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Merging the great business dilemma: profit v sustainability, responsibility and ethics

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Alex Blackburne spoke with Michael Solomon, director of Profit Through Ethics, about how it is attempting to remodel the world of business into a more ethical, sustainable and responsible shape.

It was while working for a publishing company on Fleet Street that the idea for Profit Through Ethics came to Michael Solomon. Almost a decade later, you get the sense that the organisation is on the verge of something big.

It currently has 66 businesses signed up – each committed to answering 43 rigorous questions which examine important social, environmental and ethical issues. Some answers from some businesses are already available to view on its website.

Profit Through Ethics is building a new, bespoke online platform where all businesses will need to set out answers to a minimum number of questions. A guarantee that the answers are complete, accurate and verifiable will be required; and answers must also be available for scrutiny, comment and rating from the public.

This is, by design, not for the faint-hearted or the ‘greenwashers’. It is for businesses that wish to prove they are living their values and are committed to an ethical and sustainable approach in all they do.

Solomon outlines the key aspects of Profit Through Ethics’ journey to Alex Blackburne.

What problem is Profit Through Ethics trying to solve?

Business is not serving people and the planet. Trust in business is very low. We have not got the sort of protected environment and fair, happy and stable society that we might have if business was able to serve us better, and I think in recent decades it has been serving its own interest.

The idea of a social contract where prosperity is shared seems to be very much old hat. I don’t think that’s good enough, and believe a lot of people out there –  and indeed thousands of businesses –  would concur with that. A growing number of businesses want to do something about it and to show they are demonstrably part of the solution, not just going through the process of producing a glossy corporate social responsibility (CSR) report and presenting it as evidence that they are responsible or sustainable.

I think, too often, CSR comes across as trying to do a little bit of good to offset a whole lot of bad, and it’s just not working.

Is it easy to persuade businesses that being ethical, responsible, sustainable, honest and transparent is the best – and most profitable – way forward?

While it is not yet easy to persuade businesses to embrace a wholly ethical approach – large businesses certainly – it is definitely becoming much easier. A year ago I wrote an article which suggested Barclays’ then-CEO was likely to diminish his company’s reputation by proclaiming they were committed to good corporate citizenship when the evidence suggested this was not remotely the case. When a company’s words are wholly unaligned with its actions and with people’s experience of it, it is going to destroy public trust.

It’s always easy to bash banks but, very recently, Amazon, Starbucks and Google have all been greatly embarrassed by their inability to explain to parliament’s public accounts committee how their tax arrangements align with their brand images and purported values.

Unless you are truly values-driven in the future as a business, you’re going to be in trouble

What more and more businesses are starting to recognise, we believe, is that it is impossible to take the shortcuts to short-term profits without destroying trust and reputation over the medium- and longer-term. Those with the longest time horizons can see how real openness and honesty provides the solution.

Our analysis is pretty simple: offloading costs onto society and the environment, and exploiting customers, employees and suppliers is frequently the fastest route to greater profit – certainly in the short-term. Every business is measured on its ability to make profit, and big businesses are measured every quarter. We believe most businesses would rather not offload anything or exploit anyone but they fear their competitors have less scruples, will do these things and will make greater profit as a result.

So on the one hand, businesses want to have good reputations, talk about their values and be on the side of the customer, and on the other hand, they need to pursue at least some unfair and unsustainable practices or otherwise risk being less profitable than their competitors and risk ultimately going out of business. This is the dilemma that Profit Through Ethics is tackling head on.

This is the status quo. Businesses are in this Mexican stand off where they are all pointing guns at one another. We need to find a way to enable them to put their guns down at the same time. What Profit Through Ethics is offering is increasing commercial gain from a strategy of conspicuously ending any exploitation of consumers, employees, suppliers et al, and of conspicuously internalising costs otherwise offloaded onto society and the environment as quickly and completely as possible.

We offer a useful management tool that enables businesses to determine how they are doing on a range of responsibility issues, and to effectively communicate their credentials and involve their stakeholders in making more inclusive, more efficient decisions about future strategy and investment. We offer them the marketing benefit of differentiation – of proving to a cynical public they are truly open and honest, and are demonstrably ‘walking the talk’ rather than pretending to be something they are not.

How would you define responsible business?

A responsible business is one that acknowledges it cannot be perfect; that desists from painting warm, happy, friendly, on-your-side images when their behaviour is to the contrary; that is forthcoming about the challenges everyone knows it faces; that explains why profit without exploitation and offloading is so difficult but how, nonetheless, it is determined to transition from business-as-usual to something fairer and more sustainable.

We think it is now easier for businesses to do this than at any time before. And those that move first, and farthest, will be the businesses of the future. Our prescription is transparency. If a business is serious about its CSR output, and if the claims it makes are true, it should publish that information in a way that people can see it and trust it. To be credible, businesses should prove what they claim.

We’ve gone to the non-governmental organisations (NGOs) and the campaign groups and said that we’ve got businesses that are willing to be transparent and accountable in a radical way. These partner organisation – including the likes of Christian Aid, ActionAid and Tax Justice Network – have helped us create this superb set of questions on community, environment, finance and governance, human rights, marketplace ethics and workforce. We’ve found businesses that are willing to provide decent, verifiable and complete answers and that are willing to put those answers into the public domain for scrutiny, comment and rating.

Big businesses tend to be fine on community impact and environmental stuff. Indeed, many of them are doing pretty amazing things in different parts of their organisations. Sometimes they’re clearly leaders in terms of the policies and practices they have developed. But the bigger they are, the more difficult it is to talk about marketplace ethics and how you look after millions of customers. Banking, insurance, mobile phones, utilities – quite a lot of them say one thing yet do the other when the deals, the service, the small print and the contracts come under close scrutiny. This certainly seems to be the common experience. And of course tax, executive pay and lobbying government are also very challenging topics for the largest firms.

Profit Through Ethics suggests a truly responsible business is one that is willing to answer any question, one that proves it has nothing to hide, right across its organisation.

Have you ever had to turn businesses down that aren’t willing to divulge all the information required?

We have had conversations with companies that have given the impression that all they want is a positive PR hit, to get their transparency mark and a nice warm glow by having a badge, but don’t want the hassle or inconvenience of being transparent in order to earn it. Our discussions with businesses like this happen now and again yet tend not to go very far.

To know that these are conversations that are being had, and that there is a desire at the top for business to truly serve people and planet, is great

Some with only a partial understanding of what we do may think Profit Through Ethics offers a great way of getting some ethical credentials easily, but this is not actually the case. You have to be committed as a business, work pretty hard and demonstrate honesty if you want to do this.

We’re asking businesses to answer a range of questions on a range of issues, to guarantee their information and then to put it in the public domain for anybody – including their competitors and disgruntled employees – to see it. If that information is challengeable on the online platform, then people can comment and rate. If people say certain bits are not true or not accurate, we will investigate those claims and test the business further to ensure the information is meeting the guarantee they provided. If it’s not, then they’re breaking our terms and conditions, removed from the platform and they’re embarrassed.

It is not a problem if a business hasn’t yet adopted many sustainability policies or practices and is starting from a low base. It is only a problem if they try to pretend to be something they are not. We want to work with businesses that are committed to doing as much as they can as soon as they can. The ones that are honest and open about where they are on their journey and willing to discuss all the challenges they face and everything they’re doing.

Have you witnessed a shift since Profit Through Ethics started?

I already mentioned Barclays, Amazon, Starbucks and Google. A year ago, Bob Diamond seemed wholly bullet-proof. It is not contentious to suggest that, in an increasingly connected age, profits must be earned legitimately.

We know that CEOs of many of the very biggest businesses are going around saying, certainly in private, that their purpose must go beyond just making profit and maximising shareholder returns. They are saying business must contribute; business must be part of the solution; business must be more sustainable and business must transform itself; and to their view, the primacy of profit-maximisation prevents this from happening.

We’ve been saying this for 10 years or so; we believe this. It’s really exciting and there’s really a great relief to hear that this is what CEOs of the biggest companies are saying as well. To know that these are conversations that are being had, and that there is a desire at the top for business to truly serve people and planet, is great.

When a company’s words are wholly unaligned with its actions and with people’s experience of it, it is going to destroy public trust

I think that there will come a point very soon where we can see that there is an alternative to saying one thing and doing another. There is an alternative to producing glossy CSR reports while ripping off customers, because we will find and identify businesses that are willing to be completely open and honest about where they are, what all the challenges are and how they are risking short-term profitability because they are no longer prepared to leave their values out of the decision-making process.

They’re going to take some risks in order to do the right thing, because unless you are truly values-driven in the future as a business, you’re going to be in trouble. Christophe de Margerie, the CEO of oil giant Total recently said that his company will not drill for oil in the Arctic because the risks to its reputation from a spill are so great that it just doesn’t make commercial sense. That’s the financial basis on which they’ve done it, but everyone else is drilling for oil in the Arctic, despite what all the campaigners and public opinion says. The CEO of Total is taking a much longer-term view of things, and that is something we believe we’ll see more and more from big companies. They’re the companies that will be around longest and be more profitable in the medium- and long-term.

Are you optimistic that business as a whole will become widely sustainable?

Yes. It’s not been easy because most big businesses are deeply invested in business-as-usual. Finding a way to persuade those big businesses that there’s actually a better way to do this has proven to be challenging.

But we’ve found is that there is a demand for it. We found very quickly that smaller businesses think it’d be great to have a transparency mark to show they’re open and honest – and that’s still what we’re seeking to deliver, and I think we’ll start showing people what that may look like in the next couple of months.

We have always known what we’re doing is very attractive for start-ups and SMEs but we’d like to have several of the biggest businesses here too, and have them participate from the start. It’s taken nearly all year to get the first two large corporations into the project but they are with us now and there are two or three others that are really very close to joining too. So these are really exciting times in that respect.

We are thinking in terms of several hundred leading businesses on our transparency platform using a transparency mark within a year, and in terms of thousands of businesses doing that within two years.

Further reading:

Businesses, listen up: ‘The best way to be good is to keep it simple’

Home-grown innovation that might just change the world

How to be good in the ruthless world of advertising

Investments in resource-efficient firms shown to outperform competition

Global boardrooms increasingly aware of climate change threat

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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