BNP Paribas Investment Partners, the Paris-based fund manager, is lobbying the pharma sector in support of the AllTrials campaign, which was started by U.K.-based Sense About Science, a charitable trust. The campaign is pushing for much greater transparency around clinical trials, a necessary and crucial step in the process of drug development. Unfortunately, around half of clinical trial results have never been published. Perhaps not a surprise, trials with negative results are twice as likely to remain unreported as those with positive results. At the same time, industry funded trials that have been published are much more likely than independently funded trials to show positive results. Helena Viñes Fiestas, who heads sustainability research at BNP, said some companies have faced enormous fines by not disclosing clinical trial data. As recently as 2013, several pharmaceutical firms paid over $10 billion in fines for not fully articulating secondary effects they were aware of. Companies have also been criticized for wasting significant amounts of money conducting unnecessary trials when such funds could be better directed towards research and development and trials that have greater potential.

Ottawa moves to protect Canada’s “brand” abroad

Canada is introducing a new social responsibility policy aimed at protecting the country’s positive “brand” in overseas markets, and mining and energy companies that don’t toe the line could find themselves cut off from government support. That includes financing and other supportive services from agencies such as Export Development Canada, not to mention the many Canadian embassies around the world that help companies gain a foothold in foreign markets. The news was reported in Friday’s Globe and Mail, which said that International Trade Minister Ed Fast is also appointing a new corporate social responsibility counselor with added powers to assure policy compliance. In addition, the federal government is requiring that resource companies comply with new transparency standards, by reporting, for example, payments made to foreign governments.

Viking women failing to crack glass ceiling

Sweden, Norway, Denmark and Finland are hailed as being more civilized societies because of the equal opportunity provided to women. As The Economist points out, the state provides world-leading coverage for childcare and maternity leave, and more women graduate from Nordic universities than men. Take a tour of their respective parliaments and women are equals or dominate the chambers, and mandatory quotas on corporate boards assure women are well represented. In the C-suite, however, and even among senior managers, women aren’t faring so well. As the magazine points out, Denmark, for one, was ranked 72^nd by the World Economic Forum when it came to the gender gap in upper management of publicly traded firms.

Barclays, MSCI launch green bond index family

Barclays and MSCI have come out with a new green bond index family that measures the global market of fixed income securities issued to fund projects and initiatives that have direct environmental benefits. Securities must pass an independent and objective assessment by MSCI ESG Research to be included in the index family. The assessment looks at how proceeds of the bond issue will be used, whether projects meet criteria, how funds will be managed, and how results will be reported. Additional fixed income index criteria are then applied to this screened universe to identify index membership on a monthly basis. “The availability of market standard indices is important in establishing clear, broadly accepted guidelines for the new issuers rapidly entering the market,” said Sean Kidney of the Climate Bonds Initiative. “The stature of Barclays and MSCI will help to bring attention to green bonds.”

NYC comptroller Scott Stringer leads board accountability project

The man who has auditing power over New York’s $75 billion annual budget and oversees the city’s five municipal pension funds – which together represent $160 billion in assets – is leading an initiative that aims to bring better corporate governance practices to the boardrooms of big U.S. corporations. Specifically, Stringer wants to leverage the huge shareholder clout that the country’s public pension funds have to push through long-needed governance changes. Corporate Knights’ managing editor Jeremy Runnalls chatted with Stringer about the Boardroom Accountability Project, which was launched last week with a coalition of large public pension plans. Its goal: pressure companies to let shareholders that control at least 3 per cent of company shares to nominate their own board candidates. “The fact is that friends of friends are still placed on boards and then often make decisions that are not in the long-term interests of shareowners,” Stringer told Runnalls. “I think this project promises to transform the dynamic between shareowners and corporate boards by giving investors real power to nominate corporate directors.

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In the newsrooms and watering holes of Phnom Penh, the two expressions were read as a telling contrast between “nice guy who’s trying” and “Nobel Peace Prize winner.” If these two Southeast Asian reformers represented the best hopes for their troubled countries, most would have put their money on Suu Kyi and Burma. Cambodia was just three years removed from a historic United Nations-sponsored election, but it was already sliding into what one scholar notably described as a “vaguely communist free-market state with a relatively authoritarian coalition ruling over a superficial democracy.”

Burma, on the other hand, still seemed to have a political future worth looking forward to (even if it was under the name Myanmar), and the unexploited economic potential to back it. Suu Kyi’s infallible, principled resistance to the thuggish junta made her country a cause célèbre and appeared certain, even then, to put it on track for better things.

Just two years ago, that promise finally felt within sight. Isolated and aging, Burma’s military leadership had begun implementing its “roadmap to democracy,” with reformer Thein Sein emerging as the first civilian president in decades. Suu Kyi and other dissidents were released; she won a seat in parliament and toured foreign capitals in a blaze of publicity and optimism. Ordinary Burmese gained impressive new freedoms and the doors were thrown open to liberalization, investment, currency regulation and the end of foreign sanctions.

To hear their stories told this way, these two countries appear to have emerged from economic and social ruin in very different shape. But while Burma still has prosperous potential, it’s treading perilously close to Cambodia’s path – cronyism, corruption, land grabs, social and environmental exploitation. In the short time since the easing of foreign sanctions and Suu Kyi’s triumphant foreign tour in 2012, elements of “reformed” Burma have begun to resemble that ugly characterization of its neighbour. It may yet end up taking the wrong path unless its foreign partners, including Canadian investors and political leaders, show the resolve to demand better.

Land grab

If a single word can be used to sum up what’s animating the economic and political transitions of both Cambodia and Burma, it is “land.” Cambodians and now Burmese have emerged from their isolation with severely underdeveloped economies and labour forces that will require generations to rebuild, but the value of their underdeveloped land, and what can be extracted from it, is real and immediate.

The paranoid Khmer Rouge shattered the lives and livelihoods of millions of Cambodians, but its experiments in agrarian socialism had the effect of a perverse form of environmental conservation. Burmese military rule left a larger footprint – black-market logging, destructive gem mining and a cavalier attitude toward delicate ecosystems – but much of the country’s prime land emerged underexploited due to sanctions, civil war and the sleepy pace of its ox-cart economy. The sudden embrace of open markets, growth and resource exploitation has inevitably created Wild West conditions in the rush to exploit these two Far Eastern “frontier” states, along with tiny Laos.

Despite years of advocacy by international NGOs, illegal timber exports continue to significantly erode the forest cover of all three countries to feed the needs of neighbouring Thailand and China. In past decades, this trade fuelled civil conflict; today, it largely benefits Burma’s powerful military and business elites, working with the regional rubber firms that have been sweeping across Southeast Asia, acquiring land for plantations to feed global demand.

Resource extraction, which was a tricky business for Western firms in Burma under the watchful eyes of sanctions and Western public opinion, is proceeding apace, with all that entails. Gems and precious metals continue to leave a particularly dirty stain. Working conditions have been widely deplored and the infamous Letpadaung copper mine has tripped up many of those involved in the project – from former Canadian partner firm Ivanhoe, which remains locally reviled, to Suu Kyi, who headed an official committee that allowed the project to proceed against the wishes of local villagers.

Meanwhile, Burma’s government is pushing ahead with a panoply of energy projects, auctioning off oil and natural gas rights to multinational firms and advancing plans for dozens of new hydroelectric dam projects. For a country with chronic power shortages, this should be a no-brainer, but most of the new capacity is for export and the environmental and social costs of the infrastructure have been exorbitant.

Next Cambodia?

Consider the massive Myitsone Dam project at the headwaters of the Irrawaddy River, intended to generate up to 6,000 megawatts of power, most of it for the Chinese province of Yunnan. Thousands of Burmese were forcibly relocated and experts warned of widespread environmental and cultural destruction before the government suspended the project, citing local sentiment. With the government under intense Chinese pressure, it would hardly be a surprise if construction resumes following next year’s elections.

With weak regulations and enforcement practices, immense environmental and human consequences are already evident elsewhere in Burma. Villagers, farmers and remote tribes with traditional land claims, but no formal title, have been forcibly relocated or marginalized with little compensation or sympathy, and the country’s vaunted biodiversity is under threat due to habitat loss and the trade in endangered species. Black-market logging has been reorganized and legitimized through Rangoon-area ports, which observers believe allows for the “laundering” of logs illegally cut in disputed or ethnic-conflict areas – one of the issues fuelling conflict between the government and ethnic minority groups. Even the feel-good tourism industry, which has developed at breakneck speed, has brought unexpected costs, including environmental damage and overdevelopment at Inle Lake, a world-renowned tourist attraction even in the bad old days.

There are many similarities to Cambodia, where land grabbing, forced relocation, exploitative work conditions, corruption and ethnic strife are familiar parts of the landscape.

Burma “stands at a crossroads,” says Ali Hines, a campaigner with British-based environmental NGO Global Witness, which has done high-profile work in both countries for years. “Either it can continue down the path of its neighbours – whose limp efforts at reform do little to mask a de facto policy of land grabbing and cronyism – or it can use its natural resources to drive the sort of equitable national development that is needed to set the counter on a more stable, more sustainable course.”

Getting it right

For Canadians who have or want a stake in Burma, these trend lines should be cause for concern.

Will nascent reforms, such as transparency in oil and gas contracts, be strengthened and enforced, or allowed to wither on the vine? Will effective legislation be passed to properly and fairly establish land title and regulate its use and sale? Will pervasive cronyism and corruption be allowed to flourish? Will consultation and popular will play a greater role in weighing the fate of mega-projects like the Myitsone Dam? Will restrictions on Suu Kyi’s path to the presidency, currently blocked by junta-era legislation, be lifted – or have her principles and promise merely been co-opted by a junta with a friendlier face?

The answers to these and other questions are not yet certain. But this is where the outside world Burma has been courting – including Canadian investors, political leaders and even the public – can make a difference.

Like the leaders of many emerging quasi-democracies, Burma’s government, military and oligarchs are walking a fine line with their foreign suitors. In essence, they say: In order to make money with you, we will undertake an amount of reform that satisfies your business and political requirements.

So how badly do we want to make money with Burma? And what amount of reform will satisfy our standards? These are the international community’s bargaining chips.

In Cambodia, where reform has gone so badly off the rails, growth has been high but the amount of money to be made was still relatively small (its economy is defined by agriculture, tourism and low-cost labour). But international standards for reform were similarly low. The defining issue for Cambodia’s foreign suitors was justice for victims of the Khmer Rouge regime, responsibility for which was tangled in regional rivalries and Cold War politics. Prime Minister Hun Sen, in power for nearly 30 years, has a singular talent for delay and obfuscation, and the Khmer Rouge tribunal process has been dispensing justice in a slow trickle for more than 15 years now – just fast enough to keep foreign aid and investment on the hook.

Bar set low

There is no similar defining issue to distract the international community in Burma. But the amount of money to be made is much higher than it was in Cambodia. The Burmese economy is already twice that size, with a much richer resource base and four times the population. And Burma’s sanctions-era business partners (Thailand and China, notably) set a very low bar for reform. Can Western firms with checkered records of their own, such as Canadian resource companies, be counted on to raise it?

“Canadians and Canadian companies are urged to remain vigilant and ensure that they engage with individuals and companies of the highest ethical standard … it remains the responsibility of individual companies to ensure their activities are within legal parameters and beyond reproach with respect to integrity,” Foreign Affairs Minister John Baird and International Trade Minister Ed Fast advised in 2012, as Canada announced its intention to open an embassy in Burma.

To that end, international money has largely been concentrated in high-profile industries such as oil and gas, tourism and telecommunications – foreign investments “are largely contracted on the basis of intentional standards where transparency is not a problem,” says Derek Tonkin, a former British diplomat who now serves as an adviser to investment firm Bagan Capital.

But sustained change will take time and commitment by both investors and governments. Before they make their money, Burma’s new foreign partners need to demand more: clear, fair rules for foreign investment and domestic politics; the disavowal of cronyism and corruption, official and unofficial; consideration of social and environmental impacts of potential investment projects; incorporation of best practices and corporate social responsibility; understanding and accommodation of local context, culture and relationships.

Although some (including Burmese-Canadian democracy advocate Tin Maung Htoo) have argued that the threat of sanctions should be maintained, it’s clear that Burma is now open for business. Economic opportunities abound and Canadians can no longer be expected to stay out on principle or nervousness at dealing with what remains an unsavoury regime. But as they engage, they need to keep pushing back. They could start by asking what kind of Burma they want to deal with in the future: another Cambodia, or something better?

Guy Nicholson is deputy comment editor at The Globe and Mail. He was foreign editor and managing editor of The Cambodia Daily in Phnom Penh from 1996 to 1999. 

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Executives at the Walmart Global Sustainability Milestone Meeting in September rolled out two ambitious initiatives meant to reduce chemical and pesticide use throughout its supply chain. The Bentonville, Arkansas-based retailer will be working with suppliers to institute the Consumables Chemicals initiative, a policy to eliminate 10 priority chemicals from household cleaning, personal care, beauty and cosmetic supplies in products sold at both Sam’s Club and Walmart. Developed in collaboration with the Environmental Defense Fund, it will also focus on expanding public disclosure of ingredients. Some companies have issued restricted substances lists, says Sarah Vogel, director of EDF’s environmental health program, but “no other company is requiring the all-important, but often forgotten, second step to truly transformational phase-outs: putting a system in place that avoids regrettable chemical substitutions.”

With groceries accounting for 51 per cent of Walmart’s U.S. sales last year and expanded home delivery service on the horizon, pesticide use now accounts for roughly half of the retailer’s carbon footprint. The company also announced new agreements with 15 key suppliers to lower pesticide use, with the goal of cutting fertilizer use by up to 14 million acres of American farmland by 2020. “Using less energy, greener chemicals, fewer fertilizers and more recycled materials is the right thing to do for the planet and it’s right for our customers and our business,” said Walmart president and chief executive Mike Duke in a statement.

The world’s largest retailer has grown increasingly aggressive in pursuing sustainability initiatives, even as its fierce opposition to organized labour and higher wages remains a contentious issue. Hundreds of U.S. employees took part in demonstrations across 15 cities in September. The company has been accused of deliberately avoiding Affordable Care Act health insurance requirements by hiring more temporary workers. This has been paired with attempts to reduce the number of employees per store to save costs, which has affected sales. In a victory for labour advocates, Walmart backtracked on the temporary worker policy in late September by moving 35,000 workers to full-time status in an attempt to improve employee performance and retention.

Zero: JP Morgan

A wholly owned subsidiary of JPMorgan Chase is currently under criminal investigation for obstruction of justice in regards to a regulatory probe into electricity market manipulation. The largest bank by asset size in the United States settled Federal Energy Regulatory Commission (FERC) allegations that it exploited electricity power market loopholes with a $410 million payment on July 30, but may have attempted to head off the investigation by withholding key documents from the FERC. The commission alleged that JPMorgan exploited loopholes in the electricity trading markets to drive up prices in the Midwest and California between 2010 and 2012. It suspended JPMorgan from participating in the electric power market in November 2012 while conducting its investigation on the grounds that the company “made factual misrepresentations and omitted material information over the course of several months.” JPMorgan did not admit any wrongdoing in the July settlement, and is “pleased to have this matter behind us,” according to JPMorgan spokesman Brian Marchiony. It has stated repeatedly that all required documents were turned over to the FERC in a timely manner. No charges have yet been filed.

The Federal Bureau of Investigation and the Manhattan U.S. Attorney’s Office began to investigate JPMorgan’s actions in the aftermath of the July settlement, after several federal lawmakers began questioning the terms of the agreement. Massachusetts senators Elizabeth Warren and Edward Markey wrote FERC demanding to know why no employees who “impeded the commission’s investigations” were being held accountable. The Senate Permanent Subcommittee on Investigations has launched its own probe into the terms behind the FERC settlement, focused in part on allegations of a cover-up.

Faced with over a dozen investigations by separate federal agencies, states and foreign governments on everything from foreign bribery allegations to questionable debt collection practices, JPMorgan posted a rare loss in the third quarter, with fines wiping out quarterly profits. It has paid $3.68 billion in total throughout 2013. The Wall Street Journal reported on Sept. 25 that JPMorgan may be facing the largest bank fine in history ($11 billion) over the fraudulent sales of mortgage-backed securities.

Click here to view our complete Heroes and Zeros series.

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General Motors announced in July that it generated over $1 billion from recycling and reuse revenue in 2012. With 90 per cent of waste from its manufacturing facilities currently being recycled, the company has been able to monetize some streams of waste. It now boasts 105 factories that are landfill-free, with a goal of reaching 125 facilities by 2020. Much of the gains were achieved through material substitution. Replacing wood pallets with reusable plastic pallets in several facilities resulted in over 500 tons in waste reduction annually, while the increased use of robotics has slashed paint thinner use by 200 tons. Since 2010, the total waste per vehicle built by GM has declined by 55 pounds, while the average per-ton cost of waste reduced has declined by 92 per cent.

Looking to expand research and development into hydrogen fuel cells, GM also announced a seven-year partnership with Honda in July. “We are convinced this is the best way to develop this important technology, which has the potential to help reduce the dependence on petroleum and establish sustainable mobility,” stated GM chairman and CEO Dan Akerson.

The two companies have ranked first and second in the world in fuel-cell patents over the past 10 years, and are aiming to launch their first joint product by 2020. The U.S. Department of Defense, an enthusiastic proponent of reducing its reliance on fossil fuel, is likely to be a silent partner in this alliance. The U.S. Army launched the world’s largest military vehicle fleet powered by fuel cells last year in partnership with GM in Hawaii, and is currently exploring other ways to expand this nascent industry.

Although much of the company’s sustainability bona fides originate from the Chevy Volt, the plug-in hybrid electric vehicle released in 2010, GM was the first major U.S. auto manufacturer to sign the Climate Declaration earlier this year.

Established by Ceres, an investor-focused environmental advocacy group, it is “a statement calling on U.S. policymakers to capture the American economic opportunities of addressing climate change.” For GM, this is a significant shift away from a petroleum industry once counted as one of its greatest allies.

Zero: Sinovel Wind Group

Chinese company Sinovel Wind Group and two of its senior executives were indicted in June on charges of industrial espionage following a two-year investigation by the FBI. Sinovel, a company that at its peak was the second-largest turbine manufacturer in the world, stands accused of stealing the source code provided by American Superconductor Corporation (AMSC), a Massachusetts-based energy technologies firm. Dejan Karabasevic, a former employee of AMSC, pled guilty in 2011 to downloading the code and transferring it to Sinovel. The suit claims that the stolen code was eventually inserted into more than 1,000 turbines sold around the world. In a particularly brazen move, four Sinovel turbines containing the stolen material were installed in Massachusetts. “We have worked with law enforcement to verify that these Sinovel-manufactured wind turbines contain AMSC’s stolen intellectual property,” said Daniel P. McGahn, AMSC’s president in a statement. The company is seeking $800 million in damages. Litigation is also underway in the Chinese court system, with the Chinese Supreme People’s Court reviewing several civil suits brought forth by AMSC. Other problems facing the company include an ongoing China Securities Regulatory Commission investigation, which is examining a suspected breach in securities laws.

The simmering dispute between the two firms has unfolded as American authorities have grown increasingly alarmed with Chinese industrial espionage efforts. U.S. President Barack Obama expressed his concerns to Chinese President Xi Jinping at a meeting in June, explaining that “large-scale theft” of U.S. property is hindering relations between the two countries.

A report compiled by 14 U.S. intelligence agencies in November unearthed a sophisticated Chinese government-supported industrial espionage campaign. It estimated in May that illegal technology transfers are costing the U.S. economy over $300 billion annually. The authors of Chinese Industrial Espionage, a new book written by industry experts, contend that Chinese authorities began to focus on American private sector intellectual property about five years ago while in the midst of a domestic innovation drive. “Chinese cyber-hacking has been going on for a long time,” author James Mulvenon told PBS in July. “What’s new is that we’re finally fed up and trying to do something about it.”

Click here to view our complete Heroes and Zeros series.

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The factory collapse in Bangladesh back in April this year is an interesting example. That factory was supplying garments to several major clothing retailers around the world. Those suppliers have a material impact on a (retailing) company’s operations, with labour issues always representing a serious reputational risk. In the wake of that catastrophe, how would this hit the sustainability books of the retailer?

The newly-minted Global Reporting Initiative’s 4th generation guidelines, G4, may provide some answers. Departing from its previous iterations, G4 emphasizes the concept of materiality. This is defined as any issue – environmental, social and/or economic that is significant enough to influence the decisions of various stakeholders – both internal and external to the organization. Material issues usually pose significant risks for the organization, which expose them to tremendous short-term and long-term financial impacts. Indeed, that very factory collapse in Bangladesh caused at least one of the factory’s clients to pay a hefty sum to compensate for the loss of lives. According to the G4, sustainability reports are to contain information on performance regarding the most material aspects. So, if we accept the fact that sustained supplier operations do have a material impact on a retailer’s business, based on this principle, we would expect retailers to start reporting more extensively on the environmental, social and health & safety issues touching those suppliers. Furthermore, G4 now has an expanded list of indicators when it comes to reporting on labour practices. For example, indicator LA15 requires the disclosure of significant actual and potential negative impacts for labor practices in the supply chain and actions taken.

The other dramatic change brought forth by G4 is the way in which the reporting organization’s boundaries will be determined – part of what G4 calls “completeness”. Previously, an organization’s boundary was defined by the extent of the organization’s control or influence over a given entity – examples include a joint venture, a subsidiary or a contractor. If a given entity was beyond the reporting organization’s boundary as described above, performance reporting would generally not consider the figures from these entities. Under G4, boundaries are now determined by looking at where the material impacts occur throughout the whole supply chain. Therefore, if labour practices at the supplier level are a material issue for the reporting company, one would expect that it would be included in the reporting company’s sustainability report.

While all these developments are encouraging, we should remain realistic to the fact corporate sustainability reporting remain largely voluntary, with limited levels of assurance on the performance data being reported. Corporations tend to be transparent only to the extent that positive stories are told; the negative side of things are usually toned down if not omitted completely from corporate publications. The revised concepts of materiality and the determination of boundaries being more principles-based leave the door open to various subjective interpretations as to the applicability of one or more aspects to different reporters within the same industry. Furthermore, the G4 guidelines are a reporting framework and do not inform the reporting entities nor their stakeholders as to where the entity is at in terms of its journey towards sustainability – something that a standard or benchmark for sustainable business performance would be better equipped to handle.

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Officials at Procter & Gamble (P&G), the world’s largest consumer product brand, announced in April that 25 per cent of the company’s 192 factories worldwide have achieved zero waste status. P&G defines zero waste as a site where no manufacturing waste ends up in a landfill, except hazardous materials. Another 20 locations are likely to be certified in the next year. “We have found ways to divert most of our major waste streams away from landfill, so we’re now seeing new sites achieve zero manufacturing waste to landfill nearly every month,” said Forbes McDougall, P&G’s global “zero waste to landfill” leader, in a press release. The company has set a long-term goal of operating with no manufacturing waste at every factory as it battles with competitor Unilever to establish itself as one of the world’s leading sustainable corporations.

Strict recycling procedures ensure that all refuse is collected in carefully delineated containers, which then become the responsibility of the site solution provider. The goal is to not only repurpose the remaining material, but also turn it into a revenue source. Assistance is provided by a global asset recovery purchasing team. Successes include a facility in Mexico that turns paper sludge left over from toilet paper manufacturing into cheap roof tiles used on houses in the area. In Hungary, waste left over from feminine care pads is sold as fuel for a cement plant. Over $1 billion in reduced landfill costs and new revenue has been generated for the company since the asset recovery team began its work in 2007.

These efforts have successfully reduced waste generated within P&G facilities, but only account for 4 per cent of the total raw material used by the company. The remaining 96 per cent is integrated into finished products. With 4.6 billion consumers worldwide, attempts to ensure zero consumer waste are likely to prove more challenging. A life-cycle analysis is needed for each product, along with efforts to shift consumer behaviour. As an example, the creation of detergents that require less rinsing and allow for cold water use are positive steps, but reducing the ecological footprint at the point of purchase, during use and through disposal all present unique challenges to achieving zero consumer waste.

Zero: BSG Resources

Officials in Guinea, West Africa, arrested an executive of BSG Resources (BSGR) in April in conjunction with a broader U.S. Department of Justice corruption probe. The arrest came a week after FBI agents arrested Frederic Cilins, an agent of BSGR, in Jacksonville, Florida, for allegedly attempting to cover up evidence of bribery. The diversified natural resource company is part of the privately held Beny Steinmetz Group of Companies, a consortium involved in the diamond business, capital markets and real estate. Beny Steinmetz is one of the wealthiest men in Israel, with an estimated net worth of $4.1 billion. The allegations of bribery stem from BSGR’s acquisition of the mineral rights to the Simandou iron-ore deposits in a remote part of south-eastern Guinea in 2008. Two weeks before president and strongman Lansana Conte died in December 2008, he revoked 50 per cent of mining giant Rio Tinto’s stake in Simandou. It was then acquired by BSGR for no upfront cost. In April 2010, Steinmetz Group sold 51 per cent of its stake to Brazilian mining giant Vale for $2.5 billion.

BSGR maintained a cozy relationship with the military junta that replaced Conte, but the 2010 democratic election of former opposition leader Alpha Conde spurred heightened scrutiny. Conde launched several probes into mining contracts issued by previous regimes, focusing on the Simandou concession. Working with billionaire investor George Soros, a group of investigators was established that claims to have unearthed incriminating evidence about the deal. Documents provided to the Financial Times and other news services showed several contracts, signed by BSGR representatives in 2007 and 2008, promising millions of dollars to the former president’s wife, Mamadie Toure, to take “all necessary steps” in securing access to the Simandou deposit. These documents were referenced in the FBI indictment against Cilins, who was filmed under surveillance in Jacksonville allegedly attempting to obtain and destroy the evidence from Toure. The Guinean government has stated its intention to strip BSGR’s mining rights if the allegations can be proven. Vale has refused to pay $2 billion it still owes to BSGR without further progress demonstrated on the mining project. Vale issued a statement distancing itself from the arrests, while stating its intention to cooperate with the investigation.

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The British department store Marks and Spencer (M&S) announced in late October it has committed to eliminating the use of toxic chemicals throughout its products and supply chain by 2020. An investigation by Greenpeace last summer found that the majority of clothing sold by M&S and other major retailers contained a mix of chemicals harmful to animals and humans. Some chemicals were added intentionally to the textiles to provide a benefit such as wrinkle resistance, while others remained on the clothing as residue from the manufacturing process. The “Detox” campaign that followed successfully pressured M&S into sitting down with Greenpeace, and has led to the company formulating a new set of chemical commitments. Detox campaign coordinator Martin Hojsik is pleased by the company’s newfound dedication, praising M&S in a press release for “showing real leadership on the issue of toxic water pollution.”

M&S has pledged to phase out the use of perfluorocarbons (PFCs) – a group of chemicals used to make clothing water- and stain- resistant – by the end of 2016. PFCs are not processed properly and accumulate in humans and wildlife over time. They have proved toxic for some laboratory animals. With no technical alternatives currently available, M&S will be partnering with universities, dye houses, chemical manufacturers and other industry players in hopes of setting a clear benchmark for the industry. It has also resolved to increase transparency throughout its supply chain, and will launch a chemical discharge disclosure trial at five mills in China to measure groups of hazardous chemicals identified by Greenpeace as potentially harmful to humans and the environment.

Although rising wages in China have resulted in sewing factories moving offshore, the resource-intensive dyeing facilities responsible for most of the chemical use have remained. A group of Chinese NGOs released a report in October emphasizing the need for expanded on-site testing. It found that supply chain management for international clothing companies is much stronger at cut and sew factories compared to the dyeing and finishing facilities. With Chinese water prices low and government environmental enforcement lax, the report concludes that “dyeing and finishing companies commonly skip implementing water or energy savings, make no effort to reduce pollutant discharge and consistently fail to abide by environmental laws.”

Zero: Gruppo Riva

Italian Prime Minister Mario Monti’s cabinet passed an emergency decree in late November allowing Gruppo Riva’s Ilva steel mill in southern Italy to continue operating, overruling a court decision to shut down portions of the plant and seize output over environmental and health problems. Seven senior executives were arrested on November 27 for conspiring with local politicians and officials to downplay the scale of pollution at the site, which Italian magistrates have described as an “environmental disaster.” Emilio Riva, one of the richest men in Italy, was placed under house arrest back in July under suspicion of having coordinated the cover-up as chairman of Grupo Riva. His son Fabio, the chief executive, has likely fled to South America to avoid prosecution. (Update: Fabio was arrested in late January in Britain, and is fighting extradition) A local priest has also been implicated in the growing scandal.

The Italian National Health Service released data in October showing that residents of Taranto – the town that houses the steel mill – are 30 per cent more likely to develop tumors and face elevated risks for various forms of cancer. Prosecutors estimate that 386 deaths have occurred as a result of the emissions released over the past 13 years. The agreement reached between management and the Italian government will require that a $4 billion refurbishment be undertaken to comply with European Union emissions standards by 2016. Production will be allowed to continue throughout this period. Union boss Gianni Venturi blamed the company for failing to make the investments in new technology that its competitors made years ago. “Plants such as the ThyssenKrupp one in Duisburg (Germany) or the Voestalpine one in Linz (Austria) are very similar to Ilva … but [they] have a much more sustainable environmental impact,” he told Reuters in December.

The Ilva complex is the largest European steel mill, responsible for 8 per cent of continental output. It provides about 20,000 jobs in a region facing high unemployment. The national government has been desperate to preserve the facility, concerned that its downfall will lead to the loss of more industrial manufacturing jobs. Four per cent of the country’s GDP is derived from the steel supply chain, impacting industrial heavyweights from Fiat SpA down to smaller manufacturers. The future of the facility is far from assured, with national elections scheduled for February casting uncertainty over the deal that provides €336 million (roughly $440 million) in federal retrofit funds.

Click here to view our complete Heroes & Zeros series.

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Over the proceeding months, as a handful of other government-backed companies failed, Republicans looking to unseat the president crafted their message: Supporting cleantech was the definition of “crony capitalism” and a threat to the free market.

In the six months leading up to the presidential election, outside groups promoting fossil fuels and casting doubts about clean energy spent $153 million on television ads. But it didn’t work. In spite of the spending bonanza, exit polling showed that voters were just as bullish on cleantech as ever. The president kept his job, as did almost every member of Congress who was attacked for supporting the clean energy stimulus. And the cleantech sector breathed a collective sigh of relief that the White House was still occupied by an ally.

“We saw the American public willing to go another round of four more years of investments in clean energy and four more years of seriousness about climate change,” said Michael Brune, executive director of the Sierra Club, in a press conference the day after the election. “This is a big win.”

Boosted by voter support and his personal belief in the value of clean technologies, President Obama will undoubtedly make the sector a priority. But the second round of support will likely be much different from the first. If the president’s first term was defined by a grandiose stimulus package and high-flying rhetoric about building a clean economy, the second term will likely be defined by executive actions rolled out with much less fanfare – but with a decidedly positive impact.

“I actually spend a lot of time explaining to different groups just how much Obama has done with his executive authority,” says Scott Sklar, president of The Stella Group, a clean energy services firm. “I think these will be the big drivers going forward.”

Indeed, across a range of sectors – advanced automobiles, renewable energy, energy efficiency and the smart grid – the administration is wielding its authority.

In August 2012, the White House finalized fuel standards requiring that light trucks and cars get an average 54.5 miles per gallon by 2020. All the major auto manufacturers and unions got behind the targets, saying they would drive billions of dollars in new manufacturing investments and help spur tens of thousands of new jobs.

Those new efficiency requirements – combined with existing tax incentives for electric vehicles, Department of Energy programs for new EV charging stations, and continued investments in next-generation automotive manufacturing supported by the stimulus package – will ensure steady progress in cleaning up the nation’s auto fleet. The White House estimates these policies will leverage as much as $50 billion in next-generation vehicles in the coming decades.

“If we’re going to meet the CAFE (fuel economy) standards, it’s going to require a lot of hybridization – efficient vehicles, hybrid technologies for vehicles and then of course to all-electric. That’s a major area of opportunity,” says Ron Pernick, managing director of cleantech research firm Clean Edge.

One of the Obama administration’s other big moves has been to finalize new rules on mercury, air toxics and carbon emissions for power plants through the Environmental Protection Agency (EPA).

Like fuel economy standards, new EPA rules will help propel the transition toward distributed renewable energy, efficiency and greater penetration of natural gas. They will also encourage a greater build-out of new pollution controls on existing coal plants, potentially creating thousands of jobs. According to conservative EPA figures, new regulations for mercury and air toxics will support 31,000 new construction jobs and 9,000 long-term operations jobs in the utility sector.

Under the Obama administration, electricity generation from wind and solar nearly doubled while consumption of coal-fired electricity fell about 14 per cent in 2012 alone. Although this drop was due largely to power plants switching to natural gas, the legal and regulatory factors supported by the Obama administration will play a strong role in speeding the shift to cleaner electricity.

And it’s not just wind and solar. In 2012, President Obama issued an executive order to procure 40 gigawatts of combined heat and power projects over the next decade, an efficiency initiative that could result in a doubling of existing capacity and up to $80 billion in new industrial manufacturing investments.

The other piece to this transition is how to manage all the new clean energy facilities coming online. The administration is rolling out some unique programs to help build upon $4.5 billion in smart grid investments through the stimulus.

In 2011, the White House released a comprehensive policy framework for building a 21st century grid, which offers a blueprint for what the administration plans to do in the next term. These include maintaining R&D programs for new technologies, encouraging new interoperability standards for grid communications technologies, and developing open-data programs so consumers can see their electricity usage.

These standards will build on the 15.5 million smart meters likely to be installed by 2014. “You think about Superstorm Sandy and about how woefully inadequate our grid is today,” says Pernick. “This utility of the future concept and the emboldened grid are very important. We still think that’s one area of big opportunities in the next administration.”

Expect more large-scale grid investments, too. The Federal Energy Regulatory Commission just finalized Order 1000, a rule that will require transmission planners to consider state renewable energy standards when building new lines. Bloomberg analysts say the policy will “turbocharge” a next-generation grid and help support more than $100 billion in new transmission investments by 2022.

Moving forward, the military will be one of the biggest forces pulling all of these programs together. The Interior Department and Department of Defense recently signed a memorandum of understanding that would open up 16 million acres of land for wind, solar and geothermal projects to power military bases. In 2012, the Army solicited $7 billion in contracts for renewable energy projects – part of a broader effort to expand on-site generation and develop distributed micro-grids for military bases. And the military is investing $510 million over three years to develop cellulosic and algae-based biofuels for its so-called Great Green Fleet.

“We’re seeing some pretty ambitious stuff,” says Sklar. “Whether it’s the new fuel standards, the military’s commitment or all the federal procurement programs, the administration is making some interesting plays.

Of course, there will be enormous political and market-based challenges across the board.

The balance of power in Congress is unchanged, making passage of any comprehensive legislation benefiting the industry unlikely. In addition, prominent free-market groups are working to repeal state-level efficiency, renewable energy and smart growth programs around the country.

At the same time, the energy market is undergoing immense change. The boom in unconventional oil and gas will continue to challenge the renewable energy market; solar and advanced battery manufacturers will likely continue to struggle due to pricing pressures; and consumer demand for clean technologies will be shaky along with the sluggish economy.

But those forces are not enough to stop the growth of cleantech, a sector that has become a central piece of global economic competitiveness, military planning and corporate strategy. With the Obama administration firmly behind the industry and much of the election-year fighting in the past, the next four years will bring a range of new opportunities for cleantech companies operating in the U.S.

Says Sklar: “I believe the country has reaffirmed its commitment to this sector in all its forms.”

The post Cleantech & Obama: Round 2 appeared first on Corporate Knights.

A prolific writer – he has written more than 150 articles and 15 books – Mintzberg is considered one fo the most thoughtful, provocative and critical thinkers on management. And, from an economics perspective, he asserts that our global economies are out of balance and tilted too much in favour of the private sector. The result is an unsustainable path gripped by political paralysis. The answer? Mintzberg calls for a radical renewal that brings the public, private and plural sectors – the latter representing non-governmental organizations and member-owned businesses with each other. This, he argues, will lead to responsible business, respected government and robust, interactive communities. Corporate Knights first interviewed Mintzberg in 2009. Below is an excerpt from a more recent chat that took place in the fall:

CK: When you say you believe in something because it’s impossible, what do you mean by that? What inspires that?

MINTZBERG: All change seems impossible, but once accomplished it’s the state you’re no longer in that seems impossible. You can look back and say, how did we ever tolerate that? How did the Americans ever tolerate an electoral college and how could they have tolerated the process by which a minority of voters can put someone in office?

CK: You’re working on a new book, to be released this year, that hits on topics such as balancing society, radical renewal, and moving beyond the left, right and centre. Can you give us some insights into what your core thinking is with this new work?

MINTZBERG: What I’m arguing is that since 1989, after the fall of the communist regime, the assumption was that capitalism had triumphed. I think that was a mistake. I think that balance had triumphed in the sense that we (the western world) were roughly in balance and that the eastern European countries were totally out of balance on the side of the public sector. Because we misinterpreted that, we are now swinging out of balance in the private sector – that is, cutting regulation, reducing taxes on the wealthy, the amount of tax increases in regressive taxation like sales tax. So we’ve swung out of balance and what I’m saying is a balanced society leads to responsible businesses, respected governments and robust communities, or what I call the plural sector.

CK: What is the role of large corporations in this rebalancing?

MINTZBERG: I don’t think companies are going to solve this problem. Responsible corporations will not make up for irresponsible corporations. There are too many irresponsible corporations. I applaud the responsible corporations but green retailing is not going to make up for greedy drilling. So social responsibility contributes and it’s important, but it’s not going to be the starting point or the main point. On the other hand, I think it comes in once plural-sector organizations, through social initiatives, show the way. So what you have today are thousands of fascinating social initiatives all over the world based on microfinancing. These didn’t confront banking, they went around it. They created a way for people who couldn’t get loans to get loans. That’s an example of social initiative. Once that starts happening – and you see this with microfinancing – then the regular banks can say maybe we can do that, too. You get responsible reforms.

CK: I guess this is a bit of a loaded question, but would you say financial capitalism has been more parasitic than symbiotic with respect to the planet and society?

MINTZBERG: Unbalanced, probably yes. I’m not sure the word parasitic is the right word, but yes. My vocabulary is to compare exploring corporations with exploiting corporations. Exploiting and parasitic mean the same thing. Apple would be a classic example of an exploring corporation that contributes enormously and in fascinating ways and does extremely well, although it also does its share of exploiting in certain respects. But there are too many exploiting corporations.

CK: There are some global initiatives, led by big corporations, which are aiming for the highest common denominator policies – i.e., policy changes that lead to market rewards for responsible leaders and increase market costs for the laggards. What do you think of this approach?

MINTZBERG: It sounds fine. But there are a couple of things. One is that the smaller companies behaving responsibly may not get the publicity that the bigger companies would get, so they may be at a disadvantage in that perspective. The other thing is that you can build up goodwill and blow it in an instant with a new mercenary chief executive who starts exploiting. Delta Air Lines was revered years ago for the treatment of their employees and look what happened? The trouble with working for a company today is that no matter how good it is, like Johnson & Johnson, you don’t know if some new mercenary is going to take over and just kill it in a year or two. It happens so often these days with executive bonuses and stock market forces.

CK: This seems a pretty good reason to improve the rules of the game – to rebalance, as you might say.

MINTZBERG: Right now it seems to me that it pays to be good. The trouble is that it also pays to be bad. You can make a lot of money being bad, and by bad I mean the letter of the law. Bear in mind, too, the company may be destroyed in the long run by irresponsible behaviour. But the chief executives are walking out with massive bonuses before that happens. So it pays the chief executive to be bad, but it doesn’t pay the corporation in the long run.

The post Getting back in balance appeared first on Corporate Knights.

Let’s tackle the first. Marsden explains why the 2009 Copenhagen conference failed, and why the 2010 conference in Cancun did not do much better (the book went to press before more of the same happened in Durban). He tries to make the politics of these conferences interesting, with secret drafts and forgeries of treaties flying around the back rooms. But in the end, all of these conferences fail to deal with the main issue: “the refusal of both industrialized and emerging nations to reduce their emissions significantly enough to avoid runaway climate change.” In other words, self-interest trumps climate. Next week’s sale of a barrel of bitumen in Alberta, or container full of junk from China or BMW from Alabama, is more important than the climate change that, in the minds of some, may not be such a terrible thing in the end. There is, after all, a lot of oil and natural gas locked away under that melting Arctic ice!

The chapter where Marsden writes about the opportunity in the Arctic is one of the most fascinating, because it puts paid to the theory that people are simply thinking short term about climate change. The disturbing truth is they are thinking seriously long term about how climate change impacts the Arctic. As the Russian ambassador says, “The 21st century will see a fight for resources, and Russia should not be defeated in this fight.” Norway is buying 48 fighter bombers and planning to deploy more troops in the Arctic. The United States is drawing up an “Arctic roadmap for the navy” and is building icebreakers. Even China is building icebreakers. A melting ice cap borne of climate change is just another golden opportunity to exploit a natural resource.

Marsden’s two narrative arcs meet in the Far North, where he goes to see and report on the effects of climate change, and where Arctic nations are getting ready to divvy up the spoils. He then takes us to political hot spots in California and Cancun. In California, Marsden demonstrates how big oil, the Koch brothers and other corporate forces tried to stop action on climate change, aided and abetted by their purchased delusional politicians. In Cancun, Marsden tells us how appalled he was that China, Brazil and India got a free pass:

“The agreement (struck in Cancun) gave China, India, Brazil and any other country determined to grow its economy a blank check to spew whatever emissions it deemed necessary for economic growth and poverty eradication. When you consider that the poverty in countries such as India and China is largely of their own making, it is difficult to understand why they would get a free ride. Their poverty is intimately linked to overpopulation and poor governance, for which these countries alone are responsible.”

Those are strong words that many would disagree with, particularly when one considers the kind of governance taking place in western democracies these days.

But most troubling is the last chapter, The Trouble with our Brains, “in which we contemplate the human reluctance to change and how to solve the dilemma of global warming.” After pages on the science and psychology of our brains which lead nowhere, Marsden concludes with the purplest of prose: “Climate change is a revolutionary force poised to roll over our capitalist world with a furious vengeance. It was our slavish devotion to the corporate creed and its contempt for human frailty that created global warming and now the monster mocks us and everything we have come to stand for.”

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