Burgess COMMENTARY

I am an old economist / corporate accountant. Seems to me there is a need to be very clear about the difference between correlation and cause and effect. CSR ought to be a cause of good performance by an investor owned business, but with the dominant metrics for performance being money profit and stock market prices, CSR is very much at the margin, and when push comes to shove is going to lose. I know Du Pont has been trying to Walk the Talk since Halliday was the CEO ... but getting change through a large organization is not going to happen if the performance of the staff and the departments is measured by money profit contribution. It would be interesting to know how much 'brownfield' industrial property Du Pont owns ... and what these properties are used for ... if anything. I was visiting South Jersey and Delaware a couple of years back and was appalled at the amount of derelict industrial property. My guide told me these were owned by big companies that would not remediate the properties because of the expense, and could not sell the properties because of their condition, and did not use them because of their ... whatever. In other words these corporate giants have laid waste a large area of the country and essentially walked away. Where is meaningful CSR? Or does the CSR really stand for Convenient Social Responsibility? Peter Burgess TrueValueMetrics

@Gina Lee ... Yes ... Leadership is certainly important, but it also needs the Ownership to be on board. Where the ownership are stockholders through a stock market, and the metrics for performance are profit and stock prices then CSR is going to get marginalized. If profits and stock prices are going up, CSR will be tolerated, even embraced, but don't hold your breath that CSR will survive a downturn in profit and stock prices as long as these remain the dominant measure of corporate performance. I argue for new metrics that measures impact of economic activity on people, place, planet and profit all together and all the time using the same base data. Optimizing for these four factors is more complex, but not beyond the capacity of young quants. Change the way you score the game and you change the way the game is played. Peter Burgess TrueValueMetrics

A good discussion ... and it is to be hoped that there will be more CSR at the core of business education in the future. But from my perspective, there will not be much progress until the conversation about CSR is matched with metrics that are meaningful and capture not only corporate performance as it relates to profit, but also the impact on people, place and planet. If you look at the core of business education, there is a huge component that is about how to do financial analysis that will optimize for profit and for stock price. What about similar analysis about optimizing impact for people, for place ... community, and for planet. This can get quite complex, but it is, in my view, hugely important ... and as long as the subjects of CSR and sustainability are handled only with anecdotes and narrative, they will remain marginalized. Sincerely Peter Burgess TrueValueMetrics

@Thomas McDonough I like what you describe ... but why would you be wanting a 'fabulous return'? Any time there is a 'fabulous return' for the investor, this return is extracted from some other stakeholder, and this may or may not be justified.

There have been many cycles of fabulous returns from agriculture in Africa ... Tobacco in Rhodesia, Coffee in Kenya, Tea in Malawi, Palm Oil in West Africa. In retrospect there were negative impacts on local people and their land ownership that was ignored. These same people facilitated the fabulous profits by being available for ultra-low wage labor.

I want to see investment capital being deployed into valuadding projects ... and I hope that before long there will be stock markets that cater to investors looking for impact investments. I argue that this will not happen until there is a system of metrics that captures the impact on people, place, planet and profit in one integrated system that is as rigorous for all of this as the prevalent money profit accounting is for profit and the ordinary business investor.

Peter Burgess TrueValueMetrics

Why has the 1% been winning for the past 50 years ... and before that for as long as time? They are organized to be in control of a very big and complex system, that gets more and more complex over time.

Bribery and the big wallet issue is a big part of the problem, but it is only one problem of many systemic problems that make meaningful reform very difficult.

The role of fiat money and debt serfdom is another part of the problem, and an important part. It is possible to change, but not easy to change. There are successful complementary currencies, but few understand what they are and how to deploy them.

My own contribution to change is going to be in the area of metrics ... change the way the game is scored and you change the way the game is played. Business schools have taught ways to maximize money profit in the organizations since they were first invented, but nobody teaches how to optimize for society, for people, place, planet and profit. The analysis is more complex, but not beyond the capacity of most normal thinking people. In my view it would be great if the accountancy profession would embrace value accountancy as the new norm for their work.

Peter Burgess TrueValueMetrics

Tiago ... I am interested in this stuff ... but who else is?

I took a friend to a mall in the USA the other day and while she was exploring the purchase possibilities, I spent some time talking to the staff about the various value chain issues that were on my mind, and the efforts of some of the big brands to associate themselves with responsible manufacturing and all the rest.

Bottom line ... none of the retail staff I talked to had any idea about the supply chain issues, nor the efforts of some of the big brands (like Nike, for example) to have some connection with a sustainable society.

There is a huge amount of work to be done ... and to be kind ... the corporate world has not yet stepped up to the plate. They are still in a mindset that everything is OK as long as the profits grow and the stock prices increase. The fact that people, place and planet are going down the tubes in the process is of little or no concern. This is not a good situation.

Peter Burgess TrueValueMetrics