Tag Archives: business ethics

Deepening the Dow Conversation

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“Let’s take this show on the road,” quipped Mark Tercek, President and CEO of The Nature Conservancy, at the close of Dow Chemical’s Google hangout on “Redefining the Role of Business in Society.” Moderator Alice Korngold guided the panelists, three Dow executives and a few big names in sustainability from the NGO world, through the hour-long hangout without a hitch; audience approval (registered via the thumbs up/thumbs down Applause function) seemed pretty consistently high. Everyone played their part well, and they had reason to congratulate each other.

Still, Tercek’s final remark was telling, a sort of gloss on the hour that preceded it. In fact, if I had to offer just one criticism of yesterday’s hangout — and I intend this to be constructive criticism — it would be that this was, essentially, a show. It lacked the spontaneity and the give and take of conversation, as well as the informality promised by the word “hangout” (and which characterizes hangouts I’ve attended and in which I have participated).

As a result, the hangout was less about “redefining” the role of business in society than promoting a settled definition of that role. Dow executives ran through talking points, and at several junctures even the people from the NGO world seemed to have adopted the jargon that Dow has developed around its 2025 sustainability goals. Where conversation would have uncovered discrepancies in order to work toward new understanding, here was little disagreement or dissent, and nothing like irreverence or skepticism — which are ways that interlocutors withhold assent and keep conversations honest.

For example, no one in the hangout challenged what in most other settings would be regarded as a relatively new and extraordinarily controversial idea: that business’s role is to “lead” society; no one suggested that it ought to be the other way around. The most vocal dissent focused on one small point: Peter Bakker, President of the World Business Council for Sustainable Development, said that he didn’t think it would be necessary for Dow to create another sustainability think tank. Maybe he’s right: the world has plenty of talk shops; but in this context, where it was quickly followed by Dow Chairman and CEO Andrew Liveris saying we need “do tanks, not think tanks,” it felt like another way to close the discussion, short circuit deliberation, and declare the matter settled.

I appreciate that this may not have been the appropriate occasion to invite others into the circle, to take live comments, or open bigger questions that couldn’t be resolved in the short space of an hour. I appreciate, too, the effort it takes to bring a twentieth-century industrial giant like Dow into a twenty-first-century online social forum, and the legitimate concerns about everything from reputation to litigation that effort raises. But the broadcast quality of this hangout lent it an air of artificiality and, more importantly, just didn’t seem to jive with the commitment Dow has publicly made to collaboration, dialogue, listening, and building social capacity.

Clearly, the sustainability goals Dow has set for itself warrant a more inclusive and dynamic conversation — where the outcome is not set in advance, and which allows heterodox views, strong dissent and unresolved, maybe irresolvable differences. That’s especially true because Dow claims to be serious about its sustainability goals — this isn’t just window dressing — and what Liveris called its sustainability “journey” has only just started.  At the very least, subsequent conversations should tease out and develop some salient points about this ambitious program and the thinking behind it. Here, I’ll confine myself to identifying just three of these points, based on what was said during yesterday’s hangout.

The first issue concerns the historical roots of the corporate sustainability movement. Two participants in the hangout, Liveris and John Elkington (who coined the phrase “Triple Bottom Line” and has written extensively on the subject) both traced it back to the 1960s, and what Liveris called their “hippy” days.* But, as Elkington came close to suggesting, sustainability thinking also has roots in the reactions of the 1970s and 1980s, which saw the rise of neoliberalism and the idea that markets can offer solutions to social problems, sometimes better, or at least more efficiently, than governments.** This is obviously not just a debate with historical interest; it is a question of the commitments — and the ideas about business’ role in society — that sustainability thinking carries with it.

The second point worth discussing and developing has roots in the 1970s and 1980s as well. This is the idea of natural capital. It not only went unquestioned in the hangout; it seems to have achieved the status of an article of faith. The trouble isn’t just that the figures used to calculate natural capital are made of  “marmalade,” as George Monbiot put it in a lecture on the topic, and reduce the inestimable — the natural, living world, all of creation, if you like — to the merely estimable; but there were several points during the hangout where that trouble lurked just beneath the surface. There are other objections that merit fuller discussion here; namely, that the concept of natural capital:

[harnesses] the natural world to the economic growth that has been destroying it. All the things which have been so damaging to the living planet are now being sold to us as its salvation; commodification, economic growth, financialisation, abstraction…. what we are doing here is reinforcing power, is strengthening the power of the people with the money, the power of the economic system as a whole against the power of nature.

That’s Monbiot again. The point is not that he’s right, though I think he’s got a strong argument here. Agree or disagree, meeting these arguments and others like them when it comes to natural capital would produce a much deeper, more nuanced and truer understanding of the interventions that sustainability thinking requires.

And finally there’s that question of power that Monbiot raises, which I would recast in this context as a set of important ethical considerations that cluster around the idea that you can do well by doing good. At one point, Liveris ran through some impressive numbers to suggest that Dow has figured out how to make sustainability profitable. But there was no mention during the hangout of what agency or power will hold Dow and other companies to account — or oblige them to meet their responsibilities — in case of non-performance.

The unspoken assumption just underneath the surface here seems to be that we are to trust the company, because its intentions are good; or at least the intentions of its executive team are. There’s no reason to doubt that, but if you are rolling out a “blueprint” for society’s future, as Dow says it is, you are also assuming responsibilities toward the people who now live and will live where you plan to build that future. So to get buy-in to the blueprint, earn the trust and engage the energies of all those people, it’s important to enumerate and discuss those responsibilities, to put in place appropriate checks that measure success in society’s terms, not just in business terms, and to prescribe remedies in case of failure.

All this brings me back to Bakker’s suggestion that the world does not need another think tank, and the idea that it’s time for Dow and other companies to partner with NGOs and other social institutions in order to start “doing.” The challenges Dow is trying to address —  climate change, clean water, food security, income inequality and youth unemployment were among the issues Liveris enumerated — are no doubt urgent. But a focus on “solutions” to pressing problems can’t be an excuse to short-circuit discussion or sidestep political process; and we should be careful not to mistake the advance of a business agenda for social progress, or, in our rush to meet the very real challenges the world now faces, confuse the two things. The thing we need to sustain, right now and into the future, is the conversation.

*Postscript, 18 April 2015: The day after I wrote this post, a friend brought this provocative 2006 essay by Slavoj Žižek to my attention. Here, Žižek characterizes professions of “love” for May 68 as a staple of “Porto-Davos” sustainability discourse: “What an explosion of youthful energy and creativity! How it shattered the confines of stiff bureaucratic order! What an impetus it gave to economic and social life after the political illusions dropped away! And although they’ve changed since then, they didn’t resign to reality, but rather changed in order to really change the world, to really revolutionize our lives.”

**Postscript, 14 December 2015 Joe Bakan offers a smart discussion of this point in “The Invisible Hand of Law: Private Regulation and the Rule of Law”. see especially pp. 293-4 and 297-9.

Where Are the Women in Mining?

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Glencore remains the only FTSE 100 company that does not have a woman on its board of directors. At the shareholder’s meeting at the start of this week, Chairman Tony Hayward promised that the company would remedy the situation by year’s end; but some big institutional investors have grown impatient, and UK business secretary Vince Cable said “it is simply not credible that one company cannot find any suitable women.”

The problem is industry-wide. A 2013 report by Amanda van Dyke (of Palisade Capital and Chair of the organization Women in Mining) and Stephney Dallmann (of PwC) found that mining companies “have the lowest number of women on boards of any listed industry group in the world.”

Maybe that doesn’t come as a great surprise to those familiar with mining, but within the industry there are companies who seem to be doing more than bluffing or hoping the issue will go away. Most of those are high profile global players. Women’s numbers decline steadily as we move down the ranks to the so-called juniors; and the likelihood that women will have a board seat or participate in a board committee also varies by territory. (South Africa leads the pack: over 21% of the committee seats of listed South African mining companies are occupied by women.)

Canada boasts the highest number of listed mining companies, and the “large mining companies in Canada are much further down the road [than smaller firms] in terms of their understanding of the importance of the role women play on boards.” The top-tier Canadian companies with high market capitalization (and the increased visibility that comes with size) have nearly 14% of board directorships held by women, but among the bottom 400 of the world’s top 500 miners, Canada has “the lowest participation on board committees by women, at 5.9%.”

The authors acknowledge that many of these companies are at early stages of development and they have only a few board seats to fill; but if they expect to grow and mature (as they do), there is no time like the present to lead or at least follow the lead of the big league players. When the same men keep winning the game of musical chairs — and when they sit next to each other (as they do) not just on one board, but on several, and their affiliations stretch back over decades — the result is likely to be not just over-familiarity but insularity, both of which are likely to impair and impede judgment. Meetings become a day at the club; the boardroom becomes an echo chamber.

As van Dyke and Dallmann note in a 2014 follow up report, it’s misleading to say, as many mining company executives do when pressed, that the small number of women directors correlates in a meaningful way with the lack of women with mining-related degrees. Only 32% of men on boards of mining companies have an engineering degree. So “there is no shortage of women in the talent pool;” according to van Dyke and Dallmann, “there is simply a perception of a lack of available female talent.”

This blinkered view of reality has real-world consequences, for shareholders and stakeholders in the communities where the miners operate. Mining companies with women on their boards see performance improvements on a number of fronts, from financial to social and environmental performance. “Sustainability” — as measured by water use, Bloomberg ESG score, UN Global Compact participation, Community Spend, and CSR or Sustainability Committee — improves across the board. For example, average total water use by mining companies “decreases steadily with an increase of women” in director roles — though it’s not entirely clear to me why that should be so — and “the amount [mining] companies spend on community projects and initiatives increases with the number of women on the board.” The authors are careful not to urge any hasty conclusions, but after surveying the data they are compelled to suggest that “the security of a company’s social licence to operate may be improved by having women on the board.”

I would go one step further: it’s difficult to countenance a mining company asking for social license to operate even as it deliberately insulates itself from social reality.