1. ECM November_Layout 1 05/11/2013 17:33 Page 1Sustainable business in Europe Continent of contrasts Climate change IPCC's final warning (again) Forest offsetting REDD hot solution? November 2013www.ethicalcorp.comThe executive whistle When to blow, and how to do it

2. ECM November_Layout 1 05/11/2013 17:34 Page 2rt C10 % po e E 10 ur re ot Qu ave g yo s sin to howca S onGet your report in the hands of the stakeholders it was written for! Stand out from the crowd promote your Corporate Responsibility and Sustainability report with our new CR Report ShowcaseThis is your chance to get your report infront of all your key stakeholders.On a daily basis your partners, suppliers, clients, colleagues, NGOs, academics, governance and press, visit Ethical Corporation.We will make sure you get the maximum exposure that your report deserves. List your report NOW! Get in touch: +44 (0) 20 7375 7244 | aaron.jackson@ethicalcorp.com 3. ECM November_Layout 1 05/11/2013 17:34 Page 3Ethical Corporation November 2013ContentsContents 5From the editorEthicsWatch 6Accenture CEO survey Look for the value7Extractive sector transparency EITI tightens up8Arctic activism Russia gets heavy9Child labour ILO seeks more data10 Mallen Baker Electric dreamsBriefing: Europep26 Is REDD the offsetting answer?p37 How to be strong24 Cheat sheet Reports and research, distilled and analysed32 BrandWatch Power to the people, from Ikea12 Un-common market 14 Corporate reputation recovery 18 EU red tape that works?26 Emissions and deforestation REDD alert21 Spit and Polish 30 NGOwatch Russias in the Antarctic tooStrategy and management 34 IPCCs new report Same old same old? 37 The GlobalEthicist How to blow the whistle 39 Global Compact 100 A credible new ethical index31 Peter Knight We cant share everything43 China column Paul French is back in BurmaReview 44 Report: Merck 45 Report: City of Warsaw 46 New books 47 Academic newsCOVER IMAGE: ISTOCKPHOTO48 People on the movep11 Europe's great and the (not-so) goodp34 More bad news50 Toby Webb Risky business3 4. ECM November_Layout 1 05/11/2013 17:34 Page 5Ethical Corporation November 2013From the editorWelcome to the November 2013 issue he reputation of business in Europe has seemingly never been lower, as the continents economy continues to only slowly recover from the financial crisis and its after effects. This is particularly so in the continents southern states, where unemployment remains very high. Certainly there is a public and media appetite to weed out the corporate bad guys, as the scandals on company tax policies, executive pay levels, and everything else have demonstrated. Any observer of the European Union would be unsurprised to learn that the European commission in Brussels has, as for many things, released guidance and regulations regarding corporate responsibility. Unlike some other commission activity, however, reaction to these regulations has been largely positive. There is much to be said for standardising the approach on these businesscritical matters for companies that have operations across the EU. Some companies, of course, have seen the opportunity in regaining trust through developing more sustainable business models, as our briefing, from p11, demonstrates. Elsewhere in this issue, from p34, we focus on what the recent report from the Intergovernmental Panel on Climate Change really means for business. Its sadly very tempting to say here we go again, and certainly a lot of what the IPCC says now is merely confirming what the panel has always said. There is a pressing need for companies to look beyond the next few years and to really think about what increased global temperatures will mean for them and their supply chains. Even if we manage to keep the worlds climate within the 2C increase that scientists regard as the maximum safe limit, companies will be operating in a far more uncertain world. In our strategy and management section, the latest from our GlobalEthicist columnist focuses on the difficult situation a toplevel executive whistleblower can find him or herself in, and whatTthe options are to get out of the situation. Clearly an employee at any level in a company can find themselves uncomfortable on an ethical, moral or personal basis with the actions of others. Responsible organisations have strict codes of conduct in such circumstances, with clear guidance for employees including communication channels through which they can make their concerns known. But when you are near the top of a company, or even at the top like the former Olympus chief executive Michael Woodford, your options become, inevitably, more limited. See how you can extricate yourself from p37. The executive whistle When to blow, and how to do it Also this month we have all our usual columnists and story analysis, plus reviews of reports from Merck and the City of Warsaw, which is the self-proclaimed first report to follow the new GR4 guidelines. Ethical Corporation will be back in early December with our usual review of the year and our preview for 2014. If theres anything you think we should include, please get in touch. n Sustainable business in Europe Continent of contrasts Climate change IPCC's final warning (again) Forest offsetting REDD hot solution?November 2013www.ethicalcorp.comIan Welsh EditorContributors: Rob Bailes, Mallen Baker, Oliver Balch, Andrea Bonime-Blanc, Aleksandra Dobkowski-Joy, Jon Entine, Paul French, Stephen Gardner, Nadine Hawa, Phoebe Hayes, Peter Knight, Judy Kuszewski, Claire Manuel, Eric Marx, Jerri-Lynn Scofield, Toby WebbPublisher: Toby Webb toby.webb@ethicalcorp.comEditor: Ian Welsh ian.welsh@ethicalcorp.comContributing editor: Mallen Baker Sub editors: Sarah Burton, Gareth Overton Business Intelligence for SustainabilityPeople on the move 7-9 Fashion St, London E1 6PX UK Subscriptions: +44 (0) 20 7375 7575 Editorial: +44 (0) 20 7375 7213 ISSN 1758-157552Advertising and sales: Oliver BamfordDesign: Alex Chilton Designmoves@ethicalcorp.comoliver.bamford@ethicalcorp.com | +44 (0) 20 7375 7518info@alex-chilton.co.uk | +44 (0) 20 7042 6340Subscriptions subs@ethicalcorp.com | +44 (0) 20 7375 7575Corporate subscription packages from 495Ethical Corporation is printed by Four Way Print Ltd on Green Coat plus paper, which comprises 80% recycled and 20% Forest Stewardship Council certified source material.5 5. ECM November_Layout 1 05/11/2013 17:34 Page 66 EthicsWatchEthical Corporation November 2013EthicsWatchGet off my landimpact, says the report. What we heard from CEOs is that they are struggling to make the case that links sustainability with business value. Although they havent lost faith with markets, they believe that governments are going to have to intervene to set the right market conditions to ensure that the right kind of outcomes are rewarded, says Peter Lacy, Accentures managing director of strategy and sustainability in Asia-Pacific, and lead author of the CEO study.Analysis: CEO surveyBosses seek sustainability value By Rob BailesCompany bosses feel constrained by market expectations, but transformational leaders are emerging ustainability remains firmly on the business leader s agenda, but chief executives are increasingly finding themselves constrained by market expectations and unable to quantify and harness the business value of sustainability. JUPITER IMAGESSSustainability still isnt everyones cup of teaThis was the prevailing view that emerged from a new UN Global Compact-Accenture study of more than 1,000 global CEOs from 27 industries and 103 countries. The third Global Compact CEO Study claims to be the largest piece of research into the views of chief executives on sustainability to date. It finds that while CEOs remain convinced that sustainability can be a driver of growth and innovation, businesses are struggling to deliver the business case at scale. An inability to make the connection between sustainability and business value is seen as a critical factor in blocking further progress to embedding sustainability. And 83% of CEOs believe that an increase in government intervention by way of providing an enabling environment for the private sector is integral to advancing sustainability. Government intervention can help move sustainability beyond incremental advances to a collective and transformativeTransformational leaders Of unique interest to this years study, Lacy says, was the identification of an emerging group of transformational leaders. These are CEOs of companies that demonstrate both sustainability leadership and traditional high business performance, and they are framing sustainability in very different ways from other companies. They are companies that are able to monetise sustainability through their top line, Lacy says. They are able to drive a sustainability innovation agenda that is very clearly and tangibly linked to value and thats where they are able to convince the customer and consumer that this all makes sense. What attributes do transformational leaders possess? The report identifies several emerging themes that are enabling transformational leaders to achieve both value creation and sustainability impact. One strong theme is the ability to move beyond reactive and incremental responses to external pressures in favour of a deeper understanding of sustainability as a driver of innovation, differentiation and growth. These businesses are converting sustainability to advantage and value creation. Another major point of differentiation, says Lacy, is the commitment of these companies to engage in partnerships and collaboration throughout the value chain. They recognise the value of external collaboration in helping the business to achieve its sustainability goals. Last, but not least, transformational leaders are measuring the value of sustainability to the company. These companies are quantifying the impact of their initiatives and sustainable business models to the company, as well as tracking their impact on local communities.RSOKOLOFF/ISTOCKPHOTOWhat bosses think, the EITI pushes on, the Arctic 30 and child labourGreenpeace is hoping to obstruct hydraulic fracturing, or fracking, for shale gas in the UK by encouraging use of trespass laws. Greenpeace campaigner Anna Jones says: Under English law, if you own land, your rights extend to all the groundAnti-fracking action intensifiesbeneath it. If someone drills under your home without permission, it is trespass. Fracking companies would have to obtain explicit consent from all landowners, Greenpeace says. Evidence for the claim comes from a legal case involving businessman Mohammed al-Fayad, former owner of Harrods, who in 2010 won compensation for trespass from an oil company that drilled without permission under his Surrey estate. The UK Department of Energy and Climate Change says that oil and gas developers can negotiate access rights with landowners.Food for thought Hard on the heels of revelations from retail giant Tesco about the amount of supermarket food wasted in the UK, the European commission in Brussels is considering European Union food waste reduction targets. The emphasis would be on cutting waste from the distribution and post-retail stages of the food supply chain, the commission says, meaning most pressure to achieve cuts could fall on supermarkets and consumers. The commissions proposals could be published by the end of the year. Meanwhile, an October report from the non-profit Waste & Resources Action Programme (Wrap) found that waste from the production of food in the UK outweighed waste arising from its distribution and consumption. In 2011, 4.3m tonnes of food was wasted, but 3.9m tonnes of that is manufacturing waste, Wrap says. 6. ECM November_Layout 1 05/11/2013 17:34 Page 7Ethical Corporation November 2013Analysis: Extractive Industries Transparency InitiativeA number of companies that promote themselves as green business leaders have had their commitment to sustainability brought into question by signing a letter to President Obama calling for the approval of the controversial Keystone XL pipeline. The October letter, signed by 168 chief executives, emphasises the need to boost economic recovery and enhance US competitiveness, and says environmental concerns could be managed. Signatories include the leaders of GE, Siemens and PricewaterhouseCoopers, which compiles the Carbon Disclosure Projects indexes. Critics say the letter demonstrates business hypocrisy when it comes to reducing emissions and combating global warming. The Keystone XL pipeline would transport emissions-intensive oil from Canadas tar sands to the Texas Gulf coast.EITI digs in By Jerri-Lynn ScofieldTen years on from its launch, the EITI has developed its standard and is expanding its membershipBMWBMW has been taken aback by demand for its first electric car, the i3, which will start to be delivered in Europe in November. About 8,000 of the cars have been reserved by customers, exceeding the firms expectations. The i3 will sell for about 30,000, and BMW is seeking toSparking a revolutionsoothe range anxiety, or concerns that electric vehicles will too quickly run out of power, by offering customers the option of a back-up conventional vehicle that can be used for longer journeys. BMW chief financial officer Friedrich Eichiner says: If demand holds, and thats what it is looking like, we will have to invest more. Electric cars look set to roll out on an ever greater scale: Volkswagen has outlined plans to offer as many as 40 models of electric vehicles.arlier this year, the Extractive Industries Transparency Initiative took a major leap forward with the adoption of a stricter new standard at its biennial conference in Australia. [This] is an illustration that multistate corporate governance need not be a feeble lowest common denominator effort, but can reflect real leadership in taking policy where it hasnt been before, says Jonas Moberg, head US to join the party In addition to the four EU countries that have of the EITIs secretariat in Oslo. When EITI was launched 10 years ago, both announced intentions to join EITI, the US has governments and companies resisted disclosing revealed similar plans, and is expected to even basic information. With the new EITI submit its EITI application early in 2014. standard, the consensus as to what should be disclosed has broadened significantly, says Moberg. The new standard requires going beyond merely looking at fiscal data such as corporate tax and other payments to look in detail at the licensing application, beneficial ownership, and specific contractual provisions that apply to resource extraction. Although any country with a significant resource extraction sector could benefit from implementing the EITI standard, Moberg says, initially, the EITI was aimed at developing countries with EITI brings benefits beyond simply transparency a large dependency on resource extraction. The EITIs focus on transparency and Now, theres been a shift to middle and disclosure has also stimulated tightened higher income countries also implementing accounting disclosure requirements in both the EITI standard, says Moberg, with the UK the EU and the US for companies involved in and France announcing intentions to join the resource extraction, requiring them to report EITI at the meeting in Australia, and Italy and payments to government officials in third Germany following at the G8 Summit in June. countries. (The US requirements are Forty-one countries are presently imple- temporarily in limbo, following an adverse court decision in July.) menting the EITI standard. Although the new US rules dont make EITI itself has no authority to enforce its standard by taking domestic or international such payments themselves any more per se legal action against countries that fail to meet illegal than they already are under existing US their EITI commitments. But it can determine law, inaccurate disclosure of such payments its membership an authority it has used to could trigger US securities law liability, and enforce compliance. possibly prompt private lawsuits by investors. EITI delisted Equatorial Guinea in 2009, And the increased transparency will also alert So Tom and Prncipe in 2009, and Gabon in the media and civil society groups in countries 2013. Currently, the EITI has suspended the where such payments are made.EElectric avenueCentral African Republic, DR Congo, Madagascar and Sierra Leone, and each of these countries could face delisting, if remedial measures are not taken, says Anders Krkenes, EITI communications manager. So Tom and Prncipe responded to EITI censure and the island nation has been readmitted to the organisation. What is always hard to get peoples heads around is that EITI started as a quasi multilateral response to NGO campaigning, says Moberg. The early hope was that it would result in a voluntary corporate social responsibility code. But its gone much further. The EITI instead evolved into a standard implemented by governments.HUNTSTOCKPractise what you preach?7EthicsWatch 7. ECM November_Layout 1 05/11/2013 17:34 Page 88 EthicsWatchEthical Corporation November 2013Cottoning onBy Eric MarxRussias heavy-handed treatment of activists protesting against Arctic drilling looks to have set the tone for this new battlegroundhen it comes to taking on the fossil fuel industry, what does direct action look like? If youre Greenpeace, the obvious answer is to try to interrupt major oil operations in the Arctic where an estimated quarter of the worlds oil and gas reserves are thought to reside. The global conservation organisation has consistently called for a sanctuary around the north pole and a ban on oil drilling in the Arctic, but only in the past two years did it launch a more confrontational approach involving the illegal boarding of offshore oil rigs. The risky strategy has helped attract attention to dangerous Arctic energy exploration. In late September Greenpeace drew the full fury of the Russian state on 30 activists, after two of their party scaled Gazproms new oil platform Prirazlomnaya. While the Greenpeace vessel The new normal for activists? Arctic Sunrise sat in international waters, Russian coastguard officers forcibly significant decline in output from its convenboarded and seized control of the ship, tional reserves and so must turn to oil arresting the entire crew, initially on a charge prospecting in the icy waters north of the of piracy. While the original charges have been Arctic Circle. scaled back, all 30 remained in custody seemFor this reason, Greenpeace sees ingly facing lengthy jail terms in late October [Gazproms oil platform Prirazlomnaya] as the thin edge of the wedge, says Anthea Pitt, as Ethical Corporation went to press. executive editor of Petroleum Economist magazine. If it comes off, then its almost open Blatant intimidation The Russian authorities are trying to scare season for the entire Arctic. Gazproms giant $4bn Prirazlomnaya people who stand up to the oil industry in the Arctic, but this blatant intimidation will not platform could supply oil directly to the global succeed, Greenpeace International executive market by early 2014 and, in the process, help director Kumi Naidoo said following the arrests. solidify Russias position as a global energy Naidoo subsequently offered himself as leader. Ignoring this case will only embolden security for the so-called Arctic 30 28 Greenpeace activists and two freelance journalists Russian authorities further, warns Cooper. What specific governments and the interwriting in a letter mailed to the Russian president, Vladimir Putin, of his willingness to national community, in general, need to focus share their fate. Human rights organisations on is not whether they support what Greenin Russia see the Greenpeace arrests as one peace did at the Prirazlomnaya oil rig, but the more sign of a Russian Federation bent on fact that the Greenpeace activists were unarmed protesters whose actions do not stifling any kind of democratic dissent. Since Putin came back to power things warrant such grotesque criminal charges.WConcern about forced labour in the cotton fields of Uzbekistan is prompting an increasing number of brands to refuse to buy cotton from the country, according to campaign ISTOCKTesting the watershave gone from bad to worse, says Sergei Nikitin, Amnesty Internationals Moscow office director. Here we have peaceful, nonviolent actions from a well-known organisation which identified itself. The arrest of the Arctic 30 through the use of disproportionate sanctions is essentially an international version of the Pussy Riot case, says Tanya Cooper, Russia researcher at Human Rights Watch. This is a message to show Greenpeace how high the stakes are for their environmental activism, says Cooper. Energy analysts say the Greenpeace action may have struck a nerve with the Russian state at a time when it is particularly vulnerable: heavily dependent on oil and gas revenues to finance government operations, it faces aAn opaque supply chainIGOR PODGORNY/GREENPEACEAnalysis: Arctic 30group the Responsible Sourcing Network (RSN). In the run-up to this years cotton harvest, Ikea, Marks & Spencer and Canadian sportswear label Lululemon athletica joined 133 other signatories in a pledge against forced labour. As we have reported in Ethical Corporation, each year in Uzbekistan, under a quasi-feudal system, state employees, students and even young schoolchildren must help out with the harvest or face punishment. Uzbekistan has this year, for the first time, allowed International Labour Organization inspectors to observe the harvest, though it is difficult for citizens to speak openly with ILO monitors, RSN says. Most Uzbek cotton goes to Bangladesh and China, making it hard to assess the effect of the brands boycott.100 pledges A worker-safety accord committed to improving conditions in the factories of Bangladesh reached a 100-brand milestone in October. The three signatories that took the Bangladesh Accord on Fire and Building Safety past its century are Woolworths Australia, Germanys Gebra, which makes safety warning products, and international trader Wnsche Group. The accord was established by international unions IndustriALL and UNI in the wake of the April 2013 Rana Plaza factory collapse, which killed more than 1,000 textile workers. By signing the accord, brands pledge to make funds available for factory safety upgrades, and that workers will continue to be paid while renovations are taking place. 8. ECM November_Layout 1 05/11/2013 17:34 Page 9Ethical Corporation November 2013EthicsWatch9On track Analysis: child labourToo many children still at work By Judy KuszewskiA new report claims good progress on child labour, but warns against complacency new report from the International Labour Organizations International Programme on the Elimination of Child Labour (IPEC) shows a steep decline in child workers worldwide during the period 2008-2012. The report is the latest in IPECs periodic surveys that aim to measure trends in child labour, towards the ILO target to eliminate the worst forms of child labour by 2016. The report identifies 168 million children engaged in child labour worldwide, down from 215 million in 2008, and 245 million in 2000. More than half are involved in hazardous work, considered one of the worst forms of child labour. While Asia and the Pacific regions report the highest absolute numbers of child labourers, the highest rate of child labour per capita remains in sub-Saharan Africa.AWell reputedYONGYUAN/ISTOCKCompanies with better reputations for corporate responsibility are much more likely to be recommended by their customers than laggards, according to the 2013 CSR RepTrack 100 study, carried out by US-based consultancy the Reputation Institute. The RepTrack survey, covering 55,000 consumers globally, found that 73% would recommend companies perceived to be delivering on corporate social responsibility, butSocial value engineonly 17% would recommend companies seen to be poorly delivering. The companies with the worlds best reputations, according to the study, are Microsoft, Disney, BMW and Google. Companies must recognise that creating social value is a prerequisite to creating business value. That makes monitoring and quantifying the returns on CR essential, the Reputation Institute says.not be met as evidence of this danger. Gerard Oonk of the Stop Child Labour Campaign coalition warns: Its not clear what specific plans individual countries have to speed up progress, and whether ILO is able to MYOUSSEF/ISTOCKPHOTOZurich-headquartered Credit Suisse has launched what it says is the worlds first stock market tracking index to follow the performance of companies with lesbian, gay, bisexual and transgender (LGBT) friendly policies. The index follows US companies that score high on the Human Rights Campaigns Corporate Equality Index, which benchmarks corporate policies and practices on LGBT employees. Companies tracked by the index include Apple, Johnson & Johnson, Pfizer and Wells Fargo. Timothy OHara, Credit Suisse global head of equities, says: Wall Street, and Credit Suisse in particular, has a strong track record of providing leadership and support for LGBTrelated issues.Devil in the detail While the improvements in numbers are heartening, the picture is considerably more complex in the detail. The report is transparent on the fact that gaps remain in the data, citing eastern Europe, central Asia, the Pacific, developed countries and several Asian countries as having missing or incomplete data. However, IPECs senior statistician Yacouba Diallo says the picture is getting better. Our current data coverage is an improvement on our previous estimate. We cover 53% of the population of children aged 5-17, compared to [previously] around 44%. This is based on 75 national data sets. Are the data gaps not cause for concern, then? Diallo explains: There are gaps in certain regions, but that doesnt mean we have no data just not enough to provide an estimate for these regions. For this kind of exercise, we arent able to provide statistics because of our sample size in these regions. NGOs and the ILO alike express concern over the potential for complacency that could undermine the progress recently made, and cite the fact that the 2016 target for the elimination of the worst forms of child labour willA burden not to be bornemonitor it. The Dutch government, for example, are working on a global risk analysis of where the risk is in which industries. They will then use this to focus on where the risk is greatest, cooperate with NGOs and unions, and use their own influence in specific sectors where the risk is highest. The ILOs Benjamin Smith explains that, while the focus of the report is on policy makers, there are clear actions private sector employers can take to continue and accelerate the trends in reduction in child labour. Companies can have a clear policy of no tolerance of child labour in their operations and supply chain, then do their due diligence on childrens rights. Most child labour, by vast margins, occurs in the informal economy. Therefore, we need to work towards formalising those parts of supply chains to get at the root causes of child labour. And with 168 million instances of child labour, there is still a lot to do. 9. ECM November_Layout 1 05/11/2013 17:34 Page 1010 Columnist: Mallen BakerISTOCKEthical Corporation November 2013Energy supplyLack of leadership will lose the argument As the public debate over high energy prices intensifies, we need strong leadership to build consensus for climate change action, says Mallen Baker hatever else it is, Facebook is a forum for the expression of opinions by whatever cross-section youve managed to gather as friends through your life. For some reason, Ive managed quite a large cross-section. But Im not sure it would end well if they all found themselves in the same room as each other. There is one thing, though, that many of them seem firmly agreed upon right now. Its that the energy companies especially in the UK are ripping us all off in the name of blatant greed. And the truth is that environmental charges have been widely accepted by many as the secondary villain of the piece. The inherent contradiction in attitudes has always been there, of course. On the one hand we recognise that in order to waste less energy, it needs to cost more. And, whether we like it or not, the state of global energy supply can be expected to deliver more expensive energy in any case as we come towards the end of the fossil fuel era. But at the same time, we have a widespread attitude of entitlement by the public to cheap energy, just as we do cheap food. These were always in contradiction, but now were seeing that as the pressure increases and we should expect to see pressures continue to increase it will lead to the withdrawal of public support for green measures that are perceived to be to blame. We have almost zero perception that there are big structural challenges in how energy is provided worldwide. We have no sense of outside events, some of which are outside our control and have major consequences on our choices.WRather, if energy prices go up its because someone is to blame. Politicians are to blame for not building more power stations a few years ago. Energy company chiefs are to blame for being greedy. And environmentalists are to blame for persuading the government to levy green charges to put everyones bills up. Unfortunately, the news media loves nothing better than to point the finger of blame at someone and politicians and CEOs are top of the list because the majority of citizens will gratefully line up to demonise them. But the more substantial point is that this climate of public consensus completely changes the parameters of what may be possible. In order to take the radical steps to combat climate change we need a consensus for action. We need the consent of citizens and companies need the consent of customers or else it just wont work. The energy blame game has blown that consent out of the water. Green policies have become labelled in the public mind as an expensive luxury. A nice-to-have that not only could but should be abandoned if times get tough. Corporate buck-passing In the absence of any clear analysis as to why the environmental situation is one of the causes for times getting tough and likely to make those times tougher still in the future it makes perfect sense. The leadership of the energy companies hasnt helped much by queuing up to point the finger at eco-charges in a desperate attempt to deflect criticism from themselves. This approach fails to reframe the discussion as being one aboutTransparency can pile on the pressure for changeGreen policies have become labelled in the public mind as an expensive luxuryCOLUMNIST: MALLEN BAKERnecessary choices and consequences, and simply enters the blame game discussion on its own terms. And its doomed to failure. If playing the blame game, the chief executives of major utilities will never win the hearts and minds of the general population. We need to see real leadership. As demonstrated by great historical leaders such as Gandhi and Mandela, real leadership steps outside the tribal logic of a specific position, and uses its authority to make the necessary changes informed by the bigger picture taking its constituency to a place it wouldnt naturally have gone on its own. Energy company leaders should start by improving the transparency of their own processes to answer the charges of profiteering and face down the investors that want to see above-average returns from every type of business everywhere. And they need to use that momentum then to pose a far-reaching challenge to our cosy consensus that business as usual equals cheap energy and if we dont get it, then someone in power must be to blame. Im not holding my breath. But in the absence of that kind of leadership, I fear well be reaping the consequences in the form of weak political will and token environmental measures for the next couple of decades. n Mallen Baker is a contributing editor to Ethical Corporation and managing director of Daisywheel Interactive. 10. ECM November_Layout 1 05/11/2013 17:34 Page 11Briefing: Europe 12 Regional differences 14 Bottom-up sustainability 18 Brussels takes charge 21 Poland: growing confidence 11. ECM November_Layout 1 05/11/2013 17:34 Page 1212 Briefing: EuropeFUSEEthical Corporation November 2013IntroductionContinent of contrasts By Stephen GardnerThere is no such thing as a common European approach to sustainable business or European companies, sustainability and corporate responsibility can look very different depending on where they are viewed from. For German companies, for example, the emphasis is on contributing to the maintenance of the social market economy by conforming to exacting environmental standards and seeking agreement on working conditions with workers councils and unions. In Scandinavia, it is more about equality, transparency and innovation for example, phasing out hazardous chemicals and fair representation of women in boardrooms. In France, sustainability often comes in the forms of diktats from above, for example as strict nonfinancial disclosure requirements or a moratorium on hydraulic fracturing, or fracking. Agenda-setting by the French government arguably has the sideeffect of turning many French companies into grudging box tickers. In southern Europe, companies are often close to their communities, but do little on the environment or on social issues such as gender discrimination. In the UK, the interests of shareholders predominate, and corporate responsibility is seen as worthwhile as long as it contributes to long-term sustainability and shareholder value. In eastern Europe, meanwhile, there is a desire to ride the wave of market forces in order to catch up with the west, and a suspicion of anything social that might sound like a communist-style imposed obligation. Andr Martinuzzi, head of the Institute for Managing Sustainability at Vienna University of Economics and Business, says that in the east,Fcorporate responsibility is often seen as a form of philanthropy, while in western European countries it has a much stronger strategic meaning, for example to create new markets as well as to increase eco-efficiency. Nevertheless, ideas about corporate responsibility are spreading in the east, often imported by western companies. Diverse contexts Varied attitudes towards corporate responsibility and sustainability are to a great extent a consequence of the differing frameworks within which companies operate in different parts of Europe. Broadly speaking, countries in northern and western Europe expect more of their companies than their southern and eastern European counterparts do. This can be seen in the application of environmental standards. In principle, companies in the European Union are subject to harmonised environmental rules, wherever they are located, but in practice implementation is done differently across the union, resulting in many variations. Countries such as Denmark and Sweden may go beyond EU regulated minimums, whereas countries such as Italy struggle to fully enforce the environmental regulations that are handed down from Brussels. Social welfare safety nets also vary significantly. According to the EU statistical office, Eurostat, people in eastern and southern Europe tend to be more at risk of poverty and social exclusion than those in the west and north. In Austria, the at risk rate is 16.9%, in the Netherlands 15.7%, and inCountries in northern and western Europe expect more of their companies than their southern and eastern counterparts 12. 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