Archive for the ‘corporate responsibility’ Category

Israel Excels in Use of Sustainable Energy and Water Conservation Technologies

Thursday, July 19th, 2012

Israel is a tiny country, two-thirds of which is inhospitable desert, with few natural resources, a population of less than 7.5 million, and it has been surrounded by intractably hostile neighbors ever since its founding 60 years ago. Israel sees sustainable energy use as a key to survival and has become a leader in the development of green technologies with some 1000 clean technology start-up companies.

Some examples:

 Better Place was founded by Shai Agassi who conceived the idea that the negatives attached to all-electric cars (eg. limited 140 mile range and battery cost) could be overcome by renting the batteries and having a country-wide network of re-charging stations, to complement at-home charging. To cover situations when there isn’t time to re-charge, there is a country-wide network of swap stations where you exchange a depleted battery for a fully charged one in the same time as it takes to fill a tank of gasoline.

In 2013 an all-electric car network is to open in Israel and they are being set up in Australia, Canada, Denmark, California, and Hawaii. The cars are built by Renault-Nissan while the batteries are provided by Better Place,

It has been long known that certain materials, including asphalt and concrete, generate electric current when they are deformed. Innowattech has patented a new breed of piezoelectric generators that can harvest mechanical energy, resulting from the deformation of roadway surfaces by the traffic passing over, by converting the mechanical energy to electrical energy. The more traffic and the heavier the vehicles, the more electricity is generated. The piezoelectric generators are installed inches beneath the upper layer of highway asphalt in a new roadway or during resurfacing of an existing roadway. It is also testing prototypes for airport runways and railways.

The company estimates that its generators placed along a half-mile stretch of a four-lane motorway would yield enough electricity to power 2,500 households. It is noteworthy that this is pure energy harvesting (parasitic energy), that it functions in all weather conditions, and that it can be utilized locally or routed into the grid. Just imagine, cars powered by electricity generated by their passage over the highway.

Much of Israel is desert and her main water sources are controlled by Syria and the Hezbollah in Lebanon. The risk of this geographic and political situation is mitigated by Israel’s recycling 70 percent of its waste water, and this is used for agriculture and fish farms in the desert.

More than 40 years ago, Israeli farmers revolutionized the manner of watering crops withthe introduction of drip irrigation. Water is transported directly to the roots of the plants through small tubes with tiny holes. The watering is set on timers that prevent excess water being delivered. This not only conserves water but also suppresses weeds and mold.

Netafim markets the technology to some 110 countries. The process has created self-sustaining agricultural communities in drought stricken countries particularly in Africa.

These technologies are both tools for Israel’s survival and they promote the ethical standards of sustainable use of natural resources. Other countries may adopt them for various reasons, including a preference for sustainable technology.


Monday, January 23rd, 2012

A front page New York Times [NYT] article by Edward Wyatt [1], on November 11, 2011, reported that the recent SEC settlement with Citigroup was rejected by federal judge Jed Rakoff because of a lack of any admission of guilt of fraud on the part of Citigroup. This has been a strategy in past cases with the SEC and other banks, because the SEC contends it must settle most of the cases without obtaining admissions of guilt. It does not have the necessary funding to battle the “deep pockets” of Wall Street firms, who will rarely admit wrong doing. Admission could be used against them in the case of an investor lawsuit.

 Judge Rakoff claimed that the SEC “has a duty, inherent in its statutory mission’ to see that truth emerges”. He also said” in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth”.

  Additional evidence addressing inadequate financing was reported by George Packer[2] in The New Yorker [6-27-11]. He stated that nearly three years after the financial crisis, “Wall Street still relies on reckless practices to create wealth”. He also stated that the SEC remains starved of resources. (more…)


Saturday, July 25th, 2009

As a historical matter, from 1860-1930, the state laws that authorized people to conduct business as a “corporation” actually prohibited such businesses from considering matters other than the legality and profitability of their corporation’s enterprises. Then corporations were small and had few shareholders. The popular operational economic principles found in the United States at the time of the economic collapse of 2008 included this idea. Short-term material profit was the operational standard of success for most corporations and many other organizations, when the executives did their periodic   profit and loss examinations. We emphasize “short-term.” The corporate ritual of a quarterly performance review of everyone from managers to CEOs reinforced the short term view. Those employees with below average earning results for the company in the quarter under review might be fired. There were also short term attempts to cause a rise in a stock’s prices. Another factor promoting short-term interest at the popular level was the retail distribution and ownership of equities among ordinary Americans, culturally manifest in the growth in the 1990s of “24 Hour Financial News” in outlets such as CNBC and Bloomberg.
The focus on short-term profitability became an extreme form of the early injunction to consider only the legality and profitability of an enterprise. But the restriction to profitability in fact was no longer appropriate for the evolving large multi-state or multi-national conglomerates with thousands of shareholders that we know today. Gradually, after the U.S. depression of the 1930s and World War II, the profitability-only doctrine softened. The watershed 1953 case was A.P. Smith Manufacturing Co. vs. Barlow. The New Jersey Supreme Court upheld a gift from the company to Princeton University, arguing that shareholders would benefit because it would bring goodwill to the company. In a 1979 study of eighty-two major U.S. corporations, about half treated social responsibility as one of their goals. [See Y.K. Shelby, “A New Look at Corporate Goals, in California Management Review 1979, vol.16 (2) 71-79.] By the beginning of the twenty-first century, the profit maximization norm had been somewhat relaxed, and, as certain changes in corporate governance took place, the serious discussion of long term social benefits began to occur.  Today, many corporate leaders believe that social goals enhance profitability in the long run. Those in charge of marketing and branding believe so. The short-term perspective plays into our human weakness of will or motivational preference for short term benefits of profitability that may end up being harmful, rather than long term results that are more difficult to calculate.

To the degree that a corporation [delete is] isolates itself from the community containing its offices or factories, it may get away with ignoring the long term outlook that usually includes impact on a community or community social benefit. In the summer of 2002, the board of the Hershey Trust that had a controlling interest in Hershey Foods acted on a decision about which the community in Pennsylvania, where Hershey Foods is based, was not consulted. The board had decided to sell the entire company to Wrigley. This was contrary to the founding wishes of Milton S. Hershey, for his wealth to be used “for a purpose of enduring good.” Among other things besides jobs, the community depended on the company for funding a school for the disadvantaged, and for the maintenance of the spa, hotel and gardens that brought many tourists to the town. The reaction of the community was so negative and widely publicized, that the board repudiated its own plan. In the end, for many who follow news about the corporate world, the case, reported in The Triple Bottom Line by Andrew W. Savitz and Karl Weber (2006, pp. 3-19) revealed how cooperation between community and company, including a concern with long term social benefits, can create a win-win situation for all. Indeed, this outcome for cooperation among human mammals could have been predicted. (One only needs to look at reports such as those of Franz de Waal, a primatologist and evolutionary psychologist.  He has shown how cooperation works for chimpanzees.)


Monday, February 16th, 2009

Following a management decision in 2005 Wal-Mart Corporation decided to embrace sustainability throughout all its stores. Because “sustainability” includes both environmental care and social benefit, this decision is consistent with IPPA’s principle that ethical guidelines should inform public policies. In quoting from an article titled, “Green-Light Specials, Now at Wal-Mart” reported by Stephanie Rosenbloom and Michael Barbaro in the New York Times January 25, 2009, “Wal-Mart has done well by doing good”. Together with McDonald’s Corporation, Wal-Mart was one of only two companies in the Dow Jones Industrial average whose share price rose last year.
Wal-Mart, pushed into this effort by criticism from environmental groups for being a polluter as well as having a negative image on labor and employee health care issues, began working with activists to improve its environmental record. Wal-Mart has subsequently laid out long term goals for using renewable energy, creating zero waste and selling products that will help to sustain the earth’s resources and environment. The effect of Wal-Mart’s decision to sell fluorescent light bulbs has forced General Electric to greatly increase their production. Wal-Mart’s decision to carry only concentrated laundry detergent, has pushed Proctor and Gamble to change its manufacturing process for that product in the US and around the world. Wal-Mart predicts its customers will save more than 400 million gallons of water, 95 million pounds of plastic resin, 125 million pounds of cardboard and 520,000 gallons of diesel fuel over three years. They have also introduced recycling of loose plastic and improved fuel efficiency in their trucks by modifying their design.
Wal-Mart’s profits climbed $1.5 billion in 2008 over the 2006 fiscal year. Their total sales increased $60 billion in the same period.
Quoting Lee Scott Jr., Wal-Mart’s current CEO, “As businesses we have a responsibility to society….There is no conflict between delivering value to shareholders and helping solve bigger societal problems”.
The recent experience at Wal-Mart is an object lesson:  doing the right thing is good business.

Should we, the public, demand this type of sustainable behavior from other companies with whom we do business?  Should we demand of our legislators changes in business tax policy that will encourage similar sustainable practices? If you know of other organizations that have adopted this policy, please let us know.
IPPA looks forward to your comments.


Thursday, November 20th, 2008

IPPA advocates that social policies rooted in our shared core values serve us better than policies based primarily on a purely economic model which says that short term material profit alone is the best measure of human happiness and wellbeing.

The importance of this ethical concept in the business plan of a major industrial corporation is demonstrated in a quote from Alan Boeckman, chairman and chief executive officer of the Fluor Corporation. “As a leader in the global building and services marketplace, we focus not only on such traditional measures of success as profitability, but also on a series of broader measures that we refer to collectively as global responsibility. Simply put, this means doing the right thing to benefit our clients, shareholders, employees, suppliers and others in the communities in which we work.” []

This attention to both economics and social benefits as the measure of success is gaining acceptance in the business world and is well documented in the book: The Triple Bottom Line: How the Best Run Companies are Achieving Economic, Social and Environmental Success and How You Can Too. By Andrew W. Savitz with Karl Weber. [The author’s web site is] A review of the book at quotes the authors “Every action you take in business has two components: an impact on profits and an impact on the world”. Savitz and Weber describe a path where profitability and social benefits blend and describe this overlap as the “sustainability sweet spot.” Savitz also states: “One hundred years from now, company bottom lines will include the three pillars of sustainable development (economic, environmental, and social) in a totally seamless manner.”

The reviewer points to empirical evidence in the book demonstrating that the share price of companies listed in the Dow Jones Sustainability Index have out performed various other indexes. The authors also point out that companies who belong to the World Business Council for Sustainable Development have outperformed their respective national stock exchanges by 15 to 25 percent over the past three years. []

There is a soft spot in the existing discussion of the triple bottom line. It is that the content of “social benefit”, its core ethical principles and examples of actual policies consistent with them, remains insufficiently explored. This is a place where IPPA can help.