Many NGOs and businesses have innovated with commitment and imagination over the last year. But with the global economy still weak, the challenge remains how to do more with less
Partnerships between companies and non-profit organisations look set to multiply and strengthen in 2015, if the number of high profile alliances last year is anything to go by. And the most fruitful will be innovative in some way. While weak oil prices will dominate much of the economic and political backdrop, so will the countdown to an international summit on climate change at the end of the year, analysts say. That meeting, in Paris, is aimed at reaching a global treaty on carbon emissions but a plethora of smaller scale deals and alliances between corporations, NGOs and IGOs on all kinds of sustainability issues, could be collectively just as important over the course of the year.
On the downside, the plunging oil price – in December Brent crude had lost roughly half its value since June 2014, trading at a five-year low under $60 a barrel – could hamper attempts to shun fossil fuels, particularly in transport. For global supply chains, the task will be to demonstrate that ethical production with respect for human and labour rights is compatible with competitiveness and profitability.
By promoting those standards as far as possible, progressive companies are pushing the notion that such rights are precompetitive, a basic requirement for doing business in global markets. Innovation here will continue to be key, whether in the sphere of technology, company structure or wider economic models.
Francis West, head of private sector policy and advocacy at Unicef, said the organisation’s new CSR unit, which is based in London and will be operational sometime in Q1, would focus on implementation of the UN Guiding Principles on Human Rights “through a children’s lens”.
“Business and governments have to accelerate work in this area over the next three to four years if the Guiding Principles are to retain any real purchase, so the next couple of years are absolutely critical,” West told Ethical Corp. “Some governments at the UN are proposing a binding treaty on business and human rights – that’s partly driven by what they see as a lack of implementation so far.”
The UN Guiding Principles were unanimously endorsed in 2011. They only had a very brief mention of children so Unicef, the UN Global Compact and Save the Children established a framework called Children’s Rights & Business Principles, and this will be central to Unicef’s CSR unit.
The UK government launched an action plan on human rights in 2013 yet still very few companies are actually conducting human rights due diligence, West said. “It’s partly because that’s quite a high bar, but government could also do more to encourage the businesses with which it interfaces to conduct due diligence. Also they need outside help, and that’s one reason our CSR unit is being set up.”
A series of workshops will take businesses through the human rights due diligence process to integrate children’s rights into their policies and practice. There will also be a worksteam with more intensive support for a few businesses. Some investors are also applying increasing pressure in this area – Aviva has announced it will benchmark UK companies on human rights due diligence from 2016.
“Leading businesses are very keen on ensuring a level playing field,” West said. “Some have even lobbied the Prime Minister on the Modern Slavery Bill to add a clause on supply chain transparency. There’s a whole convergence of pressures towards greater action and we’re here to offer help in that process. It’s relatively early days, but there is a lot more to achieve.”
Supply chain scale
Aviva’s Street to School programme, which supports NGOs working with street children in the UK and 16 other countries, got 870,000 children into education over five years, far exceeding an original target of 500,000. “You have to have ambition, and have a target that feels scary,” said Amanda Mackenzie, Aviva’s chief marketing and communications officer. “We are also helping build a body of knowledge. Partnerships are key to all that,” she told a roundtable event in London in December 2014.
Benjamin Smith, senior officer for corporate social responsibility at the International Labour Organisation (ILO), said the companies making the biggest difference to eradicating child labour in their supply chains all recognised that it was usually linked with other “decent working deficits”: collective bargaining, freedom of association, fair wages etc. Getting good data is also vital, Smith said. “Rigorous impact assessment is really worth the investment. Then companies can point to tangible progress and revisit it a few years later.”
High hopes ride on Unilever’s joint business development plan (JBDP) to improve the lives of 1 million people in its extended supply chain by the end of 2017. A logical extension to Unilever’s Sustainable Living Plan, launched in 2010, its wider aim is to turn sustainability “from niche to norm”, according to the company’s partner Solidaridad, the international civil society organisation that facilitates the development of socially responsible and profitable supply chains. If companies want assurance of supply of raw materials in the next 30 years, when they might have to double production to meet rising demand, then this can only be attained through sustainability, Solidaridad argues.
Further steps towards both circular and sharing economy models are inevitable, analysts say, as consumers look to make savings on traditional goods and services and entrepreneurs and innovators seek to satisfy demand. The sharing economy – typified in the UK by online services such as TaskRabbit, Airbnb and Zipcar – is already worth about £500m now and could be worth up to £9bn a year by 2025, according to PwC. It could turn the UK into a nation of “microentrepreneurs”, according to another review, by Debbie Wosskow, founder of Love Home Swap.
Sharing economy platforms, mostly online, help people access property, resources, time and skills. This includes peer-to-peer marketplaces like Etsy, car-sharing clubs like City Car Club, and time banks such as the Economy of Hours, which lets users trade their skills, an hour for an hour. The rationale is that ordinary people can save money by accessing goods and services rather than buying them outright, while providers can make money through the assets and skills that they already have.
About 20,000 property owners in the UK already rent out their driveways through JustPark, making an average of £465 a year (£810 in London). People renting out their own cars through easyCar Club earn an average of £1,800 a year, and Zipcar members save around £300 a month next to owning a car.
Meanwhile, 63% of people who have rented out rooms and apartments using Airbnb say the extra cash has helped them pay bills they would otherwise struggle to pay. Wosskow’s review makes over 30 recommendations that seek to help people exploit their homes, cars and other assets. These include creating more carpooling lanes in high congestion areas, setting up a start-up incubator and innovation lab for UK sharing economy platforms, and encouraging jobseekers to use online sharing platforms to boost their skills and experience. It also called for tax advice.
“There is a great opportunity here for the UK to be at the forefront of the global sharing economy,” Ms Wosskow said. Lawyers have argued some legal issues need to be resolved in order to create a fully enabling regulatory framework for the sharing economy. These mostly cover insurance and tax. Likewise, the concept of the circular economy is gaining traction, albeit on a patchy basis. Companies are focusing on encouraging the build-up of “circular” supply chains to increase the rate of recycling, reuse and remanufacture. This would maximize the value of materials when products approach the end of their use.
“The circular economy is an opportunity industry can’t afford to miss,” said Sir Ian Cheshire, group chief executive of Kingfisher. “It can drive our next generation of innovation and business growth, cushion our business from price volatility, provide us with competitive advantage, and help us build better relationships with customers and suppliers.”
A number of initiatives last year, big and small, gave hope that 2015 would build on the spirit of innovation in resource management. But with global demand for energy, food and commodities constantly rising, the challenge is still to keep pace. Some major multinational corporations are showing that sustainability is now ingrained into their strategy and operations. The hope is that they will serve as exemplars, inside and outside their own sectors. For instance, Mars, Inc. won the EU-African Chamber of Commerce Sustainable Economy Award for its Vision for Change (V4C) programme, which is part of its Sustainable Cocoa Initiative. The scheme addresses farmer productivity and community issues together. Mobile phone and electronics companies also stepped up efforts to keep conflict minerals out of their products, and this is likely to continue.
However, the shocking scale of plastic pollution in the world’s oceans was revealed by research published in late 2014. More than five trillion pieces of plastic, weighing about 270,000 tonnes, are floating in the world’s oceans, causing damage throughout the food chain, according to data collected by scientists from the US, France, Chile, Australia and New Zealand. Most of them are “micro plastics” measuring less than 5mm.
The volume of plastic pieces, largely deriving from products such as food and drink packaging and clothing, was calculated from data taken from 24 expeditions over six years to 2013. The research, published in the journal PLOS One, is the first study to look at plastics of all sizes in the world’s oceans. Large pieces of plastic can strangle animals such as seals, while smaller pieces are ingested by fish and then fed up the food chain, all the way to humans. Included are the chemicals contained within plastics, as well as the pollutants that plastics attract once they are in the marine environment.
The research, the first of its kind to collate data on floating plastic from around the world, will help chart future trends in the amount of debris in the oceans. But researchers predict the volume will increase owing to growing output of throwaway plastic – just 5% of the world’s plastic is recycled today. More responsibility should be placed on the manufacturers of plastics, campaigners say, which is already the case in Germany.
The question of fuel
Cheaper fossil fuels will tend to make it harder for cleaner forms of energy like solar and wind power to be competitive on price. However, markedly lower oil prices most directly affect transport fuels like petrol, diesel and jet fuel, hence they should not cause a big reduction in renewables investment, analysts say.
In cycling, the European Cycling Federation (ECF) said more than €2bn could be unlocked for the cycling industry from EU subsidies until 2020. “We should act immediately to take advantage of this opportunity”, said Adam Bodor, ECF director of regional policy. By combining national funds and private capital with European money, member states could benefit from a “remarkable return on investment” while fulfilling their commitments for clean and sustainable growth, he added. Cycling already supports more than 650,000 full-time jobs in Europe and this number would rise to 1 million jobs by 2020 if cycling modal share doubles in line with ECF strategy, Bodor said.
Barring an upset, 2015 is due to culminate in a deal to tackle climate change, although the extent of commitments will not be known until the Paris talks end. In the meantime, many innovators are busy tackling carbon emissions in various ways. GE says it is on track to meet a commitment of $15bn investment in its “ecomagination” R&D programme from 2005 to 2015. Ecomagination products and services are aimed at bringing significant environmental advantages, such as a sharp drop in freshwater use and greenhouse gas emissions. In February 2014 GE pledged to invest a further $10bn by 2020.
US-owned company Novomer is trying to find ways to replace existing plastic materials with sequestered carbon, from carbon dioxide and carbon monoxide. It uses organic catalysts to encourage the carbon in carbon monoxide –from industrial processes – to form long chains, producing a material that can replace many current plastic uses. Eventually, the company estimates, its work with carbon monoxide could yield market potential of more than $12bn.
Novomer uses traditionally produced plastic monomers to trap carbon dioxide from various sources, creating foams that can be used in footwear, construction, clothing and many other products. These sources include ethanol fermentation, ammonia, hydrogen and ethylene oxide production, natural gas wells and the flue gas from coal-fired power plants.
The foams have less carbon than most existing foams, and so could be less flammable. As well as sequestering carbon, they could also be less bulky and more rigid, allowing them to offer the same protection and insulation properties but in more compact forms. Novomer’s foams are in the development stage and the company estimates they are five years from market. To sequester dangerous greenhouse gases, while increasing the range of materials available to designers, looks like a win-win.
In a similar vein, AirCarbon diverts carbon from the atmosphere, but instead of burying it in the earth or storing it in canisters, it repurposes it as a useable material.
AirCarbon combines methane and carbon dioxide with a proprietary catalyst to rearrange the carbon into long carbon chains. The result is a plastic that can be used for bottles, chairs or almost anything else that plastic is now used for.
Founder Mark Herrema emphasises that his company’s product is completely carbon negative: from collection of the greenhouse gases to transportation to production of the plastics. Currently, AirCarbon’s plastics are used by more than 30 companies, including Virgin and KI. “Keeping up with demand is our biggest challenge right now,” Herrema says. In August 2013, the company scaled up to commercial production and is now focusing on expansion. It plans to open another plant in early 2015, competing on price as well as sustainability.
Case study 1
Funding the Big Society
Social investment bank Big Social Capital has launched a £15m prize to the private company that devises the best project for creating strong business and social value in the UK. The winner of the Business Impact Challenge will be chosen by a panel including former Standard Chartered chairman Mervyn Davies, internet entrepreneur Martha Lane Fox and Ian Davis, the former managing director of McKinsey & Co.
Lord Davies said, “Today’s most innovative companies are building social value into the core of their strategy, moving beyond corporate social responsibility activities to generate competitive advantage through business models that create positive financial and social impact. This is a fantastic opportunity for businesses at the forefront of this movement.”
As well as the matched investment, the winning idea will also receive expert support in structuring and launching their idea from Big Society Capital, which was set up in 2012 to make it easier for charities and social enterprises to get access to finance.
Big Society Capital is funded from dormant bank accounts and contributions from the UK’s four main high street banks – RBS, Barclays, HSBC and Lloyds. The deadline is in May and the winner will be announced in autumn 2015. Businesses can enter at www.businessimpactchallenge.com
Case study 2
UK start-up MeshPower is exporting micro-grids to off-grid communities in Rwanda that are demanding affordable, green energy. More than 1 billion people in emerging markets worldwide still do not have regular access to electricity, according to some surveys. Traditional electricity grids are often too expensive for installation in rural and sparsely populated areas.
MeshPower has identified Africa as one of its biggest potential markets and is now more than a year into field trials in Rwanda. Demand for their plug-in, pay-as-you-go electricity system has been overwhelming, the company says.
Up to 84% of the Rwandan population lack access to electricity but there is now strong political and financial drive to connect up to 35% of the population by 2020 under ‘Vision 2020’. This new legislation and improvements to vital infrastructure, such as roads and mobile internet, are providing MeshPower with the means to bring power to rural Rwanda.
MeshPower is currently operating 10 systems in Rwanda, and these supply energy to 155 domestic and commercial customers daily. The projects are located in Rwanda’s southern and eastern provinces, close to the border with Burundi, where grid connectivity is very limited.Bioplastic Carbon emissions Child labour Human rights NGO partnerships sharing economy Unicef
May 2015, London, United Kingdom
Europe’s leading meeting place for corporate leaders delivering sustainable business. 12+ C-Suite and over 300 attendees will address some of the key issues and opportunities, including: sustainable innovation, collaboration, and resource efficiency and brand strategies