Green

Dr John Henry Lonie

28 January 2006

Business can be

Economics, Environment and the Global Neighbourhood

JRIRedcliffe College

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Critical Thinking…

• “The ability to reason is the fundamental characteristic of human beings.”

• Three skills in critical thinking:– Interpretative Skills – determining precise

meaning – Verification Skills – determining if the

statements are true or false, and – Reasoning Skills – assessing the arguments’

validity

Critical Thinking…

• We live in the information age, not a knowledge or wisdom age, we are inundated and do not have the ability to filter or interpret the data overload

• We are constantly presented with arguments designed to get us to accept some conclusion that we would otherwise not accept

• We have to develop our own intellectual self-respect to sort arguments out

• Controversially, critical thinking makes it easier for us to persuade others to change their beliefs.

Prof Siegfried on Sustainability

• 'The truth is that a concern for the welfare of future generations is hardly paramount amongst billions of people. Marx (Groucho not Karl) put it this way: – "Why should we bother about the next

generation? They have never done anything for us."’

More seriously…

• Professor Siegfried clearly sees both the need for and impracticality of Sustainable Development noting on his book jacket that the real challenge is that:– The rich will not stop their degradation of the

environment and the poor cannot.

Nefarious Business?

nefarious \nuh-FAIR-ee-uhs\, adjective:Wicked in the extreme; iniquitous.

Or can we have both?

Sustainable Direction• What is Sustainable for my company?

– How do I balance first profit with• better protection for the environment and • social responsibility?

• Ethics – just because you can do something doesn’t mean you should….– Consume

• Travel• Products• Resources

– Produce• How can my business respond? • Should it? • Why?

Incompatible or interconnected?

My experience

• Practical Experience– Environmental Engineering and Science Consulting

Business Experience– Delivering Savings, numerous projects over £1m pa– Theoretical and Practical Crossover Delivery– Over 25 years experience– Experience in over 25 countries– Social Reporting for clients– Balanced Scorecard– Company Director and on several Boards

perspectives

Some

June 17, 2004The World's 100 Largest Economic Entities

• As part of their December 2000 Report on the Top 200 Corporations, Sarah Anderson and John Cavanagh at the Institute for Policy Studies, listed the World’s 100 largest economic entities. As you would expect, a lot of them are countries. But it’s a testament to the virtues of capitalism that 51 of the 100 are corporations.

• The world's top 200 corporations account for over a quarter of economic activity on the globe while employing less than one percent of its workforce.

2000

• Rank Country/Corp  GDP/Sales ($mill) • 1.  United States  8,708,870 • 2.  Japan  4,395,083 • 3.  Germany  2,081,202• 5 UK 1,373,612 • 23.  General Motors 176,558 (now GE)• 25.  Wal-Mart  166,809 • 29.  Poland  154,146 • 57.  Citigroup  82,005 • 65.  Chile  71,092 • 72.  Pakistan  59,880 • 100.  State Farm Insurance  44,637 

Bible perspective – one….

• "For the love of money is at the root of all kinds of evil. And some people, craving money, have wandered from the faith and pierced themselves with many sorrows."1 Timothy 6:10

• "No one can serve two masters. For you will hate one and love the other, or be devoted to one and despise the other. You cannot serve both God and money."Matthew 6:24 (Jesus of Nazareth)

Bible Perspective two….

• The Parable of the Ten Minas - Luke 19:11-27• 13 So he called ten of his servants and gave them ten

minas. 'Put this money to work,' he said, 'until I come back.'

• 16 "The first one came and said, 'Sir, your mina has earned ten more.'

• 17 " 'Well done, my good servant!' his master replied. 'Because you have been trustworthy in a very small matter, take charge of ten cities.'

• 18 "The second came and said, 'Sir, your mina has earned five more.'

• 19 "His master answered, 'You take charge of five cities.'

Can it be better?

Where are we today?

• FTSE4Good• DJSI• SAM• GEMI – Clear Advantage• Ethical Investing• GRI – Version for public comment

– 2 January 2006 - 31 March 2006– www.grig3.org www.globalreporting.org

info@globalreporting.org– Global Reporting Initiative (UNEP)– PO Box 10039– 1001 EA Amsterdam The Netherlands

Indicator Protocols Set: Environment

• Aspect: Materials• EN 1 Weight of materials used (core)• EN2 Percentage of materials used that are recycled (core) • Aspect: Energy• EN3 Direct energy consumption broken down by primary energy

source (core)• EN4 Indirect energy consumption broken down by primary source

(core)• EN5 Percentage of total energy consumption met by renew able

resources (additional)• EN6 Total energy saved due to conservation and efficiency

improvements (additional)• EN7 Initiatives to provide energy-efficient products and services

(additional)• EN8 Initiatives to reduce indirect energy consumption (additional)

Indicator Protocols Set: Labour Practices & Decent Work

• Aspect: Employment • LA1 Breakdown of total workforce by employment type and

by region (core)• LA2 Total number and rate of employee turnover broken

down by age group and gender (core) • LA3 Minimum benefits provided to full-time employees,

which are not provided to temporary or part-time em ployees (additional)

• Aspect: Labor/Management Relations• LA4 Percentage of employees represented by independent

trade union organizations or covered by collective bargaining agreements (core)

• LA5 Minimum notice period(s) and consultation and nego tiation practices with employees and/or their represen tatives regarding operational changes (core)

Indicator Protocols Set: Human Rights

• Aspect: Management Practices• HR1 Percentage of significant investment

agreements that include human rights clauses or that under went human rights screening (core)

• HR2 Percentage of major suppliers and contractors that underwent screening on human rights (core)

• HR3 Type of employee training on policies and procedures concerning aspects of human rights relevant to operations, including number of employees trained (additional)

Indicator Protocols Set: Society

• Aspect: Community• SO1 Programs and practices for assessing and

managing the impacts of operations on communities, including entering, operating and exiting (core)

• Aspect: Corruption• SO2 Extent of training and risk analysis to prevent

corruption (core) • SO3 Actions taken in response to instances of

corruption (core)

Indicator Protocols Set: Product Responsibility

• Aspect: Customer Health and Safety• PR1 Procedures for improving health and safety across the

life cycle of products and services (core)• PR2 Number and type of instances of non-compliance with

regulations concerning health and safety effects of products and services ** (additional)

• Aspect: Products and Services• PR3 Procedures for product and service information and

labelling (core)• PR4 Number and type of instances of non-compliance with

regulations concerning product and service informa tion and labelling ** (additional)

• PR5 Procedures related to customer satisfaction, including results of surveys measuring customer satisfaction.” (additional)

Indicator Protocols Set: Economic

• Aspect: Economic Performance• EC1. Economic value generated and distributed,

including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and to governments (core)

• EC2 Financial implications of climate change (core))• EC3 Coverage of the organization’s defined benefit

pension plan obligations (core) • EC4 Financial assistance received from government

(core)

The truth is out there…

Coca Cola

The truth..

• Coca-Cola emphasises ‘using natural resources responsibly’.

• Yet a wholly owned subsidiary in India is accused of depleting village wells in an area where water is notoriously scarce.

• You Decide.

Perspective One

• Christian Aid, of course, supports responsible and ethical action by business. The problem with CSR, we say, is that it is unable to deliver on its grand promises.

• The case studies in this report highlight that the corporate world’s commitments to responsible behaviour are not borne out by the experience of many who are supposed to benefit from them. In some cases, the rhetoric and the reality are simply contradictory.

• The report shows that corporate enthusiasm for CSR is not driven primarily by a desire to improve the lot of the communities in which companies work.

• Rather, companies are concerned with their own reputations, with the potential damage of public campaigns directed against them, and overwhelmingly, with the desire – and the imperative – to secure ever greater profits.

• None of this necessarily means that companies cannot act responsibly.

People from communities living around Coca-Cola’s bottling plant in Kerala, India, protesting about

the company’s use of their ground water.

• Mylama, a 55-year-old woman, leads the protest. She says that rainfall has been scarce for the past two years. ‘But the availability of water in the well has no relation to rain,’ she insists. ‘Even when we had less rain before the company came, we still had no shortage of water.’

• Another protestor, 64-year-old Shahul Hameed, has been farming since he was born and his land runs up to the Coca-Cola factory confines. ‘According to my traditional measures, the water in my well used to be 22 mola3 deep. Now it’s only one mola deep,’ he says. ‘I was able to run my pump for 14 hours every day. Now it will only run for 30 minutes. That shows you how my agriculture has suffered.’

Locals at the Plachimada well. Before the Coca-Cola factory opened, they say, the well provided a plentiful supply of clean water

• Since the Coca-Cola factory opened in 2000, however, people living in the surrounding villages have complained that their wells are almost empty, when previously there had been enough water for everyone.

• Although water levels in some wells were dropping before Coke opened its gates, the factory’s heavy use of water has, according to people living and farming near the factory, exacerbated the situation and made their lives dramatically more difficult.

• When Dr Avittathoor visited the plant and saw the size of its wells, he estimated the company could use 1,100 cubic metres of water per day. Coca-Cola says the Plachimada plant pumps an average of 400 cubic metres a day and that it was told by the state of Kerala that it could draw up to 880 cubic metres per day.

• Local people also say that the quality of the water left in the wells has deteriorated. It has an unpleasant taste and chalky consistency, making it undrinkable and useless even for cooking.

• Water samples have also been analysed by Dr Mark Chernaik, a biochemist from Environmental Law Alliance Worldwide (E-Law) – a network of American lawyers, scientists and environmental experts working to promote environmental protection. He found high levels of dissolved salts in the water, commensurate with rapid depletion of the aquifer.

• While maintaining that it is not depleting the ground water, Coca-Cola has confirmed to Christian Aid that it is currently bringing water into the Plachimada plant from other sources. ‘We took a conscious decision not to put stress on water sources at a single location and decided to source water from surplus areas,’ said a company statement.

• Coca-Cola has also acknowledged – albeit by implication – that the surrounding villages have a problem; it has been paying for tankers to distribute drinking water to the area.

• Coca-Cola not only faces allegations and protests from local people angry at the depletion of their water supplies, it now stands accused of selling toxic waste from the factory – what the company calls ‘biosolids’ – to local farmers, billing it as fertiliser. Farmers using the waste have complained of skin infections and sores – as well as poor crop yield.

• During a recent BBC investigation,15 however, samples of the waste were taken to the UK and analysed by the University of Exeter. They were found to contain dangerous levels of carcinogen, cadmium and lead.

• Following the BBC’s findings, the Kerala State Pollution Control Board (KSPCB) ordered a new study to be carried out on the waste and the well water. It found that, while cadmium and lead levels were not, in its view, hazardous, the waste should not be used as fertiliser

• However, following the BBC’s investigation, the company stopped distributing them as fertiliser because of ‘concerns in the minds of some of the local community’. Coca-Cola says it will now dispose of the ‘biosolids’ by treating them as hazardous waste.

Perspective Two

The Coca-Cola operation in India has been the subject of a variety of false allegations. We appreciate your interest in learning the facts about our business in India.

Our Operations:

• The Coca-Cola system in India includes 25 company-owned bottling operations and another 25 franchisee-owned bottling operations.

• During the past decade, The Coca-Cola Company has invested more than U.S. $1 billion in India, making us one of India's top international investors. Almost all the goods and services required to produce and market Coca-Cola are made in India.

• The Coca-Cola Company employs approximately 6,000 local people in India; indirectly, our business in India creates employment for more than 125,000 people.

Water Resources:

• In India, the beverage industry is responsible for just 0.002% of total water usage, making it one of the most efficient users of water in India.

• A typical Coca-Cola plant uses just two or three bore wells for its water needs and extracts that water with pumps of a similar capacity as those used by other industries and farmers in the same community.

• Some areas of India have been experiencing drought conditions for several years. The Coca-Cola Company shares the concerns of local communities about groundwater reserves, however there is no evidence linking scarcity of groundwater in India with The Coca-Cola Company's operations.

Coke

• Coca-Cola India has complied and continues to comply with all Federal and State laws and regulations in India.

• In October 2002, Dr. R.N. Athvale, Emeritus scientist at the National Geophysical Research Institute in Hyderabad, India studied The Coca-Cola Company’s bottling plant in Kerala and concluded: “There is no field evidence of overexploitation of the groundwater reserves in the plant area.”  He added that any aquifer depletion cannot be attributed to the water extraction in the plant area.

• A report from the local Palakkad District Environmental Protection Council and Guidance Society in June 2002 concluded: "We declare that there is no environment harassment to the public by the factory at any level."

• The Kerala State Pollution Control Board, which conducted a detailed study, inspecting samples of sludge, well water, treated water and soil, concluded that the concentration of cadmium and other heavy metals in the bio-solids are below prescribed limits and, therefore, are not considered hazardous.

Pesticides:

• Testing for pesticides in finished soft drinks is complex and often produces unreliable and unrepeatable results. For this reason, The Coca-Cola Company thoroughly treats and tests each of the separate ingredients of its soft drinks before they are combined to make a finished soft drink. This is an accurate and reliable way to ensure our soft drinks remain safe.

• Technology to test finished soft drinks for pesticides is evolving however and The Coca-Cola Company is currently sponsoring research at one of the world’s leading laboratories – Central Science Laboratories in the United Kingdom – to develop the appropriate technology and robust protocols with the objective that will enable finished soft drinks to be tested for pesticide content in the future.

So – you decide.

• And in closing, remember to watch out for those trying to convince you of something you would not otherwise accept.

Environment

Business

Balanced?