{"id":148,"date":"2016-02-29T13:53:41","date_gmt":"2016-02-29T13:53:41","guid":{"rendered":"http:\/\/blogs.plymouth.ac.uk\/sustainableearth\/?p=148"},"modified":"2016-02-29T13:53:41","modified_gmt":"2016-02-29T13:53:41","slug":"trampling-over-the-future","status":"publish","type":"post","link":"https:\/\/blogs.plymouth.ac.uk\/sustainableearth\/trampling-over-the-future\/","title":{"rendered":"Trampling over the future"},"content":{"rendered":"

Over the years I have become used to\u00a0hearing about yet another unethical\u00a0corporate act, eg the inter-bank\u00a0lending scandal (Libor) or Exxon lying\u00a0to customers and shareholders about\u00a0climate change. Knowing it can be a few\u00a0individuals who rot the barrel, or economic\u00a0system flaws that can force decision-makers\u00a0to act without broader society in mind, I\u00a0actively try not to condemn all companies\u00a0because of the worst offenders.<\/p>\n

However, I have to admit being especially\u00a0shocked on hearing of how Volkswagen\u00a0(VW) fitted at least 11 million cars with a\u00a0\u201cdefeat\u201d device that fooled pollution tests\u00a0across large parts of their fleet, with another\u00a0deception around carbon dioxide\u00a0emissions still emerging.<\/p>\n

Keeping a comparison with the Libor\u00a0scandal in mind, I would like to outline\u00a0the four ways in which in which I was\u00a0more shocked than normal.<\/p>\n

    \n
  1. Libor was about skimming profits. There is\u00a0always an ultimate human cost, but Libor\u00a0was a few stages removed in this case. VW\u00a0was dishonest about emissions that directly\u00a0affect human health (nitrogen oxides)\u00a0and planetary stability (carbon dioxide).\u00a0The data on the effect of these pollutants\u00a0(which I discussed in the last issue) is so\u00a0strong that purposefully producing 11\u00a0million cars that are up to 40 times worse\u00a0than a baseline that is already too high, is\u00a0akin to some kind of manslaughter.<\/li>\n
  2. Perhaps precisely because fixing Libor\u00a0doesn\u2019t directly kill people, bank\u00a0employees could find excuses by\u00a0pretending it was \u201charmless\u201d. This was\u00a0compounded by the involvement of many\u00a0companies, which acted to normalise\u00a0the behaviour and make it part cultural\u00a0practice. What happened in VW was\u00a0unlikely to be excusable in the same way\u00a0\u2014 it appears to have been very much\u00a0behind closed doors, but nonetheless\u00a0had to be endorsed at the very highest\u00a0levels of leadership. It therefore involved\u00a0conscious dishonesty of entrusted people\u00a0of the highest order.<\/li>\n
  3. From a more systems perspective I am\u00a0shocked at the short-term thinking that\u00a0the VW scandal belies. One of the most\u00a0toxic side-effects of our current economic\u00a0system is the short-sighted decisions it\u00a0gives false logic to, and for traders this\u00a0is potent. But if there were examples\u00a0of companies you thought might be\u00a0winning the battle towards a more robust\u00a0long-term business model logic, then\u00a0VW (the brand built on being for the\u00a0\u201cpeople\u201d), would be towards the top of\u00a0the list. However, this scandal shows that\u00a0whatever long-term social purpose the\u00a0company may once have had, it has now\u00a0been eroded.<\/li>\n
  4. The scandal also shows that marketing is\u00a0not at the heart of VW. A company that\u00a0knows the real power of marketing, ie to\u00a0make sure what a company is producing\u00a0(and decisions related to communicating\u00a0this) meets the real needs of customers\u00a0and other stakeholders in the long-term,\u00a0could never make such a deceptive\u00a0decision. A marketing mindset would\u00a0also make clear the huge value of the\u00a0VW brand which, until the scandal, was\u00a0intricately connected with feelings of\u00a0trust and citizenship. That kind of value\u00a0takes decades, big money and consistent\u00a0authentic action to build. To consciously\u00a0risk it, rather than do the hard work\u00a0of changing the business model, is to\u00a0undervalue pretty much everything VW\u00a0had ever worked to build.<\/li>\n<\/ol>\n

    Business \u201cpurpose\u201d is a concept that has\u00a0rapidly taken hold in business in the last\u00a0few years. I am currently working with\u00a0a colleague, Jaideep Prabhu from Judge\u00a0Business School, on the concept of a\u00a0purpose driven organisation (PDO) \u2014\u00a0how precisely this is defined, and how\u00a0organisations can replicate it and the\u00a0success it brings.<\/p>\n

    We are at the beginning of unpicking the\u00a0concept, but what is already clear is that\u00a0purpose is beyond a statement of intent.\u00a0It is a DNA-level thread that connects all\u00a0parts of the organisation and stakeholders\u00a0\u2014 including future generations \u2014 towards\u00a0a meaningful goal that really meets the\u00a0needs of certain stakeholders and doesnot knowingly trample over the needs\u00a0of others. It is therefore quite possible to\u00a0conclude, using this framework and its\u00a0actions, that VW is not a PDO.<\/p>\n

    Being a PDO is about head, heart, soul. It is\u00a0not about compliance. The VW affair shows\u00a0yet again that a monotheistic \u201clegislate for\u00a0sustainability\u201d approach is not a fruitful one.\u00a0Neither can we trust that an invisible hand will drive compliant behaviour.<\/p>\n

    We need culture and system change,\u00a0and that requires looking critically at the\u00a0systems barriers to positive behaviour and\u00a0implementing common frameworks, codes\u00a0and standards. These must:<\/p>\n