Fairtrade, forestry and the fast-buck

There has been some reflection on the continued rise in sales of Fairtrade goods in the UK as we approach Fairtrade day on 12th May.  The UK is a significant market for such goods, with £1.3 billion spent each year, a figure that rose by 12% between 2010 and 2011.  Of this total, some 82% is accounted for by sales of coffee, cocoa products, sugar products and bananas.

The arguments for and against the efficacy and effectiveness of the Fairtrade system are often conflated with those of the so called ‘ethical’ or ‘green consumer’.   In other words, it is the consumer through their buying decisions that is driving the demand for Fairtrade products.  This argument was also deployed twenty years ago when the issue of imported tropical timber products became a cause celebre of the environmental movement.  From these scuffles independent certification schemes emerged such as that established and controlled by the Forest Stewardship Council or FSC.

Here the argument ran that individual consumers would go into their local DIY store and be faced with either a non-certified hardwood furniture set or an FSC certified hardwood furniture set.  The view prevailing that the latter would come at a premium because of the costs associated with sustainable management and certification.

As someone that helped to formulate the rules of the FSC and managed some of its pioneering audits in south-east Asia, I was able to observe its effects at close quarters and with interest.  The first thing to note is that history has shown that in the retail context, the price premium for certified timber products was a myth.  In addition, while the ‘chainsaw massacre’ campaigns played their part, the idea of the consumer driving the agenda was also misplaced.  Retailers such as B&Q observed the campaigns, however, they also saw the growing pressures on the supply side so took the decision out of the hands of the individual shopper by making it policy to supply, as far and as rapidly as possible, all of its timber products from certified sources.  Thus the family DIYmeister was relieved of the burden of choosing between clean or sullied rubberwood doors. 

Since those early days, some twenty years ago, the FSC has achieved a great deal and as of May 2012, 151 million hectares, or just over  5% of the world’s production forests had been certified.  However, it is worth noting that North America and Europe between them accounted for about 82% of the total certified forest areas, while the whole of Asia, including China, accounted for a mere 3.44%, consisting of 145 certificates out of a world total of 1125.  This is certainly progress since my mid-nineties forays into the forests of south-east Asia and in particular Indonesia, but what the numbers do perhaps illustrate is the scale of the challenge in this part of the world to establish a real and acceptable market value for standing forest and maintain it as such.  This scenario, as opposed to the continued pressure to extract valuable timber at an unsustainable rate and in a poor way and then convert what is left to a mono-crop or grazing.    Hence we see the continued shrinking in the area of standing natural forest and the efforts taken by the UN to initiate global schemes to price and monitor the existence of what is left for ‘ecosystem services’.

As it was then, so it is now, with big money continuing to talk in the south-east Asian forestry realm, despite the improved efforts of Governments to control malpractice.  Indeed, the rise of China as a major market has affected management and prices across the globe.  In my experience, the companies looking to buy FSC certified timber were small, insignificant players compared to those customers not too interested in the source and willing to buy hardwood timber, no questions asked, subject to quality, price and shipping suitability.

While both FSC and Fairtrade have undoubtedly achieved a great deal, facilitating fair and environmentally sound supply chains, the major challenge of making sustainability a mainstream business dynamic remains.  This will only happen when the global investment community recognises that the dynamics of sustainability are not soft, blurry and irrelevant, but are risk-based, fundamental drivers of value.  Perhaps surprisingly, given the ongoing claim and counter-claim in the climate change and carbon debate, things are starting to happen in the world of capital markets.  New models of management and investment are emerging and multinational corporations are actually starting to pay more than lip-service to sustainability.  While mechanisms that were designed to shape and by-pass capitalist models have had moderate success, it seems ironic that the true saviours of the planet may be local, national and international markets, the multinational corporations and marauding entrepreneurs.

Trees, Haggis and Babies

I have the distinct pleasure of speaking on business and sustainability at the Scotland Food & Drink AGM in Perth on 24th February.

The presentation, entitled 'Trees, Haggis & Babies' takes a quick whizz through my early days auditing forest management in Asia, helping Macsween create its sustainability reports and co-founding Totseat, the company that makes the world leading fabric highchair 'babies who lunch'.

See www.scotlandfoodanddrink.org

Don't Fight the Power, Like the Power

Expert panel uses film clips to explore a smart networked, low carbon energy future for Scotland

The Fintry Renewable Show, FRESH 2012, is playing host on March 9th to the entertaining debating format Moving Conversations.  ‘Power to the People – the citizen and energy independence’ brings together ice cream and wind power magnate, Maitland Mackie, localism activist and Chair of the Forestry Commission, Pam Warhurst, land ownership campaigner, Andy Wightman and renewable energy entrepreneur, Max Carcas.  Each will come armed with an entertaining clip from the Scottish Screen Archive with which they will try to convince the audience of the strength of their arguments.

FRESH 2012 organiser Kelly McIntyre said:
“While renewable energy is a serious subject, the village of Fintry wishes to celebrate the success and potential of low carbon technologies.  Hence FRESH, our third renewable energy show, will offer a wide array of talks, exhibitions, workshops, food, crafts and fun.  Moving Conversations is the centrepiece of our events schedule and with the line-up of experts, allied to some intriguing film clips, we can guarantee a fantastic wide-ranging debate on Scotland’s energy future.  Don’t fight the power, like the power!”

The Moving Conversations debate is set to explore the future of energy generation and use in Scotland.  Its particular focus will be on the potential for individuals and households to generate more of their own energy and control that which they use.  A key question will be if we can look forward to energy independence for the citizen, regardless of the political backdrop.  To fuel the debate, each panellist will show a clip that they have chosen from the Scottish Screen Archive, the national audiovisual collection, managed by the National Libraries of Scotland.

Organised by the Fintry Development Trust, FRESH 2012, takes place over the 9^th and 10^th March in and around the village of Fintry in Stirlingshire.  As well as talks, the festival includes demonstrations of micro-renewable power technologies, visits to domestic installations, a local food and crafts market, kids’ activities and trips around the local Earlsburn wind farm.  For more information visit www.fintrydt.org.uk

Moving Conversations is from 2.30-4pm on 9^th March in Menzies Hall, Main Street, Fintry.  The event is free to attend.

Creativity and sustainability - shurely shome mishtake

An upcoming conference in Edinburgh has its sights firmly set on the role that creativity can play in all areas of Scottish policy making, business and society.  While the so called ‘Creative Industries’ – film, art, broadcast, music, gaming – will inevitably be a focus, the conference sets out to identify how the wider business and government sectors can embrace the creative urge.  This may mean redesigning processes, products and business plans, embracing digital technologies or redefining the ways in which businesses and government deal with employees and indeed their customers.

This debate fuels my own view that the urge and need for reinvention also applies in business attitudes towards the environment and sustainability.  At the moment, as soon as the ‘E’ word is mentioned it induces well rehearsed arguments along the lines of “the debt crisis and recession are infinitely more important issues;” “head-hunters are telling me that demand for sustainability professionals has fallen off a cliff;” “we comply with legislation, and that is enough of a cost burden”, or “our customers are not asking about this stuff.”

While fully accepting that there are of course many and competing external pressures on business, there is a growing band of companies that have redefined the importance of sustainability and are seeing the rewards in cost savings, enhanced employee motivation, better management control and a much greater degree of competitive advantage.

With some noteable exceptions, the real business action on creativity and sustainability is taking place in small and medium sized enterprises.   One exception is Interface, world’s biggest producer of carpet tiles, founded by the late, great Ray Anderson in the 1970’s.  In the mid-1990’s he reinvented the business with environmental sustainability at its heart.  While still subject to the vagaries of the global market, Ray Anderson showed that sustainability and business success are not separate bedfellows. The company remains at the top of the flooring tree.

For small businesses, that decision to place sustainability to the fore and centre can be somewhat daunting, particularly as the first task is to decide what it means in its own context.  Having done so and defined priorities, the next major challenge is one of performance measurement, which means some data crunching.  All this takes time and resources, but there is lots of free advice and support out there from the likes of Zero Waste Scotland, Carbon Trust and business organisations such as FSB or the Scottish Food and Drink Federation.   Once the groundwork is done, the business can then review its performance or report to customers or financiers.

The latter are playing an increasingly interesting and important role as agents of sustainability, for if we accept the enhanced importance within a business, it inevitably has financial consequences.  These may be reducing overheads by diverting waste from landfill and turning this material into revenue as recyclate or an investment may be required in machinery to help process and store the waste.  Through having performance information to hand and a willingness to communicate, the business can respond to external scrutiny from customers and investors.  This scrutiny may be in the form of tendering requirements, where a ready response on questions about sustainability, not only saves on management time, but might help to win the business.

Where investment is required, the company’s bank may profit through working with a stronger business and providing asset finance for new plant or equipment.  Getting closer to the customer is an oft quoted banking aspiration, so, in the form of a sustainability dialogue, there is a way for the banks to [1] understand and de-risk their customers, existing and potential; [2] unearth new business from those customers and [3] promote some creativity and innovation within the bank’s own product development teams. 

The opportunities presented around sustainability are there for businesses and their financiers.  It just needs a bit of guts and some creativity.  That’s why I welcome the conference and its effort to provoke a debate on the wide ranging benefits of ‘creativity’ to Scotland’s future.

The Creativity Applied conference is organised by the RSA Fellows' Media, Creative Industries, Culture & Heritage Network and the Institute for Capitalising on Creativity, University of St Andrews.  It will take place on Monday 21st November 2011 at the Royal College of Physicians of Edinburgh, 9 Queen Street, Edinburgh EH2 1JQ.  The conference is free, but bookings should be made before 16^th November http://creativityapplied.eventbrite.com

Great Circle gets a slug of private equity

http://www.ft.com/cms/s/0/f9f3aacc-f29d-11e0-931e-00144feab49a.html#axzz1aKH3PlDL

The College Group (http://www.thecollegegroup.com/), including my business Great Circle (http://www.greatcircle.co.uk/), has received a substantial investment from private equity outfit Vitruvian Partners (http://www.vitruvianpartners.com/).  Onwards and upwards!

Trading with the West amongst the best at EIF

Trading with the West

Edinburgh International Festival

19^th August, 2.30pm, Filmhouse, Lothian Rd, Edinburgh

www.eif.co.uk/trading

A panel of business gurus use film clips to discuss the status and future of business relationships between Scotland and Asia.

Michael E Ward, Screenwriter, producer and marketer
Michael Ward was born and raised in India.  A veteran of business and the arts in the West, including producer and co-adaptor of The Far Pavilions stage musical in 2005 and theatrical director in 2007 of Miss Bollywood, starring Shilpa Shetty.  Michael is deeply involved in the UK-India creative corridor and works to build bridges between the two countries, solving problems in order to increase co-operation for mutual commercial benefit.  His first film will be the low budget urban comedy "The Phone Thief" to be shot in Mumbai in October and distributed in India by Fox Star Studios.

Catherine Schenk, Professor of International Economic History, University of Glasgow
Catherine Schenk has written widely on changes in the international economy since 1945.  Most of her research has been on the development of international banking in East Asia and Europe since the 1960s and also on crises in the international monetary system.  Her current project examines the failure to introduce effective international banking supervision.  She has been a visiting researcher at the International Monetary Fund and the Hong Kong Monetary Authority and has presented at the Bank for International Settlements, Bank of Japan and at Chatham House.  Her most recent book is entitled International Economic Relations since 1945 (Routledge, 2011).

Zarir J Cama, Group General Manager – Group Management Office, HSBC Holdings PLC

Zarir Cama joined HSBC in 1968, becoming CEO of HSBC India in 1999, the first Indian to hold the position.  In 2002, he became CEO HSBC Bank Malaysia Bhd and in June 2007 set up a new International Division overseeing the Group’s business worldwide.  In 2009 he ran the Group’s Continental European business, before taking up his current role of Group General Manager – Group Management Office.  Zarir was born and educated in India, is on the Committee of the British Malaysian Society and the Royal Society for Asian Affairs and has recently been elected to the Board of Trustees of Asia House.

Ian Ritchie CBE

Ian Ritchie founded Office Workstations Limited (OWL) in Edinburgh in 1984.  OWL became the largest supplier of Hypertext/Hypermedia authoring tools for personal computers and was sold to Matsushita of Japan in 1989.  Ian Ritchie was awarded a CBE in 2003, for services to enterprise and education.  He is a Fellow of the Royal Academy of Engineering; a Fellow of the Royal Society of Edinburgh; a Fellow and a past-President of the British Computer Society; Co-Chair of the Scottish Science Advisory Council and was a member of Scotland's Cultural Commission in 2005/2006.  He is Chairman of leading technology companies and advises a number of venture capital firms.

John Callaghan, Former President, Director and CEO pt hero tbk, Indonesia

John Callaghan has a 40 year career in retail, encompassing Canada, South Africa, UK, Ireland, Hong Kong and Malaysia.  For the past four years he has been based in Jakarta, where he held a number of senior positions within major retail companies in the UK and overseas.  He is active in the Globalscot network, assisting Scottish businesses to internationalise and grow.

Michael Groves, Creator and Producer, Moving Conversations

Since completing a PhD in airborne remote sensing, Michael has worked in the UK and internationally in the fields of environmental management, sustainability and corporate communications.  This included three years based in Indonesia, pioneering forest certification throughout south-east Asia.  Since returning to the UK he has advised companies on sustainability strategies and reporting and co-founded a consumer product company that exports to more than 40 countries.  Moving Conversations^® was born from a long standing interest in cinema.  It is now an established format, attracting sponsorship and working with film archives in the UK and internationally.

Moving Conversations^®

“It’s a terrific format”, Sir Michael Grade

Moving Conversations^® is a proven ‘intelligent entertainment’ format where expert panellists choose film and television archive material to shed light on any topic.  Moving Conversations^® have covered a wide range of subjects, including the oil industry, climate change, renewable energy, urban development, fast food, comedy, digital media, journalism, acting, conflict, heritage, banking and television; working with a range of public and private sector sponsors.  Moving Conversations^® have been produced in the UK and Ireland with more planned internationally.

The National Library of Scotland, Scottish Screen Archive

The Scottish Screen Archive is a film and video collection of over 100 years of Scotland's history.  The archive reflects 20th-century Scottish social, cultural and industrial history, the lives of ordinary Scots across the generations and the achievements of Scottish film-makers in the craft of film production.  It houses more than 32,000 items, mostly non-fiction, including documentaries, newsreels, educational material, home movies, television and public information films (including Gaelic broadcasts), industrial material, promotional films and an array of written and printed matter.  The archive was set up in 1976 and has been part of the Collections Department at the National Library of Scotland since 2007.

Cashmere is Scottish....isn't it?

My Moving Conversations show at the Edinburgh International Festival is shaping up well.  All of our panellists have chosen their films from the Scottish Screen Archive - an amusing, amazing and enlightening bunch of movies.  We now await, with eager anticipation, the punchy, controversial arguments from our Bollywood producer, technology investor, banker, retailer and Professor.  The latter is Professor Catherine Schenk, whom has chosen a film called Cashmere is Scottish http://tinyurl.com/3htj4sh, a 1970's promotional film for the cashmere industry.  Catherine has kindly shared some of here thoughts with us on her reasons for choosing this fabulously retro and Joanna Lumley starring film.

The film clip from the 1970s firmly states that Cashmere IS Scottish and this was certainly its reputation and a key part of its value as a luxury product.  It was traditionally a part of Scotland's international brand image (along with bagpipes, shortbread and whisky).  In fact, of course, cashmere was almost always a 'globalised' product that linked Scottish producers and designers with rural Chinese herders who supplied and undertook the first processing of the essential raw material.  In recent years, the production of cashmere has been shifted to China and other countries in East Asia, and the luxury 'brand'  has been somewhat tarnished by variation in quality and fraudulent products.  If cashmere WAS Scottish in the 1970s, it isn't any more - many of the key traditional companies here have been taken over - most notably Pringles.  The ability of Asian companies to produce large amounts of cashmere products for the global market has had an important impact, not only on Scottish business and on consumers, but even more importantly on the environment in China because of the huge expansion of grazing goats.

This leaves the questions:
Was cashmere ever REALLY Scottish or is it an example of long-standing integrated trade links between Scotland and China? 
Does it matter if cashmere is now predominantly 'made in China'?

To see the other films and hear from the other panellists, come along to Trading with the West on 19th August, 2.30pm at Filmhouse, Lothian Rd, Edinburgh.  www.eif.co.uk/trading.