CERES’ Fifteenth Anniversary(A)
It is often said in the press that CERES began in reaction to the Exxon Valdez oil spill in Alaska on March 24, 1989. That is not true. But we did hitch a ride on the media frenzy around the spill – and we owe Exxon thanks for keeping the story in the news for months (probably not their goal). Exxon, by the way, is not fond of us.
In fact, CERES began months before the spill with much loftier goals – to recast the way the economy deals with the environment. CERES was a project hatched at a special strategic planning Social Investment Forum Board meeting in mid-1988. The question that started it all was “how are we going to get information to make intelligent investments?”
In 1988, the investment clients of socially responsible advisors invariably focused on environmental issues at the same time or before other social issues. No good information was available to professionals. Company literature rarely dealt with environmental management or results and when it did, it was incomplete and selective. Environmental groups released information, but that information was issue-focused, anecdotal and often exaggerated. Government data was inaccessible, expensive and also anecdotal and incomplete.
The members of the Social Investment Forum Board wanted to find a way to both obtain accurate information about the companies in which the stock portfolios were invested and to brainstorm possible alternative investment ideas for portfolios. Bhopal, dirty beaches, polluted water, fish diseased from PCB’s, and many other environmental issues received press during the late eighties. These tragedies and other signs of environmental degradation had fomented discontent among a wide swath of the population. In this climate of media attention and government failures, CERES was born.
The Valdez spill happened nine months after the genesis of the idea that became CERES. By then, initially skeptical environmental leaders had contributed to the focusing of CERES on corporate responsibility and reporting. The Principles were conceived as an environmental ethic, or mission statement, and it was suggested that the Principles be named Valdez to capitalize on the media attention being given to the spill. We also wanted to memorialize that accident as emblematic of what we were trying to prevent. As with almost every decision we made, there was vigorous debate before the name was used.
It is important to remember that the relationships between environmentalists and the business world at the time we announced the existence of CERES in New York were mostly very adversarial. CERES released the Valdez Principles with pointed challenges to corporations from environmental leaders such as Peter Berle of Audubon, Mike McCloskey of Sierra, Jay Goldin, Controller of New York City, Tim Smith of the ICCR, Alice Tepper Marlin of the Council on Economic Priorities, Jan Hartke of the Humane Society and others. The people speaking at the press conference represented about 10 million environmental members and over $150 billion dollars of invested assets. The core message was “the people of this country are fed up: we demand more”.
The people who crafted the Principles did not know whether every single company would jump in and sign them or whether no companies would make this public commitment. As it turned out, large corporations were not even slightly interested in signing the Principles. Our visions seemed remote as even friendly companies were baffled as to how they would collect and assimilate the data CERES was looking for.
Companies universally resisted our first stab at addressing “governance” when we suggested that shareholders should an environmentalist to the Board.
Immediately after the announcement of the Coalition and the Principles, Andy Smith of the ICCR worked with Ken Sylvester of the City of New York to draft the first shareholder resolution focusing on CERES. It asked companies to disclose their “compliance” with the ten principles. Resolutions were filed with about 50 companies for the following proxy season. Later in 1989, a letter was mailed from the CERES Board to the CEO’s of the largest 200 companies asking them to sign the principles. The response was mostly unfriendly. The most agreeable big companies just wanted to talk. Some were curious and many were defensive. Some were angry. However, Paul Hawken phoned with the news that he wanted Smith and Hawken to be the first company to sign the Principles. Aveda followed suit soon after.
Coalition members contributed teams who met with corporate representatives in groups of companies in many venues, with companies of all sizes in many industries. After much debate and corporate input, the Principles were revised and renamed. Later, a disclaimer was added. We tortured over six allowable synonyms for the word “sign”.
The representative from Ben & Jerry’s talked us into moving away from the “Valdez Principles” by saying the name was “like naming Audubon the dead oily bird society”. The signing of the renamed CERES Principles by Sunoco in early 1993 was a watershed event.
During the next eight or nine years of CERES’ existence, collaboration was improved and, with much hard detailed work CERES launched a potentially robust system of global reporting with the assistance of companies such as General Motors. Very real and tangible gains were made by CERES companies in areas such as conservation of resources, recycling, energy conservation, property restitution, and partnerships to preserve valuable natural assets.
Along the way we learned about the “paragon problem” as the leader companies were criticized for any small slip. And over three years, we painfully outlined a path for separating from companies if something went wrong with the relationship. There are countless stories surrounding these rungs on our ladder.
No story is more dramatic or more breathtaking than the story of the Global Reporting Initiative, or GRI. In preparing for this evening, Mindy suggested that I “couldn’t have imagined” that more than 400 companies around the world are now following the guidelines for reporting on sustainable management. Actually, in the long term vision sense, I think that was always the goal. However, I NEVER imagined that it would happen this quickly – we talked about 50-year reporting goals. It took more than 50 years to develop the financial accounting standards in this country. I will never forget standing in back of a packed auditorium in London watching speakers laud the official birth of the GRI.
Fast-forward to last fall, when Secretary-General Kofi Annan spoke to another crowded room about Sustainable Governance at an Investor Summit held at the United Nations. The same shiver ran up my spine – in a typical U.N. big theater room complete with microphones for participants, there were dignitaries representing trillions of investment dollars, mostly from the United States but some from abroad. They listened to each other and debated how to focus capital in constructive ways to promote the health of the planet.
We have a long, long way to go to convince the traders of Wall Street or Hong Kong or London that the market is not God, but if history is any guide, it will happen sooner than I think. CERES is part magic. To those of us who were around CERES during its beginning years, we know that if the Roman Goddess CERES didn’t take care of us, some higher being did. We teetered perilously between being broke and total defeat. In the early days, CERES was often saved by a measure of humor liberally sprinkled on top of our sense of mission. When I visit the CERES office fifteen years later, I can tell that the culture of smiles is still there – with a whole new cast of characters.
From the very beginning, CERES was an idea whose time was ripe. The idea behind CERES, a tiny germ of an idea, turned out to be profound in its implications with all the staying power that timeless imaginings have.
And finally, that I am able to stand here and reflect on fifteen years of CERES is completely due to the people who have lent their minds, spent their energy and risked their reputations or organizations for the work it adapt to the changing environment. But perhaps most significantly, they have found and cultivated the new platforms on which to build on our core vision.
That vision is:
– That the economy, the environment and social systems are inextricably entwined
– That most people, whether in companies, on Wall Street or in environmental groups want a healthy and peaceful planet
– And that those people can and will work together toward that goal if they are given a place and time to do that work.