Digging Deep for First Impressions
July 15, 2008
“Great Uncle ‘Erbert’s coming for dinner!” called my Mum.
“Not Great Uncle ‘Erbert!” yowled her children. He was old and grizzled with white facial hair which seemed to clump together for warmth in random places before hibernating up his nostrils every night.
The wind whistled around the gaps in his misshapen teeth and there was always that strange smell which I later came to associate with men’s public toilets. We tried to avoid him whenever possible.
In the same way, environmentalists avoid the mining industry whenever possible.
This is not surprising: an industry which digs large holes in the ground and then sloshes toxic chemicals all over the contents is unlikely to go down well with the green movement.
What is more mining companies, unlike Great Uncle ‘Erbert, are not fictional. In fact, they operate predominantly in developing countries and so should have a lot to say about their sustainable practices on their websites.
Wide Ranging Content
Anglo American is one of the largest mining companies in the world. Their operations stretch across the Americas, Europe, Africa and Australia and include household names such as De Beers and Tarmac.
Like any good corporate website, it has a link from its top banner to its sustainability section. This immediately places the issue on the same footing as Investor and Media Relations.
In addition, this link automatically expands to be a menu, allowing the visitor to gain access with a single click to topics ranging from Anglo American’s sustainability reports to its approach to HIV/AIDS.
Within the section here are links to a whole slew of policies, speeches and presentations, a discussion of “Good Citizenship” and descriptions of the eight international schemes Anglo American plays a part in.
There’s also a page dedicated to the sensitive issue of the transfer of a share of ownership, management and benefits of business interests in South Africa into the hands of those previously excluded under apartheid.
Most intriguing of all is the Anglo American’s Social-Economic Assessment Toolbox (SEAT). This methodology has been deployed in over 16 countries to support and engagement with local communities.
This will be covered in more detail in a future post.
Burying The Facts
Antofagasta is another FTSE 100 mining company. Formed from the Bolivian Railway Company, it mixes railway and water interests in South America with being one of the largest copper producers in the world.
On the corporate website sustainability is part of the Investor Relations section, accessible throughout the site from drop down menus from the website’s title bar.
But the single page isn’t much to look at on arrival. Two links to extracts from the Antofagasta’s Annual reports and, a little bizarrely, a link to the Spanish-language website of one of its mines in Chile.
This means the content does have one thing in common with the Anglo American site: both are devoid of any firm figures concerning their sustainability measures.
This is a shame because the PDF documents both supply are stuffed full of the kinds of facts and figures which analysts love to pore over.
In addition, the Anglo American sustainability report contains 16 Key Targets covering environmental, governance and social aspects of the company’s performance.
Similarly, the Antofagasta report contains details of various awards the company’s installations have won alongside their progress towards ISO 9001 certification.
No need for Mining
These are almost unforgivable errors in a major company’s web-based presentation of its sustainability credentials.
It may be too much to hope all companies will have data-mining tools implemented on their websites, allowing analysts to investigate their raw data as best they see fit.
However, one of the traditional ways of presenting your best side is to publish a table showing progress towards a static target. Both companies have missed a golden opportunity of doing this.
Companies need to get wise to the data they have within their control and use it as effectively as possible within a web based environment.
Visitors to the Anglo American website would leave with the distinct impression of “all fluff and no substance”; those to the Antofagasta website may think the company just didn’t care.
These first impressions last. Great Uncle ‘Erbert may have been a leader in particle physics, but because he never told us we simply think of him as a smelly old man.
Similarly companies, especially those involved in naturally unsustainable past-times such as mining, need to be careful. Otherwise the truth may be lost to bad first impressions.
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BAT’s A Lesson In Sustainability
July 10, 2008
News just in: British American Tobacco (BAT) is in sustainability trouble. Again … no, yet again.
Actually, forget it. BAT falling foul of sustainability standards isn’t really news any more.
The company is one of the great bêtes noires of a whole collection of pressure groups, each keen to use it as an example of what can go wrong when corporations are unchecked. Highlights from the past six years include:
- 2002 – the World Health Organisation accuses BAT of using “lies and deception” to hook children into “a lifetime of addiction and suffering”
- 2003 – BAT becomes the last UK company to cease business in Myanmar following a direct plea from the UK Government
- 2005 – the company’s manufacture of cigarettes in North Korea, not reported in its annual report, comes to light
- 2006 – examining BAT’s systematic destruction of scientific documents, a judge concludes “the whole purpose was to keep evidence [concerning the health risks of tobacco] out of the courts”
- 2007 – Nigerian state governments sue BAT for systematically targeting underage smokers
- 2008 – BBC broadcasts evidence that BAT is continuing to ignore its own guidelines across Africa in order to sell to underage smokers
However, many of BAT’s practices are legally acceptable and it has won awards from the Association of Chartered Certified Accountants for its sustainability reports. So this should not be taken as a hatchet job on BAT.
It’s purpose, in fact, is simply to illustrate the point made in recent posts concerning the FTSE Environmental Technology Index and Caisse d’Epargne’s Financial Product Certification Scheme: that a company’s sustainability cannot be wholly measured using financial instruments.
For example:
- shredding documents may avoid hefty payouts, but does it help sustain the regulatory freedoms companies rely upon? [BAT strenuously denied the claim, but settled out of court to avoid disclosing further documents ]
- operating in a communist state may be cheap, but does it really help improve the lives of those who are paid the flat communist wage? [BAT have since announced they are going to sell the North Korean factory ]
- targeting young, impoverished smokers may bring in revenue, but does a 5 minute gasp of tar and nicotine help them sustain health and well being? [BAT have recently launched a Youth Smoking Prevention campaign ]
I think I’m morally obliged to point out that I’m an ex-smoker. However, I’m in no way part of the Ex Smoker Mafia and I find the recent wave of anti-smoking legislation deeply unsettling.
However, you cannot measure a smoker’s freedom to light up in financial terms, only the cost of allowing and maintaining that freedom. Similarly, better ways of measuring sustainability have to be found to replace the crude instrument of the monetary impact a company’s actions have.
Squirrels of Sustainability
July 9, 2008
I’ve got a bit of a height thing. When I’m more than eight feet above the ground I start to feel all a bit funny inside, as though I shouldn’t really be there.
This means I have several “challenge your boundaries” moments each year as I run up and down ladders to clean windows, repair shed roofs, lop encroaching branches off the council’s trees, and so on.
Yet whenever I return to terra firma, nothing serious has ever happened and quite what got the emotions all worked up remains a mystery.
Languages provide another “ladder moment” and my knee-jerk reaction is to reach for the nearest online translation website. This is especially shameful if the language is French as I have a reasonable if rusty grasp of it.
So I was relieved to find myself quite happily ploughing through a French website, almost oblivious to the fact it was a different language.
The resulting understanding of a brand new certification scheme for financial products was well worth pushing my boundaries a little further.
Going Beyond Commitments
The story begins in 2005, when Friends of the Earth (FoE) analysed the environmental practices of several French banking institutions.
One of those cited as lacking credibility was Caisse d’Epargne whose logo, incidentally, is an idealised squirrel. The bank took the criticisms seriously and made a commitment to improve its practices.
Two years later it launched the Bénéfices Futur (Future Benefits) framework for a sustainable future. This in turn has led to many initiatives, including the opening of the first French bank accessible to deaf and hard of hearing.
At the same time it entered into collaboration with a number of bodies, including FoE, WWF and the French environment agency, to produce a certification system for financial products.
This summer that certification system was launched. And boy, is it good!
Fast Moving Financial Goods
The scheme rates savings products in three categories, displaying the results in a schematic similar to that used for the energy efficiency of Fast Moving White Goods (i.e. fridges, freezers, washing machines, etc).
The three categories are broadly defined as follows:
- Security: how secure is the capital invested. Considerations include the variability of the product’s interest rate and the riskiness of the underlying investments.
- Responsibility: how the underlying investments are judged against social and ecological ethical standards. Considerations include the administration of the savings scheme itself as well as the behaviour of the organisations invested in.
- Climate: how the underlying investments are judged against climate change benchmarks. Considerations include a bank’s own emissions as well as those of any product invested in throughout its lifecycle.
The innovation behind this scheme is precisely that which was envisaged in “Green without Sustainability”: the introduction of a non-financial based methodology for measuring performance.
In addition, this scheme goes far beyond those measurements which are in common use today.
For instance, car manufacturers are usually measured according to the emissions produced during the manufacturing process. This scheme measures them according to the emissions produced during the lifetime of their product.
There can be no misunderstandings about what has happened here: this is a huge and ambitious step forward whose consequences will be far reaching and lasting.
Following The Leader
It’s all very well for one bank in France to introduce such measures and many environmentalists will instinctively look for the greenwashing angle.
Most greenwashing stems from companies’ desire to bring sustainability under their marketing aegis, instinctively trumpeting their successes while concealing their failures.
This is one of the reasons transparency is such a key feature of sustainable business practices. If you are open about what you do and how you do it you cannot be accused of deception, and so are much more likely to gain trust in the longer term.
Caisse d’Epargne understands this and has taken the unprecedented step of publishing the scheme’s entire methodology, in all its mathematical eye-crossing glory.
The bank and its partners are now calling for other financial institutions to look at adopting the scheme themselves. It’s difficult to imagine how other institutions are going to be able resist this call, especially given the international reach of FoE and WWF.
Ripples Across The Pond
As the scheme spreads, pressure will increase upon companies to adopt sustainable business practices. Before too long, this pebble dropped by Caisse d’Epargne in the pond of commerce will have created waves upon shores near and far alike.
The only hope is that as this happens financial institutions use common sense and use this scheme rather than trying to invent their own.
Otherwise they may find themselves feeling as embarrassed and stubborn as I did when I discovered the English translation of the bank’s website and documentation long after I’d finished writing this post.
C’est ma vie*, and I’m used to it. However, Finance has to wake up now and realise how creative it’s influence could truly be. Driving that realisation must be an understanding of how serious of our situation truly is.
* Such is my life
The United Nations Global Compact Gets Tough
July 7, 2008
“And what’s this?” asks a bemused Olympics commentator as the middle distance race enters its final lap. “I don’t believe it … I really don’t believe it!” and the slightest trace of a giggle enters her voice.
For round the track, overtaking all the runners, comes an athletic, well-muscled figure dressed in a baggy red suit with white fur trimmed collar and cuffs and holding a curvy bottle of a bestselling sugar-based fizzy drink.
“Yes indeed,” concludes the commentator, “Santa really has been working out! No more fat and flabby; no more shaggy beard. He’s fit and lean and ready to take on the World!”
When it comes to previously slow and cumbersome figures starting to show a little zing in their activities, the United Nations being tough with miscreants isn’t too far off the fantasy of a fit and active Santa.
Read more
Green Without Sustainability
July 1, 2008
Once upon a time, on the edges of Fangorn Forest, Gimli son of Glóin grasped the haft of his axe and eyed up the tree next to him.
He was in full flow about this “horrid, dark, dank, tree-infested” forest when a threatening rumble from the forest itself brought him up short.
Suddenly the dwarf realised the trees around him were in fact “charming, quite charming”, and in all likelihood avoided the environmental disaster of a-branch-dropped-on-the-head as well.
So the tension between dwarf and tree was interpreted by Peter Jackson in his film adaptation of JRR Tolkien’s “The Two Towers”.
It appears a similar rumble is starting to be heard amongst investors and those who serve them, the index companies. The most recent response comes from FTSE, who have just launched a new “Green Index”.
Read more