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Vodafone is calling on governments to introduce laws compelling them to request a mobile phone company’s permission before accessing its customers’ calls and data.

Anti-snooping laws, it says, should then require governments to undergo “regular scrutiny by an independent authority”.
Vodafone, the world’s second largest mobile phone operator, serving 29 countries, has revealed in a new report that a handful of regimes, not named, can snoop whenever they wish without interception requests or warrants.

The company says: “It is governments, not communications operators, who hold the primary duty to provide greater transparency on the number of agency and authority demands issued to operators.”

The report shows that, of the governments that seek permission, nine publish the number of their approaches.

Last year the UK government made 2,760 interception requests and 514,608 communications data requests to all operators. Italy made 139,962 interception requests altogether, and 605,601 communication requests to Vodafone alone. In the US the communications company Verizon received 321,545 customer data requests.

Several companies refused to give information, including Egypt, India, Qatar, Romania, South Africa and Turkey.

The report exposed how much the data collected, known as metadata, can show about a customer.

It said: “It is possible to learn a great deal about an individual’s movements, interests and relationships from an analysis of metadata … In many countries, agencies and authorities therefore have legal powers to order operators to disclose large volumes of this kind of communications data.”

Shami Chakrabarti, director of the UK human rights group Liberty, said the findings were a “worst-case scenario infringement into civil rights”.

She protested: “For governments to access phone calls at the flick of a switch is unprecedented and terrifying. Bluster that all is well is wearing pretty thin. Our analogue laws need a digital overhaul.”

Vodafone’s report observed: “The need for governments to balance their duty to protect the state and its citizens against their duty to protect individual privacy is now the focus of a significant global public debate.”

Despite its objections to intrusion, Vodafone will continue to grant official requests rather than quitting any country.
It pointed out: “If we do not comply with a lawful demand for assistance, governments can remove our licence to operate, preventing us from providing services to our customers.”

 

Picture credit: Aleksandar Stojanov, Dreamstime.com
 

The OECD Working Group on Bribery in International Business is pressing Japan to step up investigations and prosecutions of companies using bribery in the course of foreign business.

Japan is a party to the OECD Anti- Bribery Convention and has enacted legislation making bribery a serious criminal offence, but there is much more to be done.

The OECD Working Group has major concerns about the extremely low level of enforcement of Japan’s laws against bribing foreign public officials – just three prosecutions since 1999. In December last year the Working Group recommended that Japan establish an Action Plan to organise police and prosecution resources to detect, investigate and prosecute cases of foreign bribery by Japanese companies.

Japan responded with an Action Plan, which became operational in April this year. The plan creates newly specialised resources for detecting and investigating cases of foreign bribery in the three largest district prosecutors’ offices and each prefectural police office. Although the Action Plan still lacks important details, it marks the first time that prosecutors and police in Japan have ever been assigned responsibility for specific crimes of these kinds.

However, the Working Group has criticized the Action Plan for failing to rectify misleading information on “facilitation payments” in guidelines to companies about bribery that are issued by Japan’s Ministry of Economic Trade and Industry (METI). The Group has asked METI to make it clear that “facilitation payments” are a form of bribery under Japanese law.

On the positive side, the Group has commended Japan’s National Tax Agency (NTA) for its contribution to the Action Plan. The NTA has provided training and guidance to tax inspectors on detecting bribe payments disguised as “miscellaneous expenses,” and strengthened arrangements for reporting suspicious payments.

The Group says that Japan should close the gaps and remedy the weaknesses in its Action Plan by the end of this year. It also expects to see a major increase in the number of foreign bribery cases detected and investigated and a substantial increase in successful prosecutions and convictions in the near future, according to a statement on its website.

The Working Group will be monitoring Japan’s progress in enacting the legislation required for it to fulfil its obligations under the Convention and on implementing the Action Plan. In December 2014, the Working Group will also assess implementation of other outstanding recommendations, including METI’s role in enforcing Japan’s foreign bribery offence.

 

Picture credit: Derberby, Dreamstime.com
 

The tax affairs of Apple, Starbucks and Fiat are now to be formally investigated by the European Commission. All have been accused of avoidance, largely by switching to more favourable tax locations.

Apple, the huge US electronics multinational, was said by the Senate last year to have received special treatment in the Irish Republic, where it has tax residency.

The investigation will determine whether parts of the Apple group charged others excessively for goods and services to minimise tax liability. Commission rules insist on charges being at the market rate.

In the Irish Republic Apple paid only 1.9% tax on its $37bn (£22bn, €27.3bn) overseas profits in 2012. Both Apple and the Dublin government deny any special arrangement.

The Starbucks inquiry will scrutinise the coffee multinational’s tax deal with the Netherlands government, through which it can transfer money to its Dutch sister company in royalty payments.

Starbucks, whose tax policy has recently been attacked fiercely, responds that it complies with all relevant rules, laws and guidelines, and the Netherlands finance ministry says its system is “robust”.

Fiat, the Italian vehicle manufacturer, which has so far escaped intense interest, cuts tax bills by raising debt, mainly bonds, and lending on sums to companies within its group – and by being based in Luxembourg. The group answers that it follows applicable codes of conduct.

In Britain, the central London store of the pharmacy, healthcare and beauty products chain Boots faced demonstrators accusing the company of avoiding £1.21bn ($2bn, €1.51bn) in tax since 2007.

Protesting charity activists and health services professionals claimed this could have covered the annual starting salary for 85,000 NHS nurses or two years’ prescription costs.

Len McCluskey, general secretary of the Unite union, said: “Boots has abused the trust of the British public and needs to come clean on its tax affairs, and act more responsibly towards this country.”

The protesters say a private equity company used the interest due on the £9bn borrowed to buy Boots in 2007 to cut its tax by 95%. On purchase the Boots headquarters was moved from Britain to low-tax Switzerland and is owned by a Gibraltar-based company.

Boots, now Alliance Boots, replies that it complies with tax laws wherever it operates, and pays more tax today than in 2007. Last year its tax payments rose more than 40%, and its UK corporation tax totalled £90m, up from £64m.

Demonstrators targeted Vodafone shops too. UK Uncut, a group proposing alternatives to the government’s austerity policies, claimed Vodafone had paid no corporation tax since 2011 when it sold its shares in the US mobile phone group Verizon for £84bn.

The company’s US stake is owned by a Netherlands holding company and is tax-exempt in Britain, but £3.2bn will be paid in the US. However, Vodafone says that even if the US shareholding was held in Britain there would be no gains tax. A 2002 agreement exempts companies from liability on profits from selling at least a 10% stake in other companies held for more than a year.

Margaret Hodge, the parliamentary public accounts committee chairman, said: “We need assurances that [the tax authority] has crawled over this deal and done its damnedest to make sure taxpayers receive the highest amount of this sudden windfall.”

The UK tax authority estimates it misses £35bn every year, £8.8bn from big business. Some observers believe £100bn is lost through avoidance and evasion.
 

I’ve worked in this ‘space’ - as so many in ‘the sustainability space’ like to call it - for almost 18 months now. Like all new jobs, it often takes a while to get used to the vocabulary and jargon of a particular sector. When I worked in the pharmacy press for example, there were zillions of acronyms to get used to – ABPI, PSNC, PAGB, RPSGB, NPA, to name just a few. I didn’t think I would ever remember them all (and what they stood for). But it does all eventually sink in and then you become familiar with them. And then, horror of horrors, the jargon becomes second nature and by dint of that fact, acceptable. You’re in the club at last!

Indeed, using the accepted jargon of an industry makes you part of an exclusive set – and that sometimes feels good - but when it comes to CR and sustainability that’s not a good thing. Apart from the fact that everyone seems to have a different interpretation of what sustainability means to them and their business, having any kind of accepted jargon makes CR and sustainability unhealthily exclusive when what we all want it to be is the direct opposite.

I remember at my very first BITC Responsible Business week back in March 2013, Justin King, then ceo of Sainsbury’s, commented that he too disliked the terminology/language of the sustainability/CR set.

Over a year on and I worry that the sustainability industry – and its jargon – keeps the CR/sustainability discussion apart from the mainstream. The whole point of responsible business practice is to get CR and sustainability embedded into the business model.
To ensure that the ‘sustainability space’ isn’t a bolt-on or an added extra. To ensure that it’s actually part and parcel of the norm.

Speaking recently to Christian Leitz at UBS about the UN Principles about human rights and how they apply to the banking sector, we touched on the fact that while there are lots of experts in human rights and lots of experts in banking, people who know about both is a very limited community. The Thun Group which he convenes is trying to address that (see the summer edition of Best Practice).

But it’s a big problem. There are too many events and occasions ‘in the space’ where we are preaching to the converted. We need to keep remembering that CR is meant to be part of a whole; a whole new approach to responsible business practice. We’ll never achieve it if we insist on the elitism of sustainability speak or continue with the creation of a whole sustainability industry of its very own.

Collaboration is therefore key. Commenting on some recent research from the Charities Trust, Professor Phil Harris, Dean of the University of Chester’s Business Faculty, said: “The future for resolving complex issues in society will be a partnership of the best companies, people and third sector organisations aided by government. To achieve results the best organisations and people have to come together, whether it be in education, on the environment, health care issues or sustainability. Working together brings results.”

Amen to that. And inclusivity – in all its aspects, including language – is key too.

[email protected]
 

The ‘last word’ by Elaine Cohen in the March edition of Ethical Performance was a timely summary of what has been becoming apparent for some time. There is indeed a degree of confusion ‘on the ground’ about the GRI, IIRC and SASB frameworks, which in our experience on working with clients on non-financial reporting, can simply lead to companies retreating from them all.

That said, direct comparisons between IIRC, SASB and GRI are perhaps a little unfair as they are intended to provide guidelines for different purposes. IIRC and SASB are both aimed squarely at how companies communicate with their investors, providing guidance on how non-financial information should be incorporated in annual reports and US mandatory filings, respectively.
 
The prospect of integrated reporting, as now formalised by IIRC <IR> guidelines, has been held up as the ‘holy grail’ by many commentators. However, it is not yet clear if integrated reports serve the same function as, or will therefore replace, the dedicated CSR or sustainability reports that have become commonplace for many large companies.

Taking into account the interests of all stakeholders (i.e. anyone with a stake in a company), GRI provides guidelines for how companies can report non-financial information in a standard and, hence, comparable way. With G4, the requirement to establish material issues means that the GRI guidelines no longer simply cover the contents of a report itself, but also the way in which those contents are defined. This adds a new preliminary step to the reporting process, which requires organisations to engage with their stakeholders in order to understand which issues matter most.

Everybody seems to agree that this focus on materiality provides a robust approach, leading to more relevant reporting but again there is confusion around the different definitions of materiality by GRI, IIRC and SASB. Again, this stems from these frameworks’ different target audiences. IIRC and SASB use the more “traditional” meaning of materiality (evolved as it is from the financial accounting world), referring to the threshold above which an issue is determined to be sufficiently significant to be included in financial reporting. On the other hand, GRI encourages companies to identify and focus their reporting on those (non-financial) issues that matter most both to the company and to its stakeholders.

However, having different audiences does not mean that better harmonisation between the frameworks is not needed. Each of them have aspects that might benefit the others.

With the European Commission recently adopting a new directive on the disclosure of non-financial information, impacting an estimated 6,000 ‘large’ companies across Europe, this would seem to be the ideal time for the three organisations to come together and agree areas of common ground and better explain reasons for differences. That way, the many companies who are having to approach non-financial reporting for the first time will have a much clearer idea of where to start.

Richard Westaway & Coralie Ponsinet, IMS, the sustainability consultancy 

Manny Amadi explains the secrets to successful, sustainable collaborations

 

We all collaborate and partner in different ways, whether with colleagues or informally within our sectors. However, the role of formal partnerships in driving forward the sustainable business and sustainable development agendas is becoming both more essential, and more prominent, as the realisation dawns that it is sometimes more effective to collaborate with others in order to achieve our own goals.

Examples of partnerships increasingly abound, and they come in different forms. They include intra-sector partnerships (for instance, Boots sharing lorry space with other companies to drive down cost and carbon foot-print) and cross-sector partnerships (even unusual ones, such as Greenpeace and McDonalds collaborating formally to tackle de-forestation in the Amazon rainforest).

In particular, the cross-sector partnering agenda between companies and NGO is becoming increasingly important – presenting advantages to practitioners on either side who are ready to harness the opportunities whilst overcoming the inherent challenges.
The C&E Corporate-NGO Partnerships Barometer 2013 report revealed that 93% of corporate and 79% of NGO respondents held the view that partnerships have helped to enhance business understanding of social and environment issues; whilst significant numbers (46% of corporate and 40% of NGO respondents) agreed that cross-sector collaborations have helped to improve business practices for the better. Confirmation, indeed, that collaboration between the sectors is really adding value.

However, the benefits of cross-sector partnering are not realised by magic. Whether they are bi-lateral or multi-lateral, enduring partnership success can only be achieved when partnering organisations are well matched, their joint proposition well conceived and executed, and the partnership itself well nurtured and steered towards achieving the joint partnership ambitions, as well as the individual goals of each partner.

Here, for those interested in securing enduring, value-adding partnerships are some points to note across each of the stages of the partnering life-cycle. These features are demonstrated by the most admired, and most effective partnerships in all sectors.

1) The ‘fit’ is all important: Effective planning and alignment around commonly agreed goals that galvanise commitment and action:

• At their core, partnerships are about self interest which matures into enlightened self interest or mutual benefit. The more material a partnership is to each of the actors involved, the more likely it is to succeed. But success is dependent on the identification of mutual benefits and commonly agreed goals between partners
• Like all relationships, human and institutional, partnerships are built on a foundation of trust. Planning should therefore include an overt articulation of ‘partnership principles’ and values, as well as clarity of where the ‘red lines’ lie for each of the parties. Each party needs to have secured clear mandate from within their own constituencies before commencing the partnership journey – including from the extremists in their organisation, who may otherwise deliberately or inadvertently sabotage the relationship at a later stage.
• The role of leadership is often key at this stage – particularly if the nature of the partnership is unusual. Leaders can ensure proper mandate and also provide ‘air cover’ as the partnership unfolds.

2) Governance is a big deal: Effective relationship management and governance are key to successful execution of agreed actions

• The most effective and most enduring partnerships are those where the partners can challenge each other, and act as critical friends. Cross-organisational learning often lies at this point of intersection between trusted, but challenging partners.
• Beyond the formation stages, it remains critical to have a strong governance structure in place to lead and guide the partnership development, with continued CEO or senior level leadership and championship.
• Stakeholder ownership and engagement are central to the execution of agreed actions. As such, relationship management must extend to internal and external stakeholders. It is often said that the ‘point people’ for each of the organisations in partnership act as change agents within their organisation. Much depends on their ability to make things happen and the goodwill they establish for each organisation. But even the very best relationship managers cannot succeed as lone rangers.

3) Be proud: Communicate and celebrate success

• In C&E’s annual Barometer report, reputation enhancement is cited as an important reason for engaging in cross-sector partnerships. As such it is important for partners to leverage the value of their investments through regular and smart communications.
• Internal marketing is important for building the employee brand and for galvanising active supporters. For instance, the best partnerships would typically undertake soft or internal launches initially, as a way of building advocates / champions for the partnership at a later stage.
• Additionally, the most resonant and admired partnerships are those that communicate on substantive issues that appear to be clearly material to the parties involved - for example, Samaritan and Network Rail collaborating to drive down rail line accidents, or Boots and Macmillan working together to reach everyone affected by cancer

4) Lifelong learning: Learning from success and failure - helps partnerships to evolve more strongly

• Regular reviews – including mid-term reviews for strategic collaborations – are vital in enabling partners to learn from success and failure, to re-set within the partnership term, and elevate success to a higher level.
• It can sometimes be value adding to have a trusted third-party involved in the review process. Some great partnerships do this as a matter of course, for instance IKEA and WWF, The HSBC Climate Partnership, and the P&G (Pampers) - UNICEF partnership.
• The concept of partnering and the value it brings is becoming increasingly prominent on the agenda of companies and brands.
• Partnerships can be hard and are certainly not a panacea. But done well (both well conceived and effectively executed), they can be excellent in speeding the pathway towards achievement of major strategic goals. Materiality, trust, communication, and a relentless focus on ongoing learning are key factors for success.

Manny Amadi, MVO is CEO of C&E Advisory, a ‘business & society’ consultancy , Twitter handle: @mannyamadi 

Making a pitstop in Milwaukee this weekend I was excited to see that Harley Davidson would be offering a peak at their new LiveWire electric motorcycle prototype at their iconic museum here.

As it turned out, demand was so high for test rides the best I could get was a look at the bike and chance to rev one held in a stationary position (see video below).  Nonetheless, it was more than enough to be impressed.

Harley's new ride (more info on the company website here) is merely an experiment at the moment.  Although they've produced more than a dozen fully functional prototypes, the bike is currently just a test to see who's interested in a mainstream electric motorcycle and to garner feedback on the model.  The test will also determine whether such people represent a new market for the company or if the grizzled, sonic-boom inducing core of Harley enthusiasts would ever go for a quiet, carbon free alternative.Although there are a number of high end electric bikes on the market already, Harley's foray into the space represents a serious mainstreaming of the concept.  Nonetheless, deviating from Harley's trademarked rumble (it literally is trademarked) is risky and bold.  I don't expect Harley to spend a lot of time touting any "green" claims surrounding LiveWire.  Although the company has solid green cred, I'd expect that their marketing will continue to focus on independence, speed and, in this case, modernity. All of that is fine with me if it means moving electric bikes into the mainstream.

With a busy week behind you and the weekend within reach, there’s no shame in taking things a bit easy on Friday afternoon. With this in mind, every Friday TriplePundit will give you a fun, easy read on a topic you care about. So, take a break from those endless email threads, and spend five minutes catching up on the latest trends in sustainability and business.

On the heels of the latest three-part report from the Intergovernmental Panel on Climate Change (IPCC), it seems a new study comes out daily about how a changing climate may impact life as we know it. It's always tricky to ask: Why now? But, as recent research shows, not asking may prove even more costly. To get your mind going this Friday afternoon, we gathered up five reasons businesses should care about climate change -- not tomorrow, not next year, but right in the here and now. 

1. Climate change is expensive

Like, really expensive, according to a new report. If current climate trends continue, the East Coast and the Gulf of Mexico will likely see a $7.3 billion increase in the annual cost of coastal storms and hurricanes, bringing the total annual price tag to $35 billion on average.

Increases in temperature, heat waves and humidity will also drive up demand for energy, calling for the equivalent of 200 new power plants across the country, which could cost up to $12 billion a year, the report predicts. Long-term impacts pose even greater risks to property and lives.

As costs of dealing with the physical effects of climate change mount, they threaten to impact the entire economy--from consumers, who may see increased insurance costs or even lose their homes due to sea level rise, through the businesses that depend on increasingly volatile commodities markets and the discretionary income of at-risk consumers.

2. It poses risks along the entire supply chain

The rising costs of business in a changing climate are already doing damage to corporate bottom lines across the country. In a recent interview with Triple Pundit, Andrew Winston, author of "The Big Pivot," pointed to a recent example from General Mills:

"The cost of doing business is rising pretty dramatically," said Winston, who also advises some of the world’s biggest companies on environmental strategy. "General Mills in their last quarterly report said that due to the extreme winter they lost 62 days of production … and this cost them a significant amount for their earnings for the last six to nine months."

According to the new Risky Business report, which examines the economic impacts of climate change in the U.S., the agricultural sector in the Midwest and South may see decline in yields of more than 10 percent over the next 5 to 25 years. Considering the fact that the ongoing drought in California is already causing a noticeable increase in food prices, such spikes in commodity costs could be disastrous for both business and consumers.

3. A smart climate policy helps attract and engage employees

At the 2014 Sustainable Brands conference in San Diego, Andy Savitz, author of “Talent, Transformation and the Triple Bottom Line,” called employee engagement "the human thread between sustainability, the triple bottom line and business results.”

Employee engagement has long played second-fiddle to risk mitigation and cost savings when companies consider crafting climate and other environmental policies, but that's starting to change quickly. A recent PwC study found that more than half of recent college graduates are seeking a company that has corporate social responsibility (CSR) values that align with their own, and 56 percent would consider leaving a company that didn’t have the values they expected.

“I hear this a lot in companies: The ability to attract and retain really good people partly depends now on how you’re managing [the world's] mega challenges,” Winston told us, relaying the sentiments of Fortune 500 clients. “Companies are hearing this in recruiting, even from the millennials who are desperate for jobs.”

4. Investors are asking

Employees aren't the only ones interested in a company's climate policy. Data shows a growing number of investors are asking, too. PwC recently surveyed a broad mix of institutional investors – asset managers, pension funds, mutual funds, hedge funds and others – responsible for managing over $7.6 trillion in assets to find out how sustainability influenced their decisions. Their findings may surprise you:

Four out of every five institutional investment companies responding to PwC’s survey said they considered a variety of sustainability issues in at least one, if not more, investment contexts in the past year. More than four of five (85 percent) said they anticipate doing so three years hence.

"Fund managers can’t play casino capital like the short-term traders do on Wall Street," Clinton Moloney of PwC said in a recent interview with Triple Pundit. "They’re really looking to place assets over the longer term. They’re the investors for whom sustainability really matters."

2014 also saw a record number of environmental and social shareholder resolutions, with political spending and climate change driving the majority of the activity.

5. Now is the time to act

In "The Big Pivot," Andrew Winston uses the metaphor of health warnings to describe the mounting risks of climate change, saying, "You don’t want to wait until you actually have the heart attack to start changing your behavior."

"This is the time because the costs are starting to hit, but it’s not so devastating that we don’t have the resources to react," he explained. "We’re getting those warning signs, but we’re not having the heart attack yet in most businesses. So, now is the time to get healthier before things get ugly."

Experts note that changing up business as usual is no easy feat. As Amy Longsworth of PwC said in a recent interview with Triple Pundit, "You really have to rethink your business model which is very scary."

But, as Winston notes, failing to act may prove even more costly in the long-run: "It’s getting increasingly expensive to not do this. If resource prices keep rising as they do, then not getting more material efficient, not building a circular economy, not finding ways to de-materialize, is going to get more expensive."

Why do you think businesses should care about climate change? Tell us about it in the comments section. 

Image credit: Flickr/nicholas_cardot

Based in Philadelphia, Mary Mazzoni is a senior editor at TriplePundit. She is also a freelance journalist who frequently writes about sustainability, corporate social responsibility and clean tech. Her work has appeared in the Philadelphia Daily News, the Huffington Post, Sustainable Brands, Earth911 and the Daily Meal. You can follow her on Twitter @mary_mazzoni.

When "Cradle to Cradle" was published in 2002, it generated great hopes that it could lead to a more sustainable future. The launch of the C2C certification by the Cradle to Cradle Products Innovation Institute provided companies with a clear framework on how to adopt the concept, making a paradigm shift seem even more likely.

Yet, even with more than 200 companies worldwide participating today in the C2C Certified Products Program, and with hundreds of product lines representing thousands of different products certified, C2C is still a niche market with little influence on the overall economy.

And so, almost a decade after C2C certifications became available, it’s still very much a promise that hasn’t been fulfilled.

Why? I assume there are many reasons, but the main one seems to be that most companies just don’t recognize the value in adopting the C2C certification. In order to address this issue, the C2C Products Innovation Institute commissioned Trucost, a leading global environmental data and insight company, “to develop an assessment framework with clearly defined indicators to determine the effect of optimization on the business, environmental and social impact of products.”

The result is a 145-page report in which Trucost presents its analysis of 10 C2C-certified products from different companies (and industries), including Aveda, Desso, Ecover, PUMA, Shaw Industries, Steelcase and Van Houtum.

The analysis is based on the assessment framework Trucost developed, which looks at the five categories of C2C certification: material health, material reutilization, renewable energy, water stewardship and social fairness. Them main question it tries to answer is:

“What are the actual and quantifiable impacts of pursuing the Cradle to Cradle Certified Products Program on business, the society and the environment?”

And the findings? In general they were quite encouraging, showing “a promising account of the positive impact and added value achieved by 10 companies during their pursuit of certification.”

I’d like to focus on the business benefits because I think these are the ones making most difference for companies, but before we do that let’s take a quick look at the environmental and social benefits of adopting C2C certification.

When it comes to environmental issues, the report identified significant benefits generated by “replacement of toxic and questionable ingredients by non-toxic and defined alternatives, conservation of product materials in continuous product cycles, increased renewable energy use and improved energy and water efficiency."

Take for example Puma: The company developed a compostable sneaker, called Incycle, which holds C2C Basic certification. Compared to conventional Puma sneakers, Incycle has a smaller water footprint (51 percent reduction), uses less energy in manufacturing  (48 percent) and has a smaller environmental impact (87 percent if all pairs are composted at end-of-use).

Looking at social benefits, the report found that these benefits are most strongly linked to improved transparency and commitment towards social goals. One example is Ecover’s purchasing department, which screens all of its suppliers on child labor, employee treatment and other social criteria, while encouraging suppliers to innovate with them. However, apparently most companies analyzed were socially-responsible even before adopting the certification. As the report notes: “For the majority of companies taking part in the research, social commitments were largely in place and little additional effort was required to meet Cradle to Cradle Certified standards.”

So far there are no surprises. It makes a lot of sense that the C2C certification, shifting companies from eco-efficiency to eco-effectiveness, generates products providing positive influence on society and the environment, and that the latter seems to have greater added value than the former. After all, four of the five C2C quality categories are more environmentally oriented (material health, material reutilization, renewable energy and water stewardship), and only one is more socially oriented (social fairness).

Yet, the more interesting question is: What about the business benefits of adopting the C2C certification? And even more importantly, how significant are they? The answer is a bit complex. As the analysis shows, C2C has various business benefits, including cost reduction, improved product value, innovation promotion, risk avoidance, growth in sales and increased profit. However, it looks like not all the benefits could be clearly connected to the C2C certification.

For example, while cost reductions are pretty easy to associate with C2C (annual water and energy savings of $2.5 million in the production of Ecovox carpet tile), when it comes to growth in sales, the report explains that “there are many factors affecting a company’s performance over time and the impact of certification would likely be only a part of larger fluctuations caused by other factors.”

My guestimation is that it would take more than that to convince more companies to join the C2C club, especially given one element that wasn’t included in the analysis: What is the value of the C2C certification for companies when you compare companies using the certification to those taking similar steps (such as reusing product materials or increasing resource efficiency) without having the certification?

It’s clear that C2C will continue to have a role in the development of a more circular economy. Yet, more evidence is required to show it has a significant value for companies, especially for their bottom lines, to convince many more companies to adopt it. Until then it will probably continue to be a promise for a better, sustainable world.

Image credit: The Cradle Products Innovation Institute

Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons The New School of Design. You can follow Raz on Twitter.

Plastic is used in everything from electronic devices, including computers and smartphones, to food packaging. However, plastic also has a big impact on the environment.

There is a mass of garbage in the Pacific Ocean off the California coast twice the size of Texas, called the Great Pacific Garbage Patch. It outnumbers marine life by 6 to 1. That plastic swirling around in the Pacific makes its way into the food chain as marine life eat small pieces of plastic.

The material is also energy-intensive and requires petroleum to be manufactured. Another key issue with plastics manufacturing is the release of greenhouse gases (GHGs): More than 30 percent of the natural capital costs from GHG emissions released upstream in the supply chain come from extracting raw materials and manufacturing plastic feedstock, according to a report from the U.N. Environment Program (UNEP). Marine pollution has an additional natural capital cost of at least $13 billion.

The total natural capital cost of plastic used in the consumer goods industry is more than $75 billion a year, the report finds. Food companies are the biggest part of that figure, responsible for 23 percent of the total natural capital cost. That figure is especially startling when you consider the brief lifespan of the plastics food companies use for packaging: After food is eaten, their packages are tossed in the garbage can, which is not exactly efficient use of plastic. The toy sector has the highest intensity, at 3.9 percent of revenue, meaning that a higher proportion of their revenue is at risk.

Plastic use poses risks not only to the environment, but also to manufacturers and companies who use the material. The report cites several, including:

• The impact of tougher environmental legislation such as bans on disposable plastic bags, carbon pricing schemes and chemicals regulation


• Damage done to a brand’s reputation by campaigners who target them over their association with plastic litter


• Cleanup costs


• Disruption to the plastic supply chain caused by resource scarcity and price volatility

Despite the risks, the report finds that levels of disclosure on plastic are “poor.” Only about half of the 100 companies assessed “reported at least one item of quantitative data on plastic.” The disclosure rates among various sectors varies. No footwear and athletic goods companies reported any “useable quantitative data points,” while 88 percent of companies in the durable household goods sector and 71 percent in the personal products sector did.

The report recommends several things companies can do to deal with the risks associated with plastic. One is to take action to reduce the risks of plastics. A place to start is using the research in the report to build a business case to take to the board. Companies can begin measuring and reporting their use of plastic like they do with other environmental impacts, and they can disclose how plastic is used in their products and packaging. Some specific steps companies can take include switching to recycled plastic, investigating using bioplastic, reducing the weight of plastic in products and packaging, and working with governments to develop legislation and waste management infrastructure.

Image credit: Horia Varlan