THE TRIPLE-BOTTOM-LINE
Sustainable development needs to be brought to the court of public opinion. Ethical, progressive companies deserve our support.
• David Rutherford reporting from Rotterdam

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I have recently returned from a Triple-Bottom-Line Investment (TBLI) conference in Rotterdam. Triple-Bottom line reporting takes into account a company’s 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.

Man’s 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.

Don’t 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 NGO’s 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 investment”.

One 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?

Surely, 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 NGO’s 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 didn’t 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 it’s 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 point.
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 themselves.

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 analysts.

We must remain on our guard and ensure that the more easily achievable social side of its mandate doesn’t 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 issues.

Sustainable development needs to be brought to the court of public opinion.

Better 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 the rest.

Ethical, progressive 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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