Community Indicators for Your Community

Real, lasting community change is built around knowing where you are, where you want to be, and whether your efforts are making a difference. Indicators are a necessary ingredient for sustainable change. And the process of selecting community indicators -- who chooses, how they choose, what they choose -- is as important as the data you select.

This is an archive of thoughts I had about indicators and the community indicators movement. Some of the thinking is outdated, and many of the links may have broken over time.

Thursday, November 22, 2007

Beyond GDP: Day Two - Business, CSRs, and Responsible Investing

There are a number of reports out on the conference. This one has a number of notable quotes from dignitaries. Here's how Reuters covered the conference. I found the coverage from China gave me hope for a global movement beyond GDP. And the press release (which got picked up by a number of news services) mentions Jacksonville, Florida, which makes me happy.

Here's a blog commentary on the conference (see also Day One to give you a different perspective.

After the opening remarks, Hazel Henderson led a panel of business representatives in a conversation about triple bottom lines, enhanced analytics for investment practices, and other efforts to include externalities in assessments to avoid risks and hold companies accountable for their impacts on People, Planet, and Profit. While this has been an ongoing conversation for years, the information age is now an age of truth, Hazel suggested, making it easier to ask for and receive a broader range of information from companies on their environmental and social impacts.

Carole M. Laible, President and Chief Operating Officer, Domini Social Investments, began by showing that the pressure to meet short-term economic goals often leads to horrible long-term impacts. The wealth that corporations create is more than just their stock price; accordingly, investors need to recognize the intangible costs and the intangible values created. The key is disclosure; what is disclosed is measured, and what is measured is monitored. What we might consider are global investment standards; by using investment standards at Domini, responsible investors have accomplished what many others have not. These standards should examine the companies' impacts on universal human dignity, ecological sustainability, and financial wealth. The standards should include three aspects:

  1. Measurement of externalities, the intangible costs and intangible value-added assets
  2. Incorporation of these externalities into an expanded GDP
  3. Ensure the public understands what is being measured and why

Nicole Notat, President, Vigeo Group, added that we should look to re-internalize externalities. Including social impact and sustainabiity measures provides a more useful analysis for asset managers and investors, and opens up new opportunities for innovation and growth. We need to emphasize that companies who do not pay attention and incorporate these externalities in their reporting are putting both their reputations and legal consequences at risk. We also need to make sure that the standards cover companies that operate internationally so that we can examine the same parameters no matter where they do business. Currently, the legal framework isn't there. ILO, the UN, and the OECD can make recommendations and help with the analysis parameters. We need also to consider the effectiveness of managerial systems in addressing indicators of environmental and social aspects, indicators on the consistency in implementing processes, and indicators of the results of implementation of these processes. The raw material is information, but at some point we will need to create an international standard to make it easier to set up these parameters. The ISO -- the international standards organization -- has been looking at a possible social responsibility standard, but they have been working on this for three years and are no closer to a conclusion.

Lothar Meinzer, Director with BASF, stated that corporate social responsibility means mainstreaming social and environmental concerns into business acttivities for added value. the problem isn't creating the indicators -- the Global Reporting Initiative and the European CSR Alliance have indicators, and BASF reports the data in their annual report. The real question is how to use the indicators in value-based management and to push towards eco-efficiency and beyond to socio-eco-efficiency. Integration is the key word.

Stephen Pursey, Head of the International Labour Organization (ILO) Integration Department, reinforced what Dr. Frey had said about employment, happiness, and well-being -- employment is central to one's identity, self-esteem, and social relations. Work centers are where economic markets meet social relationships. As such, we should include measures of decent work in our efforts to move beyond GDP. In doing so, we should consider the following:

  1. Many developing countries have weaker data available and less capacity to collect data, particularly on the quality of work.
  2. Classical market indicators are created in developed countries are less useful in developing countries. We need a broader measure of labor availability that takes into account the very different labor conditions in different countries, especially as we currently have no adequate picture of decent work conditions.
  3. More and more developed countries are supplementing their data with surveys on perceptions of job security. Few developing nations have this data.
  4. We should focus on national policy makers and the information they need to make decisions. This suggests an approach that creates country profiles with multiple measures that can be useful even if not every country has the data available for every measure. The numerical data usually needs an accompanying narrative.
  5. We need a major transformation in the world of work. We need to be looking at 'sustainable employment', and the industrialized nations need to be supporting the developing world in making this happen. The decent work concept embraces the economic, social, and environmental pillars of sustainability.

Hazel Henderson suggested examining the green jobs initiative and the need to grow a green economy. Once we internalize the social and environmental costs we will have the ability to steer towards building a new sector.

Nic Marks, from the new economics foundation, suggested that while we've been talking about the need to internalize the externalities, what we really should be looking at is how to externalize the internalities. Our economic system itself is the problem -- marketing necessarily creates a cycle of dissatisfaction and the need to produce more and more products, many if not most of which are unnecessary. No matter how eco-efficient we become, as long as we are trapped in this cycle we are not improving our quality of life.

Other important discussion points that followed were:

  • Unless we make change at the macro level, individual business change will always be the exception. This will require global standards and a global framework. CSR is only voluntary.
  • If we are serious about the environmental concerns raised, we need to dematerialize the economy. We need to move toward an economy that focuses on quality, not quantity; services, not products; adding value, not increasing production.
  • To have sustainable development we need different development. We need to recognize intangible goods, not just those classified as intabgible company assets. We need to create a different kind of society that appreciates the immaterial goods. The kind of development represented by the GDP is inherently unsustainable -- we need cultural consensual development, which means indicators on the immaterial or dematerializing society which is more than just companies.
  • We are likely to go down in history as the species that monitored our own extinction rather than doing anything about it.
  • We need to recognize that paying attention to social and environmental indicators may require decreasing economic activity.
  • Indicators have local dimensions and should link up to local frameworks. We have excellent examples of local communities with indicator frameworks that go beyond GDP and should be considering their work -- including Jacksonville. (Amen!)
  • We need a decent work index with true measures of actual work and decent work conditions. However, the problem with an index is making the subjective decisions on how to weight the values.
  • How do we aggregate individual corporate reports? How can we link corporate sustainability reports into a larger global framework? How can we decide how much progress is enough?
  • We should start by ending subsidies to unsustainable practices and begin by leveling the playing field.
  • Companies already plan investment cycles in 20, 30, 40 year cycles. We can get companies thinking long-term rather than short-term. One way to do that is to insist that executive bonuses are received only at the end of a long-term contract to remove the individual financial incentive for short-term thinking.

Author's comment: I took too many notes, obviously, and am having difficulty not putting some of the information in. I hope you can bear with me -- there's still two more sessions and the concluding remarks to come! I spent the evening after the conference at the amazing Grand-Place and then yesterday traveling. Today is the American holiday of Thanksgiving, which should allow me the time to catch up on these notes to share with the blog readers. I hope you're finding them interesting -- if nothing else, this is ensuring that my notes ae saved somewhere that I can find them again! Now on to the next session ....


Post a Comment