Monday, November 23, 2015

Responsible Marketing Summary

Responsible Marketing
                
            Marketing definition is continuously changing by time, If we have a look 80 years ago, we can clearly say that definition cant able to fit tomorrow. There are few aspects of marketing currently, and responsible marketing becoming an important part of marketing every day. Responsible marketing is based on the idea that market offerings must not be only profit driven, but they must also reinforce social, environmental and ethical values for benefit of citizens and planet. I read in many sources that the people have proven more likely to support a company they perceive as being ethical and fair at all levels of their product life.
                
             In order to manage a responsible marketing campaign, responsible marketers should aware of the power of social media and internet. Internet can become a really dangerous place for big companies, If company deals with some kind of un-ethical action. Millions of people can spread words like lightening. There was a BP oil accident several years ago. Everyone in the world learnt the accident and their carelessness. So responsible marketers should honest and transparent about social causes. Another important advice is being aware of legal regulations. Some industries are dealing with financial and legal services, in order to avoid fines and consumer backlash, marketers in the firms should be careful about their actions.

                
          Recently,  most of the big company has social media accounts, I see, some of the companies are struggling to manage their social media accounts (facebook, twitter, LinkedIn, etc.). They are not interacting enough with their social audiences on platforms. This may lead consumer backlash. I personally think that, when I post some question or complain into companies page on facebook, I expect someone to interact with me soon but sometimes I am receiving that comment 25 days later. It is important to be involved quickly with audience at social level.

Wednesday, November 18, 2015

Final post

Responsible marketing considers Vc, Vf, Vp, Vs, Vn as a whole. It means when company decides to offer solution to a specific problem, the solution does not trade one value for another. New problem should not be caused when old one is solved.
To change current marketing situation, companies will have to be truly aware of the impact of their products. Although government can prescribe regulation so that companies are forced to be responsible, it is a solution only comes after problem happened. Many companies accept the idea of responsible marketing out of cost reduction consideration. It is reasonable in that companies' interest is subjected to shareholders' interest largely. If they want to change, probably they should start by choose investors carefully and make sure there is no interest conflict.

Monday, November 16, 2015

ClimateWise an initiative that is helping the Insurance Industry in UK to address climate risk.

The ClimateWise Principles were launched in September 2007 by HRH The Prince of Wales and a group of insurance industry members committed to follow six principles on managing climate risk.
  1. Lead in risk analysis
  2. Inform public policy making
  3. Support climate awareness amongst our customers
  4. Incorporate climate change into our investment strategies
  5. Reduce the environmental impact of our business
  6. Report and be accountable
As an initiative, ClimateWise is run on a not-for-profit basis by the University of Cambridge Institute for Sustainability Leadership (CISL), and there are over 30 insurance companies and organisations in the UK signed up to the ClimateWise Principles. The ClimateWise report sets out innovative examples of risk management and investment practice that should become increasingly relevant indicators of progress and contribution towards a resilient low carbon economy.


Progress towards that contribution varies across members, but examples are emerging of new action among the members, for example:
  • Informing customers of climate risk to enable them to protect themselves
  • Incentivising the move towards sustainable behaviours through the claims process
  • Moving capital towards sustainable businesses and assets through investment decisions
  • Supporting innovative investment products such as green and flood defence infrastructure bonds.

Through its approach  ClimateWise initiative is supporting their members to further understand they role and the impact of their business.

http://www.climatewise.org.uk/independent-review/

How plastics in the ocean get into food chain

Every small to smaller particles are in this world are in the environmental chain. And how the plastics are coming back to us in our stomach through foods.
http://www.bbc.com/news/science-environment-34428677


Two worthwhile documentaries

I admit this is somewhat off topic, but I feel the need to share these two documentaries with you. They have changed my perceptive on things and are highly relevant to the meat discussion I'm sure we will have tomorrow.

I'll link them in full, they are feature films 90 minutes a piece. They are really worthwhile to see. In short it covers the horrendous conditions under which super marker meat is produced (food inc) and the unspoken problem of emissions from the meat industry (cowspiracy). If you haven't seen them. They are worth the watch.



Sustainability Report - GLS Bank

The german GLS bank looks like the perfect bank, but I wanted to know more and had a look at their sustainability report. And I was very impressed - who needs annual report is you have GRI G4 standardized sustainability reports?! There is really everything in there... from cash flow statement to use of recycled material, from general strategy and analysis to energy and water use and so on. Even the ratio between the highest and lowest salary is published and critically reviewed.

There is, imho, no need for another report if a company has a sustainability report like the GLS bank - which means a GRI G4 standard report. Another big step in the right direction.

Better late than never - TerraCycle and the "new" cigarette butts

Hope it's still fine to post about TerraCycle :D

I think you have all heard about these things: K-Cups
It not only makes bad coffee, it also produces a hell lot of hard-to-recycle plastics. One of the "great inventions" of the 21st century...

Even though, Keurig announced to make these things recyclable by 2020, TerraCycle takes care of them now already. Not much more to say about than: Good job, TerraCycle! Thank you!

How Much Trust Can We Put on Sustainability Reporting?

Today, with the effort of improving transparency and accountability, many companies make it their business to include reports about their performance of their sustainability initiatives in their annual reports. However, Sustainability Reports have often been categorized as intangible and unable to be measured, the fact remains that they are having an increasingly significant effect on company’s value. It has provided good reputation for the company but some take advantage of it because of the variation across companies, countries and issue areas to be covered in the sustainability reports. So, it opens doors to omission of some issues and putting more stress on the ones that can help the company to green-wash its image.

I think that the absence of a standardized sustainability reporting format and strong regulating bodies (independent external auditors, NGOs and or government) it becomes harder to trust what is being reported and what is actually being done. Like the recent VW scandal which has helped investors and customers become more skeptical about sustainability reports.

According to its Sustainable Value Enhancement, VW group states:

 “We run the business responsibly and with a long term perspective along the entire value chain. Everyone should benefit from this-our customers, our employees, the environment and society.”
I wonder how much of this value has been affected by the false sustainability reporting. Will it be the end of VW’s image? How will they fix this problem? 

Sunday, November 15, 2015

Sustainability Reporting Guidelines

Searching through internet it was quite overwhelming of the various sustainability reports and how are they all so different in contents. Finally I found that they are guidelines that companies can follow when putting together this report.

According to GRI a Sustainability reporting is the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organisational performance towards the goal of sustainable development. For many companies a sustainability report provides a balanced and reasonable representation of the sustainability performance of an organisation – including both positive and negative contributions.

GRI provides a reporting framework of what companies need to include in their sustainability reports.
The GRI Reporting Framework is intended to serve as a generally accepted framework for reporting on an organisation’s economic, environmental, and social performance. It is designed for use by organisations of any size, sector, or location. It takes into account the practical considerations faced by a diverse range of organisations – from small enterprises to those with extensive and geographically dispersed operations

This framework is divided into two parts:
Part 1: Reporting principles and guidance
Part 2: Standard disclosures

For further info on GRI Reporting Framework:
https://www.globalreporting.org/resourcelibrary/G3.1-Guidelines-Incl-Technical-Protocol.pdf

Nissan's Sustainability Report

I have given a look to Nissan's Sustainability Report. I found interesting that Nissan mentioned not only the environmental friendliness of its autos, but also regarding their operations in general (e.g. use of clean energy sources in their buildings). Furthermore, I found also interesting that Nissan does not only stress their commitment towards the environment, but also it mentions its support to philanthropic activities. This points out that Nissan wants to show that it is a sociable and environmental friendly company.

Regarding the information about its environmental contribution, I found noteworthy that they present several statistical data and results. However, Nissan never mentions in its report how the measurements were carried out or if any institution has certified them (especially the ones related with the environmental impact of its operations). In my opinion, Nissan shall include this information. Otherwise, some people might think that Nissan is using some kind of Green Washing method. By providing more accurate and complete information, Nissan can get a greener image and convince more people about the honesty of its efforts. 

Friday, November 13, 2015

Huawei Sustainability Report 2014

Water footprint is quite interesting point in Huawei's report. "Blue water" refers to ground/surface water that is consumed in operation and production. "Grey water" refers to the water that is polluted.
Huawei reports its program of collecting rainwater, reusing water, recycling reclaimed water.


For other parts of the report, the figure above shows up most frequently. Huawei highly focuses on energy-saving and GHG reduction.

Another point mentioned in the report is new bio-tech material, such as bioplastic that hurts environment less and soy ink that can be de-inked.

Huawei also claims reducing landfill rate to 2.37% which astounded me. But detailed operation or approach is not mentioned in the report.

Wednesday, November 11, 2015

value for ecosysytem of earth.

http://www.bbc.com/news/science-environment-34540193
An independent study found that lab-grown beef uses 45% less energy than the average global representative figure for farming cattle. It also produces 96% fewer greenhouse gas emissions and requires 99% less land.

Tuesday, November 10, 2015

Terracycle Quits Worm Poop Business

Terracycle Quits Worm Poop Business, Merges with Miracle Gro


         Terracycle starts his journey with worm poops. They sold TerraCycle plant food successfully in the home depot and wall mart markets back in years but then company decided to take a radical shift in their business model. In 2009, company merged with Scotts Miracle-Gro for the production of Plant fertilizer and they quitted worm poop project, which is sad because Scotts Miracle-Gro is producing mostly synthetic line of plant food made from a petroleum based formulation.[1] Which is also sad that company still has the documentary and all those videos about worm poop production on YouTube. 

Please check the link for further information...

http://www.triplepundit.com/2009/04/terracycle-quits-worm-poop-business-merges-with-miracle-gro/

Monday, November 9, 2015

A update and great looking bags

Interested in seeing what happen after the case I founc this post, which seems to indicate that they continued on with corporate relationships. Im also very impressed by the bags... Id buy ut!

https://www.takepart.com/article/2015/11/02/green-business-recycles-un-recyclable

Sunday, November 8, 2015

Brigada de Esponjas Scotch-Brite

Recycle your waste with Scotch-Brite

To leave the planet, even cleaner, Scotch-Brite joined TerraCycle in Brazil, to create a recycling of household cleaning sponge program. The program will provide a nobler destination for discarded sponges and the opportunity to raise money for those who participate in this collecting program. This program is really good because until now the normal destination for used sponges was to throw them in the garbage and, the best part is that they collect sponges from any brand.

The video shows how to participate in this collecting program.


https://www.youtube.com/watch?v=8MbRwc4pXK0
FROM ECO-REALITY TV SHOW TO INTERNSHIP PROGRAM AT TERRACYCLE


With the aim of changing consumer behavior or create greater awareness for how people manage waste, TerraCycle has played a big role. The company and its employees were featured as in a reality TV show called “Human Resources” which has aired for two seasons now. This TV show, unlike other reality TV shows, lets the viewers know that all wastes are either recyclable or reusable. It also recruits local university students and makes them compete among each other to work on specific recycling projects. This TV show was reported to have gained good reviews with audiences ranging from primary school student to adults.
To encourage the younger generation to improve waste management, TerraCycle also provides internship programs to youngsters. At TerraCycle, these youngsters get the opportunity to work on different cool projects for recycling and up cycling wastes. They get to participate in activities within the different departments according to their interests and develop the knowledge and skills that they would not have learnt at school.  
I believe that it is these kinds of initiatives that help create responsible citizens of tomorrow. The passion and dedication of Tom Szaky has inspired many people and provided greater hope that it is possible to find many other solutions in the near future.


http://www.takepart.com/video/2015/10/09/recycling-gets-real-season-finale-human-resources-season-2-finale-clip



Saturday, November 7, 2015

TerraCycle: The Google of garbage?

I was stunned to see the innovations.
https://www.youtube.com/watch?v=qA9Iw9OsJmo

Sustainability is happening thing in current world, day by day as reports are coming in, it is influencing the finances of several company. 

Terracycle in Oregon: Are they doing a good job regarding plastics?

I found the following note regarding Terracycle performance in Oregon:

http://koin.com/2015/09/21/terracycle-helps-ore-students-repurpose-waste/

According to this note, Terracylce is collecting several kinds of waste, plastics among them. Furthermore, the article describes that Terracycle is using those plastics to produce new products. Keeping this in mind, I am asking myself, as polymer chemist, if this is the best thing to do.

Each time that a plastic is recycled, it looses mechanical and chemical properties. Therefore, each time that a plastic is re-used, that plastic needs to be used in a product whose demands are lower than the previous product. The only way to avoid this is using a chemical recycling where the polymer is decomposed again into its building blocks or monomers and then undergoes chemical reactions to become again a polymer. By proceeding this way, the re-cycled material can keep its properties (the properties can be improved depending on the chemical process).

Based on what we have seen until now, it seems that Terracycle has not considered the possibility of using the chemical recycling methods for their close-loop supply chain. In my opinion, Terracycle shall start considering this in order to be more efficient regarding the re-use of plastic materials. In this way, Terracycle is not only decreasing the amount of waste, but also the consumption of raw materials, such as oil.

Thursday, November 5, 2015

TerraCycle launches UK-wide cigarette recycling program

This is a new program to offer free recycling for cigarette butts and packaging.

This is a free scheme that has been offered to both groups and workplaces, as well as individuals over the age 18. Anyone who wants to participate in the recycling program simply needs to collect their cigarette or cigar butts and send it to TerraCycle. TerraCycle will accept anything from ash, used and unused cigarette filters, tolling paper, inner foil packaging and outer plastic packaging.
Much of the cigarette waste will be recycled into a range of plastic products, such as delivery pallets while and remaining tobacco or paper will be composted.

It will be interesting to see whether or not places such as pubs, restaurants, shopping centres, trains stations, airports, and individuals will actually participate in this scheme.


In my opinion this sounds like a good initiative, however how will the logistics of this scheme work, who will be collecting this waste or is it the responsibilities of the the groups, workplaces or individuals to drop off the waste at TerraCycles facilities?

For more information:

Terracycle tutorial of recycling Halloween waste

Halloween is not popular in Chinese culture, but I know in other countries people decorate their houses with pumpkins and scary staff, treat kids with baskets of candy and people dress up in costumes which is used only once in a year. For valuable things, people might want to put them away and use them in the next Halloween. There are things, like candy wrappers, pumpkins and ragged costume that will end in trash bin.
Just in this Halloween, Terracycle posted an article to teach people recycle these waste. Some of its tips are doable. Like throwing unwanted costumes in donation bins, offering plastic/wooden pumpkins on Freecycle.org, reuse candy bucket for other purpose. Other tips, like composting pumpkins/hay, are not easy to implement. Terracycle also accepts candy wrappers that used to be unrecyclable.
In China, we really have the trash problem after many kinds of assemblies and festivals. Food package is the biggest portion of waste. There are trash bins for collecting waste but not sorted. Besides, waste is simply too much to be handled by limited number of bins. If people can be educated, or better instructed, to recycle, by volunteers or this kind of Terracycle tutorial articles, the waste problem should be handled better.


http://www.providencejournal.com/article/20151031/ENTERTAINMENTLIFE/151039963/13937/LIFESTYLE


Tuesday, November 3, 2015

Ola, Nissan ink partnership for cab leasing programme


This news do not have any thing to do with sustainability.
But seems the direction as our Prof said is on the direction of product leasing and who owns the product will finally come to the producer.

http://timesofindia.indiatimes.com/business/india-business/Ola-Nissan-ink-partnership-for-cab-leasing-programme/articleshow/49649384.cms


Monday, November 2, 2015

Miyako Ecology Center CLICK FOR MAP

Muda - Mura - Muri

When companies are looking for ways to reduce waste, theye will eventually find the Toyota Production System (TPS) and the so called "7 wastes" (I think we all heard/read enough about that^^).

The three key elements of the TPS are Muda, Mura and Muri. A quick wikipedia research helps to understand these terms, if you are not fluent in japanese.

Muda (無駄) is a Japanese word meaning "futility; uselessness; idleness; superfluity; waste; wastage; wastefulness"


 Mura () is a Japanese word meaning "unevenness; irregularity; lack of uniformity; nonuniformity; inequality"

 Muri (無理) is a Japanese word meaning "unreasonableness; impossible; beyond one's power; too difficult; by force; perforce; forcibly; compulsorily; excessiveness; immoderation"

Or, if you are more a picture-kind-of-person...
I think its not very difficult to understand these concepts if you take a little time to think about it. But it is in my opinion essential to know about them for all of us. Since we all studied in Japan, and all of us are "somehow" interested in making the world a little better, we should keep these concepts in mind when doing our future job, whatever it might be. This will not only help to increase the profitability of the company, but also to decrease the produced waste in many ways, which is a benefit for all actors in the value system.

Further readings & Sources:
http://deejaygraham.github.io/2014/11/24/muda-muri-mura-so-what/
http://leanmanufacturingtools.org/71/muda-mura-and-muri-lean-manufacturing-wastes/
http://www.shmula.com/about-peter-abilla/what-is-mura-muri-muda/
https://en.wikipedia.org/wiki/Muri_%28Japanese_term%29
https://en.wikipedia.org/wiki/Mura_%28Japanese_term%29
https://en.wikipedia.org/wiki/Muda_%28Japanese_term%29

Volkswagen pushed into loss by emissions scandal

VW slumps to first quarterly loss in at least 15 years

In the three months to the end of September, vehicle sales fell 3.7% and production fell 11.6% compared with the same period last year

http://www.bbc.com/news/business-34650233

This is not just loss, I have another story to tell for next week how it is going to affect more 100000 people and around the world.

Regards

Nike Considered - a momentum that stopped?

I set out to research a bit into this and found something that excited me a lot, Nike's Considered. Good looking shoes and products, great story and a good cradle to cradle 
perceptive. 

http://uk.reuters.com/article/2008/10/28/btscenes-us-nike-idUKTRE49R74W20081028

the article written in 2008 makes some massive claims, just look at this:
Nike, whose U.S. track and field uniforms during the recent Beijing Olympics were made from recycled Coca-Cola bottles, set a target to have all its shoes meet "Considered" standards by 2011, all clothing by 2015, and all equipment like balls, gloves and backpacks by 2020.

so now, 2015 both shoes and clothing should have the standard right? I try to search Nike.com but the latest report i found of this is from 2011. It then seems to have been abandoned. I can't help but ask why. 

Recycling Program - HP Planet Partners

HP makes example in cartridges recycling.



This video shows the Recycling Center in São Paulo, that has processed more than 1 million 200 thousand units of used ink cartridges. Part of this material turns to new cartridges, and the other parts of printers manufactured in the country. For this and other, HP in Brazil won the 1st place in Green Best Award for Sustainability, and the HP cartridge has been voted the most sustainable product of the country.









Find out more explanation about the global program here:  (https://h30248.www3.hp.com/recycle/ereturns/welcome-hpe.asp?__cc=gb&__la=en)
What Happens to the Old Mobile Phone Models?

I was always curious about the end of damaged and / or old model cell phones once people threw them away in the trash cans. I assumed they could be scrapped and their parts reused for maintenance purposes. Plus, with the fast evolution of technology, we are replacing old models at even faster rates. This also raised some more questions in my mind as to who should be responsible for the way they should be handled after the end of their useful lives.

After searching for some articles online, I stumbled onto two articles “Where Do Old Cellphones Go to Die” (http://www.nytimes.com/2013/05/05/ opinion/sunday/where-do-old-cellphones-go-to-die.html?_r=0) and “E-waste: Whose responsibility?” (https://itunews.itu.int/en/1940-E-waste-Whose-responsibility.note.aspx) helped me answer some of my own questions.

At the end of the day, it is evident that it is responsibility of all the stakeholders (i.e. government, customers, manufacturers...) to consider the impact of the product from birth till death.  However, the manufacturers must take a greater share of the responsibility and take appropriate measures as they control which materials and processes to be used. 

Shenmei beefs up Coca-Cola’s sustainability initiative

I saw this article and  seems to me it is complete green washing.
http://www.shanghaidaily.com/business/consumer/Shenmei-beefs-up-CocaColas-sustainability-initiative/shdaily.shtml


Sunday, November 1, 2015

Teijin Eco-Circle

In my opinion, one of the best examples of manufacturers who are taking the responsibility for their products along the whole product cycle is Teijin. Teijin is a polymer fiber manufacturer that has implemented the Eco-Circle close loop supply chain. Under the umbrella of this supply chain, Teijin chemically recycles PET products. Keeping this in mind, the recycled polymer has the same or higher quality than the original material. This characteristic is not common among the recycled polymers.

Teijin gets the material to be recycled from its customers. One very good example is Patagonia. Patagonia buys PET from Teijin to produce garments. Once these garments have ended its useful life, Patagonia collects them and send them back to Teijin for its recycling. In this way, the loop is closed and there is no necessity of consuming raw materials.

Further information about Teijin's Eco-circle program can be found under the following link:

http://www.teijin.com/solutions/ecocircle/
  

Puma: Future is leasing not selling products

According to Puma the future of sustainability for consumer goods brands isn't selling products, but leasing them through a new consumer model that uses loyalty initiatives to drive sustainable business.

Currently Puma already provides drop of points in the stores to encourage customer to return their shoes, this is their way of making customers more aware and involved in the product lifecycle. However they are hoping in the future they can lease shoes to their customers instead of selling them,,as this will allow them to be truly sustainable.

The idea of leasing seems to be more favourable to brands that want to be more sustainable, but this processes of leasing means that both the brand and customers need to be aware of the product design, manufacturing and product usage.

The idea of leasing seem to be focused around the idea of transparency between the brand and the customer.

For further reading on how leasing can be beneficial to a company here are a few links:
http://www.core-collective.org/puma-future-is-leasing-not-selling-products-marketing-week/
http://leasingworld.co.uk/userfiles/file/Leasing%20equals%20Sustainability%201.pdf








Saturday, October 31, 2015

Current smart phone recycling and reusing plan

I looked into Apple, Samsung and Huawei websites for their recycling smart phone plans. As they occupy the top three in terms of sales globally, their movements may dominate the future in such sustainable development.

I was expecting something innovative. But their plans all look like very identical. Setting recycle stations all around their market regions, telling customers that the companies won't charge them for recycling (this just sounds ridiculous, in that they try to make it sound like customers benefit economically from recycling), giving out discount price/coupons in case of customers purchasing new phone.

Besides, they have extended their responsibility to recycling smart phones of other brands. People naturally suspect if the companies are doing this only for market share.
As for their reusing plan, although they claim the renewed phones legally enter the second-handed markets, they just cannot avoid suspicion of selling renewed products as brand new. Moreover, after they close the circle of products' first life-cycle, they must start to consider the second circle of responsibility for reused products, such as user experience, safty. And it would be much harder to recycle a reused product which remains little value than new products.

Monday, October 26, 2015

Jumbo Wild

If you have been to the Patagonia sore at Karasuma Oike recently, you've probably heard about it already. For this of you who didn't, please take the time and watch this clip:

I don't want to spend time and explaining the project in detail. I just want to point out that this is exactly the essence of what Patagonia is preaching the whole time: if you want a sustainable world, stop exploitation!
There are many reasons for the proposed resort and it would be easy for any MBA student to make it "sound nice". But in the end, it's once again the exploitation of the nature. We take something, use it until it is broken and then throw it away and take the next thing, without even thinking of the consequences.

Yes, it would (probably) be profitable. But is this really the most important thing right now? Is a country like the USA really in need of another business based on exploitation of the environment? Can money really outweight public interests, biodiversity and environmental preservation? Should it?

There are a lot of things we should think about very carefully...
Patagonia Whistle Blew on their own Scandal


It is not uncommon for the famous brands in the fashion industry to be involved in human rights scandal. In 2011, one of Patagonia’s manufacturing chains in Taiwan was involved in a human rights scandal by hiring illegal immigrants to work at low wages.  What makes Patagonia different is that it whistle blew on its own scandal. Instead of covering up the scandal, Patagonia made sure that its partners in the supply chain understood the values and costs of doing business responsibly. Towards the end of 2014, Patagonia drafted a migrant worker standard to be adopted by its entire supply chain. This standard will help set the bar for how clothing manufacturers should operate and end modern day slavery in manufacturing. In addition, this will inspire further-reaching change on social and environmental responsibility.

http://www.trulydeeply.com.au/madly/2015/06/17/patagonia-a-purpose-driven-brand-brand-agency-melbourne/

Sunday, October 25, 2015

Stella McCartney sues Steve Madden over Handbag knock-off

Steve Madden has filed a complaint against Steve Madden accusing the lower-priced brand of knocking off one of their most "well-known and enormously popular" handbag styles. Although this lawsuit does not come as a surprise for Madden, the timing for Stella McCartney is rather unfortunate due to the increased attention around vegan fashion items and whether or not vegan was just another word for 'fake' or 'not real'.

There are actually two issues involved in this handbag knock-off: Firstly this handbag knock-off is likely to damage Stella McCartney reputation and result in loss of sale as a result of confusion among customers. Secondly is that Steve Madden knock-off handbag used materials that were harmful to environment, creating a product that goes against everything that Stella McCartney stands for.

Where or not this lawsuit has any leg to stand on, is a debate for another day.

 In my opinion this knock-off brand will raise questions among the Stella McCartney's customers of where or not this high-end vegan bag actually lived up to its promise in the first place. The media attention around Stella McCartney Falabella collection of bags, will also cause customers to take a closer look at other fashion items belonging to the brand. How they handle this media attention can either be harmful or beneficial to the brand especially with the increased focus around vegan fashion. This maybe a platform for Stella McCartney to educate its customers on vegan fashion and its commitment in  protecting the environment.


For more information on this article and vegan fashion:
1. http://fashionista.com/2015/10/stella-mccartney-steve-madden-lawsuit
2. http://www.latimes.com/business/la-fi-vegan-fashion-20150205-story.html
3.http://www.refinery29.com/2014/07/70664/stella-mccartney-vegan-leather



Scope, Consciousness and the ripple effect : From Patagonia to Noah

While this post might stretch what "related" means I think it captures a lot of the things covered both in class discussions but perhaps more so when we consider Patagonia's story. 

Supreme to the uninvited is the perhaps most important street wear brand in existence, much so to the credit of former creative director Brendon Babenzian. 

In the linked article Babenzian talks about leaving Supreme to set up his own brand Noah. While his anti-consumption is interesting enough and echoes Yvon Chouinard's views it becomes truly relevant in the following paragraph:
 "There's something else that's worrying me, and it's something I don't know if I'll ever be able to fix. I don't know what to do about it." He shook his head. "I recently found out that PETA had outed Patagonia for buying wool from a company with farms where the sheep were being treated horribly. I mean, I watched the video and I was holding back tears. It was just brutal. It was atrocious. And, to their credit, Patagonia responded within a day. They dropped that company. But upon further research, I found that this sort of treatment could be common practice in the wool industry. And, I mean, Patagonia has the resources and the buying power to change their suppliers' practices, but for me, I'm too small. So, at the moment, I have no idea where my wool is coming from. I'm like, Do I not sell wool? I love wool. So I'm going to have to find suppliers who treat their animals in a reasonable way, or, you know, take it on the chin."
He thought for a second and added, "I'm not a vegan. I'm not going to stop eating meat. I would just like for animals to be treated in a reasonable way. We don't have to torture them."
I think this speaks volumes to how the perceptions are changing within the industry itself, an perhaps more importantly how this is on the agenda far beyond Patagonia and Stella McCartney . Also Noah seems pretty cool. 

Read the full story - Click here


Problem between Patagonia and PETA

I found an interesting article about a problem between Patagonia and PETA. It seems that PETA discovered that one of Patagonia's wool supplier has been cruel to sheep:

http://www.peta.org/blog/read-petas-response-to-patagonias-reaction-to-horrifying-investigation-of-its-sustainable-wool-supplier/

Although it seems that PETA is right about its claims, I find PETA's reaction and statements very exaggerated. PETA was expecting that Patagonia react immediately, without any previous investigation, and cut any ties with that supplier.

In my opinion, Patagonia is handling the situation properly. This incident only points out that there is still much to do regarding certification and implementation of the Value Chain Index framework.

Patagonia launches sustainable jeans "Patagonia Denim"





The jeanswear fashion often pollute the environment during their manufacturing process, and the Patagonia brand is looking to change that with its new collection of sustainable jeans. Comprising 100% organic cotton grown without synthetic fertilizers, pesticides or herbicides, the relaunched "Patagonia Denim" line uses environmentally sensitive dyes that attach more readily in the fiber, and uses 84% less water and 30% less power than the means conventional.

It would be great if the jeans industry could copy this example.

Friday, October 23, 2015

Patagonia and Stella McCartney playing different roles

Patagonia's most recent move is to release a documentary "Jumbo Wild" about protecting wilderness and originality of nature in Jumbo Valley. To be short, Jumbo Valley is a backcountry area in British Columbia, which is renowned among skiers for its natural environment and wilderness. The movement Patagonia involved with local conservatives, nature lover and skiers, is to resist a large-scale resort developing scheme.
I would also like to mention Patagonia's Tools Conference, a four-day intensive meeting of activists who will receive Patagonia's guidance about how to organize so that they can reach goals without encountering internal disorder.

These two presses are on their website, click through: http://www.patagoniaworks.com/press

These moves are quite impressive, in that they are not related to Patagonia's business, not very closely at least, yet through which I recognize that sustainability has been integrated into Patagonia's core value and vision deeply. Their don't aim at only making business sustainable. Moreover, they have ambition of support sustainability through whatever measures they got.

I also quickly searched about Stella McCartney. They are devoting in leading top fashion without hurting animals. Likewise, they realize about the cruelty existing in supply chain and workers. Recycling project is on running. Their moves deserve applause as well. But comparing with Patagonia, I sense the difference between integrated sustainable mindset and sustainable business.
KPMG report says that
51% of energy CEOs are worried about environmental regulation. #CEOoutlook http://bit.ly/1PJ4jdu
LinkedIn Rich Media Post

Monday, October 19, 2015

Return of sustainability (Jetblue)

Highly questionable series metrics put forth from Jetblue in how to assess the ROI of sustainability practises - as discussed before they seems to have chosen a very liberal definition of the central sustainability concept.


http://www.sustainablebrands.com/news_and_views/new_metrics/brynn_mcnally/rosi_jetblues_unique_new_metrics_assessing_roi_sustainabili

Sunday, October 18, 2015

Marine Stewardship Council (MSC)

For those of you who don't know about the MSC, here's a little introduction video:

I personally think that the idea of MSC is very good. Recent studies have shown the dramatic impact overfishing has on our sea's. (If you are interested in further information, I can strongly recommend the documentary "The end of the line")

However, there have been a lot of troubles regarding MSC and their certification process. As with many sustainability metrics, some organisations get certified and don't deserve it. The reason is often very simple: money. That's what happend in the case of MSC too.

In the beginning MSC went nearly bankcrupt. But a cooperation with "Wal-Mart" boosted the awareness of the people and soon the supply of MSC certified seafood couldn't meet the demand. That's where the "mass certification" of fisheries began, which is not a bad thing itself. But the scientifical basis for the certification was often given by "MSC-made" studies. Independent researcher, who often had different opinions about certain data, were consequently ignored and own results have been promoted instead.

I don't want to say that it's all bad what MSC is doing, but for me it seems that their focus is a little bit too much on the profits, rather than on scientific sustainability. It sure is a very good step forward in reaching a sustainable world, but there's always room for improvement.


Edit:

Further readings:
http://fishyfellow.blogspot.jp/
http://www.undercurrentnews.com/2015/07/28/wwf-concerned-over-msc-credibility-after-spate-of-controversial-certifications/
http://www.npr.org/2013/02/11/171376509/is-sustainable-labeled-seafood-really-sustainable

Carbon Trust Standard

The Carbon Trust Standard is an independent certification scheme from The Carbon Trust founded in 2001, certifying an organisation’s impact in respect of:
  • Energy usage and greenhouse gas (CO2e) emissions
  • Water usage, management and effluent
  • Waste management and disposal.
Its stated aim is to recognise best practice and real achievements in reduction, to help organisations to measure, manage and reduce their environmental impact, whilst improving their resource management and operational sustainability. The certification process aims to identify inefficiencies in resource use and to provide a framework for improving management processes, reducing waste and costs.
They offer the following certification based on their clients needs:
  • Carbon Trust Standard for Carbon
  • Carbon Trust Standard for Water
  • Carbon Trust Standard for Waste
  • Carbon Footprint from the Carbon Trust
  • Carbon Trust Standard for Supply Chain
  • Carbon Trust product water Footprint
Once an organisation has received a Carbon Trust Product Footprint Certification, the Footprint Label can be used to publicly brand footprinted products to communicate their sustainability credentials.
They have clients in the electronics, education and food and beverage industries, and focus more on established organisation in order to help them measure, manage and reduce their environmental impact.
For more information visit this link: http://www.carbontrust.com/home/


GLOBAL REPORTING INITIATIVE INDEX

      Many sustainability reporting metrics/standards are being used throughout the world today. However, the Global Reporting Initiative (GRI) index is one of the oldest and most widely used one. GRI is affiliated with the biggest organizations such as OECD, UNEP, United Nations Global Compact and ISO. Initially, GRI has evolved its reporting format from a “one- size -fits-all” model to developed “sector-specific” supplements that provide more appropriate indicators for sectors such as mining, car manufacturing, financial services, and tour operators.

        Through time, international organizations such as the Institute of Chemical Engineers (IChemE) have also used the general GRI framework to draft their reporting formats. The GRI has helped them come up with progress report format that will assess the performance of the processing sector by assessing the impacts of their activities on the triple bottom line.

      But, like the many other reporting standards, GRI index has been criticized of being inefficient because of the following reasons:
  1.       It allows companies decide what to include in their reports ( completeness, relevance, and  context ).: Most companies decide not to include the performance of companies in their supply  chain as they consider it off bounds.
  2.          It being universally accepted is helping companies to continue to use reporting as an opportunity for public relations spin rather than a serious effort at measuring and improving performance.
  3.      Self- composed reporting format of GRI gives way to inaccurate / false reporting merely for protecting the company’s reputation from unexpected social and environmental violations
  4.       While GRI pushes for more reporting, they have done little to increase or even assess the impact of existing sustainability reports. No usable or actionable reporting.

https://en.wikipedia.org/wiki/Global_Reporting_Initiative

Wednesday, October 14, 2015

The Changing Business Climate Is Causing Product Die-Offs (VW’s diesel cars are a casualty of sustainability-driven market evolution.)


A another article from MIT. *)
VW’s diesel cars are a casualty of sustainability-driven market evolution.



"A rule-of-thumb I give managers is that if your sustainability performance indicators only improve when customers use your product less often, it means you’re in trouble," writes Gregory Unruh, of George Mason University.

VW is discovering a stark Darwinian reality: Sustainability kills.

Sustainability is an evolutionary force of creative market destruction and is slowly weeding out the firms and products unfit for a sustainable future.

The recurring narrative I hear about the VW crisis is that it is an issue of corporate fraud, plain and simple. While that is true — fraud is intentional perversion of the truth for financial gain — it ignores the reason VW was driven to deceit. The underlying cause was that VW’s chosen technology, the diesel engine, failed to meet 21st century sustainability standards in key markets.

The problem for VW began with the financial crisis of 2008. With GM and the other motor giants on the verge of bankruptcy and dependent on government support, industry opponents were not in a position to oppose the stricter emission and fuel economy standards that had been in the works for a decade.

To put it simply, the standards for what constitutes a “sustainable automobile” shifted. Ford, GM, Toyota, and Honda responded by commercial investments in hybrid-electric technology. VW did not.

The loyalty to diesel power is uniquely German — after all, its was named for German engineer Rudolph Diesel. VW executives were dismissive of hybrids, but staying loyal to their diesel-fueled engines was problematic with the changing standards. Unable to consistently meet EPA emissions standards, they turned to famous German engineering — not to solve the problem, but to circumvent it. And the public finally learned what “Fahrvergnügen” actually meant.

The Great Sustainability Extinction

VW is a multi-brand behemoth and point of national German pride. As the largest auto company by volume with over $12 billion in annual profits, VW is not going to disappear anytime soon. But the “clean diesel” concept in passenger cars is unlikely to recover in the United States. And this illustrates where sustainability’s natural selection occurs. Not at the company or brand level per se, but at the product and production levels.

I remember watching managers struggle with this while leading an in-company executive development program at a European conglomerate in 2011. As we discussed the impact of sustainability standards, production managers in the engineered wood division began complaining that big customers like Ikea wanted the chemical concentrations reduced in the particleboard used for shelving. The managers had worked diligently to reduce the amount of the chemicals in their boards, annually reporting percentage reductions, but it was still not enough. They were looking for a magic bullet that would save their formulation. I had to break the news that sustainability may mean the end of their product — something that they had not considered.

This is quietly becoming true for many products. A rule-of-thumb I give managers is that if your sustainability performance indicators only improve when customers use your product less often, it means you’re in trouble. Cigarette and alcohol companies, for example, now report the number of kids that don’t smoke or drink thanks to their public campaigns. Junk food purveyors improve their sustainability performance by shrinking the serving size. Sustainable paper products perform better the less virgin pulp they contain. And so on. A business model that meets ever-higher standards of sustainability only when customers reduce consumption of the product is by definition unsustainable.

Darwinian selection like this in products and companies is a gradual process. VW is wounded but not dead. But sustainability selection is hard at work. The company’s darling diesel motors will continue to lose ground to hybrid electric and other sustainably fueled drive trains in passenger cars.

However, sustainability selection can be much faster in management ranks. Just asked recently fired VW CEO Martin Winterkorn. Failing to adapt your product to the changing sustainability ecosystem kills products — but it also can kill careers. If managers don’t want to become “fossils in the tar-pit,” so to speak, they need to recognize and respond to the realities of creative sustainability destruction.


Monday, October 12, 2015

ISO 1400 certification

Here you can find a nice introduction about the ISO 1401 certification:

http://www.sustainablecitiescollective.com/david-thorpe/286801/iso-14001-revision-reaches-milestone-updating-standard-environmental-management

http://www.acsregistrars.com/iso-14001

In my opinion, the ISO 1401 certifications is a well structured way to evaluate the impact of the companies on the environment. Furthermore, it seems that the certification can cover several industries, allowing the comparison of companies within the same or different industries.

Currently, this certification is voluntary. However, I think that the governments, as regulators, shall push the companies to implement it. This will allow to have a better overview about the environmental performance and impact of a company.

Friday, October 9, 2015

The Hidden Costs of Organizational Dishonesty article from MIT.


The Hidden Costs of Organizational Dishonesty






A brief scanning of The Wall Street Journal — or, tellingly, almost any other newspaper in the country — reveals the alarming prevalence and far-reaching impact of organizational dishonesty. Reports of malfeasance or criminal conduct in corporate governance, accounting practices, regulatory evasions, securities transactions, advertising misrepresentations and so on have become all too commonplace. It’s no wonder that business schools across the country have been rushing to design and introduce courses that emphasize a subject traditionally given short shrift: ethics.1

This is not to say that, as a group, business people are inherently unethical. All other things being equal, most executives would unhesitatingly choose the high road. Except in hypothetical situations, however, all other things are never equal. In any organization, people are motivated by myriad factors — sales quotas, corporate economic health and survival, competitive concerns, career advancement and so forth — which can easily override their moral compasses. Indeed, in spite of the assortment of arguments contending that “ethics pays,”2 the number and extent of the recent transgressions suggest that a significant portion of the business world has yet to be persuaded.

Of course, companies should always adhere to universal ethical principles because, after all, that’s the right thing to do. But one additional reason for businesses to engage in honest practices is that the consequences of failing to do so may be much more harmful to the bottom line than has traditionally been recognized. Companies that deploy dishonest tactics typically do so as a means of increasing their short-term profits, and in that regard they might succeed. But the misconduct is likely to fuel a set of social psychological processes with the potential for ruinous fiscal outcomes that can easily outweigh any short-term gains. In other words, organizations that behave unethically will find themselves heading down a slippery and dangerous fiscal path.

In this article we chart that path, providing details of the extent of the damage and its insidious nature. Our formulation begins with a fundamental assertion: An organization that regularly teaches, encourages, condones or allows the use of dishonest tactics in its external dealings (that is, toward customers, clients, stockholders, suppliers, distributors, regulators and so on) will experience a set of internal consequences. These outcomes, which we call malignancies, are likely to be surprisingly costly and particularly damaging for two reasons. First, they will be like tumors — growing, spreading and eating progressively at the organization’s health and vigor. Second, they will be difficult to trace and identify via typical accounting methods as the true causes of poor productivity and profitability. Thus, they might easily lead to expensive misguided efforts that fail to target the genuine culprits of the dysfunction. The malignancies can be categorized into three types, according to the processes involved (see “The Consequences of Organizational Dishonesty”).

The Consequences Of Organizational Dishonesty


The Consequences of Organizational Dishonesty

A company with dishonest business practices toward customers, vendors, distributors and other outsiders might achieve higher short-term profits, but it would incur various costs from three types of malignancy.

http://sloanreview.mit.edu/files/2008/12/45312-si1-lo8.png

Malignancy #1: Reputation Degradation

Perhaps the most obvious consequence of systematic organizational dishonesty is that a company will develop a poor reputation among current and prospective clients and business partners. To be clear, we are not referring to small-scale, localized or infrequent ethical infractions but rather to an organizational culture in which employees are socialized into an environment that either implicitly condones or, worse, explicitly teaches dishonest business practices. When anyone outside the company (such as customers, partners, suppliers, regulators or the media) uncovers the improper tactics, the fallout can be swift and devastating. As Edson W. Spencer, the former chairman of Honeywell Inc., once stated, “The businessman who straddles a fine line between what is right and what is expedient should remember that it takes years to build a good business reputation, but one false move can destroy that reputation overnight.”3

For one thing, the damage to the firm’s opportunities for new and repeat business can be considerable. According to a recent survey of the general public conducted by Wirthlin Worldwide of Reston, Virginia, 80% of respondents stated that their perception of the ethicality of a particular company’s business practices has had a direct effect on their decisions to purchase goods or services from that firm.4 And the financial damage could extend further. According to the Wirthlin survey, 74% of the respondents asserted that their perceptions of the honesty of a corporation’s behavior had also influenced their decisions about whether to buy that company’s stock.5

More importantly, the damage could be irreparable. An organization that has historically been successful but is currently suffering from inefficient operations, a lack of creativity or even incompetence still has the ability to regain people’s confidence by demonstrating the early stages of a turnaround (for example, by hiring a well-respected consulting group, by developing an alliance with a highly regarded organization or by impressing industry insiders with an innovative new product line). But companies that are perceived to be corrupt will find it much more difficult, if not impossible, to shed themselves of that stigma. Past research has found that, by nature, people react more adversely to deceitfulness than to any other attribute.6 And even if only one branch of a company is caught in the wrongdoing, the whole organization might suffer because dishonesty is a trait that, when discovered in one domain, is immediately perceived to be underlying the behaviors across other domains.7

Consequently, once outsiders perceive that dishonest policies and practices have become central to the way a company does business, that organization will face a long, uphill battle. Research suggests that a disreputable company attempting to recover lost trust needs to demonstrate its newfound integrity consistently on numerous occasions (many more than the number taken to display its dishonesty in the first place) to stand even a chance of convincing wary others that it has changed for the better.8 During the recovery process, which could easily take years, customers and clients who have defected are likely to commit themselves to another, more respectable, organization. To speed its rehabilitation, a company may need to replace top management quickly in an effort to convince others of its sincerity and eagerness to attack the root cause of the dishonesty.

Malignancy #2: (Mis)matches Between Values of Employee and Organization

The extent to which the values of an organization coincide with those of its employees is another issue. Whether that match is good or not, companies with dishonest practices are likely to incur substantial costs.

A Poor Fit for Organizational Dishonesty

An organization that encourages deceptive business practices by rewarding the use of duplicity with outside contacts is likely to be met with moral opposition by a number of employees whose values do not comport with those espoused by the company. Many of these individuals will find their moral standards continually clashing with workplace expectations, leading to constant stress from the ever-present conflict.9 The resulting costs to the organization can be considerable: greater instances of illness and absenteeism,10 lower job satisfaction,11 decreased productivity and higher turnover.

Increased absenteeism.

Corporate expenditures on illness and absenteeism amount to far more than the costs of “get well” cards and Mylar balloons. A recent survey on unscheduled absences in the workplace revealed an all-time high of $789 per employee annually, which amounts to more than $3.6 million in yearly losses for larger corporations. This number reflects only the direct payroll costs for the absent employees. It does not include the cost of lost productivity and the expense of covering for the absent individuals, including overtime pay for other employees and the hiring of temporary workers.12

Lower job satisfaction.

An even greater concern arises when the mismatch between the moral standards of some employees and the unethical practices of a company leads to lower job satisfaction among those individuals. From a strictly utilitarian perspective, an organization should be concerned about worker job satisfaction only to the extent that it affects employee productivity and turnover. Clear evidence has existed for the latter (to be discussed shortly) but not for the former until relatively recently. Specifically, traditional studies on the relationship between job satisfaction and productivity suggested only a weak connection between the two.13 But subsequent research has qualified this finding, revealing that the correlation between job satisfaction and performance is rather weak only for workers with low skill levels, presumably because those individuals do not have the capability to produce high-quality work even when they are quite content with their jobs.14 But for employees who are highly skilled, job satisfaction actually makes a substantial difference: Those who were satisfied with their jobs outperformed those who were not by a margin of 25%.

These findings have serious implications. When moral employees are required to engage in immoral behaviors, the productivity of the most competent and proficient workers will suffer most. This outcome should be extremely troubling to many organizations for two reasons. First, companies generally earn a sizable portion of their revenues (and enhance their reputations) based on the highest efforts of their ablest workers. If those individuals aren’t motivated, revenues (and reputation) could easily suffer. Second, because the most capable workers are usually the ones better able to find other jobs, dishonest companies bear a large risk of losing their best employees.

Higher turnover.

Because of the high direct costs of recruiting and training new employees, any organization should be concerned if it has trouble retaining people. Dishonest companies should take particular note, though, because their turnover will be selective in nature. Research has shown that workers who do not share the values of their organizations tend to be less satisfied with their jobs, less committed to their organizations and significantly more likely to quit.15 Thus, over time, an unethical corporation is likely to have employees who are disproportionately dishonest. Moreover, policies that promote dishonest business practices are likely to drive the most productive workers into the offices of more honest competitors, where those individuals can find greater job satisfaction and be more at ease with their work environments. In other words, once a dishonest organization has unwittingly thrown out the baby, all that will be left is the dirty bath water.

A Good Fit for Organizational Dishonesty

We have already discussed how honest workers select themselves out of dishonest firms by leaving to work for companies with values more consistent with their own. It should be noted that this “moral dilution” also occurs at an earlier point in the employment process. Specifically, job seekers tend to be attracted to organizations with attributes that are congruent with their own personality profiles.16 For example, in a recent survey, 76% of respondents said that their perceptions of a company’s integrity would influence their decision about accepting a job there.17 Of course, selection through the filter of value congruency also occurs on the employer’s side. That is, companies that regularly require their workers to engage in unethical practices tend to seek people who are willing (if not eager) to play ball in that system. As these various forces attract unethical prospects and repel ethical employees, the low standards of a dishonest organization can be self-reinforced in perpetuity.

Unethical corporations do not merely select and retain dishonest employees; they create them as well. Honest employees can be converted into wrongdoers in various ways, but the process often begins with peer pressure or a supervisor’s direct request.18 After transgressors have had the opportunity to reflect on their recent misconduct, the incongruity between their values and behavior will strongly motivate them to rationalize their actions. (Otherwise, they would need to change their views of themselves in light of what they’ve just done.) Counterintuitive as it may sound, many of these individuals will continue to engage in dishonest business practices in an attempt to bring a sense of legitimacy to their original offenses. These workers are likely to find further comfort in the vast system of justifications embedded in the corrupt ideology of the organizational culture.19 As the practice of rationalizing their misdeeds becomes routine, the employees gradually adopt that ideology for themselves.20

Regardless of whether a company’s dishonest workforce comes primarily from turnover, recruitment or conversion, an organization that consists of dishonest workers is certain to suffer from various internal consequences, such as employee theft, fraud and delinquency. After all, if workers are cheating customers and others outside the company, why shouldn’t they also be bilking their employer?

Consider the experiences of a former employee of a consulting firm whose manager suggested that she withhold information from a client. “I was constantly on guard to what I was ‘supposed’ to tell them,” says the former employee. “I felt dishonest.” Later, the employee found herself regularly cheating on her travel expenses. “We were allotted a set amount of money per day that was the maximum we would be reimbursed for,” she recalls. “I began charging this amount to my expenses each day, regardless of my actual expenses. This was the accepted practice for most people on the project, but it was unethical.” Since leaving the firm, the employee has had some time to reflect on her actions. “Looking back,” she says, “I have to wonder if the dishonesty that I felt at the client site as a firm representative had anything to do with the ease with which I was able to be dishonest with the firm in another way.”

According to a recent survey, fraud perpetrated by employees is the most common type of fraud that afflicts companies. In fact, it is nearly twice as widespread as consumer fraud, the next most prevalent type.21 The financial burdens of internal fraud, including employee theft, are mind-boggling. According to the Association of Certified Fraud Examiners, U.S. companies lose roughly $400 billion dollars a year to internal fraud.22 Years ago, a government legislative committee noted that nearly one-third of all business losses in the United States were the result of internal larceny.23 More recently, in 2003 nearly two-thirds of corporations surveyed reported they had suffered from employee fraud, and the trends suggest that the situation is likely to worsen.24 For example, compared with data from half a decade ago, theft of company assets has more than doubled, expense-account abuse has nearly tripled and fraud through collusion between employees and third-parties is also on the rise.25

In response to this growing problem, many organizations have overlooked any role that their own dishonest policies and practices might have played. Instead, they have focused on the symptoms of the problem, implementing a host of specific preemptive and reactive measures. Of these, the use of stronger internal controls, such as increased security and more sophisticated surveillance systems, is growing at the fastest pace.26 But the unintended consequences of such countermeasures can sometimes be nearly as deleterious as the problems they are aimed at solving in the first place.

Malignancy #3: Increased Surveillance

The direct expenses associated with the installation of surveillance systems are staggering. Between 1990 and 1992, for example, more than 70,000 U.S. corporations spent over half a billion dollars on surveillance software.27 But the indirect costs —degradation of the work environment that leads to adversarial relations between employer and workers, diminished productivity and other dysfunctions — can also be considerable.

Health Consequences

Employee monitoring is associated with a host of mental health problems,28 including high levels of tension, severe anxiety and depression.29 Employees are also more likely to experience physical disorders, such as carpal tunnel syndrome, when they perceive their organization’s surveillance system as encroaching on their privacy.30 These types of psychological and physical ailments are linked directly to increased absenteeism and diminished productivity.

Lack of Trust in Employees

Workers often perceive the installation of surveillance software and other devices as clear indications that their organization doesn’t trust them. This perception eventually harms any existing companywide esprit de corps, often creating an atmosphere of antagonism between employees and management.31 In addition, workers who feel insulted that their integrity is being questioned are more likely to quit or retaliate with a variety of counterproductive behaviors, ranging from the simple withholding of voluntary support to outright acts of revenge and sabotage.32 This type of dysfunctional environment has been described by a former manager of a company that was trying to curtail inventory shrinkage due to employee theft: “Senior management brainstormed the best way to solve the issue and came up with the use of expensive video surveillance equipment in the stockrooms to monitor employees leaving and also the process of opening new shipments. This implementation did not decrease shrinkage, but did have a negative impact on employee turnover.”

Backlash to Perceived Restrictions of Control

People who feel that their sense of freedom is being threatened will often try to reassert some control over their environment.33 In the workplace, employees might attempt to empower themselves through both corrective and retributive means — that is, by trying to regain the control that was previously taken away and by committing deliberately hostile actions to retaliate.34 Consequently, in an organization with excessive control systems, some employees might be more motivated to steal from the company.35 Of course, employee theft and other dishonest behaviors are only likely to motivate management to procure even higher levels of surveillance technology, further perpetuating the vicious cycle.

Undermining of Positive Behavior

Another potential consequence of surveillance equipment is that many employees might come to believe that the systems are warranted even when they’re not. That is, honest and dishonest workers alike might assume that the monitoring must reflect both the corrupt dispositions of fellow employees and the large rewards of cheating. Unfortunately for the company, actions that convey expectations of wrongdoing (either implicitly or explicitly) may in fact lead to a rise in misconduct for both honest and dishonest workers by creating self-fulfilling prophesies for the former36 and self-perpetuating ones for the latter.37

Surveillance technology can also undermine employee behavior in subtler ways. Specifically, when individuals are being monitored closely, they might begin to attribute any of their honest behavior not to their own natural predisposition but rather to the coercive forces of the controls. Eventually, they might view their actions as being directed less by their own moral standards and more by the prying eyes of management.38 When that happens, they might lower their ethical standards and be more inclined to try to outwit or elude the surveillance system and engage in misconduct when they aren’t being monitored.39 This, too, will spur supervisors to find more effective (and more expensive) control systems.

Overestimated Influence of Monitoring

Management, too, can begin to overestimate the power of surveillance systems. That is, people who are responsible for the implementation, maintenance and strengthening of control systems are likely to assume that the desirable conduct of the monitored workers is primarily a result of the surveillance equipment even when that behavior would have occurred without the use of such systems.40 This misconception may help explain why internal controls continue to rise in popularity in corporate America despite the dramatic increases in supervisors’ workloads when new systems are first established.41 After these systems are in place, management may come to see them as more effective and more vital than they truly are. And once again such mistaken assumptions might lead to greater expenditures to purchase even more sophisticated systems.

Toward the Honest Organization

Beyond moral grounds, we have discussed sound utilitarian reasons for organizations to conduct themselves ethically. We focused primarily on what the costs might be for those businesses otherwise tempted to teach, condone or merely allow the systematic use of dishonest practices with external contacts.

Although many of the effects of organizational dishonesty are difficult to trace, the damage done is no less real. Consider the following account of how the unprincipled practices of a company helped cost it nearly $1 billion in losses. According to a former employee, “The CEO … abused ethical principles on a regular basis. … People believed him in the short run, but as the truth would leak out, the company’s reputation deteriorated. Few companies are willing to do business with him now — those that do will only do so on onerous terms.”

Eventually, that culture of dishonesty had permeated the entire organization. “The marketing department was coerced to exaggerate the truth,” says the former employee. “The PR department wrote mostly false press releases, and salespeople coerced customers.” Moreover, the misconduct was directed internally as well as externally. “Taking a cue from the executives, employees would steal from the company whenever they could, usually via travel and expense reports. Some would cut side deals with suppliers,” recalls the employee.

To make matters worse, a security force was hired to roam the building routinely, ostensibly to protect employees, but many workers instead felt that they were being spied on. That suspicion only intensified when reports of even minor infractions, such as people taking long smoking breaks, were sent to the CEO. Not surprisingly, job satisfaction at the company was bad, morale terrible and turnover high. “People were attracted to the company by high salaries, which the CEO saw as justification for treating employees poorly, but left as soon as they could find work elsewhere,” recalls the former employee.

The various costs of organizational dishonesty — decreased repeat business, low job satisfaction and performance, high worker turnover, employee theft, expensive surveillance mechanisms and an atmosphere of distrust — have often been cited as severe business problems. But many organizations have failed in their efforts to address those issues, often because they are unaware of a root cause: their own tendencies to conduct business with customers and others unscrupulously. So, instead, corporations often launch wrongheaded efforts to control one fiscal hemorrhage (for example, losses from employee theft) by creating another (namely, investments in increasingly expensive security systems).

The more effective solution is to staunch the wound at its self-inflicted site, with an unblinking examination of corporate dishonesty and a true commitment to end it. But achieving ethical standards requires more than just implementing institutional codes of conduct42 or more effective security systems because increased control often leads only to even more negative outcomes. Instead, the effort must begin at the top, with senior executives setting the right example and then implementing policies to encourage the same behavior from employees in their dealings with clients, customers, vendors and distributors as well as with other employees. For example, top managers should incorporate customers’ ratings of the ethicality of specific employees into the incentive structures of those individuals. Also, the ethical reputation of the organization as a whole should be measured regularly and included in the annual assessments of the company’s performance. With such policies in place, companies can maintain high standards of conduct and attract (and retain) honest employees, and by doing so they can avoid the various hidden costs of organizational dishonesty.

References

1. A. Sachdev, “Ethics Moves to Head of Class,” Chicago Tribune, Friday, Feb. 14, 2003, Business Section, p. 1.

2. For a discussion of the history of “ethics as enlightened self-interest” arguments, see A. Stark, “What’s the Matter With Business Ethics?” Harvard Business Review 71 (May–June 1993): 38–48.