Oxygen n. 12-02.2011 English version by Enel Spa

12 â&#x20AC;&#x201D; 02.2011 Science for everyone

054 – 055 Oxygen versus CO2

Corporations go green

006 – 008 Editorial by Fulvio Conti 010 – 015 Interview with Ian McEwan

Solar Blues by Stefano Milano 016 – 017 Photoreport

Corporate Social Responsibility 018 – 023 Interview with Georg Kell

CSR: “corporate citizenship”

056 – 061

CSR is...

The ethical consumer and the quest for “the business case”

038 – 041

by N. Craig Smith and Elin Williams

A model for corporate social responsibility

062 – 065

036 – 037 Connect the dots

by Gianluca Comin and Luigi Ferraris 042 – 045 Interview with John Elkington

The sustainability of apparent irrationality

by Mindy Lubber

The value of tradition and the dignity of work by Brunello Cucinelli 066 – 073 Photoreport

Cloud Cities

by Alessandra Viola

by Tomás Saraceno

046 – 049

074 – 077 Interview with Enrico Giovannini

by Pino Buongiorno 024 – 027

Integrated reporting: the standard by 2020

086 – 087 Photoreport

Are you really sure that a floor can’t be a ceiling? 088 – 091

Communicating CSR: a change of mindset by James Osborne

CSR: brilliant ideas and real results

What the GDP does not measure

by Mervyn E. King

by Carlo Falciola and Manuela Lehnus

028 – 031

050 – 053

CSR Glossary

078 – 081

A brief history of CSR

Ecoelce: innovation and strategy at the service of corporate social responsibility

by Stefania Stecca

by Marcos González

by Daniela Mecenate

by Roberto Bagnoli

032 – 035

082 – 085

The global power sector, sustainability and the bottom line

CSR and finance: “seeing sustainable” in the future

092 – 093 Future Tech

IT and CSR: Green computing and cloud computing services of responsible companies 094 – 095 Science at the toy store

Barbie manager and Barbie stakeholder

Oxygen 2007/2011

cover image

Oxygen is an idea by Enel, to promote the dissemination of scientific thought and dialogue.

Andrio Abero, Zhores Alferov, Enrico Alleva, Colin Anderson, Paola Antonelli, Antonio Badini, Andrea Bajani, Pablo Balbontin, Philip Ball, Vincenzo Balzani, Ugo Bardi, Paolo Barelli, Roberto Battiston, Enrico Bellone, Carlo Bernardini, Tobias Bernhard, Michael Bevan, Piero Bevilacqua, Andrew Blum, Albino Claudio Bosio, Stewart Brand, Luigino Bruni, Giuseppe Bruzzaniti, Massimiano Bucchi, Pino Buongiorno, Tania Cagnotto, Michele Calcaterra, Paola Capatano, Carlo Carraro, Federico Casalegno, Stefano Caserini, Ilaria Catastini, Marco Cattaneo, Corrado Clini, Co+Life/ Stine Norden & Søren Rud, Elena Comelli, Ashley Cooper, Paolo Costa, George Coyne, Paul Crutzen, Partha Dasgupta, Mario De Caro, Giulio De Leo, Michele De Lucchi, Ron Dembo, Gennaro De Michele, Peter Droege,

Freeman Dyson, Daniel Egnéus, Richard Ernst, Daniel Esty, Monica Fabris, Carlo Falciola, Francesco Ferrari, Paolo Ferri, Tim Flach, Stephen Frink, Antonio Galdo, Attilio Geroni, David Gross, Julia Guther, Søren Hermansen, Thomas P. Hughes, Jeffrey Inaba, Christian Kaiser, Sir David King, Hans Jurgen Köch, Charles Landry, David Lane, Manuela Lehnus, Johan Lehrer, Giovanni Lelli, François Lenoir, Jean Marc LévyLeblond, Ignazio Licata, Armin Linke, Giuseppe Longo, L. Hunter Lovins, Tommaso Maccararo, Giovanni Malagò, Mark Maslin, John McNeill, Joel Meyerowitz, Paddy Mills, Marcella Miriello, Antonio Moccaldi, Carmen Monforte, Patrick Moore, Richard A. Muller, Nicola Nosengo, Helga Nowotny, Alexander Ochs, Robert Oerter, Alberto Oliverio, Sheila Olmstead, Rajendra K. Pachauri, Mario Pagliaro, Francesco Paresce, Claudio

Pasqualetto, Federica Pellegrini, Matteo Pericoli, Emanuele Perugini, Telmo Pievani, Michelangelo Pistoletto, Viviana Poletti, Stefania Prestigiacomo, Giovanni Previdi, Filippo Preziosi, Marco Rainò, Jorgen Randers, Carlo Ratti, Henri Revol, Marco Ricotti, Sergio Risaliti, Kevin Roberts, Lew Robertson, Kim Stanley Robinson, Alexis Rosenfeld, John Ross, Marina Rossi, Jeffrey D. Sachs, Gerge Saliba, Saskia Sassen, Steven Shapin, Clay Shirky, Uberto Siola, Antonio Sofi, Leena Srivastava, Francesco Starace, Robert Stavins, Bruce Sterling, Chicco Testa, Stephen Tindale, Mario Tozzi, Andrea Vaccari, Nick Veasey, Jules Verne, Umberto Veronesi, Marta Vincenzi, Alessandra Viola, Mathis Wackernagel, Gabrielle Walker, Changhua Wu, Kandeh K. Yumkella, Edoardo Zanchini, Carl Zimmer.

editor in chief Gianluca Comin

editorial director Vittorio Bo

publishing coordination Giorgio Gianotto

editorial board

Luca Di Nardo Paolo Iammatteo Dina Zanieri

Enrico Alleva chairman

managing editor

Giulio Ballio Roberto Cingolani Fulvio Conti Derrick De Kerckhove Niles Eldredge Paola Girdinio Piero Gnudi Helga Nowotny Telmo Pievani Francesco Profumo Carlo Rizzuto Robert Stavins Umberto Veronesi

Stefano Milano

art direction and layout studiofluo

picture editor

translations Susanna Bourlot Laura Culver Gail McDowell Federica Niola Silvia Pallottino

chairman Vittorio Bo

studiofluo

printer Officine Grafiche Artistiche Grafart, Venaria (Torino)

editorial team Simone Arcagni Davide Coero Borga Elisa Frisaldi Francesco Rossa

quarterly magazine published by Codice Edizioni

exclusive Italian distribution Arnoldo Mondadori editore via Bianca di Savoia 12 20122 Milano t +39 02 754 21 f +39 02 754 22 584

registered office, management, advertising and administration Oxygen c/o Codice Edizioni via Giuseppe Pomba 17 10123 Torino t +39 011 197 00 579 f +39 011 197 00 582 oxygen@codiceedizioni.it www.oxygenmag.it ÂŠCodice Edizioni. All reproduction and translation rights for the published articles are reserved.

Contributors

Roberto Bagnoli

Fulvio Conti

John Elkington

Bagnoli, a journalist who graduated in political science and earned a master’s degree in international economics at New York University, now works in the Roman editorial office of the newspaper “Il Corriere della Sera,” where he deals with politics and economics. He previously wrote for the newspaper of Idro Montanelli, “La Voce” as well as for “Avvenire,” “Fortune” and “Il Giorno”.

Enel CEO and General Manager since May 2005 and director of Barclays plc and AON Corporation, as well as deputy chairman of Eurelectric and adviser to the National Academy of Santa Cecilia. From 1991 to 1993 he headed the accounting, finance, and control department of Montecatini and he subsequently was in charge of finance at Montedison-Compart. General manager and chief financial officer of the Italian National Railways between 1996 and 1998, vice-chairman of Eurofima in 1997, and general manager and chief financial officer of Telecom Italia. From 1999 to June 2005 he was Enel’s chief financial officer.

Founding Partner & Executive Chairman of Volans and Co-founder of SustainAbility, he is a world authority on corporate responsibility and sustainable development. In 2009, a CSR International survey of the Top 100 CSR leaders placed Elkington fourth: after Al Gore, Barack Obama and the late Anita Roddick of the Body Shop, and alongside Muhammad Yunus of the Grameen Bank. Elkington is a Visiting Professor at the Doughty Centre for Corporate Responsibility and he is also a member of many advisory boards. He has written or co-authored 17 books, including 2008’s The Power of Unreasonable People (2008), and he is a columnist for a number of publications.

Pino Buongiorno Deputy director of the weekly magazine “Panorama,” he has been a special correspondent from the United States and editor-in-chief of the editorial team in Rome. He recently edited the essay collection Il mondo che verrà. Idee e proposte per il dopo G8 (The World to Come, Ideas and proposals for Post-G8) (Università Bocconi Editore), which was also translated into English.

Gianluca Comin Comin is the Director of External Relations at Enel and also in charge of Institutional Relations in Italy and internationally. He previously worked as Director of Media Relations for Telecom Italy and was Director of External Relations at Montedison. In 19971998, he was the spokesman for the Minister and Press Officer of the Ministry of Public Works. Comin is president of the Italian Federation of Public Relations (FERPA), a member of the board of Civita, an Enel Heart nonprofit organization adviser and a lecturer in the Department of Economics at Luiss University. He is a member of the National Council of Confindustria and Executive Vice President for the Greater Industry of Unindustria Venice-Province of Venice Industrial Union and Regional Adviser of Confindustria Veneto.

Brunello Cucinelli Born in 1953, he had the intuition when still just a boy that colored cashmere could be a real revolution in style; in 1974, he interrupted his university studies to dedicate himself entirely to the activity that has made him world famous. Since the very beginning, his company has registered a constant growth: today there are 50 single-brand stores and many “shops in shops” inside the most prestigious department stores in the world. In 2010, the company turnover reached 200 million Euros, of which 65% was due to exportation (mainly the USA, Europe, Japan, Russia and the Far East). During his career, Cucinelli has received numerous awards and honors, some on an international level.

Carlo Falciola Freelance journalist, photographer and television author, he has worked in the field of popular science and scientific communication for twenty years. He has created TV programs and documentaries for Mediaset and La7. He has collaborated with newspapers published by Mondadori, RCS and L’Espresso. He has been photographing Italian and African nature for ten years, cooperating with photography agencies and research institutions.

Luigi Ferraris Chief Financial Officer of Enel S.p.A., he joined Enel in 1999 as the CFO of Eurogen, Elettrogen and Interpower. He later served as Director of Planning, Monitoring, Administration and Services in the “Infrastructures and Networks” and “Market” divisions, Group Controller and Director of Administration, Planning and Control. Ferraris is currently also President of the companies Enel Green Power, Enel Services and Enel Factor SpA. In addition, he is an adviser to the companies Endesa S.A., OGK-5, Enel Distribution SpA, Enel Production SpA, Enel Engineering and Innovation SpA

and Enel Investment Holding BV. Among his other activities, he is a professor in the Department of Economics at Luiss Guido Carli University.

Enrico Giovannini Giovannini is currently the Director of ISTAT in Italy, and former Chief Statistician of OECD. At the OECD he founded and directed “Global Project: Measuring Progress of Society” - the objective of which was to review GDP as the sole indicator for economic growth. Due to his pioneering work on this topic he was appointed by French President Sarkozy to join a commission of luminaries to study this issue. He is member of several European Commission committees and of other International Organizations. He was a member of the strategic Committee of the Ministry of Treasury for the introduction of the Euro in Italy and of several scientific committees at Italian universities and research institutes.

Marcos González A journalist, he is the founder and CEO of MediaResponsable, the first Spanish publisher specializing in Corporate Social Responsibility. He is the editor of the journal “Corresponsables”and the president of the Fundación Corresponsables. He has worked as a journalist and editor for several publications on economy or business, including “Staff Empresarial” and “Equipos & Talent.” He received the 2003 Economía Solidaria award, conferred by the Asociación Internacional de Estudios sobre Management (ASIEMA), and the second Premio Estudios Financieros award in 2005. He has also collaborated on the publication of many books related to CSR, a subject he teaches at many business schools, and he regularly participates in meeting and conferences on this topic.

Georg Kell

Mindy S. Lubber

Daniela Mecenate

Is the Executive Director of the United Nations Global Compact, the world largest voluntary corporate responsibility initiative with more than 6,000 participants in over 130 countries. Spanning more than two decades, his career with the United Nations began in 1987 at the UN Conference on Trade and Development (UNCTAD) in Geneva. In 1997, Mr. Kell joined the Office of the UN Secretary-General in New York, where he spearheaded the development of new strategies to enhance private sector engagement with the work of the United Nations. As one of the Global Compact key architects, he has led the initiative since its launch in 2000, building the most widely recognized global business platform on human rights, labor, environment, and anti-corruption.

She is the President of Ceres, the leading coalition of investors, environmental organizations and other public interest groups working with companies and investors to build sustainability into the capital markets and address sustainability challenges such as global climate change. She also directs the Investor Network on Climate Risk (INCR), a network of more than 90 investors representing approximately $10 trillion in assets that coordinates US investor responses to the financial risks and opportunities of climate change. Ms. Lubber was the Regional Administrator of the US Environmental Protection Agency and Founder/CEO of Green Century Capital Management, an investment firm managing environmentally screened mutual funds.

Ms. Mecenate writes for the newspaper “Il Sole 24 Ore” and is the author and presenter of topical news programs for the Italian network RAI Radio One. She has been concerned with economic, and environmental issues and “business culture” issues for some time: she worked for press agencies and then conducted communication activities for major Italian companies such as TIM, Telecom Italy and SACE.

Mervyn E. King

Ian McEwan

Senior Counsel and former judge of the South African Supreme Court, and Professor at the University of South Africa in Corporate Citizenship and president and founder of the KING Commission on Corporate Governance in South Africa. He is president of the Global Reporting Initiative in Amsterdam and member of the private sector consultative group for the World Bank regarding Corporate Governance.

One of the most important contemporary writers, McEwan was born in 1948 in Aldershot, England and lives in London. He is the author of two short story collections: First Love, Last Rites and In Between the Sheets; a book for children: The Daydreamer; and the opera libretto: For You. He has published the essay, End of the World Blues and many novels, including: The Cement Garden, The Comfort of Strangers, The Child in Time, The Innocent, Black Dogs, Enduring Love, Amsterdam, Atonement, Saturday, On Chesil Beach and Solar. All of his books have been published in Italy by Einaudi.

Manuela Lehnus Collaborator on documentaries and scientific reports for “Sfera,” a television program on the La7 network in Italy, she has worked in the field of communications with the Hoffman Institute and is a consultant for Paramount Home Entertainment and DreamWorks. Since 2002, she has been writing popular science articles for various national publications such as “D - la Repubblica” of the Espresso Group and magazines published by Mondadori, Hachette-Rusconi and RCS

James Osborne Osborne is a partner and the head of CSR communications at Lundquist, a corporate communications consultancy in Milan (www.lundquist.it), and coordinates the annual CSR Online Awards. He has advised numerous listed companies in Italy, Switzerland and Austria on their CSR communications, content strategy and corporate message analysis. Before joining Lundquist, James worked for 12 years as a journalist in the U.K. and Italy. He was a reporter and then editor for “Bloomberg News” in Milan, specializing in the European energy sector. He has also written for the “Financial Times” online and is still a regular contributor to publications including “European Energy Review.”

N. Craig Smith Smith is the INSEAD Chaired Professor of Ethics and Social Responsibility at INSEAD, France and the Academic Director of the Corporate Social Responsibility and Ethics Research Group in the INSEAD Social Innovation Centre. He was previously on the faculties of London Business School, Georgetown University, and Harvard Business School. His current research examines ethical consumerism/consumer activism, marketing ethics, deception in marketing, stakeholder engagement, and strategic drivers of corporate responsibility/ sustainability. He consults with various organizations on business/

marketing ethics and corporate responsibility/sustainability.

Stefania Stecca Ms. Stecca deals with organizational communication and public relations as a consultant and trainer. She is a teacher and educational coordinator of the Master’s in Marketing and Communications+Online+Offline Unconventional program. She develops participatory communication projects for public, private and political sectors. She has collaborated with magazines and periodicals on occasion.

Alessandra Viola Ms. Viola is a freelance journalist who writes about science issues for many Italian and foreign newspapers and magazines (including “L’Espresso,” “la Repubblica,” “Wired Italy,” “Wired UK,” “Il Sole 24 Ore”). In 2008, she was the recipient of the ArmeniseHarvard Foundation Award and the UGIS (Italian association for science journalists) prize for the best Italian Scientific journalist. She writes articles and documentaries about energy, research and sustainable development.

Elin Williams Is a freelance writer and journalist who divides her time between the UK (Oxford) and France (Fontainebleau). A former managing editor of careers magazines and websites, she now specializes in writing about business, business education, corporate social responsibility, and philanthropy across a variety of media. In her spare time she strives to be an ethical consumer and, though she does not always succeed, she finds intellectual inspiration in the ethical dilemmas she encounters.

Editorial

by Fulvio Conti

This issue of Oxygen is dedicated to the ethics of business in society in the twenty-first century. It is not by coincidence. I believe that the events of the decade that has just ended have made this a central theme, not only for the strategy of big corporations, but also the political world. In a world that is changing faster and faster, and sometimes chaotically, creating value also through the adoption and promotion of ethical and social values that are shared locally and globally has become imperative for companies and businesses. The new business context

The ethics of profit, an irreplaceable instrument for measuring the ability to manage the best allocation of resources in a competitive context, has been enough to justify the actions of businesses until not very long ago. Today, it is no longer sufficient to support the “license to operate” of just any economic actor. Moreover: to live in this turbulent era, businesses are required to contribute to the definition of new models of development that the company is looking for, and thus, to demonstrate their path and level of sustainability. Every company today must be able to meet many new needs that arise from the increasing participation of individual members of society or individual citizens in the formation of new paradigms of public opinion. This is the new dynamic call “glocal” (global/local) that interacts on blocked economic/social systems, creating extreme volatility. The latest thinking on business strategy is trying to find answers to all this; about the role of its leaders, about the management and marketing of companies at the beginning of this new century, defined as turbulent and chaotic by authors such as Philip Kotler and John A. Caslione. It should be noted that these troubled times are not simply a consequence of the financial crisis that began in 2008 or because of the speed of technological and social change in the last thirty years, which is unparalleled in the history of mankind. Rather, we should look upon this constantly evolving arrangement not as a transitional phase determined by the single cyclical phenomena but as the new face of our norma-

lity, the new scenario that will characterize the next decades. A composite, ambiguous, and certainly unexpected normality that brings patterns and behavior into question, that requires flexibility to manage the pace of change and new approaches, so as to even be able to innovate. The “new normality” is looking for models to address the economic crisis, once again to focus interest and action on the real economy, the role of states and governments in the markets and the fundamental system of new and binding rules to manage the complexities of the global financial world. But above all, the aim is to create a new “social order” based on moral values, transparent behavior and respect for people, to the point of preferring the public welfare to one’s own interests. Probably for this reason, business strategy is interwoven more and more with the “becoming” of global and local society: a community in which all its components are no longer social partners, but “social actors,” no longer subjects opposing interests and representation, but protagonists of the complex dynamics of sharing and making choices. As Zygmunt Bauman points out, we live a “liquid society” characterized by the pursuit of wellbeing and economic growth that is faced with momentous challenges, such as the consolidation of the major emerging economies, the crisis of the welfare models tested to date, the definition of a new order of global governance, such as the fight against climate change or the management of financial crises. In this context, companies, especially large transnational ones, have become a crucial hub of encounter or confrontation between business and society.

CSR as a business philosophy for managing the new reality

The challenge for the construction of “another economy,” as Paul Krugman has defined it, which guarantees the overcoming of the economic downturn, is to give companies and their strategic choices an unprecedented role as social actors, which is vital for the creation of not only new economic value, but also and especially, new values, therefore making it possible to rebuild trust and reliability. It is for these profound reasons that there is widespread talk of the “social integration of the company” as a new vision of the relationship between business and society, and Corporate Social Responsibility (CSR) has become an unavoidable priority for business leaders around the world. On the other hand, as emphasized in the Encyclical Caritas in Veritate, “the risk in our time is that the de facto interdependence between men and nations is not matched by the ethical interaction of consciences and minds which, as a result, would give rise to a truly human development.” Therefore, there is a unique parallel between the evolution of social thought and philosophy and that of the great experts of corporate strategy. There is the search in both for a “missing dimension” of reconciliation through an organic process of adaptive and long-term vision, to re-weave the apparent conflict between economic action and the welfare of humanity. A contradiction that Max Weber solved by invoking the ethical meaning of work, and especially that of intellectual nature, emphasizing a connection, foremost etymological, between ethics and economics: in fact, the term Beruf in German means both “job-profession” and “mission-calling.” It is in this dimension that we find the best thinking on the interactions between business strategy and society, critical thinking, intellectual development and the fundamental actions of business. Viewed in this light, the commitment required of companies toward future generations, to build a more ethical and sustainable future that is more respectful and responsible toward the development of human beings and the planet, acquires innovative value.

A new vision of the relationship between business and society emerged from these discussions, one based on the social role of enterprise, planned and reported on through use of the CSR tools, as claimed by Michael E. Porter and Mark Kramer. This approach eliminates the tension between business and society, placing the accent instead on their profound interdependence; and mutual dependence implies that business decisions and social policies must both follow the principle of shared value proposition. According to Porter, “the heart of every strategy is a set of needs that the company is able to meet on behalf of clients it has chosen to serve, whereas others cannot do so. [...] The CSR reaches the maximum strategic value when a company enters a social dimension in its value proposition to boost its competitive edge.” To implement these general principles, a company must integrate a CSR perspective of the fundamental patterns that are already used to analyze the competition and govern their business strategy. Obviously, no company is able to solve all the problems of society, nor to support the cost to do this, but they all have to select topics that intersect with their specific business area. This way, a relationship can be developed in which the success of the business and that of the community, in its broadest sense, are mutually reinforcing. Moreover, when the CSR activities that fall within the company’s set of values and within that of the community’s values, and investments directed to the competitive environment are fully integrated, it becomes difficult to distinguish CSR from the daily activities of the company.

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Editorial

The responsibilities of transnational corporations

Multinational companies today are responsible for spreading the work ethic of sustainability all over the world, alongside functions of stimulus proposed by national and transnational institutions. Take for example the social debate on limiting greenhouse gas emissions, for a moment leaving aside the dispute among scientists about the actual size of the contribution of human activity to the phenomenon of climate change. What we need to do is to avoid piecemeal and asymmetrical approaches that only risk causing the exodus of thousands of companies from countries that have set themselves limits as stringent as they are unrealistic, as in the case of Europe, toward those parts of the world where these restrictions do not exist. For this, we must all work together, companies and institutions, to build a clear, shared regulatory framework that is valid all over the globe. The real experience of multinational companies can be decisive to head us in this direction. Strengthening, for example, those mechanisms that could transfer technologies of low environmental impact to the emerging countries that do not have them yet, in order to achieve much greater results in terms of emission reduction with the same investment. Of course, one must always be aware that the integration of business and sustainability is a process and a goal. The achievement of sustainable competitiveness, in fact, is possible only through constant effort, to be renewed over the years as part of a growth strategy based on financial strength and profitability, on the involvement of different actors and a detailed, shared policy of environmental resource management. With particular regard to the electric utility industry, the energy of tomorrow will have to be able to cope simultaneously with the economic, social and environmental challenges. In other words, the role of those working in this field, which is crucial for the welfare and progress of humanity, is that of ensuring a reliable energy supply for everyone that is cost competitive and environment- friendly. How can we forget that two thirds of the world have yet to reach an adequate level of welfare? This goal would be unthinkable without the avai-

lability of abundant energy at a reasonable cost. To achieve this, we must produce more, but at the same time we must reduce the consumption of raw materials and preserve the environment and climate. Only science and technology can help solve this dilemma. Therefore, for those who deal with energy, socially responsible behavior requires investing in the research and development of all the best solutions with which mankind is experimenting. In a globalized economy, all businesses operating in any field are now being entrusted with a great responsibility: to drive the change toward a future in which our prosperity will depend on the innovation that we can achieve today, on a better use of resources and the centrality that we will give to the knowledge and values of solidarity that this new century requires.

TO BUILD A SUSTAINABLE ECONOMY WE NEED ENLIGHTENED COMPANIES.

DEVELOPING A SUSTAINABLE BUSINESS IS GOOD FOR EVERYONE. ABOVE ALL, FOR BUSINESS ITSELF. Enel is committed, on a daily basis, to be an ever more responsible business. We have organised this Sustainability Day so that sustainability thinking can be shared and discussed at a global level. www.enelsustainabilityday.com

Interview with Ian McEwan

Solar Blues

by Stefano Milano

Ian McEwan, one of the masters of contemporary literature, tells Oxygen about his ideas on issues such as renewable energy, global warming and the future of the planet. These are the themes running through his latest novel, Solar, in which literature and science, rationality and human nature all meet.

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Hein van den Heuvel/Corbis

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oxygen 12 – 02.2011

With his ascetic face and sharp eyes with their expression of perpetual seriousness beneath which a wry smile lurks, Ian McEwan welcomes me into his hotel suite in Rome. He is in the capital to open the 2011 Science Festival with his End of the World Blues, a poetic reflection upon apocalyptic thinking and the need we all have to be able to imagine the end of our civilization. Or a new beginning... McEwan points out that science and the culture of reason have not yet managed to find a mythology that can compete with the fascination of the end: “The scientific method, skepticism, rationality in the broadest sense, have yet to find an epic of sufficient impact, simplicity and fascination to compete with the ancient stories that give meaning to people’s lives.” But there is an antidote, which according to the British writer comes even before reason, and it lies within curiosity: “Every story needs an ending, as well as a beginning. And the story of humanity has always been nourished by the myth of a glorious apocalypse. In reality, no one will come to save us, we will have to think for ourselves. Perhaps, with the unconquerable impulse of curiosity, the true mark of an independent mind.” For McEwan, curiosity is a powerful engine, which led him to the Arctic with scientists and artists to witness the effects of global warming in 2005: a journey that triggered the spark in him to write Solar, his latest novel “set” in the era of global warming and

renewable energy. Science, energy and solutions to save the planet arouse the curiosity of the writer, who accepted to talk to Oxygen about them with enthusiasm and remarkable competency. If faced with the problem of global warming, “nobody will come to save us, we will have to think for ourselves;” McEwan certainly has very clear ideas about what road to take.

Interview with Ian McEwan

There is nothing more visionary than science and certain questions that are being raised in recent years.

In Solar you conducted a dialogue between science and literature, addressing major issues but told through the implications of the human nature of a single story: that of the protagonist Michael Beard. How did you strike the right balance between the two languages? The difficulty was in dealing with issues as broad as climate change, political ethics and a scientific approach, but all told through a story that has life within it. The main character couldn’t have been just any ordinary man; I needed a very particular human being, with his glories and miseries, who would find himself in certain situations and have social relationships. The story comes before everything else, and the novel dies if you start to tell the reader how to live, without going through the narrative.

Why did you decide to write a novel “set” in the world of renewable energy and global warming? It was an idea I have had in mind since the mid-’90s, when global warming had become an unavoidable problem that was unique and different from all the others; because it is all over the world, not only in Bangladesh, Yemen or southern Italy. It is a universal dilemma for humanity that raises a number of other issues about human nature and what we are, because it is asking us to confront a problem that has had a fairly slow development, the consequences of which we won’t be able to see clearly until 80-100 years from now. For democracies, which have very short-term cycles of 4-5 years, it is very difficult to deal with this problem. For example, if the benefits will be medium to long term, for democratic politicians who really want to deal with the global warming it is very difficult to raise energy taxes or implement other policies to reduce emissions during their short-term political mandate. It is a matter that regards human nature in general: why should we make an effort to do something to favor people living in the future and whom we will never know? It is for this reason that my novel explores human nature through a double lens: it tells of the complicated emotions, transferring them to a political level in the chaos of the selfishness of individuals, national interests, jealousy and mistrust.

But then the rational part enters into this scenario, and therefore, science... Human rationality is the flip side of this story. Between 2005 and 2008, global warming became a much debated topic, perhaps even the most important issue, and with it, the knowledge that we had to intervene in some way. Since then, attention has grown exponentially and this issue was no longer only of interest to environmentalists and scientists, but it became a cornerstone of the Obama campaign, for example, and a problem that every world government had to face. And then the considerable positive attention that had been created suddenly collapsed with the failure of negotiations in Copenhagen… Yes. The Danish summit inspired me a lot right while I was writing Solar: that failure and the snowstorm that hit the Danish capital, the 2000 delegates who attended the summit, the intransigence of the Chinese, the resignation of Europeans and the sterile activism of the Americans all sparked my imagination and I went back to rewriting the book, which had almost been completed. Participants in the summit seemed like perfect characters for a Moliere comedy and my main character – the Nobel Prize winner for physics, Michael Beard – is very similar to those delegates.

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oxygen 12 – 02.2011

We are very good at cooperating, but also very selfish. We have this double nature, and what literature can do is illuminate it for us and make us see how weak we are, but also how potentially strong we are. 014

And a few months ago, there was the summit in Cancun, which was generally met with almost total indifference and resignation. How do you assess the outcome of this latest summit? Cancun was practically ignored by the media but it served to rebuild from the rubble of Denmark. The shift in the Chinese position was the truly important fact. In Copenhagen, the Chinese saw all types of negotiations on emissions as a threat, while they now view them as an opportunity. If each nation must get 20% of its energy from renewables, that is good for the Chinese because they are already world leaders. And then they changed their position obviously due to interests, and not because of the virtue that a “green” choice of this kind implies. It is the same thing I say in the novel: choices are always made for personal gain, never virtue. Precisely for this reason, I remain optimistic that the decline in oil production and its rising price will push us to make a change.

What is needed in order to overcome the current impasse? We need a new industrial revolution. And this revolution will be made by pragmatic, competitive and ambitious people. For example, by the people who are able to build a new electricity network in the United States, where it is now owned locally and a real chaos that is impossible to manage. What do you think the energy equation should be for getting us out of the transitional territory where we now find ourselves? We have to get rid of the coal and oil, and later, gas and then we must aim for an energy portfolio that is as clean as possible. My conclusion, resigned but pragmatic, is that we cannot help but include nuclear power among the sources we need. In the short to medium term, i.e. within 20 years, we will not be able to get the energy we need from renewable sources. For example, today in Rome there is no wind and the sky is overcast, and the current state of affairs can’t keep this city, the public transport and hospitals going with only the sun and wind. If we want to get rid of fossil fuels, I believe that we will need nuclear energy, at least for a generation.

Has this position also been influenced by your friendship with Stewart Brand, who recently in his Whole Earth Discipline – An Ecopragmatist Manifesto proclaimed the four heresies of the environmental movement, including the need for nuclear energy? Stewart, whom I respect a lot, was an opponent of nuclear energy ever since he helped create the American environmental movement; then, for compelling reasons that I share, he pragmatically changed his mind. But he is not the only one: Jared Diamond and James Lovelock also changed their minds a long time ago. The environmental movement must learn to love the city, science, new technologies and possibly, even nuclear energy.

Interview with Ian McEwan

In any disaster, such as in the case of global warming, there are a lot of opportunities that we can grasp. I believe that human beings are much more adaptable and flexible than governments think.

Lester Brown, another historical American environmentalist, told me long ago in an interview that at the international summits on climate, governments should send their best scientists and visionaries rather than lawyers and diplomats. What effect does this provocation have on your rationale? We definitely need visionaries, but not at international summits. What we need are agreements that are rapid, pragmatic and realistic. And I’m not saying this because I don’t like visionaries, but because the bargaining at the summits on climate is extremely boring and we need numbers, not dreams. Will we manage to achieve a 20% reduction in emissions? Will we manage to get 15, 20, 50 or 80% of our energy from renewables? These are questions to which only very practical people can respond, such as the engineers of the energy companies.

Michael Beard, the protagonist of Solar, is working on a complex project: artificial photosynthesis that could allow the production of economic fuels and materials for the chemical industry from renewable solar energy. To come up with Beard, you must have been inspired by other real projects, for example such as Michael Grätzel’s work on dye-sensitized photovoltaic cells, an alternative to the current technology of silicon solar cells. Or that of Takashi Yabewith with the injection cycle of magnesium. Could it be that the real visionaries are scientists who work on ambitious futuristic projects in the field of alternative energy? There is nothing more visionary than science and certain questions that are being raised in recent years: in the future, will energy come from magnesium? Or else, from what other source? What contribution will be made by nanotechnology and quantum mechanics? Will photovoltaic energy of the future, that is to say, hydrogen derived by water-splitting through solar radiation, accumulating heat and solving the problem of the intermittency of the sun, be the solution up there on the roofs of all our homes? I have great confidence in new technologies and who knows, perhaps that noble dream of mine and Michael Beard’s of being able to achieve artificial photosynthesis, which does not seem impossible, could save us.

Can literature also illuminate the path of future changes? What is its role in this scenario? We need a new source of energy for civilization, a new “battery” that is neither oil nor coal. But it is very difficult to change things because of who we are: we are very good at cooperating, but also very selfish. We have this double nature, and what literature can do is illuminate it for us and make us see how weak we are but also how potentially strong we are. In any disaster, such as in the case of global warming, there are a lot of opportunities that we have to grasp. I believe that human beings are much more adaptable and flexible than governments think.

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Photoreport

Corporate Social Responsibility ÂŤA concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.Âť (European Commission)

photo by Elena Segatini Bloom, Corbis

Interview with Georg Kell

CSR: â&#x20AC;&#x153;corporate citizenshipâ&#x20AC;? In this exclusive interview granted to Oxygen, Georg Kell, executive director of UN Global Compact, explains the progress made in these 11 years of activity and also reveals the next challenge for the UN Global Compact 2.0.

by Pino Buongiorno

Mike Kemp/Tetra Images/Corbis

If there is one area where Italy does not cut a bad figure in the eyes of the world, but instead, is unanimously considered to be one of the best, it is that of corporate social responsibility. Particularly, within the UN-managed program called Global Compact, which has served for 11 years now as an umbrella organization for all those companies that voluntarily agree to sign the 10 universal principles on human rights, labor, the environment and the fight against corruption. There are currently 192 Italian companies actively involved in the UN Global Compact, which include the cream of the business and civil society. They were the first to join and also the first to form the local network, one of the 70 found all over the world. When Georg Kell, executive director of the UN Global Compact told me in his office in New York about the Italian role in corporate social responsibility, he added that he has always seen great enthusiasm and great involvement from the Italian companies, as evidenced by the last summit of business leaders organized by the UN. There is no doubt that the increased focus on CSR is a product of globalization when corporate social responsibility has become essential for access to new markets and gaining acceptance locally and for obtaining the necessary licen-

ses and fortifying their brands. In this sense, CSR is much more than a public relations tool: it is a crucial business strategy which enhances the companies, enabling them to manage risks and opportunities, and then to integrate them further into the global market. In this exclusive interview with Oxygen, Georg Kell – who is of German origin and had extensive experience as a financial analyst in Africa and Asia before joining UNCTAD (UN Conference on Trade and Development) in Geneva – explains the progress made since 2000 and also reveals the next challenge for the UN Global Compact 2.0. Let us start with a matter that, so far, nobody seems to have explained very well: the exact definition of corporate social responsibility. First of all, at Global Compact we prefer to call it “corporate citizenship” in the sense that the role of business in society is to pay more attention to certain problems such as the environment, the fight against corruption and abuse at work. It is not merely a linguistic dispute. In today’s world where business has become global but governments have remained local, companies have to bear the social responsibility for their actions. Let me explain. At first, CSR had to do a lot more with consumer products. Over the years, the focus

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has shifted to the point where, although the social aspect is still important, the environmental aspect has become even more important. Quite recently, the component of governance has assumed a greater importance because of the rule changes in some key markets and improvements in transparency. What was your priority 10 years ago? Globalization. Do you remember what happened at the G8 in Genoa and Seattle, where unions and environmental groups united against the rules of globalization on trade? The supply chain of textile companies was at the center of the No Global campaigns in many countries. Another big issue was the ideology underlying why many in the civil society movements declared that they were opposed to market economy. Today the priorities have changed. The traditional businesses of the advanced world are not the only players on the global stage. New actors are emerging

and many of them are from China, India and Brazil. Secondly, the aspect of natural resources and energy has strongly become one of the priorities due to concerns about climate change and the scarcity of natural resources and primary goods. Has there been a watershed stage? A fundamental change occurred within the CSR movement between 2004 and 2005 and the financial crisis has exacerbated it. Ten years ago, CSR was primarily a moral issue. The companies said: “I want to do the right thing, I want to invest in the community.” The moral dimension is still important today, but a new, more material dimension has been added. Today, it is basically recognized that human rights, abuse in the workplace and the fight against corruption have material implications for the financial results. In other words, the market is beginning to recognize that these issues translate

into profits in one way or another. To ignore them would cost the brand dearly. If you are going to deal with them you had better be equipped to face the risks and create value for your shareholders. Now even investors are beginning to give importance to everything, because they believe that actively addressing these issues is an asset and not doing so would be exposing oneself to trouble instead. That is why the platform of responsible investment launched by the UN in 2006 is growing rapidly. There are currently 800 members, made up of investors or institutions involved in the project. What has been the impact of the organization you lead in the daily practice of the business world so far? The first impact can be traced to within the companies. As I said, ten years ago few companies had an explicit policy on human rights and anti-corruption and also their environmental management

In todayâ&#x20AC;&#x2122;s world, where business has become global but governments have remained local, companies have to bear the social responsibility for their actions.

system was not a priority. Through the UN Global Compact, many participants have made enormous improvements, finally placing emphasis on these issues. Our model implies a constant development: it begins with the commitment of business leadership, which is essential. Successively, every year we expect a better performance than that of the previous twelve months and we insist on the disclosure of the progress achieved with a real annual report. This is the way to impose transparency. With what results? Here they are. 7% of our participants said that they would never have integrated environmental governance and social issues if Global Compact had not existed. 20% said that our organization has accelerated this process. Another large chunk revealed that the Global Compact has helped to integrate these issues, since they were not a strategic part of the leadershipâ&#x20AC;&#x2122;s agenda. There is a remaining 20%, which concluded that even without us, the manager would have done so anyway. Basically I think we have accelerated the spreading of the principles of corporate social responsibility strategies in the boardrooms around the world. Are you satisfied with the progress? No, clearly not. Our ambition is to make global markets much more robust and sustainable, through the values shared and recognized worldwide. After 10 years of efforts, we have 6,000 active participants. This number may seem huge, but according to some credible estima-

tes, there are at least 80,000 multinational corporations in operation. That means we still have a long way to go. Secondly, there are profound differences among our 6,000 participants: some are way ahead in the sustainability challenge and others are just at the beginning of their virtuous path. At our summit of industry leaders recently (and I repeat once again, with strong involvement of the Italians), we launched the Blueprint for Sustainability Leadership, which more precisely defines what it means to be a leader in this field. We believe that few companies can currently claim to be top innovators in all areas. Several have a compliance gap, in the sense that the top managers understand the importance of CSR and fight for its implementation, but then there are the affiliates around the world who are far behind in the achievement of the targets set by central government. Has the recession slowed down your work? We conducted several surveys among our executive officers. The first result was that the recession has resulted in much cost-cutting, with all the consequences on social spending, philanthropy, and so on. But at the same time, the real economy, particularly with regards to manufacturing companies, has been strengthened by their commitments based on values, because when there is a crisis, you need to implement your long-term social purposes. The reason is clear: the financial crisis has shown that not addressing and preparing for the systemic risks

leads to disaster. Rule number one: we must find new ways to anticipate and integrate environmental and governance aspects. Rule number two: to recover the confidence that has been lost, as well as a sense of the brand. That is, we must redefine what is right and what is wrong. The financial crisis has been associated with many ethical errors, many individual mistakes, the failures of the market and so forth. With right and wrong returning to center stage, the research of ethics and trust has been strengthened. Third rule: pay attention to the long-term goals. Unfortunately, the financial markets, Wall Street and other exchanges do not seem to have learned the lesson: that focusing on short-term transactions only leads to disaster. Gambling is the translation of all this. You place just one bet and you want to win without worrying about the consequences. When instead, if you are oriented towards long term results, you want to be sure that in 5 or 10 years, everything you have made will still be strong. That is why we must remove the obsession with short-term profit maximization. This third dimension is very important, because we were hoping that the financial crisis would have produced more initiatives towards the long-term values but unfortunately this has not happened yet. What do you have in mind for the future? How will Global Compact change in the next decade to help business and social society? A lot depends on the political deve-

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lopments. There are two extreme scenarios. The first is that of a world where the tensions of rivalry are not well-managed and where the strongest markets will return to looking within themselves and to their own particular interests. This would be a tragedy for everyone. It is a possibility though, because unfortunately humans are prone to repeat their mistakes. If the world turns to nationalism and protectionism, then corporate social responsibility has no future. If I were to bet, I would give a 50% chance to this scenario. Then there is the second view. In a world in which we manage to govern global integration well, and where the tensions can be overcome, I think the world markets could emerge strengthened. If that is what happens, then CSR will become even more of a transformation force because it is part of the success at the enterprise level. Only

companies that administer these types of issues will stay at the top. This means that the non-financial problems will still have a value and that investors will reward courageous choices. This will also mean that business schools around the world will have to include these very issues in their curricula for the next generation of industry leaders. In the scenario of an open, multilateral world where competition remains a key parameter, sustainable business will establish itself as a feature of competitiveness. At the World Economic Forum in Davos, at last the UN Global Compact Lead was launched. Why? The Lead is a very important platform because the traditional Global Compact has grown so much that we need to sustain the positive trend. Companies have entered into competition with

each other and must set the trend for the change of direction. This is the purpose of Lead, which includes 50 multinational corporations from all over the world. Including Enel and Eni, two Italian companies, I see... Right. As always, Italian companies are with us in these challenges.

ÂŠ

Beau Lark /Corbis

The financial crisis has been associated with many ethical errors, many individual mistakes, the failures of the market and so forth. With right and wrong returning to center stage, the research of ethics and trust has been strengthened.

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UN Global Compact In 2000, when it was launched in New York at the UN Headquarters as the UN initiative on corporate responsibility, Global Compact brought together just 50 companies. Eleven years later the number has grown to 6,300, representing both the business world and civil society and involving 130 different countries. On average, 100 new companies join each month, even though at the same time sixty leave, because they failed to maintain the required standards or to record their progress. In many cases, corporations are combined to form local Global Compact networks in each country: there are currently about seventy.

The UN Global Compact was created as a response to the globalization of the business world. To join, the companies must adhere to the 10 universal principles already accepted by governments, especially related to human rights, abuse in the workplace, the environment and fighting corruption. In this way, the business helps in advancing the objectives of the UN, such as the Millennium Development Goals. In essence, the true meaning of this organization is that if businesses voluntarily accept to embrace the universal values, if they choose to act in a way that is governed by principles wherever they do business, then the social legitimacy of open markets and global economy can be strengthened. In practice, these operate in opposition to protectionism, which, however, due to the economicfinancial crisis, is gaining ground all over the world.

Ocean /Corbis

Integrated reporting: the standard by 2020 «Integrated reporting is not intended to replace financial reporting or sustainability reporting, but there is no doubt that integrated reporting, where there is a summation of pertinent financial and sustainability information and the company’s long-term strategic direction, is a form of reporting whose time has come, because of the crises of our time.» The new international standard according to Mervyn King, president of the Global Reporting Initiative.

by Mervyn E. King

Cameron Davidson /Corbis

History teaches us that global events or crises caused changes to the way companies have reported over the last 100 years. For example, there were changes after the Great Depression in regard to the value of assets from mark to market and when there were the BCCI and Maxwell scandals in England, this led to the Cadbury Report on “The financial aspects of governance,” which had a huge impact on corporate reporting. In 2001, the Enron/Worldcom debacles resulted in the Sarbanes-Oxley Act, with a number of rules contained in that Act in regard to corporate reporting. In 2008, it was the Global Financial Crisis, which impacted on corporate reporting. The world, however, has never faced such crises as it now faces. And these crises are in the context of a flat, borderless electronic world in which faster economic growth over the next few decades will take place more in developing economies than in developed economies. There are three crises at present, namely the global financial crisis, the crisis of climate change and the crisis of ecological overshoot, which simply means that we have used and continue to use the natural assets of planet Earth faster than nature can regenerate them. Companies do not operate in a vacuum. Consequently, all boards of directors have to apply

their collective minds to the question of these three crises in planning long-term for the businesses of their companies, where faster economic growth will occur in developing countries. The way businesses have been run over the last 100 years has been based on two false assumptions. The one is that planet Earth has natural resources which are limitless and the other is that the Earth has an infinite capacity to absorb waste. Neither is true. Because of these crises and these false assumptions, it is quite clear that business cannot carry on as usual. This is exacerbated by the question of over-population with an expectation of another three billion people on planet Earth by 2045. Consequently, companies have to learn to make more with less. It also is generally accepted that reporting influences behavior. A company that reports on how its operations impact on society and the environment will manage these issues more carefully than a company that does not report on it. Company’s stakeholders, however, need information of these impacts to assess the sustainability of the business of a company. The great shareholders of today are financial institutions and mostly pension funds. Pension funds, in turn, represent the citizens of a country, who are the ultimate beneficiaries of the pension

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Corbis

fund. Trustees of a pension fund have a very onerous duty to make an informed assessment of the sustainability of the business of a company in which they intend to invest their ultimate beneficiaries’ money to buy the equity of that company as a long-term investment. A trustee cannot make that informed assessment from a financial report alone. Trustees need to know how the company is dealing with the way it impacts on society and the environment and how the board has addressed its collective mind to the sustainability issues pertinent to the business of a company in its long-term strategy. For example, if the business is that of a beverage manufacturer, a trustee needs to know how the company is going to have access to potable water over the longer term. It is in this context that the crises that the “Take, Make, Waste” economy on which business decisions have been made in the past 100 years, led to a meeting in July 2010 in London, of very disparate bodies. The disparate bodies were, inter alia, the International Federation of Accountants (IFAC), Accounting for Sustainability – Prince Charles’ Trust, the IAASB, the IASB, IOSCO, UNDP, the Global Reporting Initiative

(GRI) and most significantly, the FSAB. The significance of the FSAB is that the Financial Standards Accounting Board of America and the International Accounting Standards Board, which has promoted the International Financial Reporting Standards, have for years now been debating the convergence of the American standards with the international standards. While this debate has raged, the planet has entered these three crises described above. Within an hour of the meeting, the representatives of these world bodies, although with different interests in corporate reporting, had an identity of purpose and agreed that companies have to start reporting on how their operations impact both positively and negatively on society, the environment and financially. In short, integrated reporting. That the world has accepted this is clear from the fact that certain countries have started legislating about it. Denmark, for example, in its Financial Statements Act, requires its 1,000 top companies to report or explain how their activities impact on their society and environment. The International Integrated Reporting Committee, which was established in July 2010 in

Integrated reporting: the standard by 2020

Corbis

London, contends that corporate reporting has to be in clear and understandable language so that the user can understand how the operations of the company have impacted both positively and negatively on society, the environment and financially and they can make an informed assessment of the sustainability of the business of the company. This cannot be done from the financial report alone. By October 2011, the IIRC hopes to have a discussion document out on integrated reporting and it is hoped to persuade the G20 to follow the Danish Financial Statements Act example of creating a legal paradigm of report or explain how the activities of the company’s operations impact on society, the environment and financially. In Geneva in October 2010 and Kuala Lumpur in November 2010, the world’s leading accountants met and it was generally accepted that the accounting profession is the one that is closest to the business person and not only has a professional, but perhaps a social duty, to ensure that the company reports on how it impacts on society and the environment. The very identity of companies has changed. The company has become as important to society

as the family unit. Some of the large multinational enterprises, over which the OECD has launched guidelines as to the manner in which these multinational enterprises should conduct business, have economies greater than most countries. The impact they have on our world is patent. The global financial crisis is still impacting on the world and the crisis of the Euro is still raging. We know, however, from the Great Depression of the 1930s, that financial capital will be restored, but natural capital, once spent, cannot be restored. In short, corporate reporting is not what it used to be. It has to be in clear and understandable language and tell the reader how the company’s business is going to be sustained in the long-term. The formula is simple. No planet, no people, no profit. Integrated reporting is not intended to replace financial reporting or sustainability reporting, but there is no doubt that integrated reporting, where there is a summation of pertinent financial and sustainability information and the company’s long-term strategic direction, is a form of reporting whose time has come, because of the crises of our time.

CSR glossary

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Added Value (also gross product): the total wealth created by the company and distributed to the stakeholders (human resources, financial partners, state and local authorities, partners/shareholders, community) or reinvested in the company (depreciation and retained earnings). BPD (Business Partners for Development): informal international network that brings together businesses and representatives of the government and civil society. Its objective is the worldwide promotion of three-party partnerships that aid social and economic development.

BSR (Business for Social Responsibility): international network of businesses, created in 1992, which aims to provide its members with innovative products and services that help them achieve commercial success and that respects ethical values, the people, the community and the environment.

Community (or joint) investing: support for a cause or activity through an investment in its funding. Contrary to donors, the investors wish to recuperate their initial investment, either through payments (for loans) or transactions (for shares). Corporate giving (or direct giving): donations, gifts, donations provided by the company to organizations and projects of social/environmental utility. In this case, the company’s contribution is exclusively of the monetary kind. CSR (Corporate Social Responsibility): this acronym for corporate social responsibility, translated into Italian as RSI, may be defined as the “voluntary integration by enterprises of social and ecological matters in their business operations and their relations with stakeholders.” Ever since a concept based on the awareness of the growing interdependence between economic and social outcomes was established in the 1970s, many firms (small, medium, large) have begun to concern themselves with non-financial matters within their overall strategic vision.

Disclosure: information-based activities undertaken by an enterprise toward the market, voluntarily or by law, to increase its transparency. DJSI (Dow Jones Sustainability Index): quotation index of the companies that are committed to sustainable development provided by Dow Jones in association with SAM (Sustainable Asset Management).

Eco-Audit: systematic assessment of environmental, rather than financial, criteria in an investment decision. Ecological Efficiency: notion that an improved utilization of resources can limit environmental damage and reduce costs. Environmental Impact Assessment: the analysis of the impact of a project or operation on the environment. Environmental Report: management/ communications tool describing a firm’s environmental performance by evaluating the ecological impact of its commercial activities. Ethical Audit: systematic assessment of ethical, rather than financial, criteria in an investment decision. Ethical code: guidance document outlining the policies for members of the organization with regard to all the stakeholders, clarifying the basic principles underlying the company’s choices.

Ethical finance: it consists of selecting and managing investments (shares, bonds, credits) on the basis of ethical and social responsibility criteria. Ethical funds are not strictly oriented to yield, capital and interest rates. They operate taking into consideration the rationale for the return on their investments in terms of the characteristics of the goods produced, the area where the company is located and of the sustainibility of its business. They do not aim at speculating but they select sustainable and responsible investments. In Italy, ethical finance is growing also thanks to a new regulatory framework introduced by the law on banking Foundations. Ethical Screening: inclusion or exclusion of shares in investment portfolios on ethical, social or environmental grounds. Ethical Trade: proposes to ensure the working conditions on major production lines at the level of basic minimum standards and to eliminate the worst forms of labor exploitation, such as child labor, forced labor or sweatshops. The criteria for evaluation and action are generally based on the ILO core conventions.

FTSE4Good Index (Financial Times Stock Exchange for Good Index): index of European businesses that stand out for their transparent management and implementation of sustainable criteria. The FTSE4Good Index assesses the performance of businesses that are globally recognized for having high standards of social responsibility. The index is reviewed twice a year, in March and September, to include any new companies and to exclude those that have not maintained the required standards of sustainability.

G IH Global Compact: initiative of the UN Secretary General launched by Kofi Annan in 2000 that aims to promote cooperation among the UN agencies, international corporations, labor unions and civil society in supporting the ten universally-recognized social and environmental principles.

GRI (Global Reporting Initiative): international initiative of various stakeholders to create an international standard for the voluntary reporting of the economic, social and environmental practices of a business. In June of 2000, the GRI published Guidelines for the preparation of reports on sustainable development (Sustainability Reporting Guidelines).

Human Capital: produced by the skills â&#x20AC;&#x201C; or rather, the combination of the knowledge, capabilities and behavior - of people.

ILO (International Labour Organization): UN agency that aims to promote social justice and workersâ&#x20AC;&#x2122; rights recognized on an international level. Integrated Reporting: the standard proposed by the GRI to supplement the consolidated financial statements with the sustainability reporting, created to renovate existing reporting systems of enterprises, that particularly takes a look at corporate social responsibility. This system requires that financial, environmental, social and governance results be documented by means of a uniform instrument, in order to increase transparency to the community and the financial world.

Intellectual Capital: the representation of all the resources that are the reason for the difference between the market value and that of the accounting of an organization, allowing it to generate a competitive advantage over time. The intellectual capital of a company, therefore, is represented by the combination of these three resources: relational, structural and human capital.

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K LO R King Report III: the abbreviated name for the King Report on Corporate Governance for South Africa, published in 2009 in South Africa, an Italian translation of which is published by Codice Edizioni. It is the sequel, following the first report published in 1994, commonly known as King I, and a second report in 2002, commonly known as King II. The King III Governance Code recommends that organizations should have a single integrated report instead of an annual financial report and a separate sustainability report. Listed companies should draw up an integrated report or justify the lack thereof. KPI (Key Performance Indicator): key performance indicators help a business or organization to define and measure progress made in achieving their goals. After a company has analyzed its mission, identified all of its competitors and defined its objectives, it needs a way to measure the achievement of its objectives; these measures are precisely what the KPI is. In the context of CSR, in addition to the economic aspect and product responsibility, these indicators relate to environmental protection, the adequacy of practices and work conditions, respect for human rights and the impact upon society.

LBG (London Benchmarking Group): a model, created in 1994 to classify and manage the impact on society of a business’ or organization’s initiatives. OECD (Organisation for Economic Co-operation and Development): deals with creating forms of cooperation and coordination in the economic field among its 30 member countries, 70 developing countries, NGOs and civil society.

OHSAS (Occupational Health and Safety Assessment Series): the ruling that identifies the certification of an international standard for a system of safety and workers’ health management. The decision to apply such certification within an organization or business is voluntary.

Relational Capital: produced from the relationships with the customers, suppliers and other external actors (universities, research centers, etc.), represented by the image, reputation, customer satisfaction, loyalty and products of the brand, considered as a trademark. Responsible Entrepreneurship: a concept developed by the UN under which businesses have a role to play in achieving sustainable development so that they can manage their operations in order to stimulate economic growth and enhance competitiveness, while ensuring environmental protection and promoting their social responsibility.

CSR Glossary

SAM (Sustainable Asset Management): an international investment company focused on sustainable investments. It has its headquarters in Zurich and merges economic, environmental and social criteria in the consideration of its investment strategies.

Social Audit: systematic assessment of the impact on society by an enterprise with respect to certain standards and expectations.

Social Impact Assessment: the systematic analysis of the impact of a project or operation on the social and cultural situation of the communities involved. Social Label: words and symbols on products which seek to influence consumersâ&#x20AC;&#x2122; purchasing decisions by providing an assurance about the social and ethical impact of a business process on other stakeholders. Social Report: management/communications tool for describing the social dimension of the relations between the organization and the stakeholders, integrating their needs in strategic choices. SRI (Social Responsible Investment): investment considered socially responsible in light of the nature of the business the company conducts. Common issues related to socially responsible investments include the rejection of investing in companies that produce or sell addictive substances (like alcohol and tobacco), and finding companies committed to environmental sustainability and clean energy. A socially responsible investment can be made by individual companies or through mutual funds or ETFs (exchange-traded funds).

Stakeholder: person or group of people having an interest in the performance or success of an organization (in this case, the enterprise). Example: customers, owners/ shareholders/partners, employees, suppliers, competitors, banks, unions, community groups and local and central government, future generations and the local communities. Structural Capital: produced by a range of procedures, instructions, organizational models, communication tools and elements that allow for the passage of knowledge from the individual sphere to that of the organization. Sustainability: the word â&#x20AC;&#x153;sustainabilityâ&#x20AC;? is usually associated with the concept of development. Sustainable development is a form of the positive evolution of society (including economic, social and environmental) which preserves the possibility for future generations to continue that development. The objective is to maintain economic development that is compatible with social equity and eco-systems. Sustainability Report: management/communications tool for reporting the social and environmental, as well as the economic, performance of a firm, with a view to meeting the needs of stakeholders.

Triple Bottom Line: notion that the overall performance of a company should be measured in terms of its contribution to economic and environmental development and that of social capital.

V W Verification: the certification by an external auditor of the validity, relevance and completeness of records, reports and statements of an enterprise. WBCSD (World Business Council for Sustainable Development): international network of businesses created in 1995 in order to establish closer cooperation among businesses, governments and all other organizations concerned with environmental protection and sustainable development.

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oxygen 12 – 02.2011

A brief history of csr An account of the stages and main thinkers that have marked the history of “Corporate social responsibility,” of those who have experimented with this fluid matter, with new views of differing disciplines in the attempt to create a solid foundation for the relationship between ethics and enterprise.

“Civilization owes its greatest achievements precisely to times of political weakness.” This declaration by Nietzsche expresses the growth potential inherent to every time of major crisis. And it was a time of crisis – especially economic – that gave rise to studies regarding corporate social responsibility (CSR): the Great Depression in 1929. It is too soon to define this area of study as a “high achievement,” but with the birth of this new sensitivity, there has certainly been an introduction of a dimension to the entrepreneurial culture that is unusual. The presumed origins can be retraced to the debate on “the fiduciary duties of a manager” undertaken by the lawyers Adolf Augustus Berle and Edwin Merrick Dodd in the “Harvard Law Review” in 1931-32. According to Berle, “all the powers attributed to a corporation or to its management should be wielded only if they are advantageous to all of its shareholders.” In the article where he is responding to a colleague, Dodd states instead that “the enterprise should be authorized and encouraged by right to be mainly at the service of the community rather than a source of profit for its owners.” The enterprise is an institution that must take many different constituencies into consideration: the community, the employees and the consumers. So according to this proposition, mana-

gement should be given greater responsibility, something unacceptable to Berle, according to whom the disappearance of the fiduciary obligation of the managers toward the company owners has threatened to turn the manager’s power into absolute power. A vivid comparison can be made with the ‘30s, which were enriched with studies by other scholars and gained vigor after World War II, especially in the ‘50s: an exponent of that time was Howard Bowen, who published Social Responsibilities of the Businessman in 1953, and who was also convinced of the need for greater responsibility of top management – considered a service to society – rather than solely the interests of shareholders. Starting then, various definitions of CSR were proposed, arising from the need to understand just what the obligations to society were as implied by the concept of “social responsibility,” by individuating them. The question remained focused on matters of moral nature. In the ‘60s, the momentum took off on several different levels, shifting attention to the visible and concrete aspects of a business’ operations: its response to the social environment (social responsiveness). What is interesting about this perspective is the capability of an enterprise to respond to social pressures; in social respon-

by Stefania Stecca

David Arky /Gallery Stock

siveness, at the center of the analysis are the company’s responses and changes in order to cope with the pressures of this context. With this shifting of perspective “we passed from a notion of ethics – social responsibility – to that of a more technical nature. Now the problem is no longer moral but pragmatic. […] Nevertheless, even this perspective does not propose any set of entrepreneurial values” (stated by Emilio D’Orazio in the article Corporate Social and Ethical Responsibilities of Business, published in “Notizie di Politeia” in 2003). Starting in the ‘80s, first in the USA and then in Europe, an independent study was developed concerning business ethics, according to which ethics are embedded in the economic disciplines on all levels, both in terms of the political economy as in that of the enterprise. In this sense, “corporate ethics does not simply imply a general reference to some moral obligations to follow, the study of which is left to moral philosophy and theology” (underlined Gianfranco Rusconi in Ethics, business social responsibility and involvement of the stakeholders, in the magazine “ImpresaProgetto” in 2007), its inclusion in the economic disciplines allows for new avenues and insights because it allows you to connect the economic studies that were previously independent.

Since then, the topic of corporate social responsibility has spread to many areas (the unions; the political, academic and entrepreneurial spheres), drawing new strength from this interdisciplinary interaction. If we wanted to give a definition of CSR, we would choose that by Gianfranco Rusconi, one of Italy’s most authoritative scholars on the subject, who defines corporate social responsibility as “the legitimate response, on a moral and social level, that the enterprise gives – or doesn’t give – to civil society, in which this latter is made up of all the people who interact with the activity of the enterprise, whether on the inside or on the outside of it.” Developed within this context are the theories of Edward Freeman, considered to be the main exponent today of this theoretical position, also known as “the stakeholders’ theory.” Edward Freeman, who believes use of the term “social responsibility” to be inadequate and potentially deviant, in that it associates it with something that is extrinsic to business, prefers to speak of “corporate ethics.” In his view, the social responsibility of a corporation does not refer to marginal activities related to good practices in social and philanthropic promotion; instead, it is the spirit guiding the management, whether in reference to its “core business” or in refe-

oxygen 12 – 02.2011

A brief history of CSR

David Arky /Gallery Stock

rence to the strategy guiding the relationships of all those who have something to do with the enterprise. The most authoritative critic who has confuted this view is most certainly Milton Friedman, winner of the Nobel Prize for Economy, illustrious exponent of liberal thought, an expert who has strongly influenced the economic policies of the last decades, influencing the orientation and dominant capitalistic way of thinking. According to this prestigious economist, the only social responsibility business has is “to use its resources and devote itself to activity aimed at increasing it own profits” (The Social Responsibility of Business Is to Increase Its Profits, “The New York Times Magazine,” 1970). And so far, there is nothing amazing here in the sunshine of liberalism; but there is a “but.” Friedman actually follows his assumption by introducing a conditio sine qua non: “...provided that the business obeys the rules of the game, which is the equivalent of sustaining that it compete openly and freely without resorting to deceit or fraud.” Two basic assumptions can be gleaned from Friedman’s position, the exponent of the Stockholders theory. The first is that corporate obligations are exclusively attributable to the investors involved: he retains that any extension to other areas would be “subversive” to the principles and values that sustain the free market system, and in which the role of the Government is “limited to the prevention of coercion and fraud.” The second assumption, which introduces the ethical component of the managers’ actions, underlines that the management’s respect for the owners’ rights must take place within a system of rules of the game, which is made up of the laws and the limits set by the morality of the surrounding community. Supporters of Friedman’s position claim that his ethical thought includes the concept of bu-

siness itself and therefore there is no need of any other indication in this sense. In an efficient liberal market system, the natural consequence of respecting the logic of profit promotes general well-being and this – more than anything else – is the best translation of social responsibility one could expect from an enterprise, that thus consequently satisfies the expectations of the stakeholders and the community. His critics, instead, hold this reference to ethics to be too general, as well as insufficient for directing management behavior in the event of conflict between the pursuit of profit and respect for the law and morality. Also, Friedman has never provided an analysis of what the liberal market “rules of the game” are, so the controversy is still unresolved. According to supporters of the current theory, starting with Friedman, ethics are innervated within the “style of government.” In this case, management’s goal will be to expand upon the partners to consider – the stakeholder reference – as a resource to maximize corporate and collective well-being: thus, ethics becomes a more intelligent and convenient way to maximize profits. Conceived in this way, ethics is not the indirect result of the corporation, but rather the watermark that shapes managerial imprinting and management relationships. Satisfying the stakeholders promotes the success of the enterprise and develops a system of government that guarantees more far-sighted corporate policies. Despite the fact that the economic crisis we are going through has presented us with many other forms of applied entrepreneurship, the “high achievement” that can reasonably be expected from the path of this doctrine is that managers come up with some form of social responsibility of their own, even if it is only to create a horizon of stories that are the opposite of those regarding BP, Thyssenkrupp or Parmalat and, why not, to prove that Nietzsche was right.

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oxygen 12 – 02.2011

Connect the dots

CSR is...

1. «The definition of CSR

which seems to be gradually emerging on an international level could be formulated thus: a company can be defined as responsible in economic, social and environmental terms when and to the extent of which it is chosen to be included in the presiding decision-making framework – both as to its corporate strategy and the management practices of all production units controlled by it in any way – the rules, terms, suggestions, prohibitions, recommendations and obligations often of a moral and not legal nature, contained in the international Agreements and Conventions referring to these documents.» Luciano Gallino, Perspectives of Corporate Social Responsibility. The International Context, Towards a New Definition of Social Responsibility

2. «The field of corporate social responsibility from a comparative point of view, ultimately, deals with research of vital practical importance: what is the best way to structure the company to introduce the best behavior in order to produce sustainable economic development that is compatible with raising labor standards and environmental protection?» Cynthia A. Williams, Corporate Social Responsibility in a Comparative Perspective, College of Law, University of Illinois

edited by Francesco Rossa

3. «This is a controversial

4. «A company’s reputa-

5. «Sustainable behavior

issue for the shareholders but, ultimately, a company’s value depends on the number of employees who have confidence in the company they work for and the amount of effort they are willing to spend. This confidence is based on an element that’s rare and difficult to define: its legitimacy. Legitimacy provides the benefit of the doubt. […] With it, decisions can be made with less worry and fewer objections than in a company where it is lacking.»

tion and its products are always considered as a resource that’s very difficult to quantify. Today, it is clear that reputation is a vital component of the value of a company and is becoming a cardinal indicator of performance. Three-fifths of the CEOs who made up the analyzed sample believe that the corporative status or reputation represents more than 40% of the market capitalization of a company. And more than 77% of them believe that the value of the reputation had increased over the last two years.»

can offer an advantage in terms of competitiveness with others. What I’ve noticed with the explosion and expansion of the financial crisis is that if we are capable of showing ourselves as openly as possible, and if we can show that we manage our business to the best of our ability, that would be of great help to us as to the possibility of having access to capital.»

Rakesh Khurana, Harvard Business School/ International Herald Tribune

John Graham, president and CEO of Fleishman-Hillard, a public relations and integrated marketing company

Ming Long, CFO of Investa, Australian real estate company

moodboard /Corbis

6. «Ed Barker, director of

7. «Corporate social re-

8. «At Timberland, we

9. «Does Wall Street

10. «As emphasized in

corporate partnerships of the Earthwatch Institute, an international environmental organization based in the United State, declares that ‘sustainable goals and business goals have to be in line with one another.’ In the final analysis, business strategy and that of sustainability are becoming so interrelated that they can no longer be separated. Philips is a good example: ‘From a strategic point of view, if we can reduce the energy consumption of our products, and make them more easily recyclable, we believe that these will be more attractive to consumers,’ says Henk de Bruin, senior vice-president and bureau chief for sustainable business at Philips in the Netherlands.»

sponsibility must come from the heart and be based on integrity. Even though it’s not possible to make responsible behavior in terms of sustainability binding, as a bank, we still have the opportunity to achieve something more in this area, making it more attractive and seductive. It is my commitment to make it clear to every employee of Rabobank that the objectives related to social responsibility are among their performance indicators.»

have managed to collaborate with seemingly improbable partners, such as direct competitors, environmental activists and non-profit organizations: people and organizations that don’t share many of our values and interests aside from the constant commitment to protect and preserve the environment. I firmly believe that every time we can manage to bring people together under a common goal, it doesn’t matter how different they are, the only thing that counts is that they have a great chance to fight for a positive result. The feedback from our employees reveals that they appreciated the company’s commitment to social issues, just like they appreciated the fact of being able to participate in person. Our programs have been very successful because they have made employees more than happy to work within the company: this is certainly the best demonstration of the value that returns from investing in people.»

need a code of ethics? A potential code should be compared with those fundamental principles to which we have responsibilities, and to what the priorities are between you, your client and the regulation authority.... This really is a code that must be applied.»

the Encyclical Caritas in veritate, it is important to increase awareness about the need for a broader ’social responsibility’ of the company, that pushes to give due consideration to the expectations and needs of the employees, customers, suppliers and the entire community, and to have a particular focus on the environment. In this way, the production of goods and services will not be tied exclusively to the pursuit of economic profit, but also to promote the good of all.»

from Managing for Sustainability, Economist Intelligence Unit, 2010

Ruud Nijs, Corporate Social Responsibility Director at Rabobank

Jeffrey Swartz, CEO of Timberland, interview for “Daily Wired”

Felix Rohatyn, investment banker, special advisor to the CEO of Lazard

Pope Benedict XVI in a speech to executives and personnel of the Municipal Water and Power Company in Rome

oxygen 12 – 02.2011

A model for corporate social responsibility

by Gianluca Comin and Luigi Ferraris

Financial, social and environmental commitment: three pillars of the Enel CSR and business plan to be programmed, translated into concrete action and transferred to all partners of the company. The CFO and the Director of External Relations talk about this and that Enel is one of the first companies in the world to soon be launching of single-document integrated reporting to communicate the results of this triple approach.

Development, relations and responsibility by Gianluca Comin

Economy, environment and society. These are the three buzzwords in the discourse on the development of countries and on the global geopolitical equilibrium. Indeed, these three concepts drive the way in which enterprises are managed and any goods or service they produce for their customers. This evolution is not at all new: in fact, the early debates on the ethical role of companies and on the idea of Corporate Social Responsibility date back to the ‘20s and to the period immediately after the 1929 crisis. But it is in the last 10-15 years that these notions have become established at the institutional level and that this discipline has moved from academic circles to business organizations. Why? Maybe because of the rapid growth of the so-called smart customers who use the internet to join other people and to represent their interests, to inform and to be informed and to play an active role. They have become stakeholders, in the broad sense of this word. They spread the reputation of the company, buying its products and services, possibly investing in its shares and evaluating whe-

ther its industrial projects are sound. In sum, they play an active role as citizens. These different roles are not mutually exclusive: enterprises are judged on the basis of their overall commitment to the society, the environment and the economy of the countries where they operate. In other words, the media, consumers, institutions and the public opinion at large decide whether they can “trust” these companies on the basis of their reputation. The three CSR pillars are also the foundations to obtain the approval of major infrastructural projects. This is the reason why, for some years now, Enel has launched a communication strategy for its interlocutors, which has transformed conflicts into consistent and constructive relationships. In my view, a responsible way to manage projects and businesses starts by listening, i.e. by analyzing the scenario and the stakeholders’ requirements, by understanding their different positions and motivations to avoid conflicts. We consistently use market surveys, environmental analyses, information to citizens, relationships with consumers’ associations and all the instruments for an institutional dialogue to understand what different stakeholders expect of Enel.

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This is followed by sharing information on the industrial projects where different parties are involved, such as financial institutions, the social partners and the environmental organizations and by involving them in their development. For this reason, Enel has developed relational techniques and tools such as the mega-community, to involve major stakeholders in the design of these projects and early forms of public debate with the aim to define infrastructural projects together with government authorities and citizens in terms of their social and economic spin-offs, structural benefits, and even the improvement of the environmental conditions around power plants or distribution facilities. But there is more. We share our economic and industrial plan, we also develop concrete community projects at the local level, by providing our industrial, scientific and international know-how: training programs for young people to enhance their knowledge, infrastructures turned into fitness centers: information centers and other “spaces” for citizens, thus improving the quality of life in urban areas and supporting and launching cultural initiatives that do not have the funds to be developed; ad hoc scientific

dissemination programs for all age groups and corporate giving initiatives carried out by the Non-Profit Association Enel Cuore. I would like to add a final contribution which is crucial: our consistent focus on the people who work for us, on training, on working conditions and especially on safety, which is ensured at 360 degrees via procedures, working tools, and communication initiatives to increase awareness, to teach and to provide the right methodology. This “hands-on” approach has shown that it is possible to develop an industrial plan not only in line with different stakeholders, but also by concretely responding to the requirements of all the parties involved. The next challenge is the solution of the socalled “energy equation’” on a global scale: by providing sufficient energy to the population as a whole, at competitive prices and respecting the environment. So let us go back to the three buzzwords mentioned at the beginning: economy, environment and society. I believe that enhancing the role of CSR and extending it to public governance may be an answer to the key question of the third millennium.

oxygen 12 – 02.2011

Enel: leader in CSR by Luigi Ferraris

There has recently been an increased awareness of Sustainable and Responsible Investment (“SRI”) matters for investors all over the world, with a growing number of funds dedicated to these issues. The Global SRI market has reached approximately €7 trillion, as estimated by Eurosif in September 2010, with an increase of 41% in the last two years. In particular, European SRI funds confirm their leadership in the global SRI market. In fact, despite the ongoing global financial crisis, total European assets under management reached approximately €5 trillion at the end of 2009. Also on the Enel shareholder basis, there is a remarkable presence of SRI investors. In particular, in the latest analysis as of December 2010, SRI oriented institutions account for: – 17% of the identified institutional free float; – 7% of the total free float; – 5% of the total shares outstanding. In other words, SRI is one of the largest Enel in-

stitutional shareholders with a 5% stake, with a stable and well-diversified presence across a variety of geographies, with an especially high incidence in France (32.5%). These funds have maintained a consolidated presence in the Enel shareholder basis also in the years after the crisis. For this reason, it is essential to have daily dialogue with these investors, guaranteeing homogeneous, complete and constant communication. Therefore, we use all the elements that can support our efforts of communication with investors in offering them an integrated and complete view of the company, paying particular attention to sustainability issues. That said, I would like to stress that there are long-term synergies between economic and social objectives, and there is a mutual dependence on the performance, the future development of a company and the context in which it operates. For this reason, it is fundamental to also take social and environmental aspects into consideration for the development of a strategic plan.

A model for corporate social responsibility

Enel Cuore Onlus Enel Cuore Onlus (Enel Heart nonprofit organization) was created in 2003, stemming from the desire of companies in the Enel group to create an independent non-profit structure through which they could express Enel’s commitment to social solidarity (which by its nature is linked to strategic lines of the business) through philanthropic activity by the company. Enel Cuore is a devolution association whose activity aims to make a real contribution to support people who live in conditions of suffering, hardship and poverty. The philosophy of this non-profit organization is indeed that of supporting the third sector; it starts by listening to their most urgent needs in order to develop initiatives that can enhance services in the territory, in specific areas such as social and healthcare assistance, schooling, sports and free time.

We at Enel have been working hard for almost a decade to address aspects of sustainability throughout our business strategy and organization. The first step was the coordination between Corporate Social Responsibility (“CSR”) and Strategy departments in order to identify Group Sustainability priorities, objectives and KPIs. Now, CSR is integrated into our strategy, management processes and activities and it represents one of the pillars of our business plan. The positive development of the main indicators of sustainability over the past year at the Group have shown that the result of our commitment to sustainability is quite evident. In particular, there has been a reduction in the number of workplace accidents, which fell to 40% in 2009 from 48% in 2008. There has also been an improvement on both the injury rate, decreased to 3.6% in 2009 from 3.7% in 2008 and 5.5% in 2007, and on the seriousness of injury rate, which was equal to 0.14% in 2009 compared to 0.15% in 2008 and 0.22% in 2007. Therefore, if we look at net energy output by primary energy sources, we note that in 2009

Since 2004, Enel Cuore has distributed 37 million Euros to finance 394 projects: 342 in Italy and 52 abroad, in the countries where Enel operates (Latin America, Eastern Europe and Russia). This non-profit organization is especially involved in regions in Southern Italy and in the development of initiatives abroad; just as importantly, it meets with other foundations of companies and institutions, giving rise to collaborations that aim at creating major projects on a local and national level. For further information: www.enelcuore.org

the production of electricity from renewable sources amounted to approximately 30% of the total net production or 86.6 GWh with an increase of ca. 17% vs. 73.9 GWh in 2008. In recent years, Enel has also worked on the Sustainability Report, issued every year in addition to the Annual Report, in order to monitor our non-financial performance. Our Sustainability Report obtained an A+ rating for compliance and enforcement of the guidelines of the Global Reporting Initiative (“GRI”) in 2006. Also, Enel is part of the Dow Jones STOXX Sustainability Index and Dow Jones World index, selected for the seventh year in a row. We aim at generating integrated reporting for both financial and non-financial issues. This report will be the result of this integration, in which sustainability indicators are combined with financial indicators, connecting environmental and social topics with the economic performance of the company, as well as giving a unique view of the Group and its performance.

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Interview with John Elkington

The sustainability of apparent irrationality ÂŤHighly unconventional entrepreneurs have resolved some of the major economic, social and environmental problems in the world. These pioneers are changing existing industries, the chain of values and current business models and creating fast-growing markets almost everywhere in the worldÂť. Corporate social responsibility, business models and unconventional choices: the views of John Elkington, the author of The Power of Unreasonable People.

by Alessandra Viola

Marc Abel/picture tank

Norbert Huttermann/Corbis

“The reasonable man adapts himself to the world. The unreasonable man tries to adapt the world to him. This is why all progress depends on unreasonable people.” Thus wrote the Irish playwright George Bernard Shaw, but equally convinced is John Elkington, a world authority in the field of corporate social responsibility and sustainable development, business consultant, founder and chairman of Volans and co-founder of SustainAbility, as well as the co-author, together with Pamela Hartigan, of the essay The Power of Unreasonable People. Elkington, who has turned his travels among the “unreasonable” entrepreneurs of our time into a lucrative job that is in high demand, has repeated on several occasions that only those who force the schemes and think “outside the box” manage to create new markets and… sometimes even change the world. But is it really possible to change the world simply by adopting a higher quality of social standards? “According

to Shaw’s definition, some entrepreneurs today are quite unreasonable, so much so as to be considered crazy,” Elkington declares. “And yet our future is based on their work. We have identified highly unconventional entrepreneurs who have resolved some of the major economic, social and environmental problems in the world. And we also have shown how these pioneers are changing the existing industries, the chain of values and current business models, creating fast-growing markets almost everywhere in the world. Whether it is the pioneering flight of the Wright brothers or the founders of Google, Page and Brin, new technologies and the most sensational business models have often come from outside the entrepreneurial flow of the major companies. Moreover, if we had left the future in the hands of the stable owners, saddle-makers and blacksmiths, we would still be riding horses instead of driving cars or using buses, trains and airplanes.” Innovation is certainly one of the key

oxygen 12 – 02.2011

Whether it’s the pioneering flight of the Wright brothers or the founders of Google, new technologies and the most sensational business models have often come from outside the entrepreneurial flow of the major companies.

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elements of progress in all fields. But often, in the history of human discoveries and, even more so, in their applications, the environment, the quality of work, safety and transparency were not among the primary concerns of the entrepreneurs. “Business is business,” it was said - a slightly overused formula that seemed to justify the adoption of any measures that would outperform the competition and increase profits. However, today there are many who no longer believe that capitalism is “the best way of life” and are asking themselves if the current economic model is sustainable in the long term. “At the present time, it isn’t,” Elkington says. “If they are not adapted, the current forms of capitalism will lead our economies and our entire civilization over the ecological precipice. But the interesting thing about capitalism is that, compared with alternative economic models such as a state-run economy, it is much more capable of changing over time to meet new challenges. One of the prices we pay for having adopted it as an economic model is that capitalism has cycles of expansion and recession coupled with periods of creative destruction, like the one in which we’re about to enter, in which large slices of the economy will become obsolete and die while new needs, technologies and value systems emerge.” Capitalism, therefore, but with the appropriate corrections. First of all, a greater concern for the environment, and more space for social entrepreneurship and transparency. “Transpar-

ency is very important today. To give some extreme examples, just think of companies like Parmalat and Enron, which have defrauded investors who were not able to realize what really happened in the management of these enterprises. But it is not simply a matter of fraud. Capitalism, at least in its current form, is a gigantic Ponzi scheme, of the type conducted by the fraudster Bernie Madoff, that is outsourcing a wide range of social and environmental costs, and effectively, stealing the future from our children,” Elkington explains. It is unthinkable, however, that transparency, at least in the short term, will intervene to make “transparent boxes” out of all of society in the eyes of investors. In fact, a part of business is based on the risk of investors who do not have all the elements for making a decision and are partly “betting” on the basis of available information. Whereas some companies feel the need to defend themselves against external interference in any way possible. “In the future, we will not see all companies or all governments become 100% transparent,” Elkington continues, “whatever WikiLeaks and Julian Assange may think about this. Rather, I think, that on a business level, we’ll mostly see three kinds of behavior. The first, which we’ll call the ‘Goldfish’ strategy, will involve some major brands and high-profile companies to operate in the spotlight. The second option, which we’ll call the ‘iMac’ strategy, will be to allow investors to take a look at only some parts of the compa-

ny, while most of the company will remain unknown, closed in ‘black boxes’ that cannot be seen. Then there’s the ‘Nighthawk’ strategy, named after the F-117 fighter aircraft, of those who will choose to stay out of the spotlight completely, such as state oil.” Transparency and business ethics are increasingly important, also because their absence deeply corrupts the economic system. “A lot depends on which part of the world you’re operating in, but there are some basic principles of the CSR agenda that should be embraced wherever you are. The first is a combination of transparency and accountability, which leads us into areas like corporate governance, business ethics and the constant battle to take bribes and corruption out of the economic system. This latter is very important because corruption makes decisions more personal, tribal and short term, at a time when we need decisions in the public and private sectors and at the level of citizenship to take a broader social agenda into consideration for the creation of social value rather than the accumulation of private wealth.” The creation of new value systems is an essential step for the introduction of a more responsible and environmentalfriendly capitalism. Which today does not seem so far-off from happening. “Fifteen or twenty years ago, business and environmentalism seemed to be at war against one another,” continues Elkington. “In some sectors and geographical places, it’s still like that of course, but in the 35 years that I’ve worked on issues of safety, health, en-

Interview with John Elkington

Marc Abel /picture tank

vironment and sustainability, I’ve seen an increasing number of companies take charge of these problems. Let’s take the case of General Electric, which for years has waged a war of words against the environmentalists regarding the pollution of the Hudson River. Today its CEO Jeffrey Immelt has developed the ‘Ecomagination’ initiative, conceived for creating solutions for a wide range of challenges related to sustainability. And in the last five years, this sector of their business has guaranteed an income of 70 billion dollars, pushing administrators and managers of other companies to ask what they can do to get the same results.” The question is perfectly legitimate, because making profits with business and sustainable initiatives is not all that easy. Also because these policies

are generally neglected in the name of business and higher earnings. “Even today, the ‘social’ entrepreneurs are not rewarded by the market, although it must be said that many non-profit employers don’t expect to be. However, over time we’ve followed the emergence of company profit, even hybrids, and even in some cases, of listed companies. In general, what drives the social enterprises or entrepreneurship based on clean technologies is the passion, energy and enthusiasm of their founders. But that can only take you so far. Now, however, the best practices are becoming ‘scalable’ and there are others that call all of us into question, whether as investors or as employees, customers and, in the end, voters.” Our role of being “customers,” voters and makers of goods and services,

despite the difficulty of a lack of widespread awareness, puts us in a situation of great power and responsibility. The power to direct entrepreneurship toward respect for the environment and social policies is in our hands. For those who learn to do so wisely, cost (energy, food or other kinds) is an extremely powerful weapon.

oxygen 12 – 02.2011

CSR: brilliant ideas and real results Today more and more companies are taking social responsibility, and particularly sustainability, into consideration as a fundamental factor especially for their long-term growth. It is no longer simply operations of image, but real ethical choices that are turned into actions and concrete projects.

Phenomena such as globalization and the recent economic crisis have underlined the need for companies to have a view that is broader than the purely financial one. The diffusion of and access to information on an increasingly large scale, especially through the internet, allows consumers to have a clearer picture and deeper understanding of how businesses operate, thus forcing them to question their image and their social and environmental impact. Recent research commissioned by Enel that was undertaken by the Economist Intelligence Unit analyzed 200 companies’ approach to Corporate Social Responsibility. In particular, the survey highlighted the reasons that lead companies in this direction, regarding both how their social choices are combined with production and trade aspects and how their achievements are measured and disclosed. First of all, from a geographical point of view, the importance of working in a sustainable way seems to be felt more strongly in the AsianPacific area (50% of those surveyed), followed by North America (46%) and Western Europe (39%). Beyond geographical location, 87% of the managers surveyed felt that the social responsibility of a company will become an even more important and strategic factor in the next three years. Whereas 69% stated that, in the

long term, the link between economic performance and commitment to sustainability will be increasingly essential. According to this survey, the most important reasons that lead to undertaking a corporate strategy geared toward sustainability are due to: ethical reasons (56% of those surveyed), the need to comply with laws and regulations (45%) and the desire to improve the corporate image (43%). Whatever the motivations, there is an increasingly wide range of choices and projects linked to social responsibility and sustainability in all sectors of business. Responsibility and Health There are many chemical industries that adhere to the “Responsible Care®” initiative, an agreement which brings together companies in the sector from all over the world to improve their performance in terms of health, safety and the environment, and to undertake to communicate all their achievements to the shareholders. The annual reports show and confirm the gradual improvement of the companies involved. The effectiveness of Responsible Care in contributing to sustainable development was also recognized by the United Nations Environmental Program. The BASF group, world leader in the chemical sector, with more than

by Carlo Falciola and Manuela Lehnus

Rubberball /Corbis

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97,000 employees and more than 400 locations, has adhered to the program from the start and has a Responsible Care Competence Center for managing all the activities necessary for respecting the required safety and environmental protection standards, including the use of ecofriendly products and processes, and the reduction of emissions and waste. Furthermore, the group has a program for improving the physical conditions of its employees, in collaboration with the institutes dealing with Occupational Medicine and Health Protection. The campaign aims to show that it is possible to acquire greater psycho-physical wellbeing through regular physical activity. Solidarity and Ecology In 2001, the World Diabetes Foundation was founded, for the purpose of promoting the prevention and treatment of diabetes in developing nations. The initiative is partly thanks to the funding and support from the world’s leading pharmaceutical company for diabetes cure, Novo Nordisk, numbering 29,000 collaborators in 76 countries, which combines research and production activities with its commitment to an information campaign, awareness and social initiatives. The company has also begun a multi-year partnership with UNICEF to support

activities to aid the street children in Congo. In addition, it was one of the first companies in the world to publish an environmental report. Since 2006, Novo Nordisk has adhered to the project “Climate Savers,” a WWF initiation to promote voluntary business plans aimed at reducing greenhouse gas emissions. Thanks to a series of strategic sustainable choices, such as the use of wind power, in 2008 the company achieved a 9% reduction of CO2 emissions, whereas in 2009 it even reached 32%, producing 69 million tons less than the previous year. This result is amplified by further actions to increase the awareness of employees, through the promotion of virtuous actions; for example, such as riding a bicycle to work. Sustainable Ideas and Products According to the most important worldwide producers, by 2015, 10% of the cars in circulation will be run by electricity. In order to respond to the new challenges presented by the economy and the environment, the automakers are striving to create a car with zero emissions. Among these, the Renault group has set a dual objective of improving the existent technology and marketing new generations of engines with low CO2 emissions. Between 2011 and 2012, it will also be presenting its range of

oxygen 12 â&#x20AC;&#x201C; 02.2011

three new zero-emission electric vehicles. Another initiative heading in this direction is that of Tata Motors, the Indian automotive company that is part of the Tata group, which recently announced a funding program of $15 million for the research and development of a car that is run by water and able to separate the hydrogen needed to fuel it directly onboard. Another company of the Tata, group, Tata Steel, the seventh largest steel producer in the world, is carrying out the project called â&#x20AC;&#x153;Specificâ&#x20AC;? (Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings), whose aim is to develop affordable, innovative construction materials that will allow buildings to generate their own energy. Green Tech According to the report The Economics of Climate Change, by Nicholas Stern, the Director of the Research Institute on Climate Change at the London School of Economics, in order to limit the effects of climate change, emissions will have to be reduced 25% globally by 2050. Considering that 80% of the emissions come from urban areas and that 40% is due to civilian use, for most industrialized countries this goal is 30% by 2020. All strategies that limit energy consumption are

therefore of utmost importance. In 2009, the Dutch group Philips, present in over 60 countries and with around 116,000 employees, reduced its CO2 emissions by 10% and exceeded a 30% incidence of green products in its total turnover. Its goals for 2015 are to increase these percentages up to 25% and 50%, respectively. The company is also committed to improving the energy efficiency of its products by 50%, to double the collection and recycling of worn-out devices and to use recycled material in its production processes. Moreover, among companies in the ICT sector, one of the greenest companies in the world is Vodafone, the English group present in 30 countries and partners with another 40 countries on all five continents, with more than 343 million customers. During 2010, the company acquired almost 70% of the electricity used for its network activities from renewable sources. In the last three years, it has reduced its CO2 emissions by 12%, and it aims to reach 50% by 2020. Vodafone Italy, in particular, already receives almost 100% of its energy from renewable sources and in 2011 it has undertaken to use 100% recycled paper, thus saving 88 tons of CO2. Objective: zero emissions Is it really possible for a company to operate at

CSR: brilliant ideas and real results

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Stuart Oâ&#x20AC;&#x2122;Sullivan /Corbis

zero emissions while maintaining its high economic and productive profile? The managers at IKEA are convinced they can and have made it a strategic goal that has virtuously influenced the entire functioning of the company on all levels for years. The Swedish giant, operating in 44 countries and numbering over 260 stores with more than 120,000 employees, already receives 49% of its energy from renewable sources and by 2011 it wants to reduce its energy consumption from its suppliers by 30%. In this context, IKEA is completing the transition in favor of low energy consumption light bulbs for all the lighting systems within its headquarters, for a savings of 50% on the light used. In addition, 150 stores will be gradually equipped with solar panels to produce electricity and cover from 10% to 25% of their requirements, whereas 50 units are already equipped with solar waterheating systems and 20 are equipped with boilers running on biomass. The headquarters in Slependen, Norway owns the third geothermal power plant in Scandinavia and is able to produce 80% of its heating and cooling. Among the sites that adopt this solution, there is also the one in Corsico, near Milan, that operates with a similar plant and is able to develop 1,600 kw of thermal power and 400 kw of cooling power,

with a savings of 300 tons of oil per year and 800 tons of CO2. In the last three years, the company has sold 50 million energy-efficient light bulbs, representing a savings equal to the production of more than four nuclear power plants. Since 2002, IKEA has been collaborating with the WWF to fight illegal deforestation and to increase the presence and extent of certified forests. These forests, which provide timber, are the result of sound and sustainable management in ecological, economic and social terms. Thanks to this partnership, the area of certified forests in China has doubled, while in Russia it rose from 3 to 20 million hectares. This attention to the environment and health also extends to the details: from printing textiles and saving 60% of the water, to printing their catalogue using 50% renewable energy, to food that is subjected to severe restrictions regarding its geographical, biological and genetic origins. Furthermore, IKEA is one of the most important partners of UNICEF and Save the Children and since 2003, it has donated almost 25 million Euros that have contributed to the education of more than 8 million children in 30 countries, Its social programs aim to reach out and help 100 million children in the coming years.

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Ecoelce: innovation and strategy at the service of corporate social responsibility The Endesa’s project in the State of Ceará in Brazil allows access to electricity to disadvantaged sections of society and encourages recycling through the collection of recycled waste in exchange for a reduction in the electricity bills based on the value of the collected material.

The increasing integration of CSR at the strategic level and the increased demand for creativity and innovation in the policies of social responsibility are two of the main conclusions arising from Corresponsables v Informe: La Situación de la RSE en España (v Correspondents Report: The Status of CSR in Spain) elaborated by MediaResponsable publishers from a survey completed by over 300 representatives of all the realities involved (companies, public administration, NGOs, universities and the media). According to the report, a substantial segment of opinion feels the crisis has led companies to give priority to CSR projects that are more strategic and able to create value. In other words, in light of the crisis and the cuts that the crisis entails, businesses prefer to make initiatives in line with their core business. Another significant trend is the importance given to innovation in assessing the various aspects of CSR. If in the IV Correspondents Report, which analyzed the financial year 2009, the innovation had risen from ninth to seventh place in all the fields inside the IHR, in the V Correspondents Report, it had risen to sixth place. CSR has always been identified with the practice of going beyond compliance with the laws.

But a further step must be taken for the differentiation, excellence and impact of social responsibility: a greater contribution is needed in the field of CSR, the body of generalized actions that are repeated in most of the plans for sustainability. We must pursue pioneering action in the context of social responsibility, thus creating a precedent with actions that could become points of reference for a correct practice. The Endesa Ecoelce Project

Social responsibility of Endesa responds to these objectives, as demonstrated by its strategic plan for sustainability and the various projects it supports, including the Ecoelce project, implemented in the State of Ceará (Brazil), an initiative that undoubtedly deserves two definitions: innovative and strategic. This project allows access to electricity to disadvantaged sections of society and encourages recycling through the collection of recycled waste in exchange for a reduction in the electricity bills based on the value of the collected material. Waste products recovered by customers are deposited at collection points in places of easy access. Each kind of waste is weighed and valued at the market price. The value is immedi-

by Marcos González

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Paul Taylor /Corbis

Tara Moore /Corbis

ately recorded on the customer’s card and the discounts are passed on to the billing system of Endesa Brazil. The result is a triple benefit: the environment (less use of raw materials and less impact of waste), social (access to basic goods, and thanks to the billing, also to credit, lower incidence of diseases due to poor waste management, social development of the recycling through the creation of more than 50 direct jobs and over 200 indirect jobs, and lower incidence of theft) and economic (less unsolved theft and an improved reputation) with a simple and wide-ranging plan. In a broader sense, it benefits all the people of the State of Ceará, given that the development of the program has increased awareness of the environment, leading to a reduction in the amount of rubbish left on the street. This reduction has meant a lower visual and environmental impact, and an improvement of general living conditions in the area, reducing the incidence of diseases like dengue fever, caused by poor waste management. Other areas of Endesa distribution in Brazil (EcoAmpla) have

developed this project, which is currently being piloted in Chile (Ecochilectra) and studied by other companies and other countries. Therefore, the innovation that this project brings with it is a benefit across the board in all areas related to social responsibility and sustainability. It is also consistent with the scope of the business of the company, given that in addition to social and environmental improvements, its aim is to promote greater customer loyalty regarding the core business of the company: the marketing of electricity. These were precisely the reasons given by the jury of the prestigious “Premios Corresponsables” conferred for the best practices in CSR and Sustainability, organized by Fundación Corresponsables – an entity created by MediaResponsable to extend CSR to every kind of body and society – upon giving the award in the “Big Business” category to the Endesa Ecoelce project. The selection criteria for these awards are based on creativity, innovation, the initiative’s alignment with the core business of the company, sustainability and the contribution of value for its stakeholders.

Ecoelce: innovation and strategy at the service of corporate social responsibility

Value for the base of the pyramid

The Ecoelce project is also a flagship project, since it creates value for both the company and for the base of the pyramid, i.e. the population segment of more than 4,000 million people on a global scale with an income of less than $8 per day. As the Base of the Pyramid Laboratory has noted, commercial activities regarding the base of the pyramid that bring social and economic development require business models that create value for both the community and for the company, which is obvious in the case of Ecoelce; it involve partnerships with civil agencies and public administration in order to obtain a greater number of positive externalities (in the case of Ecoelce, the participants were the University of Fortalesa and the Institute of Entrepreneurial Training and Continuing Education, IFEE); the business strategy includes elements of triple bottom line or the social, economic and environmental impact of the business (paradigmatic element in the case of Ecoelce) that should contain a potential large-scale replication of the business model for the transformation of society and generate economic benefits (which, as we have seen, Ecoelce is exporting). CSR addressed to the base of the pyramid is also found in other projects that Endesa is pursuing in Latin America. This is the case with the Instituto Tecnológico Superior Nuevo Pachacutec in Peru. In 2004, Edelnor, a subsidiary of Endesa in Peru, began to collaborate on the project of the future Catholic University of El Callao through the provision of electrical installations. The following year the partnership was established with the creation of a technical-vocational course of study in electricity at the Instituto Superior Tecnológico Nuevo Pachacutec. The project is being developed in the Ventanilla

area, one of the poorest neighborhoods in Lima, where only 15% of the people achieve higher education and in which there is almost a total lack of educational or work offers to ensure development opportunities for the population. When students complete their studies, or during the final stage of their education, Edelnor examines the possibility of job placements in the firm or in the Peruvian electricity sector in general. It was precisely for this initiative that Eldenor won the “Integración y Solidaridad” award. This university project also meets the principles of CSR in businesses with regard to the base of the pyramid because it allows people to improve their quality of life through training and employability, it is based on the alliance of interest groups and responds to the triple bottom line. Ultimately, Ecoelce and the Tecnológico Superior Nuevo Pachacutec Institute are two examples of how innovation and strategic thinking should be related to CSR if we want this entrepreneurial paradigm to take root in enterprises and to be introduced in an increasing number of companies.

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Oxygen versus CO2 by Elisa Frisaldi

Corporations go green

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More and more often, modern marketing is chasing after the “green mirage,” not out of necessity to change the current model of growth and consumption, but rather because of being enticed by the higher revenues that can be generated from the interest in issues related to nature, the environment and ecology. This is the case of McDonald’s, defined “McAmazon” by Greenpeace, due to their involvement in the destruction of the Amazon rainforests in favor of the monoculture of soy, a highly nutritious cereal used for animal feed. The corporation knows the rules of marketing well and so it has decided to change its “suit.” The first “green” fast food place made out of ecological materials, equipped with turrets to recharge electric cars and an interior design that allows for illuminating the “restaurant” with sunlight was opened on July 14, 2009 in North Carolina. Instead, in England, the McDonald’s branch there has begun to convert the fuel system of its vans to one using recycled cooking oil for fuel. “Corporate social responsibility is no longer an optional,” declare Michael E. Porter and Mark R. Kramer, the founders of the Foundation Strategy Group (FSG), a consultancy company with headquarters in Boston. Much more than in the past, the lack of attention to social responsibility can undermine the economic-financial sustainability of the company. Perhaps inspired by the saying “if you

can’t beat them, join them,” CocaCola and WWF have entered into a multi-year agreement for the protection of fresh water. For years, in fact, the Coca-Cola industry has been the object of criticism, boycotts and information campaigns about the impact their production of the beverage has on drinking water. The commitment they have made is to replace every drop of water used for the preparation of beverages and their production. This means reducing the amount of water used to produce beverages, recycling that which was used in the factory and returning a good share of it to the community and to nature. Not unlike this is the case of the Chiquita industry asking for donations for sustainable development projects when most of its profits derive from the exploitation of people and the environment. Nevertheless, aside from some controversial cases, there is no lack of positive initiatives in the field of CSR. The ideal situation for society and for the company is one in which everyone plays their part well: the first generates clear and coherent signs based on its system of values, the second follows its objectives of profitability and growth, in line with the social values. What usually happens is that the more closely the social purpose is connected to the company’s business, the greater its ability to leverage corporate resources, using them to benefit all of society. Nestlé’s approach to working with

small farmers illustrates the symbiotic relationship between social progress and competitive advantage. Although its reputation was tainted by a controversy three decades ago as a result of the sale of baby milk in Africa, the impact of Nestlé on developing countries has often been very positive. For example, in 1962, the company introduced the sale of powdered milk in the poor district of Moga, India. In every town, it builds dairies with refrigeration systems that act as collection points for milk. When the first factory opened, only 180 local farmers supplied the raw material. In 2007, Nestlé bought milk from more than 75,000 local farmers, collecting it twice a day from more than 650 dairies scattered in different towns. In 2006, another world-famous company decided to include an eco-friendly line in its collections. This is Levi Strauss, whose garments have been certified as “Eko Sustainable Textile” by the Control Union Certification, the most authoritative inspection and certification body for organic production and products. Levi’s ECO are the first jeans with an entirely eco-sustainable production cycle, starting from the 100% organic cotton. The models are distinguished by a white label, coconut-shell buttons and non-galvanized metal zippers. The garment finishings are made with natural substances such as indigo, potato starch, mimosa flower and Marseilles soap. And that is not all. In 2009, the company launched the campaign “A

Oxygen versus CO2

care tag for our planet,â&#x20AC;? with the aim of increasing the life cycle of jeans and to prevent millions of garments from ending up in the dump. The secret is contained in the new labels that instruct consumers on how to wash the garment in such a way as to produce the lowest possible environmental impact: use cold water, dry in the open air whenever possible and donate used pairs to Goodwill, one of the major voluntary and non-profit organizations in the world.

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The ethical consumer and the quest for “the business case” Businesses have noticed the value of ethical branding and consumers care about CSR issues and will exert purchasing power accordingly. But there are many valuable lessons for those who do business and those who would be ethical consumers. In both cases, we have to move to a more sophisticated concept of ethical consumerism where there are multiple “business cases.”

by N. Craig Smith and Elin Williams

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Owaki /Kulla /Corbis

oxygen 12 – 02.2011

Much has been written on the business case for corporate social responsibility. Like knights at a vast round table piled high with reports, books, journals and spreadsheets, we academics and journalists – along with governments, managers, think tanks, NGOs and others – have pursued our tireless quest for the proof that more responsible businesses are more profitable businesses. Together, we have sought this “business case” in the investor, the employee, the regulator and, most of all, the consumer. But, so far, the business case has eluded us all – just as the legendary Holy Grail kept King Arthur and his Knights of the Round Table searching for a lifetime. Is it finally time to give up the search? Perhaps it is simply time to acknowledge that the issue is more complex than it seemed when expressions like “ethical purchase behavior” were first coined back in the1980s. In those days, the idea of buying a product or service becoming a kind of vote on the supplier’s social or environmental responsibility seemed novel. Now it is commonplace and goes by a variety of names: “conscience consumerism,” “ethical consumerism” and “the green consumer,” to name just a few. But the idea remains the same: that the consumer cares about CSR issues and will exert purchasing power accordingly… thus proving the business case. The flaw in the original quest starts to sound

obvious when it is put in those terms. There is no such thing as “the consumer.” And even if there were, he or she would be a human being – subject to all the erratic behaviors that the species is known for. No wonder there is also no such thing as the definitive business case. And we might have known we would not find it in the consumer. Take those surveys that were piled on our imaginary round table, for example. Some of the most optimistic among them suggested that up to 90% of consumers consider CSR before buying. One US study in 2002 concluded: “84% of Americans say they would be likely to switch brands to one associated with a good cause, if price and quality are similar.” That is a big “if.” And there are others even bigger. What about “if I am aware of the aforementioned good cause” and “if I remember to think about it on the day I hand my money over?” Unsurprisingly, the statistics about actual consumer behavior do not match those about the good intentions. One European study found that, while 75% of respondents said they would use social and environmental criteria in deciding what to buy, only 3% had actually done so. On the other hand, there is good historical evidence that negative ethical consumerism, in the form of the traditional “boycott” has been highly effective – to the point of changing the world. The rejection of British salt and cloth orches-

The ethical consumer and the quest for “the business case”

Vast Photography / First Light /Corbis

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trated by Gandhi is said to have contributed to Indian independence in 1947. And Rosa Parks’ refusal to give up her seat on a bus to a white man in 1955 sparked a boycott – supported by 90% of black people in Montgomery, Alabama – that nearly bankrupted the bus company and certainly influenced the end of segregation on the city’s public transport. More recently, in the ‘90s, as many as one in four UK consumers were said to be refusing to buy South African produce in an expression of opposition to apartheid. And just last year, at the height of the oil spill in the Gulf of Mexico, the “Boycott BP” page on Facebook had nearly 800,000 fans. They appeared to succeed in reducing sales at BP-branded gas stations across America – temporarily at least. Though the pile of research on the round table suggests that participation in boycotts is generally over-estimated, it also implies that its effects are long lasting. Barclay’s bank is still feeling the effects of the apartheid boycott today. Many consumers have forgotten that the company bowed to pressure and withdrew from South Africa at a time when it was the largest bank operating there. The end of apartheid itself does not seem to have influenced them, either. And some shoppers are still punishing Nestlé for its aggressive marketing of baby milk in the developing world decades ago. Nonetheless, strong examples of positive ethi-

cal consumerism or “boycotting,” as it is sometimes known, are less abundant than some CSR advocates would like. Perhaps the current growth in fair-trade certifications or innovative alternatives, such as Illycaffè’s University of Coffee (which aims to develop wealth-creating skills among growers), will provide the multitude of examples the “knights” of the business case have been seeking. After all, sales of Fairtrade-certificated products have soared in the UK – from £92.3 million in 2003 to £799 million in 2009. It was also recently estimated that one in four eggs bought in Britain are now free range. And just this year, Barilla became the first pasta maker to go “cage-free” in its egg purchasing. Yet, while these facts no longer point to a niche market, the global food industry still has a long way to go in embracing CSR. Similarly, the Toyota Prius, the world’s first mass-produced hybrid electric-petrol car has taken the US (or at least the 2010 Oscar ceremony) by storm. But worldwide sales only recently reached the 2 million mark after over ten years of marketing. The Prius is not going to save the planet any time soon. It seems we cannot as yet point to fail-safe recipes for harnessing positive ethical consumerism across different issues, industries and geographies. Undeterred, some champions of the business case cite the international success of brands such as Ben and Jerry’s “ethical” ice cream

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Image Source /Corbis

or the Body Shop’s squeaky-clean cosmetics. But even here, mixed messages emerge. Both brands have been acquired by much larger competitors (Unilever and L’Oréal, respectively) in recent years. Similarly, the founders of British eco-friendly smoothie brand, Innocent, sold a minority stake to global soda giant Coca-Cola in 2009. Are we to conclude that the multinationals have woken up to the value of ethical branding? Or are they just trying to fool consumers with a conscience into buying products that have lost their ethical credentials? So what can we conclude after decades of searching and researching? In fact, it turns out that there are many valuable lessons for those who do business and those who would be ethical consumers. And in both cases, we have to move from the model of a sacred and absolute Holy Grail to a more sophisticated and contingent concept of ethical consumerism where there are multiple “business cases.” Here, by way of a summary of the body of research about ethical consumerism and the quest for the business case, are some of the significant questions for both customers and companies to consider. Company action versus words First of all, how much is the company actually doing on a given issue? If it is not doing harm, can it really be said to be taking action to do good? How does it measure up against com-

petitors? Only when these questions have been answered can the communications department produce the messages. And they have to match the reality, otherwise the charge of “greenwashing” might apply. Company-issue fit How salient is the issue relative to the core activities of the company? It makes sense for energy or transport companies to focus on carbon emissions, but a clothing retailer might be better placed to spend more of its CSR budget on working conditions along the supply chain. Consumer sacrifice How much more are consumers willing to pay for the product, in terms of higher price, lower quality or greater inconvenience? And how much do they care about the issue in the first place? The case for organic food may be compelling to some, but the vastly higher prices can be off-putting to a mass market largely uninterested in the health and environmental arguments. Consumer-perceived effectiveness Do consumers believe they can make a difference? Do they believe that there are enough like-minded people to make an impact? Issues like global warming can seem dauntingly huge.

The ethical consumer and the quest for “the business case”

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Consumer-perceived opportunity for self-enhancement Will the so-called ethical consumption make people feel better about themselves? Or do they think it will help them look better toward others? Think about those stars alighting onto the Oscars’ red carpet from their fleet of Toyota Priuses. Strength of the counter-argument Are the reasons against as strong as the reasons for? Will genetically modified crops feed a hungry planet or destroy its vital ecosystems? Length of the supply chain linking the company and the consumer Is the company in direct marketing contact with the consumer or just another business in the chain? Depending on the answer, the tactics will be different, but do not underestimate the extent of the consumer’s influence, as suppliers of wood products to DIY retail chains have learned (sometimes the hard way). As someone recently quipped, echoing Lord Leverhulme’s famous remark about advertising, “I know half my CSR budget is wasted, but I don’t know which half.” At least now, after decades of research, CSR budget-holders might be in a better position to make some well-informed purchasing decisions themselves.

oxygen 12 – 02.2011

The value of tradition and the dignity of work

by Brunello Cucinelli

“The dream of my life was to make work more humane, to give moral and economic dignity to work. [...] I have always imagined that, if we were to feel that there were custodians rather than owners of companies, then everything would take on a different meaning.” The values of tradition and those of work come together in the business model of Brunello Cucinelli who, from a small Umbrian town, exports two-thirds of his production of cashmere knitwear all over the world.

If it is true that most of us learn what respect and love of human existence mean by our own father’s example, then we need to talk about the past. Going back to my childhood in the ‘60s, when my family, which until then had lived in the countryside and was used to seeing the passage of time marked by the rhythm of the earth, moved to the city to seek a better future and pursue the dream of buying a house. I cherish one great memory from my childhood: I have never seen my parents argue. I always remember the image of my father, my grandfathers and my uncles, men engaged in hard and often thankless work, who prayed to God to send good weather so that the crops would not be ruined. Their example was an unforgettable experience for me that still inspires me in my life. Then, when I was around fifteen, we moved to the city because my father left the country and devoted himself to another job. To see his son work in a factory instead of in the fields had been my grandfather’s greatest dream. Even as a factory laborer, my father had to deal with hard work, but he was happy with the new commitment. At times, however, at night I would see him return home silent and sad because he had suffered humiliations and sometimes had even been offended by his employer. Although I could not fathom what message

was to be found in this mood of his, nevertheless it made me think. Something changed in me. I was sad to see my father like that and it was probably then that I began to understand the importance their workplace has for men. I realized from experience how unfair it was to offend their dignity and not recognize the value they deserve. From 15 to 25 years of age, I attended school and received an engineering degree. However, I admit I did not study much because I was not sufficiently motivated and I did not find studying textbooks very gratifying. Nevertheless I passed the high school exams and then enrolled for university in the engineering department. I attended classes for about three years, during which time, however, I took only one exam: in descriptive geometry. My experience as a student can be summed up in a few remarks. The most important event in that period, and also the following ones, was meeting the woman who would become my wife: we were both around 17 years old; she had finished her accountancy studies and had decided to open a small clothing store. It was while following her in this experience that I somehow rediscovered a taste for beauty and started to appreciate fashion. Even more important at the time was the social life at the Italian coffee bar where I went almost daily, and of which I am increasingly

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Hans-Bernhard Huber / Laif / Contrasto

fond. That was where we would meet up in the evening, 70-80 people, only men, according to the culture of the time. Virtually all the social classes met there, in relationships of friendship and mutual respect, without barriers and without bias. There you would find businessmen and workers and slackers like me (I confess to being such). It was much more than just a way to pass time because we would discuss various problems and engage in endless debates. Already at the age of 19, I began reading more. To tell the truth, regardless of the life I was leading, I wanted to know more about that dignity that seemed so important to me when my father had been offended. So I thought I could find some answers to my questions in philosophy. That is when I approached the world of learning and Kant was the first I read, apprehensively and eagerly. Meanwhile the years passed and I began to think about what I would do in life. As I hung around with my girlfriend at her shop, I began to get interested in knitwear, which was then, as it is now, a distinctive feature of Umbrian culture. Thus, I came up with the idea of making colorful cashmere sweaters which, as far as the product is concerned, I would say was a small innovation. However, the dream of my life was to make the activity more humane, to give the work moral

and economic dignity because, believe me, the work is often hard and repetitive. But I was also convinced that it heightens the dignity of man. And this objective has become my real purpose in life. Although I aspired to make a profit (because I believe that the reason behind the very nature of capitalism is that every company should make profits), at the same time I did not want these profits to do any harm to mankind, or at least as little as possible. I promised myself, by means or purpose, that the profits would be made while respecting human dignity and value, and would thereby be aimed at a moral purpose. To put what I had promised myself into practice, I decided to divide the profits according to four criteria, which I still stand by today. The first part went to the business, of which I feel myself to be the custodian and not the owner. Yes, I am the major stakeholder and I am in charge, but only in the sense of guaranteeing its solidity and stability. I have always imagined that if one feels like a custodian and not an owner then everything takes on a different meaning, everything becomes almost eternal. The second part is reserved for my family, who live in a little town and therefore do not have any particular needs. The third and most important part goes to the people who help the company so that they can work and live in a

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Alessandro Bianchi / Reuters / Contrasto

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way that lives up to their expectations. And the fourth, which is just as important as the other three, is the part designated to “beautify the world,” a concept that regards all kinds of activities: helping someone in difficulty, restoring a church, building a hospital, a nursery school, a theater, a library... This is the underlying philosophy of the company. I wanted to create a product of fine craftsmanship, high quality, and hopefully, authentic creativity. I wanted to make a manufactured article that reflected the Italian way of living and working, the pride, tolerance, dedication, spirituality and mysticism. Without a doubt, in order to do this, many skillful hands are necessary, as well as the hearts of generous people who are proud of their origins and attached to their homeland. But the company also has other underlying principles. Above all, a concept of work that came about many centuries ago, preached and spread by the fascinating Saint Benedict, who advised an abbot who was responsible for his monks in their lifetime and after their death, to be rigorous and kind, a strict master and loving father. I have tried to bring this spirit into my business. Because, as you can imagine, there is a big problem to be dealt with which, in my opinion, is always there and always the same, in every era:

that of the employer and the people who collaborate with him. I have always thought that each human being has his or her own gift of genius, however it may vary from person to person. My father knew nothing about his employer: he did not know anything about the profits, the properties and the life he led. Instead, it is different for the new generations today: they know everything, or almost everything, about their employers. So I believe that sharing the reasons and aims of a company with those who are involved in it should be at the basis of a healthy and dignified working relationship. And that is why I have decided that any young person who comes to work in our business should know everything about me and my life. In fact, I have always imagined and wanted to have a rapport that is based on trust and collaboration. Then, finally, there is the matter of the future of the world with regard to the business sector. In these times of economic, moral and civil difficulties, I believe we are somehow re-designing humanity. It is not to be excluded that the great economic crisis of these days might have beneficial consequences in the end. I am convinced, especially for Italy, that there is a sure future if we know how to produce unique goods of high quality and great craftsmanship, qualities that belong to the tradition of our people. But what worries me most is how to

The value of tradition and the dignity of work

convince the young people, the youth coming to work at our companies, who think that the work is undignified and meaningless because of the low wages (perhaps 1,000 Euros or slightly more, a month). For my part, I would like to help the young rediscover the deep meaning found in work. If I succeed in this matter, I am sure that things will change and they will find the desire to enthusiastically dedicate themselves to an activity of craft and art. We need a great love, not just regarding work and human labor, but also for the environment where one is born and lives, an environment that we cannot neglect in any way. That is why I also wanted to restore Solomeo, in the province of Perugia. When things began to go fairly smoothly, I came to this small village I had visited when I was engaged to be married. It broke my heart to see it in ruins and abandoned because in the postwar years and then in the â&#x20AC;&#x2DC;60s, many families had built homes outside the town walls in order to have a more comfortable house. And I decided to move the headquarters of my little company to this village, a decision that was met with amazement at the time. Why the choice of Solomeo? Why so far from the economic and commercial hubs? Because life outside the cities had always fascinated me. This is what I tried to do by choosing Solomeo.

The idea of living and working in the small town I come from and where my roots are has always fascinated me. Over the years, we began the restoration spontaneously, almost as if it were a game. Rather than altering the past, our aim is to restore it for the following and future generations and, if possible, to make it more beautiful, according to the custodian spirit that I mentioned before. We must go back to believing in the important values: the family, religion and politics. These are the values that have guided our parents, our grandparents and us. They can also illuminate our children, as long as they are willing to cherish them and to be inspired by them in their daily choices.

Photoreport

Cloud Cities

by TomĂĄs Saraceno

In his work Cloud Cities, the eclectic Argentinian artist TomĂĄs Saraceno has imagined experimental structures taking the shapes of balloons or inhabitable modular platforms that make the most of natural energy. The artist has always been inspired by an interest in influencing the change in the way we live, our experience and reality, and every work of his is an invitation to devise alternative ways of knowing, feeling and acting with others. The observation of nature leads us to understand its mechanisms and the unexpected becomes an active part of the dialogue with science. Saracenoâ&#x20AC;&#x2122;s works of art emphasize the ecological nature of not only the natural environment but also of the social spaces, showing that the possibility of changing the world is always at hand for those who are ready to collaborate in its design and construction. Looking at the sky, you can see the opportunity to rethink the way we live.

Photoreport – Cloud Cities

32SW/Flying Garden/Air-Port-City, 2007. Courtesy by the artist and Andersen’s Contemporary, Tanya Bonakdar Gallery, Pinksummer.

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Luna park. Fantastic art, 2005. Villa Manin, Centre for Contemporary Art, Codroipo (UD). Courtesy by Pinksummer, Genoa. 3

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Reconstruction 1, 2006 Sudeley castle gardens, Winchcombe, Gloucestershire, United Kingdom. Courtesy by the artist. 4

Biosphere (installation view), 2009. Statens Museum for Kunst, Copenhagen, Denmark. Courtesy by the artist, Andersenâ&#x20AC;&#x2122;s Contemporary, Tanya Bonakdar, and Pinksummer. 5

Photoreport â&#x20AC;&#x201C; Cloud Cities

Photoreport – Cloud Cities

7— 8 Observatory, Air-Port-City, 2008, Psycho Buildings, Artists take on architecture, Hayward Gallery, London. Courtesy by Pinksummer, Genoa.

Interview with Enrico Giovannini

What the GDP does not measure â&#x20AC;&#x153;The GDP is important but it is not able to account for the living conditions of a society. And the classic corporative fiscal indicators give an idea of the profitability and production, but not the impact that the business has on the local territory and community.â&#x20AC;? Indicators of welfare, corporate social responsibility, economic development and sustainability: opinions expressed by Enrico Giovannini, President of Istat and former OECD Statistics Director.

by Roberto Bagnoli works by Arne Quinze

You were appointed by French President Nicolas Sarkozy to the Stiglitz Institute, which measures the welfare of a country by its Gross Domestic Product. Is there a cultural link with Corporate Social Responsibility (CSR)? Certainly. The idea of measuring the wellbeing of a nation with other indicators comes from the fact that the GDP represents the added value of market activities. It is important, but it is not able to account for the living conditions of a society. Likewise, the classic corporative budget indicators give an idea of the profitability and production, but not the impact that the business has on the local territory and community. For example, if we take the various dimensions of welfare indicated by the Organization for Economic Cooperation and Development (OECD) or the Stiglitz Commission, we see that the dimension of work is fundamental. Therefore the indicators of “decent work” developed by the International Labour Organization (ILO) have shown that the welfare of the workers of a company is not only based on income, it also takes the work conditions into account. The CSR can be viewed, at a micro level, as the “dual” of the effort made at a “macro” level by the Stiglitz Commission and other initiatives.

What are the most sensitive criteria of analysis for evaluating the CSR? Whereas the work on the indicators of wellbeing have produced increasingly consistent conceptual schemes, in the case of the CSR, we still have a list of very heterogeneous indicators without a universally recognized standard. Perhaps the Global Reporting Initiative is the most appropriate scheme, but it is a very open list that includes the environmental impact, the level of job satisfaction, fiscal indicators, social sustainability, funding of the voluntary sector, etc. A range of indicators that is still too broad... Exactly. The risk in the end is that the information is fairly illegible. It is the same problem as with the statistics: we produce an avalanche of data, but what people want to know, in a nutshell, is whether we are getting better or worse. I believe that with the CSR we are at a phase of detailed analysis and not yet that of synthesis. But the synthesis, as also shown in the Stiglitz Commission, is a political fact. Only a democratic debate with the involvement of the stakeholders can help us to understand if health is more or less important than education. This is the next frontier, to

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be able to pass from this fragmentation to a shared summary of the indicators. Will the battle at the Mirafiori plant touch upon the CSR issues in any way? Fiat raises the issue of the economic sustainability of the management of a large corporation with investments that go towards strengthening the physical capital. But the agreement between the administrator, Sergio Marchionne, and the union leaders is certainly touching on the so-called “social capital.” Are we able to create the sustainability of a company and corporation simply by looking at the purely financial aspects or do we need a broader overview? This

is the real challenge of Corporate Social Responsibility: the success of a company is not only based on the number of jobs it creates or the income generated, but on the medium-term wellbeing it produces in the area. Aren’t the CSR principles in contrast to the mega-salaries of the managers? Economic research in the field of happiness clearly shows how much the relative positions between people bear heavily on the satisfaction, of both the individual person and the company. This does not mean that equality is the right answer, but the available analyses show that, other conditions being

equal, a situation of inequality tends to produce a strong sense of dissatisfaction with life that also weighs heavily on individual behavior. The consequence is the increase of insecurity. Can you give an example of this insecurity? Soccer players. Platini admitted that the financial conditions of the soccer clubs have gotten worse, with budgets that are untenable by now, especially because of the high compensations paid to the players. And he has proposed an 80% cut for them. The moment when, on one hand, there is a manager who earns millions of Euros

Interview with Enrico Giovannini

The market has picked up on a change on the part of money-savers also interested in focusing on investments in companies that have social sensibilities. And the CSR indicators help investors choose the most responsible companies

and on the other, a worker who is being asked to make an effort and in return for this uncertainty about their job is also added, there is a risk of paying a steep price in terms of social capital. In Italy, flexibility was seen as a necessary step for many young people, but it now risks becoming an existential condition, affecting people’s lives and plans, the choice of whether to have children or not and their rapport with their own family. These considerations lead us to a conclusion: the four categories of capital – fiscal, natural, social and human – upon which the sustainability of a society depends are closely related and should be considered altogether. You spoke of the need for a synthesis to simplify the implementation of Corporate Social Responsibility. But who should do this? The OECD, Brussels, single governments? One of the OECD’s recommendations, then reiterated by the Stiglitz Commission, is that the debate on the indicators of wellbeing must be organized through a round table in which the stakeholders can share three basic points. First: the important things in this country for wellbeing (health, work, etc.). This is a decisive passage; as Amartya Sen says, “to discuss indicators means addressing the issue of the ultimate goals of a company.” Second: find more solid statistical indicators for measuring this taxonomy. Third: communicate this information to the citizens. This approach can also apply at the micro level. For example, when a company is placed in a community, it

is possible to create round tables with the stakeholders so as to discuss the perimeters within which to move the CSR value system. Does the market follow or hinder this path? I would say it stimulates it. The market has picked up on a change on the part of money-savers also interested in focusing on investments in companies that have social sensibilities. And the CSR indicators help investors choose the most responsible companies. What role can the banking system play? The world of banking has shown its limits during the last financial crisis and has contributed towards increasing the feeling of insecurity and vulnerability of our society. In the name of its importance to the functioning of the economy, the banking system has benefitted from publicly funded bailouts. If the banking system is sound and is able to ensure the sustainability of a nation, its social role is obvious to everyone. What can Istat do to measure these “emerging” indicators? At the National Conference of Statistics – held in mid-December – Istat began a collaboration with Italian experts to start a joint reflection on CSR. In the coming months we will meet to evaluate the inclusion of some questions in our questionnaire on this issue, in order to evaluate the approach that companies have towards corporate social responsibility.

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CSR and finance: “seeing sustainable” in the future CSR is becoming more and more attractive for financial investments. In Europe, the total amount of Sustainable and Responsible Investments (SRI) has grown over the last two years by 87%, going from 2,700 to 5,000 billion Euros. And in recent years, the share values of Italian companies following the path of social responsibility have risen on average 15% more than all others. But how can you quantify the propensity of a company that wants to give a joint nature to their business?

There are those who see the future to be pink, those who see it as green, and those who see the future as...sustainable. A color we could define as “off-pantone,” but one that is becoming increasingly common. Already known in Holland, it is now gaining space in developing countries. And a growing number of financial experts are “seeing sustainable,” too. We speak of Sustainable Finance to indicate to investors that choices and strategies are based on parameters other than just the expected returns or profits: instead, they are looking at the attention of a company toward environmental issues, their ethical and social choices, a transparent governance and one in which there are solid principles such as minority rights and equal opportunities. In short, the values of Corporate Social Responsibility. Which is, therefore, increasingly turned into numbers: in corporate performance indexes. In short, into the attractiveness of financial investments. And as proof of this increasingly direct relationship between finance and corporate responsibility, there are the numbers themselves: in Europe, the total amount of Sustainable and Responsible Investments (SRI) has grown over the last two years by 87%, going from 2,700 to 5,000 billion Euros. And in recent years, the share values of

Italian companies following the path of social responsibility have risen on average 15% more than all others. But how can cold financial numbers render anything as intangible as the “sustainable spirit” of a company? How can you quantify the propensity of a company that wants to give a joint nature to their business? To attribute a numeric value to these non financial-economical aspects and, thus, to break the neutrality of finance to ethics, “sustainable indicators” have come to the rescue, through which a proper rating can be assigned to a company, giving it a sort of “social responsibility merit” and evaluating its reliability for non-economical/financial policies. A whole other perspective, of course, than the so-called mainstreaming finance, a perspective that is strongly gaining space and “contaminating” traditional finance more and more. In 1999, the first indexes were elaborated by Dow Jones. The Dow Jones Sustainability Index (STOXX), traced the financial performance of leading companies in terms of sustainability and supplied reliable benchmark information on the financial community, particularly for those who have to manage a “sustainable portfolio.” The Dow Jones Sustainability World Index also

by Daniela Mecenate

Helen King /Corbis

includes a list of the best companies globally in terms of sustainable performance and includes only 10% of the 2,500 large companies that are part of the Dow Jones Financial Index. Enel is one of them. Among the criteria considered by the Dow Jones Sustainability Index are the corporate policies and strategies on environmental and social issues and on corporate governance. With one strict restriction: sectors such as tobacco, weapons and pornography are automatically put on a financial “black list,” as well as countries where human rights are not respected. Inspired by the American experience, shortly afterward the FTSE4Good index, managed by the British group FTSE, was created to reflect real-time performance of companies that respect CSR standards. It is not only rich western countries that have been taking this route. In 2003, South Africa was the first emerging market to include a sustainability index in its stock market. And just two years later, one of the most rapidly growing markets in the world, Brazil, arrived at the threshold of financial ethics by launching the first index of corporate sustainability in Latin America. And then there is the Bovespa Corporate Sustainability Index, that brings economic and social responsibility

aspects together to be included in a special new market of the 40 best companies in Brazil who have distinguished themselves for sustainable activities. The index is reviewed annually and is based on three broad categories: environmental, social and economic/financial, including all sectors of the economy, without preconditions. In short, we are on the road to ethical finance. And even China, the “new Eldorado,” has chosen to follow it: in recent months, this Asian country has launched its first index based on environmental and social sustainability criteria. The project arose from a joint venture between the Chinese Securities Index Company and the ECPI group, headquartered in Milan, specialized in the assigning of credit ratings and a building sustainability index based on the analysis of non-financial values. “It is an important step for China,” explains Aldo Bonati, director of the research sector of ECPI, “that shows the growing attention of the Chinese government for these issues, which are fairly new for the country.” And Italy? The “boot” seems to have slowed down, and for now, is lagging behind neighboring Europe on these issues: “Regarding sustainable finance,” Bonati continues, “Italy is undoubtedly a country with plenty of room

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CSR and finance: “seeing sustainable” in the future

Peter Ginter / Science Faction /Corbis

for improvement.” Once again, the numbers are the confirmation. If the growth of “sustainable” investments over the last two years has been 87% on the rest of the continent, with us it has stopped at +28% with a total share of 312 billion Euros. Very little compared to the European 5 trillion. Meanwhile, at the end of last year, together with FTSE, ECPI launched the first series of sustainable indexes for the Italian market expressly for responsible investment. ECPI explains that the indexes (FTSE ECPI, SRI Italy) will enable investors to replicate the performance of companies listed on the Italian Stock Exchange which are distinguished by their high standards of management of environmental, social and corporate policies. “Their launch,” says Bonati, “coincides with the increase of investor interest towards social responsibility issues.” There are two indexes in harmony with the Dow Jones Sustainability Index: Benchmark, whose members are distinguished by a good rating in terms of corporate responsibility, and Leaders, who qualify as excellent. This category now includes companies such as General Insurances, Autogrill, Enel and MPS, many of which can already be found on the Dow Jones Sustainability index. The indexes are made through the use of various parameters, from sustainability reports prepared by the companies to press articles, from environmental strategies to employee incentives for the achievement of CSR objectives. This results in a rating ranging from “EEE” to “F” at nine levels. Will these indexes help speed up the walk of the “boot” on the road to financial responsibility? “We hope so,” answers Maria Paola Marchello, program officer of the Forum for Sustainable Finance, a non-profit association to promote the culture of social responsibility in financial investments. “Unfortunately, we are still behind the rest of Europe, especially regarding the retail market. A significant fact: 99% of the share of sustainable investments is attributable to institutional investors, especially insurance companies and pension funds. In fact, due to its very nature, sustainable investment seems to adapt better to a long-term perspective.”

But the retail market also has its financial responsibility instruments: these are the so-called “ethical funds,” mutual funds that rely on an ethical index of reference (such as the Dow Jones Sustainability Index or the FTSE4Good index or the recently launched FTSE, ECPI, and SRI Italy) and replicate the composition of the index basket in their portfolios. According to the latest research released by the Forum for Sustainable Finance, in Europe there are almost 900 ethical funds that currently manage assets of around 75 billion Euros. Between 2009 and 2010, these have grown both in terms of numbers (+29%) and in terms of the resources managed (+41%). “But even here we need to grow more,” continues Marchello, “seeing as in Italy ethical funds are still a niche market, confined to retail clientele of little weight, even though these customers are more highly motivated and culturally superior than the average.” Yet in Italy, ethical funds arrived in the nineties, and in 1997, what was then the San Paolo Bank created the first fund for the ethical selection of investments, which for several years was one of the largest on the continent. Today, Germany and the United Kingdom lead the European rankings. So what will the future of ethical finance be, especially in our country? It will become more synonymous with CSR, according to observers: “It is an inevitable process,” the Forum for Sustainable Finance assures us, “due to the fact that foreign investors are looking more and more to the elements of sustainability before investing and their choices are based on ethical parameters: this will push companies to become increasingly recognized for their sustainable management. In short, they will be engaged in a virtuous circle.” Signs of optimism are also shared by ECPI researchers: “In the future,” Aldo Bonati concludes, “we imagine that the road will be that of making environmental reports mandatory for companies and it will be compulsory for investors to look at sustainability ratings. Only in this way can financial ethics ever take off our country.” And the future of finance may actually become more sustainable.

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The Global Power Sector, Sustainability and the Bottom Line

by Mindy Lubber

“Today’s electric utilities face an array of challenges and opportunities amid a fast-shifting landscape. New approaches to serving customers by reducing demand for energy, providing cleaner energy and leveraging emerging technologies are taking hold.” The key role played by environmental, social and governance issues according to Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk.

John Lund / Blend Images / Corbis

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The sustainability challenges the planet faces are extraordinary and completely unprecedented. From climate change and water scarcity to labor, population and public health concerns, mounting evidence argues that business leaders and policymakers must act now to provide for the long-term health of the planet – and the global economy. These challenges have enormous implications for electric utilities, the largest source of U.S. and global greenhouse gas emissions. Complying with scientists’ urgent calls to slash emissions to avert the climate crisis requires nothing short of a fundamental rethinking of how we produce, transmit and use electricity. Once extremely stable and predictable, today’s electric utilities face an array of challenges and opportunities amid a fast-shifting landscape. New approaches to serving customers by reducing demand for energy, providing cleaner energy and leveraging emerging technologies are taking hold. At the same time, traditional approaches – building large fossil and nuclear power plants – have become more expensive, complicated and risky. In the developed world, utility CEOs face the unenviable challenge of prudently deploying capital in ways that provide affordable and reliable electricity while simultaneously decarbonizing their generation sources. In the developing world, clean and distributed energy resources must be developed cost-effectively to lift billions out of energy poverty and avoid investment in high-carbon resources.

These are no mean feats, but integrating sustainability imperatives into day-to-day decisionmaking is simply the reality of doing business in the 21st century. Business leaders increasingly realize that best practice business strategy is about leveraging sustainability challenges into increased revenues, profitability, and competitive advantage. Responding to sustainability challenges has direct implications for the bottom line. In the U.S., utilities that pursue overly capital-intensive or higher-carbon approaches will increase the risk of unfavorable cost recovery over the long run, which in turn could lower credit ratings and increase capital costs. This effect is already being felt by some U.S. utilities. In contrast, utilities that ramp up investments in energy efficiency and distributed resources as part of a diversified portfolio of resources will reduce capital investment risks, which should be rewarded by the financial institutions that rate and lend to electric utilities. Given the trillions of dollars of investment required to modernize and de-carbonize our electricity systems, “best practices” such as transparent planning and proactive stakeholder engagement are now essential business strategies for mitigating political risks, facilitating recovery of proposed investments, and attracting capital. The world’s largest global investors are paying attention to how electric utilities are responding to this changing landscape. The Investor Network on Climate Risk (INCR), a Ceres-organized group of more than 90 institutional inves-

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tors managing about $9 trillion in assets, has engaged with dozens of U.S. electric utilities since 2003 to encourage proactive strategies to mitigate climate risks and prepare for carbonreducing regulations. Investors are also actively supporting innovative policy frameworks to jump-start the global clean energy economy. Last November, sixtyeight major investors managing assets of $415 billion successfully defended California’s landmark global warming law, leaving in place an important framework to support clean tech development. And more than 250 investors, hailing from all corners of the globe, publicly urged negotiators at last month’s UN climate change talks in Cancun to adopt policies to spur global private investment in energy efficiency and lowcarbon technologies. Investors are also paying greater attention to environmental, social and governance (ESG) issues in their investment decisions. More than $3 trillion is now invested in funds using ESG analysis, a 13 percent jump from 2007. Further, there is growing evidence that investors using ESG analysis in their decision-making outperform funds that often ignore these issues; a recent RLP Capital analysis of the eight largest tra-

ditional mutual funds and the eight largest ESG funds showed that the ESG funds had significantly higher returns over the last three years. Ceres recently issued two reports mapping out pathways to responsible and sustainable business. The 21st Century Corporation: The Ceres Roadmap for Sustainability sets out 20 expectations in areas of governance, stakeholder engagement, disclosure and performance for companies in all industry sectors. The 21st Century Electric Utility: Positioning for a Low-Carbon Future makes specific recommendations to help utilities navigate the paradigm shift underway in the power sector. Both reports are meant to serve as useful tools for business leaders in a new era of resource constraints, burgeoning population and climate change. Turning a blind eye to the future will not stop change from coming – and utilities, which have a large environmental footprint and a public service mission to reduce the risks and costs of providing reliable and environmentally sustainable electric service, should be out in front today preparing for a carbon-constrained future. Those that respond quickly, decisively and comprehensively will be best positioned for success in the 21st century.

The Global Power Sector, Sustainability and the Bottom Line

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Michael Blann / Stone /Getty images

Photoreport

Are you really sure that a floor can’t be a ceiling?

photo by Micol Talso

An ecological house hosting many kinds of plants and hundreds of varieties of butterflies: big, little, colorful. Real. Looking at reality from all angles: front, upside down, through. Are you really sure that a floor can’t be a ceiling?: this is a quote from Maurits Cornelius Escher that not coincidentally is the title of the work by Liesbeth Bik and Jos Van der Pol, the two artists who won the 2010 edition of Enel Contemporanea. “This model,” the two artists explain, “is a temporary home for butterflies, seen as the actors of the latest idealistic ideas of transformation, change and recycling, characteristics inherent in their life cycle.” They say that the slightest flutter of a butterfly’s wings is able to cause a hurricane on the other side of the world. This is the “butterfly effect,” but it must be reconsidered in terms of sustainability: a little deed done daily can lead to great changes in the system.

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Communicating CSR: a change of mindset

by James Osborne

How do companies use internet to communicate CSR information and involve their stakeholders? The switch in focus between reporting and communicating may seem like a simple progression, but it calls for a dedicated strategy and a radical change in mindset: even though many people will continue to judge the success (or lack thereof) of the phenomenon of CSR reporting only on the basis of the number of reports, companies continue to keep their distance from their public, to the great disappointment of those who had hoped for greater social accountability on the part of corporations. How can this be remedied?

At the start of the year, there was a discussion on the Global Reporting Initiative (GRI) group on LinkedIn, the social media site. Members were speculating – and even offering to bet – on the number of companies registering nonfinancial reports with the GRI. Would the 2010 total exceed the previous year’s count of just over 1,400? Or would 2010 mark a sudden reversal in the trend towards greater GRI reporting? (Unlikely, since a lot of companies usually only get around to registering in January or February of each year.) There are plenty of other organizations measuring the growth in CSR reporting, for example Corporateregister.com, which counted almost 4,000 reports in 2009. Then there are the many classifications, ratings, awards and prizes dedicated to CSR, sustainability and non-financial reporting. The growth trend seems destined to continue: CSR reporting is becoming practically a de facto obligation for large, publicly traded companies, particularly in developed countries. In some places, regulation and statutory requirements are forcing disclosure. At the same time, however, there is a growing dissatisfaction about the effectiveness of the re-

port as a medium for CSR. This is partly because the report is now called upon to do multiple tasks: disclose information, engage and involve stakeholders, be an effective communication instrument both offline and online for expert and non-expert audiences. It is also partly because companies doubt many people are actually reading their reports. During a discussion last year at the Media CSR Forum, a gathering of British media companies focused on corporate responsibility, almost all of the 20 or so companies said they spent between three a six months a year producing their CSR reports. But none had any real confidence that they were read by more than a few people. The crux is that companies lack effective ways to track who reads their reports – and which parts they read. At Lundquist, the consultancy where I am in charge of CSR communications, we focus on how the internet is used to communicate CSR information and engage with stakeholders. We look at the issue from the user’s point of view, starting with the fundamental reality of how people use internet: often with search and now increasingly through social media. Over the past three years we have collected more than

Roderick Chen / First Light / Corbis

500 survey responses examining how CSR experts, professionals and sector specialists use the internet to find CSR information. Our 2010 survey revealed that many users make little distinction between the information presented on a company’s site and in its CSR report: what is important for most is to have reliable data (thanks to third-party assurance) and frequently updated information. Users also seek another element, which corporate websites usually do not offer but for which the web is ideally suited: dialogue and exchange. People interested in sustainability do not just want to hear what the company has to say about its impacts and how they are managed: they crave comment from stakeholders, authoritative third parties and other experts, and are often keen to have their say, too. The switch in focus between reporting and communicating may seem like a simple progression when described in these terms. Indeed, many companies have become well aware of the need to evolve – reporting less and communicating more – and there are some interesting experiments in that direction. But the transition involves a radical change in mindset.

Publicly traded corporations are used to reporting and have tried and tested procedures for producing an account of their activities once a year or once a quarter. Hence, adopting something like the GRI’s G3 guidelines and generating a CSR report is well within their “comfort zone.” But communicating CSR is a different matter altogether. For CSR departments, communications is not necessarily a forte and not usually part of the skill set (stakeholder engagement is a related area of expertise but not synonymous with communications). For corporate communications teams, CSR represents a challenge, too. They are used to having one-onone relationships with very specific audiences, relationships that tend to be quite stable over time: with journalists in the financial and trade press, financial analysts, regulatory bodies, and so on. CSR, by contrast, involves a much broader audience, encompassing specialists and non-specialists, overlapping often with internal communications (for employees) and marketing (when communicating CSR to consumers). Lundquist’s CSR Online Awards aims to measure how well CSR is communicated by analyzing corporate websites in terms of their content,

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Ocean / Corbis

user experience and aspects that involve ongoing engagement (thanks to the input of our annual surveys, we have drawn up 77 criteria with which to assess websites). Based on the evaluations carried out in 2010 (including members of the Dow Jones Sustainability World 80 index and leading companies in Germany, Italy, Switzerland and the U.K.), the picture is mixed. The study found many companies are locked in a once-a-year reporting mentality, failing to keep stakeholders updated in an engaging and dynamic manner. Above all, the results suggest corporations are not keeping pace with the desire of a skeptical audience for genuine dialogue and engagement on the internet – whether by responding to e-mails or understanding the impact of social media. Among the key findings from the flagship “Global Leaders” research, which examined 91 members of the Dow Jones Sustainability Index: – companies publish a fair amount of pertinent CSR information online but fail to use the web’s potential for providing ongoing engagement and interactivity, – websites perform best in providing environmental and social information as well as presenting CSR/sustainability reports, – companies are weakest on dialogue, interactivity and information on governance, ethics and socially responsible investment (SRI), – British companies performed well on average, along with the Dutch and Swiss, but US companies continue to perform below average,

– industries with major environmental impacts continue to perform best, such as utilities and oil & gas companies; financial and telecommunications companies fared worst. It emerged that companies generally treat communication of non-financial information as an annual disclosure exercise: they generate large amounts of information through their annual reporting cycle, providing ample detail about their environmental and social performance. The way this information is communicated on corporate websites reveals how CSR communication is rarely accompanied by a desire to enter into a genuine dialogue with stakeholders and lay the basis for ongoing accountability about wider issues of corporate responsibility, ethics and governance. For this reason, the 2010 edition of our research was entitled Ask no questions: the implication, for those unfamiliar with this phrase, is that an absence of dialogue means companies can set their own agenda. They thus avoid having to tackle the uncomfortable questions stakeholders and the media may be asking. (The phrase “ask no questions, tell no lies” is originally attributed to Irish playwright Oliver Goldsmith, 1728-1774: “If you don’t ask me questions, I can’t give you an untrue answer.”) This situation of one-way communications might explain why many companies find the CSR or sustainability section the least visited part of their website. Our surveys repeatedly highlight the great skepticism people have for

Communicating CSR: a change of mindset

So while many people will continue to judge the success or otherwise of the CSR reporting phenomenon by counting reports, a communications gulf remains between enterprises and their audiences, which is disappointing for those who wish for greater social accountability in corporations.

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what companies tell them. This “allergy” to CSR-speak is only exacerbated by the trend in marketing towards labeling a wide variety of products as “sustainable,” “eco,” “green” or “ethical.” When companies seek to demonstrate their “responsibility,” “sustainability,” “commitment” or “good citizenship,” suspicious outsiders always look for the evidence to back up grand claims, filtering out the self-promotion. According to Marketing Sustainability 2010, a research report by US-based The Hartman Group, 15% more consumers in 2010 were aware of the term “sustainability” compared to three years before (69% in 2010 said they were familiar with “sustainability” vs. 54% in 2007) but only 21% could identify a sustainable product and a mere 12% could name specific companies as “sustainable.” The way to deal with this situation can be boiled down to six core “pillars” for online CSR communications. Companies must ensure that their CSR websites are: – Comprehensive (they must satisfy all the requirements of key users, eliminating their need to go elsewhere for information), – Integrated (they must work as a whole and provide links between different sections and to offsite social media channels), – Open (content must be open to feedback, discussion and debate, including via social media, with companies demonstrating that dialogue is heard and used), – User friendly (visitors must be able to find

what they are looking for with minimum time and clicks through intuitive and jargon-free navigation), – Engaging (websites should employ a range of multimedia tools – including video, animation, images, graphics and interviews – to draw the audience in, tell a dynamic story), – Concrete (users want hard facts, pertinent and credible data and case studies, not self-promotion and marketing messages). Our analysis suggests that CSR communications by large, publicly-traded corporations tends to be above all user friendly, which should not surprise. They are also fairly concrete, thanks no doubt to guidelines like those of the GRI, and fairly complete (especially when it comes to core environmental and social information). But they perform poorest in relation to the three other “pillars.” Websites are generally static and text-based, lacking dynamic and engaging content. They also tend to be stand-alone spaces, cut off from the rest of the corporate communications agenda (financial performance, careers information, commercial sites, etc.). And, above all, they lack openness, featuring the “ask no questions” mindset outlined above. So while many people will continue to judge the success or otherwise of the CSR reporting phenomenon by counting reports, a communications gulf remains between enterprises and their audiences, which is disappointing for those who wish for greater social accountability in corporations.

Future Tech by Simone Arcagni

IT and CSR: Green computing and cloud computing services of responsible companies 092

The “green party” of Information Technology (IT) in the context of CSR (Corporate Social Responsibility) is acting in two strategic areas at the moment: one is the so-called Green Computing and the other is Cloud Computing. The first regards the ethical codes and the sustainability of acquiring computer technologies, and follows the rule of purchasing or producing computers that are more and more sustainable and that maximize energy efficiency, of avoiding toxic substances in the construction of machinery and of being concerned with their re-utilization, recycling and disposal. On the Wikipedia page about Green Computing, directions to follow are summed up by four basic points: “green” use, “green” disposal, “green” design and “green” manufacturing. Some international regulations already exist, such as the European Union’s RoHS (Restriction of Hazardous Substances Directive) on the destruction of these substances; and the EPEAT (Electronic Product Environmental Assessment Tool), an environmental certification for computer products. Above all, there is the Energy Star standard, a voluntary system for defining

the energy efficiency of office equipment, which was implemented in the USA in 1992 by the EPA (Environmental Protection Agency), and in which the European Community has also participated. Its main objective is to eliminate toxic substances in the making of these components, in order to avoid problems in their disposal, as well as to reduce the packaging, lower the machinery’s consumption of electricity and to improve battery performance. Instead, Cloud Computing can reduce energy waste and the storage of equipment by resolving hardware and software needs from a distance. Furthermore, Cloud Computing and virtualization allow one to relocate the virtual, permitting work to be done more and more from a distance and through conferences, without having to use air travel with its serious consequences in terms of pollution. With “telework,” even a city like Los Angeles – famous for its smog – has managed to decrease its air pollution in part by avoiding the movement of employees and professionals. A few months ago, “Italian Cloud” was launched in Italy, offering a series of on demand and pay per use services

to businesses and the Public Administration, such as ”Infrastructure as a Service” (Iaas), “Platform as a Service” (Paas) and “Software as a Service” (SaaS), as well as virtual forms such as “Desktop” and various management services. The data on Cloud Computing in Italy indicates a sharp increase of investments and an expanding market, despite the crisis. A company that wants to refer to a protocol of “social responsibility” cannot disregard important factors such as the sustainable system of their computer equipment. It is a simple and effective solution, or so it seems, given that the Greenpeace report “Make It Green: Cloud Computing and its Contribution to Climate Change” focuses instead on consumption, which will be greatly increased by ever more powerful data centers. For Greenpeace, the electricity consumed by Cloud Computing may go from the 632 billion kilowatt hours in 2007 to 1963 billion in 2020. The solution could be to run these structures with renewable energy and to work on decreasing energy loss. In this sense, Google is a good example, in that it is committed to fueling its plants with recycled water and also

Future Tech

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to utilizing voltage modulators to limit the dispersion of energy. Furthermore, Google â&#x20AC;&#x201C; together with IBM, Oracle, Microsoft, Dell, AMD and others â&#x20AC;&#x201C; is part of the Green Grid, an international consortium of IT companies seeking to improve the energy efficiency of data centers. The new technologies are rapidly redesigning the world of communication, and culture in general. They are redefining the characteristics of our society and therefore, first of all, they have a duty to care for the very survival of society. That is why IT looks increasingly to a green economy and, in general, to a sustainable model: defining the future also means protecting it.

Science at the toy store by Davide Coero Borga

Barbie manager and Barbie stakeholder

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“Playing Responsibly.” This is how the world’s largest toy producer, Mattel, opens its page on Corporate Social Responsibility. Among the first companies in the world to embark on the CSR mission, after the creation of the Social Accountability International (SAI), the international organization was founded in 1997 to ensure companies have working conditions that respect social accountability (SA 8000). With its four mantras – fair play (strategies that respect the company’s values), play together (internal transparency and collaboration for safe toys), play to grow (attention to sustainability and eco-compatibility) and play with passion (against the exploitation of child labor) – Mattel is acknowledged among the 100 Best Corporate Citizens: one of the most ethical companies in the world and among the 100 best companies to work for. Playing responsibly is also the title of the third Global Citizenship report, presented a little more than a year ago by Mattel. A completely independent initiative of innovative social responsibility that, if necessary, confirms the foresight of a group that has been distributing toys to children all over the world for more than sixty years. Founded in 1945 by Elliot Handler and Harold Matson, it owes its entire for-

tune to Elliot’s wife, Ruth Handler, who later also served as president. It was she who created the most famous doll in the history of toys: Barbie. Observing her daughter at play, Ruth realized that children loved to give dolls adult roles. So she suggested a line of adult-looking dolls to her husband, which would go to fill the void in a market monopolized by dolls representing infants. The first Barbie was made with the help of the engineer Jack Ryan, and was named after her own daughter, Barbara. The woman doll made her appearance in stores on March 9, 1959. 350,000 Barbies were sold in the first year alone. Since that time, it is estimated that more than one billion Barbies have been sold in more than 150 nations. Mattel has said that today more than three Barbies are sold every second. Fascinating, sportive, intelligent, bourgeois, never married and always desirable, Barbie has managed to interpret the history of women’s emancipation. Her character has been exploited to promote equality between the sexes with the intention of demonstrating to the women of the future that they can undertake any career. Barbie has been an Olympic athlete, a pediatrician, surgeon, astronaut, presidential candidate, a UNICEF ambassador, rock star, firefighter, ballerina, film

Science at the toy store

director, teer, military and naval officer, pilot and mother. In 1997, her hips were widened so as to be distanced from accusations of promoting a female image that touched on anorexia. But that is just an example. More generally, the case of Barbie and Mattel is a great example of how any company, even if it simply produces toys, can assume a role of responsibility in a company that prospers, produces and sells. In August 2007, Mattel announced the withdrawal of 21,334,000 items that were potentially dangerous due to excessive quantities of lead in the paint and small magnets which, if swallowed, could be risky. The withdrawal was widely broadcast by television, newspapers and websites. This design error led Chief Executive Robert Eckert to expose it in person. “I can’t change the past, but I can change the way we’ll work in the future.” A sign of the times in which the difference between social and criminal liability is very subtle.

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