While the NOTHING PERSONAL project continues to put a face on the more obvious pain inflicted by the global financial crisis, new research details trouble beneath the surface.

On APEsphere we have often noted the negative impact on happiness of contemporary business practices, but the global recession has made the problem all the more acute within the workplace itself.

According to the research by UK mental health charity MIND, one in fourteen British workers is now on anti-depressants. Other findings include: 10% have seen a doctor as a result of work-related stress; 8% left work last year because of job-related stress;  5% of staff have seen a counselor; half of those questioned reported staff morale as low; antidepressant prescriptions rose from 35.9 million in 2008 to 39.1 million in 2009.

Meanwhile, research by the Shaw Trust found that half of UK managers think their staff do not suffer from mental illness.

Mooted solutions include:

• ensuring staff take breaks


• giving staff opportunities to raise concerns without fear of reprisal


• better availability of psychological therapies as well as medication


• counselling services


• more innovative approaches, such as BT's vegetable garden 

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A little update on what I have been up to and what happens now...

You may have noticed that things have been a little quiet on APEsphere these last couple of months. I am now able to explain why.

It has long been my view that the global financial crisis is the single biggest responsible business issue of the decade. Yes, even bigger than climate change, because thanks to the global financial crisis efforts to address climate change have been badly set back.

While regulatory reform - specifically a reversal of the deregulatory fervor fo the last thirty years - is clearly needed, what strikes me is the way we talk about the crisis in such abstract terms. It is so standard to talk about what the markets did, or even "the banks", and to talk in aggregate terms about unemployment, foreclosure, bankruptcy.

Of course, those statistics are always worth repeating:

• an increase in the number of people around the world in chronic hunger and poverty by over 100 million, to 1.02 billion;
• between 200,000 and 400,000 more babies could die each year between now and 2015 if the crisis persists;
• an increase in global unemployment by between 29 million and 59 million people;
• one in eight US mortgage borrowers is behind on mortgage payments or facing foreclosure at the end of the second quarter 2009;
• pensioners relying on developed country stock market returns for their retirement incomes have seen their savings fall by 45%.

Not to mention the fact that the crisis is associated with a sharp uptick in mental health problems and suicide rates, children being pulled out of schools and put to work, increases in human trafficking, social unrest and violent conflict.

But all this talk of aggregates repeats part of the problem that got us into this mess in the first place. Aggregates create emotional distance. They enable us to forget that the crisis both impacts and was brought about by individuals.

So Kelsey Timmerman and I are about to set out on a journey to tell some of the personal stories behind the numbers - our very own Financial Crisis Inquiry Commission. Our blog, NOTHING P€R$ONAL, will be the main means by which we keep readers updated on our travels, though I will also post some of those stories here on APEsphere.

Kelsey has penned the first post here, explaining why this project is so personal. You can also join the conversation through our twitter stream @0_personal.

If coverage of the financial crisis seems to you to be missing something important, we hope this blog will fill the void. Enjoy.

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Well, here is confirmation that Hillary Clinton's State Department was briefed on Google's delivery of an ultimatum to China over censorship.

The text of the statement:

Statement on Google Operations in China

Hillary Rodham Clinton

Secretary of State Washington, DC

January 12, 2010

We have been briefed by Google on these allegations, which raise very serious concerns and questions. We look to the Chinese government for an explanation. The ability to operate with confidence in cyberspace is critical in a modern society and economy. I will be giving an address next week on the centrality of internet freedom in the 21st century, and we will have further comment on this matter as the facts become clear.

There is no indication as to whether they were briefed before the move or subsequently, but for reasons given in my earlier post I think the State Department knew perfectly well this move was coming. The allegations against China that the statement refers to are unlikely to be new to any degree, and certainly would have been known at the time of Clinton's meeting with Eric Schmidt and other CEOs last week.

Such meetings I am sure happen regularly with various industry heads. My point is simply that this move by Google has to be seen as a private firm coordinating its foreign policy with that of US national foreign policy. Not a new idea (think oil companies for starters) but interesting in an era of radical transparency, corporate responsibility and "Do no evil". It's also intriguing here because the move is not - as far as I can see - the kind of cynical, manipulative coordination between private and public foreign policies that we saw in advance of the Iraq war (or again, earlier oil interests), but a development that is at least hooked on a genuine issue of human rights (privacy, speech).

For those suggesting this is simply Google scuppering other tech companies in China because its own position is weak, I think it highly unlikely. If my main argument is correct, this move either arose out of or would have at least been mooted at the meeting of industry leaders with Clinton last week. They all face the same problems in China. Perhaps it was agreed that Google.cn would be sacrified as shot across China's bow precisely because it had the weakest commerical position of those present. If alternatively Microsoft had taken this position, what are you holding in reserve as a threat? Google.cn?

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In a timely follow up to my post yesterday on whether companies need a foreign policy, Google has effectively delivered an ultimatum to China.

The ultimatum essentially says "let us provide uncensored Google in China or we will shut Google.cn". Naturally, no one expects China to accede to Google's wishes.

The background an a good analysis are provided by Imagethief here.

Imagethief does not mention the meeting between Internet business leaders and Hillary Clinton last week, and I cannot help but feel that the timing of this announcement is linked to that meeting even if there are broader events leading up to this. Eric Schmidt is simply too close to the Obama administration to do this on the fly. Certainly to China it will look like it is, and if there is one thing that was acknowledged in that meeting it is that any stand US companies take in relation to human rights in China will be viewed by China as a proxy move by the US.

While Imagethief notes and the Wall Street Journal implies that Google's eventual withdrawal from China on human rights grounds makes it really difficult for Microsoft to remain, I would be very surprised if Microsoft, the State Department and others did not already know of the move before Google dropped today's bombshell.

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US Secretary of State Hillary Clinton held a dinner last week for the tech industry's key leaders. It looks to me like the consolidation of a trend.

I attended a talk a few years back and I am struggling to recall where it was. It was either in Boston or in Washington. Anyway the talk was given by a recently retired general counsel of a mahor corporation - perhaps IBM, perhaps GM. The main argument of the talk was that corporations need a foreign policy. I thought the idea was instantly exciting and terrifying.

Exciting because back then I had recently written a paper on "Legitimacy risks and peacebuilding opportunities for businesses in post-conflict Iraq". The fact is that businesses have presence, relationships and power and they will have an impact on communities and even nations whether they have a policy or not.
 

Terrifying because, as that paper had tried to make clear, legitimacy was key, and in the Iraq situation the absence of inclusiveness and accountability pretty much assured that the reconstruction effort would lack local goodwill. Think about how the reconstruction contracts were allocated, the absence of community involvement in allocation, the lack contract winners of Iraqi origin, then the failure of firms that undertook the work to do so from the outset with a solid local outreach and inclusion approach.

There are plenty of extractive industry firms with a substantial involvement in foreign affairs, too often with dubious and opaque relationships supporting regimes run by corrupt elites.

It is the global technology firm - particularly though not exclusively the internet-based firms - that is new to the art of running aground on foreign policy issues in most recent years. So I was very interested to hear about a small private dinner hosted by Hilary Clinton last week with Google CEO Eric Schmidt, Twitter Co-Founder Jack Dorsey, Microsoft Chief Research and Strategy Officer Craig Mundie. The subject under discussion: how technology can be used to meet the nation’s foreign diplomacy goals.

It is a topic I touched on here during the first major upheavals in Iran when twitter played such a role: Iran, business models and the right to tweet speech. The basic argument of that post - that access to twitter is crucial to freedom of speech - has been echoed in a State Departent blog post which said the agency wanted to use twitter in a contest as a:

"worldwide platform in which people can discuss the meaning of democracy and exchange ideas from diverse perspectives."

My thoughts/questions are these:

1/ Is corporate foreign policy simply an alternate name for existing corporate responsibility issues with a global hue, like climate change or, in the internet company case privacy issues? Or is it - and I believe it is - something more, where corproations are taking on a responsibility to consider their impact on human rights within their sphere of activity in a more accountable, thus perhaps quasi-public way?

2/ how do we assure legitimacy? How can we bring the right kind of transparency and inclusivity to corporate statecraft to ensure that it is just?

3/ global corporations are based in dozens of countries. Is there a question of to which foreign policy it needs to align its own?

Do you have any views?

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The US Federal Deposit Insurance Corporation that insures US bank deposits is considering billing banks more if they incentivize higher risks.

The FDIC maintains a fund to pay out in the event that depositors lose money frrom the failure of a bank. All insured banks pay into the fund. Banks that according to regulatory assessments incentivize staff to take higher risks are more likely to have such risks materialize. So, the FDIC argues, why not get them to pay higher contributions into the insurance fund. Sounds logical to me.

But lets round this out. We could use a basket of indicators to determine contribution levels, including not just pay plan riskiness but also lobbying spend which is highly correlated with risky lending behaviour.

And rather than just use this for assessing contributions to the FDIC - which are not enormous in the great scheme of things - why not tie bank capital requirements to these factors too?

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The International Monetary Fund is not known for random assaults on the financial establishment.

This makes the results of a new IMF study - A Fistfull of Dollars: Lobbying and the Financial Crisis -  all the more compelling. Large US banks that spend heavily on lobbying are more likely to engage in high-risk lending, and their shares perform less well. The UK's Guardian newspaper notes that finance sector lobbying outstripped all other sectors.

It is 8 days until the Financial Crisis Inquiry Commission begin to take testimony from top bankers. Their lobbying activities should provide one of the core, and still current, seams of questioning.

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In 9 days time the US Financial Crisis Inquiry Commission begins hearing what senior bankers have to say about the causes of the crisis.

I will be keeping a close eye on the Commission’s work and posting background and analysis here on the APEsphere blog. Let me explain why.

The FCIC in a nutshell

Phil Angelides (pictured above), the man appointed to chair the commission, last September defined the FCIC’s mission as being “to conduct a full and fair investigation in the best interests of the nation—pursuing the truth, uncovering the facts, and providing an unbiased, historical accounting of what brought our financial system and our economy to its knees.”

The Commission’s 10 members — six chosen by Democrats, 4 by Republicans – have until December to report back to Congress. They have the power to subpoena witnesses, and to refer individuals for criminal investigation and prosecution.

Who cares?

The Commission is investigating the worst financial crisis since the Great Depression. The Global Financial Crisis (GFC) has produced a longer term Global Economic Crisis that has impacted the everyday lives of real people around the world to an extraordinarily severe degree:

• it has increased the number of people around the world in chronic hunger and poverty by over 100 million, to 1.02 billion;
• widespread conflict and state fragility is being anticipated and has already begun to be realised;
• between 200,000 and 400,000 more babies could die each year between now and 2015 if the crisis persists;
• the crisis has undermined the will to make progress on combating climate change, thus contributing to the ecological, social and political risks associated with that phenomenon. Earlier predictions that the recession would reduce emissions have proved ill-founded;
• an increase in global unemployment by between 29 million and 59 million people;
• one in eight US mortgage borrowers is behind on mortgage payments or facing foreclosure at the end of the second quarter 2009;
• pensioners relying on developed country stock market returns for their retirement incomes have seen their savings fall by 45%. The links between the crisis and retirement incomes are explained here.

No wonder countries are marking an upward trend in stress-related mental illness and crime.

What could this Commission achieve?

We want to ensure that this crisis cannot be repeated. A thorough public investigation of the causes can help channel anger into the political will to undertake effective regulatory reform, including the dismantling of powerful institutions known to be “too big to fail”. While regulatory reform is already underway in Washington and elsewhere, further and more profound reform is a potential outcome of this Commission’s work.

The committee set up in 1934 to investigate the causes of the 1929 crash and the Great Depression that followed it signals what is possible. Once Ferdinand Pecora became the committee’s lead investigator and began cross-examining Wall Street’s leaders the ground was laid for reforms that included the establishment of the Securities and Exchange Commission and the Glass-Steagall Act that separated staid commercial banking from risk-fuelled investment banking – reforms that kept Wall Street out of systemic trouble for forty years.

But the FCIC could achieve much more than this, and needs to do so.

When South Africa emerged from apartheid, a Truth and Reconciliation Commission was established to consign to history the egregious, state-supported human rights violations that were committed against a large section of its people.

In 1995, after decades of the systematic abuse of economic, social and political rights known as apartheid, the South African government set up a Truth and Reconciliation Commission to give ordinary people an opportunity to air their grievances against a system that institutionalized racial segregation and discrimination in all aspects of life.

According to the then Minister of Justice Dullah Omar, "... a commission is a necessary exercise to enable South Africans to come to terms with their past on a morally accepted basis and to advance the cause of reconciliation."

The TRC was a forum in which anyone who felt that he or she was a victim of the system could be heard. Those on both sides who had done wrong could also give testimony and request amnesty.
Now, political establishments around the world have been shown to have placed the interests of a powerful financial minority above those of the majority.

Dead babies will never learn to speak, and how do you give voice to the 100 million starving? But what the FCIC can do is provide public, open and free discussion of the causes of the crisis, confront those responsible with those they have impacted, raise the question of prosecution and possible amnesty rather than assume as now a cosy settlement between corporations and regulators.

How else do governments and financial institutions expect the results of egregious risk taking at great cost to communities and individuals to be put behind us? How else will they lay to rest the cynicism, mistrust of institutions and raw anger that that behaviour has garnered?
 

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In my last post I listed 10 books of the Noughties that make the case that contemporary capitalism is failing most of us. So what if you are convinced that business has to change: how do you set about changing it?

This second list features ten of the best titles published over the last decade on the subject of advancing sustainability in business.

The first five books help you make the case for change within your organization. Whereas the majority of books on sustainability argue that change should be advocated using the argument that “being good generates more profit”, - an argument that fails to bring about necessary change in those cases where behaving responsibly costs money - the selected books make the case that business has to change because society’s expectations of business have changed – with social and political consequences if business resists.

The second five books present management frameworks, perspectives and skills that will help to transform a business into a more responsible and sustainable organization.

1.  Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance by Lynn Sharp Paine

Written by one of the only business school professors around with the intellectual integrity to point out the devastating flaw in the argument that you can rely on the pursuit of profit to motivate business to act responsibly. Paine argues clearly that there is something beyond shareholder value changing the business landscape, though she stops short of detailing what those other forces might be.

2.  The Moral Underground: How Ordinary Americans Subvert an Unfair Economy by Lisa Dodson

This book looks at the consequences of failing to reconcile business practices and ideologies with the better side of human nature. Put people in a situation where their freedom of conscience is restricted and they will find opportunities to resist. People like Bank of America’s Jackie Ramos.

3.  The Age of Empathy: Nature's Lessons for a Kinder Society by Frans De Waal

De Waal's latest exploration of what makes people tick. Why is it here on a list of books about business sustainability? Because the ideology and institutions of contemporary capitalism systematically undermine the application of empathy, and I argue that is a core reason why capitalism is in crisis, and why we will increasingly witness resistance like that illustrated in The Moral Underground above.

4.  The Market for Virtue: The Potential And Limits of Corporate Social Responsibility by David Vogel

David Vogel's book is here because he articulates clearly the limits of the supposed "business case" for responsible business behavior on which 90% of corporate responsibility advocates rely.

5.  The Civil Corporation: The New Economy of Corporate Citizenship by Simon Zadek

Zadek does a great job of describing the phenomenon of civil regulation - the pressures being brought to bear on business to improve its conduct. My only criticism is that Zadek is too focused on non-governmental organizations engaged in civil regulation, and ignores the more organic way in which individuals inside and outside business are advancing the movement for responsibility

6.  Social Intelligence: The New Science of Human Relationships by Daniel Goleman

Daniel Goleman is best known for his old book on Emotional Intelligence, but this newer book is more than an excuse to include Goleman's work in the present list. Social Intelligence brings the focus to bear on the importance of relationships at work, and what it takes to nourish them. Crucial for those seeking ways to move from business based on transactions to one of relationships.

7.  Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental and Economic Impacts by Marc J. Epstein

A very solid, reasonably comprehensive sustainability management framework in a single volume. The main criticism is that the case for action relies on the business case, and Epstein pays almost no attention to questions of character and empathy.

8.  Managing for Stakeholders: Survival, Reputation, and Success (The Business Roundtable Institute for Corporate Ethics Series in Ethics and Lead) by R. Edward Freeman

This book is the most recent encapsulation of Edward Freeman's stakeholder view of the firm. Freeman is the father of stakeholder theory.

9.  Cradle to Cradle: Remaking the Way We Make Things by William McDonough

A simple but popular book that is great simply for throwing into question the way in which products are designed. Simple and radical.

10.  Natural Capitalism: Creating the Next Industrial Revolution by L. Hunter Lovins

Add together these new ways of doing business and what kind of economy will take shape? This book presents a now classic vision of sustainable business.

If you have enjoyed these two selections of books, do take a look at the other selections available at the APEsphere bookshop. This is an Amazon affiliate focused on responsible business and engaged, sustainable living. By buying your books from our bookshop you help cover the costs of running APEsphere – and you pay the same price that you would on the main Amazon site. Please take a visit and support APEsphere.

 

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This decade’s end almost passed me by – so immersed I have been in writing projects. That would have been a shame. The period of the Noughties marks precisely the period following my departure from the world of financial services when, after some false starts, I set about writing full time about the place of business in society.

It was a decade that began with the dotcom boom and bust, the Enron and WorldCom scandals, New York Attorney General Eliot Spitzer’s investigation of deep-rooted conflicts of interest on Wall Street and the investment houses, the rise and stagnation of the World Social Forum, the crystallization of mainstream concern about man-made climate change, and the high stakes game of financial pass-the-parcel-bomb that precipitated the global financial crisis, the Great Recession and with it placed over 100 million people around the world into a state of severe poverty and hunger.

I would like to share with readers of this blog the best of the books  I have read about these crises of capitalism and those which signpost the way forward. In this post I will list my favourite ten books of the Noughties that have drawn attention to what is deeply wrong with the particular incarnation of capitalism that has taken root over the last 30 or so years. In the next post I will list the ten books published during the decade that I feel help best to lay the foundations of a new approach to business management that is genuinely sustainable.

So, first to the selection covering the crisis of capitalism.

1. No Logo: No Space, No Choice, No Jobs by Naomi Klein

For younger generations awareness of the cultural problems stemming from contemporary capitalism began with this book, and for earlier generations it updated older concerns by addressing the impact of economic globalization.

2. Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves by Andrew Ross Sorkin

This is the most comprehensive account yet produced on how the current financial crisis happened.

3.  The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan

A smart analysis of what is wrong with the corporate form using the even smarter metaphor of psychopathy to bring out what those flaws mean for the real world. There is also a great documentary based on the book.

4.  Supercapitalism: The Transformation of Business, Democracy, and Everyday Life by Robert B. Reich

Reich - Secretary of Labor in the Clinton administration - does a solid job of describing precisely how big business is undermining democracy. He is also dismissive of the claim made by many corporate responsibility consultants that the profit motive can drive responsibility, in other words that it costs you nothing to act responsibly with due regard to the impacts of your actions.

5. Globalization and Its Discontents by Joseph E. Stiglitz

This is the book that brought the academically lauded economist Stiglitz to a much broader audience. He cuts through the free market rhetoric to identify how the institutions of global capitalism undermine its promise of higher standards of living for all, everywhere.

6. Nickel and Dimed: On (Not) Getting By in America by Barbara Ehrenreich

Ehrenreich went undercover to research this account of how hard it is for working class Americans to get by or to improve their situation. US capitalism does not offer opportunity to everyone.

7.  The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein

Of course business always knows how to turn a crisis into opportunity, but what happens when they gather sufficient power to influence the shape of crises as they emerge? Klein's detailed analysis of this disturbing new trend earns her a second book on the list.

8. The Divine Right of Capital: Dethroning the Corporate Aristocracy by Marjorie Kelly

This book by the founder of Business Ethics magazine represents one of the earlier and better analyses of how the focus on profit maximization costs society dear. She then sets out a vision of how the course of business can be reset.

9. The Loss of Happiness in Market Democracies by Robert Edwards Lane

Much of the defence of contemporary capitalism rests on the argument that for all its undoubted flaws we are much better off for it. This book comprehensively rebuts that complacency by reviewing what has happened to happiness within western market economies.

10. The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron by Peter Elkind

While Wall Street heads back to business as usual, insisting that the financial crisis cannot be repeated, this wonderful report on the fall of Enron reminds us (and I hope honest politicians) why good regulation is needed.

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