Archive for Politics

Finance after the Turmoil: Markets, regulation and Bruce Almighty

The rather optimistic title of this forum (… after the Turmoil) says it all: Host Ackermann sees “the dust settling”. What is the response to crisis, how can this lead to an “optimal system”?

The main challenges, according to Axel Weber, President of Deutsche Bundesbank are institution-specific approaches and all the mistakes that have been made. To the EU, this is even more pressing than to any other: we have to prevent happenings such as Lehman, *and* deal with the ones that happen in the US - including “fire sales”. The German response was a systemic approach, recapitalisation is within the remit of governments. In crisis, banks have much higher capital demands. You need to raise capital buffers, and this can only be done through the government.

Ackermann asks: Should there be one global accounting standard? Quick answer from Cerberus (apart from that this was that doggy in front of Hades, where these not the guys highly involved in M&A a la KKR?) Senior Advisor Cees Maas: Yes. Every country feels it has its own structure and therefore have their own interpretation. That is not helpful, so that within 3-4 years we might be there. Sounds like Lafontaine’s intimus Flasbeck speaking. Nice.

Thunell, CEO IFC, assumes that by spring, “we might be at an employment crisis including political tension”. It would therefore be essential to focus on the safety net for the very poor. So, Ackermann follows up with a question on if there should be an Early Warning System - distant from the aim of making money and who could this be (I had always thought that this is the role of central banks? Never mind). Weber takes this up with that there probably is “too much hope in EWS indicators” and if these would be successful, the people developing them would no longer be in academia (a bit telling, this statement from former Prof. Weber, or is it not?)

To put it politely: it probably rings true from all of the above that things in this forum were not really all to substantial. Another Erkenntnis was that Banks have departmentalised and thus minimised their risks even before the crisis, and, basically as Weber says “Banks are not Bruce Almighty” (well, bankers certainly thought about themselves in these terms, or did they not?).

Does this speak against accountability? I would say so, but then: I am not a banker. It certainly does not speak for the quality of this forum, hosted by the guy who had only six month ago the goal of reaching a 25% yield on its equity. I would have another thought here: If this is the summit of top European bankers, it’s a pretty low one. Certainly not Mount Everest. More like Kleiner Feldberg

They seem to feel this too: Ackermanns final apercu (accompanied by the famous Ackermann grin) ironically mentions Reagan’s statement “I think we should keep the grain and export the farmers”. You got it, man.


Broaden the net?

grow.jpgA nice thing about a day of music around climate change: there’s plenty of opinions around, the topic seems to be paramount (I’ll look forward to the evening news…). N24 interviewed a climate change expert from Potsdam. He referred to a study from ISET/Kassel that shows that shows - from engineers as well as ecologists perspective - proof of concept to provide energy for all of Europe through wind power.

And, indeed, why not using the decentralised powers of networked economies in a susidiarity manner - the IT-power for that should be there, if not now than certainly within the next few years.
He says, all it needs is to extend the network and rely thus on a grid that would ensure energy reliability even in peaks - so that whenever there’s no wind in the North there would be some in the South. Again: the big energy utilities do have that, but only on a national basis - clumsy, to say the least, as has been proven a few times already.
That entire debate comes nicely in time with the ongoing discussions in Germany about disowning the four large power utilities (RWE, E.ON, Vattenfall, EnBW) of their network - leaving them with production and sales only. btw this is not a socialists idea, but one that has support from Chancellor Merkel as well as the EU. The big four control about 95 percent of the German power grid. Europe’s most powerful business women, competition commissioner Kroes doesn’t approve with that, as well as a majority of German energy users (err… who’s that again?). Interesting, innit?


Letterman’s Top Ten Bush Moments

Pretty funny stuff.
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Does Labour work for CSR?

tories_green_label.jpgThe Worldbank PSD-blog had a look into the CSR-policies of both the British Tory and Labour parties. While David Cameron heavily relies on his Steve “Chief Advisor” Hilton (see my post) and promotes CSR, Gordon Brown (still most likely the successor of Tony Brown, whilst not by government but by Labour appointment) now explains how important it is to

“champion social enterprise, to champion corporate social responsibility and to champion community and environmental action …”

Don’t get me wrong: I think it’s great that Labour now embraces CSR - by and large they are still miles ahead of, say, most German politicians. However, the CSR-Minister appointed by Labour was accused by the CSR-community amongst other things to ghettoise CSR, and only a few months ago Labour supported the half-hearted approach of CSR by the EU (Ethical Corporation has more details).

BTW on German politicians: they still grapple with the issue of whether or not they should apply OECD-guidelines to their procurement).


Boston CCC: reframing the role of business

googins.jpgIt’s conference week: I could not avoid attending the 2nd International Conference on CSR in Berlin. As they’ve got WLAN available, I will try to blog it - forgive me for any misunderstandings or wrong perception and interpretation of ideas - mistakes are all mine.

There’s Bradley Googins starting just now. He’s a former student of Brandeis, of all things (disclaimer: me too…), and now runs the Boston College Center for Corporate Citizenship. His focus is change, or the way in how it has been speeded up lately. His take on the private sector is, to recognise the changing role of business - and the changing of the role of government. Not that this in itself would be particularly new, but he has just finished a research study with 25 CEOs of MNCs, posing his frame in front of them and asking, if there are implications of this towards a much needed change in leadership within businesses.

Googins’ main point: Businesses can no longer afford to be bystanders in the process. They already do take sides. Isn’t that a bit like “It is not possible not to communicate” or Mary Anderson’s background to “Do no harm”: “presence is not neutral. It influences the context”, I thought.
CSR is at a very early stage in capturing the necessity to adopt to the responsibilities they de facto have: while 51 of the 100 largest “bodies” (in regards to value and GDP) are companies and 49 states, they have only adopted to the compliance issues introduces, while not seizing the opportunities this responsibility.

Googins presents a survey (can’t read source) on the trust of different players citizens bring towards all three sectors. NGOs rated highest, corporations at the very bottom end.

He points to the growing inequities on our planet and then, aptly connection, to fat cat pay rises, and closes this critical remark with some more positive some examples that show opportunities, such as SC Johnson (?) and the ecomagination campaign by GE. And, he adds that he perceives the new GRI G3 as a very promising step forward.

A McKinsey Study (2005) looked at the CEOs perspectives and tactics for the future. They have four issues: Increasing transparency, implementing internal CSR policies, engaging stakeholders, industry coalitions for self regulation.

Then there’s a real compliment for “German” corporations: They seem to by far outperform US companies in regards reporting (only 18% of US companies - sample: the largest 200 companies worldwide - report on their CSR activities, the percentage of German companies doing this is much higher… didn’t get the figure). However, he does not discuss whether or not this is mainly a PR exercise - leading on to an at first sight quite funny chart, connecting the to-do’s of companies within a sort of mindmap cloud.

He goes through the stages of corporate citizenship (CC), starting from donations and philanthropy up to Business Practices, naming Starbucks, HP, AMD - and their quest for the “sweet spot” i.e. business case in CC. His earlier mentioned CEO survey was quite a surprise: when talking with (and taping) CEOs, they seemed to have more time than Googins originally thought: actually always more than an hour. Quite amazing, I thought, especially since their word is weighted on gold scales by shareholders and the investment community, who has nothing else to do…
New Reality emerging:

1. Business perspective is moving from shareholder to stakeholder (a quote by Sam Palmisano, Chairman and CEO IBM), but still: Milton Friedmans quote of “The business of business is business” remains the paradigm of Wallstreet.

2. Deregulation comes at a price: the benefits of economic prosperity can only be harnessed, whenever the responsibility that is connected to the opportunity which in turn is the reason for pushing towards deregulation.

3. Short-term thinking does not provide solution for long-term problems.

Creating a soft landing to Globalisation means to use the positive contributions economy brings to society - and, of course, the secret of success is to do what one aims for and wants to be good at without generating envy in the world around. It is this that creates the demand for business leaders that recognise their importance in and value to society.

Update: Googins’ keynote.


Ethical fundraising

vert-cover-poker.jpgThis weekend’s Observer ran an interesting piece on the UK Tory Party’s fundraising: While Sting and his wife Trudi Styler, Jemima Khan, her partner Hugh Grant and some 26 others paid 10.000 GBP a head to play cards at an exclusive London member’s club, they thought they did so to raise money for an environmental charity. A spokesman for the organiser Zac Goldsmith said, this money had been raised:

for Ecology Grants Ltd, a not for profit company set up to receive non-charitable monies from environmental fundraising events organised by the Goldsmith family. Its aim is to promote sustainable development for the benefit of the public.

According to the Observer, this event was planned to raise thousands of pounds for the Conservative party. The Goldsmith spokesman is further quoted saying:

However , should the decision be taken to pass some of the money raised to the Quality of Life Policy Group (QLG), this would not be incompatible with the stated aims of the evening, since one of the QLGs aims is to put environmental issues and solutions into the public remit so that they are picked up by the political process.

Goldsmith is vice-chairman of QLG, the policy group on the environment for the Tory-hope-and-happiness-next-primeminister-to-be David Cameron.

I don’t know how Sting and Co. feel about this, but I wonder, what Cameron’s chief advisor Steve Hilton thinks about this false labeling. I have worked with Steve at Good Business and appreciate him as one of the smartest and sharpest guys I know. If he keeps his lifestyle as it was *and* stays chief advisor to Cameron, a new page could turn for toryism that will further push new labour into shade in their polished, trendy townhouses and airy loft appartments. To me that’s quite in line with what Cameron now experiences: Glamour doesn’t pay.