Kevin Brady: We need to shift from concentrated power to power sharing

Earlier this summer I had the opportunity to provide opening remarks on the second day of the CSR Upmanship Conference in Toronto, organised by the great people at EthicsScan. I had planned to talk about CSR strategy and then a couple of days before the conference something happened that changed my views on CSR completely. See the speech I delivered below and please let me know what you think of what I am proposing.

My instructions were to say some inspiring words about CSR strategy and how to move organisations toward that goal in new and exciting ways.  And I had that talk all ready to go.  In that talk I was going to draw on my twenty five years in the field of sustainability, in particular my time within the company I helped found, Five Winds International.

At Five Winds (which is now part of another firm), we worked with champions within private and public sector organizations to revamp and improve their core decision-making processes. We used an environmental and social “lens” to improve the sustainability of their strategy development processes, their product development, operations, supply-chain management, sales and marketing and capital investments.  I was going to tell you about the process we used for moving organisations toward sustainability leadership, and how that process was based on principles of organisational change and organisational psychology.

I was going to tell you about how we used new types of data, and creative stakeholder engagement approaches, to ensure we had the information base needed to expand our client’s perspective on the world.  And I was going to explain how we leveraged that expanded view to get senior leadership teams to identify and agree on the most material risks and opportunities.

I was going to share my insights on how to develop strategies, action plans and performance metrics that lead to deep meaningful and long lasting change. And finally I was going to close with some thoughts on the organisational success factors and barriers I had encountered over the arc of my career. (One key tip – tie performance to the bonus and risk and opportunity analysis to the release of capital).

Henry Mintzberg is someone I have admired for some time…

That was what I was going to do right up until Sunday. On Sunday I was working in my garden planting tomatoes, fighting off my chickens and I was listening to Henry Mintzberg  being interviewed on the radio by the CBC’s Michael Enwright on his new book Rebalancing Society: Radical Renewal Beyond Left, Right and Centre. Now Henry Mintzberg is someone I have admired for some time, for those of you who might not be familiar with him he is the Cleghorn Professor of Management Studies at McGill University. He is considered a management guru by many and his work and the work of other management professors such as Stuart Hart and Michael Porter had a great influence on my thinking on how to position sustainability as a business opportunity and how to approach it from a change management angle.

henry-mintzberg

Henry Mintzberg, Professor of Management Studies at McGill University and author of Rebalancing Society: Radical Renewal Beyond Left, Right and Centre

This thinking was critical to how we positioned CSR and sustainability efforts with clients at Five Winds – we called ourselves management consultants and not sustainability consultants, and although our work was focused on environmental and social issues, we were not focused on soft outcomes, it was all about business strategy, business improvement and innovation –  we focused on helping our client do well by doing good, creating shared value and improving their triple bottom line – these concepts that we all know, and some of us love, were like mantras to us.  We got on the sustainability wave early (1998) and the we rode the crest of the wave for a number of years, we worked with some of the best companies in the world and even had the audacity to call the highest level of strategy we proposed to our clients a “shape the future” strategy.

So how does Mintzberg relate to this? Well his latest book, which he discussed at length in the interview, calls for a new social, economic and political equilibrium, one that would benefit people, the planet and the political process.  Enwright’s interview of Mintzberg was fascinating to me and sometimes disturbing. In it he lamented the domination of economic thinking and the private sector’s influence in our lives, and he called for a rebalancing of power between the three main components of society – the public sector, business and industry and what he called the plural or civil society. The comment he made that caused me to change my presentation came about mid interview when Enwright asked Professor Mintzberg the following question..

CSR is NOT Enough

What about the idea of corporate social responsibility, and corporate citizenship and so on, businesses talk about this all the time. To which Mintzberg responded, “it is a wonderful idea that will not get us out of this mess”.

CSR is a wonderful idea that will not get us out of this mess

I don’t know Mintzberg personally but it was like he was sitting right in front of me, planting a tomato and he was saying well Kevin the focus of you your career was a wonderful idea but it was not enough, you have been working on the wrong things.  I have to admit, similar thoughts have been rolling around in my mind for a time, but hearing Mintzberg articulate it so bluntly was jarring.  And I believe he is right about traditional CSR – it is not nearly enough. Most of what we have tried to achieve in the CSR movement is directionally good but not nearly enough given the scale and the scope of the challenges we are facing.

The primary focus of the CSR community has been on improvements in corporate governance structures, environmental stewardship and restoration, social performance improvement and broader based notions of value, these are all good things but they are not nearly enough.

We need to shift power from those who have too much (what Mintzberg called legal corruption) and give power back to those who do not have enough.

So if that is not good enough where should we focus? It was only yesterday that I fully realized the shortcomings of my career so far, so please forgive me if I have not figured out the details of what to do next but here are some thoughts. I think the focus needs to be on power and rebalancing of power in society. We need to shift power from those who have too much (what Mintzberg called legal corruption) and give power back to those who do not have enough.

3 Areas That Need Improvement

In the context of companies, and how they can improve there are a couple of ideas forming in my mind on how to achieve this. One of these focus areas was mentioned by Mintzberg and it is well known, particularly in the context of carbon, and that is we need them to internalize externalities – and companies like Trucost which helps companies monetize the resources they use more accurately are helping here. Circumstances are conspiring to drive this approach, as a planet with 7 billion stresses the resource base, and the one with 9 billion, that is coming soon, will cause dramatic changes in the price of resources. In addition to monetization of externalities, the pricing of ecosystem services needs to be accelerated. Money is a form of power and if we start to a price externalities and ecosystem services then the financial side of the house – in industry, in government and in our own homes will be engaged and management practices will follow.

Secondly, thinking about Mintzberg’s call for rebalancing of power led me back in time to when I was chair of my universities chapter of the Public Interest Research Group or PIRG. PIRGs were founded by Ralph Nader and they are still present on many university campuses across NA.  While I was involved in the UVIC PIRG I attended a training session in California on organizing issue campaigns and one of the key tools that was shared was power mapping – which entailed identifying all of the stakeholders around an issue and mapping out their influence, and power, and identifying who to focus on to drive change.

Thinking about this lead me to think we need to do a better job helping organisations understand the powers they have, and to work on addressing power imbalances.  We hear a lot about shared value in the CSR community but not so much about power sharing.  I think companies need to look at the power they have and identify where changing the power dynamics can be beneficial – that is result in a more balanced consideration of interests.

I was struggling to find a good example to illustrate this but I recalled some work I did in the Middle East. There, unlike here, all energy projects are joint ventures between government and multi-national companies. These multi-national companies often must, at the behest of the host government, hire workers through third party companies and I have seen firsthand, evidence of these intermediary companies abusing these workers.  Anyone following the Guardian’s effort to expose labour practices in Qatar in the lead up to the 2022 World Cup will know what I am talking about.

The MNCs companies need to transfer some of their power to the workers building their facilities and not hide behind contracts with third party organisations. This will improve the lives of these workers who often have substandard working conditions, poor health and safety training, restrictions on movement and association, and in some cases the loss of control of their passports and it will reduce a massive risk these companies are exposing themselves to.  Unfortunately instead of MNC companies getting together and stopping this model, it appears that governments and companies are facilitating the expansion of this approach through things like lax temporary foreign worker rules, and poorly designed trade agreements.

We have to change this power dynamic or we will be accelerating the race to the bottom. A bottom where workers are seen as commodities to be used up as opposed to people.

We have to change this power dynamic or we will be accelerating the race to the bottom. A bottom where workers are seen as commodities to be used up as opposed to people.

Of course companies cannot do this alone and that brings me to another focus area – strengthening government.   In my view it is a dangerous myth that businesses benefits from weak government and lax regulation, and for evidence of this I would point what has happened to the oil and gas industry in Alberta where a laisse-faire approach by the federal government inflicted considerable damage to the global reputation of that industry. Now one can argue that the carbon intensity of the tar sands would still have been an issue even if there is a strong government. But is also likely that progressive climate policy with clear targets and a balance of regulations, investments in reduction technologies and a level playing field for lower carbon supply would have encouraged capital to flow to lower carbon options and reduced the real possibility of wasted capital, sitting on top of stranded assets.

We are in the bizarre position that companies can use clauses in trade agreements to sue governments for implementing progressive environmental regulation, or for trying to keep products made in unsustainable ways out of their markets.

Another example where governments need to shift the power dynamic is the liberalization of trade. There have been many benefits to trade liberalization but is has also enabled the pursuit of low cost labour in unregulated environments around the world. This has accelerated pollution and driven consumption of some resources to unsustainable levels. And governments can do little to stop this – today we are in the bizarre position that companies can use clauses in trade agreements to sue governments for implementing progressive environmental regulation, or for trying to keep products made in unsustainable ways out of their markets. This has to stop.  Strong government and well-designed regulations and trade agreements ensure stakeholder interests and power are more balanced, and this provides stability and lowers the risk of business interruption. I believe government led inclusive processes around the design of environmental and social regulation and standards are a means to ensure businesses can operate in the future – that they will have access to resources, water, energy, fibre, they need.

So pricing externalities, rebalancing power structures and creating stronger government – these are my Mintzberg inspired yet clearly underdeveloped thoughts on the primary focus areas to concentrate on if we want to achieve the objectives of corporate social responsibility.  Will it be enough? I am not sure, but I think it will drive the scale and speed of change we need more so than working with individual companies. Note to my clients here – that does not mean you!  Oh and one other area that needs some focus is the digitization of our lives – surely this can be more than a vehicle to drive consumption and eliminate humans from production.

At Five Winds we talked often about how to make a difference, and we believed we were changing the world. As I mentioned we advised firms on corporate strategy, product strategy and the implementation of sustainability into their core business practices – and much of this was, and is good work. But knowing what I know now I would say this. If you take, or are on, a similar path, you will have a good career, make a good living and certainly achieve some things you can feel good about. But when you reach like I have, what a friend Brian Kelly once called, the legacy portion of your career, you will look back and sadly you will realize, as Henry Mintzberg pointed out to me Sunday, it was not enough.

In closing I would like to share one final story. In the early days of my career I went on a month long study mission to Sweden and the Netherlands to look at strategy and actions organizations were taking to shift to sustainability. This was not long after Chernobyl and the effects that event was having on the safety of the Northern European food chain was driving a lot of rethinking about energy, business and regulation.

“this is not the world I imagined when I was a child”.  His point being that we were on an unsustainable path and we need to change things and he wanted to be part of that.

One of the people we interviewed was a Swedish insurance executive whose company was taking a radically different approach to insurance, focusing on helping their clients become more sustainable. They believed working with clients to improve efficiency, reduce pollution and set higher health and safety standards, lowered their risk. We asked him why they were taking this approach and he said it made good business sense and then he got kind of whimsical and he said “this is not the world I imagined when I was a child”.  His point being that we were on an unsustainable path and we need to change things and he wanted to be part of that.

Well I have devoted my career to being part of that change he was thinking of and this is not the world I imagined when I started on this journey. My advice now is to focus on different things than traditional CSR, and as Mintzberg suggests work on changing the power dynamic between government, industry and civil society.

Thank you
Kevin Brady, June 2015
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Kevin Brady has a 20-year background helping his clients and Canada move towards more sustainable practices. He sits on a number of national and international standards boards and has worked extensively with major retail and mining clients and industry associations. To connect with Kevin, please visit his website at SustainableEnterpriseConsulting.com.