Gem of the day

Finally: Walmart is making a concerted effort to address some of the major social and economic criticisms the company has faced for decades.

Except this is not about making long overdue commitments - it's The Real Walmart campaign. Featuring a PR firewall of Q&A and supportive quotes from "real customers". Little else could sum up the reality of rampant inequality and declining mobility in the US that Walmart represents better than this customer quote:

"On two deployments in Iraq I served with a lot of guys who didn't know if they had a job waiting for them. Walmart held my job for me."

Gem of the day

Businessweek continues its run of excellent pieces on BP's shift from highly visible humility post-Gulf of Mexico to aggressive litigation and denial, pointing out how the company is becoming one giant law firm.

The best example is delivered through an interview with CEO Bob Dudley, who pulls no punches with lines like this one about alleged corruption in the claims process:

"We’re a big investor in the United States, and we’ve challenged this really strongly. It’s just not right."

Anyone looking for more insight into Dudley's remarkable attitude might find grist for the mill later in the interview, when he attempts to answer the following:

[Interviewer]: "Why do people hate oil companies?"
[Dudley]: "People in oil and gas are sort of perplexed by this...I absolutely, passionately, and thoroughly enjoy oil and gas."

Gem of the day

KPMG's highly scientific graph proves once and for all sustainability can deliver ROI - oh right:

Something that's actually good

Simon Zadek on the irony of systemic risk in financial markets, in a nutshell:

"Short termism delivers some specific, systemic biases in the pricing of risk. Zero carbon pricing in valuation is the exemplary case. practiced by the vast majority of investors (including many of those belonging to climate-sensitive investor coalitions). Such pricing in effect is betting on a four to six degree world, an approach that at scale is nothing less than shorting civilization itself."

Another non-environmental wonder

Understanding the scale of Serco, the private government contractor running prisons, hospitals, and even nuclear facilities across the UK, is no small challenge. Here's two clues to help convey just how giant it is (via the Guardian):

•  "Without Serco, Britain would struggle to go to war" says the Daily Telegraph
• A prime example of the level of information Serco is willing to release publicly about its operations in the UK, bringing new meaning to the term "opaque": "We operate in a range of markets and geographies, which means we are well placed to bring a wide range of experiences and knowledge to help customers with the challenges that they face."

But nothing tops the explanation of CEO Chris Hyman as to why the company is so invisible:

"We are delighted when the public knows who we are, but really, we need to be known by the people who make decisions."

Another non-environmental wonder

John Oliver (standing in for Jon Stewart on The Daily Show) on the absurdly repetitive efforts of Jay Carney, the White House Press Secretary, to avoid calling the situation in Egypt a "coup" (his only talking point: "I'm going to be blunt here, it's a highly complicated situation."):

"I don't know if Jay Carney is doing a bad job, or just has a really bad job."

Something that's actually good

Since the media seems to have missed it entirely, here's welcome proof that at least one person in the convoluted land of intergovernmental policy is taking on the challenge of playing provocateur to the food industry. Thanks Director General of the WHO, Dr. Margaret Chan (via UN):

"Instead of diseases vanishing as living conditions improve, socioeconomic progress is actually creating the conditions that favour the rise of non-communicable diseases...It is not just Big Tobacco anymore. Public health must also contend with Big Food, Big Soda, and Big Alcohol."

Gem of the day

BP's strange campaign to combat alleged fraud in the payouts from its $20 billion Deepwater Horizon recovery fund, ironic in more ways than one, took another twist yesterday. In a move that the WSJ correctly identified as a marked - and inevitable - shift from the company's PR-led apologetic tone in the aftermath of the Gulf spill, BP is aggressively reaching out to the mass public for help by setting up an anonymous fraud "hotline".

The company's official statement on Tuesday promoted the hotline as a resource "for people who want to do the right thing". So in that case here's someone who should probably call in: former CEO Tony Hayward. After all, when stepping down in July 2010 he assessed his role in the Deepwater Horizon disaster in exactly the following terms: "I became a villain for doing the right thing".

If he does speak up about the proportion of alleged fraud in the fund, BP had better hope Hayward's recommendation isn't based on his early approach to talking about the environmental impact of Deepwater Horizon:

"I think the environmental impact of this disaster is likely to be very, very modest...Gulf of Mexico is a big ocean."

Gem of the day

Oil majors like BP might be in denial about oil running out, but they sure are quick to notice when money is running out - especially money linked to legal obligations from a spill.

In editorial adverts last month BP issued concerns over potentially illegitimate claims being paid out from its dedicated $20 billion Gulf of Mexico reparation fund. Verbatim:

"Trial lawyers and some politicians are attempting to capitalise on this misinterpretation by encouraging the submission of thousands of claims for inflated losses, or losses that do not even exist...Whatever you think about BP, we can all agree that it's wrong for anyone to take money they don't deserve."

It sure is. Which makes BP's own history of poorly managed anti-corruption policies so much more ironic, from over 365 breaches of conduct in its Russian TNK venture, to years of bribery exposed in its shipping division.

And it's not worth getting started on BP's own role in promoting things that "do not even exist" - artificial reserves, anyone?

Gem of the day

What does it say about Interbrand's 50 Best Global Green Brands 2013 that four out of the top five are car manufacturers? Not surprisingly, Interbrand has specifically highlighted that question. Even less of a surprise is that their answer is misses the point.

Congratulating auto companies for "keeping the long term in focus" is rightfully said for Toyota, a business guided by a vision to achieve sustainable mobility. For other manufacturers, the real test of whether they deserve to be on any list like this one will be their approach in emerging markets where the sales are, not in slow-moving efforts to transform or adapt some product and service offerings in Europe and North America. If those companies are truly balancing long and short term goals, it will be by influencing the mobility system in countries like China - now the biggest car market in the world - not least by helping governments avoid the car-dependency culture that has trapped the USA in a cycle of obesity, air pollution, suburban malaise and punishing oil prices. Rethinking what America might do with the estimated three parking spaces per person of empty concrete space is still in very early stages.

It goes without saying that the core of the Interbrand ranking, a score based on performance and "perception", is in and of itself a non-starter. One of several "perception" elements, for example, is "authenticity", which Interbrand describes as "the perceived credibility of the brand's environmental claims". Since authenticity can only be based on real action over the long term, "perceived credibility" is hardly a useful way of measuring it. Consider how often BP ranked in the top 10 most accountable companies in the world throughout the 2000s, only to reveal the extent of its inauthentic approach to environmental management in April 2010's Deepwater Horizon disaster.

Rankings like this one are amusing, but they don't tell us much about the core challenges ahead for the auto industry and beyond.

Another non-environmental wonder

Epic Pentagon Papers whisteblower Daniel Ellsberg nails how secrecy, and operating in a culture organised around the "haves" and "have nots" of classified information, turns people into "morons" (via the New Yorker):

"'You will deal with a person who doesn't have those clearances only from the point of view of what you want him to believe and what impression you want him to go away with, since you’ll have to lie carefully to him about what you know...[So] the danger is, you’ll become something like a moron. You’ll become incapable of learning from most people in the world, no matter how much experience they have in their particular areas that may be much greater than yours.'"

Gem of the day

Via Nestle Waters Twitter debate, a classic case of corporate sustainability jargon raising the question, why bother even asking? Or more to the point, why should anyone in their right mind give the "reports not reporting" approach a single second of time?

Another non-environmental wonder

Case-in-point why Hillary Clinton didn't win the 2008 election against Obama, illustrated by one of the multiple slogans rolled out across the misguided campaign (via Jon Lovett):

"Strength + experience/change = 1"

Something that's actually good

Larry Huston of P&G fame explains why for most incumbents the concept of "transformation" fails to catalyse change (via London Business School):

"I think transformation is a dirty word. If you go and say to a company, 'I'm going to go transform you', they'll say, it's going to be impossible and we'll never finish. In the case of Connect + Develop we were careful not to position it as transformation – even though now it is. We said, we have a strong, powerful, global organisation, we've built outstanding capability all over the world, we have world class people, what we're going to do is take this already strong capability and turbocharge it. And so the core idea is based upon how do we turbocharge? And then, what are the accepted beliefs that people have about this kind of thing? How do we create its credentials?"

Something that's actually good

John Thackara on the mindset challenge of big data for multinationals (via Change Observer):

"A lack of data does not mean a lack of value and potential. Billions of people with low cash incomes meet their daily life needs outside the money economy — for example, through traditional networks of reciprocity and gifts...The problem with Big Data is not that numbers are bad — it’s that we’ve made them an end-in-themselves in ways that lead us to misallocate time, attention, and resources. Big Data can work well in support for online resource-sharing — AirBNB, Uber, eBay and their like — but they’re of modest efficacy to the informal economy where, to repeat, a big majority of the worlds’s citizens subsist."

What could be a more timely observation, as the giants that created the big data revolution come under scrutiny for their role in mass surveillance of Americans?

Another non-environmental wonder

How Walmart has lost its way (oh let us count the ways), according to retail man Doug Stephens (via Businessweek):

“This is the lesson Costco teaches. You don’t have to be Nordstrom selling $1,200 suits in order to pay people a living wage. That is what Walmart has lost sight of. A lot of people working at Walmart go home and live below the poverty line. You expect that person to come in and develop a rapport with customers who may be spending more than that person is making in a week? You expect them to be civil and happy about that?”

Gem of the day

In a potentially radical about-face, Apple has hired former EPA head Lisa Jackson to push environmental progress at the company. Great news for cleaner products with a cleaner foundation - renewables, zero waste.

But Jackson's true challenge may be moving beyond the built-in glass ceiling of her title - VP for Environmental Initiatives - to reframe sustainability as a powerful driver of innovation for the company (as Hannah Jones has done at Nike). An initial guess suggests that is unlikely to happen.

Gem of the day

Case in point why The Nature Conservancy, like most corporate-funded, partnership-dependent NGOs, just doesn't get:

a) The biggest impact of their work on business, especially companies where conservation isn't most material (hint: it's reputational, the halo effect of being seen to work with a global conservation organisation)

b) The changing role of business in the world, especially in relation to government (hint: "megatrends" are called "mega" for a reason, so it's not an "either/or" of government vs. business need to take action)

But I'll let TNC President Mark Tercek speak for himself:

"You’re asking, what’s Coke going to do about its product, or how can they be an even nobler citizen? I don’t know the answer. And it’s not exactly TNC’s job. If Coke’s product is a bad product, I think the government has to say so. That’s my personal answer. I don’t think you can ask a business to not be a business."

Luckily for Tercek there are people out there who know the answer: stop targeting minorities and kids with marketing, price drinks so smaller sizes are best value (full list here), or, even better, just sell less Coke.

Another non-environmental wonder

Generic insight of the day, courtesy of Deloitte (via Bloomberg):

"India is offering a great opportunity for companies to be part of the volume growth...There is continued interest and there will more international players coming into India."

Gem of the day

The 2013 Sustainability Leaders survey is out from Globescan & SustainAbility, and the results aren't surprising. Unless, that is, you happen to think that Coca Cola looks painfully out of place in the top 10 next to the likes of Unilever, Natura and Nike.

First thing's first: Coke is doing a lot on water, setting huge goals like net zero water consumption in its operations that the company hardly has any idea how to achieve. But in a year where we saw the obesity epidemic finally rising to panic button levels, Coke's sports-as-medicine strategy that places the burden 100% on people to "consume responsibly" is starting to make the soft drinks industry look like the new tobacco (Franck Riboud was already saying this at Danone 7 years ago, and the company refocused its business on healthy products as a result).

Companies that deserve to be on a leadership list are those that are not only accepting responsibility for, but truly leading an effort to transform their most material impacts into net benefits for everyone. Unilever on personal resource efficiency and sanitation at scale, Natura on biodiversity and Nike on innovation driven by sustainable materials fit that description - or at least have set the kinds of long-term goals that commit them 100% to getting there.

Until Coke's board gets real about the obesity crisis and the central role of its products in fueling it - and that includes stopping its ridiculous 1990s-esque attempts to stymie any and all regulation, read it and weep - they don't belong in such company.

Gem of the day

An example of how not to sum up where we are with the sustainable business agenda, especially when making the case for leadership (via HBR):

"Warren Buffett, Robert Rubin, and Howard Schultz have been outspoken about the role of business in American society, and companies from Walmart to Chevron have engaged in socially responsible activities."

Another non-environmental wonder

The aftermath of CEO Ron Johnson's hasty exit from retailer JC Penney has proved a busy space for commentary on just how wrong he got it.

Apple board member Bill Campbell echoed a critical insight into why business transformation can fail with his take on the situation (via Businessweek):

“You have to keep your current business going while you experiment with a new one. [Ron] didn’t do that. He just put a bullet hole in his current business."

Even better, an interview with Johnson offers a priceless look at his misguided attitude towards the change process, in his own words (via FastCompany):

"All my ideas just sort of come. I don’t know to explain it. It’s all intuitive I think...I wanted to do something that had scale. I don’t just want to run a business, I want to do what I did at Apple--I want the chance to transform something. So I picked JC Penney. I didn’t come here to improve Penney, I’m here to transform Penney."

Gem of the day

Infamous Whole Foods CEO John  Mackey is on a roll with his "Conscious Capitalism" call to action - business should lead by embedding a "higher sense of purpose" in value creation. So it's beyond ironic that his answer to an area where upscale Whole Foods has yet to fulfill that kind of leadership - increasing access to healthy food in the US, land of "food deserts" - is to...create a nonprofit (via Forbes):

Forbes: "One of the primary issues with Whole Foods is that the stores are largely located in well-to-do areas. How does Whole Foods intend to make healthy food available to all?"

Mackey: "We do take seriously our responsibility, and growing ability, to educate people about healthy eating and giving them greater access...We will start to bring healthy food options to people in several other cities, starting with a new store in mid-town Detroit that will open in May. We are even looking to create a new non-profit to help make this a reality."

Gem of the day

Former BP chief Tony Hayward's take on the operating environment for oil companies in Kurdistan, where he's quietly excelling as CEO of Genel Energy as the memories of Deepwater Horizon fade away (via BBC):

"If you like, it's conventional Middle Eastern oil and gas exploration - pretty straightforward, and pretty low-cost."

In that case what passes for "conventional" in the Middle East must mean something quite different from in other parts of the world, if we believe this Kurdish observer (via Independent):

"We Kurds have one of the most complicated political situations in the world."

Or even better:

"I call it ‘Corruptistan’," said one woman.

Gem of the day

Coca Cola's new "Chairs" ad (see raging critique in HuffPo) is the company's latest take on placing responsibility for health and wellbeing squarely on the consumer - where it's easiest to say it belongs. Why "Chairs"? Of course Publicis, creators of the ad, can handily explain:

"The goal was to open the discussion with the society about the sedentary lifestyle problem. Some studies show that people spend more than half of their lives seated and that was the inspiration for the idea. Since the insight is human and universal the campaign can be used in future in other countries, depending on Coke Worldwide's decision."

With half of Americans already obese and numbers rising, surely a "sedentary lifestyle" is only chipping away at a much larger systematic issue - but given Coke's focus on marketing around this issue rather than taking real action, that's probably asking too much.

Gem of the day

Al Gore uses his ShareAction speech to give us something to be optimistic about in the uphill battle to making capital markets sustainable:

"Here's what we've got on our side: the way markets are operating today is functionally insane."

Another non-environmental wonder

How much can you pack into a generalized statement about "Africa"? In the world of business, a lot (via BusinessWeek, of course):

“Africa is an idea, not a market," sayeth veteran IBM shareholder Richard Soultanian.

Not to be outdone, IBM's head of South African operations has this to say:

"On his desk was a newspaper article chronicling the aftermath of an August police massacre of 34 platinum miners after an illegal strike turned violent. 'My actions cannot be dictated by what is going on in the country or the marketplace,' he says."

Now that's a smart way to look at doing business in emerging markets. Get thee to the real experts before it's too late - they just might be able to help you appreciate this reality instead:

"If the local socio-political system is characterized by a lack of transparency, profound structural inequalities, deeply engrained types of social discrimination, widespread arbitrariness, omnipresent corruption or pervasive structural violence, then your actions will normally reinforce those features, even if unintentionally."

Right.

Gem of the day

When someone writes an article titled "Can Even Hated Industries Redeem Themselves with Social Media?" you know what you're getting: very expensive "crisis communications" consultancy, free from any sense of irony.

Still, inevitably it's worth reading these pieces if only for outstanding gems like this one:

"Utilities have a powerful story that simply isn’t being told. They are the engine that makes every aspect of modern life possible. They are the first responders on the front lines when Mother Nature wreaks her havoc...These are the narratives that will establish tangible consumer connections and put a human face on that flick of the switch."

Then again, what more would you expect in this particular case from the man who did PR for Guantanamo, Deepwater Horizon and the Catholic Church?

Bonus gem

More extraordinary statements from an extraordinary industry (financial services). Here's a very special one from a "financial services expert" at PA Consulting Group (via FT, where else?):

"The great core strength of banks is their ability to take an intelligent view of the value of an asset and its associated risk."

So that core purpose must have just slipped bankers' minds in what made 2012 a record year for massive risk fall-outs at the world's biggest banks:

• "Barclays Chief Says 'Sorry'"
• "'Proud' JP Morgan Chief Apologizes"
• "HSBC 'Sorry' for Aiding Mexican Drug Lords, Rogue States and Terrorists"

Then again, maybe JP Morgan leader Jamie Dyman was acknowledging the bitter truth when he said this during his semi-apology to Congress:

“We’re doing what a bank is supposed to do."

Gem of the day

Sometimes a single quote can sum up everything you need to know to take the temperature of the sustainability conversation in the investment community (and yes, it does exist): the challenge, the opportunity, and the problem with that entire equation.

So thanks to JP Morgan's Head of Environmental Affairs for doing just that in a conference panel with the non sequitur title "The Power of Wall Street in Promoting Sustainable Development":

"Wall Street can only make a difference on this stuff if we figure out a way to make money on it."

Gem of the day

The concept of digging one of our most precious resources - oil - out of the ground and burning it for fuel hardly makes much sense, so as the world's oil majors cling desperately to the century-old business model you'd expect bumps along the way.

Even better is the double embarrassment Shell has faced over the past 24 hours:

• Being forced to shut down Arctic operations for 2013 after spending billions of dollars, with no results to show
• Acknowledging solar is where the money's at, a business Shell quietly exited 4 years ago

All of which only makes the company's "Let's Go" stakeholder campaign even more ironic.

Another non-environmental wonder

Craig Charney, colleague of Leland Miller (infamous China Beige Book fame), on why everything we think we know about China is wrong:

“You know the old joke about advertising? 'Half of all advertising is wasted. I just don’t know which half.' The same thing is true of Chinese statistics. Half of them are wrong. The problem is that we don’t know which half."

Genius.

Gem of the day

George Packer takes a masterful look at what the evolution of American business since the 1970s means for the country's social contract, using the example of Apple vs. Walmart (via the New Yorker):

"The middle class has shrunk; tax rates (especially on upper brackets) have plunged; inequality has exploded; the safety net (especially for the poor) has weakened; the old power structure has given way to a more diverse and broad-based upper class based on education...and business culture has become entrepreneurial, fast, risk-taking, and harsh. The trade-off: more freedom, less security."

"Together, Apple and Walmart represent the intense separation of American life into blue and red, rich and poor, overpriced and undersold, hyperconnected and left behind."

Gem of the day

Sometimes you just can't make this stuff up. Can anyone spot the problem with the design of BASF's stated "Purpose" - ideally one of the most important pages on their website, let alone the entire driver of their business?

Gem of the day

British American Tobacco's so-called "sustainability vision" offers a lesson on how to make a statement without saying anything at all:

"Our vision of a sustainable tobacco business is one that manages the impact of its operations and products responsibly today and prepares for a future in which it continues to create value for shareholders as well as being in the best interest of other stakeholders."

Gem of the day

Finally: academic evidence to support the bold analogy Danone CEO Franck Riboud made 7 years ago, as his company changed to a strategic health focus, about obesity as "the new tobacco".

A new study shows relying on the biggest food and drink companies to "self-regulate" salt, fat and sugar content in food won't work. Most importantly, the report points out this is a battle that needs to be won - and quickly - to make sure these companies don't repeat the same mistakes in emerging markets, where the focus is on aggressive growth over the next decade:

"Saturation of markets in high-income countries has caused the industries to rapidly penetrate emerging global markets, as the tobacco industry has done. Almost all growth in the foreseeable future in profits and sales of these unhealthy commodities will be in low-income and middle-income countries [where consumption is currently low]."

Gem of the day

Edelman's point of view on what's required for a "sustainable business future":

"For successful corporate citizenship and a sustainable business future, companies need to focus on conducting and communicating their efforts in a way that garners trust and generates positive reputations among key stakeholders."

Influencing stakeholder views - progressive.

Gem of the day

Netflix CEO Reed Hasting's amazing presentation on "Culture" nails what company values truly are:

"Many companies have nice-sounding value statements displayed in the lobby, such as: 'Integrity. Communication. Respect. Excellence...The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted or let go."

Gem of the day

As the world's largest food company, you'd assume Nestle has a good vantage point for understanding the impact of climate change on the energy, water and nutrition challenges we face. And yet, here's Chairman Peter Brabeck doing just the opposite (via GSB):

"I've been coming up here [World Economic Forum] for 15 years and nobody was talking about water. They were talking about CO2, they were talking about climate change; that we're going to roast and burn. We're talking about running out of oil, well it happens that we have 120 years of proven oil reserves, we have 240 years of proven gas reserves, we have 550 years of proven coal reserves, we have thousands of years of proven Uranium reserves and we are running out of water today."
There's only 3 possible explanations:

1. He doesn't get the link between climate change and oil, gas and coal (scary)
2. He's so busy talking up Nestle's water focus (a big reputational issue) that he got his story totally wrong.
3. He assumes because oil has a value in the market, investment will be made into alternatives as supply runs out (never mind the timescales demanded by climate)

It's all even more ironic given that he goes on to make a big deal out of understanding the big picture:

"If you become more and more and more specialised in a world that is more and more interconnected, you are losing your impact and your credibility to find solutions."

You can say that again, Mr. Brabeck.

Another non-environmental wonder

Nobel Prize winner Andre Geim gets a less than warm reception at Davos (via FT):

"'What are you doing here?' The software billionaire choked in astonishment when I told him I was a physicist. The reaction was informative: it was as if he had encountered a seasonal labourer at our meeting place, the World Economic Forum in Davos."

So why did Geim bother showing up? Oh right:

"The distinguished crowd at Davos last month discussed the poor health of the global economy...The only thing they shared was a belief that a quick fix was available...The advantage of ivory towers is that they allow a view beyond immediate problems. Where one sees banking crisis, debt crisis, currency crisis or some other crises, academics may see even more worrying developments. We are in the midst of a technology crisis. Disruptive technologies now appear less frequently than steady economic growth requires."

Gem of the day

Scott Anthony gives business a cold, hard dose of reality (via Forbes):

"Most efforts at transformation fail miserably. This unnerving and frustrating reality should not be a surprise--after years of pervasive 'continuous improvement' programs, executives are reaping what they have sown. Their organizations, from executives down through the rank and file, have been motivated and compensated to focus on incremental improvement, measured quarterly and annually, along competitive performance parameters established years earlier."

And even better as a zinger:

"Cultural change does not occur through PowerPoint."

 

Gem of the day

The "sustainable brands" conversation has accelerated over the past few years. One critical point from a set of takeaways at London's Sustainable Brands conference this year sums up the serious problem at the core of the concept:

"We should use The Power of 'And' — there is no need to trade off materialism and concern for environmental and social issues."

That's an assumption, not a fact - and one that puts a dangerously low glass ceiling on answers to the sustainable business model question.

 

Gem of the day

BrandLogic's 2012 "SustainabilityIQ Matrix", sold as a new way of looking at sustainability leadership in business, suffers from a few fatal flaws:

• Comparing apples to oranges - Different sectors have wildly different sustainability impacts, so benchmarking BP, Allianz and Walmart all within the same framework doesn't tell a very useful story.
• Defining sustainability as "ESG" - Environmental, social and governance factors made for a useful reporting foundation when companies were just starting to get their heads around these issues about a decade ago. For real leaders like Danone, where the company's entire business model (except for Waters) has shifted to a strategic focus on health, ESG is totally marginal.

Case in point are the results, which place the oil majors - BP, Shell, Chevron, ExxonMobil - and even regulatory disaster Bank of America, firmly in the "Challengers" category. To give a better sense of just how wrong that is, here's BrandLogic's definition of "Challengers" and what that means for companies in that category:

"Companies whose real ESG performance is above average and substantially ahead of their perceived performance may have opportunities to secure unrealized ROI from investments in communications and brand positioning."

More brand positioning linked to "best in class" performance in underperforming energy and banking sectors - oh yes, that's what sustainability needs.

Something that's actually good

Peter Uvin of Tufts University distils a set of 8 principles for companies operating in emerging markets, based on learnings from the work of development organisations; his colleague (and a former McKinsey partner), Dr. Bhaskar Chakravorti, responds to them from a business perspective (via Tufts MIB).

It's a great conversation that touches upon the operational, strategic and even psychological challenges of emerging markets.

Two key points from the first principle, 'All Action is Political':

• "Managers on the ground have short time horizons: they know they are on the job for a short stint before they prove their ability to thrive under adversity and then move 'up' to more prestigious markets...rather than thinking holistically and longer-term about the broader impact of their commercial initiatives."
• "If the local socio-political system is characterized by a lack of transparency, profound structural inequalities, deeply engrained types of social discrimination, widespread arbitrariness, omnipresent corruption or pervasive structural violence, then your actions will normally reinforce those features, even if unintentionally."

Another non-environmental wonder

The words "Davos" and "groupthink" are rarely found far apart from one another. But given the state of economies around the world, this gem takes it to the next level (via BusinessWeek):

"There’s a crystallization of thought that the financial crisis is over,” says Scott Minerd, managing partner and chief investment officer of Guggenheim Partners, a Santa Monica (Calif.) firm with about $160 billion under management."

Something that's actually good

Sam Palmisano, former President and CEO of IBM, summarises the critical challenge he faced taking the company in a new direction [product to service shift and adoption of Smarter Planet] at a time of strong financial performance (via Wharton School of Business):

"I really believed in the beginning that I had to keep the business going, [and] at the same time start the transformation of the business model. I didn't think the business model as it was at that point in time was going to sustain itself over the next 10 or 15 years...There were people, phenomenally successful in the PC era, who were wedded to a business model...[They thought] 'I'm making so much money in this business, do I really want to take the risk of transformation?'"

More proof that the short-termism of financial markets stunts innovation.

And speaking in a personal capacity, but one entirely relevant to that challenge, he nails the #1 reason most companies never get there:

"To get prepared for the future, you need to really put yourself in an uncomfortable space."

Gem of the day

Paper industry group Two Sides, authors of key message "print and paper have a great environmental story to tell", have something to say about Google's new "go paperless" campaign:

"This new initiative is clearly another example of a self-interested organization using an environmentally focused marketing campaign to promote its services while ignoring its own impact upon the environment."

No comment.

Gem of the day

Economist writer Schumpeter has a new column summarising two new reports on risk, and what their contents could mean for business in 2013. He couldn't be further from the point:

"The more you read, the more risks you see; eventually, you succumb to nervous exhaustion...[nevertheless] these reports not only provide warnings about dangers that can be avoided by better planning or clearer thinking. They also suggest opportunities."

The landscape of trends presented in these reports might not be news; rising inequality, unstable financial markets, climate change, resource scarcity, health crisis. But so far few companies have seriously changed the way they do business in response to any of those trends (Danone is a contender; Unilever, Kingfisher, GE, IBM and others aspire to). The past few years indicate the complexity and threat of these trends is only increasing; in the words of Frost & Sullivan, "bringing new competencies into play at half the life-cycle speed of the past decade." This all adds up to serious implications for business.

Companies face a world where the rules of the game are beginning to require more than delivering against short-term financial targets and producing a CR report. That means "better planning" and "considering opportunities" are not going to help any company find a strong, sustainable and long term direction for their business model in an operating environment that is fundamentally changing. 

Linda Sanford of IBM calls it "the golden age for transformation". It's also the start of a great disruption, and that won't be pleasant for any company silly enough to listen to Schumpeter.

Something that's actually good

Even companies we might consider today's sustainability leaders - Unilever, GE, Kingfisher, IBM - still face a huge challenge to doing more: a market environment that demands short-term results.

That's why Unilever CEO Paul Polman's quest to push back on the limits of "quarterly capitalism" is so important.

But what about companies that are coming at the issue from a more mainstream point of view? Here's Amazon CEO Jeff Bezos on the benefits of a long term perspective (via HBR):

"If you're long term oriented, customer interests and shareholder interests are aligned. In the short term, that's not always correct.. if we needed to see meaningful financial results in two to three years, some of the most meaningful things we've done we would never have even started."

Now all Amazon needs to do is reconcile its status as the world's biggest online retailer with a sustainable business model. A long term mindset is the perfect place to start.

Gem of the day

McKinsey, steadfast supporters of the status quo, offer three tips for "becoming more strategic" in a company. Tip #2 is "Become expert at identifying potential disruptors", which they describe as "the sorts of changes that make or break companies".

Ironically one hypothetical they give is for an oil company with UK assets to keep an eye on competitors and their investments - not, say, the price of carbon, the rise of non-traditional activist movements, growth of renewable energy markets, energy return on investment or, heaven forbid, decisionmakers' awareness of peak oil. Because in the world of business as usual, monitoring "less conventional" fluctuations in the average is what counts as mastering strategic threats.

Here's one tip they could have offered instead of all three:

"Become expert at translating global megatrends into threats or opportunities for your business - and then find the real thinkers who will help the company design a long-term strategic response to them."

Gem of the day

Machiavelli: the world's original sustainability thought leader? Surely that's what he meant when he wrote the excerpt below in 1513. Whether it's the cliched battle over pollution, the fight to transition away from fossil fuels, or the food industry's double standards over health, the symptoms of incumbent opposition to change are all too familiar:

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new."

Another non-environmental wonder

UK nonprofit Fairer Gambling released a report this week revealing that betting shops are making billions more in profit from the country's poorest areas with the highest unemployment. And who better to make a comment on the divide than a Tory MP (John Redwood, Conservative MP for Wokingham in Berkshire, via The Guardian):

"I put it down to the fact that poor people believe there's one shot to get rich. They put getting rich down to luck and think they can take a gamble...They also have time on their hands. My voters are too busy working hard to make a reasonable income."

Stunning.

Gem of the day

Walmart is often held up as a hero of green business - a company that will scale sustainability up to new heights through their aggressive supply chain standards.

Here's what Walmart bought in Mexico using bribes over the past decade:

• $341,000: Sam’s Club built in one of Mexico City’s most densely populated neighborhoods, near the Basílica de Guadalupe, without a construction license, an environmental permit, an urban impact assessment, or even a traffic permit.
• $765,000: A vast refrigerated distribution center built in an environmentally fragile flood basin north of Mexico City, in an area where electricity was so scarce that many smaller developers were turned away. 

Then again, what should we expect from a company that is clearly experienced at dealing with ethical grey areas, as the biggest customer of American gun manufacturer Freedom Group? 

Gem of the day

Breaking down the increasingly artificial barriers between how we define 'developed' and 'developing' countries is getting easier. It's now official that the UK:

• Is in food poverty.Thanks to soaring food prices and shrinking incomes, many families are going through a nutritional recession.
• Is in energy poverty. As the Big 6 utilities continue to increase energy prices by as much as 10% (funny that they all settled on similar hikes at such similar times), 7.2 million households are now living in fuel poverty.
• Is starting to experience water poverty. Scarcity of supply coupled with higher prices has already made 4 million households "water poor".

If that isn't proof to underpin the case for a truly green economy, I don't know what is.

Gem of the day

A classic case of how most big businesses still aren't asking the right questions to drive sustainable innovation at scale (via HBR):

"'What if I can change the game and make a car for one lakh?' Ratan Tata wondered, envisioning a price point of around US$2,500, less than half the price of the cheapest car available...He knew, however, he could still make money if he could increase sales volume dramatically, and he knew that his target base of consumers was potentially huge."

Imagine if Tata had instead asked "What if I can change the game and transform how affordable, healthy and low carbon mobility works in megacities?"

He probably wouldn't have gotten an answer that entailed selling about 170,000 passenger cars per year, flooding India with more traffic, more pollution and a big missed opportunity to transcend the impacts of car-centric development.

Gem of the day

There are many, many things that could be said about Chevron's new Aids Will Lose campaign. Here's one: it's a deliberately designed PR initiative to enhance Chevron's image and distract sustainability critics, after a particularly bad year revealing Chevron and BP represent the worst risk for investors given their respective oil spill records.

Case in point is this Tweet:

On the other hand, with global oil production continuing to plateau and no new conventional reserves in sight, maybe over the next decade it's Chevron that will lose.

That must be what Ian MacDonald, a VP at Chevron meant when he said this at the latest Kurdistan-Iraq Oil & Gas conference:

"I believe all of us stand on the threshold of a great adventure."

Gem of the day

If America's Ivy League universities can't get the intellectual argument behind 350.org's call to divest endowments from fossil fuels, they could at least do the math, right? After all, if schools like Harvard want to be around for another 375 years, it would be smart to recognise that abundant fossil fuels and the dollars attached to them sure won't be.

Or not (via NY Times):

"At colleges with large endowments, many administrators are viewing the demand skeptically, saying it would undermine their goal of maximum returns in support of education."

Even better, a spokesman for Harvard had this to say:

"We always appreciate hearing from students about their viewpoints, but Harvard is not considering divesting from companies related to fossil fuels."

Funnily enough that doesn't really seem to align with Harvard's mission:

"Harvard seeks to identify and to remove restraints on students’ full participation, so that individuals may explore their capabilities and interests and may develop their full intellectual and human potential."

Gem of the day

Case in point for why the sustainability/CSR community is partly responsible for BP's image leading up to Gulf of Mexico:

In 2010, 45% of 'global sustainability experts' polled by Globescan said they thought 'Beyond Petroleum' had an 'effective' or 'average' impact on BP's sustainability performance, despite the company's consistent record of oil spills and lack of serious investment in renewables.

Gem of the day

As one of the major service providers to BP's Deepwater Horizon rig, Halliburton has had a lot of big questions to answer to over the past few years.

That must be why in the Q&A on its website Halliburton is so open and honest about its role in the spill - provided you can find the information yourself:

"Halliburton’s contract with BP Exploration relating to the Macondo well is available on its website at www.halliburton.com. Halliburton’s responses to the various commissions and agencies investigating the incident are available in the form of press releases on Halliburton.com."

How useful.

Gem of the day

The concept of an 'Access to Medicine Index', comparing how well the world's big pharmaceutical companies are doing at providing people in developing countries with affordable drugs, could be just the shake-up this industry needs. Novartis continues its 6-year battle with the Indian government over pricing and patents, and GSK is still reeling from its record $3 billion settlement with the US government for fraud and civil liabilities (read: mislabeling drugs and covering up evidence in medical journals).

Instead, here's the quote the founder of the index chose to provide to sum up the challenge at hand (via The Guardian):

"Access to medicine is a multi-faceted challenge and therefore responsibility for improving it lies with a number of different actors, but the pharmaceutical industry has a critical role to play."

Gem of the day

Here's a gem that has to count in the top 5 worst forms of praise you can get in the business world (of Rich Kinder, CEO of American energy giant Kinder Morgan and former executive of massive, corrupt failure Enron):

“If Kinder had stayed on as president, Enron would still be here,” says Richard Smead, a veteran industry executive.

That seems just about right for a guy willing to say this about our global energy future:

Kinder says: "I’m not naive...I’m a huge believer in the genius of mankind, and I think we’ll continue to find new ways to utilize, explore for and produce more and more fossil fuels."

Another non-environmental wonder

London Mayor Boris Johnson has a solution to the UK's stagnant economy: sell cars to India (via The Telegraph):

"It is the economic partnerships that offer the most extraordinary prospects. Imagine selling a Jag to one in every 100,000 Indians. That’s a lot of Jags, and a lot of jobs."

Truly ingenious.

Another non-environmental wonder

News that Hostess, the infamous American manufacturer of sickeningly sweet snacks, has filed for bankruptcy, is attracting weirdly misguided analysis. Here's one gem (via Forbes):

"The company’s assets can become valuable properties of several of its rivals...I would imagine that its production machinery as well as several proprietary items such as recipes might make great additions to Kellogg’s, Kraft and even beverage giants CoCa-Cola and Pepsi. 'Have a Coke and a Twinkie' has a nice ring to it...Hopefully the brand can re-emerge as part of a company such as Keebler or Mondelez with proven track records that is able to make Twinkies the non-perishable item for which it is known."

Memo to Forbes: Twinkies are so artificial they can last up to 25 years without going bad. That's only one reason a nation facing 44% obesity rates by 2030 should never, ever eat them.

Gem of the day

The UK CFO of McDonald's on ethical sourcing (via FT):

“The health of farmers is important to us,” says Brian Mullens.

For a business that spends over £320m every year on produce from 17,500 British and Irish farmers, that statement could mean a lot.

In that case, given their record on health and their business strategy, which underscores "value will continue to be a key growth driver as we reinforce the affordability of our menu", they'd better not invest in feeding farmers McDonald's.

Gem of the day

There's been plenty of excitement about the Pentagon's growing interest in renewable energy. BP's astonishing return to "business as usual" in 2011 is case in point for why this shift could have a huge impact and change the game - because it really is a ridiculous game - for our global energy mix (via Businessweek):

"Since BP has admitted it violated criminal law, will the U.S. government stop doing business with the company? Not necessarily. BP is a big supplier to the federal government. It sold more fuel to the Pentagon in 2011 than any other company—contracts worth $1.35 billion...The military needs fuel for its tanks and trucks and planes."

Gem of the day

For the world's big food companies, there's an awkward cognitive dissonance at the heart of the sustainability agenda (via GSB).

It's the consumer's choice:

"Most large food makers have resisted government regulation, instead favouring self-regulation and emphasising the personal responsibility of consumers to make their own choices about diet."

But business markets to influence those choices:

"Marketing messages seen in food advertising strongly influence behaviour, especially among children who are forming eating habits that will last a lifetime."

Another non-environmental wonder

Just one potential reason why Microsoft lacks innovation (via Businessweek):

"The environment in Microsoft’s executive suite resembled something out of Game of Thrones, with division heads poaching talent from one another and thwarting attempts from other groups to collaborate on products."

Progressive.

Something that's actually good

Daniel Birnbaum, CEO of make-your-own-soda firm SodaStream, explains why the business models of Coke and Pepsi are out of date (via WSJ):

"If the beverage industry had to create itself now from scratch, it wouldn't do it the way it is. You don't need factories, trucks, bottles and cans. Transportation for carbonated drinks in the world utilizes 100 million barrels of oil every year. That is 20 times the BP disaster that hit the Gulf of Mexico. Every single day...[beverage companies generate] one billion bottles and cans, most of which just go to trash, landfill, the oceans or parks."

Gem of the day

Jeremy Leggett, CEO of renewables firm Solarcentury, reacts to today's report from the IEA predicting that oil will make the US the world's largest energy producer by 2020 (via Businessweek):

“It’s a comfortable narrative, and people are desperate to believe comfortable narratives."

And now for the uncomfortable narrative: as part of the report's launch, IEA head Fatih Birol called energy efficiency policy to date an "epic failure".

If Paul Ryan did the math, this scenario would probably add up.

Something that's actually good

Fantastic new report from nef makes the link between the economy's dependence on oil today and the banking industry in 2006, proving energy is our biggest barrier to prosperity:

"Unless nations prepare to break the relationship between fossil fuels and their economy, this will prolong or prevent recovery from the current economic crisis, in effect, placing a glass ceiling on recovery."

nef translates into clear policy terms what Kurt Cobb has described as "a financial system and physical infrastructure premised on continuous and rising levels of oil consumption."

In other words, it's the oil, stupid.

Gem of the day

Conservative MP Richard Bacon on HMRC's convenient tax relationship with Starbucks (via Guardian):

 "It smells – and it doesn't smell of coffee. It smells bad."

Another non-environmental wonder

An analysis of what it takes to win a campaign from one of Romney's advisors, almost as deep and meaningful as most of his "policy recommendations" (via NY Times):

“It’s one thing to say you are going to do it; it’s another thing to actually get out there and do it,” said Brian Jones, a senior adviser.

Another non-environmental wonder

Case in point for why our system for measuring prosperity is completely broken (via the FT):

"The storm that ravaged the north-east coast of the US last week will hit economic growth in the final quarter of 2012...However, economists are already looking forward to the likely boost to GDP next year from spending on reconstruction."

Another non-environmental wonder

McKinsey casts a dreamy look at the future for the world's emerging economies: replica USAs all around, with enough impersonal shopping experiences for everyone:

"Eventually, mom-and-pop stores may go the way of buggy whips, and the descendants of today’s village children in countries such as China and India may scoff at the idea of buying products and services anywhere but in climate-controlled malls or online sites. For now, though, manufacturers staking their futures on these booming economies must forge lasting relationships with a diverse set of retailers—before competitors do."

Gem of the day

Jack P. Williams, President of XTO Energy, shares some words of wisdom:

"Why am I so optimistic? Because I live in Fort Worth, which happens to sit on top of the most actively drilled shale play in the United States – the Barnett Shale. Where I live, shale gas activity is a familiar part of everyday life. You know that old saying, 'not in my backyard'? I don't have a shale well in my backyard ... but I can see one from my front yard."