Foreword

I'm told that 2005 was a good year for wine. I’d say it’s also been a good year for maturing the debate about the role of corporations in society.

The bitter taste of Enron, Parmalat, and other corporate scandals, and the strong flavour of popular systemic critiques in the book No Logo and the film The Corporation have fermented more creative thinking on how to resolve the clash between financial and social pressures on companies.

For instance, in 2005 the oil giant BP began teaching its customers about their carbon footprints whilst at the same time calling on government and other companies to do more to solve climate change and support those companies that are taking action. Major financial institutions like HSBC, Allianz and others have been calling on their peers to engage with sustainability.

At events throughout the year, such as the EU corporate responsibility conference, the clarion call is now much the same from NGOs, investors and companies - "it's the market stupid". Thoughtful people in all sectors recognise the need to change the frameworks within which business operates, in order to make responsible and sustainable activities more financially viable. Despite this emerging consensus many Governments seem deaf to it and the implications for public policy, and fearful to act in case they upset their friends in stale trade associations like the Confederation of British Industry.

Some will remain cynical of corporate motives but others detect a change in the old 'regulate or deregulate' debate. Sophisticated companies are recognising that they cannot shift their business models to more sustainable ones without the support of government, consumers and investors. This Annual Review describes how the cutting edge of corporate citizenship is now about working with those three groups to engineer the business case for sustainability and create new market opportunities.

True leadership will come from refocusing efforts from communicating in sustainability reports read only by specialists, to speaking the right language to these key audiences. It will come through transparent and accountable third-generation lobbying1 of governments, encouraging them to re-engage and recognise the need to step in to address market failures. It will come from empowering consumers to become part of the shift to sustainable consumption (and thus sustainable production) through responsible marketing and advertising. And it will come from innovative ways to engage with investors so that they give companies more free rein to act in the longer-term interests of people and planet2. This challenge requires professionals in all sectors to see beyond the walls of their organisations and work together on generating systemic change. In this review Jem Bendell highlights how some executives are beginning to express such 'transcending leadership'.

The Review also describes how many people and organisations are not transcending narrow self-interests, being trapped in cellars of separative thinking and short-termism. If Milton Freedman was right that companies are unable to be moral, then we need to reinvent them and the rules that define them so that they can be. We would do well to revisit Adam Smith’s sentiments on morals and markets to rethink what it really is we ultimately want - increased economic growth or maximum wellbeing? If the latter is the case then also need to question whether our current political and economic systems and their operators are up to the job. As Bendell says in this Review "if we want to change the way business does business, we have to change the way money makes money". As such, working to create greater 'capital accountability' must become a central part of future efforts at systemic change, within the corporate responsibility arena.

Transforming capitalism to a system that enables prosperity in harmony with eachother and the planet is the greatest challenge of our time. Today, companies are the most pervasive and persuasive communicators and have a key role to play in this great transition towards a sustainable society. Corporate executives urgently need to innovate in how they use their influence and show moral leadership. The stories and analysis in this Review will hopefully encourage us all to engage with this task with greater maturity and, perhaps, a youthful fizz. After all, can there be anything more invigorating than playing a part in the most important challenge of our time?

Jules Peck

Global Policy Advisor

WWF

www.wwf.org.uk

contents © Greenleaf Publishing, apart from the Introduction © jem bendell, 2006. site by waywardmedia.com