The 70th anniversary of the Battle of Britain is rightly receiving the attention it deserves. While Scotland remains geographically distant from the airspace that saw the heaviest of the aerial combat between 10th July and 31st October 1940, we should not forget that Scottish born squadrons fought with distinction and gained their Battle of Britain honours. Both 602 ‘City of Glasgow’ and 603 ‘City of Edinburgh’ squadrons were involved in the harsh, unforgiving combat within the 11 Group sector over south-east England and the English Channel.
The anniversary brought to mind a Moving Conversation that I organised one September at Edinburgh’s Dominion Cinema, on the subject of the Battle of Britain. We preceded a showing of the 1969 film of that name with some short but telling contributions from the then Commanding Officer of 603 Squadron, a Tornado pilot from RAF Leuchars and a historian of 602 Squadron. While we could not be joined by one of Scotland’s surviving fighter pilots, we were honoured to hear from Squadron Leader Andrew Jackson, DFC, AE, MID, who had flown two operational tours, including the first bombing raids over Berlin in August 1940. These raids took place during the full heat of the Battle, at which time the Luftwaffe was dealing heavy blows to the RAF’s Fighter Command airbases and associated infrastructure. As a morale booster more than anything else, Winston Churchill ordered the bombing raids on Berlin.
Andrew Jackson described the raids in his Aircrew Association paper ‘The First Raids on Berlin’, “On the 28th August 1940, we took off from Norwich Airfield, as an advanced base from Marham to attack Berlin, on the first operation by Wellington bombers....Search lights and heavy flak were encountered on our flight, but over the actual target there was very little opposition – not what we expected. We had a clear view of the city and the marshalling yards were easily identified and attacked. Two nights later we returned to be met by numerous searchlights and well-directed and intensive flak. The enemy was learning fast!”
History shows that these raids were decisive factors in Hitler and Luftwaffe chief, Goering’s decision to concentrate their own bombing efforts on British ports and railways, thereby providing the RAF with some desperately needed relief. With the change of tactics, came greater success for Fighter Command, ultimately leading to the decision to withdraw the German invasion forces gathered on the French coast.
While the Berlin raids were astounding at that time, throughout the summer of 1940, Bomber Command continued to harass the German invasion fleet and destroy shipping in the heavily defended French ports of Dunkirk, Calais and Ostend. The role of these crews and those whom flew to Berlin during 1940, should be acknowledged, as should those of the men and women who kept the aircraft in the air, transported men and machines across the Atlantic and the UK, designed, built and tested the aircraft, designed and manned the control and radar centres, trained the pilots, manned observation posts and the many others that combined to keep the aircraft in the air and homing in on their targets. Not to mention of course, the now legendary young men of Fighter Command, whom took on the German bombers and their fighter escorts.
That night at the Dominion Cinema left an indelible mark, confirming the debt of gratitude that we owe men like Andrew Jackson, whom accepted the need to act in the interest of their country while forging unbreakable bonds with their Squadron colleagues under the greatest of pressure. While historians continue to debate the Battle of Britain’s significance in the great scheme of the Second World War, in this 70th anniversary year we should remember the Fighter Command’s ‘few’ and the those from other arms of the RAF, working in the air and on the ground. I will leave the last word to Andrew Jackson, “Britain was saved from invasion by the Royal Air Force, and that was what the Battle of Britain was all about. The young men from the UK and overseas stood side by side, risking all, with many paying the ultimate price in violent death. We owe them a huge debt!”
Sadly, Squadron Leader Jackson died in 2009. We owe him and his generation a huge debt.
Tuesday, 31 August 2010
Wednesday, 11 August 2010
The Transparency Express
As we enter a period of concern over a double-dip recession, the poor old small business continues to fight on in the economic trenches. While the bankers continue to party and play the Government like salmon in the Tweed, the case for corporate sustainability would seem to be somewhat weakened. While the orgy of recrimination around the so-called climategate scandal has muddied the waters around global warming, the fundamental logic for companies to do something about waste, resources and energy remains, regardless of what the carbon footprint brigade or climate-sceptics might be arguing.
At its basic level, small businesses have to respond to a growing raft of eco-regulations which drive up the costs and associated risks of non-compliance. By being prepared, there are opportunities to save money, earn revenues, win new business and increase value.
For those companies supplying the supermarkets, take heed. The buyers may not be asking about sustainability now, but they will start doing so over the next few years. This is already happening in relation to certain products, for example, European legislation that targets imports of illegal timber. Suppliers of other products should start preparing for increased scrutiny.
Rather than consign sustainability to the pending tray, this is the pefect time to address it, in preparation for that moment when the legislators, customers or even financiers come knocking. From its eco-roots, sustainability has emerged blinking into the light as a full-blown source of competitive advantage, particularly in a world chasing a diminishing number of public sector contracts and fighting pressure on margins.
Having recognised the logic, how does the small business proceed if it wishes to take sustainability out of the box marked ‘eco-freak’ or ‘tree hugger’. Here are some tips:
Firstly, ensure that it is taken seriously at Board and senior management level.
Secondly, seek advice. There is loads of it out there and much of it is free. Speak to Envirowise, WRAP, Zero Waste Scotland, CarbonTrust, Scottish Environmental Protection Agency, Ethical Trading Initiative, trade associations and any number of other organisations. They can help with advice, audits, standard setting and contacts.
Next. Start to measure performance and put in place a simple roadmap to manage in the long term. A management system may be appropriate, it may not. Also think through the expectations of your employees – how can they help and contribute. Your customers and suppliers may also have questions, particularly where you are bidding for new work or terms of trade are changed, with greater emphasis on sustainability.
At the same time, somehow work out a means of managing and monitoring sustainability in the long term. You may not be able to afford the resources to do this in-house, but perhaps its a part-time role or one that can be economically outsourced.
Finally, learn how to communicate what you are doing. This will be required in order to speak and listen to your employees, however, it will also be important when customers and others come calling, looking for a concise and credible summary of your actions in relation to sustainability. By this stage of course, you will be able to report on how you have saved on landfill costs, found outlets for waste packaging, reduced your water and wastewater bills, saved on energy costs, reduced the risk from poor suppliers and raw materials, won more work and motivated employees. You might even have developed new products and services in response to the green, eco, ethical or sustainability agenda – whatever you wish to call it.
Along the way, you will find and benefit from companies who have taken a similar view, which can only be a good thing. If you have international ambitions, not only will it free up some cash for export marketing [through greater resource efficiency and employee motivation], it will be a fantastic calling card, since all key international markets are upping their own scrutiny of sustainability performance.
Like all management and process change, it is not easy. The plethora of support agencies can be confusing, however, in Scotland many of these agencies have been consolidated – which helps.
While there will be up-front cost, some of this outlay will be required for compliance purposes anyway. The rest, if spent wisely, will more than pay itself back through greater resource efficiency, lower bills, more business and a better reputation. Double dip or not, I would urge Directors of small companies to revisit sustainability, not as eco-irrelevance, but as part and parcel of competitive advantage.
At its basic level, small businesses have to respond to a growing raft of eco-regulations which drive up the costs and associated risks of non-compliance. By being prepared, there are opportunities to save money, earn revenues, win new business and increase value.
For those companies supplying the supermarkets, take heed. The buyers may not be asking about sustainability now, but they will start doing so over the next few years. This is already happening in relation to certain products, for example, European legislation that targets imports of illegal timber. Suppliers of other products should start preparing for increased scrutiny.
Rather than consign sustainability to the pending tray, this is the pefect time to address it, in preparation for that moment when the legislators, customers or even financiers come knocking. From its eco-roots, sustainability has emerged blinking into the light as a full-blown source of competitive advantage, particularly in a world chasing a diminishing number of public sector contracts and fighting pressure on margins.
Having recognised the logic, how does the small business proceed if it wishes to take sustainability out of the box marked ‘eco-freak’ or ‘tree hugger’. Here are some tips:
Firstly, ensure that it is taken seriously at Board and senior management level.
Secondly, seek advice. There is loads of it out there and much of it is free. Speak to Envirowise, WRAP, Zero Waste Scotland, CarbonTrust, Scottish Environmental Protection Agency, Ethical Trading Initiative, trade associations and any number of other organisations. They can help with advice, audits, standard setting and contacts.
Next. Start to measure performance and put in place a simple roadmap to manage in the long term. A management system may be appropriate, it may not. Also think through the expectations of your employees – how can they help and contribute. Your customers and suppliers may also have questions, particularly where you are bidding for new work or terms of trade are changed, with greater emphasis on sustainability.
At the same time, somehow work out a means of managing and monitoring sustainability in the long term. You may not be able to afford the resources to do this in-house, but perhaps its a part-time role or one that can be economically outsourced.
Finally, learn how to communicate what you are doing. This will be required in order to speak and listen to your employees, however, it will also be important when customers and others come calling, looking for a concise and credible summary of your actions in relation to sustainability. By this stage of course, you will be able to report on how you have saved on landfill costs, found outlets for waste packaging, reduced your water and wastewater bills, saved on energy costs, reduced the risk from poor suppliers and raw materials, won more work and motivated employees. You might even have developed new products and services in response to the green, eco, ethical or sustainability agenda – whatever you wish to call it.
Along the way, you will find and benefit from companies who have taken a similar view, which can only be a good thing. If you have international ambitions, not only will it free up some cash for export marketing [through greater resource efficiency and employee motivation], it will be a fantastic calling card, since all key international markets are upping their own scrutiny of sustainability performance.
Like all management and process change, it is not easy. The plethora of support agencies can be confusing, however, in Scotland many of these agencies have been consolidated – which helps.
While there will be up-front cost, some of this outlay will be required for compliance purposes anyway. The rest, if spent wisely, will more than pay itself back through greater resource efficiency, lower bills, more business and a better reputation. Double dip or not, I would urge Directors of small companies to revisit sustainability, not as eco-irrelevance, but as part and parcel of competitive advantage.
Tuesday, 10 August 2010
Diamonds are For Every Business Cycle
I woke up this morning to the headline BBC news that veteran supermodel Naomi Campbell was to appear before a war crimes tribuneral for accepting gifted blood diamonds from disgraced former dictator Charles Taylor. Leaving aside the questionable editorial policy from the twenty somethings in Auntie’s newsroom, thoughts of carbon based gems were floating around when I read the obituary of Tom Mankiewicz, screenwriter on my favourite Bond film, Diamonds are Forever.
It was the first Bond film that I watched at the cinema, transfixed by the moon buggy and frustrated that I never owned the Corgi, or was it Dinky, version. I think too that it was the first screen violence I can remember witnessing, particularly the scene where Bond sends diamond smuggler Peter Franks to his death with the aid of a fire extinguisher. Brutal in the extreme, but I emerged suitably shaken, not stirred.
Childhood memories aside, I did not realise it at the time that this was Connery’s comeback to Bond, after the Lazenby interlude [not as wooden as given credit for], lured back with a $1 million fee and $10,000 a week wages. Quite a sum at the time, but infinitely more value than your average SPL or Premier League showman.
While not wishing to venture into ‘best Bond’ territory, it struck me that those of us in business in Scotland could take a page or two out of the book of Connery to guide us going forward.
First lesson, he started local, but built a global phenomenon. Starting from his milk delivery days in Fountainbridge, Connery pursued and ultimately realised his vision. It took him six years from his first film part to his breakthough in 1962’s Dr No. He accepted the small parts, dealt with the inevitable crap, but kept his eye on the prize. A lesson for all budding entrepreneurs!
Secondly, he grabbed the opportunity and ran with it. Bond might not have made him. He might not have been in the right place at the right time. We might have hated his interpretation. He played the legendary spy his way and it worked. That combination of clarity, sophistication, looks and ruthlessness won the fights, the girls and the audiences. While there may be something here for the entrepreneur to emulate, its more about the strength of character to move away from home turf and mix it with an alien culture, in this case Hollywood, and not be cowed or manipulated. Surely this must be a fantastic example of internationalisation.
Having made it to the big time and secured his cash cow, Connery then realised that there must be more to life. More product with which to grow his personal brand. He was not afraid to step off the Bond bandwagon and negotiate the maze of undoubted crazy offers and ridiculous roles. As David Thompson has put it, he has made strange film choices but he retained and retains public affection. Something brands aspire too. The lesson here being the need to accept failures as part of the baggage of ambitious business. Just keep the faith and the successes will come.
We then return to Diamonds are Forever. Our hero was not afraid to change his mind and take the money, and while this may have been death to brand Connery, in fact turned out a cracking performance in a cracking film. Opportunism is an oft underated trait. Although, the less said about Never Say Never Again, the better.
After 54 years in the film business, Connery has globalised and has reaped the rewards thereof. The Bond brand or franchise continues without him, but he helped to make it what it is. He remains the best Bond in my book and an icon in his home country and has helped others from Scotland to commercialise and promote themselves, particularly in the USA and used his influence to help those less fortunate. He made the most of his talent, pursued his vision, globalised, made mistakes, worked extremely hard and earned his place in the A-list.
Diamonds can be forever for those of us struggling to make our mark in business, with the right ambition, staying power and hard work. Just beware strange men bearing free gemstones – there is no such thing - they always come with responsibilities and consequences attached.
It was the first Bond film that I watched at the cinema, transfixed by the moon buggy and frustrated that I never owned the Corgi, or was it Dinky, version. I think too that it was the first screen violence I can remember witnessing, particularly the scene where Bond sends diamond smuggler Peter Franks to his death with the aid of a fire extinguisher. Brutal in the extreme, but I emerged suitably shaken, not stirred.
Childhood memories aside, I did not realise it at the time that this was Connery’s comeback to Bond, after the Lazenby interlude [not as wooden as given credit for], lured back with a $1 million fee and $10,000 a week wages. Quite a sum at the time, but infinitely more value than your average SPL or Premier League showman.
While not wishing to venture into ‘best Bond’ territory, it struck me that those of us in business in Scotland could take a page or two out of the book of Connery to guide us going forward.
First lesson, he started local, but built a global phenomenon. Starting from his milk delivery days in Fountainbridge, Connery pursued and ultimately realised his vision. It took him six years from his first film part to his breakthough in 1962’s Dr No. He accepted the small parts, dealt with the inevitable crap, but kept his eye on the prize. A lesson for all budding entrepreneurs!
Secondly, he grabbed the opportunity and ran with it. Bond might not have made him. He might not have been in the right place at the right time. We might have hated his interpretation. He played the legendary spy his way and it worked. That combination of clarity, sophistication, looks and ruthlessness won the fights, the girls and the audiences. While there may be something here for the entrepreneur to emulate, its more about the strength of character to move away from home turf and mix it with an alien culture, in this case Hollywood, and not be cowed or manipulated. Surely this must be a fantastic example of internationalisation.
Having made it to the big time and secured his cash cow, Connery then realised that there must be more to life. More product with which to grow his personal brand. He was not afraid to step off the Bond bandwagon and negotiate the maze of undoubted crazy offers and ridiculous roles. As David Thompson has put it, he has made strange film choices but he retained and retains public affection. Something brands aspire too. The lesson here being the need to accept failures as part of the baggage of ambitious business. Just keep the faith and the successes will come.
We then return to Diamonds are Forever. Our hero was not afraid to change his mind and take the money, and while this may have been death to brand Connery, in fact turned out a cracking performance in a cracking film. Opportunism is an oft underated trait. Although, the less said about Never Say Never Again, the better.
After 54 years in the film business, Connery has globalised and has reaped the rewards thereof. The Bond brand or franchise continues without him, but he helped to make it what it is. He remains the best Bond in my book and an icon in his home country and has helped others from Scotland to commercialise and promote themselves, particularly in the USA and used his influence to help those less fortunate. He made the most of his talent, pursued his vision, globalised, made mistakes, worked extremely hard and earned his place in the A-list.
Diamonds can be forever for those of us struggling to make our mark in business, with the right ambition, staying power and hard work. Just beware strange men bearing free gemstones – there is no such thing - they always come with responsibilities and consequences attached.
Wednesday, 4 August 2010
Pablo Picasso and the budget deficit
A friend recently quoted a former boss as saying that ‘any problem is straightforward provided you find the right level of abstraction’, in other words, to get out of the doodoo you need to think laterally and view things differently.
Given that we have all been exhorted to come up with ideas for reducing the budget deficit I thought I would ‘abstract’ on the theme of public sector cuts and the ‘go green’ agenda. I will not address extra taxes on the private sector since beleaguered small businesses have suffered enough already and tax rises are not at all an abstract solution. My starting point will be the difficult choices required to maintain a sensible level of investment in emerging green technologies while meeting spending targets - think here of the debate around cuts to the Carbon Trust in order to help fund the proposed Green Investment Bank.
The recent announcement of cuts to support for low carbon and renewable energy technologies has received media attention, however, what about the spending on media and advertising to raise awareness of government initiatives? While the Carbon Trust is no stranger to full page adverts in quality periodicals, other parts of Government have traditionally funded large scale public information campaigns about issues such as healthy eating, healthy living or going green. Such campaigns are given life in order to convey a sense of Government purpose, however, will they survive the current economic malaise and will anyone notice?
If we accept reduced budgets for public information campaigns, rather than spend money doing the same thing in the same old way, here is the abstraction. Let’s say for example we have a smaller budget for a healthy eating campaign, why not divide it up and give it as grant aid to a selection of key food companies for them to market their own produce in their own way. By promoting their own products, the companies win, by spreading the policy message for less, the government wins and by spreading the creative work, the agencies win. Assuming that this could be done in a way that meets state aid rules, we end up with a win, win, win situation. The relevant Minister can still claim the credit, organise a photo-call and send out a rousing press release. Admittedly, because the money is distributed amongst a group of different companies, the results will vary, but the overall impact would be positive.
Consumer facing eco-campaigns are another case in point. Rather than put out generic ‘go green’ messages to the wider populace, targeted action on problems such as food waste backed up by the provision of the necessary collection infrastructure is surely more sensible. The delivery mechanism is Zero Waste Scotland working in conjunction with local authorities and private contractors.
The Climate Challenge Fund, for which local communities bid to initiate carbon reduction projects, is an interesting abstraction. This takes its lead from the people in villages, towns and cities throughout Scotland who have devised their own ways of reducing environmental impacts. A good example is the project from SPOKES, the Lothian cycling campaign, which aims to devise solutions to the storage of bicycles in Edinburgh tenements. On a related note, a Scottish village has recently employed a full time energy manager to advise residents on the optimum mix of energy efficiency and micro-renewable technologies. Abstracting this concept, perhaps 100 energy managers could be chosen and/or trained and assigned two villages each from the 200 that make the best case for it. Leaving aside the massive challenge of changing the way we generate electricity, getting 200 villages in Scotland to reduce energy demand would go a long way to helping the country meet its carbon policy targets. It could be enacted within a tighter budget regime, could employ some re-assigned civil servants and provide work for private sector energy efficiency and micro-generation providers.
This abstraction game is fascinating, although there is a danger that it creates opportunities for the management class to organise workshops and strategy sessions. Indeed, I was once accused of not having a plan by someone working in a large organisation, unlike them, who admitted to spending most of their working day discussing strategy. There must be a happy medium, so I call on policy makers, and indeed private sector strategists, to ditch their Powerpoint slides and get all Mark Rothko and Eduardo Paolozzi. If the body politic can think in the abstract it can meet its revised budget targets while improving governance and the lot of the governed. As long as we don’t end up with a load of Jackson Pollocks.
Given that we have all been exhorted to come up with ideas for reducing the budget deficit I thought I would ‘abstract’ on the theme of public sector cuts and the ‘go green’ agenda. I will not address extra taxes on the private sector since beleaguered small businesses have suffered enough already and tax rises are not at all an abstract solution. My starting point will be the difficult choices required to maintain a sensible level of investment in emerging green technologies while meeting spending targets - think here of the debate around cuts to the Carbon Trust in order to help fund the proposed Green Investment Bank.
The recent announcement of cuts to support for low carbon and renewable energy technologies has received media attention, however, what about the spending on media and advertising to raise awareness of government initiatives? While the Carbon Trust is no stranger to full page adverts in quality periodicals, other parts of Government have traditionally funded large scale public information campaigns about issues such as healthy eating, healthy living or going green. Such campaigns are given life in order to convey a sense of Government purpose, however, will they survive the current economic malaise and will anyone notice?
If we accept reduced budgets for public information campaigns, rather than spend money doing the same thing in the same old way, here is the abstraction. Let’s say for example we have a smaller budget for a healthy eating campaign, why not divide it up and give it as grant aid to a selection of key food companies for them to market their own produce in their own way. By promoting their own products, the companies win, by spreading the policy message for less, the government wins and by spreading the creative work, the agencies win. Assuming that this could be done in a way that meets state aid rules, we end up with a win, win, win situation. The relevant Minister can still claim the credit, organise a photo-call and send out a rousing press release. Admittedly, because the money is distributed amongst a group of different companies, the results will vary, but the overall impact would be positive.
Consumer facing eco-campaigns are another case in point. Rather than put out generic ‘go green’ messages to the wider populace, targeted action on problems such as food waste backed up by the provision of the necessary collection infrastructure is surely more sensible. The delivery mechanism is Zero Waste Scotland working in conjunction with local authorities and private contractors.
The Climate Challenge Fund, for which local communities bid to initiate carbon reduction projects, is an interesting abstraction. This takes its lead from the people in villages, towns and cities throughout Scotland who have devised their own ways of reducing environmental impacts. A good example is the project from SPOKES, the Lothian cycling campaign, which aims to devise solutions to the storage of bicycles in Edinburgh tenements. On a related note, a Scottish village has recently employed a full time energy manager to advise residents on the optimum mix of energy efficiency and micro-renewable technologies. Abstracting this concept, perhaps 100 energy managers could be chosen and/or trained and assigned two villages each from the 200 that make the best case for it. Leaving aside the massive challenge of changing the way we generate electricity, getting 200 villages in Scotland to reduce energy demand would go a long way to helping the country meet its carbon policy targets. It could be enacted within a tighter budget regime, could employ some re-assigned civil servants and provide work for private sector energy efficiency and micro-generation providers.
This abstraction game is fascinating, although there is a danger that it creates opportunities for the management class to organise workshops and strategy sessions. Indeed, I was once accused of not having a plan by someone working in a large organisation, unlike them, who admitted to spending most of their working day discussing strategy. There must be a happy medium, so I call on policy makers, and indeed private sector strategists, to ditch their Powerpoint slides and get all Mark Rothko and Eduardo Paolozzi. If the body politic can think in the abstract it can meet its revised budget targets while improving governance and the lot of the governed. As long as we don’t end up with a load of Jackson Pollocks.
Friday, 21 May 2010
Well....
Before proceeding further, I would like to declare that I own a petrol driven car, have lots of plastic items around the house and use various chemicals in the home and the garden. While acknowledging my oil based dependency, am I alone in being appalled at the sight of a 98-tonne metal funnel being touted as the solution to one of the biggest environmental disasters of our time?
The explosion on the Transocean rig, operated on behalf of BP in the Gulf of Mexico is a personal and environmental disaster on its own merits but once again it raises questions over the long term sustainability of the oil industry and our associated dependence. While it is not the first oil based incident and will not be the last, given the frenzied arguments around ‘peak oil’ and the move towards a low carbon economy, the sight of the Heath-Robinson funnel speaks volumes about the state of the oil industry.
The event itself has exposed aspects of the commercial structure of the oil exploration sector, where the multinational behemoths no longer do the work but subcontract to the ‘services’ companies. In this case, we have a rig operated by Transocean with certain critical tasks undertaken by Halliburton, all under the auspices of a BP contract. Which is fine, up to a point, but as per the UK financial meltdown, when something goes wrong, everyone is left looking quizzically at everyone else. In this case, BP’s Chief Executive Tony Hayward has gone so far to say that BP was not at fault, even though it has promised to pick up the bill for the cleanup.
An inevitable enquiry will no doubt expose problems with systems and safety procedures, however, the fact that the best solution seems to be a large metal funnel seems somewhat inadequate, not to say pathetic. Given the technological advances made to seek out and extract oil and gas from the sea bed in massively hostile environments, there must be a lingering concern that the technology push has focussed too much on identifying reserves and a smooth extraction process, rather than multiple and sophisticated fail safe solutions and contingency procedures.
While views will vary on the significance of this event to BP’s long term prospects, immediate share price dips aside, the images of Tony Hayward looking and sounding like a man who is wondering what all the fuss is about, exemplifies a certain measure of big oil untouchability. Such a position is however misplaced, given the gradual move towards low and no carbon fuel sources and the fact that whichever way you look at it, the amount of oil that we extract from the earth is in a long term decline. The oil majors will of course argue that new reserves will be discovered and technology will make extraction economically feasible, however, their horizon extends no further than 30-40 years, if that. One does not need to think in geological terms to start pondering the need to expend significant time and effort now in order to eventually replace oil as a fuel, lubricant, intermediary and product constituent. This latest event has already caused many people to question the USA’s offshore drilling efforts, a policy largely driven by oil interests.
While restrictions in US offshore activity may be a lasting legacy of the tragedy in the Gulf of Mexico, it may also represent the chronological point at which the world started to create a road map for a post-oil economy. In Scotland, the offshore oil and gas sector has of course wrought significant economic benefits, particularly in and around Aberdeen and HM Treasury. We have all benefited through the North Sea dividend, created by many clever and brave individuals, but we now face the prospect of declining reserves in our own offshore waters. At the same time in Scotland, we are seeing a gradual commercial transition from oil and gas to offshore renewable in the form of wind, wave and tidal, at the same time the traditional oil and gas services companies have already internationalised and focussed on maintenance and decommissioning. While the low carbon transition in the North Sea may seem insignificant at the moment, I am reminded of an ITN Roving Report from 1962. The intrepid reporter joins the crew of a converted North Sea trawler using IIWW anti-submarine technology to map the sea bed for its oil bearing potential. On returning to land, our correspondent asks a Professor of Oceanography the immortal question: “Do you think that they will ever find oil in the North Sea?” What a lot has changed in fifty years, what a lot will change in the next fifty years.
The explosion on the Transocean rig, operated on behalf of BP in the Gulf of Mexico is a personal and environmental disaster on its own merits but once again it raises questions over the long term sustainability of the oil industry and our associated dependence. While it is not the first oil based incident and will not be the last, given the frenzied arguments around ‘peak oil’ and the move towards a low carbon economy, the sight of the Heath-Robinson funnel speaks volumes about the state of the oil industry.
The event itself has exposed aspects of the commercial structure of the oil exploration sector, where the multinational behemoths no longer do the work but subcontract to the ‘services’ companies. In this case, we have a rig operated by Transocean with certain critical tasks undertaken by Halliburton, all under the auspices of a BP contract. Which is fine, up to a point, but as per the UK financial meltdown, when something goes wrong, everyone is left looking quizzically at everyone else. In this case, BP’s Chief Executive Tony Hayward has gone so far to say that BP was not at fault, even though it has promised to pick up the bill for the cleanup.
An inevitable enquiry will no doubt expose problems with systems and safety procedures, however, the fact that the best solution seems to be a large metal funnel seems somewhat inadequate, not to say pathetic. Given the technological advances made to seek out and extract oil and gas from the sea bed in massively hostile environments, there must be a lingering concern that the technology push has focussed too much on identifying reserves and a smooth extraction process, rather than multiple and sophisticated fail safe solutions and contingency procedures.
While views will vary on the significance of this event to BP’s long term prospects, immediate share price dips aside, the images of Tony Hayward looking and sounding like a man who is wondering what all the fuss is about, exemplifies a certain measure of big oil untouchability. Such a position is however misplaced, given the gradual move towards low and no carbon fuel sources and the fact that whichever way you look at it, the amount of oil that we extract from the earth is in a long term decline. The oil majors will of course argue that new reserves will be discovered and technology will make extraction economically feasible, however, their horizon extends no further than 30-40 years, if that. One does not need to think in geological terms to start pondering the need to expend significant time and effort now in order to eventually replace oil as a fuel, lubricant, intermediary and product constituent. This latest event has already caused many people to question the USA’s offshore drilling efforts, a policy largely driven by oil interests.
While restrictions in US offshore activity may be a lasting legacy of the tragedy in the Gulf of Mexico, it may also represent the chronological point at which the world started to create a road map for a post-oil economy. In Scotland, the offshore oil and gas sector has of course wrought significant economic benefits, particularly in and around Aberdeen and HM Treasury. We have all benefited through the North Sea dividend, created by many clever and brave individuals, but we now face the prospect of declining reserves in our own offshore waters. At the same time in Scotland, we are seeing a gradual commercial transition from oil and gas to offshore renewable in the form of wind, wave and tidal, at the same time the traditional oil and gas services companies have already internationalised and focussed on maintenance and decommissioning. While the low carbon transition in the North Sea may seem insignificant at the moment, I am reminded of an ITN Roving Report from 1962. The intrepid reporter joins the crew of a converted North Sea trawler using IIWW anti-submarine technology to map the sea bed for its oil bearing potential. On returning to land, our correspondent asks a Professor of Oceanography the immortal question: “Do you think that they will ever find oil in the North Sea?” What a lot has changed in fifty years, what a lot will change in the next fifty years.
Monday, 29 March 2010
Sustainability reporting is not just for the big boys
For some years now, larger companies have been churning out annual reports describing their corporate responsibility (CR) or sustainability record. While these reports have become more sophisticated, they try in many ways to please everyone and often please very few.
At the same time, there is a growing band of smaller companies which have embraced regular reporting as a means of driving process improvement. These companies will take different approaches to environmental management and working conditions, but they share a desire to improve their relationship with the environment, suppliers, local communities and employees. This work is partly driven by legislation, but is also a means of responding to questions from customers and saving money, for example through reduced waste disposal, energy and recruitment costs.
Why make progress or problems with sustainability public? Firstly, the report can be a mechanism for setting targets and driving the resulting process improvements – you cannot beat a public statement of intent to concentrate minds! The report can sit easily alongside an existing data and management system and should offer a full and frank picture, even where progress is not being made. Secondly, the company may well be getting enquiries from potential customers, investors and employees about its sustainability record. Thirdly, greater transparency is a facet of improved management, which in turn enhances the value of the company brand.
The rise of digital communication means that even small businesses can produce concise, engaging and up to date summaries of environmental and sustainability performance. While a printed summary will always be necessary, online reports can be much more flexible, visual and up to date. In addition, the work of those within the business can be brought to life, specific projects can be illustrated and targets updated.
The report need not emulate the thick tomes produced by larger companies. It should describe the nature of the business, associated policies and how the company is tackling its key ‘impacts’ such as waste, water, responsible sourcing, employee development or community involvement. The report may also be structured in line with external voluntary guidelines.
In the era of business transparency and scrutiny, those companies that are prepared to expose their management of environmental, ethical, social and community issues will undoubtedly enhance their bottom-line and their value.
At the same time, there is a growing band of smaller companies which have embraced regular reporting as a means of driving process improvement. These companies will take different approaches to environmental management and working conditions, but they share a desire to improve their relationship with the environment, suppliers, local communities and employees. This work is partly driven by legislation, but is also a means of responding to questions from customers and saving money, for example through reduced waste disposal, energy and recruitment costs.
Why make progress or problems with sustainability public? Firstly, the report can be a mechanism for setting targets and driving the resulting process improvements – you cannot beat a public statement of intent to concentrate minds! The report can sit easily alongside an existing data and management system and should offer a full and frank picture, even where progress is not being made. Secondly, the company may well be getting enquiries from potential customers, investors and employees about its sustainability record. Thirdly, greater transparency is a facet of improved management, which in turn enhances the value of the company brand.
The rise of digital communication means that even small businesses can produce concise, engaging and up to date summaries of environmental and sustainability performance. While a printed summary will always be necessary, online reports can be much more flexible, visual and up to date. In addition, the work of those within the business can be brought to life, specific projects can be illustrated and targets updated.
The report need not emulate the thick tomes produced by larger companies. It should describe the nature of the business, associated policies and how the company is tackling its key ‘impacts’ such as waste, water, responsible sourcing, employee development or community involvement. The report may also be structured in line with external voluntary guidelines.
In the era of business transparency and scrutiny, those companies that are prepared to expose their management of environmental, ethical, social and community issues will undoubtedly enhance their bottom-line and their value.
Tuesday, 23 March 2010
Common Sense Really
In the current economic climate, it might seem somewhat irrelevant to be talking about corporate social responsibility or CSR. But, while corporate heads have been turned towards market turmoil, the resulting mangling of corporate governance and death of long standing companies, makes it a fitting time to re-visit the concept of CSR and its relevance to a profit making enterprise.
Firstly, the acronym. It’s all wrong. While businesses can be social enterprises, most are not. So let us rescue the concept and call it ‘common sense really’, ‘enlightened self interest’ or indeed, good old fashioned ‘corporate governance’. Let us also accept that a company that is financially successful over a long period is, by dint of this success, a company that is corporately responsible in relation to people and the environment. See Adam Smith for details.
It seems sensible to believe that commercial longevity is more likely to be achieved by those companies that innovate, that are sensitive to the needs of their employees, customers and suppliers, that manage and mitigate their impacts on the environment and whose systems are efficient and effective, that are not afraid of making hard decisions based on a long term view, that enjoy what they do and bring stakeholders along with them. There is also a strong reputational aspect to this and, particularly for public companies, there is a relationship to share price.
Having taken a stab at a definition, it’s worth mulling over the question of who drives the CSR agenda. Like all good concepts there is no simple answer. Orthodoxy says that CSR should be embedded within the values of the business and driven from the top. In reality there will be all manner of prods and pressure from customers, peers, regulators, investors, local communities, as well as the management team and, yes, even the CEO. Then we have the activists, non-governmental organisations and elements of the CSR industry. Here perhaps, and this is admittedly a cynical view, the agenda is less about accountability but more about an aversion to profit and the abhorrent pursuit thereof. Let’s whip the fat cats in their pinstripes and make them atone for their wicked ways!
Being a trendy concept, CSR also comes with its own mountain of written material, created by companies, academics, commentators or CSR professionals. Too much of this material can be inappropriate, boring, turgid and seemingly created to satisfy a generic audience that does not actually exist (hence no-one reads, listens or watches). This has a particular relevance in a world where communication channels are globalising and multiplying and ‘audiences’ are disaggregating. While the media and communications paradigm shifts, those wishing to say something about CSR need to work that much harder to make their information coherent, relevant and interesting, ensuring that it engages and is tailored for different channels and different recipients.
We have gone this far and not even mentioned carbon and climate change. Is the latter the same as CSR? Of course not, even given the strong focus on the carbon impacts of commercial enterprise. Briefly, abundant evidence exists that climate change will shape the business environment, which in turn will shape CSR. End of story.
So where does that leave us? CSR – it’s a piece of cake, or should it be POC, for an innovative, well run company with long term growth ambitions. Those of us for whom this simple goal is not as easy as falling off a log (or FoaL) also need a little bit of a steer. Above all, companies must not lose sight of the fact that they are there to create value for their shareholders, employees and customers, retaining a focus on profit, performance and governance.
While this is all well and good, how do investors best take a view on CSR when there is no official ‘standard’ against which companies can be measured. The Global Reporting Initiative is useful, but for many companies, even listed corporates, getting to grips with all of its tenets is a mammoth task. The resulting outputs can also offer a major interpretive challenge, even to fund managers. Third party tools and services are available, but again, they define their own criteria and assessment structures.
Clearly the level of due diligence will vary amongst investors and some will be more engaged with environmental, social and governance risks than others. At the same time, the investee companies, and this returns to a point already raised, could help themselves through better, clearer information provision in relation to CSR related issues. Put simply, investors need to be more engaged and clued up, while investees need to recognise the importance of ESG risks as both management and communications challenges.
In conclusion; when looking to a globally warmed future, the successful companies will innovate, take a long-term view, manage risk, pursue strong governance and effectively communicate. Those that do not will die. It’s common sense really.
Firstly, the acronym. It’s all wrong. While businesses can be social enterprises, most are not. So let us rescue the concept and call it ‘common sense really’, ‘enlightened self interest’ or indeed, good old fashioned ‘corporate governance’. Let us also accept that a company that is financially successful over a long period is, by dint of this success, a company that is corporately responsible in relation to people and the environment. See Adam Smith for details.
It seems sensible to believe that commercial longevity is more likely to be achieved by those companies that innovate, that are sensitive to the needs of their employees, customers and suppliers, that manage and mitigate their impacts on the environment and whose systems are efficient and effective, that are not afraid of making hard decisions based on a long term view, that enjoy what they do and bring stakeholders along with them. There is also a strong reputational aspect to this and, particularly for public companies, there is a relationship to share price.
Having taken a stab at a definition, it’s worth mulling over the question of who drives the CSR agenda. Like all good concepts there is no simple answer. Orthodoxy says that CSR should be embedded within the values of the business and driven from the top. In reality there will be all manner of prods and pressure from customers, peers, regulators, investors, local communities, as well as the management team and, yes, even the CEO. Then we have the activists, non-governmental organisations and elements of the CSR industry. Here perhaps, and this is admittedly a cynical view, the agenda is less about accountability but more about an aversion to profit and the abhorrent pursuit thereof. Let’s whip the fat cats in their pinstripes and make them atone for their wicked ways!
Being a trendy concept, CSR also comes with its own mountain of written material, created by companies, academics, commentators or CSR professionals. Too much of this material can be inappropriate, boring, turgid and seemingly created to satisfy a generic audience that does not actually exist (hence no-one reads, listens or watches). This has a particular relevance in a world where communication channels are globalising and multiplying and ‘audiences’ are disaggregating. While the media and communications paradigm shifts, those wishing to say something about CSR need to work that much harder to make their information coherent, relevant and interesting, ensuring that it engages and is tailored for different channels and different recipients.
We have gone this far and not even mentioned carbon and climate change. Is the latter the same as CSR? Of course not, even given the strong focus on the carbon impacts of commercial enterprise. Briefly, abundant evidence exists that climate change will shape the business environment, which in turn will shape CSR. End of story.
So where does that leave us? CSR – it’s a piece of cake, or should it be POC, for an innovative, well run company with long term growth ambitions. Those of us for whom this simple goal is not as easy as falling off a log (or FoaL) also need a little bit of a steer. Above all, companies must not lose sight of the fact that they are there to create value for their shareholders, employees and customers, retaining a focus on profit, performance and governance.
While this is all well and good, how do investors best take a view on CSR when there is no official ‘standard’ against which companies can be measured. The Global Reporting Initiative is useful, but for many companies, even listed corporates, getting to grips with all of its tenets is a mammoth task. The resulting outputs can also offer a major interpretive challenge, even to fund managers. Third party tools and services are available, but again, they define their own criteria and assessment structures.
Clearly the level of due diligence will vary amongst investors and some will be more engaged with environmental, social and governance risks than others. At the same time, the investee companies, and this returns to a point already raised, could help themselves through better, clearer information provision in relation to CSR related issues. Put simply, investors need to be more engaged and clued up, while investees need to recognise the importance of ESG risks as both management and communications challenges.
In conclusion; when looking to a globally warmed future, the successful companies will innovate, take a long-term view, manage risk, pursue strong governance and effectively communicate. Those that do not will die. It’s common sense really.
Subscribe to:
Posts (Atom)