simon zadek » Dear Mr Wolf…Reflections for the Magic Mountain

Dear Mr Wolf…Reflections for the Magic Mountain

simon — Mon, 23 Jan 2012 14:16:26 +0000

The Davos countdown has begun, as some of the world’s most powerful embark on the ritual trek up the Magic Mountain. What should be expected from this glitzy dialogue in this Year of Unreasonableness. Davos this year is titled The Great Transformation. But can Davos offer real alternatives or will it serve up a smiling, gritted-teeth espousal that ‘business as usual’ can and should be sustained…read my response to Mr Wolf’s proposed ‘seven ways to fix the system’ on OpenDemocracy @ http://bit.ly/wP96tP…

2012: The Year of Unreasonableness

simon — Sat, 31 Dec 2011 08:15:20 +0000

The Guardian invited me along with a few other folks to scribble some predictions for 2012. It must been a bad day when I finally hit the keys, but here is what I wrote.

2012 is going to be an unreasonably difficult year. We must be equally unreasonable in our ambitions for advancing sustainability.

The ‘sustainable biz’ circle’s golden rule is to keep one’s chin up, point out the good news, and duck the hard questions by appealing to an unknowable future. Being a party-pooper is considered impolite behavior, except perhaps through the majesty of John Elkington’s very-English metaphors. My personal prospects might be well served by joining Messrs Porter and Kramer in speaking of ‘shared values’. Better to be like Emma Howard Boyd, stretching optimism to breaking point in being positive about a financial sector whose bankers have personally pocketed US$2 trillion in the last five years and whose shenanigans cost the OECD an astonishing 26% of its collective GDP.

Frankly, penning positive ‘sustainability’ predications for 2012 on the same day that IMF chief, Lagarde, warns of a 1930’s style meltdown in the global economy is a challenge. The implications of China’s imploding property boom does not improve my state of mind. That The City instructed Cameron to either secure their interests in Europe or turn out the lights provides an expected, but ugly, backdrop. And all that in the context of the inexorable fall in the share of US working citizens in their own GDP, down to an historic 58%, which bodes badly for our cherished, North Atlantic ways.

Unfounded optimism, offered up to calm our rattled nerves with soothing lullabies, is a luxury we cannot afford. Time will tell whether 2012 will be a disaster of Largardian proportions, lets hope not. But as predictions go, one can’t go far wrong in saying that 2012 is going to be ghastly for, quite literally, hundreds of millions of people. Allowing oneself the discomfort of being troubled by current affairs might not be a bad thing. As Ed Mayo, my one-time boss at the New Economics Foundation, often gently reminded me that it is helpful to be at least a little angry when one gets up in the morning.

Noah’s biblical story spells out the fate of unreasonable folks, as I wrote in a recent China Entrepreneurs Club article, “Noah attempted repeatedly to warn his neighbors of the coming deluge, but was ignored or mocked”. Ray Andersson championed environmental sustainability despite being ridiculed for many years by his peers, employees and partners. Similarly for Anita Roddick of The Body Shop, John Browne of BP and many others who have stuck their necks out to say and do the right thing.

Being ridiculed for doing the right thing is an art that I have been working on over the last year in contributing to unreasonable initiatives. The South African Renewables Initiative was launched in Durban as an international financing partnership to accelerate the roll out of renewables in South Africa. The China Council for International Co-operation on Environment and Development has recommended to the State Council that China greens its expected trillion-dollar flow of outward investment over the next five years. The Korean-based, Global Green Growth Institute is working with governments around the world in advancing national and regional green growth plans, and the Canadian-based Centre for International Governance Innovation has provided an incubation hub for debating policy innovations that if implemented would better align financial market reform to sustainability outcomes. And we all hope that the UN High Level Panel on Global Sustainability, due to report out early in the new year, will raise our spirits and ambitions in the run up to Rio+20.

These initiatives are reasonably unreasonable, but we can and must do better. The Occupy movement has set the disruptive pace in calling for change, and it is our task to help deliver it. For 2012, I hereby open the Unreasonable List with three unreasonable ambitions. Firstly, Rio+20 could be a moment for some of the world’s largest businesses, working with others, to initiate their own ‘sustainability marshal plan’ by establishing collective stretch targets, their own post-Millennium Development Goals to deliver the benefits many nations are failing to achieve. Secondly, although we do seem to be able to land a decent, international carbon price, we could commit at Davos and then at the G20 in Mexico to ridding the world of the US$1 trillion worth of tax-financed, fossil fuel subsidies that in effect places a negative price on carbon today. And, thirdly, it is time to confront the financial sector, if not now when. We can during 2012 agree to establish, at least in Europe, a financial transactions tax as the vanguard of a root-and-branch realignment of the financial markets to delivering sustainability outcomes.

Predictions for next year, left to their own devices, look pretty bleak. So my wish list of one is that we declare 2012 the Year of the Unreasonable, establish an Unreasonable List and set ourselves some ridiculously ambitious goals.

Sign-up to future updates from me right here.

Durban: Plan B Is The Real Deal

simon — Mon, 19 Dec 2011 08:25:06 +0000

The climate negotiations in Durban has delivered a deal. As we return exhausted to our Xmas preparations, can we celebrate a breakthrough securing the future of our children, or should we condemn the outcome as a sham. The truth is that our futures depend less on the effectiveness of the Durban deal, but on what nations, communities and businesses do over the next decade, largely in their own economic interests.

Plan A has always been seen as a top-down deal involving global institutions, massive cross-border, public resource transfers, and national commitments to which wealthier sovereign states could be held to account. Plan A was not agreed when tabled in Copenhagen in 2009. In Cancun last year, and again in Durban, all negotiation efforts have remained focused on landing Plan A. Yet with falling confidence in an approach to the global challenge requiring almost 200 nations to reach consensus, voices advocating a Plan B have become more vocal.

Plan B would be made up of the bottom up actions of nations, regions and cities acting in pursuit of the interests of their citizens, businesses and political leaders. International co-operation would be key to Plan B, but by coalitions of the willing, acting in mutual interest and dependency. This would prevent it being a free-for-all, a pure expression of strong-arm politics or corporate interests. Harnessing the power of business and markets cannot mean allowing profits to lead in governing our international affairs, as Greenpeace points out in its recent report, Who Is Holding Us Back. Plan B would in essence be one for shaping a new global economy for the 21st century that would deliver the reduced carbon emissions whilst establishing a secure basis for creating jobs, income and growth for at least 9 billion people.

The Durban deal has been hailed as a Plan A. Agreed has been to develop a global framework with legal force for emissions reductions that would apply to all nations, including China and India. In return, Europe would commit to extending their commitments now, under the existing, legally-binding, international deal, the Kyoto Protocol, that would otherwise expire. A Global Climate Fund, furthermore, would be established to channel up to US$100 billion a year from 2020 from wealthier to poorer nations to help pay for the transition to green, and to support communities vulnerable to climate change.

Plan A is, however, a Plan B in disguise. The Durban deal at best delivers global, legally binding emissions reductions after 2020, whereas the science dictates that maintaining temperature rises below the critical 2 degrees is all about what is done before 2020. Similarly for the money. By 2020 many clean technologies will be cheap enough to be taken up without public subsidies. Our challenge is to mobilize funds now to accelerate green energy, energy efficiency measures and low carbon transport, just to name a few areas, whilst they are still relatively expensive, so requiring public subsidies.

For the Durban deal to mean anything at all, we need a Plan B for the next, crucial decade. And the good news is that the essential elements of such a plan are in motion. Renewables in Africa is a case in point. Africa’s largest planned green power project, the Lesotho Highlands Power Project, has secured funding from China in pursuit of its economic interests, a sign of things to come. Morocco will sell its desert energy into Europe, attracting public investors such as the European Investment Bank. South Africa is progressing a game-changing ramp up of its renewables, supported by an international partnership, the South African Renewables Initiative, launched in Durban, that will help to shape innovative financing instruments to reduce the burden of the extra costs of renewables on South Africa’s citizens and economy, stated by President Zuma as amounting to at least US$660 million a year.

Beyond Africa, India is advancing a huge build up of renewables through its Solar Mission. China is planning to spend US$1 trillion dollars by 2015 on renewables and enabling developments in its power grid, and also plans to pilot 7 domestic carbon markets across the country over the next five years. In Europe, Denmark’s newly-elected government is aiming for 50% of Danish power to come from wind by 2020 and Germany has established aspirational targets for a power system run entirely by renewables.

Finance is of course an issue, especially in this era of austerity across Europe, and uncertainty across the global economy. Public finances can be unlocked, however, by removing fossil fuel subsidies that today cost global taxpayers upwards of a US$1 trillion a year. Also, governments around the world spend almost US$5 trillion a year on everything from paper and ink to aircraft and food, which if greened would make a major difference to reducing carbon emissions and incentivizing new technologies and businesses. The proposed tax on financial transactions, now widely supported, can raises tens of billions of dollars annually, and go some way to reducing the endemic short-termism in financial markets that caused our current economic crisis as well as reducing investors’ interest in longer-term investing that would count carbon more fully.

Plan B, was very much in evidence in Durban, not in the negotiating rooms, but in the sprawling bazaar for ideas, projects, money and partners taking place on the sidelines. Thousands of people in tents, clubs and hotels, and in side rooms to the main negotiations, described with great vitality and in extraordinary detail how this real deal was going to play out over the coming decade. And the best news of all is that Plan B is not only our only option for reducing our emissions right now, but our only hope to those committed to a Plan A into the future. Nations will only sign up and stick to legally binding commitments if enough progress has been made in advancing the greening of their economies. Such real experience on the ground, with the associated development of business and political interests, is what it takes for nations to move beyond the search for an absent logic of trust to that of less inspiring but more impactful actions driven by first mover advantage, co-benefits and mutual dependencies and interests.

Join in Financial Transactions Tax On-line Debate

simon — Sun, 18 Dec 2011 06:08:52 +0000

This upcoming Monday (December 19th) at 11am EST, I will be participating in a webinar hosted by the United Nations Principles for Responsible Investment Inititative on the implementation of a Financial Transactions Tax. The debate will feature four very practical thinkers from different sides of the issue including Tjerk Kroes (APG Asset Management), John Fullerton (Capital Institute), and Roger Exwood (BlackRock). Raj Thamotheram of the Network for Sustainable Financial Markets will moderate. John and I will speak in favour of the tax, and the other two folks against.

If you are interested in the issue, you can join us, and join in !

To register, go to https://www2.gotomeeting.com/register/113001242

President Zuma Endorses South African Renewables Initiative

simon — Sat, 03 Dec 2011 13:02:56 +0000

President Zuma today endorsed the South African Renewables Initiative as a South African-led, international, lighthouse initiative designed to enable the scaling up of renewables in South Africa by reducing the incremental cost burden to South Africa’s citizens, economy and jobs…the relevant part of his speech is below:

“Ladies and gentlemen,

As we noted, the biggest barriers to developing renewable energy in Africa to date are not technological, but financial.

In that regard, South Africa has been hard at work in the development and design of financial instruments aligned to our national plans for green growth. During the course of COP 17 we will be launching a key initiative that could kick-start major development for renewable energy generation and industrial development.

The South African Renewable Initiative (SARi) funding mechanism will help us unlock South Africa’s green growth potential through the funding of large-scale renewable developments. This will be achieved with the assistance of global partners – donors and Governments, who will provide innovative funding solutions to facilitate it.

Renewable energy still costs more than non-renewable energy, which in South Africa is largely supplied by cheap, abundant coal supplies. It is estimated that the renewables’ targets indicated in our Integrated Resource Plan 2010 would add an average incremental cost of around 660 million US dollars to South Africa’s annual electricity bill up to the year 2044. The SARi model will enable us to deal with the high cost through low cost loans and other financial instruments combined with time limited pay-for-performance grants.”

Sign-up to future updates from me right here.

Consumers without Boundaries

simon — Tue, 22 Nov 2011 18:36:08 +0000

Unilever, working with The Guardian, today launches its on-line debate on sustainable living. As a part of this initiative, Unilever invited a number of folks to write short essays on the topic that have been compiled into a bound collection, Inspiring Sustainable Living, also published today on line. My contributed essay is set out below.

Exiting the Valley of Death

Start-up companies have named the most dangerous moment in their development as the ‘Valley of Death’ – the moment between proof of concept and the beginning of mass production and significant sales. It is the place where most dreams perish in the face of conservative capital markets that doubt an entrepreneur’s abilities to beat the competition.

[media-credit id=2 align="aligncenter" width="300"][/media-credit]

Sustainability has reached its own valley of death. After two decades of intense activities, we have excellent data on the nature and scale of the problem, an abundance of cases of successful experiments, and the growing attention of political and business leaders. Yet we cannot leverage our insights, resources and passion to contain our production of carbon, manage the scarcity of water, or dampen the speculative fluctuations in the price and availability of basic foodstuffs. De-materialised products, rentalised markets, renewable power and sustainability standards are amongst the social innovations that have provided inspiration and advances in offering consumers greener choices. Yet whilst our call to arms has been for transformation, we are, in practice, celebrating incremental changes in the spirit of increasingly desperate optimism.

Yet although we bemoan the lack of much-needed speed-to-scale in advancing the sustainability agenda, scale is something we know a lot about – in selling mobile phones, going to war, watching the World Cup, or in catalyzing fundamentalism in its many forms. Markets, governments, and communities in action have been societies’ three historic instruments for achieving scale. Business, the world’s most fashionable vehicle of change over recent decades across richer nations, can in quick time sell billions of packets of crisps, tens of millions of cars and millions of handguns. If the price is right, businesses can innovate, produce and deliver, and citizens will turn out en masse and do the right thing, namely buy. But the logic of the business community has, to date, limited its ability to deliver sustainability-aligned products and services at scale. Today’s backward-facing markets, in the main, only reward companies for doing the right thing on the margin. Despite exemplary businesses, innovative products, technological advances and the fact that most people do care about other people and the planet, most profits are still made by selling lots of stuff that is produced, and then used, in environmentally unsustainable and often socially-destructive ways.

Government and the power of public policy
Government, after religion, is arguably our most venerable institution for scaled action for the broader interest – in principle, at least. Most obviously, it does much to define what should not be done, set out through the rule of law. Fiscal policy also plays a critical role in driving consumer behaviour, with feed-in tariffs (or their equivalent) crucial for advancing renewables, whilst perverse fossil fuel subsidies encourage unsustainable lifestyles. Governments have soft as well as statutory and fiscal instruments. The decline in smoking throughout wealthier nations resulted from a combination of public education and a gradual restriction in social space for exercising the habit. Public education, from classrooms to billboards, has played a major role in socialising a deeper, inter-generational appreciation of sustainability, from climate to waste to health management. And governments are big spenders, with contestable public procurement globally amounting to US$4-5 trillion annually, and some have indeed moved, albeit slowly, in greening this voluminous purchase of goods and services.

Public policy counts in achieving scale, and so enabling business to do what it does best in ways that are sustainability aligned. The nexus between business and government is critical in shaping options facing citizens as consumers, voters, employees and investors. Both together have the power to make or prevent change, complementing each others’ strengths and offsetting each others’ weaknesses. The US’s environmental shortfalls can be directly attributed to the power of businesses that benefit from the status quo, whatever the cost. Meanwhile, Denmark’s new government has come to office with a mandate to double the country’s carbon emission reduction targets to 40% by 2020 and to deliver an energy system powered largely by wind by the same date, providing a strong domestic basis for building its next generation of global exporters. The Korean government, similarly, is driving forward with the nation’s business community an integrated, green economy with every intention of taking global markets by storm. Brazil and China, also, are leading in shaping domestic policies to incentivise green business, whilst simultaneously advancing their immediate development agendas.

Social norms and collective action
Citizens’ norms of concerns and behaviour in large part define the difference between nations like Denmark and Korea, and those failing to progress, such as the US. These are in no small part shaped by governments alongside business. After all, citizens did not stand up and demand the internet, they merely responded to the increasingly persuasive offer. Yet this closed loop is not the entire story. Germany’s decision to green its power system was built on a deep sensibility of its citizens towards the environment, just as others have tapped national sensibilities, including problematic ones like nationalism and other aspects of identity. At a far smaller scale, after all, support for ‘fair trade’ products from coffee to cotton was borne in Europe’s churches, community centres and political movements. Major events can also be important turning points, such as Japan’s recent nuclear disaster.

People, that is, citizens acting together, are our third way of fracturing and seeking to replace incumbent social norms and outcomes that are no longer acceptable. The Arab Spring in Tunisia, Egypt and elsewhere demonstrate vividly that people can and do rise together and say ‘enough’, even to those with the destructive power and the willingness to exercise it. OccupyWallStreet – and its thousand or so companion protests – show us that people from every walk of life will join together, despite their huge differences, to challenge what is just plain wrong. But these dramatic cases also illustrate the potential poverty of social movements that can declare ‘enough’, but do not identify, cohere and secure the next steps. Although these unfolding histories are far from complete, the concern from Cairo to the City of London is that these cathartic societal experiments might fail to deliver the much-needed new economics. There is no sign that the Muslim Brotherhood is concerned with Egypt’s dirty and weakened economy. Equally, there is no obvious sign that the US and UK governments are inclined to respond to OccupyWallStreet’s call for reform of the financial sector, the lifeblood or life-taker of the real economy, with anything but platitudes or worse.

Exiting sustainability’s valley of death is not about public policy, business initiative, or citizen action – it is about all three and their dynamic alignment with each other. Citizen actions that create scaled change will be collective, not necessarily on the streets, but as social norms confirmed in bars, taxis, workplaces and schools, and only in the end at the point of purchase. Shaping new social norms that underpin citizens’ collective action is a task where businesses and governments have an important catalyzing role to play. Government policies are a product of artful politics, occasionally inspired by crisis and leadership, shaped by business interests, and underpinned by the ultimate need to satisfy the public in all but the most despotic cases. And, finally, to achieve scale, progressive businesses will have to help to create the political space to shape the right enabling policies, edging to one side their resistant competitors, and mobilising citizens’ support in encouraging governments to do the right thing. Only with such alignment will public policy play a fulsome role, opening the opportunity for us to exit sustainability’s valley of death.

Sign-up to future updates from me right here.

Financial Transactions Tax – Rest in Peace

simon — Fri, 07 Oct 2011 14:43:02 +0000

The Financial Transactions Tax is surely dead, may it rest more peacefully in future. Surging objections to the European proposal, indeed ridicule, have come from almost every quarter, from leading lights representing the ‘responsible investment movement’ to the IMF’s former chief economist, Kenneth Rogoff. Beleaguered European Commission President, José Manuel Barroso, will find it hard to continue circulating in polite society if he sees through his high-profile support of the tax to the bitter end.

Yet the benefits of a value added tax, essentially a transactions tax, on almost every other industry, and certainly on Jo Citizen at every opportunity, is widely accepted and forms an increasingly important portion of global tax revenues. So emotion and interests aside, what’s the problem? I decided to take a look-see.

Needless to say, there is not one but a multitude of inter-locking objections to the tax. I have picked out three to highlight. First in the dock is the ‘efficient market hypothesis‘, an awkward term for a view that has, unbeknown to most of us, come to dominate our lives. In a nutshell, this inelegant phrase suggests that markets, left preferably to themselves, will deliver the best result for society by allocating information, capital and outcomes ‘as good as it gets’. Mess around with markets, such as by introducing taxes, distorts them, makes them less efficient, and delivers poorer results. A financial transactions tax, following this logic, will constrain transactions that would otherwise optimise financial markets, increase volatility, increase perceived risks, raise the cost of capital, reduce investment flows, damage the economy, reduce risk adjusted returns to pensioners, and in general do harm to us all.

There is nothing inherently problematic with this argument. Indeed, it may well be right. The only minor problem is that we have no idea in practice whether, and if so in what ways and to what degrees, it is right. In a second-best world with many blemishes in markets, and notably with demonstrable short-term biases in financial markets, it is utterly impossible to predict the impact of a financial transactions tax on market efficiency, let alone the cascade of effects described above. Some research suggests that such a tax would increase volatility, whilst other research suggests that by advantaging long term investors, volatility would fall. All we can be really sure of is that we don’t know.

Mr Rogoff, secondly, presents a different, although curiously related, argument, which simplified down amounts to the view that taxing capital is bad for the economy:

“Higher transactions taxes increase the cost of capital, ultimately lowering investment. With a lower capital stock, output would trend downward, reducing government revenues and substantially offsetting the direct gain from the tax. In the long run, wages would fall, and ordinary workers would end up bearing a significant share of the cost.”

Fair enough, penalising the owners of capital by taxing some element of their profits must pose some kind of disincentive to them. But Rogoff’s argument appears quite unlimited in its presentation, applying it would seem wherever and whenever a tax on capital was being proposed. His remarks, that is, have apparently little on this score to do with the financial transactions tax in particular, but presumably imply that he favours taxing labour and/or consumption over capital, or perhaps if possible not taxing at all.

By far the strongest objection to a financial transactions tax concerns the potential for traders to avoid it by moving their operations for taxable purposes to other jurisdictions. The European Commission’s own study, as the Financial Times points out, “expects [the effect of a financial transactions tax to be that] 10 per cent of securities market transactions either leave the EU or disappear, while the volume of EU derivatives trades will plummet by 70 to 90 per cent”.

Frankly, this might be a real downside, although the Commission defends its support of the tax by arguing, unusually provocatively, that “Such disappearance could be seen as positive if the activities targeted are considered as harmful”. And it is true, certainly, that those raising the red or indeed the green flag in relation to these taxes have some work to do in setting out the value of, say, high-frequency trading to the jurisdictions in which they take place (beyond high property prices). The jury is out with strong arguments on both sides. No less a financial guru as former UK City Minister, Lord Myners, has made the point that such black box trading is bad for financial markets and the economy as a whole. Once again, I struggle to find convincing evidence one way or another based on robust analysis rather than emotive views.

But Rogoff’s argument is more fundamentally problematic. Opposing a tax because of the potential for private actors to avoid it appears eminently pragmatic on the surface, but is surely a little scary on deeper reflection. Where might such perverse arguments take us on other matters of criminality and morality. Surely one would expect the former chief economist of the IMF to help us all out by explaining how best to overcome such regulatory arbitrage, rather than accepting as an inevitable, acceptable, or perhaps even desirable fact of life that regulators and tax authorities can be outrun and indeed outgunned by their targets. At least the UK Government, albeit some might suspect disingenuously, has professed a willingness to consider such a tax if it is embraced across the G20.

It may well be that a financial transactions tax is not viable given the circumstances, or that Rogoff and others are right that it is just a lousy idea on any and every day of the week. But this surely misses the point. Financial folks make super-profits using our capital, and keep rather a lot for themselves in the process – fair’s fair, as Barosso argues, we have saved your skins, now you need to be part of a solution to the wider repercussions of (in part) your actions. And secondly and more substantively, we need to find ways to harness the financial markets to our real needs, for stable financial returns and investment flows into a sustainable economy for us all.

Rogoff and others would be more convincing if they spent more time in offering up urgently needed solutions to these two inter-related problems, rather than appearing to offer professionally crafted justifications for the current, quite unsustainable, status quo.

Hangover Remedies in the Age of Austerity

simon — Mon, 05 Sep 2011 20:29:05 +0000

“There is no such thing as the perfect hangover”, argued Indigo Jones in the History of the Hangover, “although anyone who has known more than one of them seems to have the perfect hangover cure. The roast beef sandwich, I’ve heard it said repeatedly, can’t be matched”. Like such cures, there appears to be a profusion of ‘keys to economic recovery’ currently in vogue, ranging from the well-worn calls to ‘spend, spend and spend’ through to the magically curative effects of garbage, emissions contol and women.

“Unity“, reported Al Jazeera on the conclusions of a World Economic Forum meeting in Qatar helpfully titled the ‘Global Redesign Initiative’, is the key to recovery. At the other end of the universe, Life Science reported that “For Haiti, key to economy recovery might be in the garbage”, referring in fact to the most practical of enterprises in creating internationally marketable material from recycled garbage. Due South, the Community Board reported that the St Lucia Tourist Development Council, perhaps having attended the Qatar meeting, had concluded that “public-private partnerships were the key to recovery’. Meanwhile, one Marcia Rhodes, writing in Best Companies in Arizona, concluded that “employee engagement” was in fact the secret ingredient of economic recovery, whilst Forbes reported on the phenomenon of “She-orientation”, where the author “believes it is time to take a fresh perspective on how women can help shape America’s economic recovery and future”.

Such innovative perspectives should not over-shadow the more conventional views about keys. Forbes, once again at the forefront, reported on Warren Buffett’s considered opinion that “housing is key to recovery’ (referring of course to their price rather other more homily qualities), whilst ABC’s This Week reported on his namesake, Warren Buffett, insisting that “tax hikes on the rich are essential to an economic recovery”. Pascal Lamy, meanwhile, perhaps biased by his role of head of the faltering World Trade Organisation, argued that international trade was in the fact the alchemical clue to recovery, whilst President Obama chose to hedge his bets in going for a broad portfolio of solutions that included small (and big) businesses, innovation (and discipline), confidence (and humility), and quantitative easing (and tax increases). And it would be remiss of me not to mention the Treehugger for reporting on a new Potsdam Institute report that concluded that if Europe established a target of 30% cuts in carbon emissions, it would be, yes, you guessed it, ‘the key to economic recovery’.

My father, after a lifetime devotion to Freud, concluded (and I summarise here), “we know so little about what it takes to make people sane let alone happy, we might just as well hit them with a hammer and see if it does the job”. He at least confessed to understanding nothing about economics.

Wanted: Effective Strategies for Civil Action on Markets

simon — Sun, 04 Sep 2011 18:22:10 +0000

What do Greenpeace and the Worldwide Fund for Nature have in common? More than you might think, although Greenpeace is a high-profile, aggressive campaigning organisation funded by individuals with a penchant for spectacle, whilst WWF describes itself as a ‘critical friend’ of business and governments, and has long term partnerships with these folks, funded by, well, these folks.

Participating in their self-reflective analysis of their approach to business and sustainability revealed way more similarities than expected. Whilst Kumi Naidoo, Executive Director for Greenpeace International, was languishing in jail for his part in challenging Cairn Energy over its operations in the Artic, Greenpeace’s top 100 corporate campaigners met in Washington to debate the organisation’s approach going forward. The extraordinary energy, competencies and dedictation of this global team drove their pressing sense of the need to get more to grips with the underlying drivers of corporate misdemeanours. And when Jim Leape, Director General of WWF International, sat down with some of his senior folks in Gland last week to reflect on their approach to sustainability and markets, they too puzzled over the most effective points of leverage on the US$63 trillion annual global economy. Both Greenpeace and WWF are struggling with same problem that their historic theory of change, whilst not failing to make a difference, are not halting our seemingly inexorable slide into unsustainable economy.

Civil society organisations have in the main had a great couple of decades. Baptised into the global community by Rio in 1992, they have grown in influence, competence and resource-base. Many commentators and practitioners have told this tale, including (just to name a few of The Greats) David Korten (before his ‘When Corporations Rule the World’) and David Sogge, author of Compassion and Calculation (both graduates of the Transnational Institute) and Michael Edwards (until recently top civil society guy at the Ford Foundation).

Mike has recently published an edited volume, the Oxford Handbook of Civil Society. Embedded in the bowels of Mike’s hefty 552 page collection is an article by myself entitled, unprovocatively, ‘Civil Society and the Market’, (early draft attached). The article, largely mirroring Kumi and Jim’s respective organisations’ dilemmas, concludes:

“Simply put, civil society engagement has delivered real and positive results, but it has not yet achieved the scale or depth required to lever a systemic impact, and even these potential systemic impacts may have effects that are unintended and possibly undesirable from a civil society point of view. Moreover, ‘more of the same’ is unlikely to deliver better results, largely because conditions in the global economic context are changing so much. Therefore, civil society tactics and strategies must also evolve, rooted in a considered view of how civil society groups will function in a world with new and/or more extreme sustainability challenges, a clear need for business to be part of the solution and not merely ‘not part of the problem’, and a dramatic change in the cast of powerful political and economic interests that are seeking to shape tomorrow’s agenda and how it might be advanced.”

Civil society needs to up its game. ‘Green growth’ is in the air (and will be in Copenhagen this October), the UNFCCC’s COP17 in Durban is round the corner, the UN High Level Panel on Global Sustainability will report early in 2012, and Rio+20 will play its hand in June 2012. These are intended to be big moments about big topics. Yet civil society has become uncertain, and rightly so. Spectacular campaigning and intimate engagement have helped to move the needle, but only fractionly compared to what needs to get done. And more worryingly, more of the same will not do the job.

Civil society is facing its own Valley of Death. Its failure to engage (to date, watch this space) in pushing the sustainability envelope of financial market reforms is in itself inexcusable, but just a symptom of the problem. Despite NGOs’ growing professionalisation and upswelling of resources, they often lack key competencies and are funded and so also configured to solve problems incrementally, perhaps the price of the post-Rio entry to the global discourse. Incremental solutions should not be dismissed, but are inadequate for the historic moment. So my congratulations to those who are pondering what to do next, including Greenpeace and WWF – it is the right response to a conundrum facing us all, how to accelerate a scaled transition to a sustainable economy. For those not yet pondering, you have a long way to go.

Now for something (not so) different…

simon — Fri, 01 Jul 2011 06:42:55 +0000

Hardly had I pressed the button on my recent ‘Thank you, Harvard’ blog that I received a cascade of emails asking me what i was planning to do ‘next’. Normally I would not use my blog to detail my (presumed) place in the world, but to fill apparently an information vacuum this blog will be a (hopefully rare) exception. Those with no interest or having already over-indulged in such enquiry need read no further.

My preoccupation in my last two years at AccountAbility was three-fold: the responsible competitiveness, new forms of collaborative governance , and that small matter of climate change. On the first, the challenge was to push the business and sustainability to the next level in making it a competitive matter for nations, not just companies. On the second, the puzzle was that new forms of public-private partnerships could only scale up their impacts if they become structurally more significant, but this in turn created systemic governance and accountability challenges. And on the third, my work with Project Catalyst had brought me into a whole new sphere of inter-governmental work focused on climate but by implication driving questions forward on both responsible competitiveness and collaborative governance.

Eighteen months on (now), I can with confidence report that I have remained focused, for better or worse, on these three core topics. My work for the South African Government as team leader of the South African Renewables Initiative is focused on the challenges of scaling up renewables to a critical mass that catalyzes domestic green growth opportunities through the development of an international partnership to bring down the incremental financing costs in effect a blend of all three topics. There is much hope that this initiative can be brought to the point of launch in the run up to COP17, and so also illuminate for others just how ambitious we can and must be.

My newly-established role as Senior Fellow with the Korean-based Global Green Growth Institute is to develop its work on the next generation of public-private platforms advancing green growth, especially those inter-connected with inter-governmental relations. A key aspect of this is my current work with the Danish Government in establishing the Global Green Growth Forum, which will include an annual event showcasing the brightest and the best of these initiatives globally.

And my even newer role as Senior Fellow of the Centre for International Governance Innovation, linked to its alliance with the Institute of New Economic thinking, will be focused on the critically important issue of financial market reform and sustainability. As part of this work, I am working Jim Balsillie and David Runnalls in supporting the ‘markets’ component of the work of the UN High Level Panel on Global Sustainability.

Since early 2010, I have also had the good fortune to work as an advisor to the World Economic Forum on its sustainability initiatives. Core in the first year was its Critical Mass initiative, focused on the challenges of taking large scale renewables and energy efficiency initiatives to scale as part of a green growth alternative/supplement to an effective climate deal. This year the work has continued under the rubric of the Forum’s Sustainable Consumption initiative, with a specific focus on how businesses work with governments in advancing the policy innovations needed to advance profitable green growth opportunities. in addition this year i will be with the Forum, working together with the Global Green Growth Institute, be supporting the UK Government’s Capital Market Climate Initiative.

My work in China has progressed rather well since early 2010. Apart from the work on China and Africa, I have been drawn into being a member of the Task Force on Trade, Investment and Environment of the China Council for International Co-operation on Environment and Development, focused of course on the sustainability aspects of China’s competitive positioning, and the place of Chinese public policy in advancing such an alignment. This work has been very helpful in framing some of the work in South Africa, where over time the role of Chinese ‘green investment’ in Africa will be all important. Alongside this work has been my work on how accelerated diffusion of ICT in China can assist it in realising its new carbon intensity targets.

Alongside this work has been a small portfolio of work with corporate clients advancing their alignment of sustainability to their underlying strategies and value creation processes. For many years, this work has included at its core my engagement with General Electric, a company that has successfully transitioned from being at best outside of the sustainability community to one of its leading business voices and actors. Also in my current portfolio of corporate clients is AngloGold Ashanti, and until recently Nike and the Chilean copper extractive, Codelco.

And last but not least are some of the most fascinating moments spent in various board and advisory board roles. Three are of most note: my Board memberships of the Employers’ Forum on Disability led by Susan Scott-Parker and the International Centre for Trade and Sustainable Development, headed by Ricardo Melendez-Ortiz, along with my membership of the Advisory Board of Al Gore and David Blood-led Generation Investment Management. Each of these has served to build my knowledge in their respective specialist areas, and offered me continued reminders of how tough it is to make purposeful institutions succeed in today’s world.

So its been a busy time. My work has leveraged my earlier experience, but taken it more deeply into practice, working with governments, international agencies and companies on how to get stuff done. Responsible competitiveness and collaborative governance have in this sense come of age, and are at the nexus of much of what challenges us today, and hopefully also is one peice of how best to meet these challenges. Needless to say, effectively handling such an extensive portfolio of work has required the love, care and hard work of many other people. At core has been Maya Forstater, Kelly Yu, Fernanda Polacow and Tania Gobena, four stalwart associates who have made so much of the above happen in practice. Then are the folks across all of the institutions with which i have been associated, Jane Nelson and John Ruggie from Harvard, of course, but also Dominic Waughray and others from the World Economic Forum, Jeremy Oppenheim from McKinsey, Rick Samans now Executive Director of the Global Green Growth Institute, David Runnalls now at the Centre for International Governance Innovation, Mark Halle at the International Institute of Sustainable Development, Edwin Ritchken from the South African Government and Saliem Fakir from the World Wide Fund for Nature in South Africa, and many, many others, most notably my life-long partner and guide, Mira Merme. To all who have brought me to this place, many thanks.

For those who wanted to know how I am spending my days, there it is, and for those who did not, apologies for time wasted. My luck and privilege has over the years been to work at some of the most interesting junction points of change, and i feel such a place continues to be reserved by someone, somewhere, for me given my current work. Lets hope it stays like that…