Branching out

Now that I have covered all of the major 2010 CSR rankings currently on my radar, I could certainly sit back and wait for the next crop to come out. Newsweek has still to present its 2010 edition, and a number of lists I haven’t yet explored have yet to publish as well (the Covalence and Access to Medicine Index are among those I am looking forward to).

In the meantime, I have started taking a slightly different approach, comparing basic CSR lists to a variety of other types of rankings. Doing so offers some interesting insights. For example, juxtaposing the Best Places to Work ranking with other CSR rankings offers the insight that a good CSR program may not be as central to satisfying to employees as CSR practitioners like to suggest, since only twenty percent of companies on the list appeared in even one of the CSR rankings I studied. By contrast, comparing Fortune Magazine’s “World’s Most Admired Companies” (which, by the way, is disconcertingly heavy on U.S. companies) with the rankings suggests that CSR recognition and general reputation may go hand-in-hand. Thirty-eight of the fifty companies selected by Fortune made it onto at least one of the five CSR lists I examined, indicating a reasonably strong relationship (N.B. that I am not making any assertions about causality!).

More to come, and as usual, please pass on your suggestions for additional CSR rankings to explore.

Call for CSR Consumer Insights Data

In a recent post, I laid out some of the topics I plan to cover in my Justmeans blog this month. I’d like to add one more to the list, and am interested in soliciting your help.

One of the concerns I have seen while working on this blog is a lack of good consumer insights data. I am currently doing research into different market research databases relevant to this topic and would welcome any information readers can offer on data resources for those interested in this topic.

Why is this important? As I hinted in my Justmeans post on the Ethical Sourcing Forum Conference (see “Ninety-Nine Years after Triangle: CSR in Factories”, published on the 26^th of March), one of the big disconnects hindering the advancement of workers’ rights is the fact that companies can’t monetize their efforts in any way. Guarding against human rights abuses is an important tactic for minimizing reputational risk, but wouldn’t it be great if companies taking superior measures to protect the workers in their supply chains could increase revenues as a result of their good efforts? Unfortunately, the word on the CSR street is that consumers don’t want to hear sad stories when buying products, making it counterproductive for firms to share information about their social compliance work. Is this true? And is there any sort of modified messaging that would counteract this problem?

Ah, if only we had data to guide how consumers REALLY receive this kind of CSR information! If you are in a position to share comprehensive data on this subject, please connect with me through the Justmeans website.

Photo credit: ocw.osaka-u.ac

Upcoming CSR posts

It has been a lot of fun keeping up with your questions! In March, my blog on Justmeans covered a wide range of topics, with posts covering sustainability indices, CSR rankings, games companies play in reporting on their greenhouse gas emissions, a conference on ethical sourcing, a new book on CSR, and a database of information that will freak you out. If this kind of stuff excites you, stay tuned for April, which should offer a rich array of new topics.

While I don’t plan out my posts for the month too far in advance, I thought I would offer a preview of two of the key areas I plan to cover in April. First, I have received some questions about how the approaches of different CSR rankings and sustainability indices compare to one another, so plan to spend some time delving into methodologies. Second, some people have asked me questions as of late about standards for measuring greenhouse gas emissions, so expect to do at least one piece on measurement and reporting frameworks. Finally, on a related note, it seems appropriate to spend some time talking about carbon markets and how they relate to CSR.

What else? That’s somewhat up to you, so please send me emails through Justmeans if you have special requests for CSR-related topics you’d like to see me cover in my blog.

Financial reform bill suggest CSR failures

If CSR is about self-regulation, then industries that face regulation should view government regulation as a function of their own failure to preempt laws with socially responsible market behavior. After all, if corporations were considering the public interest, if they were acting responsibly, there wouldn’t be a need for consumer protection laws at all. However, there was (and still is) insufficient consideration of corporate responsibility as it relates to financial transactions in financial sector operations. The financial sector must move from “Greed is good” to “Serving customers is good”, and perhaps then to “Acting responsibly towards the economy is good”.

Financial sector must focus on adding value

The financial sector’s problem began when finance stopped being about providing a product to customers. Instead, finance became about figuring out ways to make the most money possible as quickly as possible. The maximum profit goal is only occasionally related to the need to serve customers. In fact, based on the data, customers of active managers may end up losing money when the money manager doesn’t make enough gains to cancel out inflation and the fees they deduct from client funds.

The data also indicates that, on the whole, investors will do just as well by investing in passive funds, like ETFs, that just let money grow with the market naturally. Indeed, statistics show that even top managers only “win” in the market around 50% of the time; that is to say, managers whose investment decisions are 50/50 are prized. Most investors can make financial choices that benefit them 50% of the time; one does not need a financial professional to do that. The value of money managers – to society- is thus debatable.

Financial sector should bear higher fiduciary duties

The financial crisis showed that the souring of risky investment choices for firms, often with their own money, had a serious ripple effect of detriment on the entire economy, and on a national and international scale. In this way, participants in the financial sector must realize that they not only bear the burden of adding value to customers’ portfolios, but they also are each playing a role in safeguarding the entire economy. In the same way that a careless foodworker can poison and kill hundreds of people, a careless financier can do as much damage to life savings, retirement, college funds, etc.

Further, disturbances in the economy has a much stronger tendency to continue to ripple- to continue to cause more and more effects. So where a foodworker’s negligence may lead to harm, etc, those deaths won’t (usually) cause more harm. Whereas in the financial sector, one harmful event triggers a chain of harm.

No lessons learned- firms that caused crises fighting reforms

Thus although the very financial firms that caused (and profited from) the financial crisis are now fighting reform, there is no alternative when firms so obviously lack the discipline to be socially responsible on their own. One day, perhaps we will have a financial sector that again serves and facilitates the economy rather than manipulating it.

Banks Initiate Green CSR Campaigns

No sooner had I reported on Wells Fargo’s green financing track record than I stumbled over an article in American Banker describing the impressive sustainability activity of four other banks. These inspiring actions show the many ways in which banks of varying asset size can be sustainable and good for society.

Citigroup

Despite Citi’s ‘on the edge’ status in terms of whether it will fail or not, the bank has been able to do a lot of excellent work in sustainability. Citi’s size allows it to make infrastructure investments in cleantech in ways smaller banks can’t, as well as to finance larger scale green projects. One area Citi has focused on is “sustainable IT”, where it has made changes to procedure and to equipment to better manage its firm’s enormous energy use. Citi has worked with the EPA to transition to CPUs that are ultra-energy efficient. They have also changed the company’s email procedure in a program called “Lighten the Load”, which serves to cut down on the volume of email workers spend computer energy managing each day. These initiatives will cut down on Citi’s total carbon output by 3%.

Their IT initiative is only one of a swatch of initiatives you can read about on their website. Others include green building, Haiti recovery, technology recycling and more. Despite the craven behavior of many financial firms, Citi stands out as an ethical firm in an industry that too often rewards amoral behavior.

Bank of America Looks to Green Energy

BOA has pledged $20 billion in investments in sustainability, and they’ve applied it pragmatically, with a focus on efficiency. BOA now runs one Southern California office with fuel cells, following in the footsteps of First Bank of Omaha, which was the first bank to operate off of fuel cells. BOA has also invested heavily in green building. Their green building initiatives have included HVAC upgrades and putting computers to sleep at night, yielding significant energy and cost savings. BOA is off to a good start; with their newfound size and market power, these investments should only be the beginning since they can afford to do so much.

The Johnson Financial Group ($6B in assets) has taken very similar steps as BOA, but on a smaller scale. They also adopted the same software that BOA uses to put its computers to sleep (called Nightwatchman) and built a green facility. Like BOA, despite up front investment, Johnson Financial is seeing savings from reduced energy demand.

Third Federal gets creative with tele-business

Third Federal, a smaller national bank ($750M in assets), has cut down its energy, paper and C02 through reducing the travel of its employees. By instituting new internal policy that embraces broad IT networks, the increasingly popular paperless-billing option and new green building initiatives. Although Third Federal doesn’t have BOA’s cash reserves, they serve to show that banks of all sizes can make common sense changes and investments to reduce their environmental impact.

Overall, it’s just great to hear positive things about the financial sector, and to see that some banks do care about customers beyond their account size.

Accenture Provides Roadmap for Consulting CSR

By advising the world’s most powerful firms in business practices, consultants have great opportunities to use their power for CSR-good. Although many consulting firms have not taken an introspective look at their own businesses’ CSR, Accenture’s 2008-2009 Corporate Citizenship report shows that the consulting industry has many chances to help propagate CSR practices. Their report provides a plethora of examples of ways a consulting firm can be socially responsible and set an example for their clients.

First steps towards sustainability

In its sustainability report, Accenture evaluates its own business and looks at how its advice influences its clients’ sustainability. Accenture’s own sustainability steps aer in their early stages, and involve a lot of promises about the future. They both reported its carbon footprint, and set targets to meet on carbon reduction. Of course, Accenture’s most important sustainability steps- meeting their targets- lie in the future.

CSR Strength in Numbers

Accenture, as is its business model, has surrounded itself with smart people. In 2008, it joined the World Business Council for Sustainable Development, and formed an environmental steering group. Relatedly, it also joined the U.N.’s Business Call to Action. Accenture also committed to the United Nations Global Compact, which describes ten basic principles supporting business’ obligation to protect global human rights. Joining coalitions of larger movements can be useful in encouraging companies to engage with CSR programs, and seems to have been a successful mode for Accenture.

Ethical rigor at the forefront

Accenture appears to be very strict on employee ethics. It is important that a firm with such a trusted role advising other large companies be ethically fastidious themselves. In 2009, they joined a global Anti-Corruption effort, but they also administer a rigorous compliance regime at the firm level, where most employees complete ethics training. Accenture emphasizes and frequently communicates its ethical code to employees, and fires on the first compliance offense as part of its zero-tolerance policy.

Two unique CSR programs

Two particularly cool aspects of Accenture’s program stand out. First, they adopted an offical Pro-Bono policy. Pro-bono work is a relatively untapped way that consultants can be socially responsible in measurable ways. Then, perhaps as part of the pro-bono effort, Accenture has launched a program called Skills to Succeed. Skills to Succeed lends out Accenture’s consultants to solve problems in microfinance, abroad, and in underserved communities domestically. Working together, these two programs have enormous power to help solve business problems in the interest of sustainability.

In total, Accenture’s sustainability report describes a large and established consultancy intent on doing good, and taking the first steps on a CSR journey.

How Green is Cloud Computing

One of technology’s latest catchphrases, “cloud computing” has been generating a lot of buzz lately. What does it mean to be “in the cloud”? And can operating “in the cloud” become a new sustainable business practice and a green alternative to other forms of computing?

What is it? The term “cloud computing” is used to describe a number of different services and technologies. At its broadest, the term “in the cloud” can refer to any resource available on the Internet. But when IT professionals refer to cloud computing, they often mean software, storage or processing power available virtually, outside of local servers: “software as a service,” “platform as a service,” or “infrastructure as a service.” Cloud computing, then, can refer to services like Google Apps, Google’s collection of applications like Google Docs and Gmail, where file-sharing and email is handled by Google’s servers rather than by a company’s local machines. It can also refer to the services offered by companies like Amazon, whereby computing infrastructure – virtual servers – can be created. It is the latter in particular that might point to a greener future for computing.

How green is it? Much has been written about the energy consumed by data center servers, and as more and more users “log on” and utilize these resources, the power used by the world’s computing infrastructure increases at a rapid rate. The buildings that house data centers are massive, housing thousands of servers that require electricity for both connectivity and for cooling. Although some data centers themselves have gone green, utilizing efficient forms of air-conditioning and upgrading to more efficient computers for example, “cloud computing” provides another alternative.

While companies, particularly those involved in e-commerce, rely on their servers being up and running 24-7 and being able to handle heavy traffic loads, most of the time, these computing resources (including redundancy plans that often involve additional backup servers) are under-utilized. Even with the most energy-efficient processors and cooling plans, this can be incredibly wasteful.

The rise of cloud computing allows for businesses utilize the computing resources they need and pay for what they use. In other words, it allows them to take advantage of “virtualization.” Rather than employing the hardware in data centers, where the servers are always on even when not being fully utilized, virtualization allows “machine instances” to be launched as necessary. There is no need for backup servers, staging servers, redundancy plans and the like; server instances are launched in the cloud as necessary. This is scalable almost instantly, allowing for amazing flexibility with a vastly smaller energy consumption footprint.

Offering a very different metaphor than the unfortunate description of the Internet as “a series of tubes,” cloud computing hopes to provide the next step in computing technology, services, and power. And as one of its features is “virtualization,” the move away from massive hardware and energy consumption might point to a greener, more sustainable business and computing future.