It is now that CSR have to prove its value

Cover of "Too Big to Fail: The Inside Sto...

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Europe and the US is standing on the brink of bankruptcy. Countries like Greece, Spain and Ireland have already over exceeded the boundaries for what can be accepted as good governance by any standard and the US is struggling with internal political issues that have the potential of destabilising the whole world. Unemployment is staggering high with Spain leading at over 21% unemployment and with a situation among younger people, which is even worse at over 40% having problems finding work. Together with the Greek currency bond being rated as junk by some of the big international rating companies the basic outlook bleak if not hopeless.

If the problems were only confined to a few countries it would not have matter that much but in a globalised world we are all interconnected and if these states fall into national bankruptcy we will all suffer. First of all will countries like Italy and Ireland be some of the first to go under a and these will be closely followed by others in the European region. And with 11 of the Euro 27 countries having unemployment rates in excess of 10 % (4 over 15%) there is little or nothing to buffer any kind of downturn.

There are of cause some economies that are doing better than others but in general economies are strained and there have been little in terms of economic recovery since the crisis in 2008. Basically the states have used up all or close to all their resources in order to cope with the last crisis and they will have close to zero chance of making it through another.

So why should companies care? Their obligations are not to the state or the currently sitting Government so why should they bail out the results of irresponsible economic practices.

Well first of all there will be a direct impact on business if they do nothing. A state in bankruptcy will not be ale to uphold its trade agreement with companies meaning potential huge losses. They will try to find similar products at a cheaper rate such as copy-medicine or they will stop treatment all together. There will be little or no investment in infrastructure in areas like energy, roads and water meaning that the ability to conduct an efficient business operation will be reduced.

On a longer term basis it will mean increased corruption and poor governance as countries will be unable to effective police its own laws. A bankrupt state will also men that the country will be less able to educate their own population which have a effect on business as they will be unable to recruit qualified people.

So what can business do? First of all they can start by paying tax in the countries were their operations and customers are. A significant number of companies in Europe and the US are not paying the tax that they should if companies like Google, IBM, Morgan Stanley, DHL and Apple. Companies that have gotten millions in government hand-outs or stimulus money as it’s called should start paying back and not continue to hide money away in tax havens. If they just paid the tax, as they should have done in the first place all our trouble would basically be over. Companies should not be overtaxed but they should at least pay the basic rate in the country that they are situated in. Transfer prising and other trick of the trade have to be governed in a way that will allow countries whom are providing the educated labour, markets, infrastructure and social systems benefits also gets the funds to maintain these systems. Tax systems have for too long been a competitive advantage and this issue have to be effectively resolved.

The biggest of the corporations need to live what it means to have economic power, which is bigger than most countries. Big multinational companies like Shell, Wal-Mart, Exxon Mobile, AXA, General Electric, IBM, Citigroup and Bank of America that are bigger economic entities than countries like New Zealand, Vietnam and Morocco have to live up to this responsibility. One cannot continue to act like a “normal” business when ones impact on demographics and society is so great. These entities are outside our democratic control and while I do not believe that they would willingly be engaged in wrongdoing I do believe that we need to increase transparency to the level that we have on governmental level in order for stakeholder to truly evaluate the performance of these companies. As Andrew Ross Sorkin so adequately put it these companies are simply “Too Big To fail” and in 2007-08 we saw what happens when they doo. Still today we have a hard time believing that companies like Enron and Lehmann Brothers do not exist.

Third corporations have to integrate their CSR. A quick look at CSR reporting will show that most corporation still view their impact and responsibility to society as part of their everyday thinking. When managers and executives take decisions in big transnational companies we have too often seen that they do not have the necessary understanding and comprehension of the effect that their actions will have on society. Time and time again we have witnessed how highly professional business leaders have created situations which they themselves could not comprehend or even fully understood that had significant implication for a much wider group of people than original anticipated. Therefor the “Responsibility of the Businessman” as Bowen describes it needs to be embedded in the very basics of business thinking and education. We cannot keep on having CSR as a add-on to other activities that corporations are engaged in it has to be like Visser so will put it embedded in the corporate DNA.

Some might claim that these proposals are more or less communism or at least socialism in disguise. But I think that the facts speak for themselves when I say that the current way we are handling capitalism is not working to our advantage. I do not speak against people making money of their hard efforts or that some people are just smarter and better at doing business than others and should be rewarded as such. What I’m working for is business done on the basis of having talent and knowledge, which is hard if not impossible for others to duplicate. Not as it seems to be the case today that who ever is the one with the lowest moral and willingness to exploit the ability to withhold information to others that come out on top.

Apple is the”nuclear” cloud of cloud computing

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According to Greenpeace is Apple the number one polluter when it comes to running cloud computing data centers. But is this really true? Any student or researcher will tell you that if you put the question right you will get the answer you have hoped for and in this case it is as true as ever. So what did Greenpeace try to investigate?

“The ‘cloud’ is IT’s biggest innovation and disruption. Cloud computing is converting our work, finances, health and relationships into invisible data, centralised in out-of-the-way storage facilities or data centres. This report seeks to answer an important question about this trend, currently underway across the globe: As cloud technology disrupts our lives in many positive ways, are the companies that are changing everything failing to address their own growing environmental footprint?

Well, of cause it will be more polluting is because in the question you have excluded any other alternative. It is like asking if the windmill industry is polluting well of cause it is because you do not consider the alternative.

Greenpeace sets out to describe some of the key learning points that they have discovered.

Key learnings:

•Data centres to house the explosion of virtual information currently consume 1.5-2% of all global electricity; this is growing at a rate of 12% a year.

We should be happy that more and more of the data that we store are centralized so that we utilize the combined capacity of these facilities instead of multiple decentralized and inefficient systems which will cause even more pollution.

•The IT industry points to cloud computing as the new, green model for our IT infrastructure needs, but few companies provide data that would allow us to objectively evaluate these claims.

Well yes according to Greenpeace but try making the math and consider the alternatives e.g. a underutilized server in every home, business and governmental organization that consumes just or close to as much energy if it running at 20% or 99% capacity.

•The technologies of the 21st century are still largely powered by the dirty coal power of the past, with over half of the companies rated herein relying on coal for between 50% and 80% of their energy needs.

The world have failed to realize that coal and oil is a resource that is running out but mostly because the US have made a combined effort to combat any green legislation both nationally and internationally. So if companies in the US want to have alternative they will have a hard time finding any valid alternatives on the market for green energy.

•IT innovations have the potential to cut greenhouse gas emissions across all sectors of the economy, but IT’s own growing demand for dirty energy remains largely unaddressed by

the world’s biggest IT brands.

I think that cloud computing is a greener alternative to more traditional means of data storage.

•There is a lack of transparency across the industry about IT’s own greenhouse gas footprint and a need to open up the books on its energy footprint.

This is quite true. There is very little knowledge about what the carbon emission impact of the big IT companies actually is. It makes me wonder how and why Greenpeace can make such bold statements about the environmental impact of these companies.

•In emerging markets, where there is limited reliable grid electricity, there is a tremendous opportunity for telecom operators to show leadership by investing in renewable energy, but many are relying on heavily polluting diesel generators to fuel their growth.

Well Greenpeace does not actually know this as they state in their report “Clean Energy Index and Coal Intensity are calculated based on estimates of power demand for evaluated facilities” so in reality it is just a guess that this is how things are done at the facilities and not based on any real evidence or investigation. I could properly have come to the same conclusion if I had looked at a map of power plants and compared this to be the different datacenters are located.

•Data centre clusters (Google, Facebook, Apple) are cropping up in places like North Carolina and the US Midwest, where cheap and dirty coal-powered electricity is abundant.

It just underlines my guess that the survey was done based the placement of different facilities and comparing them to the most likely energy source. The claim of Greenpeace is properly true but with the evidence presented they do not actually know this.

•IT companies are failing to prioritise access to clean and renewable energy in their infrastructure sitting decisions.

This is true but growing energy prices are changing this.

•Of the 10 brands graded, Akamai, a global content distribution network, earned top-of-the-class recognition for transparency; Yahoo! had the strongest infrastructure siting policy; Google & IBM demonstrated the most comprehensive overall approach to reduce its carbon footprint to date.

It sounds good that IT companies are becoming more transparent but this does not make the Greenpeace report any more scientifically valid.

•Across the board, IT companies have thus far failed to commit to clean energy in the same way they are embracing energy efficiency, which is holding the sector back from being truly green.

What is truly green according to Greenpeace?

So is Apple the worst of the worst in cloud computing… well we don’t really know do we?

You can read the full Greenpeace report here.