CHAPTER SIX
When the System Is at Risk
RULE #6
Co-create to Win
To influence something as complex as overfishing, you need to engage— and trust—your competitors—and forgo the competitive advantage that may emerge if you only work to secure your own supply chain.
—JIM CANNON, SUSTAINABLE FISHERIES PARTNERSHIP
AT THE HEART OF New York’s Midtown business district lies Bryant Park, the most densely occupied urban park in the world. On a summer day it’s tough to snare a seat in this magnificent public space surrounded by gleaming skyscrapers, where office workers on their lunch break mix it up with the tourists heading to the theater district or Herald Square. There you will find music, Wi-Fi, yoga, film screenings, an outdoor lending library, and vendors of all kinds. In the winter, the expansive lawn turns into a skating rink, and a soaring Christmas tree and bustling crafts fair replace the folding chairs.
It was not always like this.
In the summer of 1981, a year into business school, I landed in New York City for an internship with the 42nd Street Development Corporation. This scrappy nonprofit was run by Fred Papert, the advertising executive who, with the help of Jackie Onassis, protected the Beaux Arts masterpiece Grand Central Station from development.
Our office was in the old McGraw-Hill Building—a turquoise-, silver-, and gold-striped Art Deco relic on a seedy West Side block. The Development Corporation shared a floor with the police unit tasked with rooting out derelict activity in Times Square. To the west of us was Theatre Row, a stretch of funky avant-garde theaters that Papert incubated as the anchor tenants of his vision for a renaissance of West 42nd Street. Farther east, past Times Square, lay the New York Public Library, Grand Central Station, and some of the best addresses in New York City, including another example of Art Deco splendor, the Chrysler Building, plus the landmarked modern façade of my future employer, the Ford Foundation.
On Fridays I would walk the long blocks of 42nd Street to the steps of the New York Public Library to meet my friend Lynn for a sandwich. From the sidewalk, I would glance up to the inviting green canopy of Bryant Park, the backyard of the library. I never set foot inside the park—not then, nor for quite a few years after I moved permanently to New York to become a banker to clothing manufacturers and importers in the Garment Center close by.
The public park, named for William Cullen Bryant, abolitionist and editor of the New York Evening Post, has a remarkable history. It was once a potter’s field and also contained the city’s water reservoir. In 1853, it was home to the Crystal Palace, which welcomed visitors to the 1853 World’s Fair. During the Great Depression, the park hosted a WPA-sponsored outdoor reading room for the unemployed. But by the late 1970s, as the city careened toward bankruptcy, Bryant Park became a tangible symbol of the city’s decline—a sanctuary for drug dealers, pimps, and the homeless.
How did Bryant Park evolve from a state of neglect to a jewel of the Midtown business district?
As you delve into the Bryant Park story, it tells volumes about what is involved in making change in a complex system. It requires someone, or a group of someones, who identify with an issue, clarify what is at stake, and build the right coalition to analyze the problem and develop an action plan. A successful plan is well-resourced and long-term in nature but is also open to modification as experience and circumstances demand.
In this case, the story begins in the 1970s with Brooke Astor, denizen of New York society and major donor to the Public Library, who, according to lore, was incensed when she was accosted by drug dealers on the front steps of her library.
The turnaround of Bryant Park took decades. It benefited greatly from the stewardship of a visionary leader and true social entrepreneur, Dan Biederman, who, with a core of committed allies, worked continuously to keep the work headed in the right direction.
But the transformation of Bryant Park was not due to one event or one person’s vision.
There was no silver bullet that contributed and sustained the change—it was more of a fusillade of efforts over time, story by story, pitch by pitch, dollar by dollar, brick by brick. Entirely new funding mechanisms and governance structures were created, and larger forces, such as a general drop in the crime rate and an improving economy, also played an important role.
The Parks Council, which formed in the initial states of cleanup, included prominent New Yorkers such as former advertising executive Fred Papert himself; Andrew Heiskell, the head of Time Inc. who chaired the Board of the New York Public Library; and members of the Rockefeller family. Real estate investors and business tenants in the immediate area were recruited along with representatives from city government and key anchor institutions, like the library itself.
Today, the park is owned by the city but is managed by the nonprofit Bryant Park Corporation, which accepts no public money but operates 100 percent for the public benefit. Revenues come from private concessions and assessments paid by the surrounding corporations and property owners, who benefit both directly as users and indirectly as investors in recovered real estate values. The Business Improvement District that was created to engage local property owners became a model for development in other New York neighborhoods and well beyond.
In hindsight, it all seems tailor-made for the result we have now. The bigger concerns of inequality, homelessness, and urban crime are still with us, but that reality should not detract from this singular achievement. Walking by Bryant Park on a summer day in 1981, it was beyond my comprehension that this remarkable urban treasure could emerge from the dust.
I am drawn to the Bryant Park story as a tangible example of what is possible when private business interests and the public interest connect around a complex and dynamic problem.
Dealing with the challenges embedded in a physical space, six square blocks in the middle of a vibrant city, feels more straightforward—more doable—than the daunting changes needed to radically reduce dependence on fossil fuels, or rebuild national infrastructure, or restore a fragile ecosystem, or influence the norms that make it difficult to change how CEOs are paid.
Yet, like the other examples of systems change in this chapter, the turnaround of Bryant Park began with the vision of a small number of fellow travelers, including business leaders with institutional levers and deep networks, a personal stake in success, and a belief that the public benefit belonged at the heart of their vision. Each of these examples tells a story of co-creation, of how public needs and private interests intersect to create a sustainable future. There is no other path to systemic change than to work together.
Two inspiring examples take us back to the close of World War II. Both stories link national interests with business and community interests.
In the first story, the change agents are three Americans—Paul G. Hoffman, president of Studebaker Corporation; William Benton, founder of the advertising firm of Benton & Bowles; and Marion B. Folsom, treasurer of Eastman Kodak—who began working together in the summer of 1942 on the need for a massive number of private sector jobs at the conclusion of the war.
They created a new organization called the Committee for Economic Development (CED). The purpose of CED was to guide the transition of business from a war economy to a peacetime economy without falling, again, into recession—or worse. The effort began years before the war ended and it embraced an ambitious agenda, including some mundane but also complex problems, like how to unwind war supply contracts, refocus tax incentives, and plan for postwar production to minimize strains on the system and “set business’ own sights for high employment.”1
The charter of the Committee for Economic Development anticipated the need for 7 to 10 million more jobs than the United States had in 1940, a peak year of peacetime production. The vision was bold. If free enterprise and democracy were to flourish, jobs that offered returning servicemen both dignity and adequate income had to be created at a remarkable pace.
This band of brothers set out to enlist national business interests that in turn would ignite local business networks all over the county to begin to plan for the employment needed to absorb the troops as they returned from the front.
We often celebrate US engagement in the execution of the war and the prolonged period of economic expansion that followed, but there is more to the story than public support for infrastructure and higher education and the invisible hand at work.
The track record is impressive. In only a few years’ time, the membership of CED grew to 50,000 businessmen across 2,000 communities as the local networks kicked into gear. The leaders of the CED didn’t stop there; they also built the political support among business executives for the Marshall Plan to rebuild Europe. In both efforts, the benefits to the business community were rooted in a common sense understanding of the interdependence of business and society.
For the economy to gain strength, and for business to prosper —whether selling Studebakers, washing machines, or advertising— people need jobs and disposable income. The notion of an old boys’ network determining the fate of the nation may feel cringeworthy, especially with the benefit of hindsight about the fate of women and people of different races and skin colors, whose contributions to the war effort are legendary but failed to earn them a place in the recovery effort. Yet the sheer scale and pace of job creation to reabsorb millions into the private workforce and avoid a postwar slump is a remarkable achievement. It should be a template for what is required of business and industry and the professions as we work to build an economy that works for all.
THE POWER OF A SMALL GROUP
I have not read an account of how the Hoffman-Benton-Folsom team got started. I don’t know who first picked up the phone to call whom or attended the first and later gatherings as the group coalesced around a strategy and put a plan in motion, but I envision the first encounter taking place around a dining room table, not in a conference room. The thinking and envisioning stage required deep trust—colleagues who shared a common view of the future—and commitment to build the network, a network of networks needed to get the job done.
The founders’ profound belief in free enterprise permeated their vision for the common good. It is impossible to read the principles under which they operated without thinking about the levels of inequality and financial insecurity that test our public institutions today and undermine trust in both government and the private sector:
The good of all—the common good—is a means to the enduring happiness of every individual in society and is superior to the economic interest of any private group, not only in war (when the validity of the principle is obvious) but in peace as well An economic system based on private enterprise, Americans believe, can better serve the common good, not because it enables some men to enrich themselves, but because it develops a high and rapidly rising level of living. . . . It can provide the largest economic opportunity for the largest number of individuals of the community.2
These are lofty ideas. Like any vision statement, they take on meaning only as they become concrete and actionable and are sustained over a prolonged period of trial and error, course correction, reenvisioning, and reinvesting—the 99 percent perspiration part of the equation.
GETTING THE RIGHT PEOPLE IN THE ROOM
Another game-changing conversation from the same period of time began after the end of the US occupation of Japan. It started with a dinner party. The guest list included 21 leaders of Japan’s most important industries, who were invited to Tokyo in 1950 to meet the American statistician W. Edwards Deming. Deming convinced the dinner guests that a focus on quality was the key to reinvigorating the country’s economy. Collectively, and without regulation or legislation, these leaders coalesced around Deming’s vision, jump-starting a manufacturing renaissance that turned “Made in Japan” into an unbeatable brand of consistently high quality.
It took decades more, and the imprimatur of the US military, for the tenets of Deming’s message to take hold in the United States. The practices and protocols embedded in the Quality Movement— or Six Sigma, or Lean Manufacturing—still animate thinking in the C-suite and on the shop floor. A singular focus on the customer, the notion of continuous improvement, and the importance of listening to the workers began to permeate many corners of business, not just manufacturing.
In Japan, Kaizen, the “Japanese way,” reached a tipping point after a careful period of vetting and trial and error, supported by a group of individual leaders who in a different context might have been competitors but joined the party out of a common need. A fundamental reset was required to increase the value of a critically important common asset, the brand of a nation.
In the United States, the transformation of manufacturing required many supports and assists, just like the turnaround of Bryant Park. For a new way of thinking and the focus on quality to move into the mainstream of a much larger and more complex economy, many structures and institutions emerged: standard-setting bodies and award programs like the Malcolm Baldrige National Quality Award; frameworks like Six Sigma; standard bearers like GE; special-purpose trade associations—all of these played a role in shifting mindsets and capturing the attention of management.
The problem could not be solved by one company or even an industry. The upside benefit of investing in the commons was clear; everyone at the table would benefit from firm-specific investments to change practices across manufacturing. A table of industrial leaders, guiding both private and public investment, was sufficient to negotiate the steps involved.
Who needs to be at the table for the problems we face now? Getting the right people in the room may still be the most important first step—but who is invited to the party when designing for the future creates both winners and losers?
Who are the right people to frame the problem, identify the levers of change, and search for solutions when much greater diversity of experience and networks is required to get the job done? The imagery of a dinner party as a conversation starter works when the host is one or maybe two degrees of separation from the guests—when they would all be at home in the same club.
Who will represent those usually left out of the conversation altogether—who are the most vulnerable and have the most to lose? What mechanisms allow for long-term thinking to take root and to imagine the voices of future generations—those who will bear the consequences of inaction?
The challenges we face now are just as complex as recovering from the Great Depression and transitioning from the war economy were—in significant ways, more so. A cacophony of voices that call for change is hard to hear clearly amid protestations of those who benefit from the status quo. The confusion in the public square, and fears about future consequences of taking action or the prospect of inaction, emerge in the low levels of trust in institutions of all kinds. We, the people, need to discern the common good, but progress is stymied; the voices we hear are discordant.
The moonshot moment on climate; preparing for mass recalibration of work in an era of artificial intelligence; opening up an economy to face economic exclusion, racism, and inequality—a persistent blind spot in our economic evolution—each of these challenges requires business at the table with clarity of purpose and long-term commitment to the health of the commons.
Inaction is not a choice. It’s time to pick up the pace of change.
BUILDING TRUST AT THE TABLE-THE COD INDUSTRY
An example of contemporary problem-solving on a systems challenge of remarkable complexity comes out of the cod industry in the Barents Sea, which spans the arctic shores of Norway and Russia between the North Atlantic and the Arctic Ocean. Once the backbone of the economy in the North Atlantic, cod is a mild-flavored white fish commonly used in fish and chips and fish filet sandwiches. Cod liver oil is still a popular nutritional supplement.
In the 1600s, codfish was so ubiquitous and central to nutrition that it played a starring role in the triangle trade among Europe, Africa, and the Americas. Entire books have been written that chronicle age-old battles about fishing rights and attempts to govern cod fishing on the open seas. Cod was abundant and also lucrative. Dried cod of high quality was shipped from the rocky shoals of New England to as far away as Asia. The slave economy depended on cod from Newfoundland; “salt fish” was an inexpensive, high-protein form of sustenance on the sugar and cotton plantations of the Caribbean.
Today, cod is a threatened species and a symbol of the failure of markets to self-regulate. Regardless of cod’s status on the watch lists of environmentalists, it still pays for rogue operators to flout expansive protocols designed to sustain the fish supply for the long term. The threats to productive fisheries in this moment are very real. Newfoundland cod stock declined to such a degree in the early 1990s that even after a long-standing moratorium on fishing, it remains largely depleted and may never recover.
The pressures on the health of cod, haddock, and other fish stocks in the North Atlantic range from climate change to unintended effects of fish farms, but the major factor is what NGO activists label “IUU” catch: “illegal, unregulated, and unreported” fishing. IUU fishing is the underbelly of the high demand for cheap fish for ready markets in the UK, Europe, and North America.
The strategy deployed by groups from WWF to Greenpeace is a familiar one. The fishing industry—including suppliers that encompass everything from industrial-scale trawlers to intermediaries who engage in piracy—is hard to influence and harder to govern. Direct campaigns aimed at the consumption of fish by mass consumers are horribly complicated given the market confusion of varieties, origins, and substitutes. The activists have focused instead on a brand with significant leverage up the supply chain—one that is vulnerable to social media and headlines.
Enter McDonald’s.
In 2007, Greenpeace released the following announcement:
Oslo/Amsterdam, International—Eight of Europe’s largest and most influential seafood companies have signed and addressed a joint letter to the Norwegian government, committing to do their best to avoid illegal Barents Sea cod and have called on the Norwegian government to provide up-to-date black lists so companies can live up to this commitment. The signatories include some of Europe’s largest seafood processors and purchasers such as restaurant chain McDonald’s as well as Espersen, Royal Greenland, Young’s Seafood and Iglo/Birds Eye, Frosta/Copack.3
The focal point of the campaign is McDonald’s, which sources product across the world to feed about 70 million people each day. McDonald’s customers are drawn to quality and convenience at an affordable price, and behind the restaurant chain’s promise of tasty, well-priced food lies a complex set of suppliers, brokers, and producers that span some of the most environmentally sensitive places on the planet.
The arctic waters of the Barents Sea encompass one of the last healthy fishing grounds for highly popular white fish. The party convened to confront the declining health of these fisheries was led by Klaus Nielsen, CEO of Espersen, a Danish enterprise set up in 1937 for cod fishing in the Baltic Sea.
With 2,500 employees around the globe and an annual turnover of more than 200 million euros, Espersen is today a major supplier of processed white fish. The company’s history is chronicled on its website, but its future depends on a steady supply of cod:
In the years ahead, we wish to further consolidate our business in order to be able to continue to absorb and learn from the challenges of the world and the market. As such, we steadily continue on the journey we set sails to undertake more than 75 years ago to ensure that we can serve delicious fish to our grandchildren 25 years from now—as well as to many generations to come.4
I had a chance meeting with Nielsen and members of the company’s industry association, AIPCE, plus Jason Clay of WWF and Jim Cannon, founder of Sustainable Fisheries Partnership, at the Rockefeller Foundation’s conference center in Bellagio, Italy. The industry executives who participated in the dialogue depend on a delicate balance of guardrails and protocols to protect fisheries—ideally without killing off current production and revenue.
These producers sell into the vast market for what Americans once called fish sticks, including all forms of processed and breaded white fish that are still highly popular in lunchrooms, as frozen convenience food, and on McDonald’s menus throughout the world.
In 2006, the fishing industry in the Barents Sea was in crisis. A Swedish TV show had run a sting operation and released damning film footage that featured traders selling cheap cod from vessels that flouted the region’s fishing limits. Local authorities were offering phony or “fig leaf” quotas for illegal catch, and fishery management authorities and Norwegian scientists estimated then that as much as 50 percent of the catch violated negotiated limits.
The public reaction to the story proved a great opportunity for Cannon, whose organization, the Sustainable Fisheries Partnership, acts as a go-between among the private producers, the retailers, and the NGOs working to excise illegal fishing. Cannon was advising both McDonald’s and Espersen at the time, and discussions about a response were already underway. Public visibility was the missing link; it offered a platform for the campaigners to tie rogue operators back to the producers—and, ultimately, to the retailers and consumers. Cannon recalled it this way:
Truls Gulowsen—aka Greenpeace Nordic—drew the lines and exposed the connections from the traders to companies like Espersen, and then to McDonald’s. Greenpeace originally asked for observers on vessels and full traceability, but the industry resisted; they did not think that would work. It took the public exposure to really get it to the top of the agenda for all the main buyers, to get things moving.5
For producers like Espersen who depend on a steady supply of cod and white fish, a sustainable business plan required finding a way to keep the whole supply chain accountable. As the largest producer in the region, Espersen was the linchpin. Like the real estate owners eager to revitalize the park next door, or the Japanese businessmen tied to the brand quality of Made in Japan, regional producers including Espersen have real skin in the game.
McDonald’s is Espersen’s largest customer. The massive restaurant chain could choose to source elsewhere, and fleets operating in the Barents Sea have some freedom of movement, but the health of the fisheries in the Baltic and Barents Sea region was the lifeblood of Scandinavian and European producers like Espersen. If McDonald’s, the most popular restaurant chain in the world, severed its relationship, Espersen’s future was at risk.
But CEO Klaus Nielsen could not solve the problem alone. With the help of Jim Cannon’s organization, Espersen engaged the main European importers and, ultimately, its trade association to agree to police every vessel in the supply chain, using a contract and protocol that quickly became the industry standard. It heavily penalizes and eventually enforces a boycott on any trader who fails to assure that its catch is legal.
The solution was engineered by industry leaders with the most to lose, thus the most to gain by ratcheting up the operating standard. When leaders raise the bar to protect their operating license, competitors follow.
Cannon explained how the contract works in practice in an email he sent in response to my query about the process:
The contract basically says, “Cheat me on one shipment and I’ll stop buying until you demonstrate you’re 100 percent clean, and if I hear you cheated any of my customers, I’ll also stop buying. . . . And by the way, if you cheat me, I’m going to alert all my competitors.” By this means, a disreputable trader risks losing all their main customers—rather than losing just that catch . . . so it’s a much bigger deterrent . . . far bigger than the formal fines.6
The program was a huge success. The road to arrive at a solution was a long one, but within six months, the fig leaf quota boats dropped out of the cod fishery, and illegal fishing dropped to near zero.
Building trust was critical to the system coalescing around a workable solution—and to the ability to co-create. Cannon continued,
We worked with the NGOs to ensure they understood and were ok with what the industry was trying to do—and to see that all the parties were aligned, at least privately, if not publicly. The individual relationships built between the businesses and Greenpeace have sustained to this day, which is a huge side benefit.7
At this writing, the Barents Sea has since been the world’s largest source of sustainable cod—a healthy fishery, certified by the gold standard for sustainable seafood, the Marine Stewardship Council.
Bob Langert retired from McDonald’s in 2015. During his 25-year tenure, he managed dozens of complex negotiations between and among the company and the stakeholders representing various interests—including the parties to the agreement to secure the health of the fisheries in the Barents Sea. In 2019, he published The Battle to Do Good: Inside McDonald’s Sustainability Journey, which chronicles his experience at the center of a host of hot-button issues that defined his time with the company.
As he began sketching out the lessons learned in 2016, Bob accepted our invitation to visit with members of our forum for enterprise-level leaders responsible for sustainability and stakeholder management— Citibank to Johnson & Johnson to Chevron. He had a handwritten list of ideas that he spoke from.
Bob and Jim Cannon agreed on at least three key ingredients for enlisting a critical mass of partners and competitors to realize a higher standard of practice:
• Public pressure. Media and public exposure of the kind provided by Greenpeace pressures key buyers and is an essential catalyst for action.
• Trust among parties. Cannon cites “calm and measured dialogue between the buyers, NGO pressure groups, and experts” as critical to keeping all parties at the table. Langert found that constructive dialogue requires a credible broker—an entity like Cannon’s organization—with impeccable credentials and the support of hard facts and science, to build trust.
• Private self-interest. Finally, and importantly, is the need for a collective and intelligent response from the supply chain of private actors, who ultimately benefit over the long term from attacking the problem at the source.
Underlying these ingredients is the need for a diversity of perspectives at the table, to ensure that the solutions address aspects of the problem that may not be apparent to the market-based principals—and that offer both out-of-the-box thinking and accountability. The table must accommodate those who speak for the health of the commons.
To eliminate overfishing in the Barents Sea also required reaching a critical mass of buyers and sellers. The entire fishery was at risk. Espersen brought other producers with significant market exposure to the table. Peers with reputations at stake and customer relationships to protect enabled a new industry standard to emerge. By working together, the trade group devised a solution that offered bad operators no place to turn.
THE ARCHITECTS OF CHANGE: MARKET-BASED COALITIONS AND CIVIL SOCIETY ORGANIZATIONS
In his book Responsible Leadership: Lessons from the Front Line of Sustainability and Ethics, Sir Mark Moody-Stuart describes his experience with coalitions like the one in the Barents Sea. I enjoyed many conversations with Mark, from the first Aspen dialogue he attended in 1999 on the role of corporations while serving as CEO of Royal Dutch Shell Group, and on through his chairmanship of Anglo American in the mid-2000s.
One of Mark’s great strengths was a genuine curiosity about the people he would meet at all levels of society across Shell’s massive footprint. He has a keen appreciation for human nature, and the values that he and his intrepid wife, Judy, embraced and that guided decisions through 10 posts at country offices of Shell made him a highly sought-after adviser to many organizations, including the United Nations.
I remember sitting on the south bank of the River Thames, in front of Shell’s London headquarters, cramming for a meeting with Mark early on in my tenure at the Aspen Institute. I hoped to persuade him to co-chair our business dialogue the following summer in Aspen. Sitting on the grass, I read through the first ever People, Planet, Profits report on the company’s social impact and responsibilities. Shell was among the first global companies to issue a CSR report; it was known in the biz as the Tell Shell report because it utilized frank feedback and criticism from adversaries and agitators to learn from, speak to, and help set the agenda for the work ahead.
I was totally disarmed by the fresh language and transparent reporting on how the company measured up against its principles on the environment, labor, human rights, and corruption. The report included a postcard to send in comments. Reading the report gave a window into Mark’s open style of leadership. He was a great listener, and whenever he opened his mouth, what he had to say was worth hearing. I learned a lot from him about the chain of actors between consumer and brand on the one hand, and natural resources and labor markets on the other. “You know,” he once said to me casually while we were in line at the salad bar, “the brand isn’t really your problem; the ones you need to worry about are the ones with no brand to protect.”
Mark dedicates a chapter of his book to these market-based coalitions and alliances with civil society organizations that employ dialogue and shared commitment to build trust with critics and among competitors, and to deepen understanding about how private self-interest connects to higher operating standards.
CO-CREATION AMONG COMPETITORS WHEN THE LICENSE TO OPERATE IS AT RISK
One of Mark’s many engagements has been with the International Council on Mining and Metals (ICMM), created by nine of the largest mining entities to respond to the “resource curse”—the prevalence of poverty, poor labor conditions, and environmental decline in regions with abundant mineral resources but weak rule of law.
ICMM’s commitment to research, transparency, and continuous improvement was set out by the founders in 2002. Dialogue among peers led to a set of principles designed to hold themselves, and eventually their industry, accountable to international standards on labor, human rights, and the environment. A report 10 years out found both real progress and new challenges to contend with, but the organization had also grown in scope and today represents 27 significant mining companies, each of which is vetted against the standards of the collective, plus 36 industry and commodities associations and affiliates across the world.
One of the themes that emerge in Mark’s remarkable book— described as part autobiography, part confessional—is about the importance of the local business networks baked into regional associations and communities.
When Kofi Annan, as UN secretary-general, launched the UN Global Compact in 1999, he welcomed 40 international companies to the table, Shell and Unilever among them. Each member committed to report against a set of nine principles based on UN conventions on human rights, labor, and the environment and a tenth principle to address corruption and pressure to pay bribes.
Today there are more than 12,000 signatories from 160 countries. The UNGC members and affiliates commit to the principles designed to raise the bar on complex business-society issues and have access to opportunities for peer learning among leaders of industry.
Mark knows from decades of experience in oil and gas and mining that the endgame is about both transparency and accountability on the ground; it is in the host communities where the impact of business decisions, for good or for ill, is felt most directly. The real dynamism within the UN Global Compact resides in the local networks, where business managers and executives throughout the world can meet across the breakfast table to consider the priorities that are most important in their own region, such as human rights in China or issues involving migrant labor in Bangladesh and Dubai.
The emphasis on local networks recalls the Committee for Economic Development’s challenge of job creation after World War II. It’s in community that the nature of relationships and the codependencies and personal ties between business and other vital institutions are abundantly clear.
Mark’s other key message about collaborative efforts is that they are most effective when the objective is “clear but limited.”
The Better Cotton Initiative (BCI) is one of the fastest growing of the business-society networks. It illustrates the need for both localization and specialization.
BCI was started as a project of WWF’s initiative on commodities. Its approach, in important respects, is the polar opposite of the targeted campaign to eliminate overfishing in the Barents Sea region. Cotton is a commodity with many uses that in one way or another contributes to the livelihood of an estimated 250 million people around the world. The United States is a major producer, along with Uzbekistan, China, and India, but cotton is grown in warm climates on every continent.
As BCI’s website makes clear, there are no guarantees for their members about physical traceability of the product.
Members of the organization include fashion lines, along with producers at every stop along the supply chain: from growing and harvesting to multistep processes for turning cotton into yarn and then into fabric for clothing or myriad industrial uses. Clothing manufacturers and retailers who source their materials globally may be under pressure to eliminate the use of pesticides or inhumane labor practices in the supply chain, but they are unable to make definitive claims about their product.
The Marine Stewardship Council’s ratings of fish varieties and the Forest Stewardship Council’s certification of sustainably harvested wood products rely on traceability of the products. When it comes to cotton, a step change in the labor and environmental practices requires an entirely different model of co-creation. You have to tackle the entire market.
The Better Cotton strategy links manufacturers and retailers all the way back to the farmers. To see real change across markets requires steady increases in the number of producers committed to practices of fair labor, environmental sustainability, and resource conservation. There is no other way to approach the problem when the chain of custody is so complex.
The number of producers at the BCI table is impressive; in 2019, cotton certified against the Better Cotton standards represented 19 percent of the global market and is on track to achieve much higher penetration. The issues are remarkably complex: protections against child labor, pesticide use and runoff, equitable wages and worker safety, the effects of climate change and management for drought and extreme weather. The organization has provided training on sustainable agriculture practices to more than 2.2 million farmers in 21 countries.
Technology is also playing a role; experiments with blockchain are deployed in an attempt to tag and trace the origins of cotton supplies. Two inventive members of our forum for chief sustainability officers, Michael Kobori of Levi Strauss and Mark Mason of the commodity trader Cargill, collaborated on a project to influence commodity trading and to separate out organic cotton as a discrete tradable product.
But the consumer, for the most part, just wants a good-looking pair of jeans at an affordable price—and maybe a hint of security that the product is clean of noxious practices. The interests of the retailers and manufacturers with a brand to protect offer the glue and impetus for the steady growth in membership in BCI. They motivate unbranded, B2B producers to come to the table, where they are joined by a host of civil society actors representing discrete concerns in specific regions, from the economic security of laborers in Pakistan to exposure to chemicals for workers in China, to water scarcity and pollution in India.
It is hard to take in the scale of the Better Cotton Initiative. In Bryant Park terms, it’s as if you are not allowed to completely enjoy your lunch in one beautiful urban space until all parks, everywhere, are safe and clean.
THE WORK AHEAD: LEADERSHIP FOR CO-CREATION
The story of the Barents Sea continues to unfold. Jim Cannon expects the region to be in the news again: “As the arctic ice recedes ever further . . . due to climate change, fishing boats are venturing ever further north and trawling on pristine habitat, including cold water coral areas.”8
The problems that Cannon tackles in his organization are messy, complex, dynamic—seemingly intractable. Cannon has the vision, emotional intelligence, and commitment required to identify the first movers, help them envision a different future, and unlock the change needed in partnership with others.
Critics find the voluntary initiatives that link producers and consumers lacking; they want the clarity of law and regulation and visible punishment of scofflaws. Progress comes in fits and starts as campaigners and the consumer face reluctant leaders and investors. But in a global world, there are no command-and-control answers.
Even the most tangible change in business requires a special kind of leader—one who can subordinate his or her ego and link his or her ambition and skills to something larger, to root cause analysis and systemic change. Mark Moody Stuart of Shell, Bob Langert of McDonald’s, and Klaus Nielsen of Espersen are able to listen to critics but also work with their suppliers and even their competitors.
TACKLING CLIMATE CHANGE
The ultimate systems challenge for business leaders, and the rest of us, of course, is climate change. We need pricing policy to catch up with a shift in mindset and make the markets work—both to increase the cost of the status quo energy sources and to ramp up investment in carbon capture and in new sources of energy, including next-generation nuclear power.9 The consequences of ignoring the problem, or depending on voluntary initiatives only, are just too great. The need for business leadership on policy change in the United States is acute.
As the COVID-19 pandemic was emerging in the winter of 2019, the Business Roundtable was preparing to release a policy statement and recommendations on addressing climate change. The process of study and dialogue among members and experts was thorough, and the result carefully guarded, but as the date for going public came closer, I heard from colleagues that the statement was strong and compelling. I became more confident that with the BRT’s shoulder to the wheel, we could, at last, begin to break the logjam on forging federal policy.
Broad-based business trade associations like the BRT stay alive by avoiding controversy among members and by focusing on win-win policies for which there is broad agreement in business—like public investment in education and workforce training and lowering corporate taxes. When it comes to a massively complex system like energy policy, it’s infinitely more complex to agree on a policy solution. Greenhouse gases are the product of industrialization and consumer demand for power, and the massive changes required to avoid catastrophic impacts of global warming touch every part of industry and commerce. There are winners and losers—both belong to the BRT.
Under the US system of private influence of public policy, it is impossible to move the needle if our most influential business network stays on the sidelines or leaves the microphone in the hands of the naysayers. The BRT protocols for taking policy positions don’t typically embrace the kind of diversity of voices and interests that we see in the coalitions described in this chapter.
However, after years of nudging from environmental campaigners, and from other business networks and conveners like my own organization, and with careful stewardship by staff within the BRT and its member companies, the long view had finally won out. The costs of inaction were too high. And these leaders, many of them, were already on record about the need for policy change. The rest were hearing from their own employees and family members.
I heard from colleagues in BRT companies that an overwhelming number of the CEOs had signed off on the last draft of the policy paper. Based on the attention the organization received for its statement on the purpose of the corporation in the summer of 2019, I expected a surge of interest—and the potential, at last, for business-supported public policy to catch up with overwhelming public opinion on the need for change.
At this writing, the proposed BRT climate policy is stalled. As we moved rapidly into “social distancing” and shutdown due to the COVID-19 surge in March 2020 and all travel and events were canceled, the launch event was postponed indefinitely, and it was deemed impossible in this moment to create the space for substantive discussion of climate—or much of anything else.
But in a funny way, the climate crisis has both receded from view and moved to center stage. At this writing, the air is clean in Los Angeles and Shanghai for the first time in decades. Biking is now the best way to get around New York.
Can it last? Does this moment of crisis offer a real opportunity, or will we fail to capture the moment? What if this is the opportunity we have been waiting for?
The shock to the system from the coronavirus, on top of years of deteriorating trade conditions, could force a reevaluation of the “take, make, dispose” model and allow, at last, a shift to the decades-in-the-making business design principles of a circular economy. Businesses built on extensive global supply chains have to consider a Plan B.
Teams inside our most capacious companies are impatiently waiting for the chance to design products and business models that work for the planet.
The Business Roundtable’s acknowledgment of the multiple stakeholders who exist alongside shareholders opens the door for new ideas to emerge. Will supportive protocols (and regulations) that are needed for systemic change follow? Will coalitions of businesses and labor convene to rethink the share of wealth that goes into the pockets of workers? Will share buybacks again be regulated as stock manipulation, and will tax avoidance schemes that undermine local infrastructure and services finally become intolerable? Will companies consider those who are most vulnerable in the global economy and redirect their government relations teams to prioritize the health of the commons?
Investment—both public and private—to fix a crumbling health care system and build the green infrastructure of the future must rise to the top of the priority list. Shareholders will benefit too, over time.
Real change in business priorities will always face headwinds, but that’s where leadership comes in. And we all have a role to play, as investors, consumers, and citizens. As the journalist and social activist Dorothy Day was known to say, “No one has a right to sit down and feel hopeless. There is too much work to do.”
Sometimes, the most effective change agents are found inside the business.
Within every corporation, capable, courageous staff and managers with a belief in business as a powerful platform for change are stepping up on complex problems. To be effective, they need to tell a good story and paint a vision of what is possible. These skills are found in our colleagues who manage CSR and sustainability efforts across global enterprises. They also exist in the front lines of purchasing departments and supply chain management, and even in staff functions like human resources—and the CFO’s office. For these exceptional leaders, co-creation is the norm, not the exception.
The stories collected from the Aspen First Movers Fellowship are drawn from years of supporting change agents in every industry and across every corporate function. The fellows improve the protocols for use of private data, incubate new approaches for reducing carbon emissions, and create revenue-generating businesses that utilize waste or help people without bank accounts access financial services.
The two-decade-plus turnaround of Bryant Park is a miniature blueprint for the work ahead of us now: the importance of small wins and the need for more leaders able to innovate at the intersection of private enterprise and public benefit.
Perhaps the greatest inhibitor of influencing capitalism as we experience it now is the failure to imagine anything different. Reading the stories of Jim Cannon and Jason Clay and their counterparts working inside businesses remind us that deep change is possible.
Business executives don’t get out of bed in the morning and wring their hands in despair—they are wired to find the opportunity in crisis, even in the throes of a pandemic. The same is true of visionary leaders in other domains. It’s about the complex interplay of commerce and culture. When public interest and business needs are aligned, extraordinary change is possible.