This blog will cover some news items related to Sustainability: Corporate Social Responsibility, Stewardship, Environmental management, etc.


Great photos :: humankind's impact on the environment

Over 30 years ago, Edward Burtynsky worked in mines and auto manufacturing
plants, giving him direct exposure to industry and the world's growing
demand for resources. During that time, Burtynsky began shooting large
format color photographs; images that captured views of the earth altered
by mankind; blasted quarries and mines, a landscape plundered and then
abandoned. Burtynsky has explored the impact of our expanding footprint
and how it has begun reshaping the surface of the planet in very profound
ways. Burtynsky's images are simultaneously beautiful, yet deeply
shocking. Our judges believe the TED Prize will allow this Toronto-based
artist/photographer to bring his work to a broader audience, and help
change the way we think about the world and our place in it.

More at

Big Investors Demand Disclosure on Corporate Climate Practices

Big Investors Demand Disclosure on Corporate Climate Practices
NEW YORK, Feb. 1, 2005 - A group of 143 institutional investors with
assets of $20 trillion under management have written to the 500 largest
quoted companies in the world by market capitalization, asking for the
disclosure of investment-relevant information concerning their greenhouse
gas emissions. This is the third time such a request has been made.

In this request a larger group of investors have collaborated to ask for
this data. Corporations that previously provided responses are invited to
report progress. Companies that previously did not respond are requested
to do so, or to provide a reason why they do not believe the request is
relevant to their business.

Commenting on the information request, Paul Dickinson, the project
coordinator, said: "The numerous indications of accelerating human induced
climate change make it clear that there are business risks and
opportunities that have implications for the value of investments in
corporations worldwide. Examples include changes in weather patterns,
political and regulatory momentum moving against significant carbon
emitters; the development of emissions-sensitive technologies, products
and services superseding those existing today; and shifts in consumer
sentiment due to a corporation's stance on climate change.

This makes it necessary for investors to improve their understanding of
climate change risks and opportunities. The data to assess these issues is
not always available, sometimes lacks comparability or is of poor quality.
The Carbon Disclosure Project aims to encourage the development of a
common emissions measurement methodology and to facilitate its integration
into general investment analysis. The signatories recognize that companies
face pressure to comply with constant demands for information and so have
joined in this single call for information to reduce the number of

The recipient corporations have been asked to respond within four months
and the information received will be used to compile a thematic report by
Innovest Strategic Value Advisors who have been retained to perform the
analysis. The report will be distributed to participating institutional
investors and companies that respond to the questionnaire, and made
publicly available online from September 2005. All submitted data
authorized for publication will also be available from the web site at
this time.

This initiative has been coordinated by the Carbon Disclosure Project, a
special project of the Philanthropic Collaborative of Rockefeller
Philanthropy Advisors in New York.

The group of investors is not a legal entity and the Carbon Disclosure
Project has no authority to make any other statement on behalf of the

Conference Board Briefing Targets CEOs with Energy-Efficiency Message

Conference Board Briefing Targets CEOs with Energy-Efficiency Message
OTTAWA, Canada, Jan. 26, 2005 - Energy efficiency is back -- and business
executives would do well to embrace it, according to a Conference Board of
Canada briefing, "Why Energy Efficiency?"

"Energy efficiency directly impacts the bottom line. Company champions
need to communicate the benefits of energy efficiency to their
organizations in terms of dollar savings. They need to make the business
case, so that energy-efficient investments are clearly attractive," said
John Roberts, Director, Environment, Energy and Transportation.

"Energy costs are increasing faster than other overhead expenditures, so
energy-efficient organizations will give themselves a competitive
advantage, at a low risk and a predictable return. Organizations that
adopt energy efficiency today will also have a head start on competitors
as Kyoto targets are introduced."

The Canadian Industry Program for Energy Conservation says industries
saved $3.4 billion in 2002 through effective energy management. Moreover,
plenty of "low-hanging fruit" remains that could produce tremendous
savings, but energy efficiency does not often register as a priority
compared to developing new products or entering new markets. Two reasons
for this lack of action are: executives are often not made aware of the
benefits, and investments can take several years to generate financial

The briefing outlines four reasons why executives should pay attention to
energy efficiency:
1. Improving financial performance (one U.K. study indicates that
saving 20% in energy consumption can have the same positive effect as a 5%
increase in sales)

2. Generating low-risk and predictable returns on investment, with
respectable payback periods in many instances

3. Progressing toward achieving societal goals of energy security,
climate change mitigation and improved air quality; and

4. Increasing potential to commercialize energy-efficient Canadian
The briefing is publicly available online at the Conference Board of
Canada?s e-Library (free registration required).

Caterpillar Inches Toward Major GHG Reduction Target

Caterpillar Inches Toward Major GHG Reduction Target
PEORIA, Ill., Jan. 20, 2005 - Caterpillar Inc., manufacturer of
construction and mining equipment, diesel and natural gas engines and
industrial gas turbines, has pledged to reduce its global greenhouse gas
(GHG) emissions 20% by 2010.

Caterpillar?s emission-reduction target would cover global greenhouse gas
emissions on a revenue-normalized basis for the period between 2002 and
2010. According to EPA guidelines, setting a revenue-normalized target for
GHG reductions allows a company to account for increases or decreases in
production over time. Those companies can then focus on GHG emissions per
unit of production as the key performance indicator to measure GHG

The company committed to the reduction target as part of the United States
Environmental Protection Agency Climate Leaders program, which Caterpillar
joined in 2003. Started in 2002, Climate Leaders is a voluntary program in
which the EPA works with companies to set aggressive long-term emissions
reduction goals. Partners set a corporate-wide GHG reduction goal and
inventory their emissions to measure progress. By reporting inventory data
to EPA, partners create a lasting record of their accomplishments.

Between 1990 and 2001, Caterpillar reduced direct GHG emissions from its
facilities by 450,000 metric tons. The reduction resulted from fuel
switching, process changes, and energy conservation programs.

In many cases, Caterpillar has used its own products to reduce greenhouse
gas emissions at its facilities. Examples of such efforts include using
natural gas-fired combined heat and power units featuring Solar Turbines
in conjunction with units that recover waste heat. Such systems are not
only more cost efficient, says the company, but they also have
substantially reduced GHG emissions at those Caterpillar facilities.

In addition, dozens of 6 Sigma teams have implemented energy conservation
projects that can be replicated across the globe at Caterpillar
facilities, not only saving money, but also continuing to reduce

The company is an active participant in other environmental stewardship
initiatives in addition to the Climate Leaders program. Examples include
the U.S. EPA Clean School Bus initiative and Caterpillar's participation
as a founding member and supporter of the Health Effects Institute, an
industry and EPA organization designed to facilitate dialogue and fund
research on emissions-related issues. The company is also a founding
member of the Diesel Technology Forum, which raises awareness about the
advances in fuel efficiency and economic contributions of clean diesel

Future Forests: Selling a Climate-Friendlier Lifestyle

Climate Wise
by Matt Loose
February 2005

Future Forests: Selling a Climate-Friendlier Lifestyle
Source: Matt Loose
As consumers, most of us are determined to have our cake and eat it. We
want to travel by car but also -- when we think of it -- want a stable
climate. A growing number of products and services are providing
climate-friendlier lifestyles, with one of the most well known in the U.K.
being Future Forests.

Future Forests has a business model which is highly unusual for an
organization concerned with climate change. It could be described either
as a for-profit NGO or as a campaigning business. Formed as a for-profit
limited company in 1997, Future Forests is backed by venture capital. The
linked needs for growth and consumer understanding have driven the
development of a strong brand and a diverse range of partnerships with
some well- known companies.

So what?s the product? Future Forests offers consumers the chance to
measure, reduce and offset the climate change impacts of their lifestyle
choices through .carbon sequestration. and investment in climate friendly
technology projects around the world. Its central achievement has been to
make this message accessible to ordinary consumers. However, fears have
been raised that its success in simplification has also led to confusion
about what the business actually does.

Given its entrepreneurial zeal, it was perhaps inevitable that Future
Forests would trigger scrutiny from some areas of the green movement,
particularly when it managed to scoop up a series of celebrity backers and
succulent contracts, for example rendering the U.K. leg of the last
Rolling Stones tour -- CarbonNeutral.

Earlier this year concerns came to a head when one NGO, Trees for Cities,
made a complaint to Camden Trading Standards Office, claiming that
consumers were being misled into thinking that all of the money they spend
with Future Forests would lead directly to the planting of saplings.
Although this complaint was subsequently rejected, for a high-profile
brand aiming to appeal to hearts and minds, such challenges pose real
risks, and Future Forests was quick to act in order to defend its

Jonathan Shopley, chief executive, recognizes that achieving a high
profile has made Future Forests a potential lightning rod for wider
concerns. In response, Future Forests is looking at ways in which it can
be even more explicit and transparent. Under review: clarifying its
offering; increasing the transparency of its governance; and examining
ways to draw stakeholders into its business decision-making. Learning from
the inevitable travails of early pioneers like Future Forests may prove to
be a valuable skill for social enterprises. In fact, the long march toward
mainstream markets and consumers will probably demand it.


Swiss Supreme Court Rejects IBM Appeal Against Lawsuit by Gypsies Who Allege Company Had Holocaust Link

Swiss Supreme Court Rejects IBM Appeal Against Lawsuit by Gypsies Who
Allege Company Had Holocaust Link
By Jonathan Fowler January 28, 2005
1 of 1
This is an ongoing story that IBM has been hoping would fade away. Now
that the Swiss court has determined Big Blue should stand trail, it's not
likely that will happen. However, today, there are very few media outlets
-- 4 so far -- picking up the story. And those 4 stories are actually wire
copy, which means that there are no original copy on this. But there are
1,000 stories on the Polish rememberance that happend yesterday as well.
-- By Brad King.

What Others Are Saying:

England's The Helard has a piece that ties the with the IBM announcement
with the Auschwitz gatherings in Poland.

The Arizon Republic has an American perspective on the Holocaust.

On the Net:

Gypsy International Recognition and Compensation Action

Related Stories:

AP Writer

DAVOS, Switzerland (AP) -- Computer giant IBM will have to face a trial in
a Swiss court over a lawsuit by Gypsies claiming the company's punch-card
machines helped the Nazis commit mass murder more efficiently, the
plaintiffs' attorney said Thursday.

Switzerland's Federal Tribunal -- the country's supreme court in Lausanne
-- rejected IBM's appeal against a lower court ruling that IBM had a case
to answer in Geneva, lawyer Henri-Philippe Sambuc said. Details of the
Dec. 29 ruling were only made public Thursday.

"We don't discuss pending litigation, but we continue to believe the case
is without merit," said John Bukovinsky, an IBM spokesman.

A Gypsy group filed the lawsuit after a 2001 book claimed the company's
punch-card machines enabled the Nazis to make their killing operations
more efficient.

The group, known as Gypsy International Recognition and Compensation
Action, claims the Geneva office was IBM's hub for trade with the Nazis --
something the company has rejected.

The New York-based firm also has consistently denied it was in any way
responsible for the way its machines were used in the Holocaust.

In 2003, a lower court in Geneva decided it didn't have jurisdiction to
hear the case, saying IBM only had an "antenna" in the Swiss city during
World War II.

But last year, the city's appeals court said this decision was wrong,
noting that Geneva's archives showed that IBM opened an office in 1936
under the name "International Business Machines Corporation New York,
European Headquarters."

The supreme court upheld the appeals court ruling.

The appeals court said it couldn't rule out "IBM's complicity through
material or intellectual assistance to the criminal acts of the Nazis."

The Gypsies' lawyers maintain that the company's Geneva office continued
to coordinate Europe-wide trade with the Nazis, acting on clear
instructions from IBM's world headquarters in New York.

The Gypsy group sued IBM for "moral reparation" and US$20,000 (euro16,650)
each in damages on behalf of four Gypsies, or Roma, from Germany and
France and one Polish-born Swedish Gypsy. All five plaintiffs were
orphaned in the Holocaust.

The lawsuit was filed after U.S. author Edwin Black -- in his book "IBM
and the Holocaust" -- said the punch-card machines were used to codify
information about people sent to concentration camps.

In addition to 6 million Jews, the Nazis are believed to have killed
around 600,000 Gypsies, although Roma groups say the number could have
been as high as 1.5 million.

IBM's German division has paid into Germany's government-industry
initiative to compensate people forced to work for the Nazis during the

In April 2001, a class action lawsuit against IBM in New York was dropped
after lawyers said they feared it would slow down payments from the German
Holocaust fund. German companies had sought freedom from legal actions
before committing to the fund.

Copyright 2005 Associated Press. All rights reserved. This material may
not be published, broadcast, rewritten, or redistributed.

Japan, Canada Should Link to EU on CO2 - Analyst

Japan, Canada Should Link to EU on CO2 - Analyst
Mail this story to a friend | Printer friendly version
NORWAY: January 31, 2005

OSLO - Japan and Canada should link up to the European Union market for
greenhouse gases as the best way to meet their pledges under a UN scheme
for fighting global warming, a leading analyst said on Friday.

Kristian Tangen, managing director of Oslo-based Point Carbon, said the EU
model was the best blueprint for a global market under the 137-nation
Kyoto protocol for curbing emissions of heat-trapping gases from cars,
factories and power plants.
"It's very hard to see how Canada and Japan can meet their Kyoto
commitments without linking to the EU emissions trading scheme," he told
Reuters. "It would be the least risky strategy if they are serious about
meeting their Kyoto commitments."
He estimated the two could be ready to link up from 2008. Under Kyoto,
rich nations are due to cut their emissions of carbon dioxide by 5.2
percent below 1990 levels by 2008-12.
Kyoto, due to enter into force on Feb. 16 after years of delay, is an
attempt to offset a creeping rise in world temperatures that most
scientists say is likely to trigger wider floods, storms, droughts and
raise global sea levels.
Tangen said Japan and Canada were the main industrial nations outside the
25-nation EU where there may be big demand among businesses from steel
mills to oil companies to buy rights to emit extra greenhouse gases.
The United States, the world's top source of carbon dioxide, is not part
of Kyoto. President George W. Bush pulled out in 2001, saying Kyoto was
too costly and wrongly excluded developing nations. Australia is also
staying out.

Under the EU scheme, industrial sites have been set emissions limits for
2005-07 and will have to buy allowances if they overshoot, or pay fines.
Those below target can sell surplus quotas.
Tangen said that separate Japanese or Canadian markets would not work well
because, unlike in the EU, there were likely to be only buyers. "In the EU
scheme you have much more variety and liquidity," he said.
Some EU nations, like Portugal, Spain, Greece and Ireland, are far above
goals under Kyoto. But there are also sellers in the EU, like new east
European members with emissions to spare after the collapse of
communist-era smokestack industries.
Point Carbon, which has 30 employees, supplies analyses of the emerging
carbon markets.
Tangen said another option for Japan and Canada was to buy surplus carbon
dioxide from non-EU nations led by Russia, which hopes to earn billions of
dollars by selling spare quotas.
"I think Japan and Canada will buy something from Russia. But it depends
on the political system in Russia -- transparency, law and order and
stability," he said.
The biggest emitters of carbon dioxide registered under the EU scheme so
far are power companies, led by German energy groups RWE AG and E.ON and
Swedish power company Vattenfall, according to Point Carbon.
Fourth is Spain's largest utility Endesa followed by Anglo-Dutch steel and
aluminium company Corus Group, Royal Dutch Shell Group, Thyssen Krupp,
Estonian power group Eesti Energia and Britain's Drax Power Ltd. Companies
in Italy, Greece and Poland are still missing from the allocations plan.
The ranking helps explain why mild weather across much of Europe in early
January has prompted a fall in EU carbon dioxide prices -- power companies
have been burning less coal, oil and gas to generate electricity than in a
normal winter.
In the EU market, carbon dioxide currently trades at about 6.95 euros
($9.06) per tonne, down 17 percent from a market debut at 8.4 euros on Jan

Story by Alister Doyle

Top 100 'sustainable' corporations named: HP, Xerox named

Top 100 'sustainable' corporations named

Lisa Roner
1 Feb 05



A new global business ranking ? the Global 100 Most Sustainable
Corporations ? was launched at the World Economic Forum on Friday. Three
companies ? Toyota, Alcoa and BP ? were singled out for excellence.

Global corporations ranked

The companies have distinguished themselves through their ?ability to
profit from recognising new environmental and social markets,? the list?s
organisers say.

The top 100 companies were selected from a pool of more than 2,000 firms
representing large global indices. These include the S&P 500, MSCI World,
FTSE 350 and Eurostoxx, based on rankings by Innovest Strategic Value

Companies were rated on a range of criteria that included strategic
governance, environmental initiatives and human capital/labour relations

?How companies perform on environmental, social and strategic governance
issues is having a rapidly-growing impact on their competitiveness,
profitability and share price performance,? says Matthew Kiernan, founder
and chief executive of Innovest, who provided analysis for the rankings.

The list is co-ordinated by Canadian publishers Corporate Knights.

Each of the companies recognised in the ranking, Kiernan says, is
?particularly well-positioned to capture opportunities in this new world
we are all entering?.

Toyota, one of the world?s leading automakers, has developed and
successfully commercialised the ?marquee environmental technology of the
decade? for its industry ? the hybrid drive vehicle, the group says.

The company?s Prius model was the fastest selling car in America in 2004
and it is licensing the technology to others automakers, ?expanding its
positive impact? on the sector, Innovest says.

Toyota has also made strong commitments to environmental management at its
facilities and with its suppliers, the group notes.

Despite significant sustainability-related challenges in the metals and
mining sector, Alcoa, the world?s leading primary aluminium producer, the
group says, has distinguished itself as a leader ?through its
sophisticated approach to identifying and managing the material
sustainability risks? it faces as a company.

Innovest says Alcoa has ?the requisite sustainability strategies in place
to meld its profitability objectives with society?s larger goals of
environmental protection, wealth creation and social stability?. And those
strategies, the group says, add financial value.

BP, the second largest global oil and gas company, is ?on the leading edge
on overall sustainability excellence? in the oil and gas industry, the
group says.

The company?s corporate social and environmental strategies are ?strong in
practically all areas of intangible value creation? compared to its peers,
Innovest finds.

BP has been a leader in resource and energy efficiency, climate change
risk abatement, waste reduction and recycling and overall environmental
impact minimisation, the group reports.

In addition, the company has ?implemented a global social policy backed up
by programmes and initiatives comprising ethics, transparency, employee
responsiveness, stakeholder relations and health and safety? and gained
competitive advantage in the process, Innovest reports.

?Sustainability is not new to us, although we may not have always used the
term,? Alcoa chief executive Alain Belda says. ?For years, we have been
using our values as a guide, while striving for excellence, with a focus
on better understanding and managing our economic, social and
environmental impacts on our communities.?

Belda says companies must act not only on present challenges, but ?with
the legacy in mind that we leave for those that come after us?as well as
the commitments made by those that came before us?.

Corporate Knights, the Toronto-based media company which will publish the
complete listing, calls the recognised companies ?trailblazers that are
potential allies in helping to create a better world?.

Great Britain led the list with 32 recognised companies, followed by the
US with 20 and Germany with nine.

"It is high time for a Global 100 ranking of sustainable companies," says
Bill Shireman, chief executive of The Future 500, a non-profit corporate
network based in San Francisco. "Like the Dow Jones Sustainability Index
and FTSE4Good, this will help drive competition among corporate leaders to
be the most sustainable - a step in the right direction."

But the most promising steps forward are by those companies that are
developing technologies with the capacity to radically reduce consumption
of non-sustainable resources, by redefining whole industries and sectors,
Shireman says.

He cites HP's "E-Inclusion" business unit, which provides information
technology to developing countries, in forms that help them leapfrog the
roads and centralised factories of traditional industrial development,
while preserving cultural diversity.

He also points to NatureWorks, the joint venture between Cargill and Dow
that makes bio-plastics economically from sugar, without petroleum.

"Eco-efficiency gains are to be congratulated, but more fundamental shifts
offer even greater profit and environmental potential, because those who
develop them successfully can marry radically lower costs with radically
lower environmental impacts," Shireman says.

On CSR email lists yesterday, some commentators expressed concern that the
methodology used to make the rankings was not available and noted that the
definition of a sustainable corporation as "a corporation that produces an
overall positive impact on society and the environment" by the group, was
a little vague.

Groups that rank companies using both intangibles and measurable factors
often face some controversy as their methodologies are often complex and
are sometimes not fully revealed or easily understandable.

A complete listing of the top 100 companies by country is available at:


The 2005 List by Country

Read about the Top 3 finalists for 2005.

The Global 100 list for 2005 (alphabetical | by country)
Company Name Sector
Alumina Limited Metals & Mining
Company Name Sector
Dexia Banks - Europe

Company Name Sector
TransAlta Utilities Electric Utilities - Intl
ENBRIDGE INC. Gas Utilities
SUN LIFE FINANCIAL SVCS Insurance - N. America
Alcan Inc. Metals & Mining

Company Name Sector
VESTAS WIND SYSTEMS A/S Electrical Equipment
Novo Nordisk Pharmaceuticals

Company Name Sector
Nokian Renkaat Auto Components
Nokia Oyg Communications Equipment
KESKO Food & Drug Retailing

Company Name Sector
LAFARGE SA Construction Materials
Danone Food Products
STMicroelectronics Semiconductor Equipment & Products

Company Name Sector
Volkswagen Group Automobiles
FRESENIUS MEDICAL CARE AG Health Care Providers & Services
Henkel Household & Personal Products
Siemens AG Industrial Conglomerates
SAP AG Software
Deutsche Telekom Telecommunications
Adidas Salomon AG Textiles & Apparel

Great Britain
Company Name Sector
HBOS PLC Banks - UK & Ireland
Diageo Beverages & Tobacco
Sabmiller Beverages & Tobacco
Pilkington PLC Building Products
Hays PLC Commercial Services & Supplies
DAVID S. SMITH HOLDINGS PLC Containers & Packaging
3I GROUP PLC Diversified Financials - UK
Expro International Group Energy Equipment & Services
J SAINSBURY PLC Food & Drug Retailing
Unilever Food Products
CENTRICA PLC Gas Utilities
Smith Nephew Health Care Equipment & Supplies
Taylor Woodrow PLC Homebuilding
Whitbread PLC Hotels Restaurants & Leisure
Aviva Insurance - UK & Ireland
BP PLC Integrated Oil & Gas
GUS PLC Multiline Retail
MARKS & SPENCER PLC Multiline Retail
Cairn Energy PLC Oil & Gas Exploration & Production
SEVERN TRENT PLC Public Services
Pearson PLC Publishing
British Land Co PLC Real Estate
Land Securities PLC Real Estate
Slough Estates PLC Real Estate
KINGFISHER PLC Specialty Retail
BAA PLC Surface Transport
BT Group PLC Telecommunications

Company Name Sector
DENSO Auto Components
Toyota Motor Automobiles
Kuraray Company Limited Commodity Chemicals
RICOH COMPANY, LTD. Electronic Equipment & Instruments
NTT Docomo Inc Telecommunications

Company Name Sector
ABN Amro Holding Banks - Europe
ING Group Diversified Financials - Europe
Philips Elec Household Durables
Royal Dutch Petroleum Integrated Oil & Gas
Reed Elsevier PLC Publishing

Company Name Sector
TOMRA SYSTEMS ASA Industrial Machinery

Company Name Sector
Indra Sistemas IT Consulting & Services

Company Name Sector
FoereningsSparbanken AB Banks - Europe
Ericsson Communications Equipment
Skanska Construction & Engineering
VOLVO Construction & Farm Machinery
Electrolux AB Household Durables
Svenska Cellulosa AB Paper & Forest Products
Hennes & Mauritz Specialty Retail

Company Name Sector
ABB AG Electrical Equipment
Swiss Reinsurance Company Insurance - Europe

United States
Company Name Sector
United Technologies Corp Aerospace & Defense
Bank of America Banks - N. America
PEPSICO INC Beverages & Tobacco
Pitney Bowes Commercial Services & Supplies
HEWLETT-PACKARD COMPANY Computers & Peripherals
FPL Group Inc Electric Power Companies - N. America
PINNACLE WEST CAP CORP Electric Power Companies - N. America
AGILENT Electronic Equipment & Instruments
Xerox Corp Electronic Equipment & Instruments
SCHLUMBERGER LIMITED Energy Equipment & Services
Baxter Health Care Equipment & Supplies
MARRIOTT INTL INC NEW Hotels Restaurants & Leisure
Eastman Kodak Co. Leisure Equipment & Products
ALCOA INC Metals & Mining
Weyerhaeuser Co Paper & Forest Products
Bristol-Myers Squibb Co. Pharmaceuticals
Intel Corp Semiconductor Equipment & Products
Ecolab Inc Specialty Chemicals
AT & T Corp. Telecommunications

Foundation: The world's richest charity confronts the health of the world's poorest people

Jan 27th 2005
From The Economist print edition


The world's richest charity confronts the health of the world's poorest
THREE-QUARTERS of a billion dollars is a lot of almost anybody's money.
Almost anybody, that is, except Bill Gates. Even for him, though, it is
more than small change. And that is the size of the donation announced on
January 24th by the foundation that bears his name and that of Melinda,
his wife. The money is going to the Global Alliance for Vaccines and
Immunisation (GAVI).
The Gates foundation is the richest charity in the world. Its endowment is
worth $28 billion. Its annual income is that of a small country. And its
founders are on a mission. The more modest parts of that mission are to
improve America's schools and libraries and to benefit Mr Gates's native
region of the Pacific Northwest (charity, after all, begins at home). The
most ambitious part, though, is to free the world?and, in particular,
those regions of it that are poor?of ill health.
The donation to GAVI is merely the latest of a series of gifts intended to
combat disease in the tropics. The foundation's contributions have almost
doubled global spending on research into malaria. They have formed the
largest non-governmental gifts to the Global Fund to Fight AIDS,
Tuberculosis and Malaria, which was set up at the prompting of Kofi Annan,
the United Nations secretary-general, to combat those diseases.
Independently of this, they have helped entire countries to set up
anti-AIDS programmes. They have driven the creation of the Global HIV/AIDS
Vaccine Enterprise, which, earlier this month, published a plan designed
to pave the way to such a vaccine. And in a few months' time they will
begin to fuel the most ambitious project of all, an attempt to bulldoze 14
?roadblocks? which the foundation has identified as standing in the way of
its medical objectives, and which it has dubbed its ?Grand Challenges in
Global Health? initiative.
This scale of spending could indeed transform tropical-disease research
and treatment, as the Grand Challenges project intends. That is certainly
the foundation's aim?and it is a laudable one. But two risks come with it.
One is that he who pays the piper calls the tune. With such a large amount
of money at their disposal, the foundation's scientists might end up,
albeit unwittingly, controlling the research agenda in these areas.
The second risk is that other foundations?and governments, even?might feel
that so much Gates money is flowing into global health that they can cut
back on their own contributions. Then, ironically and unintentionally, the
Gates foundation might end up with the sort of quasi-monopoly in its field
that Microsoft, the source of Mr Gates's wealth, enjoys in its.

Foundation and empire
With luck, neither of those things will come to pass. Patty Stonesifer,
the foundation's president, and Rick Klausner and Helene Gayle, its top
scientists, are certainly aware of both risks. The first, of
unintentionally calling the tune, is dealt with by what might be described
as an auction of ideas. Though some money is simply given to good causes
that approach the foundation, much of it, particularly that directed
towards research, is awarded by open competition?as, for example, in the
case of the Grand Challenges. The challenges themselves were the distilled
wisdom of 1,000 ideas from the world's scientists. Once they were
announced, 1,500 suggestions for meeting them flooded in, and these have
been refined into 400 formal proposals which are now being sifted through
by a panel of independent scientists. As Dr Klausner puts it, ?the idea is
to stimulate the agenda, not create it.?
The risk of displacement is dealt with by an explicit understanding that
the foundation will have no permanent pensioners. As its website rather
inelegantly puts the matter, ?Priority is given to projects that leverage
additional support?. In this regard, GAVI is a good example. The alliance
(of disparate interested parties ranging from UN agencies to industry
representatives), and its financing arm, the Vaccine Fund, were in essence
created by the Gates foundation with an initial grant, also of $750m, in
1999. This was intended to last five years, and those years are now
up?hence the new announcement. But the second $750m tranche is designed to
last ten years, rather than five.

GAVI is being weaned. In its first five years its Gates money amounted to
about half of its income, despite the fact that 11 national governments
also chipped in. That got the alliance on its feet (see chart 1). But if
it is to fulfil its objective of giving comprehensive vaccine protection
to 90% of newly born children in the countries it serves by the end of
those ten years, then it will need a lot more cash: some $8 billion-12
billion by its own estimates. That is way more than the Gates foundation
wants to give, or, indeed, can afford. But the weaning strategy seems to
be working. On January 24th Norway chipped in $290m, and on the 26th
Britain followed suit with $1.8 billion, to be channelled to GAVI through
a newly created International Finance Facility for Immunisation.
However, while it is true that the foundation's strategy is not to
monopolise the field, monopsonies?that is, dominant purchasers?are a
different economic animal from a donor's point of view. Creating a
monopsony was certainly part of the motive behind GAVI. Childhood
vaccination is a cost-effective way of saving lives, and one of the
foundation's precepts is, as it were, to buy lives cheaply: that way more
people can be saved. But GAVI represents a way to do it more cheaply
still. By creating a purchase fund that bundles together the requirements
of the countries it serves (some 70 nations that have a GDP per head of
less than $1,000), GAVI creates a large, reliable demand that stimulates
more companies to get involved in manufacturing existing vaccines,
provides an incentive to develop new ones, and pushes down unit prices.
Another way of buying lives cheaply is to make sure the money is neither
wasted nor stolen. For this purpose GAVI, at the foundation's instigation,
has strict auditing procedures. So far, 41 countries have been audited. Of
these, 25 passed and 16 failed. If a country's vaccination programme is
successful, it is rewarded. If a programme is seen to be failing, GAVI
will work with that country to identify the problem and try to correct it.
But if correction is impossible, funds will be cut off?as has already
happened in six cases.
The principle of unity in diversity has also informed the foundation's
involvement in the Global HIV/AIDS Vaccine Enterprise. The purpose of that
enterprise is to promote collaboration between funding bodies, such as the
Gates foundation itself and the International AIDS Vaccine Initiative, and
scientists, both academic and commercial. Such collaboration cannot, of
course, be unconditional. Commercial scientists work for organisations
that need to protect their intellectual property in order to make a
profit. But by establishing agreed standards for testing putative
vaccines, encouraging the maximum possible sharing of data, and planning
how a vaccine might be manufactured in bulk and deployed, even before it
is ready, the enterprise intends to speed the shining hour. The hope is
that this sort of ?industrialisation? of the discovery process will become
a model for future research. Indeed, the foundation has already detected
interest in a similar enterprise to discover and deploy a malaria vaccine.
The Global HIV/AIDS Vaccine Enterprise is a more speculative investment
than the one in GAVI, since no one knows for sure that an AIDS vaccine can
be developed. Nevertheless, AIDS is such a threat to world health, and
also one of the biggest obstacles to economic development, that in this
case speculation could bring a huge dividend.

In fact, combating AIDS both directly and by indirect methods such as
improving reproductive health, particularly for women, and attacking the
tuberculosis that kills so many HIV-infected people, already absorbs a
third of the foundation's spending on health care (see chart 2). Besides
contributing to the Global Fund, the foundation is intimately involved in
two large projects. Again, the targets have been carefully chosen. ACHAP,
the African Comprehensive HIV/AIDS Partnerships, is Botswana's anti-AIDS
project. Botswana vies with Swaziland for the unenviable title of country
with the highest HIV infection rate. According to UNAIDS, the UN agency
responsible for combating the disease, almost 40% of Botswana's adult
population has the virus. Unlike Swaziland, however, it is a well-governed
democracy. Yet, with a population of 1.8m, it is small enough for the
foundation to make a real difference.
Another country in which the foundation is taking a direct interest is
India. Here, its Avahan programme, backed by $200m of foundation money,
has concentrated on the country's lorry drivers, a trade whose members had
a large share of responsibility for spreading HIV in Africa. It has
co-opted India's main oil company and also its national truckers
association to spread the message to drivers that they should take care
not to spread the disease. It has also tackled the difficult task of
making AIDS a topic of polite conversation by recruiting Raul Dravid, a
prominent cricketer, to the cause. India is in Dr Gayle's sights not so
much because of how bad things are there, but because of how bad they
could become. Even though the adult infection rate is less than 1%, that
still amounts to some 5m people, making India the second-most infected
country, in terms of total numbers, after South Africa. The idea is to nip
the epidemic in the bud.

Second foundation
The Grand Challenges initiative, though, may dwarf all this. Its scope is
so ambitious that it is almost a foundation within a foundation (the
actual administration is being done by America's Foundation for the
National Institutes of Health). The challenges in question (Dr Klausner
borrowed the title from a lecture delivered in 1900 by a mathematician
called David Hilbert, which outlined 23 grand challenges in maths for his
successors to solve) range from the mundane (?prepare vaccines that do not
require refrigeration?) to the esoteric (?develop a genetic strategy to
deplete or incapacitate a disease-transmitting insect population?). The
latter will require both serious genetic engineering and a public
relations campaign designed to persuade people that it is safe and
sensible to unleash engineered insects into the wild.
Nor are basic matters neglected. As David Fleming, the foundation's Global
Health Strategies director, points out, half of childhood deaths in the
poor world have malnutrition as an underlying cause. So one of the
challenges is ?to create a full range of optimal, bioavailable nutrients
in a single staple plant species?. More genetic engineering there, in all
probability, or maybe a revolution in plant breeding techniques. So, if a
new, healthy crop called Billgatesia graces your table one day, you will
know who to thank.

No time for consensus: German companies have been far too resistant to change

No time for consensus
Jan 27th 2005
From The Economist print edition

German companies have been far too resistant to change

Get article background
SOMETHING is rotten in the state of Germany's joint-stock companies, and
it is robbing them of competitiveness in a harshly competitive world.
Banks, carmakers, engineering and communications companies, as well as
old-fashioned conglomerates, all have struggled to keep up with rivals
abroad that are set up so that they can make quicker decisions.
Is it really that bad? After all, plenty of German companies do just fine,
and the problems of Germany's economy cannot all be laid at their door.
Moreover, the corporate sector there seems relatively free of the gross
corruption that has dogged its equivalents in America and other parts of
Europe?no big scandal has made international headlines to rival America's
Enron, the Netherlands' Ahold or Italy's Parmalat.
Appearances, however, are deceptive. In aggregate, Germany's companies are
falling behind their competitors, and they know it. Big efforts are under
way to try to understand why companies seem to be less effective at
innovation than those in, say, Britain or America. As for scandals, they
do happen in Germany, but the tendency when one company is embarrassed is
for the others to close ranks and pretend there is no broader problem. The
latest brouhaha concerns companies keeping parliamentarians on their
payroll for no obvious reason but to gain political favour (see article).
The main targets of scorn, however, have been not the companies, but the
politicians, for failing to declare their second incomes.
As fish are said to rot from the head, so the rottenness of German
companies starts with their two-board system. In addition to an executive
board of directors, they all have supervisory boards, up to half the
members of which represent the workforce rather than shareholders. Too
often these boards endorse decisions that merely reinforce the status quo.
Appointments are far too cosy: new blood is seldom sought from outside.
Most of the boards are too big to be effective, and their instinct is to
defend or deny mistakes on the executive floor rather than to represent
shareholders. This week, for instance, the supervisory board of Infineon,
a computer-chip company, experienced little more than lively heckling at
its annual meeting. That was despite a disastrous year in which the
company finally (rather belatedly) fired its chief executive. No one at
the supervisory level felt obliged to resign. At its recent annual
meeting, ThyssenKrupp, a steel conglomerate, saw all of its old boys
re-elected to the supervisory board, including a 73-year-old former chief
executive and a 69-year-old who steered one of Germany's most illustrious
banks close to disaster. Even Siemens, one of Germany's (and Europe's)
most successful companies, has allowed its chief executive, retiring this
week, to head the supervisory board.
Even if shareholders were to become more militant, there is precious
little they can do to change things, despite the mock-democracy of annual
shareholders' meetings. As in other countries, their protests are politely
heard and then dismissed by a thundering majority of institutional voters,
most of whom share the same vested interests as the managers they might
otherwise tackle.

Some action please
What might change things at Germany's biggest companies? The government
seems unlikely to weigh in, although it could. A voluntary
corporate-governance code, published in 2003, has remained just
that?voluntary. Almost one-third of the top-30 listed companies flout one
of the code's main requirements: to publish specific details of how much
individual bosses earn. Last year the government threatened to put this
requirement into law, but it has since gone silent.
Yet there are a few simple things that can be done by the companies
themselves. They could slash the size of supervisory boards; hive their
real decision-making into smaller committees; and upgrade the quality and
broaden the selection of board members. Better still, they could switch to
the Anglo-Saxon system of a single board in which independent
non-executive directors spar with executives. When set up properly, this
system gets things done, and faster.
There is one truly hot potato, however, that even employers and right-wing
politicians dread touching: the removal of employee representation from
supervisory boards. Bizarrely, even independent economists in Germany
mumble that so-called ?co-determination? is a good thing and should be
strengthened rather than weakened. But they forget one vital thing:
companies have never been, and arguably cannot be, democracies. Today the
successful ones are streamlined machines that need strong leadership amid
their constant fight to survive. German companies have spent too long
trying to be fair and failing to be transparent?a fatal mixture. If they
are to flourish in future, they need to move on.