The Rise of Corporate Leadership

I suppose that now the dust has settled I should say a few words about Rio plus 20, which has been universally slated as a failure.

I did not go to Rio- in these straightened times, I did not think I could justify the expenditure. However, I did go to the Johannesburg Earth Summit back in 2002 as I had put together the UK Government submission on Financial Services.

Ten years ago, in Johannesburg I was struck by the lack of ambition of the official delegates- it was almost as though world leaders had been carried away with enthusiasm at the original earth summit, and their successors (and the army of minders accompanying them) were determined to avoid making even the slightest concession which would commit them to action of any kind.

 It was a bizarre bunker mentality- reminiscent of a spinster at the County Fair who is so determined not to be swindled by hucksters, that she sits in the refreshment tent nursing a cold cup of tea and completely missing out on the sunshine and fun. 

What struck me was how completely at odds this was with the drive and enthusiasm of the attendant circus of NGOs and Corporates, who clashed and cooperated on a massive range of initiatives designed to keep the flame of sustainability alive.

One particular exchange really stuck in my mind. It was a side event on corporate social responsibility in the minerals extraction sector. The CEO of a major mining firm with interests in West Africa, had stood up to make a speech, when he was interrupted by a group of protesters, decrying his company's record (if memory serves me, they wanted to give him an award for "greenwash").  However, they in turn were interrupted by an immensely dignified African who in a mesmerising baritone, quietly stated-





"It was not a company who jailed me for eight years for daring to organise a union. It was not a company who arrested and beat my colleagues when they questioned why the millions of dollars flowing into my country from mining were not being spent on schools and hospitals. It was a government." (Check out African Arguments for a fascinating insight into these issues)

 



 Now, I am not for a minute going to claim that companies are not culpable- through inaction and through collusion- for corruption, environmental destruction and abuse of human rights. However, I do believe that these issues are firmly on board room agendas.

Why? Well the driver is altruistic self-interest- these issues affect bottom line performance, and scandals concerning human rights, corruption or pollution show up clearly on balance sheets. 

Many of the more forward sighted corporates are now using sustainability as a management tool, horizon scanning to identify threats to profitability from resource shortages, or opportunities for new products or services to meet demands arising from global challenges.

The financial research on the London Accord website nails the economic drivers- not all corporates have woken up to sustainability yet- but those that have are significantly out-performing their rivals.

Which brings me back to Rio+20- governments may have abrogated their responsibilities and stepped back from leadership on sustainable development, but corporates are stepping up to the batting plate-  The Corporate Sustainability Reporting Coalition and the Principles for Sustainable Insurance are a case in point.

The latter of these initiatives presents a particular irony- it is entirely industry driven, and it aims to ensure that investors can price sustainability risk accurately when assessing the value of equities. Where is the government led initiative calling for agreed reporting standards for nations so that sustainability risk can be priced into sovereign debt?

I am not naive, I am aware that there are ample examples of appalling corporate behaviour, and there is a long way to go before Corporate sustainability is the rule, rather than the exception. However, I firmly believe that attitudes are changing- the agro-commodity sector is viewing water shortages and land degradation with alarm, the manufacturing sector is accutely aware of resource depletion, climate change and rising energy prices, and the financial services sector is begining to price climate risk.

Furthermore, the conversations I have with Corporates reveal increasing disquite with the failure of policy makers to develop clear and stable policy within these fields.

What I hear is a repeated mantra- "We can take account of environmental and social risks, we can factor legislation and regulation into our business models- but policy risk is pure poison- how can you commit millions of dollars of investment, when a programme can be killed with one speech by a politician pandering to a partisan audience?"