Posts Tagged ‘Rethinking’

Noreena on Sustainability

October 29th, 2010 by admin

Dialogue magazine: ‘Sustainability in Context’ in support of Amsterdam’s Sibos 2010 conference.

Published: Quarter 4 2010

Does sustainability have a broader application than the environment and environmental impact?

I think it’s a very reductionist definition of sustainability to think of it only in terms of green issues. The term has been used in a multiplicity of ways. From a company’s point of view, sustainability involves an understanding of what it takes to survive today, and in the future. That incorporates issues like the environment, but also things like labour relations, human rights, employee discrimination, equal opportunity, and the company’s role in society. In other words, what does it take for a company to succeed today and in the future, beyond what one would associate with a standard balance sheet or a profit and loss statement?

Does that mean it goes beyond the things that the CFO of a company would think that shareholders should be interested in?

Well, it may go beyond what he or she currently thinks shareholders should be interested in, but I would argue that, actually, all of these issues are issues that shareholders should be interested in. If we take a case like BP and we look, with hindsight, at the company and how it works, we can see a host of issues that analysts and institutional investors should have been aware of and interested in: for example, the discrepancy between a very strong focus on personal accident safety reporting and a lack of reporting on the safety of industrial core processes.

If I’m a bank executive and I want to address the issue of sustainability in a comprehensive and concrete manner, where do I start?

There are a few areas where sustainability interacts with what the bank does. One is the kind of products that the bank offers. Then of course, there’s the issue of how analysts evaluate companies where sustainability also needs to come into the picture. Then there are issues around the bank’s own brand and reputation. Those are three of the main elements we could look at. One of the most interesting is the area of valuation. I think we are increasingly coming to see that risk is being underestimated by analysts who are only looking at a very narrow set of metrics in judging the success of a company.

Can sustainability issues be expressed in terms of metrics?…

To read the rest of the interview view Dialogue magazine’s PDF: Sustainability in context: measuring the impact on financial institutions.

Noreena rethinks Economics in Der Spiegel

March 24th, 2010 by admin

Spiegel Online: ‘Even war is good for economic growth’

Economist and globalization guru Noreena Hertz was already warning about overpowerful banks, unfettered greed and unregulated markets way back in 2001. Speaking to SPIEGEL ONLINE, she explains the limits of focusing on GDP and why capitalism is at a turning point.

SPIEGEL ONLINE: Dr. Hertz, one is constantly reading about how much a country’s economy has grown or shrunk. Why is gross domestic product (GDP) taken so seriously?

Noreena Hertz: It’s easy to measure and shows how one nation performs in comparison to another. Every country, therefore, measures its economic success by its GDP. Only Bhutan is an exception.

SPIEGEL ONLINE: According to the constitution of Bhutan, the people should not become richer every year, but happier. The little Asian kingdom wants to achieve this with a socially equitable society and better protection of the environment. Is this a better approach?

Hertz: Definitely. GDP only measures a small part of economic success. Some really important aspects are ignored. Take sustainability, for example. It’s absurd that a country can have high growth rates because it has a lot of polluting industry. The quality of the air, health, progress made by women, child care and social cohesion — these are all important economic factors. GDP does not show how innovative an economy is. Nor does it show if the products being produced will be successful in the long run or will be out of fashion tomorrow. But, up to now, there has not been a substitute for GDP…

Read the rest of this interview on the Spiegel Online website

Professor Noreena Hertz debates the right steps to economic recovery with Professor Robert Reich and Sir Martin Sorrell on BBC’s ‘Newsnight’.

Watch the programme on the BBC News website.