Corporate Responsibility in a
Collapsing World
Cranfield School of Management
Jonathon Porritt
29 October 2008
Forum For The Future
• A registered charity committed to accelerating the building
of a sustainable way of life
• Solutions-oriented approach
• Over 180 different partners from national, regional and
local government, higher education, and business
• Green Futures magazine
Mission:
To accelerate the building of a sustainable way of life by
taking a positive solutions-oriented approach
JT Group
PASSIONATE
about
Sustainable Development
Not passionate about Corporate (Social) Responsibility,
Quality of Life, Corporate Citizenship, CSR, Liveability etc
etc
The Global Economy:
nothing more than
A House of Cards
built on
A MOUNTAIN OF DEBT
aided and abetted by
Governments’ in Retreat
From
Masters of the Universe
to
“A bunch of spivs and speculators”
Jack Welch
•
•
•
•
•
CEO of GE (1981 – 2001)
In 1981, GE valued at $14bn.
In 2001, GE valued at
$400bn
“Manager of the Century”
“Neutron Jack”
Hudson River – Jack Welch’s
toxic legacy.
GE Ecomagination: a strategy
for growth
•GE’s environmental innovation
programme
•High quality products with increased
environmental performance
•Renewable energy, hydrogen fuel cells,
cleaner, quieter aircraft and locomotive
engines, water purification and
desalination technologies
•Part of GE’s growth strategy – target to
increase revenue from these businesses
from $10 billion in 2004 to $20 billion by
2010
SOCIAL EXTERNALITIES
GLOBAL
ECONOMY
ENVIRONMENTAL EXTERNALITIES
Radical Discontinuities
Social Externalities
Environmental Externalities
Population growth
Worsening inequity
International terrorism
“Clash of Civilisations”
Demographic timebombs
Debt mountains/credit
crunches
Climate Change
Oil at $100 +
Resource constraints (water/soil)
Food shortages
Worsening air and water pollution
6th “extinction spasm”
Capitalism today is
the only economic
show in town
“Creative Destruction”
Joseph Schumpeter
Creative destruction as
you have never seen it
before as today’s
unsustainable economic
development gives way
to genuinely sustainable
economic development
IPCC Consensus
Staying below
2°C
means stabilising
at 450ppm CO2
which means
c. 80% cut
by 2050
Canaries in the Mine
•
•
•
•
•
•
•
Permafrost in Siberia
Arctic Sea ice
Greenland Ice cap
Antarctic ice sheets
CO2 absorption rates
Amazon Rainforest drying out
Acidification of the oceans
550
450
350
Stern Review
“Climate change is the
greatest market failure the
world has ever seen”.
Get a realistic price
on a tonne of CO2
just as fast as possible
The Shrinking Earth
Five Capitals Framework:
“interdependent and indivisible”
Human
Capital
Social
Capital
Capital
Natural
Manufactured
Capital
Financial
Capital
The Five Capitals
• Natural Capital
any stock or flow of energy or matter that yields life, goods
and services
• Human Capital
health, knowledge, skills and motivation required for
productive work
• Social Capital
the value added to any activity by human relationships and
cooperation
• Manufactured Capital
material goods (tools, machines, roads) which contribute to
the production process
• Financial Capital
no intrinsic value itself but reflects the productive power of
the other types of capital
Capitalism is Dead…
This version of……
•
Licensed cost externalisation, natural
limits defied
•
Deregulation of capital markets: risk and
opportunity mis-priced
•
Economic growth credit-fuelled, not
earnings-based
•
Profits maximised, greed incentivized
•
Macho CEOs rule the world
WEALTH WITHIN
ENVIRONMENTAL LIMITS
- NOT BEYOND!
• DECARBONIZATION
• DEMATERIALIZATION
• CLOSED-LOOP SYSTEMS
THE “LAWS”
OF THE MARKET
MUST YIELD TO
THE LAWS OF
THERMODYNAMICS
Changes Ahead
• Prices tell the truth
• Governments reclaim their rightful role
• The Corporate “Licence to Operate” is
re-written
“20 years from now you will be
more disappointed by the things
that you didn’t do than by the
things that you did.”
(Mark Twain)