I would like to thank the organisers of Sustainable Brands 2016 not only for providing a platform for me to speak about a topic that I am incredibly passionate about but for allowing the Mitchell’s Plain Bursary and Role Model Trust to showcase some of their achievements with a small group of you yesterday.
Since the adoption of the standards on the ‘triple bottom line’ by the United Nations in 2007
I have styled myself as a bit of a cheerleader for the cause. But, anybody present who knows anything about cheerleading can confirm that no cause advances continually with the same cheerleaders. The pom-poms fade, the kicks are lower, the pirouettes more jolted and the routines grow tired. The same naturally applies to cheerleaders for this cause, even though the cause of sustainable reporting has probably grown stronger and more necessary over the past ten, or so years. I should stress, however, that the launch of a reporting system encapsulated in the phrase, People, Planet, Profit, that draws attention to the environment in which business is conducted remains a huge step forward. This means that we continue to have a responsibility to ensure that the practice and metrics remain current and that each and every loophole is closed. We must also work hard to broaden the discussion and the ownership of the work and outputs and to create new frontiers where development checks itself. This is necessary, if only because resources are finite.
I was struck by a recent report titled, “How to make Green Growth the new Normal” that states that:
In 1900, the world used 35 exajoules of energy (the equivalent of the current annual electricity consumption of South Korea). By 2000, that had risen to 500 exajoules, and it could be 700 exajoules by 2030 – requiring bout 3 000 additional 1 gigawatt power-stations (one GW can power about as many as I million US homes.)
That is just one example of the 20-th century dynamic. As the global economy expanded almost 20-fold, resource requirements also expanded anywhere between 600 to 2 000 percent, depending on the resource. Even as demand for resources expanded, supply expanded even more.
The report also warns of other natural capital challenges including over-fishing, thinning tropical forests, soil erosion and species extinction.
So the world needs to check itself. And people working in the particular field of data gathering and report-writing have an obligation to ensure that your ‘dance routines’ do not grow ritualistic and tired. In fact, you need to grow a bit impatient and ask tougher questions of yourselves operating in this sector. As the great economist, John Maynard Keynes argued at one time, “once we allow ourselves to be disobedient to the test of an accountant’s profit, we’ve begun to change our civilisation.” Now, I need to digress and plead that you recognise this as a figurative plea for disobedience. I really don’t want to be quoted as having revolted against IFRS 8, or Solvency 2, or US GAAP, or whatever. My plea is that we think about the mode of sustainability accounting differently and recognise that if the only achievement is a contest to see how many boxes a corporation can tick in a particular column, then the endeavour for sustainability would have floundered on the sharp pencil of the accountant. We need the conscious disobedience.
I once read a scary report about illegal deforestation in Mexico that spoke of the gaps between the earnings of Mexican workers and the profits made by illegal loggers. The report stated that if the loggers paid a security guard to blink, say for 10 seconds, while the truck loaded with an illegal harvest passed by, he would grow rich. Each 10 second blink would give him thrice his monthly wage every time a truck passed by. If he were the original data capturer for sustainability reporting, he could honestly say that he did not see the truck pass by. Disobedience means handling this debate with eyes wide shut.
But the disobedience also means that each of you must learn to be more curious, to look outside of your sector and to engage in robust discussion about our collective future because every failure now, is a theft from future generations.
The challenge now is to create a strong cadre of activists, some of whom would be required to wear a suit and even a tie in their day jobs, but live by the norms of activism. And yes, that includes each of attending this gathering.
Let me share two topical examples of why this is necessary.
First, in the past two weeks you would have heard about a city called McMurray in the province of Alberta in Canada. We have heard of McMurray because of the tragedy where more than 100 000 people have been displaced by a monstrous fire that has destroyed everything in its path. The truth is that it may be years before some of the displaced people can return to where they once lived with family and neighbours in a community. McMurray is a city that grew because of the presence of a large oil industry that developed out of the extraction of oil from the Alberta tar sands. In Canada there was a huge debate that waged between the environmentally-conscious and the representatives of the previous government led by Prime Minister Steven Harper. Mr Harper and his Minister for Natural Resources, Joe Oliver, were climate denialists who described the Kyoto Protocol as a fraud. They argued for the extraction from tar sands which wreak massive environmental degradation. Now my hunch is that the reason why the fires are out of control is that Alberta has an exposed body of hydrocarbons, destroyed vegetation and altered water courses because at oil prices of $100/ barrel nobody needed to bother much about the environment. Or so they thought. The problem, of course, is that Mr Harper is no longer in office, but the devastation of his denialist approach has ruined McMurray and the lives of tens of thousands of its inhabitants. So, where do we start to ask the questions of the oil extractors? Do we ask when we read their glossy sustainability reports, or do we factor in the devastating costs of McMurray? What about the devastation in other parts of the world, such as the Niger Delta? What about the billions of litres of gases flared because their conversion into fuel would reduce the profits of the oil giants? Who asks these questions?
Second, the inhabitants of Indonesia, Singapore and Malaysia dread the balmy months of July, August and September because this is the period of the year when the most unbelievably horrible smog drifts across from the areas that have recently been deforested in Indonesia to cultivate palm oil. The problem is now so pernicious because the smog is no longer caused only by the burning on the surface, but more dangerously, by the smouldering peat below the surface. We all need palm oil products in our daily lives – whether in the soap to wash, or the shaving creams or in the detergents to maintain standards of hygiene. So when do we start accounting for what the lifestyle-consumer-goods manufacturers produce? Is it when they start the chemical processes using the palm oil as an input? Or should it realistically all be way upstream from there? And if they are compliant with the norms of people, planet and profit, what about other industries?
We can and should examine the rate of destruction of the eco-balances of our ocean where the consequences of illegal and unrecorded overfishing wreak havoc, where plastic pollution is both visible from outer space and present in micro particles in the digestive tracts of the seafood we consume, where the extraction of biological materials for the production of pharmaceuticals and cosmetics destroys the necessary biodiversity and where the production of too much CO2 has changed the acidity of the water and resulted in much warmer waters and melting icebergs. Where does the calculus of ocean destruction start? And if you answer that it has to be with the artisanal fisher who removed too big a catch, I am afraid that the answer is incorrect.
It is important to recognise that systemically there is the absence of enforceable controls, and in the consequence there is the destruction all around us. We must ignite a larger, more intense and much wider discussion as part of recalibrating the calculus of sustainability. We need to recast the tough questions such as who measures? Where do they start? What is the purpose of the measurement? And who cares enough to query? If sustainability merely means ticking the boxes to make the company that employs you look good, I am afraid that you are embarking on an exercise of global delusion, and we are allowing you to get away with it.
This is such an important issue – partly because the United Nations recognized that it merits developing new reporting standards, albeit that the codes are voluntary and therefore unenforceable. Between the UN Commission on Sustainable Development and yourselves, as practitioners of the art of recording sustainable development in your particular firm, are two other important layers. The first of these comprise the 193 member states of the United Nations which each has both the authority and the responsibility over their sovereign territory to make appropriate legislation. A scan across all countries will demonstrate exactly how flawed this arrangement is. Countries who easily sign UN protocols at the point of agreement, frequently fail to absorb the agreements into their national legislation, or even if they do, they fail develop the instruments for enforcement. But we all know that there are vast differences between countries and groups of countries in respect of their commitment to sustainability. Hopefully, the tragedy unfolding in our lifetime, with the reality of climate change, the speed of resource depletion and the huge, if sometimes still unexplained, disasters may compel change. We need much better laws, we need verifiable commitment to the promises and accords, and we need action and enforcement by governments.
And then, there are the corporations that sometimes are large enough to transcend national legislation and on other occasions are bound by sovereign law. Yet, it is not evidently in the interests of corporations to take on long-lasting responsibility. In many instances the quarterly results trump the sector sustainability, or the shareholder demands produce a sharper pencil for the accountants to ‘trim the fat’, including environmental sustainability, or the preponderance of reporting requires that boards trawl through thousands of pages that will result in better compliance, frequently to financial regulation, without making any attempt at genuinely giving attention to the sustainability of the business. All of this architecture will have to be reconsidered. We need a better grip on the reality of the destructive path of our development to this point.
Strip away all of the metrics for ‘triple bottom line reporting’, look beyond the verbiage of the UN Accords and let me leave no ambivalence about the importance of these measures. At the heart of all of this, we are dealing with the issues of justice, expressed as a set of intergenerational responsibilities.
John Plender, the distinguished columnist, writing in the Financial Times (31 July 2015) argues that “The capitalist system is able to lift people out of poverty but struggles to create a just society.”
This may account for why we have the occasional shocks to our system. I want to mention a few examples here – I need all the caveats place – I am mindful of the fact that some of these examples may still be the subject of ongoing litigation and I actually know too little to comment on those. I mention these examples only because they are topical at present. The first example is Volkswagen and the diesel emissions saga that shocked many of us to the core. Could it really be that easy to circumvent the truth? Then along came the second: Mitsubishi that has now admitted to euphemistically ‘altering the results’ on 25 of their models.
On a personal level, there has been a different kind of shock. It involves a corporation that I have a very soft spot for, partly because it invited me as a political party representative to address their entire workforce – from the sweepers to the MD before our first democratic elections in 1994. I have read their sustainability reports and marvelled at their quality. Their Chief Executive, Mr Rakesh Kapoor, writes in the introduction to the 2015 Sustainability Report as follows, “Successful companies today are those that not only embrace sustainability, but where being sustainable is integral to the way in which they do business. At RB, sustainability is at the heart of our corporate strategy”. This is a moment for a fist pump! And yes, I am referring to the much-admired Reckit Benckiser. So you can imagine my horror when the story broke about 10 days ago of sterilizers for humidifiers, produced and distributed by RB that killed about 100 people in South Korea. The company spokesperson says the number of cases linked is 177 and the South Korean press puts the number of cases at around 700. When reading of this, I was shattered to learn that the company was fined just the previous week for misleading customers in Australia, apparently about the painkiller, Nurofen. I cannot even begin to explain how deflated I’ve been by this news.
So, in respect of sustainability reporting, we have to wonder what is there to believe in. However, what we cannot do is to abandon this fundamental cause. We need, as Keynes wrote all those years ago, to become a little ‘disobedient to the test of the accountant’s profit’, so that we begin again to ‘change our civilisation’. We have to broaden the discussion, and take the questions of sustainability out from the boardrooms, and the annual reports or the polite discussions in the developed world and ensure that everybody, but especially the poor and the young are part of the discussion. We must do this with energy and determination as an integral part of revaluing our future.
We will not succeed at making a difference towards a truly sustainable future, unless you, in your everyday practice can persuade decision-makers that change requires time and commitment and that it is necessary to look far beyond the next reporting cycle. Some years ago I was privileged to serve on the Oxford Martin Commission for Future Generations – my humble advice to you as practitioners of sustainability, is that you should read the report and incorporate the findings into your everyday practice. Essentially, the report argues in its conclusions that:
· We are discriminating against future generations simply because they will be born tomorrow. Discounting is an essential tool used to calculate the future value of something today. It has to play an essential part in weighing up the costs of taking action now to prevent disasters in the future.
· We should attack poverty at source by recognizing the intergenerational effects of poverty. What we spend on education and nutrition now is vital to secure a different future.
· We must invest in young people to reduce the scars of long-term unemployment and disconnection.
If we take these three proposals from the report on our future, you may ask what it has to do with sustainability. My response is “everything”. We must invest in the youth to ensure that we can enlarge the cadre of critical thinkers who will engage in action against environmental degradation. Your efforts at working for sustainability will, I am afraid, come to nought if societies remain as grotesquely unequal as they are in most countries. Not only are the poor excluded from market access, they also feel excluded from the discussions we have about the future. As part of building an understanding of a sustainable future we must work to counteract the sense of despair and alienation that consumes the being of too many people.
An informed youth is the key to sustainable development.
I thank you.