The Institute of Directors (IoD) went green at its annual conference at the Royal Albert Hall in London today, which for an organisation as traditionally stuffy and conservative as the venue it chooses for its annual shindig represents a pretty seismic shift.
To put it in context, ever since the IoD was founded in 1903 it has always been part of the UK's old school business community (I was once denied entry to its headquarters on Pall Mall because I was wearing, shock horror, jeans).
Until very recently its pronouncements on the environment could have fitted on the back of a postcard. And that postcard would probably have read something along the lines of: "The environment is there to help us maximise profits. Would all regulators, politicians and mung bean-eating hippies who think otherwise kindly bugger off and leave us alone to get on with the serious business of making money and lobbying for low taxes and even less regulation".
So to see the organisation unveiling a new climate change microsite for IoD members and handing over a sizable chunk of its keynote slots to speakers with an environmental or CSR drum to beat must have proved quite a shock to the system for some of the more traditional members of the 2,500-strong audience.
The morning session was dominated by an hour long debate on how to be a "good" director featuring chief executive of Cafedirect Penny Newman; Rory Stear, executive chairman of clock work radio inventors Freeplay Energy; Director of the Institute of Business Ethics Phillippa Foster Back; and John Elkington, founder of management consultancy SustainAbility.
A few home truths were delivered to the rapt audience as Elkington argued that despite great strides forward in recent years CSR was still confined to the periphery of many businesses. "Many companies are seeming to do something [on CSR and the environment], but it is not going back into the guts of the business," he observed, arguing that as a result firms are at risk of "seeing very profound reverses [to their brand value] that cascades through their business".
In a recommendation bound to concern some of the older members of the audience, Elkington argued that to counter these risks firms needed to appoint younger executives to the board with a better understanding of environmental and CSR issues. "Many of the companies [that have had brand damage in recent years], like Shell and Nike, did pick up on the early warning signals," he said. "But they didn’t pick up on the importance of the problem."
Foster Back added that there was also a need for board level directors to improve communication channels with the rest of the business if they are to turn CSR and environmental policies into a reality. "The board really has to listen to the rest of the business to pick up on potential CSR issues," she said. "You also need to constantly monitor the say-do gap because if it gets too wide you are actually opening yourself up to more risk [of bad publicity]."
However, both Stear and Newman insisted that there are major benefits to be had by firms that do run successful CSR and environmental initiatives, including improved staff morale and retention rates, and enhanced brand value.
But if these benefits were a bit too wishy-washy for some in the audience, it was left to Elkington to hammer home the solid commercial case for adopting environmental best practices. The "market gate keepers" such as Wal-Mart, Tesco and the public sector were realising the importance of climate change and were beginning to force environmental standards onto their massive supply chains, he argued. "We are at the beginning of a period of convulsive change… and it is going to happen far faster thah people expect," he predicted.
To further highlight the urgency with which green business models should be adopted the afternoon session featured a live satellite broadcast from the Arctic Circle in which explorer Jim McNeill explained how 40 percent of the Arctic ice had disappeared in the last 40 years.
So has the IoD really changed its spots? Is the environment and the transition to a low carbon economy really a top priority for the business group's 55,000 members?
Well, with the Albert Hall's car park dominated by a display for the latest Bentley it looks like some of the IoD members' environmentally unsustainable habits are still alive and kicking.
Speaking in his opening keynote, IoD director general Miles Templeman neatly summed up the growing tension between the group's increasingly influential cabal of dedicated green businesses, such as Cafedirect and Freeplay Energy, and its more traditional priorities.
In a nod to the growing concern about environmental issues he argued that business had a critical role to play in tackling the problem of climate change and that there needed to be a greater acceptance from the business community that the shift towards a low carbon economy presented an opportunity rather than a threat. However, he qualified his support for environmental best practices by observing that "it is important that we don't save on CO2 but lose on jobs".
He added that the IoD wanted the UK to take a lead on tackling climate change, "but not at the cost of competitiveness".
This caveat is an extremely complex one and lies at the heart of much of the current support for green business models demonstrated by groups such as the IoD and the CBI.
It can be argued, quite rightly, that with investment in new green technologies essential to reducing carbon emissions it is critical that the economy remains healthy and competitiveness is protected if climate change is to be tackled.
However, the assertion from the IoD that cuts in carbon emissions must always come second to jobs and competitiveness means it can not be relied upon to support a large number of environmental initiatives, which at first glance appear to hinder economic competitiveness.
The EU carbon trading scheme, for example, will hamper European competitiveness in the short term if, as expected, it starts to impose large-scale costs on the most polluting industries. Without China, India and the US signed up to the scheme those firms forced to shell out for the most carbon credits are likely to up sticks and move to countries outside the trading mechanism.
If the IoD sticks to its guns over competitiveness being its top priority then it could well shed its green image at this point and begin to oppose the trading mechanism along with any other form of environmental restrictions that are not adopted globally.
The fact is that as with any economic transition the move towards low carbon business models will mean job losses. However, as with any technology upgrade, jobs lost in the most polluting sectors will be replaced by jobs in the new clean technology industries. Legislation, like the carbon trading scheme, that makes some industries less competitive will by definition make the new low carbon industries that replace them more competitive. According to some economists the net effect on the economy of this transition will be positive.
The IoD and other business groups need to realise this and ensure that in their desire to protect their members' jobs and competitiveness they do not lobby against the very environmental policies that will boost the jobs and competitiveness of the new breed of entrepreneurs who will make up their membership in the low carbon economy.
It will be interesting to watch the imminent internal battle between the new green wing of organisations like the IoD and the old school "jobs first" hierarchy. For the sake of the entire green business movement it is a fight that the new breed of environmentally-aware executives must win.
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