“The ecological problems caused by human economic activity are worsening and taking on global dimensions. ..If we are to move toward sustainable development, the industrialized countries will have to accept special responsibility... The key is to sever the traditional link between economic growth and the consumption of resources.”
These are not the words of an environmental campaigner or pressure group, but taken from an article in the journal Science, written in 1998 by the then German Environment Minster, now Federal Chancellor Angela Merkel.
A scientist by training, Merkel developed quite a reputation in the late 90s for banging other politicians’ heads together to address the growing threat of climate change. Her efforts were instrumental in getting leaders to sign the so-called Berlin Mandate in 1995, a precursor of the Kyoto Protocol. In the view of Eileen Claussen, President of the Pew Centre on Global Climate Change, "Kyoto would not have happened without her."
In the past couple of years as well, Merkel has shown a willingness to rattle the cages of her fellow leaders on climate change. Speaking to a joint session of the US Congress in November 2009 she urged the need for agreement that “global warming must not exceed two degrees”, an aim for which was “the readiness of all countries to accept internationally binding obligations" was essential.
She is also credited with arguing the case with Presidents Bush and Hu Jintao, to set verifiable targets for the reduction of greenhouse gases. Such a preparedness to champion the environmental cause led Time magazine to hail Merkel as a ‘Heroine of the Environment’ in 2007, and even The Guardian – not an organ given to praising right-of-centre leaders – declared her in early 2008 as one of the “50 people who could save the planet.”
Does this mean therefore that return of Merkel to the Federal Chancellery last Autumn can be seen as a triumph for the environment? Unfortunately not.
Like democratic politics the world over, last year’s parliamentary elections had infinitely more to do with economics, the recession and the credit crunch than it had to do with the environment.
The global economic downturn has had significant effects on Germany. As a major exporter, German industry has been hit by much reduced demand for its goods, and the horse-trading over the future of car-maker Opel further demonstrates the vulnerability of the German economy. These developments, together the economic stimulus package announced early last year, and tax cuts introduced after the election are expected to bring Germany’s budget deficit to 6% of GDP this year, twice the EU ceiling.
In addition to these immediate problems, Germany has structural problems to address. The pension system, for example, is becoming increasingly unaffordable in a country that has one of the lowest birth rates in the world.
For most Germans therefore, fixing the German economy is more important than saving the global environment. Merkel’s victory therefore says much more how her unassuming style gives people the confidence that she was the one to fix the economy, rather than about her environmental credentials. Her choice to enter into a coalition with the pro-business Free Democrats demonstrates that the new government sees its focus as being to get German industry back up and running.
However, it is still the case that environmental factors remain much closer to the core of political debate in Germany than they do in many other countries. Although no longer in power at a Federal level (they formed a coalition with the Social Democrats from 1998 to 2005), the Green Party made a good showing in September, winning 68 seats in Parliament. They are also part of the governing coalitions in 3 of Germany’s 16 Laender.
Germany was also one of the first countries to take climate change seriously, launching the Enquete Commission on Preventive Measures to Protect the Atmosphere in 1987. The German Emissions Trading Group—composed of a representatives from federal and state governments, parliament, industry, and environmental groups—was established in October 2000, and in 2006 and 2007, a series of ‘Energy Summits’ were held to bring together important parties in the debate surrounding the intersection of energy policy and climate change.
For businesses operating in Germany therefore, environmental policy remains a key operating factor. Indeed, the German employers federation, the BDI condemned the failure of the Copenhagen summit – the organisation’s Director-General Werner Schnappauf commented that “we are sobered and disappointed by the outcome of the UN climate conference.”
Nonetheless, Schnappauf’s further comments reflect the tension facing German industry – “there is still an acute danger that emissions and jobs will be shifted to countries with lower climate protection burdens.” Here then is the dilemma for German business. In the longer term, it will be well placed to deal with the higher environmental standards that will eventually have to be introduced. However, in the short term, it risks being undermined by manufacturers operating to less stringent criteria.
Friday, 29 January 2010
Tuesday, 19 January 2010
Google: stay in China!
Dear Google
I know you've had been through a rather bad period in your relationship with China.
First of all you get accused of allowing the Chinese authorities to access details of dissidents' emails and are accused of complicity with human rights abuses
Now you are thinking of ending your relationship because of allegations of hacking into some of the accounts in China.
But please do not get into a huff and leave this relationship. Despite all the limitations you have had to endure in your relationship with China, your presence is an important element in the process of changing China.
China is not the same place it was 2 decades ago.
There is more awareness of issues like human rights; corruption is less marked; and labour conditions are improving. Certainly, there's a very long way to go, but the rest of that journey only comes about through engagement with the Chinese, not by ostracising them.
So Google: painful though it may be, your relationship with China is worth saving...
I know you've had been through a rather bad period in your relationship with China.
First of all you get accused of allowing the Chinese authorities to access details of dissidents' emails and are accused of complicity with human rights abuses
Now you are thinking of ending your relationship because of allegations of hacking into some of the accounts in China.
But please do not get into a huff and leave this relationship. Despite all the limitations you have had to endure in your relationship with China, your presence is an important element in the process of changing China.
China is not the same place it was 2 decades ago.
There is more awareness of issues like human rights; corruption is less marked; and labour conditions are improving. Certainly, there's a very long way to go, but the rest of that journey only comes about through engagement with the Chinese, not by ostracising them.
So Google: painful though it may be, your relationship with China is worth saving...
Helping Haiti
A lot of people seem to have been ridiculing President Obama's commitment to help Haiti - if they're your neighbours now, why did the US not do more in the past to help one of the poorest countries in the world?
The answer's simple
Whether we like it or not, one of the central principles of international relations is the concept of the sovereignty of the territorial state. Haiti maybe only a couple of hundred miles off the US coast, but it is still a separate state.
This is the same reason that meant that the international community could not, a couple of years ago, stop the Mugabe's violence against the MDC in Zimbabwe.
Therefore the US could not have involved itself in Haiti without being asked to do so by the Haitian government.
The answer's simple
Whether we like it or not, one of the central principles of international relations is the concept of the sovereignty of the territorial state. Haiti maybe only a couple of hundred miles off the US coast, but it is still a separate state.
This is the same reason that meant that the international community could not, a couple of years ago, stop the Mugabe's violence against the MDC in Zimbabwe.
Therefore the US could not have involved itself in Haiti without being asked to do so by the Haitian government.
Monday, 11 January 2010
The realities of business in China
If only people had the common sense to look at what they are getting into when they begin to operate in places like China - this case demonstrates the importance of understanding the detail of how things are done.
China gets a bad rap when it comes to things like human rights and labour conditions, but this case is nothing to do with these issues - the problems have stemmed from the fact that business in China is done completely differently from the UK or the US.
It constantly gob-smacks me that companies do not do more work to understand new countries where they intend working. They do financial and legal due diligence, but don't think to do the same in relation to the social, ethical and environmental issues that will affect their business.
China gets a bad rap when it comes to things like human rights and labour conditions, but this case is nothing to do with these issues - the problems have stemmed from the fact that business in China is done completely differently from the UK or the US.
It constantly gob-smacks me that companies do not do more work to understand new countries where they intend working. They do financial and legal due diligence, but don't think to do the same in relation to the social, ethical and environmental issues that will affect their business.
Friday, 8 January 2010
Why Leverhulme was right
Lord Leverhulme (founder of what's now Unilever) once famously observed that he knew half of his advertising to be effective; he just didn’t know which half.
Many companies today feel much the same about their Corporate Responsibility (CR) and sustainability programmes: they know that some of it is necessary, but they are often rather hazy about which bits, and why.
This situation is not helped by the fact that CR and sustainability remain rather imprecise terms. For some companies CR remains synonymous with philanthropy, community projects and charitable donations.
For others, the environmental – particularly the climate change – aspect of the sustainability agenda holds centre stage.
For others again it includes more novel and complex issues such as human rights and business ethics.
At the moment things are further complicated by the worsening economic environment.
Are CR and sustainability are ‘bull market’ phenomena that will wither as colder economic winds begin to blow?
The simple answer to that question is no, they are not.
Certainly, much of the ‘fluffier’ philanthropic aspects of corporate practice will decline with the economic slow-down.
However, proper CR and sustainability practice will continue and deepen for the simple reason that they are increasingly central to business success, or even survival.
The development of CR and sustainability reflect the reality that companies are having to operate in much more complex environments than was the case in the past, and are required to take account of factors which would historically not have been regarded as ‘business issues’.
These issues cannot be disregarded, as they have direct commercial and operational relevance, so cannot be ignored. CR and sustainability, properly undertaken, reflect the most important challenge facing managers today: how to manage complexity?
To talk about the need ‘to manage complexity’ may not seem anything new. An article in Management Today in April 2008 examined the issue of complexity. It assembled a group of business ‘gurus’ to solicit their opinions.
For Mike Gibson of PwC, complexity emanates from the tensions between different legal structures around the world, and the problem of accountability in large organisations.
According to WPP’s Sir Martin Sorrell, complexity derives from “an increasingly networked world”.
BUPA’s then-CEO, Val Gooding argued that increasing customer demands lies at the heart of complexity.
Of course, all these people are correct – business life has become more complex because of all the issues that they highlight.
However, at the same time, they have completely missed the point.
Certainly, managing an organisation has become more complex because various elements of ‘normal’ business life have become more complex.
However, the central reason why business has become more complicated is because leaders and managers now need to address entirely novel issues; issues to do with politics, society, ethics and the environment which historically were not seen as having anything to do with the private sector or with the management of a commercial organisation.
CR and sustainability are windows onto this complexity. Companies which realise the importance of these issues and which manage them well realise that there are new issues and new stakeholders which have significant impacts on the business, and which therefore need to be managed as assiduously and effectively as more traditional operational considerations.
Many companies today feel much the same about their Corporate Responsibility (CR) and sustainability programmes: they know that some of it is necessary, but they are often rather hazy about which bits, and why.
This situation is not helped by the fact that CR and sustainability remain rather imprecise terms. For some companies CR remains synonymous with philanthropy, community projects and charitable donations.
For others, the environmental – particularly the climate change – aspect of the sustainability agenda holds centre stage.
For others again it includes more novel and complex issues such as human rights and business ethics.
At the moment things are further complicated by the worsening economic environment.
Are CR and sustainability are ‘bull market’ phenomena that will wither as colder economic winds begin to blow?
The simple answer to that question is no, they are not.
Certainly, much of the ‘fluffier’ philanthropic aspects of corporate practice will decline with the economic slow-down.
However, proper CR and sustainability practice will continue and deepen for the simple reason that they are increasingly central to business success, or even survival.
The development of CR and sustainability reflect the reality that companies are having to operate in much more complex environments than was the case in the past, and are required to take account of factors which would historically not have been regarded as ‘business issues’.
These issues cannot be disregarded, as they have direct commercial and operational relevance, so cannot be ignored. CR and sustainability, properly undertaken, reflect the most important challenge facing managers today: how to manage complexity?
To talk about the need ‘to manage complexity’ may not seem anything new. An article in Management Today in April 2008 examined the issue of complexity. It assembled a group of business ‘gurus’ to solicit their opinions.
For Mike Gibson of PwC, complexity emanates from the tensions between different legal structures around the world, and the problem of accountability in large organisations.
According to WPP’s Sir Martin Sorrell, complexity derives from “an increasingly networked world”.
BUPA’s then-CEO, Val Gooding argued that increasing customer demands lies at the heart of complexity.
Of course, all these people are correct – business life has become more complex because of all the issues that they highlight.
However, at the same time, they have completely missed the point.
Certainly, managing an organisation has become more complex because various elements of ‘normal’ business life have become more complex.
However, the central reason why business has become more complicated is because leaders and managers now need to address entirely novel issues; issues to do with politics, society, ethics and the environment which historically were not seen as having anything to do with the private sector or with the management of a commercial organisation.
CR and sustainability are windows onto this complexity. Companies which realise the importance of these issues and which manage them well realise that there are new issues and new stakeholders which have significant impacts on the business, and which therefore need to be managed as assiduously and effectively as more traditional operational considerations.
New Year, New Blog
Having arrived inthe 21st Century a decade late, I thought it would be a good idea to start blogging, so here we go...
I spend my time working with various organisations - mostly companies - to help them understand the challenges they face from the world around them. Corporate Responsibility, CSR and Sustainability are some of the labels that get used for what I do, but I actually don't think any of them are that helpful. I prefer to think of what I do as helping companies to manage societal, ethical and environmental issues, and to see these things, not as additional work, but as a fundamental part of what they do. Part of the day job.
As a result, a lot of the time I find myself involved with issues that are highly political - human rights, governance, conflict and so on - hence the name for this blog. Understanding the changing relationship between governments and the corporate sector will, I think, be a major challenge in the next few years.
Watch this space...
I spend my time working with various organisations - mostly companies - to help them understand the challenges they face from the world around them. Corporate Responsibility, CSR and Sustainability are some of the labels that get used for what I do, but I actually don't think any of them are that helpful. I prefer to think of what I do as helping companies to manage societal, ethical and environmental issues, and to see these things, not as additional work, but as a fundamental part of what they do. Part of the day job.
As a result, a lot of the time I find myself involved with issues that are highly political - human rights, governance, conflict and so on - hence the name for this blog. Understanding the changing relationship between governments and the corporate sector will, I think, be a major challenge in the next few years.
Watch this space...
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