transforming business for tomorrow’s world
DESCRIPTION
Sukhdev presents in his new book "Corporation 2020" a number of strategic challenges for sustainable business and recognizes the need for a fundamental transformation of the economy.TRANSCRIPT
www.corp2020.com @corp2020
Can Today’s Corporation Deliver Tomorrow’s Economy?
Pavan Sukhdev
Founder & Author, Corporation 2020Study Leader, TEEB, &
UNEP Goodwill Ambassador
Stockholm, 28th January 2013
www.corp2020.com @corp2020
“A Green Economy is defined as one that results in improved human well-being and social equity, whilst significantly reducing environmental risks and ecological scarcities.”
Source: Towards a Green Economy, UNEP, 2011
1989…
…2011
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Source : T-21 Model, Green Economy Report,2% of GDP invested in Greening vs 2% more in BAU
www.corp2020.com @corp2020
83.3%
16.7%
U.S. Nonfarm Employees
PrivateGovernment
74.9%
7.1%5.5%
12.5%
U.S. Gross Value Added, By SectorPrivate Business Households Nonprofit institutions serving households Government
Total = GDP (US$14,526.5 billion)
Is “Green Economy” possible without “greening” the Private Sector? (eg: USA)
www.corp2020.com @corp2020
“Green Economy” is the righteconomic vehicle to achieve Sustainable Developmentwww.unep.org/greeneconomy
“Corporation 2020” is the right economic agent to achieve a Green Economy
www.corp2020.com@corp2020
www.corp2020.com @corp2020
“Corporation 1920”
• Four Defining Behaviours– Pursuit of Size– Active Lobbying– Unethical Advertising– Unlimited Leverage
….
www.corp2020.com @corp2020
Pursuit of Size…
www.corp2020.com @corp2020
Pursuit of Size…
www.corp2020.com @corp2020
…Leading to explosive growth in trade
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“Corporation 1920”
• Four Defining Behaviours– Pursuit of Size– Active Lobbying– Unethical Advertising– Unlimited Leverage
Resulting in Negative Externalities…..
www.corp2020.com @corp2020
• Negative externalities of top 3,000 companies estimated at US$2.15 trillion per annum
Why do we need change?
Source: Trucost for UNPRI, 2010.
www.corp2020.com @corp2020
Why do we need change?• We are approaching or have exceeded several
“planetary boundaries”
www.corp2020.com @corp2020
What will drive change?
Excessive Demand
Culture of Consumerism
Fuelled by Marketing/ Advtg
Ethics & Accountability in
Advertising
Macro Issue Micro Driver Micro Solution
Public Capital Losses Externalized costs Measure & Disclose Externalities
Underpriced Supply Unlimited leverageLimit
Leverage/capital adequacy/etc.
Resource Depletion
Underpriced resources (Low royalties /
perverse subsidies)
Resource Taxes replace corporate
taxes
www.corp2020.com @corp2020
Limiting Leverage• Tools for limiting leverage:
– Capital adequacy ratios for “TBTF” corporations– Consortium banking (info sharing between banks)– Segregate lending/clearing institutions from
investment/ insurance (re-visit Glass-Steagall?)– Limit tax-deductibility of interest beyond caps– Constrain leverage from M&As– Re-align performance bonus systems
www.corp2020.com @corp2020
Rob WaltonChairman, Walmart
http://sharequotes.us/robson-walton-biography.html
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Limiting Leverage
See Interview with Rob Walton on www.corp2020.com
…to see why Wal-mart went public…
www.corp2020.com @corp2020
Accountable Advertising• Two principles
– Treat all consumers equally, irrespective of market– Disclose advertising policies & practices, eg:
• Annual “Accountable Advertising Report”• Four strategies
– Disclose life span of product on packaging and in ads– Disclose countries of origin– Disclose the “footprint” of the product on its packaging
(GHG emissions, freshwater, etc)– Recommend how to dispose of product
www.corp2020.com @corp2020
Jochen ZeitzExecutive Chairman, Puma
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Accountable Advertising : PUMA
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See Interview with Jochen Zeitz on www.corp2020.com
…to see why PUMA disclosed its Externalities…
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Disclosing Externalities : PUMA
PUMA Press Release, November2011
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Quantifying Usage, Discovering Depend-
encies & Impacts
Standardizing & Valuing Impacts
Disclosing Impacts in
“One Report”
Emissions /tCOeFreshwater / CuMForests LUC / HaPollution / …Waste / …
Economic Costs of Emissions,Freshwater Use, Deforestation,Pollution, Waste …
Framework for Integrated Reporting of All Externalities… incl Social & Human Capital..
WBCSD…GRI…CEF… CDP, WDP…
TEEB for BusinessCoalition& Network
IIRC, SASB, & AccountancyRegulators
(Value Chain Impacts“Cradle to Gate”)
TEEB for Business Coalition:Measuring, Valuing, Disclosing Externalities
www.corp2020.com @corp2020
TEEB for Business Coalition• Incorporated as a company
limited by guarantee*• Incorporated in Singapore
Founder Member Reps - Members of the company – known as Founder Members - and therefore its legal owners, all have permanent board seats:1. ICAEW2. WBCSD3. GRI4. WWF5. CI6. IUCN7. IIRC8. Global Initiatives
Observer Reps – organisations for whom legal ownership is complicated but who have been instrumental partners are offered a permanent board seat as observers:• CBD• UNEP• World Bank/IFC• Accounting for Sustainability• UK Government (Defra)• Others? European
Commission; Singapore Economic Development Board; other donor gov’ts
Co-opted board members:1. Pavan Sukhdev, Study Leader
TEEB2. Gerard Ee (Chair) (Member of
Parliament, Singapore)3. Sanjeev Sanyal (Senior Economist
Deutsche Bank Singapore)
Ordinary Member Reps – ordinary members of the Coalition elect five board members for a three year period
(Company) Board
* A company limited by guarantee is a structure that means there are no shares in the company; its members are guarantors rather than shareholders. There is therefore no need for share transfers as members join or leave the company.
Board Advisory Group• Jochen Zeitz (Puma)• Michael Izza (ICAEW)• Juan Costa-Climent (E&Y)• Herman Mulder (GRI)• Peter Bakker (WBCSD)• Fernando Rodes (Havas)• Pavan Sukhdev (GIST Advisory)
(Chair)
TEEB for Business Coalition:Measuring, Valuing, Disclosing Externalities
www.corp2020.com @corp2020
What will define a “Corporation 2020”?
• Four Characteristics–Goal Alignment with Society–Capital Factory–Institute–Community
www.corp2020.com @corp2020
Corporation as “Institute” : Infosys World-class Training for 30,000 p.a.
www.corp2020.com @corp2020
Infosys Externalities DisclosureFinancial Statements Y/e March 2012
Source: Annual Report, 2011-12
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Corporation as “Community” : Natura Greater Economic Security for Women
Source: http://www.managementexchange.com/story/innovation-in-well-beinghttp://totallybeautyaddict.fr/mon-jolieapero-chez-natura-brasil/
www.corp2020.com @corp2020
In Summary : Reforms for “Corporation 2020” to become the DNA of Business
Source: Why Corporation 2020?, Island Press, 2012
Resource Taxation : Replacing Corporation Tax (profits) with Taxes on Resource Use & Extraction
Accountable Advertising : Making advertising responsible & accountable via norms & standards
From : www.corp2020.com
Limiting Leverage : Introducing rules & limits to govern financial leverage
Disclosing Externalities : Measuring & disclosing all major corporate externalities (+ve & -ve)
www.corp2020.com @corp2020
Planks Stages
DisclosingExternalities
Resource Taxation
AccountableAdvertising
LimitedLeverage
Research & Ideation
GRI, IIRC
Outreach& Advocacy
GRI, IIRC, WBCSD, AFS, B4E
? ? ?
InstitutionalChampionship ? ? ?
Implement- ation (Funding & Proj. Mngmt.)
UK (Defra) SING (EDB)
? ? ?
www.corp2020.com @corp2020
Thank You !www.corp2020.com
Pavan SukhdevFounder, Corporation 2020
& UNEP Goodwill Ambassador