How Relevant is Sustainability to Business Executives?

There is no shortage of studies on the growing prevalence of sustainability in business. Below are some of the results from the more powerful ones:

Results from an Accenture study conducted for the UN Global Compact on the importance of sustainability found that 96 percent of CEOs surveyed thought that sustainability issues should be fully integrated into the strategy and operations of a company – up from 72 percent in 2007. Even CFOs, those typically more resistant to sustainability due to pressure of financial market judgments, have shown signs of acceptance. A study of 175 CFOs and other senior executives conducted in 2008 by CFO Research Services found that more than half believed that their companies’ sustainability programs will very likely or somewhat likely increase revenue, cut operating costs, improve employee retention and improve investor returns and shareholder value. They tended to cite reduced risk (78 percent), enhanced brand and reputation (77 percent), customer retention (72 percent) and improved employee health and productivity (68 percent) as the more popular opportunities.

In terms of around sustainability, it appears that regulatory compliance is most important for 61 percent of respondents while improving energy efficiency, reducing greenhouse gas emissions (47 percent) and reducing the environmental impact of operations (45 percent) – those priorities associated with being less unsustainable – came in second.

Some of the greatest challenges identified in these studies included the following:

- The inability to measure the effects of sustainability on shareholder value (46 percent of respondents)
- Inability to document the effects on finical performance (37 percent)
- Lack of standard decision-making frameworks that consider environmental factors

In a study conducted by the Network for Business and Sustainability that asked Canadian managers to define the sustainability challenges in 2012, the following were identified:

- How to redefine the traditional business case to include sustainability
- How can sustainability drive innovation within companies?
- How can companies mobilize citizens to take more sustainable actions?
- How to build sustainability into corporate budgeting and planning
- How to continually green the firm in tough economic times
- How can businesses attract and retain employees through sustainability?
- What are the best (and worst) practices in sustainability reporting?
- How can businesses effectively engage with NGOs on social and environmental issues?

Interestingly, one of the least significant challenges was organizational resistance to sustainability.

One observation from these studies is that while business is increasingly recognize that sustainability is here to stay, their response to the trend is highly incremental. As mentioned, the objective of executives appears to be to understand how to fit society and the environment into the business model rather than the other way around. Put another way, the business ideology is the starting point rather than the laws of nature or the fundamental values of society (e.g. democracy, freedom, equity, inclusion, justice), with which business is forced to align. This is the sort of radical leadership that does not come out of these studies…not yet anyways.

The Lengths We Go to Promote Our Oil

I've been following Kathryn Marshall's postings on Huffington Post for some time. Marshall is the "spokesperson" for EthicalOil.org, an organization that promotes Canada’s tar sands as the ethical alternative when compared with the socio-political issues evident in traditional oil producing countries like Saudi Arabia and Venezuela. For months Marshall has been blasting political decisions against the Keystone Pipeline and of course those pesky environmentalists, promoting vigorously the claim that Alberta's oil is so much more ethical than oil sourced from virtuously anywhere else in the world. While I’ve been acknowledging these columns as right-wing conservative opinion deserving their own share of airtime, this last column crossed the line in its appalling hypocrisy. I think readers need to be aware that there is a very fine line these days between free speech in the media and clever rhetoric drawing on irrelevant argumentation meant to disguise the reality of a given situation.

Her latest post entitled "Obama Flushes Canadian Interests Down the Pipeline" is a beauty. In it she quotes Obama in a statement he made several years ago regarding his promise to wean the American economy off of oil from the entire Middle East and Venezuela. All of sudden Marshall has become an expert in political commentary and truly interested in whether a politician keeps his/her promises. How sincere! She also sounds so sincere when she explains that the US is going to lose its energy security and will be increasingly dependent on despotic regimes. Again, how nice of her.

What shocks me the most about Marshall and many others who push their agenda by latching on to completely irrelevant arguments is that she is not aware of how hypocritical her writing sounds. For instance, she writes tirelessly about the injustice to the American people of Obama’s decision to cancel Keystone but doesn’t at all consider how the decision to approve the pipeline is in fact a similar if not greater injustice when considering the environmental and economic implications of its approval. What many people don’t realize is that the tar sands really only postpones the much needed development in renewable energy that can represent a huge source of economic development in the US. So the question is not where the US should get its oil but where it should get its energy.

The hypocrisy continues when she appears to claim that the US government is committing a crime in their decision to maintain reliance on oil from terrorist-harboring nations. Now she’s qualified to comment on defense. How diversified in her skill set. Clearly she really cares for these Americans. Pardon my sarcasm, but humorously she sees no connection between the need to protect American citizens from foreign oil and the need to protect American citizens from its reliance on oil more generally.

The greatest irony in her writing is that she, among others, criticize Obama for making this decision for political gain. In particular, she criticizes Obama for masking his true ambition, which is to gain voters by claiming that the pipeline is not in the country’s national interests. Hmmm, that sounds familiar. How is this any different from Marshall, who masks her true ambition of finding markets for ethical oil by appealing to the American and Canadian public on issues that have nothing to do with the tar sands.

She also appeals to the notion that large OPEC oil suppliers are crippling Canada’s oil sands and that environmental extremists are usurping Alberta’s plans to bring their oil to market. Again, this sounds so familiar. Marshall is complaining that large social actors are influencing political decisions and the view of the public on these sorts of issues yet ignores the slew of political lobbyists and right wing extremists using the same strategies to accomplish the opposite. The Canadian government, for instance, has actively lobbied in state, municipal, and federal European capitals to promote policies that are tar sands friendly. It’s as if the tar sand companies are innocently operating a lemonade stand hoping that customers will pass by, yet the unfair police office is diverting traffic from their street. Come on now, let’s be a bit more realistic. Another way to look at this is that the left wing environmentalists have learned that the only way that they can truly induce change is to adopt the tactics of those actors who have influenced public policy for decades.

She then says that "Obama's self-serving decision should remind Canadians of the dangerous risks of relying on just one single customer, and toughen our resolve to build more pipelines.” Is it not also a self-serving decision on the part of Canada to promote these pipelines at the expense of the rest of the planet? She ends with, “we must make sure that our national ambitions and our prosperity aren’t left at someone else’s mercy”. Is it not true that our decisions to advance the oil sands very much strips the ambitions and prosperity of those countries that will suffer further from the implications of climate change? Are they not therefore left at someone else’s (Canada’s) mercy?

I therefore completely disagree with Marshall and other who say, “the Northern Gateway pipeline is an all-Canadian affair…it is our decision alone whether to approve that pipeline, not that of a foreign government, or foreign interest groups”. This view is highly naïve, self-centered, and completely absurd. Unfortunately, our Prime Minister shares the same view. Countries outside of South America have for the last decade imposed substantial pressure on countries surrounding the Amazon rainforest to put in place policies that preserve the forest. This is because they realize that any degradation of the rainforest will have catastrophic implications for the entire planet. Country boundaries are a social construction. The planet doesn’t discriminate along these lines meaning that decisions made by individual countries can have dramatic impacts on other countries. One only has to look at the severe environmental conditions of developing countries imposed by the actions of developed countries to see this. So I think that foreign interests have every right to voice their democratic right to oppose decisions of another country especially if those decisions affect their livelihood at home.

Now I recognize that Marshall is just doing her job. She has a cause and she’s finding every and any possible way to further that cause as spokesperson of EthicalOil.org. But at some point you have to draw a moral line in the sand that separates opinion to further a cause from the highly insidious attempt to distract the public from what is really underlying the implications of that cause. The sad thing is that Marshall’s strategy here is to instill a sense of frustration among readers by tapping into their emotional triggers. But at the end of the day, she doesn’t care about whether politicians in the US keep their promises. She doesn’t care about whether the US is less dependent on unethical sources of oil. She simply uses arguments to which the audience is sensitive to push her agenda, which is to get more oil to the US. That’s what she cares about and that’s what EthicalOil.org stands for. The mask behind which these individuals hide is as fascinating as it is shameful.

Perhaps this is the job of the editor of Huffington Post. Should they be publishing columns by someone who clearly has a conflict of interest?

What a Deal! Obesity for Only 7% of Your Income

A very interesting study conducted by the Food Service Warehouse plotted worldwide food consumption levels and compared these with income levels. When you put the highest and lowest countries side by side, the outcome is rather striking:



The green line is the recommended daily allowance of calories (typically between 2000 and 2500). A quick glance confirms that western nations are well above the recommended caloric intake, which is no surprise when we consider their overly abundant waste lines. The fact that these are averages means that approximately half of Americans and Canadians consume more than 3800 and 3700 calories a day respectively. That’s a lot of food and/or a lot of really crappy food (i.e. high calories with low nutrients)!! Even France, a country once considered highly disciplined in the eating habits, is not immune to this trend.

Interestingly, the lowest consuming countries are not that far from the recommended daily allowance. This is despite the fact that many of these countries suffer from severe malnutrition, which suggests that much of the food these countries are consuming is likely unhealthy. It would be great to see these statistics over time to see if there is any heterogeneity by country in growing consumption rates. If not, then one has to wonder if the quality of the food available to the entire planet has eroded over time. Indeed, when considering our aggressive agricultural practices, research has shown that nutritional value in global soil levels have eroded over time meaning that we need to consume more of a given unit of food than we did decades earlier.

It gets more interesting when the study authors cross-reference the above data with the percentage of income spent on food in the graph below. With the exception of a few outliers, it’s fascinating that there is a direct and negative correlation between food consumption levels and the amount of income spent on food. With the exception of Romania, all of the biggest eaters dedicate little of their income to food. Fast Company attributes this to the fact that a majority of the high consuming nations consume mostly processed, unhealthy food, which is dramatically less expensive than “real food”.



But when you think about this in more depth, another explanation emerges. What strikes me most about the second graph is that the seemingly educated, more affluent countries are those that are not spending much of their disposable income on food. This goes against the view that we need more disposable income and education to eat better. If this were the case, then what’s going on here? Canadians are one of the lowest in the amount of disposable income that goes to the consumption of food – around 7%. That seems bizarre to me! That’s $2,240 spent on food out of $32,000 annual income. That’s $186 per month or $6.14 per day. Yet we manage to turn this $6 into 3700 calories. A quick glance online and the only foods that can muster such a caloric-bang for the buck include things like animal fat, vegetable oils, salad dressings, junk food, processed meats and fried food. Notice that many of these are highly dependent on caloric-intensive corn derivatives, a point I'll get to later.

On the one hand, Canadians seem to be doing everything they can to minimize the percentage of their income spent on food. As if eating is a necessary evil, it appears that Canadians are doing whatever is possible to leave available disposable income for other things; things that are more important than what we put into our bodies. In 2009, Canadians spent about the same on recreation as they did on food and double on transportation as they did on food. Canadians allocated three times the amount we spend on food to a place to live and a third of what we spend on food for alcohol and tobacco products; meaning that if we lumped tobacco and alcohol under food, they would represent 25%. Perhaps most ironic is that we pay just as much on personal insurance payments and pension contribution as we do on food. Yet food decisions lead to short- and long-term implications for our health. The more we compromise on food the higher our personal insurance fees, and the greater pointlessness of contributing to our pension!

But consumers are not the only ones to blame here. There is an inherent motivation on the part of processed food companies to inject as much processed, caloric-intensive food into the food system as possible. And because a majority of the ingredients in this food are highly subsidized, the price is quite low relative to real food. The fact that a 2 liter bottle of Coca-Cola costs less than the equivalent amount of water is a good illustration of this. This is not to mention the fact that processed food frees us from the seemingly burdening task of making our own food, which would actually encourage us to 1) pay attention to what’s in it, 2) consider eating as a substantial part of our day, and 3) eat slower and therefore not over-eat. Add the billions of dollars spent on marketing processed foods as convenient and complementary to a busy lifestyle and voila, you have people in the West who consume 3700 calories a day for cheap, nutrition-empty food yet with only a tiny portion of their budget. Together, this trend is incredibly frightening because we’ve relegated food to the level of a commodity similar to filling our vehicles up with gasoline. We eat at the office desk, in the car, on the go as if consuming food was as inconvenient as learning that your car is approaching empty.

There is a whole host of interpretations coming from these data. I’d be interested in hearing what you think these two graphs are telling us.

Exporting Canadian Asbestos: A Reminder of Supply Chain Responsibility

Recently, two of Quebec’s asbestos mines shut down amid noisy political debates and a dramatic anti-asbestos news conference Thursday on Parliament Hill. I find this to be an interesting illustration of how fast-moving a relatively recent ballooning of criticism can turn into the dramatic stoppage of operations of an industry that has been left relatively untouched for years.

The growing interest was partly spawned by the Daily Show with Jon Stewart where Asaaf Manvi, one of the show’s correspondents, implicitly ridiculed Canada’s hypocrisy for exporting a substance (asbestos) that the country itself has banned in use domestically and is currently removing from federal buildings. What is more, Canada has fought tooth and nail any United Nations’ efforts to label asbestos a toxic substance, which would place a strong sanction against the use of asbestos in industrialized countries.

This is not unlike the long string of companies over the last two decades that have faced major public outcry and subsequent financial despair because they failed to take accountability for their supply chain. That is, companies think that the extent of their accountability is bound by their position in the supply chain rather than the actions of suppliers and customers that make up the supply chain.

Analogous to many CEOs and senior executives that have ignored the call for greater responsibility in the supply chain, Stephen Harper reacts to criticism by saying that the federal government’s actions are merely a response to global market forces. More specifically, if India is willing to purchase the product, we won’t stand in their way simply because they do not have the appropriate education and infrastructure in place to assure the substance’s safe handling, let alone the precautionary measures in place to withstand future exposure of the substance when buildings age and erode.

A very similar argument led to the boycott of Nike in the 1990s when then CEO Phil Knight argued that poor working conditions and penny wages in their supplier factories is not Nike’s concern and is merely a product of a global economic system. Company after company has fallen victim to "reacting" to criticism by arguing that what goes on in their supply chain is not their problem because they don't technically own those operations. Coca-Cola’s blatant disregard for killings in bottling factories, Apple’s disregard for suicides in its Foxconn factories, Hershey’s disregard for unfair treatment of cocoa farmers in Ghana, the list goes on and on. They typically begin with a reaction that absolves them of any responsibility. They then engage in a public relations campaign to distract the public from these problems before finally admitting that there is a problem and that they have to accommodate the requests put forward by activists and eventually the mainstream public. Unfortunately, companies do not engage in this “accommodative” stance until they’ve suffered financially or see fairly dramatic financial repercussions for not responding in a favorable way as determined by the public.

Why aren’t companies learning from other industries as they get lambasted in the form of heavy criticism? Is their memory that short? Is it a case of an evaluation of risk where they conduct a cost/benefit analysis of taking responsibility in the supply chain and comparing that with the potential implications of doing nothing? Is it the short-termism of the investor community that detracts from any consideration of longer-term financial implications?

Going back to the asbestos industry, the business community unfortunately operates under a very simplistic definition of value. Value, to economics and business, is the difference between the opportunity cost of holding on to the asbestos as an extractor (versus selling it) and the price customers are willing to pay for products that have asbestos in it. Notice that this definition is purely financial. That is, value is determined based on the cost of making the product and the cost of purchasing it. Nowhere in here is there room for calculating the erosion of value in terms of health or the environment.

So one answer to the above questions (why do managers continually fail to see the freight train associated with ignoring the supply chain), it becomes somewhat clear that managers are ill-equipped to incorporate social and environmental calculations into their decisions. And by ill-equipped I don’t only mean the skills required to understand the financial implications of these issues, I also mean the cognitive ability to first see their decisions in this way. So in effect, they cannot foresee that ignoring social and environmental considerations may someday influence how much a consumer is willing to pay for a product. Put another way, the executive is blind-sided by the perception that consumers only use financial-based variables in their purchasing decisions. But time and time again, firms have been railroaded for ignoring public perception on acceptable behaviour of business. Wouldn’t it be easier if consumers didn’t care about these sorts of issues?

The Globe and Mail Compromises Truth for Politics

Margaret Wente, a right wing columnist for the Globe and Mail, recently argued that it is wrong and disastrous to science to suppress debate on climate change. She puts forward a string of anecdotal and disproven information to weave a web of doubt of climate change for the innocent and less-educated reader. She refers to Roger Pielke Jr. “one of the saner voices on the climate scene”, yet doesn’t point out that he presents no peer-reviewed empirical evidence to oppose the 97-98% (tens of thousands) of scientists who argue and have proven that climate change is real and man-made.

The question of whether Canada should or should not support a renewal of the Kyoto Protocol is a separate issue from what Wente is referring to here. Her objective is to create doubt when there is none in the science on climate change. It is perhaps no coincidence that this story has been published in the lead up to the UN Climate Conference on Monday, Dec. 5th, 2011 in Durban, South Africa. At this conference, Canada is expected to represent one of the strongest opponents to renewing the Kyoto protocol and, for that matter, any international commitments to mitigate climate change.

I fear that the newspaper’s decision to publish this highly inaccurate and misleading column is a political one rather than one that is in the best interests of the public. Here’s why:

The problem with these opinion pieces is that they plant seeds in the minds of readers that climate change is still debatable. That is, readers walk away with the belief that there is perhaps a 50% chance that the science behind climate change is accurate. The amount of news coverage in mainstream media reflects this with half the stories arguing that climate change is real and man-made and half the stories arguing the opposite. Yet if the media were doing its job and communicating to the public the truth based on sound science, we should see 97-98 out of 100 stories on climate change indicating that it is real and man-made and 2-3 out of every 100 stories with arguments against this science.

In effect, readers should understand that there is no longer any debate on climate change. The science is therefore clear. And by clear I don’t mean 100%. This is impossible. No concentration of scientific studies on a complex issue like this can claim 100% accuracy. We go on probabilities. Decisions are made everyday and conclusions to guide theory are made everyday based on 95% probability levels and sometimes 90% probability levels. This means that if we were to run experiments on a particular scenario, 19 out of 20 experiments would produce the same result. For climate change, we’re at a similar level of probability. This doesn’t dismiss the opportunity to prove these 97%ers wrong. But there needs to be a mountain of peer reviewed empirical studies to raise such doubt and there are few credible studies denying that climate change exists or is man-made.

Wente’s writing is outdated and completely inaccurate. Like most scientists who claim that climate change is not happening, she picks out isolated statistics yet overlooks the overwhelming evidence that opposes these outliers. The fact that we’ve experienced the warmest weather in 13 of the last 15 years is not discussed, nor is the rather remarkable rate at which the polar ice caps are melting, or the dramatic increase in freak weather events in the last decade. The list goes on and on and she speaks as if these rogue scientists represent mainstream thought.

Claims like “no one knows with any certainty the exact impact of carbon dioxide emissions” is completely inaccurate. So is, “what long-term climate trends will be or the effect of other factors, such as the sun”. These alternative explanations have been disproven time and time again and are therefore unrelated to the changes in climate we’re seeing today. She spends time talking about climategate despite the fact that three independent studies were conducted to see if the science behind climate change was compromised as a result of these emails. All three independently concluded that there is absolutely no evidence that the science on climate change has at all been put into doubt as a result of these scandals. Recently Exxon and other climate-change deniers funded an independent study which concluded that climate change is happening and that it is caused by man. Finally, she refers to old quotations from rogue scientists, many of whom, are not even experts in climatology and in some cases have been funded by oil and gas companies (see Climate Cover-Up by James Hoggan)

So Wente is completely hypocritical when she says that science needs healthy debate yet doesn’t produce any empirical evidence that such a debate is warranted. Put another way, she’s advocating for sound science based on healthy debate without using the very scientific principles upon which this is meant to occur.

I respect the views of the conservative right. They are legitimate and important in our society. But when these views ignore the unbiased science that is meant to provide society with knowledge to make decisions, they become an obstruction to democracy. A democratic society requires accurate information and opinions based on sound science. It needs media outlets that publish stories that reflect the findings of unbiased sources rather than stories that create inaccurate views in society.

The fact that this article has been published in Canada’s top newspaper is disgraceful. Wente’s views sadly align closely with the expected stance of our government in Durban on Monday. One has to wonder whether this column was published intentionally by the Globe and Mail as a political statement to defend against the tidal wave of criticism our country will face in the next week. When a media outlet like the Globe and Mail compromises its purpose of helping the public distinguish rhetoric from fact and myth from science, they have lost their role in society and, in my view, are no better than the infamous and highly misleading Fox News. Recently a study found that Fox News viewers were less informed than people who don’t watch the news at all. Is The Globe and Mail heading in that direction?

The Occupy Movement and Business Schools

I was fortunate to take part in a panel discussion today at the Ivey School of Business on the relevance of the Occupy Movement to business schools. While there were some heated discussions, I think all four panel participants agreed that change is needed in business schools to produce leaders who can make decisions that consider a wider range of interests. There also appeared to be agreement that the old adage that profit maximization is how business contributes to society is outdated in light of the uncontroversial evidence of a negative correlation between profit levels and societal and/or environmental welfare.

This places business schools in a precarious position when their foundation largely hinges on the maximizing of the universal metric of financial performance. While all business schools have in their mission some reference to social good, ethics, and benefit to society, there is no doubt that the underlying objective behind all decisions in the classroom is financial accountability to shareholders within the confines of the law and, if necessary, at the expense of society and the environment. This is fundamental and while I acknowledge business schools’ fluffy wording on their commitment to society, it rings hallow when it comes down to class discussion.

But it was clear from student reactions today that they struggle with the notion that business is as bad as the occupy movement says it is. I can imagine that a 21-22 year old, part of one of the top business programs in the country and the world, would be disheartened to read about a movement that is against everything that they’ve pinned their future career on. Even as a business professor pushing for change in business schools, this is not an easy thing to read and hear about. But as I’ve written before, the occupation’s painting of business with the same brush is not only unfair but entirely inaccurate. That being said, there is no doubt that many businesses have and are continuing to play a major role in creating the inequality that the occupy movement is concerned about.

One area of disagreement among the panel members and perhaps among the students was the notion that consumers are ultimately accountable for their own decisions. So, going into unmanageable debt is nothing but irresponsibility of the consumer not the fault of companies. To me, this is a very naïve argument because it overlooks the fact that we all live in a society that is socially constructed. History has shown that when actors are powerful in society, they play a substantial role in shaping the norms and beliefs of that society, sometimes for millennia. Religious organizations, once the most powerful actors in society, institutionalized a number of taken-for-granted belief systems that we see followed today for good and bad. The dominant actor today is business, more powerful than religion and more powerful than most governments.

Here’s the kicker, what happens when a for-profit entity is able to wield power that intentionally or unintentionally influences social norms and beliefs? I discussed this in more detail in a previous posting.

Bringing this back to what we teach in a business school, company profit maximization largely hinges on the creation of a monopoly or near-monopoly situation wherever possible. By default then, the objective is to weaken the power of consumers by discouraging their search for information that would allow them to make informed decisions, influencing how that information is presented, influencing consumer interpretation of that information, and/or reducing the options available to consumers regardless of their absorption of information. The oil and gas industry’s attempts to create doubt in the science of climate change is an example here. Also the financial industry’s efforts as of late to destroy or at least weaken the Consumer Financial Protection Agency, a body meant to help educate and protect consumers from complicated financial innovation, proves quite remarkably that companies do not hope for consumer irresponsibility to pave their fortunes but instead create conditions that inhibit informed decisions.

This all comes down to a perverse incentive based on profit maximization exclusively with no consideration of the social and environmental consequences of these decisions. Combined with immense power that business as a social actor holds in shaping consumer behaviour, business’ role in influencing society is not the next conspiracy but merely an obvious and highly predictable outcome of what we’d expect these actors to do in our current socio-economic system.

So in my view, when the occupy movement voices its concerns over social inequality, they’re also implicitly referring to the disruptive effects on democracy when those in power work to maintain the status quo by shaping the views and beliefs of society.

My Experience at Occupy Toronto

I joined Occupy Toronto on a Friday and Saturday in late October, 2011. On Friday, I was part of a silent march that started at St. James Park, passed through Toronto’s financial district at King and Bay, and ended at old city hall. The gathering at St. James Park was relatively small with a majority of the population exhibiting behaviours that many people would stereotypically associate with a very left wing persona: some meditation, incense, a Marxist table and a number of signs calling for the abolishment of capitalism and corporate greed. My conversations with people there indicated to me that while we may have differences in how we go about expressing what the problem is (a clear reason why the media perceives the protests to be incoherent and unfocused), we all seemed to agree that the current institutionalized economic system is not working for a majority of people.

But I was most struck by the reaction of Torontonians and working people to our silent march and our presence at old city hall. Many would stop and stare not with a look of criticism or repulsion but with a look of interest, curiosity and resonance. By resonance I mean their growing awareness that the movement, now present in dozens of locations around the world, was not for some marginalized, isolated cause but for the defense of the middle class. Where I could, I tried to talk with these people to learn what they thought of the protests. To my surprise, everyone I spoke with was very concerned that the status quo is not working for a majority of people and that change is needed. While their busy-schedules, mild temperaments, and hesitation to join what many perceive to be a “hippy-march” discourage their participation, they also feel obligated to respond to the seriousness of the issues around the world and the impact on future generations. One woman said to me, “I’m a working mom and quite successful in my career but I’m concerned for my kids and my grandkids”. It seemed like by observing the occupy Toronto protest, these people, for the first time, were able to personalize the very abstract and seemingly distant stories they’ve read about in the news.

On Saturday, I was part of a much larger march advocating the need for a Robin Hood Tax. This march began at St. James Park and made its way around downtown blocking one direction of traffic before ending up at King and Bay (see video here). While one could debate the merits of this Robin Hood tax idea I think the highlight of the day was the fact that the march was filled with a substantial number of the middle class. These people echoed much of the concerns I heard from people on the street the day before. While they didn’t have any answers or solutions, they felt that it was more important to be part of the conversation and to start a dialogue. As many have argued, the complexity and systemic nature of the issue commands a grassroots movement to kick start a global conversation on what needs to change and how, without any naïve and pre-conceived solutions.

But most important was the difference in the crowd between Friday and Saturday. This suggested to me that the wide range of people who have concerns with this inequality issue are not necessarily the ones doing the protesting. This results in an inaccurate depiction by the media of who is representing the movement. So when the media describes these protests as representing a certain demographic, they are presuming that those most concerned are only those doing the occupying on a full time basis not those hundreds of thousands of people who recognize the problem and want to do something about it, yet are simply not occupying. The Daily Show’s John Oliver nicely captured this in one of his satirical story coverages.

When I invited via email friends and colleagues to join me at the protests, it didn’t take long for the message to reach a wide number of audiences. My message to them was that I felt business schools and business more generally needed to be a part of this discussion rather than an actor in opposition. I received about 30 responses from executives, entrepreneurs, other business faculty, graduates, and business and non-business students. A majority of these were very supportive with apologies that they couldn’t join me. A colleague in the office next to me at Ivey mentioned that she was having dinner with a number of executives. Although she was expecting them to voice a rather smug and harsh discontent with the occupation, to her surprise they instead voiced support and a broader concern that what these people are protesting about is indeed a systemic problem that needs to be closely examined and talked about.

I received 5 harsh criticisms, surprisingly all from business students. I didn’t receive one criticism from a non-student audience. This was perplexing to me and some of my students shared their thoughts on why this might have been the case. They said that perhaps these students perceived the occupation to be a threat to the years of personal investment they’ve made to succeed in the existing system. They also said that perhaps business students naively view the protests as being a symbolic opposition to the very idea of business. Finally, like many others, these students are perhaps more strongly frustrated by the incoherent message of the occupation and the rather blanketed criticism of business more generally. But make no mistake, the people walking beside me at the march on Saturday and the many people occupying around the world are employees of business, executives of business, and owners of business and are therefore strong supporters that business needs to be part of the conversation.

Many people have asked me, somewhat out of frustration, what the purpose of the occupation actually is. Is it corporate greed, lack of jobs, the financial crisis, our current recessions, austerity measures, social inequality, environmental issues? (See Stiglitz' opinion piece in Aljazeera for a good summary) These same people exhibit a rather strong criticism that there is no point occupying unless the message is coherent and unless solutions are presented. Recently, my students voiced their preference for more solutions to the first half of a course that examines the relationship between corporations and society. Yet the focus of the first half of the course was not to uncover solutions but to understand how the interests of business do not always align with the interests of society and that instances of conflict are growing in number. Exploitative labour, environmental crises, the financial crisis, and social inequity represent a signal that business is perceived to be prospering at the expense of the broader community. Because solutions to these problems are not readily available under the current systems, our objective in this first half was to instead engage in critical thinking to understand the complexity of these problems, why they emerge, and what it means for business in society. Perhaps their struggle with this approach partly explains their frustration with the occupation movement.

But I did receive several emails from business students very supportive of my participation in the movement. Just the other day, 70 students from an Economics 10 course at Harvard walked out of class because of what they perceived to be an “an overly conservative bias in the course”.

I believe that business schools and economics faculties will have to face a decision about whether they are going to join the conversation about what needs to change so that our economic systems better reflect society’s needs or whether they are going to vehemently oppose the movement as the symbolic counterweight. Time will tell I’m sure. I’m of the opinion that the occupation represents an opportunity to start a conversation within business schools as educators of future managers. What does this mean for our programs? What does this mean for the overarching ideology of the business discipline? These are unnerving questions that need to be discussed in the hallways of a number of professional institutions. My students suggested that Ivey have a panel of business and non-business faculty to discuss what the occupation means more broadly to our current systems and way of life to reflect on how business can better serve the interests of society.

I couldn’t agree more. For anyone out there who doesn’t believe the occupation is doing anything of substance, they may be overlooking the many conversations taking place around the world, including the one I just had with future business leaders.

Business to Join Occupy Protest - Friday, Oct 28th at 4pm

As you're all quite aware, the occupation that started on Wall Street in New York has ballooned into a social movement, extending to a number of cities around the world, including Toronto. Although its cause ranges from corporate greed to social inequity to the financial crisis, the underlying theme is an immense discontent with our current socio-economic system. More than 33% of Americans are in support of Occupy Wall Street and anyone who might argue that this is not relevant to Canadians overlooks the clear reality that we are all subject to the whims of a global economic system, that social inequity in Canada has reached unprecedented levels, that Canadian debt levels are tops in the world, and, more generally, that businesses in today's economic system are increasingly prospering at the expense of society.

I'm showing my support for these protests because I believe business needs to be part of the conversation. I recently posted on my blog why all Business Schools around the world should be part of this:

My colleagues Andy Crane and Dirk Matten at the Schulich School of Business posted a blog on why the protests should be top of mind for business leaders and employees in general.

This is a call to business students, business professors, business graduates, and business employees to join my peaceful walk around downtown Toronto on Friday, October 28th beginning at 4pm in front of the St James Anglican Cathedral on the corner of Church Street and King Street (65 Church St.). Anyone who would like to join me, please meet me there.

For those of you not in or near Toronto, I encourage you as actors of business (e.g. graduates, employees, faculty, students) to join the conversation in your municipality.

Feel free to pass this along.

Why Business Schools Should Join "Occupy Wall/Bay Street"

The Occupy Wall Street protests have ballooned into one of the most powerful grassroots social movements since the Great Depression and there doesn’t seem to be an end in sight. Once perceived by the elite to be a trivial display of immature angst by a bunch of hippies, the mainstream media has had no choice but to cover the protests to the chagrin of their corporate owners. For this protest, as Caplan and Grzyb explained, is of “the larger, ugly truths about modern capitalism” and as business professor Michael Porter explains, reflects the perception that corporations are “prospering at the expense of the broader community”. I think Finance Minister Jim Flaherty and Central Bank Governor Mark Carney overlook the broader message the protest is conveying when they focus on the financial crisis as the source of angst among protesters. I would argue that his was only the catalyst for a greater march against the inequities of the existing capitalist system. As Ed Clark, CEO of TD Bank said, "If you think this system is working for everyone, it's not".

A rather polarized dynamic has played out between the right and left sides of the spectrum with the right relegating protesters to a bunch of “left wing nut bars” (Kevin O’Leary) or “a collection of ne’er doers” (Murdoch’s WSJ) and the left asserting that we live in a society of “government of the 1%, by the 1%, for the 1%” (J. Stiglitz) and that “we the people have found our voice” (Professor Cornell West). More than 33% of Americans are in support of Occupy Wall Street and anyone who might argue that this is not relevant to Canadians overlooks the clear reality that we are all subject to the whims of a global economic system, that social inequity in Canada has reached unprecedented levels (81% of Canadians agree with this), that Canadian debt levels are tops in the world, and, more generally, the troubling trend that business in today's economic system is increasingly prospering at the expense of society (51% of Canadians agree with this).

So where are business schools in all of this? Naturally, business is expected to side with the right, defending their powerful position in society by putting forth rhetoric that touts the societal benefits of free markets such as job creation, access to cheap goods and services, and (perhaps taken to the extreme) individual freedom. Yet, I would argue as a business academic, perhaps paradoxically, that business schools should be an active voice in the protests not as a mouthpiece for the right but as a stark supporter of the need for change.

Here are three reasons why:

First, the last decade has proven unequivocally that Adam Smith’s original supposition that the pursuit of commercial interests leads to optimal gains for society is misguided at best. An unprecedented number of circumstances have emerged where the pursuit of corporate interest has left society worse off. Smith’s ingenuity presumed that business would make decisions using a moral lens and therefore fit a time when business represented a relatively small actor in society shadowing the power of the church and the state. Since then, we’ve seen business become the dominant societal actor with the power to not only ignore broader societal interests but to circumvent those interests. As I’ve written before, why should business be passive players responding to regulatory constraints or market demands when they can wield their growing power to influence regulation and what the market demands. To that end, many executives have essentially taken business school fundamentals to the extreme by deliberately shaping those environments to their liking with little regard for society. Wall Street’s active suppression of government regulation of derivatives and their relentless effort to defer risk to the public is one such example. Reducing these behaviors to "corporate greed", as many protesters have voiced to be the crux of their cause, overlooks the broader fundamental practices of our current economic system. So business schools, in my view, are obligated to occupy wall/bay street to voice the need for change in the fundamentals of the business discipline.

Second, I think it’s important to make sure that we don’t paint all businesses with the same brush. There are a growing number of companies, large and small, that define their purpose and operations on precisely what these protesters stand for: equality, human rights, and environmental sustainability. They adopt triple bottom line businesses with the purpose to co-create value along social, environmental, and economic systems not as isolated endeavors but as an integrated value proposition to society. Businesses like Grameen Bank, Interface, Patagonia, Better Place, Frogbox, Terracycle, and SEKEM represent the hope for business in a sustainable society. They are challenging the practices of those companies in the previous paragraph and redefining the purpose of business in society. Business schools should be marching to demonstrate their commitment to understanding these sorts of businesses and to build theories and frameworks that educate future managers to replicate this role.

Finally, any academic at a university is held to an obligation to engage in activity that advances new knowledge for the purpose of contributing to the welfare of broader society. If we’ve reached a stage in history where our business school teachings and research are partly responsible for the negative impacts on society, then is it not our duty to lead the charge in understanding what needs to change? One approach of business schools, which I presume is the most common, is to distance ourselves from the protest thereby further fueling the polarization of society. Another is to be part of the conversation so that we are truly doing our job as academics and understanding how the private sector can better respond to the needs of society. This takes a combination of courage and humility because it suggests that what we’ve taken for granted in the classroom and in our management journals might need radical change.

Canada at Odds with Peace Laureates

Of the first 50 and most popular comments in response to last Wednesday’s web-based front page Globe and Mail article describing the Nobel Laureates’ efforts to persuade Stephen Harper, and by default Canada, to cancel expansion of oil sands development, all 50 were harshly blasting the Laureates’ cause as repugnant and revolting. Some of the more common responses included the following:

1. The exploitation of Canadian resources is a decision left to Canadians…so mind your own business!
2. The demand for oil will persist and so it’s better to get it from a democratic nation with large reserves than a human rights suppressing nation in the Middle East, Africa, or Latin America
3. The environmental implications are overstated. Industry has put in impressive measures to reduce environmental issues
4. There are worst things in the world right now and Canada’s oil sands are way down the list. Why bother with us? These Laureates must have some kind of hidden agenda.

Aside from the complete embarrassment I felt in reading these highly ill informed, rash, and toxic comments, I thought it necessary to put forth my own response to these comments:

First, climate change is a global and complex issue. Decisions we make in one part of the world have huge consequences on other parts of the world not privy to those decisions. To suggest that we have a right to make decisions as one country that will undoubtedly leave other countries under water, plagued by drought, overwhelmed with forest fires, and/or bombarded with hurricanes and typhoons is either a demonstration of our blatant disregard for humanity, our primitive emphasis on national sovereignty at the expense of everyone else, or complete idiocy. On top of all this, future generations not yet born will be looking back at our ignorant, arrogant, and uneducated rants demonstrating our lack of understanding of complex systems such as the climate. I’m in a time warp if a good chunk of Canadians mistakenly strive for national sovereignty over global sovereignty now that we know how interconnected national decisions are to the welfare of the planet and our future generations.

Second, any environmental improvements made by the oil sands sector can only be evaluated with a starting point of how catastrophic this process is to begin with. I have not seen any evidence to refute the very common claims that the resources required to produce 1 barrel of oil from the oil sands are several times that of light crude and that the CO2 emissions to produce one barrel is several times more than that of other sources of oil. When scientists link the systematic extraction of oil sands to the planet’s tipping point on climate change – the point of no return – there is no way that incremental efficiencies by industry are going to make any difference.

Third, as I’ve written many times before, our continual reliance on fossil fuels is no accident. To make comparative judgments on other renewable sources of energy at a point in time when government policy has supported non-renewable sources and demand for these sources pale in comparison to other environmental devastating sources is preposterous and overlooks the role of inertia and momentum in locking societies into particular sources of energy. We are so dependent on oil that movement away from the substance is going to take more than just silver bullet technologies. It’s going to take political, economic, and social courage to be part of the transition to renewable sources.

Fourth, clearly many people do not understand how interconnected our planet really is. Many of the comments I read were blasting the Laureates’ decision to prioritize Canadian actions over other atrocities that are occurring in the world today. But as the article rightly mentioned, many of the issues we’re seeing today is largely brought on by climate change. Tribal conflicts in Sudan and Kenya are primarily based on drought conditions. Imagine what will happen for several countries in the future if we continue to exploit these resources. So the Laureates are bang on because they know exactly what sorts of decisions take place in the Western world that fuel the fire of conflict in other regions.

The proliferation of these sorts of comments and other articles in defense of the oil sands puts to rest any confusion I might have had about why the conservatives are in power. Even if these comments represent a minority, it’s very clear that this is indeed a rather pervasive sentiment in Canada. I for one do not want to be included in the company of my prime minister or anyone else who doesn’t recognize the sensitivity of this issue, perceived by Nobel Laureate Williams as someone “who doesn’t really care”.

It took all but an hour to remove this article from the front web page of the Globe and Mail to several screens down and then another few minutes before it was relegated from front news altogether. We can only speculate why G&M did this. Is this what they normally do? Are they responding to public sentiment rather than putting forward the facts? Or were they influenced by some powerful individuals who would prefer that Canadians not learn about this story?