The Takeaway: To inaugurate MurnPost’s “Voices of Baby Boomers” section, Rosalie Hudnut Wright writes about the “disconnect” in our Presidential primary campaign between women’s well-being and social and economic sustainability. Recent rhetoric on birth control provides a cynical example of our impoverished politics, and reinforces power imbalances affecting the sexual and reproductive lives of women—which can lead to deepened inequality and even violence.

The other day I became aware of dangerous disconnects that seem to characterize the state of our contemporary politics these days, a reminder of how untrustworthy are those claiming to serve the public interest at a time when economic and environmental problems dwarf all others. I was watching Foster Friess, a major financial supporter of Republican Presidential hopeful Rick Santorum, say during an interview on MSNBC that in the good old days, a gal’s best and only necessary form of contraception was an aspirin held tightly between her legs.

The interviewer, Andrea Mitchell, experienced such a profound disconnect that she had to change the subject. Mr. Friess’s disconnect from women’s reality was painfully obvious—as was the conversation from what really matters these days.

The next day on CBS Morning News a furious Santorum slammed co-host Charlie Rose and the media for asking him for his thoughts on the matter. Santorum said that Freiss’s remarks were a “bad off-color joke” and that he, Rose, was practicing “gotcha” journalism for bringing it up because it had nothing to do with him or his campaign—another smiling disconnect. I thought, That’s like saying I take this man’s money, but I have no responsibility for his speech or actions.  I want to be President, but I will take no responsibility for the blunders of my administration.

Friess later apologized for the “joke,” stating that “many didn’t recognize it as a joke but thought it was my prescription for today’s birth control practices.”

Sitting in my tiny living room above Main Street, I, too, intended to disconnect, remaining calm and detached from these comments, but instead I felt numb and then nauseous.

I wanted to believe that my consideration of whom to support for President in 2012 was above so-called “social” or “wedge issue” politics. But I failed. I thought, Maybe the fundamentalists are right after all. It’s ALL  about social issue politics.

Before coming to my senses, the last thought that passed through my mind was a violent one involving a gun.

Power Politics, Social Inequality, and Violence

The image of a rifle was connected to a memory: the Eve Ensler and University of Michigan student performance of The Vagina Monologues at Ann Arbor’s Power Center for the Performing Arts a few years ago. I silently sobbed in the dark – and couldn’t seem to stop – at the words describing one woman’s story: “Vagina songs, vagina home songs. Not since the soldiers put a long, thick rifle inside me. So cold, the steel rod canceling my heart. Don’t know whether they’re gonna fire it or shove it through my spinning brain.”

Sitting years later, at age 65 in front of my computer and watching the smiling faces that accompanied the Foster Friess / Rick Santorum comments, I realize I am long past the need for contraception. I thought, Why didn’t she just keep her thighs together? I was crying again, outraged at the presumption of these men.

I know. I know.

Perhaps it’s a long way from a man telling me to keep my knees together to thwart his advances, to some guy raping a young woman with a rifle – but maybe not.

Violence against the Other begins with the certainty that you have the right and the power and the means, and the Other doesn’t. It’s an abdication of personal responsibility. It’s a dangerous disconnect from reality.

Who is this Foster Friess to dare to tell a woman how to defend her body against unwanted pregnancy? (I would have nominated him for sainthood if he had suggested that the best contraceptive was a man keeping his pants up and zipped).

And who was that soldier who destroyed that young woman’s vagina just because he could?

Both men started with the same thought: I have the right to do what I want to a woman. I am not responsible for the consequences to her.

The Politics of Disconnect and Low Expectations

Santorum likes to point out, with great gusto, his political record on contraceptives when, years ago, he voted for Title X, the Family Planning program that supports groups like Planned Parenthood. Nowadays he expresses his “personal” view that contraception “harms women”—that it promotes promiscuity and breaks down the nation’s moral fiber.

I’m quite sure I don’t want a President whose personal views on something as important to me as women’s reproductive health are in direct conflict with how he chooses to use his public influence in government. Santorum suggests his support for Title X was the “public” Santorum six years ago, and that this is the “personal” Santorum today. He has no problem with that.

Disconnect.

Moreover, Santorum says that pregnancy resulting from rape is no excuse for next-day contraception or abortion. (Lucky for that young woman in The Vagina Monologues that it was just a rifle. disappointing for those folks who might prefer a penis, so that at least a baby could have been brought into this world).

There I go again.

I have nothing against babies. But I am for women, and their choice to be mothers when they are ready to be mothers, or not to be mothers, ever.

I will not go into the obvious sound economic justifications for women exercising their right under law to full reproductive health services. Every child, a wanted child is a pillar of a healthy society—spiritually, psychologically, socially, and economically.

I just want to acknowledge the danger of the disconnect from reality that men AND women experience when they deny women the right and necessity of controlling their own sexual and reproductive lives. It’s an insidious form of power politics, bordering on violence, that has no place in modern life, and distracts us from the real work we need to do to build a better, more sustainable, prosperous, and just world.

Rosalie Hudnut Wright grew up in Lansing, Michigan and now lives in Michigan. As a teen, Rosie was a honors student, a student leader, and active in the Greater Lansing Youth Council. A longtime tennis enthusiast and now retired baby boomer, she taught high school students for 16 years, secretarial skills to women for 4 years, and continues to enjoy customer service work. She spent a couple of years in Latin America and speaks Spanish well. Rosie’s the proud mother of two good human beings. She was invited to offer her thoughts from time to time on social sustainability, particularly in regard to social justice issues. Rosie has a Masters in educational counseling from the University of Michigan and an undergraduate degree in Spanish from Hope College in Holland, Michigan.

The TakeAway:

It’s Valentine’s Day, and love is in the air—love lost, love gained, love just around the corner. A good time to open our hearts, not just to people who strike our fancy, but to larger questions of purpose and meaning, and the promise of a better life. So here’s a bouquet—not of roses, but another kind of bloom, the kind that remains fragrant as long as it’s watered and nourished.

Last month I said it was time to “get off the couch” and get moving. This post continues that theme by taking you outside and identifying twelve currents in 2012 that feed the blooms of sustainable prosperity and justice—and areas that need special care. No doubt there are many more, but these are the ones I keep thinking about. Over the coming weeks, I’ll go into each more in-depth. But first, a word about context.

The Purpose of Economic Arrangements

Before smelling the posies, let’s zoom out and look at the bigger garden of earthly delights, affecting our politics and polity. Within the U.S. and abroad, questions about the purpose of economic arrangements have risen, not just among sustainability “insiders” but in our political rhetoric, and not just in our Presidential primary campaign, but due to the efforts of Occupy Wall Street and other high-profile developments, such as a series of New York Times articles on the exploitation of workers in Apple’s supply chain. This is a good thing, if we can get beyond sloganeering and bromides. These questions inexorably are bound up in beliefs, values, and commitments regarding the purpose and meaning of capitalism—along with its enabling structures, rules, implementation, and enforcement policies. They’re profound questions that don’t get asked enough without resorting to polemics and posturing.

Within the sprawling business and sustainability movement, as improvements on reporting, accountability, and stakeholder engagement continue to occur, we need to step back every once in awhile and ask ourselves “Why are we doing this? To what aim are our efforts directed?” The maturation of CSR, corporate governance, and sustainability as concepts enable the maturation of them as part of a broader movement. This involves scale and scope—across industries, geographical boundaries, political and social ideologies – and how economies can be revitalized to balance individual prosperity with the common good. It’s not enough to assure socially responsible corporate behavior if the context in which that behavior exists is unjust, or if violations of agreed-to commitments continue to occur, or if there are no means to determine whether and if progress toward sustainability and justice has occurred.

Applied to business entities, this involves the purpose of the firm, and how, in a world wherein hierarchies have become flattened, companies are expected to behave when the actions of a few affect so many. Applied to investors, it involves revisiting the purpose of investment, and how “fiduciary obligation” and “return on investment” are to be defined and measured. Applied to both the corporations and investors, it involves drawing from the civic moral principles associated with wealth-generation and management, articulated over centuries by the world’s great religious and philosophical traditions.

And it means tapping into power we didn’t know we had, not only to hold existing systems accountable, but to create our own economic systems that embed values, both financial and non-financial, in the most generous meaning of that term.

That’s the context in which these blooms and currents exist, where they’ll either thrive, or shrivel. It’s up to us as to which fate they await.

Here’s a rundown, with more to come over the next several weeks. There’s more on the first because I’ve run out of room, and still have to celebrate Valentine’s Day before it’s too late. But you get the idea—these currents are going to be around for awhile, and the petals will continue to unfold.

Here’s to endless love!

Twelve for ’12

1. CSR Comes of Age │ Corporate social responsibility has come of age, nearing a “tipping point” (that’s the basis of a report issued January 24^th by the MITSloan Management Review in conjunction with the Boston Consulting Group) as it gets more firmly anchored within corporate headquarters thinking.

The explosion in the number of companies issuing annual sustainability reports; the maturation of the Global Reporting Initiative (GRI) reporting framework (the fourth generation of GRI’s Sustainability Reporting Guidelines, or G4, currently are under development, with expected launch late next year); the movement to “Integrated Reporting”; changing definitions of “materiality” and the emergence of new groups such as the Sustainability Accounting Standards Board (SASB), which will further anchor materiality of environmental, social, and governance (ESG) risk into disclosure and risk-management mindsets; changes in the regulatory and reporting environment, including the on-demand, digital means enabled by XBRL; rapid growth in the number of professionals and practitioners in the field; and the emergence of different corporate structures, most prominent among them B-Corporations (“B” is for “benefit”), and producer and consumer cooperatives (the U.N. has declared 2012 as the International Year of Cooperatives) exemplify this. Indeed, since its launch eight years ago, Boston-based Corporation 2020 has worked to create a vision and principles for corporate design that moves social purpose from the periphery to the heart of corporate activity.

Yet with all these positive developments, important challenges remain affecting both the inside of the firm, all the way to the board, and the outside of the firm, including stakeholders and a wider socio-political environment.

Within the firm, how can the values and commitments of CSR and sustainability engage other employees, particularly C-Suite executives and managers? How can wider professional knowledge and competence be cultivated throughout the organization to advance ESG and sustainability objectives? How can the board be engaged, where interest in and knowledge of CSR remains limited?

On the outside, what about those supply chains, and the wider desire of communities to eradicate poverty and improve their standard of living? What’s the role of responsible business in developing, divided, and post-conflict societies, taking into consideration human rights and climate change, particularly in areas such as the Middle East that continue to be hotbeds of conflict and where the status of women still lags? How can CSR / sustainability professionals avoid the dangers of segmentation and parochialism, once they’ve achieved some measure of success within their spheres of influence?

Perhaps most important, how can this work connect to a broader population of regular people, who can help inform and support it—and vice-versa? Indeed, this speaks directly to how capitalism can be directed to the common good, to sustainable development, an idea under discussion in a number of places—but in need of broader embrace within the United States.

Stay tuned for more updates on these and related issues as we celebrate the maturation of a movement and continue to push for improvements.

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Upcoming:

2. Corporate Governance for Good: “GovBites”

3. Stewardship: Reviving the Fiduciary Obligation for Corporate, Investor Boards

4. The New Internationalism / Globalization

5. “People First” and “Local First” Movements – and Urbanism’s Comeback

6. From Good Intentions to Impact: Social Sustainability and the Common Good

7. The Evolution of Stakeholder Engagement

8. Better Tools: Data Management and Analytics, Information Diets, and a New Vocabulary / Lexicon

9. Education, Education, Education

10. Serious Action on Climate

11. Disaster Readiness and Resilience

12. The Power of One

Guest Commentary by Joe McCarty, Occasional Contributor, The Murninghan Post

The TakeAway: To inaugurate MurnPost’s “Voices of Young People” section, Joe McCarty writes about the failure of undergraduate business schools to equip students with the knowledge and competence necessary for building sustainable prosperity and justice. Students can organize to help fill gaps in the curriculum, and persuade colleges and universities to do a better job.

We are currently witnessing a turning point in the way individuals, corporations, and governments view their impacts on the world. In 2011, the Occupy Wall Street (OWS) movement exposed the frustration and anger of its participants and supporters over the way many businesses are run. OWS was and continues to be a contributor to the growing collective perception that corporations need to do better – both socially and environmentally. Because corporations are run by people, it is the people affiliated with them who must change their views and behavior about the purpose and function of corporations in society. This includes board members, managers and other employees, suppliers—even customers and shareholders, and others in the stakeholder ecosystem.

But one demographic that’s overlooked in the rapidly-growing, overlapping fields of corporate social responsibility, sustainability, and responsible investing: the people who are currently being taught in our business schools about how corporations are and should be governed and run. On this front, there’s a lot of work to do.

We need to instill in these malleable and ambitious minds an appreciation for the urgency of social and environmental pressures and opportunities affecting capital markets and corporate enterprise. Only then can we be confident that a new generation of business leaders will chart our corporations (and capital) on a course characterized by civic responsibility, sustainability, and justice.

History has shown that corporations cannot sustain themselves on foundations characterized by shady business practices and questionable ethics. Product boycotts in response to sweat shop exposures, bankruptcy due to financial trickery, and public outrage over unfairness and greed all have an impact on companies’ financial bottom lines and their reputation. They represent a form of social risk that has real impact.

The same risk management problems will arise if companies continue to disregard their environmental impacts. In addition to the already harmful and visible effects of pollution and waste, the evidence continues to mount that emissions of greenhouse gases, particularly carbon dioxide and methane, pose very real threats to everything we hold dear. Many managers continue to hold the dangerous notion that concern for social and environmental impact is an impediment to financial success.

I believe that in the future, successful corporations will be the ones that have significantly positive social and environmental impacts while also maintaining financial profitability. The sooner business leaders understand this, the sooner corporations can begin to undo their damage and become responsible members of their local and global communities.

Undergraduate Business Schools Lacking

Business schools are in a great position to give momentum to this movement. But to do so, they need to have curricula instilled with the right ideas, and instructors and staff eager to disseminate them. Managers needs to possess knowledge about the impacts of companies’ practices on their environments, both direct and indirect, if they intend to improve things. Schools should thus include in their core and elective curricula courses teaching about the impacts corporations are having today, the steps that can be taken to improve these impacts, and the feasibility and likely results of these efforts. Such courses should give students both an appreciation for the necessity of significant change in business models, as well as a toolkit of ideas and practices to help achieve it.

Unfortunately, today’s undergraduate business school curricula tend not to include these important lessons. Core courses are meant to cover the basics of business administration, such as finance, accounting, marketing, operations, human resources, and information technology. All of these are critical to rounded business knowledge, but so is an understanding of corporate social and environmental responsibility.

One prominent example: the University of Michigan’s Stephen M. Ross School of Business. The Ross School offers what is consistently ranked by U.S. News and World Report, Businessweek, and Forbes as one of the top five to ten undergraduate business programs in the country. Yet the Ross School is substantially lacking in courses that delve into the important topics of social responsibility, sustainability, and impact. Out of approximately 80 courses (excluding independent study projects) currently offered to BBAs (Bachelor of Business Administration), only four deal with corporations’ social impacts; none of them address environmental impacts.

Unfortunately, this seems to be the case for most of the country’s top business schools, the exceptions being their graduate programs. This hole in business school curricula needs to be filled.

A Modest Proposal: Collective Action and Curricular Reform

Current students of undergraduate business programs can pool their collective interests in corporate responsibility by organizing formal and informal groups. These student groups, possibly taking the form of official student clubs, can network with each other and leverage their differing knowledge about available options. When college courses don’t offer what students are looking for, they can use each other to learn about courses offered elsewhere in the university (if applicable), clubs with related goals, and volunteer, internship, and full-time positions available in their field of interest.

In the long run, students should be able to influence their schools’ programs so that they include courses more closely aligned with what students want and are willing to pay for. This influence can begin with faculty-student meetings in which both student interests and business school intentions are made clear and open to discussion.

The goal of both students and administrators is to have a curriculum that prepare the students for their professional careers. The question they face now is, which types of courses and teachers are best equipped to do so.

Education for the Common Good

Throughout this gradual transformation of social conscientiousness and environmental understanding, corporations (and capital markets) will play a key role. The people who run them need to have both an appreciation of the direct and indirect effects of their practices on the world, as well as knowledge and competence to improve it. Business schools have a responsibility to sense, anticipate, and prepare students for the evolving trends of corporate responsibility, sustainability, and stewardship in business administration. This evolution is more salient now than ever. That’s why students and their colleges must work together to develop programs and resources that equip tomorrow’s leaders for meeting the social responsibility and justice challenges that lie ahead.

Joe McCarty is a junior in the Stephen M. Ross School of Business. He has an interest in sustainable development and urban planning, with emphasis on transportation. He will begin an intern position in the Marketing, Sales, and Service division of Ford Motor Company in May 2012.

The TakeAway:

Today we celebrate Martin Luther King, Jr.’s tireless efforts for simple justice—not just racial, but economic. So it’s a good occasion to celebrate continuing efforts to bring about economic justice, and contemplate what we, the people, can do to advance it. That’s why last week’s powerful speech by AFL-CIO chief Rich Trumka continues to resonate, especially when he said: “The truth is that in many places – and not just places where coal is mined – there is fear that the ‘green economy’ will turn into another version of the radical inequality that now haunts our society—another economy that works for the 1% and not for the 99%.”

Amidst the political gridlock and troubling gaps between the rich and everyone else, Trumka’s remarks snapped everyone to attention and hammered home a message that helps loosen the lock and build a bridge. He appeared before a gathering at the United Nations of roughly 500 global investors and financial players concerned about climate risk. (The speech, which was streamed live, can be viewed online[1]). His remarks drew a standing ovation from the assembly, who together control $20 trillion and hail from four continents. They were in New York for the 5^th Investor Summit on Climate Risk and Energy Solutions, an annual affair co-hosted by Ceres, United Nations Foundation, and the United Nations Office for Partnerships (UNOP).

Trumka’s speech occurred near the end of a day packed with practical information on new ideas and financial products for scaling climate and energy solutions, how to make the clean energy transition in both the developed world and emerging economies, and how the financial community can influence social policy. The Investor Summit was capped by the release of the 2012 Investor Action Plan on Climate Change Risks and Opportunities, a 5-point manifesto for managing and integrating climate considerations into portfolio decision making—including the selection of investment managers, greater investment in low-carbon / energy efficiency solutions, and integration of water risk and opportunities.

But it was Trumka’s talk that dazzled, because he called upon investors, workers, environmentalists, and policy makers to remember the 99 percent and the need for shared respect in forging a new national commitment to economic recovery and sustainability. His words underscored the critical importance for those of us working in the corporate governance, social responsibility, and sustainability space to do a better job engaging and enlisting the general public in building a better world. And they served up examples of innovative partnerships on the energy efficiency front, particularly the Obama administration’s Better Buildings Initiative and “We Can’t Wait” jobs campaign that’s been joined by the Clinton Global Initiative and involves a mix of public, private, and nonprofit sector organizations.[2] More on that later. First, let’s go back to the speech.

A Call to Conscience and Do “Just One Thing”

Trumka spoke about tackling the threat of climate change as a means of putting America back to work, a mission that not only would build a healthier world but a healthier world economy. He then explained why we’re not acting fast enough, and what needs to be done to meet “the greatest national challenge” since World War II. His comments were both personal and prophetic, drawing on principles of fairness and the common good to make a case for dialogue and respectful collaboration, which can grow into collective action.

He reminded me, a non-Catholic, about Catholic social teaching on economic justice, the preferential option for the poor, and the need for everyone to get involved in building a better world. Not only was he introducing moral considerations into economic decision making. He also was exhorting his well-heeled audience to reach out to plain people, to have empathy and work go from there in a spirit of collaboration and shared purpose. That’s what Dr. King stood for, too, because the power of many can move mountains.

But I also think Trumka’s call to action can be embraced not only by those at the U.N. to whom he was directing it. It also can prompt average people to do just one thing – maybe even two or three things – to help reverse the view that addressing climate change is a distraction from solving the jobs problem. As such it’s a perfect illustration of what this “Getting Off the Couch” series seeks to accomplish: encouraging everyone to do just one thing, at least one thing, something within reach that makes sense to them, to reassert power in individual ways that, when you put them all together, can revitalize our representative system of self-governance (both public and private) while advancing accountability, sustainable prosperity and justice.

Climate Deniers and the Politics of Fear

Trumka posed and answered two conjoined questions: Why should we focus on climate change when (a) so many believe it’s a “far off problem” and (b) we’ve got so many other pressing economic problems? I hear the same thing from some of my friends who continue to believe bizarre weather patterns are due to El Niño or some other natural cause, or maintain that environmentalists are tree-hugging elitists who don’t know about the day-to-day struggles of working – or unemployed – people.

His answer to the first: “I can tell you that I have hunted the same woods in Western Pennsylvania my entire life and climate change is happening now—I see it in the summer droughts that kill the trees, the warm winter nights when flowers bloom in January, the snows that fall less frequently and melt more quickly.”

His answer to the second: “Addressing climate risk is not a distraction from solving our economic problems. My friends, addressing climate risk means retooling our world—it means that every factory and  power plant, every home and office, every rail line and highway, every vehicle, locomotive and plane, every school and hospital, must be modernized, upgraded, renovated or replaced with something cleaner, more efficient, less wasteful.”

Then Trumka zeroed in on one of the biggest hurdles blocking the march to justice: the fear that one’s way of life will disappear forever, stolen by strangers; the defensiveness and mistrust, the sense that “the fix is in”, that prevents any constructive collective action. I saw this dynamic during my involvement with the Boston Public Schools desegregation effort: the fear and defensiveness in white neighborhoods that powers greater than they were out to destroy them. While there’s never a doubt in my mind that the cause of racial justice is grand and good, I learned then – and later, in the 1980s, during my work in the South Africa divestment / divestiture movement – that you need to empathize with your opponent and disarm fear before you have a prayer of getting beyond it.

“Half of the electrical power in the United States comes from coal. This has been true for years,” Trumka told the U.N. gathering. “People I grew up with dig the coal that lights the lights and heats the buildings all across this country today.

The world we know exists because coal miners go down to the mines. But the carbon emissions from that coal, and from oil and natural gas, and agriculture, and so much other human activity, causes global warming, and we have to act to cut those emissions, and act now.

Now, some people’s response is to demand that we end all coal production now—they say ‘End Coal’…It’s important to think about how that slogan is heard in places like my hometown of Nemacolin, Pennsylvania.

Nemacolin lives on coal—the coal mine my grandfather and my father went down to every day of their working lives, the power plant the mine feeds, the rail lines that carry coal to other plants.

But when these folks hear ‘End Coal’, it sounds like a threat to destroy the value of our homes, to shut our schools and churches, to drive us away from the place our parents and grandparents are buried, to take away the work that for more than a hundred years has made us who we are.

The truth is that in many places – and not just places where coal is mined – there is fear that the ‘green economy’ will turn into another version of the radical inequality that now haunts our society—another economy that works for the 1% and not for the 99%.” [Emphasis added]

The way out of this, he said, is for everyone to get involved, to work together to make a difference. “If we are going to build an innovative, sustainable, climate friendly American economy, if we are going to rebuild, restore, modernize or replace everything we inherited in just 30 years, we are going to need the energies, talents, passion and hard work of more than some regions or some Americans,” Trumka  said. “The job we have to do is too big. We need the skill and effort of all of us.

Our enemy in this great challenge, as always, is fear.  Sometimes it seems like fear, and the power of money, has paralyzed our government.  But the antidote to fear is trust.

So how can all Americans sit down together and develop trust?  I think it begins with a commitment—a challenging and difficult commitment—that we are going to measure our approach not by how well it fits the needs of the well-positioned.  We must ask ourselves, “How well does this pathway serve the least, the hardest to reach, the most likely to be left behind?”  Places like West Virginia and the Ohio Valley must come first, not last.”

His remarks took aim at those who argue for progressive policies without considering the immediate impact on those whose livelihoods are enmeshed in the status quo. “Too often, we have failed to consider who bears the cost of change and ensure that change is managed fairly and respectfully,” Trumka said. “And when we do that, no matter how important the reasons might seem, we sacrifice the chance to build the power to move forward.

The only way for our democracy to act is for those who care about climate change to engage with the people whose livelihoods are tied up with carbon emissions.  All of us—investors, companies, workers, environmental activists, governments—need to be part of this dialogue. Any other approach to addressing climate risk is not just fundamentally unfair, it simply won’t work in our democracy.”

Tangible Actions, Bipartisan Appeal

Trumka then went on to tell the Investor Summit audience that the labor movement stands ready, willing, and able to address problems of climate change because it means “putting investment capital to work creating jobs. It means building a road to a healthier world and a healthier world economy—one less dependent on volatile energy prices, one where many more of us have the things that modern energy makes possible.” In addition to public policy making, he described various initiatives in which the AFL-CIO is engaged, including its Housing Investment Trust energy efficient retrofits of multifamily housing; partnership with the Clinton Global Initiative’s (CGI) Better Buildings Challenge launched in June, affecting retrofits, transportation, and infrastructure; and the AFL-CIO involvement in the aforementioned Better Buildings Initiative (BBI) initiated by President Barack Obama last February.

Of course, these alone are not enough. We also need responsible, comprehensive public policy. “It was through just such a process of [policy] dialogue that the AFL-CIO came to endorse the House Climate Bill in 2009,” Trumka said. “But it is clear that as long as Congress is effectively controlled by climate change deniers, all of us—investors, companies, workers and the broader public—must take action ourselves. So a year ago, as the climate bill failed in Congress, as the jobs crisis deepened, and as workers’ pension funds continued to suffer from microscopic fixed income yields, the American labor movement decided we couldn’t wait—we had to act to help advance profitable, risk weighted investments that would create jobs and address climate change.”

It seems to me that you don’t have to be a union member to support these efforts. I think each of us can encourage our cities and towns, our hospitals, museums, and schools, and the local companies we rely on for various goods and services to support them, too. We have civic power and consumer power, and can use these to fight climate change and build the energy economy in ways that benefit us all—once we get over the fear factor. We needn’t rely on experts or public officials or labor leaders to do that job alone.

First announced by President Obama last February, the Better Buildings Initiative is a package of administrative actions, legislative proposals, and the Better Buildings Challenge to the private sector (the Challenge is spearheaded by former President Bill Clinton).  The Better Buildings Initiative is committed to achieving 20% more energy efficiency in commercial and industrial buildings by 2020 while accelerating public-private partnerships. In 2011 President Obama traveled the country touting the plan, which could create up to 114,000 new jobs, according to a report released last June that was based on research conducted by the Political Economy Research Institute (PERI).

Over 9 month, the Better Buildings Initiative had done so well in eliciting preliminary commitments that in December, President Obama boosted funding to $4 billion over two years. These commitments now include nearly $2 billion in financing support from nearly 60 property owners (corporations, hospitals, financial institutions, cities and states, colleges and universities) representing nearly 1.6 billion square feet. It also includes another $2 billion to retrofit all Federal buildings through the use of Energy Savings Performance Contracts, at no cost to taxpayers. (Performance-based contracts rely on long-term energy savings to pay for up-front costs; in essence, energy service companies and utilities conduct energy upgrades and guarantee savings from the improvements.)

And, even better in this polarized age, the Obama initiative is supported by the U.S. Chamber of Commerce because it generates jobs and “increases our energy security”. In fact, President Clinton and U.S. Chamber of Commerce president and CEO Thomas J. Donohue joined President Obama at the December announcement.

Justice for All: Climate Change and the Energy Economy

Trumka closed his speech by stating that the AFL-CIO is ready to lead “honest, constructive dialogue between workers and their communities and environmental advocates, between investors and companies can forge pathways to fair and politically sustainable change.” Doing this, he said, means working together with others “to shape a process for how we are going to address climate risk by putting America back to work, how we are going to build a smart grid and retool our vehicle fleet, catch up with our foreign competitors on high speed rail and wind and solar, retrofit coal plants and commercial buildings and modernize industry, how we are going to help communities prosper when coal plants and mines are closed, how we are going to create jobs for out of work construction workers—jobs that build America’s competitiveness, while we turn our nation’s economic future in a low carbon emissions direction.

And so I am closing with a proposal that all of us sit down together on the basis that we live on one planet, and that we share a common humanity that requires respect for each others’ families and communities.

In particular we need dialogue between environmentalists and workers and communities about the future of coal. About what the global labor movement calls a Just Transition to a low carbon emissions economy. And the AFL-CIO is ready to host that dialogue.

Addressing climate risk is the path to a competitive, profitable future for investors, but the path is only open if it is a path to an economy that works for the 99% who seek good jobs, economic security and healthy communities—not just in New York, but in Nemacolin, and in countries around the world, from Australia to Poland to South Africa to China, countries that face the same issues and share the same climate with you and me.

I think Dr. King would agree. The question is, do we—and what shall we do to act?

The TakeAway:

“2011 set the table.  2012 has the potential to accelerate the ‘revolution’ toward the new corporation agenda,” Allen White wrote to a group of us the day after New Year’s. “Growing wealth disparities between managers and workers, regressive taxes, privatizing gains while socializing losses, ‘too big to fail’, hyper-leveraged organizations linked to financial destabilization and dislocation—these are among the many, linked conditions that are bringing unprecedented scrutiny of the purpose and design of corporations,” he said.

White, who’s a Senior Fellow with Boston-based Tellus Institute for a Great Transition, was referring to the fact that, despite the “volatility and hardship” of 2011, it was a year that also provided hope—perhaps falling short of “urgently needed systemic change,” yet offering “glimpses of the possible.” He also drew upon remarks made at last year’s World Economic Forum by U.N. Secretary General Ban Ki-moon, which underscored the importance of “revolutionary thinking and action” to bring about sustainable development in all aspects of modern life.  White was signaling to those of us affiliated with Tellus’ Corporation 20/20 project – now in its tenth year – that 2012 bodes well for redefining the purpose of business within a larger public interest context, in which questions about purpose and meaning – affecting economic, political, and civic life – are raised and, more importantly, addressed.

I couldn’t agree more. The signs are everywhere. Just yesterday, President Obama appointed former Ohio attorney general Richard Cordray to fill the long-vacant director position at the Consumer Financial Protection Bureau (CFPB). A battleground for Congressional Republicans and opponents of financial reform, the watchdog CFPB is a centerpiece of 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act. Obama set a precedent by using his recess powers (a controversial move that likely will face a legal challenge) to install Cordray, whom he nominated last July but whose confirmation was held up by a Senate filibuster—despite the 53 votes supporting him.

Obama’s action infuriates CFPB opponents, who claim the country is being ill-served. But Cordray’s appointment activates the CFPB’s powers, which will make clear, he said in prepared remarks made today at the Brookings Institution, that there are “real consequences to breaking the law.” According to the New York Times, Cordray laid out a vigorous oversight and enforcement agenda, which is good news at a time when 77% of Americans believe that rich people and large corporations have too much power and that the economic system is unfair.

“This appointment was long overdue and is essential to helping restore the frayed sense of confidence that Americans have in many financial institutions and consumer financial products,” said Lisa Woll, CEO of the U.S. Forum for Sustainable and Responsible Investment (formerly the Social Investment Forum). “Attorney General Cordray brings strong pro-consumer credentials to this important job.  His background will help ensure that consumer financial products and services are fairer for all Americans.”

Instability and Outrage

Having this new cop on the beat is a refreshing change from a year of massive instability where no one seemed to be in charge. In fact, it was a pretty bad year for authority: as the recession continued its dampening effect (now extended to the Eurozone), authoritarian governments were toppled, and those who play by their own self-serving rules were confronted by collective outrage. The peoples’ cry “Enough!” produced regime change in places where political conflicts previously were muffled by fear and brute force. (Whether or not the new regimes are any better is another question, as we’re seeing in Iraq, Egypt, and Afghanistan; perhaps counter-revolution is part of the yin yang force found in physics and nature.) In other places – Spain, Greece, Israel, France, Britain, Russia, China, Syria – protesters sick of economic disparities and corruption called for reform.

Meanwhile, as Occupy Wall Street (OWS) protestors turned out in droves throughout the world, those who stayed home continued to wonder why cheaters and lawbreakers never get punished, despite the collateral damage. It was a year when we learned that 1 of 2 Americans are poor or low-income, that even wealthy suburbs are hit with poverty, and that many aging Americans turn to their families for financial aid.

Whatever we feel about OWS, most of us agree with their premise, according to the Pew Research Center. That’s why it’s time to get off the couch and hold this country accountable for its stated values, says famed TV and film producer and unabashed patriot Norman Lear. The Occupy movement has given us a “born again American” moment, Lear opined recently in the Los Angeles Times. “In calling attention to the country’s widening chasm between rich and poor, the Occupiers have unleashed decades of pent-up patriotic outrage against the systematic violation of our nation’s core principles by the ‘say good-bye to the middle class’ alliance of the neocons, theocons and corporate America.

To those many millions of Americans whose guts tell them the Occupy movement is on to something but aren’t the sort to camp out or protest in the street, I say find another way to let your voice be heard in the new year. Work with others who share your passion for equal opportunity and equal justice for all Americans, and find ways to channel outrage into productive action. I’m betting you’ll find, as I have over my nearly four score plus 10, that you’ll form some of the most rewarding relationships and have some of the most meaningful experiences of your life.

Don’t Forget Mother Nature

As for climate change, 2011 was the year that Mother Nature fought back, because She couldn’t take it anymore. The evidence is everywhere, dominated by our insatiable demand for energy as demand patterns shift, an appetite that scientists claim outstrips available supplies while affecting our water systems and increasing business water risk. Yet we continue to overstep boundaries that we are told repeatedly will lead to environmental catastrophe. The permafrost continues to melt, and data on climate change show that greenhouse gas (GHG) emissions are rising faster than worse-case scenarios envisioned by the International Panel on Climate Change (IPCC) in its 2007 report. Meanwhile, wild weather wreaked havoc as storms, floods, and tornadoes capsized lives and destroyed property, and unusually mild weather redefined the winter landscape.

Yet, there are glimpses of the possible: As political leaders and mainstream media generally ignored the reality and implications of climate change – and its relation to poverty – a global grassroots movement continued to grow, helping to push the passage of new laws in Australia (carbon tax) and California (cap-and-trade), and even proposing human rights standing for Mother Nature.

In Durban, South Africa, inconclusive talks on climate change (despite a last-minute deal) motivated activists to tackle corporate power and the politics of energy. Writing in the Guardian, eminent sustainability expert Simon Zadek accused progressive companies of not doing enough, that they should “use their corporate muscle” and call out offenders. “Those working on the nexus of business and sustainability need to wake up to the fact that we have to deal with the ‘bad guys’. They are not persuaded by the fine examples of sustainability leaders, and shrug off the pleadings of the great and the good.” It’s time, Zadek said, for new behavior and alliances: “Good, indeed great, businesses and their respective leaders who embrace tomorrow’s sustainable markets need to move out of their comfort zone in outing and addressing this problem. Greenpeace and other campaigners, in turn, need to establish new alliances, including business, through which they can follow up on their own diagnosis, namely that sidelining resistant incumbents is the real deal.”

Alliances have clout. On January 12^th, a group of nearly 500 institutional investors and other financial players representing trillions in combined assets will gather at the United Nations for the 5th Investor Summit on Climate Risk & Energy Solutions, sponsored by Ceres, the United Nations Foundation, and the United Nations Office for Partnerships (UNOP). Its purpose: showcase actions and discuss “promising trends to catalyze the large-scale investment needed to reduce carbon emissions and mitigate potentially catastrophic climate impacts.” According to the Investor Summit press release, “Investors are pouring more money than ever into the clean energy sector with total investment recently topping the $1 trillion mark since 2004.

The US solar industry experienced more growth in third quarter 2011 than it did in all of 2009. And leading investors are moving more decisively to price the risks and opportunities of climate change into their holdings and to develop creative financing mechanisms that encourage energy efficiency and address water and resource scarcity.

Calling Our Future

The failure of mainstream economic thinking. The breakdown in political representation. Disgust over the role of money in politics. Ruptures in global ecosystems and weather patterns. The list goes on.

Yet “glimpses of the possible” are everywhere. As we sail toward 2012’s horizon, we’ll see more enlightened citizen action, shareholder activism, employee and consumer behavior, and various campaigns to promote sustainability and social justice. “The forces driving companies to become more sustainable are getting stronger all the time,” writes veteran journalist Marc Gunther.

These efforts will be aided by the power of the worldwide web and digital media, due in part to smartphones, tablets, and various applications that enable broader real-time knowledge, reporting, participation, and influence on business decisions—and monitoring their outcomes. The social media landscape will continue to grow, with new intermediary organizations to help citizens filter information, facilitate meaning, and take action.

To help frame what 2012 has in store, the next Post will provide a brief rundown of twelve areas that I think will significantly advance the broad purpose of sustainable prosperity and justice. Some are familiar, others less so, and they’re at various stages of development, populated by different actors, yet share common elements and values. Over the coming days and weeks, I’ll elaborate on each and draw from various communities of experts in doing so. I’ll also give my take on who’s doing the most intriguing work, what lies at the cutting edge, and what are the implications for practice—both immediate and long term.

Time to get moving!

The TakeAway:

What a week this was: in the face of a double-dip recession, the Dow exhibits bipolar behavior, its wild volatility (including the worst trading days since September 2008) an apparent reaction to last Friday’s unprecedented downgrade by Standard & Poor’s of the nation’s debt rating, from “AAA” to “AA.” President Obama hit the airwaves Monday afternoon, less than a week after signing a debt-ceiling bill that many believe is a complete capitulation to right-wing Republicans because it failed to include any tax increases while calling for massive cuts—which in the long run won’t make much of a difference. Adding insult to injury, Congress abdicated its authority to a 12-member “Super Congress” that supposedly will recommend at least $1.5 trillion of additional deficit measures, further concentrating public power in the hands of a few.

Meanwhile, despite last year’s passage of omnibus financial regulatory reform, its opponents have taken to the courts while seeking to castrate the SEC by defunding its ability to make and enforce rules based on the law’s provisions. Unemployment remains at historic levels (9.1 percent), with nearly 14 million Americans out of work and more than 6 million of them jobless for more than six months.  Income / wealth inequalities – exacerbated across racial and ethnicity lines – continue to rise, with most Americans unable to cope with a $1,000 emergency. This is a picture far removed from Washington’s political gamesmanship as politicians gear up for 2012 elections. Last night’s Republican debate was the opening salvo in what promises to be a dreary, dirty campaign season.

No wonder the public is fed up. A Washington Post poll reveals that three-quarters of the American people have little or no confidence in Washington’s ability to repair the economy. The vast majority are dissatisfied by the way the way our political system is working, and believe Washington is focused on the “wrong things.” “The decline in confidence has potentially profound implications for coming elections,” reports the Post, “although the anger appears directed evenly between the two parties.”

We’re suffering from a “failure of leadership,” opines the New York Times, telling us what we already know: that our elected officials have no sense of what we need, no empathy for our plight, and no apparently ability to speak our language, define the problem and call upon us all to rise to the occasion and fix it.

You’d think that in the face of this mess that my colleagues, who’ve dedicated their lives to sustainable prosperity and social justice, would rally quickly and use their power as civic change agents as effectively as they’ve used their power as private sector change agents. You’d think that they would apply their recognition of the links between private prosperity and the public good and the overlapping interdependence of healthy ecosystems, and work to complete an incomplete picture of what’s wrong and what’s needed.

But you’d be wrong.

Instead, they’re on the political sidelines, working to advance corporate accountability, responsible investing, and stakeholder engagement. These are noble and important goods, but relatively meaningless within a political context determined to destroy them, driven by an ideology that’s taken us to the brink of economic disaster, poisoned public rhetoric (and even worse, our imagination), and dashed our dreams of liberty and justice for all.

So it’s time to get off the bench and onto the playing field, educating each other and a wider public about alternative approaches to markets that strengthen society rather than dividing it. It’s time to support candidates who recognize that “building value” has multiple meaning, involving not just economic well-being but environmental and social well-being, too.

It’s time to forge a new politics that builds us up rather than takes us down, reminding us that we are more than the sum of our pluralist parts, instead of appealing to prejudice, fear, and vulnerability.

It’s time to create a new vocabulary that’s suitable not just for Wall Street and Main Street, but for our street—a language capturing the fullest sense of “return on investment” that has both civic moral and material purpose and meaning in our lives, and those who come after us.

It’s time to hold political candidates accountable, challenging them to address the problems we tackle every day: global warming and sustainability, accountable business models, responsible ownership, good corporate governance, stakeholder engagement, human rights, clean energy—the list goes on and on.

It’s also time to support those few candidates who dare to run for office because they offer transformative leadership that embodies the purpose, passions, and pragmatic principles that animate our work.

Four Stratagems for Restoring Our Politics

Fortunately, on each of these fronts, there are a number of options available to us.

1.  With respect to education, both social media and the Internet provide endless opportunities for communicating far and wide alternative models of economic behavior that advance sustainable prosperity and justice, which we’ve only begun to tap. But beyond Facebook, we need more face-time, too. We need to go offline, reach out to our community, have a conversation about what this country needs, and what we can do about it.

Coalition building in the finest sense, we need to engage a broader, diverse public about how we can improve both our economy and the planet at the same time. We’re far too isolated from public discourse, as evidenced by the dominance of extremist rhetoric, demagoguery, and downright ignorance. It’s time to speak up, and get beyond our comfort zone in ways that are civically compatible with voter education. Go ahead: call 5 of your friends—better yet, contact folks you know don’t agree with you, and get the discussion going!

2.  As for a new vocabulary, we need to be “bilingual”, speaking both what Canadian philosopher Charles M. Taylor calls an “upper language” of purpose and meaning and a “lower language” more utilitarian in scope.  We need to make it plain, as well: our sustainability language is off-putting to many average people who yearn for a better way to make sense of a bewildering world they feel powerless to influence. One small step for linguistic clarity and precision: I’m working with colleagues Deborah Leipziger, Bill Baue, and Joshua Gay to build a platform for words and terms that more accurately convey the concepts that characterize our work. But we need to do a whole lot more to craft and speak a language that helps us speak to the world in more effective ways. We need to engage, collectively, in broader public conversations about how to strengthen our democracy and political economy within an international context that values many of the same goods that we do.

3.  As for holding political candidates accountable, we need to take to the editorial pages and airwaves, advancing the social justice and sustainability arguments we make so well in proxy races and boardrooms. Our 501(c)(3) status is no excuse for not speaking out as private citizens and letting our voices – and expertise – be heard, challenging candidates to reveal their agenda for building a sustainable economy that incorporates environmental, social, and governance goals, and laying bare their prejudices for business development at any price.

4.  As for supporting candidates that embody the change we seek, we’ve already got one here in Massachusetts who represents our shared commitments and aspirations. His name is Bob Massie, and he’s running for U.S. Senate. Bob holds precisely the depth of knowledge, skills, experience, and temperament so desperately needed to tackle the thorny problems that beset our nation and world.

Bob Massie for U.S. Senate

For those who don’t know him, Bob’s entire life is about public service, whatever his perch—behind the pulpit (he’s an ordained Episcopalian minister), in the boardroom (he’s years of experience advancing corporate accountability), or on the streets (he’s a history of marching on behalf of the oppressed). Against great personal and professional odds, he’s fought for the common good, in health care, in economic life, in sustainable prosperity here at home and abroad. What makes him especially unusual is that he’s a thinker as well as a fighter, someone who understands both the big picture and the details, and isn’t afraid to state his opinions. Plus, he’s an entrepreneur, something sorely needed in this ever-changing world of ours where adaptive creative is a necessity, not rigid adherence to failed models.

Some examples of Bob’s vision and portfolio of experience that helped set the stage for so many to follow:

• He was the first executive director of Ceres, asked by Ceres’ founder Joan Bavaria back in 1989 to build a coalition of responsible investors that would make companies more responsible environmental citizens.
• He founded the Investor Network on Climate Risk (INCR), now a network of 100 institutional investors with combined assets of $10 trillion, which focuses on climate change risks and financial opportunities, and addresses the policy and governance issues impeding investor progress toward more sustainable capital markets.
• He co-founded the Global Reporting Initiative (GRI) in 1997, now widely viewed as the gold standard for corporate sustainability reporting, used throughout the world by more than 1,800 companies for corporate reporting on environmental, social, and economic performance.

More recently, when he’s not campaigning Bob serves as a member of the Working Group of the International Integrated Reporting Committee (IIRC), a powerful, international cross section of leaders from the corporate, investment, accounting, securities, regulatory, academic and standard-setting sectors as well as civil society. The IIRC extends the principles of the GRI by seeking to legitimate this wider definition of business performance and impact throughout the world, “in a way that will create a more profound and comprehensive picture of the risks and opportunities a company faces, specifically in the context of the drive towards a more sustainable global economy.”

And this is just a sampler. Bob Massie’s run for office before, worked on numerous political campaigns, knows how to speak both the “upper language” of purpose and meaning, and the “lower language” of persuasion and practicalities. He’s climbed more mountains that most of us can see, yet maintains a tireless faith in the future and our ability to transcend our limits without losing our souls.

Bob’s campaign, which receives favorable support from grassroots Massachusetts, continues to advance the causes we hold dear, while elevating the discourse from polemics to possibility. He needs our help, though, to carry the message through the coming grueling months. If you believe in sustainable prosperity and justice, please consider supporting him by visiting his website at www.bobmassie.org and making a donation.

A Time to Play

What’s troubling to me about the current state of affairs is not just the Tea Party’s outsized strength, or the polluting power of corporate money in campaigns, or even the polarized climate in which the nation’s business is conducted.

What’s troubling is the absence of those who’ve dedicated their lives to social justice, sustainable prosperity, and the common good who are missing in action when it comes to electoral politics, thus enabling a democracy crisis that threatens our markets, our heritage, and our common human future. Within this climate, one can choose to sing a song of sorrow and stay on the sidelines, or fight back and reclaim our politics, exercising the duties that citizenship bestows, the Spirit of America upon which our republican government relies.

The destructive dysfunction of contemporary public life needs to be reversed, and who better to do this than those who’ve fought to make economic enterprise more accountable to the public interest?

It’s time for those who are sitting on the sidelines to put their actions where their beliefs are. So get out there and speak to the world, watch your language, hold candidates accountable by asking hard questions and make them talk about their plans for building a sustainable and just future.

And support Bob Massie’s campaign for U.S. Senate. Otherwise, we run the risk of letting our ideals, values, and commitments become ghosts on the landscape of tyranny’s shadows.

The TakeAway:

Today we celebrate another “movement milestone”, one of several occurring during the month of June: the long-awaited launch of the Global Initiative for Sustainability Ratings (GISR), announced at a Washington, D.C. briefing held June 9^th by the nonprofit groups Tellus Institute and Ceres.  GISR’s purpose, according to the press release, is to “create and bring to widespread adoption a single standard for rating the sustainability performance of companies.”  GISR will operate as an independent, non-commercial framework that “builds on the current system’s strengths and, corrects its shortcomings, thereby unleashing the full power of ratings to drive sustainability deep into capital, procurement and consumer markets.”

That announcement coincides with year-long efforts of SustainAbility, a think tank and strategic consultancy, to examine and improve the corporate social responsibility (CSR) / sustainability ratings space, and sustainability expert Bill Baue’s work to spark conversation among experts about the value, role, and improvements needed to link ratings to performance improvement and impact.  “Corporate sustainability ratings are trending as a hot issue in the CSR space, so they’re a perfect focal topic for the third Sustainability Chat on OpenEyeWorld,” said Baue.  Baue, a MurnPost Co-Founder and ad hoc Editor, is curator of the two-day “SustyChat3” on Sustainability Ratings.  It’s happening today and tomorrow at OpenEyeWorld, a commercial platform for online sustainability expert engagement.  Representatives of both SustainAbility and GISR are moderating one of the three SustyChat3 dialogues.

Improving Corporate Performance?

They’re everywhere: sustainability reports, rankings, ratings, “Best Of” lists, “Worst of” lists, narrative reporting, integrated reporting—not to mention the firehose of social media Tweets and Facebook posts.  What once was a niche market has become de rigueur for business firms that want to attract and retain their customers and shareholders, not to mention comply with regulations and wider stakeholder expectations of transparency and disclosure.

Like the proliferation of Hollywood award shows, market saturation of sustainability ratings fosters confusion, contradiction, and concealment—even burnout over “too much information”, both for reporting companies and those expected to absorb the information generated.  “Survey fatigue” plagues many firms that are bombarded with data requests and allocate staff and money to respond.  Meanwhile, those conducting the “research” often monetize the process—sometimes as consultants to help companies get higher scores.  And there’s nothing to prevent companies from picking which ratings results best suit their aims, and ignoring those that don’t.  As for “objectivity”—there are no generally-accepted principles, frameworks, or standards against which to gauge best practice.  Until now.

A GRI for Sustainability Ratings

According to its founding partners (which include TIAA-CREF, the Calvert Group and Bloomberg), the mission of the GISR is to “continually expand the contribution of businesses and other organizations – including social enterprises, non-profits, and public agencies – worldwide to sustainable development through the creation and promulgation of a generally accepted, organization level sustainability ratings framework.”  Modeled after the approach used by Ceres and Tellus to incubate the Global Reporting Initiative (GRI), the idea is to bring some order to a sprawling ratings-and-rankings industrial complex, while bolstering credibility, accountability, and quality.  “GISR aims to create a benchmark standard rooted in technical excellence, impeccable integrity, and continuous improvement, via a process involving multiple stakeholders,” the announcement stated.

“The GISR initiative is about creating a world-class, transparent ratings system,” said Tellus Institute Senior Fellow Allen White, a co-founder (with Robert K. Massie, Jr., now running for U.S. Senate in Massachusetts and MurnPost Co-Founder). “GISR will help drive capital, procurement and consumer markets toward companies committed to continuously higher standards of sustainability excellence.

“Getting this right matters,” said White. “If we aren’t infusing sustainability into all ratings frameworks, both financial and non-financial, we are losing precious time in the race toward shifting markets to sustainable outcomes.  That’s why GISR is an idea whose time has come.”

Put another way:  “The simply-stated goal of this system is to avoid the next BP disaster,” said Mindy Lubber, Ceres President. She was referring to the fact that, as the GISR release pointed out, “Prior to last year’s Gulf oil spill – and well after BP’s fatal Texas oil refinery disaster and a slew of other major violations – there were no credible ratings that flagged BP as a material risk to investors.  Even investor screens like the Dow Jones Sustainability Index held BP’s stock for a long time before divesting at a significant loss to shareholders.” (Sustainability legal expert Sanford Lewis writes about this, in connection with current revision process of the GRI Guidelines.)

Sustainability Experts Weigh In

Improving sustainability ratings also is the focus of SustyChat3 on Sustainability Ratings at OpenEyeWorld.  “Some of the key influencers on this topic are co-facilitating the three discussions, including Michael Sadowski of SustainAbility, who heads its Rate the Raters project, and Mark Tulay, who’s managing the Global Initiative on Sustainability Ratings for Ceres and the Tellus Institute,” Baue said.  Sadowski and Tulay will moderate the “Rate the Raters” conversation.  Corporate folks are on deck, too, with Suzanne Fallender, Director of CSR Strategy & Communications at Intel, and Tracey Noe, Senior Director, Global Citizenship and Policy at Abbott, managing the “Rated Companies” discussion stream.  “Bahar Gidwani and Cynthia Figge of CSRHUB are moderating the ‘Raters’ thread,” said Baue, referring to two of the founder of this online resource for user-generated corporate sustainability ratings.

“The multi-day format of Susty Chats allows for in-depth dialogue to develop, as sustainability experts from around the world contribute to several threads of conversation that unfold organically,” Baue said.  “We welcome sustainability experts and CSR practitioners to join in the conversation!”  You can take a look at OpenEyeWorld, but registration is required.

It’s Raining Ratings!

These efforts mark yet another step in the evolution of how to foster improved corporate sustainability performance, with ratings schemes but one of many tools in the toolkit. (Others include wise policy, laws and regulation; thoughtful activist shareholders; informed citizen and consumer action; and virtuous boards and executives.  No doubt I’m missing others.)  But it’s just a step in a long long journey, with many challenges ahead—chief among them how best to engage a broader public of everyday people who remain generally clueless about what’s going on.  We need to include them in discussions of accountability, materiality, and impact, not to mention the evolving definition of “sustainability”—and suitability in public discourse.

As I wrote nine months ago in “It’s Raining Ratings!”, back in 1983, when I first started working in this field, “you could count on one hand the number of credible corporate responsibility ratings schemes—starting with the Sullivan Principles, the most prominent due to the dominance of the South Africa anti-Apartheid movement.  The Sullivan Principles served as the prototype for subsequent ratings, including the MacBride Principles for Northern Ireland, the Valdez (now Ceres) Principles, and others.”  By 2000, there were roughly a couple dozen; by 2010, there were 108, according to Sustainability.

Nowadays, it’s practically raining ratings, with many sponsored by magazines such as Newsweek (based on research from MSCI and Trucost), Corporate Responsibility (research by IW Financial) and Corporate Knights (research by Inflection Point Capital Management). Add to that the ratings that serve the sustainable investing community – such as the Dow Jones Sustainability Index and FTSE4Good – and you have a veritable deluge.  But even the worst corporate offenders – Exhibit A:  BP and the Deepwater Horizon rig explosion – can receive high sustainability ratings scores.  What gives?”

I continued by describing SustainAbility’s release of Part Two of its four-phase “Rate the Raters” research program launched in May 2010.  SustainAbility launched the Rate the Raters project to shed light on the universe of external sustainability ratings, while improving their quality and transparency.  The project’s second phase (June to mid-September 2010) inventoried more than 100 sustainability ratings—providing insight into source of research, issue focus, and whether or not its methodology is disclosed.  Rate the Raters: Phase Three, released this past March, zoomed in to conduct an in-depth evaluation of 21 ratings schemes.

According to SustainAbility’s Vice President Michael Sadowski, during this phase “we went out of our way to capture key insights and good practices across the 21 ratings in our selection…[and] came away with a number of fundamental questions/dilemmas, answers to which we believe will shape the future of sustainability ratings:

• What is the ‘right’ funding model for sustainability ratings to ensure their objectivity and own sustainability? The predominant model for ratings today is ‘client pays’, but as [Sustainability points out], that may not translate to strong ratings in all cases.
• Can raters also be consultants or service / product providers? If so, under what conditions?
• How can raters provide greater details on their approach and results to companies and clients without giving away commercial secrets? …[S]ome think private and public ratings might need to be treated differently.
• Could the major raters agree on a core set of standard criteria and format (to reduce survey fatigue), then compete/differentiate themselves only on a smaller set of future-oriented criteria?
• What might a universal quality standard look like for ratings? Could more ratings espouse the sort of principles and commitments that underlie the CSRR-QS standard we describe in our report?

Answering these questions – affecting revenue models, common standards, and ethics – constitutes the basis for Phase Four, which is still underway.  SustainAbility wants your thoughts on these, so if you’ve something to say, go to their website, Facebook page, or Tweet them @SustAbility.

Still Evolving

All of these welcome efforts remind me of something that occurred in the late 1980s, another era of business greed and deception.  Back then, I was retained by James A. Joseph, then president of the Council on Foundations, to conduct a first-time survey of the 110 institutionalized ethics programs in the U.S.  This burgeoning “ethics enterprise” resembles the equally robust sustainability ratings-and-ranking enterprise: hugely autonomous, ambiguous, and often aligned with business, academic institutions, or nonprofits.

The oldest were (and remain) free-standing, with a national or international purpose and constituency.  Writing for the September / October 1989 issue of Foundation News, I said, “The ethics enterprise – particularly as it concerns public policy and the professions – is still evolving. As a result, it is hard to discern the existence of a professional community of shared beliefs, language, and practices. Even though there are emerging networks and evidence of some collegial activity, there appears to be little effort to guide its growth.

While there are numerous examples of ‘success stories’ provided by survey respondents, the ambiguous nature of the field makes it difficult to judge program impact and quality. Several respondents said as much in their replies, stating that success is hard to measure and that the results of their work – particularly with regard to human or organizational behavior – may not be seen for some time to come.

Given the need to develop a more conscious and conscientious ethical dialogue, the need to foster imaginative replies to public moral dilemmas, and the need for us to treat each other with greater dignity and respect, the ethics enterprise has a way to go.  So, indeed, do we all.

Twenty-two years later, the same could be said for the Sustainability Ratings Industrial Complex. Perhaps with the help of the Global Initiative for Sustainability Ratings and the efforts of many other groups and individuals, progress can occur on addressing these “public moral dilemmas” with respect to human and organizational behavior in advancing sustainable prosperity and justice for all.

The TakeAway:

It’s the end of June, and time to break out the sunscreen and flip-flops. Before sipping those sangrias, we thought it worth reviewing the major milestones occurring this month, which advance sustainability and justice.  Among the markers are those involving human rights; sustainability impact; integrated / sustainability reporting; and sustainability ratings. This progress signals the maturation of a movement that has ancient roots, yet continues to be challenged by those with parochial beliefs in unlimited growth and the supremacy of coins and paper over people and planet.  And, they point to new frontiers in need of civilization, particularly regarding stronger integration of sustainability and justice into socio-political systems and an emerging world economy. Today and tomorrow, we’ll provide a recap before commencing flag-waving and fireworks.

Human Rights: A Moral and Material Business Concern

First up: the landmark June 16^th UN Human Rights Council (HRC) endorsement of the Guiding Principles for Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. The HRC action further establishes human rights as both a moral and material part of economic enterprise, extending a principle that’s been around (but not widely accepted) for decades.  (Reminder: South African apartheid and the Sullivan Principles, or Northern Ireland discrimination and the MacBride Principles.)  The Guiding Principles were proposed by Harvard Kennedy School professor John Ruggie, the Special Representative of the Secretary General (SRSG) on human rights and transnational corporations.  We think it’s among the most important milestones in the recent era of corporate responsibility and sustainability, particularly given its emphasis on stakeholder engagement and collaboration among government, business, and civil society.

“Human rights are at stake—and so, too, is the social sustainability of enterprises and markets as we know them,” Ruggie told members of the UN’s Human Rights Council (HRC) at its late May meeting in Geneva when he presented the Principles.  “I am pleased to report that multilateralism works.  Human Rights Council Special Procedures can make a significant difference even where discord and contention once prevailed.”  Ruggie’s submission of the Guiding Principles capped an extraordinary six-year, two-stage process that was “intensely consultative and rigorously evidence-based,” he said, and “not driven by doctrinal preferences….  They provide a common global platform for action, on which cumulative progress can be built, step-by-step, without foreclosing any other promising longer-term development.”  (Ruggie’s presentation appears on the HRC video archive website.)

The Protect, Respect, and Remedy Framework and Guiding Principles build on earlier efforts to codify human rights as applied to business institutions, a separate branch on the human rights accountability tree.  Governed by what Ruggie calls “principled pragmatism”, they were deliberately designed as a high-level guidance, leaving room for specific tailoring at the company and industry level.

Although the HRC stopped short of creating a global standard or oversight structure – thus drawing legitimate criticism from human rights groups, who claim there should be strong follow up – it did establish a working group consisting of five independent experts to be appointed by the HRC this September.  The Working Group will host an annual Forum on Business and Human Rights for governments, business, and others to gather and examine how the Guiding Principles are being carried out.

Along with important caveats issued by Human Rights Watch and Amnesty International on moving forward, the Guiding Principles have received widespread support, the result of extensive stakeholder engagement.  (All commentaries received on both the proposed and final draft can be viewed on the Business and Human Rights Resource Center [BHRCC] website, which has a dedicated portal for Ruggie’s work.)

Meanwhile, now that the UN mandate has ended, Ruggie and his team are expected to form a nonprofit entity to advise governments and NGOs on how to move forward.  Ruggie also will continue his teaching and research at Harvard.

The Long and Winding Road

Stage one of Ruggie’s mandate began in 2005, as he put it, “amidst divisive debates among stakeholders and little consensus among States” regarding business and human rights.  Three years later in 2008, he presented the Council with the “Protect, Respect, and Remedy” Framework, backed by full stakeholder support.    Unanimously endorsed by the HRC, “that Framework addressed the ‘what’ questions: What do States and business enterprises need to do to ensure business respect for human rights?” Ruggie said.   It’s since been applied by numerous states, organizations, investors, and multistakeholder initiatives throughout the world, and rests on three pillars:

1. The state duty to protect against human rights abuses from third parties, including business, through policies, regulation, and adjudication;
2. The corporate responsibility to respect human rights, implementing due diligence to avoid infringement and address adverse impacts;
3. Access to effective remedy for victims of human rights abuses.

At the Council’s request, Ruggie then embarked on the second stage of his mandate in 2008, to address the ‘how’ question—meaning “How we move from concept to practical, positive results on the ground?”  That process, extraordinary in its breadth and depth, included 47 international consultations on every continent; more than 20 site visits to business operations and communities to learn from “the diverse experiences of affected individuals and groups, local leaders, civil society and company representatives”; and expert volunteer analysis and advice from all regions—including pro bono research from more than two dozen law firms throughout the world.

According to Caroline Rees, director of Harvard Kennedy School’s Corporate Social Responsibility Initiative’s Governance and Accountability Program who works closely with Ruggie, the Guiding Principles primarily focus on the Responsibility to Respect (Pillar 2).  “All international human rights are the reference point that business needs to look at,” she told a group gathered at the Tellus Institute in May.  “This is politically sensitive territory, because states have ratified human rights conventions differently.”

The Guiding Principles represent a movement from “naming and shaming” to “”knowing and showing”, she said; a key part of approach addresses the question of verification.  Companies will have to show they have in place “human rights due diligence” policies and procedures.  These include:

• assessing actual and potential human rights impacts;
• integrating and acting upon the findings; and
• monitoring and communicating progress on how they’re addressed.

Action Research: Putting Principles Into Practice

The effort also included four main pilot projects undertaken by several companies, with help from “Team Ruggie”, to design or revise their grievance mechanisms within the context of the Guiding Principles.  The twin purpose of the undertaking: help companies improve their grievance processes and generate insights on how the Principles could be improved to reflect practical realities. Companies involved in these projects included:

• Carbones del Cerrejón, a coal mine in Colombia;
• Tesco stores Ltd, a United Kingdom-based multinational supermarket chain, working with suppliers in South Africa;
• the Sakhalin Energy Investment Corporation, an oil and gas company in the Russian Federation; and
• the Esquel Garments Group, a Hong Kong based garment company working with its wholly owned supplier in Vietnam.

In addition, an adjunct project with Hewlett-Packard and two of its suppliers in China retrospectively analyzed their collaborative efforts to enhance suppliers’ grievance mechanisms and reviewed them in light of the Guiding Principles.  An analysis of these action research projects appears in Piloting Principles for Effective Company-Stakeholder Grievance Mechanisms: A Report of Lessons Learned, published in late May.  Written by Caroline Rees with annexes authored by Doug Cahn, Stephan Sonnenberg, and Luc Zandvliet, this must-read report reinforces the critical importance of stakeholder collaboration and continuous learning.

“The range of sectors (oil and gas, mining, garment manufacturing, food, electronics), geographical and political contexts (Russian Federation, Colombia, Viet Nam, South Africa, China) and the scale of companies (major transnationals, factory with around 3,400 workers, supply farm with less than 50) in which these pilot projects took place was extremely valuable in ensuring that the Special Representative’s principles for non-judicial grievance mechanisms were well tested,” Rees writes.

Clearly, there are other contexts in which the principles could also usefully be tested, including pharmaceutical and ICT companies, and there are still lessons to be gained from how the mechanisms in this pilot work in practice in the months and years to come.

However, the pilot projects have generated valuable learning. They repeatedly confirmed the value and importance of the overarching concepts represented in the principles themselves. They also added some clarifications and nuances to how those principles should be understood and applied in practice, regardless of the situation.

…For all of the participant companies, the pilot process was only the start of a longer process. The project team looks forward to seeing how their efforts, and those of their stakeholders in these projects, develop in the future

Supplementing this large-scale action research endeavor, the CSR Initiative also set up the BASESwiki, a collaborative tool for sharing information and learning about how dispute resolution between business and society works around the world.

Materiality Matters

The key implementation challenge for companies: creation of assessment mechanisms that are industry-appropriate and suit the scope of operation.  This is easier said than done: most firms are new to this form of operational environment scanning, but it’s now part of a larger pattern of risk management and “materiality”.  Corporate financial reporting typically has been the lens through which material issues have been identified.  (A common rule of thumb to consider those issues material that could potentially impact financial results by more than 5 percent.)

But as sustainability becomes recognized as an important driver for business success (and a popular choice among ambitious young graduates) it challenges prevailing assumptions about “material” risks and opportunities. In February 2010, the U.S. Securities and Exchange Commission published an interpretive guidance regarding its existing disclosure requirements as they apply to climate change. This ruling opened the door to a new interpretation of material risk, in furtherance of its regulatory role.

“Environmental and social issues have not typically followed the rigor of a materiality interrogation,” says Jean Rogers, managing director of Rogers Associates LLP and a sustainability materiality expert. “Environmental disclosures have historically been viewed through the lens of contingent liabilities due to the enormity of the fines they represented. Corporate reporting on environmental and social issues from a materiality perspective continues to evolve.”  She and Steve Lydenberg of Domini Social Investments and Harvard’s Initiative for Responsible Investment (IRI) develop this idea in their report, From Transparency to Performance: Industry Based Sustainability Reporting on Key Issues, an IRI white paper that examines materiality within industries and identifies key performance indicators.

Meanwhile, human rights expert Liz Umlas uses the term “social materiality” to describe the incorporation of environmental, social, and governance (ESG) considerations into business and investment decisions.  “ESG issues are not ‘non-financial’, the term preferred by mainstream investors a few years ago, but often financially material, as a growing body of research shows,” she wrote in a Guest Commentary for the Murninghan Post last October.  Umlas believes social materiality captures those corporate impacts that are vital to stakeholders’ well-being.

The Guiding Principles for Business and Human Rights advance this interpretation of materiality. Writing on the CSR and the Law blog published by Foley, Hoag LLP, longtime sustainability expert Sarah Altschuller noted, “As observed in our earlier commentary, while the Principles are not law, they are likely to influence national law and policy in jurisdictions around the world….In our experience advising companies on how to identify, prevent, and mitigate the adverse human rights impacts of their operations, Professor Ruggie’s work has been a key reference point since the outset of his mandate.  The Principles provide high-level guidance applicable to all business enterprises, and many companies have already begun the hard work of interpreting how best to apply this guidance to their specific activities.”

Faris Natour, director of human rights for Business for Social Responsibility (BSR), agrees that the Guiding Principles will foster the emergence of human rights management systems.  “Already, governments such as Australia, Canada, the EU, and the UK have applied the UN Protect, Respect, Remedy Framework in their public policy,” he writes in a guest blog for Business Ethics.  “We can expect governments to begin implementing the principles’ many recommendations directed at them, including, for example, encouraging or requiring corporate human rights disclosure.

They’ve got their work cut out for them:  There are tens of thousands of transnational corporations, but “according to the Business and Human Rights Resource Center’s list, only 271 companies have human rights policies,” Natour says.

Other commentaries on the Ruggie submission and the UN HRC decision, as well as background and links to relevant analyses, tools, and news updates, appear on the BHRRC platform.

Conclusion

We hope that firms respond to the Guiding Principles without segregating human rights into a separate category.  “So much is about lenses or vocabularies,” Rees told the Tellus group. “Food crises, environmental issues—we need to make sure they don’t exclude the human rights lens, or concerns.  I was at an environmental meeting the other day, and it was all about wind farms and renewables, with no reference to human rights. There was no people reference.”

“The UN Principles on Business and Human Rights is a major milestone in the evolution of  the organization’s relationship with the business community,” Allen White, Tellus vice president and co-founder of the Global Reporting Initiative (GRI), told us.  “This journey began in the 1970s with the Center for Transnational Corporations and accelerated with the launch of the Global Compact a decade ago.

The next decade is pivotal.   Will UN norms remain purely voluntary,  minimally monitored, and loosely enforced?  Or will they rise to the level of de facto standards through national law, regulation, stock exchanges and other mechanisms, with strong accountability mechanism and broad-based uptake among the world’s 75,000 transnational enterprises and millions of SMEs?”

Time, and due diligence, will tell.

The TakeAway: Public pension fund investors turn up the heat on big banks as outrage over lending and mortgage practices mounts.

With millions of families losing their homes – and fears that millions more are on the brink – there’s a groundswell of concern about exactly what banks were doing, efforts to create safeguards so it won’t happen again.

Shareholder resolutions calling upon bank boards to conduct independent reviews of mortgage and foreclosure practices at Citibank, Wells Fargo, and Bank of America won high votes this season as pressures mount for banks to come clean about their questionable loan and securitization strategies.  (Vote tallies at JPMorgan Chase were unavailable at this writing.)  The Citigroup proposal received 29.3 percent support (based on votes cast “for” or “against”); those filed with Wells Fargo and Bank of America were supported, respectively, by 23 percent and a 39.5 percent, according to figures provided to Murninghan Post by Heidi Welsh of Sustainable Investments Institute (Si2).

Led by the New York City pension funds, a $432 billion coalition of public funds – including the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund – claimed that widespread irregularities increased their risk exposure.

The coalition, which has $5.7 billion invested in these banks, called for board audit committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter to each bank, sent in January.  Last November, the Congressional Oversight Panel estimated that banks’ potential mortgage liability could total $52 billion, borne largely by the four banks targeted by the pension funds.  Together, these banks control more than half of both the mortgage servicing and home equity loan market.  (Letters to each of the banks are available on the NYC Comptroller’s website.)

On Tuesday, hundreds of protesters descended upon JPMorgan Chase’s annual general meeting (AGM) in Columbus, Ohio, literally crossing the moat that surrounds the building to get their point across.  Similar demonstrations occurred at the Wells Fargo AGM on May 3^rd .  On May 11^th, religious investors demonstrated outside Bank of America’s AGM in Charlotte, North Carolina over its handling of foreclosures.  And in April, they turned out in force for the Citigroup annual meeting.

This isn’t a new issue for religious investors.  Led by the Interfaith Center on Corporate Responsibility (ICCR), they’ve engaged banks since the 1970s on a range of practices including predatory lending, modifications of housing loans, executive compensation, and lobbying.  Last October, ICCR issued a white paper on “Faith and Finance” that rearticulated these positions, grounded in the principle of “the protection and promotion of the common good”.

Proxy proponents want to prevent future compliance failures and restore the confidence of shareholder, regulators, legislators, and mortgage market participants.  They want independent audits to determine whether bank management allocated adequate staff to review mortgages before foreclosing, and addressed financial incentives to foreclose when other options posed better long-term solution.  And they were not reassured by company assurances that these foreclosure issues are “mere clerical errors that will be resolved quickly”.

Other Ammunition

Proposals for independent audits are one of several weapons aimed at banks this year, the result of mounting public anger, regulator attention, and possible prosecution.

Shareholder efforts parallel those of attorneys general of all fifty states to seek redress for home borrowers.  On March 3^rd the AGs – joined by U.S. agencies including the Justice Department, Federal Trade Commission and Department of Housing and Urban Development – proposed a purported $25 billion settlement with top U.S. banks that outlines a code of conduct for mortgage servicing; critics charge that the settlement offer is too weak because it fails to reduce the principal amount on outstanding mortgages.  The AGs are expected to conclude their negotiations in coming months.

In April the Office of Comptroller of the Currency and the Federal Reserve forced fourteen mortgage servicers to establish new foreclosure processes. The largest servicers signed consent orders in April pledging to modify their procedures, and halt foreclosures to correct affidavits signed en masse without the proper review of documentation as required by law.

Meanwhile, on Monday, the New York Times’ Gretchen Morgenson revealed that actions taken by New York’s Attorney General suggest a new investigation is underway into practices that contributed to billions in mortgage losses.  On Sunday she wrote that this is just the beginning: the United States Trustee Program, the arm of the Justice Department that monitors the bankruptcy system, has found ample evidence of extensive and abusive servicing practices.  ”It’s worth noting the immense pushback the banks have mounted against the trustee office,” she wrote.

This is a fresh breeze in the midst of odious economic destruction wrought by banks that engaged in reckless lending and relied upon unsustainable and incomprehensible mechanisms such as securitized loan portfolios.  Thus far, no executive has been found guilty of specific wrongdoing.  Their fiduciary abuse was bolstered by the notion of “too big to fail“, with most of us inadvertently or tacitly complicit.

The significance of shareholder votes is not so much in the amount of the vote, since votes themselves are not binding.  Rather, votes above a minimum threshold of 10% cause an issue to stay on the table and require the continued attention of the Board of Directors, who are supposed to represent the shareholders.  Shareholder resolutions are a vital means of leverage, causing corporate management to negotiate an outcome satisfactory to the shareholders and not just to themselves.

But it’s not just institutional investors who have clout.  Individual investors can flex their ownership muscles, too, through an exciting new service.  MoxyVote was set up to give individual shareholders a voice in company boardrooms. “We want to empower the little guy,” MoxyVote states on its website.

We want to bridge the gaps between the buttoned-up world of the corporate boardroom and shareholders in suburban office parks, union halls, church meeting rooms, and anywhere else that people with big ideas gather. We want to allow the free exchange of good information among shareholders, advocate groups, and public companies. MoxyVote will make it easy to get informed, get involved, and take a stand.”

Shareholder action, combined with broader citizen action, a more aggressive enforcement system, and dogged media coverage, may help avert such widespread damage from happening again.  But first we need far more information about – and prosecution of – these horrible abuses in our capital markets.

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Editor’s Note: Marcy Murninghan contributed to this post.

The TakeAway: Advocates for corporate responsibility need to address the wider context of global politics and power, particularly within conflict zones where human rights abuses are most pronounced.

So we got Osama bin Laden. Now what?

This question, raised by pundits and policy makers, generally relates to using military power to protect and advance American interests. Overall, many reactions to bin Laden’s death – and our involvement with NATO forces protecting Libyans from Col. Muammar el-Qaddafi’s deadly wrath, not to mention continued unrest in Egypt, Syria, and other parts of the Middle East – stem from a misunderstanding of the context of power in the 21^st century, and the fact that American influence on foreign policy no longer is restricted to the use of military force, or “hard” power.

Advancing democracy, human rights, and civil society involves the use of “contextual intelligence” in applying what Joseph S. Nye, Jr., a renowned scholar of politics and international relations, calls “smart power”: that is, combining hard (e.g., coercive military or economic force) and soft (e.g., persuasion and attraction) power into effective strategies in varying contexts.

This has huge implications for business and human rights—which are about to be elevated with next month’s expected U.N. ratification of the Guiding Principles for Business and Human Rights, issued in March. The Guiding Principles cap a six-year process undertaken at the request of the U.N. Secretary-General Kofi Annan in 2005. They’re based on the “Protect, Respect and Remedy” policy framework proposed by the Secretary-General’s Special Representative John Ruggie to the Human Rights Council, which endorsed it in 2008. The Policy Framework consists of three pillars:

• the state’s duty to Protect against human rights abuses by third parties, including business;
• the corporate responsibility to Respect human rights, which involves a process of due diligence to assure that they do not interfere or infringe upon the rights of others; and
• access to both judicial and non-judicial Remedy, which includes not just the courts but grievance mechanisms at the local level.

The Guiding Principles emphasize “human rights due diligence”, particularly in zones of conflict—those places where the “worst of the worst corporate related human rights abuses take place,” Ruggie says, where there’s fighting over territory, or over the government itself. “This is the type of context that attracts illicit enterprises, who treat them as lawless zones. But even well-recognized firms can get drawn into involvement in human rights abuses, including complicity in forced labor and genocide.” In a recent Harvard Kennedy School video, Ruggie explains the costs of conflict and “stakeholder related risk” to companies, which, in the extractive industries, can run into billions of dollars. Part Two of this two-part Post will delve into the specifics of the Guiding Principles and what lies ahead after their ratification.

But first, let’s place this shift in thinking about corporations and human rights – and its expression by other nonstate actors (such as institutional investors, advocacy groups, financial analysts, law firms, the media, and so on) – within the larger context of world politics and the global economy, which have undergone great change over the past few months, as we have seen.

Changing Power Frameworks and Organizational Requirements

Today, power in the world is distributed in a form resembling a complex, three-dimensional chess game, says Nye, a former Assistant Defense Secretary for International Security Affairs and Harvard Kennedy School dean emeritus.  The top chess board represents military power and is largely unipolar, with the US dominating. The middle chess board represents economic power and is largely multipolar, with the US, Europe, Japan, and China as major players, but others (Brazil, India, Russia) gaining in importance. The bottom chessboard consists of transnational relations that cross borders outside of government control, and includes nonstate actors “as diverse as bankers electronically transferring sums larger than most national budgets at one extreme, and terrorists transferring weapons or hackers threatening cybersecurity at the other,” Nye writes in his new book, The Future of Power.

Companies occupy this bottom chessboard of nonstate actors, their efforts now turbocharged by technology and the advent of social media. “The barriers to entry into world politics have been lowered,” Nye says, “and nonstate actors crowd the stage….This is a new world politics for which we have less experience.”

That’s why it’s important to exercise what he calls “smart power”—which fits the corporate responsibility agenda of environmental, social, and governance concerns. “Smart power is the combination of the hard power of coercion and payment with the soft power of persuasion and attractions,” he says. Smart power involves networks and connectedness, which generate “power to accomplish goals that involves power with others.”

Smart power also involves contextual intelligence, which is “the ability to understand an evolving environment and capitalize on trends.” Nye first used the term “contextual intelligence” in his 2008 book, The Powers to Lead. Contextual intelligence, he wrote then, is “an intuitive diagnostic skill that helps a leader align tactics with objectives to create smart strategies in various situations. Others have called it judgment or wisdom.”

The trick is converting these power resources into strategies for desired outcomes.

If you put together smart power and contextual intelligence, you get what Nye’s Kennedy School colleague Ronald Heifetz calls the practice of “adaptive leadership”, another hallmark of progressive corporate responsibility development—and competitive success. Adaptive leadership anchors the various dimensions of power and strategies to a coherent set of core values, recognizing what’s worth keeping and what’s worth changing. Like smart power and contextual intelligence, adaptive leadership is a way of thinking rather than a process, and relies on continued curiosity and intelligence about the changing environment. It also relies on innovation and improvisation, with pervasive experimentation—including a willingness to fail and accept losses. When harnessed to organizational learning and change, the practice of adaptive leadership – like the practice of smart power – helps foster sustainable prosperity, for companies and stakeholders alike.

Something to keep in mind when viewing images from the Middle East of their power struggles, and people’s desire for freedom and a decent life.