Sustainability and business - how many planets are enough?

For boards, climate change needs to be made meaningful not in terms of “did we do a good thing”, but in terms of “what are the dangers and opportunities this company faces in the years ahead?”.

I watched a TV programme this week on how to create a new planet. It was light scientific stuff but it reminded me of the WWF statement that “If everyone in the world consumed natural resources and generated carbon dioxide at the rate we do in the UK, we’d need three planets – not just one − to support us.” Our populations and consumption are growing at exponential rates supported (or not) by a finite resource. This is not sustainable.

Natural capital is the value of the earth’s resources and the Natural Capital Coalition, of which the Institute of Chartered Accountants in England and Wales is a founding member, commissioned a study of 26 leading early-adopter businesses on “natural capital management”. Companies included the likes of Dow, PepsiCo, Nestle and Rio Tinto.
Asked what their resource concerns were for the next three to five years (not a long period) they put the top four as fresh water, climate change regulation, food and fibre, and were clear that delayed action on these was a substantial business risk. Asked what their challenges were likely to be, they identified a lack of harmonised methods to assess impact, a lack of government regulation and consumer demand.
So what does this all mean? Well, I think for those of us advising boards, it means that we need to start thinking about environmental issues not as things we’d like to have but as sources of risk we need to address - and with some urgency.
A great example is climate change. One very quick way to make a big dent in this one would be to end the $1.4trillion spent in energy subsidies. This is the figure the IMF calculates as the cost to society and the environment (so-called "externalities") in the form of air pollution and climate damage caused by fossil fuels, and argues that this figure should be levied in taxes. This is based on a modest cost of carbon of $25 per tonne, but even at this modest estimate it is still 2.5 per cent of global GDP. If the IMF is saying this - the issue is now out of the fringes and into the mainstream. This could well mean additional taxes and lots of them.

October saw the introduction of regulations requiring UK companies to report their greenhouse gas emissions (GHG). This represents about 1,100 companies. The regulations require these companies to disclose annually, in either their Directors’ or Strategic Reports, the greenhouse gas emissions for which they are responsible, the methodology they used to calculate the data, at least one intensity ratio and the information disclosed in the previous year. The regulations came into force on 1 October 2013 for financial years ending on or after 30 September 2013.
But what is the point of this disclosure requirement? From Defra’s perspective it is to help the government reach its climate change objectives: based on the belief that public disclosure will drive behaviour change and efficiencies, thereby lowering the country’s emissions. As the Directors’ and Strategic Reports are aimed primarily at investors there is also clearly the hope that they will use this information in their investment decisions.

This of course depends on investors, and businesses, actually wanting to use this information. Investors have seemingly been reluctant to use such information to date and, if companies simply produce the footprint and intensity ratio, then one wonders how it will be meaningful or useful information for investors. Indeed those businesses that regard these regulations as yet another costly burden will presumably wonder at their value.

For GHG information to be valuable it needs to be linked to an assessment of physical and regulatory risk as well as to strategy. The Climate Disclosure Standards Board (whose Technical Working Group ICAEW is a member of along with other accounting bodies around the world and the leading accountancy firms) has developed guidance along these lines and I urge you to read it.

For boards, climate change needs to be made meaningful not in terms of “did we do a good thing” or a public relations home-run, but in terms of “what are the dangers and opportunities this company faces in the years ahead and are we ready to steer this organisation through them?”.
As board members and advisors we cannot continue to ignore this thing called sustainability.

A volunteer lights a candle during Earth Hour in Berlin. Photograph: Getty Images.
Photo: Getty
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Cambridge Analytica and the digital war in Africa

Across the continent, UK expertise is being deployed online to sway elections and target dissidents.

Cambridge Analytica, the British political consultancy caught up in a huge scandal over its use of Facebook data, has boasted that they ran the successful campaigns of President Uhuru Kenyatta in the 2013 and 2017 Kenyan elections. In a secretly filmed video, Mark Turnbull, a managing director for Cambridge Analytica and sister company SCL Elections, told a Channel 4 News’ undercover investigative reporting team that his firm secretly stage-managed Kenyatta’s hotly contested campaigns.

“We have rebranded the entire party twice, written the manifesto, done research, analysis, messaging. I think we wrote all the speeches and we staged the whole thing – so just about every element of this candidate,” Turnbull said of his firm’s work for Kenyatta’s party.

Cambridge Analytica boasts of manipulating voters’ deepest fears and worries. Last year’s Kenyan election was dogged by vicious online propaganda targeting opposition leader Raila Odinga, with images and films playing on people’s concerns about everything from terrorism to spiralling disease. No-one knows who produced the material. Cambridge Analytica denies involvement with these toxic videos – a claim that is hard to square with the company’s boast that they “staged the whole thing.” 

In any event, Kenyatta came to power in 2013 and won a second and final term last August, defeating Odinga by 1.4 million votes.

The work of this British company is only the tip of the iceberg. Another company, the public relations firm, Bell Pottinger, has apologised for stirring up racial hostility in South Africa on behalf of former President Jacob Zuma’s alleged financiers – the Gupta family. Bell Pottinger has since gone out of business.

Some electoral manipulation has been home grown. During the 2016 South African municipal elections the African National Congress established its own media manipulations operation.

Called the “war room” it was the ANC’s own “black ops” centre. The operation ranged from producing fake posters, apparently on behalf of opposition parties, to establishing 200 fake social media “influencers”. The team launched a news site, The New South African, which claimed to be a “platform for new voices offering a different perspective of South Africa”. The propaganda branded opposition parties as vehicles for the rich and not caring for the poor.

While the ANC denied any involvement, the matter became public when the public relations consultant hired by the party went to court for the non-payment of her bill. Among the court papers was an agreement between the claimant and the ANC general manager, Ignatius Jacobs. According to the email, the war room “will require input from the GM [ANC general manager Jacobs] and Cde Nkadimeng [an ANC linked businessman] on a daily basis. The ANC must appoint a political champion who has access to approval, as this is one of the key objectives of the war room.”

Such home-grown digital dirty wars appear to be the exception, rather than the rule, in the rest of Africa. Most activities are run by foreign firms.

Ethiopia, which is now in a political ferment, has turned to an Israeli software company to attack opponents of the government. A Canadian research group, Citizens Lab, reported that Ethiopian dissidents in the US, UK, and other countries were targeted with emails containing sophisticated commercial spyware posing as Adobe Flash updates and PDF plugins.

Citizens Lab says it identified the spyware as a product known as “PC Surveillance System (PSS)”. This is a described as a “commercial spyware product offered by Cyberbit —  an Israel-based cyber security company— and marketed to intelligence and law enforcement agencies.”

This is not the first time Ethiopia has been accused of turning to foreign companies for its cyber-operations. According to Human Rights Watch, this is at least the third spyware vendor that Ethiopia has used to target dissidents, journalists and activists since 2013.

Much of the early surveillance work was reportedly carried out by the Chinese telecom giant, ZTE. More recently it has turned for more advanced surveillance technology from British, German and Italian companies. “Ethiopia appears to have acquired and used United Kingdom and Germany-based Gamma International’s FinFisher and Italy-based Hacking Team’s Remote Control System,” wrote Human Rights Watch in 2014.

Britain’s international development ministry – DFID – boasts that it not only supports good governance but provides funding to back it up. In 2017 the good governance programme had £20 million at its disposal, with an aim is to “help countries as they carry out political and economic reforms.” Perhaps the government should direct some of this funding to investigate just what British companies are up to in Africa, and the wider developing world.

Martin Plaut is a fellow at the Institute of Commonwealth Studies, University of London. He is the author of Understanding Eritrea and, with Paul Holden, the author of Who Rules South Africa?