green@work : Magazine : Back Issues : May/June 2004 :Happenings

HAPPENINGS

Global Implications
Why protecting the status quo won't get us where we need to go.

By Penny Bonda

The World Resources Institute’s (WRI) seventh annual Sustainable Enterprise Summit focused heavily on the future, not necessarily where we are going, but where we must go as a global society. “Today’s Challenges, Tomorrow’s Markets” brought together 200 corporate leaders from many different market sectors in mid-March for networking and exchanging ideas based on WRI’s Institute’s publication, Tomorrow’s Markets: Global Trends and Their Implications for Business.

Citigroup’s chief financial officer Todd Thomson, a member of WRI’s Board of Directors, delivered the summit’s keynote address and provided a glimpse of the future as financial services companies begin to accept responsibility for the direct impact they can have on environmental footprints. His talk focused on Citigroup’s environmental strategy going forward. As the second most profitable company in the world and with 35 percent of its revenue and workforce overseas, Thomson recognized his organization’s obligation to be a responsible corporate citizen in all the communities where it operates.

“Citigroup has spent $350 million on social programs worldwide, supporting education and community development,” Thomson said, “but has been slower to focus on environmental issues. For the past several years, various stakeholders have helped to educate us on environmental issues where we can make a difference and we have listened to clients, NGOs, socially responsible investors and competitors and have developed several environmental programs. We learned a lot from this engagement. Although some of the early demands from NGOs were extreme, over time we learned to identify areas where we could make substantive and meaningful changes and have productive dialogue with our critics as well as our partners.”

As a result, Citigroup has committed to make a difference in the following substantive areas: extend environmental impacts and protections into all development projects; prevent illegal logging by engaging advocates to stop deforestation and habitat destruction; create investments into forestry and climate change that are held to traditional financing standards; and develop global initiatives around climate change and renewable energy including tracking and reducing energy and water consumption and waste production in the 12,000 buildings Citigroup owns or leases globally.

Thomson announced Citigroups’s adoption of the Equator Principles, a framework for banks to manage environmental and social issues in project financing. There are now 21 banks that have adopted this approach and Thomson thinks they have become the de facto standard for the industry. He also spoke about the lessons learned as Citigroup has committed to implement their new policies.

“Citigroup employees are good people, conscientious people, environmentally sensitive people. These policies give our employees the tools they need to do the right thing,” he commented. “We may make some mistakes as we move forward. And these policies do not mean that we will eliminate all disagreements with some of our NGO colleagues. But they represent a real commitment to do what is right. And Citigroup believes that having good environmental policies is good for our business.”

The summit opened with a thorough look at the issues involved in engaging the poorer populations in developing countries in both the domestic and global marketplace. The message: to ignore them is to miss a large segment of the market.

Scientific author and entrepreneur, Allen Hammond presented a compelling case for designing business to work for the poor by using win-win models. Documented in 20-plus case studies from agriculture, healthcare, education and consumer products, these new markets, commonly referred to as bottom of the pyramid or BOP, are huge—in excess of $1.7 trillion—and untapped with great potential for top-line growth. Case in point: cellphone use in the U.S. by 2005 will be approximately 150 million versus 500 million in China, India and Brazil—a scale that will transform markets, business models and standards.

BOP markets also demand new approaches that will inevitably lead to new innovations. As an example, Hammond provided data on e-Choupal, the unique Web-based initiative of ITC’s International Business Division that’s placed computers in farmer’s homes in rural India to provide them access to real-time market information, thereby enabling them to sell their products at better prices. Hammond believes the benefits include higher farmer incomes, lower input costs, higher productivity because of access to new services, more choice, higher quality of life and empowerment.

Other speakers agreed. C.K. Prahalad, a professor at the University of Michigan Business School, argued strongly that we are moving to a new global economic order driven largely by the five billion people—or 80 percent of humanity—in the world who are currently un- or under-served. The fundamental restructuring of industry on a global basis, says Prahalad, should be focusing on next practices versus best practices. In terms of competitive advantage, he asks, does the U.S. want to protect the status quo or to create the future? The BOP will shift the balance of economic power through their purchasing power and Americans must decide if they want access to these growing markets. Through compelling examples, he and other speakers amply demonstrated that woman are central to this process.

WRI, along with its partners—the World Economic Forum, World Bank, the United Nations Development Programme (UNDP), the World Business Council for Sustainable Development (WBCSD), the business schools at the University of Michigan, Cornell and the University of North Carolina, and major corporations—will continue this important discussion on making business work for the poor at an international conference this December in San Francisco. Its theme, “Eradicating Poverty Through Profit” will bring together leading corporations, global entrepreneurs, social investors and international agencies to explore business approaches to development. Billed as a hands-on, solution-oriented dialogue, the conference will explore the economic, social and environmental challenges that are forming the new business models of the future.