Credits for going green, even if you fail along the way

April 2, 2012

The Economist (March 31^st) covers an article on the lack of credit that Chiquita has received for its efforts to upgrade its supply chain. It has been accommodating NGO’s and unions and it has embraced sustainable farming techniques, but it has found little reward. One of the conclusions in the article is that it is not sustainable for any company in a competitive sector to make progress and gain no recognition for it. Indeed, if the market and or other stakeholders do not clearly applaud a company’s quality how can it ever last? Then again, the external pressures are unlikely to disappear. Apple has to deal with them (Foxxcom) and may want to follow Nike’s example. In the same magazine the latter company claims that good labor standards and environmental practices boost profits, even without taking into any reputational benefits they may deliver. Talking about obvious benefits.

In the transition towards a more sustainable and green economy rewards and credit are crucial for any constituency, including the investors and asset managers. That can also be concluded on an article in today’s FT fund management (‘Managers talk more on SRI’ – April 2^nd). It says that expectations that socially responsible investing SRI would move from niche to mainstream have not been fulfilled. Still, although there are many complexities (quality of data) and challenges (integrating ESG in mainstream investment process) there are positive signs and expectations of increasing demands for SRI strategies. I am sure that the positive swing will strongly depend on the credits (both tangible and intangible) that will be received.

For me, one of the main struggles for all these parties remains the complexity of getting it right and balancing the needs of so many stakeholders. Chiquita has to impress unions, NGOs, investors, social activists, governments and above all its clients. Investors want hard data across companies, sectors and supply chains. One can wait forever if one only starts when everything is perfect.  I am convinced that the transition towards a more sustainable and green economy is a process of trial and error. Companies and their stakeholders should be open to experiments, applaud improvements along the way, but should not shy away for failure. Because the surest thing to guarantee failure in the long run is to be so paralyzed by fear of it that you don’t try anything new (Economist March 31^st ‘How to make a megaflop).

For the sake of making the much needed transition, all stakeholders should stick that last quote on the wall of their offices.

Comments on this blog

Your comment