How Companies Can Meet the New Demand for Fair Play
How Companies Can Meet the New Demand for Fair Play
"Fair" is in the current ether.
There is the Occupy Movement, raising questions about the fundamental fiduciary responsibility of corporations and government, whether they are acting (or capable of acting) in the best interests of the public, and how to hold them accountable in any event.
There is the ongoing Arab Spring, where another form of citizen power (itself a key inspiration for Occupy) has been challenging and overthrowing regimes across Africa and the Middle East, with emerging reflections and rebounds appearing globally, most recently in Moscow, where suddenly Vladimir Putin feels the need to explain why he will again seek his nation's highest office.
In the U.K., the coalition government is promising a vote on executive pay, while Ed Milliband is trying to reframe his Labour Party leadership under a rubric of "responsible capitalism."
Meantime (as evident in the title and content of this New York Times piece: Harder for Americans to Rise From Lower Rungs), U.S. analysts and pundits are wrestling with data suggesting American social mobility is significantly less than in Canada and many European countries -- and what that means for the American Dream.
Finally, there is the perverse new influence of Super PACs in U.S. politics. I frankly can't even go there -- it just seems so antithetical to democracy -- but if you want to learn more, this Attack of the Super PACs! article in TIME is worth reading.
Free Trade or Fair Shares?
In this milieu, what might corporations do to demonstrate as much support for fair trade as for free trade?
First, I thought the pre-Xmas Wall Street Journal A Manifesto for Sustainable Capitalism article penned by Al Gore and David Blood of Generation Asset Management offered sage advice. Written from an investor perspective, it calls for "a more responsible form of capitalism, what we call sustainable capitalism: a framework that seeks to maximize long-term economic value by reforming markets to address real needs while integrating environmental, social and governance (ESG) metrics throughout the decision-making process."
The authors posit desirable benefits to companies -- higher profits, lower costs, better compliance and lower capital costs -- and "recommend five key actions for immediate adoption by companies, investors and others" which, to my ear, have a distinct "play fair" ring to them. Particularly, their recommendations on integrated reporting (greater transparency), "[aligning] compensation structures with long-term sustainable performance," and "[incentivizing] long-term investing with loyalty-driven securities" suggest a means of business decision-making and operations that tilt towards the greater good.
Second, there is the notion of "fair shares" -- something SustainAbility explored in our 2011 research on the future of the food industry Appetite for Change and which is well explained in the WWF-Oxfam report Resource Scarcity, Fair Shares and Development.
WWF and Oxfam focus on "the issues of equity and 'fair shares' for poor people and poor countries in the context of limits to resources such as land, water, food, oil and carbon space" and suggest that the "need to advocate for 'fair shares' of these resources will become increasingly central to international development."
For business, this means taking into account the rights of all other users of scarce resources and confronting questions of equity regarding how much of any resource they can consume in the course of their operations.
As framed by WWF-Oxfam: "Is it enough to ensure people's basic needs are met, or is a more egalitarian approach needed that tries to reduce inequality in access to resources."
In a business environment used to basically a first come, first serve approach, the notion of guaranteeing equitable access to resources for all users will affect issues from material inputs to vendor selection to product cost. A horizon issue for most today, fair shares will increasingly affect business as ecosystem pressure increases under the demographic burden of a population headed for 9-10 billion; in fact, some are beginning to factoring resource and/or carbon constraint into their business now.
Fusion -- the blending of global cultural influences in food, fashion and design to create new flavors, looks and experiences -- is trendy in the current meme. But the Fusion I am thinking of today and hoping proves lasting is the Ford Motor Company flagship sedan, a representative mix of the fair shares presently emanating from Michigan.
Updated for the 2013 model year and revealed just this month at the Detroit Auto Show (where it took honors and tuned heads), the new Fusion is global in style and eco at heart. Ford will make gas-only, hybrid and plug-in versions of the car. Even the four cylinder internal combustion engine options (there are three) will get respectable mileage, while the hybrid promises 47 miles per gallon, and the plug-in 100 miles per gallon equivalent in electric mode.
For a mid-size car that Ford expects to be a best-seller, it's awesome, and all the more so because it is built on the principle of fair shares.
Fair Shares = Fair Play
Ford's not been as prominent recently in terms of trumpeting sustainability ambitions as Toyota with the Prius family, Nissan with the Leaf, and even a resurgent GM with the Volt, but it has quietly and steadily been unfolding a greener fleet, and a greener strategy.
This comes as the result of a decision taken a few years back to shape its product development strategy around the assumption that society will soon agree that greenhouse gas emissions (GHGs) must be capped at no more than 450 parts per million. Along with this assumption is the belief that manufacturers of all kinds will need to design and build their products -- use phase included -- in a way that sees them consume (in this case, emit) no more than their fair proportion of GHGs.
It's a profound shift in thinking from a Midwestern company often more associated with durable trucks than creativity. It depends hugely on the behavior of other actors and their making and honoring similar assumptions. But that's the point. Ford's promising to play fair. Let's hold them to it -- and demand that other companies play fair too.