These developments in “collaborative consumption” bring a new dimension to the existing forms of alternative exchange systems, such as business barter networks or countertrade agreements, and community currency systems that help connect underused assets with unmet needs. Countertrade accounts for around 20% of world trade, while one national barter network now involves 1 in 5 small or medium sized companies in Switzerland, amounting to over US$1.5 billion a year. The new sphere of peer-to-peer financial-lending has taken off, and predicted to reach US$5 billion next year. It appears to be a time of disruptive innovation through new forms of sharing, exchanging, renting and co-owning.

Some of these activities are important to sustainable development, and, therefore, to the broad field of responsible enterprise (whether we label our work corporate social responsibility, sustainable business, social enterprise, shared value, responsible or impact investment, or some other term). For business executives to contribute to a positive sustainability outcome from these developments requires enhanced understanding of how to explore ways to become involved, including by adapting their own business models.

Which means there is an educational need, for those of us interested in enabling the sustainability transition. Lifeworth Consulting is conducting research on these developments, for presentation in July at the EABIS colloquium at IMD (in Lausanne), and in September at the Necessary Transition conference at GBS (in Brisbane). So, if you are currently employed, and would like to receive the results of this research, please participate in our 5 minute survey, it would really help:

http://www.lifeworth.com/survey-responsible-enterprise-collaborative-consumption

Please, click that link!

Thanks, Jem Bendell

Lifeworth founder and Adjunct Professor @ GBS

Some of you will be familiar with how a remission period of five years officially means that one is ‘cured’ of the ‘disease,’ as is my case. Looking back, what I find interesting is that during my convalescence and my subsequent return to health, as far as I can remember, no one around me mentioned the word ‘healing.’ Yet in whatever illness, personal or social, healing is key. Being Easter, it made me think about what the Christian tradition says about healing.

In “Binding the Strong Man: A Political Reading of Mark’s Story of Jesus”, author Ched Myers describes the symbolic meaning of Jesus’ actions in Mark’s Gospel. He explores the theme of healing through Jesus’ miracles. Citing the insights of theologian John J Pilch and his research into medical anthropology, he distinguishes between two approaches to the social meaning of sickness:

“Ethnomedicine places primacy on the culturally construed causes of illness…In contrast, biomedicine places primary emphasis on biological symptoms and pathogens…Disease derives from a biomedical perspective that sees abnormalities in the structure and/or function of organ systems. These are pathological states independent of whether or not they are culturally recognised. Disease affects individuals, and only individuals are treated. Illness is a sociocultural perspective that is concerned with personal perception and experience of certain socially dis-valued states including, but not limited to, disease. Illness inevitably affects others: the significant other, the family, the neighbourhood, the village…”

In this sense, we can get an understanding of the difference between ‘healing’ and ‘curing.’ Pilch goes onto say that,

“Jesus and all healers of that period could only perceive illnesses and not diseases [and therefore] Jesus’ activity is best described … as healing, not as curing [as] he provides social meaning for the life problems resulting from the sickness.”

As such, when authors use the disease ‘cancer’ as a metaphor to describe our current economic system, they refer to abnormal growth within that system and the socially dis-valued states it generates – illnesses such as inequality and poverty are two such examples.

As we seek to better understand the systemic implications of capitalism on business, people and community, we feel that ‘healing’ describes our intention. Our work, and our forthcoming book, not only addresses many of the symptoms of the ‘disease’, to use Pilch’s biomedical metaphor, but proposes strategies for business to become agents of ‘healing’ with the goal of restoring social wholeness, and thus greater well-being. In my case, having this context in mind has provided a powerful context for individual projects, as I question how our efforts and those of our clients, can best be agents of a wider healing.

For those of you who observe it, or appreciate festivals of reflection, Happy Easter!

Ian Doyle

Lifeworth Consulting

Jem Bendell by Paulo Pellegrin

“I’m delighted to hear Professor Jem Bendell has been appointed a Young Global Leader” said the head of the UN Global Compact, the largest corporate responsibility initiative in the world. Georg Kell explained “Bendell’s pioneering work on multistakeholder alliances in the late 1990s helped us at the United Nations understand how to engage business in new ways, which led to the launch of the Global Compact. We now count nearly 7,000 active participants. But that is not yet a critical mass. The great majority of companies worldwide remain aloof or sceptical. It is our aim that Rio+20 will bring a big boost to the spread of universal sustainability principles as advanced by the UN Global Compact so that the movement can reach a critical mass and transform markets for sustainable development.”

In his interview accepting the accolade, Professor Bendell discussed the opportunities and challenges for leadership today:

“One opportunity for the new generation of leaders is an awakening. Everywhere I turn, I’m hearing people asking “how long can it go on?” Financial and ecological crises are leading people to sense the need for a transformation of economic systems. In the past years working on sustainable development I’ve seen positive initiatives, products or services, but they remain marginal. Social innovations can no longer be the side show to systemic decay. Its time to team up for massive change, and take positive innovations from the margin to the mainstream. For that we need leaders who are adept at learning from the edge, because those ideas that seem strange to you today may hold the solutions for tomorrow.

“In a sense, the challenge of this generation of leaders is the same as any, to transcend the mental barriers we are brought up with, between us and them, us and nature, my generation and yours, my specialism and yours, my faith and yours. These barriers are inventions, yet we maintain them due to our egos, and fears, and our need to belong to one particular group. In an interdependent world we now need globally responsible leaders: not just leaders serving their own, but conscious of the world, and how they affect it. I’m not talking about leaders from the West, but leaders from the rest of the world, caring about all of the world.”

“One of the unique aspects of the Young Global Leader Community is that it is the first generation of leaders who are truly global citizens: they have all lived, studied and worked in different countries throughout their careers,” said David Aikman, Head of The Forum of Young Global Leaders. “They see themselves as being fundamentally interconnected and have the cross-cultural leadership skills to be successful in a globalized world. Thanks to the incredible diversity of the group, they are able to collaborate across complex systems and build informal coalitions to facilitate action on the biggest challenges facing the world today.”

In 2012 Professor Bendell is training leaders around the world, on the theme of “Healing capitalism through critical collaboration.” Destinations include: Abu Dhabi, Bangkok, Beijing, Brisbane, Dubai, Hong Kong, London, Istanbul, Madrid, Paris, Singapore, Stockholm, Sydney, and Zurich.

More on Jem Bendell:

A strategist and educator on social and organisational change, specialising in responsible business development, alliances for sustainable development, and transformative philanthropy. Professor Bendell has helped create innovative initiatives, such as the Marine Stewardship Council, to endorse sustainable fisheries, and The Finance Innovation Lab, to promote sustainable finance. He leads a consulting network, whose clients include UN, NGOs, large firms and family foundations, in over 25 countries. With a PhD in international policy, over 100 publications (including four books and five UN reports) and Visiting Professorships in management (GBS and IE), Professor Bendell is an award-winning international authority on business-society relations. He works with people who seek to contribute to, and benefit from, the transformation of markets to promote global well-being. His latest book on collaboration is “Evolving Partnerships”, and his latest TEDx talk is on sustainable currencies.

As I read leading commentators on business responsibility and sustainability sharing their insights on trends for 2012, I saw a new boldness. People are recognising the need for ambitious goals that address root causes, including economic governance failures. At Lifeworth we have been seeking to contribute to a sustainable economic transformation and published a variety of works on that theme over the past ten years. In that time I’ve seen the more critical analyses initially ignored by leaders in favour of less challenging narratives. Yet this year I think we will see more opportunity for ‘radical’ suggestions for change to be discussed and trialled. In that sense, despite the fears, it’s the year we have been waiting for. But rather than adding to the many predictions, I’ll summarise Lifeworth’s efforts that could be of relevance if you seek to team up to strive for far greater positive change than you might have before.

The first area for transformative action in which we are engaged is policy innovations for scaling responsible enterprise and finance. Rightly or wrongly, government budgets cuts are happening in many countries. The implications for them to regulate businesses for social and environmental objectives are beginning to be felt. How then can we promote and reward better business practice, without increasing the costs to government? Leveraging private standards of social or environmental performance is one option. In work for the UN Conference on Trade and Development (UNCTAD), we looked at public policy innovations to scale the number of firms adhering to voluntary standards like the Forest Stewardship Council. This appeared in the World Investment Report, with the full academic study published elsewhere. The idea that these forms of ‘collaborative economic governance’ are a pragmatic response to the twin challenges of sustainable development and government efficiencies, was fed into the policy discussions leading to Rio+20, happening this June. The need now is to create systems for collecting innovative public policies for scaling responsible business, analysing which work well in what contents, and disseminating this to government officials worldwide. If you can help on this project, do get in touch.

Yet we must go further than coping mechanisms in a world of irresponsible enterprise and governance failures. The second area for transformative action, therefore, is redesigning financial systems for more fair and sustainable outcomes. Although commitments to responsible investment have existed for some years, the translation into investment practice and the realities of corporate leaders has far to go. The limitations of current environmental, social and governance (ESG) practice in empowering investors to act is one of the stumbling blocks which we analysed in 2011, sparking lively debate. Our interest in ESG is because of the potential for progressive investor influence, which is a historically novel situation. In 2012 I hope we see the emergence of a progressive voice from investors on matters of public concern. Aside from investor-business relations, the public voice of the progressive investor has been slow to emerge. The Carbon Disclosure Project has shown that on climate change investors can sound a new tune on public policy. In 2012 and beyond, we could see other forums, particularly the UN-backed Principles for Responsible Investment (UNPRI), providing opportunities for progressive investors to promote policy debates that better include social and environmental priorities. Whether they will be able to counter-balance the more regressive investor resistance to financial re-regulation will be interesting to watch.

In 2012 I’ll continue to participate in fora that discuss the need for transformation of economic systems for sustainable development, including The Finance Innovation Lab in the UK, the World Economic Forum in Davos, Switzerland, and the Griffith University conference on transition, in Australia. As I explained in an interview for Griffith, the key stumbling block to progress on tough issues is our limiting assumptions and oversights about the real causes of our crises. During the next months I’ll be asking world leaders what they think are the key activities to drive massive positive change that weren’t possible before now, and who they need to work with to make that happen. Identifying such pressure points for massive positive change will inform our philanthropy advisory during 2012, and beyond.

One area where I think there is currently a woefully lack of attention, funding and action is in “sustainable currencies”. Current monetary systems are incompatible with the goal of a fair and sustainable economy, and thus we need greater efforts at reform, as well as at developing secure, scalable and community-owned alternative currencies and barter systems. It is, no doubt, a difficult area for many to grasp; as I experienced myself. Yet in 2011 there were strides towards greater understanding by sustainable development professionals, through the work of New Economics foundation (nef), among others. My TEDx talk on the topic reached over 12,000 views in a couple of months. As austerity bites and unemployment persists, new ways of getting people working for each other without putting governments further into debt will inevitably rise up political agendas. In 2012 we will help through collaboration with Community Forge and The Finance Innovation Lab, amongst others, and promote the uptake of ’sustainable currencies’ as an innovative social development mechanism, through fora such as the Geneva Forum on Social Change.

What does this renewed emphasis on systemic change mean for specific industry sectors? I think the main implication is to be more ambitious in attempting to mainstream change for sustainable development. That is a third area for seeking transformative action. That has been our approach in the work we do in the luxury and mining sectors. With the organisation Fair Jewelry Action we researched and published “Uplifting the Earth: the ethical performance of high jewellery brands.” In this report we mapped out a transformative agenda for responsible jewellery, where the industry can contribute to sustainable development. From this basis, we aided De Beers’ stakeholder consultations, and worked with the UN Institute for Training and Research (UNITAR) on their training for the jewellery industry, which will be rolled out from Antwerp this year. The Spanish version of the report was launched at the world’s first Sustainable Luxury Awards, in Buenos Aires, co-organised with CSSL and the Authentic Luxury Network. The aim of these awards is to encourage sustainable innovation in the luxury sector; this year’s awards are scheduled for November. The insights from our work on transformative corporate responsibility in the luxury sector were refined for the launch of the world’s first MBA module on ‘Sustainable Luxury and Design’, which I teach at IE Business School, in Madrid. Students learn how sustainability is the smartest and most elegant paradigm within which to design anything. At the other end of the value chain, in 2012 we are working with Channel Research and the German development agency Gesellschaft für Internationale Zusammenarbeit (GIZ) to encourage disclosure on the social, environmental and economic impacts and contributions of mining companies in the Congo. There are few more challenging locations for mining to align better with the goals of peace, human rights and development.

A fourth area for transformative action in 2012 is enhancing the way UN agencies and civil society organisations engage companies. There are now many cross-sectoral partnerships, and the relationships they established hold the potential for greater changes. Largescale change goals need to be connected back to practical steps that can deliver benefits in the near term for various partner organisations. That’s the thinking behind a spate of new resources on more transformative partnering that were released in 2011, including reports from the UN Global Compact, and my own book, “Evolving Partnerships: engaging business for greater social change.” During 2011 we applied our approach to developing transformative alliances in our support for the International Labour Organisation’s fight against forced labour. In 2012 we aim to help the development of their Global Business Alliance against Forced Labour.

Despite the shocking persistence of slavery today, and the general dystopian tone we hear from thoughtful people in international fora, or indeed, because of such darkness, we need a bright vision for life on Earth. That is why we are helping the Future Perfect Festival in Sweden in August. It will celebrate the brilliance and fun of sustainable lifestyles, sustainable businesses and sustainable communities. It will shine rays of light on a better way of life, beyond the dark mountains of outmoded and destructive ways of thinking, working and living. Our ability to understand values, and articulate them in professional contexts, is important when working towards a positive vision. My colleague Ian Doyle has therefore been teaching ‘voicing your values’ class at Grenoble Graduate School of Business, and we will be integrating this into various lines of work in 2012. In our forthcoming book, Healing Capitalism, Ian and I will seek to integrate both the personal and systemic levels of analysis, to aid transformative action.

In summary, we hope our 2012 will involve the following arenas of transformative action:
1) Policy innovations for scaling responsible enterprise and finance;
2) Redesigning financial and monetary systems for more fair and sustainable outcomes;
3) Mainstreaming contributions to sustainable development within specific industry sectors (including luxury, mining etc);
4) More ambitious collaborations between UN agencies, civil society organisations and companies;
5) Visions of sustainable ways of living, pathways to achieve them, and values competence to walk that path.

To better develop our work, this year we become a Swiss non-profit association. We will remain a network of independent associates, and will continue to deliver in partnership with other service providers, for a limited number of clients who seek to create meaningful change. If you can help us have an impact in these areas, I’d love to hear from you.

Professor Jem Bendell
Founder and Director, Lifeworth.com and Lifeworth Consulting
Adjunct Professor, Asia Pacific Centre for Sustainable Enterprise, Griffith Business School
Distinguished Visiting Professor, IE Business School

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Professor Bendell explains that the damaging effects of the financial crisis on companies are making some business leaders ask deeper questions about our economic system. Increasing inequality also presents risks to business, according to the International Monetary Fund and World Economic Forum. Meanwhile, as the costs of natural resources rise and our population reaches 7 billion, so more business leaders are wondering whether the world can support more and more economic growth. Professor Bendell, explains that management consultants and business schools have largely failed to provide business leaders with insight on these questions, and help them develop appropriate strategies. Throughout 2011 more business thinkers shared initial ideas on creating a new form of capitalism, but were too narrow in their analysis, according to Bendell.

He says we need to uncover our hidden assumptions in order to develop new insights into the strategic implications of our current crises. He describes how the current debate about the merits of economic growth is illustrative of how the wrong assumptions lead to meaningless and unresolvable debates. Professor Bendell explains that there are now four main views about the role of economic growth in society – pro-growth, no-growth, green-growth, and beyond-growth. These positions seem irreconcilable, and yet they are all based on a false assumption that the nature of money, and its mode of creation, is neutral in its effect on society. He explains how better understanding the monetary system could help resolve the impasse on growth, and lead to new approaches from business, even including new business opportunities.

The interview echoes arguments in his 2009 book “The Corporate Responsibility Movement”, where he suggests the fundamental reform of capitalism is now an issue for responsible business leadership. The interview follows up Professor Bendell’s TEDx talk on the hidden cause of the financial crisis, which is rapidly becoming the most watched speech on monetary reform available online. During 2012 Professor Bendell will be helping Griffith Business School develop its research and events to explore redesigning capitalism for sustainable development.

Interview at Griffith University, December 2011

Click here to view the embedded video.

Speech at TEDxTransmedia, September 2011

Click here to view the embedded video.

The winner of the Best Sustainable Luxury Performance in Latin America in the fashion and accessories category was Pachacuti. The British-based company works with indigenous communities in Ecuador to produce fairly traded high-end panama hats. The Paris-based Ainy won the award for beauty company. It works with Latin American producers to sustainably harvest key ingredients. Argentine company Perma Hue won the award in the tourism sector. An eco-resort in Patagonia, Perma Hue seeks to promote the wellbeing of their visitors through re-connecting with nature. In the jewellery sector, a special mention was given to Oro Verde, not as a company, but as a community cooperative, pioneering the production of ethical gold. They work with Afro-Colombian communities to support small-scale alluvial mining operations in the Choco region of Colombia. Oro Verde™ have pioneered an environmentally sustainable, socially responsible form of artisanal mining that seeks to preserve the unique and vital virgin rainforest ecosystems while providing a fair, regular source of income to miners, their families and their communities. Also for work on jewellery, a special mention was made of Ian Doyle, from Lifeworth Consulting, for his research on a new agenda for responsible jewellery, focusing on social development. A spanish version of his report “Uplifting the Earth” was launched at the awards.

Dana Thomas presenting at the awards

The award to Perma Hue was presented by Maria Eugenia Giron, former CEO of Carrera y Carrera, and author of “Inside Luxury”. Award winners received a leaf bowl of Palo Santo wood carved by the Wichi aboriginals of the Argentine North East. The awards were judged by Maria Eugenia Giron (IE Business School), Dana Thomas (best-selling author), Eduardo Escobedo (United Nations, UNCTAD), Summer Rayne Oakes (Source4style),

Awards Judge Maria Eugenia Giron with winners from Perma Hue

The main Argentine newspaper covered the event and the winners. Awards organiser Miguel Angel Gardetti announced that the awards would stay in Argentina for one more year, but extend their reach in nominations and coverage. Further information on the winners, the speakers, the awards, and others working on sustainable luxury, is available at: http://www.authenticluxury.net

Professor Gardetti and Professor Bendell, founders of the awards

Nominations for the 2012 Sustainable Luxury Awards should be sent to www.lujosustentable.org

Some in this space prefer to look away from the growing crises, and busy themselves with a growing market for CSR advisory and reporting in emerging markets or the increasing (yet relatively few) examples social enterprise and ’shared value’ partnerships. But others are thinking about how their work relates to the critical issue of transforming our economic and social systems to be more fair and sustainable, as we discussed in our last review “Capitalism in Question.”

Front cover of Ethical Corporation issue 1

Over the past 16 years working in CSR I’ve sought to encourage and apply a “movement mentality”, being conscious of how we are working on something greater than building the reputation or business of an employer or client. We need to be clear that we are working as a social movement to transform all business and finance. So these times of instability require us to discuss with each other about how to have a far greater systemic effect that we currently have in our silos. They require us to look deeper our own sectors and how they contribute to systemic problems, and could contribute to systemic solutions. For instance, can people in responsible investment continue to consider the realm of high frequency trades and derivatives to be beyond their concern? Why accept impotence if you entered finance to have a greater impact?

Having difficult conversations with colleagues is essential if we are to see deeper change that matches the challenges of economic governance today. Having unusual conversations with those outside our normal professional community is also now critical – listening to critics who are engaged in OccupyWallStreet and other campaigns is key. Learning together in this way, we may discover a more systemic agenda for our work, and begin healing capitalism. For your employees to learn in this way, they will need to get out of the office, and onto the streets. That’s why your company needs to OccupyWallStreet.

My own journey in CSR has led me to an understanding of systemic flaws, some of which are described in my book “The Corporate Responsibility Movement”. One systemic flaw I overlooked for too long is our monetary system. Beneath the financial and environmental crises lies a hidden crisis in the way our money is created. The way private banks create about 97% of our money as debt, out of nothing, and charge interest on it. That monetary policy choice is a cancer at the heart of our economies, meaning that our real economy, and our real wealth found in our environment and communities, is chewed up to service compound interest on perpetual debt. I explained in my TEDx talk in Rome last month that the solutions involve both monetary reform and scaling complementary currencies. Although many of the protesters’ initial demands are fairly mainstream reforms of banking and political process, discussions about the underlying causes of the current crises are happening and new initiatives around monetary reform are springing up.

Initially it may seem difficult to see how companies can usefully engage in these issues. But I believe they can. All forms of business can begin to accept complementary currencies as payment, and offer to pay their employees partly in a complementary currency. Mobile phone companies can help scale complementary currencies through collaborating on sms payment systems. Retail banks can open accounts in complementary currencies. All firms can integrate complementary currencies into their philanthropy and community engagement. Firms can switch their accounts to banks who practice full reserve banking, such as the JAK members bank. Firms can encourage local governments to issue their own mutual credit systems, and for all governments to tax transactions in complementary currencies in such currencies, not national money. Firms can also back campaigns for ending fractional reserve banking, such as Positive Money, in the UK.

Although much can be done, it would be naive to think that all firms and banks can find a win-win approach to monetary reform and monetary alternatives. Some banks will lose out if the right changes are implemented. Their commercial interests are our common enemy. Individuals in such banks could consider to donate their wages to groups campaigning for real change or creating real currency alternatives, like Community Forge. They could also leak documents to help future prosecutions, or expose the attitudes and approaches in their banks. And they could apply for jobs at banks that practice full reserve banking or provide innovative peer-to-peer lending. Movements need people on the inside and outside, but key is that we make sure we are having an impact, not just making excuses.

Responsible companies should back protests for fundamental economic reform, like OccupyWallStreet. They should do this both for commercial reasons, given the economic damage caused by the current financial system. But they should also do it as an expression of the shared concerns of their stakeholders, including their staff and owners.

It is time to cut out the cancerous monetary system. Otherwise we have no chance of healing capitalism, for a fairer and more sustainable way of life.

–

l’ll expand on these themes in my next book “Healing Capitalism” (Bendell and Doyle, 2012 forthcoming Greenleaf Publishing). For now, to learn more, you can read the introduction to Capitalism in Question, and see the TEDx talk on money. I am currently researching how large organisations, including companies, can more effectively engage with complementary currencies. I’d welcome any information on this topic.

8th October 2011, www.twitter.com/jembendell

In the past year the criticism of ESG analysis and ratings increased in the wake of the Deep Water Horizon disaster. Earlier this year I published in the Journal of Corporate Citizenship an analysis of the flaws of ESG, and an article in the magazine Responsible Investor, which ignited some lively debate. One proponent of the existing industry of ESG analysts and retail funds even suggested my argument that a premium could be paid for certified ESG practitioners or products was somehow “Maoist.” That might come as a surprise not only to organic and fairtrade businesses, but also doctors, nurses and most professionals! Rhetoric aside, some in the industry think that ESG research should be left to continue its natural market-driven evolution. Yet such market-evolution is not satisfying the needs of many in the investment chain, and has not created the change many of us hoped for when promoting responsible investment. ESG professionals who are attracted to simplistic market fundamentalism, may be doing so as it aligns with their own choices and sense of self-esteem (what psychologists would call ‘confirmation bias’, and what less kind commentators might call selfish short-sightedness).

Collaborative innovation on market failures is a key aspect of well functioning markets; and in the ESG field, it is becoming clear we need some collaborative innovation, including some useful standardisation on transparency and governance. A substantive piece of research from the thinktank and consulting firm SustainAbility found that asset managers would also prefer more transparency and continuity in the methods of ESG analysts and raters. So, despite some market fundamentalist critiques, there is growing understanding of the need for new standards.

Aside from ESG analysis, questions are also beginning to be raised about the effectiveness of general commitments from asset owners and asset managers to responsible investment, and this may increase the need for credible information and metrics. The UN-backed Principles for Responsible Investment (UNPRI) is gradually increasing its requirements on its members, and increasing transparency on their performance. However, the question remains: how do we know a more responsibly-managed fund when we see one? Or how do we recognise a highly responsible fund manager when we meet one?

In other industry sectors, the past 15 years has witnessed the creation of voluntary standards on environmental, social and governance issues by processes involving stakeholders from civil society, business and government. In particular, the Forest Stewardship Council and Marine Stewardship Council, which I was once involved in, have grown to have global reach, with 11% and 6% of their respective global trades being covered by their certification schemes. A similar multi-stakeholder standards, accreditation and certification system could play a useful role in the standardising and communicating of both ESG analysis and the practice of responsible asset management – an ‘Investment Stewardship Council’. The conformity assessment industry, and related organisations, including ISO and ISEAL, would be key to informing such a process. Given the importance of investment decisions for incentivising or discouraging voluntary corporate responsibility, more clarity in this area will be useful for responsible companies, investors, civil society and governments. An ‘Investment Stewardship Council’ could complement existing initiatives, such as the UNPRI, and provide a means for pioneers of best practices to be rewarded in the marketplace.

For such an initiative to develop will require significant support to convene asset owners and asset managers, on the one hand, and global civil society on the other, to drive forward an agenda that innovative ESG analysts will be able to respond to help develop appropriate standards. For such a process to develop requires 2 challenges to be overcome.

First, is a shift in thinking by people working in “responsible investment” towards understanding that the core of greater responsibility is to be accountable to a wider set of stakeholders than ones owners, shareholders or clients. Paradoxically, many “responsible” fund managers ask their investee firms to be more accountable to society, without questioning the accountability of the ones who invest, the processes through which they assess companies, or their own systems of incentives and governance.

These issues are avoided by focusing on the ideas that considering ESG issues should be limited to either, on the one hand, what is financially smarter investing, or on the other hand, what the ethical preferences of the investor are. Yet might responsible investing really mean investing in ways that are accountable to those affected by that process, particularly those with little power who are impacted a lot? Might responsible investing not simply mean being a smarter investor, or a more caring investor, but mean being more accountable and promoting accountability of investments in general? I first advanced this idea of “capital accountability” in a UN study in 2004, as the natural maturation of the ESG and responsible investment fields, and have been disappointed to see the lasting ethical immaturity of these fields. Indeed, some new initiatives to improve ESG practices are opaque, focused on the client, and do not involve stakeholders, let alone being accountable to stakeholders.

The reason for this lack of awareness of the ethical limitations of current ESG work, could be the lack of civil society campaigning. This is the second difficulty I see in the development of a process to form an ‘Investment Stewardship Council’. The existing Stewardship Councils required active civil society campaigning over many years, which challenged not only the practices but also the ethical assumptions and responses of companies. In the field of finance, we see NGOs and others are quite limited in their analysis and activism on financial issues, despite its importance. Perhaps that is partly due to the brain-drain of business and economics savvy NGO people into the private sector in the past decade. In addition, those remaining in the campaigning NGOs are increasingly sceptical of what voluntary initiatives can achieve. If more ex-bankers joined NGOs with the aim of transforming investment, this could help build the field of professionals who can engage.

Seeing these limitations, we may rely on wise and committed asset owners and their trustees to move this agenda forward, encouraging engagement and dialogue between NGOs and investors on how to improve the voluntary ESG field, in addition to any regulatory innovations needed on mainstream financial and monetary systems. Such asset owners would do well to look at the Global Initiative for Sustainability Ratings, which was launched in June by CERES and the Tellus Institute. These two organisations previously launched the Global Reporting Initiative, that has become the de facto global standard used by 2,000 companies worldwide for corporate reporting on environmental and social performance. The GISR already includes some leading investors and businesses, such as the Calvert Group and Bloomberg. Its success in dealing with the issues I’ve described above may depend on how well it engages a broader range of civil society actors in elaborating standards.

If you have a vocational commitment to transforming finance, business and economy, for positive social and environmental outcomes, I recommend signing up to the Standards and Governance group at The Finance Innovation Lab and also becoming involved in the GISR.

Professor Jem Bendell
www.twitter.com/jembendell

There was a time when the growth of such corporate social responsibility (CSR) standards was hailed by some politicians and business leaders as evidence that governments did not need to intervene in markets for sustainable development. Yet the statistics of success do not justify such a a view, as simply inverting the numbers above, we see that worldwide 89% of timber and 94% of the wild fish catch are not certified as sustainable, while problems with deforestation and fisheries collapse are just two of many global challenges requiring international collaboration by governments.

The publication of the 2011 World Investment Report today shows that many governments have moved well beyond excuses for inaction, and are now actively leveraging private CSR standards to achieve public outcomes. This form of collaborative regulation by governments arises from the dual challenges of needing to make markets more sustainable and socially inclusive, on the one hand, and limited resources for enforcing regulations on the other. In this new policy arena, governments are using systems where businesses pay the costs of their own regulation, through certification schemes.

The UN report comes at an important time when governments are assessing what they can commit to do to promote sustainable development, at the twentieth anniversary of the Rio Earth Summit, coming next year in Rio De Janiero. If 1992 was about governments calling on business and civil society to work together for suatainable development, it appears that Rio 2012 may be about business and civil sociuety calling governments to join in and help to scale the approachges they have pioneered over the last 20 years.

As someone who heeded the original call of Rio to for collaborative innovation towards sustainable development, and had the privilege of working on the early phases of both the FSC and MSC, Im delighted to see this new agenda emerge. Its been a pleasure to work with UNCTAD on the CSR sections of this years World Investment Report.

Perhaps we are witnessing the birth of a new policy agenda on business regulation worldwide, where governments move beyond traditional hands-on or hands-off approaches to markets, and instead seek to nudge business towards more responsible and sustainable behaviours. As the UNCTAD report points out, in this new era we must remember to promote the effectiveness and accountability of any governance mechanisms. Only if these new approaches help empower those affected by trade and industry and have little voice at present, will they achieve a sustainable scaleable place in our global economy.

You can download section 3E of the World Investment Report 2011.

Professor Jem Bendell is director of Lifeworth Consulting. His last book was “The Corporate Responsibility Movement”

www.twitter.com/jembendell

One reason for the lack of comprehensive action from prestigious brands is identified as the absence of a positive vision for the ethical role of the jewellery industry. “Although a decade of effort to reduce conflict and environmental damage from jewellery supply chains has curbed some of the worst practices, it has failed to identify an aspirational role for jewellery. Today, the efforts of responsible jewellery pioneers are outlining a vision of ethical excellence,” says report co-author Dr. Jem Bendell. “By comparing the actions of ten luxury brands with this new vision, the report finds luxury jewellery firms risk being left behind in an increasingly aspirational marketplace,” he says.

The report, entitled Uplifting the Earth: the ethical performance of luxury jewellery brands, provides guidance on how brands can move beyond a negative risk management approach to their ethical considerations, and instead use social and environmental issues as a creative inspiration and collaborate to make jewellery a positive force for all involved. “More people recognise something is beautiful if it has been made beautifully, which involves all aspects of its creation. Some in the industry understand that, and need help to get buy-in from their colleagues. This report is for them,” explains report co-author Ian Doyle, of Lifeworth Consulting.

Interviews with international experts identified new brands that embody a new approach to jewellery, including CRED Jewellery, Fifi Bijoux, JEL and Brilliant Earth. Marc Choyt, of Reflective Images Inc and co-founder of Fair Jewelry Action says “The big brands must get their act together if they are not going to lose customers to the companies that really care. They can’t hide behind vague statements or the Kimberley Process any more, because others are showing what’s possible. We can make jewellery that makes a positive difference to the world.”

Uplifting the Earth follows up Professor Bendell’s study for WWF-UK called Deeper Luxury which was widely acknowledged to have inspired the luxury industry to increase efforts on social, environmental and ethical performance.

In the foreword, Maria Eugenia Giron, former CEO of Carrera y Carrera, writes that the report “is an invaluable contribution for wise, forward-thinking executives in our evolving industry.”

The brands benchmarked in the report are: Boucheron, Bulgari, Buccellati, Cartier, Chanel, Chopard, Graff Diamonds, Harry Winston, Piaget and Van Cleef & Arpels.

The report can be downloaded for free here.

A spanish version of the report can be downloaded from http://www.lujosustentable.org by clicking on “reportes”.

Questions about the report should be directed to Ian Doyle (Email: idoyle at lifeworth.com)

From “Report Unveils Ethical Excellence in Luxury Jewellery: Press release, Lifeworth Consulting and Fair Jewelry Action Geneva, June 30th 2011″