Cloud Citizen

The two big claims that undermine the credibility of David Jones’ statements on the environment

2011-02-02T13:29:17-08:00

It isn’t often enough that corporations get picked up and ridiculed for the rubbish they perpetuate in their public relations spin on the environment. But we can’t let what we have here pass without comment, simply because we are building before your eyes the very evidence that makes a mockery of David Jones’ claims on its environmental stance. Indeed, it is the very reason for this blog.

Cloud Citizen’s favourite sustainability academic, Emeritus Professor Dexter Dunphy of University of Technology Sydney, is the original creator of what we describe as the Dunphy Scale. It depicts six progressive stages of corporate evolution on the environment, of which we tend to use five, but third of these is the “compliance” mentality of most commercial organisations.

Compliance is the stage at which companies will do as much as it takes to stay on the right side of the law on their environmental stance, avoiding the possibility of any directors being carted off to jail, but little more. At this stage, companies will typically over-claim on their environmental records to keep unquestioning customers and shareholders happy.

Compliance is the stage at which David Jones exists: its management knows exactly how limited its undertakings are and may be hoping its shareholders aren’t alerted to its real record.

Where it over-claims is in its annual report, and these words may come back to haunt it.

It is not possible while still aiming at growth based on selling more of the same goods for a department store to become a sustainable operation, and anyone who tells you it is will likely be working in the public relations operation of a department store. So let’s pick this apart, because there are two key statements which undermine the credibility of all else it claims.

Let’s begin with the summary to the environment section on page 35 of the David Jones 2010 annual report. It says:

Over the past year, David Jones completed development of its whole-of-business environment strategy … David Jones has also made considerable improvement in relation to environmental disclosure through FY2010.

The lie is that David Jones’ business lies in trading the branded goods of others. That is “the business”. It is where its revenue and its motivation lies. It exists for no other reason. It does not exist to employ people, to be a good citizen or to run any other kind of supporting operation. These are only needed to keep the money rolling in.

A whole-of-business strategy on the environment and the company’s impacts must embrace accountability for the environmental impacts throughout each of the supply chains of each of the products it sells from each of its suppliers. We are doing the research: we know there is no whole-of-business strategy, unless it is to be hands-off. But its message implies the opposite.

The implied strategy can’t possibly exist until its suppliers undertake to act otherwise on the environment and climate, and we can see already that almost none is. Few are even trying to over-claim for their achievements, and that makes for a pretty reliable barometer.

If David Jones has “also made considerable improvement in relation to environmental disclosure through FY2010”, it hasn’t moved far at all. Of course, if it were that the whole-of-business environment strategy was to do nothing, that would make a mockery of the latter part of the above statement.

This is more likely the strategy: comply, over-claim, under-deliver and hope none of the shareholders, media or public is smart enough to pick it up.

The next can be found under environmental management in section three, found on page 33:

David Jones’ key focus in relation to environmental management is on those areas where the business has the ability to influence environmental outcomes …

It goes on to isolate “energy, waste management, packaging, transport, travel, water and refrigerant gases” as being areas in which it “is obligated to disclose its impacts”.

If we take the fact that a meaningful whole-of-business strategy is absent, then this second statement must also be untrue, simply because David Jones has absolute discretion over its stockholdings of each and every product it sells. Unless caught in a contractual obligation to a supplier, there is nothing it must stock – unless it chooses to do so.

The company can not eschew its responsibilities and is therefore completely culpable for, once again, the environmental impacts throughout each of the supply chains of each of the products it sells from each of its suppliers. This is its footprint and no amount of weasel words can escape this simple fact. It is a business built entirely on the shoulders of others which are doing little or apparently nothing to ameliorate their own impacts on the environment.

We aim for a future in which companies can not state such utter rubbish in their reports, but there is more to complain about here, all of it pointing to continued growth in this business’s externalities – or environmental cost to everyone else – and all in contradiction to what David Jones might wish to perpetrate as the myth of its own environmental good work. And here we must be selective, for wishing not to bore the reader.

Robert Savage, chairman:
“We recorded sales growth in each quarter …”
Paul Zahra, chief executive officer:
“In the future however we will overlay an increased focus on … sales growth (in particular as we start to experience an improvement in economic conditions) … "
“The two new David Jones Bourke Street Mall stores offer customers … 30% more selling space spread across 11 brand new architecturally designed floors … ”
“Sales and EBIT from our new Bourke Street mall stores are expected to grow by at least 30% over time (in line with floor space) …”
“Enormous growth potential exists for David Jones in the Melbourne metropolitan market … "

So, there is apparently no holding back the environmental juggernaut that is David Jones.

But this one, wrapping up, from chairman Robert Savage, is a jewel: “Our continuing success in a very challenging environment is a tribute to the strength of our brand...”

That one could come back to bite. Shareholders beware.

Public relations on the environment pulls up short on the Sunbeam shelf at David Jones

2011-02-01T02:01:30-08:00

We recorded here that we’d been surprised at electrical goods supplier Sunbeam chief executive David Jackson’s declaration that he had no policy to spout on the company’s environmental undertakings and that we had better take our enquiry to its owner, GUD Holdings, and its chief executive Ian Campbell.

Today, we were even more surprised at Campbell’s curt dismissal. As the inevitable final investor relations front for his company, we’d have expected a little more attempt at polish in his replies. And, after all, he called us, so he clearly wanted to say something.

Campbell described the few simple questions Cloud Citizen had posed as aggressive. I explained I was only doing my job, as a journalist, on a challenging subject. We have no need to pull punches, and these are after all tough questions on a serious subject. Cloud Citizen is not the Australian Women’s Weekly.

When we suggested the issue of concern to Cloud Citizen’s investigation lay in Sunbeam’s sales at David Jones, Campbell asserted that his company complied with all the ASX listing rules. That was hardly the question. He said the company did nothing to break the law. I hadn’t suggested it did.

I asked if he would characterise his business’s standing on the environment as “compliance-only”; he said his company complies with the laws and doesn’t break any. Again, this was hardly the subject, nor the question.

When I asserted that there was a lot of skin to be lost for his business on the environment and asked could Campbell not lose out to competitors, he professed himself unconcerned. I asked him who he considered his competitors to be, and he suggested I pick up the phone book and find out.

He clearly didn’t like it when I asked him, was he not concerned about climate change; was he a climate-change denier? He replied, “When you have something sensible to ask me, call me back,” and abruptly put the phone down.

So, there you have it. If you think David Jones’ own undertakings on the environment are a bit short, just look at this from one of its key suppliers. Apparently, this passes for investor relations at Sunbeam and GUD.

Such dismissive behaviour certainly doesn’t help the department store’s own claims about its “whole-of-business” environment strategy (sic). And Campbell’s entitlement is apparently to keep on running a business from the past, despite the concerns of anyone else for its externalities.

So, there’s a simple message here for the interested. If you care about the climate and environment, believe that business is a contributor and you have to replace your electrical goods anytime soon, you might wish to consider a brand other than Sunbeam.

How does Bamix’s response on its environmental undertakings help David Jones?

2011-02-01T01:14:41-08:00

We have five standard opening questions that we put to all companies as we first begin to build their profiles on this site. They are robust questions because they point to management intention about mitigating a company’s climate and environment impacts. The answers – or, to this point, more often non-responses – are revealing.

So, when a business’s managing director proudly steps forward to claim responsibility for its climate change and environmental management policy, it is possible to become hopeful and assume they might know something about the subject.

On its profile, we’ve posted a lightly edited version of the response we received from Bamix distributor Cambur Australia’s managing director, Leigh Jeffs. The full response in a pdf is there too, so you can check the extent of our editing.

In his email, as if by way of an implied threat, Leigh concludes: “We have also forwarded a copy of your original email to David Jones management for their consideration.”

Does he think a public company with a reputation to protect isn’t already using various mechanisms to follow exactly what is being written about it? Does he somehow think Cloud Citizen has something to hide? Leigh, this is the media, it is open and above board, no secrets. What are you thinking?

A light on a dark space at David Jones: Sunbeam

2011-01-24T17:55:53-08:00

If proving a public hypothesis is a journalistic bulls-eye, then we’ve hit one of sorts in one of our first enquiries on a David Jones brand’s performance on the environment.

Because this is new turf and the way this work is carried out most effectively in the blogosphere, I’ll be narrating and commenting on both the process of conducting my research as well as its findings. Here’s just one useful and informative indication of what we will likely see much.

My research at the date of this post shows the web site of electrical goods brand Sunbeam to be offering no evidence that this business has any undertakings at all on climate and environment. On deeper interrogation, you’d hope that its executives could offer more. After all, there are no sales to be lost for acting more sustainably. Moreover, those companies that have some kind of initiative under way, no matter how minuscule and inconsequential, will usually over-claim about their efforts.

That Sunbeam has nothing to show, however, doesn’t look good. It won’t inspire confidence among potential customers seeking some kind of reassurance from a major-label brand about its attempts to alleviate its negative impacts on the environment. Both this and its retail host could be doing more and should, many might expect, if they are to claim brand leadership, be leading by example.

Worse, however, is that upon enquiring with the company, I received a return call from Sunbeam’s boss, David Jackson. He concurred, somewhat unguardedly I thought for one keen to field my query, that he thought I would find most major companies doing little on the environment.

Worse, Jackson – the chief executive - said he couldn't comment on his own company’s environmental policies and would have to pass me up the line to his own boss at Sunbeam’s owner, GUD Holdings Limited.

As a story, this is a good one: that the senior executive of a well-known household electrical goods brand can’t tell us what his own organisation’s policy is on climate and environment is poor public relations at best. But, if this also suggests there is no such policy, or at least one that can not easily be recited by those who should be most fluent in doing so, is this not both an own goal, but also an opportunity for its competitors?

Two obvious steps follow. First, we will identify who those competitors are to seek their comment. Next, we will get on to GUD’s managing director Ian Campbell to find out what he thinks should be its brand’s next steps in clearing up this gaffe. After all, GUD Holdings’ own site isn’t exactly rich in its own promises on climate and environment.

It would be good to know how important Sunbeam’s sales are to David Jones and what kind of investment it has made in this brand, but that can wait until there is more flesh on this bone.

Sunbeam’s Cloud Citizen profile is here.

The investigation of David Jones’ credentials on climate and environment will be narrated and shared

2010-12-13T12:24:12-08:00

Few still are the companies whose undertakings on the environment will meet the test of integrity when scrutinised thoroughly in public. Even fewer are those with commitments on how they will change their business models so as to mitigate their contributions to climate change. And many are those simply hoping the spotlight of responsibility for action will somehow pass over them without them having to amend their ways.

Based on its own published ambitions to sell in increasing volume the brands it stocks, David Jones appears to meet the typical profile.

As with others, it purposefully omits from its own accounting the dominant negative environmental impact on which its entire business model is based.

In a transparent economy, of course, this can no longer persist without the company facing difficult questions in the court of public opinion.

Typically, when under investigation, the inability or unwillingness of a company to respond appropriately to charges made against it will have negative consequences and create a loss of trust amongst key stakeholders. This may cause damage to the reputation and image of the organisation.

Poorly managed stakeholder relationships are expensive and can result in the diversion of substantial resources, time and money on the part of management.

Quite apart from creating potential difficulties in attracting and retaining quality staff, the attractiveness of ownership of such companies will decline, potentially affecting their share price - and the directors' bonuses - as well, possibly, as their ability to attract future funding.

Many companies will find that through the social investigations that distinguish the future’s transparent economy from that they are used to, the progress of their environment undertakings will be narrated and shared. Ideally, most would wish to control rather than be the victim of the story.

How David Jones will cope with the investigation of its managerial competence on climate and environment is of course not yet known.

Next, we’ll outline the ways in which the narrative will be constructed.

To understand David Jones’ true negative environmental impacts, just follow the money

2010-12-06T11:23:10-08:00

A sustainability teardown will begin with an evaluation of a company’s "business models" – the ways in which it makes money.

A single business may have many ways of making money. Generally, these will be related in some way, but each has managers who make decisions about how that of their own business units will be carried out to maximise their profit – and pay their own bonuses.

Consciously or otherwise, all companies’ managers make decisions that determine the magnitude and impact of their own organisation’s environmental footprint.

In David Jones’ case, its footprint is founded on its managers’ decisions to buy the goods sold to consumers in the company’s stores. The company also extends credit to customers and it makes money on the interest charged for such credit. Its managers try to lock customers into lasting relationships with the company.

There is scope for discomfort when making public the relationships between the actions and decisions of a company’s management team and that company’s impacts on climate and environment. These can also prove inconvenient in its relationships with the suppliers from which it buys and sells. (And you can follow this list to find the limitations of some of those brand suppliers’ undertakings on climate and environment.)

A teardown is structured to identify who is making a business’s buying and selling decisions, because each will play a different role in creating that company’s ultimate environmental footprint.

For maximum effect when depicting its environmental footprint, to discern where management places its priorities, it pays to identify, in this case about David Jones:

For what it earns its money
Where and on what it spends its money
The provenance of the goods and services it buys and from whom it buys them
Which companies are investing in it
Which organisations lend it money
Which organisations are its insurers
Where and how it invests in its efforts toward sustainability
How and for what its people are rewarded

Each of these factors plays a part in the investigation of David Jones that comprises its sustainability teardown.

What is a sustainability teardown, and how is David Jones vulnerable to investigation of its environmental record?

2010-12-02T11:16:35-08:00

When Apple’s iPad was launched early in 2010, its competitors did what they always do. They went out and bought iPads and tore them to pieces to analyse the product’s design, identify its parts and calculate how much one would cost to make. In the electronics industry, this routine is called a "teardown".

As we see clearly with the panic surrounding WikiLeaks, the web makes the actions and, inner communications and deliberations of any company potentially open to similar inspection and accountability.

Cloud Citizen is going to apply the same principles to investigate companies and their decision-making processes as they affect us all: in their impacts on climate change and environmental depletion.

We call this a “sustainability teardown”, and Cloud Citizen will use social journalism to apply it to some of Australia’s best-known retail brands.

Social journalism allies working journalists with non-professionals in the connected web audience to draw on and promote the knowledge of informed citizens in developing stories that need to be told. This information may not be readily available to mainstream media at the time of disclosure. Someone, somewhere, holds everything the media wishes to find out – and someone else wishes to hide.

Its application in a sustainability teardown is not a violent, sudden act but one that is executed patiently, methodically, and deliberately. It can provide new leads. The audience contributes answers to precisely targeted questions, and presents new questions of its own. It is a guided social investigation.

Here, the purpose is to use David Jones’ example to educate all who are interested in the ways in which the actions of a business under scrutiny is contributing to the depletion of the shared natural environment.

A guided public teardown therefore equips the community with tools to tell any business precisely on which environmental metrics it expects them to make progress, and on which of their impacts it expects them to act and report.

And David Jones’ business model provides the perfect example because it is built not on necessity but on the perpetuation of unsustainable consumption.

The truth about David Jones' statement on the environment it would prefer investors did not understand

2010-11-14T13:12:34-08:00

The truth is an inconvenience when it comes between public companies and threats to their share prices.

This being the case, anyone with a concern for the environment and a brain between their ears should give David Jones’ annual report’s spin on its environmental conduct extremely short shrift.

A retailer, by definition, sells to the public at an inflated price the products it buys from others. They are the last seller in the chain of supply. That is the “business”, as it is where the money changes hands and from which it makes its profit.

David Jones claims in its annual report to have “developed a whole-of-business environment strategy that aims to [enhance its] ability to protect shareholder value”.

Yet, over time, it has made an investment, a very big investment, in developing as a science the art of selecting, buying, displaying and taking money for the products of others.

And nowhere does this portrayal of its alleged “whole-of-business” strategy actually address this.

If there is no hard evidence produced of any requirements it makes of the suppliers of those products that ensures they are produced in a manner which is environmentally sustainable, it can hardly be accounting on a “whole-of-business” basis.

Such a statement that does not bring clarity on this truth can only be misleading, if not purposefully deceptive.

But, it does not want this inconvenient fact getting in the way of its claims of being an environmentally responsible trader.

That also puts to the test reassurances offered to investors in the company’s risk policy, which says: “Material risks are those with significant areas of uncertainty or exposure at an enterprise level that could have an impact on the achievement of company objectives ... David Jones considers risk in at least the following categories … brand and reputation [and] sustainability.”

What about deceiving readers? Is that not also a risk? After all, a corporate statement built on at least one misstatement of fact might also be found wanting in others. And if you’re an investor, that could be the biggest risk of all.

How you can help in the social-media investigation of David Jones on its management record on climate, environment and sustainability

2010-11-09T14:15:43-08:00

Cloud Citizen aims to get more companies reporting on their actions on the environment and climate change, and to improve both the effectiveness and transparency with which they do it. We believe for many companies this can be a transformative undertaking, but cumulatively for the advance of society, all the better.

By investigating David Jones in the social media, we are putting into play a study of a whole ecosystem of interconnected suppliers, each of which brings to the table its own discreet and perhaps unique environmental impacts, most commonly without disclosure, and it is these we wish to identify and correct. For the many managers involved throughout these organisations, their impacts and their potential for reputational blowback are simply out of everyday consciousness. It is our work to bring them into awareness in every significant management discussion and decision.

We’ll be publishing more about our strategy for thoroughness in our investigation of the retailer, but for a quick and dirty guide to how you can help, this is a start and this is how we can divide the work with those who wish to participate.

Really importantly, this is "proper" journalism, albeit conducted as a public conversation, and we will absolutely guarantee to protect the confidentiality of all sources.

This is how we start:

If you are of a mind to read David Jones’ annual reports and statements to the market, help us follow the money to identify its environmental impacts and how its business models may perpetuate environmental harm.
Help us identify the managers and teams responsible for making the decisions that perpetuate the damage. If you have contact details, phone numbers, email addresses and so on, all the better.
Help us identify the moles, leakers and whistleblowers within the organisation: they are an inconvenient truth of business life, especially when an organisation is challenged, and they drive change.
Help us find the internal climate and environmental activists within the company: every company has people within who care more about the climate and the environment than the company does, and who want to see it change course.
Help us find those who can send us the organisation charts, internal email and phone lists of the company and its suppliers.
Nominate high-profile champions or celebrities you think might wish to help in raising the visibility of this enquiry, and if you know them put them in touch with us, or help us get their approval to contact them.
Introduce us to market analysts who can gain advantage from this targeted investigation.
Help us forge peer alliances with like-minded organisations and individuals.
Help us identify experts and insiders you think should be brought into this study, and those who can help or influence its shape and sharpen its investigative powers.
Help us build the body of questions on climate and environment stewardship you’d like David Jones and its brand-name suppliers to answer.
Introduce us to parties with relevant academic, scientific, consulting or professional expertise to bring to bear on David Jones’ environmental impacts or disclosures.
Let us know of other sites and bloggers of worth to connect with on matters of David Jones’ sustainability and environmental management.
Introduce us to partners, sponsors and benefactors who can benefit from this work.
Evangelise within your own organisation – especially if you are a competitor and stand to gain: there’s little more potent than activism at the coalface.
Become a contributor - well-informed editorial content or argument is welcome in any publishing endeavour.
If you’re a lawyer interested in this subject and wish to offer pro bono advice as to David Jones’ capacities for shutting down a social investigation of its record such as this, please step forward.

Thank you for your time. We look forward to working with you.

How David Jones will drive community learning on managing for climate, environment and sustainability

2010-11-09T11:46:30-08:00

In confronting the steady degradation of the climate, what has been missing until now is a common account, a decent piece of sustained collective investigative journalism open to everyone to build and share, that helps the community to contrast and compare the management undertakings on climate change and environmental depletion of Australia’s best-known companies and brands.

Cloud Citizen aims to create this social or citizen journalism project. It aims to construct rigorously built independent “social sustainability profiles” – or "sustainographies" - for each, through a form of “reverse sustainability reporting”.

Cloud Citizen will use department store retailer David Jones’ journey to sustainability as its example, as a single well-known company at an influential intersection between the public and the suppliers of high-profile retail brands can service the public’s learning best. If you have important information about the environmental impacts of this company or any of those suppliers that can help us understand better their collective footprint, please contact us here, or become a participant in this effort. You can also follow this project at the Cloud Citizen Facebook page and through Twitter.

David Jones is about to learn, and teach, many lessons on how to conduct the management of its business’s climate and environmental impacts

2010-11-08T12:06:58-08:00

For the purpose of educating the public, Cloud Citizen is conducting, and about to publish, research about the likely climate and environmental impacts of Australia’s best-known department store retailer. This will be an investigation and conversation, shared socially over the internet, and contributed to by anyone has knowledge to bring to it.

The issues Cloud Citizen will address here are not fads such as the dismissal of an allegedly sexually errant chief executive, but are of deep, lasting and embedded organisational cultures that reflect the ways a company conducts its business. Old habits die hard, they say.

We inhabit what many economists and academics, such as Peter Senge, author of The Necessary Revolution (Nicholas Brealey Publishing, 2008), say is an unsustainable economy and this company will be among the first to learn from a new kind of scrutiny to which all companies will soon be exposed. Its investors should look on this research as an opportunity. They will soon have the chance to make a better-informed decisions about the resilience of the company and its ability to deliver sustainable growth.

Why David Jones?

For the public, retail is where problems related to consumption of the planet’s resources begin and are most visible. There is also little point in investigating a company that no one has heard of, and David Jones is at the centre of an ecosystem of some of the world’s best-known brands and how they fit into Australia’s consumer society. Some of those brands’ own local sustainability undertakings will no doubt be found to be lacking in their commitment to the Australian environment.

The channel through which their goods pass to the point at which money changes hands is one in which culpability is easy to identify. Because factors that affect David Jones’ own reputation also pose potential reputational concerns for others in its ecosphere and its industry, pressure applied publicly to its managers’ decisions and actions can potentially lead to great and rapid positive change elsewhere.

If the actions of a company’s executive team and its suppliers are perceived as reckless and costly to the community and to the interests of its environment, the quicker such changes will take effect.

On which side of this line is your investment fund?

2010-08-29T15:19:53-07:00

Cloud Citizen

Financial institutions are steering the car towards the crash that is climate change

2010-08-29T14:28:49-07:00

The financial services industry’s players would no doubt deny their contribution to climate and environmental degradation. And they will continue to do so until it is brought publicly to their attention that a concerned community knows exactly what they are doing.

The banks are the obvious offenders. Their sustainability reports take liberties in using the broad indicators of sustainability as their licence to use the term. Their chosen usage places emphasis on the ability to stay in business, and they use it to legitimise their ability to make super profits by claiming dubious success in becoming better employers and more profitable places to work. It focuses attention only on the interests of those directly in their camp.

Their achievement may be a palliative to gullible shareholders, glad of the dividends, most of whom are unknowing of the environmental consequences of their own good fortunes.

But without exception, in the hands of a bank, sustainability reporting is a smokescreen designed to distract rather than inform. It is a prettified, thick-headed attempt to distract those who don’t hold their shares from the inconvenient fact they least want the public to know, much less talk about.

That fact is that they make profits from lending money and providing services to organisations that pollute the environment to the detriment of all others, including their own customers.

Extrapolate this to the broader financial services industry and you’ll see that all the fund managers, superannuation funds, insurers and so on likewise have their fingers in the same pie. All are hastening the demise of the common environmental inheritance. And as long as the climate is healthy, all well and good.

But evidence is mounting that the climate and the environment are not in good repair. Leaders of these companies make no suggestion, however, of change in the ways in which they will conduct their organisations’ affairs. They simply assure shareholders’ that their interests will continue to be looked after. They who turn a blind eye and who extract handsome bonuses from the returns on environmental depletion will continue to do so.

And when you’re furtively lining your pockets from everyone else’s common inheritance, why would you want others to begin to join the dots to find out how you are doing it and stop you? For one, it’s embarrassing. Second, there may be a cost to pay for what you made from everyone else’s ignorance.

Many of these organisations are now, however, much more vulnerable than they might appear. The music is slowing and for the slower-witted the party is coming to an end. When they tie their fortunes and sales pitches to the likely sustainability car crashes that are the reputations and share prices of companies such as Australia’s best-known department store, they deserve no better.

If they haven’t already realised how vulnerable their bonuses are, it is likely they have also overlooked how irresistible to a crowd is the scene of a spectacular accident.

A conversation to drive change in business on climate and environment

2010-07-20T13:54:41-07:00

Whichever way you look at it, climate change and the continuing depletion of the environment pose great challenges to the way in which business is done. If business is to survive and thrive in a habitable world it can not continue to go down the same path and must innovate through new forms of decision making and execution. Business sustainability is not an output but is the result solely of human input and decisions, which, as the tools are now available, free of charge, even, to drive the right kind of change, is why this conversation is necessary now.

But a festival of chatter without direction or clear aims will serve neither the population nor business well. It needs focus also for businesses to be able to gauge their own needs to enter into their own internal dialogues on how they intend to meet the new challenges.

Guiding aims
We’ve charted the goals and intended execution of Cloud Citizen in simple form beneath.

We aim to advance the public conversation on the sustainability performances of business such that:

Cloud Citizen’s conversation becomes a subject of discussion at every corporate board table
Its initiative became known and understood in every workplace
Its influence can extend to affect the understanding and attitudes of the young and those engaged in every place of education on business sustainability
Markets, government and media are drawn into the wider discussion

Execution
The following steps in opening this conversation up are drawn in no particular order.

Begin with journalistic research and a few straightforward questions asked of every company to gauge its actions on climate change and environment and against which to start constructing its social profile
Make the research public by opening the investigation up to enquiry and comment through Facebook, LinkedIn, Twitter, and so on, and other key emerging social media
Engage the media and every influential community and its leaders in the networked discussion
Through a dedicated effort, take the research into schools and places of education where its discussion can influence beliefs, understandings and attitudes in the minds of the young
Focus attention on identifying what are a business’s environmental impacts – both direct and indirect - how its particular decisions are made against all the other competing possibilities, who makes them and what are their risks to its reputation
Provide competitive levers to companies who wish to take the lead in their own responses on the environment
Focus on best-known household brands and retailers as those we expect to lead in their demonstration of how to drive change in engaging with the new challenges
Focus market attention on winners and losers alike
Engage celebrities and high-profile ambassadors as champions to focus public attention
Validate work through academic participation and the creation of a proper body of postgraduate research into an entirely new discipline with its focus being what happens when social media and the demand for enhanced business performance on sustainability meet
Perpetuate the loop by focusing the internet crowd’s attention on emerging information and the questions they give rise to

If anyone reading this wishes to add to it or improve on it or to contribute to it, please don't hold back. Thanks, and I look forward to your suggestions.

How to create a company's social sustainability profile

2010-07-19T22:26:03-07:00

With a better networked community, corporate processes and responsibilities that were once opaque are now much more vulnerable to scrutiny. Before now it simply would not have been possible to create a social sustainability profile of any company. But that the climate change age will impose ever increasing requirements for transparency on the part of business is inevitable.

A social sustainability profile is the outcome of a collaboratively driven internet research activity that aims to identify all the impacts a company’s conduct of its business imposes on the climate and environment. This applies both in the ways it makes its money – and in the nature of the activities of those it makes it from – and how it spends it. There are implications for its total environmental footprint in both directions and quite often they are not obvious at first glance.

Essentially, in conducting a social profile, the best guide is to follow the money. If the target is a publicly listed company, this makes it easier to identify from its annual report all the different ways in which it generates profit, often through several revenue lines.

Each revenue line has a "business model" – the package of discrete management activities that turns the wheel of the profit machine. A single business may have many ways of making money, generally related in some way, but each has its own specific mode of managerial execution.

The operation of a specific business model may itself have several divisions and departments charged with its conduct. And all organisations have people who make decisions, and in charge of each of its business models is likely to be a team of executives that decides how it is to be run and what are the necessary undertakings it must commit to that will optimise profit.

It is in these people's hands that responsibilities for that business's responses to environmental depletion and climate change lie. Each will play a different role in creating its environmental footprint.

A social sustainability profile is intended therefore not only to identify where a company’s impacts come from but who controls the decisions in the business relationships from which they emerge.

The creation of a profile will rest on the inventiveness of its contributors in identifying and drawing out the individuals and their connections who can contribute the insights and information which brings it to existence.

Once drawn, the social sustainability profile makes clear where its creators expect to see improvements made in the environmental undertakings of the target company.

The key questions beginning any social sustainability reporting enquiry

2010-07-19T21:16:36-07:00

These are the key questions with which we begin any enquiry on a company's sustainability, climate and environment undertakings. They are hard for some companies to answer but their merit is that at least by using them it is possible to compare companies on a like basis. They are essentially a gauge of management commitment.

* Who is your organisation's board director or senior-ranking Australian executive with explicit responsibility for its climate-change and environmental-management undertakings?

* Where can we view your organisation's local (Australian) declaration on how it intends to respond to climate change through innovation and changes in the conduct of its business?

* Where can we view your organisation's declaration on how it is changing its Australian procurement policies in order to minimise its climate change impacts?

* When was the last date on which your company issued an Australian sustainability report and where can we view it?

* When did your organisation last certify its ISO14001 environmental management system with an accredited certifying agency in Australia, and where can we find it?

* How is your business demonstrably identifying and acting on its barriers to sustainability - every organisation has them - and where and how can we see the evidence?

* Where can we view evidence of the collaborative organisation-wide programs you have in place that underscore your commitment to sustainability by seeking the input of all staff?

* How are staff being rewarded for their contributions to increased sustainability across the organisation’s operation, and where can see your policy?

Survey: How great is the risk to organisations posed by inaction on climate and environment?

2010-07-18T13:40:28-07:00

Many companies are simply lucky so far that there has been no social policeman watching over their inaction on climate change and environment in the management of their workplaces. As they are still not cognisant of the concerns and opinions of certain segments of their customer bases on the subject, we're introducing a new survey into the profiles we post here and on the Cloud Citizen group page on Facebook. It aims to explore the opinions of visitors about the risks to which these companies' managers are exposing themselves to risk as the inevitable consequence of the failings of their undertakings.

INTRODUCTION
Questions of risk and trust are always important in any company’s relationships with its stakeholders - customers, investors, employees, banks and insurers, the community, and so on. These relationships often form the constraints - “the licence to operate” - within which companies can trade to “thrive in perpetuity”.

There are many risks to which all companies are exposed on their reputations. This survey aims simply to create a better understanding of how much this company’s transparency in its actions and undertakings on climate change and the depletion of the natural environment can be trusted, and to what degree they, or the lack of such commitments, pose a risk to the future of its business.

Throughout, where not written out in full, this survey will use “CCE” to substitute for “climate change and environmental depletion”.

RISK FACTORS
Based on your current knowledge and understanding of this company’s activities and undertakings on climate change and environment, please indicate the degree to which you agree with the following statements about the risks each presents to its future business.

The failure of the company to act swiftly enough on the threats of CCE will alienate future customers over the long term
The company is vulnerable to public awareness, knowledge, understanding and concern being seen to be ahead of the its own on CCE
The company is vulnerable to its board and management being seen to have misread public sentiment on CCE
The company is vulnerable to perceptions that its management has an insufficiently broad understanding of the risks CCE pose to the health of its business
The company’s management on CCE is creating negative perceptions of its managerial competence
The company lacks the key people, skills and understanding to manage its business risks on CCE
The company will attract increased negative media coverage on the basis of its present actions on CCE
The company is at risk from others identifying more about the risks its business poses on CCE than it can for itself
The company is vulnerable to social media using the company as an example of poor management of its true actions on CCE
I believe the company is vulnerable because it does not understand the power of social media as a tool for investigation of its actions on CCE
I believe the company is vulnerable to the reputations of the suppliers it is seen to buy from on the basis of the limitations of those companies’ own undertakings on CCE
Competitors are likely to take advantage of the company’s failure to act on CCE in the conduct of its business
The company’s actions on CCE are unconvincing enough that we could see its example being used to demonstrate management failure in future teaching in schools and universities
The company is at risk of losing or to develop key skills that will earn it favour on CCE
The company is at risk from failing to develop the quality of thinking and understanding about CCE in the minds of its workforce
The company is at risk from failing to share effectively the existing knowledge or understanding in the minds of its workforce in limiting its risks on CCE
Staff sharing information about growing perceptions of its failures of management on CCE will create problems in the effectiveness of the company’s internal communication
The company is at risk from customers knowing more about the risk of CCE to its business than its own management does

CONSEQUENCES OF RISK
Based on your answers above, please rate the degree to which you agree or disagree the company is exposed to the risks of each of the following possible outcomes, should it fail to act on effectively on CCE.

The value of the company’s sales and future contracts will begin to fall
The company will lose market share to competitors
The company’s shares and and investors’ holdings will fall in value
The company’s reputation will suffer
The reputation of individual members of its board will be damaged
The individual reputations and credibility of its chairman and chief executive will be harmed
The reputations and career prospects of identified, named inidividual decision-making executives will be affected negatively
Key executives will leave to join other companies
The company’s workplace morale and productivity will suffer
The company will find it harder to attract quality staff, downgrading the overall quality of its workforce
The company will find it harder to attract bank financing at a reasonable price
Insurance will be harder to attact at a reasonable price

TRUST AND ACTION

Based on your existing knowledge of the company’s activities and undertakings on climate change and environmental depletion, which of the following five outcomes do you consider most likely:

More bad news will come out about this company
Management will try to bluff it out and ignore the increasing risk to its reputation of being seen not to act more effectively on CCE
Management will attempt to be seen to act on the concerns of the public, but only through increased promotional and public relations activity
Management will attempt to obfuscate and block communication between the public, the media and its employees
Management will apply real commitment and make a demonstrable, transformative and positive success of its effort to act on its environmental footprint and CCE liabilities

On the critical question of trust, to what degree do you agree with this statement:

"I now associate this company more with the damage to the environment it is responsible for than I do with whatever good things it claims to do on behalf of its community."

With its waste-generating business model, can the credibility of David Jones’ reporting on its environmental record withstand social scrutiny?

2010-07-14T02:29:32-07:00

David Jones displays the hallmarks of a 20th century retail business trying to divert attention from the real impact of its business on the environment. Like the banks, the unacceptable effects of its trade are many, many orders of magnitude greater than the cost to the environment of the operation of its outlets.

It is, however, easier to walk away from David Jones, and until it really grapples with its impact and comes clean about the elephant in its display space, once alerted to the environmental shortcomings of its business model, many customers may indeed willingly entertain that possibility.

The David Jones model compels it to stock the products of well-known brands, enhance perceptions through their display and keep as much stuff ringing its cash registers as the constraints of competition and consumption will allow.

It relies on everything it sells ultimately ending in landfill, and people coming back for more. Worse, at the peak points in the annual cycle of retail-driven consumption (Christmas, Easter and parents’ days), an even greater volume of more excessively over-packaged stuff passes through its outlets to the same end destination.

To those with a mind to do so, David Jones may be an attractive place to shop, but like the Royal Family’s, its waste is no better than that of any other.

So, let’s confront the unmentionable David Jones elephant. That the company should report on its environmental undertakings is no bad thing, but that it undertakes its reporting so disingenuously as not to address the impacts of the products it sells is to do so in bad faith. Such reporting is not the action of a company deserving of trust.

If it is to “[develop and implement an environment strategy guided by the principle of meeting] the changing expectations of our stakeholders”, it can not plausibly do so without first knowing, and then relating to its customers and community, the identified sustainability credentials of those others upstream in its respective supply chains from which it buys.

Its credibility is further dependent on the transparency with which it both reports, and exercises, product-selection processes supportive of such declarations.

But of course, the likelihood that we will ever see such a statement is near-zero and that there is no mention of either anywhere in its “environment report” makes public disclosure of this patent management vulnerability on this subject all the more important. And that is so whether you are a customer, an investor, a banker or insurer, or simply a stakeholder (that’s everyone else, by the way) to the company.

Instead, of course, the company prides itself on offering a range of quasi-“luxury” brands, none of whose goods’ provenance features anywhere in its report.

If that’s an environmentally sustainable way of conducting an enterprise, then you’d have to ask on the basis of which of its directors’ or senior managers’ particular academic journeys David Jones has come to the decision it is. Perhaps academia has simply got it all wrong.

At the point of writing, the environment appears to be David Jones’ inconvenient truth as it gets no visible run on the company’s web site. So clearly marked is its omission that it appears management has decreed it too plainly obstructive, potentially, to its continued upward profit trajectory.

Inspection of the relevant sections of its annual reports for 2008 and 2209 prove similarly unedifying in their espousal only of worthy management efforts in minimising those wastes that are within its easy grasp, but which fail truth and serve to benefit only the company, without reaching for any higher aspiration.

At a time of visible managerial disarray, the last thing David Jones management needs is a candle held to its feet for the critical omissions from its reporting on its environmental impacts, but here are some short observations on which we can develop further our open critique.

Environment at David Jones is a matter of compliance, not of opportunity.
Simple hygiene factors such as the existence of an independently certified ISO14001-certified environmental system are absent of mention in its reports, from which, without further evidence, we can probably assume that such certification doesn’t exist.
No director has his or her name on this section of the report as a mark of ownership, pride, honour or responsibility. Thus, no indvidual can be held publicly to account.
Statements that its environmental conduct accords with changing community standards are baseless: who did it ask, when and how? Evidence please.
Why is business model innovation not mentioned in connection with environmental improvements? Perpetuating the same old model without radical readjustment in the climate-change age can only repeat the same negative environmental result year in, year out.
Where are the real barriers to sustainability at David Jones? Are they cultural? Can its present management really adapt to changing circumstances and real community expectations? Does its board understand even what they are and where they are coming from?

There is no magic, delight or imagination on view here in David Jones’ statement of its attitude to our most-prized natural assets, so customers and shareholders should act on and beware the consequences of its actions.

Until this company starts changing its disclosures on its contributions to the depletion of the environment and climate such that they accord with reality and not its board’s highly selective perceptions of “stakeholder expectations”, we can, and should have little faith in its reporting.

Bring on the social investigation and let the questions begin.

Cloud Citizen's challenging questions for David Jones, the Commonwealth Bank and every company

2010-07-08T17:12:10-07:00

I am building a list of the sorts of questions Cloud Citizen can ask companies to identify their undertakings on the climate and environment. We are aiming to identify clear winners and standout losers. Developing this list can be done most effectively only through sharing and collaboration, so if you can help in building it, please do.

In all of this, it is difficult to compare apples with oranges and we need common benchmarks. Clearly, most attempts to compare the outputs of retailer David Jones with the financial services business of Commonwealth Bank of Australia would make no sense. This means we must apply our investigation and analysis upstream to focus on management processes, and how these companies do what they do rather than necessarily what the impacts are of those identifiable outputs.

Much of the cause of our concern lies beneath the surface, and the big story of sustainability lies in people’s behaviour in the workplace. We must therefore ask questions that do allow for comparison - and competition and reputation management - because it is only when companies get busy on fixing the processes, sense-making and assumptions that underpin the rationale of their executives’ decisions that we will really see demonstrable progress and new winners emerge.

When processes are lacking and result in undesirable “externalities” - the environmental costs everyone else has to wear - it is always a fault of management’s prioritisation. And because it is a management failing, its risk is qualitative: it may result in a measurable output, but not always obviously. It’s a bit like pornography, hard to describe, but you know it when you see it.

Opening questions
As such, the first questions Cloud Citizen sets out to ask companies against which it can be sure to get like-with-like comparisons are:

Who is your organisation's board member or named senior-ranking Australian officer with explicit responsibility for its climate-change and environmental-management undertakings?
Where can we view your organisation's local (Australian) declaration on how it intends to respond to climate change through innovation and changes in the conduct of its business?
Where can we view your organisation's declaration on how it is changing its Australian procurement policies in order to minimise its climate-change impacts?
When did your organisation last certify its ISO14001 environmental management system with an accredited certifying agency in Australia, and where can we find it?
When was the last date on which your company issued an Australian sustainability report and where can we view it?
How is your business demonstrably acting on its barriers to sustainability - every organisation has them - and where and how can we see the evidence?
Where can we view evidence of the collaborative organisation-wide programs you have in place that underscore your commitment to sustainability by seeking the input of all staff such that you can minimise your environmental impacts, refocus your business and report convincingly on progress as it occurs?
How are staff being rewarded for their contributions to increased sustainability across the organisation’s operation?

Companies only thrive through public permission. Right social behaviours form their licence to operate. Our purpose is simply to build the social media conversation around each organisation by asking legitimate questions we all have a right to see answered.

How you can help this investigation
There is no shortage of scope for contribution to the work of Cloud Citizen, so:

What do you know? Who do you know? What actions could you take? How can you contribute to the conversation? What questions should we be asking?
What observations can you contribute about a company’s footprint and its costs and risks to the rest of us?
What actions could you take to get more inside information? Who do you know who would know more?
What do you know about the financial markets: who follows this company’s stock and who are its key brokers?
What do you know about the media that serve a company’s sector? Among those news sources, which titles and which correspondents most want to know what we know about this company, and why?
How as observers can we best apply the levers to get the information we need?
Where can we get an organisation chart with the decision makers clearly depicted?
Where can we find the evidence - email trails and suchlike - that demonstrate how a company’s executives want to shut down this conversation?
Who do you know who can help us get more information?
What inventive ideas can you contribute to expose what is really going on in a company on its environmental and sustainability record?
Who are the executives we need to identify who have responsibility for each of its revenue lines?
Who do you know who can get Cloud Citizen’s work known throughout an organisation?

Community investigation of organisational vulnerability
As social investigators, our responsibilities are to identify the buttons to press that will drive companies into action on their environment and climate impacts. How can you help Cloud Citizen identify:

What in its operation forms the biggest risk to this organisation’s environmental reputation?
What is it on this score that this company’s management most wants to hide?
How vulnerable is the company to disclosure of this information?
Who are the managers responsible for perpetuating this risk?
Why is the company resisting coming clean about this impact?
What are the consequences for the company of this risk being exposed?
Who most needs to know of it, and why?
Which of its customers most needs to know?
How much does the customer need to know about this?
Which of its investors, financiers or insurers most needs to know?
How vulnerable are its sales and reputation if a lack of action is identified?
How essential to its business that customers buy in the usual quantities? How much damage could it sustain, and for how long?

Barriers to sustainability
Every company has them and they may not always be obvious unless you work for it. But, applied either organisation-wide or to each revenue line:

Who are its barriers to sustainability?
Do those barriers exist at board level?
Do they lie in the organisation’s vision and understanding of sustainability?
Do they lie in its leadership?
Can they be found in its culture and politics?
Are they found in its capacities for and encouragement of organisational learning?
Can they be identified in the operating environment and its workplace’s methods and management?
Are they in the resources and support given to sustainability initiatives?
Are its management strategies destructive to its people’s competence and initiative?

Reporting and affiliations
Companies that are proud of their actions will always brag about them, and where there is a negative contribution to hide, they will lie or obfuscate. As Cloud Citizen begins every investigation with identifying how a company reports or accounts on its environmental and climate-change undertakings, we need to identify:

Who makes the decisions about what goes into its report?
How open is the process?
How plausible are the reports?
What other sustainability affiliations or industry group memberships does it claim?
How meaningful or how much of a smokescreen are its affiliations and memberships?

Supply chain impacts
This is the area in which we will find most companies wanting and to draw up a meaningful social sustainability profile for every company we must ask:

Who are its suppliers?
What does the company know about its own suppliers, and how is it acting in seeking greater transparency from them?
How much of its environmental footprint is this company inheriting from others upstream?
How much are its decisions adding to the footprint others must inherit downstream?
What can it prove about the provenance of the goods it sells?
Who are its customers?
What guarantees or undertakings does it offer its customers?
Who are its business (and perhaps joint-venture) partners?
How many supply chains converge at the point it creates its value, how many stretch beyond it downstream, and what processes does it undertake to evaluate its upstream inheritance and to its own contribution to the footprint of each?
What is the consequence of its marketing spending?

This list is not conclusive by any means, but more an early stab against what will surely grow and improve with use and experience, so please make your contribution. You can find other ways to contribute to the work of Cloud Citizen here.

Gary Hamel and the agenda of management change Cloud Citizen is pursuing

2010-07-07T12:48:50-07:00

Gary Hamel is one of the world’s most consistently incisive and inspiring management thinkers. His work is also a key feature guiding Accelerated Sustainability thinking in its pursuit of management innovation - itself a radical notion - but in this post in his Wall Street Journal blog this week - he finds an inspiring demonstration of same. It features the radical thinking of Vineet Nayer at the fast-growing maker of mobile handsets, HCL Technologies.

Hamel begins his post:

I believe that many of the tools and methods we use to manage people at work are ill-suited to the challenges of succeeding in today’s “creative economy.” All too often, legacy management practices reflexively perpetuate the past—by over-weighting the views of long-tenured executives, by valuing conformance more highly than creativity and by turning tired industry nostrums into sacred truths.

Check it out and compare Nayer’s work with that of management at your own workplace. In 20 years’ time perhaps many more will resemble it. We can hope - the technologies at least are no longer the barrier.

If you want to read some real corporate rubbish, just try the Commonwealth Bank's sustainability report

2010-07-06T13:47:21-07:00

Unless you really want to suffer some second-rate English squeezed into a package clearly designed to palliate the concerns of mums and dads investors who aren’t going to ask any questions that are too taxing for a management team which clearly chooses not quite to get the subject, I suggest you give the Commonwealth Bank of Australia’s sustainability report wide berth. This sort of nonsense gives sustainability reporting an extremely poor name. This is just self-congratulatory corporate drivel with the word sustainability shoved in there because the PR department thought the bank should put such a report out at the same time as the annual financials. And this is all the more reason why we need independent, socially assembled reporting against all the metrics that matter.

Imagine for a moment: when compared with heavy industry, how much environmental damage can a paper-shuffling organisation do? Sure, it can adapt to use more energy-efficient accommodation, but when you’re making so much money from your customers in the first place, why wouldn’t you invest some of the surplus in cutting your energy bills? Why would your organisation not play ball with energy efficiency drives of government or try to align itself publicly with other international initiatives? After all, we do live in the 21st century and not the 19th.

What is most galling for anyone who thinks this through is that the CBA’s “undertakings” on the environment other than those of its claims of carbon progress are so mealy mouthed, lacking in substance and riddled with motherhood and the appearance of social concern, CBA-style, that they are worthless. Moreover, there is no named executive taking responsibility for this garbage other than chief executive Ralph Norris in his introduction. That he could let such poorly written and constructed nonsense out under his own name reinforces the impression of a man pressed into tokenism and unconcerned by the credibility of his report’s actual content.

Worse, however, is the failure to acknowledge the real impacts on the environment of the bank’s business. These lie not in its own operations but in the many thousands of environmentally despoiling actions undertaken everyday by the business customers to which it lends. Think it through: if this is Australia’s biggest bank, it almost certainly lends as much if not more to businesses than any other, and in a country with a large base in primary and extractive industry, where’s the sustainability in that?

Here’s the killer, tucked into a single paragraph on page 48: “We acknowledge that we may have an indirect impact on the environment through the provision of financial services in environmentally sensitive industries.” And that’s it. What does it mean? It appears to that the bank is apologising because the industries are sensitive and at risk from its interventions - poor flowers - rather than the environment they are hell-bent on depleting. That some people get paid to put this sort of stuff into print is an insult to the rest of us.

Indeed, this report is a total travesty, as if the banks need to look any worse. Ralph Norris should be ashamed and shareholders should be alerted. Anybody thinking that this is a sustainability report needs to pull themselves together. When community partners are trumpeted loudly with logos blaring and earthquake appeals and its overseas community programs are lauded as a great and worthy banking effort for the non-banking world, along with those of cricket in the indigenous community, that is not a sustainability report, that is pure public relations, plan and simple. And it is not addressing the profound environmental impact its business creates, which is many, many times that of its direct impacts and weighed in total possibly on a par with the largest despoilers the country possesses.

Get a grip, Ralph. Your own people are making you look stupid. And now it is up to us to show you what we know about your business which may not make you look less so.

Is Harvey Norman unnecessarily risking its shareholders' investments?

2010-05-04T13:16:07-07:00

Harvey Norman chairman Gerry Harvey is one of the rare few chiefs to undertake his own public relations. He might wish to reconsider that strategy should the combination of the environment and the social media converge to bite into his management's reputation.

Deliberately or otherwise, Harvey Norman gives every impression of being an organisation not wanting the inconvenience of its customers' or investors' environmental concerns impinging on its commercial activities.

In beginning to construct our profile, we invited Harvey Norman to answer five simple questions presented here, in its profile about its environmental undertakings.

As it refused to do so, we can safely interpret its response as a display of tacit expectation that questions as to his organisation's environmental obligations, if unaddressed, will recede. In this, it seems to have misjudged the capacity of the social media for causing unwanted reputational trouble, and of Gerry Harvey's own as a media lightning rod for invoking it. See this recent story about his reported attitude towards charity and philanthropy in the Sydney Morning Herald.

Capping the reply from his assistant that "Mr.Harvey is unable to assist in this request due to time restrainst" [sic] (where what we really wanted first of all were replies to our questions), this quote is lifted straight from the company's 2009 annual report. It's extremely unlikely that any Harvey Norman customer or shareholder who concerned for the future of the planet will draw comfort from this.

Environmental Regulation Performance
The consolidated entity’s environmental obligations are regulated under both State and Federal Law. All environmental performance obligations are monitored by the Board. The consolidated entity has a policy of at least complying, but in most cases exceeding its environmental performance obligations. No environmental breaches have been notified to the consolidated entity by any Government agency during the year ended 30 June 2009 and up to the date of this report.

This is code for saying that no directors' interests were injured in the production of this report. And we'd love to be shown the examples of where the company was "exceeding its environmental performance obligations".

Perhaps the more important question we must contemplate here is whether Harvey Norman's management team is competent to operate in a commercial field in which the environmental undertakings of its players becomes a focus of competition. This will require substantial business model reinvention. Outwardly, there is not much to suggest it will be.

The inconvenient truth for Harvey Norman investors is that this appears to be a company that will not be able to compete on its sustainability record.

In an interview with Smart Investor magazine in August 2008, Gerry Harvey said:

"[We are] the No.1 player by a long way. Our market share varies across the categories from 15 to 30 per cent, whether it's plasma or LCD or fridge or washer or computer. We have the best people, we have the biggest market share and we're growing both. So, as long as we're doing that, and [have] the latest format stores the others are copying, then we're on the front foot ... there's a lot of scope for us to increase our market share."

The PR problem the company faces is that of having to manage its social media relationships against its record on sustainability. This is likely to put a cap on its share price as its reputation for doing little spreads. In the social media, unanswered questions have the potential to trip controversy for a corporation because they won't just die as they once did. And the oxygen of corporate opacity, obfuscation or the simple refusal or inability to address a concern in the way its audience expects can cause an issue to run out of control in quite unexpected ways.

It will be interesting to see how Harvey Norman can contest this near certainty.

In developing Harvey Norman's social sustainability profile, with 200-odd stores and doubtless management of widely varying qualities installed between them, there are plenty of difficult questions to be asked and plenty of work to do in asking them. Please help in any way you can.

Join the dots to drive Sydney's sustainability

2010-04-11T13:14:00-07:00

By virtue of the fact that you are reading this, you are on an inside track as the traffic numbers to this site are at the time of writing very limited, and that a this point is a purposeful decision. However, Cloud Citizen’s research to this early point already tells us that few are the companies that are undertaking visible, demonstrable change in their policies, practices and undertakings on the environment and against the threat of climate change.

Yet few businesses can escape scrutiny of their environmental impacts when an organised campaign is mounted in their community to bring them to public awareness. Most are lucky it hasn’t happened to date. But those most visible and familiar must inevitably become the preferred targets of any organised group wishing to get its message heard with maximum impact. That is why we are going to focus attention onto the failings on their environmental undertakings of Sydney’s major-name corporations, retailers and their brand-name suppliers here.

The diagram beneath shows the groups most likely to be interested in knowing of a concerted campaign on climate change and environment, and the connections between them and local businesses. Knowing how to join the dots is the key to executing it effectively.

Concerns for the environment will change buying behaviour, brand preference and company reputation, and it can drive share prices when investors review their decisions about a company caught in the spotlight. When share prices change adversely and the prospects of an organisation take a similar turn, its managers start looking for more promising ways to advance their careers, particularly if the company’s reputation doesn’t look like it will recover anytime soon.

Taken to its extreme, the desertion of its managerial talent can make a company vulnerable to takeover, or worse, ultimately, to failure. All businesses, then, are potentially vulnerable on their environmental records when the tide of market sentiment turns against them.

The organisation of Cloud Citizen’s campaign will expose companies’ environmental management weaknesses systematically by identifying their failures to commit their teams to the undertakings expected by their communities.

Over time, it will reach into every relevant community group to share the message of what each company is doing, and what it is not. If you are a manager reading this and thinking you can get away without reacting in some way, you are misguided. The word will spread, simply because everyone will want to know.

Cloud Citizen has as its explicit mission:

For its campaign to become a subject of discussion at every board table
To make its initiative known and understood in every workplace
To make its initiative known in every place of education

To make its campaign most effective, Cloud Citizen aims to enlist a steering panel of well-connected individuals to get the word out and to help it join the dots between the communities faster.

The relevant interests and concerns of many of those groups depicted on the diagram will be reasonably clear. Investors get spooked by bad publicity, and banks and insurers aren’t known for their love of the risk associated with companies seen to be failing in their management of critical risk indicators.

Governments may be slow to act without a clear expression of voter concern, but they will sit up and notice soon enough when they find themselves following and not leading their communities. The media will prey on any initiative it believes will help it build either audience or advertising sales. And the targeted companies will do whatever it takes to protect their sales to whomsoever buys their products and services.

Cloud Citizen has natural allies in the many groups that make up the environmental lobbying sector. WWF, the Australian Conservation Fund, the Wilderness Society are among these groups, but we can probably also find among their number Choice, the consumer society, and many others. These groups are natural channels for link-sharing initiatives on the web. We'll be more than happy to trade our audiences for theirs.

But as society’s most fundamental unit for the transmission of ideas, interests and concerns is the family, ultimately it is young people who join the dots between every group on the diagram. Where companies and all the profit-generating groups on this map are ultimately most vulnerable is in the unavoidable connections between social media and the young. It’s time for retailers and their big brand suppliers to wake up to this fact, because this where the conversation is going, and it is they who will feel the pain of failing to associate the environment with their own behaviours first.

Children have a natural affinity for nature and an equally strong disgust for those who would abuse it or fail to recognise the importance of its maintenance. A child who is educated to ask better questions about the environmental undertakings of any company will have a significantly enhanced influence over the thinking and behaviour of their parents, and hence over purchasing behaviours and preferences.

As there is little parents like to talk about more than their children, the messages the child communicates will soon find their way into the discussions taking place between employees in their own workplaces.

Teachers are always seeking fresh and relevant material for their lessons. To speed awareness and enhance its effects, Cloud Citizen aims to bring these conversations into the classroom, as the local environment and the effect of the businesses neighbouring it or in which kids’ parents work it is natural topic for its discussion. The reputations earned among these young minds will build, fester, spread and last.

If you think the children in your life won’t affect your organisation’s undertakings on the environment, you are missing the point entirely. Poor brand associations and the lessons learned in the family and the classroom can stick and often persist forever.

..............................................................

You can help. Which of these dots can you bring together? What can you tell us about the company you work for?

AMP stuck in a spin-only sustainability cycle

2010-03-21T11:47:00-07:00

Following an earlier inspection of its web site we attacked AMP Limited for its apparent hypocrisy in selling sustainable investment products and promoting its experts to judge the sustainability reports of others, yet failing to put its own house in order in creating a meaningful sustainability report of its own.

This time around, Cloud Citizen put to AMP Limited its standard list of opening questions in an approach to its media representative, Sarah Hudson. As fairness dictates, we've faithfully reproduced her response at the foot of this post.

To only one of our questions - "Who is your organisation's highest-ranking Australian officer with explicit responsibility for its climate-change and environmental-management undertakings?" - did we get a direct and straight reply. She named Stephen Dunne, AMP Capital Investors' managing director. We're not quite sure what his qualifications are. As for the rest, just as with anyone failing to offer a direct answer to a direct question, our concern lies in what falls between the cracks of our enquiry in her reply.

AMP, in a manner not dissimilar to many other corporations, wishes to conflate the issues of environmental responsibility with what it opts to undertake in the broader social arena under the rubric of corporate social responsibility. But there's a difference. AMP's business impacts on the environment affect us all while its public relations gestures in other areas are largely something we can all ignore if they're not targeted at us.

This is a tactic of PR puff on which Cloud Citizen, given its narrow focus on which corporations are and aren't acting to mitigate their effects on the environment, is disinclined to let any corporation off the hook. (But, check it out: at best, one might describe the cupboard as bare, anyway.)

On the first question, of how AMP intends, essentially, to change and innovate in response to climate change, Hudson, as you will see, offers no reply at all, or at least one that doesn't address the question. Can one assume, therefore, that at AMP innovation as a response to the environmental problems facing civilisation is simply not a valid response, even when one's investments (those that aren't declared "sustainable") might be among the problem's causes?

On the question of where we could view its declaration on how it is changing its Australian procurement policies in order to minimise its climate change impacts, we were given a reply that its "procurement policy includes bi-annual reviews of [its top suppliers'] corporate social responsibility commitments" [those weasel words again] and a listing of its commitments. Yet, clearly, not all suppliers (say, those which sell it pens and toilet rolls) can be "top", and would therefore be extremely unlikely to meet any of the criteria offered in the company's response.

On the question of its environmental management policies, from its sniffy response, "AMP does not use ISO certification", it is unclear whether the company considers this international standard of environmental management systems inadequate for its purposes or simply beneath it.

For the benefit of readers unfamiliar with ISO 14001 (or its European counterpart EMAS), in anticipation of 1992's 1992 Earth Summit in Rio, the World Business Council for Sustainable Development concluded that business needed to develop international standards on environmental performance so that organisations around the world could operate on a level playing field. It set in train the development of the ISO 14001 standard for this purpose.

Major companies sufficiently resourced and committed to showing their environmental credentials in their local community should surely use this as their baseline. Why is it not being applied at AMP?

AMP says its CSR initiatives include being a signatory to the United Nations Principles of Responsible Investing but it’s hard to see why it wouldn't for the veneer of international prestige this offers, while requiring no commitments in response. This is simply good for business.

Likewise, membership of the Investor Group on Climate Change is simply that of a club recognising it is in all members' interests to belong to an organisation that offers them better protection through the sharing of information that can serve to minimise any member's individual risk. Being a signatory to the Carbon Disclosure Project is likewise a no-risk undertaking allied to its membership of the IGCC that enables it to better understand the risks to which businesses are exposed in their carbon outputs.

Given its scale and market position, it would be hard for AMP not to be "fully committed" to the Australian government's mandatory Energy Efficiency Opportunities program as it can only benefit by becoming better aware of ways in which it can save on energy usage across its properties - as it can by participating in the local Sydney CitySwitch Progam. Why wouldn't it participate in such undertakings?

That AMP wishes to present the meagre trickle downs from its policies as a win for society leaves it no less exposed to enquiry as to its real local commitments to the environment as a Sydney city resident. It may be the biggest in its industry, but it is signalling clearly that this is one area in which it is not a leader and can be beaten for public favour.

By hoisting the figleaf of one division - AMP Capital Investors - as the symbol of its leadership, it demonstrates little but an ad hoc, opportunist response, cherry picking those things against which it can obtain favour against those that demand real commitment, courage, investment and leadership.

Perhaps what we need to identify and focus on in greater detail is where within AMP the barriers exist in its own adoption of more sustainable practices across its business.

Whatever, Cloud Citizen would appreciate help in getting under the skin of AMP to understand how it really works within. As with all city residents, if we were to pool energies to make this an item of discussion at its board table, we might really begin to see some change.

So, who in this organisation most needs to know about this, and is likely to stir up the hornets' nest within? Somewhere within AMP is an activist just itching to get this one into play.

You can view AMP’s Cloud Citizen sustainability profile here.

..............................................................

Sarah Hudson's reply is here.

Where can we view your organisation's local (Australian) declaration on how it intends to respond to climate change through innovation and changes in the conduct of its business?

AMP clearly discloses its Corporate Social Responsibility (CSR) position on its website under About AMP in the Corporate Social Responsibility section. Many of AMP’s environmental initiatives are led by the investment manager AMP Capital Investors which uses the investment decision process to influence environmental, social and governance outcomes.

AMP’s CSR initiatives include:

completing the FTSE4 Good and Dow Jones Sustainability surveys
encouraging responsible investing, including;

o Signatory to the United Nations Principles of Responsible Investing

o member of the Investor Group for Climate Change

o Signatory to the Carbon Disclosure Project

o Publishing bi-annual Corporate Governance Reports

energy efficiency opportunities

o AMP is fully committed to the Energy Efficiency Opportunities (EEO) program and reports on results of energy efficiency assessments in line with the Energy Efficiency Opportunities Act which took effect on 1 July 2006,

o AMP has also a number of initiatives in place to reduce energy consumption throughout its tenancies.

minimising environment impact including;

o Participating in Government programs at the local (CitySwitch Progam), federal (EEO program) and international level (UNPRI signatory) to minimise the environmental impact,

o increasing waste recycling, and

o purchasing carbon offsets for all air travel.

_________________________________________________

Who is your organisation's highest-ranking Australian officer with explicit responsibility for its climate-change and environmental-management undertakings?

Stephen Dunne, AMP Capital Investors Managing Director

_________________________________________________

Where can we view your organisation's declaration on how it is changing its Australian procurement policies in order to minimise its climate change impacts?

AMP’s procurement policy includes bi-annual reviews of the corporate social responsibility commitments of AMP’s top suppliers. The review evaluates the following:

suppliers’ CSR stated commitment;
measurable targets eg CO2 emission reduction;
governance;
internal social and environmental programs;
staff engagement; and
independent ratings.

_________________________________________________

When did your organisation last certify its ISO14001 environmental management system with an accredited certifying agency in Australia, and where can we find it?

AMP does not use ISO certification.

_________________________________________________

When was the last date on which your company issued an Australian sustainability report and where can we view it?

AMP provides information about Corporate Social Responsibility including environmental, social and governance initiatives on its website and in the annual report. It does not prepare a separate Sustainability Report.

Sarah Hudson | Senior Media Manager | AMP Limited

Level 20, 33 Alfred Street | Sydney NSW 2000

 (02) 9257 2700 |  0424 034 059 |  sarah_hudson@amp.com.au

We're tracking the responses of top Sydney businesses on climate and environment, and you can help

2010-03-21T07:08:00-07:00

Cloud Citizen is an exercise in social or citizen journalism, applied to identifying the actions of Sydney's leading corporate management teams on the challenges of climate change and environmental depletion. It is the people's account on corporate environmental stewardship.

What has until now been missing is a common account, open to everyone, that tells us exactly which companies are doing what on these critical topics, and against which, using the tools now available to it, the public can ask its own better-informed questions of their corporate citizens. This site and its accompanying discussion on Facebook aim to create an open and fair account of progress, and both to report on and assist in guiding that questioning.

Out of it, rigorously built independent “social sustainability profiles” will enter the conversations about the city’s major corporate residents and servants. It is a form of “reverse sustainability reporting”. The quality and focus of its questions will determine the quality of business's responses.

This is important to both business and the community. How authentically companies effect their actions toward sustainability can tell us a lot about their future competitiveness, opportunities and risks, as it will guide future customers – consumers and businesses – in their buying preferences.

Deeper academic research will follow into the convergence of modern social-media age management and sustainability practices – an entirely new discipline, with Accelerated Sustainability at its lead – which, as it is introduced into mainstream discussion, will become the topic of teaching in the classes of all ages around Australia.

Comment, provide information and help us ask the challenging questions of our leading companies. What you know can make a difference. Which organisations should we be looking at? Who has great leads and information? We want to know what you know.

It's very early days and so far, we have the beginnings of profiles for the companies listed in the right hand column shown on the table we've linked to here.

What are the barriers to sustainability in your own organisation?

2010-03-12T22:01:28-08:00

I was asked to prepare this questionnaire for a presentation I am to give in a couple of weeks’ time, so it seemed like a good reason also to post it here. It probably needs little further expectation.

Despite the fact that sustainability is growing as a competitive imperative, even those companies that would like to get started on this mission still bump into obstacles. This questionnaire is framed therefore to identify possible barriers to action on sustainability within your own organisation. It is not comprehensive and there are no prizes intended for right or wrong answers. It is merely intended as an aid to reflection and consideration of your own circumstances.

Using a scale of one to five, in which five is agree strongly and one is disagree strongly, to what degree do you agree with the following:

Vison and understanding of sustainability
In our organisation:

Senior management has worked to develop a definition of sustainability that everyone can recognise and understand
There is a shared understanding of sustainability that is applied every day in our work
I am required and able to apply our sustainability policy daily in my own work
Sustainability is recognised not as something that is just built into products but which is the result of the human processes and thinking engaged in work itself
Sustainability is an issue for discussion

Leadership
Our organisation's leaders('):

Apply a vision of sustainability to all of our company's work practices
Speak of sustainability and demonstrate a commitment to it in practice
Have overcome barriers to sustainability in the way our organisation is structured
Commitment to sustainability is applied equally by all divisional decision makers
Communicate their mission and strategic vision such that all who have to put them into practice are aware of them and able to do so
Reject short-term thinking and over-simplification of complex problems
Realised strategies - actual priorities and concerns - resemble closely those that were planned for

Competence-enhancing people-management strategies
Our organisation's people-management strategies ensure:

Strategy is developed collaboratively by senior managers and workers
The organisation works on, encourages and rewards commitment from its employees
Training and development practices are effective in promoting new ways of thinking
Performance and reward systems only promote behaviours that are consistent with sustainability
Leadership in our organisation can be built on and developed from wherever it emerges
The organisation only develops skills that support sustainability in operation
The organisation only recruits the sort of people who will be able to improve on the practices of the past

Culture and politics
In our organisation's culture:

Sustainability is a significant consideration
Sustainability is thought to reflect the most appropriate form of management
Sustainability initiatives are enhanced by the way power is used and decisions are made
We are expected to make a commitment to operating sustainably
Sustainability is seen as a shared priority across its divisional sub-cultures
Teamwork and power sharing are both encouraged and rewarded
The ways in which information is shared remove barriers to operating sustainably
Individuals' lack of resistance to change facilitates work on new initiatives
Our high-trust environment lifts all barriers to sustainable change
Sustainability initiatives are enhanced as a result of workforce commitment
Initiatives on sustainability benefit from the workers' trust in management's motives

Organisational learning
Our organisation's learning capacities:

Are strengthened across the organisation by management's belief in the need for sustainable change
Are aided by consistent management encouragement and support of individual initiative
Are aided by the effective sharing of information
Are considered of high priority and all initiatives are well executed
Have not been affected in spite of past downsizing and outsourcing
Have sustained no legacy damage from incidents in the past

The operating environment
Sustainability initiatives are supported by corporate head office:

Making available the required resources
Because they are perceived as being supportive of existing priorities and agendas
Because it won't let longer-term investments be undermined by a short-term sales focus
Because it sees change and innovation as legitimate undertakings
Because it anticipates the possibility of competitor activity in this area
Because it can calm customers' concerns that sustainability adds cost
Because it is anticipating regulatory obligations on competitors in our industry to act on the environment
Because pressure from its community is being anticipated and addressed

Workplace methods
In our workplace:

Management practices empower and support workforce competence
Past success has created a open-mindedness about the need for change
Past failures on initiatives that depart from the mainstream have reinforced the need for new thinking
Top-down management has been replaced by workplace consultation in pursuit of progress
Change and innovation are viewed as essential to successful management
Longer term improvement always trumps temptations for quick fixes
Alternatives to existing programs are always considered as legitimate proposals
Management's flexible approach favours sustainability as a preferred course of action
A history of well-managed change initiatives removes a barrier to sustainability
Management is selective about observing the advice and packages of external consultants

Resources and support
In our organisation:

The perceived benefits of operating more sustainably enhance prospects for investment
Sustainability programs are explored in detail when their costs and benefits are uncertain
Its systems of work and supporting technologies and resources are capable of supporting sustainability management initiatives
Time and resources are dedicated to lifting obstacles to sustainable operation
Sustainability management is considered primary to its real work
Our workplace's management style never has to call on bushfire-fighting capabilities
Management is confident it has the resources and capabilities to implement any sustainability program

Get the conversation going. Pass this round your own workplace. See what reaction you get - it will be interesting at least.

The beginning and end of an ideas business is, er, ideas

2010-03-08T12:00:39-08:00

Sometimes when you work in a professional media business you have to wonder how they are going to survive. There's a core ingredient in any business's sustainability DNA that says it must stay in business. That means paying attention to its core business.

On a magazine that means keeping the pot boiling with new ideas. Media means nothing if it can't keep planting new slants and interpretations in the minds of users. They are the ones who attract advertisers, which is where the real money is, or used to be, made.

The editor of a title with which I have become familiar, however, recently put out a call to her staff calling for new ideas. The publication is becoming stale and must work harder to retain its readers against the emerging competition. But, when a freelancer with a justifiable case came forward to submit her own ideas, she was told there was no budget for freelance commissions and that the reason the staff were employed was to produce the content - and come up with the ideas for it.

Therein lay the problem. Without fresh thinking, the magazine is unlikely, to paraphrase Einstein, to solve its problems with the same mind that created them. To keep a flow of ideas happening, new minds and new perspectives must be brought to old problems, and currently this isn't happening. Nor, given the nature of a parent organisation struggling against the forces of the new yet battling them with the thinking of the old is it ever likely to.

Media has enough challenges facing it already that to sacrifice the possibility of new thinking emerging for what are really quite inconsequential budgetary savings in the longer term scheme of things is really the last thing likely to help its cause. There was an opposition parliamentary quote aired last week in the wake of the death of former United Kingdom Labour Party leader Michael Foot that his election manifesto had been the "longest suicide note in history". One wonders if the traditional media is getting busy on writing a longer one.

Environment and social media equals potential public relations nightmare

2010-03-07T21:22:27-08:00

Having set up Cloud Citizen, there are two things that continue to strike me. The first is how inevitable is its requirement that business should account to the will of the people for its environmental impacts, rather than deciding this unilaterally and continuing business as usual.

The second is what a nightmare the new social media will create for the public relations representatives of the current generation unused to its ways and unable to engage in anything other than old-fashioned one-way media diplomacy. Retaining its authority is something the media itself is wrestling with.

PR is, however, traditionally a one-way communication exchange. I as the journalist want information about which I can write a story that tells my audience something you as the PR don't want it to hear. News is what someone wants to suppress; everything else is advertising, as the saying runs.

In this game, if I am lucky, I'll be able to get a tip from an extra source, corroborate my information and run with it as truth, giving my reader something worthy of their time. Playing this game, me attacking, you blocking, is what both you and I get paid for.

Another key part of this game lies in the time in which the journalist requires the information they've asked for. The first question the PR will ask is, what is your deadline? That gives them a get-out. If you plan to publish on a given date and the PR would rather not answer the question they can stall and simply wait for the deadline to pass. This can be upended in social media, however, where stories are no longer finite pieces with a given word length and a publication date but can become running issues on which anyone can comment and to which anyone can contribute. The environment and how companies manage their relationship with it is just such a topic. It isn't going away anywhere fast, and its relationship with their enterprise's activities is going to be hard for many to manage, or to explain.

So, what happens when the audience has access in theory to unlimited points of contact within your organisation, some actively leaking material and not all of whom have its management's interests at heart? How can you defend it when a crowd is on the attack and pulling together in a number of directions apparently all in opposition to your business's wishes?

How can you defend against rumour and innuendo when even management itself hasn't laid out the grounds for a decent defence, and you're the one in the middle? Defending your organisation on the environment looks like this when you've got no policies in place and no documentation to assist in proving a fragile case.

There are many Sydney businesses who when suddenly faced with a wholly different order of questioning are going to find this quite discomfiting.

What is a social sustainability reporting system?

2010-03-01T14:56:48-08:00

You can't compare apples and oranges and to this point we've lacked a consistent way of interrogating Australia's businesses on their undertakings on climate change and the environment.

Not that many companies haven't erected convenient smokescreens. If we want change, though, we must become more serious and more organised about it.

In the established model, those larger companies that report on their efforts towards sustainability do it of their own volition and select those of their activities and impacts on which they will report, offering no dialogue or possibility of recourse to their audience.

We are flipping this on its head.

In a social sustainability reporting regime, the concerned internet crowd, guided by experts and interrogators in its midst, identifies and homes in on a company's negative environmental impacts to tell it exactly what it wants to see that target company reporting on.

Many companies will find the potency of such a sustained social enquiry - conducted in parallel through Facebook and other key social media - uncomfortable, or possibly disruptive.

But even businesses in that camp with a mind to do so can find in it an opportunity to turn it to their competitive advantage.

For new, more sustainable businesses to flourish, old ones must weaken

2010-02-19T18:57:17-08:00

If we wish to stimulate the creation of new companies capable of solving problems in new and increasingly sustainable ways, at least part of our solution is clear. We must simply apply the necessary social pressure to highlight the weaknesses of the incumbents. It is the history of capitalism that the new emerges from the shortcomings of the present.

This post, then, is a precursor to one about a way in which we can begin to create that pressure to bring about a more authentic form of reporting by corporations on their true environmental impacts.

But first, we must dismantle the framework of perception that passes for what we currently understand as corporate disclosure on the environment.

I've complained about the inadequacy of companies' sustainability reporting endeavours here at Accelerated Sustainability and in the piece published in the journal of Chartered Secretaries Australia that you can download here but I'll recap on what I believe to be its greatest shortcoming.

We live in an age of spin. Public relations has become the force that drives our relationships with companies, social organisations, the political establishment to create what we see and our understanding of what is true in the world.

Yet much of what corporations present to us as truth is in fact nothing more than a well worked out and defensible position which is impenetrable simply because without good cause the media lacks the time, motive, or force with which to bring the myth down. And if the media can't do it, it is going to take extraordinary effort on the part of individuals or even committed activist organisations to begin to bring a well prepared corporation to heel. Or at least, that's the way things used to be.

Sustainability claims are part of the myth a well prepared corporation perpetrates. Let me give an example.

A visitor to the site of brewer Lion Nathan (now owned by the Japanese brewer Kirin) will see that it displays its commitment to sustainability proudly on its home page, and its alcoholic product featured in situations in which people drink too much as being ones of "sociability". This all looks good, even if it is a complete nonsense.

Yet in a story that appeared in The Australian Financial Review of on October 28, 2009, entitled "Drink giants face $500m recycling bill", its representative, the beverage industry lobbying operation, came out in force to stop federal government plans for a drink container recycling scheme, claiming the proposed levy would cost the industry nearly $500 million a year.

The company opposed a national 10¢ rebate on bottled and canned drinks. "Container deposit legislation carries a huge cost to consumers and the community for marginal additional environmental benefit over kerbside and public-place collection," its spokesman, James Tait, said.

What is this industry, however, other than a huge waste-generation machine, whose product's value in use represents but a fraction of the time ultimately bound up in its creation, packaging, distribution and destruction.

Nonetheless, it remains cheaper to claim sustainability than to back it up with deeds.

Because it costs money to create a sustainability report, such documents are, similarly, an act of corporate fraud. They are created only by companies that have something to hide and are well enough resourced to want to do so. They are a constructed corporate reality designed to picture a profit-maximising business as an feeling entity confessing to its - minor - sins, and they portray it as faithfully working on building its contribution to society.

But because sustainability reports are voluntary documents - there is no law mandating them, no set of regulations controlling their content, no individual body to haul them to account for the mistruths they perpetuate, their mistruths and their purposeful omissions - companies can say what they like in them.

And because they are paying for the privilege, those documents will be produced by professionals who ensure their appearance will appeal to readers, and that they will say exactly what the corporation wants its audience to believe.

Sustainability reporting is cheaper than change.

Even in a big company in which the senior executive body is a committed to far-reaching change, it takes a lot of effort to turn it around and to transform the way it works.

Economist Reginald Coase won a Nobel prize for his 1937 exposition in 'The Nature of the Firm' of the "transaction costs" that determine how and why companies exist. Put simply, a company comes into being when the cost of communication between its various agents is lower when organised in its corporate form than it would be for a grouping of individuals to accomplish the same task.

When you look at the complexity and resources required to run any successful modern business of scale, you can understand this, and how hard it would be for you and I to attempt to compete against it as individuals.

But you can also understand how, once such an organisation has invested huge effort and expenditure on refining its processes to maximise profit, how difficult it is, even with a committed management team, to unpick its logistics once they become fundamental to the way the business works.

It is likely that those in control at many companies would like to act more sustainably (and we can quibble over definitions at a later time), or at minimum make their operations more environmentally benign. Not all humans are evil, after all, and most executives have families to whom they would like to pass on a better world.

But the intractability of an organisation's processes and the nature of the behaviours for which its bonus-earning senior executives are really rewarded represent the biggest and most obvious barriers to real sustainability. This is the same in any organisation driven principally by the imperative of shareholder returns. People don't like to risk scrambling their golden eggs.

For an organisation to behave sustainably - say, minimising its environmental footprint by monitoring the toxic content and production methods of what it buys from suppliers; creating the reward structures that engender worker enthusiasm for doing the right thing in its own workplace; using human ingenuity to construct processes that deliver innovative breakthroughs that not only reduce its material load but grow the bottom line, sustainably - takes real effort and imagination on the part of managers from top to bottom.

That's why it's easier for a few people within a big company to get busy on the glossy report. And if they don't like an inconvenient fact, well, just whipping out a sentence that no reader will notice because few indeed will give a damn about what is included let alone spot the omission, then deleting a line and rejigging the design of a page is infinitely cheaper than reorganising the processes that gave rise to the inconvenient fact in the first place.

If there is a crime in corporate sustainability reporting, it is one that can presently not be controlled by any stronger force than notions of morality alone. It is that despite our vague awareness that almost all business has an impact on the environment in some way, the companies that choose to report should be permitted to decide unilaterally on which of their environmental impacts they will report, and on which they won't. Such is the nature of the smokescreen that their reports typically answer questions that no one is asking.

But things are changing. Sustainability reporting's decaying form belongs in the past, in the age of a one-way media propped up by the corporate megaphone. But as its own players are now discovering to their increasing cost, the media is no longer a one-way channel.

The internet brings new channels and new hope. If its capacity for cross-pollination of wisdom between peers now makes it hard, if not impossible, for corporations to block negative messages the crowd wishes to share, it is going to get harder. The concerned audience now has the tools to erect its own framework of demands as to the ways in which companies will be required to report on their environmental conduct. And if for no other, for this reason alone, the future of sustainability reporting looks nothing like its past.

Breakthrough technologies - the internet itself, Google, Craigslist, YouTube, iTunes, iPhone and likely next the iPad - are often hailed as being "disruptive" because they unpick the ways in which business has been conducted in the past to create opportunities for a host of new competitors.

In the post-industrial era (most articulately heralded by Peter Senge in his 'The Necessary Revolution', an excerpt from which you can find here, the future of our environment and, indeed, the health of our civilisation, lies in the rise of organisations that are more agile and transparent, and better able to do their business without dumping on anyone else's patch.

These businesses will emerge in the gaps we highlight from our closer social investigation of the true environmental impacts of the incumbents. They will prove truly disruptive, if simply because incumbents built on wasteful ways are even less likely to be able to respond to new forms of sustainable management practice than they are to simple threats posed by new and nimble technology.

These organisations will be less dependent on the stonewalling of professional spin, will have authentic sustainability management and reporting woven into the fibre of their beings, and will be capable of delivering value where bigger competitors can't tread.

If we wish to give rise to this new order, one of our principal challenges is to create the holes into which existing corporations can dig themselves. And that, with guidance, should not prove too hard.

Remember, even the most faceless of corporations comprises human beings. They dislike change. And that makes them fundamentally vulnerable.

Let's bring it on.

Daddy, what did you do in the sustainability wars?

2010-02-17T14:42:47-08:00

I've written a piece, 'The competition of sustainability', published in Keeping good companies, the journal of Chartered Secretaries Australia, in November 2009, which is linked to in the left margin of this site (and you can download it here) about the new mode of competitive sustainability reporting that will drive change in corporate actions on climate change and environment. It will do so because unlike prior reporting methods, it does not just represent cost but is a liberator of savings and innovation across an enterprise. It is wholly modern and utilises social media technologies to achieve its aims.

CSA, which commissioned it, is the professional body representing Australia's company secretaries and its membership has its necks on the block on all matters of mandatory corporate disclosure. Hence, those members must be interested in all developments in sustainability reporting.

The title of this post is relevant because it needs to be recognised that the only thing that has any chance of success in mitigating our environmental failings is to change the course of managerial decision making. Nothing gets done in any business until a manager decides it will be so. Our environmental problems are therefore the direct cumulative result of successive generations of managers' choices in executing their business. They were, of course, just obeying orders. They were bowing in obeisance to the shareholders. And no, they weren't paid to think about the externalities.

So, this now it's time to put the battle squarely on their turf.

If we are to be successful in curbing the corporate actions that result in a denuded environment and overheating atmosphere, we must instigate a war in which the culprits are named and forced to compete for public favour, or shamed otherwise.

It must be one in which some of the best generals are forced to leave the field bloodied, defeated and bowed. And there must be defectors from many sides when the forces they represent are shown not to be quite the A-squads they are presented to be.

We're starting this war in Sydney. We're using this site, Cloud Citizen, and we're seeking skilled renegades and mercenaries to help out. We're going to use the social media as supply lines, blood will be spilled and it's going to get nasty. I'll be posting on it again regularly, but contact me if you can help, want to know more or are a good strategist who can help draw up the battle lines.

When your offspring ask you, 'What did you do in the sustainability wars, daddy?' you are going to want to be on the right side. And you are going to want your answer to be good.

AMP Limited - hypocrisy on sustainability, climate and environment?

2010-02-16T12:31:46-08:00

It's a bit of a gift to an investigation of big companies' records on climate change and the environment that the first company on Cloud Citizen's Sydney corporate watch list should be both the nation's biggest insurer and a provider of "sustainable" investment services - but be unable to boast its own sustainability report or, for that matter, a demonstrable link from its web site to a current, certified environmental management system.

Such undertakings are fundamental in demonstrating a corporate commitment to our common environmental good, and when we go searching for evidence of such a major company's undertakings on the environment, we are serious about wanting to find some. We can only be extremely disappointed, then, when they add up to nothing more than a fig leaf.

But get this, because this really is a matter of the most splendid irony.

AMP Capital Investors' Ian Wood, its senior research analyst for its Sustainable Alpha Fund - that's the sustainable investments arm of this investment giant - was a judge on the Association of Chartered Certified Accountants (ACCA) Australia And New Zealand Sustainability Reporting Awards, 2008. The link is here.

Here's the question. If AMP is happy enough to lend Ian Wood out to judge the sustainability reports of others, why has it not got its own sustainability reporting house in order? Does this not seem somewhat hypocritical?

Look at Wood's credentials:

Dr Ian Woods

Dr Woods is the Senior Research Analyst for the AMP Capital Investors Sustainable Alpha Fund. Ian’s prime role is to the assess the management of intangible assets of companies on the Australian Stock Exchange through the assessment of environmental, social and governance (EAG) issues and in engaging with these companies in the areas of corporate social responsibility and sustainability.

Ian also undertakes assessment of greenhouse gas risk issues for the wider AMP Capital Investment teams and has undertaken a number of studies in this area. Since joining AMP Capital in December 2000, Ian has been instrumental in the further development of the Sustainable fund assessment process used to integrate ESG issues into the fund’s investment decision making. Ian’s particular focus has been in considering how the issues of sustainability and ESG relate to financial investment and the investment risks.

Ian’s background is in environmental and risk consulting both in Asia/Pacific region and Europe, working with most of the large companies Australia and the UK. He has a PhD in Chemical Engineering from the University of Sydney, a Masters of Environmental Law and recently finished an MBA at AGSM.

I've met Ian Wood and he seemed a decent enough bloke. But, if he is clever enough, and his intellect doesn't seem to be in doubt, could it not be better deployed in boosting AMP's own social sustainability profile, and perhaps its credibility?

What a social business sustainability index is and why we need one

2010-01-22T20:31:41-08:00

Companies that report on sustainability and their efforts toward it should be applauded because it could augur the beginnings of change within a corporation’s behaviour. But it is comical that anyone should take them seriously enough to give them awards.

Anyone knows that the executives running most companies are in denial about the negative environmental consequences – as economists would depict them, the “externalities” – created by their actions. Most corporate decision makers would be unhappy for those consequences of their decisions to be made public.

And telling porkies on paper will always be cheaper than confessing to and fixing a significant externality within any reasonable time frame. Shareholders are complicit in such arrangements.

For such reasons, it is comical that anyone or any commercial body, such as Australia’s ACCA should take seriously enough the exercise of sustainability reporting to mount an annual exercise to judge the large corporations that produce them. Even if presented as fact, it is an award for fiction in a corporate context. It is the reward of a fig leaf of respectability, no matter how noble and highly qualified the judges might sound, or how seriously some might take themselves in that role.

The problem with rewarding the status quo is that we end up with more status quo. So if we are to reframe the idea of reporting, we must also redefine what we expect and the framework that can deliver what we need to save the environment and ward off climate change.

I’ve stated elsewhere that quite apart from its fictional quotient and its failure to deliver any real change, the substantial problems with sustainability reporting are that not enough organisations are yet compelled to do it, too few would know how, and that the reports that get published answer questions no one is asking.

Yet pretty much all companies are vulnerable on their environmental records and the only way we will get a better result is by holding them more effectively to account.

Banks lend money to businesses that despoil the environment daily in their acts of creation and distribution, and insurers and superannuation funds invest in them. Those two acts, while creating the sometime miracle that is capitalism, are reliably propelling us towards the precipice of potentially catastrophic climate change. There is no sign of them stopping any time soon. All are greedy for growth, and their stockholders for its financial reward.

What we need is a better way of unpicking the interlocking system of actions such that each of the respective players on the stage can better reflect on how, or whether, to play their own part in preventing climate disaster.

The kind of framework that best delivers change will likely not be driven by government but constructed through activism and community pressure. It is a web-driven social business sustainability index.

In a social sustainability index, it is the concerned consumer that asks the questions of what those companies are doing for the environment in real, practical ways. Those questions will typically be guided by the best informed among them, and those best informed may be industry specialists with an insight into the impacts of the businesses in their sector, or they may be academics studying an industry. Alternatively, they may just be those who’ve studied and read widely enough to ask the sort of questions most companies will shy away from answering because of the negative consequences for reputation and profitability they create.

In a social sustainability index, it is the public that identifies the companies it thinks should be on its register. Community opinion then not only begins to drive the reputation of the organisation from without based on the plausibility its responses, it also identifies moles within who in turn are going to name the executives making the lousy decisions that foul up the planet for everyone else. And it identifies their bosses.

The index’s community then solicits those directors’ and executives’ email addresses so they may be held to account personally for their rotten decisions. It identifies their suppliers and customers so that they may also be held up for scrutiny. It creates ripples of discomfort that work their way up and down the supply chain of each industry it touches until one of its players breaks ranks and effects the changes that affect the dynamic of the competition within the chain.

The index’s community engages the blogosphere, Facebook users and the mainstream media in the pursuit of miscreant organisations and executives. Its questions give rise to other, better, more sharply honed platforms of interrogation that no organisation will be able to shrug off comfortably without serious, demonstrable, credible demonstrations of change within.

Part of that change will the reward experienced for and motivation of new behaviour toward sustainability within the organisation, because, as any good management student knows, you get what you measure and what you reward.

And that is how we drive change, because the payoff in reputation of failing to act when the public is so clearly asking your organisation to do so will be considerable, both in financial reward, or loss, and in the attraction of talented individuals who wish to work for organisations motivated to do the right thing.

One might hope that knowing such an outcome as a socially constructed business sustainability index is an inevitability because its stirrings are here and now in the words you are reading (and probably others) would be enough to precipitate change within some of our leading organisations. But don’t hold your breath.

Nevertheless, if not educated in the finer arts of sustainability management, the intelligent segment of the consuming population is now educated enough to know that their purchases have consequences for the environment. Many, if not all, are concerned about those effects.

These are the most important customers of all because their decisions and attitudes influence others. The withdrawal of their custom can have disastrous consequences for those they would buy from. And when a company loses a sale, it might be a long time until it shows up in the accounts and very much longer before it finds out why.

We must identify which companies we most want to haul over the coals and get to work on building the index. It contains the future of the businesses we know.

This post first appeared at Accelerated Sustainability.

Key considerations in an investigative campaign to increase business accountability on climate change

2010-01-14T00:49:46-08:00

As someone whose day job is journalism, I see the real story on climate change as being that of how individual managers working within organisations are acknowledging and attacking it and environmental depletion at base level in their operations - and how they are not. Yet, mainstream and business media's focus has seemed so far to focus on issues of emissions trading schemes and the politics of government (in)action. Neither, frankly, will solve our shared problem.

Instead what we need is concerted, organised community action. The anthropologist Margaret Mead's words are perhaps over-quoted, but for those who aren't familiar with them they are perhaps the best explanation of the responses needed: "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has."

In short, we need better ways of uncovering and understanding what really goes on within organisations and what it is that can be exposed to bring about better outcomes. We are now equipped to do this.

Through my studies and professional interests, I came up first with a solution, a new way of sustainability reporting that would deliver workplace-wide change in organisations that adopted it. Stuart Wilson, chief executive of the Australian Shareholders' Association assured me that he believed it to be that discipline's "future model". You can read about Stuart's comments here and about a tentative early implementation of Accelerated Sustainability here.

What I didn't have at that point was the way of kicking the demand to use it into wider play. Through its ability to guide public enquiry, I believe Cloud Citizen now offers a worthwhile opportunity to deliver real progress in improving business-related sustainability outcomes.

Why and how
Here is a simple summary of the why and how of this investigation.

Consumers are not responsible for the mess this planet is in, but the decisions of executives running the organisations that drive the economy are.
Companies can only be held accountable when they report on their actions towards environmental sustainability, and we need to apply pressure to ensure that more, and ultimately, all of them, do so.
As a community we must recognise that it should not be corporations that decide on which of their negative environmental impacts they will report (or if they report), but the community, guided by its informed and better qualified members and our collective intelligence. That's why we need to enlist senior executive retirees, environmental scientists and the like to bring attention to the shortcomings of the companies, boards and executives that are our focus.
But getting more companies to report is not enough. Current corporate sustainability reporting is whitewash and inadequate to solve our growing problems and we need to see those that are doing so using better, more credible methodologies that promise genuine and recognisably improved environmental outcomes.
To ensure this outcome, we need, collectively, to construct a better platform on which organisations compete more effectively in winning customer and community favour, as those that can pull this off will surely do so at the cost of competitors and to the benefit of their shareholders; pity only, though, those losers unable or unwilling to play at any cost.
As an enabled, empowered community, it is our responsibility to ask those better questions that result in socially constructed profiles for businesses. This will bring to wider scrutiny the negative environmental impacts of, ultimately, all companies that serve us, draw attention to how effectively they respond to our enquiries, and enable us to follow their progress in meeting our expectations.
This is a radical suggestion, but we must also not be fearful of attaching individual sustainability profiles to identified company executives whose decisions determine our shared collective environmental fate.
As it is their choices that are responsible for their organisations' impacts, such profiles could follow each and every executive throughout their careers, as long as they carry decision-making authority. Individually, such managers and their decisions are either part of the problem or part of the solution. There is no middle ground.
We must offer companies better alternatives in the manner of their reporting, such that they learn more effectively how to lessen their environmental impacts and innovate their ways into a better future for all of us. (The Dunphy scale, described here, gives a workable description of the paths corporations must follow.
We must demand better leadership and improved qualifications as the ticket to board seats in all of our listed companies. This will have a lasting and profound impact on the change we need to see.
Likewise, we must guide and gradually educate the public and each member of workforce in the meaning of sustainability, what it delivers in benefits to its workers and the world and how to recognise a sustainable enterprise.

In Australian parlance, this is a big ask but perfectly within the realm of the achievable. Let us not waste time in getting to work.

Isn't Sustainable Sydney 2030's vision missing the point?

2010-01-08T21:25:00-08:00

It's now significantly more than a year since Clover Moore's City of Sydney Council launched its vision for the sustainable city. But it's still missing an obvious ingredient.

A sustainable city is of necessity one that drives and rewards innovation towards sustainability in its businesses. So why isn't Sydney making business innovation the centrepiece of its initiative? It is after all, a city's business residents that determine whether or not sustainability is going to be delivered.

Cycle lanes, parks and traffic reductions in the centre of town are nice things to have, but a city's business districts are where the damage is done to the wider community space. If any campaign is going to go beyond simply delivering a more liveable inner city, to deliver real sustainability, it must articulate how corporate citizens are going to be motivated to participate and change their ways.

Yet, but for a few airy, nice-sounding words the city's sustainability vision does none of this.

And yet sustainability is entirely a problem of corporations' making dumped on the rest of society. A city's citizens can only buy and consume what is offered; they are innocent victims and (until now) not drivers of the products and services available. Yet, in the council's undertakings there is no mention whatsoever of how it will influence business to the ends of fixing the city's businesses' impacts on the wider environment. A council that did that would be worth voting for.

So why, instead of the empty rhetoric [found here on its site is there no mention of business change at all in the council's vision statement?

And what is this nonsense, without mention of climate change, environmental depletion or pollution:

The City will commit to partnerships and cooperation between governments, the private sector and the community to lead change.

Maybe the council doesn't have one. Maybe it should. We can push it to take on and deliver more.