development needs to be brought to the court of public opinion. Ethical,
progressive companies deserve our support.
David Rutherford reporting from Rotterdam
I have recently returned
from a Triple-Bottom-Line Investment (TBLI) conference in Rotterdam. Triple-Bottom
line reporting takes into account a companys financial position
as well as providing an auditable position on its social and
environmental impact. In essence a starting point from which to develop
a sustainable business culture.
Buzz words such as, socially responsible, corporate citizenship,
triple-bottom line, hang heavy in the air and litter positioning
papers. Do they mean anything or provide for better environmental protection?
In a word, no, not if left unsupported by action and intention.
Mans propensity for inflicting self-damage is a long and distressing
history however, socially responsible investing and developing a sustainable
business culture may warrant its own chapter.
Dont get me wrong a great many people have their hearts and minds,
dare I say even souls in sustainable development. However there appears
to be two opposing forces seeking to make a compromise that threatens
only to make a dogs breakfast of the whole concept. On the one hand we
have the NGOs and people like you and me, seeking a better, environmentally
friendly and socially equitable world. On the other hand are the folks
who control the purse strings, trying to work within fiduciary duty and
liability laws and people like us in our guise as employees, trying to
get our job done as quickly and cost effectively as possible.
The first group understands that money makes the world go around and is
attempting to work with the business community in order to achieve their
goals. The other side is sympathetic to those goals, especially if brand
enhancement and cost savings can be achieved, but here is the biggy
Want to see the solid business advantage for socially responsible
question hung heavy over the conference Why does Socially
Responsible Investment need to out-perform the market, in order
to be viewed as viable in the long-term?
simply keeping pace with the market, would in effect be a real sign
of the markets acceptance that sustainability is to be embraced.
It seems that NGOs can badger, cajole and shame corporations
into action, but having got into bed with the asset and fund managers,
they seem to be compromised when it comes to pushing for an answer
on this key question. Unable to bite the hand that has invited them
into the engagement process and which, offers them commercial legitimacy,
when the question of out-performance is raised, it is fended off
and left hanging like a bad smell.
The reason we were
in Rotterdam, why the buzzwords previously mentioned exist, is because
at present the world is developing in an unsustainable manner and we
are trying to find a workable solution to rectify this global problem.
To be now ten years down the road since SRI was born is on the one hand
encouraging, at least the idea didnt die at birth. On the other
hand, to be still having conferences exploring the business case for
sustainable development, (basically and ultimately a tool for prolonging
the viability of our existence) is more than a little depressing. We
might as well be debating the business case for humanity because we
are in effect debating the business case for morality, for the legacy
we leave our grandchildren and their children.
Some would say that it seems facile to be debating the merits of SRI
performance in bull and bear markets and adoption of Sustainable Development
on risk and reputation grounds, yet apparently there is no other way.
Corporates put up a persuasive argument that further legislation is
unnecessary, that they and the markets are driving sustainability and
that they should be left to it. To a degree they are right, in so much
as high-environmental risk companies are pushing this, but
they are doing so for brand enhancement / protection reasons. That cost
benefits can be achieved in the process, i.e. profitability can be enhanced
is a wonderful bonus and incentive, and it is this that has become the
business case for pursuing sustainable development. It is
the business case that everyone is latching onto and pushing
and it is that which is prompting the move to sustainability, not a
Paulean style conversion to environmental protection, or
a sudden twanging of social conscience.
Some would say, who cares how its achieved just as long
as its achieved, however one wonders how SRI will develop in a
sustained down period. SRI is almost a Sector bet at present
(especially in the retail market), weighted in favour of Tech companies,
which explained its good performance until the tech bubble burst.
There are it would seem three routes to attaining sustainable development:
1. Set a global target for emission levels and work backwards from that
2. Highlight the business case for sustainability, and implement legislation
that offers a carrot and stick approach in equal measure.
3. Stakeholder / shareholder / consumer education and action.
The answer lies not in following one route rather in perusing all three.
Clearly SRI has to be taken and sold to the public. Interestingly the
Sunday Telegraph (21 Oct) carried an article on the growth of Green
Funds and the various indices that have sprung up. Most interesting
was perhaps the articles conclusion in which we discovered that
Close Fund Management which offers a FTSE4Good tracker fund, found that
its clients were not taking up this option because they felt the index
was not ethical enough! Nikko Asset Management
- Japan, who presented in Rotterdam, stated that they were very surprised
at the domestic appetite for green funds. Clearly there is a public
demand. Perhaps we need to tap into the primetime viewing audience to
further grow the market and explain how, where and why they should be
investing and what are the relevant issues that they can address for
Contrary to the corporate argument, we do need more legislation of the
kind introduced by the UK government last year, requiring greater transparency
within the pension industry on their policy towards social, environmental
and ethical issues, given the impact it has had on the market. Perhaps
this could be expanded to all investment vehicles. The European Commission
green paper on CSR, advocating a triple-bottom approach to reporting
should be ratified and adopted as a European standard. The FSA should
compel all companies to report their social and environmental impact
as standard in all analyst meetings; not just those conducted with SRI
We must remain on our guard and ensure that the more easily achievable
social side of its mandate doesnt hijack the sustainable development
agenda. Improved staff / workers rights and community investment risk
being viewed (deliberately in some instances) as an extension of a North
American style community outreach project. There is of course
much validity in pursuing the social agenda especially addressing child
labour issues, however this must not be given priority over environmental
development needs to be brought to the court of public opinion.
working conditions and more prosperous communities could be redundant
issues against climate change that brings droughts to some, floods
to others, soil erosion, desertification and crop destruction to
companies deserve our support, those unwilling to assume their responsibility
should via our consumer choice be made to act responsibly. Stakeholders
and shareholders need to be informed as to how they can play their role
in its evolution -
As Mahatma Gandhi said, You must be the change you wish to see
in the world".
© David Rutherford October 2001
email: David Rutherford
David is a regular contributor to Hackwriters on ethical and moral matters
- he is currently studying for an MA in Environmental Issues in Scotland.
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