World Business Interview - Polly Courtice

Polly Courtice is director of the University of Cambridge Programme for Industry (CPI), which provides research, dialogue and programmes for leaders on the social, environmental and economic context in which global businesses operate. Amongst its key themes are climate change, poverty and development and ethics.

by By Morice Mendoza
Last Updated: 23 Jul 2013

What are the challenges facing global business in relation to sustainability?

They are facing very significant challenges. They may have existed before in different forms. But now they are coming together as one and business leaders are expected to address them in a more joined up way than ever before. They have to think about global challenges caused by social and ecological stresses in the system. These are stresses brought about by such factors as poverty, social justice, resource utilisation and shortages of natural resources. Past global leaders generally did not have to factor them into their strategy and planning. And the biggest challenge at the moment is global warming and climate change.

Are business schools helping train managers in this area?

Business schools are not dealing with this as a whole. They are dealing with bits of it. You get lots and lots of business schools talking about globalisation because you can connect this to supply chains, profitability and the whole commercial network. I looked into the top ten European business schools (according to 2006 ranking) and asked how many of them are dealing with climate change in any form in their MBAs or in their full time educational programme. The answer is not one of them. They are addressing it in a very ad hoc way. They've barely got CSR onto the agenda. So the reality is if you were concerned about climate change you have to find other ways to get the training. This is not surprising in the sense that it takes time for these things to get on to a curriculum. But it does mean that business leaders by and large have to work this out for themselves, from within the business community or by going to academic providers.

Are business leaders motivated to respond to these social and ethical issues?

There is a lot of pressure to do it. It goes beyond complying with regulations. It is connected to the idea of having a license to operate, not least because of the pressure created by civil society organisations - the NGOs.

What lessons are companies learning? What are they doing right?

What they are doing that is right is engaging with the issues openly and honestly and admitting that they have to engage with it. What they are doing that is right is admitting that it is extremely difficult. Because you can create a wonderful set of principles, you can even create a fantastic set of policies but actually getting it embedded in the way you run your organisation is very different because this sort of thing very often entails a complete culture change in your organisation.

What are the mechanics of how this is done?

Change happens when you have leadership from the top saying that this stuff matters, that caring about it is good for people's career and it is going to affect their pay and rations.

Do companies have enough knowledge now?

Companies do have expertise within their organisations because these issues are not new. There are plenty of people in good companies who are thinking about stakeholder relations, thinking about what to do about local communities, what to do about technology, about issues concerning their contribution to society. But it's the question of how you pull these elements together to get a real change in the organisation where it becomes part of the way you do business. My sense is those leaders have to start conversations and encourage conversations throughout their organisations on why this stuff matters. And they also have to invest in developing capacity. We have a programme running on climate conditions at CPI and it is packed out, completely over-subscribed. The demand comes partly because they need technical information - they need to know how to implement carbon trading for instance. But climate change and the environment is now recognised as having a significant impact on their business. But when you look at some of the wider issues such as poverty and social justice - the longer-term issues - they are not yet high up on the corporate agenda.

Is there a danger these issues can be faddish?

There is always a danger that something that isn't seen as being of paramount importance to the leadership slides into that category. But we find that once the leaders get it the issue doesn't escape from their mind - but it doesn't make it any easier to frame appropriate policies. Now the spotlight is on climate change but in future the spotlight could be on all the other eco-system services we depend on - land, water, air quality - things that may be a major worry for business as they become scarcer. As the world increases its demand for natural resources and as they become more and more scarce the question of how business deals with this will become an imperative.

Is there a difference in attitude between new and old world business leaders?

This is not my area of expertise but it seems in the emerging markets companies are more focused on growth - this seems to be the biggest single driving force. And the hunger for resources is making those companies look to parts of the world where some of these resources are available such as Africa. I think it is very often tempting for an impoverished African country to do deals with companies that are less challenging about the terms in which they agree. So if the companies are not asking too many hard questions about their social or environmental policies, when those countries are under pressure to feed and employ their citizens it is very tempting for them to take the short-term option. That puts pressure on some of the companies from the developed world also competing for resources and markets.

Where is the line between intervention and non-intervention?

That's a very hard question because I think we would all like companies to intervene in ways in which we regard as beneficial. But it is fraught with concerns about the legitimacy of the outsider's intentions and we see many companies who struggle deeply with questions such as these. I think at one level there are simple hard rules a company can put in place. For example, no bribes or trying to maintain the same standards you would expect in any other part of your organisation or anywhere else in the world. But you can well imagine why companies would feel extraordinarily nervous about active intervention to improve the way a country runs itself. Yet of course when they are doing deals with governments for access to minerals or whatever it might be they can act as powerful force for good in encouraging things to be done in a certain kind of way. On the other hand there are others who regard the power of companies to be way ahead of what is tolerable.

What about CSR-led intervention?

That sort of intervention can only be good unless there is strings attached - whether it buys access to market or entitlements within countries. I believe many companies do many things, which are wholly benevolent and are part of their corporate philanthropy and it is very often because the individual who is there initiates something without making a song or dance about it. I'm not saying that it is wrong to do some good with the expectation that there will be some business benefit coming from it. The real question is: are the benefits fairly and equally distributed? So if you are helping to set up and create a business in a developing country is there an equitable distribution of the benefits. I think fortunately many companies now are held to account for those sorts of activities much more than before. But I am sure there is still a need for plenty of watchdogs.

Do businesses understand the cultures they operate in?

You have to make a distinction between good, large multinationals, which have been thinking about this stuff for years and years and other smaller or younger firms. The former are really trying hard to employ nationals in the companies and many have spent very significant sums of money trying to understand the cultural context in which they are operating. For instance, they are sensitive to the fact that if you come in to a poor country and pay fantastically high wages you will skew the labour market. Whilst they may have the best of intentions, good policies don't always work on the ground. For instance, you often can't recruit locally with the required standard of experience and capability. Of course you can do things with the best of intentions and still distort the local marketplace. There is no question that you affect the local culture - if you are selling fancy shampoo or other fancy goods to which those people have every right and entitlement you nevertheless affect them simply by being there.

What kind of leadership should world business aspire to?

If we are going to tackle climate change in a way that will mitigate the problem of climate change as opposed to us just adapting to its consequences as fast as we can we will have to make fundamental changes to the way businesses and society operates and is run. We need to find or develop leaders who can profoundly rethink things. They need to rethink how business operates, how business works with government and how business works in countries and states. I'm not suggesting this is easy. We are talking about a very significant societal shift. There are others who will say technology will fix the climate change problem and that we won't need such a big shift in thinking. However, in my view unless you really believe technology will fix it there is no alternative to changing the way we do things. We need the kind of leaders who really challenge the ground rules, ask tough questions about what we want and what a good economy looks like. What's an economy for? Profit for whom? I'm looking for signs of that debate getting off the ground.

Is it happening?

You can have these conversations with individuals. That is what we have on our programmes at CPI - we get top business leaders to take three whole days out of their schedules. And we put them together with people who have exciting, interesting and perhaps sometimes radically alternative world-views and the conversations are just phenomenal. But of course there is a very long way to go from starting those conversations to seeing a shift in the system.

What will this new thinking look like?

I can tell you where I would start. I would start by making sure I really understood to the best of my ability the impact that my company had in its entirety. I would try to understand, measure and assess the impact that the company had in its products, services, people and actions on the social and natural world. I would also try to encourage a conversation in the whole of the organisation. These may sound like nice fluffy luxuries. But if we want a long-term future this is what I'd like to see. I would like to have a conversation within those organisations about what kind of a future do we want. We haven't really created a vision for a sustainable world. Understanding what kind of world we would like to live in will help us plan how to get there. At the moment we have a sense of despair in our vision of the future.

Will we be asking for sacrifice on the part of consumers and shareholders?

Those people represent a very small percentage of the people on this planet. If you look at the way people are living in Africa they don't have much to give up. They are where the population is growing and they are where the future lies. So in the short-term we may have people hanging on to what they have got and look for ways to enable them to do so and bring the rest of the world up. But when you look around you see that all the wealth they enjoy is derived from the natural world, which is finite. There isn't going to be anymore of it out there. If everybody in the world wanted the same high standard of living, even if only a small proportion wanted it, we would have a problem. Unless there is some major disruption perhaps caused by climate change little will change in our life times. But what is needed now is bold action from government and strong action from business to bring consumers with them.

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