs, chief operating officers and CSOs to determine what exactly organizations want to see in a Chief Sustainability Officer.

Polled executives represent almost every industry including consulting, manufacturing, advertising, architecture, accounting and education, and companies and institutions like Accenture, ArcelorMittal, Mattel, Mars, Novo Nordisk, PricewaterhouseCoopers, Siemens, Sodexo, and the University of Denver.

Most noteworthy are the requirements detailed as key competencies for a CSO. Top picks, for example, included:

1) Evaluation skills such as LEAN and Six-Sigma are helpful to reach the next level of complexity.
2) Business development experience and sales training is useful in sharing a sustainability vision across an organization.
3) Accounting and number crunching skills come in handy while conducting assessments and monetizing risks.
4) Environmental, health and safety experience are useful as a framework for understanding the core sustainability principles.

But that’s not all. Continue reading on Vault's CSR Blog: In Good Company.

Picture Credit: http://www.flickr.com/photos/opensourceway/4525955161

The sharp rise in oil prices over the last week has coincided with a raft of inter-related headlines – the popular uprisings across North Africa and the Middle East, revelations via the Wikileaks US cables that Saudi Arabia has been overstating its oil reserves by 40%, and claims from the International Energy Agency that the oil price is putting the global economic recovery at risk. This news comes on the back of recent allegations from whistleblowers that the International Energy Agency has been hiding the onset of global ‘peak oil’ and BP’s Gulf of Mexico oil spill which drew attention to the fact we are prospecting for oil in more and more difficult locations, suggesting the low hanging fruit has already been picked.

It’s coming increasingly clear that climate change is just one reason to wean ourselves off high carbon fuels very quickly. The more immediate, tangible, in your face threats – global instability, fuel and commodity prices, quality of life, energy security and national security are much easier to sell across political and social spectrums. As an aside, it may be that the way to tackle climate change is not to talk about it, but to focus on these ‘what’s in it for me’ factors instead.

So if oil is in trouble, what alternatives do we have? ‘Coal’ was for a long time the easy answer, but evidence is emerging that the ‘cheap abundant coal’ meme is based on shaky 30 year old assumptions which may no longer apply. The only truly sustainable energy sources are renewables, but as yet they only represent a tiny fraction of global energy use. So can they save us?

An interesting point came from Chris Huhne, the UK’s Energy and Climate Change Secretary during a speech last week. His department has calculated that $100 a barrel is the oil price at which the low carbon economy can stand on its own feet and compete with fossil fuels mano-a-mano. With the price of Brent crude at $108 a barrel as I type, you might think ‘job done’ – well not quite. As with all so-called ‘no-brainer’ decisions, many otherwise very clever people close their brains to inconvenient truths. We need a raft of enlightened investors and entrepreneurs to make the leap - and there is plenty of evidence that they are on their way. Investments in renewable energy overtook those in fossil fuel exploitation for the first time in 2008. Fast Company magazine recently profiled the ‘Beyond Petroleum generation’ of ex-BP executives who jumped ship for renewable energy start-ups when the oil giant reverted to type. They sang with one voice that oil was on its way out and that renewables was the sector to be in.

So with the oil world in turmoil and renewables fast becoming the cool industry du jour, there is a strong chance we are witnessing a perfect storm. Will the fossil fuel industry become the fossilised fuel industry? Will the renewables revolution finally blossom? We shall soon find out.

Post written by Gareth Kane.

Picture Credit: http://www.flickr.com/photos/powazny/3782692376

We have become so used to the way business has been done for the last 50 years or so it's often difficult to break out of the mindset and look at what is unsustainable and how we can fix it.

Four pieces of news from the past few weeks have set me thinking, and below are my conclusions. These I offer up as four challenges for CSR businesses, ways in which they can truely change the paradigm of business to a more sustainable model.

A blog I read last week (I truely forget where) was having a rant about state intervntion in markets to protect precious resources. Why should we need state regulation, the poster opined, when we already have an adequate mechanism for protecting resources : market price.

I won't bother to argue this point by point, suffie to say the whole rationale of a market economy is that price is NOT based solely upon production costs. It is based, in a pretty barefaced way, on how much you can get away with charging.

For example: a quick Google tells me I can pick up a wirelesss keyboard and mouse for up to £27. However a wireless RS232 connector (for monitors) costs up to £158. The technology isn't that different, it's just that RS232 connectors are typically business only items so the manufacturers ramp up the price.

The challenge is to review your pricing policy. Take out the idea of how much you can get away with charging. If this brings you in drastically below your competitors then be prepared to explain the policy to your clients.

Business is about profits, yes. Greed, no.

Competing in the marketplace is hard, really really hard. Your competitor brings out a new product or service and suddenly you're under pressure to produce something new yourselves.

There's a disparaging term in journalism: churnalism. This is where the same story is reported as news by several different outlets with no new content, comment or opinion added. Often it's nothing more than the reorganisation of a press release, which happens frighteningly often even on quality news outlets.

As an example of copying gone mad, consider a recent report by the French consumers' association (UFC). This found that very few of the new drugs introduced in 2010 actually brought medical benefits: most were simply a reformulation in order to appear to innovate, charge more and appear to be keeping up with competitors (who were, of course, doing the same thing).

Churnalism doesn't produce news : pharmaceutical reformulation doesn't improve health : copying your rivals isn't a business model.

The challenge is to review your product and services offering and cull anything which isn't truey innovative. Go for the jugular and look to innovate.

There is a valid arguement for differentiation and USPs are important; however simply copying your rivals "because you have to compete" only leads to business stagnation.

Business is all about adding value. Thus the miner charges for the iron ore, the smelter for purifying it into a metal, the blacksmith for producing the sword and the mercenary for killing people. Each adds value, each takes a profit.

How big a profit you take is based upon how you leverage your resources. In essence, if you can get your resources cheap and sell them expensive you get a big profit. We've already dealt with the selling them expensive above, but what about the getting them cheap?

The price of labour for raw goods has become a growing irritant over the past few decades with various initiatives looking to bring a fairer deal to workers at the very bottom of the supply chain. Very little is done about our own western businesses however.

The standout example of leveraging gone wrong is the recent sale of HuffPo to AOL. To recap, HuffPo was started in 2005 with up to $2m investment. In 2010 it made $31m and a few weeks ago it was sold for $315m, $300m of which was in cold hard cash.

During its entire history the people who made the site a success, the writers, were completely unpaid. There wasn't even anything in the deal about whether they would continue, be paid by AOL, remain unpaid .. or whatever.

Forget about the ethics of the situation, when you look at it in terms of who's adding value the whole thing is lopsided. Of course Ariana Huffington can sell her business and of course she takes a return on her initial investment. But are we really to believe that all those bloggers added absolutely zero value to the site's success?

So, the challenge is to re-evaluate your employees and think about who adds value to the organisation. Forget about the market for pay, competitors, skills and .. most of all .. the old "generals and soldiers" corporate structure.

Think instead about who brings what value to the company. For sure senior managers will say they deserve to be paid more because of the skills they have, but then again a vanishingly small number will have the same skills as their "shopfloor" employees.

Once you've done this, readjust your pay grades appropriately. And whilst you're about it, be open and transparent with your employees. You never know, they may like you for it.

Hidden costs are gnawing away at countries' economies like a swarm of termites on steroids. The most startling of these is the recent Harvard report that coal has cost the US a staggering $500 billion over the product's lifecycle, an estimation the report describes as "conservative".

The trouble is that up to this point we have had a very short sighted view about what is sold when we deliver a product or service. Yes there are certain hoops you have to jump through (mainly trade description stuff) but generally the provider doesn't have to think too hard about what impact their product or service may ultimately have.

Surely this is the wrong way round? If I manufacture a washing machine surely it's up to me to make sure it won't shred your clothes, not up to you to put unshreddable clothes in it in the first place?

Cradle to cradle manufacturing has been around for nearly a decade now and, thanks mainly to the EU's increasingly tough stance on waste and recycling, manufacturers are starting to take it on board. In this context manufacturers are having to pay for the recycling of their products, which is focussing design upon ensuring the materials and construction support the aim.

But how can you translate this into the services sector?

Here's the challenge: talk to your clients during business negotiations and agree on terms for your re-engagement at a later date should the service you provide need changing. This re-engagement shouldn't be approached as a new thing, but as a reuse or recycling of a service already provided.

The cost is a different matter: unlike manufactured products you cannot charge for recycling as part of the initial service price. But you can take a more long term, commited and sustainable view. And this, I think , will be more attractive to potential clients, rather than the current "chuck it over the wall and run" model we currently pursue.

So...

These are my thoughts, but what do you think? Too ambitious? Too "socialist" (I've tried not to be!)? Or just plain wrong? Which can you see working, and which ones not?

Picture Credit: Everest by Pablo Costa under Creative Commons Attribution Share Alike License.