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Corporate Responsibility in a Collapsing World
Cranfield School of Management
Jonathon Porritt29 October 2008
Forum For The Future
• A registered charity committed to accelerating the building of a sustainable way of life
• Solutions-oriented approach• Over 180 different partners from national, regional and
local government, higher education, and business• Green Futures magazine
Mission:To accelerate the building of a sustainablesustainable way of life by taking a positive solutions-oriented approach
JT Group
PASSIONATE
about
Sustainable Development
Not passionate about Corporate (Social) Responsibility, Quality of Life, Corporate Citizenship, CSR, Liveability etc
etc
The Global Economy:nothing more thanA House of Cards
built onA MOUNTAIN OF DEBT
aided and abetted byGovernments’ in Retreat
From Masters of the Universe
to“A bunch of spivs and speculators”
Jack Welch
• CEO of GE (1981 – 2001)• In 1981, GE valued at $14bn.
In 2001, GE valued at $400bn
• “Manager of the Century”• “Neutron Jack”• Hudson River – Jack Welch’s
toxic legacy.
GE Ecomagination: a strategy for growth
•GE’s environmental innovation programme
•High quality products with increased environmental performance
•Renewable energy, hydrogen fuel cells, cleaner, quieter aircraft and locomotive engines, water purification and desalination technologies
•Part of GE’s growth strategy – target to increase revenue from these businesses from $10 billion in 2004 to $20 billion by 2010
GLOBAL
ECONOMY
SOCIAL EXTERNALITIES
ENVIRONMENTAL EXTERNALITIES
Radical Discontinuities
Social Externalities
Population growthWorsening inequityInternational terrorism“Clash of Civilisations”Demographic timebombsDebt mountains/credit crunches
Environmental Externalities
Climate ChangeOil at $100 +Resource constraints (water/soil)Food shortagesWorsening air and water pollution6th “extinction spasm”
Capitalism today is the only economic show in town
“Creative Destruction”Joseph Schumpeter
Creative destruction as you have never seen it before as today’s unsustainable economic development gives way to genuinely sustainable economic development
IPCC Consensus
Staying below2°C
means stabilisingat 450ppm CO2
which meansc. 80% cut
by 2050
Canaries in the Mine
• Permafrost in Siberia• Arctic Sea ice• Greenland Ice cap• Antarctic ice sheets• CO2 absorption rates• Amazon Rainforest drying out• Acidification of the oceans
550
450
350
Stern Review
“Climate change is the
greatest market failure the world has ever seen”.
Get a realistic priceon a tonne of CO2
just as fast as possible
The Shrinking Earth
Five Capitals Framework:“interdependent and indivisible”
HumanCapital
SocialCapital
ManufacturedCapital
FinancialCapital
Natural Capital
The Five Capitals
• Natural Capital- any stock or flow of energy or matter that yields life, goods and services
• Human Capital- health, knowledge, skills and motivation required for
productive work• Social Capital
- the value added to any activity by human relationships and cooperation
• Manufactured Capital- material goods (tools, machines, roads) which
contribute to the production process• Financial Capital
- no intrinsic value itself but reflects the productive power of the other types of capital
Capitalism is Dead…
• Profits maximised, greed incentivized
• Macho CEOs rule the world
• Licensed cost externalisation, natural limits defied
• Deregulation of capital markets: risk and opportunity mis-priced
• Economic growth credit-fuelled, not earnings-based
This version of……
WEALTH WITHIN ENVIRONMENTAL LIMITS
- NOT BEYOND!
• DECARBONIZATION• DEMATERIALIZATION
• CLOSED-LOOP SYSTEMS
THE “LAWS” OF THE MARKET
MUST YIELD TO
THE LAWS OF THERMODYNAMICS
Changes Ahead
• Prices tell the truth
• Governments reclaim their rightful role
• The Corporate “Licence to Operate” is re-written
“20 years from now you will be more disappointed by the things that you didn’t do than by the things that you did.”
(Mark Twain)
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