Published on: June 25, 2010The Cost of Growth...
LONDON - The first Consumer Goods Forum (CGF) Summit, following in the tradition of its forebear CIES, has produced a thought-provoking several days...albeit with a dysfunctional character that may leave the audience with few answers.
The problem is that while clothed in the cloak of sustainability, addressing the very real steps that can and should be taken by manufacturers and retailers to use less and be smarter as they aim for operational effectiveness and efficiency, there have been sessions here that have suggested that the very nature of traditional capitalism needs to be reconsidered.
On the one hand, much that has been focused on here at CGF makes sense. If there has been a theme to these meetings, it is that the building blocks of change are being put into place by organizations big and small that recognize sustainability must be a top priority in coming years for both environmental and economic reasons. CGF recognizes that it has a role to play in helping companies communicate about their efforts, successes and failures, and to help create dialogue and idea-sharing that can serve the industry and, by extension, the global consumer population. Good enough.
Will Day, chairman of the UK’s Sustainable Development Commission, spoke this morning about the ways in which human beings are using up the world’s resources and how wealth is not spread about with any sort of parity. He noted that 38.4 percent of the world’s wealth is owned by 10 percent of the world’s people, “and that is not a recipe for harmony.” He suggested that geographic and demographic shifts are creating an ever expanding chasm between the haves and have-nots, and that “economic growth is destroying more than it is creating.” And he proposed to the audience of highly capitalistic, successful business executives that they have to reconsider the nature of appropriate growth.
In essence, Day’s position is that infinite growth is not possible in a world of finite resources - and that while growth is not wrong, effective and responsible leaders have to reconsider whether growth by itself is enough of a motivation, whether short-term goals (like, say, volume, profit and share price) need to be put aside in favor of longer term, strategic imperatives with greater societal resonance.
The problem is that, unless I’m wrong, there cannot be many attendees at this conference who are not judged - sometimes daily - on the growth they generate for their businesses. There is not a CEO on the planet (with the possible exception of Apple’s Steve Jobs) who would not lose his job if he suggested to his board and shareholders that “enough is enough.” Indeed, Will Day noted that current lifespan for a North American CEO is 15 months, in part because they are forced to make short-term tactical decisions that are focused on the balance sheet, not posterity.
There is not a politician in the known world who could get elected by saying that we live in an era of limits and that there ought to be a redistribution of wealth to create harmony between peoples. (Well, maybe Jerry Brown said that kind of stuff when he ran for president back in 1976 and 1980...but even he isn’t saying that anymore as he tries to once again to become California’s governor.)
“Better lives through better business.” That’s the slogan being used by CGF, as noted by Muhtar Kent, the Coca-Cola CEO, who serves as the association’s co-chairman.
“Better lives is creating more wealth.” That’s the line used by Lars Olofsson, the Carrefour CEO, who serves as CGF’s other co-chairman.
The problem is that for most people, “better lives” and “more wealth” may be at odds with the philosophies being urged by people like Will Day and Tony Juniper, the sustainability activist who spoke yesterday.
Indeed, this morning’s other speakers were independent retailers who have used the IGA system to create successful, consumer-oriented retail businesses in places like China, Russia, and Sri Lanka. They’re not thinking about limits. They’re thinking about growth, about more stores, about selling more stuff to more people. As they should be, because that’s the dream. It’s the basic tenet of capitalism.
But the fact that they spoke immediately after Will Day argued for a different kind of growth and a new set of business priorities illustrates the core dysfunction that defines this conference.
Give CGF credit. The notion of redefining capitalism - indeed, the idea of a “natural capitalism,” as defined in book of the same name that suggests the next industrial revolution will be of a sort much more in tune with the ecosystem - is probably not something that comes up at a lot of business conferences. (If I have a criticism of the programming, it is that there are too many speeches and too little of the kind of real, profound dialogue that will be necessary to confront and deal with these fundamental issues. I’ve been told that a lot of CEOs don’t like the uncertainty and unpredictability that come with public conversations; if true, they’re missing a real opportunity.)
If people like Day and Juniper are right, and we are living on a fragile planet that has been over-exploited, and that sustainability cannot just be a catch phrase used by business executives looking to establish their environmental and economic bona fides, then a lot of hard decisions remain to be made. It won’t just be using less water and less packaging. It won’t just being creating more nutritious products that offer a promise of better health. It won’t just be about carbon and food safety. It won’t just be developing an infrastructure that is more transparent, engendering greater trust in a system by a global population that has less faith in institutions than ever.
Those will be building blocks, sure. Important ones. Muhtar Kent talked several times about the power of the food industry to shape and mold public policy, behavior and global priorities because it touches virtually every person on the planet. We’ll see. That power - and the good intentions behind it - may be tested, because some of the changes and recommendations being made here could home with a high price tag.
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