Meanwhile rising inflation is driving growing discontent, as a third of us are unable to pay our bills on time, and polls show that 39% are worried about the rising cost of living. The economic landscape is grim for young people who are locked out of the housing market. It is even grimmer for many people of colour and Indigenous people , one in four of whom live in poverty, including 40% of their children. Is it any wonder that many people have concluded that the world is stacked against them and democracy is failing them?  

To reduce this injustice, we need to address inequality’s root causes, which lie within traditional practices of money creation and land ownership. We need to implement ways to change the reality that when the return on capital outstrips the rate of growth, inherited wealth will always grow faster than earned wealth, as the French economist Thomas Piketty has been at pains to point out. And we need to do this now, while the windows of change are wide open: popular support for reducing inequality is at an all-time high of 82%.  

It may seem overly simple to whittle this immense issue down to a list of a few solutions, but hear me out. These are the distillation of complex steps to solve a complicated problem.  

1. Fair banking for all

How many businesses can create a new product for no cost at the simple click of a mouse?  

You might think this isn’t possible, and yet this is how banks operate. They create money as loans and charge interest on it. When the Bank of Canada raises interest rates and a homeowner with a mortgage sees their rate increase to 6% from 3%, the banks double their income with little additional effort.  

Those who have capital to invest or who own shares in a bank get richer, thanks to those who are now paying more on their mortgages. The solution is to make banking a community, cooperative or public service that can create money at very low interest, or at 0% with a fee to cover costs and losses. In Western Europe, public banks hold US$12 trillion in assets. In Germany, 40% of all banking assets are held by public or community banks. 

Central banks also create new money, adding it to the economy to head off a crisis without need for repayment. If that new money was distributed equally to everyone, or preferentially to people on low incomes, it would have the same effect of stimulating demand and reducing financial fear, but that’s not how it’s done.  

Since 2008, the world’s central banks have given US$33 trillion in newly created money to banks and corporations by buying risky assets off them; they have not given any of this money to the public. This has been the primary driver of the recent dramatic increase in inequality.  

It has caused stock markets and housing prices to soar and those who own such assets to get richer, while those on the borrowing side of the divide who don’t own property have continued to struggle. This has created a permanent distortion in the economy, favouring the wealthy. The solution is for the federal government to change the Bank of Canada’s mandate, requiring it to exercise its money-creating powers for the benefit of all Canadians, not just for those who are already rich. 

2. Universal basic services for all

Universal basic income sounds nice. The idea is that regardless of need or work status, every citizen is given a monthly sum from the government. But British authors Anna Coote and Andrew Percy have found no evidence that universal basic income can live up to the ambitious claims made for it. They argue that it makes more sense and is more affordable to invest in universal basic services, including affordable childcare and adult social care, affordable housing, affordable public transport and affordable broadband.  

 If the cost of rent can be held at $700 to $1,000 a month, rather than $1,500, that’s a basic income equivalent (BIE) of between $500 and $800 a month. If a community has affordable transit, great cycling and walking trails, as well as a car-share cooperative (so that you don’t need to own a car), that’s a BIE of between $300 and $500 a month.  

 Childcare costs $1,000 to $1,500 a month, so $10-a-day childcare becomes a BIE of $800 to $1,300 a month. All combined, excluding affordable adult social care, these measures come out to between $1,600 and $2,600 a month, which is a pretty good basic income. 

3. Social inheritance bonds for all 

 Most of the wealth we enjoy today stems not from our efforts, but from those of our ancestors. It is a social inheritance.  Inheritance laws, by contrast, assume that we earn it all, resulting in huge payments to the children of the rich. In Canada there is no inheritance tax, further widening the inequality divide.  

 The solution is to tax all inheritances above (for instance) $250,000, to invest the income in a Social Wealth Fund managed by the government, earning a typical 3% a year, and to use the income to establish social inheritance baby bonds. These bonds would give every newborn child a gift of $1,000, and up to $2,000 for babies in the lowest-income families, to be topped up by that much again on each birthday. When the child reaches its 18th birthday, these bonds could be withdrawn for a list of allowable uses such as studying, starting a business or buying a home. During that time, the nest egg for a child from a low-income family would grow to around $46,000, entirely transforming that person’s sense of opportunity.

4. Higher education for all  

When people don’t have equal opportunity to learn career skills through higher education, it makes the inequality divide ever wider

Around 62% of Canadians between the ages of 25 and 64 have some kind of higher education – the highest in the world – but that still leaves 38% who don’t. The solution is to make higher education free for all who can’t afford to pay, as it used to be in the 1970s and as it is in many European countries, and for full-time students who are residents of Quebec. Early childhood education is another way to increase equality of opportunity. In prosperous Canada, there are spaces for only 27% of our children. The solutions are quality training for early childhood educators, as in Finland, where they require a bachelor’s degree, and quality affordable $10-a-day childcare, as B.C. is introducing.  

5. Affordable housing for all  

On one side of the inequality divide, two-thirds of Canadians own a home. On the other side, a third of Canadians either pay an average monthly rent of $2,043 (15.4% more than last year), or they live with their parents, or have no home at all. Two earlier “Big Solutions” columns laid out the solutions, including transitioning rental properties to community ownership, so I won’t say more here.  

 Let me just pose a question. How many MPs, MLAs and MPPs own their homes? If our legislatures reserved a third of the seats for lower-income renters, think how different our housing policies might be. 

 6. Fair work for all

Those who are already wealthy get more income by investing it, as the French economist Thomas Piketty demonstrated in Capital in the Twenty-First Century. The rest of us need to work.  

 Canada’s average wage may be $36 per hour, but this means that many working Canadians earn much less. In 1998, 5.2% of Canadian workers earned only the minimum wage. By 2018, this had doubled to 10.4% (15% in Ontario), almost half of whom are over 25. The first essential solution is more participation by labour unions.  

 During the 1950s and ’60s, Canada’s CEOs earned 30 times more than their employees. In 2020, Canada’s 100 highest-paid CEOs were paid an average of $10.9 million a year, 191 times more than the average worker.  

 When employees play an active role on company boards through their unions, there is a smaller range of salary scales, greater investment by workers in their firms’ strategies, and higher productivity. In Germany, workers elect representatives to a third of the seats on the boards of companies with between 500 and 2,000 employees, and half the seats in companies with more than 2,000 employees.  

 The second essential solution is employee ownership, making it easy for an owner who wants to retire to sell to the employees. The way to achieve this is through an employee ownership trust, which Toronto-based Social Capital Partners is working to achieve, and which the federal government has said it will create.  

 An American study found that household wealth is 92% higher among employee owners than among employees in traditionally owned firms. In the U.K., 200 companies have been sold to their employees by this means, creating 20,000 new employee owners. 

7. Fair taxation for all

According to polling conducted by Abacus Data, 62% of Canadians feel that the country’s tax system is unfair, and 89% of us support the idea of an annual wealth tax on Canada’s richest people.  

 A 1% annual tax on wealth over $10 million, 2% over $100 million, and 3% over $1 billion would generate $26 billion a year, according to an analysis conducted by the Canadian Centre for Policy Alternatives. A 25% tax on the foreign profits of Canadian corporations would generate $20 billion a year.  

 Increasing corporate income tax from 15% to 20% would generate $11 billion a year. A tax on 100% of realized capital gains, instead of allowing 50% to be tax-free, would generate $20 billion a year. A similar tax on corporate capital gains would generate $19 billion a year.  

 Along with other measures, these changes could generate $100 billion a year, which would go a long way toward funding free college education and universal basic services for all. If we could also end personal and corporate tax avoidance, this would generate an additional $13 billion to $30 billion a year. I could add declaring a debt jubilee, but that’s complicated, so I’ll leave it for another time. 

 Taken together, these solutions would lessen those feelings of injustice and build a Canada that is fair for all. What would it take to make them happen? Far greater coherence and a wider reach of imagination in policy debates about poverty and inequality. A willingness by politicians to show leadership in this realm. And far stronger demands from ordinary Canadians. The level of inequality that has crept up on us is hurtful, harmful and politically dangerous.  

Guy Dauncey is the author of Journey to the Future: A Better World Is Possible.  

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In an age of corporations taking stands on social issues, some companies reacted to the news with strong statements supporting a woman’s right to choose. 

Before the draft decision leaked, a growing list of companies, including Apple, Salesforce, Citigroup and Yelp, had already spoken out against new state laws restricting abortions or announced they would change their benefits to help employees travel to ensure access. 

On the same day of the leak in early May, Amazon announced that it would provide up to $4,000 to employees to travel for medical treatments they couldn’t get within 100 miles of their homes. Other companies, such as Microsoft and Starbucks, followed suit, saying they would also cover travel costs.

“It is a great thing that companies are willing to do this, and I think it really defines what social responsibility for companies looks like,” Christian Nunes, president of the National Organization for Women, recently told Fortune.

Though Amazon has said it will help employees in affected states access abortion services, Popular Information reports that the e-retail giant has donated almost US$1 million to anti-abortion political committees since 2016. Some of the other top contributors to anti-abortion committees include AT&T, Citigroup, Coca-Cola, CVS, Google, Walmart and Verizon.

It is a great thing that companies are willing to do this, and I think it really defines what social responsibility for companies looks like.

-Christian Nunes, president of the National Organization for Women

And many of the United States’ largest companies have stayed quiet on the issue. After the draft decision was leaked, Yahoo Finance reached out to the 72 largest corporations with women CEOs to see how they planned to respond to potential changes in abortion laws (and whether they planned to expand their benefits to employees in affected states). Only two responded: CVS and Citigroup. 

Even though more than 61% of Americans say abortion should be legal in all or most cases, many companies are reluctant to comment on the issue. Some analysts say corporations may be waiting to see the final decision before jumping in. But others believe that Disney’s treatment by Republicans in Florida after it (belatedly) voiced its opposition to the so-called Don’t Say Gay bill could be having a chilling effect. The Florida State government stripped Disney of a special operating status. 

By no surprise (and likely fearing the same kind of backlash from the right), Disney has been silent on the draft decision on abortion. 

Citigroup may be about to face a similar punitive action from state legislators in Texas for its policy covering travel expenses for employees seeking out-of-state abortions. Texas State Representative Briscoe Cain has said he will introduce a bill that bars Citigroup from underwriting municipal bonds in the state unless it backtracks on its policy. 

While many companies may not want to wade into the latest hot-button topic in the United States’ culture wars, they may have little choice in the weeks and months ahead, as the midterms approach, and reproductive rights are sure to be a ballot box issue. 

“Employers who profess to uphold abortion rights need to prepare a plan for supporting their employees as they carry the fight to the next stage this summer and into Election Day 2022,” writes Tina Casey on TriplePundit. 

UPDATE, June 28, 2022:
Since the Supreme Court released its decision overturning Roe v. Wade, more companies have come forward saying they will cover travel expenses for any employee unable to access abortion services in their state. On Friday, Disney, Meta and others announced they would adopt such a policy, as trigger bans started to go into effect in a number of states. Patagonia went a step further, promising it would pay for the bail of any employee arrested while peacfully protesting the court’s decision.

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At the same time, inequality makes it harder to fight climate change, partly because it corrodes the social trust we need to work together for the common good. Climate tools like carbon pricing often make it more expensive to heat homes and tank up vehicles, which could be particularly burdensome for poor families.

Canadian carbon pricing is better designed than that. About 70% of families get more back from federal climate rebates than the fuel charges they pay. But we’re still rather stuck. Canada’s climate pollution remains stubbornly high, with the worst reduction record in the G7. And inequality is just as high as it was 50 years ago.

Canadians have not engaged very productively with the debate about whether the climate crisis and inequality are competing causes in a zero-sum game. But our neighbours to the south are showing us that bold public policy can improve them both at the same time.

U.S. President Joe Biden’s Justice40 initiative promises that at least 40% of the benefits from federal investments in climate and clean energy will flow to disadvantaged communities. This would be a major shift from past approaches. As the White House Environmental Justice Advisory Council notes, front-line communities are routinely left behind in the competition for government funding, because of bias, inertia and a lack of capacity. Even if there is no racial bias, organizations that are well resourced with people, technology, know-how and connections are better able to obtain government funding than those most in need.

In the hope of changing this trend, this summer the White House directed 21 federal government programs to immediately start enhancing benefits for disadvantaged communities. Each agency must define “benefits” and “disadvantaged communities” for its programs, including flood mitigation assistance, lead hazard reduction, and loans and grants to farmers for renewable energy and energy efficiency. Each program is tasked with conducting meaningful community engagement, evaluating the distributional effects of their programs, and deciding how to modify them.

Inequality makes it harder to fight climate change, partly because it corrodes the social trust we need to work together for the common good.

At the same time, five U.S. non-profits got together to help front-line communities apply for the new federal money. In August, their Justice40 Accelerator gave $25,000 plus guidance to each of 52 environmental-justice-focused community organizations, so they’ll have staff, computers and know-how to apply when Justice40 grants are available.

Inequality in Canada is not as extreme as it is in the U.S. Measured by the Gini coefficient, Canadian inequality is roughly the same as it was 50 years ago. Still, many Canadians say they can’t worry about the climate breaking down in 20 years if they can’t make the rent in three weeks, particularly if they don’t see how climate policies will benefit them. A version of Justice40 in Canada could help build public support for climate action and increase our ability to withstand the worst effects of climate breakdown.

The good news is that many climate policies would be of particular benefit to disadvantaged communities. For example, Vancouver is focusing on energy retrofits of low-income and social housing to reduce fossil fuel use, climate pollution and operating costs while creating good green jobs and supporting local businesses. Typically, these buildings are cheaply built and poorly maintained, expensive to heat and uncomfortable to live in. Fixing them would boost the clean economy while giving residents more comfort and dignity.

Low-income residents also live in the dirtiest air and would benefit the most if it were cleaned up. What makes their air so dirty? Fumes from gas- and diesel-powered vehicles, especially older cars and trucks. A generous cash-for-clunkers program can get these vehicles scrapped. A 2009 U.S. program was so popular it ran through its $1 billion of funding in weeks.

Plus, it’s easy now to provide better ways to get around. Halifax is planning electric buses on dedicated lanes to reduce climate, toxic and noise pollution. Low-income and disabled residents are particularly dependent on good transit and benefit the most from not having to own a car. Dedicated transit lanes are the cheapest, fastest way to improve speed, service and reliability. Halifax Transit expects to save $24,000 a year per electric bus on operating costs because they require less maintenance and use no gas. The city also anticipates that its plan will reduce congestion and servicing costs while increasing property tax revenue.

Better transit, in turn, improves the case for eliminating requirements for developers to build parking in their buildings, as Buffalo and Edmonton have done. This makes housing less expensive and facilitates smaller-scale developments in walkable locations. This can also reduce the amount of concrete used in development, as underground parking lots require a lot of the material, which has a heavy carbon footprint.

Then there is urban greening. Low-income communities tend to live in heat islands with few trees. Tree planting helps to improve mental health, sequester carbon, catch rainwater, clean the air and cool the surrounding area. In the U.S., a new tree-planting project aims to help combat climate change, boost well-being and support economically disadvantaged areas. Tazo, a tea company owned by consumer products group Unilever, and the U.S. conservation organization American Forests have partnered to bring “Tree Equity” and urban forestry jobs to low-income areas in five American cities.

These examples show that considering inequality when choosing climate policies can improve environmental justice while protecting the more stable climate upon which all of us depend. Doing both at once may not be easy, but we’ve run out of time to leave either goal behind. Those demanding justice now won’t wait until the climate crisis is solved, and climate action can’t wait because reckless burning of fossil fuels will soon push the goal to limit warming to 1.5°C (i.e. a stable climate) out of reach. Lucky for us – we can do both.

Dianne Saxe is an environmental lawyer, a former environmental commissioner of Ontario, and the deputy leader of the Ontario Green Party.

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At the same time, as American billionaire hedge-fund manager Ray Dalio recently acknowledged, “capitalism is a fundamentally sound system that is now not working well for the majority of people.” He warned that “the income/wealth/opportunity gap is leading to dangerous social and political divisions that threaten our cohesive fabric and capitalism itself.”

That gap threatens the social contract in Canada and around the world, particularly as environmental impacts grip our planet. To heal those divisions, Canada will need to close the political-posturing gap between western and eastern politics through meaningful, inclusive economic policy. To do so, we’ll need leadership that goes beyond platitudes and party politics, setting partisanship aside to put people ahead of political ideology.

Corporations are already on board. Driven by investment firms and pension funds, much of the business community has been rewiring capitalism and pivoting to a low-carbon economy and committing to purpose beyond profit. According to the Global Sustainable Investment Alliance, more than 40% of all professionally managed assets (US$47 trillion worth), as of 2018, use some form of social-responsibility criteria. Canadian banks, insurance companies, building companies, agriculture companies and energy firms are committing to disclosing their climate risks and improving their performance on environmental, social and governance (ESG) metrics. We need to go much further; it’s where the smart money is going. We just need competitive government policy to catch up.

Corporations are already on board.

We just need government policy – and leaders – to catch up.

As Harvard Business School professor Rebecca Henderson writes in her recently released book, Reimagining Capitalism in a World on Fire, “I’m not talking about a distant utopia. It’s possible to see the elements of a reimagined capitalism right now, and to see how these elements could add up to profound change – change that would not only preserve capitalism but also make the entire world better off.”

A just transition to a net-zero world underpinned by fierce capitalism (capitalism that prioritizes inclusive growth across our country) requires an economy and society where no one is left behind, be that working mothers or energy workers. The components of an inclusive transition should include removing barriers to employment systems, providing access to education suited to the new marketplace, and increasing the availability of affordable housing, as examples. But this is where political ideology, political rhetoric and partisanship can get in the way. Instead of the “S” in ESG being the launch point to depolarize discourse, it becomes the wedge between left and right.

Depolarizing the process is difficult. The divisions caused by gender, racial and economic inequality and inequity are threatening to boil over, and COVID-19 has only deepened those fissures. The only way to move forward is for businesses to continue to recognize that shareholder success is intertwined with societal equity, for our political leaders to usher in policies that reflect the time and pave the way for a sustainable, inclusive future.

Henderson writes, “Reimagining capitalism through the push to create shared value, rewire finance, and find new ways to cooperate will make an enormous difference, but on their own they are not enough to build a just and sustainable society. Effective government action is the missing piece.” Our world is changing, yet our political processes, deal-making and lobbying remain the same.

Being inclusive with a reimagined capitalist framework that is uncompromising in its efforts to win at both social and environmental issues and private-sector growth is what it’s going to take to have a thriving society.

Changing capitalism so it’s a system that works for the majority will require leadership, conviction and, above all, the will to effect change. By embracing fierce capitalism that prioritizes inclusive growth across our country, Canada can set the stage for an economic resurgence the likes of which we have not yet seen.

Sandip Lalli is a business strategist based in Alberta.

This article is part of a series of stories from our Winter Issue cover package: What it will take for us to get the climate message before it’s too late.

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The #MeToo movement has shone a welcome spotlight on gender inequality (while highlighting how much work remains to be done). In Cape Town, the drought and resulting restrictions on water use provided a stark illustration of the growing scarcity of water and its consequences, while the surge in battery production has shone a spotlight on child labour and working conditions in the Democratic Republic of Congo.

A plethora of climate rules and regulations has been introduced over the last year, most successfully in California, which mandated that 100 per cent of its electricity will come from renewable sources by 2045 along with a raft of other measures. But linking a law with climate change doesn’t automatically make it good policy – France’s Emmanuel Macron had to back down on plans to pay for new renewable energy with a carbon tax on fuel.

As Joss Garman of the European Climate Foundation wrote: “Macron’s policy didn’t fail because it taxed carbon. It failed because it was a bad, regressive policy that hit the poorest hardest.”

In the corporate world, there have been some significant breakthroughs, too: Royal Dutch Shell became the first oil and gas company to commit to binding emissions reduction targets; the world’s largest shipping company, Maersk, announced it would be zero-emission by 2050 even as it admitted it did not know how it would get there; one of the biggest carmakers, Volkswagen, announced that its last internal combustion engine car would be launched in 2026.

Meanwhile, the costs of renewable energy and batteries continue to plummet and a growing number of companies have committed to move to 100 per cent renewable electricity or to cut their emissions in line with a 2°C future through initiatives such as RE100 and the Science-Based Targets. For the first time, developing countries installed more renewable energy capacity than fossil fuel power plants this past year, according to Bloomberg New Energy Finance.

The corporate world is increasingly aware of the consequences of failing to deal with environmental, social and governance issues – from the ever-more obvious impacts of climate change, to issues ranging from Facebook’s travails over the use of data and Goldman Sachs’ involvement in the 1MDB scandal in Malaysia, to the sudden need of retailers, food and beverage producers, apparel makers and others to tackle plastic pollution.

In an age of greater transparency, consumers, employees, civil society but especially investors are pressuring companies to act. Shareholders are better informed, better organized and more outspoken than ever before.

In part, this is because they have more data, and new technology such as artificial intelligence, machine learning and big data techniques is enabling them to use it more effectively. But they are working together more, as well, through initiatives such as the Task Force on Climate-related Disclosures and Climate Action 100+, which targets the world’s biggest emitters of greenhouse gases.

It is increasingly clear that performing well on sustainability issues goes hand in hand with financial outperformance, which is why investors and corporations are embracing it more than ever.

Click here to return to the 2019 Global 100 landing page.

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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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Five environmental groups and one farmer’s union are working together to dissuade Health Canada from approving a new systemic pesticide that could prove harmful to bees, birds, small mammals and other organisms. The pesticide, called flupyradifurone, attacks the nervous systems of insects and has the potential to contaminate pollen, fruits and seeds of plants. Bees and other pollinators, for one, are already having a hard time coping with the effects of neonicotinoids, which is widely believed to be a major cause of mass bee die-offs. “Scientists have called for a global phase-out of neonics. The last thing we need is another systemic pesticide contaminating the environment,” said Karen Eatwell, a spokesperson for the National Farmers Union. Health Canada has initiated a public comment period on its proposed approval of the new pesticide, says the group, which includes the Sierra Club Canada Foundation and the David Suzuki Foundation. Comments are being received up to November 3.

32 countries at “extreme” risk of conflict

An analysis of 198 countries has identified 32 nations that are most likely to experience conflict and civil unrest as a result of climate change. Bangladesh was found to be the most at-risk country in the world, followed by Sierra Leone, South Sudan, Nigeria and Chad, as well as island nations the Philippines and Haiti. Perhaps even more alarming is that growth economies like Cambodia, India and Pakistan are also on the “extreme risk” list, raising an important question about how much climate change could destabilize our increasingly globalized economy. Maplecroft, the analytics company that produced the report, said that one unifying characteristic of all these economies is their heavy dependence on agriculture for job creation and growth. “Changing weather patterns are already impacting food production, poverty, migration and social stability – factors that significantly increase the risk of conflicts and instability in fragile and emerging states alike.”

85,000 buildings in NYC flood zones: Report

You can bet insurance companies are taking note of this one. A policy brief released this week from the Office of the New York City Comptroller has determined that 84,596 buildings and 400,000 residents in NYC now lie within the so-called 100-year flood plain thanks to the rising effects climate change. The building count more than triples the previous estimate from 2010 and represents property value of nearly $130 billion, according to the analysis. The new estimate came about because of the $14 billion in devastation caused two years ago by Hurricane Sandy. “With such immense value arrayed along the city’s coast, we must act now to make the necessary investments to protect our homes, our businesses and our neighborhoods from the future effects of climate change and the potentially destructive force of another hurricane,” the brief states. “While the costs of resiliency projects are high, investing in the city’s future will pay enormous dividends, both to our waterfront communities and our broader economy.” The brief follows a report from the Union of Concerned Scientists that urges eastern and Gulf coast communities to prepare for chronic flooding over the next 15 and 30 years. To assist with adaptation, New Jersey just launched its Energy Resilience Bank, also in response to Hurricane Sandy. The bank will spend $200 million (U.S.) toward development of distributed energy resources at critical facilities so they can stay operational during outages caused by extreme weather. As Corporate Knights’ Ashley Renders reported today, Canada isn’t immune to the expected rise in flooding events. Unfortunately, it is the only country in the G8 without overland flood insurance.

Climate depression… It’s real

If all of this news about flooding and conflict is getting you down, you’re not alone. Madeleine Thomas at Grist.org wrote an insightful piece this week pointing to the struggle some climate scientists, environmentalists, and other “frontliners” are having with anxiety and depression as a result of climate research. “From depression to substance abuse to suicide and post-traumatic stress disorder, growing bodies of research in the relatively new field of psychology of global warming suggest that climate change will take a pretty heavy toll on the human psyche as storms become more destructive and droughts more prolonged,” wrote Thomas. “For your everyday environmentalist, the emotional stress suffered by a rapidly changing Earth can result in some pretty substantial anxieties.” Corporate Knights had a story on this important but underreported issue in our Summer 2014 magazine. Two years earlier, we ran a feature looking at the impacts of climate change on the mental health of employees working at companies perceived to be contributing to or solving the problem.

Tall travellers of the world unite!

The problem tall people have sitting in airplane seats isn’t really comparable to climate change, but it can cause considerable stress and discomfort – particularly for long flights, and when the person sitting in front insists on permanently reclining their own seat. As The Economist’s business travel blog wrote this week, “Spending three hours wedged into a seat that cannot physically accommodate your legs may not technically qualify as medieval torture, but it’s a close call.” The blog points to the fact that many airlines now accommodate extra-large – that is, heavier – passengers by finding them a complimentary second seat that allows them to spread out. So, it asks, why not adopt the same policy, official or otherwise, for tall people? It’s a reasonable suggestion, and such a call for civility would only be fair. After all, tall travellers have a proud history of helping their shorter peers get their luggage into and out of overhead compartments. But as one of Corporate Knights’ Twitter followers replied, “KLM would go out of business” with such a policy. True, those Dutch folks are pretty tall. But we love them just the same.

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In September last year, some 300 workers died in a garment factory fire in Pakistan, many because they were trapped behind locked emergency exits. Six months later, another 1,100 seamstresses were crushed to death when an eight-storey building collapsed in Bangladesh, despite warnings it was unsafe.

As the multi-trillion-dollar textile industry struggled to respond to these tragedies, the much smaller global toy industry was able to call on a resource no other consumer product industry can match.

In short order, big toy brands and retail members of the International Council of Toy Industries (ICTI) were able to tap into a one-of-a-kind database they have built over the past decade known as the ICTI CARE (Caring, Awareness, Responsible, Ethical) Process (ICP).

The trove of data, which includes wage rates, hours worked, worker age and 200 or so other metrics at thousands of toy factories, allowed big toy buyers to rapidly identify manufacturers located in the areas affected by the recent labour disasters for focused follow-up. Within weeks, industry executives started to develop and roll out tougher rules to all of the factories in the ICP network, guiding inspectors to enforce stricter requirements for fire escapes and building integrity.

The quick response was made possible by a combination of ICP’s carefully cultivated industry collaboration together with a recent decision to port its unique database onto a web-based platform provided by Enablon, a supply-chain software service provider founded in 2000.

“Not long ago, this sort of information was considered proprietary. A single factory might have two dozen clients, but they didn’t want to talk to one another, for fear of competitive disclosure” says Philippe Tesler, co-founder and CEO of Enablon North America.

A combination of factors has rewritten these habits. There’s a growing recognition that risks can be lowered and costs minimized through collaboration. “Reporting has gone from a defensive response to a more proactive process,” says Tesler.

Back in 2002, the toy industry was facing a series of relatively small-scale labour mishaps at overseas factories. “Pressure was building from retailers, from consumers, NGOs [non-governmental organizations] and investors to boost regulation,” recalls Christian Ewert, president and CEO of the ICTI CARE Foundation, which oversees the supply chain program.

Instead, the industry group pushed for self-regulation and established the ICP, a framework in which toymakers would share and compare information towards the end of “ensuring safe and humane workplace environments for toy factory workers worldwide,” says Ewert.

Notably, the ICP was established as a standalone not-for-profit, overseen by a board that includes NGO and civil-sector experts, and on which active toy industry executives are in a minority.

Streamlining inspection efforts has been a central priority from the beginning. When Ewert started in the toy industry in the 1990s, he worked with a manufacturer that faced 64 audits per year, each asking for similar information. “I’d much rather have seen those auditors inspecting 64 different factories, rather than the same factory 64 times,” he says.

The move to Enablon’s platform has helped transform this process from a cumbersome paper chase into a more scalable, easier to use and fast-evolving technology. On a factory floor in China, auditors and factories can input data wirelessly. On the other side of the planet, ICP members can log in and tweak standards on the fly, and do deep data analysis across the factories they are working with.

Today, the system tracks data on roughly 2,500 factories that employ some one million workers. Most are based in China, home to a vast majority of the world’s toymakers. Just 1,600 factories are currently certified as meeting ICP’s criteria. New factories join each year, but year to year about 13 per cent lose their approved status.

The most frequent causes for such a loss? A lack of transparency about whether workers are paid correctly or companies are demanding too many hours of work, says Ewert. Picking up such malpractice early can nip bigger problems in the bud, lowering the risk to corporate reputation.

“Companies don’t want to be named and shamed,” says David Metcalfe, CEO of Verdantix, an independent analyst firm focused on energy, environment and sustainability issues.

Over time, Metcalfe adds, the best employee health and safety plans can evolve to do more than protect workers. They can also proactively improve supply chain operations by identifying potential trouble spots, focusing corrective responses and avoiding the cost and hassle of switching factories following a crisis.

ICP, for example, goes beyond simply tracking auditors’ reports. It reaches out to workers directly. Factories are required to post a hotline to which workers can anonymously phone in problems. The organization receives up to 350 such calls per month. When the software detects a spike in calls from a given factory, ICTI CARE can increase its training efforts with both staff and management, before a crisis breaks.

And if early action doesn’t work, the threat of being de-certified is a potent motivator, says Ewert. After all, it’s not a single buyer pulling out, but the entire ICP network. Ewert is confident the transparency will continue to grow as technology advances.

“Workers can call us today,” he says. “In time, they’ll be able to send pictures of dangerous conditions too,” as smart phones emerge as another tool to help the industry identify and repair risks before they become tragedies.

Click here to view our complete Tech Savvy series.

The post Tech savvy: toys appeared first on Corporate Knights.

Having made our way through Lagos’ dingy airport, we were transferred by van to a hostel. As night fell we drove through a seemingly never-ending street market, a sea of Nigerians selling every conceivable thing out of baskets balanced on their heads, carts and mobile stalls. It was my first taste of the so-called Third World. I had never seen humanity on that scale and it was overwhelming.

Living in the West, the population explosion that has taken place in the last century reaches us in the form of numbers. Lagos, 10 million people when I visited it, is now home to 21 million. By 2100, the United Nations expects Nigeria at an estimated 914 million to be the world’s second-largest country after India and before China. The UN’s most recent projection envisions the world population in 2100 at 10.9 billion. That’s the medium variant; the high variant projects 16.6 billion, the lower 8.3 billion, depending on fertility rates, over which demographers bicker endlessly.

It all seems pretty abstract. But as the world’s population, currently at 7.2 billion, continues to grow, we’re becoming more aware of its impact: climate disruption, plant and animal species extinction, land degradation, ocean acidification, the spread of toxic compounds, increased susceptibility to infectious diseases, groundwater depletion and resource wars. It’s a depressing litany for which history offers little consolation; we’re not talking about the rise and fall of a regional civilization, like the Mayan or Egyptian, but the potential collapse of a global one.

Humans are good at denial. We’re also good at blaming others. And as British environmentalist and occasional Corporate Knights contributor George Monbiot points out, the rich white Western men that dominate the population control conversation are more inclined to blast the breeding habits of far-away brown people than to acknowledge the impact of their own overconsumption. The uncomfortable fact is that I, with my trans-Atlantic, first-worldly existence, will have consumed a whole lot more of the world’s resources in the last 20 years than probably all the yam vendors on that street market combined. In fact, Paul Murtaugh, statistical ecologist at Oregon State University, estimates that an American born today will produce a carbon footprint 86 times that of a Nigerian down the generations.

This fact can’t be taken to condone population growth in the developing world, providing it remains poor. Population-curbing support to the developing world is indeed worthwhile but it won’t solve the problem of overpopulation, let alone begin to address the arguably more egregious one of overconsumption. Begging the question of what, if anything, will.

Humankind is not grappling with this problem for the first time. Ever since populations began blossoming in the Industrial Revolution, cautionary voices have been raised. Writing in 1798, Reverend Thomas Malthus predicted that with human numbers increasing exponentially and food supply growing arithmetically, mankind was headed for a catastrophic crunch. Being a man of the cloth, Malthus’ recommendations were of a moral nature – abstinence and delayed marriage – but his morality did not extend to the poor or “defective” whose reproduction he thought should be forcibly prevented. Otherwise and less desirably, Malthus believed that war, disease or starvation would take care of the overpopulation problem.

While the Malthusian catastrophe was averted by advances in agriculture and birth control and his thinking subsequently roundly denounced for its pessimism and inhumanity, the notion that the unwashed masses threaten the well-being of the rich has proven remarkably tenacious. And his basic tenet, that human population will ultimately outstrip global resources, has gained currency with time. During the postwar boom of the last century as the world’s population growth peaked, reaching a 2.2 per cent annual increase in 1963, the World Bank, UN and major American philanthropic foundations made population control in the Third World top priority, more or less deaf to calls that what was needed as much as contraception was development aid aimed at reducing poverty and child mortality and improvements in women’s health and education. Soon developing countries were taking matters into their own hands. When Indira Gandhi declared a state of emergency in 1975, her son and advisor Sanjay implemented a sterilization program – initially voluntary and then forced – in which over eight million Indian men are said to have been snipped. In 1978, China introduced its one-child policy, which was only eliminated fully last month. It was credited by the Chinese government with having prevented the births of 400 million people.

The extent to which these measures kept the numbers down is debatable. Many, including Karan Singh, India’s health minister under Gandhi, maintain that it was advances in development more than sterilization and abortions that put Indian population growth in check – consider the difference between fertility rates in developed southern states like Kerala (1.6 children born per woman) versus impoverished northern ones like Bihar (3.4). Likewise, demographers of China will point out that fertility rates were already in decline when the one-child policy was introduced, and that with urbanization and poverty reduction, the population was bound to drop.

Not only is their efficacy questionable, such coercive measures cause collateral damage. The selective abortion of girls which has drastically skewed China’s gender balance, the notorious abuse of power by local bureaucrats trying to fill quotas or their own pockets by kidnapping and selling “illegal” children for international adoption – all these offend Western (Christian, human rights, feminist, democratic) sensibilities to the point that even today’s most vehement population control advocates won’t defend them.

India’s health minister maintains it was advances in development more than sterilization and abortions that put Indian population growth in check.

American ecologist Paul Ehrlich, for instance, who in the 1960s supported certain forms of coercion, including suspending food aid to countries deemed “hopeless,” now talks less about adding sterilants to drinking water than about empowering women and reversing wealthy countries’ tax systems so that additional children cost more. A biologist and butterfly specialist at Stanford University, Ehrlich is in no way anti-life. But he fears the worst and, within a generation, his concerns have migrated from the margins to the mainstream.

In his 1968 best-seller The Population Bomb, Ehrlich predicted that global overpopulation was going to cause imminent catastrophe in the form of widespread disease, famine and/or war. His critics don’t tire of reminding him that none of this came to pass. But as with Malthus, Ehrlich’s prognosis was followed by something of a miracle – the Green Revolution – in which agricultural yields and thus food supply were dramatically increased particularly to those parts of the world that needed it most.

But even Norman Borlaug, the so-called father of the Green Revolution, described these gains as “bought time” and took his 1970 Nobel Lecture as an opportunity to warn of the ongoing “magnitude and menace of ‘the Population Monster’.” Today, with 852 million people suffering chronic malnourishment, the vast majority in developing countries, Borlaug’s concerns have been validated.

It’s unlikely that the world is going to be blessed with another miracle. In fact, as Alan Weisman points out in his just-published Countdown: Our Last, Best Hope for a Future on Earth?, the next two billion people are going to have a more devastating impact on the planet than the last two billion did, as we scrape the bottom of various resource barrels. Modern-day cornucopians and free-market environmentalists who claim that technological advances will continue to support unfettered consumption of energy, food and stuff sound like increasingly deranged voices in a rather barren wilderness. Carbon capture, ethanol, genetically modified organisms, space colonization – none of these advances, if that’s what they are, are going to rescue us from ourselves. We are faced with the most inconvenient truth that we might actually have to change our own habits.

Is it too late, or as a paper Ehrlich recently presented to the Royal Society in London cheerily asked: “Can a collapse of global civilization be avoided?” Despite a grim collective assessment of the current state of affairs – Prince Charles calls humankind’s current behaviour an “act of suicide on a grand scale” – Ehrlich and others find reason for hope.

For one thing, population growth rates are steadily dropping. In the last 60 years, women have gone from having an average of 6 to 2.5 children. Population numbers will continue to increase as the postwar bulge works its way through the system, but fertility rates continue to fall. The burgeoning middle classes in China, India and Africa – increasingly educated and urbanized – are having fewer children than their foremothers. And they’re not behaving as badly as we sometimes claim; in 2012, China committed to put a quarter of its land mass under ecosystem protection.

Furthermore, Ehrlich applauds Europe’s negative population growth and calls on wealthy countries to dispense with early retirement and to plan for rather than bemoan their aging populations. “It’s easier for a 70 year old to be economically productive than a 7 year old,” the 81-year old professor said in a recent phone conversation from California, before jumping on a plane to Australia and New Zealand for lectures, conferences and field work.

The biggest challenge, Ehrlich believes, is to wean the economic system off its addiction to growth. Steady-state economic systems have to be designed and, trickier, sold to a consumer-driven public. Ehrlich makes a plea for a culture of “foresight intelligence” which would eclipse short-term selfishness, enabling people to pay a price today for benefits that will accrue to others tomorrow. Too bad that can’t be sprinkled in the drinking water.

According to Sara Parkin, a further challenge is the male domination of the population debate. The former British Green and founder of the sustainability charity Forum for the Future has observed in her careers as both nurse and politician that men simply can’t talk about sex. They prefer calling for “chalk boards and dollar bills” than anything to do with the reproductive act. While for Parkin, the key lies in contraception.

“Look at Cleopatra,” Parkin exclaims. “She saw half an orange and thought womb cup.” Perfectly shaped and acidic to boot.

Parkin would love to debunk the myth that poor women want lots of children. Poor women are acutely aware of mouths to feed; they simply want children that survive to adulthood. She believes that if women have constant access to contraception – not predicated on roads that wash out, refrigeration that fails and spouses that won’t comply, as is still the case in much of the world – global population could be brought down to the UN’s lowest projection trajectory by 2100.

Honking our way through that chaotic Lagosian street market 20 years ago, I remember thinking of my grandmother, who had fretted about my going to Nigeria. For her, the place was a something of a black hole. A fan of Silent Spring author Rachel Carson, she kept a huge garden at her home in the countryside outside of Hamilton, Ontario, where a rainbow sticker on the front door reassured visitors: “You are entering a nuclear-free zone.”

Every generation has its challenges. My grandmother had six children, but none of her 13 grandchildren have had more than three. In fact, most of my cousins, in their 30s and 40s, are childless. And there hasn’t been nuclear war.

No doubt, with enlightened (and maybe a little more female) leadership, global population can be kept under control, too.

The post Debating population appeared first on Corporate Knights.

It’s not what one would call healthy diversity, but there is reason to believe the demand for women directors is growing as CEOs around the world are increasingly threatened with gender quotas. While quotas are not an issue in the United States, business leaders are increasingly feeling pressure from women rights advocates, consumers and investors who seek greater board diversity.

In the recent book Leaning In, author Sheryl Sandberg draws upon her personal experience to offer reasons why even highly educated women tend to lag behind, while their male peers reach positions of economic leadership and power.

The unyielding problem, Sandberg argues, is that women hold themselves back; they are locked into social or behavioural norms, and locked out of the DNA of most businesses. Tackling these barriers requires leadership by example. As chief operating officer of Facebook, Sandberg’s views triggered a national conversation, and for many were considered quite controversial.

The irony was not lost upon the New York Times as it described Facebook’s forced appointment of Sandberg to its male-only board in June 2012. It came after women advocates used Facebook’s social media tools to stage protests at the company’s headquarters, launch a user petition, threaten to boycott the social networking site, and crash Sandberg’s Harvard Business School’s commencement speech. Investors joined the movement as well.

The Facebook firestorm follows years of engagement by institutional investors who have worked behind the scenes to get companies to make boards more diverse. Some business leaders asked for patience. They agreed that board diversity needed to be addressed, but also pointed to the limited talent pool of qualified candidates as a reason for not rushing. Others said there was a lack of empirical evidence proving the economic value of board diversity. They preferred to wait.

In so doing, many business leaders seemed oblivious to the reputational risks they were exposed to as public opinion and investors drew inferences of their positions and a growing number of studies provided empirical evidence that companies with diverse boards outperformed their peers.

With these studies in mind, CalPERS and CalSTRS, two American public pension funds, commissioned the Diverse Director DataSource (3D) initiative, which is owned and operated by GovernanceMetrics International. It is a director database designed as a clearinghouse for corporate director candidates with a more diverse range of backgrounds, perspectives, skills and experience.

In other countries where cultural norms have held women back, legislators have opted for gender quotas. In 2003, Norway led the way by instituting a 40 per cent quota for women within a two-year window. Other European countries such as Spain, France, Italy and Iceland have followed, while Britain and more recently Germany held quotas at bay, after much heated debates.

Corporations in Germany, which has one of the worst records in Europe when it comes to diversity of leadership, are beginning to feel the pressure from politicians, investors and activists.

Deutsche Bank in particular has become a “lightning of criticism” for dragging its feet on leadership diversity, according to a recent Wall Street Journal report. Women represent just 18 per cent of senior management at the German bank, compared to a rate of 42 per cent across the company.

France, by contrast, is the largest market in Europe to have adopted gender quotas that apply to more than 2,000 companies. Boards of all companies, publicly listed or in private hands, with more than 500 employees or €50 million of revenues must have at least 40 per cent women directors.

European CEOs are not alone in feeling the pressure of quotas: Malaysia requires companies to have 30 per cent women in decision-making roles, and the province of Quebec in Canada has also adopted quotas.

While there is debate on the merit of quotas, having them on the table has led CEOs to take the issue more seriously and find ways to narrow the diversity gap.

We are reaching a time when global demand for qualified female directors is resulting in global searches for candidates. French companies, longtime laggards in geographic and gender diversity, are now leading.

American CEOs are aware that international governance trends promoting values shared by American investors and public opinion have crossed the Atlantic. It was not so long ago that the European practice of “say on pay” regarding executive compensation became the most hotly contested and widely covered business issue.

Other initiatives that widen director search, identify skill sets and promote globally diverse director networks will add to the supply pool of exceptional diverse board candidates. Business leaders will tap that pool as global demand for diversity balloons.

American CEOs should not drag their feet too much if they want to build diverse boards and senior management teams out of the best and brightest candidates. If such people are in short supply now, they’ll been in even shorter supply as this diversity trend gathers momentum.

The post Gender in the balance appeared first on Corporate Knights.