Meet Stephen Hine and the EIRIS Message

L to R: John Tepper Marlin, Stephen Hine, NYC.
Photo by Alice Tepper Marlin, March 26, 2012.

It was an honor and a pleasure for Alice and me to  welcome Stephen Hine to our home in NYC this week. He is Head of Responsible Investment Development for a growing social enterprise based in London, EIRIS, which once stood for Ethical Investment Research and Information Services but now is generally cited without full unpacking.

I've always thought the EIRIS acronym to be extremely clever, although I am told I may be have been reading too much into it. The Greek word eiris means messenger; in Greek mythology Iris was both  a messenger - especially from Hera, Zeus's wife - and also the goddess of earth and sky. She is often portrayed as a rainbow, which reminds me that the rainbow was the Biblical message to Noah that never again will such a flood cover the earth. Which clearly doesn't mean no more tsunamis and rising sea levels.

EIRIS was founded in London in the 1980s by a consortium of churches and charities that needed an institution to do research on the social responsibility of companies. They picked Peter Webster to run it and  picked well, since he is still their Executive Director nearly 30 years later. At that time the New York-based Council on Economic Priorities (CEP) has been going strong for a decade and a half. The business model for EIRIS was similar to that of CEP, and worked better in the UK and Europe than it did in the United States, as it has been increasing the portion of its income that comes from institutional investors. It is comparable in the United States to the Boston-based Kinder Lydenberg and Domini (KLD), which was able to offer its research in return for soft dollars. KLD has been absorbed by a larger organization that mostly provides traditional measures of investment performance.

The good news about EIRIS is that it is growing, with a staff of 60 people distributed in London, Boston and Paris. It is working with seven overseas partners and the group is called the EIRIS Global Platform. On March 22, EIRIS announced the global launch of the EIRIS Sustainability Ratings, which will provide a comprehensive assessment of more than 3,000 public companies worldwide. For the first time, EIRIS will  be rating companies on a 5-point scale (A through E). Long ago, in its infancy, EIRIS provided only "binary" ratings, i.e., whether or not the company complied with a specific law, standard or screen. It has progressively added increased detail and in this latest development is combining the measures into a single Sustainability Rating for each company.

I asked Stephen whether the user could change the weights assigned to the 5-point environmental, management systems, reporting and performance component ratings that make up the overall score. He said: "Yes, clients can manipulate the weightings," although it could be complicated. Clients utilizing the EIRIS Portfolio Manager software have an easier time of it, since one of the inputs is a question about weights to assign each of the criteria.

Mayor Koch on Corruption in Government

Former Mayor Edward I. Koch

Former Mayor Ed Koch writes an email that is sent out by his law firm Bryan Cave. I get it, and the one he sent out on Halloween was a blunt cri de coeur about corruption in the country and the City.  I couldn't find a website link for his commentary, so I will excerpt from it and suggest you contact www.bryancave.com to ask for your own email subscription.

Right in the opening of his commentary, Mayor Koch lays out why he thinks the Occupy Wall Street initiative resonates in the nation and the world:

What this country needs is a Congress and a President who will investigate the corruption that Americans feel is rampant. The Occupy Wall Street crew… has captured support because of the uneasiness of Americans... that our lawmakers at every level of government have been compromised, if not purchased… Corporate America – particularly the banks and Wall Street securities firms – that were responsible for... the Great Recession [are] now richer, bigger and more powerful than ever… while 15 million Americans remain unemployed…

He cites Tom Friedman's column in the October 30 issue of the New York Times, on the power of corporations and Wall Street:

Our Congress today is a forum for legalized bribery… [T]he financial services industry… spent $2.3 billion on federal campaign contributions from 1990 to 2010… Why are there 61 members on the House Committee on Financial Services? So many congressmen want to be in a position to sell votes to Wall Street.

Mayor Koch was a member of the House Banking Committee, predecessor of the Financial Services Committee, before he was elected Mayor. So he is in a good position to assess what is happening in the Congress. He goes on to cite a specific failure of justice:

Two major Wall Street corporations responsible in part for the Great Recession were fined by the S.E.C. One, Goldman Sachs, paid a fine of $550 million; the other, CitiGroup paid a fine of $285 million [for] taking advantage of clients in the sale of securities which they knew were near worthless. In imposing the civil fines, the S.E.C. did not require the companies to admit guilt.

Friedman is referenced again as the source of a quote from Senator Richard Durbin, Democrat from Illinois and number two in the Democratic Senate leadership, describing the financial industry lobby as "still the most powerful lobby on Capitol Hill. And they frankly own the place." Koch's comment: "Many of us think they still do."

Koch links to this national corruption the current police scandal in New York City:

We see the beginning of a police scandal, which I sense will rival that of 1972 when the Knapp Commission investigated the Police Department … [I]n the Borough of the Bronx [there are] charges against 16 cops for ticket fixing. The Daily News of October 30 reported, "Some of the roughly 160 cops whose names surfaced in the ticket fixing scandal will be asked to testify against their fellow officers..." … Robert T. Johnson, the Bronx district attorney, said the ticket fixing scandal had bled between $1 million and $2 million in revenue from the city’s coffers and tainted the police force. What this situation calls out for is a new Knapp Commission to once again examine the integrity and practices of the police officers and their union, the Patrolmen’s Benevolent Association.

Since the days of the ancient Greeks, some people earn the status of prophet. The way to do this is to first to become a prominent leader  (like King Oedipus) and then continue to speak up in retirement. Many ex-leaders try to get heard, but only a few continue to have a voice and influence - as Mayor Koch did in confronting the President on Middle East issues. I think the reason he gets heard is that he tries to be reasonable even when he is passionate about an issue, and that he is above all fearless. I hope he keeps on commenting, for as long as he is able, on what's wrong with the country and the City.

The Sugar Stimulus - Comment

In his blog "The Sugar Stimulus", on Halloween candy, Andrew Rosenthal, editorial director of the NY Times, wonders about the net economic effect of $2.2 billion sales of Halloween candy. I have commented - see http://community.nytimes.com/comments/loyalopposition.blogs.nytimes.com/2011/11/01/the-sugar-stimulus/?permid=1#comment1.

Here is the text of my comment, should you not want to go look up Mr. Rosenthal's original post:

To put Halloween candy in perspective, the $2.2 billion sales is 2.4 percent of what U.S. consumers spend (2006 data) on tobacco products. Tobacco companies spend $12.4 billion (2006) promoting tobacco products in the USA, double what they spent in 1997. Cigarette smoking is debited with $193 billion in annual U.S. health-related economic losses ($96 billion medical, $97 billion lost productivity, data through 2004), about $10.50 per cigarette pack sold in the USA. The Center for Science in the Public Interest seems more concerned about (1) corn syrup added to food, and (2) daily consumption of fatty food than about candy. Here's a thought: Kids getting sick at Halloween might actually be put off consumption of candy the rest of the year. (Sources on tobacco at http://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/.)

Foretica CSR Conference, Madrid

Alice with German Granda, Madrid.

Madrid, Sept. 20, 2011 [updated Oct. 3, 2011] - I am in Madrid with Alice attending the launching by Foretica of the Spanish component of Enterprise 2020, the corporate part of the planning exercise of the European Union that was launched last October. We attended a dinner yesterday for speakers hosted on Sept. 19 by German Granda of Foretica. See photo at left of German and Alice.

The European effort is led by CSR Europe, of which Stefan Crets is Executive Director. He said at the conference opening today that  Europe-wide they have recruited 3,000 companies in 27 member countries as partners in the project. Crets used to be at Toyota. In his introductory remarks he asked:  “What is the added value of CSR? How can it add value for society and the company? The business case can be made easily in some areas, but in others it is simply a belief. In the 'third phase' of CSR we must emphasize innovation. How does the core business model generate innovation toward sustainability? What new ideas, businesses can be created that address sustainability issues? Urban mobility, for example, will require government cooperation to move toward plug-in hybrids, smart cars, electric cars. We need to look to practical projects.” 

LtoR: John Tepper Marlin, Gefei Yin, German Granda, Madrid, Sept. 20. 

Conference participants at Foretica Conference, Madrid, September 20, 2011.

The Spanish launch is led by Foretica, of which Juan Pedro Galiano is President and German Granda is Director General. Foretica is recruiting Spanish companies to join in the European corporate effort. Companies are asked to come up with ideas for solving environmental and social problems. The elephant in the room was Spain’s economic crisis, which dampened the enthusiasm of Spanish companies to send their top executives to the conference. However, the number and importance of the companies at the conference was impressive. While many companies may be cautious about committing themselves heavily to the program, they are clearly eager to avoid the other danger, which is being absent from the dialog. In fact, the quality of the corporate staff that showed up was extremely high – the corporate speakers were well informed and masters of their subject matter. [My report on comments by Spanish speakers is based on the simultaneous translation provided by the conference.]

Pedro Ortun, Director of Enterprises and Industry of the EU, spoke of his office, which was opened in June 2010 in Brussels. He assists in recruiting companies to create partnerships with government entities in Spain.. Now 700 companies are involved Europe-wide with the BSCI initiative, which has led the way [its labor standard is based on the SA 8000 standard]. Since 10,000 companies have more than 1,000 employees,  many large companies are still not involved. Active corporate CSR groups exist in 7-8 member states - what about the remaining 27 member states? Most companies have a small CSR component in their advertising and put out a CSR report. But this is not enough. Companies need to involve their stakeholders and checking on their processes. Very few, maybe 10 companies, where the company is totally responsible. 

Will Day spoke eloquently on environmental issues (deserves a post of its own) and Alice Tepper Marlin spoke on labor issues, especially SA 8000.

Right Travel - Bicycle Rental and Safety

Riding a bicycle is the most efficient and least environmentally damaging form of transportation. Unfortunately for our planet, the bicycle is rapidly being replaced by cars in China and other emerging countries, which adds to their thirst for oil. Bicycle advocates are trying to reclaim space on city streets. I have blogged about companies (Decaux et al.) that have made rental bicycles available in Paris and elsewhere. Here are some updates on business, government and community actions enabling more bicycle travel in cities:

New York City. (1) NYC is planning on bringing in a company that has done public bike rentals for London and Boston. They plan to start with 10,000 bikes in 600 locations in Manhattan and Brooklyn.  However, the company plans to charge a $100 membership fee, which may make it hard for tourists to use. More. (2) The NYC Department of Transportation has put out a terrific bicycle map. One thing to look for is the location of every bicycle shop in New York (identifying which ones rent bikes), as well as details on bicycle paths and special detail on crossover points at highways and bridges. We have biked on the riverfront path up to the West Side and down to the Battery. (Reminder: The Dutch bought Manhattan - Battery Not Included.) (3) Another innovation in NYC is community responsibility for growing flowers in the pits next to the bike lanes.

Paris. I read reports that the bicycles in the Velib’ program were being vandalized and that the Mayor was reducing his commitment to it. But on two visits in the last three months I saw no sign of this. The Velib' program is alive and well.

Transport for Oxford alumni, Said School, Sept. 2011.

London. Bicycling got a boost from the Central London Congestion Charge (about $12 a day to bring a car into the central district) and then from the tube bombings in July 2005.

Oxford rickshaw-cycle with passenger.

Oxford. As Oxford University has grown, so have the bicycle racks. And for Oxford alumni there in September wishing to stay out of the rain, Oxford brought in in cycle-rickshaws for its senior members and their spouses (see photos, in front of the Said Business school ).

Washington, DC. Alice and I have bicycled along the Potomac and along the Mall. I have also ridden many times on the towpath next the canal from Georgetown.

Topeka, Kansas. Elly Blue is is reporting every couple of days on her travels by bicycle with a documentary film-maker and a vegan cook. Most recently in Topeka, she shows how bicycle riders can push their case hand-in-hand with community renewal programs.

Nantucket, Massachusetts. Earlier in September Alice and I visited Adele in Nantucket and we went biking. We needed to rent a couple of bikes and Edgartown has three bike shops in a row. We picked the middle one, Young's, and were each fitted with a bike and a helmet in a couple of minutes. We visited the Coast Guard beach and several other beaches in different parts of the island.

Safety-conscious bicyclist studies map ahead of the trip (left) and reads notices at the Coast Guard beach (above).

Bicycle Safety Issues

Note that even in Nantucket we wore helmets! It's even more important in an urban environment. Hand-in-hand with the growth of bicycle riding in cities, more attention should be paid to bicycle safety. Ross Sandler of the New York Law School has just urged that bicycle safety be improved in four ways. I have slightly edited his list to make it clearer (at least to me):

• Mandate Helmets: These are the equivalent of seat belts. They should be mandatory.
• Mandate Visibility Conditions. Bike riders are not always visible, especially when traveling closely between cars. New York City’s car lanes are narrower than the lanes found in most cities and on all modern highways. This puts a premium on visibility for pedestrians and for cars in tight turning situations. Bicyclists should be required to wear bright-colored clothing and have lights at night.
• Enforce Compliance with Traffic Laws. This should be a police matter of high priority. Bikes are silent and often speed faster than cars on the same street. Only police officers can stop a bike going in the wrong direction or weaving through pedestrians in the cross walk. For bike riders with driver’s licenses, put points on their license and impose a stiff but realistic fine for traffic violations including ignoring red lights.
• License Bikes and Commercial Bike Riders: Register bikes on purchase. Put a license tag on all bikes. Make commercial delivery riders wear shirts with the names of their businesses on their back. Licensing would permit identification of violators and put teeth into enforcement.

Some of these proposed rules are common sense, like wearing bike helmets. Others are more controversial.  For example, should bicycle-riding behavior be a factor in deciding whether to allow someone to drive a car? Does the punishment fit the crime?

Comparing Coffee Standards

Sooner or later, it has to happen. The raters are rated. Jorrit Reintjes has written an excellent M.A. thesis for Rotterdam's RSM Erasmus University on "How Do You Take Your Coffee Production?" He rates eight standards for sustainable coffee supply chains. Coffee is a good product to start with. It's legal, calorie-free and is addictive yet has healthful properties. They say that when human life becomes extinct on earth the beetles will survive. In the same vein, at an NYU Stern seminar last week, the consensus among panelists was that in the deepest recession, coffee sellers will thrive.

The eight coffee standards are FairTrade (FLO), Utz Certified, Common Codes for the Coffee Community (4C), Rainforest Alliance, Globalgap, Organic (EKO), SA8000 and Sara Lee's Global Standards.

The five overall criteria for rating the raters are: scope of standards, rigor, embeddedness, compliance information system, and non-compliance response system.

As might be expected, the single-company standard fell short in every category. The three top-performing standards were FairTrade (FLO), Rainforest Alliance and SA8000. One characteristic of these three standards is that the organization sponsors are long-term members of the ISEAL Alliance and they know what it takes to develop, institute and enforce a global multi-stakeholder standard. Some of the other organizations have joined ISEAL and can therefore be expected to be moving in the right direction.

Jorrit deserves huge praise for this detailed and thoughtfully executed study. His professors at RSM Erasmus University also deserve commendation. As Jorrit notes, there is room for further work in this area. Meanwhile, this is a major contribution to the field.

New Report: Workplace Conditions in China, India, Turkey

A new collection of three corporate citizenship case studies has just been published by the Center for International Private Enterprise (CIPE). The report is called: "From Words to Action: A Business Case for Implementing Workplace Standards". The case studies review workplace conditions in factories in three countries - China, India and Turkey. The report was prepared with the assistance of Social Accountability International (SAI).

Evidence from all three factories supports the idea that better working conditions support a healthier, better trained, and more loyal staff. A better workplace supports better quality products and a sustainable company.

The companies profiled include a mid-size garment factory in China, a large textile company in Turkey, and a world-renowned steel manufacturer in India. All three used the SA8000 system for managing and being certified to ethical workplace conditions.

"Business attains corporate sustainability when all three bottom lines - financial, environmental, and social - are addressed in an integrated fashion," said Eileen Kohl Kaufman, Executive Director of SAI.

Disclosure: I worked on one of the case studies, that of Topkapi Iplik, the Turkish textile company.