Public interest goes through cycles, it's on broadly an upward trajectory but
you can track back concerns about business, the economy, broader societal
issues, back to the period of slavery, the Clean Air acts of the 1950s.
Environmentalism yes came through in the Sixties – a bunch of different
reasons, Rachel Carson’s book The Silent Spring, the Santa Barbara oil
spill, a bunch of things. But these things do cycle.
In the early years what happened was that campaigners focused on governments
and basically said, through the media very often, governments you should
regulate these polluters or whatever. The regulators in the end did that,
business went on the defensive, didn't like being told what to do. So the
first wave was 69 to 73.
The second wave of environmentalism, and this time when very much larger
numbers of people switched on, was driven by issues like the discovery of
the Antarctic ozone hole. So suddenly people felt that there was real
scientific evidence that things that they were doing everyday, particularly
using things like aerosol cans with CFC components, were actually tearing at
the global fabric. And they didn't want at that point to continue just
sub-contracting their conscience to Friends of the Earth or Greenpeace or
whoever it might be. They wanted to do something themselves, they wanted to
choose the right product, and in a way to vote for the environment.
These waves tend to last for about three or four years, they tend then to fall
back because of recession, or in some cases war, and the two Gulf Wars have
been examples of that. And also because people can remain concerned for only
a short period of time, relatively. But each time this happens the system in
some way switches on at a different level. So the first time was politics,
politicians, governments, regulators those people switched on.
The second time it was a very different part of the system that switched on,
it was for example supermarkets. They suddenly became very concerned – and
companies like McDonalds – that consumers were coming in and saying we don't
want that product, what have you got that's green. Or they would be
challenged on hamburgers and rainforests. Supermarkets would be asked about
why have the batteries got mercury in them, or the paper got chlorine in the
production chain, or the detergents got phosphates and so on and so on. And
so they had to react quite quickly. What this meant was instead of companies
being able to lobby against all that sort of stuff they were having to react
in very much shorter order. So we helped a growing number of companies,
throughout that period, to respond to the pressure which in part we were
helping to create. And quite a number of campaigning groups said to us at
that stage in a sense it doesn't really matter what you want to do with
business, the only way to deal with them is just like Gulliver, tie them
down to the ground and beat them up. We felt that really the most successful
way forward was if you could really switch on the creativity of
businesspeople, if you could really get them engaged with all of this.
Throughout the Nineties you had a series of voluntary initiatives – many of
which were involved in the Global Reporting Initiative – a bunch of
different standards which companies started to adopt on a voluntary basis.
The third wave peaked 99 to 2001 kicked off literally on the streets of
Seattle with the protests against the World Trade Organisation. The focus
this time was on the anti-globalisation agenda and on two forms of
governance: global governance, basically how should the world be run and in
whose interests; and corporate governance, the same questions around
companies. And that agenda was very much pushed forward by the scandals
around Enron and Worldcom and Parmalat and so on. Anyway, the third wave was
brought to a screeching halt by the attacks of 9/11 and their aftermath. And
we've been through a period of about three, four years where security –
which up to that point had started to be redefined to include issues like
environment and climate change – that suddenly collapsed back to what colour
of turban do you wear, stand by this retinal scanner and we'll see how
criminal you are, all of those sorts of issues. But now it's opening out
again and there's a fourth wave, we believe, building very very powerfully
and it focuses on disruptive innovation, areas like clean technology, into
which the venture capital industries are piling with huge sums of money, and
basically scalable solutions to some of the really big sustainability
problems.
Think about industries like asbestos. You'd have to go back 25, 30 years to
see the real impact on that industry beginning and then it was basically
wiped out. And then if you think about the losses that almost destroyed the
Lloyds insurance market in the early 1980s. Twenty per cent of those losses
were linked to asbestos exposures, particularly in the United States market.
So, it's not that all this stuff is totally new, but it's tended to hit
certain industries one at a time. Another industry that got hit extremely
hard was the insecticides and pesticides industry from the 1960s onwards.
Now it's spreading out and it's hitting the car companies, it's hitting the
oil companies. It's increasingly affecting the financial sector, so it's not
just socially responsible investment funds that are being set up, you've
increasingly got people like the insurers and reinsurers suddenly fighting a
huge upward shift in terms of the costs to them of the natural disasters
that they're having to compensate people for, and a growing proportion of
those natural disasters are linked to climate change. So the reinsurers –
the people who insure the insurers – are getting extremely nervous about
that.
You see the venture capitalists starting to come in...in California you have
funds like Kleiner Perkins who were very early on into companies like Amazon
and Google and companies like that during the IT revolution and the new
economy period. They now see another huge opportunity space, in many ways a
much bigger opportunity space in terms of investing in and helping the
development of cleaner, more climate-friendly technologies.
The level at which companies engage with this agenda has shifted profoundly.
So for example when I, 30, 35 years ago first started to engage companies,
or try to, you were really lucky if you got through the front gate or the
front door, and if you did you largely met public relations people or
lawyers. They were basically defensive and they really wanted to keep people
like me and environmentalists as far from the guts of the business as they
could. Now if you don't get through almost at the first stage to the CEO, to
a board member or several board members you wonder whether the company is
really serious, so I think all of that has shifted. And then at the same
time it's gone global, so this is now an agenda which even the Chinese and
Indians and Brazilians are struggling with, and it's massively ramified and
complexified, so it's not just about climate change, and it's not just about
urban air quality, or energy efficiency, or water efficiency, or human
rights, or bribery and corruption. It’s all of these things and many other
things at the same time. Basically, society is saying to business: we think
you should be doing all of this, but in addition to that, we don't totally
trust government to do all of this, so we'd like you to take a lead, in some
cases doing the things that government should otherwise be doing, in other
cases lobbying government, as has started to happen in the United States,
where companies like General Electric, PG&E, DuPont, have got together
with some of the NGOs, to put pressure on the Federal Government and the
Bush Administration, basically to say you know for God's sake, climate
change is building up on us, we don't want uncertainty, we want to know what
we're going to have to do, so regulate us, tell us what we should be doing.
I think it's going to be stickier and hang around, the recession, for longer
than most people expect. And in that context I think two things will happen.
One of them is profoundly bad, in a way, and one of them is probably much
more positive. The bad piece of the equation is I think that companies will
be squeezed. I think they will increasingly look at some of their corporate
social responsibility and citizenship activities as discretionary
expenditure and start cutting back. This wouldn't be the first time this has
happened. If you go back to the early Eighties there was again a long and
protracted recession where many companies, particularly chemical and oil
companies, had set up safety, health and environment departments, and they
squeezed the size of those down quite energetically when the crunch hit that
time. The odd thing was, and this is where we become a bit more positive, is
that the underlying trajectory of many of the issues that we've discussed –
from climate change through to access to medicines, access to clean water,
poverty, all of these different things, the risk of a global pandemic –
those aren't going away. In fact with a world that's headed towards, if we
ever get there, 8, 9, 10 billion people, the pressures are going to become
extraordinarily intense, and all of this is happening now in a business
environment where you can Google or use a search engine and you can find the
most extraordinary degree of detail about brands and the companies behind
them and the sorts of issues that they're involved in, so the pressures
don't go away. So if what we find is that companies cut back on corporate
citizenship activities, the pressures won't be held out of companies,
they'll go even deeper in. And I think it'll push right through to the
people who lead business units to the board to the investors behind who back
companies.
I think the difficulty sometimes – and I'm saying this as an optimist – but
the difficulty as a realist is that if you’re really going to drive societal
change, if you're really going to [arouse] public concern and get ordinary
citizens, ordinary people to act there needs to be a very clear and present
danger. So one of the reasons why the CFC and ozone depletion issue became
such a controversy was that people could suddenly see the risks…the risk of
skin cancer, the risk to their children if sunbathing or on the beach or
whatever, and they became quite urgently engaged. Climate change has tended
to creep up on us rather more insidiously. But I'm an optimist at the moment
because I think that you're suddenly seeing a very different group of people
becoming involved. And I think Al Gore has had a profoundly important role
in waking up not just ordinary folk but people like the venture capitalists
in California and Silicon Valley who were really seized by Al Gore's
PowerPoint presentations, and by the film An Inconvenient Truth and
so they're ploughing a huge amount of money into this space. So that's why
I’m an optimist.
I think the biggest challenge that we have looking forward is not dumping
everything into the laps of young people and saying this is your century,
this is your world you sort it out. I think the ageing populations,
particularly of the West, have a huge responsibility to address these sorts
of issues, to help guide the responses in sensible ways, and I think longer
term they will. But I think in the short term we'll see a lot of very
self-interested voting patterns and consumption patterns, and in the end
that comes back to political leadership. We need politicians who are up to
the scale of the challenge that we face, and as Al Gore said relatively
recently, the one thing you can say about political leadership is it's at
least a renewable resource.
