In the Shift

Two books on my summer reading list are causing my consternation.  One is Beinhocker’s ‘Origin of Wealth’; the other is Jackson’s ‘Prosperity without Growth’.  In different ways, both play into a current obsession of mine: that economics is a big part of what is stopping transformation in the climate change context.

The title of Tim Jackson’s book sets out the fundamental challenge: as a society we have come to equate economic growth with prosperity.  Without growth society will shrivel and perish.  There’s nothing new in that insight: Lenin for instance identified the insatiable quest for economic growth as a characteristic of international capitalism (and Western economists have had an easy time of it arguing that communism’s failure was in part due to its failure to create a growing and hence prosperous economy).

But Jackson’s message is that because of climate change and the consequent need to build an economy that stops treating the environment as if it were an infinite resource, we cannot rely on or even expect there to be continual economic growth.  The environment – the stock of non-renewable natural capital that supports life – is finite.  We cannot draw on it as if it were not.  Jackson doesn’t use this analogy, but his message (backed up with pertinent analysis) is that we are getting to the stage where we are treating the environment like financiers treated the mortgage market.  Because we are addicted to growth (and because emerging economies want the growth = prosperity the developed economies have enjoyed), we are slicing and dicing natural capital, producing the environmental equivalent of collateralized debt obligations and credit default swaps.  Rather than face up to the dangers of our current environmental overusage and overdependency, instead we are creating ever more complex, incomprehensible and ultimately absurd ways of engineering what Jackson presents as an unsustainable relationship  between our economy and the environment.

The green new deal and the idea that tackling climate change is the number one economic growth opportunity of the C21 have helped deflect attention from the incompatibility of a growth oriented economy and a finite environment.  The green component of economic stimulus packages from South Korea to the USA have been justified on these grounds, i.e. that instead of seeing climate change as a threat to our economic prosperity, we should see it as a once in a life time opportunity to kick-start a new era of growth.  The thinking here is that we can decouple economic growth from growth

Jackson does a good job of showing that despite a history of producing more with increasingly less natural resources, we need to abandon the belief that we can ever meet the requirements of a low carbon economy by technological efficiencies alone.  As I right, I’m sitting in a hotel in Boston, USA, and all about me are signs saying how the hotel chain seeks to be environmentally friendly, so would I please use the recycling bin, turn off the energy efficient lights, reuse my towels and so on.  And on the screen of the lift that takes me from the 23^rd floor to the reception, I watch promotional clips of how the chain is building new hotels around the world, about its thousands of happy employees, about its growing number of club members, and so on.  In my complimentary copy of the Wall Street Journal, what matters will be the stock price of the hotel chain.  No mention anywhere that power showers, lifts, air conditioning and the food thrown away because anything less than a mega serving would be un-American are probably the biggest direct environmental footprints of my stay.  According to Tomorrow’s Values Rating’s index of the hotel industry, my hotel chain is in the top three, but none of the industry is even close to being a satisfactory performer.

So, yes, Jackson makes a strong argument for why our current model of economics is not a good compass for a new era where Man’s impact on the environment can no longer be treated as an externality when it comes to costing and accounting economic activity.  He sets out ideas of what an alternative economic system might look like, including those he has presented over the years to the British government, not least in his role as economist on the Sustainable Development Commission.  I won’t go into those ideas here, although anyone interested in them and others will be interested in the Incongruence series of seminars to be held at the Smith School of Enterprise and the Environment in November 2010.  What I want to focus on for now is the battle that lies ahead to get those ideas or anything similar accepted.

First off, let’s note that the Sustainable Development Commission was an early victim of the Conservative/­Liberal government’s cuts in public spending.  Despite its meager costs and its unique role in thinking about alternative futures for the British economy, it has been axed as the government pursues a hugely conventional programme for economic recovery that is based entirely on economic growth.  Thankfully, there is probably enough happening in academia and to an extent in business that political short-sightedness won’t stop things from limping along.  But if anyone in Britain thought that by voting for change they were voting for new economic thinking, sorry, but you should ask for your money back.

But the same is true in the USA where the much vaunted comprehensive energy and climate bill – the centerpiece of President Obama’s environmental agenda – is officially dead, according to climate tsar Carol Browner, talking to Rolling Stone: “An economy-wide program, which the president has talked about for years now, is not doable in the Senate.”  All eyes are on economic growth, getting unemployment safely out of double digits, paying for health care, saving social security, getting banks to lend, getting people to consume, etc.  It’s not even normal growth: it’s growth on steroids so that the country can get back to pre-2008 levels of prosperity.  And Obama’s administration, rather than show its once heralded desire to lead on climate change, is telling the rest of the world that it needs to buy more, spend more, and all in all become exemplars of Keynesian economic recovery.

That itself is contentious and economic debate in the USA is once again a fight between those who think the government is spending too much and those who think it’s spending too little.  Talk shows are splattered with the growling, phlegmy voices of conventional neo-classical economists (why do these men always sound like they are dying of gout?) prevaricating about market equilibrium and how if we leave things alone the free market will come to our rescue.  And this is where my second author of the summer, Eric Beinhocker, comes in with his blistering critique of why neo-classical economics, if it ever was appropriate, is entirely unfit for purpose now.

That is for the next entry ….

Hard to imagine after the environmental impact and the financial cost, but is there a sunny side to the Gulf oil spill that has implicated BP, Transocean and Haliburton?  Setting aside the beating dealt out to pension funds around the world by the collapsing share price, and the PR humiliations of BP executives (note to self, don’t spend Father’s Day cavorting round clear blue waters on a yacht when half way around the world an oil slick has your face on it; oh, and don’t let your chairman say you care about the ’small people’): is it possible that BP’s oil disaster may end up benefiting climate change?

This thought sprang to mind reading a fascinating essay by one of my business school students.  The argument was that the gallons upon gallons of oil gushing into the Gulf of Mexico serve as a daily reminder to millions of people that the oil industry is extractive and polluting.  Like other acts of corporate irresponsibility, the plight of BP and the other firms’ is put on steroids by social media.  The blogosphere has been almost unanimous in its condemnation of BP – and this despite BP once having been a pioneer of old energy taking CO2 emissions seriously.   And as Nike or the chocolate industry, once a company stains its reputation in cyberspace, that can be an even harder type of spillage to clean up.  potential to keep bad news front of mind and available for many people.

So why my optimism?  BP’s share price plummeted by 40% between the discovery of the leak and mid-June, and has bounced around ever since on the news of any signs of a successful or failed attempt to stem the spill.  BP has had to put significant money into bail out funds for affected Gulf coast citizens on top of the money it is spending on ending the leak.  It hasn’t been helped by the fact that companies such as Haliburton whose technology seemes partly to blame for the problem, appear to have contractual get outs that make any liability BP’s alone.

But even with all of that going on, the cost of these problems are not equal to 40% of BP’s market capitalisation are they?  No: what has dragged BP’s share price down to the depths is investor and consumer sentiment.  Obama has leapt on BP’s woes to make the argument for energy security and green energy.  And by draping attacks on oil in the Stars and Stripes he and others are able to make tackling climate change almost like a patriotic duty.

If this opportunityis used with dexterity, it could prove a tipping point where not only activist investors point the finger at ‘dirty’ energy but the mainstream investment community goes into one of its herd mentality charges to change the Wall Street mindset.  In the UK, the BP case has caused business-friendly Conservative MPs such as Zac Goldsmith to call for tougher approaches to the material consequences of environmental issues for publicly listed companies.  How long will it be before big pension funds and endowments see this is an opportunity to get tougher on companies?

Of course, the trick is to use this crisis as a trigger to keep awareness of the dangers of pursuing conventional energy resources at the top of the agenda.  That could prove tricky because the BP/Gulf case has taken on an unhealthy nationalistic flavour, and could lead to people defending or attacking the oil industry simply because the B in BP once meant British.  But at a time when politicians seems to have foresaken any serious thinking about tackling climate change in order to focus on economic growth and recovery, it is nice to think that there is at least one disaster that could have a positive outcome.

I’m nearing the end of writing the second edition of the book ‘Corporate Responsibility: a critical introduction‘, and I’ve been reflecting on the changes since I started on the first edition in 2006.  These have been years of excitement and disappointment for anyone interested in the role of business in taking on the social and environmental challenges of the new millennium.

No sooner had the first edition been published containing a detailed overview of the Economist magazine’s lambasting of corporate responsibility as a cause of lost shareholder value and a source of bad governance, than the same magazine came out and agreed that corporate responsibility was rightfully high on the agenda of business leaders who saw it as a way of addng value to their companies. What a difference three years makes!

A couple of years on again and socially responsible investment is expanding rapidly, major companies like Nestle through its Creating Shared Value initiative are thinking about their products in terms of benefits for society, social enterprise is generating an incredible buzz in both government and business circles, and senior executives are getting behind alliances such as the Climate Leaders Group on Climate Change to help tackle major social and enviornmental challenges.

But corporate responsibility has been missing in action during the financial crisis when corporate irresponsibility in terms of products, management, the single-minded pursuit of profit as business’ main social mission brought catastrophic results.  BP - a long time exemplar of corporate responsibility best practice – has became the latest example of how ignoring the business-society relationship destroys shareholder value.  And Toyota, heralded for its green technology innovation, has hit the barriers (literally) with its faulty breaks debacle.

Apparently this is what governance looks like

Where we stand today

So, is corporate responsibility in the ascendancy or in crisis?  As ever in corporate responsibility it’s a bit of both, and it depends what expectations we have of CR as a way of managing business’ relationship with the rest of society.  Right now, I see four different sets of expectations – the visions of corporate responsibility.  Here they are:

Vision 1: Business exploits society, and corporate responsibility is an approach to combating things like the exploitation of workers at Apple supplier Foxconn or the contamination of paddy fields near factories in India. In the last ten years there have been significant advances in companies’ monitoring of conditions in their supply chains, and firms such as Patagonia provide the kind of information that allows anyone to find meaningful information about what is produced where and under what conditions.  But the global supply chain is huge, critics like Jeff Ballinger keep providing evidence that labour codes of practice aren’t working, and there are far too few studies like the one commissioned by the Ethical Trading Initiative asking what impact codes of practice are having.

Vision 2: Business is a liberating element of modern society, and corporate responsibility fosters positive qualities like entrepreneurship and innovation in order to tackle the big issues of our age.  The enthusiasm with which Prahalad et al’s concept of the fortune at the bottom of the pyramid has been greeted in business schools and elsewhere is but one example of this.  Social entrepreneurship is energising some of the smartest minds of a new generation of business innovators who believe that the qualities of the entrepreneur, the skills of business management, and even the capital of the financial markets can be harnessed to fix the poverty and environmental degradation associated with dysfunctional markets.  And the promise of budding entrepreneurs tackling being at the frontline in fighting poverty etc has strong appeal to politicians who for financial and/ideological reasons want to cut back the state’s role as a social safety net.

Vision 3: Corporate responsibility is the glue that binds together new kinds of partnership between business and society.  In the 1950s and 1960s – at least in the richer economies – there was a tacit agreement that company management, trade unions and government used their respective power to define and manage business’ role.  Company management allocated capital and distributed profits, but were subject to a pact with unions about sharing the benefits with workers, and were constrained by laws and national policy.  These countervailing forces negotiated and defined business’ role.  But then shareholders got more aggressive in battling management, unions lost their hold, and having unleashed the forces of globalisation, governments found their own role undermined.

The breakdown of the countervailing forces was greeted by many as casting away the shackles on free enterprise.  But a two decades after Milton Friedman went public with his idea of the social responsibility of business is to make money for shareholders, companies found themselves under assault from a society that didn’t buy into the idea of profit at all costs.  Companies around the world have learnt the truth that they need more than shareholders to obtain the licence to operate upon which their success depends.

But with the countervailing forces fatally weakened, what could companies turn to.  Out of the hostile clashes with anti-business protesters emerged the idea of partnerships involving ’stakeholders’ from all different sectors.  The Forest Stewardship Council whose logo is found in many DIY and stationery stores was an early example of these partnerships.  So too is the International Cocoa Initiative fighting child labour in cocoa production, and the Better Sugar Cane Initiative focused on sustainable sugar production.

Vision 4: There is a global governance vacuum and corporate responsibility aims to fill it through what’s called co-governance.  What that means is that business, organisations such as NGOs and unions, and parts of government come together to oversee the social and environmental outcomes that arise from business doing its business.  Conventional corporate governance is about the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.  Co-governance is about the ways in which providers of a corporation’s licence to operate assure themselves that the company is adequately addressing financial and extra-financial matters material to the firm.

Fairtrade labelling is a good example of this whereby companies look to NGOs to verify the fairness of the trading system.  The Marine Stewardship Council certifies that fish come from sustainably managed fish stocks.  The Fair Labor Association monitors and reports on labour conditions in factories supplying major apparel brands.  What each example has in common is that companies and other producers throughout the supply chain collaborate with non-business and non-government organisations to tackle the social and environmental elements of their business.

Half-time verdict

Your verdict on corporate responsibility at this stage depends on where you stand – the vision you have.  If you see it as a way of putting right the wrongs of business (Vision 1) then for all the advances made, you will probably frustrated that more hasn’t been done more quickly.  You may also feel that some practices are not being addressed, and in fact seem more acceptable now than ever before – think tax avoidance (legal) being used for what was once ‘tax evasion’; think the reneging on pension promises and the replacement of defined benefit pension schemes (favourable to employees) with defined contribution ones (favourable to balance sheets); think the steady erosion of job security and how short-term contracts and outsourcing have become the norm.

If you see corporate responsibility as part of the liberation through private enterprise lens (Vision 2), then you are likely to be excited by what is happening, and the way not only start-ups but also major companies such as Vodafone (with its M-Pesa product) and GE (ecomagination) are making money by tackling head on social and environmental issues.

If you prefer to think of corporate responsibility in terms of a new social contract replacing the old paradigm of countervailing forces (Vision 3), then there are ample examples of partnerships to turn to, although you might feel uncertain about their real potential.  Partnerships seem to work quite well the nearer the organisations are to the problem at hand – e.g. Anglo American’s approach to managing the local impact of mines.  But the big, much vaunted partnerships designed to tackle problems of a global scale have trouble demonstrating their effectiveness, unless what we mean by impact is press coverage and the number of meetings.  Perhaps it is not the specific partnership’s fault, but rather whether the partnership model is fit for purpose given the sheer size of the problems such as climate change.

And impact – the evidence or lack of it – is at the heart of corporate responsibility as co-governance (Vision 4).  The web is littered with case studies of how companies in partnership with NGOs are putting accountability and transparency into global business operations.  But I know from just finishing a chapter on corporate responsibility’s impact that you will struggle to find systematic evidence of the benefits or otherwise of what is often hailed as a new governance innovation.  What do I mean by systematic?  I mean evidence from multiple locations using the same methodology and conducted by people without a vested interest in the findings.

It is up to you which vision of corporate responsibility matters most to you.  For me, co-governance seems the most essential for deal with transformation and climate change, and from what I’ve seen we are coming up very short.  As I discussed in an earlier posting on the impact of Fairtrade, we seem a lot more concerned about our intentions than the outcomes.  Our knowledge of co-governance has come to resemble less evidence-based action than belief-based evidence.  It is time to reverse that situation because well meaning disaster is a disaster nonetheless.

Any day now it will be my organisation, the Smith School of Enterprise and the Environment’s, annual world forum: this year on the topic of low carbon mobility.  It should be a great event with prominent speakers and participants engaging on the economics and technologies of mobility in a low carbon economy.

But the challenge with events big and small about climate change and sustainability at present is that the news is not good.  Martin Chilcott of 2Degrees did a guest blog on this a couple of months ago, and one only has to look at the recent Hartwell Paper on climate change policy or Roger Pielke Jr’s new book Climate Fix to catch a sight of the latest storm clouds.  I have just come back from SE Asia and the Middle East where the economic conditions far outweigh any attempts to deal seriously with long term climate change strategies, most notably of all in Australia where one time champion of the globalwarming fight, prime minister Kevin Rudd, has had to shelve emissions trading and is locked in a battle about taxing the mining industry.

Perhaps because of the justified pessimism about where we stand in relation to meeting the transformational challenges associated with climate change, the alternatives tend to fall into the category of unbounded positivity.  When I hear some of the optimism about what can be achieved by simply replacing old energy with alternative energy, or by trumping manmade emissions with the ace of geoengineering, I feel like I’m at a meeting of positivity life coaches – you know, the kind that your company brings in to cheer up the workforce when it lays half of them off, or inhabit the halls of university positive psychology departments picking up the latest research findings on positive individuals and organisations.

Okay, I have a bone to pick with these people because, like Barbara Ehrenreich in her book Smile or Die, I believe that the big challenges of the age cannot be solved by wishing away their underlying causes – and the causes are not  a shortage of positivity or a failure to believe that all things are possible.  Mary Eddy Baker, founder of that early school of positivity, Christian Science, believed that God had gifted the world with abundance, but part of the problem today is that combating climate change seems to put us in a kickboxing cage with the notions of abundance, infinite supply, and that as humans we can have all of things we desire.

But I can perfectly understand if people say they find the challenge is overhelming, and no matter how strong the reasons for scepticism about the current state of transformation, there need to be actions we can take.  So let me take a leaf out of positivism’s innumerable books, and offer a short list of the types of contribution we can make to creating a culture of change.  But before I begin, a word of caution.  Do not try and count or measure what any of these things does by itself or in combination with others.  Right now we don’t know what’s enough: we only know that based on the size of the challenge, what we are doing is too little.  But what we do have is the experience to know what’s right and what’s wrong – or at least have a reasonable guess.  And based on that experience there are actions we can take – some tough, some easy.  I’m not asking everyone to pick an example of all of the action types listed below, but do as much as you can from as many as possible, and hopefully that will give you enough of a sense of positivism that you will feel sufficiently engaged to ward off debilitating pessimism, and sufficiently aware to ward off delusional optimism.

Economist and business expert John Kay has a new book out called Obliquity.  The main message is that we have got too caught up in numbers and measurement, and this has left us pursuing goals whose main justification seems to be that they can be spelt out in equations.  Kay calls this ‘bogus rationalisation’ and gives as an example the UN Human Development Index, a list of countries ranked by their human development scores: scores that have been arrived at using the equation below:

And from this we can tell Canada is more developed than Afghanistan, although the relative positions of Afghanistan and Monte Carlo aren’t known as Monte Carlo doesn’t provide the right kind of data.

According to Kay even the World Economic Forum is waking up to the idea that measurement madness is hampering our efforts at transformation because it locks us in a paradigm where if you can’t measure it it doesn’t count.  Ironically, I was presenting at a WEF meeting last month, and mentioned that one of the distractions I saw in companies’ attempts to develop sustainability strategies was this fixation on measurable targets – to which the response was, ‘Well, we have to measure things.’

Things.  Anything.  It’s as if we’ll get fidgety fingers if we can’t find new ways to understand the world using that calculator function on our PDAs.  But as Einstein said, “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.”  Lots of people cite that quote, and then leave it hanging in the air as if there’s nothing else we can do but carry on counting anyway.

But measurement as an indicator of an activity’s value and worth is not a harmless distraction.  It is dangerous.  It becomes an end in itself.  It becomes an end that overtakes the purpose of the enterprise.  Take for example some of the leading business-related sustainability initiatives such as the Forest Stewardship Council or the Roundtable for Sustainable Palm Oil.  These are both wide-sweeping attempts to get their respective industries to engage in responsible natural resource management, and they’ve both enjoyed a fair amount of success in what are hugely challenging sectors.  But over time their overwhelming focus has come to be on measurement – through sustainability audits, verification, certification and so on.

Yet can one really measure all the elements that contribute to sustainability in these industries?  Can one measure what a sustainable indigenous community is (even if the auditor had a couple of years rather than a day or so)?  Can one measure the degree to which workers, growers, communities and all of the other local stakeholders feel about the way the resource is managed?  Is the auditor being asked to measure that notoriously difficult quality – happiness?

My feeling is (and since the 1990s I’ve been involved in a number of these types of certification/auditing/labeling initiatives) that they have become the victim of Kay’s bogus rationalisation.  It is true that difficult/impossible to measure elements still get included.  But that’s the problem.  Because they can’t be measured properly, these elements get discounted during the very process that seems to be recognising them.  Meanwhile, the measurement process moves on, giving an elevated status to elements because they can be counted and included in equations, and not because they necessarily matter.

It will be a huge task to put in place auditing and verification processes for all of the different aspects of sustainability that apply in a decarbonised economy.  It’s one reason why the accountancy firms salivate at the thought of battling climate change.  But we could end up wasting huge amounts of useless energy coming up with worthless equations that satisfy our need to count but contribute nothing to either our understanding or our management of sustainability issues.

The British national elections have been top of the local news these past few weeks.  I waited and waited, but there was precious little said about climate change.  It was there in the party manifestos for the largest parties, and of course the Greens who won their first seat in the national Parliament.  But it barely registered in the much publicised leadership debates, and when pollsters called to ask what I was concerned about, they didn’t seem to have a check box for either of my two top issues (climate change adaptation and higher education).

Now the election over, and the parties are negotiating over who will align themselves with whom there seem to be a few more politicians raising the climate change issues again.  The Conservatives say that one of their areas of common ground with the Liberals is the importance of tackling climate change.

Not a huge change of direction it has to be said. Nothing like the constant reassurances given to the mah-kets that dribble from politicians mouths like slobber from a bloodhound’s jowels.  Nothing like the attention paid to economic recovery. Or education reform. Or parliamentary reform. Or … You get the picture.

So why the absence of climate change during the election, and how much traction will it gain now?  I’m going to be mulling that over as the electoin fever settles down.  Watch this space.

Did you ever see or read I Claudius - written by Robert Graves and adapted for TV by Jack Pulman (whose work deserves a lot more than this miserly entry in Wikipedia)?  Claudius the smart idiot who became emperor of Rome looked on during his quiet ascent to power and frequently remarked that if he waited rather than intervened the poison would rise to the top of the cess pool that the empire had become.

Feeling glum and probably not the best company at a party recently, I met someone I really should have avoided.  He was a seasoned climate change denier well prepared with the gamut of arguments from medieval warming period and what about the cold winter we’ve had, to nanny state and the fundamental right to consume.  This on the back of a week when I figured out that if you built an eco-home in Oxfordshire today, not only would it cost you more than the most ungreen house you could plan (no insulation, ash block, high energy boiler, PVA glazing etc), the selling price would actually be less because green technologies are still thought to be risky. Oh, and as there’s only one firm that can build such a building in the county, be prepared to wait and pay a premium when the work is done.

I was not in a happy place.

But the more my party buddy kept rabbiting on (and to be fair he had a hidden supply of good quality tequila that he was happy to share), the more I started to think that given the half baked efforts to tackle climate change, maybe there would be mileage in doing as much damage as possible.  Buy a jet ski, plant a Toyota Sequoia and leave it running in the front garden, triple dry the laundry in the tumble dryer, and only shower in the bathroom farthest away from the power shower pump.  And that’s just a start.  First class airfares as a matter of principle. Or better still buy airplane tickets and don’t use them. Load as many empty containers onto long haul ships from China.  And don’t forget to light up the patio heaters.

Why?

Because if you get drunk enough it’s hard to see what good doing good is doing.  How many times did climate change more than a cursory mention in the UK election campaign? A boiler replacement programme is not going to deliver the goods.

So do bad.  Churn up the cess pool so the poison starts to rise.  Do we need a crisis before we tackle climate change?  If so then let’s start the crisis.  Don’t spend time organising communities to put in renewable energy plants or recycle their rubbish.  Organise them to trash the environment. Do some real damage and provke a response.  Build the dirty homes.  Buy the dirty cars.  Let jet skis rule our canals.

Just a thought.

The recent volcano in Iceland that brought European air travel to a halt, prompted a few people to think about this as a dry run for a world with fewer planes. I am part of a multi-company project thinking about the low carbon world, and here are some comments posted on that project’s message board. It seems working lives were not greatly affected by plane free skies – a fact that prompted some people to conclude that if there’s an air travel crunch, we’d do better to keep tourists flying rather than business folk. Video conferencing has evolved to level of remarkable sophistication, and those that posted comments were not so concerned about the loss of physical human interaction as they were pondering about what sorts of job do and don’t require travel.

Here are the comments … (Names removed for privacy reasons)

Subject: Volcanic Ash – is this showing us what a flightless working environment would be like?
4/20/2010 13:57
Despite the travel chaos that the recent Volcanic Ash incident has caused, does anyone else think that a global incident like this will catalyse the thinking of organisations about how to operate in an environment where air travel is not an option?

If we truly believe that at some point in the future, carbon tax will make air travel the option of only the elite, then surely this is the closest we can get to experiencing what that would feel like.

In our company, people are stranded all over the world – either trying to return from holiday or business travel – and the feeling is that there is not a lot of evidence of a ‘plan B’ with people just riding it out waiting for flights to resume, as opposed to having access to technology to remain connected and mobile.

Interested to hear whether any of your companies are capturing the learnings from this very real role play?

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Subject: Re: Volcanic Ash – is this showing us what a flightless working environment would be like?
4/20/2010 14:20
Air travel will remain an option in the future. There is a lot of talking these days about pessimistic scenarios for the future (think also about films like 2012 and the day after). I suggest we are not pessimistic in this forum and rather optimistic. As W. Churchill would say: The pessimist sees difficulty in every opportunity, the optimist sees opportunity in every difficulty”. The ash cloud adds to a longer list of recent events like earthquakes, financial crisis, and the like.

These events, on top of megatrends like demographic change and global warming, directly impact the business, which in turn impacts HR. So the answer to your question is a clear YES. The way we work together will rapidly change: more virtual teams, more collaboration tools, social networks and the like. Smart companies need to #1 understand megatrends and impact of negative events #2 turn insights from #1 into points of action for their organization. SAP has a dedicated team in Palo Alto to do this job, other companies too.

Just a few thoughts after lunch …

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Subject: Re: Re: Volcanic Ash – is this showing us what a flightless working environment would be like?
4/20/2010 15:38
I believe there is quite some learning from the volcanic ashes incident. Our company strongly pushed the use of Video Conferencing equipment and alternative travelling. Furthermore there people evaluate these days very well if it is really necessary to fly.

So on a short term I assume people will probably fly fewer and the use of VC equipment and the use of other virtual equipment can increase. But if flights remain cheap, we will see people going back to normality. I believe the Babyboomers and Gen X will always prefer a face-to-face meeting over a VC-Meeting (and is used to make holidays wherever and whenever they want). Maybe a next generation will think differently as they grow up being used to use virtual equipment and not to meet face-to-face, but in FB or other virtual communities.

But we could combine the learnings from this incident with the predictions and thoughts from the low carbon thread and thinking about alternative traveling. We recently did a study within our company how to optimize travel costs. Estimations expect a reduction of 20% of our current carbon footprint.

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Subject: Re: Volcanic Ash – is this showing us what a flightless working environment would be like?
4/20/2010 15:39
Air travel will remain an option of the future but the direction will be increasingly tourism. The necessity to travel from site to site because of business will diminish as we become better at creating virtual teams and even virtual companies and organisations.

The recent events will only serve to advance the research into collaboration tools within organisations as part of their BCP programmes (Business Continuity Programmes). Most large organisations are investing in better technology for phone and video conferencing with everything from web-cam to tele-presence (virtual board rooms) type scenarios, and shared workspace and document management systems.

The drivers for this are differentiated between cost saving, Corporate Social Responsibility (Carbon footprint reduction), efficiency in working on a global platform, corporate risk reduction and a better work life balance.

The longer this volcanic cloud impact goes on the more aggressive the change will become

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Here is Matin Chilcott, climate change entrepeneur and CEO of 2Degrees, wrote on the Smith School blog about the business and climate change conference held in Oxford last week.

Nowadays, I can sometimes feel overwhelmed by the enormity of the task we face to address climate change. But it takes being in the company of real experts to actually crush all hope in me.
That nearly happened on the occasion of attending The Smith School of Enterprise and Environment’s half day conference on Business and Climate Change. The tightening in my chest was brought on by the excellent speakers and their knowledgeable peer audience, whose collective voice was so unambiguous and so pessimistic.

This particular half day conference was delivered in partnership with the Economic and Social Research Council (ESRC), Middlesex University, and the University of East Anglia.  The conference discussed the question: ’What business is doing about climate change?’ Speakers at the conference included Will Day (Chair, Sustainable Development Commission); Wanda Kim (Managing Director, Head of Environmental Advisory Group, UBS); Jonathan Pinkse (Assistant Professor at University of Amsterdam Business School); Dr Mick Blowfield (Senior Research Fellow, Smith School); Leo Johnson (Partner of PwC’s Sustainability and Climate Change team) and Dr Katherine Begg (University of Edinburgh).

Their slides contained serried ranks of figures outlining how far we have to go, and how quickly we are slipping behind. They took us from analysis of policy and regulation, to the need for collaboration and the challenges for technology transfer into the developing world. And wrapped around these figures from the speakers were questions from the audience and anecdotes from both about the failures and set-backs that have beset the global efforts since the disappointment of Copenhagen, and the sceptic onslaught in the press around Climate Gate, and Glacier Gate.
To be fair to businesses (the subject of the conference) it wasn’t any sense of corporate inertia that brought on the gloom, but the sense that politicians, bureaucrats and civic society itself was looking incapable of setting the right regulatory framework, with a decent carbon price, in which business could get on and do its thing. At the nadir, was Leo Johnson’s otherwise warm, witty and interactive analysis of the options facing humanity. When asked to vote on various options as “most likely to come about”, not one of the hundred or so in the room put their hands up for Scenario 2, that predicted “controlled reduction in emissions, stabilising average global warming at no more than 2degrees centigrade”. Such was the pessimism, that the normally ebullient Mr Johnson was almost reduced to tears.

None of this should be taken as criticism of the speakers whose analysis and argument was of the highest academic and professional quality. It is just a simple observation that each of them were in effect reporting that the task looks unfeasibly huge, we are heading in the wrong direction still and the main intergovernmental mechanisms being deployed to address climate change aren’t working nearly well enough. No dissenting voices. No wonder optimism drained away.

It wasn’t until the Smith School’s own, Dr Mick Blowfield, took to the Power Point that I start to feel the warm embers of hope glow again. Dr Blowfield has been working with a small number of high impact industries, such as palm olive production, to understand how easy or otherwise it is for them to transform to being low impact. Part of this work involved applying 5 drivers of change from a model of transformation. To explain the model he showed comparisons from the past including how the slave trade was overturned despite the fact that almost none of the necessary factors were in the right place to lead to transformation. What he was demonstrating was that even when nearly all the drivers are in the wrong corner of his two by two matrix it is possible to migrate them rapidly to the right corner and make things happen.

And then it struck me. We have just gone through a major economic and societal revolution of almost equal magnitude to that which we must achieve to address climate change. We should be grateful that we never stared up at the cliff face daunted by the challenge of creating global standards, developing new technologies, disrupting incumbents and investing trillions of dollars in a couple of decades. And that the likes of Tim Berners-Lee only ever saw it as an opportunity not really as a risk. Otherwise, I might not be posting this blog up on the internet for you to read today.

Martin Chilcott – founder and CEO of 2degrees, the world’s leading community of practice and peer-to-peer service for sustainable business

I have been tied up with organising a conference in Oxford on business’ role as an agent in tackling climate change.  Here is the blurb and you can register online.  I’ll post about the conference once it’s over.

What is business doing about climate change?