corporation 2020: transforming business for tomorrow's world

www.corp2020.com @corp2020

Corporation 2020Transforming Business for Tomorrow’s World

Pavan Sukhdev

Founder, Corporation 2020& UNEP Goodwill Ambassador

TBLI Conference Europe 2012, Zurich, 8th November 2012


“A Green Economy is defined as one that results in improved human well-being and social equity, whilst significantly reducing environmental risks and ecological scarcities.”

Source: Towards a Green Economy, UNEP, 2011

1989…

…2011


Source : T-21 Model, Green Economy Report,2% of GDP invested in Greening vs 2% more in BAU


83.3%

16.7%

U.S. Nonfarm Employees

PrivateGovernment

74.9%

7.1%5.5%

12.5%

U.S. Gross Value Added, By SectorPrivate Business Households Nonprofit institutions serving households Government

Total = GDP (US$14,526.5 billion)

Is “Green Economy” possible without the Private Sector? (example: USA)


Private Sector Today : “Corporation 1920”

• Four Defining Behaviours– Pursuit of Size– Active Lobbying– Unethical Advertising– Unlimited Leverage


Big Is Beautiful ?


The Success of World Trade ?



Corporation 1920

• Four Defining Behaviours– Pursuit of Size– Active Lobbying– Unethical Advertising– Unlimited Leverage

Resulting in Negative Externalities…..


• Negative externalities of top 3,000 companies estimated at US$2.15 trillion per annum

Why do we need to change?

Source: Trucost for UNPRI, 2010.


Why do we need to change?• We are approaching or have exceeded several

“planetary boundaries”


What will drive change?

Excessive Demand

Culture of Consumerism

Fuelled by Marketing/ Advtg

Ethics & Accountability in

Advertising

Macro Issue Micro Driver Micro Solution

Public Capital Losses Externalized costs Measure & Disclose Externalities

Underpriced Supply Unlimited leverageLimit

Leverage/capital adequacy/etc.

Resource Depletion

Underpriced resources (Low royalties /

perverse subsidies)

Resource Taxes replace corporate

taxes


“Corp2020” : Micro-Policy Reforms to Make Business Deliver a Green Economy

Source: Why Corporation 2020?, Island Press, 2012

Resource Taxation : Replacing Income Tax with Resource Tax for Resource Use & Extraction

Limiting Leverage : Introducing rules & limits to govern financial leverage

Accountable Advertising : Making advertising responsible & accountable via norms & standards

Disclosing Externalities : Measuring & disclosing all major corporate externalities (+ve & -ve)

From : www.corp2020.com

http://www.corp2020.com/


Rob WaltonChairman, Walmart

http://sharequotes.us/robson-walton-biography.html


Limiting Leverage

See Interview with Rob Walton on www.corp2020.com

…to see why Wal-mart went public…



Limiting Leverage• Tools for limiting leverage:

– Capital adequacy ratios for “TBTF” corporations– Consortium banking (info sharing between banks)– Segregate lending/clearing institutions from

investment/ insurance (re-visit Glass-Steagall?)– Limit tax-deductibility of interest beyond caps– Constrain leverage from M&As– Re-align performance bonus systems


Accountable Advertising• Two principles

– Treat all consumers equally, irrespective of market– Improved disclosure of advertising practices

• Annual “Accountable Advertising Report”• Four strategies

– Disclose life span of product on packaging and in ads– Disclose countries of origin– Recommend how to dispose of product– Voluntarily commit 10% of ad spend in developing

countries to local sustainability projects


Jochen ZeitzChairman, Puma


Accounting for Externalities

See Interview with Jochen Zeitz on www.corp2020.com

…to see why PUMA disclosed its Externalities…



Disclosing Externalities : PUMA

PUMA Press Release, November2011

www.corp2020.com @corp2020www.corp2020.com @corp2020

Disclosing Externalities : Infosys


What will define a “Corporation 2020”?

• Four Characteristics–Goal Alignment with Society–Capital Factory–Institute–Community


Corporation as “Institute” : Infosys World-class Training for 30,000 p.a.


Corporation as “Community”: Google

http://www.joe-ks.com/archives_feb2009/GoogleHeadquarters.htm


Corporation as “Community” : Natura Greater Economic Security for Women

Median Salary 16 times more than national minimum

Network of 1.4 million independent sales representatives

Training women to offset lack of department stores and offer good

job opportunities in Brazil


Planks Stages

DisclosingExternalities

Resource Taxation

AccountableAdvertising

LimitedLeverage

Research & Ideation

GRI, IIRC

Outreach& Advocacy

GRI, IIRC, WBCSD, AFS, B4E

InstitutionalChampionship

Implement- -ation (Funding & Proj. Mngmt.)

UK (Defra) SING (EDB)

Implementing the Four Planks of Change


TEEB for Business Coalition• Incorporated as a company

limited by guarantee*• Incorporated in Singapore

Founder Member Reps - Members of the company – known as Founder Members - and therefore its legal owners, all have permanent board seats:1. ICAEW2. WBCSD3. GRI4. WWF5. CI6. IUCN7. IIRC8. Global Initiatives

Observer Reps – organisations for whom legal ownership is complicated but who have been instrumental partners are offered a permanent board seat as observers:• CBD• UNEP• World Bank/IFC• Accounting for Sustainability• UK Government (Defra)• Others? European

Commission; Singapore Economic Development Board; other donor gov’ts

Co-opted board members:1. Pavan Sukhdev, Study Leader

TEEB2. Gerard Ee (Chair) (Member of

Parliament, Singapore)3. Sanjeev Sanyal (Senior Economist

Deutsche Bank Singapore)

Ordinary Member Reps – ordinary members of the Coalition elect five board members for a three year period

(Company) Board

* A company limited by guarantee is a structure that means there are no shares in the company; its members are guarantors rather than shareholders. There is therefore no need for share transfers as members join or leave the company.

Board Advisory Group• Jochen Zeitz (Puma)• Michael Izza (ICAEW)• Juan Costa-Climent (E&Y)• Herman Mulder (GRI)• Peter Bakker (WBCSD)• Fernando Rodes (Havas)• Pavan Sukhdev (GIST Advisory)

(Chair)

6th Nov 2012, ‘Externalities’ plank launched in Singapore


Planks Stages

DisclosingExternalities

Resource Taxation

AccountableAdvertising

LimitedLeverage

Research & Ideation

GRI, IIRC

Outreach& Advocacy

GRI, IIRC, WBCSD, AFS, B4E

? ? ?

InstitutionalChampionship ? ? ?

Implement- -ation (Funding & Proj. Mngmt.)

UK (Defra) SING (EDB)

? ? ?

Who will launch the other Three Planks of Change?


Thank You !www.corp2020.com

Pavan SukhdevFounder, Corporation 2020

& UNEP Goodwill Ambassador


corporation 2020: transforming business for tomorrow's world

Economy & Finance

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negative externalities

leverage tools

green economy report

major corporate externalities

green economy possible

corp2020 accounting

private business