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Corporate Responsibility Insures Sustained Profitability

Australian Institute of Company Directors - Brisbane
May 11, 2004

I don't understand why anybody wants to listen to a Ling Yai - that's Thai for Big Monkey, but thank you for inviting me.

I'm quite proud of that Ling Yai moniker for two reasons.

First, my staff gave it to me, and that tells me we've got a great professional relationship that allows such liberties, unheard of in Thailand.

Second, Ling Yai actually started 53 years when my Mama told me I was a miracle, a marvelous human machine so special I could do anything I wanted to do - even fly to the moon - as long as I never forgot I am nothing but an overgrown monkey.

In short, as special as we humans are, we are still primates, subject to our own set of imperfections - and arrogance is #1. Unfortunately, arrogance is all too common - and a devastating weakness. Arrogance allows us to forget that we are still animals, and once we lose touch with Nature, once we insulate ourselves from those we perceive as "beneath" us, we lose our sense of balance. And when we lose our balance, strange things happen.

The concept of Corporate Responsibility balances our arrogance. It forces us to survey our environments - business, natural, personal - and consider the consequences of our actions. The Triple Bottom Line - social, environmental, financial - demands scientific management. It isn't easy, and is sometimes a threat to short term profitability, but it forces us to think, making us better managers

You are all progressive and competent managers who study and practice Corporate Responsibility - I started was writing about it in the 70's, same concepts, different buzzwords. I'm not going to bore you with concept definitions or claim the sky is falling, but if a Big Monkey is possible of intellectual thought, I'm going to try to stimulate some today.

I'm approaching 60, and through an accident of birth, I lived in exciting and colorful times so I'm just going to recount some milestones, because I want you to do the same. This room is full of remarkable people, and I only wish I were one of you. I know you have your own stories, so let's take a hike through life together.

When I swam in the sea in 1945, it was pure, clean and bountiful. When I went albacore fishing in my teens, the ocean went frothing to the horizon. A tuna feeding frenzy is an amazing sight, or should I say it was. Today, 90% of the World's big fish are gone. Fisheries are so depleted there isn't much hope for the ones that still remain.

On my first camping trip in 1949, the Sierra Nevada's still smelled like Pine cones and fresh air. We drank from the fast moving stream.

I was 10 in 1955. During Los Angeles' "Smog Alerts" we couldn't play in the schoolyard because it hurt to take a deep breath. I couldn't see the mountains from the foothills. It seemed like the sky was falling, and I asked my teachers why we didn't do something about it.

Every afternoon the Audubon society delivered their war orphans to our house - several hundred birds, nests , eggs and any other animal unlucky enough to come in contact with humans in rapidly expanding L. A. It seemed like war to me. I learned that animals are people too, and the human animal was in fact waging war on the Animal Kingdom, and all of Nature. Lofty thoughts for a 10 year old who played with the animals.

In 1960 I was curious about the Communist Boogie Man, so I read Das Kapital and The Communist Manifesto. Marx offered interesting insights, but he wasn't a manager. Karl's impractical solutions simply went against human nature.

I decided the Communist Boogie Man was an unrealistic Bogus Man and my country was into mass hysteria. Why worry about Russia and China when the greatest threat came from within. Capitalism wasn't that great either. Economics is central to society, and the best available option had many loose ends.

Armed with my skepticism in capitalism, my student business club elected me company president. I got into the game. In 1961 my Junior Achievement company won many awards and I was President of the Year. My Annual report won a national contest to the New York Stock Exchange where the Exchange President presented me with a Bull and Bear tie clasp on the floor of the Exchange. I will never forget the pandemonium, a feeding frenzy that makes tuna lightweights.

I was the first person I knew to fly a jet air liner and tie clasp was a nice souvenir. In those days, I still wore ties.

In 1964, Mr. Stock Exchange went to jail for stock manipulations, setting the stage for Enron and WorldCom. I realized I had actually embraced the hand of greed and arrogance. For the next ten years, I watched a small humble man from Asia tear apart the most powerful nation on Earth - by attacking its arrogance. Today, it's déjà vu all over again.

In 1977, about three months into my real business career, I pigeonholed James Gary, chairman of Pacific Resources, at a Hawai'i Employers Council function. My job was cocktail party photography, his was managing one of America's largest corporations, but I boldly introduced my self and immediately asked "Why isn't the nation's 7th largest energy company into solar energy?"

This time, capitalism worked. PRI Solar hot water was born, Congress passed a Five-Year tax exemption, and hundreds of thousands of American homes saved on their taxes and energy bills, consuming 40% less energy in solar hot water homes. Pacific Resources made a nice profit and I got tremendous inner satisfaction.

Everybody won, especially PRI shareholders. Today, PRI is something else, but I still smile every time I see Australian's Solar hart logo - it's everywhere I go.

Two years later, I went back to PRI with my new idea - solar roof panels. Instead of putting a field of solar panels on to of an existing roof, why not just O-ring the panels so they are watertight, make the roof itself from silicon cells? PRI loved the idea - and reported back that the idea was already patented, and the holders were sitting on it. Why drastically reduce fossil fuel consumption in return for one small roof sale? There's true capitalism at work for you. Tell it to the Great Barrier Reef.

A quarter of a century later, I couldn't wait to bring in the new millennium by kayaking my favorite reef anywhere - Gilan'gila Bay in Fiji's rarely visited Lau group. In 1998, the coral was so remote even the lobsters weren't afraid. Gilan'gila knew no human impact whatsoever. My video footage was a rainbow of color extending to the horizon.

But when I returned in 2001 I paddled an alien spaceship over a dead planet. The coral shapes remain, but the colors were gone, covered with a constant carpet of brown algae. No fish remained, no life in the coral, and not one kingfisher above water. On the surface, the sea looked the same but below, it was dead.

It felt like driving past a car wreck and realizing the carnage was my family. I was devastated - and I still am. After my initial shock, I realized that global warming was the culprit. This event was bound to reoccur throughout the tropics, with no hope of stopping it. In fact, fried reef is gaining popularity.

Gilan'gila Bay was just the tip of my personal iceberg. I didn't have to call NOAA to recognize global warming, but I did anyway. They confirmed that for two months only, Gilan'gila Bay's water was 1/10 of one degree centigrade higher than coral can withstand, and the reef fried. The damage was irreversible.

As I speak, The Australian Institute of Marine Science reports that the Great Barrier Reef - and many others throughout the South Pacific - is experiencing another "extensive" coral bleaching for the second time in four years. On paper, there are solutions, but given the human psyche, the problem is unsolvable.

I've known since my first Smog Alert that we are the real culprits - we are all consumers within the market economy. Until we massage the system, and our own personal values, we will never stop the computer projections - and they don't lie. We have about 50 years of watching the Reef die before our next milestone - catastrophic climate change. The processes are already underway. The bad news is that just like Gilan'gila Bay, the damage is probably irreversible for at least several centuries.

A recent study claims Rapid Climate Change will have profound effects on World Economy and Security - European Ice Ages as soon as 2020, droughts in Australia, mass starvations and Fortress America.

This isn't a liberal think tank talking; this report comes straight from the Pentagon, and is addressed to the Man Who Cannot Read.

The phrase "Profound Effects on World Economy and Security" gets my attention. It certainly should get yours. And as Corporate Directors, you have to look the Triple Bottom Line squarely in the eye. It is your obligation to your stockholders to protect their investment.

My academic friends call me a fool, but I don't believe in Doomsday. I believe there are always solutions, but we need a few thousand more years of human evolution before common good replaces maximizing profits. We don't have the luxury of time to reinvent the entire economic system, and changing our own personal values are the most difficult challenge of all.

We are only starting to realize that our backs are against the wall. Survival has a unique impact upon us animals, and it's time to move into survival mode - before the Great Barrier Reef becomes Gilan'gila Bay

But it's difficult to sit in the opulent comfort of the Brisbane Club and think survival - that's a long way off. To be realistic, we aren't going to change our banking and corporate systems - and personal attitudes - in time to do any good.

We must look at the comfort zone we call Market Economics, and learn how to massage this already productive and sometimes efficient system into accepting Triple Bottom Line thinking as an instrument of sustainable profitability. Like it or not, the role of business is more than maximizing profits. We have to consider the long-term implications of our actions, we must become involved citizens of the Planet, and we have to recognize the power and impact of our corporate actions. We must balance profits, social responsibility and environmental responsibility - or look for another home.

And the Reef won't let you ignore the issue.

I firmly believe that when we "Do the Right Thing", good things happen. In the Corporate system, good things are defined as "Return on Investment", so for the past 30 years, I've seen the Triple Bottom Line as basic common sense.

I'm just a Big Monkey, but I had some great mentors along the way.

Hawai'i will always be my home. The Island State is a "small Town" - the entire state's population is only 1/3 of Brisbane - yet we are headquarters for several Fortune 500 companies. It's a land of remarkable beauty and a living indigenous culture. I came to Alohaland at the invitation of indigenous and activist Hawaiians, yet thanks to my marketing and media efforts, I was fortunate enough to work with some remarkable Triple-Bottom Line managers - in the 1970's. These visionaries certainly made their shareholders happy, but they also taught me the importance of reinforcing profitability with a sophisticated process called Triple Bottom Line. These leaders didn't see the corporation as simply a money-making machine, they understood that their organizations are an integral part of society, and to be responsible participants of that society, the corporation must consider its social and environmental responsibility as part of the profit.

Not surprising, they discovered that when scientific management is applied to include the entire corporate environment, profitability and sustainability is actually enhanced.

I am nothing but the pipeline for their ideas and ideals, and only hope I honor them in accuracy and spirit.

Doc Stryker came to Dillingham Corporation after a career as Vice President - Public Relations of Kodak - back in the days when cameras used film. Remember film? I was a young idealist writing about "Enlightened Human Resources" for the Hawai'i Employers Council, an organization similar to yours. Doc's first lesson for the Big Monkey was "Everything about Public Relations is directly related to profitability."

Doc Stryker is a true humanitarian, birdwatcher and co-founder of Hawai'i Nature Conservancy, but in his mind, there is no triple bottom line - social and environmental responsibility are basic common sense, and everything answers to profitability. Our ultimate responsibility is to our shareholders.

I agree. If they trust us with their money, we are obligated to answer with a generous return.

Returning to Maui with his Stanford degree, Willie Cannon started at Bank of Hawai'i as a teller. I knew him as the Aloha shirt banker, and never saw him in a coat and tie. When somebody asked Willie how such a nice Maui boy became Chairman of a major bank, Willie replied "I never played politics or climbed up anybody back. I simply do a good job and made everybody around me happy - customers, fellow workers, and eventually shareholders."

Willie was so busy I had trouble clearing his media releases, so he told me to just get them into print as long as I called at 7AM to tell him what he said before the shareholders called. When Willie died unexpectedly, Central Union Church put speakers on the lawn for the overflow crowd. They weren't there because Bankoh Corp. was highly profitable. It was something more than that.

Henry Clark drove his restored Chevy II to C & C's Financial Plaza of the Pacific, parking in the spot reserved for "Chairman, Castle & Cooke". The simple car was spotless, got great mileage, and allowed Henry to give, give, give to the community - but only anonymously. Castle & Cooke was about 240 on the Fortune 500 during Henry's tenure, and Castle & Cooke's home base was a Garden of Enlightenment thanks to the silent social concern of this giant of a man. Henry's commitment definitely carried his corporation through troubled times.

This talk is my tribute to these three great managers. They all recognized that in tiny Hawai'i, everything in interconnected. Damage to the environment or the social fabric - or the economic machine - damages everybody. To these workaholics, environmental and social responsibility wasn't work, it was basic responsibility.

Thirty years later, the entire world is a small town. The irony is an exploding population. It took humans a million years to hit 1 billion, 150 years to reach 2 billion - and only 40 more years to hit 6 billion.

Expanding markets are great for profitability - to a point. But our rapidly expanding population - read "markets" - helps conceal the inefficiencies of capitalism.

Today, with our backs to the wall, we must ask questions like:

"How will my corporation be impacted when the Great Barrier Reef dies",

"How long before air traffic is reduced because of global warming", and

"What happens to my family when my community is infested with hard drugs?"

In Phuket, the big question is "Which friends will die in traffic accidents this year?"

These are serious Triple Bottom Line Issues. Without healthy markets, we cannot expect healthy profits. And isn't Quality of Life the real issue anyway?

Times are always troubled and unpredictable, but events accelerate thanks to climate changes, overpopulation, epidemiology and technology. The challenges may be beyond solution - at least until we totally restructure our attitudes and values. We are all competitive, or we wouldn't be here today. Shareholders - both individuals and institutional investors - judge your performance by return on investment. And that's a good thing - I've lived in societies where there are no dividend checks. Life is very hard.

What I'm suggesting is we look beyond the quarterly dividend check. To enjoy corporate sustainability - to keep those dividends rolling along - we need to look at our total environment - natural, social and business. Factoring Social and Environmental responsibility into the management matrix is our insurance policy for corporate sustainability.

These days, you folks truly earn your paychecks. Challenges to the corporation are already enormous - and exploding. Inbound tourism brings Australia millions of tourists per year, who leave untold revenues. They buy beer, shop for souvenirs, consume petrol and pay back real estate investments,

But the marine biologists say that in 50 years, only 5% of the Great Barrier Reef - the essence of Australian National Identity - will remain intact. Almost every Australian business will be impacted.

Are you factoring this calamity into your strategic planning? Are you really committed to dealing with the future, or do you simply give it lip service? The answer lies in your Board meeting minutes - how much time do your Board meetings devote to social and environmental issues destined to impact the corporation?

The issues are staring us in the face, so insurmountable they generate a mental version of the "Flight or Fight" response. Most of us are still in the "flight" mode, choosing not to confront green house gases and ozone depletion.

Now it's time to "Fight". Is your Board funding environmental and social study groups, or playing ostrich? Are your planners taking a proactive approach - looking for solutions? Is your public relations department targeting institutional investors? Does your economic planning department have an environmental planner on staff? Do you encourage staff participation in social service? Do you participate in social service?

Or are you reactive - simply trying to accept an inevitable future?

To confront the issues, we have to break out of "Flight or Fight".

I've had a solar powered boat on the drawing boards for 12 years. The computer models show 10 knots under solar power, but the concept is impractical without efficient storage cells. There's economic opportunity there for somebody, but why bother as long as fossil fuels still propel outboard engines?

Because of flight or fight, human perceptions can't "feel" the issues, but just like the citizens of Pompeii, we choose to ignore the facts instead of dealing with them. We ignored those 1950's "Smog Alerts" - just taking a deep breath was painful. The problem has been hitting us in the chest for at least 50 years, but humans simply didn't want to deal with it.

Now, you must do something to save your reef - and fast. The Great Barrier Reef is integral to your national identity, and it's gone in 50 years if things don't change. For me, the problem is generating enough motivation find the solution.

The Great Barrier Reef scenario demonstrates why Triple Bottom Line thinking is just good business. If Australia's corporate sector doesn't come together and find solutions, Australia's economy, Quality of Life and National Spirit will suffer. The only safe prediction is that the downside is totally unpredictable, and the multiplier effect will be greater than any prediction.

There is an undefined opportunity for basic sciences solutions, and a quantifiable opportunity to use your marketing budgets to create awareness of global warming, emphasizing ways to cut down on consumption. Solar boats, CO2 break-down, atmospheric scrubbers electric cars, silicon cells and storage cell technology are all economic opportunities guaranteed to please shareholders if you strike gold, not to mention spin-offs including positive national image and international relations and improved domestic quality of life.

If the technical solutions sound like Jules Verne, that's great. Everything he wrote eventually came true. Changing human behavior is slow and difficult, but not impossible. My "Spirit of O'hana" United Way campaigns captured the imagination of the entire state in the late 70's. It was a wonderful time to be in Hawai'i. The O'hana campaigns laid a foundation of co-operation that worked on all fronts.

That was a charitable marketing effort, but the key word is marketing. Don't be afraid to demonstrate your social and environmental concerns, and use your marketing dollars to do it. Build brand loyalty in the process, and smile back when your neighbors and employees thank you for your concern for others.

But if your commitment is just lip service, don't even try. Us Plebeians call meaningless environmental messages "Greenwash" and go out of our way to shun insincerity. And we aren't afraid to spend a bit more to support true commitment.

In the late 80's, I chaired the Coastal Resources Steering Committee for the Hawai'i Marine Master Plan It was an awesome five-year commitment, an ambitious idea to actually plan the use and protection of Hawai'i's marine resources and set the standards into law. The true hero was Dr. Craig McDonald of the Hawai'i Department of Planning and Economic Development.

Craig recruited 125 academics, recreational users, government officials and business people to participate in his statewide planning concept. We then enfranchised thousands of people into a totally transparent five-year planning effort based on citizen participation. Academics were Gods, and held the ultimate say on environmental impact. There was plenty of give-and-take, and everybody enfranchised in the effort, we all understood that concessions were only to benefit the common good.

Do "concessions" and "benefit the common good" make you a bit nervous? Costs go up and revenue decreases? Well, in the first three year after the Plan became law, Japan suffered a recession and tourism dropped 42%. Marine Tourism revenues tripled from US$300 million to US$900 million in the same tourism slump, the only economic sector to show such positive performance.

So much of this goes on in Australia I'm preaching to the converted. When I spoke in Perth at a FACET conference, I was impressed with the efficiency and environmental awareness within Western Australia's Marine and Ecotourism sectors. From what I've seen in researching this talk, Australia's conservation and Ecotourism planning and practices are as good as anywhere.

But what you have to do to protect your reef - and the Planet - is set a bold example of the conservation ethic combined with technological solutions. That's directly related to your bottom line.

For the progressive scientific manager, my talk today is basic common sense. Enlightened management is gaining impact, but if we expect to survive as an economy and as a species, we must expand our focus to include our entire environment, not simply the "Business Environment".

I'm no so foolish to tell you how to run you companies or your lives, but I do have some ideas that will make you think.

1 - I love my "Ling Yai" nickname because it makes you embrace the reality - we are all monkeys, nothing but highly evolved animals. Humans share a basic arrogance - we feel better than those stupid animals because we can reason. Arrogance detaches us from our surroundings, and that's when bad things happen.

2 - Get Close To Nature. I'm a wildlife rehabber and I've been talking to animals for over fifty years. We are just one step up on higher primates, and some whales have larger vocabularies. On my jungle runs, my dogs are smarter than I am, and I've got a hundred IQ points on George Bush.

Our gift of reason allows us to be arrogant, and that arrogance is killing our home.

We are the only animal with this capability. Maybe we are the dumbest animal, not the smartest.

3 - All life is interrelated. See your self - and your corporation - as interconnected with all things, not just the market, or the regulatory environment, or your suppliers. When an estuary dies of pollution, a part of you dies. Just understand it.

4 - Do the Right Thing - It's strange how good deeds are rewarded. Making a commitment to an issue that doesn't seem related to your business may eventually become an economic opportunity. Go for it, and be sure to maintain your values. You - and your shareholders - will be rewarded.

5 - Use Your Workforce - I haven't said much about social responsibility because I expect that everybody here is into "Enlightened Human Resources." Because you understand that a corporation is nothing but its people. You have an honest, hard-working and loyal staff, and if you are really good, you invest in sharpening your employees' minds and job skills.

Not it's time to return the investment. Share your issues of concern, and see who has ideas. Give every idea the respect of consideration, no matter how odd-ball it may seem. I don't have a solution to global warming, but I guarantee it will be off-the-wall.

Most good staff want to see their team, their corporation, win. By helping stimulate their minds, you also show you care. Don't be afraid to go down into the ranks and rub elbows with "The Boys". Creativity harbors everywhere, and you build loyalty in the process.

6 - Seize the Opportunity - We are only entering strange times - terrorism, epidemics, global warming - all threaten not only our quality of life but our survival as a species. Technology shrinks the Global Village as it creates a population explosion. We open the doors to genetics while our reefs are dying and jungles disappearing. Life's challenges look like a top-loader washing machine.

Don't be dismayed. Buckminster Fuller saw these calamities coming in the 30's, and said that the human race will find solutions at the last possible moment just as a chick breaks out of its shell by pecking off the last of the egg. Well, now is the time folks. You are just in time to rise the occasion, turn on the Creativity machine, be a visionary, and use your corporate resources to save the Planet for all mankind by developing realistic technical solutions and public awareness.

It's OK to invest in environmental research - or to share funding in a research institute. It's OK because you are already a creative and professional visionary - and Ling Yai's mama says you can do it.

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