Posts Tagged ‘Non-governmental organization’

“Courage is of no value unless accompanied by justice; yet if all men became just, there would be no need for courage.”
~ Agesilaus the Second 443 ~ 359 BC, King of Sparta 401-360 BC

I have had my graduate students ask what are non-governmental organizations (NGOs) and why should they be considered as an externality to a corporate organization? A better question might be: Does a business-to-NGO (B2N) relationship exist and should we beware of outside agendas?

First, what is an NGO? The term originated from the United Nations, and normally refers to organizations that are not a part of a government and are not conventional for-profit businesses. In the United States, NGOs are typically nonprofit organizations. The term is usually applied only to organizations that pursue wider social aims that have political aspects, but are not openly political organizations such as political parties.

Second, the term “externality” originated from an economic perspective: a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey.

In a Sustainability context, it takes another meaning: Externalities occur when a third party incurs unintended consequences from the market behaviors of others. Externalities can be either negative (pollution, waste clean-up fees that a community must bear, rather than the generator of the waste), or they can be positive (The Clean Water Act generates positive effects for many who were not involved in enacting the bill).

Sustainability is in its infancy and understanding how to manipulate or replace one technology with another, or use a different best practice over another, or even find a better energy source that is reliable, safe, practical and cost effective can be very complex set of decisions and often require innovative approaches. Business must currently utilize existing energy resources to produce goods and services and create jobs and investments.

But, business is always looking for better ways of working. It now recognizes that energy will have a significant impact on our economy in the next 20-50 years. The 18 September issue of the WSJ states; “Companies are increasingly choosing to generate their own power, rather than buying it from a utility, spurred by falling prices for solar panels and natural gas, and fears of outages.”

Executives clearly understand that continuing to rely on local utilities is a risky decision. They also recognize that alternatives can produce significant tangible benefits for the corporation and energy efficiency is one of  those opportunities. So, when costs for alternative energy sources are available, business will migrate.

There is a raging debate about the importance of carbon energy usage. It is neither clear-cut, nor clearly understood. It is often a discussed in simplified terms, but in reality is interwoven into our biosphere and interacts with other recognized issues: global warming, climate change and increasing rise of emissions. But this is an issue that NGOs, like CDP, embrace and often distort to fit their agenda.

“Companies can only reduce their carbon emissions if they know how and when they are emitting”; says Frances Way, Co-Chief Operating Officer, of the Carbon Disclosure Project (CDP). That may sound good, but as an executive of an NGO, her perspective is neither objective, nor recognizes what has been implemented and successful without her rhetoric.  She sees CDP as the one change agent for businesses and highlights the importance of reducing carbon emissions. The Guardian journalist, Jo Cafino wrote; “Shame on all of you and the other 90 of the 500 largest listed companies in the world that chose not to give CDP the data it requested.”

So, why didn’t business furnish the data? From an executive’s point of view, compliance is not an NGO-business (B2N) function or purpose. Compliance is based on laws and regulations within governments (B2G) that corporations are legally incorporated and obliged to fulfill. But the drum beat by CDP seems to ignore what many of these companies have successfully done. In many ways they are the leaders of change and have begun the journey of reducing their carbon footprint. Had Cafino and Way actually researched a few of the 90 who didn’t report to CDP, they would have found much more.

If CDP read between the lines, Business is saying you are wasting our time. Sustainability is eliminating all waste: waste from external sources, waste from internal sources and waste from external demands that have already been actively pursued. From a Business perspective, their time has already been expended to resolve all of their Sustainability issues, not only carbon. Here are the their top three and what I found through simple searches on the web:

Amazon’s has demonstrated their commitment to energy reduction, thus reducing their carbon footprint:

  • Energy efficient buildings – usually 35-40 percent of energy use is consumed by buildings. Amazon has constructed six new LEEDs Gold certified buildings.
  • Corporate offices in Munich, Germany have been Gold-certified as environmentally friendly by the German Sustainable Building Council
  • Amazon’s fulfillment centers in Indiana, Pennsylvania and Arizona received LEED certification for their commercial interiors.
  • Beijing, China maximizes the use of natural lighting, saving thousands of kilowatt-hours of power usage each month.

Amazon’s program summary: http://www.amazon.com/b?ie=UTF8&node=13786321

Apple: Since 2009, Apple has measured their Environmental Footprint, not only in their buildings, but they approach it systematically. It included their products, supply chain and end of life cycle. It was a holistic approach. A former executive from EPA was brought in to organize and develop those strategies that would effectively benefit Apple not only in terms of carbon reduction, but included benefits in cost reduction, waste elimination, sales opportunities, brand image and incorporating Sustainability into product development and differentiation. In addition, their data centers (which also consumes 25-40 percent of energy in most corporations) are now powered 100 percent by renewable sources (e.g., solar, wind, hydro, and geothermal). Apple’s program: http://www.apple.com/environment/

Facebook is often controversial. Its privacy policies and lack of transparency are often problematic. So, when the issue regarding carbon usage or even applying Sustainability is not clear; therefore, their organization is easy to target its brand image.

So, what is an NGO? CDP is an organization that pursues wider social aims that have political aspects. It could also be viewed as an organization with an suspicious agenda. In this case, it demands information without authority, one that duplicates efforts from the business-government relationship model (B2G). So, in this context, what is the value-added? Maybe CDP should be obliged to apply Transparency themselves?

For those interested in the original articles, their links are provided below:

Original articles

An NGO opinion: Report shows companies still don’t take climate change seriously – CDP analysis reveal lack of action on emissions by top FTSE Global 500 corporations


Another NGO opinion: Full disclosure on carbon emissions is the only way to save the planet. Shame on you, Apple, Facebook and Amazon. It is nothing short of a disgrace these three brands and 94 other major corporations refuse to divulge carbon emissions data to global NGO CDP. Read about the 97 brands, including Apple, Facebook and Amazon, which refuse to disclose their carbon emissions


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In the globalised world, issues such as demographic change, global poverty, environmental degradation or developing a skilled workforce for the knowledge-based economy become increasingly intertwined and extend across national borders and industrial sectors. Tackling them effectively requires joint action from companies, governments, stakeholders and the civil society. Faced with today’s complex environmental and socio-economic challenges, progressive companies are gearing up for a CSR approach focused on cooperation and innovation.

Through active engagement in Enterprise 2020, many enterprises and stakeholders are able to lead on collaborative projects and in doing so, develop though leadership and practical tools for companies and their stakeholders. In this respect, under the umbrella of Enterprise 2020, CSR Europe has prioritised six focus topics for the period 2011-2013. 

1. Supply Chain and Human Rights

Key EU and international frameworks have prioritized human rights and responsible supply chains for businesses – and particularly European and European-based companies. Despite the business sensitivities around human rights and supply chain issues, companies need to take a proactive approach to address the risks and opportunities of CSR and human rights in their operations.

2. Health and Wellbeing

Health literacy activities in the business context create value not only for employees, but also for businesses. By investing in a health- friendly work environment, businesses can increase employee well- being and productivity, thus reducing absences and lowering costs. Businesses play an important role not only as employers, but also as advocates for health in society. Technology and social networking can raise awareness and health literacy of employees and society as a whole, fostering a healthier lifestyle for all.

3. Ageing and Demographic Change

The European population is shrinking and ageing at the same time. The number of those older than 55 years is steadily growing, while all younger age groups are shrinking:

  • Fertility rates in most EU member states have remained below replacement levels developed countries over the past 30 years.
  • Individuals aged 50 and over already represent 20%. The number of people over 60 years will increase by 2 million every year.
  • Eurostat predicts a possible labour supply shortage of 15% by 2050, which represents an unemployment gap of 35 million people.

In light of these demographic changes, it is crucial for business, policy makers, and society at large to radically change their entrenched ways of thinking.

4. ESG Disclosure and Reporting

Research continually shows that CEOs and investors regard valuation of non-financial performance as a crucial issue. However, companies are slow to integrate non-financial performance (NFP) measurements into mainstream business strategy internally and to communicate it externally; and investors are slow to incorporate non-financial indicators into valuation models. ESG factors are nevertheless seen as key drivers of NFP and they contribute to the company’s ESG strategy.

5. Financial Education

Across Europe people are unable to save enough money for their retirement as countries face an unprecedented pension’s gap. Two financially vulnerable groups that stand out are young adults and pre-retirees. In several European countries, state retirement ages are being increased while provisions of defined benefit pensions are being decreased. This is also leading to more individualised pension decisions.

 6. Base of the Pyramid

Many companies are seeking to create new business models and partnerships which aim to alleviate poverty and deliver economic results through ‘Base of the Pyramid’ strategies. However, there is scope for better understand how to successfully develop and maintain effective cross-sector and multi-stakeholder approaches that partner with BoP groups in a mutually inclusive value chain.

To read more about other Enterprise 2020 projects, driven by CSR Europe’s members and national partners, please click here.


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