The Chinese word for crisis has two characters – ‘danger’ and ‘opportunity’. Holding apparently contradictory ideas together is not easy. So here are 12 reasons to be hopeful in 2013.
1. Occupy Wall Street has shown that citizens can set agendas – for example, on inequality: now some corporate execs accept the need for higher taxes. More unethical or illegal corporate and political behaviour is coming to light faster than before. Politicians are being forced to act, with Iceland the clear leader, and NGOs are mobilising pension members.
2. Consumers are moving from big banks to credit unions and even supporting alternative currencies.
3. Exposed corporate ideologues are fighting a rearguard action and Wall Street lost the presidential election. Having shown itself to be so partisan, the US Chamber of Commerce is now less influential. Corporate fines have never been greater. Of course, this shift shouldn’t be overstated.
4. Climate change is making ‘not in my backyard’ a force for good. After Hurricane Sandy, the New York mayor, Michael Bloomberg, said that all elected officials should be “compelled” to take action. As severe weather events increase in frequency and severity, more opinion-shapers will come off the fence. For the first time since 2008, more than half (54%) of Americans believe global warming is caused mostly by human activities.
5. The Newtown shootings gave (US) asset owners a wake-up call. Asset owners have learnt that they need to do better due diligence on all asset classes and that the ‘s’ (social) in ESG matters.
6. Senior insiders are showing ‘positive deviant’ leadership.
7. The financial transaction tax arrives. Despite vigorous opposition, the EU has acted to address excess market short-termism. Yes, the proposal has all sorts of exceptions and it has become confused with revenue-generating and anti-bank debates, but the path forward is clear.
8. With much debate about the anti-social nature of MBAs, students are responding, for example with an MBA Oath and, most significantly, fewer MBAs are going into finance.
9. Better collaboration between regulators. After decades of a regulatory race to the bottom, there are hopeful signs, such as the recent proposals by the BoE and the US FDIC on systemically important financial institutions.
10. Better collaboration between asset owners. Ideologically-driven competition between pension funds is on the way out, as in the case of Sweden, while collaborative action on new systemic risks, like climate change, is on the way in.
11. Failure of austerity and importance of employment are increasingly understood. Aside from the ideologues in control, everyone else – including the IMF – gets that austerity has failed.
12. CSR events tend to be self-congratulatory. This year was different, with significant public self-criticism after the US Businesses for Social Responsibility event.
Will critical self-reflection spread to the ESG community? PRI and ICGN urgently need renewal; authenticity is the starting point.
These trends are about people doing what was once seen as not even worth trying. Such ‘positive deviant’ leadership results in real, not superficial, hope. Indeed, the CSR/ESG community is largely unconnected to these trends, and in several cases is part of the problem, an issue we’ll address later. Our hope for 2013 is for more ‘authenticity’ from the CSR/ESG community, more engagement with these promising debates and more reasons for real hope.
Raj Thamotheram is an independent strategic adviser, co-founder of PreventableSurprises.com and president of the Network for Sustainable Financial Markets and Jack Gray is an adviser and academic