Ray Anderson Lecture 2014: Tex Gunning

FROM A CLEAR CONSCIENCE TO A NEW WORLD ORDER Tex Gunning

Ray Anderson Lecture, 10 October 2014

Good afternoon, ladies and gentlemen.

It probably did not escape your attention: today is the day of sustainability. A day to consider, even more consciously than normal, what it means to live a sustainable and clean life and to practise corporate sustainability.

The fact that that is what we’re doing here today at Interface has of course everything to do with Ray Anderson, an entrepreneur who concluded that things had to be done differently. He developed a vision for his business, but mainly also for our children and grandchildren, a vision about what corporate sustainability could entail. He then linked this to his Mission Zero, a big ambition to make that vision tangible.

With the Day of Sustainability, we hope to truly speed up sustainability initiatives in order to achieve a shift towards a more sustainable society.

Because this is, of course, not about a day of sustainability, or even a year of sustainability. What we want to achieve is a millennium of sustainability.

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Fifteen years ago, the Social Economic Council, led by Herman Wijffels, provided a framework for the ideology of the innovators in the field of CSR with its ‘The gain of values’ memorandum, opening up their vision to the rest of the business community. And successfully; the visions of the front runners of those days have now reached the early majority and, to a growing extent, the late majority.

In the meantime though, the need for CSR is confirmed time and again. We also realise that formulating good intentions is one thing, but taking action is a different matter altogether.

Perhaps today is a good time to take stock. Where do we stand with our CSR policy? And will it help us in the transition to a sustainable society?

We achieved a lot in those fifteen years. The OESO drew up guidelines for international CSR, the number of businesses that commit themselves to the Global Compact programme of the United Nations is growing each year and there are various quality marks in the fields of sustainability and CSR. But if I take a critical look at the thirty-three criteria of the CSR performance ladder for instance, I still see too much non-commitment and no vision for a better world.

Of course it is important that we report about our use of raw materials and our emissions. Of course we have to eradicate child labour. Of course we have to fight for human rights, democracy and freedom of speech. They form the basis for a decent existence. And as such, I think they are a basic form of business ethics.

But it’s not enough. Where is the true transformative ambition?

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When I look at the guidelines of the OESO or those of the United Nations, I wonder what kind of society they will bring us.

What happens when we’ve ticked off all thirty-three criteria of the CSR performance ladder? How will this world have changed? Will it provide a framework for society of the twenty-first century? Or will we have a cleaner, more conscientious version of our industrial system from the twenty-first century?

That is the question we have to ask ourselves if we truly want to live a socially responsible life and want to practise corporate sustainability:

‘Is our current CSR policy the prologue that heralds a new world order, or is it the epilogue that restores order of the old world, enabling us to conclude an era with a clean conscience?’

I’m afraid it’s the latter. I’m afraid we view the outlines of the new world too much on the basis of old ideas. We look at challenges of the third industrial revolution through the glasses and with the knowledge of the second industrial revolution.

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The economic system of the first and second industrial revolutions is a paradigm of endless growth, driven by innovation and increasing labour productivity, with profit as indicator for success and with take, make & waste as mode of operation. An economic system that assumes that if everyone pursues his individual economic interests, everyone will be better off thanks to the invisible hand.

We know better now. Because it’s also a system that exhausts our planet by extracting riches from the earth in the form of raw materials and fossil fuels, which we systematically undervalue.

An economic system where pollution and other negative spin-off are brushed aside as external effect, collateral damage that no one will deal with.

A system of over-the-top individualism, where short-term orientation is rewarded, which regards people primarily as a production factor and which doesn’t answer questions about the distribution of wealth.

A system with a biased focus on economic profits for individual lenders. A system under which a couple of billion people miss out.

The paradigm of the winner takes it all has led to an enormous imbalance. Climate change, famine, wars, terror, mass migration, epidemics; we are witnessing an escalation of problems we have helped to create ourselves.

If we want to remain in business and form part of a new world, we have to be prepared to question everything. To let go of values and paradigms that represented the truth for decades. We have to raise our level of ideas. As Albert Einstein once said: ‘No problem can be solved from the same level of consciousness that created it.’

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If we hang on to those old ideas, we also remain trapped in a Bermuda triangle of people, planet and profit; an area of tension where we have to make compromises.

Because how on earth can you choose between people and profit? Or between planet and profit?

What is profit anyway?

If we practise CSR from our old mindset, we will remain stuck in good intentions and in limiting the negative external effects and we will not achieve our goal, namely increasing the positive external effects.

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Profit: Profit maximization > Value creation

First, we have to redefine the value we attach to the word ‘profit’ and place it in the wider context of value creation. Profit was the accounting difference between input costs and output revenue. For finance people, it was an indication of a business that is doing well. However, profit has been reduced to a goal in itself, it has become an indication for enrichment instead of the result of useful and corporate responsibility. Short-term profit as a sacred cow and as indication of value creation leads to wrong and sometimes even perverted results.

We have to find a definition for ‘profit’ that is recognisable to all of us. It is profit when we can make solar energy available to everyone on this planet, for instance, or when we can simply convert seawater into drinking water. It is profit when we can develop markets that, in the course of time, nine billion people will take part in and it is profit when we can use those nine billion talents to create a better world. That is recognisable and valued profit!

People: Humane working conditions > Human values

From that notion, we have to see people not just as ‘our’ employees, but we have to see all fellow humans in this world as our stakeholders.

This creates enormous opportunities for growth and innovation and a much more sustainable perspective. It would be a complete illusion to think that if we only look after our own people, we create a sustainable society.

Of course, it starts close to home. We, entrepreneurs, have to be more conscious of the fact that our colleagues are human beings first, with intellectual and physical needs, but particularly also with social and spiritual needs. If we can provide in those needs, our employees will be more creative, more innovative, they will be working together better, be more productive, more loyal and they will respond to changes better. So it also pays off. As they say at Friesland Campina: ‘happy cows give more milk!’

And of course we can still take big steps with our employees, steps that go far beyond discussing co-decision powers, labour law, equal opportunities or the obligatory training courses and personal development interviews.

Most leaders still pay too much attention to the sustainability of their production processes instead of that of their employees.

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However, the real People challenge in the transition to a sustainable society lies in a model that provides for the needs of nine billion people. Compare it to your own organisation. You can’t let a business grow sustainably; you can only allow people to develop, who in their turn realise sustainable growth. And in exactly the same way, the world can undergo sustainable growth only when you enable the people who live and work in this world to grow.

We all want to live a valuable life. A life in which we provide for more than just our basic needs. A meaningful life. We all want to be able to live in community with others, a community in which we all care for each other, a community with integrity, respect and opportunities for self-fulfilment. Where ‘People’ are aware of the fact that without coexistence there will, ultimately, be no existence at all.

We have to invest in awakening and awareness, and create world citizens who can understand what the danger is of a world that is unjust and imbalanced.

We also have to invest in the notion that a world of nine billion people with nine billion creative minds is an unprecedented potential for essential development. A market place of nine billion entrepreneurs, connected by a shared interest. We have to invest in the development of socially responsible fellow human beings, who together can structure a sustainable society of the twenty-first century and beyond.

Planet: Damage control > Model nature

During the past years, the ‘Planet’ chapter has been frequently on the agenda of the CSR debate.

And perhaps that is where the Netherlands made the biggest progress. But it is vital that the good intentions actually come to fruition. It is high time that we start structuring this stewardship and this circular economy and that we find solutions that will benefit the entire world.

If a large group of entrepreneurs remain stuck in measures such as a paperless office and planting trees to compensate for our hours on an airplane, we won’t make it. We have to learn to realise what it really means to coexist on and with this planet.

That is much more than an economic issue; it is an all-encompassing cultural issue. We have to be careful that we don’t approach the issue on the basis of our old economic market ideas. We have to ensure that we transcend from our animal instinct of survival of the fittest into a survival of the species.

We are so busy fighting for a bigger piece of the cake that we forget the fact that there is a lot more to gain if together we make that cake bigger. Sharing technological knowledge, for instance by releasing patents such as car manufacturer Tesla did recently, is a good example of that. We have to collectively free up more capital, which will create collective value, i.e. collaboration, because the challenge is highly complex.

‘The winner takes it all’ is an illusion. There will be no winners if not everybody wins!!!

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I’m convinced that we need to achieve a society in which we are aware of our mutual dependence and our dependence on the planet we live on. A world in which we live and work together, a world in which we invest in technological developments and other shared goals, together.

A society where the line between East and West and between manufacturer and consumer, between colleague and rival, between collective value creation and individual value creation is difficult to draw.

That may all sound a bit grand and compelling. You may even call me a dreamer. But I see no other way. If we end up with nine or perhaps even twelve billion people on this planet, who all want to realise their American dream and who all want a standard of living like we have here in the West, you’re talking about an economy that is much, much bigger than our existing global economy.

Much, much bigger than this planet can bear.

We can all do the sums. Something will have to fundamentally change if we want to be able to pass this planet to our children and grandchildren in a sustainable manner. We have to start structuring that sustainable society. And we can.

I’m convinced that we can have a world where every human being on earth has the opportunity to develop his full potential.

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How? That’s a voyage of discovery.

We have to be brave enough to leave our safe harbour. That’s exciting.

But as Thomas of Aquino once said: ‘If the highest aim of a captain were to preserve his ship, he would keep it in port forever.’

We have to find new ways of living together, consuming, doing business and above all, we have to find a new way of investing for the collective interest. A search for new technology, but mainly for new investment models. A redefinition of the economic system, where we let go of our old ideas and where the focus is on collective value creation.

In that respect, we are now in a transitional period. Like two images flow together in a film, we are in a process where two eras are flowing into each other. This doesn’t happen from one day to the next.

The Renaissance didn’t start at a quarter past two in the afternoon of the third of March fourteen fiftythree. That rebirth required a gestation period of many decades before it started to flourish.

I doubt we have that much time this time round. There is a lot of time pressure and the transition to a sustainable society is progressing too slowly in my opinion.

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During that transitional period, technological development will have to play a big role. And if I’m to believe some visionaries, technology may even open up its doors to a world of abundance.

In his book ‘Abundance’, Peter Diamandis draws a positive picture with a simple line of reasoning: there is enough water on this planet, but we have to develop affordable technologies to make that water clean and drinkable.

There is enough energy for this planet, namely from the sun, but we have to find efficient ways of collecting that energy.

There is enough brainpower and innovative potential on this planet, all we have to do is link them up.

So abundance.

An important central theme in his vision is that a considerable number of technologies in the fields of ICT, nanotechnology, the internet, solar energy, and a whole range of other disciplines are developing at an exponential pace and are about to facilitate breakthroughs we can hardly consider possible these days.

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Jeremy Rifkin, an economist, also pictures an abundant future thanks to a third industrial revolution with an Internet of Things, where physical and virtual networks are linked up by means of grids and sensors. Thanks to the Moore Act, price/performance ratios are now developing exponentially and the marginal costs of certain products and services tend to point to zero.

This will create a world of abundance, with energy that is virtually free of charge, a prosumer who makes a lot of his own products by means of a 3D printer, with education that can be followed online for next to nothing and developments in the field of artificial intelligence that will drastically change our lives.

So potentially, we can create a world where nine billion people will have clean drinking water, food, affordable homes, virtually free, customised education, excellent health care and an abundance of clean energy, from endless solar supplies.

Technology

Technological development is without doubt one of the main keys that could open up this sustainable society. However, what we can’t do is sit back with a sigh of relief, thinking this will also create a new world order.

New technology alone will not be enough. After all, if we use that technology mainly to clean up our old economy, we are predominantly fighting the symptoms. And if this technology isn’t available to everyone on this planet soon enough, the inequality of the old world will not disappear.

A new mindset So it starts with letting go of old ideas.

The notion of coexistence forms the main key to the sustainable society. It starts with the intention and notion that we can only be happy and can only survive if we develop solutions that benefit not just a number of individuals, but the entire world.

When it benefits all nine billion fellow human beings who also hold a share in this planet!

We shouldn’t be afraid of aiming for a global level of prosperity like the one we pursue in the West, and we have to start working from a mindset of ‘we care, therefore we share’.

By prosperity I don’t mean an infinite material wealth, but self-fulfilment for every individual.

And by ‘we care, therefore we share’ I don’t necessarily mean that the haves have to give a bit more to the have-nots.

It is about finding solutions that benefit everyone.

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Financing And that brings me to the third key: the financial world.

When I look at our banking industry, I see a system that lacks all trust, as it fails to learn from the financial crises and it refuses to accept its social role and responsibility.

The banking industry and the availability of our collective assets should serve the real economy, but the banking industry mainly focuses on financial products and pushes the risk back to the society that provides it with capital.

Furthermore, the terror of the short-term horizon of institutional investors harms the creation of longterm value. When it concerns money in the financial world, short-term pleasure always beats longterm happiness.

Our financial ideas are perversely dominated by the Net Cash Value method, which factors every future value into today, and as such it automatically decreases. You can’t factor in anything that is of true value in the future.

Our current system, where every decision is dominated by economic and short-term interests, acts like a brake on the necessary changes.

Common approach

And those changes are considerable. We are on the eve of a challenge with a scope and complexity we, as humanity, have not seen before, let alone resolved. The transition to a new, sustainable society can start only if we are prepared to phase out our old technology and invest in new, circular, renewable technologies. That is quite an exercise, and it is not really getting off the ground in my opinion. And that isn’t just the fault of our financers.

The business community often seems to suffer from what psychologists refer to as the bystander effect. If someone is about to drown in front of a group of people and no one in that group takes the initiative, that person in the water may actually not survive. That is what’s happening in this transition.

A pioneer can realise a first mover head start, but he can also slip up in this complex vacuum between old and new. Unfortunately, the short term also triumphs in the business community.

We can only open the door to a sustainable society if we can find a new balance between pursuing our individual interests and serving the collective interest. That is why I think a fourth key is held by the government. Together with the business community and knowledge institutions, they should prepare a collective vision with a collective investment programme for future technologies.

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I can hear you think: ‘yes, but what about the Energy Agreement?’ In my opinion, that agreement doesn’t provide for any vision about what we, the Netherlands, could and should achieve and it lacks any ambition.

Whereas Germany are heading for thirty percent, we are still arguing about whether or not we can achieve fourteen percent of renewable energy by twenty-twenty…

I don’t consider that an ambition. It seems we all just keep doing what we’re doing, but with energy that is a bit cleaner.

What we need is an ambitious, collective long-term vision with a strategy that inspires and engages, and which initiates changes that will put the Netherlands on the global technology map. Changes that at the same time contribute to a new, sustainable society for everyone.

In my opinion, those are the four keys that can open up the door to a sustainable society.

Our CSR policy can help us, but we’ll have to be prepared to raise the bar quite a bit.

Our CSR policy is ready for upgrading.

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C First, we should redefine the S in CSR. It is not just about the footprint we leave behind, it is not about the licence to operate; it is about how we, as sustainable pioneers, help to shape our society.

CSR pioneers relate to society differently, and they move from doing no harm to doing good.

S Today, the ‘R’ in CSR mainly seems to relate to accountability.

It’s time for us not just to account to society but to also take responsibility for the development of that society.

It’s time we transcend from local stakeholders to global stakeholders and accept responsibility for the development of a world we share with each other.

I can’t see us make that shift under our existing CSR agenda.

R If we really want CSR to help us make the transition to a new, sustainable society, we will also have to start approaching the C in CSR differently.

We have to move from reactive anticipating unwanted changes to proactively initiating the changes we want to see in this world. We have to be brave enough to formulate an objective with the calibre of Ray Anderson’s Mission Zero!

Take human rights for instance. We talk about a business practice that shows respect for human rights.

That constitutes a completely different ambition than creating equal rights for all people.

Equal rights to education, health care, prosperity, water, energy, safety, etc.

We don’t show any respect to our fellow human beings as long as we accept the fact that they live in absolute poverty, are unable to vote democratically or drown in the Mediterranean!

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A sustainable society characterised by prosperity and well-being for all is within reach if we are prepared to let go of old habits. One question we should therefore be asking ourselves on the ‘Day of Sustainability’ is: how can our CSR policy help us in that respect?

If we really place sustainability in a long-term perspective, there is no distinction between our individual interests and the collective interest. Collective value creation, aimed at the future, should be the starting point. Collective financing instruments, a long-term vision and new forms of collaboration are vital preconditions that will enable us to capitalise on the opportunities offered by technological developments for everyone on this planet.

Let’s ask ourselves the question whether we use the existing CSR ambitions to clean up our old system, or if we are really building a new world order.

Whether we are operating from a new pattern of thought that rises above the field of tension between people, planet and profit.

The way in which we structure the concept of CSR should evolve along with the developments around us. They should evolve along with the challenge that becomes more complex and urgent as each day passes, but also along with the opportunities offered by technological developments to accept that challenge.

We can wait for the OESO or the government to come up with new guidelines. Or we can wait for stakeholders, here or elsewhere in the world, to force us to think about our ambitions. I’m of the opinion however, that we, as socially responsible entrepreneurs, should take the lead.

As far as I’m concerned, it’s about time we redefine the term CSR. It’s time to lift it to the next level.

With stricter criteria and more ambitious targets.

We have to realise that there is no difference between our own interests and the collective interests.

We owe it to ourselves, to each other and to our mutual children and grandchildren.

To all children in this world!

Thank you.

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About the Ray Anderson lecture In 2011 Interface and the Dutch CSR Academy introduced the Ray Anderson lecture in memory of Ray Anderson, CSR pioneer of the first hour and founder of Interface. The goal: to inspire entrepreneurs.

It is an annual event in which inspiring pioneers from industry give their views on CSR. In 2011, Jan Peter Balkenende (E & Y) and Leen Zevenbergen (Qurius) in 2012, Professor Jan Jonker and Shawn Harris (Nature’s Pride), and in 2013, Gunter Pauli and Martijn Lampert (Motivaction).

Ray Anderson Ray Anderson was the founder of Interface. In 1994, he was so inspired by Paul Hawken’s book ‘The Ecology of Commerce‘ that he decided to reform Interface form a petroleum-intensive company to a sustainable business. He launched ‘Mission Zero’: a mission to make the company 100 % sustainable by 2020 and to start making a recovering contribution to the environment and society. He compared this challenge to climbing Mount Everest (‘Mount Sustainability’) and formulated seven ambitious goals on the way to the top, which are still used by Interface.

Tex Gunning During his career (director of Unilever, CEO of Vedior, Director at Akzo Nobel Decorative Paints and now as CEO of TNT Express) Gunning developed a clear vision on the transition to a sustainable society and the kind of leadership that is needed for this.

The lecture entitled ‘From a clean conscience to a new world order’ he spoke out on the ‘Day of Sustainability’, October 10, 2014, to the members of MVO Nederland (the Dutch CSR Organisation).

2014 Tex Gunning With thanks to Roel Esseboom en Henk van Dijke