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In survey several years ago, CEOs were asked whether they would make an investment that would meet their internal return-on-investment targets and make their business stronger, profitable and sustainable. One hitch: It would also make the company slightly miss its next quarterly earnings estimate.
Eighty percent said no.
That, according to former Vice President Al Gore, is "functionally insane."
"It's not only insane where the values that we share are concerned, it's functionally insane where the well-being of that business is concerned," Gore said today. "It's the wrong decision for the investors, for the shareholders, and for all the stakeholders."
It all boils down to short-termism, he said this morning in a keynote speech kicking off the annual BSR Conference in San Francisco. Short-term thinking not only runs counter to a healthy and sustainable marketplace, he said, it also prevents serious, much-needed action on climate change.
"We now have about $7 trillion' worth of sub-prime carbon assets in the global economy," he said. "Their value, like the sub-prime mortgages, is based on an assumption that is highly questionable. The assumption is that it is perfectly O.K. to dump 90 million tons of heat-trapping pollution into the thin shell of the atmosphere surrounding our planet every 24 hours as if the atmosphere is an open sewer."
The parallel between the sub-prime mortgage mess and the climate change crisis can be described by the mentality of "IBGYBG," Gore said: "I'll be gone, you'll be gone."
He called for policy changes, a tax on carbon, loyalty shares that reward long-term equity-holders and a tax on financial transactions, which may curb the high-frequency stock trades that drive short-term financial thinking.
Businesses must also take a lead role in driving the market toward sustainability, Gore said. Their numbers may be growing, he said, but not without some familiar challenges.
"It's still difficult for many companies committed to this agenda to find investors who understand how important it is," he said. "The impatient short-term nature of the investor marketplace is still a very serious obstacle."
He named several factors underpinning the business case for sustainability: enhancement of brand; recruiting, retaining and engaging employees, and "introducing savings by the elimination of waste from sources that are invisible until you look clearly through the sustainability lens." Customers, too, want to do business with companies that are part of the solution, not part of the problem.
The sustainability agenda, he said, is far more important now than it has ever been.
"We have a choice to make now," he told the audience in closing his speech. "You are a key part of the solution. I congratulate you on what you are doing. We have everything we need to succeed, with the possible exception of political will and the will of the executive suite of some businesses, but always remember that the will to act is itself a renewable resource."
Al Gore image via Shutterstock.
America has turned to much
America has turned to much control our economy from entrepreneurs, hands on managers and engineers, and builders to a whole class of high priced parasites, accountants, lawyers, financial manipulators, and no nothing MBA’s. They have hollowed out our economy and replaced designing, building, and making products and services with financial manipulation and short term flash-in-the pan profits.
Our high flying CEO's have learned that you can make a few years of big profits by stopping R&D, reducing staff, cutting back on quality control, and moving production off shore. Sales stay level for a while until the public realizes the company’s good name no longer means a quality product. The workers and the stock holders are left with an empty shell and the CEO cashes in his stock options, heads for the exit with his golden parachute, and looks for another company to suck dry.
All this is aided and abetted by Wall Street that finances these deals, chases after next quarters dividends, and pays no attention to the human capital, product quality, and product knowledge that determine the long term value and viability of a company. Wall street rates these hollowed out companies as “Buy” right up until they hit the wall and go bankrupt, or limp along on as a shell of their former selves.
A good solid company that cares for its workers, its communities, and its environment is in the long run, a better investment, a better neighbor, and a valuable asset to the country.
Kent it is unfortunate that
Kent it is unfortunate that you deem anyone who does not share your point of view worthy of being called names. And partisan? I'm just stating the facts. Surely you are not offended by truth. Does name-calling indicate the lack of substance to your position?
In the PriceWaterhouseCooper survey of 1000 CEO's 79% agreed that sustainability is vital to the profitability of any company and 71% said they would sacrifice short-term profitability in return for long-term shareholder value when implementing a sustainability program. Bottom line, there IS an expectation of ROI whether short or long term.
So Al conveniently found a survey to support his inconvenient story and I found one for mine. So what? I rather suspect the CEOs in his study were reluctant to commit to a short term loss because of the smoke and mirrors employed by the environmentalists, promising but seldom delivering-extending the next quarter shortfalls to the next and the next.
Eighty percent said no. That,
Eighty percent said no.
That, according to former Vice President Al Gore, is "functionally insane."
That makes them smarter than Al Gore wants them to be. easy to call others insane when you stand to gain untold millions on the outcome.
He can call them insane if he wants his credibility is shot and he will be found out for what he really is soon enough.
I apologize for the name
I apologize for the name calling. That was neither necessary nor appropriate, and I offer my apologies. Please disregard the word after "partisan" in my prior email. The rest I stand by 100%.
And by the way, are you really surprised that 790 out of 1,000 CEOs would resond that sustainability is vital to profitability? What are they going to say, "Sustainability is a ridiculous and unimportant concept? It's a farce perpetuated by leftists and those nasty environmentalists?" Please. 71% say that they would sacrifice short-term profitability in return for long-term shareholder value when implementing a sustainability program. What percentage has actually done that? Their response is predictably politically correct, but that is a far cry from being genuine.
As for name calling, I would thing that implying that all environmentalists employ "smoke and mirrors" and that Al Gore is a "discredited and hyprocritical profiteer" falls into that category. Would you not agree?
Apology accepted. Just a
Apology accepted. Just a couple of comments: (1) smoke and mirrors brings to mind the erroneous and manipulated data used to buttress the case for global warming that was exposed as false. Nevertheless, environmentalists charged ahead without regard to accuracy. (2) the references to Al Gore as discredited-are you kidding me. Rather than list them here, why don't you Google. And hypocritical? Would he dare calculate his carbon footprint, beginning with his monstrous energy-hog house here in Belle Meade. Those who know him know that he is like the proverbial preacher who says "do as I say and not as I do."
And back to the CEO dialogue, there have been great strides to marry profitability with environmental responsibility, not the least of which is LEED certified buildings whit documented real dollar savings and a fairly quick ROI. I am in total agreement that we can move forward. I just want reason and common sense to prevail instead of the wanton misuse of my tax dollars by government investing in shaky businesses (Solyndra) or wasting money on the Volt or the home energy savings fiasco that cost lots of money with very few homes improved.
Tony, did you actually read
Tony, did you actually read the article and pay attention to what the man said? His point wasn't that profits are bad. Nor was his point that "value for the dollar" is unimportant. His point was that making financial decisions - whether they are related to sustainability or not - based solely on short term criteria is often counterproductive in the long term to the health of the business. When those short term decisions also preclude otherwise sound investments in sustainability, there is a clear negative environmental impact as well. This isn't rocket science...it's business 101. The problem is that people like you are happy to slash and burn your way through life, taking what you can get today without thinking about long term implications...both financial and otherwise.
Stop being a partisan douche and try to grasp the bigger picture.
Al Gore remains the authority
Al Gore remains the authority on insanity.
...a tax on carbon, loyalty
...a tax on carbon, loyalty shares that reward long-term equity-holders and a tax on financial transactions, which may curb the high-frequency stock trades that drive short-term financial thinking - Good ideas to be implemented.
Regardless of his politics
Regardless of his politics this guy put Sustainability on the Agenda for many, many people, today for me he remains an effective communicator whose presence in this field only helps raise its profile!
I cant believe that this
I cant believe that this discredited and hypocritical profiteer is still considered a serious voice for environmental responsibility. Contrary to his rhetoric, customers want to do business with the best value for the dollar. Price isn't everything but it is the first thing. Companies are in business to turn a profit and if they don't they won't be around to do anything for the environment. Until we can formulate cost effective solutions and stop the executive branch from squandering millions of dollars on cronies, green innovations will continue to languish as an anemic and sick kitten--evoking sympathy but never recovering.