Category Archives: Sustainability

Does Suicide Sell?

Hot on the heels of the Motrin Mommy fiasco, a new row has broken out on Twitter over a series of advertising visuals developed by BBDO for Pepsi. You can read all about it at my blog on ZDNET.

In the end the conundrum is this –  should commercial speech be allowed free speech protection and artistic sanctity? My view is that free speech ought to be protected fully but when the chips are down a commercial enterprise and their PR mavens are going to find it nigh on impossible to defend. There have been exceptions, Benetton comes to mind but is that what a Benetton is for?

In the Pepsi case – we have a company that is committed to sustainability & transparency. They publish their standards and performance and they admit a mistake and say sorry.  The alternative could be to stick by their guns and defend it. I would respect that too and I would enjoy seeing that play out. BBDO, sadly has done neither — they appear willing neither to say sorry  and recant or stand behind the work and their client.

There will be many more moments like this in the future. It won’t be viable in future to always either roll over or hide.

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You are the supply chain

I was inspired if only by the title of this recent Economist Free Exchange blog. I often think of supply chain as a B to B concept when, of course, the supply chain exists solely for the final link – you and me. But how much responsibility do we take for our consumption and the associated externalities when we forage for bargains? In my opinion, I think we are OK with the low prices so long as the externalities along the supply chain stay hidden. €2 for a T-shirt? Great. €10 for a camera? Even better, just don’t ask any questions.

Occasionally, reality comes crashing in and we hear the stories of sweat shops, safety & quality issues, not least recently from China. Thankfully, we have quality standards such as SA8000 to assure supply chain ethics and more and more businesses are adopting such. But what of the carbon externalities? Who should be responsible for this cost? If you look at carbon from the point of view of the nation state then indeed the statistics are damning for BRIC countries. China’s incremental annual growth in energy consumption equates to roughly the entire energy requirements for the state of California for one year. If the UK just shut down energy production right now, the diverted capacity would only keep China going for three weeks.

So what is China doing with all this energy? They are busy making stuff mostly for you and me. If you take a view of carbon accounting from the point of view of the end consumer and you allocate carbon in this manner the statistics would again clearly show that it is the developed world’s consumption that is causing the lion’s share of Green House Gas emissions.

So who should act? I felt a little humbled by an article in the September 3, FT about how the Chinese government has announced a campaign to ask citizens to reduce personal energy consumption. The campaign goes so far as to suggest that indulgence in the local tipple, baijiu, should be limited to a half litre a month in order to save 0.88 kg of carbon per person. Civil servants have been saddled with pay related eco efficiency KPI’s. It also stretches credulity to suggest that clothes might be washed only once a month. Of course this campaign is doomed, because the fact is energy in China is consumed overwhelmingly in the industrial sector by the people busy making stuff for export. Still we cannot but acknowledge that the government is at least engaged.

Today’s FT has a remarkable feature on the greening of Wal Mart. It turns out lobbyists are now flocking to Bentonville rather than Washington to try to influence Wal Mart’s environmental supply chain standards which apparently is now a more potent force in the economy than government regulation. Voluntary compliance it seems is here to stay as an important factor for supply chain efficiency as well as risk and reputation management. According to Kert Davies of Greenpeace, USA:

‘We spend a lot energy trying to get giant corporations to move an inch and here we have the biggest corporation of them all shooting for the same targets. ……… They’re acting as we would act, .. to get full carbon accounting even before it is required by regulation.   …. I love that they just go for it’

The flip side of this is that Wal Mart may eclipse the role of government and split the environment lobby between those who believe Wal Mart’s standards are too low and illegitimate and those who are grateful for incremental progress. I am with the latter opinion. This is a remarkable turn of events and the way is clear for anyone, competitor or regulator to raise standards further beyond Wal Mart’s voluntary action.

So it seems to me the responsibility is reaching down the supply chain finally to you and I. Tesco too has promised carbon labeling. So when you go to the supermarket with your weekly budget of not just money but also a fair personal carbon allocation of the carbon we can afford to emit, what will you choose to buy?

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Spiritual Offset

What do Leonardo DiCaprio, the Pope, Aer Lingus and Ian Paisley have in common? Read on and find out.

Carbon offset purchasing has been a somewhat controversial if pragmatic solution towards climate change.  Back in April, Andrew Revkin writing in his International Herald Tribune column quoted Denis Hayes of the Bullit Foundation:

“The worst of the carbon-offset programs resemble the Catholic Church’s sale of indulgences back before the Reformation,” said Denis Hayes, the president of the Bullitt Foundation, an environmental grant-making group. “Instead of reducing their carbon footprints, people take private jets and stretch limos, and then think they can buy an indulgence to forgive their sins. ….This whole game is badly in need of a modern Martin Luther…”

What can I say? Someone in the eternal city must have been reading the IHT and had a light bulb or two go off. Guess who is setting up shop for brisk business in indulgences at the Greenpeace festival in Waveney this weekend? Head Office is also separately getting in on the act by declaring this Sunday ‘Save Creation Day’ according to the Beeb.

Not that the Holy See is being complacent about climate change, while it is clearing the path for us to the eternal, it is also still managing it’s own carbon footprint back here on this mortal coil. Last month the Vatican announced a massive carbon offset programme in Hungary towards becoming the first carbon neutral sovereign nation on earth. Then this week with spiritual and physical offsets all in place the Vatican announced it’ entry into the airline business. With the environment dimension accounted for how well is this venture doing on the social and economic dimensions of sustainability? It’s a mixed bag, the inaugral flight was not without it’s customer relations issues when pilgrims were prohibited from taking holy water on board. Even the vatican is not immune to the anti terror security gauntlet at airports these days.  God’s reputation for price optimisation and overall yield management also took a drubbing from the people at Ryanair, now the competition in more ways than you might imagine:

“Ryanair already performs miracles that even the Pope’s boss can’t rival, by delivering pilgrims to Santiago de Compostela for the heavenly price of €10”

So there is a great deal more to sustainability than technical environmental management, measurement and offset. Even the vatican must face competition, socio political externalities and return on capital hurdles to sustain this business. Spare a thought then for poor Leonardo DiCaprio who had to face an unexpected and multi dimensional sustainability question this week from Kate Coe of the Grist at the Time Warner launch of The 11th Hour. The question: is 11th Hour a union movie?  Answer:  err… no.

Kate’s objection is this:

‘ …..it’s impossible to discuss — and attack — climate change without addressing issues of social class and economy. Encouraging conscious consumerism without addressing the underlying class and labor issues is irresponsible — no matter how green the product, how progressive the process.’

It was a bit harsh but it does underline an important point we see in abundance in the aviation business and elsewhere. Taxes, voluntary or otherwise, may not be an effective method to reduce consumption. Ryanair say it isn’t here and I think they are probably right. So does the extra cost associated with an offset or tax amount to an indulgence for the wealthy and an object of exclusion for the poor? Tread carefully the politician who tries to take away our access to air travel. Also tread carefully the business who sells carbon off sets or other environmental premiums. With still immature standards for carbon markets, assuring consumers so to maintain confidence of the bottom up consumer led action on climate change is paramount. See AccountAbility’s excellent report What Assures Consumers On Climate Change? here.

Consider the plight of Aer Lingus. Last year Ryanair attempted to take over the airline just one week after it was floated and currently holds a 29% holding. In recent weeks it has tried to force Aer Lingus to call an EGM to force a reversal of it’s decision to transfer it’s Shannon to Heathrow service to Belfast where it will set up a new base with new and less favourable labour conditions. The Irish government also holds 25% and employees another 22%. The opposition party and local politicians have placed Aer Lingus and the government under immense pressure to U turn in the interests of the economic & social welfare of the west of Ireland region. If I was cynical I might assume Ryanair would prefer to see Aer Lingus struggle to operate the less profitable Shannon – London route in head to head competition than move to the more profitable base in Belfast.  Aer lingus has rejected Ryanair’s call for an EGM as they believe listening to their number one shareholder also the number one competitor on this issue would be a breach of competition law and that Ryanair’s true motive is to destroy shareholder value at EI.

So aside from the environmental stakeholders, Aer Lingus is also finding itself juggling the competing & conflicted demands of customers, politicians, shareholders, employees whilst trying to stay within the framework of good corporate governance. Even the church, without the divisions of reformation this time, has gotten involved in this unholy row. No wonder, CEO Dermot Mannion had a jittery PR launch in Belfast. Look here for an hilarious picture from the event. Which finally brings us to Ian Paisley. It’s a huge political breakthrough that Ian Paisley now shares power in Northern Ireland with Sinn Fein in a devolved government. Nothing short of miraculous and personally having grown up in Ireland during the troubles not something I ever thought possible. I don’t know what Ian Paisley thinks about the sustainability performance of either Aer Lingus or the Vatican though we all remember well his infamous heckling of the Pope at the European Parliament in Strasbourg back in 1988. Seems like a lifetime ago. Watch it here.

And speaking of things never thought possible, what is the point of all this? It’s all to say that sustainability and stakeholder management is a complicated and long game. It may seem intractable and dare I compare them but so too did the problems of Northern Ireland. Some ideas will fall by the way side, others will catch on and go to strength. Climate change is a huge problem but maybe it is just about possible for us to find in time not just a technical solution but a solution that also addresses all the associated social, political and economic issues.

In the meantime, it is critical for all major organisations whether business, government or even the church to have antenna up, information on hand and be at the ready to engage intelligently with increasingly enabled and informed stakeholders.

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