Are you feeling ‘materially misled’?

I shan’t bore you with my life story. But long ago, as a disillusioned young chemical engineering graduate I looked for work in a consumer protection role and happened to land my first ever proper job at the UK Advertising Standards Authority (ASA).Then as now, the ASA earnestly considers the complaints from members of the public and competitor companies concerning advertising material. If found to be in breach of any one of a multitude of rules, after thorough investigation (my job), the ASA publishes a ruling and the advertiser is commanded not to repeat the advertising. Sounds fine as a system, except the rapid speed of brand advertising campaigns and the glacial pace of the ASA’s case load mean that most rulings are published long after the event.

I’m not here to knock the ASA though - I’m still fond of them for employing me and have significant empathy for anyone dealing with complainants. It’s like going home to the wife / husband every morning you enter the office. But compared to another UK regulator Ofcom (responsible for most UK broadcasting and telecommunications), the ASA is a model incisive action like their almost namesakes, the SAS.
On leaving the ASA, I resolved never to complain about anything, ever (except to the wife). And for close on 25 years I held to this maxim.

Then on the 8th March 2007 (note the date) I sat down to watch Channel 4 Television’s documentary on climate change, The Great Global Warming Swindle. This extraordinarily mendacious programme used falsified evidence and misrepresented interviewees to assert that manmade CO2 emissions are not the cause of climate change. One more time - manmade CO2 emissions are not the cause of climate change.

I was appalled. Just when Al Gore was finally getting some traction with An Inconvenient Truth here was a reputable broadcaster casting doubt about the science. What made me furious, and caused the breaking of my ‘never complain’ rule, was that it’s a message we would all dearly like to hear. The wonderful relief we might enjoy if climate change was a scare story cooked up by green activists and leftist politicians to prevent the wealthy from enjoying themselves to the full. Best of all Jeremy Clarkson would be right, fire up the V8, I’m going on a road trip. Friends called me as soon as the programme ended. ‘You’ve got it wrong’ they said. ‘Your career’s a fraud’. And most hurtful of all, ‘I always knew you were a pessimist’.

So after due consultation of the Ofcom broadcasting Code, I drafted my complaint. As I mentioned, I have experience with Codes. One of the Context team sent it to a friend who sent it to someone at an NGO who published my complaint on the web as a template for others. Not at all my intention, but no harm done.

Today, one year and four months after broadcast, Ofcom made its ruling. Yes the programme breached the code. It misrepresented interviewees, misplotted graphs and failed to give a balanced view. But no it did not ‘materially mislead’ the viewer. Despite the established fact that my friends and thousands of other people were caused by watching the programme to misunderstand the cause of climate change, they were not materially misled. This enabled Channel 4’s vacuous head of documentaries Hamish Mykura (note that name - it will no doubt appear in future broadcasting misdeeds).

 

“Ofcom’s ruling explicitly recognises Channel 4’s right to show the programme and the paramount importance of broadcasters being able to challenge orthodoxies and explore controversial subject matter,”

“This is particularly relevant to Channel 4 with its public remit and commitment to giving airtime to alternative perspectives.”

Note, Channel 4’s ‘public remit’. So what would Ofcom regard as a material misclaim? Ah, look a couple of cases down in the same Ofcom bulletin. The case of one viewer against porn channel Sport XXX Girls. Apparently the viewer was aggrieved because the live sex chat he believed he was viewing was a pre-recorded repeat. Now that really would be misleading - even a material waste of his £4 pay per view fee.Ofcom agrees.

Sage

Spend to Save

Dear Blog readers

You are few (I know I check the stats) but I like to think of you as discerning. A minority of people share our deep interest in environmental and social issues and fewer still in the relationship between companies and those subjects. If we are indeed a minority it seems we are a growing one. The question of what happens when sustainability meets consumerism is interesting and beginning to be put to the test. There is an explosion of marketing effort directed at consumers to convince them of the environmental benefits of everything from laptops to smoothies. This is because market research is once again saying that the consumer is motivated by green issues (yes it happened at least twice before). The so called ethical or green shopper is back and this time she or he means business.

According to an American Express survey of its most affluent customers, The Centurion Luxury Living Index, high earners are seeking to recreate the classic 70’s TV sitcom The Good Life. (Younger and non-British readers need only know that a husband and wife living in the suburbs had ridicule heaped upon them weekly for growing their own vegetables, fuelling the car with cooking oil and riding bicycles.)

Apparently the wealthy are displaying their conscience in their purchasing habits and life-styles. So can we really spend our way out of the environmental crisis? As I mentioned in my last blog, there are some significant champions of green consumer power. Terry Leahy of Tesco to name one.

I’m less sure. For one thing, the wealthier you are the more environmental impact you tend to have. I reckon that a person’s carbon footprint is roughly proportional to their income (assuming they spend it). The same goes for their waste volume. OK, there comes a point when even the super rich can’t consume any more and are forced to leave it in the bank, but up to that very high point, Sage’s Law, applies. Income and impact are in proportion.

So wealthy customers are buying organic vegetables and talking about allotments. But are we really to believe people too busy to raise their own kids or do their own laundry are about to dematerialise in droves?
Token greenness is easy when you are wealthy. It’s no sacrifice to buy organic, install solar panels or take an eco-break in the Amazon. But it’s the absolute footprint that counts, and the wealthy make a bigger one than the poor. That’s why Al Gore was embarrassed shortly after The Inconvenient Truth was released. His sixteen room mansion consumes a lot of power.

The challenge is to square man’s desire for possessions and experiences, with the physical limits of the planet to supply those. If we make each activity a little less impactful, but continue to demand more, faster, bigger, then the net impact will continue upwards and be unsustainable. Add to this population growth and rapid economic development in heavily populated regions and we have cause to be worried. There is precious little evidence that limits to consumption have been reached, even in the luxury West, only limits to supporting that consumption. Marketing and some instinctive consumption gene, just drives us to get more stuff. Try standing in the middle of Top Shop or Primark on a Saturday morning and thinking about sustainable consumption as hordes of girls grab cheap fashion from the rails and clutch it to them on route to the fitting rooms. I’ve done it – then flashed my credit card for my daughter.

Next week I will be entering one of the high temples of consumerism, the Cannes Lions Advertising Festival, where I have kindly been invited by WPP branding agency G2 to participate in a panel discussion. The main event at the festival is the screening of advertisements (presumably now in all media) to select the award winners in various product categories. Those most effective at shifting products, winning market share and raising brand awareness will be honoured. If I can find evidence of sustainability there, things may truly be changing.

G2 has bravely dedicated its session at the conference to Sustainability and the Shopper. One of the topics we will discuss is: Is sustainability an enduring issue?
You have to think about that one!

CR Sage

 

Counting carbon part 3 - product carbon footprints

 

 

In my last blog (counting corporate carbon) I tried to give a flavour of the complexities, vagaries even, of calculating a company’s carbon footprint.

Challenging as that task is, it is a trivial pursuit compared to the difficulty of calculating the carbon footprint of each of us as we go about our daily lives, eating, showering, heating, cooling, travelling and of course(since we are good capitalists)purchasing.

 

But this is the aim of a number of influential and well intentioned people. To identify the ‘embedded’ carbon in each and every product and empower the consumer to make low carbon, climate friendly choices.

“We’ll put the Orios back and have the low carbon rich teas instead.”

 
Before I get to the issues here, let’s just deal with the terminology. Whoever labelled the carbon dioxide associated with the manufacture, packaging, distribution and sale of products as ‘embedded’ was either very poor with words or setting out to sow confusion. Because ‘embedded’ it is not.

The carbon dioxide (confusingly often just called ‘carbon’) is of course released to the atmosphere at a multitude of points during the extraction of raw materials, processing, manufacture and transport to retail outlets. The carbon is (mostly) not in the product but in a huge trail of gas wafting behind them as they are created and sold. That’s what makes counting it so hard. If it was indeed embedded in the product, life would be simple – we could just measure it.

 
So how can the ‘wafting trail’ be measured and what would we do with the information? In the UK business leaders are committing to footprint their products under the guidance of The Carbon Trust, a government funded organisation. The carbon Trust has developed a methodology and publishes the footprints on its (rather strange) website.

Most significant among the early movers is UK and international supermarket Tesco. In the words of CEO Terry Leahy:

“Imagine if all those people acted to cut carbon emissions in all they did. This would be true collective action: millions of people who, through their own unique, individual actions, would be working towards a common, shared goal of protecting the environment. The green movement would become a mass movement in green consumption. That’s our goal.”

“As I announced back in January (2007), we’re beginning the search, a worldwide search, for a universally accepted and commonly understood measure of the carbon footprint of every product we sell.

 
This will enable customers to compare their carbon footprints as easily as they can compare their price or nutritional profile. We want to understand how measurement can work in a simple, cost effective way when applied to a wide range of products.” 

Similar work is being undertaken in the US. I’m unsure if this is coordinated by an equivalent to the Carbon Trust, but outdoor clothing company Patagonia is leading the charge.

This is all well intentioned, expensive and hugely encouraging activity. But what will it achieve? Let’s look behind the label…

As I mentioned above, to capture the carbon footprint of a product, you have to measure the ‘wafting trail’ of CO2 at every point of emission all the way ‘down’ the life cycle of a product. Something simple like a potato, for example might involve:

 

- carbon emitted by the seed company,(energy used, packaging manufactured, delivery to farmer) 

- carbon emitted by fertiliser manufacturer

 

- carbon emitted on the farm (water pumping, sowing, harvesting, packaging, delivery to supermarket)

 

- carbon emitted by the supermarket (distribution, refrigeration, lighting, heating).

 

Even this is simplified and remember we are considering a potato. Now try it for a pizza – or a pair of jeans – or, deep breath, a laptop. By the way apologies for any inaccuracies in the growing of potatoes – I’ve never done it.

Undaunted, teams of environmental scientists have been crunching the numbers to bring the consumer the carbon data he or she craves. Now, I confess to a morbid fascination with the numbers below, but I suspect as interests go, it has the social appeal of model railway engineering (visit our office and I’ll show you my Hornbies).

So here are some of the first carbon labels:

Patagonia presents the information very nicely on a micro site. They have footprinted ten products from shirts, to dresses to shoes (see http://www.patagonia.com/usa/footprint/index.jsp)

 

 

For example, Womens Nine Trails shorts:
CO2 1.4kg shorts 0.107 kg, ratio CO2 to product 6.

 

 

Or, Honeydew Shoe:
CO2 22 kg, shoe 0.56 kg, ratio CO2 to product 39.

 

 

It’s shocking and fascinating that between 6 and 39 times the weight of their products is released as CO2 to make them.

Here are some from the UK companies (see http://www.carbon-label.co.uk/product.html) 

 

Tesco Pure Squeezed Orange Juice:
360g CO2 per 250 ml serving: ratio 3:2
 

Tesco King Edwards Potatoes:
160g CO2 per 250g serving: ratio 2:3 

 
Walkers crisps:
75 g CO2 per 35 g crisps – ratio 2:1
 

Innocent Smoothie:
249 g CO2 per 250 g drink – ratio 1:1

 

 

Look behind the label though and the complexity and fluidity of many supply chains becomes apparent. Strawberries in winter are different from summer. Shoes from China different from Vietnam. Spanish oranges different from Californian oranges? To keep labels accurate and current they would require real time updating as product specifications or sourcing alter. Can anyone really imagine this working? What we have with today’s, early labels, is a significant proportion of assumptions and generalisations being used to produce a number. Fine for an indication of the size of the issue, but no good for telling your Orios from your Rich Teas.

Some are suggesting we have a CO2 recommended daily allowance, RDA (like fat or salt). We are told we are each responsible for around ten tonnes of CO2 per year in Europe and 20 tonnes in the US. This of course is spread across all our activities, but I strongly suspect does not include the full ‘wafting trail’. So the RDA would be calculated as 1/365 of whatever our annual carbon allowance becomes.

The idea that we can calculate this for ourselves as we shop is probably unrealistic. But it would be possible with online purchases to provide a carbon statement with the shopping basket – if the numbers were robust.

So where is all this heading? I can’t see Terry Leahy’s vision of consumers voluntarily responding to labels having a significant impact on global warming in the near future. I can imagine governments attaching sales tax rates to carbon footprints like VAT but ‘CAT’ (carbon added tax). Maybe I should trademark that! This way consumers could continue to worry about dollars and pounds and not have to cope with a parallel carbon currency.

Lastly might there be a quota? A what? Not since world war two have we rationed products. Might we each have a carbon footprint to use as we choose – one transatlantic flight or 10,000 Orios? Perhaps the wealthy could buy credits from the poor. Crack for your carbon? On reflection I don’t think we should go there.

CR Sage.

 

Counting (Corporate) Carbon - Part 2

I’ve been intending to write this post for a while. But you have to be in the mood to blog about carbon in the evening after a day’s CR consultancy, as an alternative to say, going for a drink with a friend, or chatting to my kids. I have tried talking to my friends and children about carbon, but so far without success.

This is about carbon emissions, specifically corporate emissions. As most professional CR practitioners know, the Carbon Disclosure Project (a coalition of major investors representing $57 trillion of assets under management) has been asking listed companies(nicely but firmly) to disclose their annual CO₂ emissions on a public website.

The logic being that carbon emissions represent a business risk,and that transparency will drive better risk management. No need for an ecological motive.

We are all going to have to get much more carbon literate, in personal purchases and in how we view companies. So here’s a quiz for CR professionals. Below are ten well known companies, five from the US and five UK. Underneath is CO₂ emissions data for all the companies. All you have to do is match the data to the company – easy right? Answers are at the bottom.

BP

BT

GSK

HSBC

Tesco

UK data million metric tonnes CO₂:

0.63, 4.1, 69.4, 2.2, 0.72

Exxon

Verizon

Pfizer

Citigroup

Wal-Mart

US data million metric tonnes CO₂:

1.4, 7.2, 158.8, 20.4, 1.4

 

Of course this quiz is not too hard because the companies are all in different sectors. Even so, you end up wondering if a telecoms company or a pharma company is a bigger carbon emitter.

 

This only illustrates how much we have to learn. But before we can, we need a reliable protocol for calculating carbon emissions. Here unfortunately we’re in wobbly logic land. The accepted methodology is the GHG Protocol of the World Resources Institute (WRI). This well intentioned piece of early thinking is well overdue an upgrade – imagine using Word 1.1 today – and you get the idea.

 

The subtlety surrounds where you draw the boundary around the emissions for which you are responsible. Should you include the products your company buys? If so what about the services? And what about the products or services you sell? Should you include the CO2 emitted during their lifetime?

 

 

To answer this, WRI define three ‘Scopes’ (see pic)

 

 

Unfortunately the logic flaws are all too clear in the diagram. CDP ask companies to report Scope 1&2 emissions.

 

For a bank for example that means heating fuel, electricity and company owned vehicles but NOT business flights which are in Scope 3.

 

This would be quite easy to remedy, but the question of how to treat suppliers is much trickier. Suppliers appear in Scope 3 and pressure is mounting on companies to include supply chain emissions. But how far back do you go? Just complete products purchased? Or components for products? Or materials for components for products?

 

A typical supply chain can commonly have four or five ‘tiers’ in modern manufacturing. And if you are accountable for physical supplies what about services you purchase? Finance for example. How much of your bank’s emissions are your emissions? And if your bank manages funds that happen to invest in your company (a common occurrence) how much of your own emissions owned by your bank, supplied to you as services and finance are you responsible for?

 

You can see why this issue is tying everybody in knots.

 

At lunchtime at Context, we often sit round our big table and discuss whatever comes-up. Our young team are all in favour of companies reporting more comprehensively and trying to include the carbon emissions in their supply chain. I understand their motivation, but don’t think it can work – because it’s complicated and we need simplicity.

 

I view carbon like value added – we count value added at each stage of the supply chain and tax it – we can do the same with carbon. Each company is responsible for its own ‘carbon added’.

 

Ok, so a western brand with outsourced manufacturing gets off lightly, but we need to recognise that emerging economy companies are substantial organisations that must be subject to the same transparency as western companies. We can’t really live with a system where Sony (Japanese)reports and pays taxes for its carbon but LG (Korean) does not.

 

In any case the balance of commercial power is shifting East. It’s increasingly unrealistic for western brand owners to dictate terms to eastern suppliers. Increasingly the supplier is the stronger company. So the idea that a purchaser can manage the carbon emissions of its suppliers is based on yesterday’s power balance.

 

There’s no escaping climate change – whether we are American, European or Chinese or Indian, we must start counting our own carbon and cutting down.

 

CR Sage.

 

Million metric tonnes CO₂
Exxon - 158.8
BP - 69.4
Wal-Mart - 20.4
Verizon - 7.2
Tesco - 4.1
Pfizer - 2.4
GSK - 2.2
Citigroup - 1.4
BT - 0.72
HSBC - 0.63

Counting carbon - part 1

Google today (in the UK) has blacked its screen…. 

 

The company explains, “We’ve turned the lights out. Now it’s your turn - Earth Hour“. Google explains this is an awareness raising gesture not in itself an effort to save energy (black screens use the same power as white ones). 

What of Google’s efforts to take ownership of its own carbon footprint? The black screen carries a link to an explanatory page detailing research and investment into renewable energy sources. Fair enough. 

But how big is Google’s carbon footprint? The company won’t say, claiming it is commercially sensitive. The data they provide to the Carbon Disclosure Project is not - err disclosed. At the same time Google claims to be carbon neutral, having purchased offsets to balance their (unknown) footprint. 

A scan down the ICT sector data in CDC raises more questions than it answers: 

Dell – 0.38 million tonnes CO2Google – not disclosed but ‘carbon neutral’
HP – 1.6 million tonnes CO2
Intel – 3.9 million tonnes CO2
Microsoft – 0.42 million tonnes CO2
Yahoo – not disclosed but ‘carbon neutral’ 

Should we trust the carbon neutral claims? Both companies say their data is independently audited. Is this enough?

I think not. Even if the data has been properly collected and the offsets rigorously arranged (two huge assumptions) we want to know the size of the problem. The Stern Report estimated that the internet is responsible for approximately the same amount of greenhouse gas emissions as global aviation. This was a revelation to many, who had seen the ‘virtual’ sector as almost impact free.  

So how good an argument is commercial sensitivity? I imagine it would be simple to estimate the number of servers (or total storage) Google and yahoo have from their carbon footprints and that’s why they are so shy about carbon. Googling the question reveals a lot of speculation in geek circles, with estimates between 100,000 and 500,000 servers for Google.

Another tack would be to look at their energy bill which might be assumed to be material to their annual accounts. I haven’t checked – but let me know if it’s there. 

If we accept that there are certain sectors where carbon footprints cannot be disclosed to the public, we need to be thinking about a trusted authority to verify claims. Not individual hired auditors and definitely not carbon offset arrangers. Something analogous to the supervision of disarmament in Northern Ireland where the militarised factions would not reveal their armouries to one another. 

On the whole though, openness should be the rule. Openness would mean we could have more confidence in the data, we could understand the consequences of our own IT use and we could trust the likes of Google and yahoo better. Notice anything strange about the other ICT companies in the list above? How can Microsoft and Dell be under half a million tonnes CO2? That will be the subject of my next blog – but at least their willingness to be open with their data allows us to discuss it. 

CR Sage.

Fashion Victims

Amazing, really the speed with which ignorance can pass to concern and then cynicism. In fact in the case of Peacocks, a second league UK fashion retailer, I’m unsure whether they paused even briefly in the ‘concern’ phase.I was literally stopped in my tracks in one of their stores by a huge poster campaign, “Global Warming – beware”.Pictured in toxic landscapes of orange lakes and dead tree stumps (see web banner above) minor models pranced in the brand’s cheap clothing. 

What, I enquired of the store manager, did “Global Warming- beware” mean?  

“It’s advertising” he said.

Yes thank you, but how does it relate to your clothes? 

“Just advertising” he said. 

Now I’d really like to meet the ad executive who dreamt this one up. What possible thought process led to the slogan, “Global Warming – beware” for a fashion line that has no connection whatsoever with the subject? Perhaps I’m missing a new marketing trend – disaster marketing. I do recall a brand of cigarettes called ‘Death’. Maybe it’s the new consumer aspirational marketing. Nihilism equals sexy.

I have a hunch this may be over-analysing the Peacocks marketing strategy. So are Peacocks clothes low-carbon in some way? Is their ethical sourcing an example for the apparel industry? Judge for yourself - this is the entire information on climate change and ethical sourcing on their website: 

”Our ethical sourcing policy sets out a comprehensive list of requirements, which we expect our business partners and suppliers to adhere to, including how they should deal with their own employees. We recognise that in some countries there are legal and cultural differences, which need to be taken into account but we do insist on all of our partners meeting our own set of requirements.“ Move over Gap!

Perhaps it’s a little unfair singling out Peacocks (despite their vacuous posters) because we all know that CR is mainly the preserve of the really huge S&P100 and FTSE100 companies. The message from the high street is – there’s one hell of a lot more work to do. Sage

I am beautiful - aren’t I?

You’re out on a date. You know the (man/woman) opposite you only slightly. They appear interesting and you are paying close attention to everything they say. Each sentence is helping you build a quick-fit image of their personality. Then out of the blue – ‘I am beautiful aren’t I’. It’s so preposterous you’d not believe it could even happen. But it does…

I have resisted bloging for some years. Colleagues beg me to keep my thoughts to myself or at least in the company. They worry about losing their bonus. A blog for your bonus? This blog will mostly be about CR (corporate responsibility to the innocent). It’s a field where few are speaking their minds anymore. So much effort is going in to consensus building (and money making) that critical comment has all but evaporated.

The golden rule for companies talking or writing about their own environmental and social behaviour – is humility. Do not blow you own trumpet. Do not tell your audience how great you are. And above all do not claim leadership. It’s the nature of the subject that people will make their own judgements about the appeal of a company. Telling them you are a great employer is unconvincing. Telling them your pension fund is fully financed might score a point. Indeed making your own mind up is the only reward a reader has for ploughing through the turgid company CR reports and websites.

If you are involved in CR you probably subscribe to one or both of the email services that deliver newly minted CR reports to your inbox. Why on earth do they send these things out on a Friday afternoon? Is it like government slipping out an embarrassing news release under cover of a bigger news story? Are they actually hoping you won’t click the link to their latest collection of ‘homilies, platitudes and soft assurances’(as the MacDonalds CR report was once described).Either that or they are so removed from the real world that they actually imagine Friday afternoon is a prime CR report reading opportunity. Beer after work or group CR report reading anyone?

So mostly I ignore the Friday pm CR spam. But recently one popped up I could not ignore. Heading, ‘The best in sustainability reporting just got better!’Wrong, wrong, wrong. Adidas can’t even claim to have been the best, never winning any of the respected benchmarks like UNEP or ACCA. In fact I recall their previous effort being distinctly flimsy. Even if they were the best and had actually improved – this would be a cringe-making headline. But in their case it’s delusional. Why would you want to spend even one minute reading the report from a company that announces itself so presumptuously? Would you believe a word or figure inside?

When it comes to CR (and personal beauty) best leave the judgement to the eye of the beholder.

Sage