The Triple Bottom Line Blog

Andy Savitz and Melissa Tritter have penned this story in the current edition of Ethical Corporation, highlighting a shift that has sneaked up on many of us in business--the emergence of "localization" as a force that is beginning to rival globalization in importance. (Actually those crazy Brits at EC insist on spelling it "localisation"--go figure.)

The story explains the new trend, describes how companies like PepsiCo and Whole Foods are capitalizing on it, and offers some advice for business managers on what it all means. The elevator version of their take-away:

The key is to be both big and small at the same time--big in terms of resources, scale, and positive impact; small in terms of supporting local economies and the consumers who care about them. To the extent that a large company can do all this, the same forces that are currently fuelling the localisation movement will support them, making it easier to do business in a profitable, sustainable fashion.

Follow the link to read the whole thing--worth a look, in our not-so-humble opinion.

Labels: Andy Savitz, Ethical Corporation, globalization, localization, Management and Organization, Melissa Tritter, Personal Musings, Supply Chain

In a world where fast-growing giants like India and China are rapidly catching up to the West in terms of their consumption--and the burden they place on the environment--we sometimes assume that creating sustainable approaches to growth will involve impositions on the developing world.

This assumption helps produce friction around environmentalism between the world's haves and have-nots. The fear is that newly-enlightened Western thinkers will "change the rules" and prevent the countries of the global South from claiming their fair share of consumption--all in the name of sustainability.

But maybe there's an alternative. Maybe the peoples of the developing world will devise their own environmental solutions, based on ideas about respect for nature, our dependence on the planet, and the unity of life that are deeply embedded in traditional religions and cultures.

That's the possibility suggested by this NPR piece about business leaders in the Middle East who see sustainability as naturally linked to Islam and the traditional Arab way of life. Here's a quote from one of the Kuwaiti business people interviewed by NPR:

Think about it. This [the Middle East] is one of the hottest inhabited regions in the world and yet people lived here not only in days before electricity, but in days when people were dirt poor, I mean literally had nothing . . . . There's still memory, individual memory of what it was like in the time before oil. There's still that link to a not-so-distant past.

Doesn't it make sense that peoples in the Middle East are more likely to draw inspiration for their own approach to sustainability from Islam than from Western environmentalists?--just as the peoples of India are more likely to be inspired by Hinduism, and those of China by Buddhism and Confucianism.

I'm no expert on any of these great non-Western faiths, but everything I know about them suggests that they are at least very compatible with the core concepts and ethical requirements of sustainability--at least as much as Christianity and Judaism, and arguably more.

As the global impact of this century's environmental challenges becomes more and more apparent, the need for a global sustainability movement becomes more and more clear. And while such a movement will require international cooperation and some universal standards--tomorrow's improved versions of Kyoto, if you will--it will also require roots in dozens of local cultures.

As a planetary people, we'll need many forms of sustainability, driven by leaders who speak not just in the accents of New York and Portland and Stockholm and Berlin but also those of Abu Dhabi and Mumbai and Kinshasa and Beijing.

Labels: globalization, Islam, Personal Musings, sustainability

For your "law of unexpected consequences" file, check out this column from the current Economist. We're all familiar with the concept of the "race to the bottom" driven by globalization. The idea is that companies in manufacturing and other fields that are capable of relocation will shift their operations to countries that cater to them through weak regulatory regimes. The expected result: competition among nations to offer the "most attractive" business environments--even if that makes them among the "least attractive" from an environmental or labor-rights perspective.

There's some evidence that the race-to-the-bottom phenomenon is real. But now an American researcher named Mark Schapiro (whose book provoked the Economist column) suggests that an opposite pressure is being exerted by tough European regulators in a marketplace where global corporations want uniform international standards:

When [Schapiro] began his research, he found firms resisting the notion that the American market would follow EU standards for items like cosmetics, insisting that their American products were already safe. But as the book neared completion, firm after firm gave in and began applying EU standards worldwide, as third countries copied European rules on things like suspected carcinogens in lipstick. . . .

[Schapiro's] book [Exposed] records similar American reactions to the spread of EU directives insisting that cars must be recycled, or banning toxins such as lead and mercury from electrical gadgets. Obey EU rules or watch your markets "evaporating", a computer industry lobbyist tells Mr Schapiro. "We've been hit by a tsunami," says a big wheel from General Motors. American multinationals that spend money adjusting to European rules may lose their taste for lighter domestic regulations that may serve only to offer a competitive advantage to rivals that do not export.

In effect, European regulators are setting the agenda for businesses around the globe--especially since companies that want to do business among the 500 million customers of the EU have to meet EU standards anyway.

It seems likely that, in the long run, globalization may well promote higher rather than lower standards across the board--not just in regard to product quality but also environmental protection and even workers' rights. After all, the more unified the world's markets, the more fully pressures from consumer groups, human rights organizations, and environmental crusaders should eventually impact companies everywhere, producing not only rough equality across borders but also gradually rising standards of corporate behavior.

But only in the long run. In the short run, forces driving toward the top and toward the bottom will continue to compete, and watching how they interact will make for some fascinating business drama.

Labels: European Union, globalization, Mark Schapiro, Role of Government

Advocates of environmental and labor protections worry--with good reason--that globalization may drive a "race to the bottom" in which government regulations get watered down in the competition for world markets. But as this article in today's New York Times suggests, the process can sometimes operate in reverse. The story deals with the fallout from the recent stories of tainted foodstuffs and toothpaste being exported from China and the resulting loss of confidence on the part of foreign consumers. Key grafs:

While Beijing has strongly defended the quality and safety of its food and drug exports, and even denied that the toothpaste it exported was unsafe, government regulators at the same time have stepped up safety inspections and shut down companies accused of producing unsafe food or counterfeit drugs.

But with pressure growing from regulators in the United States, Europe and other parts of the world, and international food companies expressing concern about the risks of importing Chinese-made food and feed ingredients, Beijing is pushing for a more forceful response to the crisis.

In its announcement on Tuesday, which was posted on a government Web site, China said that the State Council had approved a new food and drug safety guarantee system on April 17 and that an outline of the program was being distributed to government agencies nationwide.

The government said in its announcement that it planned by 2010 to place new controls on food and drug imports and exports and to step up random testing on medicines. It also said that it would have information on inspections of 90 percent of all food products, although it was unclear how that would work.

There seems to be little doubt that Chinese food and drug safety standards have always been lax. But as long as only Chinese consumers were affected, the government had little incentive to act. (That's the sort of attitude that having dictatorial powers tends to encourage.) Nosy, noisy, demanding Westerners are another matter. Economic pressure from disgruntled Americans and Europeans may be having an impact on Chinese practices that domestic dissatisfaction never could.

This doesn't mean that globalization automatically leads to good results. That happens only when people care, are informed, and have mechanisms through which to act. Companies in the United States and elsewhere that are partnering with firms in China or using Chinese suppliers need to encourage these conditions. The sooner firms in China (and the rest of the developing world) can be prodded or pushed into applying world-class standards of product safety and quality, the better it'll be for the future of global trade.

Labels: China, Food and Agriculture, globalization