As the Global Demand for Palm Oil Rises, There is More Focus on the Growing Areas – and on Industry Behaviors Such as Deforestation

By Hank Boerner – Chair, G&A Institute

Palm Oil is one of the world’s most popular vegetable cooking oils and in western nations is widely used as prepared food ingredients. Food industry interests promote the benefits: lower cholesterol levels, less heart disease, more Vitamins A and E, and much more, derived from the rich beta-carotene from the pulp of oil palms.

Palm oil also shows up in our detergents, shampoo, cosmetics, pizza slices, cookies, margarine — and even in biofuels. Palm oil is especially used for cooking in Africa, Asia and parts of South America and is growing in favor in other regions such as in North America.

The palm oil plantations are located in such regions of the world as Southeast Asia – and there the industry is linked to the downside of the beneficial consumer product: deforestation, degrading of flora and fauna habitat, abuses of indigenous peoples, and negative impact on climate change as old growth land and tropical forest is cleared to make way for oil palm plantations.

Stakeholder reaction resulted in the creation of “reliable No Deforestation, No Peat, No Exploitation” policies – the “NDPE”.

These were developed for certification (to buyers) by the Roundtable on Sustainable Palm Oil (RSPO) and adopted in 2013 and 2014 by numerous Southeast Asian palm oil traders and refiners.

The policies (spelled out as best practices) are designed to prevent clearing of forests and peat lands for new palm oil plantations. There are 29 company groups, reports Chain Reaction Research, that have refining capabilities and have adopted NDPE policies. (Climate Reaction Research is a joint effort between Climate Advisers, Profundo and Aidenvironment.)

“Un-sustainable” palm oil practices are an issue for investors, customers (buying the oil), companies with sustainable practices, and countries in which palm oil is grown and harvested.

According to a new financial risk report from Chain Reaction Research, major markets with customers that accept “unsustainable palm oil” include India, China, Pakistan and Indonesia.

One of the major centers of production is the huge – more than 3,000-miles wide — Pacific Basin archipelago nation of Indonesia (once known as the Dutch East Indies). Almost half of the world’s palm oil refineries are in Indonesia and Malaysia.

The Indonesian government (the Ministry of Agriculture) reacted to the NDPE policies and proposed changes to its own certification program – known as the “Indonesian Sustainable Palm Oil Standard” (ISPO) – that would appear to be presenting companies with pressure to adopt one or the other of the certifications.  (The ISPO policy focus is on reducing Greenhouse Gas Emissions and addressing environmental issues.)

For Indonesia, palm oil is a strategic product that helps the government to meet job creation and export market goals. “Small holders” account for more than 40% of production in the country.

“Evidence suggests that the need for edible oil and energy will continue as populations grow, “Darmin Nasution, Coordinating Minister for Economic Affairs for Indonesia points out. “Land that can be utilized will decrease, so the question is how to meet those needs in the limited land area. Increasing productivity will be the key.”

Companies using the existing Indonesian ISPO certification were accused of human rights abuses and “land grabs” and so in January the government developed the new certification, which opponents claim weakens protection (the draft changes for the regulation removes independent monitoring and replaces “protection” with “management” for natural ecosystems).

Stranded Asset Risks

CDP estimates that global companies in the industry had almost US$1 trillion in annual revenues at risk from deforestation-related commodities. As the developed nation buyers looked carefully at their global supply chains and sources, “stranded assets” developed; that is, land on which palm oil cannot be developed because of buyers’ NPDE procurement policies. Indonesia and Malaysia have some of the world’s largest suppliers.

Western Corporate Reaction

Early in 2018 PepsiCo announced that it and its J/V partner Indofood suspended purchasing of palm oil from IndoAgri because PepsiCo — a very prominent global brand marketer — is concerned about allegations about deforestation and human rights were not being met.

Institutional Investors are busily identifying companies that source Crude Palm Oil (“CPO”) without paying attention to sustainability requirements, putting pressure on both sellers and buyers and perhaps pushing the smaller players to the sidelines. European buyers import CPO in large quantities to be used in biofuels.

The bold corporate names in western societies show up in rosters of company groups with refining capacity and NDPE policies, including Bunge, Cargill, Louis Dreyfus Company, Unilever, and Wilmar International. These are large peer companies in the producing countries (like IOI Group, Daabon, Golden Agri-Resources) are aiming for “zero deforestation” in their NDPE policies.

Other companies that source palm oil include Kellogg’s, Procter & Gamble, Mars, General Mills, Mondelez International, and other prominent brand name markets.

Your can check out the Chain Reaction Research group paper – “Unsustainable Palm Oil Faces Increasing Market Access Risks – NDPE Sourcing Policies Cover 74% of Southeast Asia’s Refining Capacity” at: http://chainreactionresearch.com/2017/11/01/report-unsustainable-palm-oil-faces-increasing-market-access-risks-ndpe-sourcing-policies

What About Exercise of National Sovereignty?

This situation raises interesting questions for developed nation brand marketers. If the government of Indonesia presses forward with the country’s own standards, should the purchaser in a developed country ignore or embrace the country standard? Instead of the Roundtable on Sustainable Palm Oil (RSPO) standard? What about “sovereign rights,” as in the ability for a sovereign nation to establish its own policies and standards governing the products developed within its borders?

As industry groups create their own standards and invite industry participants to embrace these (such as for product certification), corporations may find themselves bumping up against “nationalistic” guidelines designed to benefit the internal constituencies rather than “global norms” imposed from outside the country’s borders.

# # #

Responding to the streams of negative news coming out of Indonesia, Chain Reaction Research on April 26 reported that Citigroup has cancelled loans to Indofood Agri Resources and its subsidiaries. Citigroup will exit its overall relationship with Indofood other than specific financial relationships that are not related to the palm oil business, says the research organization.

The research firm said that labor and environmental violations by Indofood and other companies related to Anthoni Salim and his family have been documented. The web of companies: Salim and family own 44% of First Pacific, which owns 74% of Indofood.

In April a report commissioned by Rainforest Action Network Foundation Norway and SumofUS and prepared by Chain Reaction Research alleged deforestation of almost 10,000 hectares of peatland by PT Duta Rendra – which is majority owned, the report says, by Salim and PT Sawit Khatulistiwa Lestan, which is associated by Salim.

Notes:

As we prepared this commentary, the Danish Institute for Human Rights and The Forest Trust carried out a Labour Rights Assessment of Nestle’s and Golden Agri-Resources palm oil supply chain in Indonesia.  Nestle’s and GAR and going to share their own action plans in response to the findings and recommendations.

For The Roundtable on Sustainable Palm Oil information: https://www.rspo.org/

There is information from a recent conference in Jakarta for you at: https://www.scidev.net/asia-pacific/forestry/news/science-can-keep-palm-oil-industry-sustainable.html

The Indonesian Government ISPO information is at: http://www.ispo-org.or.id/index.php?lang=en

General Mills Statement on Responsible Palm Oil Sourcing is at: https://www.generalmills.com/en/News/Issues/palm-oil-statement

Rainforest Action Network information is at: https://www.ran.org/palm_oil?gclid=EAIaIQobChMIuJyBg97i2gIVE1mGCh3A-QMYEAAYASAAEgKZePD_BwE#

The Union of Concerned Scientists information is at: https://www.ucsusa.org/global-warming/stop-deforestation/drivers-of-deforestation-2016-palm-oil#.WudvOKjwbAw

The Words From Davos In 2018: Sustainability, Responsibility…And More In This, The Fourth Industrial Revolution

by Hank Boerner – Chair and Chief Strategist, G&A Institute

The World Economic Forum (WEF) annually convenes business leaders, government officials, celebrities and other luminaries in the Swiss village of Davos-Klosters to explore societal issues and develop or work to advance solutions to same.

This year’s convocation was staged over four days n late-January. Some of the highlights for you:

UN Sustainable Development Goals in Focus
The Government of Denmark and the WEF signed a memorandum of understanding to move ahead with a partnership to improve the state of the world through a public-private cooperation. The agreement provides a model framework that could lead to improvement over the long-term.

And, adoption of the approach by other nations. Consider what this European nation and the WEF have in mind:

  • They will pursue public-private partnership to promote green growth.
  • Develop a technology and innovation partnership.
  • Work together to encourage greater adoption of the SDGs.
  • Support the mobilization of private capital for infrastructure through the WEF-led initiative, the Sustainable Development Investment Partnership.
  • Support trade and investment through the Global Alliance for Trade Facilitation (a multi-stakeholder initiative).
  • Work to implement the WEF’s System Initiative on Education, Gender and Work.
  • Denmark will assign a Ministry of Foreign Affairs senior advisor to the WEF New York City office (a second such WEF appointment for Denmark).

Prime Minister Lars Lokke Rasmussen said: “Denmark has an ambitious agenda to promote public-private partnerships…in terms of sustainable growth, social cohesion and technological skills. We are delighted to team with WEF to create concrete progress on these agendas…to create better lives for more people and sole the urgent climate crisis. We must build bridges across sectors, borders and old divisions…”

Addressing Modern Slavery
Influentials addressed the need for coordinated global action to end modern slavery – that was championed by US Senator Bob Corker (R-Tennessee); Monique Villa, CEO of Thomson Reuters Foundation; and, Gary Haugen, CEO of the International Justice Mission.

Senator Corker drew attention to the new Global Fund to End Modern Slavery (“GFEMS”), a public-private partnership to fund programs in countries where such practices are prevalent.

The initial funding is from the United States and United Kingdom; the goal is to raise US$1.5 billion-plus and develop a global strategy to address modern slavery. (It’s estimated that as many as 40 million people now live in modern slavery conditions. This is said to be a $150 billion global business.)

There are three pillars adopted by GFEMS: (1) leverage the rule of law; (2) “energized” engagement with business sector (3) work to sustain freedom.

Jean Baderschneider is CEO of the new Global Fund. The fund’s work will be modeled on the global effort to fight AIDS, TB and malarial infections, bringing together governments, the private sector and NGOs.

Tech-Reskilling Drive Announced
The Information Technology industry is going to work to target 1 million people to offer resources (such as on-line tools) and training opportunities to “re-skill” adults to help them meet the requirements of the tech industry for employment, as well as continue their education and learn more about today’s technology.

Big names in tech are signed on: Accenture, CA Technologies, Cisco, Cognizant, Hewlett Packard Enterprise, Infosys, Pegasystems, PwC, Salesforce, SAP, and Tata Consultancy Services. The coalition is seeking more members to help develop tools and processes to address the “barriers preventing adults from re-skilling or successfully completing training, initially in the United States. There are plans to scale to other geographies.

The coalition’s “SkillSET” is hosted on the EdCas AI-powered Knowledge Cloud Platform, accessible to all.

ISO 20121:2012 Certification for Davos
The conference was awarded the ISO certification for “sustainable event planning and operation” by DNVGL (a certifying body). ISO 20121 is a framework for identifying and managing key social, economic and environmental impacts of an event.

Sustainability measures implement by the Forum included carbon compensation for all air travel by the staff, media and participants; promotion of “sustainable transport” in Davos (walk don’t ride); energy efficiency; water management; sourcing of renewable energy; reduction of waste and recycling.

Ending With A Call to Action
The 2018 Forum closed with a call to action to “globalize compassion” and “leave no one behind.” This, the 48th WEF Annual Meeting, closed on a creative note with four artists sharing visions of how painting, photography, film and dance can inspire empathy with other people’s stories.

Across all of the 400 sessions, the Davos organizers said, “…one key theme kept emerging, the need to embrace our common humanity in the face of rapid technological changes ushered in by the Fourth Industrial Revolution.”

And so the call for a spirit of inclusion, diversity and respect for human rights…this characterized the 2018 gathering, said Sharon Burrow, one of the seven female co-chairs of the meeting (she is General Secretary of the International Trade Union Confederation).

Important outcomes of the meeting included these developments, on the theme of “mending our fractured world”:

  • Preparing workers for the future.
  • Safeguarding our oceans.
  • Closing the gender gap.
  • Tackling waste and pollution.
  • Unlocking nature’s value.
  • Making meat sustainable.
  • Bridging the digital divide.
  • Fighting financial crime and modern slavery.
  • Taking on fake news.
  • Securing air travel.

And…advancing the Fourth Industrial Revolution, which includes Forum centers at work with social, public and private sector partners in numerous countries.

As Oliver Baitch writing in Ethical Corp observed, having spent four days at the conference:

“First, and foremost, sustainability is here to stay. Long gone are the denials or debates as to whether “non-financial” or “soft” issues are the preserve of global business. Themes such as citizenship-centred science, a post-oil energy matrix and tax transparency have shifted from side-room workshops to the main stage.

“Second, companies are beginning to put their money where their mouths are. Davos 2018 saw a litany of firm, measureable corporate commitments – professional services firm PwC promising to cut its carbon emissions by 40% by 2022 (having cut them by 29% since 2007) through to Coca-Cola pledging to collect and recycle the equivalent of every bottle or can it sells globally by 2030.”

You can read his summary of the 2018 confab at: http://www.ethicalcorp.com/will-sustainability-be-ceos-trays-after-davos

And, of course, there is a significant amount of related information at the WEF web site:  https://www.weforum.org/

A Big Year, 2018 – Tipping Points For Developments in Corporate Sustainability & Sustainable Investing…

by Hank Boerner – Chair and Chief Strategist – G&A Institute

Volume & Velocity!
Those may be well the key characteristics of developments in corporate sustainability and in sustainable in the year 2018.

Linda-Eling Lee, Global Head of Research for MSCI’s ESG Research Group and her colleague Matt Moscardi (Head of Research Financial Sector, ESG) this week described what they are projecting in the traditional early-in-the-year setting out of key ESG trends to watch by the influential MSCI ESG team:

Bigger, faster, more – that’s how Linda describes the “onslaught of challenges happening soon and more dramatically that many could have imagined” in the corporate sector” (including public policy, technology, and climate change as key factors).

Investors (in turn) are looking for ways to better position their portfolios to navigate the uncertainty of the 2018 operating environment in the corporate sector.

As the “heads up” for investors and companies– the five key 2018 trends projected by MSCI’s ESG researchers/analysts:

  • Investors will be using ESG “signals” to navigate the size/shape of the Emerging Markets investment universe to pick the winners for portfolios.
  • The first steps are coming in “scenario testing” for climate change (this is systematically looking at risks emanating from company carbon footprints across asset classes, with short- and long-term transition scenarios).
  • The fixed-income universe will see acceleration (velocity) with the alignment of ESG frameworks by investors across all asset classes.
  • And this is very important for the corporate sector:

Investors are looking beyond the growing volume of corporate disclosure and reporting for data.
Keep In Mind: 65% of a company’s rating by MSCI is based on data sources beyond the corporate reporting!

 

  • MSCI sees 2018 as the Year of the Human – it’s about human talent, talent, talent!  That is, what companies do to help in the transitioning to new working environments (with the changes brought about by automation, artificial intelligence, robotics) that will be factored into the analysis of public companies by the MSCI ESG team, and measured over time (for outcomes over a 3-year horizon).

Linda Eling-Lee observed:  These are the major trends that we think will shape how investors approach the risks and opportunities in 2018.

Already, at the Davos meetings this week, major global firms in IT are creating an initiative to “tech-reskill” one million people to meet the global skills gap challenge inherent in the “Fourth Industrial Revolution” (firms are Cisco, Accenture, CA Technologies, HP, Infosys, Salesforce, SAP, Tata Consultancy, others).

What we think company managements / boards should expect in the “volume and velocity” context:  many more investors (the volume / especially large fiduciaries) are embracing comprehensive ESG factors in their analysis and portfolio management approaches with a faster uptake of this trend among the mainstream elements of the capital markets players (the velocity).

Voluntary reporting by companies has its limits in providing a full picture of the companies’ ESG risks,” the MSCI ESG researchers note. “In 2018 we anticipate that the disclosure movement reaches a tipping point, as investors seek broader data sources that balance the corporate narrative and yield better signals for understanding the ESG risk landscape actually faced by portfolio companies”

# # #

Buzzing:  The Larry Fink CEO-to-CEO Message for 2018

Speaking of significant influence, the head of the world’s largest asset management firm sent an important CEO-to-CEO letter to stress the importance of companies having “a social purpose”

Background:  BlackRock engages with about 1,500 companies a year on a range of ESG issues, meeting with boards of directors and CEOs, and other shareholders when that is needed.

Each year, CEO Fink reaches out to the CEOs of companies in portfolio to alert them to the key issues in focus for BlackRock (as fiduciary).

For 2017-2018, the key Investment Stewardship priorities are:

  • Corporate Governance / Accountability
  • Corporate Strategy
  • Executive Compensation Policies
  • Human Capital (again — there’s the focus on talent management)
  • Climate Risk Disclosure

Larry Fink is the Founder, Chair, and CEO of BlackRock and heads the firm’s “Global Executive Committee.” BlackRock is about to celebrate its 30th anniversary in 2018.  It now manages more than US$6 trillion (Assets Under Management-AUM).

Of this, $1.7 trillion is in active funds managed by the company.  As one of the world’s most important and influential (and trend-setting) fiduciaries BlackRock engages with company management to drive the sustainable, long-term growth clients need to meet their goals.

“Indeed,” CEO Fink said in his letter to CEOs, ”the public expectations of your company has never been higher.”

“Society is demanding that companies, both public and private, serve a social purpose…to prosper over time, every company must show it makes a positive contribution to society.”

“Without a sense of purpose, no company…can achieve its full potential…it will ultimately lose the license to operate from key stakeholders…”

# # #

The Key Word on Responsible Investing Growth is Global, RBC Reported

In October 2017, RBC Global Asset Management (RBC GAM) conducted its second annual global survey of asset managers.  Two-out-of-three respondents said they used ESG considerations, and 25% will increase their allocations to managers with ESG investment strategies to offer in 2018.

Does ESG mitigate risk…or drive alpha?  Answers were mixed.  Some asset managers are increasing their allocation and others are skeptical, especially about the accuracy and value of the available data on corporate ESG performance.

For 2018:  RBC sees responsible investing as a global trend, with many managers incorporating ESG in analysis and portfolio management due to client (asset owner) demand.

# # #

Tracking Company Behaviors – The RepRisk ESG Risk Platform

One of the leading producers of research and business intelligence for the banking and investment communities is RepRisk, based in Zurich, Switzerland. The firm started in 2006 to serve bank clients wanting to be alerted to real or possible risk issues in the corporate sector.

RepRisk developed artificial intelligence and data mining tools, that along with human analysis, “reduces blind spots and sheds light on risks that can have reputational, compliance and financial impacts on a company…”

Today, there are 100,000-plus companies in the RepRisk database (both listed and non-listed, from all countries and sectors). The firm started out monitoring 100 companies for clients.  The daily screening is delivered in 16 languages and about 50 companies a day are added for screening.  Is your company one of those tracked?  What are the risks tracked?

# # #

Does Adoption of ESG Approaches Sacrifice Corporate Performance?

Robeco, one of the world’s leading financial services firms (based on The Netherlands), and a sister company of RobecoSAM, managers of the Dow Jones Sustainability Indexes, looked at the question of whether or not the adoption of ESG / sustainability approaches “cost” the company performance.

Adopting sustainability approaches does require investment, but companies with poor ESG performance also have greater risks and “seriously under-perform” their peers.  And investors “win” by investing in the better performers (that reduce risk, strategize around climate change, reduce bad behaviors).

Says Robeco:  “…a growing body of evidence concludes that companies which are progressively more sustainable today will reap the rewards of the future…and it may save their businesses…”

The Company’s positioning:  “Robeco is an international asset manager offering an extensive range of active investments, from equities to bonds. Research lies at the heart of everything we do, with a ‘pioneering but cautious’ approach that has been in our DNA since our foundation in Rotterdam in 1929. We believe strongly in sustainability investing, quantitative techniques and constant innovation.”

# # #

CalPERS, America’s Leading Public Employee System – Corporate Engagement on Diversity Issues

“CalPERS: is the California Public Employee’s Retirement System, the largest state investment fund in the United States with about $350 billion in total fund market AUM.

CalPERS sent letters to 504 companies in the Russell 3000 Index to engage on the issue of diversity on the companies’ boards of directors.

CalPERS request:  the company should develop and then disclose their corporate board diversity policy, and the details of the plan’s implementation (to address what CalPERS sees as lack of diversity in the companies).

“Simply put, board diversity is good for business,” said Anne Simpson, CalPERS’ investment director for sustainability.

Starting in Fall 2017 and into 2018, CalPERS is monitoring companies’ progress on the matter and making it a topic for engagement discussions.  If a company lags in progress, CalPERS will consider withholding votes from director-candidates at annual voting time (at annual meetings).

# # #

The Climate Action 100+ Investor Initiative

 Sign of the times: More than 200 investors supporting action on climate change by the corporate sector are focusing on the board room of such companies as ExxonMobil, Boeing, GE, P&G, Ford, Volvo, PepsiCo, BP, Shell, Nestle, Airbus, and  other  enterprises (the “100” plus companies in focus) to dialogue on their GhG emissions as contributions to global warming.

The 100 corporates are said to account for 85% of the total GhG emissions worldwide – they need to step up, says the Coalition, and develop strategies and take action (and disclose!) to address the issue.  The investors manage more than $26 trillion in AUM, and are coordinating their efforts through five partnerships…

# # #

McKinsey Weighs In – ESG No Longer “Niche” – Assets Are Soaring

The McKinsey & Co. experts studied ESG investing and reported to corporate clients that of the $88 trillion in AUM in the world’s capital markets (in late-October), more than $1-in-$4 (25%-plus) are invested according to ESG principles.  That’s a growth of 17% a year, and ESG has become “a large and fast-growing market segment.”

# # #

Investors Are Not Forgetting – Rana Plaza Still in Focus

One of the characteristics of the sustainable investing market players is having-the-memory-of-the-elephant.  Do you remember the Rana Plaza apparel factory tragedy of five years ago?  Most media reporters and commentators have moved on to other crisis events.

Investors are signing on to a statement – “Investors Call on Global Brands to Re-commit to the Bangladesh Accord for Fire and Building Safety” – with focus on the upcoming fifth anniversary of the statement signed (in May 2013) after the accident that killed more than 1,000 workers in Bangladesh.

Reforms were promised in the Accord by industry participants and trade unions.

# # #

Another Example of Investor Action – McDonald’s

“In a win for the health of the world’s oceans,” began the As You Sow shareholder advocacy group announcement, “McDonald’s Corp. agreed to end the use of polystyrene foam packaging – worldwide! – – by the end of 2018.

The advocacy group had campaigned to have the fast food retailer stop using foam cups and takeout containers.

A shareholder proposal filed by As You Sow in May 2017 requested the company stop using polystyrene and 32% of shares voted (worth $26 billion at the time) voted to support.

# # #

Finally – What a Low-Carbon Economy Looks Like – California Dreamin’

The State of California is the world’s sixth largest economy all by itself!

While President Donald Trump upon taking office fulfilled one of his signature campaign promises – beginning the process of withdrawal from the historic COP 21 Paris Accord on climate change – California Governor Edmund (Jerry) G. Brown, Jr is moving ahead with his state’s plans to move to a low-carbon economy.

The Global Climate Change Action Summit is scheduled for September 2018 in San Francisco, California.

The theme, as described by the governor:  “Sub-national governments” (cities & states), business sector leaders, investors and civil society leaders will gather to “demonstrate the groundswell of innovative, ambitious climate action from leaders around the world, highlight economic and environmental transition already underway and spur deeper commitment from all parties, including national governments.”

Says the governor: “California remains committed to a clean energy future and we welcome the responsibility to lead on America’s behalf…”

# # #

Coming:  ISS QualityScores for “E” and “S” for 1,500 Companies

As we communicated in early January, Institutional Shareholder Services (ISS) has expanded its long-term focus on corporate governance to encompass “E” and “S” issues for its QualityScore product for fiduciaries (its client base).  In late-January it is expected that ISS will issue the first wave of scores for 1,500 companies in six industries, expanding to 5,000 companies in additional industries by mid-year 2018.

The first 1,500 companies to be scored are in Autos & Components; Capital Goods; Consumer Durables & Apparel; Energy; Materials; and, Transportation.

The QualityScore is a Disclosure and Transparency Signal that investor-clients are seeking, says ISS, and an important resource for investors to conduct comparisons with corporate peers.

Keep in mind:  ISS serves its 1,700 clients with coverage in 117 global markets.

# # #

There’s much more information on this and other critical 2018 tipping points for corporate managers and investment professionals in the comprehensive management brief from the G&A Institute team posted on our G&A Institute’s “To the Point!” platform for you.

We’re presenting here more details on the MSCI trends forecast, the BlackRock CEO-to-CEO letter about Social Purpose for the Corporation, California’s move toward a low-carbon economy,  RepRisk’s focus areas for corporate behavior…and a host of additional important developments at the start of the year 2018 that will shape the operating environment throughout the year – and beyond! Read the brief here!

Dangerous Antics – Fiddling with the Future of US EPA and the Health and Safety of the American People

by Hank Boerner – Chair & Chief Strategist, G&A Institute

The Trump Administration  — Making moves now on the US EPA to destroy its effectiveness through budget cuts and ideological attacks on its missions.

In his landmark work published in 1993 – “A Fierce Green Fire – The American Environment Movement” – former New York Times journalist Philip Shabecoff explained:  the U.S. Environmental Protection Agency was created by President Richard Nixon (a Republican) in December 1970 (two years into his first term) as part of an overall re-organization of the Federal government. The EPA was created without any benefit of statute by the U.S. Congress.

Parts of programs, departments and regulations were pulled from 15 different areas of the government and cobbled together a single environmental protection agency intended to be the watchdog, police officer and chief weapon against all forms of pollution, author Schabecoff explained to us.

The EPA quickly became the lightning rod for the nation’s hopes for cleaning up pollution and fears about intrusive Federal regulation.

As the first EPA Administrator, William Ruckelshaus (appointed by Richard Nixon) explained to the author in 1989: “The normal condition of the EPA was to be ground between two irresistible forces: the environmental movement, pushing very hard to get [pollution] emissions no matter where they were (air, water)…and another group on the side of industry pushing just as hard and trying to stop all of that stuff…” Both, Ruckelshaus pointed out, regardless of the seriousness of the problem.

We are a half-century and more beyond all of this back and forth, and the arguments about EPA’s role and importance rage on.

Today we in the sustainability movement are alarmed at the recklessness of the Trump White House and the key Administration officials now charged with responsibility to protect the environment and public health in two key cabinet departments: The EPA and the Department of Energy.

The ripple effects of the attacks on climate change science are in reality much larger: The Department of Defense (which has declared climate change to be a major threat long-term); the Department of Interior, overseeing the nation’s precious legacy of national parks and more; the Department of Agriculture (and oversight of tens of millions of acres of farmland); the Department of Commerce; the Department of Justice..and on and on.

The destruction could start early: The Washington Post (with its ear to the ground) is closely watching the administration and reported on February 17th that President Donald Trump planned to target the EPA with new Executive Orders (between two and five are coming) that would restrict the Agency’s oversight role and reverse some of the key actions that comprise the Obama Administration legacy on climate change and related issues.

Such as: rolling back the Clean Energy Plan (designed to limit power plant GhG emissions), which required states to develop their own plan as well. And, withdrawing from the critical agreement reached in Paris at COP 21 to limit the heating up of Planet Earth (which most of the other nations of the world have also adopted, notably China and India).

The destroyers now at the helm of the EPA also don’t like the Agency’s role in protecting wetlands, rivers etc. (The Post was expanding on coverage originally developed by investigative reporters at Mother Jones.)

Mother Jones quoted an official of the Trump transition team: “What I would like to see are executive orders implementing all of President Trump’s main campaign promises on environment and energy, including withdrawal from the Paris climate treaty.”

And, in the Washington Post/Mother Jones reportage: “The holy grail for conservatives would be reversing the Agency’s ‘so-called endangerment finding,’ which states that GhG emissions harm public health and must therefore be regulated [by EPA] under the Clean Air Act.”

Think about this statement by H. Sterling Burnett of the right-wing Heartland Institute: “I read the Constitution of the United States and the word ‘environmental protection’ does not appear there.” He cheered the early actions by the Trump-ians to give the green light to the Keystone Pipeline and Dakota Access Project.

On March 1st The Washington Post told us that the White House will cut the EPA staff by one-fifth — and eliminate dozens of programs.

A document obtained by the Post revealed that the cuts would help to offset the planned increase in military spending. Cutting the EPA budget from US$ 8.2 billion to $6.1 billion could have a significant [negative] impact on the Agency.

We should remember that in his hectic, frenetic campaigning, Donald Trump-the-candidate vowed to get rid of EPA in almost every present form – and his appointee, now EPA Administrator (Scott Pruitt) sued EPA over and over again when he was Attorney General of Oklahoma, challenging its authority to regulate mercury pollution, smog (fog/smoke), an power plant carbon emissions (the heart of the Obama Clean Energy Plan).

In practical terms, the Post explained, the massive Chesapeake Bay clean up project, now funded at $73 million, would be getting $5 million in the coming Fiscal Year (October 1st on). Three dozen programs would be eliminated (radon; grants to states; climate change initiatives; aid to Alaskan native villages); and the “U.S. Global Change Research Program” created by President George H.W. Bush back in 1989 would be gone.

Important elements of the American Society have tackled conservation, environmental, sustainability and related issues to reduce harm to human health and our physical home – Mother Earth – over the past five decades: Federal and state and local governments; NGOs; industry; investors; ordinary citizens; academia.

Today, the progress in protecting our nation’s resources and human health made since rivers caught fire and the atmosphere of our cities and towns could be seen and smelled, is under attack.

The good news is that for the most part, absent some elements of society, the alarms bells are going off and people are mobilizing to progress, not retreat, on environmental protection issues.

American Industry – Legacy of Three Decade Commitment to Environmental Protection – The Commitment Must Continue

The good news to look back on and then to project down to the 21st Century and Year 2017 includes  the comments by leaders of the largest chemical industry player of the day as the EPA was launched and key initial legislation passed (Clean Air Act, Clean Water Act, and many more)  – that is the DuPont deNemours Company.

Think about the importance of these critical arguments – which could be considered as foundational aspirations for today’s corporate sustainability movement:

Former DuPont CEO Irving Shapiro told author Philip Shabecoff: “You’ve have to be dumb and deaf not to recognize the public gives a damn about the environment and a business man who ignores it writes his out death warrant.”

The fact is, said CEO Shapiro (who was a lawyer), “DuPont has not been disadvantaged by the environmental laws. It is a stronger company today (in the early 1990s) than it was 25 years ago. Where the environment is on the public agenda depends on the public. If the public loses interest, corporate involvement will diminish…”

His predecessor as CEO, E. S. Woolard, had observed in 1989: “Environmentalism is now a mode of operation for every sector of society, industry included. We in industry have to develop a stronger awareness of ourselves as environmentalists…”

And:  remember, warned Dupont CEO Shapiro: “…if the public loses interest corporate involvement will diminish…”

Today let’s also consider the shared wisdom of a past administrator as she contemplated the news of the Trump Administration actions and intentions:

Former EPA Administrator Gina McCarthy (2013-2017) said to the Post: “The [proposed] budget is a fantasy if the Trump Administration believes it will preserve EPA’s mission to protect public health. It ignores the need to invest in science and to implement the law. It ignores the history that led to the EPA’s creation 46 years ago. It ignores the American People calling for its continued support.”

Consider the DuPont’ CEO’s comments above … if the American public loses interest.  At this time in our nation’s history, we must be diligent and in the streets (literally and metaphorically) protesting the moves of this administration and the connivance of the U.S. Congress if our representatives go along with EPA budget cuts as outlined to date.

# # #

About “A Fierce Green Fire: The American Environmental Movement,” by Philip Shabecoff; published 1993 by Harper Collins. I recommend a reading to gain a more complete understanding of the foundations of the environmental movement.

A decade ago I wrote a commentary on the 100-year evolvement of the conservation movement into the environmental movement and then on to today’s sustainability movement in my Corporate Finance Review column.  It’s still an interesting read:  http://www.hankboerner.com/library/Corporate%20Finance%20Review/Popular%20Movements%20-%20A%20Challenge%20for%20Institutions%20and%20Managers%2003&04-2005.pdf

 

 

Mondelez International – Food & Beverage Marketers With Strategy of a “Call for Well Being” for Stakeholders — Colleagues, Suppliers, Farmers & Consumers

Executives of major consumer brand marketers are increasingly concentrating their focus on their sustainability and responsible business practices up and down the value chain.  Senior managements are paying attention to their global enterprise value chain, from beginning to end.

For food marketers, as example, that includes greater engagement with their partners at the beginning of the chain:  farmers, small growers and suppliers. And at the other end, the all-important consumer reaching for their product at the local supermarket.

For many large marketers, the beginning of the value chain is populated with growers and small “holders,” family farmers located in less developed countries, with small amounts of land, supplying important ingredients for their large customers’ products.

Around the Equator, in countries near “zero degrees” latitude, this especially includes cocoa growers and coffee growers. These small holders are concentrated in a dozen or so such nations as [for coffee] Ethiopia, Kenya, Indonesia, Colombia, Mexico, Ecuador, Brazil, and Costa Rica; and [for cocoa] some of those countries plus Cote d’Ivoire (Ivory Coast), Ghana, Nigeria and Cameroon.  For most food companies, countries like Madagascar (for vanilla, found in many food products) are also important production centers.

In the USA, consumers are paying more attention to the sources of ingredients in their food; the method of growing or raising food; conditions on the ground where ingredients are sourced; the treatment of farmers and growers at the source, and more.

Recently, Mark Bittman, prominent food writer and editorial commentator at The New York Times, described his surprise (and delight) at how rapid this rise in interest in “food origin” has been in recent years. (“When I began, nearly five years ago, food was not generally considered as serious a topic as it is now,” he wrote in September in his Sunday Times farewell column.)

Of significance:  Mark Bittman, in many of the news stories, commentaries and editorial page columns over the years, identified the major issues “facing us in the interwoven worlds of food, agriculture, nutrition and the environment.”  Food & beverage marketers are taking these issues into account as they create their sustainability strategies.

And as more retail customers raise concerns about these and other issues related to the food and beverages they consume, prominent brand marketers are paying close attention.  Companies are devising corporate sustainability strategies, operationalizing these, engaging with producers, and reporting on their achievements. (Often this is by publishing a sustainability progress report following the GRI framework, and reporting to CDP on emissions, water, supply chain, forestry practices, and other aspects of their operations, among various disclosure practices.)

Mondelez International – a Proactive Sustainability Journey

An example of corporate sustainability leadership by global brand marketers is Mondelez International (NASDAQ:MDLZ), headquartered in Deerfield, Illinois and marketing its products in over 165 countries.

The company’s “brand family” in the United States includes such well known products as: belVita and Chips Ahoy (biscuits), Dentyne & Trident (gum), Hall’s (lozenges), Triscuits, Wheat Thins, Premium and Ritz (crackers), and Tang (powder beverage);  Lu Petit Beurre (cookies), Mikado (cookies), Kinh Do (moon cakes), Stimorol (gum), and other brands that are well known in local markets; and, global brands favored by many consumers, such as Oreo cookies, and  Cadbury’s chocolate products. Many of these familiar brands date back a century or more.

The Company’s Core Values

The Mondelez International corporate management team is headed by Irene Rosenfeld, chair and CEO, and includes Robert Marques, EVP and president of North America operations.  The core values set in place by the team are built around these seven pillars:  (1) Inspire Trust; (2) Act Like Owners; (3) Keep It Simple; (4) Discuss/Decide/Deliver; (5) Tell It Like It Is; (6) Open and Inclusive; (7) Lead From Head and the Heart.

How do these thematics translate to the Mondelez International sustainability journey?  We chatted with Jonathan Horrell, MI’s director of sustainability (based in the UK at the Cadbury facility in Bournville) to learn more about MI. The company has a long tradition of taking a holistic view of its operations, he explains, and has structured its sustainability journey on four pillars that are high level strategic priorities:  (1) sustainability; (2) community; (3) mindful snacking; (4) safety.   The integration of these are summed up in the “holistic” and connected approachthe call for well-being.

Reporting on the Progress of the Journey

The company’s 2014 Call for Well Being Progress Report describes the specific goals related to the Mindful Snacking theme of the sustainability journey, and the progress made toward it at the end of 2014, with highlights. For example, on the goal of reducing saturated fat in products by 10 percent by 2020 – they noted more progress needed.  For increasing whole grains by 20% by 2020 — on target. (Since 2012, MI has increased whole grains by 23% across the entire global product portfolio, and has launched new whole grains products.)

Highlights are available at: http://www.mondelezinternational.com/~/media/mondelezcorporate/uploads/downloads/cfwb2014progressreportataglance.pdf

Concern for Developing Economies

Important ingredients for Mondelez products originate in developing countries, including cocoa and coffee (Note: The company was the world’s #2 coffee marketer.  In July, the company combined its coffee business with DE Master Blenders 1753 to create JACOBS DOUWE EGBERTS (JDE), now the world’s leading pure-play coffee company).

There are thousands of small [land] holders/ growers in the company’s supply chain, mostly located across the global Equatorial growing belt (such as in the West Africa region).  The company invests millions of dollars in community development, training, and smallholder assistance.

In these (and other regions), climate change issues are front-of-mind.  There is also the consideration for Mondelez with its factories around the world (i.e., carbon emissions, water usage, water disposal, etc.).

As many global companies are doing, Mondelez is looking closely at the new Sustainable Development Goals (SDGs) approved this fall at the United Nations.  Horrell explains that in terms of gender equality, for example, the work done with small holders includes assistance for the females involved in the growing communities.  The goal of eliminating poverty comes into play with the coffee and cocoa belt programs for suppliers.  And for the food safety SDG, Mondelez has long been focused on nutrition and food safety.

Stakeholder Engagement

Horrell notes that NGOs play an important role in providing advice and on the ground experience to Mondelez to help the company set strategies and calibrate its actions. For example, World Wildlife Fund has been of great assistance with advice on relations with growers of cocoa and palm oil.   Community-based agricultural associations are important partners in key areas.

As director of sustainability, Horrell’s mission is to embed sustainability throughout the business.  He is the lead in external engagements, and internally, is the point person bringing business units and functions into the company’s sustainability efforts.  His CEO is very involved in the sustainability journey, Horrell notes, and key members of the management team are involved and supportive, as well as the board of directors. (There is a board committee with sustainability responsibilities in the charter).

Among the company’s many recognitions, Horrell points to the Dow Jones Sustainability Indexes (DJSI) — Mondelez has been included in these important sustainable investing benchmarks for the past decade.

Mondelez International has a well-structured materiality process, says Horrell.  Engagement with stakeholders is a key element, including investors, customers and suppliers.  The materiality process began in 2012 and is regularly reviewed.

Another key element is lifecycle assessment (LCA). The company’s use of LCA to assess environmental impacts has resulted in an end-to-end approach across the whole product life cycle.  This requires establishing policies all along the value chain — upstream at the producer level, choice of ingredients, through factory operations, to marketing, distribution, to consumer relations – with a particular focus on raw material sourcing and manufacturing.

Jonathan Horrell’s Background

He joined Mondelez three years ago after a decade’s work with a dairy products chain and several years with Kraft Foods. Jonathan was director of corporate affairs for Kraft Foods in the UK and Ireland, and director of sustainability and global issues management. (In 2012, Kraft was spun off from Mondelez).  He comes from a farm family background, which prepares him well for his relations with small holders, he believes.  He began his career as a journalist (Accountancy Age, covering UK business, accountancy, finance) after graduation from University College, London (University of London).

Commenting on his work, Horrell says that he sees small steps in the company’s sustainability journey leading to significant positive change.   Putting a code of conduct in place for suppliers sends a strong signal as to MI’s expectations of its suppliers, and brings continuing improvements in such as areas as water quality, labor relations, solid waste reduction, and improved production of basic crops.  This is true, he explains, in MI’s palm oil and cocoa supply.

MI Chairman & CEO Irene Rosenfeld in her progress report message noted:  “When we began our journey three years ago, we set a high bar for ourselves — to create delicious moments of joy. To make that dream a reality, we knew we had the opportunity to grow our business by building a bright future for all of our stakeholders — colleagues, suppliers, farmers and consumers.”  That setting of the high bar resulted in the strategy of “Call for Well-Being.”

Important Perspectives – 1995 – Sustainability in Focus

by Steve Viederman – Fellow, G&A Institute

Introduction by Hank Boerner

In 1995, Stephen Viederman, then President, of the Jessie Smith Noyes Foundation, authored this thoughtful, forward-looking view of key stakeholders’ focus on sustainability and the quest for a more “sustainable world” — a topic of discussion that has grown in importance in recent years.. 

Steve Viederman is a respected pioneer and thought leader of the sustainable and responsible investment (SRI) movement.  We found his 1995 commentary compelling and certainly applicable today to the various public conversations going on about “sustainability.”

At the time of writing this article, Dr. Viederman was President of the Jessie Smith Noyes Foundation in Steve ViedermanNew York City. A historian by training, he has also held senior positions with the Population Council and the UN Population Fund.

Today, Steve is a Fellow of the G&A Institute and a valued advisor to our team.

Steve’s perspective on the importance of sustainability c 1995:

 

Knowledge for Sustainable Development: What do we need to know?A chapter from a “Sustainable World” By Stephen ViedermanOn January 17, 1994 a major earthquake rocked Los Angeles. That event, combined with chronic problems of water and air, underline the obvious: that Los Angeles presents a textbook example of technology and science winning out over common sense. This bears directly upon our concerns today: knowledge for sustainability.There are those who see sustainability as a problem of science. Harvard scholar and science statesman Harvey Brooks (1992) has written:“There is a need for a relatively value-neutral definition of sustainability that permits consensus among people with widely differing value perspectives and world views to agree on whether or not the objective criteria for sustainability have been met in any given development strategy or project, but without necessarily endorsing that strategy or project in terms of their value system. In other words, whether or not a given development path is sustainable should, in principle, be a scientific rather than a trans-scientific question . . .”Robert White, President of the U.S. National Academy of Engineering, has similarly argued recently that scientists are more capable of creating “rational” public policy than the public-at-large (White 1993).Sustainability is not a technical problem to be solved or an “uncertain characteristic,” as suggested by David Munro in his [article in this volume]. Sustainability is a vision of the future that provides us with a road map and helps to focus our attention on a set of values and ethical and moral principles by which to guide our actions, as individuals, and in relation to the institutional structures with which we have contact—governmental and nongovernmental, work-related, and other.

  • I have argued elsewhere that sustainability is a community’s control of capital, in all of its forms—natural, human, human-created, social, and cultural—to ensure to the degree possible that present and future generations can attain a high degree of economic security and achieve democracy while maintaining the integrity of the ecological systems upon which all life and production depend (Viederman 1993).

We must begin by recognizing that many of the problems that we face today, as Barry Commoner observed many years ago, are not the result of incidental failures but of technological and scientific successes. Witness nuclear power and the problems of agriculture. The problems of environmental justice are also products of technological successes, without comparable social and moral development.

Witness Los Angeles

Science can describe, with different degrees of precision, what is, and to a lesser degree, can help us to assess what can be. Science cannot tell us what should be, and that is the key issue of sustainability. Science is a form of know-how: it is a means without consideration of ends. It underlines the differences between knowing how to do something, and knowing what to do.

Many have argued for new thinking about science at different times in this century. Albert Einstein observed that “we cannot solve the problems that we have created with the same thinking that created them.”

Economist John Maynard Keynes remarked that “the difficulty lies not in new ideas, but in escaping from old ones.”

And Friedrich Hayek, in his Nobel address, noted the irony that economists of his time were being called upon to solve the very problems which they had helped to create. Each of these observations should become an internal guide for each of us as we think about the role of knowledge in sustainability.

With this as introduction, let us return to the assigned question: “What do we need to know?” It may not come as a surprise to you by now that I think that is the wrong question on at least two counts.

First, the problem of sustainability is not a problem of lack of knowledge. Focusing on “need to know” as an issue assumes that lack of knowledge is the problem and suggests that there is a cure—namely, more and “adequate” knowledge.

But as David Orr (1991) has correctly observed, “As important as research is, the lack of it is not the limiting factor in the conservation of biodiversity.”

The problems of sustainability are primarily problems of power, on the one hand, and political will, on the other hand. Debates over international whaling and wetlands in the United States reflect this.

These issues, however, go beyond the purview of the task assigned to me, so I will focus more on my second concern, which relates to the nature of science and the limitations that are encountered in addressing issues of sustainability.

Sustainability confronts us with a situation where, as Funtowicz and Ravetz (1991) have observed, “facts are uncertain, values in dispute, stakes high, and decisions urgent.” This is not a set of circumstances where conventional science excels, to say the least.

Investigator-initiated, peer-reviewed research, as suggested by the proponents of the U.S. National Institutes for the Environment, is not likely to be responsive to such circumstances.

The problems of sustainability are systemic in nature. In a system there are no byproducts, there are no side-effects, nor are there any externalities, all of which are rather products of too narrow a paradigm. In a system there are only effects and products. Conventional science reflects the narrower paradigm, however, and is, therefore, often ill-equipped to deal with issues of significance for sustainability. Again, investigator-initiated, peer-reviewed research is unlikely to deal effectively with the system issues.

What, then, do we need?

First, I think we need to restate the question to conform with one of the key principles of sustainability. This is the humility principle, which states that we should recognize the limitations of human knowledge. The question then becomes: What is our tolerance for ignorance and uncertainty in order to act in a timely fashion with the highest degree of certainty possible while avoiding harm and doing good in the short and long-term? That is what Ravetz (1986) has called “useable ignorance.”

Yes, there are immutable laws of nature. But despite the mythology of science, they are not always knowable to us, and most certainly not knowable—or rarely knowable—in the time frames necessary to right the wrongs of the past and prevent future harm. Yes, we humans are always dominating nature. We have no other choice, in many respects.

The issue is do we dominate in ways that destroy nature, such as is the case of conventional agriculture, or in ways that can contribute to sustainability, as organic and sustainable agriculture are assumed to do. Can we dominate without or at least while minimizing adverse repercussions? This brings us to another dimension of the knowledge base—economics, which is increasingly being recognized as part of the problem of sustainability.

There are no immutable laws of economics. Nor are there what Nobel laureate Paul Samuelson has called “inexorable economic forces.”

Economics and the economy are human constructs. The assumptions and assertions that are part of conventional economics are key issues that we need to address if we are to achieve sustainability. Among these are the mantra of growth; the assumption that rising tides raise all ships; that increasing national wealth effects distribution and equity within a country; that comparative advantage and specialization apply in an economy where capital is mobile; that the market can deal with all issues, including equity; and that competition is good and natural, in all cases.

The need for a new economics—an ecological economics—is clear.

Questions – What We Need to Ask

What then are some of the things that we might need to know to achieve sustainability, along the lines of the definition that I have offered above that includes economic security, democracy, and ecological integrity? This is clearly not a research agenda. Rather, my purpose is to suggest questions that I believe are quite different from those more normally asked.

  • How can we design an economy that honors economic security, democracy, and ecological integrity? What would an economy look like that goes beyond socialism and beyond capitalism?
  • What can be done, working with indigenous peoples to help them to preserve their lives and cultures, as well as their habitats?
  • Can we begin technology development and product design with the question of need foremost in our minds, rather than simply worrying about how to do it better and in a less damaging way, as important as that is? What is appropriate technology? Does “industrial ecology” really deal with the fundamental issues, or simply postpone the ultimate problem?
  • What are appropriate measures of work and wealth that value sustainability? Ponder for the moment that the word “asset” once connoted “having enough.” Can we move from “excessities” to necessities? How?
  • What determines the sustainability behavior of individuals and institutions, and how can it be encouraged? Finger (1993), for example, has completed empirical research in Switzerland that suggests that only environmental action, with values of equity and justice, lead to environmental behavior. Environmental experiences, linked to fear and anxiety and awareness about environmental problems do not appear to translate into environmentally responsible behavior. This runs counter to the usual suggestion that knowledge, values, and attitudes taken together create new behaviors.
  • How do we achieve a sustainable agriculture, one which includes sustainable communities? Is there such a thing as sustainable forestry? What are appropriate measures of production in agriculture and industry that reflect concern for sustainability? For example, why do we measure crop yields in terms of units of land, rather than in terms of, or in addition to, units of water used, land degraded, workers and consumers harmed, etc.?
  • How can we live in peace within and between families and communities and nations?

The Reversibility Principle

I would urge us all to add to the list, while recognizing that in many—in most cases—we sadly cannot wait for the answers. We must proceed with caution, respecting the two other principles of sustainability, beyond the humility principle already referred to. These are the precautionary principle: When in doubt (which, taken together with the humility principle, means most of the time) move slowly and think deeply; and, the reversibility principle: Do not make irreversible changes.

We must make clear our own values, assumptions, and assertions and demand the same of others, in terms of the problem definition, the scientist’s response, the methods and models used, and the policy climate. We must understand the politics of knowledge, and the political economy of science.

There are no knowledge products independent of institutional setting, financial support, scale, place, pace, and person. Fortunately, scientific bodies seem to be more accepting of this analysis now than has previously been the case, although the acceptance is far from universal.

Of particular importance is the recognition that much of the discussion of sustainability—all too often narrowly defined as ecological sustainability—has taken place in and is driven by northern elites. The South, no less interested in the concept of sustainability, has, however, spoken more of issues of poverty and inequity and justice. Only recently has there been a joining of the concerns.

But the northern paradigm of science still prevails. The prestige of southern institutions is still measured against a northern standard. Molecular biology is more highly valued than taxonomy as David Ehrenfeld (1989) has pointed out. As a result, what is taught, how it is taught, and what is researched all too often are designed to meet international standards rather than national needs.

Thirty years ago Ali Mazrui referred to African universities as multinational corporations rather than national institutions (Mazrui 1975). The same is still too often the case all over the South. I have serious doubts that this contributes to sustainability.

The northern tradition of science has generally failed to value indigenous and experiential knowledge. While this is changing among some groups of scientists, the change is slow.

Knowledge generation for sustainability also demands that we involve stakeholders in the process because sustainability is more than ecological or economic.

Sustainability is a statement of values

Sustainability  is a statement of values; in effect,  a vision of the future. Stakeholder involvement is also essential because, as I have noted earlier, “values are in dispute.” In a democracy, value dispute requires participation.

In speaking of science for sustainability, it is important to observe that the corporate world has been stating its support for environmentalism more and more frequently in terms of support for “good science” rather than emotion. I suggest that is a smokescreen for inaction.

The “good science” they want before they act—the exact answers to unanswerable questions—sounds good but is destructive. For example, the effects of the toxic soups that we are each exposed to by modern life cannot be assessed in a manner that reflects human variation.

We do need science and knowledge to address the realities of sustainability, but it will be a new science, an issue-driven science. It will not pretend to be either value-free or ethically neutral, although it will certainly need to remain objective and unbiased in its approaches and continue to be based on rigorous hypothesis testing.

The scientific enterprise in this new paradigm will have to accept the world as it is, rather than try to recreate it in ways that are more susceptible to its research needs. The circumstances that demand this new paradigm are worth repeating: “Facts are uncertain, values in dispute, stakes high, and decisions urgent” (Funtowicz and Ravetz 1991).

As a result, the new paradigm will focus attention on the qualitative assessment of the quantitative data available, recognizing that uncertainty exists. It will also extend the peer community involved in assessment to all stakeholders, as the only way to arrive at decisions that are both scientifically sound and politically tenable.

An “issue-driven” science would, therefore, begin with a problem orientation that is non-disciplinary or trans-disciplinary, recognizing at the outset that it is fraught with uncertainties. This distinguishes it from curiosity-driven science, where the effort is to minimize uncertainties.

In this respect, the new paradigm is “post-normal,” to differentiate it from the scientific paradigm that is now considered “normal.” The characteristics of this new paradigm will include:

·         Pragmatism and plurality. Tools and conceptual frameworks will be appropriate to the solution of the problem, rather than being limited by the tools and conceptual frameworks of a particular discipline.

·         Acceptance of uncertainty as a given. It is acceptable to ask questions about the real world that at present we do not know how to answer.

·         A focus on data quality rather than data completeness.

·         Use of a systems approach that is comprehensive, holistic, global, long-term, and contextual.

·         Explicit concern for future generations, sustainability, and equity.

·         A concern for dynamics, non-equilibrium, heterogeneity, and discontinuity.

  • Expression of social points of view, as well as individualistic points of view.
  • Concern for the processes through which the behaviors of individuals and institutions change.

I would like to close with two observations. First, history teaches us that we should expect the unexpected. We should, therefore, study history as part of the knowledge base for sustainability, as a constant reminder of humans’ incapacity to manage the planet.

Second, knowledge is obviously better than ignorance. But wisdom is even better. We should proceed with caution and humility, and try to avoid doing something that cannot be undone.

Notes:  The preceding is a chapter from T. Trzyna, ed. A Sustainable World: Defining and Measuring Sustainable Development. Sacramento and London: California Institute of Public Affairs and Earthscan for IUCN, 1995. Copyright © 1995, IUCN – The World Conservation Union.

 References 

  • Brooks, H. 1992. The concepts of sustainable development and environmentally sound technology. ATAS Bulletin 1(7): 1924.
  • Ehrenfeld, D. 1989. Forgetting. Orion.
  • Finger, M. 1993. When knowledge is inaction: Exploring the relationships between environmental experience, learning, and behavior. Paper available from author [as of 6/2006 at the École Polytechnique Fédérale de Lausanne, Switzerland, www.epfl.ch].
  • Funtowicz, S., and J. Ravetz. 1991. A new scientific methodology for global environmental issues. In Ecological economics: The science and management of sustainability, ed. R. Costanza. Columbia University Press, New York.
  • Hayden, G. 1991. Institutional policy making. In Ecological economics: The science and management of sustainability, ed. R. Costanza. Columbia University Press, New York.
  • Mazrui, A. 1975. The African university as a multinational corporation. Harvard Educational Review 45(2): 191210.
  • Orr, D. 1991. Conservation Biology.
  • Ravetz, J. 1986. Useable knowledge, useable ignorance: Incomplete science with policy. In Sustainable development of the biosphere, ed. W. E. Clark and R. E. Munn. Cambridge University Press, Cambridge.
  • Viederman, S. 1993. The economics and economy of sustainability: Five capitals and three pillars. Talk delivered to Delaware Estuary Program. Available from Noyes Foundation, New York.
  • White, R. 1993. Regulations shouldn’t be relics. Technology Review 96(4): 66.