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

With Fair Jewelry Action we recently followed up the report with “Uplifting the Earth” which maps out a progressive agenda for the jewellery industry. Once again, we mostly heard grumbles from incumbent brands about our analysis, while it is the newer, smaller brands who are leading the way with innovations in responsible sourcing. A good review of the report was written in the main industry newsletter, which shows there is some appetite for a transformative, not herd, mentality on these issues.

So while incumbent executives grumble from their comfortable cages, the future is for creative sustainable entrepreneurs like Kresse. Indeed, it’s time for more “disruptive luxury”. Which is the name of my talk at the launch of the world’s first sustainable luxury awards, in Buenos Aires this coming November. Look them up if you are pioneering sustainable and want to be considered for these landmark awards.

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″

There is a whole bunch of other things that are important and help comprise a great character (born leaders?), or a skilled professional (trained leaders?), but here are the 5 key attributes I identified. Leadership involves:

* Inspiring people to believe in their greater selves,
* Showing them a pathway for enacting that,
* Encouraging them to participate in a community in the process,
* Practically helping them along the way, and then,
* Reminding them of their commitment.

Leadership is expressed, not held. With these attributes in mind, no one is a leader per se, but anyone can exhibit leadership. That is because leadership exists in relation to others and contexts.

I’ll expand a bit… Inspiring people to believe in their greater selves is key because its the most incredible thing you can do for someone, to unleash their hopes and dreams and sense of dignity and ability. Usually the result of encouraging someone to think of their greater or higher self is for them to connect to a purpose beyond their immediate worries or insecurities, and be an agent for something useful in the world. It is deep and lasting impact, and important at an existential level.

Showing them a pathway for enacting that is important, as unless people can relate their aspirations to their immediate predicament, this can lead to frustration and disillusionment. By providing a practical example of how to take a first step, this makes an abstract idea seem tangible.

Encouraging them to participate in a community is important, as it is through engaging others that we can achieve results, learning what we bring, and how we are valued, when acting from our higher aims and sense of purpose.

Practically helping them along the way is important, as true leadership needs to involve some substantive contribution rather than simply exhortation and advice. Introducing people to people, providing them with new responsibilities or opportunities for experiences and training, and defending them when they stumble while advising them on what to do as a result, are all important if the initial inspiration is to stabilise into a new way of being.

Reminding them of their commitment is key. I almost said “holding people accountable” but that sounds too much like a positional role. Instead, what’s important is that if someone is impacted positively by your actions and advice, and you see them act differently as a result, then you have a bond. They will remember. In my own experience I have often belittled the impact I’ve had on others, not wanting to take things too seriously or create an impression of hierarchy. This means I’ve not accepted this aspect of leadership and perhaps this means that Ive missed the opportunity to play that useful role for people… to help them reflect on whether they are living their commitments or not today. Perhaps it takes a maturity that I’ve not had, to take on all this final aspect of leadership, which assumes an “elder” role… To do it in a way that is also humble, and still playful, could be my personal holy grail.

After lunch I looked back at some of the literature on leadership and it appears much discussion on leadership does not emphasise these attributes. Could it be our somewhat individualist, egotistical and patriarchal culture means we focus on powerful or charismatic individuals? Or that our organisation-centric and hierarchical forms of work mean we focus on those people who best get people to serve organisations, rather than their own higher callings?

Perhaps. And these limitations also then play out in discussions of what “responsible” leadership might be. Many speak of responsible leadership in terms of an individual being a fearless do-gooder confident in their own moral frameworks or, more introspectively, seeking fulfilment beyond accomplishment or, more simply, looking after their immediate subordinates.

I’ll venture that ‘responsible leadership’ is the expression of the five relational qualities I identified above in ways where the intention and effect is to help people who will be influenced as a result. i.e. if leadership concerns ones immediate relations with others, responsible leadership concerns one’s wider relations with communities influenced by those being “led”.

Sometimes a focus on responsible leadership can distract us from systemic issues. As if individual leaders acting in the public interest could change the world despite ingrained racism and sexism, structured inequality, corporate-owned mass media, consumerism, compound interest and financial speculation (to list some of my pet peeves). So its important when thinking about responsible leadership to think in movements and systems. Therefore our key interest, research, education, advice and advocacy should be about how we can cultivate such leadership in everyone, and what aspects of our culture, politics, economics and organisations undermine these qualities of leadership that anyone could naturally express!

In outlining these attributes of leadership I’ve probably been inadvertently rehearsing a leadership theory found in a 1950s management text or 4th century BC spiritual text. If so, please advise, as I could then cite the ideas of a known “leader” who defined leadership this way. As Im involved in the Globally Responsible Leadership Initiative (GRLI.org) I could then also feed this stuff into their work in a way that could be valued academically (as you dont get points for a bad memory freeing up mental space for a new schema!).

Or if these are new ideas and we need a new management fad name for them, tweet me a suggestion (@jembendell http://twitter.com/jembendell). Perhaps Relational Leadership? Connective Leadership?

Thanks,
Jem Bendell

When the concept of business education, or management science, first developed, it was largely with progressive and egalitarian intentions. By outlining the skills that could be learned and mastered by anyone with the right talent and application, it challenged the assumption that future bosses would always be the sons of the former bosses. There was a meritocratic thrust, that businesses are rational enterprises that can be run by anyone with the relevant skills, from whatever social background. That original intention is not often acknowledged today, as more business schools worldwide aspire to be considered elite institutions embedded in elite social, economic and political circles. From Singapore to Sydney, people drop the names of Harvard Business School, INSEAD and others with either reverence or pride. That elitism is both an opportunity and a challenge for how they play a positive role in social progress. As educational institutions, with many charitable foundations, or government owned, or partly government funded, how they make a positive difference in society is a central question. In my ten year association with business schools I have witnessed how their efforts on social responsibility are largely focused on the content of teaching and research, or adopting some environmental measures for internal operations, rather than a full embrace of social purpose relevant for today’s challenges and applied to all organisational functions.

A responsible business school makes social progress its central purpose, through enabling students and staff to contribute significantly to that goal. It involves the integration of social, environmental and ethical considerations into the core strategy and operations of the school, and collaboration to create a supportive context for such integration to be sustainable in the long term. Aspen Institute’s ‘Beyond Grey Pinstripes’ survey and ranking has been useful in encouraging change, but it focuses only on the social, environmental and ethical content of teaching and research, rather than a broader agenda. Although the UN Principles for Responsible Management Education (UNPRME) have played a useful role in internationalising the conversation amongst university staff, they do not provide a management framework for responsible business schools. It is promising, therefore, that the hosts of those principles, the United Nations Global Compact, are collaborating with the World Business School Council for Sustainable Business and The Globally Responsible Leadership Initiative (GRLI) to prepare a high level report on transforming business education. To help, in a forthcoming study in the Journal of Corporate Citizenship, I identified sixteen steps for responsible business schools to take. These came from my experience of advising the Pro Vice Chancellor of Griffith Business School (GBS) on their sustainability strategy from 2007-2009, participation in related UNPRME and GRLI working groups, and insights from outside the university sector on how for-profit and not-for-profit organisations have enhanced their accountability and sustainability in recent years.

Sixteen important steps for responsible business schools are:

1) Clarify the social purpose of the institution and what it means for today’s context, and incorporate that into organisational mission and governance;
2) Upgrade existing curricula and pedagogy to incorporate the social purpose of the institution, such as teaching on social, environmental, and ethical issues;
3) Create new curricula and executive courses with content and pedagogy aligned to the social purpose of the institution;
4) Encourage the research projects of existing faculty and students to include more social, environmental and ethical themes;
5) Encourage and fund new action-oriented rather than theory-driven research;
6) Incorporate social, environmental or ethical expertise into recruitment of faculty and research students;
7) Upgrade admissions procedures, fee structures, scholarships, advertising and outreach, to improve diversity of students and their ability to do progressive work upon graduating;
8 ) Support students and alumni to organise to promote learning and action on social, environmental or ethical issues;
9) Incorporate consideration of social, environmental, and ethical issues into the operations of the organisation (i.e. practices at work), including core issues such as executive compensation or student welfare;
10) Encourage an organisational learning environment by requiring departments put forward academics to lead internal staff training on the social, environmental or ethical dimensions of the organisational functions they are experts in;
11) Host events and produce newsworthy reports or papers that stimulate public and professional discussion on social, environmental and ethical issues;
12) Encourage and support staff to engage helpfully with issues affecting the local community, using their particular talents, either as volunteers or in their work for the school;
13) Seek and support collaboration outside the organisation to align external factors such as institution and staff rankings, accreditations, awards, and funding, as well market demand, with these steps;
14) Develop policies and procedures for private donations or consulting fees to be received transparently and in-line with the mission of the organisation and without threatening the success of the organisation’s other activities;
15) Align incentives within the organisation with all these steps, including reducing perverse incentives;
16) Communicate internally and externally on implementation of these steps, using (and perhaps developing) relevant benchmarks, as well as providing mechanisms for stakeholder feedback on progress.

These steps cover those areas of activity that have important lasting effects on the social role of business schools. I have seen some of the steps taken at different business schools, but not yet all of the steps taken at one.

Given the elitism in the business school sector, their responses to social inequality have been particularly problematic, with public rows in both the UK and France in recent years. A business school’s response to social inequality, and to finding a progressive role in social mobility, is a litmus test for whether a school see corporate responsibility and sustainability as, on the one hand, a new management fad, teaching product, or marketing opportunity, or on the other, an aspect of the very purpose of the school. With that in mind, for the Journal of Corporate Citizenship, with my colleague Ian Doyle at Lifeworth Consulting, we looked for innovations on social mobility from business schools worldwide.

In France, one business school that has been actively trying to address social justice issues is Bordeaux Management School (BEM). A member of GRLI, BEM claims to be the first French business school to integrate civic service into its management courses. It has a partnership with UNIS-CITE, a non-governmental organisation dedicated to promoting the development of civil society in France, with specific goals to encourage citizen responsibility and engagement, fight against exclusion to reinforce social cohesion and mobilise youth on social and environmental issues. The partnership allows students to participate in the management of a civic project for 6-9 months on territorial and social development and is an integral part of curriculum. Not only does the programme try to apply management education to social issues, it also allows students to have a more systemic view of society in working with local authorities.

BEM has also recognised that access to business schools needs to go further than scholarships for those students that show potential. As part of democratising access to the school, since 2006 it has partnerships with two local high schools whereby university undergraduates tutor socially or geographically under-privileged students in the schools. The goal is to support and provide guidance in terms of pupils’ professional ambitions, and the direction necessary to access to higher education courses whilst removing some of the socio-cultural barriers that impede such access. As well as providing financial access to BEM through a solidarity fund and thus better access to opportunities, the personalised nature of the process means that it is adapted to the needs of student in question, thus trying to address other inequality barriers that may impact upon the life of the student.

Another member of the GRLI is the Welingkar Institute of Management Development & Research in India, whose leadership programme, Project Netrutva, aims to provide social-economic empowerment to under-privileged individuals through management education. By integrating disadvantaged students that were unable to complete their school education into a management course at Welingkar, such students are encouraged to complete their higher learning, potentially enabling greater social mobility and professional development.

To facilitate the process, the school needed to think about the practical aspects of incorporating students with lower educational qualifications into the programme. A first step was to pay the selected students a stipend to replace any lost income so that they could focus on their studies. Another step was to reduce the knowledge divide between the students that had passed through the usual entry criteria. Rather than marginalising the disadvantaged students, Welingkar inaugurated a participative approach to the programme so that peers take responsibility for the development of the students needing to catch-up.

Perhaps the leading social innovation in university education comes from South Africa. The Community Individual Development Association (CIDA) University in Johannesburg aims to provide education in business administration for the rural poor with a view to transform its students into leaders of their communities in turn advancing the socio-economic transformation of the country and the broader region. To do this, it focuses on four building blocks: being holistically centred, by going beyond the technical competencies related to business; low-cost; relevant to the different segments of society including business and government; and encouraging student resourcefulness to study. The school recognises the challenging backgrounds of students including former street-kids, students from geographically isolated areas, orphans and students whose parents have criminal records, and has put in place a life skills certificate as a part of the programme.

These schools are expanding the notion of merit so that it is measured according to one’s contribution to society, rather than one’s place in it.

For more universities and business schools to act on this social agenda in a comprehensive fashion will require reconsidering some core operations and system conditions. Two key issues are school finances and school rankings. Heads of business schools have warned of the financial challenge posed by a lack of endowments and reductions in government funding, due to fiscal tightening. They say this is leading them to raise fees, which will not help them in their social role. However, one answer lies close to home – their own salaries. A New York Times article highlighted how university chancellor compensation is starting to resemble the trends in corporate executive pay. Ms Barbara Bowen, president of the Professional Staff Congress, the faculty and staff union for the City University of New York CUNY has stated, ‘Lavish salaries for top management are unfortunately standard in American higher education…But what’s also standard is underfinancing of the core activity of the university, which is instruction. The gap between the chancellor’s salary [and that of lecturers] , or the standard of living of many of our students and their families, is huge.’ A report by the Guardian newspaper illustrated a similar trend in the United Kingdom where some vice-chancellors had seen their annual earnings double or even triple over the last decade compared with a 45.7% rise for the same period for average higher education teaching professionals. Unless senior executives in business schools curb their pay, then expressions of commitment to social inclusion, or explanations for raising fees in the name of quality, may seem superficial.

Business school heads also need to collectively call for a change in the way rankings are produced. Currently one of the key indicators of the success of a business school is the students’ salary upon leaving the institution. If this remains, then initiatives such as encouraging graduates into social enterprise or public service, will always remain marginal. Ranking systems need to measure the social utility of projects and careers, rather than equating success with monetary worth. Although the rankings assume salary to be a key interest of prospective students, it could be that the status of the business school i.e. its ranking, is of key interest, and thus the rankings have the opportunity to encourage not thwart the social purpose of business schools

The challenge of transforming management education is at the same time highly systemic, broadly institutional, and deeply personal. Prestigious universities may be able to attract millions from donors for chairs and centres in social enterprise or inclusive business, yet our brief review found that the real innovations in education are occurring amongst people to whom the struggle and creativity of social change is a lived experience, not just a topic of study. Humility and exchange are the parents of new insight. Herein lies perhaps the greatest challenge for elite institutions – to overcome the pride of a high status, or the fear of losing such status. Only then will they authentically embrace a public purpose and take risks to lead, rather than just reacting to public pressure or government legislation. As Mark Drewell, Chief Executive of the GRLI Foundation, explained: “It is about moving from being the best in the world to an era where business success is predicated on being the best for the world.”

This blog is based on research for a forthcoming article in issue 41 of the Journal of Corporate Citzenship (Doyle, Visser and Bendell (2011). References can be found in that article. Jem Bendell is an Adjunct Associate Professor with GBS, and Distinguished Visiting Professor at IE Business School. Http://www.twitter.com/jembendell