To us, sustainability means that everyone thrives in harmony with the biosphere and future generations. That does not mean maintaining or spreading a particular way of life, but a transition from behaviours and systems that are destructive, towards those that restore the environment and support individual rights, wellbeing, and community. It implies a systemic shift; large numbers of persons and organisations acting in a significantly different way. A transition to sustainability involves promoting ecological integrity, collective wellbeing, real democracy, human rights, support for diversity, economic fairness, community resilience, a culture of compassion, inquiry, non-violence to all life and appreciation of beauty.

Studies of positive transformations suggest this shift will require interacting cultural, economic, technological, behavioural, political and institutional developments at multiple levels. Leaders during social transformations appear to have transcended a concern for self, yet sufficiently sustained their wellbeing, and empowered others. Therefore our work seeks to connect the systemic and the personal, and mobilise insights from diverse schools of thought on how transformations occur. We see the transition to a sustainable way of life as an adventure, which I explained on film is a theme that frames much of our work.

Research at IFLAS will focus on actionable knowledge, action research, combining diverse disciplines, linking local with global, and learning from old and new teachings that arise from diverse cultural settings. I describe the research areas in a brief video. I am currently welcoming inquiries about potential PhD research. There is one opportunity for receiving a bursary to cover fees.

Our education will draw on our heritage as a place of experiential learning for over a century. We currently run an MBA in Leadership and Sustainability.

A sustainability leaders’ summit in July will mark the official launch of IFLAS, but the first open event is on March 11th, where we will train people on how to launch and scale a local currency. Our website goes live at the end of January.

So what am I letting go?

In the coming months, the Lifeworth jobs portal will be merged with Globethics.net who will be able to develop it further and reach a wider audience. Projects at Lifeworth Consulting will now be managed by my brilliant and steadfast colleague Ian Doyle.

As the year comes to an end, try letting go.

Unless you work in a circus.

Or especially if you work in a circus?

Cheers, Jem
Professor Jem Bendell
Director, Institute for Leadership and Sustainability (IFLAS)
University of Cumbria, UK
Charlotte Mason Building
Rydal Road, Ambleside
LA22 9BB, UK

http://www.cumbria.ac.uk/iflas / http://www.jembendell.com / http://twitter.com/jembendell / http://weibo.com/jembendell

Click here to view the embedded video.

Just over five years ago I began working on the luxury industry.  I thought, why cant these elite brands not excel in social and environmental performance? I researched, wrote and produced the report Deeper Luxury for WWF-UK, and it triggered a bit of a furore in the fashion press and wider luxury industry (about 8000 sites now link to the report). 5 years on, I’ve helped some luxury companies with their social and environmental impacts. But I havent seen much change. Some large firms like PPR have embraced the agenda, although we wait in anticipation for more results, in terms of positive social and environmental outcomes. In the 5 years, what inspired me the most were the entrepreneurs I met. People who were creating businesses to address social and environmental problems, and targetting the luxury segment as a way to do that. I began to realise something might be in this – that these entrepreneurs might be shaping the future of luxury, and that they might be revealing a new way we can engage in social change. In the new study, I profile sustainable luxury firms Elvis and Kresse, Tesla Motors, Shokay, Source4Style, Rags2Riches, Positive Luxury, Timothy Han and Nue Luxe… It’s called “Elegant Disruption: How luxury and society can shape each-other for good”. It took about a year to write, as it involved a lot of conversations to understand just what the potential of luxury might be to influence social change. Ill be presenting it at conferences in Brisbane and Barcelona in the coming weeks.

Abstract, August 2012:

From http://www.griffith.edu.au/business-government/asia-pacific-centre-for-sustainable-enterprise/publications/working-paper-series/issue-9
This paper outlines the contemporary luxury sector, showing it is global, thriving and influential. It shows how creative destruction is typical in most industry sectors, including luxury, and how disruptive innovation by entrepreneurs is key to that process. It proposes that the current time is potentially disruptive for incumbent luxury brands and groups, due to five key trends that are beginning to re-frame the markets that luxury brands sell to. Sustainable luxury entrepreneurs from USA, UK, Philippines, India, Argentina, China and Hong Kong are profiled and described as  pursuing “elegant disruption”: a well-designed intervention in markets that both uses and affects aspirations in ways that change patterns of consumption, production or exchange, for a positive societal outcome. The paper reviews the response of mainstream luxury brands to the sustainability agenda, proposing some possible reasons why they appear to be encumbered in embracing this agenda fully. Some of the paradoxes in the notion of “sustainable luxury” are described, in order to draw implications for both the luxury industry and people interested in positive social change. The paper draws upon the authors five years of interaction with the luxury industry on sustainability issues, and is therefore written as a “first person inquiry” and draws upon principles of “appreciative inquiry” in documenting the breakthrough approaches of some sustainable luxury entrepreneurs.

In the coming months, Lifeworth, in association with the world’s leading provider of free open source software for community currencies, is co-running workshops at major sustainability events in Sweden and Greece, and lecturing on this topic in Australia. Scroll down to see details on the events nearest to you. A crisis is an opportunity for a new system to emerge, if we make it so!

Sweden

At the Future Perfect festival in Stockholm, world-leaders in sustainable enterprise, science, design, and media will gather at a world-class summer music festival on 23-26 August.

At Future Perfect, we (Lifeworth Consulting) are hosting a panel on monetary reforms and innovations for sustainability, and a workshop for executives who want to start, scale or participate in alternative means of exchange.

Panel: “Currencies of Transition: monetary reforms and innovations for sustainability.”

Chair: Professor Jem Bendell (Lifeworth Consulting, Community Forge and Griffith Business School)
Ben Dyson, director of Positive Money, which campaigns for a systemic solution to monetary crises, by full reserve banking.
Josh Ryan Collins, New Economics Foundation, the Brixton Pound and co-author of “Where does money come from?”
Lynnea Bylund, Board Member, Ormita, the international business barter network.
Matthew Slater, Board Member, Community Forge, a leading provider of open source software for community currencies, and editor of Community Currency magazine.

The panel will address the questions: Is a fair and sustainable economy possible with our debt-driven money system? If not, what needs to change? What is being done already? What can we do to get involved, personally and professionally? How can we make this a movement? What mistakes can we avoid?

Workshop: “How alternative exchange systems work and how to get started”
Trainers: Professor Jem Bendell and Matthew Slater
The trainers work with Community Forge, which provides free open source software for community currencies. This video explains why, what and how Community Forge operates.

To book your tickets to the festival, visit http://www.futureperfect.se

Greece

In Greece right now there is an exciting air of change and thirst for new ideas and innovations. On the 10th October Lifeworth’s Jem Bendell will co-lead a half day seminar with Matthew Slater of CommunityForge.net on creating and participating in alternative exchange systems and community currencies. They will be joined by Greeks who are pioneering these solutions to the current crisis. On the 11th, Matthew Slater will offer a software training for those wanting to implement a local currency.

The seminars are part of a 2 week sustainable business summit to launch the new European Sustainability Academy in Crete. Information on the final days of the summit, including these workshops on alternative exchange systems, is here. Contact the European Sustainability Academy for more information or to book.

Australia

“Currencies for the Sustainability Transition” is a speech that Professor Jem Bendell will give in Brisbane at the Necessary Transition Conference at Griffith Business School, on the 26th-28th September. Contact the centre for more information on tickets.

As a meeting place of leaders in business and government, the WEF seemed the ideal place to share ideas on how to tackle the jobs crisis. Many of the discussions highlighted small things that businesses can do, such as helping promote employability through funding career-relevant education, or investing in internet start-ups that provide new job opportunities. They also discussed how governments could invest more in infrastructure, education and look again at labour mobility. However, all these issues are secondary to the prime role of our banking system in determining levels of potential employment. As money is issued as debt, if the banks won’t lend to businesses in the real economy, particularly small and medium sized businesses who provide the majority of jobs in any society, then as debts are paid back, so the amount of currency in circulation shrinks. The first key function of a currency, any currency, is to help connect assets, including people’s time, with needs. If a currency becomes scarce in an economy, then there is less ability for exchange. That means needs go unmet, and assets go underutilised. It’s called unemployment.

This critical factor was mentioned at the WEF events in passing, for instance when a finance minister from a North African nation called for more regulations on the percentage of bank lending that must go to small and medium sized enterprises. However, I did not hear discussion of how governments around the world have previously addressed this problem, for instance in East Asia, where 5 year plans often included controls on bank lending, to guide lending to the real economy and job creation, rather than lending for consumer debt and speculative activities. Indeed, I heard from a senior official in Thailand’s planning ministry that credit controls had been dropped from the new 5 year plan. This indicates that the mainstream discourse on the job crisis needs to shift, and business leaders from the real economy, could play a role in that, given that job creation is a win-win for business and society.

For business leaders to play a role in addressing the challenge, the first step is to gain insight into the most significant levers of change, and escape untenable myths about the key causes of unemployment. Five myths I heard from delegates in Davos, Bangkok and Istanbul about the main causes of the jobs crisis, that business leaders need to escape from are:

Myth 1: “Unemployment is due to falling demand.”

Are people’s needs really falling? Or just the amount of money in circulation to employ people/assets to meet those needs? Clearly, given the levels of human need in the world today, its the latter.

Myth 2: “Unemployment is due to technology displacing human labour.”

Could we not design systems of ownership and revenue distribution so that the income from technology frees us to work creatively and caringly for each other? How can we govern technology to release us to a world of service, not a life of redundancy?

Myth 3: “Unemployment is due to the cost of hiring and firing.”

Why then do some countries with high wages and labour standards, like Scandinavia, have less % unemployment? Where would competition between nations to lower costs of hiring and firing lead us? What will competition between nations for the same number of jobs worldwide lead to the total global level of unemployed? Clearly the loosening of employment law is not a systemic solution.

Myth 4: “Unemployment is due to a lack of skills and appetite for the new types of work.”

The world has more skilled labour than ever before, and more labour mobility than ever before, and many people with Masters degrees can’t get a job. The internet means that people can access knowledge more easily than ever before. Education is important, and a lack of education may be a problem for specific groups, but is not a critical factor in mass unemployment at present.

Myth 5: “Unemployment is due to the option to claim benefits.”

Why then was the existence of benefits not keeping people out of the workforce before the recession? Why do some countries with the most supportive welfare states, like Scandinavia, have less % unemployment?

These myths arise from a general lack of understanding about the monetary system. Once we understand that the availability of a currency in an economy determines employment levels we must then look at the monetary system. Once we look at the monetary system we must question why governments have chosen to create a system where 97% of our money is created by private banks as debt with interest so that governments cant spend on public needs without taxing us to pay interest to banks. Rather than maintaining the myth that the financial markets are like the tides or the weather, its time to redesign these entirely man-made systems, to enable currencies to be in fair, stable, sufficient and targeted supply, for job creation. To tackle jobs crisis we need to:

1. wind down non-reserve banking and replace private bank credit creation with government issuance of money, according to strict rules enshrined in law, to avoid inflation. In this situation governments could create credit to lend at low rates to banks who would then lend it to businesses.
2. regulate bank lending and leverage to ensure a large share of lending goes into the real economy and not into consumer debt or speculation.
3. create complementary currencies or exchange systems for communities and businesses, some of which could be issued or backed by local governments.

In my video keynote at the Rebuild21 conference in Copenhagen last week I went into some detail on the monetary system and what we need to do about it, as responsible professionals working towards sustainable development. Then at the World Economic Forum in Istanbul, on video, I explained further how we need to work on monetary reform in order to solve the global jobs crisis.

Once these reforms and innovations occur then governments and companies in the real economy will be far better placed to invest in the necessary transition to a low carbon and resource efficient economy. As Ida Auken, the Environment Minister of Denmark explained at the WEF in Istanbul, there will be tens of millions of jobs created in the green economy of enterprises that deliver more efficient use of resources. Government needs to guide businesses in that transition, but if its only tools are bonds, even eurobonds, then that means very limited spending, higher taxes for future generations, and greater resources for global banking to invest in what it decides will deliver the highest returns. If anything is learned from the financial crisis is that the power of global banking is out of hand.

Folks, in the 5 years since the beginning of the credit crunch, it is now clear that not enough politicians or civil servants know what to do, or are willing to take leadership on the root causes of the financial crisis. In this situation, we need more statesmanship from business leaders from the real economy, to help shift the policy debate onto real solutions. In so doing, as business leaders you will be protecting your own businesses from the disruptive effects of recession. There is also a case for institutional investors to engage in this issue as well, as the long term interests of savers are being risked by the current monetary system.

To sum up: how can your company help create more jobs? By getting involved in monetary reform efforts, and alternative exchange systems, including business barter networks, and the fledgling self-issued credit systems that people like my colleagues are working on. It might be easier to parrot the myths I mentioned above, but it wouldn’t be responsible, or effective.

Professor Jem Bendell

Founder, Lifeworth Consulting, Young Global Leader, World Economic Forum.

June 10th, 2012.

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

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

Follow me on twitter?

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.

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