Capitalism's Gettysburg

The Gettysburg Address invoked a call to action and a recommitment to founding principles in the revival of America. We could benefit from applying the same principles to rebuild our capitalist system after the fall of global financial markets. By John Friedman

Standing on the battlefield of the definitive battle in the American Civil War, President Abraham Lincoln gave what is perhaps the most famous Presidential speech. Many have remarked how he was able, in a few short lines to make three main points. First, he harkened back to the lofty goals on which the nation was founded. Next, with humility and restraint, he recalled the sacrifice of all who had fought – on both sides. And he concluded by invoking that sacrifice as a call to action engage in a ‘new birth’ and commitment to the founding principles.

It is important to note that the Gettysburg Address was given in November, with over four months remove from the carnage that left an estimated 46,000 to 51,000 casualties. Today we are still surrounded be the devastation of the collapse of global financial markets. It is easy – and tempting - to fixate on sadness, destruction and gloom. But perhaps we can take a lesson from Lincoln, during this the 200th anniversary of his birth, and instead look to the future where the capitalist system is revised (as America was revised) by returning to its core principles.

Capitalism is an economic system in which wealth, and the means of producing wealth, are owned and controlled by individuals rather than by groups (usually the state or other government entity). Today the two sides that have battled for the ‘heart’ of capitalism might be defined as Adam Smith’s ‘invisible hand’ of the market through which individual interest unintentionally produces collective good against the more Social Darwinist approach most famously expounded by the character Gordon Gecko in the movie Wall Street; “greed is good.”
And the result has left people questioning the future capitalism as a system – much as America’s future was doubt in 1863.

Let us recall that America before the Civil War was rife with social ills, the most obvious of which was slavery. While the Civil War did not end the practice, and true equality has yet to be achieved, Lincoln’s message of assuming individual responsibility and moving the nation forward based on its aspirations and goals, not on how it had been before set a vision that continues to guide the nation.

With apologies to Lincoln, then, let us commit ourselves now to learn the lessons from history. We must turn the imperative to rebuild into a commitment to improve on the past by this time to build an economic system that not only generates wealth, but is protective of the environment and advances the human condition.

It is the only way to honor the sacrifice and suffering that people are still feeling.

originally posted http://www.sustainablelifemedia.com/content/column/strategy/capitalisms_gettysburg

Responsible Investing: Crash or Correction?

With the Dow down in the dumps, will socially responsible investments continue to outperform the wider market? Yes - and potentially now more than ever.

It has been said that many investors who put their financial backing behind socially responsible investments (SRI) are willing to forgo potentially profitable investments in companies and industries that they find morally objectionable. But investors have embraced sustainable investing because it is not only good for the planet and society – it has been good investment in its own right.

On average, the performance of SRI has been close to that of regular mutual funds. There are several indexes that track the performance of stocks considered socially responsible investments. According to KLD Indexes, the total returns for the Domini Social 400 Index between 1990 (its inception) and September 2007 was 12%. Over the same period, the S&P 500 returned 11.49%.

Additional research from Cary Krosinsky, co-author with Nick Robins of Sustainable Investing: The Art of Long-Term Performance, points out that sustainable funds outperformed mainstream indices between December 2002 and December 2007, with sustainably invested funds showing 18.7% return on average compared to S&P return of 13.2%, and MSCI World's return of 17% during the same time period. Easy to say when the Dow was topping 14,000, but what about now? There is good evidence that what we have experienced was a true collapse and not a correction. The massive losses in value not only brought down companies with inflated values, the momentum also carried down well-run, fiscally sound ones.

As a result, SRI was not exempt - nor did those funds fare better – as one might have expected (or hoped) – during the decline. The same Domini Social 400 Index cited earlier has returned a -11.22% through June 2008, compared with a -10.49% for the Standard & Poor's 500-stock index during the same period. The Ariel Fund (ARGFX), one of the largest U.S. socially responsible funds with more than $2 billion in assets, dropped 20.2% though May.

There is some encouraging news; however, the median performance of socially responsible funds compiled by Morningstar performed better just 6.76% compared to 9.59% for the S&P. When we’re looking at trillions of dollars this translates to billions of dollars that could have been, but were not, lost.

Strong Medicine for an Ailing Economy
As we sit in the doldrums of this recession it is important to note that the economy will recover. What makes the distinction between a correction and a collapse significant is the later indicates the need to rebuild the economic model rather than an attempt by governments (and industries) to try to patch the holes that deflated a bubble. This awareness makes the task more daunting because they must work to build something truly sustainable.

As investors, the question before us now then goes beyond whether or not sustainable investment will continue to outperform traditional indices. Rather, if these investments and companies will have an even greater advantage going forward?

Robins believes that the answer is unequivocally yes, pointing out that SRI businesses are poised to take a leadership role in a new, revitalized economy:

"As the world seeks to stimulate an economic recovery, sustainable investing in clean technologies, microfinance and social enterprise offer proven routes to generating wealth and resolving pressing problems such as climate change and global poverty."

The new Obama Administration has indicated its priorities include rebuilding the nation’s infrastructure and focusing on alternative energy sources. Certainly alternative energy companies would then be poised to benefit not only from Federal emphasis, but also tax and other incentives (and possibly an infusion of capital). Those companies, and the funds that contain those companies, are therefore poised to do even better as part of the recovery.
The bottom line? An investment strategy that benefits people, protects the planet, and generates profits is still a winning strategy, especially in this global economy.

originally posted on Sustainable Life Media.

In case you missed - or want to see again - John Petersen

SB NOW's Special Presentation of January's Guest Speaker, Futurist John Petersen, is now posted for viewing on YouTube in an 11-part series at the below links. After being posted for only a few hours, the video has been viewed by interested parties all over the world. Please feel free to share the links with colleagues and friends interested in transforming our world into a sustainable future.

Many thanks to Tayna Spann Roche and J. Michael Roche of SB NOW Member Company - Think, Speak, Act Media Productions - for making this video possible (http://www.thinkspeakact.com/).

If you are not able to open these link, please visit, http://www.youtube.com/ and enter in "SBNOW.org Presents: A New World: What Emerges After the Collapse?" .

http://www.youtube.com/watch?v=-gQ1WuI04dU, Part I
http://www.youtube.com/watch?v=HPw0Q-SWcqE&feature=related, Part II
http://www.youtube.com/watch?v=HPw0Q-SWcqE&feature=related, Part III
http://www.youtube.com/watch?v=vblkFQ3udBM&feature=related, Part IV
http://www.youtube.com/watch?v=Bt7Deqg_SqM&feature=related, Part V
http://www.youtube.com/watch?v=Luki5mSHhaA&feature=related, Part VI
http://www.youtube.com/watch?v=6_T-XXrzTFM&feature=related, Part VII
http://www.youtube.com/watch?v=gqa8L08SbeE&feature=related, Part VIII
http://www.youtube.com/watch?v=sXInA6HVQQk&feature=related, Part IX
http://www.youtube.com/watch?v=2xzfg8AuH48&feature=related, Part X
http://www.youtube.com/watch?v=-R5W0-79kCg&feature=related, Part XI

New Research: Economy, Jobs Trump All Other Policy Priorities In 2009

Environment, Immigration, Health Care Slip Down the List

As Barack Obama takes office, the public’s focus is overwhelmingly on domestic policy concerns – particularly the economy. Strengthening the nation’s economy and improving the job situation stand at the top of the public’s list of domestic priorities for 2009. Meanwhile, the priority placed on issues such as the environment, crime, illegal immigration and even reducing health care costs has fallen off from a year ago.

While it is not unusual for the public to prioritize domestic over foreign policy, the balance of opinion today is particularly one-sided. Roughly seven-in-ten Americans (71%) say that President Obama should focus on domestic policy, while just 11% prioritize foreign policy. By comparison, last January, 56% cited domestic policy as most important while 31% said Bush should focus on foreign policy.

Environment a Lower Priority
The 15-point decline in the percentage calling environmental protection a top priority this year is steep, but not unprecedented given the broader shift in public priorities. Between January 2001 and January 2002, the proportion rating environmental protection as a top priority fell by a similar amount (from 63% to 44%); a number of domestic priorities declined in importance following the Sept. 11 terrorist attacks. By January 2003, just 39% called environmental protection a top priority – comparable to today’s 41% – before resurging as a priority from 2006 to 2008, only to fall again this year.

The decline in the percentage calling environmental protection a top priority crosses partisan and demographic lines. For instance, only about four-in-ten women (43%) and men (39%) now say that protecting the environment should be a top priority; last January, 57% of women and 55% of men rated environmental protection as a top priority.

Futurist John Petersen Presents to SB NOW

The Sustainable Business Network of Washington was proud to present leading futurist and author John Petersen in Washington, DC. For those who missed this remarkable presentation you can read a summary here.

Building a Sustainable Economy - the Wikipedia Model

Recently I traded some emails on whether the Internet is a device that gives more power to the rational mind, or is its democratic nature destined to "stampede us further into the world of delusion"?

Moving beyond the suggestion that there are those who will deliberately seek to use any communication vehicle for their own nefarious ends, I think it is fair to say that overall the digital revolution is a recipe for unparalleled chaos, creativity and dialogue.

Not only does this help us rise to our fullest potential, it also creates a mechanism for least-common-denominator discourse as well. The same Internet that gives the world access to highly credible information such as Wikipedia (which effectively uses community-policing to ensure or encourage accuracy) provides web sites designed to amuse, prevent the flow of information and, in some cases, control and encourage hate and anger. These range from those offering ridiculous conspiracy theories to those that espouse dangerous and deliberately misleading information.
At the same time, for every intelligent, thoughtful and important web page, there is (at least) one dedicated to the latest celebrity who somehow didn't manage to get fully dressed before going out. While not deliberately designed to pursue a negative agenda, those web sites at best lower the level of the dialogue and at worst reduce the credibility of everything on the Internet - including the credible sources.

As we move forward in the digital age, I hope and think that we will see a 'split' between those who use it for the former and those who use it for the later. I believe that the future is brighter that many people think. Never before in history have so many people had access to information. We are increasingly exposed to new thoughts, ideas and cultures with a freedom that would astound people only a generation ago.

From the freedom of ideas comes the natural tendency toward the desire to do more and the unfettering of restraints (despite the efforts of some to hold back the tide). I see the 'people power' revolutions in East Germany and the Philippines as a model for continued social advancement and self-determination. There will be some 'messiness' that comes from all this. But in the chaos of personal, intellectual and artistic expression - the world moves forward. It is notable that more of us are moving forward - together - than before. We must do our best to ensure that more and more people have the opportunities that the future offers.

How does this apply to sustainability? If one accepts the fundamental premise that any system will produce the outcome(s) that it was designed to produce (no matter what the intention) then we must take heed that the economic systems in place are creating "bubbles" of increasingly alarming size at an increasingly alarming rate - from the tech boom to the escalation of real estate prices and, apparently stock markets around the world.
Economic systems that create "bubbles" rather than real value are not sustainable. When trillions of dollars in value evaporate overnight, it is fair to say that the value didn't exist to begin with. Clearly the system needs to be adjusted if we are to change the outcome. We cannot be satisfied if we continue to patch the holes in the levees and hope that we get out before the next flood.

Sadly it gets wrapped up in political agendas so that when one talks about reinventing markets it gets translated as anti-American, anti-Capitalist or anti-Freedom.
As we move forward, then, we must follow the model of Wikipedia (and other sites, but that is the most well known) to develop the forum, mechanisms, tools and discipline necessary to leverage the power of the Internet for idea-sharing and provide the people-powered economic revolution that focuses on social and environmental as well as economic recovery in 2009 and beyond.

Reprinted from JustMeans.com

BID gets SB NOW green operations seal of approval

by Vandana Sinha Staff Reporter

The Downtown D.C. Business Improvement District is now certifiably green — and it has the stamp to prove it.

The BID is the first organization to win a green seal from the Sustainable Business Network of Washington, a D.C. nonprofit that has been developing a new certification process for green operations for the past two years.

SB NOW is signing up nine more test subjects for its certification program, which focuses on everyday business practices. It plans to launch the program across the region next spring and, ultimately, take it national.

The group is creating scorecards, point systems and on-site inspections — a la the U.S. Green Building Council’s Leadership in Energy and Environmental Design standards for buildings — to quantify and verify companies’ claims of “going green,” certifying those that make the mark and differentiating them from mere “greenwashers.”

SB NOW celebrates growth ... and looks forward to 2009

Business representatives at SB NOW's Holiday event at Haworth
(left to right) David Michaelson, LEED Principal, Marion Construction; Marion Stecklow, Executive Vice President, Penguin Care; Chris Dyson, Facilities and Purchasing Management, Calvert Group; John Friedman, Senior Director, Public Relations for Sodexo and SB NOW board chair; Nathalie Abutaha, Business Development Manager, AtSite; Anca Novacovici, founder of Eco-Coach and Douglas LaBier, Director of the Center for Adult Development.

Celebrating our 2008 results:

• Making Washington DC a better place to live, work and visit - by generating $2 million in buiness between and with companies and organizations that are socially responsible.
• A 600 percent increase in network membership - making SB NOW the largest business network in the Washington, DC-area dedicated to the triple bottom line.
• The certification of the Downtown Business Improvement District - kicking off SB NOW's certification program and 'Certifiably Green' guide.

CSR, Environmental Programs Good for the Bottom Line, Report Finds

GreenBiz.com, 19 November 2008 - With the global financial meltdown sending every company "back to the blackboard," a new report from the Economist Intelligence Unit finds that almost three-quarters of businesses with CSR programs in place are seeing financial benefits as a result of achieving environmental goals.

The report was released at the start of the Economist's "Corporate Citizenship" conference yesterday in San Francisco. Kicking off the conference, Matthew Bishop from the Economist news magazine and Nigel Holloway of the Economist Intelligence Unit's North American division looked at the report from the perspective of the current economic situation.

SB NOW referenced on someone else's blog

Can this mean that the dialogue is starting? I'd like to think so ... because the sustainability community is growing and flourishing and we need to share best ideas and practices.

Economic Woes Reinforce Triple Bottom Line

While some may feel that economic arguments in favor of increasing energy efficiency and reducing production and transportation costs are somehow less ‘worthy’ reasons for America’s sustainability efforts, the fact remains that the current economic downturn is reinforcing the triple bottom line model (people, planet, profit) as business leaders acknowledge the inter-dependence of all three elements.

Research from BSR/Cone confirms research by Shelton Group and others that companies are increasingly finding that they can improve their financial performance by taking environmentally responsible actions. And that realization – especially in light of the continued belief by some companies that environmental efforts de facto cost more – may be just the thing that sustains sustainability programs through the current economic downturn.

What is driving CR today?
84 % Reputational benefits are increasingly important
80 % Stakeholder demands are increasing
76 % Increased pressure to show a return on investment
75 % Long-term cost savings or efficiencies are major drivers
59 % Corporate responsibility initiatives are driving more by company values and mission than by bottom-line impacts or other factors
57 % Corporate responsibility is increasingly seen as a driver of innovation
12 % Corporate responsibility initiatives are less of a priority today
source: BSR/Cone

Other drivers for business include the vast majority (94 percent) that anticipate increased government regulation of issues related to corporate responsibility, including climate change (86 percent) and corporate governance and financial transparency (83 percent).

For those who might find this unseemly – somehow less ‘pure’ than if companies were to be embracing CR for more ‘altruistic’ reasons – the Shelton Group research shows that not only are people struggling with the concept of ‘green’, they often have misconceptions about what really has a positive impact on the environment. While half (49 percent) of respondents said a company's environmental record is important in their purchasing decisions, the number drops by half (21 percent) when consumers were asked if this had actually driven them to choose one product over another. And only 7 percent could name the product they purchased.

So if, as Milton Friedman famously said, the business of business is business, and consumers are not yet using their purchasing power to help reward environmentally responsible companies, then companies that wish to do well must look for other ways to live their values – and reducing costs by saving the environment remains a preferable option.

Brilliant thoughts

The following piece is part of a larger article in the Washington Post on Sunday letting several key thinkers describe what they feel President Obama's first priority should be when he takes office.

The world's richest nation dare not forget the world's poorest people. Obama's top priority should be adopting a strategy of what I call sustainable development -- a strategy that combines economic development with environmental sustainability, for the United States and for the world. Such an approach merges science and policy, thinks in terms of decades rather than years, and recognizes that solutions must be cooperative and global rather than unilateral and national.

Currently, we lurch from crisis to crisis, from food to energy to natural disaster to finance, without recognizing that these cascading shocks are interconnected. Darfur, Somalia and Afghanistan are at least as much about water scarcity, climate and population as they are about politics; even the global financial crisis was triggered, in part, by the contemporaneous energy crisis. As president, Obama will need to lead the U.S. government to address these problems holistically. As thankless as government reorganization can be, he should create a new Department of International Sustainable Development to work together with the rest of the world on the Millennium Development Goals and the interconnected long-term challenges of poverty, disease, energy, climate, water and population -- all of which are key to sustainable growth, prosperity and security.

-- Jeffrey Sachs, director of Columbia University's Earth Institute and special adviser to U.N. Secretary General Ban Ki-moon

To Walk the Talk You Need to Know Where You're Going

Chip and Dan Heath wrote of the ‘curse of knowledge' in their book Made to Stick. The fundamental idea is that once you know something well enough, it becomes very difficult to imagine what it was like not to know. I often say that if you know and understand every acronym in your company you probably risk this syndrome.

It's no difference for those of us in the sustainability space. Many of us, myself included, have been doing this long enough that we find it hard to imagine that millions of people do not take for granted some of the principles that we believe - such as whether or not global warming is caused by human activity.

Believe it or not, people are still not sure. And there are some good reasons for this, aside from the politics that have clouded the issue, there are a number of key challenges communicating scientific research to the public.

Read the whole post on JustMeans-->

SBNOW names Board Chair (Washington Business Journal)

The Sustainable Business Network of Washington has named John Friedman, senior director of public relations for Sodexo Inc., the new chair of the board of directors.

Friedman succeeds Lee Boyle, vice president of Cardinal Bank. His one-year term had ended.
Friedman has experience managing the public relations activities for the Gaithersburg-based Sodexo Foundation. The Annandale resident has more than 10 years of experience under his belt in the area of corporate responsibility.

“John combines a thorough knowledge and commitment to corporate responsibility with a business background,” said Pamela Skarda, executive director, in a statement. “John’s experienced leadership as Board Chair will be instrumental as SB NOW begins the roll out of our international green business certification program.”

The D.C.-based network, made up of 300 businesses, works with companies to help them integrate environmental and social responsibility principles into their operations and strategy.

See the original article

Lesson From Wall Street

The famous phrase 'Greed is good' from the movie Wall Street has been quoted time and time again as a sign of what's wrong with America. But let's look at the entire speech and see if, in fact, the character famously played by Michael Douglas was onto something. In fact, in some ways the speech was downright prescient.

One of the fundamental rules of management it to align incentives with desired behaviors and base rewards on measurable and accountable results. One of the main criticisms of Wall Street today is that senior managers were making huge salaries and bonuses that were divorced from company performance. In fact, there is a popular uprising against using funds from the 'rescue package' to pay for these golden parachutes for people who did nothing more than run companies into the ground.

Gecko: "Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here [Teldar management] own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent.

You own the company. That's right -- you, the stockholder. And you are all being royally screwed over by these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes."

Another criticism being leveled today is that of wasteful spending with needless layers of bureaucracy that add complexity and no real value - building houses of cards using fancy accounting loopholes and principles that mask the real picture.
Gecko: I have spent the last two months analyzing what all these guys do, and I still can't figure it out.
And the actual quote about greed makes it clear that what he's really talking about in enlightened self-interest (and not limited to fiscal gain).
The point is, ladies and gentleman, that greed -- for lack of a better word -- is good.
Greed is right.
Greed works.
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind.
And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA.

He's linking that desire with evolution - combining capitalism with social Darwinism and the idea that survival of the fittest applies to companies, economies and countries and not just individuals.
While I object to the principle that often grows from this combination - that those who are on the lower end economically are somehow inferior or undeserving - there are a few basic truths that this speech does address:

1. Stakeholders (shareholders) are not just there when it is time to reap the benefits of financial gain; they also assume the risk and have to face the losses when and if things go wrong. Therefore they need to be ENGAGED and ACTIVE.
2. As any parent knows, you need to reward behaviors you wish to see repeated, and address those that you do not. Corporate incentives must be aligned with desired outcomes. And there must be consequence for failing to meet those outcomes. They don't have to be draconian, but they certainly should be proportional and FAIR.
3. Inefficiency, obfuscation and esoteric rules cloud the picture. TRANSPARENCY allows for informed decision making (including whether or not to invest). People must insist that they know what they are buying.
4. The idea that shareholders can cut and run when things go badly doesn't work when company values drop as precipitously as they have recently. Or when they are prevented from selling stock due to the restrictions within their employee stock purchasing plans. Therefore they also must be and make efforts to keep themselves INFORMED
5. Long term thinking is necessary for long-term sustainable growth and value creation.

Business Benefits to CSR

I am still amazed at the number of people who cling to the notion that sustainability is optional. Despite the strong evidence that companies are maintaining their long-term focus during the current economic crisis, critics still question whether or not sustainability is a 'fad' that will be abandoned at the first sign of tight budgets.

I understand that for anyone to accept the premise that social responsibility is a business strategy we must be able to define and quantify the business benefits that can be derived from adopting this model. This is so that success can be measured, just as with any other business strategy.

That's Doctor Green to you

The Rochester Institute of Technology has received New York state approval for its doctoral degree in sustainability, the program first of its kind in the world.

The Ph.D. program focuses on sustainable production and seeks to advance research and education in alternative energy development, sustainable design, green product development, industrial ecology and pollution prevention. It is being offered through RIT’s Golisano Institute for Sustainability, an academic, research and technology transfer center devoted to enhancing the development of sustainable systems in all aspects of society.