Corporate Responsibility in a Collapsing World Cranfield School of Management Jonathon Porritt 29 October 2008

Forum For The Future A registered charity committed to accelerating the building of a sustainable way of life Solutions-oriented approach Over 180 different partners from national, regional and local government, higher education, and business Green Futures magazine Mission: sustainable To accelerate the building of a sustainable way of life by taking a positive solutions-oriented approach

JT Group

PASSIONATE about Sustainable Development Not passionate about Corporate (Social) Responsibility, Quality of Life, Corporate Citizenship, CSR, Liveability etc etc

The Global Economy: nothing more than A House of Cards built on A MOUNTAIN OF DEBT aided and abetted by Governments’ in Retreat

From Masters of the Universe to “A bunch of spivs and speculators”

Jack Welch CEO of GE (1981 – 2001) In 1981, GE valued at $14bn. In 2001, GE valued at $400bn “Manager of the Century” “Neutron Jack” Hudson River – Jack Welch’s toxic legacy.

GE Ecomagination: a strategy for growth GE’s environmental innovation programme High quality products with increased environmental performance Renewable energy, hydrogen fuel cells, cleaner, quieter aircraft and locomotive engines, water purification and desalination technologies Part of GE’s growth strategy – target to increase revenue from these businesses from $10 billion in 2004 to $20 billion by 2010

GLOBAL ECONOMY SOCIAL EXTERNALITIES ENVIRONMENTAL EXTERNALITIES

Radical Discontinuities Social Externalities Population growth Worsening inequity International terrorism “Clash of Civilisations” Demographic timebombs Debt mountains/credit crunches Environmental Externalities Climate Change Oil at $100 + Resource constraints (water/soil) Food shortages Worsening air and water pollution 6 th “extinction spasm”

Capitalism today is the only economic show in town

“Creative Destruction” Joseph Schumpeter Creative destruction as you have never seen it before as today’s unsustainable economic development gives way to genuinely sustainable economic development

IPCC Consensus Staying below 2°C means stabilising at 450ppm CO 2 which means c. 80% cut by 2050

Canaries in the Mine Permafrost in Siberia Arctic Sea ice Greenland Ice cap Antarctic ice sheets CO 2 absorption rates Amazon Rainforest drying out Acidification of the oceans

Stern Review “Climate change is the greatest market failure the world has ever seen”.

Get a realistic price on a tonne of CO 2 just as fast as possible

The Shrinking Earth

Five Capitals Framework: “interdependent and indivisible” Human Capital Social Capital Manufactured Capital Financial Capital Natural Capital

The Five Capitals Natural Capital - any stock or flow of energy or matter that yields life, goods and services Human Capital -health, knowledge, skills and motivation required for productive work Social Capital - the value added to any activity by human relationships and cooperation Manufactured Capital -material goods (tools, machines, roads) which contribute to the production process Financial Capital -no intrinsic value itself but reflects the productive power of the other types of capital

Capitalism is Dead… Profits maximised, greed incentivized Macho CEOs rule the world Licensed cost externalisation, natural limits defied Deregulation of capital markets: risk and opportunity mis-priced Economic growth credit-fuelled, not earnings-based This version of……

WEALTH WITHIN ENVIRONMENTAL LIMITS - NOT BEYOND! DECARBONIZATION DEMATERIALIZATION CLOSED-LOOP SYSTEMS

THE “LAWS” OF THE MARKET MUST YIELD TO THE LAWS OF THERMODYNAMICS

Changes Ahead Prices tell the truth Governments reclaim their rightful role The Corporate “Licence to Operate” is re-written

“20 years from now you will be more disappointed by the things that you didn’t do than by the things that you did.” (Mark Twain)