Blog Action Day 2009 - Climate Change

Systems-Overload is pleased to take part in the 2009 Blog Action Day where the focus is on Climate Change this year. This is the third year that we've participated (here are our posts from 2008 and 2007). Climate Change has become quite a popular topic over the last several years and many companies are trying to brand themselves as green and world leaders are at least paying lip service to the subject but so much more needs to be done and can be done.

In the area of climate change I see several issues that have encroached into this space, making it more complicated and seemingly unmanageable.

• Many global/multinational corporations have expanded at alarming rates into emerging markets.

1. Easier and hire and fire workers and less worker protections
2. Less environmental regulations to deal with

• The governments in these emerging markets don't have the necessary infrastructure

1. Additional costs borne by the new localities
2. Tax subsidies/abatements provided to lure in new business
3. Don't have experience writing environmental and labor regulations to be enforced upon global companies
4. Don't have proper agencies with proper personnel to keep companies in line

• Governments in the areas that are losing plants and jobs don't have the necessary international cooperation needed to enforce "good corporate citizenship responsibility" on companies

1. They have lost tax dollars and the budget necessary to enforce the laws that are already on the books
2. They're too distracted by the Global Financial Crisis to stop job losses
3. Corporations have too much lobby power and can easily impact pending legislation via a variety of means
4. It is too easy for corporations to move

• Too much focus on "maximizing shareholder value" and executive profit, without regard for long-term impacts on health and viability of the company's clients, employees, and the communities that they do business in

Having identified some of the problems that are making climate change unmanageable what can be done? What can you do?

• Let your elected and corporate leaders know that you don't approve of this any longer.

• Write to your elected and corporate leaders, be sure to include company boards, CEOs, congressmen, and senators, as well as presidents, and so on

• Let businesses know that you won't buy their products as long as they act irresponsibly

• Let your government know that any contracts that they sign with such businesses need to impose some form of responsibility on those that they do business with. When you're paying the bill, you can set some conditions!
  

• Let business that you do business with know that if they have contracts with irresponsible vendors that you won't do business with them any longer. Supply chains can be very long today and you'd be amazed at how many vendors your average business has dealings with
  

• Make your family and friends aware of things that you've found out and encourage them to join in on any boycotts

• Before buying a product or service check to make sure that the company is truly an ethical company as well as being environmentally responsible

• A well known IT company is a poster child for what is wrong with companies today

1. They paid its CEO over $107 million dollars over the past four years and six top executives (including the CEO) combined for compensation totaling over $140 million dollars in 2008.
   
2. This CEO saw his compensation grow from $25 million in 2007 to over $42 million dollars in 2008, a 68% increase.
   
3. This company has laid off 40,000+ employees during the current CEO's tenure with most of those jobs being moved into emerging markets (off-shoring)
4. This CEO requested a "voluntary" 5% may cut from the employees earlier this year and told the employees that he was taking a 20% pay cut (but this is off his base salary, before all his bonuses) and for most normal employees 5% can make the difference between making mortgage and car payments and have a huge impact. The company has made billions in profit the last few quarters, so the pay cut wasn't necessary for the company's survival (unlike some more notable companies that have really been fighting for their very existence).
5. Many IT companies are moving more and more jobs to off-shore locations. If this companies want to continue to do this type of activity, they should have to make sure that all employees that have been made redundant have "comparable" positions, or pay until they find such positions! Business needs to work more with government to make sure that local education meets their needs, not that this is used as an excuse to move more positions off shore.
   

• Give some serious thought to where you buy your stuff, not just what you buy

1. One well known and very large retail company is known for not paying their employees very well, many of this company's employees are making wages that put them just above the poverty line and some aren't able to pay for health care coverage. This should not be allowed

• Buy from and support local companies and products whenever possible. The company mentioned above has a reputation for going into a community and forcing several local businesses into closure because they can't compete on price and volume. It is the local companies that are more likely to be active in the community and do the things that used to make our towns nice places to live in

• Let your corporate and government leaders know that you want to see more international cooperation. Corporations should not be above the law. If companies move headquarters to avoid their tax and other responsibilities, they should not be permitted to do business in your area. Can you imagine a company today that doesn't want to be able to see its goods and services in America, if they couldn't sell in this market, they might not be in business for long

America has the largest economy in the world and has a huge impact on the rest of the world. The financial crisis has shown how interconnected things have become in the last few years. It is time for consumers and taxpayers to "encourage" our businesses to be the responsible enterprises that they should be.

Photo credit: Industrial 4 courtesy of kkiser.

Happy Birthday, America

As America celebrates it birthday, I've given some thought to the Declaration of Independence, the U.S. Constitution, and the Gettysburg Address and the impact that they've had on Democracy throughout the world and on history.

Within the Declaration of Independence you'll find the following text...
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security." The text used here can be found in Declaration of Independence at the ushistory.org website.

Within the Constitution it is introduced with "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." The text noted here can be found within the Constitution at the house.gov website.

In his famous speech at Gettysburg, President Lincoln concluded "that we here highly resolve that these dead shall not have died in vain - that this nation, under God, shall have a new birth of freedom - and that government of the people, by the people, for the people, shall not perish from the earth." The text note here can be found in Gettysburg Address at historyplace website.

A quick survey of some of Declaration of Independence, U.S. Constitution, and the Gettysburg Address do not expressly mention corporations and in fact the development of the modern corporation ocured much later than these documents, although you could argue that corporations have existed prior to the founding of America and did wield some influence, but certainly not the influence that they've wielded since the onslaught of the Industrial Revolution.

I find it hard to believe that the great men that founded and forged America and died for her very existence, would be happy with CEOs making $42 million in a year while planning to layoff thousands of workers and moving more and more work to cheaper labor market where workers have little protections and it is easier to fire them. To these men I didn't believe that "the people" were corporations but the overall population of America. The large corporations and their leaders have become modern day aristocracy, controlling and influencing much of what happens in American government (as well as governments around the world). Much like colonial America overthrew British aristocracy, it is time to overthrow our American aristocracy. Because corporations have grown beyond the reach of the various governments around the world, it is time for cooperation amongst the various world governments to reign them back in. The Declaration of Independence lays the ground work for changing governments when they don't server the needs of the people any longer, by logical extension we should apply this to corporations that are looking after "maximizing shareholder value" all else be damned.

Capitalism and Communism are at opposite ends of the economic spectrum and can be seen as ying and yang. When much of the world headed down the road to Communism, the pendulum shifted back towards Capitalism. At the moment the pendulum has shifted too much in the direction of Capitalism and forces will eventually swing things in the other direction as the focus of various social issues will move things that way. Debates are being held about health care, retirement benefits, and so on. People will eventually realize that there are some basic benefits that if not provided by employers, can't be paid by the employees (because they don't have the needed extra money to fund such things) and therefore will need to be provided by the government. It should be noted that Health Care and Retirement are complicated items that require more discussion and explanation that I can give them at this point, maybe I can go further into them at a different time.

I'm not arguing that corporations shouldn't exist, but that corporate laws need to be revised to make them more responsible. Corporations should have a feeling of responsibility to the communities that they do business in. While this should be common sense, it seems to be often forgotten. Most businesses work hard to develop some sort of brand image through advertising, marketing, and so on, but by doing harm to the communities that they do business, they can do harm to their brand image. The people in the communities that have been harmed by these companies can and should start publicly boycotting goods and services of these companies and make the companies aware of why they're doing so.

Corporations should have a feeling of responsibility to their employees. Employees are typically one of the greatest resources that they have, but now a days management keeps trying to eliminate benefits, move jobs to cheap labor countries where the employees are easier to fire, and in general demoralize and demotivate the employees. While employees don't need to be given everything under the sun, most of them would like to earn a decent wage with some sense of security that their jobs will be there next year. Employees know their companies products and services, have lots of idea about how they can be improved, and even how sales could be increased, and possibly ideas about getting into new market areas where additional profit could be made. Employees can give management a sort of sanity check on ideas, policies, and so that should be discussed further before being implemented, but these need to happen in an environment where employees are respected, not loathed.

The tenet of maximizing shareholder value needs to be reviewed as well as compensation that top executives receive. When someone starts a company, most people will do so for a variety of reasons, but most people want to see their company exist for the long-run, they're willing to invest their own blood, sweat, and tears to grow their companies and are willing to make investments in programs that shareholders might view as costly and not providing return quickly enough. Many of the IPOs (Initial Public Offering) that have gone public are on companies that have already made a name for themselves, but how many of the people that got in on the IPO would have invested any money into the company at initial start up, when the risk was a lot higher, probably not. The point here is that a mechanism needs to be in place where the long-term health and viability of companies is looked after. Would companies be so willing to off-shore so many jobs if they knew that there'd be a public backlash in a few years with irerupuble damage done to their company image, possibly even making the company's position weak and ripe for takeover or failure? Executives are rewarded for driving up the share price, but this is so often a game today. Stock prices can and often are manipulated, so that executives get their bonuses and Wall Street rewards them for cutting jobs. Since most executives don't plan on staying at their current jobs for the long term, they have a short time horizon and aren't concerned so much about the long term health and viability of the company, in fact many exectutives receive bonuses if they "sell" their company. So they can play some games to get the stock price up, sell the company, get their bonus and leave with a nice "golden handshake". One departing CEO from a company received $50 million for "selling" his company to another and leaving by the end of last year. This same CEO was only CEO for a year, if that.

Revolution did happen in America in 1776 and can happen again. If enough people lose their jobs and aren't able to find good ones to replace them and enough people lose their homes, companies doing business in America (and since America is the biggest economy in the world, this is a lot of companies) should worry. Companies need to see the writing on the wall and make the necessary changes before changes are forced on them.

Photo credit: American Pinwheel courtesy of reznor70.