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  • Leo Johnson talking to Rob Cameron at our London office.

    This article originally appeared in Radar Issue 03: What Chance Change? Exploring Sustainable Finance.

    Leo Johnson, a partner in PwC’s Sustainability and Climate Change team, has recently co-authored Turnaround Challenge: Business and the City of the Future, which explores how capitalism can reinvent itself to offer sustainable growth.

    Rob Cameron spent a morning with Leo exploring his views on the wisdom of Hollywood icons, tequila capitalism, jujitsu moves and the parallels between banks and rock ‘n’ roll.

    Rob Cameron: Let’s start with that most British of questions – what do you think of the recent weather here in the UK? I ask because I wonder if it takes this kind of flooding disaster to get politicians to pay attention to the risks of climate change?

    Leo Johnson: We should be so lucky. My take is that major progress won’t result from flooding. If anything my fear with big-time impacts from climate change is that they could bring what they call ‘threat rigidity’, the draw-bridge going up. My optimism comes from a different place than disaster. To me, it’s most simply put by Marilyn Monroe. She said: “Sometimes good things fall apart so that better things can fall into place.”

    This is exactly what Schumpeter was trying to say too. His idea was that there are these waves of ‘creative destruction’ where the technological model that was triumphant starts, as it gets fully deployed across the economy, to burn out and then becomes dysfunctional, creating the space for disruptive technologies to erupt. …

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  • Radar Issue 03

    The financial crisis has dominated headlines for several years. Now the talk has switched to recovery, which has led us to the question what type of recovery? There is an urgent need to reshape the global economic system—including financial markets—to better serve the needs of society, the environment and the wider economy. While we welcome signs of improved financial investment, rising incomes and profitability, we must also ensure that they are not at the expense of more sustainable development.

    In this third edition of Radar, we explore the issue of sustainable finance and ask what chance is there for change? In our lead article we outline the business case for banks to be the institutions that steer us into a new era of sustainable finance (Banking on Sustainability: Financing the Future). Rob Cameron interviews Leo Johnson about his new book and the signs he sees of a new form of capitalism emerging (The Unusual Suspects: Leo Johnson). …

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  • The idea of business model innovation—that a company could launch a new business model never conceived of before, or transform an existing business model—has long captivated business leaders. And yet, executives are often held back by vested interests in their current approach: “If it ain’t broke, don’t fix it.” But as global trends—environmental, social, political, technological—continue to shift the foundations of our current business models, incremental innovation will become less effective in enabling companies, industries and whole economies to adapt and succeed. There is an urgent need for fundamentally different approaches to value creation….

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  • Crowd-sourced models enable individuals to invest directly in solar projects and novel partnerships will finance solar projects. Image by Activ Solar, Flickr

    This is post 8 of 10. See next or previous.

    For over 25 years, companies have valued our ability to serve as their early warning system—to interpret emerging issues and trends in the sustainable development agenda and help them anticipate, understand and respond to shifts in the business landscape. In 2013, SustainAbility re-launched a dedicated function to regularly track and interpret “what’s next”—our Ten Trends of 2013 series is the distillation and public output of our thinking over the year.

    In the wake of the 2007/8 financial crisis, the phrase “financial engineering” has come to have a negative connotation, conjuring images of math wizards creating esoteric financial products that brought our global financial system to its knees. While such engineering is showing signs of a gradual rebirth, we see a new form of financial engineering happening–one that promises beneficial social and environmental outcomes. …

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  • Experts feel the urgency of issues like food safety is on the increase but corporate performance is still lagging behind. Image © David W Oliver, Flickr

    What issues are sustainability experts most concerned about? How well is the private sector addressing these challenges? Which sectors are most accountable for tackling these vexing problems? After analyzing responses from nearly 900 sustainability experts in 91 countries, the recently released 2013 Issues Survey, Challenges, Performance and Accountability, dives into these thorny issues, with mixed results.

    It’s been nearly two years since The GlobeScan / Sustainability Survey explored how our international pool of sustainability experts see issues—ranging from climate change to food safety—and the urgency and corporate performance surrounding them. In 2011 our survey (Key Challenges and Industry Performance) found urgency regarding several leading issues was in a slightly downward trend, and industries received mixed reviews about their ability to manage the transition to sustainable development—with no sectors receiving high marks for sustainability performance. …

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  • Will the vital pollination provided by bees, which is currently at risk due to Colony Collapse Disorder and other stresses, be the next big eco-system issue? Image © bob in swamp: Flickr

    On December 3, I moderated WBCSD’s US Midwest meeting, a one-day conference held in Columbus, Ohio whose theme was to “scale up and accelerate the transition to a sustainable economy, in the US and beyond.” The meeting was packed with excellent speakers, panels and working sessions on a diverse set of topics, including: ecosystem services, reporting, communicating with investors, inclusive business, innovation and business leadership.

    At the end of the day I was asked to wrap up the meeting with a “Top 10 List” of the issues that stood out most for me. I ended up with eleven key words and phrases. Much as Spinal Tap’s Nigel Tufnel’s amplifier that goes to 11 was “one louder” than most amps, my Top 10 List is “one longer” than most Top 10 lists.

    1. Responsibility. I didn’t expect this to be on my list, but it popped up several times during the day. Ohio State University President Joseph Alutto kicked off the conference by telling us that OSU has a responsibility to address sustainability in both its operations and its curriculum. One of our corporate speakers declared that it is time for the business community to step up and take responsibility for leading the transition to a sustainable economy. With most of the conversation these days focusing on the business case, it was significant to hear that responsibility remains an important motivator. …

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  • Many business leaders find themselves stuck in a plateau on their ascent towards “Mount Sustainability,” unable to scale at the pace required to address global challenges, says the CEO Study on Sustainability” by the U.N. Global Compact and Accenture. The report is an important read for anyone working in the sustainability profession, and the results show how far corporations have come in their journeys towards sustainability, as well as how far we have to go….

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  • Recently I attended an event as part of the United Nations Global Compact Leaders (UNGC) Summit entitled “Impact Investment in the Post-2015 Development Agenda,” that focussed on the practical steps needed to bring impact investing to scale. Given the size and systematic nature of issues that the current Millennium Development Goals seek to address, both for-profit companies and mainstream investors will need to play a key role in creating solutions. Recent reports by JP Morgan and the Rockefeller Foundation as well as the World Economic Forum (WEF) suggest that impact investing may provide the right platform to do so, but that this will require both collaboration and innovation from a range of stakeholders….

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  • Mineral rich frontier economies like Myanmar are attracting a surge in investment but some are advising caution when looking to move into regions with a track record of human rights issues. Image credit: CC license by rhaddon/Flickr

    Between traditional news channels, blogs, and social media, it can be hard to keep up with what’s making waves in the field of sustainable development. In this roundup we aim to cut through the noise with a handful of highlights that have caught our eye.

    Social Investment Gathers Momentum

    In the UK, a number of developments in the social impact space are creating momentum around the departure of business as usual. Last year saw the establishment of Big Society Capital, a social investment institution that has been set up by the UK government to provide access to finance for social enterprises. In early June this year, the Social Stock Exchange (SSE), an investment of Big Society Capital, was launched as an online platform where listed companies are connected to investors who are looking for measurement of social and environmental credentials. To be listed on the SSE, companies have to produce social impact reports that are assessed by a panel of experts in the field. The SSE is supporting the shift to a broader definition of shareholder value by enabling companies to make their social and environmental impacts more transparent and ultimately, more quantifiable to investors. …

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  • Time is of the essence: Are investors failing to acknowledge long-term risks to their funds and overvaluing their assets?

    Earlier this month I attended two investor-related events – the launch of the new report published by the Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment, and the RI Europe 2013: Investor-Corporate ESG Summit. Both events recognised the challenges of incorporating ESG considerations into company valuations, and discussed the growing set of initiatives and approaches that investors are taking to resolve the situation.

    In the first report in the series – Unburnable Carbon: Are the world’s financial markets carrying a carbon bubble? – Carbon Tracker argued that if the world is to remain within the 2 degrees limit of tolerable global warming then it can only “afford” to burn approximately 20% of total known fossil fuel reserves, leaving 80% of assets technically stranded and meaning that investors who are valuing companies based on their ability to continue to burn these fossil fuels may be massively overpricing their assets….

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  • “The current economic system, built on the idea of perpetual growth, sits uneasily within an ecological system that is bound by biophysical limits.” So states the fifth Global Environment Outlook (GEO-5), published by the United Nations Environment Program (UNEP) in 2012.

    Renowned economist Kenneth Boulding reflected the same sentiment more pointedly many years ago when he said: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

    Infinite growth is the operating principle, reinforced by our current economic and political systems, on which many of the world’s business leaders, policy-makers and investors make decisions every day. As a result, the gap between our current burn rate and what the planet’s environmental systems can support on a sustained basis continues to grow. This gap represents a significant risk – and an opportunity – for the business community.

    This is the context of the most recent collaboration between UNEP and SustainAbility, along with Green Light Group: a just-released report titled GEO-5 for Business. Using GEO-5 (a 500+ page compilation of environmental data, policy options and scenarios) as its foundation, GEO-5 for Business serves as a translation and primer written specifically for business leaders. While much analysis has been conducted on the impacts of business on the environment, this report looks in the other direction – at the impacts of environmental trends on business….

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  • Image: USFS Region 5 (Flickr)

    “The best time to plant a tree is 20 years ago. The next best time is now.” Chinese proverb

    If planting a tree is a metaphor for taking action on climate change, the old Chinese proverb is wise advice for our present day dilemma. We are, of course, a couple of decades late in taking meaningful steps to transition to the low-carbon economy necessary to safeguard the quality of life and economic prosperity that businesses, governments and individuals strive to achieve and maintain. But just because we should have begun long ago does not mean we should not take action now. Indeed, urgency has been added to necessity, and adaptation has been added to mitigation, as the implications of a warmer world are becoming clearer with each passing year….

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  • Here’s the crux of the sustainability dilemma: What researchers and nonprofits deem “important” to the long-term health of companies doesn’t coincide with information that investors consider “material.” That’s how one investment professional described the current “epic battle” to our company, SustainAbility, in an interview for the latest edition of our “Rate the Raters” research, The Investor View.

    There’s a wide gap between what investors say is important and what they do with their money. For example, more than 1,000 investors, managing more than $30 trillion in assets, have signed on to the United Nations’ Principles for Responsible Investment….

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  • The momentum around fair and responsible tax practices continues to build. I was struck by a recent comment from Britain’s highest paid executive who decided he should support responsible tax practice by disclosing that he pays all UK taxes with minimal tax avoidance (i.e. the legal ways of reducing tax bills). He believes, he says, ‘that if you want to be accepted in society you have to be seen to be paying your fair share’. His disclosures come hard on the heels of public denouncements of aggressive tax avoidance by David Cameron as ‘morally wrong’ and by a Treasury minister as ‘morally repugnant’. Nor is this issue restricted to the UK. Personal tax affairs feature strongly in the US Presidential elections. And the French billionaire CEO of Louis Vuitton was widely pilloried for seeking to shift his domicile to Belgium – allegedly to avoid the new 75% tax rate….

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  • One of the perks of being a graduate student at the University of Michigan was access to football season tickets. With this, I learned the various rituals undertaken by the student section on game day, including chanting, “who cares?” when opposing team players’ names are announced before each game.

    This ritual still makes me smile for some reason, and is also a question many of us in the sustainability field ask during ratings and rankings season, which kicked off last week with the release of the Carbon Disclosure Project and the Dow Jones Sustainability Indexes. These results, like those in previous years, sparked a flurry of press releases by proud companies, angst in companies who fell short, blogs debating the merits and shortcomings of ratings, and consultancies offering their services to improve company performance….

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  • Over the last decade, there has been an extraordinary growth in the number of ratings and award schemes designed to measure corporate sustainability performance. While these rankings play an important role in improving corporate performance, companies are struggling to keep up, and many question the time and effort required to respond to raters’ requests for information.

    Is it all worth it? Which ratings, if any, do people pay attention to? How much does a company’s score …

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  • The phrase “In praise of Barclays”, used during this, of all weeks, and with Wimbledon coming to a conclusion, surely elicits only one response: “You cannot be serious!!” Well, no, not exactly serious. In fact, most definitely not serious, because the company’s performance has been nothing short of woeful at best and disastrous at worst. So, why the headline?

    I will remodel it: “In praise of Barclays individuals that I know have worked patiently and diligently for over a decade or more to drive change against all the odds, and in praise of the tens of thousands of frontline Barclays staff who are being vilified daily by the media. They have surely felt …

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  • I’ve just returned from a visit to Philadelphia and New York last week where I had the opportunity for in-depth conversation with students and faculty at Wharton Graduate School of Business, as well as business and thought leaders from Coca-Cola, Johnson & Johnson, SAP, Unilever, Interbrand, Ogilvy, GRI, Corporate Responsibility, SustainAbility, The Economist and many others. All of these conversations touched on how we are unfolding our thinking about, and finding ways to measure, new forms of value that business might deliver to its customers and other stakeholders in the future. Underpinning these rich and varied conversations was the growing drumbeat, launched in New York, of #occupywallstreet. This growing movement is yet another indicator of the pressure on business to demonstrate its ability to extend its focus beyond profit to other forms of value creation for broader swaths of society.

    The fact that the focus of #occupywallstreet seems to center on “corporate greed” as the target of its aggregated angst is just one sign of disconnect between business and the stakeholders to whom business is supposed to be delivering value.

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  • Copyright (c) Kyra Choucroun

    Despite years of thinking about the traditional model of economic growth, it wasn’t until I drove through rural Ghana that it truly hit me just how spectacularly it has failed to deliver on the promise of global prosperity.

    In my last blog I challenged the widely held belief that infinite growth is both necessary and viable. That piece generated a flood of responses, from howls of protest at one extreme to speaking invitations at the other. And it was one of those invitations that led me to Ghana in the first place, to share my views on how Africa can play a part in tackling the world’s most complex challenges at a youth-led conference in Kumasi.

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  • A question and answer with Wood Turner and Mike Bellamente of Climate Counts, one of the ratings profiled in SustainAbility’s Rate the Raters research series.

    1) Looking at the Phase Four paper of Rate the Raters, what resonates most with you?

    Now that corporate sustainability ratings have been around awhile, SustainAbility’s Rate the Raters project helps us gauge what the future holds. The phase four paper establishes that rating standards will require greater differentiation moving forward, and that raters will need to distance themselves from the overly saturated data compilation side of the business in order to remain competitive. We at Climate Counts certainly believe this to be true; indeed, if our goal is to point the business community in the direction of climate change awareness and leadership, it should be done with clarity and efficiency, not complexity and duplication.

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