In its first-ever green issue, Fortune commends “10 Green Giants” — corporations that are making impressive environmental gains. The editors decided to bypass GE and Wal-Mart, whose eco-endeavors have been heavily publicized, and instead highlight companies whose sustainability efforts have been less high-profile recently — among them, Hewlett-Packard, Continental Airlines, S.C. Johnson, Suncor, and Alcan. While its list focused on big, mainline corporations, its cover went to an idealistic maverick who runs a 350-employee, uber-eco outdoor-gear company — Yvon Chouinard of Patagonia.

Fortune‘s Marc Gunther writes in an intro to the green package that environmentalism in corporate America has gone beyond mere compliance and efficiency: “Now we’re at the threshold of a different era, one in which smart companies are trying to figure out how to profit by solving the world’s big environmental problems.”

Fast Company would seem to agree. Its latest annual “Fast 50″ edition — which spotlights trendsetting companies and leaders — features California Gov. Arnold Schwarzenegger (R) on the cover and lauds him for “focusing the power of the free market on major problems” like climate change and dependence on foreign oil. In fact, this year the “Fast 50″ is wholly focused on companies aiming to be green or socially responsible, from NativeEnergy to EcoFish to Home Depot, which now boasts that 95 percent of its wood products come from sustainably managed forests. The issue’s lead essay argues that we have to shift to Business 3.0 — a new, socially and environmentally sustainable set of economic and business models that acknowledge “we can’t continue indefinitely to cannibalize our life-support systems for spare parts.”

Even more striking, in a recent BusinessWeek column, Jack and Suzy Welch write of the “global warming wager” — quite a breakthrough when you consider that Welch, former CEO of General Electric, has had a long-standing antipathy to the environmental agenda. While the Welches still aren’t convinced there’s a climate crisis — “we simply don’t know” — they argue that the weight of the evidence suggests do-nothing strategies now would be “bad business.” Business leaders should act as if the risks are real: even if they are less serious than originally feared, “your plants will use less energy and emit fewer effluents. Your packaging will be more biodegradable, and your new products will be able to capture any markets created by severe weather effects.”

Business 2.0 magazine may be a bit wary about buying that “Business 3.0″ jargon (for the same reason 20th Century Fox didn’t much look forward to the millennium), but it too is on board with the broader sustainability message. “Go Green. Get Rich,” it declared on a recent cover. The issue pinpointed nine environmental and social problems that will create massive new market opportunities — not just climate change but malnutrition, epidemics, and overfishing. It also quoted Ray Lane, a partner at venture-capital giant Kleiner Perkins Caufield & Byers, to the effect that “clean tech” will be “bigger than the internet, by an order of magnitude.”

Compare that with the picture 20 years ago, in 1987, the year we founded SustainAbility and also the year when the Brundtland Commission published its watershed report Our Common Future. That report spurred the slow, long haul of putting sustainable development on the political and business agendas. For several years, our firm ended up helping the rest of the world learn how to spell sustainability.

These days the S-word is everywhere (and most of the time spelled correctly). We’ve made dramatic progress in the past two decades toward a paradigm shift in business thinking — albeit against the backdrop of accelerating deterioration in such areas as climate change and the collapse of oceanic fisheries. Few are still in denial about the scale of the challenges, though many are unclear about what to do next.

Eye on India

So where will we be 20 years from now? Shell recently convened a bunch of us from around the world to discuss the future of technology and sustainable mobility out to 2027. The location, Bangalore, was fitting, as so much is happening in India that is of global importance in the sustainability debate.

Even a week’s immersion in the country provided a wonderful opportunity to get a sense of what is going on in this giant, rapidly mutating society. We visited NGOs and social entrepreneurs, but also took time to see a number of leading Indian companies, from Infosys, which has emerged as one of Asia’s leading IT companies, to Orb Energy, a Shell Renewables spin-out that focuses on supplying solar photovoltaic systems to rural users. And a meeting with a key figure on the corporate-social-responsibility side of Unilever’s Indian operation highlighted the importance of the water issue; he had just come back from working as a volunteer on a rainwater-harvesting project. If you are seeking clues about where the future will take us, India is a great place to look.

One afternoon, Shell split us into working groups beside a hotel swimming pool, the sun beating down. One of your authors — part of the group discussing the future of scanning, sensing, and surveillance technology — idly suggested that it might help to spy on what a neighboring group was thinking, and mused aloud that a robotic dragonfly would meet the need nicely. We got into an impassioned debate about whether the spying device needed to be robotic or whether it could be an electronically steered real insect — following an earlier presentation on how the Australians are now wiring up cows so they can be virtually fenced in via satellite using electric “stimuli” from collars. Then, just a few moments later, a giant dragonfly appeared, zooming across to hover inquisitively over our group.

Who knows who it was reporting back to? But we wish we had a few of the things to help us keep an eye on developments across this extraordinary subcontinent.

India’s energetic entry into the global economy is creating many shockwaves — positive in terms of job creation and opportunities for the country’s fast-growing population of college graduates, but also negative in terms of exacerbating the country’s already tremendous inequality and the world’s already tremendous environmental burdens. We all have a vested interest in what happens there, as Mahatma Gandhi foresaw decades ago. “God forbid that India should ever take to industrialism after the manner of the West,” he once warned. If the populous nation “took to similar economic exploitation, it would strip the world bare like locusts.”

Instead, we hope that the India 2.0 emerging now — and the 3.0 version to follow — will be a leader in new development pathways, forged by sustainable companies that will deserve to be profiled in future green issues of Fortune.

There was something different in the air at this year’s Davos gathering of global movers and shakers — and not just an increase in CO2 concentration. Instead of the irrational exuberance of the 1990s or the celebrity-studded glitz of recent years, we found upbeat but serious discussion of big issues — climate change in particular.

A few days before the World Economic Forum opened its doors on Jan. 24, people were fretting that for the first time in living memory the snows might not come to this legendary ski town in the Swiss Alps, though they finally arrived in the nick of time. And speaker after speaker — in a total of 17 sessions on climate, but in many other conversations, too — voiced concern about global warming. Among them, British Prime Minister Tony Blair; the CEOs of Duke Energy, Shell, and Swiss Re; and Sir Nicholas Stern, whose recent report to the U.K. government on the economic implications of climate change is still making waves around the world.

One of the most interesting sessions focused on the growing links between climate and security, with organizations like the Stockholm International Peace Research Institute spotlighting the growing “carbon signatures” of the world’s armed forces.

Alongside climate and carbon, another C word kept popping up: “concrete,” both the cement mixture and the notion of concrete action.

China and India have been running hot and cold as they talk about tackling climate change, but both want accelerated transfers of clean technology to their emerging economies. Zhang Xiaoqiang, vice chair of China’s National Development and Reform Commission, told a crowd at Davos that cement producers in his country are only about half as energy efficient as Western competitors — and that China will be using a vast amount of cement and concrete in the coming decades.

Jacques Aigrain.

Photo: E. T. Studhalter/World Economic Forum

Climate was also front and center in the remarks of Jacques Aigrain, CEO of the huge reinsurance group Swiss Re, whose whole business model is threatened by Hurricane Katrina-style disasters that climate experts say we’ll be seeing a lot more of. He stressed that taking tangible action on climate change now would be a lot less costly than inaction. “Waiting and seeing because one element or another is not certain is not a valid answer,” Aigrain insisted. “No shareholders would tolerate this in business. Why should the people tolerate it from us?” He encouraged the political leaders present not to hide behind international treaties. “Global agreements are the best way to get nowhere. It’s true in business and even more true in international politics. Let’s take concrete steps, like the ones in California,” he said, alluding to Gov. Arnold Schwarzenegger’s moves to cut carbon in transportation fuel and slash greenhouse-gas emissions in other ways.

Throughout the gathering, there was a sense that the tide had changed, and powerfully, with corporate leaders now popping their heads above the parapet to announce climate-related initiatives, even competing to be seen as friends of the climate. There was considerable interest, for example, in the new U.S. Climate Action Partnership, launched just days before the forum by Alcoa, Duke Energy, DuPont, GE, and Lehman Brothers, among other big corporate names. The coalition is calling on the U.S. government to set up an emissions-trading system and require carbon cuts of 10 to 30 percent below current levels over the next 15 years, and 60 to 80 percent below current levels by 2050.

Top among the “concrete developments” touted in a media release at the end of the forum was the formation of a new international partnership — the Climate Disclosure Standards Board — that brings together seven organizations including the California Climate Action Registry, the Carbon Disclosure Project, Ceres, and the Climate Group (to name just the Cs). It aims to come up with a standardized framework for climate-related information that corporations will be asked to report on, to make it easier for investors, managers, and the public to compare the performance of different companies and sectors.

There were still the occasional contrarian voices, however. One CEO of a major food company — in a private session in which he appeared alongside half a dozen other CEOs — questioned whether climate change should even be a priority concern. He noted that when Hannibal went over the Alps with his elephants, he could do so because there was little ice at the time, and that the “green” in Greenland reflected the fact that at least some of that giant island was ice-free and fertile at the time when it was settled by Icelandic and Scandinavian Vikings.

We felt moved to stand up and point out that the Greenland colony died out after 450 years, with graves in the area suggesting that the colonists were increasingly stunted as conditions worsened and ships failed to get through the ice. (We were also tempted to ask to what degree Vikings could be relied upon to tell us whether a place was warm, but resisted the urge.) No doubt the colonists squabbled energetically over which god was responsible for the dramatic change in their fortunes, just as ExxonMobil and its ilk have squabbled energetically with the Intergovernmental Panel on Climate Change and others over what is driving climate change.

Pamela Hartigan.

Photo: E. T. Studhalter/World Economic Forum

So who needs to do what in response? A striking feature of Davos 2007 was the growing interest in the work of social and environmental entrepreneurs. Indeed, Nicholas Kristof drew one final concrete connection in a New York Times column lauding social entrepreneurs as the most interesting people at Davos. He quoted Pamela Hartigan, managing director of Schwab Foundation for Social Entrepreneurship, as saying, “The key with social entrepreneurs is their pragmatic approach. They’re not out there with protest banners; they’re actually developing concrete solutions.”

We couldn’t have said it better ourselves (though we made a valiant attempt in our previous column). Social and environmental entrepreneurs — like Davos attendee Nic Frances of Easy Being Green — are leading the way in addressing climate change and just about every other major challenge the World Economic Forum has highlighted in recent years.

In the same way that wealthy people once went to clinics in the Swiss Alps for health-promoting exposure to fresh air and energizing concoctions, the high and mighty now head to Davos for fresh ideas and energizing discussions. Let’s hope that a few years hence we can conclude all that hot air produced concrete results for people, planet, and posterity.

Much of the work that we do at SustainAbility aims to help corporations that aspire to behave — and be recognized — as good citizens. All well and good. In some cases, too, as in the aftermath of the 2004 tsunami, some corporations have gone to extraordinary lengths to help out those in distress. But there is a growing sense that, even with the best will in the world, current approaches to corporate citizenship are not going to save the world from poverty, hunger, and disease, let alone from environmental challenges like the collapse of major fisheries, the loss of tropical forests, and climate change. What’s needed are creative solutions that are easy to replicate on a large scale — and a fair few of today’s citizenship-driven approaches, to put it bluntly, may fail to make the cut.

None of this means that we are about to abandon our work with large corporations, but we do believe that the time has come for mainstream businesspeople to take an urgent, close look at what social and environmental entrepreneurs are up to. Happily, there are a growing number of opportunities to do so. Fast Company (which prefers the term “social capitalists”), the Schwab Foundation, and the World Economic Forum [PDF] all will be hosting major events on the theme in January, for example, while the Skoll Foundation’s World Forum on Social Entrepreneurship is slated for March. If you can’t get in, book early for next year.

The entrepreneurs spotlighted by these events are setting new benchmarks in the field. Indeed, the extraordinary potential of the work such people do has become increasingly evident, for example with Kenya’s Wangari Maathai of the Green Belt Movement winning the 2004 Nobel Peace Prize for her work on reforestation, and now Muhammad Yunus winning the 2006 prize for his attempts to make poverty history. The world, it seems, is beginning to sit up and notice things that have been building — like Yunus’s microfinance organization, the Grameen Bank — for at least three decades.

The Grameen Bank, formed in 1983, has helped to rescue huge numbers of Bangladeshis from poverty by extending loans of as little as $30 to people ignored by traditional financial institutions — poor, rural women, for the most part, who use the money to start up cottage businesses and have proved remarkably reliable in paying back their debts. It also spawned daughter companies that spread renewable energy, mobile telecommunications, and other goods and services to underserved communities. Its basic business model has been replicated by social entrepreneurs around the world. Yunus, as a result, is the social entrepreneur’s social entrepreneur, and the Grameen movement he catalyzed is the glittering tip of a surging global wave of social entrepreneurship.

Significantly, too, the microfinance models Yunus and his colleagues have pioneered are inspiring a wide range of parallel projects not only by other social entrepreneurs but by major international companies like financial-services giant Citigroup, Brazilian bank ABN Amro Real, and mobile-phone company Sony Ericsson. And these new market approaches are now bubbling up into the world of the global power elite. So, for example, “scalable sustainability solutions” will be central to the agenda at next year’s World Economic Forum meeting in Davos, Switzerland.

We sense a remarkable and accelerating convergence between what mainstream companies will want to do and what social and environmental entrepreneurs are already working on, with a growing potential for fruitful cross-fertilization. This is something we take a look at in a new SustainAbility business primer, “Scalable Solutions” [PDF], which explores potential lessons to be learned from the growing success of social entrepreneurship; it’s an early product of the evolving three-year, Skoll Foundation-funded expedition we’re making into social-enterprise territory.

Happily, the natives are turning out to be friendly — and keen to know how they can bridge across to thoughtful companies and financial institutions. At the same time, we have been struck by the way some of our clients are beginning to wake up to the opportunities here. Still, if we’re honest, even many leading corporate citizens lag behind leading social entrepreneurs — and the foundations that fund them — in terms of understanding how to build and capture social and environmental return on investment.

We clearly have much work still to do to convince businessfolk that the growing focus on entrepreneurial solutions to sustainability challenges could easily outstrip the corporate citizenship movement within a few short years — but we’re anxious to take on the challenge.

One key reason is that we think our clients — and business more broadly — have a lot to learn. Companies can find out about potentially rich new markets where social and environmental entrepreneurs are experimenting with new business models, services, and products. They can learn from the creativity and innovation that such entrepreneurs bring to the world’s most pressing sustainability challenges. And they can potentially click and drag some of the social-progress metrics that these people and their supporters are developing.

The potential of social and environmental entrepreneurship is huge. As Yunus wrote a few years back, “We have created a slavery-free world, a polio-free world, an apartheid-free world. Creating a poverty-free world would be greater than all these accomplishments while at the same time reinforcing them. This would be a world that we could all be proud to live in.” Coming up with a dream scenario is one thing, however; making it happen is quite another. But the point is that successful social entrepreneurs are delivering the goods — and services — needed by the poorest of the poor.

Yunus and Maathai richly deserve their prizes, even if the original Nobel funding came from patents on explosives like dynamite. They are key agents of the waves of creative destruction that the world now needs to blow away the old, unsustainable economic and business models, opening up opportunity spaces for more sustainable and equitable ventures, business models, and livelihoods.

The boy who cried “flood.”

Illustration: clipart.com

As we scoop up a fistful of passing canapés, Full Disclosure’s authors must swallow hard and admit that we have been deeply involved in the roller-coaster ride of the GRI’s development — and in some aspects of its governance. Through it all, we have remained staunch fans of both the institution and its work. Still, with the G3 launch taking place in below-sea-level Amsterdam (where the GRI secretariat has its headquarters), we found ourselves thinking of that little Dutch boy trying to hold the sea back by putting his finger in a hole in an endangered dike. If memory serves, that story turned out fairly well, but is corporate reporting really making a marked difference in global sustainability efforts in the face of the century’s challenges? And — thanks, we’ll take the champagne — will the G3 accelerate things in a material way?

In some ways, the GRI already has raised the reporting bar. The GRI’s vision today is “that reporting on economic, environmental, and social performance by all organizations becomes as routine and comparable as financial reporting.” We drink to that. And even with a swimming head, it’s clear that the GRI’s framework has become the de facto standard for sustainability reporting. This is key, because transparency and disclosure, or so the logic flows, enable stakeholders to hold companies to account — which in turn drives improved sustainability performance.

But in the near-decade since the GRI was launched as a project of Ceres, have adequate numbers of companies taken up the challenge to “come clean” — or does the GRI, like that shivering little boy, stand pretty much alone?

As ever, the story has its bright and dark sides. In a world with more than 50,000 multinational corporations, the GRI counts just over 1,700 companies using its guidelines in some way — and far fewer reporting “in accordance,” which requires comprehensive reporting against the GRI’s core indicators, plus CEO or board-level sign-off. The GRI’s close partner in the reporting world, the U.N. Global Compact — which accepts GRI reporting as evidence of signatories making progress against their Compact commitments — claims some 3,000 members, of which around 2,500 are companies. So at best, we’re probably looking at 1 percent of globally operating companies currently reporting along GRI lines.

Just prior to the G3 launch, a UNEP-commissioned study of the future of GRI-type reporting suggested that a plateau has been reached. The implication is that corporate reporting might get stuck — or, worse, shift into reverse as momentum fades. The challenge for the boy with his finger in the leaking sea barrier was how to get the word to others that the dike had a sprung a leak without abandoning his post and letting the sea rush in. For the GRI (and UNEP), the trick may lie in staying at the current post while working out how to help companies shift from CSR strategies to a new focus on scalable, entrepreneurial, and, yes, reportable solutions to sustainability challenges. This is already on the international business agenda, with, for example, “scaling up sustainable solutions,” one of the core themes for the ski-slope crowd at next year’s World Economic Forum in Davos.

Putting our optimists’ hats on, we see considerable progress in reporting — and huge progress since SustainAbility began its surveys of the field in 1992. Every two years, we publish the Global Reporters benchmark survey, which identifies and assesses best practice in corporate sustainability reporting worldwide. This fall, we’ve partnered once again with UNEP and Standard & Poor’s to produce our seventh benchmark survey, and the fourth focusing on sustainability reporting. While the full results of “Global Reporters 2006″ will not be available until November, we have completed most of our research. As in 2004, the best reporters we can find all make some reference to the guidelines, while nearly half report “in accordance.” So it is blindingly clear that the GRI has both inspired people to act and shown them how to get started. The survey concludes that, whether or not they directly mention the GRI guidelines, most leading reporters are using them to some degree.

Still more good news is out there: perhaps counter-intuitively, leading global companies are finding value in reporting far more information on their sustainability performance than the GRI currently demands. Far from fretting about a plateau (although this is a clear present and future danger), we think the launch of the G3 guidelines will boost societal interest in the business impacts of sustainability issues like climate risk. In the process, the spotlight will likely move well beyond annual, stand-alone, “in accordance” sustainability reports.

Companies such as Novartis are integrating their sustainability reporting into their annual reports. Whole industries face new requirements for public reporting, such as the pharmaceutical industry requirement for the disclosure of clinical trial data. Investors like those participating in the Carbon Disclosure Project are congregating in greater numbers — and, now that the CDP community represents over $30 trillion of funds under management, enjoying greater clout in demanding that Global 500 companies disclose critical sustainability performance data.

So, unlike the boy at the dike, who waits through a full day and night before help arrives, the GRI may not be so alone. A new wave of reporting is building, one better linked to and more influential over corporate strategy and which does more to explain (with specific targets and clear performance indicators) where the company is going and how. This wave has the potential to help add and account for value right across the triple bottom line.

Recent reports from companies such as BP, BT, Gap, GE, and Nike are really exciting; all are linking their sustainability reporting more closely to their mainstream business. As an example, consider BP’s commitment to invest $5 billion-plus in alternative energy and grow this investment five- to tenfold in the next 10 years. (Yes, yes, we know about BP’s current operational challenges, but we have seen instances in the past where such reverses become powerful drivers for future action, and we hope this will be the case here.)

So what comes next? We see the agenda following a number of trajectories. Reporting will be only one component of continuous, customized corporate communication, drawing data from entire value chains, addressing hard issues (e.g., carbon emissions) in quantitative terms, offering more coverage of issues of consequence to emerging economies, and mutating from encyclopedic reports designed to win awards to prospectuses designed to attract investment and other forms of support.

As some parts of the agenda become too important to be left to CSR departments, the spotlight will increasingly shift to board level, to CEOs, CFOs, and the financial markets. Once the party is over, picture CEO, CFO, and COO fingers being thrust into the leaking, trembling stonework. It’s sad that this will leave only one hand free for the cocktails. But hey, it takes a (global) village to raise a standard.

He’s getting closer …

Photo: iStockphoto

These days there can be few Grist-folk who haven’t seen — or at least heard of — the YouTube short Al Gore’s Penguin Army, in which he is depicted lecturing an army of slumbering birds. Those stoking the engines of climate change clearly have a vested interest in crying penguin and pouring ridicule on inconvenient assertions about their roles and responsibilities. And then there was the South Park episode this spring in which Gore cried “ManBearPig” as a ploy to attract attention and overcome the real problem — that he didn’t have any friends. South Park may be a national treasure, but bear in mind how the Nazis and their favorite cartoonists portrayed the Jews and others during the 1930s. Lampoons can mask darker intent.

Meanwhile, for most people, most of the time, the climate wolf is still a long way from the door. But it’s coming. When SustainAbility polled our network of some 10,000 people working or interested in the field of sustainable development a few weeks back, asking about the prospects for globalization over the next decade, we received more than 1,000 responses from 75-plus countries. Climate change came in fourth in the ranking of big issues that will impact globalization and the corporate responsibility agenda. The top slot went to conflict (42 percent), the second to energy availability (39 percent), and the third to terrorism (26 percent). Climate came in at 22 percent — although it could be argued that it will have a fair old impact on the availability, or acceptability, of certain types of energy. Poverty got 18 percent.

Perhaps respondents were calculating that the major shocks from climate change would impact our economies beyond the time frame we presented. With no one wanting to cry frog, maybe there was a sense that the water around us will come to a boil at a slightly more relaxed, comfortable pace. The Jacuzzi theory of climate change?

Still, there were some respondents with frogs on the brain — or in their Jacuzzis. One of the most thoughtful early commentaries on Gore’s presentation came from Kevin Sweeney, who argued that, while his message was outstanding and important, Gore didn’t leave enough space for hope. This theme was picked up in different ways by two Pauls in our survey, Paul Hawken and Paul Ray.

“My sense is that there has been a reversal of the crying-wolf syndrome in the environmental sector,” Hawken warned. “Instead of overstating problems, there is tendency to understate. The IPCC process is necessarily slow and deliberate, a pace of understanding and buy-in that may be overtaken by [damage to] oceans, forests, and Arctic permafrost.”

So are there any grounds for hope in all of this? Hawken thinks so. “Hope is not extracted from demonization of business or a recitation of past errors,” he noted. “Hope is humanity’s willingness to restore, redress, reform, rebuild, recover, reimagine, and reconsider.” And there was more. He noted that there is a huge amount of positive activity designed to address climate and other environmental issues, “but it flies under the radar. For several years now, our Natural Capital Institute has been researching the extent of NGOs, village-based organizations, foundations, institutes, citizen-based organizations, etc., that directly address the issue of social justice and the environment. Our estimate is that it comprises over 1 million organizations populated by over 100 million people, and that collectively it constitutes the single biggest movement on earth.”

A cheering factoid, but clearly more needs to be done to give this movement of movements a clear, collective identity. Someone else who has been picking up on elements of this is Paul Ray, probably best known for his book The Cultural Creatives. He kicked off with some fairly gloomy projections, though. “The planet is lurching toward integration,” he told us, using the term planetization. Once we factor in the gathering tempo of natural and other disasters, he said, and “our much more uniform and newly collective planetary reactions to them, the paradoxical-seeming effect is that it will take some falling apart of many vulnerable institutions for us to go farther with planetary integration, with the result being a new system.”

While Ray believes civil society may well become more informed and more virtuous, even here there was bad news for some. “International NGOs as we have known them will look primitive, because the next generation will be quasi-corporate and make their own money, rather than being in poverty and in perpetual ‘begging for money’ mode,” he said. “Some of them may fuse with newly designed for-profit corporations. I expect the line between for-profit and not-for-profit to be blurred and eventually erased.”

We agree, to a degree. Indeed, that’s why we’re working increasingly with social entrepreneurs and exploring the extent to which for-profit business models can scale faster than their nonprofit counterparts. It’s clear, however, that the spread of these new hybrids won’t be easy or comfortable. As Ray continued, they “will not only violate our conceptual categories, but will take the lead in redefining what we mean by ‘corporate responsibility.’”

And so what should business be doing? Helping us wake up to the wolves at our doors? Replacing straw with sticks and sticks with bricks? “Business can make more and better money in redesigning and in financing planetary integration than it can in trying to hang on to the old inherited neo-imperial exploitation model,” Ray concluded. “It is utter folly to be either pessimistic or optimistic, because both are immature emotional responses that fall well short of useful creative action.”

Drawing together the epistles from our two Pauls, it’s clear that we shouldn’t deny ourselves the pleasure of crying wolf when the wolf is out there. But there are at least some grounds for hope — and, to a degree, clues to how we might achieve something like global salvation. A huge social movement is building worldwide that’s likely to spin out novel business mind-sets and models that can tackle vulpine challenges. But this will only happen if CEOs and other business leaders take up Ray’s parting advice: “Pull up yer socks an git on wiv it!”

Mr. McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.

This exchange came to mind when we were developing our latest survey of SustainAbility’s 60-person faculty, as part of a project on the future of globalization. For fun, we tacked on a final question: “If — as in that memorable scene in the film of The Graduate — you were giving career advice to a bright student on how to best make a contribution in the corporate responsibility or sustainable development fields, what would you advise, and why?”

Choose your own adventure.

Photo: iStockphoto

With another school year rolling around in the U.S., we thought we’d share what some of these global leaders had to say. (Of course, some were too caught up in nostalgia to offer advice. “The scene I most remember from The Graduate had nothing to do with career advice,” said Andrea Spencer-Cooke from Scotland, with a wink. And Sir Geoffrey Chandler, whose career has embraced a couple of decades as a director of Shell, a decade with the public sector, and a decade helping human-rights group Amnesty connect with the world of business, mused: “How I regret not having had a Mrs. Robinson in my own undergraduate days! Different tempora, alas, different mores!” But we digress.)

“What’s brilliant about Mike Nichols’ scene,” observed Peter Kinder, president of Massachusetts-based SRI analysts Kinder, Lydenberg, Domini, & Co., “is the utter passivity ‘Plastics’ urges on Benjamin. A noun, not a verb. Acceptance of the iconic substance of the age, the very symbol of falsity in American culture … Well, there’s only one remedy for [passivity]: action. And, in the question’s context, my advice would be to pick a relatively narrow cause you’re interested in, and then in the great labor organizer’s mantra, ‘Organize! Organize! Organize!’ And when you finish, get out and organize some more!”

Also from the U.S., and very much in the spirit of Mr. McGuire’s monosyllabicity, came: “Monetize.” This was suggested by sustainability adviser Ralph Earle, whose previous incarnations included periods with Environmental Defense and its Alliance for Environmental Innovation. “There remain too few individuals who can effectively translate the sustainable development or the corporate social-responsibility agendas into economics,” he said. “Far too often, the debate is about what’s ‘right.’ This is an inherently subjective personal and moral debate, and one which is difficult to win against intelligent and informed opposition.”

So how to proceed? “The power of economics can move companies, individuals, and governments far more effectively,” Earle continued. For example, he said, “the U.S. tobacco industry has been hugely impacted by the economic impact of lawsuits and anti-smoking laws and advertising. The moral arguments that the anti-smoking community makes fall on largely deaf ears in the corporate suite, but the market and profit impacts of reducing the number of smokers have triggered the beginnings of real change … My advice to students would be to take their personal instincts and to figure out not how to convince someone that they are right, but how to convince someone that it is in their economic interest to act in accord with those instincts.”

Way more verbose than “monetize” was an answer from Sweden, where sustainability consultant Alan AtKisson allowed himself the luxury of two words. “Business models,” he suggested. And “get out more” is our distillation of the advice from Imelda Dunlop, currently working on CSR issues in Dubai. “Living within different cultures is a great eye-opener — and the only way ultimately to build bridges, greater empathy, and mutual understanding,” she said. Running a few words longer was Andrew Fourie, CEO of the National Business Initiative in South Africa: “Decide who determines your values — your own soul or the needs of the corporation.”

From the Royal Tyrrell dinosaur museum in Alberta, Canada, Coro Strandberg — the former chair of VanCity Savings who’s served as a sustainability consultant for the Vancouver 2010 Olympics — reported that “Anything seems possible, and everything seems insignificant, when wandering through the museum with representatives of the older and the younger generations.” Her advice for anyone wanting to avoid joining the dinosaurs was “to get as well-rounded an education as possible. The way forward for survival of the human species will come through those working at the intersections of people, planet, and profit with cross-sectoral and cross-cultural experience, plus a skill set in finance and conflict resolution.”

Toshihiko Goto, co-chair of the Environmental Auditing Research Group, massaged the elitist side of undergraduate brains in his response from Japan. “I believe that graduates are the elite among humankind,” he explained. “To survive, elites have to act in a spirit of what the French called noblesse oblige.” Rather more spiritual was a response from India. “My advice would be do whatever your gut tells you to do, but remember that it is not how much money that you make that is important but how you made it,” said Shankar Venkateswaran, executive director of the American India Foundation-India. “And remember what Gandhiji once said: ‘Recall the face of the most helpless man you have seen and ask yourself if the step you contemplate is going to be of any use to him.’”

Someone who is constantly asked for career advice by “very bright M.B.A.s” is professor Jean-Pierre Lehmann of the International Institute for Management Development in Lausanne, Switzerland. “My first advice is ‘Don’t listen to my advice.’ (There is a saying in Spanish: No me das consejos, ya se equivocarme solo — don’t give me advice, I know how to make mistakes by myself.) Having said that, I advise them that they should seek to make money (nothing wrong with that) and to enhance social welfare. Social entrepreneurship, i.e., a money-making activity that is geared to empowering the poor, that is what I strongly advise (following the first piece of advice).”

After Lehmann “educated” his colleague Ulrich Steger about “the deeper meaning of The Graduate,” Steger — whose background includes being a board director of Volkswagen and a state environment minister in Germany — was characteristically pragmatic. “Even if you are heavily interested in corporate sustainability,” he warned, “you need to have a professional ‘anchoring’ in one discipline, be it economics, engineering, or whatever, rather than going for fashionable courses suitable for the ‘general dilettante.’ And you have to gain management experience and reputation before being able to have an impact. The crucial success factor for such management jobs is not knowledge of [the] buzzwords of the day, but knowledge of the company and its people, the ability to negotiate, communicate widely, and be persistent and diplomatic at the same time — all things you scarcely touch on [in school].

And finally, “cultural creatives” guru Paul Ray had more advice you won’t learn in any classroom: “In process terms, the most important thing is to hold the tension between winning and being right: You’ve seen those guys in business and politics who exclusively hold on to ‘winning.’ They’re selling their souls, and they’re bad folks to be around, because they’ll sell yours too. And as they get older, they finally find it’s all empty and folly. You’ve also seen the true believers in various causes, who exclusively hold on to ‘being right’ … and you don’t want to be around them either. Again, as they get older, they finally find it’s all empty and folly. But when you hold that tension between winning and being right, you keep learning from your experience and from having to stay on top of things. What you don’t get is also critical: fat and sloppy, burned out, or murdered for your efforts. You have a chance of having gained some wisdom by the time you get older, and you don’t regret your life.”

It’s early yet to begin writing the business obituary of long-standing BP CEO Lord John Browne, slated to retire in 2008. But the man once billed as the closest thing to a green Superman has had his cape singed recently.

Have we been duped? Could anyone reading BP’s annual sustainability reports the last few years have detected early warning signs of the sort of problems that have shaken this superhero of oil and gas — events like the Texas City disaster, the Alaskan pipeline mess, or the allegations that some BP employees crossed legal lines attempting to control pieces of the U.S. propane market?

We all have our kryptonite.

Photo: Warner Bros. Entertainment Inc.

Such turns of fortune call to mind the plot twists that leave comic heroes at the mercy of villainous adversaries. Have Browne and others among the world’s erstwhile CEO supermen been exposed to something akin to kryptonite, or were we unrealistic to believe they could vanquish all foes, not least those inside their own organizations? Either way, it’s time to examine some myths and realities of CEO superhero-dom. (While we do this, we remind readers that the CEOs mentioned here have bravely done or said enough in the sustainability space for us to try to assess their efforts, while too many business leaders continue to view environmental and social issues as non-core, or something only governments and NGOs need to worry about.)

Two of the more striking things about Browne’s climb to rare heights of credibility and esteem have been his consistency and ability to think in multiple dimensions. One result: he has provided welcome counsel in high-level deliberations at other companies. Many moons ago, we found ourselves in the Ford boardroom with Bill Ford, then the newly christened chair, and Jacques Nasser, then CEO. (Full disclosure: SustainAbility has worked for Ford for many years.) Between the assembled top executives, a series of big screens carried a satellite feed of Browne, who was asked to explain how BP had managed, so early on, to stake out a coherent position on issues like climate change.

Like the faux-wizard of Oz, the man on screen was addressed with near-reverence. Unlike the wizard, however, he appeared to have nothing to hide, giving coherent, pragmatic replies. This memory came to mind when the news broke in mid-July that Ford will invest $1.8 billion in green car research and development in the U.K. over the next six years. While this may not result in a world swept by swarms of ultra-green mini-Fords, it’s one of the largest such investments ever, intended to accelerate Ford’s adoption of lightweight, hybrid, and diesel (including bio-fueled) technologies worldwide.

During the announcement, Richard Parry-Jones — Ford’s chief technical officer and group vice president of product development — admitted that folks may doubt these intentions, given that the company’s performance on previous high-profile environmental commitments relating to fuel economy and hybrids has fallen short. In light of this, The Financial Times reported “Ford’s record of reneging on environmental commitments, such as Mr. Ford’s promise to improve sport-utility fuel efficiency, made the company particularly careful in its analysis” of the potential of this latest program to generate real change. Thus Bill Ford, another corporate environmental superhero of recent years, is finding the reach of his powers questioned. Should we get rid of our collectible lunchboxes now?

It’s a Bird, It’s a Plane, It’s … One Step at a Time

Part of Ford’s problem is that, until recently, the U.S. market has been off-road in terms of environmental sensitivities and energy security. Given Ford’s profitability, could and should the company have bypassed consumer demand for SUVs to build and try to sell smaller — and smaller-margin — models, on which competition with the likes of Toyota is much more intense?

It’s hard even today, as the margins on SUVs and full-size pickups are still in the range of 10:1 versus what Detroit makes on most cars. But transitioning to the future takes foresight and courage — as The New York Times put it, “Had Mr. Ford produced more fuel-efficient vehicles like hybrids sooner, he not only would have found his company keeping pace with nimble competitors like Toyota when oil prices spiked, but he also would have been able to illustrate the bottom-line merit of his environmental values. Instead, Ford is again in the all-too-familiar spot of playing corporate catch-up.” Ford himself has said publicly that he wishes he’d pushed management harder, sooner, to adopt more of the environmental ethos to which he does seem to personally subscribe, but has struggled to embed in the automaker.

In comparison, John Browne’s problems, while painful, seem more manageable. Although once seen as a cultural outsider at BP, he has built a spectacular financial track record by any standards, and has the relative luxury of taking on crises and critics from a position of immense profitability.

While greens were thrilled by Browne’s early speeches on climate change at Stanford and in Berlin in 1997, his oil-industry peers were shocked. But he tempered his critics’ views by proving to be a consummate business leader. With his vision of a cleaner energy future and brave market forays, Browne has kept his competition off balance. He has transformed BP from a “two-pipeline company,” widely considered doomed, into a hugely energetic and profitable global player. When he took over as CEO in 1995, the company was generating annual revenues of around $30 billion, compared with $260 billion today. Under his guidance, BP — an early presence in areas like Alaska and the North Sea — has again got ahead of the pack in new markets like Russia and China. And, despite hiccups, the company’s “Beyond Petroleum” branding has helped to considerably soften its public image.

Part of the charm is that Browne and others at BP speak with considerable candor. Addressing a major conference in Istanbul recently, group vice president Nick Butler noted that “the 20th century is over, and the old oil industry — dirty, arrogant, and secretive — is becoming a thing of the past. The shift isn’t complete — we all have more to do — but the shift is well under way.” Ford has been similarly outspoken relative to industry peers: early on, it was the first automaker to leave the anti-Kyoto Global Climate Coalition, and recently became the first in its industry (and one of few globally) to produce a report exploring the impact of climate change on its business.

But candor gets you only so far. Whatever senior executives may say, recent disasters and controversies raise questions as to whether the BP miracle is starting to unravel — and no one is quite sure where Ford’s market share will settle, a question critical to determining what it really will be able to invest in cleaner technologies. Has BP’s push for growth and profitability been undertaken too quickly to allow even the most earnest CEO to maintain desired standards in the areas of ethics, safety, health, and environment, making some breakdowns inevitable? Can any hard-driving CEO — including recently anointed “Ecomagination Man” Jeffrey Immelt — deliver on wider promises consistently enough to continue to captivate the rapidly growing sustainability crowd, or will they be forced to hang up their capes?

We hope it’s not the latter. The world needs visionary leaders. And frankly, in spite of some glitches, Browne’s and Ford’s rhetoric may have been as important as their deeds. Against internal and external opposition, they’ve created room for others in their industries to join critical environmental and social debates. So we say to them: keep the capes, and may your companies and others become as green as you are.

Over the last few weeks, much of the world has clustered around TVs, watching World Cup rivals fight for the right to hoist what may be the ugliest trophy in sport. Inevitable arguments have broken out over who ought to win, and who invented “the beautiful game.” As we head toward the final match this weekend, it’s all made us wonder: could humankind ever apply that same energy and enthusiasm to the distinctly less exciting pursuit of sustainability?

At some point along the way, whether you peg soccer’s origins to soldiers in China’s Han Dynasty, the Greeks and Romans, or Britain — where one of the earliest matches is said to have been played with the severed head of a just-defeated Danish prince — this game evolved into one of the world’s shared passions. It has also become a humongous industry, with a range of impacts on a dizzying array of other sectors.

So great is soccer’s current impact that it is easy to identify industries that are pretty much guaranteed winners during tournaments. As this year’s World Cup got into its stride, for example, sales of electronic goods jumped 19 percent over last year at John Lewis, a major British retailer. Supermarkets like Sainsbury’s, Tesco, and Waitrose reported huge rises in sales of beer, wine, and barbecue foods, and it was estimated that each of England’s games would add more than $50 million to pub profits. Meanwhile, industry experts estimated that roughly $550 million extra would be spent on food- and beverage-related advertising during the Cup.

And what about the losers? In addition to the teams that fail to make the two-year qualifying cut, they include travel agents, as people stay closer to home; real-estate agents, as large numbers of people shelve plans to buy homes until the Cup is over; and cinemas, some of which closed their doors during England’s matches because so few people were turning out.

On the whole, though, the retail industry says the Cup is a good thing for the economy. So let’s turn our minds to that champion among questions: how we might sex up sustainability to inspire the same passion, and even greater economic impact.

We take our cue in part from one of our favorite social enterprises, the Homeless World Cup, launched in 2003 by Scottish entrepreneur Mel Young. Later this year, 500 players representing nearly 50 countries head to Cape Town, South Africa, determined to “kick off global poverty and change their lives forever.” Evidence suggests that the approach can have results: in 2005, 77 percent of the once-homeless players involved in the program had made significant changes in their lives. More than a third found regular employment, and a similar proportion improved their housing situation.

So let’s take one issue, kick it about a bit, and see how it might play in the Sustainability World Cup.

What’s “Moby Dick” in Mongolian?

Recently, Japan made headlines for pushing to overturn the international whaling ban, strong-arming such unlikely nations as landlocked Mongolia into supporting a pro-hunting stance. Most of this type of lobbying goes on behind the scenes, but what if we were to bring it out into the open? What if sustainability-related lobbying took place in front of thousands of deeply vested observers? Would licensing and sponsorship deals amass if we were to play for the future of, say, the minke whale?

Here they come now: Japan in the red shirts, the International Whaling Commission in green. The guards frisk the players to ensure they aren’t wielding harpoons, the crowd roars, a Greenpeace helicopter drops the ball dead-center on the field … and they’re off.

To crank up the viewing pleasure even further, we might add a bit more spice — plus a measure of democracy — with citizens and organizations around the world encouraged to use the potential of interactive media (and their remotes) to influence the outcome. Governments and NGOs would be “fans” right alongside business and finance, briefing and counter-briefing each other on the benefits of turning endangered leviathans into steaks. In the end, the teams would play not only their immediate opponents, but anyone around the globe who took an interest in the issue at hand.

If we were really Roman about the thing, the referee could give an ultimate thumbs up or down. Losing teams could be forced to pay up — for instance, ending subsidies to their share of the 3 million or so fishing vessels busily undermining marine ecosystems. Even if the whalers swept the field, they’d be in the winners’ spotlight, so their once-stealthy operations would come under intense scrutiny.

And it wouldn’t have to stop with soccer: imagine politicians competing in a round-the-world hot-air balloon race, investors taking part in sweepstakes where losers had to give a year’s income to environmental cleanups, and Formula 1 designers competing to pass the checkered flag with the greenest technology on wheels.

It could all turn out to be a lot more interesting than rehashed Big Brother episodes. (For that matter, imagine the reality-TV possibilities: Punk’d depicting unsuspecting big-shot polluters; The Apprentice fast-forwarding business models into various resource-constrained futures, with successful competitors given public-sector support and unsuccessful ones declared bankrupt; Wife Swap encouraging greens and non-greens to set up house together.)

But it will be a tough nut to crack. Part of the challenge, as ever, will be overturning entrenched powers who have a vested interest in the status quo. Despite global participation and interest, for instance, only seven different nations have won the 16 tournaments in World Cup history. This year, in spite of the great promise of teams from Africa and Asia, six of the eight quarterfinal teams, and all four of the semifinal teams, were European. Further, some World Cup observers argue that the rules too often bend in favor of the most established teams, suspecting favors by the referees. It’s all uncomfortably similar to the way the global sustainability game is currently played: G8 nations and Fortune 500 firms almost always make the playoffs, pretty much regardless of performance. And when the refs do intervene with progressive regulation or innovative codes of conduct, offenders like heavily polluting nations or industries are allowed to play on in return for weakly enforced promises that they will change — some day.

Encouraging more active citizen participation — which would fly in the face of declining voting rates — could pump up green consumer appetites and might even trigger something akin to the emotional upwellings that move the fans who paint their faces, wear team colors, and sing team songs. With many erstwhile activists now in the employ of big corporations, the time has come to crank up the volume again, reminding each of us that this really is a matter of life and death — both for today’s billions of have-nots and for future generations whose world, whatever sport they’re watching by then, will be rocking on its climatic hinges.

Peter, ever the rebel.

The World of Beatrix Potter™
© Frederick Warne & Co., 1902; 2002.

By turning the spotlight in Peter’s direction, we hope to illuminate some lessons in the game of responsible global branding. You see, SustainAbility has been called in to advise Frederick Warne & Co. — a division of Penguin Books, which owns the Peter Rabbit brand — as the wayward rabbit makes inroads on the global lettuce patch. It seems the brainchild of a Victorian English lady has become a hit in, among other places, the Land of the Rising Sun.

Why is Japan so taken with Peter and his pals? Part of the answer is that Potter’s stories are rooted in a highly romanticized view of nature. Another factor is the Japanese schoolgirl — or, more specifically, her love of kawairashii, cuteness. Perhaps, too, there is an even more important factor in a world where English has become the lingua franca: Potter has huge appeal in Japanese classrooms because her language is simple and her sentences short. (You never know when you might want to explain veggie kleptomania when traveling.)

If Peter Rabbit hasn’t yet bounded onto your radar screen, he soon will, thanks to Renée Zellweger and Ewan McGregor. Since it really is about time those two appeared in this column — even if our mailbags are not groaning with letters protesting the oversight — we note that they are working on a bio-pic on the life and times of Potter, currently being shot on location on the Isle of Man.

So what happens when a local brand like Peter Rabbit explodes onto the global stage? The issues may differ considerably from those faced by other current or recent clients of ours — among them Coca-Cola, Nike, Starbucks, and Unilever — but this bunny business still presents several useful lessons.

A $500 Million Sideshow

The first lesson of going global is an old one: think local, or even better multi-local. Not all lettuce patches are the same. If the English are inclined to embrace rabbitkind, for example, across the Channel the French prefer their lapins simmering in the stewpot. A world away, the Australians — well, Australian views on rabbits aren’t for polite company. In short, you must know your own story well enough to be prepared for surprises. Can you predict how your corporate culture, product, and brand will be received in different places?

If your answer is “with open arms, of course,” then pay attention to the second lesson: prepare for the problems of transcultural success. Today, thousands of Japanese tourists pour into Potter’s adopted county of Cumbria each year. In the process, they contribute something like 5 percent of the county’s tourist income. On average, we are told, these visitors — spurred on by the national addiction to gift-giving, or o-mayage — buy 12 Beatrix Potter T-shirts and 20 fridge magnets. So many visitors turn up that the National Trust — which runs Hill Top Farm, where Potter once lived — has instituted a daily limit on tours.

Unless it is a complete dud, the new film can only make the National Trust’s problems worse. While Zellweger and McGregor would no doubt make fine magnets, it’s more likely that the spotlight will be on the likes of Mrs. Tiggy-Winkle, Jemima Puddle-duck, and the increasingly ubiquitous Peter. Which brings us to the third lesson: be very conscious of whom you’re ultimately selling to. In this case, almost all Peter Rabbit-branded products go to children. That might make embracing sustainability more natural a step than it would be for, say, Boeing or General Dynamics. In fact, it presents a good model; the whole point of the sustainability agenda is that all companies should act as if they were selling their wares to the folks who will inherit whatever we choose to leave them. And as companies like Johnson & Johnson have long understood, selling to children, or to those caring for or giving to children, is a very different game.

Not that Potter herself would have had any concerns about selling to children. As her books began to sell by the wheelbarrow-load, then the wagon-load, she proved much more commercially adept than one might imagine. It’s clear that she saw the commercial opportunities attached to her art. Among other things, she patented a Peter Rabbit doll and devised branded games, puzzles, and wallpaper. Although Potter described these ventures as “sideshows,” today’s versions have taken off, with annual retail sales now valued at around $500 million — a business well worth protecting.

Which brings us to the fourth lesson: what starts out “soft” can harden quickly. Let us explain. Many companies operating in hard-nosed, highly competitive industries still see corporate citizenship as soft, discretionary. But many consumer brands now know different. When they come under challenge or attack on ethical, social, or environmental issues, such companies can shift to new priorities surprisingly quickly — and those priorities can then cascade through value chains. In today’s increasingly interlinked global economy, even the hardest-nosed companies sometimes prove surprisingly sensitive to sustained pressure — think Wal-Mart.

Penguin Books is at the softer end of the market, and would seem unlikely to be called out on the carpet. But the company has had a few PR problems in its long history — among them being tried for obscenity in the infamous Lady Chatterley’s Lover case in 1960 and being caught up in the fatwa against author Salman Rushdie. In the end, the company was found not guilty in the Chatterley case, and the Rushdie affair has simmered down — but it is hardly surprising that the iconic publisher is now a little gun-shy, even where fictional rabbits are concerned. Companies like Penguin are becoming acutely aware that corporate responsibility issues proliferate faster than rabbits in the wild. And they have also seen that even well-run companies can get caught out in the most extraordinary ways, as the impact of the Islamic boycotts on Danish industry has shown.

This brings us to the fifth lesson for brand owners: there really is no time like the present to think through how to sidestep potential future problems. Because in today’s nanosecond markets, the media are on a sensitive hair-trigger — even more than poor, pest-plagued Mr. MacGregor.

Just as people sailing full-tilt into an iceberg zone can get distracted rearranging deck chairs, those of us advocating corporate responsibility may be guilty of spending too much time fiddling with the nuances of the language that describes our work. We do this even as abrupt climate change, pandemics, and other mega-trends float, quiet but menacing, in our path. But as people like the Inuit have long known and acknowledged via their kayak-loads of words for ice and snow, language can powerfully shape thinking — and perhaps even influence our species’ chances of survival.

What lies beneath?

Photo: iStockphoto.

Next year marks the 20th anniversary of the landmark U.N. Brundtland Commission report. It will be a moment when world leaders will have to account for two decades of progress made, or not made, on sustainable development. So perhaps it’s indeed time to ask ourselves whether the language of corporate social responsibility (CSR) has blinded us to looming planetary and civilizational risks.

The very fact that terms related to CSR are now in wide use means we have made considerable progress in catching the attention of businesspeople. But the way those terms frame the issues can leave companies fretting about things that distract them from the real challenges — a bit like an igloo-dweller straining to keep his seal-fat lamp from smoking when the ice is disappearing beneath him.

Not that a few global leaders aren’t trying to help us focus; think of Al Gore’s new film, or U.K. Conservative party leader David Cameron energetically dog-sledding toward melting glaciers. Still, it strikes us that it’s time to give our vocabulary a vigorous round in the cocktail shaker.

Does the intensifying focus on corporate social responsibility risk pulling our eyes from core economic challenges? This concern is behind the current efforts of our colleague Geoff Lye, SustainAbility’s vice chair, to stress the growing need to think in terms of corporate economic responsibility instead.

Full Speed Ahead

Since we coined the term “triple bottom line” in 1994 to characterize society’s growing demand that businesses balance the economic, environmental, and social bottom lines, we have seen an accelerating progression from early concerns about safety, health, and environment to a growing range of social concerns, among them poverty, human rights, and diversity. Recently, it has dawned on us that the economic bottom line — where we expected private-sector savvy to make progress easier — is in fact least understood by many of those shaping the corporate and public-policy agendas.

Economic issues have long been the poor cousins within the corporate-responsibility debate. For many years, they were considered to be synonymous with financial issues, and widely assumed to be well managed. But as concerns like fair trade, fair pricing, and fair wages have increasingly made headlines, it has become clear that economic issues are surprisingly ill-understood by most corporations, and an underrepresented dimension of the corporate-responsibility agenda.

As you chip away at this, it’s clear that too many of us have been obsessed with the nearest iceberg, rather than thinking about the wider ice pack — let alone the underlying, shifting continental plates of economic reality. How, for example, does the bribery and corruption agenda connect with human rights or biodiversity? Economic responsibility is not simply a matter of companies being financially accountable, recording employment figures and debts in their latest corporate-responsibility report. The economic dimensions of the sustainability agenda should embrace accountability, affordability, diversity, and equity. That is what makes up “corporate economic responsibility.”

Let’s just toy with one of these dimensions: economic equity. This addresses the reasonably transparent — and certainly strategic — management of the creation and distribution of wealth. It includes issues like fair trade; fair wages (is it reasonable for 50 cents of the price of a $100 sneaker to go to production workers, and $18 to the retail labor selling them?); fair pricing (is it reasonable for the world’s poorest to pay from two to 20 times as much as the richest for their food, water, energy, and drugs?); and — the new humdinger — fair tax (is it responsible for business to see corporate taxes purely as a cost to be avoided, rather than part of their “social contract” with society?).

SustainAbility’s latest report, “Taxing Issues,” explores how different stakeholder groups view the latter issue. It proposes ways in which companies can assure themselves and their stakeholders that they have a responsible tax policy in place. Tax avoidance is perfectly legal, but often ethically suspect — for example, one study has shown that tax avoidance by business deprives developing countries of more than $50 billion a year. Under increasing public scrutiny, companies will need to think about tax policies in new ways — and weigh their social and economic impacts more carefully.

We believe these emerging economic angles can potentially take the corporate-responsibility agenda to a new level. The advances we’ve seen in corporate responsibility so far are to be welcomed and, in cases of clear best practice, applauded. But in its current incarnation, the movement is simply not equal to global challenges like poverty and climate change.

With the shift in power from the public to the private sector — and with open and globalized markets to pursue — come obligations and responsibilities. Economic diversity, accountability, and equity cannot be delegated to public-affairs staffers and corporate-responsibility teams. These issues go to the heart of a company’s business model, challenging the conventional wisdoms of development and investment. Ultimately, they go to the heart of a society’s economic model.

Those at the helms of “supertanker corporations” must open their eyes to the billions of people living in poverty who are currently denied affordable access to clean water, health care, and energy.

Navigators like Muhammad Yunus of the Grameen Bank and C. K. Pralahad, with his book The Fortune at the Bottom of the Pyramid, are busily mapping the trade routes. And those doing the steering ought to see the invisible billions below the waterline not simply as a new market opportunity — though it certainly will be — but as a critical global community, whose needs must be met if 21st-century capitalism is to have any chance of being sustainable.