Technology and Capitalism

Evgeny Morozov is a well known researcher and writer, who has produced a number of interesting insights on the interaction between technology and capitalism. You may or may not agree with him, but he is always an interesting and engaging speaker. Here is an interesting keynote, from November 2017:

 

Advertisements
Posted in Technology | Tagged , | Leave a comment

Solutions looking for problems

One of the most interesting conundrums emerging from technological innovation is the problem of solutions looking for problems: somebody develops a new and interesting piece of technology, and only then do they look for applications of that technology. It’s a common problem, which we can see again and again.

I was listening to this episode of the BBC’s excellent The Inquiry podcast about technology, and I was struck by the sheer breadth of the claims about the potential of the blockchain technology.

I’ve wondered about other potential use cases before, and to be honest I can see a bunch of both opportunities and problems associated with distributed ledgers. In effect I have wondered if capitalist modes of economic organisation and competition are really compatible with the radical transparency proposed by such an arch-libertarian approach.

It turns out it’s not just me. Zack Korman has a really interesting post which drives straight to the heart of the matter. Specifically: why would you necessarily want to do away with economic intermediates?

This doesn’t prove that blockchain isn’t the technology of the future, but it does suggest that we should be skeptical. A proposed blockchain application can’t just make some vague reference to trust and removing intermediaries and say that is sufficient. I want answers: Why do I want to remove the intermediary? Why can’t I trust some third party? Will removing intermediaries actually cut costs, and if so, is there anything I’m giving up by losing the intermediary?

My answer to the questions above is that the blockchain technology is shot through with a series of libertarian principle, which assume that the acts of disintermediation and decentralisation are good onto themselves. It’s a case of the device reflecting the politics of those who created.

To me, the greatest problem is when this politics is unacknowledged, and we import the principles the technology embodies alongside the (potential) benefits it brings.

Posted in Technology | Tagged | Leave a comment

Can luxury ever be ethical?

This article was first published in the Historic Futures blog.

 

How can companies in the luxury segment be responsible? For a long time it has been assumed that companies producing luxury articles are immune to concerns about wider societal concerns and business responsibility in general. Images of exclusivity and conspicuousness of consumption are associated to this idea; social and environmental concerns, this view goes, are alien to luxury. For example, experiments in the garments industry have suggested that to explicitly include recycled material in luxury clothes reduces their value, rather than adds to it.

There are reasons to believe this is not always the case. Companies in the luxury segment are just as exposed to potential PR blunders as other producers of goods and services. In the modern, networked, post- NO LOGO world, no company, no matter how rarefied and wealthy their clientele can easily shrug off accusations of malpractice, wilful ignorance or flat-out malfeasance. What’s more, sometimes luxury companies can actually be more vulnerable to bad press than their mass consumer counterparts, as they depend on projecting a cast-iron, non-ambiguous image. At the same time, they often depend on long, complex supply chains, which they do not fully control or audit. And while suffering from these limitations, luxury companies often come to realise that their customers, while not openly demanding responsible and ethical practices, have implicit expectations about what the company does and how it does it. One interesting example of this is the jewellery industry, as recently described in a report from the Centre for Business in Society, at Coventry University. The report, Titled Signalling Change: Jewellery SMEs and Corporate Social Responsibility, is aimed at the jewellery industry, CSR practitioners and policy-makers.

Small companies, problems down the chain

Over the years, the jewellery industry has suffered its fair share of problematic (and traumatic) PR difficulties, which have raised important questions about their practices and commitment to social and environmental best practice: environmental devastation caused by open pit mining, long-term pollution effects of the extraction of minerals, their role in financing conflict and human rights abuse and labour disputes. The result is that the jewellery industry ended up being associated with making the expression Blood Diamonds part of the everyday lexicon of campaigners for better business practices. A dubious distinction if ever there was one. But speak to the industry and the case becomes more complex. The UK jewellery industry is not dominated by large companies; instead, what the report shows is that most of the companies selling jewellery are Small and Medium Enterprises (SMEs), facing increased pressure to engage in Corporate Social Responsibility (CSR) activities. These SMEs see themselves as only small pieces of a large industry, with very little capacity to make a substantial difference. They also feel that, as small players, they face disproportionate compliance costs.

A darker side of trust

Much of the work necessary for jewellery SMEs to comply with responsibility standards involves improved traceability of the provenance of materials. This is a tall order for small companies, which have neither the capital nor the information to provide full traceability of the products they sell. The sheer length of jewellery supply chains present obstacles to the adoption of CSR by small and medium enterprises. As a result, they are often in a position of working based on trust in their business partners. The very small number of employees in a typical jewellery SME means that business relationships become personal over time; the result is strong bonds of trust between individuals in the same supply chain. But while trust is usually a good think in social a business relations, in this case it can prove a negative factor in implementing supply chain traceability and CSR, as individuals’ mechanism for assuring the provenance of products is to ask their supplier and take the answer as trustworthy, without hard evidence. Trust can be an obstacle to CSR adoption in jewellery SMEs.

Not broken, in need of fixing

Luxury providers faces the need to future-proof their practices, a task which requires adopting CSR across long and complex supply chains. Each new PR blunder creates yet another wave of questions, and at the very least hurts reputations for all companies in the long term, not to mention having the potential to result in a patchwork of regulation, making industry operations more difficult by increasing compliance costs. What’s more, it is at the level of SMEs that non-compliance to business responsibility could prove to be the “soft underbelly” of the CSR armour that luxury industries are building. Specific actions must include increased transparency along supply chains, with the implementation of traceability mechanisms and best practice, as well as more effort to communicate the added value of their recent CSR initiatives. Furthermore, the entrenched trust between buyers and sellers must be complemented by public disclosure of facts and figures which can assure other stakeholders. While consumers may not be actively requiring that responsible business practices be at the heart of all the luxury products they purchase right now, these industries cannot afford to become complacent; being responsible may be the key to survival when the next corporate scandal happens.

Posted in Responsible Business | Tagged , , , , , , | Leave a comment

Biodiversity Offsets As Corporate Responsibility: Opportunity Or Paradox?

This article was first published in the Ecosystem Marketplace blog.

 

A visit to the SpeciesBanking website confirms what specialists have known for some time: that the practice of offsetting impacts to biodiversity is widespread. And while national, regional and local practices vary widely, one point is clear: offsetting is an increasingly important mechanism for conservation as more and more companies use them to mitigate their biodiversity impacts.

However, few firms are choosing to offset as a way to manage their image and show consumers that they are environmentally-responsible companies. The reasons for this may lie with the fact that very little is known about what consumers think of biodiversity offsets. And this unawareness at the consumer level could be impacting the sector’s ability to expand.

The ethical consumer – a new frontier for biodiversity offsets?

For decades there has been an interest in understanding how consumers’ ethical and environmental preferences translate into behaviors. So far, these preferences has translated into what is known as the ethical consumer – buyers genuinely interested in making purchases that have little negative environment and social impacts. Experts routinely suggest that these ethically-motivated consumers will drive companies to lessen their environmental impact, by withdrawing their support – and their custom – from those firms perceived as causing unnecessary damage.

There is evidence that this is indeed the case: on the one hand, study after study has shown that people prefer to associate with brands and products lauded for their sustainability. Green is good, and the halo effect of sustainable products is not negligible. On the other hand, the growth of ethical markets such as FairTrade, organic, low carbon, and more recently FairWage – has been a well-documented phenomenon. Ethical and environmental actions by companies add value to products and improve brand reputation. Caring consumers will potentially pay more for products from businesses taking action to make the world a better place.

Despite this potential, the ethical consumer remains one of the great untapped resources in the development of biodiversity offsets. While many companies acknowledge the potential of offsetting as a mechanism for assuring regulatory goodwill and securing social license to operate, there is very little evidence that it is being used as a mechanism for managing corporate reputations or corporate social responsibility.

Apart from Walmart’s association with the Acres for America programme, no companies have chosen to publicise their involvement with offsetting. In fact, the concept of offsetting biodiversity impacts remains virtually unheard of among consumers. And therein may lay one of the big problems for the offsetting industry.

Biodiversity Offsets in Britain: competing ideas and consumer confusion

The British government has supported the introduction of biodiversity offsetting, and 6 biodiversity offset pilots have been operating in England since early 2012. However, anecdotal evidence indicates that most consumers have never heard of biodiversity offsets. Nor have consumers heard of the idea of no net loss of biodiversity, which is intended to commit companies to demonstrate measurable outcomes.

No net loss of biodiversity is not only a good formulation of an objective; it is also a high threshold. And the uncertainties associated with it often mean that, in order to demonstrate achieving no net loss, developers and offset providers prefer to err on the side of caution, and employ high ratios of offset-to-development area. It also means that care is taken to minimize activities harmful to nature. No net loss of biodiversity, along with ideas such as zero net deforestation, has the potential to be a good reputation management tool.

However, the reluctance of talking about offsetting to consumers has created a situation where, in Britain at least, biodiversity offsets are more often than not publicly attacked and condemned as a license to trash. Seizing on the complexities of offsetting and on the uncertainties surrounding how it is done, its limitations and its uses, critics of biodiversity offsetting have been much more vocal about the topic than proponents, making use of both broadcast and social media to promote this idea of license to trash.

This might lead to the potentially paradoxical situation where consumers may hear of biodiversity offsets for the first time in the context of a critique. Again, anecdotal evidence has suggested that some consumers first heard of biodiversity offsets while being asked to sign a petition against it! So much for corporate reputation management – this has the potential to make biodiversity offsets something that companies actively want to dissociate themselves from.

From good intentions to good communication

For all the questions surrounding it, there is no question that those involved in biodiversity offsets have the best of intentions. People genuinely want to do something which is both good for nature and for business. And close observation of the debates within the community reveals that all those involved are aware of the challenges and limitations of biodiversity offsets.

But it’s clear, in Britain at least, that this message isn’t reaching the consumers with those in opposition to the mechanism communicating the most. This constitutes a problem: in democratic societies, public support is required for initiatives to be successful. And while promoters of biodiversity offsets have, rightly, attempted to obtain the attention and support of policy makers, they must also take the time to address consumers.

Because majority of consumers haven’t heard of biodiversity offsets, we genuinely don’t know how they will feel about them. But finding out is crucial because the future of this mechanism just might depend on where they stand.

Posted in Markets, Responsible Business | Tagged , , , , , , , | Leave a comment

Compensation for biodiversity losses: can varied approaches deliver?

This article was first published in the Biodiversity Offsets blog.

 

Off­set­ting bio­di­ver­sity: wide­spread and varied

A visit to the Species­Bank­ing web­site shows that the prac­tice of com­pen­sat­ing for bio­di­ver­sity losses is wide­spread. Off­set­ting bio­di­ver­sity losses is an increas­ingly impor­tant mech­a­nism for bal­anc­ing out devel­op­ment and con­ser­va­tion, with more and more gov­ern­ments cre­at­ing reg­u­la­tion or issu­ing guid­ance for its usage, often in the con­text of plan­ning reg­u­la­tions. In fact, in sev­eral coun­tries it is pos­si­ble to observe that var­i­ous off­set­ting pro­grammes are cur­rently in oper­a­tion. The fig­ure illus­trates this, high­light­ing the num­ber of offi­cial bio­di­ver­sity off­sets pro­grammes per country.

Each of these indi­vid­ual exam­ples of bio­di­ver­sity off­sets is pred­i­cated on spe­cific objec­tives, spe­cific reg­u­la­tion and a spe­cific set way of doing things; no two pro­grammes are the same. In com­mon, the var­i­ous indi­vid­ual pro­grammes share the exis­tence of reg­u­la­tor guid­ance spec­i­fy­ing that bio­di­ver­sity dam­age must be com­pen­sated, and the idea of no net loss of bio­di­ver­sity. How­ever, there is cur­rently no stan­dard form of cal­cu­lat­ing bio­di­ver­sity losses and gains; even the Busi­ness and Bio­di­ver­sity Off­sets Programme’s 2012 Stan­dard on Bio­di­ver­sity Off­set­ting recog­nised this, advo­cat­ing that mea­sure­ments should adapt­able, with indi­vid­ual mech­a­nisms for demon­strat­ing equiv­a­lence between bio­di­ver­sity lost and gain. As a result, the var­i­ous bio­di­ver­sity off­set­ting pro­grammes remain experimental.

Dip­ping a toe: the diverse tools of bio­di­ver­sity offsetting

Part of the rea­son for the dif­fi­culty in cre­at­ing stan­dard bio­di­ver­sity mea­sure­ment tools lies with what is being mea­sured: bio­di­ver­sity is com­plex, and can refer to aspects of nature which go from the genetic level to the num­ber of indi­vid­u­als in a species, or the rela­tion­ship between species in an ecosys­tem. From the point of view of eco­log­i­cal sci­ences, this cre­ates the prob­lem of defin­ing what is meant by “bio­di­ver­sity” in each spe­cific pro­gramme, in order to pro­duce an appro­pri­ate tool for each case.

The sec­ond prob­lem lies with what aspects of bio­di­ver­sity is under analy­sis in each case. For exam­ple, in the US Mit­i­ga­tion Bank­ing pro­gramme, com­pen­sa­tion is gen­er­ally sought when indi­vid­u­als of a listed species are lost; in Ger­many, the focus is on the improve­ment of bio­di­ver­sity indi­ca­tors in a given area; and in the UK, the focus is on com­pen­sat­ing for losses of pre-defined ecosys­tem types. Obvi­ously, most of the tools devel­oped in one of these pro­grammes are not usable in another.

The third and final prob­lem is the exist­ing trade-off between pre­ci­sion in mea­sure­ment and usabil­ity of the tool. A more pre­cise bio­di­ver­sity mea­sure­ment mech­a­nism has a bet­ter poten­tial when address­ing the need to demon­strate no net loss of bio­di­ver­sity, but it makes it more dif­fi­cult to achieve that objec­tive in prac­tice. The result­ing cal­cu­la­tions can be so pre­cise as to com­pletely deny the pos­si­bil­ity of com­pen­sat­ing for bio­di­ver­sity, by mak­ing bio­di­ver­sity lost entirely unique and not liable to offsetting.

With all these issues asso­ci­ated in cal­cu­lat­ing no net loss of bio­di­ver­sity, it would appear that bio­di­ver­sity off­set­ting faces seri­ous chal­lenges. But are there new oppor­tu­ni­ties at the same time?

Cur­rent chal­lenges, future opportunities?

For all the prob­lems in devel­op­ing cal­cu­la­tion tools, the sin­gle great­est chal­lenge for bio­di­ver­sity off-setting comes from oppo­si­tion at local level. Grass­roots and NGO-led cam­paigns have suc­cess­fully man­aged to com­mu­ni­cate their neg­a­tive opin­ions about bio­di­ver­sity off­set­ting, through on-the-ground and online cam­paigns, and have in the process been noticed by the main­stream media. As a con­se­quence, bio­di­ver­sity off­set­ting pro­mot­ers may be los­ing con­trol of the mes­sage: while they have attempted to asso­ciate bio­di­ver­sity off­set­ting as no net loss of bio­di­ver­sity, oppo­si­tion cam­paign­ers have framed it as a license to trash nature.

This doesn’t need to dis­cour­age pro­mot­ers of bio­di­ver­sity off­set­ting. Bet­ter quan­tifi­ca­tion, with the explicit objec­tive of demon­strat­ing no net loss of bio­di­ver­sity, is what dis­tin­guishes bio­di­ver­sity off­sets from other forms of com­pen­sat­ing for neg­a­tive nature impacts. The poten­tial effects in sim­pli­fy­ing the nego­ti­a­tions about appro­pri­ate com­pen­sa­tion and achiev­ing stake­holder buy-in are the ad-vantage of bio­di­ver­sity off­set­ting over alter­na­tive mech­a­nisms of obtain­ing com­pen­sa­tion for bio­di­ver­sity losses. And despite the ongo­ing prob­lems with the tools to deliver this, bio­di­ver­sity off­sets still con­sti­tute one of the most thor­ough ways to bal­ance out eco­nomic devel­op­ment and bio­di­ver­sity conservation.

Posted in Markets, Responsible Business | Tagged , , | Leave a comment

Far from sight, close to the heart?

This article was first published in the Historic Futures blog.

 

The move towards a better understanding of supply chains and the origins of products is predicated on a number of assumptions about the value of that information. Firms are told they should know where things come in order to manage their costs, control their risks, or secure a social license to operate.

But beyond that, companies are also told that there is value in providing consumers with information about the origin of products. And while evidence exists that consumers may, in some situations, be prepared to pay over the odds for products which are sourced far away, there is also the perception of a growing preference for goods sourced closer to home. The relationship between distance and value remains unclear, but longer supply chains could spell increased risk of consumer backlash.

Parallel problems of distance and value

Geographers have suggested the concept of distance decay to describe how the impact of one location on another changes with distance: as distance increases, social and spatial interactions are diminished, even if they never entirely cease. Economists have used the idea of distance decay to explain changes in willingness to pay, noting that distance would often reduce the value consumers put on products. Environmental economists, in particular, often determine distance-decay value functions with regards to environmental goods and services.

The application of these insights to the problem of how distance affects value is clear: as far as consumers are concerned, products procured far away are less valuable than comparable products sourced close to home. This creates obvious problems for firms: the world economy is strongly dependent on long supply chains, with production of goods frequently occurring very far away from where acquisition and consumption takes place. Furthermore, raw materials (such as oil, gas or metals) and agricultural products (like coffee, bananas or rice) are only available from certain areas of the globe, and cannot be sourced closer to consumers. As a result, retailers may often highlight the origin of products sourced close by (see the rise of certified British produced meat in British supermarkets), while at the same time not openly disclosing the provenance of products sourced far away. Of course, a communication strategy which focuses on highlighting some aspects and downplaying others spells trouble for the future.

A market for ethical goods

Obfuscating the origins of products is not a sustainable management strategy. In any case there is ample evidence that distance to origin may not always reduce consumers’ willingness to pay. One example concerns luxury goods, which often become more valuable when sourced from afar: besides rarity, exoticism is an important component of the perception of luxury. Consumers are not rational decision-makers, evaluating products across dimensions such as price and distance from source.

Another important dimension to consider is consumers’ ethical preferences. Decades of campaigning have created a widespread ethical interest among consumers to the hardship of millions of people living in developing nations. Increasingly, trade is seen as one of the ways to do good: by buying products from developing nations, Western consumers can help bring millions out of poverty. Commerce, and buying products from long supply chains, can be framed as an ethical decision, which allows simple consumption habits to have a positive impact on others’ wellbeing. Initiatives such as Fairtrade add a further layer to the ethical framing of consumption of products sourced from long supply chains, promising that a fair price will be paid to producers. The continuing growth of Fairtrade has been, among other things, a symbol of the success of highlighting ethical factors, rather than focusing on distance alone. The same can be said of the results presented in successive Co-Op Ethical Consumer Markets Reports. Ethical judgement is not necessarily impaired by distance.

Negotiating companies’ needs and consumers’ preferences

Supply chain management and marketing/sales are not necessarily independent disciplines. Decisions about the provenance of products can have an important impact on their marketability, and on how a company communicates with its consumers. The problem is not limited to retailers, or other companies which deal directly with consumers; the need to demonstrate traceability and detailed knowledge of the origins of products is increasingly a product of regulation, and affects all agents along supply chains. At the same time, ever savvier consumers are making their preferences heard, both at the till and on the many public forums springing up on social media. Better information about how ethical preferences and distance affect how much consumers are willing to pay for products is urgently required, for both marketers and supply chain managers. Hopefully the development of supply chain mapping tools should help with this, by allowing the overlay of the two types of information.

Dr. Carlos Ferreira is a Researcher at the Centre for Business in Society, Coventry University. His research interests include ethical consumer behaviour, online identities, and the emergence and use of markets.

Posted in Markets, Responsible Business | Tagged , , , , , , | Leave a comment

2017 in review

Happy 2018! I can’t believe 2017 is already gone. Where did all the time go?

…well, to be honest I have a pretty good idea where time went last year. Just trying to list the things I have been up to for the last 12 months gives a very good idea.

First, I led the ESPON ReSSI project. Work-wise, that’s where a lot of my time went. Taking a leading role in a project this large – both in academic and in administrative terms – certainly consumed a lot of energy. I am very please with it, though. The team has submitted the last report to the funder, and this should be made publicly available at some point soon – watch this space. Meanwhile, you can still see the draft final report online.

What a project like ReSSI also does is give you the opportunity to disseminate your findings amongst the appropriate stakeholders. This is a rare privilege, especially for someone in stage in the academic career. Back in 2016, I was invited to participate in the ESPON seminar in Bratislava (Slovakia); in 2017 I was lucky to be invited again, to the ESPON seminar in Valletta (Malta). It was a very interesting opportunity, and it was especially pleasing to have some interesting findings to share. You can see my presentation (alongside David Hope, of Coventry City Council) in the video below.

But fun though it is to conduct interesting and impactful research, you also have to publish it. And 2017 has also been fruitful on that front. I have had three articles accepted and published: Untangling the Trust-Control NexusSocial Media Advertising Avoidance; and Biodiversity Offsets: Markets and Measurement. I am very proud of all of those, but especially the latter – it uses materials from my PhD.

The other project I lead – Consumers and Biodiversity – has also seen a lot of progress. My co-authors and I are hoping to submit a draft paper of our findings to the upcoming BAM2018 conference – again, watch this space. We have some cool conclusions to report. I have also gotten more involved in the Spaces of Community project, which is led by my colleague Dr Jennifer Ferreira. I contributed to a report published earlier in the year, and I have been involved in the academic side as well.

On the teaching side, I continued to deliver sessions in an undergraduate module (managing business responsibly – in which I use the VW Dieselgate as a springboard to interrogate companies’ CSR policies) and a postgraduate one (postgraduate research methods – where I teach about case study methods).

Finally, I have been developing a growing interest in cryptocurrencies, such as BitCoin, as well as on the potential uses of the underlying blockchain technology. It is something I hope to have the time to puzzle over in 2018 – we’ll see!

Overall, one heck of a year, and one made much happier by watching our little baby grow into a walking, talking, munching, jumping toddler, who likes to explore the world around her and find out how things work. It’s a good sign. I am sure 2018 will bring some more of that!

 

 

 

Posted in Looking back | Tagged | Leave a comment