This week’s Norwegian Developer’s Conference included a skit that involved inappropriate and offensive elements and vulgar language. We apologize to our customers and our partners and are actively looking into the matter.

Microsoft runs a comprehensive diversity programme and it has never been afraid to take its leadership to the barricades on such issues of social justice, so I'm not sure this is altogether a fair comment on Microsoft in particular. I suspect it's rather a sign of a more endemic problem throughout the industry. Matthew Garrett of Redhat writing in his blog said:

At the most basic level it's just straightforward childish humour, and the use of vaguely-English strings in magic hex constants is hardly uncommon. But it's also specifically male childish humour. Puerile sniggering at breasts contributes to the continuing impression that software development is a boys club where girls aren't welcome. It's especially irritating in this case because Azure may depend on this constant, so changing it will break things.

But what about the business case for diversity? Can we really afford to alienate 50% of the workforce? In a thoughtful piece ZDNet's Tom Foremski wrote:

Silicon Valley is running hard to maintain its position as the global innovation engine, against competition with dozens of fast growing innovation centers around the world.

Which is why it's puzzling that Silicon Valley has such a large gender gap in key sectors such as angels, VCs, entrepreneurs, engineers, and in senior executive roles.

Why isn't Silicon Valley using all of its people? 

A cursory look at the numbers overall makes grim reading. From a paper published by the Anita Borg Institute, Minorities and High Tech Employment:

Focusing on gender alone here are the stats from the major tech leaders, many of whom are corporate partners of the Anita Borg Institute - an organisation dedicated to the advancement of women in tech, who at least are prepared to be transparent:

Most concerning of all is the long list of tech leaders who are not yet prepared to publish any performance data at all. Without evidence and transparency are women and minorities just supposed to trust that they will be welcomed and supported upon recruitment?

Among those not yet disclosing: Apple, Adobe, Amazon, Applied Materials, Broadcom, Brocade, CA*, Facebook, Google, Intuit, JDSU, Juniper, Marvell, NetApp, Neustar, Salesforce, Thought Works, Yahoo!, LinkedIn.  

*CA does disclose women at executive level which is currently 8% and perhaps the most comical explanation for non disclosure comes from Google in 2010 when it then claimed the race and gender composition of its workforce is a trade secret.

In a week when Marissa Mayer joins the growing ranks of women in top tech jobs, the numbers (and lack thereof) beg the question of whether the success of Mayer, Whitman & Rometti represent the exception rather than the rule for women in tech.

Updated with VC data:

At the start up end of the industry things don't look much better. CB Insights research of 160 funded start ups from January to June 2010 show the same depressing trend. However, one proof point perhaps for the business case for diversity is that mixed gender start up teams are attracting more funding.

And lest we think that the problem is completely universal and therefore immutable consider the statistics from Massachusetts which together with California and New York make up the big three states for VC funding. Of the 16 start ups funded in the period January to June 2010, 31% were all women founders. Compare this ratio to just 3% each in New York and California over the same period. 

Referring to the recent Kleiner, Perkins, Caulfied and Byers sexual harassment lawsuit Tom Foremski came up with an ingenious mitigation idea that could just be the start of a tide turning:

I have a great suggestion for a new VC fund from Kleiner Perkins: the $100 million Triple 'F' Fund- "The Female Founders Fund - Investing in all our people." It can't hurt KP's reputation beyond what's already done, and the fund would probably do very well.

How about it?

"The scientific community in the US government are big users of Apple," Frisbee said, adding that they were "particularly influential" in convincing the tech giant to resume its participation.

Makes you wonder just how much kit these scientists are buying at what margin to have this kind of influence. Could other corporate customers and individuals have as much influence now that Apple has shown its softer under belly? Consider that just last year, then Timberland CEO Jeff Swartz lamented:

Why should consumers like me have to choose between transformational technology and moral consumption? To iPad, or not to iPad—why is that the question? Why shouldn’t Apple’s leadership instead have to raise its game, and make their cool products and their cool company more socially accountable? If Apple would replicate the speed-to-market rigor and innovation of their product development in their corporate responsibility agenda, consumers like me could have our cool and self respect. .......Apple should keep exceeding my expectations for products, but not at the expense of my expectations for social and environmental responsibility.

Later writing in the comments section of this blog Swartz didn't dare ask Apple to make specific changes to its product specifications but instead focused on some corporate level jiggery pokery:

James - thank you for challenging me to be more specific about a call to action for Apple. .......Here's one specific action Apple could implement without batting an eye, that would signal a commitment to leading with technology and sustainability: What keeps Mr. Jobs from establishing a Board level committee, charged with overseeing Apple's business practice?

So if Apple will now roll over on green for a few highly vocal government scientist fanboys, what about the fate of O2's approximately 40 million network subscribers in the UK and Germany still waiting for Apple to participate in O2's product eco rating scheme? 

 Speaking at London's Green Monday event, (watch13:44 to 15:00) UK O2 CEO Ronan Dunne ruled out blacklisting Apple for non cooperation with O2s eco rating but he does note a big change at Apple since the ascendance of Tim Cook. Dunne accepts Apple are unwilling to cooperate with an individual customer eco-rating but says they would reconsider their position if there was an accepted industry standard:

We absolutely engage with them and I have personally spoken to Tim Cook on a number of occasions and expressed our view on the approach we have taken. So it’s an open dialogue. ………..Since Tim has taken over you see a lot more visibility on their agenda, his visits out to Foxconn and other things. I think definitely the momentum in that business is good. If our conversations with the ITU and GSMA go somewhere maybe there will be an eco rating on an Apple soon. 

After last week's EPEAT u-turn maybe O2 and its customers have more muscle than they think. 

My colleague Heather Clancy details how IBM successfully made environmental protection pay off with an energy efficiency contribution of $43 million to the bottom line last year. But IBM's big sustainability numbers are in the social dimension with a total of $196 million in corporate giving spent in 2011. Admirably, IBM has consistently claimed to 'eschew checkbook philanthropy' where corporate citizenship is pushed below the bottom line with tax deductible cash donations made without much strategic commitment. Instead enlightened companies leverage this activity above the line with deployments of technology and skills to achieve social goals while developing talent and building markets for the future. In an interview with the Wall Street Journal last year IBM's VP for Corporate Citizenship went as far as to say IBM had given up checkbook philanthropy altogether. 

But technology and talent is at the heart of business execution where a battle for resources, bandwidth and margin rages. How much tolerance will business leaders have to diverting corporate resources to lower margin & longer term social development activities rather than shorter term, profit maximising commercial activities? Cash is an easy and tempting answer to the community engagement impulse.

If we look to the 2011 IBM numbers we see that the cash/in kind donation ratio deteriorated in favour of check book philanthropy for the first time in five years and we also see overall giving in consistent decline as a percentage of non operating income before tax. However, IBM's easily outspends industry rivals such as HP which has been all over the shop along the the cash/ in kind mix trend. And what do we make of the relative difference in rate of giving between IBM and HP? Is IBM overdoing it, is HP missing out or delivering better value to shareholders and better impact for stakeholders? The point is that both are emphasising spend over all else but not much in the way of ‘shared value’ measurement.

Four other indicators troubling indicators are bound to have management at Armonk concerned:  

• The illness and injury absence rate reported increased by 33% over last year
• IBM failed to report any employee satisfaction indicator in 2011 for the first time since the company began reporting 10 years ago. Last year's number had already sunk to a five year low of 65% compared to a high of 71% in 2002. (The report explains a transition to a more 'contemporary approach leveraging technology and analytics' to more 'nimbly' measure employee satisfaction with targeted surveys using 'predictive models', web surveys on hot issues and employee panels. While this new approach should offer much richer insight based on qualitative and quantitative data no analysis of performance at all is offered. Progress?)  
• Learning investment fell to $466 million from a five year high of $648 million in 2008. We could do with a value and impact indicator or some narrative – perhaps learning objectives are reached more efficiently now.
• Learning hours per employee fell 6% from last year to 63.  Again, this might not be a bad thing but we can’t know with the data provided.   

On supply chain due diligence IBM is clearly a class act with 462 audits carried out during the period compared to just 79 at HP. Here the effort is paying off for the least empowered - while 48% of sites initially audited by IBM were found non compliant with health and safety standards, this fell to just 3% upon re-inspection. This is a good example of impact measurement.

In her intro letter to the report, IBM CEO Ginni Rometty's sets the right tone and strategy for where corporate sustainability ought to be going these days:

Most crucially, we must create corporate citizenship and business strategies that are not merely “linked,” but one.

And yet in the expression of corporate citizenship as integral to corporate strategy IBM seems to somehow fall a little short. All the social engagement metrics for instance are outbound measuring expenditure rather than return on expenditure or impact. There is not much exploration of corporate citizenship contributes to ‘one’ strategy and there is clear blue water between the corporate citizenship programme and the Smarter Planet line of business. Absent too is articulation of the value creation cycle with human capital creating intellectual capital creating financial capital invested in human capital.  

Maybe the problem here is one of expectations raised by the Smarter Planet ideal making corporate IBM, in practice, a minor victim of its own commercial success. Yet, IBM continues to be amongst the very best, the most sophisticated and most considered in its overall approach. In the days ahead watch out for greater convergence of the Smarter Planet with IBM Corporate Responsibility. IBM is bound to raise the bar again for deeper integration of sustainability to its strategy and business model.

There is a lot to learn and look to from leaders like IBM. Next time I’ll take a look at IBM’s position on human rights.

This law is already catalyzing some positive changes on the ground, including demilitarization of some mining areas in eastern Congo and laudable efforts by certain companies to clean up supply chains............ Despite these efforts, the US Chamber of Commerce is working at all levels to derail the regulations and continue business as usual.

The Chamber of Commerce claims that it is too burdensome for companies to trace their supply chains and has argued for the rule making process to be re-started.

The US Chamber has form on opposing public policy with sustainability objectives, even to the extent that its more progressive members have had to go out of their way disassociate themselves or, like Apple, cancel their membership altogether.

On the issue of conflict minerals regulation Verizon and AT&T have themselves similarly broken cover to lobby the SEC on the record to weaken and slow down regulation. Verizon helpfully suggests:

Verizon recommends delaying the full applicability of the due diligence requirements of the Conflicts Minrerals Report until after fiscal year 2014, to allow DRC zone countries to develop the traceability protocols and related infrastructure required in order to supply to the Conflict Free Smelters. .......... we recommend that the Commission move away from the position (taken in the proposed Rules) that non manufacturing issuers who merely label products they contract for or who have 'any influence over' the manufacturing of applicable products, are nevertheless subject to the Provision. Direct and substantial over the manufacturing of a relevant product should be the test for applicability.

Similarly AT&T lobbied the SEC:

In view of our remoteness from the mines, our poor visibility of conflict minerals content (we have a scant subset of the information our OEM direct suppliers have), and the enormous number of supply chain intermediaries between us and the mines, it is surely 'a bridge too far' to draw resellers into scope.

In contrast - and to their immense credit - AMD, HP and Microsoft have gone on the record with progressive NGOs asking the SEC to implement the new rules without further delay.

So who in the industry is behind the US Chamber's lobby? Surely the companies publicly supporting regulation could not be privately sending the Chamber out to attack the process? It would be unthinkable that any company could by commission or error of omission find itself supporting both sides of this issue. And yet the uncertainty is likely to fuel demand for transparency of the Chamber's support base & motives.

When the Chamber previously set out to oppose regulation on climate change, pressure mounted on businesses to directly clarify whether or not they backed the Chamber. Watch for a similar movement to evolve to pressure companies to also disassociate with the Chamber on conflict minerals.

Starting in 2013, Microsoft will require a cross section of its suppliers to provide reports on their adherence to the requirements listed in the existing Microsoft Vendor Code of Conduct. The code of conduct sets standards for legal compliance, business ethics, labor and human rights standards, environmental protection, and respect for intellectual property.

This is a good move in the right direction for Microsoft because when large corporations start to orchestrate their supply chains on sustainability it can have truly market making effects and unlock real value for businesses upstream and down. For example, leading British retailer Tesco recently assigned a 30% carbon reduction targetto its suppliers which mustbe achieved by 2020.Wal Mart is similarly working with its suppliers to improve sustainability performance.

For Microsoft to be successful in driving business benefits such as reduced cost,environmental impactand risk fromit's supply chain then it too will need to move beyond transparency to targeting performance. You can expect, once Microsoft has set up the process, it will soon afterwards start moving towards performance objectives too.The open question is whether the pace of action will be acceptable to the pressure groups who have pressured Microsoft to move on this now. Its clear from Liu's statement this is just a first 'step' for Microsoft and that his office intends to use Microsoft's momentum to now leverage the rest of the industry to follow suit.

Microsoft has taken an important step to promote sustainability and transparency among its global suppliers ...... If more firms showed such leadership it would hold more suppliers accountable for protecting human and workers’ rights, and reduce the legal and reputational risks that companies and their shareholders face. The New York City Pension Funds are taking this proposal to other companies and expect that they will follow the prudent path Microsoft has chosen.

Let the games begin.

In 2008 the Global e-Sustainability Initiative (GeSI) defined ten major sustainability issues for the ICT industry as follows:

• Climate change
• Waste and materials use
• Access to ICT
• Freedom of expression
• Privacy and security
• Employee relationships
• Customer relationships
• Supply chain
• Product use issues (including health, safety and wellbeing)
• Economic development.

Now in 2011 two of the major players in the enterprise market have seized on two of these issues as points of pretty fierce competitive differentiation.

First Salesforce. At Dreamforce Mark Benioffwarned against the 'false cloud'.

Salesforce back up the environmental claims with a reportthey commissionedfrom hired inguns fromWSP who estimate that theSalesforce multi tenanted cloud architectureis 64% more carbon efficient than a private cloud.Intuitively this wouldseem tostack up but Tom Raftery of Greenmonk, the authoritative analyst in this space, recently poured a big jug of ice cold water over such claims:

The mistake here is presuming a direct relationship between energy and carbon emissions. While this might seem like a logical assumption, it is not necessarily valid.

If I have a company whose energy retailer is selling me power generated primarily by nuclear or renewable sources for example, and I move my applications to a cloud provider whose power comes mostly from coal, then the move to cloud computing will increase, not decrease, my carbon emissions..........

.........The main problem though, is that cloud computing providers still don’t publish their energy and emissions data. This is an issue I have highlighted on this blog many times in the last three years and until cloud providers become fully transparent with their energy and emissions information, it won’t be possible to state definitively that cloud computing can help reduce greenhouse gas emissions.

Now to Oracle. As Larry Dignan reported fromOracle Open World - itselfproduced asa 'green event' under the watchful eye of Paul Salinger- Larry Ellison went on the offensive against Salesforce's multi tenanted cloud architecturenot byarguing the toss onenvironment,but byemphasisingthe supposedinferior interoperability,privacy and security architectural features of the Salesforce platform.

They put your data at risk by co-mingling it with your competitor’s data, .........you can check in, but you can’t check out. I like to think of it as the roach motel of clouds. Now that is a false cloud.......... You have a choice, and I’m pro-choice. The guys at Salesforce are not pro-choice.

With the appointment of a Chief Sustainability Officer at Oracle and Salesforce's sudden and recent commitment to environmental transparency, watch forthe sustainability warof rehetoricto escalate. Corporate sustainability has heretofore been a genteel game practiced with a plenitude of hand wringing. For the enterprise market at least it looks as if the gloves are off.

Disclosure: I am an employee of SAP and Greenmonk has been an occasional supplier to SAP. Views expressed are my own.See my bio.

See also - Unwatchable: dial R for rape. How much does your handset really cost.

Now the US State Department is stumping up some cash and expertise to try and kick start a certification programme. Yesterday Under Secretary for Democracy and Global Affairs Maria Otero while visiting Kinshasa,announced the formation of the Public-Private Alliance for Responsible Minerals Trade (PPA) and a $3.2 million grant from USAID with the expectation that the industry will cough up another $2 million.

The PPA will focus on three main priorities:

• assist with the development of pilot supply chain systems that will allow businesses to source minerals from mines that have been audited and certified to be ‘conflict-free.’
• provide a platform for coordination amongst government, industry, and civil society actors seeking to support conflict-free sourcing from the DRC.
• establish a website designed to serve as a resource for companies seeking information regarding how to responsibly source minerals from the DRC.

It's a good start but there are some open questions and concerns. First, so called public-private partnerships can be unstable working devices with a multitude of stakeholders working as much against one another as with. Manufacturers, above all,need to guarantee their consumers that products sold are conflict free and to be able to do so quickly. Governmental aid agencies are in the business of long term humanitarian assistance and basic economic development. These two objectives maybe conflicting, at least in the short run.Secondly, its not at all clear who will develop the audit protocol, by when it will be developedand which agency exactly will have the skill, security and authority to carry out the audits & provide certification.

Certainly, the US government has legitimate trade interestsin helping the predominately US based industry work through this problem. It remains to be seen though whether USAID is just providing air cover for the industry or actually does have the know how and will to see this process to a workable solution for the long run. $5.2 million may seem like a lot of money but with producers and manufacturersoutnumbered byalmosttwo toonewith NGO's, think tanks, network operators,industry groupsand government agencies, it's a veritable conga for the Congo.There is serious risk that the pool of money will be burned through quickly inexhaustive talkingphaseswithout much in the way of robust & actionableprocess coming out the other side. Colour me sceptical.

Still, kudosto allbelow for signing up althoughDell, Microsoft and Apple are curiously absent given that its a US government process. The kick off event for the PPA will be in Washington in November and after that we should soon see if this thing has legs.

Advanced Micro Devices Electronic Industry Citizenship Coalition (EICC) Enough Project Global e-Sustainability Initiative (GeSI) H.C. Starck HP International Conference on the Great Lakes Region (ICGLR) Intel ITRI on behalf of the iTSCi project Jewish World Watch Motorola Solutions, Inc. Nokia Pact Partnership Africa Canada / Partenariat Afrique Canada Responsible Sourcing Network Sony Corporation Sprint Telefnica Toshiba Corporation Verizon Communications World Gold Council

But the really interestingnews with this announcement is the apparent emergence of the Chief Sustainability Officer role at Oracle in the name of Jon Chorley, a former Supply Chain Management solution VP. An integrated role at Oracle overseeingboth solution offerings to the market as well as Oracle’s own performance would indicate asignificant maturing at Oracle on strategic sustainability.

Oracle has beenunder pressure from the ratings agencies and has been on the receiving end ofa hostile shareholder resolution – all demanding more transparency & accountability on sustainability performance. UK analyst firm Verdantix earlier this year noted:

Verdantixresearch finds that Oracle’s existing approach maintains a legacy CSR programme typified by philanthropic reporting, lack of board-leveland outdated energy and greenhouse gas (GHG) emissions targets. While its internal programme lacks direction, Oracle does offer ‘green IT’ software solutions. Verdantix analysis finds that announcements by its competitors, such as HP, IBM and SAP, place Oracle at a sustainability strategy crossroads.

Chris Mines from Forrester puts less stock in the need for technology companies to take an integrated approach - that is,to pursue a corporate sustainability strategy and at the same timebe a leadingsustainability solution provider:

...........it’s still a limited perspective, one that I characterize as the IT industry playing defence.............If big IT suppliers are in a defensive crouch regarding sustainability, they risk missing these new markets.

With rumours of a new sustainability report in the pipe, new investments in the sustainability solution portfolioand now the emergence of a Chief Sustainability Officer, it seems that Oracle isless inclined to follow the Forrester line.Insteadit appears as if Oracle istaking sustainability rathermore seriously than before - both as a corporate and customer innovation discipline. Over the longer run that should be good for Oracle, its customers, the industry and the planet.

Last January the New York Times asked 'Is Apple the Smartest Company at Davos' revelling in the irony that no Apple executives were even there. They didn't need to be becauseApple products could do all the talking and influencing necessary to shape the agenda at jamboreeslike Davos.You see, Steve Jobs really did think differently so he didn't really need places like Davos to exert and assert his world vision for sustainability orfor social& economicjustice. He didn't really need the promethean encounter or the validating embrace of the chattering class. Why? Because he was just getting on with it while others were talking about it......andtalking .....and talking and... still continue to talk ....for years & years & years.Hedid it quietly, quickly,effortlessly and most of all he did it his way and on his terms even if that meant eschewing the popularity contests. Did he do enough and enough of the right things? The jury is out, lets see where the Jobs legacy takes usbefore we write that chapter.

In the meantime lets consider thelatest Greenpeace Guide to Greener electronics:

Apple does best on the toxic chemicals criteria, where it scores most of its points. All Apple products are now free of PVC vinyl plastic and brominated flame retardants (BFRs), with the exception of PVC-free power cords in countries where their safety certification process is still ongoing. For this Apple continues to score full marks (doubled). Apple scores points for its chemicals policy informed by the precautionary principle and for lobbying the EU institutions for a ban on PVC, chlorinated flame retardants and BFRs during the current revision of the EU’s RoHS Directive (Restriction of Hazardous Substances in electronics)....

Did Apple take the top score? Noooooo. And why not? Well here is the rub with Apple under Steve Jobs' leadership - maybe thinking a little too different, a littletoo individualistic:

....but for full marks it needs to provide a public position on its support for immediate restrictions in RoHS 2.0 on organo- chlorine and bromine compounds. It also needs to clarify its stance regarding the position of the trade federation TechAmerica on further immediate restrictions and in particular PVC and BFRs. Apple scores only one point on information about its management of chemicals and its supply chain communications; this criterion evaluates disclosure of information flow in the supply chain. Apple also continues to score poorly for the minimal information it provides about its future toxic chemical phase-out plans.

Update: Greenpeace posted their tribute to Steve Jobs earlier today. Steve Jobs- a worthy opponent, a valuable ally

So Apple performs best on actually designing and delivering products that are as ormore sustainabileits competitors but itslips in the rankingsbecause it has beenunwilling to be open, evangelicand communicative about it. Thesame can be said in its approach tosocial and ethical issues. Apple has been criticised on human rights violations in its supply chain and here too Apple has responded decisively. Tim Cook personally travelled over to Foxconn to investigate the rash of suicides thereand the recent supplier responsibility report is very comprehensive in its disclosure. And yet Apple has defiantly faced down hostile shareholder resolutions demanding more sustainability transparency - and this -even with Al Gore sitting on the board.

On the issue of conflict minerals Apple has been decisive in just refusing to source from conflict zones and such'thinking different' hasn't always won it friends. Manyhave criticised Apple for creating an effective embargo and thus further deteriorating social conditions. The politically preferred course of action is to exercise exhaustive 'due diligence' while awaiting for governments to get their act together to secure the region and certify the sources as conflict free. This interregnum period is fraught with dangerous moral relativism - how many rapes or murders per ton of coltan extracted for electronics is an acceptable performance level observed in 'due diligence'? Jobs was having none of it and pulled the plug. Did he do so in recognition of the enshrined principal of the universality of fundamental human rights or out of unswerving loyalty to protection of the Apple brand? I cannot say.I will say this though - if I have to choose between a business leader who is prepared to engage but not act and aone who is prepared to act but not engage - give me action any day of the week. Still, engaging AND acting is better still.

But maybe the best contribution of all is the undisputed excellence of Apple products and the supportingplatform. Jobs has unleashed into the world a mobile information revolution that empowers people to connect, influence and understand the sustainability of the social, economic and environmental systems around them. Yes, Facebook might have enabled the Arab spring to happen but the Apple effect delivered it and did so in style. Apple has almost completely virtualized the entertainment industry and has helped unleash a plethora of consumer applications which empower people to make more informed sustainable lifestyle choices for themselves.

There are three principles of integrity in corporate sustainability and they are instructive in assessing Jobs' sustainabilityscore card.

• materiality - is the company focused on the most relevant impact it has? It should not green wash or obfuscate
• responsiveness - is the company responding quickly and decisivelyto the sustainability risks and opportunities arising from its strategy,its products and business operations?
• inclusiveness - is the company including and collaborating with those who are impacted by or can have an impact on it?

So farewell Mr. Jobs -thank you for thebreathtaking innovation and for your unique contribution to sustainable development. I wish you had been more inclusive but maybe you wouldn't have gotten anything done if you went all 'multistakeholder' on us. Besides, two out of three ain't bad and a hell of a lot better than most.

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules, and they have no respect for the status quo. You can quote them, disagree with them, glorify and vilify them. About the only thing you can’t do is ignore them because they change things. - Applecommercial, 2007

Yet, none of the drama surrounding HP has dampened the spirits of minority sustainability investors, many of whom are into HP for the long haulvested inpublic pension fundswhich often carry stringent ethical investment criteria. And according to HP, it'ssharesare among the fifteenmost widely held byethical investors with 100 separate ethical funds holding shared.Michael Muyot,President of CRD Analytics - the firm behind the NASDAQ OMX CRD Global Sustainability Index ratings -said in an email recently:

HP's ESG performance declined significantly from 2009 to 2010. It had one of the largest across the board annual declines for large cap tech firms, 9%, based on SmartView 360 measurement of 175 ESG performance metrics. They now have multiple red flags indicating critical areas for improvement within Board Structure, Compensation and Vision & Strategy for the Governance dimension. HP's environmental footprint also went in the wrong direction, UP, while its global tech peers were predominately reducing their total GHGs, electricity purchased and waste generated. An important lesson is the undeniable connection between strong ESG performing companies and sustainable shareholder value. Savvy long term investors will most likely return to HP when they've raised the bar both internally and amongst their global peers.

Andrea Moffatt, Vice President at Ceres, an influential sustainability investment think tank, weighed in also:

Sustainability issues are critical to business success and board members have a responsibility to understand the risks, opportunities and ask management the tough questions.

Interestingly, CERES is home to the BICEP, the business lobby pressuring for US government regulatory intervention on climate change with members including Nike, Starbucks, Symantec, Timerbland,Gap Inc and Whitman's alma mater,eBay. No doubt CERES will be watching with interest to see how HP’s previously progressive policy on climate change consolidates and reconciles under the new board’s leadership. Because at least onCalifornia’s own controversial climate change regulation, AB32,Ray Lane in these two short videos.

Its often said that corporate social responsibility is part of the DNA at HP, part of the HP way. The next weeks and months will reveal just how thenew top managementwill chose to take on this mantle &make it their own or use their leadership mandate to chart a new direction.

Warning: this film contains sexual violence that some viewers and mobile manufacturers may find disturbing.

So goes the introduction to Unwatchable which is, well, unwatchable so do heed the advice &be prepared. Unwatchable is a new short film just released on the web aimed at raising awareness amongst UK consumers of the use of so called 'conflict minerals' sourced from war torn Democratic Republic of Congo (DRC). It particularly highlights the issue of rape as tactic of war in the DRC with estimates than more than 2 million women have been raped at a rate of about one victim per minute.

Mines in the eastern region of the DRC are an important source of metals such as cassiterite, tungstan, gold and wolframite. In recent years as the market for devices has exploded so too have the prices for these commodities. Over time militiashave moved into mining territories and set up virtual slave camps to exploit the trade. The result has been a human rights and humanitarian catastrophe. See previous posts on this for background.

Blood Electronics: Naomi Campbell's lesson for Silicon Valley CEOs 2010

US Congress ready to act on human rights crisis in tech industry supply chains2009

The Cassiterite Crisis: How the tech boom fuels human rights risk in Africa 2008

The film was made with backing from Hollywood heavyweights such as film maker Michael Bonvillian whose credits include Lost and Cloverfield. It is based on the story of a DRC woman, Makisa,who was rapedin front of her familywhile her husband was murdered & mutilated. The film is cleverly set in rural England to force UK consumers to more directly relate to the violence perpetrated daily in the DRC out of sight ofthe international media.Some will debate whether shock tactics such as thisare effectivebut I'll leave that debate to experts. Viewers of Unwatchable are encouraged to sign a petition to manufacturers asking them to guarantee that their supply chains are conflict free and the web provides real time analytics on the number of petitions generated for Apple, HP, Motorola, HTC and Nokia. The petition also calls for the EU and its member statesto introduce legislation similar to the Dodd Frank Act which requires supply chain 'due diligence' when sourcing from the DRC or Great Lakes and adjacent regions.

The problem withmore 'due diligence' rules in other jurisdictionsis that even under DoddFrank things have beenvery slow to progress.The regulations are now bogged down for the past year at the SEC who are responsible for issuingthe implementation directive. Writing in The Hill blog recently Bennett Freeman of Calvert Investments and Simon Taylor of Global Witness (the NGO thought leader of record on this issue in my opinion) warned:

Alas, some business lobby groups are currently pulling out the stops in a bid to delay or dilute the forthcoming regulations. These interventions are creating confusion and hindering the urgent action that is needed.

Indeed, there is confusion about protocol for due diligence. The OECD has already issued its guidelines on due diligence that has had earlier wide spread buy in so attempts to water down Dodd Franks regulations might be an attempt to drive a wedge and lower the hurdle. However, already there has been impact in the DRC with the government earlierordering a shut down of all mining activity forsix months and currentproduction levels are way down with some saying that some manufacturers have placed an effective embargo by choosing not to source from the region at all. For the DRC mining industry, bad publicity has beenbad for businessbut Global Witness reckons that the chill on the trade is only temporary:

The idea that the current hiatus represents a permanent shut-down of the minerals trade in eastern DRC is misplaced, however. Indeed, despite alarmist talk of an end to eastern Congo’s minerals sector, the past few months have seen major international companies unveiling plans to invest in and source from mines in areas of Congo covered by the law. For example, NYSE-listed Motorola Solutions Inc has recently invested in mines in the southern Province of Katanga and a TSXV-listed Canadian company has acquired a 70 percent interest in a South Kivu tin mine.

Due diligence is flawed in so much as no one isyet willing to guarantee that finished consumer good are conflict free and, as awareness rises, this is the one thing that consumers will really want clarity on.It doesn't help that thereis a lack of action and determination on behalf ofgovernmentsand the international community. GlobalWitness is right to suggest that the long run solution is to have private sector 'due diligence' matched by public sector certification programmes except that isn't going to happen anytime soon which leaves business singularly exposed. Besides the track record of governments properly implementing certification processes such as the Kimberly process for diamondshas not been good.

This should result in a control system built on a strong institutional framework. The need to build up institutions in a region where state capacity is weak also means that the certification regime will take much longer to institute than supply chain due diligence, however. Whereas companies can start implementing the UN and OECD guidance now, it could be some years before the IGGLR certification system is fully operational.

Strikingly absent from the debate has been a C level industry executive willing to take a stand on this issue, though granted the venues for doing so have been decidedly less glamorous than they have been for climate change. Few have exposed the issue to consumers at all and perhaps Telefonica's O2 is an interesting exception. O2 publish a compositeeco rating at point of salefor the phones they sell. The methodology of this rating allows for a 7.5% contribution to the rating for best practice in 'susbstance impact' managementincluding the prohibition of conflict minerals in manufacturing. The goal of the eco rating according to O2:

it expects that consumer's interest in this aspect of their mobile phones will in turn encourage manufacturers to take a leadership role in driving forward sustainability.

I give O2 and their partner in the Eco Rating initiative, Forum for the Future, a Bfor effort here and kudos for getting the big picturesustainability issue outin front for consumers.Butis it really appropriate for consumersusing the composite metricto trade off energy efficiency of a handset relative tothe 'forced labour, killings & rape' referred to in the guidance as the factors associated with conflict minerals? But the to be fair, maybe this is just a reflection of the current common approach which is couched in the corporate speak of 'due diligence' and 'continuous improvement'. Perhapsits now time for more decisive action.

This is a complex issue and there is huge risk for industry and governements to languish in a moral quagmire caught somewherebetween impotence and obfuscation. There is also infinite opportunity for principled corporate leadership on this issue from Silicon Valley.If the unwatchable is watched widely, consumers might just be about to significantly force the pace and threaten some serious brand damage.

Disclosure: I'm a former employee of Global Witness.

The HP CEO annual letter to shareholders always contains an impressive section on HP's vision of its role in society, but Leo's one and only wasespeciallyvivid:

Collectively, the right information at the right place at the right time can significantly increase the positive impact we have on our most vital issues, like improving healthcare, increasing access to education, and preserving the environment. ......We drive that innovation at an unmatched scale to advance human progress. ........A woman in Ghana can have a face to-face conversation with her daughter in France or authenticate her mother’s medication with a simple text message sent to the cloud. ....The role of technology is becoming increasingly fundamental to the workings of our global society, and we are harnessing the power of information to improve the way people live, businesses operate, and the world works.

And of these things, it can't be disputed, he knew what he was talking about not least because of his role in supporting the institutional development ofmicro-credit agenciesas a non executive director of the non profit, PlaNet Finance.

Whilst HP's role as a leading corporate citizenship was in decline in terms of corporate hygiene issues such as direct operational environmental performance & human rights safeguards in the supply chain(and make no mistake this is critically important at point of departure),there is evidence that Leo had a vision of capturing the markets rather than just the corporate treasuryto drive sustainability at HP like hadn't ever been achieved before.And while some point to the fact that Leo was a virtual unknown entity in Silicon Valley, that very quality may just be vitally important to HP's future success in capturing fast growth markets in developing economies of the future.From Leo's 2010 report to shareholders:

Going forward, we are focused on moving beyond being a multinational company to being a truly global one with both deep local expertise and a comprehensive world view that brings the full value of HP to all customers.

In contrast, Meg Whitman's first email to employees raises the worrying prospect that HP might beretreating from a global vision and telescoping down rapidly from multinational, to what..., nation, state, valley?

We believe that HP matters. It matters to Silicon Valley, California, the United States and the world.

Communication matters, as HP's Executive Chairman Ray Lanepointed out very clearlyon yesterday's announcement call though its inconceivable that the new top management wouldretreat from the firm's developing 'world view'.

So what might have been? A fitting tribute to Leothen comes in an HP press announcement coming just one day before his departure, the title ofwhich says it all. Here are some select bits:

HP Invests for Growth in Africa

New operations in 10 countries bring transformative technology solutions to help drive sustainable, long term growth.

This month, HP announced openings in Angola, Botswana, Congo, Ghana, Senegal, Tanzania and Uganda. The company expects to announce the opening of offices in Ethiopia, Mauritius and Mozambique by the end of the year. HP also appointed a new country manager in each country to lead local operations.......

Recognizing the importance of engaging multiple stakeholders to contribute to the long-term success of Africa’s IT industry, HP is investing in a series of collaborations and initiatives with governments, universities and local communities to achieve the shared goal of driving responsible, sustainable growth........

Extending social innovation programs HP has built on its social innovation strategy in Africa, which seeks to deploy cloud-based and mobile technologies through collaboration with non-governmental organizations (NGOs) to reduce poverty, improve health care, and connect disparate communities and groups. The strategy has already supported significant work in Africa, such as a relationship with the Clinton Health Access Initiative (CHAI) to improve infant HIV testing in Kenya, and a collaboration with mothers2mothers in support of its mission of preventing mother-to-child transmission of HIV........

HP is extending NGO relationships in five of the countries where new offices have opened:

• In Botswana, HP is collaborating with Positive Innovation for the Next Generation and CHAI to expand the malaria pilot disease surveillance program to other infectious diseases as designated by the Ministry of Health. The program, first introduced in June 2011 mitigates disease outbreaks through a mobile/cloud disease surveillance solution.
• In Senegal, HP and Tostanare deployinga technology platform to help bring education to adults and adolescents who are without access to formal schooling.
• In Uganda, HP is working with CHAI to expand the HIV Early Infant Diagnosis Program, which was first launched in Kenya in November 2010.
• In Tanzania, HP is working with SafePoint Trust to implement a safe injections program and monitor results
• In Mozambique, HP and Mozambique Development in Motion are establishing a computer lab in a rural secondary school.
• In Ghana, HP and mPedigree have deployed a drug authentication system that allows consumers to verify that medications they purchase are not counterfeit.

Of course much creditis due to the energy and enthusiasm of people likeJeannette Weisschuh and GabiZedlmayer& therest of team at HP's Social Innovation Unit who truly personify the 'HP way'.But if Leo Apotheker's sustainability legacy to HP is toinspirea more global vision beyond Silicon Valley for the role of technology and markets functioning at scale for human development, then we should take a moment to say 'thank you Mr. Apotheker and God Speed'.

See also:

Will HP get greener with Meg Whitman at the helm?

Ethical investment revolt - HP and Microsoft deleted from Dow Jones Sustainability Index

HP 2010 sustainability performance report - a mixed bag

Can Leo Apotheker restore HP's reputation on sustainability?

Inher ultimately unsuccessfulcampaign for the California Governor's officelast year Whitman carved out a tricky positionon Proposition 23, a ballot initiativefor voters to decide tokill off California's climate regulations also known as AB 32. Introduced in 2006, AB 32 aimsto cut California greenhouse gas emissions emissions by 25% by 2020with mandatory caps due to come in effect from 2012. The regulation is widely credited with providing the necessary market signals and regulatory certainty to stimulate the green tech market. After weeks of leaving the question open Whitmanopposed Prop 23butif elected shesaidshe would immediately suspend AB 32 climate regulationsit for a year whichcould haverisked throwing Silicon Valley's grown green tech investment climate into disarray.

My plan is to suspend AB 32 for at least one year while we develop the sensible improvements the law badly needs to protect the jobs of hard-working Californians while improving our environment. This is not an easy issue. While green jobs are an important and growing part of our state's economic future, we cannot forget the other 97% of jobs in key sectors like manufacturing, agriculture, transportation and energy. We compete for jobs with many other states, and our environmental policy must reflect that reality.

Meg Whitmancalled AB 32 as a 'job killer' but VC Steve Westly,a former colleague of Whitman's at eBay and previous California Controllerbegged to differ:

That would be a stunning step in the wrong direction.......Most of the people I know throughout Silicon Valley realize that to be a colossal mistake. This is the highest growth job segment. This state's job engine for the future is in clean technology.

And so it went in the public debate with the business community broadly split on whether regulatory action to reduce emissions would stifle the economy & throw people out of workor unleash greeninnovation, create a wave of new jobs & stimulate economic growth.To be fair, and HP employees can take heart in this,its clear that Whitman supports a thriving & competitive green tech sector in California, its just shedid (does?)not support AB 32 as the means to that end as she explained in this video.

But where did HP come down on Prop 23 in the run up to last year's ballot? Unusually (some would say bravely)for a larger corporation HP stuck its neck out with this special statement released at the time:

HP strongly opposes Proposition 23, which would impair California’s leadership in reducing greenhouse gases. As a top employer in California and one of America’s greenest companies, HP takes seriously its role as a leader in protecting our environment, and supports the state’s efforts to reduce carbon emissions and provide regulatory certainty that fuels innovation.

So is Meg Whitman likely to smother HP's leadership on environmental policy? Will she take a laissez faire approach to environmental markets and snuff outgreen product innovation andeco opsimprovement before they've had an opportunity to mature on the vine?That's unlikely on two counts.

First, the enigmatic 'HP way' of employee community and environmental engagement iswoven into the fabric of the company's culture. As incoming CEO she will do well to pull on that lever to help consolidate and unite the workforce.

Secondly,many believe that last yearshe was tacking hard to the right in the election campaign to capture a populist vote but her real convictions actually lie elsewhere. As evidence, her family foundation of which she is a trustee, granted $300,000 to the Environmental Defense Fund(EDF) in 2007 & 2008. As you might imagine, EDF is a strongsupporter of AB 32 and claims to be an originalcosponsor of the bill. Whitman's charitable foundation has continued to support abunchof progressiveeducational charities though no further support for the environment in the latest filing which was for 2009 prior to the run for Governor's office.The largestrecently recorded donation of$200,000, was gifted, not to an upstartenvironmental pressure group, but tothe rather more statelyGoldman Sachs Philanthropy Fund.

The good news is that Meg Whitman is clearly comfortable in the world ofpublic policy, she is demonstrably pragmatic in approach, cluedup on social and environmental issues and is actively engaged on sustainability issues. HP's drive for greenproduct innovation, operational performance and public engagement will continue but it will likely change directionandthat could be good news. The entire corporate sustainability field across the board needs a jolt tobreakupthe accumulating PR plaque & find faster ways forward to integrate sustainability into the business model. Maybe Meg's the one toplow new furrows for sustainability and put the 'HP way', wayout in front once again.

For more analysisfrom ZDNeton unfolding events today at HP see also:

Cisco takes the top spot but the real story is the arrival of Google and Salesforce on to the scene. Google improved its disclosure score from 44% last year to 89% this year while Salesforceparticipated for the first time this year and scored animpressive 85% on disclosure quality.However, while Google scored an A- forperformance against strategy Salesforce scored a middle ranking C. But both companies wereamongst only seven companies out of the seventy five analysedwho took the trouble to have their carbon data independently assured and this alone signals serious intent to manage sustainability in a serious way going forward.

The other company worthy of a mention in the despatches is HP who improved their disclosure score eighteen points over last year& ranked a B for performance- proof enough that sustainability management systems are alive and well. Dell, in comparison, scored 72% for disclosure and a C for performance.

At the other end of the spectrum Yahoo! scored just 36% in disclosure quality meaning that the data quality was considered too poor to rank performance. Apple again declined to disclose its carbon emissions.

For more analysis and backgroundas well as the global IT & telcoindustry perspective see also:

• G-500 Survey: climate pays but techlags. Cisco leads but Apple and Amazonwon't play ball.
• Telefonica, BT & Vodafone lead carbon survey but RIM stays back of the pack.

Following is a list of responders ranked by disclosure quality and performance. (click for better viewing)

And following is a list of companies whose disclosurewas of low quality and therefore performance could not be determined. Also a list of firms who did not respond or declined to participate. (click for better viewing)

Disclosure: I am employed by SAP who is a partner with CDP and a survey participant. As always, views are my own only. Please see my bio.

This is surprising given that the telecommunications sector is increasingly seen as providing technology that can support emissions reductions activities.

BT, Telefonica, Vodafone, Swisscom and Koninklijke all show strong quality in reporting quality, some strategic integration of the climate strategy to the business modeland a reasonable performance delivery. US telcotitans Verizon and AT&T languish in the third tier while RIM shows a surprisingly poor result with the data provided below the quality threshold to rank. China Mobile, the world's largest mobile phone operator with 600 million subscribers, did not respond to the survey request. Only three out of the twenty nine companies analysed have had have their carbon emissions data independently verified by a third party. (click below for better viewing)

The telco sector result will come as something of a disappointment to McKinsey, The Climate Group and the Global eSustainability Initiative (GeSI) who togetherin 2008 issued the Smart 2020white paper which calculates the ICT sector is capable of delivering a 15% reduction in total global man made GHG emissions by 2020 through the deployment of smarter technologies.

For a run down on the IT sector see also: G-500 Survey: climate pays but tech lags, Cisco leads but Apple & Amazon won't play ball

The 10th annualCDP survey, carried out on behalf of 551 institutional investors carrying more than $70 trillion in assets, adds to what has become the most important voluntary data base of carbon emissions activity. CDP claims that carbon leaders in their survey have out performed the market by returning 85% compared to 43% for the average between 2005 - 2011. Is this all down to carbon related energy savings and eco innovation? No, but it does indicate that well managed businesses also take climate seriously as a strategic business risk and opportunity. The S&P 500 results will be out shortly which will provide a more granular view particularly on the US market.

Disclosure: I am employed by SAP who is a partner with CDP and a survey participant. As always, views are my own only. Please see my bio.

The chapter for us is closed.....We will no longer be involved in managing thebuilding or financing ofnuclear plants.

Siemens' nuclear business has been troubled for some timeafter a failed joint venture with Areva in France was terminated in favour of a new deal with Russia's Rosatom now aborted. Siemens would have been a minority partner in the new business but was said to have rapidly cooled on the idea after the Fukushima accident in March.

Siemens is walking away from a not inconsequential market opportunity with their own projections showing nuclear powergeneration growing by 90% over the period 2009 - 2030. The company had built all 17 of Germany's nuclear power plants which Chancellor Merkel has now decreed must close earlier than planned and no later than 2022. Merkel bowed to German publicpressure in the wake of Fukushima and has redoubledindustrial policy to make Germany a green tech leader. Loescher in turn has fallen in line with stakeholder opinion. He said he believed it to be:

the clear positioning of German society and politics for a pullout from nuclear energy.

He also supports Merkel's goal to move from17% toreach a 35% renewables target for the German national grid by 2020 as the:

....project of a century.

Before this announcement Siemens were turning over €27 billion or 35%of total revenuefrom its environmental solutions portfolio with a targetto grow the business to €40 billion by the end of 2014. Pulling out of nuclear will mean a more intense concentration on the green portfolio.

But what is somewhat more curious is how Siemens'communicated its changing nuclear position & stakeholder demandsin its sustainability reporting. As late as 2008 it reported a commitment to its nuclear business but thenfell completelysilent in the 2009 and 2010 reports. The2010 report was issuedjust one month after the Fukushima accident which clearly had a dramatic influence on the sustainability strategy of the firm given today's announcement but the nuclear question was not aired. Indeed, PwCsigned off on the report andpublished an independent opinion of assurance that all material issues had been addressed even though the issue of its nuclear business was not addressed.

In contrast, arch competitor GE's 2010 corporate citizenship report issued in July takes the issue of nuclear head on and without the benefit of an independent assurance provider's prompting.It describesconcerns over nuclear power as a strategic issue for its energy business and Jeff Immelt alsoaddressed it writingin the foreword:

We remain committed to nuclear as part of the overall energy mix, and we are committed to learning from all the events created by the horrific earthquake and tsunami in Japan.

GE designed and built the reactors which failed at Fukishimaand it is prepared to take the hit from the ethical investor constituency over it's long term commitment to nuclear.

And while GE is widely acknowledged as a sustainability leader in its products and processes, the traditional 'socially responsible investment' community, primarily because of its aversion nuclear technologyor defence related activities, holds very little stock.

There are important questions here about standards of reporting, timing, consistency, comparability, materiality and of the role & professional practice of an independent assurance provider. Sustainability reporting is still in its infancy so its natural thatvariability will arise at this stage even amongst the reporting practices of closely comparable industry peers. A trend towards more integrated financial, non financial and sustainability reporting may help iron out some of these creases in the longer run and help ensure there firms are challenged not only to be transparent but also to perform against common or comparable strategic sustainability objectives. Big 4 independent assurance providers too must up their game.

Siemens is making very tough choices of leadershipin shiftingits business model to embrace sustainability and, indeed, it is already the leader in its sector according to the Dow Jones Sustainability Index. If Siemens is successful with its emergenct sustainability strategy, over the longer runitwill have adefiningrolein speeding the transition to a lower impact &more stableglobal economy.

See also:

Smart Planet - Siemens exits nuclear Integrated Reporting - can it solve the information gap?

This reflects their lower than average number of emissions reductions activities as well as less frequent verification. .......this result is surprising given the expectation that Information Technology has the potential to support a wide range of emissions reductions activities.

The survey is carried out each year by the Carbon Disclosure Project on behalf of 551 institutional investors holding more than $71 trillion in assets. With a 80% response rate now achieved through voluntary disclosureCDPhas becomethe most important global information source on man made greenhouse emissions.

CDP provide a ranking on performance assigned in bands from A toE and a ranking of disclosure quality scored out of a maximum of 100%. Without reporting standards and practices still emerging its important to balance performance scores against data quality. CDP have alsorightly tightened up performance criteria relating to data verification with only 37% of the 500 surveyed meeting all criteria.

Cisco emerges as the clear leader with a strong balance of data quality and performance. SAP, Samsung and Sony also join Cisco in the overall CDP Disclosure and Performance Indices. Interestingly, Accenture fails to balance disclosure and performance - its disclosing excellently but is not achieving performance at the highest level. Its seems extraordinary to go to great lengths to capture carbon data but then not drive equally as hard a strategy for performance. Google didn't make the leadership index but it did score an A for performance and 89% for disclosure quality. Google recently opened the kimono on its carbon and energy footprint. It had always argued that it's carbon data was commercially sensitive until, I guess, it wasn't anymore.

IBM, HP and Microsoft score as tier 2players with a B grade, recording a decent climate strategy and performance but not demonstrating a complete strategic intent. I can imagine this will be a disappointing result for IBM who have so heavily invested its identity into the Smart Planet concept.HP, who have taken some knocks recently, can take comfort that it scores in higher than the C tier ranking for Dell indicating that climate strategy & performance is pursued only in part by Dell according to grading criteria.Also in the C tier is Intel who scored 66% on disclosure quality this year compared to 87% in 2008. Two morerungs down the ladder in E territory languishes Oracle, Motorola and NetApp. Basically, Eindicates little or no strategy and no performance according to the scoring criteria. Yahoo! and it's Japanese subsidiary chose to return separately but neither couldreach the minimum threshold of data quality to allow a performance ranking. Yahoo! corporate did not provide carbon emissions datarelating tocore business operations but it was able to account for business travel and employee commuting emissions.

Apple was only one of two companies thatdeclined to participate at all, the other was Nintendo. Across in the consumer discretionary sector Amazon also declined to play ball and eBay scored a C. For now at least, Amazon and Apple are bucking the trend and showing strong financial performance without providing investors transparency on its climate performance. (Click below for a better view.)

Disclosure: I am employed by SAP who is a partner with CDP and a survey participant. As always views are my own only. Please see my bio.

'... Arab spring was a real shocker for everybody and ...what youmentioned ..... about a kind of an Arab Springfor companies, forCEOs and leaders who are not in contact with their people, there's something there.I got a little chill when you were talking about that...... I think it will improve everything. I feel good about it.'

Neil Young is no shrinking violet himself when it comes to activism and his 1989 hit, Rockin' in the Free World, has become an anthem for social and environmental activists everywhere. The third verse of the song is the most vivid:

We got a thousand points of light For the homeless man We got a kinder, gentler, Machine gun hand We got department stores and toilet paper Got styrofoam boxes for the ozone layer Got a man of the people, says keep hope alive Got fuel to burn, got roads to drive.

The song was a critique ofit's times with the reference to 'a thousand points of light'a dig at George H WBush's vision of a civil society taking care of itself through philanthropy and self help with the government taking a back seat.Roll forward 20 years and the Points of Light Foundation is handing out awards to Salesforce in recognitionof excellence in community engagement and the innovative 1/1/1 model of integrated philanthropy. Oh, how the world turns.

All credit due to Marc Benioff for leading the industrywith his foundational committment of Salesforce donating 1% of time, 1% of equity and 1% ofnet incometo non profits. As we've seen with others in the industry, its relativelyeasy to write a tax reliefed checkbut to take the extra effort to deploy the technology and back it iup with talent and money is what sets Salesforce apart.In Eric Schmidt's keynote he gave Benioff fullrecognition for inspiring Google's similarly foundsocial mission.

So while Dreamforce 2011was a theatrical spectacle - I certainly recommend taking time out to watch the keynotes - I'm left with more questions than answers about the 'social enterprise'. What exactly is a social enterprise beyond some level of it's IT enablement? How does the idea of benevolence and philanthropy fit with a new social contract between a more democratic enterprise and a more inclusive society? Does it level out or shore up incumbency? How does the 1/1/1 model change in anticipation of the 'corporate spring'? What corporatesocial pressures is Salesforce experiencing and how will it respond? Does it become itself more transparent and open? Does its governance adapt to the new deal? Salesforce has championed compassionate capitalism but can it broaden the boundaries to outline a more democratic form of capitalism also?

To define a social enterprise and itsevolved corporate governance is a thought leadership mandate thatBenioff must take up. In Dreamforce 2011, we understand the inbound socialpressures and we are introduced to thenext generation social platform salesforce has built around the customer relationship but there is still a hugevacuum to fill. And then there's the question of whether just being social is enough to overcomeincumbency todrive a real social revolution with real reforming outcomes. Even Schmidt injected a surprising level of caution about this in his keynote. (cue up to 44:25)

One of the things I've learned about the internet, by the way,is that everyone feels like they're beingheard.... andnothing changes.So the good new is, you can be heard. But that's nolongerthe criteria by which activism should be judged. It should be judged based on outcomes.

Last year Iattended theWashington Idea's Forumwhere Eric Schmidt examined the problem of structural incumbencyof all kinds andeven fieldedquestions if Google too had started to become an incumbency inits own right.Andmaybe it is the power of incumbency for both Google and Salesforcethat sets up such a strange contradiction where both champion a strong social mission for theirservices and corporate philanthropy effortsyet have resisted transparency of their own corporate sustainability footprint.

But there are signs that things are changing here too. Last week Google finally broke ranks with Facebook & Amazon to publish their carbon and energy footprint for the first time. And though independent sustainabilityanalyst firm Verdantixhas been critical of Salesforce sayingthey 'cannot ignore the closing jaws of mandatory carbon reporting indefinitely', Verdantix has recognised that Salesforce is 'getting smarter about sustainability communications'. Indeed, last year Salesforce completed its first voluntary disclosure to the Carbon Disclosure Project.

I take it as a really positive sign that Salesforce has arranged its own British invasion of sorts with JP Rangaswami, Kevin Marks and Simon Mulcahy all recently joining. All three understand the true promise of social and can lend big ideas to help Salesforce overcome any risk of it ever becomingstuck inthe considerable success of it'sown incumbency as far as sustainability and corporate responsibility is concerned.

Incumbency isthe enemy of innovation and of sustainability. Google and Salesforce must not only raise the social white smoke, but also provide theexample, thought & techleadership for the vision of a truly social,social enterprise to become a reality. Maybe then people will people be not only heard on the internetbut also have the means toachieve justoutcomes. Now watch this. Rock on.

A better model is neededand today the International Integrated Reporting Committee (IIRC)will launcha discussion document - Towards Integrated Reporting, Communicating Value in the 21st Century - outlining its vision for a more integrated reporting framework that brings financial, non financial and sustainability reporting together to provide a more accurate accounting of value creation.

According to the IIRC,at the heart of the problem is an asymmetry of information for stakeholders due to alack of information integration or connectedness:

...critical interdependencies that exist are not made clear, for example, between:

• strategy and risk,
• financial and non-financial performance,
• governance and performance, and
• the organization’s own performance and that of others in its value chain.

The discussion paper isa brave first stepby the IIRC,a 39 member multistakeholdercommittee (of which only 7 are women, ....*cough*) comprised of some of the world's leading thinkers on sustainability and accounting. The reformsin mind are summarized below relative to the status quo:

Thinking - Integrated Reporting reflects and supports integrated thinking for an organization’s value creation process.

Stewardship - An Integrated Report displays an organization’s stewardship not only of financial capital, but also of the other “capitals” (manufactured, human, intellectual, natural and social).

Focus - An Integrated Report focuses on an organization’s strategic objectives and its ability to create and sustain value in the future, as well as, past financial performance and financial risks.

Timeframe - Integrated Reporting specifically factors in short, medium and long term considerations.

Trust - Integrated Reporting emphasizes transparency, rather than focusing primarily on a narrow series of mandated disclosures, and helps to build trust.

Adaptive - Integrated Reporting offers a principles-based approach which drives greater focus on factors that are material to particular sectors and organizations.

Concise – Integrated Reporting is concise and material, not long and complex.

Technology enabled – Integrated Reporting takes advantage of new and emerging technologies to link information within the primary report and to facilitate access to further detail online.

Below is the IIRC vision for the future of reporting with the guiding principles embedded in the outer ring and key content components detailed in the centre. Notice not a single mention of the term sustainability, corporate social responsibility. The assumption is that sustainability is embedded into a truly integrated model of disclosure.

Here's my take on the opportunities andchallenges for a CFO undertaking a more integrated reporting approach.

Opportunities:

• Embarrassment avoidance- the scale & frequency of voluntary multi channel sustainability disclosurefrom the sustainability silo has now reached a tipping point. The CFO/CIO need to take charge to avoid embarrassing disclosure of duff data.
• Greed is good- sustainability is a driver not only of risk avoidance but for innovation towards new revenue streams. Just take a look at GE, Philips, UnileverNestle &Niketo name a few. However, CFOs & CIOsmustput a soundinformation platform undersustainability ledbusiness transformation initiatives to guide them towards their objectives.
• Cost savings - some firms are spending upwards of $500k anuallyon sustainability reports between data collection, design, audit etc. Effective sustainability reporting is getting too expensive not to consolidate & leave in the silo.
• Innovation of process- sustainability reporting provides an additional lens for senior management to gain insight on performance. It also provides insight on non financial capital on which the firm depends and how to better and manage these factors. Management of water, air quality, climate, talent are now or will be a competitive advantagefor the future for some or all firms.
• Innovation in reporting - the IIRC vision does help the CFO get beyond compliance disclosure and focus engagement on and with the key stakeholders that are impacted or can impact the firm. Expect this to be a two way process not a monologue.

And the challenges:

• Sustainability strategy or a sustainable strategy? - An integrated reporting approach presupposes the firm has an integrated strategy. My experience tells me that a truly integrated strategy for sustainability is still rare for all buta few leaders.
• Overstretched CFO - in the midst of economic turbulence the CFO is already well stretched to become more effective and more efficient so sustainability risks falling off the table or worse - become way too diluted in the integration. Last year's IBM CFO survey showed that although integration was a high priority for CFO's, they felt they fell short on capability to deliver it.
• Overcoming fragmentation- CFO's already have difficulty integrating datacurrently spread across geography, hierarchy, systems and various finance disciplines including accounting, internal audit, governance, risk & compliance. Add to this the complexity of retrieving datafrom across the value chain and relating to items thathave been traditionally uncosted externalities.
• Immature systems and standards - while the IIRC outlines a good framework for reporting, the reality is that many firms have not yet builttherobust information architecture to support sustainability reporting to the same level of quality as currently achieved by financial reporting. This will take time and investment.The same for standards bodies. By the way, given the multi stakeholder claim on an integrated report, we must see much more in the way of social media integration in reporting than is currently the case. Watch for innovation here.
• Vested interests - the corporate sustainability professionals must stand out of the way and allow operational and financial professionals take the lead on sustainability. Will they do so quickly and quietly? The same challengeis posedfor some of the standards bodies for reporting and assurance. On the flip side, integration could see the Big 4 consolidate their influence over the development of sustainability reporting and assurance standards. Not everyone would agree this would make for ideal stewardship.
• Which capital markets? - the IIRC assumes that the CFO will measure and manage the return on all forms of capital. But is the CFO measuring the return on capital for each type eg. human, financial, social, ecological OR is the CFO translating what each means in terms of financial capital? If the latter then its business as usual, if its theformer then the CFO must come to terms with valuing inputs previously uncosted such as fresh air, water, a high performing education system etc. In other words, market failure andthe complexities of sustainability accounting remain even if we move the deck chairs around. Other interventions will be required.
• Business integration- if the goal is to integrate & embed sustainability into the business, is reporting the best place to start? Or to borrow a phrase: 'if you want to get to there would you really start from here?' This taps into a question of timing - is the management discipline of sustainability yet sufficiently mature to be deep six embedded to business strategy and process? A leading Chief Sustainability Officer complained to me recently that he had enough problems retrieving sustainability performance data and linking it to internal management reportingto drive business performance without yet worrying about new external reporting protocols.

This discussion paper is an interesting opener in a debate that will run for some time. Personally, I'm bullish about the outcome. The next exposure draft is due out in 2012 and the IIRC are looking for broaderinput to that. Read the paper here and email yourideas to dpresponses@theiirc.org.

This will come as another blow for HP senior management though it can't be completely unexpected. Earlier this year HP's sustainability report recorded a ratcheting down of social investment & supply chain due diligence and a less than muscular approach to conflict minerals.

See also:

HP 2010 Sustainability Performance Report - a mixed bag

Can Leo Apotheker restore HP's reputation on sustainability?

Microsoft has fallen into a rather different mode of decline in recent years. First it has developed an inconsistent record on sustainability reporting - it had abandoned annual reporting against generally accepted standards before announcing an intent to resume. Next, its strategy has become confused with different centres variously advocating corporate citizenship, corporate environment performance as well as greensolutions.And yetthe overall strategy remains elusive. Also, Microsoft has come under fire for adopting environmental targets linked to unit of revenue rather than absolute reductions.

Its a big turn around in just a few short years from when these two titans set the standard on sustainability for the tech sector. The market impact of this move is not insignificant. On its corporate citizenship web pages HPsums up the importance of ethical investors:

HP is among the top 15 companies most widely held by socially responsible investor (SRI) funds, and there are more than 100 SRI funds that hold HP shares.......We expect that providing information about HP's global citizenship performance demonstrates that HP is an attractive long-term investment, which encourages investment in HP and facilitates access to capital.

On a brighter note - Alcatel Lucent, NTT DoCoMo, EMC, Sprint Nextel &Xerox are added to the index while Samsung takes tech sector leadership overall.