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Asia Notes

5 - 27 September 2003




Hong KongReflectionsAsia PE CommsUNEP FI BriefingSustainable Finance ConferenceLinux SeminarOther Notes

ThailandReflectionsAsian Forum on CSR




These informal notes summarise various conferences, meetings and impressions from the recent Asia R&D trip. Because of the long duration and number of events the perspective is wide. The table of contents has html links for ease of navigation.

There was a very encouraging selection of opportunities. Start up, market development, expansion and restructuring investments were sought. Sectors included packaging, hospitality, materials, waste management, household products, electronics and energy. (Many more suitable businesses were noticed but not yet approached.)

Although there was the normal cynicism toward sustainable business models that market change brings, as in other markets like Europe and North America, it was founded on lack of awareness only. In all public debates that I participated in during the trip, any question regarding the business case for sustainability raised early was satisfied by numerous references, examples and expertise. The closest reaction to negativity was “it may be that you're 10 years too early”. Which to a private equity investor sounds like the best time to be investing in SMEs, for an increasingly attractive return, during the next decade.

Certainly the market opportunity is available in Asia and the rationale for sustainable private equity investment is sound.

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A couple of days in London allowed me to follow up on some business and with some friends. A positive meeting with www.SustainAbility.com introduced additional interest in the fund and a team of advisers worthy of reference to clients seeking sustainable business reengineering or research. A meeting with a small landscaping and eco-engineering business is another example supporting our persuasive sustainable business rationale – big unsatisfied demand, little competition, cooperative management style, internationally applicable technology, looking for friendly financial partners. This business serves the bigger customers in the UK and has already been solicited by Turkish and Vietnamese customers. Later impressions in Asia suggest that demand for its services globally can be developed quickly.

A meeting with an entrepreneur establishing a business selling traditional crafts also left positive vibes as subsequent meetings took place in Asia with complimentary small businesses: hand-made garments from India, jewelry from Thailand and Indonesia, furnishings made from recycled paper ...

Also met with an environmental advisor, in the business for over 15 years, who noted caution in the digestion of carbon credit audits (because auditors themselves are still unfamiliar with the regulations and technology) and who introduced a biofuels plant proposal.

Several other meetings highlighted the increasing demand for sustainable technology among leading businesses – investment banking, corporate communications, media. The risk to revenue streams from not doing business fairly or even from presenting the business unfairly are becoming significant issues. Investors, insurers and operators are having to do more than pay lip-service to sustainable principles. Note the “drink responsibly” messages being developed by DIAGIO, the increasing offering of SRI funds or fee-only service from banks, the warnings from insurers about climate change risk. There is unsatisfied demand for authentic, sustainable consumer goods and services and big business is rapidly developing the skills to service it.

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Hong Kong

Hong Kong offered a warm welcome. Friends and acquaintances looked after me with great hospitality – I was spoilt! Many thanks to all who looked after me. And I was generally kept so well occupied I had no time to go shopping!

I was honoured to enjoy the Moon Festival with friends and family on Cheung Chau, where I was again, impressed by the charming culture of Hong Kong – hundreds of people of all ages on the beach, families and friends, with candles and companionship till the early hours of the morning (and without buckets of beer and hooliganism).

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Reflections in Hong Kong – What People Want

Hong Kong is a wonderful place. Dynamic. Charming. Productive. Green. Exciting. Cosmopolitan. And well placed to set an example for the world. Some people cynically say that Hong Kong is only interested in money. They point to the smart new cars and high rise buildings saying “Hong Kong people want short term profit”. But spend a moment with people and soon enough the conversation will turn to health (even SARS), education of children, clean air and water, safe food, living space and future opportunities. HK is an intelligent place, populated by warm people that care about family and work for a better life for their children. And today Hong Kong has the opportunity to obtain all of these while becoming a preeminent role model for lifestyles of health and sustainability.

Hong Kong's ability to manage contract manufacturing offering quality and quick turnaround remains the global benchmark. But to grow and evolve it is developing other competencies, like high tech with its Tech Centre and Science Parks initiatives. As always, the strength of Hong Kong lies in its culture of community and family. The strong social bonds help it identify and adapt to new market forces successfully.

The traditional mindset of opportunity and profit is still prevalent among some of the richest families and groups and among the professionals aspiring to this wealth. However, the economic weight is now with a large, intelligent consumer class that is increasingly aware of the compromises required by high density living. Pollution of air, water, buildings and lifestyles is recognised and not desired. Consumers, especially those with children are already voting for cleaner food and living environments. But the growth of the population is unsustainable if the natural environment is to be preserved.

Massive public and private development has encroached on the parks and is creating more waste than the economy can process. Packaging waste, vehicle pollution, sewerage effluent is increasingly prioritised by consumers and the administration. Businesses are generally lagging in servicing this demand. However, we saw some attractive signs that Hong Kong could be a role model of sustainable business in Asia and a premium location to live. Its traditional strengths of having a stable legal environment and premium quality housing are becoming less noticeable as other centres catch up. The unaccountable culture of the administration is challenging businesses' comfort with operating in Hong Kong, as opposed to other less crowded places. Other cities through the region offer premium office space and housing, often with less immediate crowding and closer access to leisure and clean nature.

The administration can opt to move to cleaner resource utilisation and increasing public participation in public policy (note the July 1st walk) shows that the administration is listening. Hong Kong's business as usual attitude is changing – the same effort and intensity remains, but now greater creativity for solutions is being applied. It is likely that clean tech will become increasingly demanded by public tenders. And sustainable substitutes are available. For example, we were involved in a proposal to convert taxis to electric power in 1992. Even back in 1992 the levels of poisoning of children, from exposure at street level, was dangerous. Although the plans for electric vehicles plans were shelved, the technology was proved then and is even more competitive now. A demonstration taxi was even in use. The economics were viable then and are even more so today. And the benefit of cleaning up the city will make Hong Kong a healthy place to live.

Hong Kong's dense demographics allow it to move fast to serve consumer demands, but we can all see the side effects of congestion. Small flats, living in sterile airconditioned units, dense buildings, dirty air and water and so on. 30, even 10, years ago these issues might have been brushed away. Today they can be addressed profitably. Because of its density, Hong Kong can quickly implement new sustainable technologies that will enhance lifestyles and be profitable.

As we now rely almost exclusively on a knowledge based economy in Hong Kong, we can use technology to distribute knowledge workers. We can implement natural systems to process waste and water. Clean transport technologies can be substituted in the bus and taxi systems (for example vegetable oil - which was originally intended as the fuel for Diesel's engine, or electric power). Many fields offer sustainable substitutes: organic food, IT, construction, education, governance, cooperative business models ... and they match the confucian culture of interdependence. They are lower cost and sustainable. And as Hong Kong implements them, they can be demonstrated and taught in China in particular and the world in general.

With this change we will find a new role for Hong Kong. We will continue to work hard – we've always enjoyed participating in life. But will be more at peace. Stress is less, family is more. Good food, safe homes, balanced life and the opportunity to be a world leader in sustainable systems. But the choice is ours. Increasingly when people take out cash or credit card, we vote for a sustainable Hong Kong – and our children will love us more for that.

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Asian PE Communications - Research Team

I was fortunate to be able to meet one of the more experienced Asian private equity researchers early on. The picture painted of private equity in Asia is bleak. With significant shrinkage in the industry and continued difficulty fund raising, the industry is not the happy place it once was. This may be good as it allows a clean up. People with suitable skills, attitude and experience remain while those with a more short term outlook will relocate to other industries. And the value of VC – screening investments – will become more rigorously developed.

There is also a pinch at the operating end. Companies need capital to develop, yet uncertainty is preventing lenders and investors from making commitments – they are unable to characterise and quantify the business and market risks that they face.

There was some cynicism levelled at the rationale for GRI Equity: to paraphrase “Hong Kong people are only interested in short term profit” (which may be levelled at any illiquid investment). Although, I probably wasn't able to remove this mindset, by the end of a meeting with the research team, they were already pointing out sustainable opportunities and signs of Hong Kong moving up the sustainable technology value chain.

The biggest sign was the July 1st march about Article 23. A peaceful walk by “the people” was registered by the authorities who adapted their position to compromise. A fantastic advance for all parties concerned. Many smaller signs of unsatisfied demand for sustainable alternatives where highlighted, like the organic food in supermarkets, increasingly rigorous pollution regulations, audit of manufacturing practices of subcontractors, the sustainability initiatives by MTR, CLP and others, and increasing concern over air quality.

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UNEP FI Briefing

A brief meeting with ASrIA (Association for Sustainable and Responsible Investment in Asia) seemed to confirm that there is a burgeoning demand from private sustainable businesses for equity capital though there are few teams designed or focussed on sustainable private equity.

The UNEP Finance Initiatives briefing was attended by over 30 people, mainly advisors, investors and a couple of operators. A useful presentation of their rationale. UNEP FI is 90% private sector funded. It has 4 main business units: Asset management, Climate Change, Environment Management & Reporting, Financial Systems. Approach is guided by the Millennium Development Goals (www.developmentgoals.org), which is more a guide for government, and the Global Compact (www.unglobalcompact.org), more for business. In particular, they want to include the other 4 billion people in the market and match long and short term objectives.

  • Asset management: qualitative risks have financial materiality but operators can not digest/deal with them which exacerbates the extent of legislation and regulation demanded.

  • Climate Change: affects insurance, fund management and banking. “Brings in to question solvency of financial services industry”! Raising awareness and developing methodology to cope with climate change risks.

  • Environmental Reporting: regional standards are becoming global standards. Environmental and social are being combined in CSR.

  • Financial Systems: suffered a governance wakeup call in 2002 and ongoing. Sustainability is becoming seen as a subset of governance. Environmental disclosure still being developed – once connection between disclosure/reporting and materiality is recognised, an avalanche of change will ensue. (Or are the information managers ie analysts, just failing to make the connection?)
    Much sustainable VC is focussed on energy and comes from governments.
    Encouraging adoption of “Equator Principles” (www.equator-principles.com).
    Asian finance is mainly state and family owned so it does not have the diversity of professional owned or cooperatively owned financial organisations.
    Need for private equity which delivers capital to the businesses (which portfolio investment, even SRI funding, does not do).

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Sustainable Finance Conference

Most exciting – on entering noticed that 2 of the three exhibitors were based at the Tech Centre, where I worked on the founding team at startup! Both demonstrating sustainable tech: a water cleaner and recycled rubber application. The Tech Centre seems to be a worthy incubator.

Some notes from the Financing Sustainability conference by Business Environment Council (www.bec.org.hk):

  • The move to SRI is market driven. There are no reasons for sustainable businesses to perform worse and many reasons to perform better. There is lots of skepticism but the proof is that ROI is higher.

  • Financial transactions account for 3x global GDP.

  • Fundamental drivers of opportunity are nature/biosphere and consumption.

  • Technology enabling sustainable substitutes.

  • Some suggested that technology is the currency of the future, which I disagree with. The value of technology depreciates increasingly quickly – a poor characteristic of a currency. In some cases it tends to zero, like linux (which is gaining share of the server market). Energy is the currency of the future because it is the common denominator of the biosphere (E=mc2).

  • Competitive, exclusive system fails to tap resources efficiently (eg female labour) and fails to lower costs which cooperative, inclusive systems do.

  • Micro finance worthy of focus. The state of private property law and implementation is key to business analysis.

  • Business ingenuity will develop solutions, sustainably. For example, carbon trading is expected to be a $ trillion market in 10 years. But a short term culture is a barrier to innovation.

  • Beijing Olympics 2008 offers opportunities because of big cleanup push. Organisation and capital will be required.

  • Expect more demonstrations, especially of financial institutions. “The reputational costs of not following the highest global standards are unacceptable” Head HSBC Asia & Pacific.

  • Terrorism could be much worse – chemical, endocrine disruptors, biotech etc. Need permanent solutions to global inequalities that motivate violent solutions. Opportunities for health and sustainable lifestyles must be developed for all because its “the right thing to do” and because the violence that can be executed by those without basic needs is terrible and will affectt us all..

  • Subsidies are not a solution – they support higher than necessary production.

  • Marginal cost of removing carbon $ 30 / tonne, currently paying $ 10 / tonne.

  • PE industry needs help. “Returns have not been great, no one has come up with the numbers.”

  • PRC: 80% of banking is state, therefore little influence from people. Too many issues to worry about equator principles!

  • 2 billion people without modern energy. Solar business fastest growth in Asia Pacific.

  • Sino Forest – a nice example of a successful sustainable business. “In order to be sustainable, you have to make money

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Linux seminar

Significant growth in linux on servers; UNIX and Windows flat. Attractive because of security, stability, speed and ease of customisation. Used for mission critical applications.

However, linux becoming a viable desktop solution still remains a challenge for many (although GRI Equity has implemented it). This may be because of large private or corporate fee streams influenced by MS and its shareholders creating a conflict. Costs of maintaining MS desktop very high – large organisations still not yet implemented XP switch.

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Other Meetings & Observations

www.IFC.org putting sustainability criteria in all its activities. Woicke leading the change. Positive meetings but amorphous organisation ... we'll see.

Www.Civic-Exchange.org.hk an excellent source of guidance on making a difference in one's community. Developed by Christine Loh. Useful commentary on Hong Kong's political development. Noticed coincidence of personal ties to Hong Kong, Ireland and Quebec which are all dealing with separation issues and emerging constitutional law .

Natural packaging business seeking partner.

ASrIA promoting the practice of allocating a part of pensions to SRI funds.

Market cost conscious; relevance of risk still not yet embedded.

Sanctuary Resorts focussing on building spas with a holistic approach to providing value: body, mind and spirit. Acclaimed Bale, Nusa Dua resort in Bali. Good website and +ve customer feedback. But well out of the price range of most people! Interest in Irish sanctuary eg Liss Ard. Evason, a similar offering, also represented.

Several opportunities, including at Tech Centre. Vietnam waste needs additional planning but attractive proposal.

Met a sustainable fund of funds which seeks absolute control of investee funds, and focusing on clean energy. Modern offices and well backed.

The Business Environment Council, a vibrant NGO, offers a number of case studies on sustainable businesses that are commercially attractive. See this page: http://www.bec.org.hk/07home.htm.

The Hysan group of companies provide recycling for tenants in some of its Causeway Bay properties.

The convention centre has recycle bins, with “Be bright, Recycle right” emblazoned on them.

Local editions are world class eg Pacific Coffee and Mixx.

The press remains fairly open and vibrant which helps the transition to a more participatory administration. (Media freedoms in other parts of Asia are not so great and may have even declined in some places like Thailand.)

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On driving from the airport to town, ABB advertises with the question: “How to remove 50 million tons of CO2 annually?”.

Again in Thailand I was very fortunate to be pampered by friends. As in Hong Kong, it took a few days for me to get used to the VIP treatment. And I was graciously invited to the King's Cup Elephant Polo in Hua Hin – a first for me, though I found out that my cousin Mouse, who trekked the Silk Road, was a player in 2002! (www.thaielepolo.com) Donations and sponsorship raised over Baht 1 million for the elephant sanctuary in Chiang Rai www.changthai.com (more is needed please – elephants will be extinct from Thailand in 15 years!).

Reflections in Thailand

Thailand (and Asia) is unchanged in many ways by the passage of 5 years. Great beauty, wonderful lifestyles, exciting opportunities. Often intermingled with poverty, disease and hierarchy. However, the demand for and initiatives to sustainable business development are even more compelling now.

Asia is making the same transition in 50 years that Europe and north America made over 150 years – there is an expectation that people all over the world will have the same standard of living in our lifetimes. Which puts a drag on developed economies, as well as providing a pull for emerging ones. The visible signs of equal opportunity that all people want are a job, a place to live, with modern conveniences, a vehicle, TV, mobile phone and holidays. It is certainly unsustainable to do this with the current format of north American and European society – there are insufficient resources, energy, water, materials etc, and nature can not absorb the pollution. It is possible to service this global demand with sustainable systems, and technology leapfrogging is often possible.

It is quite uncomfortable to be in the community where people get paid $ 80 a week to make the clothes that we (I) wear because we (I) won't do the same job for the same price. There is no fundamental difference between the productivity of an American or European worker and an Asian or African one. And it appears that knowledge workers are not location dependent. The fundamental drive to equitable balance between economies is strong – developed economies' consumers are willing to pay for goods and services which are audited for “best practice” and the need and ability of emerging economies to leapfrog to sustainable technology infrastructure is increasing.

The initiatives of the current administration are encouraging. Solar grant projects, SME funding priorities, “one product one tambon” project and similar development of sustainable, community economies. However, the traditional systems of collusion and patronage will take time to moderate (and similar inefficiencies are seen in many developed economies eg Ireland, USA).

The “Lee Kwan Yew approach” of the current administration is welcome for the stability it brings. It fits well with Thai culture of hierarchy and has reduced the influence of the military from politics. It is not liked by all because it can be xenophobic and there remains the sense of “having to be in the right gang to succeed”. However, it is also enabling national planning initiatives that can supply the infrastructure needed for a vibrant economy. And Dr Thaksin is on a suitable track to take a leading role in ASEAN – there has been a significant investment in cleaning up Bangkok for APEC in October.

Banks and businesses are beginning to reach sensible agreements on restructuring – which often require new equity. There is familiarity with court proceedings and bankruptcy law. There is still inappropriate behaviour – like the development company whose stock price is soaring because the developer played golf with the right person, or the related party “transaction” created to upset creditors' arrangements. But the capital markets are improving quality, liquidity, efficiency and transparency, and there are some individual examples of high standards and performance.

The strategic intent of businesses and government puts emphasis on retaining control and acting independently of new partners. This approach, described by some to be xenophobic, seems to be against Thai culture whose population is made of many ethnic groups (although the business elite is principally of Chinese extraction (2nd to 3rd generation) which has tended to be more ethnocentric). The traditional entrepreneur or politician seems less interested in technology, nor the best solutions to current development problems. But the businesses that are obtaining capital, technology and developing industrial partnerships are those that are willing to cooperate.

Current pockets of anti-farang feeling have been engendered by a difficult 5 – 8 years during which rhetoric by commentators and politicians has generally been blameful – “who did what to whom”. There is still little admission of historical problems, which has slowed the process of redevelopment since the Asian crisis, but humility is much more prevalent among some previous high flyers. Without recognising causes, restructuring is now being done with 50% debt writeoffs being standard. This is allowing the industrial landscape to become more viable again.

Many pointed to the robust performance of the stock market – “60% up this year”. However, this may not reflect fundamental improvements in value but loose fiscal and monetary behaviour plus greater confidence. The buoyant market is making some rich again, especially those with the cash to trade – one holding company we met had made more on securities trading this year than all its real businesses combined. There are again appearing fantastic valuations for some businesses – one property development company which recently embarked upon a new development was hyped up to a market capitalisation of about a billion dollars with negligible (some say negative) net assets. A personal observation is that fundamental opportunities to develop businesses are available but the stock market is a volatile and fickle measure of value. The SET itself is becoming an attractive bourse infrastructure (eg creating a CD market is now being discussed), but cultural practices make its behaviour particular and short term investors should be wary.

Energy activity is of particular interest because it underlies Thailand's economic activity. CERA thinks renewables are a way off, and they will likely occupy the bulk of new spending for the short term. But government initiatives have already recognised the need for appropriate technology (like the solar initiative) and the benefits of uninterrupted supply from onsite generation (micro-alternative energy) is an added benefit for industry. Fuel retailing capital spending has been stagnant except one brand, and it is expected/hoped that they will begin to refurbish forecourts from next year. Fuel is cheap at € 0.25 per litre. Though Bangkok pollution has driven clean transport initiatives: electric scooters and other vehicles are being introduced.

A number of businesses that we had been invested in previously came to attention. SPG is still listed though is illiquid; performance remains solid. Minor Group has done well during a tough period during which capital, custom and partners were challenging. A number of manufacturing concerns (power, food, industrial equipment) are being restructured, at last! Businesses' Japanese partners are still wide-spread and have been supportive of their associates, though seem to remain unwilling to share information and control. Some businesses have been completely bought-out or subsumed into other groups. Generally, there appears to be a healthy need for private equity and a willingness to negotiate sensible partnerships.

A number of PE players in Thailand (and elsewhere in Asia) are promoting the need for control of investments – taking majority stakes. This is a reaction to the difficulty of reengineering bankrupt businesses over the last five years. However, none of theme recognise the fundamental danger of this strategy – it presumes that businesses need management and this is the principal criterion upon which opportunities are normally screened. It is appropriate to be able to take a majority based on valuation and capital structure issues, but to presume control is needed because management is not competent begs the question – why invest? What is worrying is that controlling investments seems to be the only strategy being discussed. As those with private equity experience will attest, managing investments from without the company is more resource intensive than managing from within and, if a significant part of an investment manager's activity, is an inefficient use of investors' resources. Suitable human resources for business reengineering may be sourced by the company, in partnership with investors, for local needs. This is cost efficient and long term because the management resources from the investor will not be removed suddenly.

While there appeared to be investment opportunities, there was not a great deal of activity. Finansa, now listed, appears dynamic though one should be comfortable with its spread and focus of business and relationships. Many have pulled out (CAM), relocated (PAMA) or gone are very quiet, like Citi, Nomura and H&Q. With the current stock market frothiness, popular optimism and signs of restructuring there may be more activity soon.

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The Asian Forum on Corporate Social Responsibility

An AIM conference, coincidentally took place the day after I arrived in Bangkok. (www.asianforumcsr.com) It was well supported: keynotes by Anand Panyarachun, Mechai Viravaida, Oscar Lopez, corporae sponsors included Shell, Coke, Philip Morris, Siam Cement. Talked about

  • walking the talk,

  • collaboration,

  • targeting SMEs to share wealth, technology and opportunities.

  • Population dangers eg Philippines 120 million by 2020.

Perhaps the most striking aspect was that here were gathered many of the leaders of a wide range of organisations: big business, SMEs, NGOs, government, all saying the same thing, all noting the need for stakeholder consideration. The big question is whether or not investors should be invested in companies that are not redesigning their strategies to be sustainable.

Excellent presentation by Magic Eyes (www.magic-eyes.or.th). Long track record of cleaning up Bangkok. Offers practical education trips to schools and business groups. Has implemented recycling in shopping malls. Authentic and understands greenwash. Useful newsletter, eg highlights value of biodiesel in Bangkok.

Several examples of businesses “greening the supply chain”. Reducing waste, saving cost and improving health and safety. Metering usage or water and other utilities. Some expect minimum standards for suppliers soon. Recognition is particularly important for exporters; though I was later told that Dr Thaksin supports a drive to raise domestic produce standards at or above export standards and several royal projects support clean agriculture and traditional manufacturing.

A great concern is that the most capitalist of us will end up by losing our choices because we do not move fast enough to establish sustainable systems. There are dangers of over-regulation and control, whether benign or malign. We've seen the loss of well-being both in Ireland around 100 years ago and Zimbabwe today that results from control for the good of the people.

Choice and variety have great value for humans. But there are many well meaning people who will gladly restrict freedom of choice if the rationale is “to save the world”. It is comforting to see many realising the benefits of cooperative economic systems and developing efficient systems: reducing waste, training staff, including the needs of stakeholders in decision making. But more of us must think, talk and walk sustainability if humanity is to allow itself consumption choices in the coming decades. Look at the WTO Cancun washout to see how destructive our approach can be – all parties failed: rich and poor governments and NGOs were poorly prepared and intractable though many answer are plain for all to see (http://www.economist.com/displaystory.cfm?story_id=2035492 ).

When you see the ease with which the poor, oppressed and downtrodden (i.e. 2/3 of humanity) can scream for alternatives with hijacked planes or suicide bombers, you have to wonder who thinks they are immune from the consequences of inequality and overconsumption. (Luciana Ferreo's photo presentation graphically represents the Indonesian perspectives at the local level.)

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The UN Global Compact, covering human rights, labour and environment was mentioned regularly again. In this context I questioned the “abolition of child labour” - one of those rules, restricting choice and not necessarily appropriate or even “good”. Why? Because working is a valuable part of education. Certainly 18c a day for 18 hours of cramped drudgery is wrong and I wouldn't want to support it, but that's not labour, that's slavery. Some of the greatest educators, like Pestalozzi and Steiner, advocated work as part of learning. And if it fits the local economy where hands are needed on the land (as used to be the case in Europe and North America) then it can be a wholesome part of life. The challenge is to provide the opportunity to choose to all.

For reference the global compact says:

The Nine Principles

The Global Compact's nine principles in the areas of human rights, labour and the environment enjoy universal consensus being derived from:

The nine principles are:

Human Rights

  • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence; and

  • Principle 2: make sure that they are not complicit in human rights abuses.

Labour Standards

  • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

  • Principle 4: the elimination of all forms of forced and compulsory labour;

  • Principle 5: the effective abolition of child labour; and

  • Principle 6: eliminate discrimination in respect of employment and occupation.


  • Principle 7: Businesses should support a precautionary approach to environmental challenges;

  • Principle 8: undertake initiatives to promote greater environmental responsibility; and

  • Principle 9: encourage the development and diffusion of environmentally friendly technologies

A surprising amount of activity in Vietnam. A number of CSR related consultancies and presenters were there. E.g. Social Accountability and their SA 8000 (www.sa-intl.org) seemed to take a pragmatic approach to improving labour standards, and www.global-standards.com. US investment seems to value it; sub-contractors are being required to improve standards. There is a price benefit in being audited/qualified as more importers require labour standards audits right through the supply chain.

Some businesses see CSR as an extension of quality standards and productivity improvements. In order to move up the value chain they need to include more stakeholders and more equitably. Presentations by manufacturers showed a CSR initiative driven by other motives – quality, productivity, cost, customer satisfaction, lower administration costs etc, but always benefits. One now even is a principal of SVN Thailand. “Money is not a tool for worker retention.”

For others it is driven by consumer impressions and for many, like soft drink manufacturers (sugar and health!), fast food purveyors (ditto – note McDonalds' latest healthy eating strategy), tobacco businesses (ditto – but in this case its more a question of disclosure and truth in advertising – we still want choices!) and oil businesses (biosphere health!) and similar others, this is a significant challenge.

The rate of change of markets exemplified in shortening business cycles was illustrated by www.SustainAbility.com. The life cycle of this metamorphosis to a sustainable system is in some ways already complete. It is or has passed through all life cycle stages: emergence (activists promote change), expansion (NGOs promote change), extension (media promote change, public engage) and embedding (regulation). Laggards are still in the phase of denial, most stakeholders (including businesses, consumers, regulators) have reached acceptance, and leading players are engaged with sustainable reengineering.

NGOs occupied debate. They are equivalent to the 8th largest economy with revenues of about $ 1 trillion. Can be a force of change. Collaboration can enhance reputations, access new skills and resources. They are not immune from scandal and operate under a mandate of trust. They are cautious of over-engagement with business lest they be seen to have turned colours.

An issue that must be faced is whether NGOs are viable as the private sector improves its performance or will there be a moral hazard that they will become a cost of doing business? It is likely that businesses with improve their own standards quickly and informal auditing will increase through online discussions and information exchange so that NGOs' role here will decline and will focus on other things.

Auditing generally is difficult in Asia. Some businesses do audits, like Synergos, KIAsia, www.theGlobalAlliance.org, SAI. The Global Alliance session focussed on productivity gains through improved labour standards. Very persuasive. Some practices of sub-contractors which were discussed are embarrassing. A main barrier is educating management/owners of the business risks of pushing too hard on employees. Audit from GA etc can be a differentiator, esp. exporters.

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Returning to Ireland, the wealth is striking. Its not opulent as one sees in parts of Asia – no streams of fancy cars and luxury apartments. But everyone seems to have a fairly decent living space, clean environment, school, healthcare etc. Coming from a part of the world where people get paid $ 2.50 a day to make shorts and shoes which are later sold to us, the contrast in lifestyles and expectations is striking. The difference illustrates the great potential for change in the global economic system; the tension of human opportunity is pulling us together. The ability to build complimentary businesses with global standards and technologies is tested and inexpensive. The demand is great and capital is focusing on sustainable criteria.

The similarities of different parts of the world remain important. The trends which demographics, politics and economics follow are unmistakeable. The public choices and consumption patterns point to sustainable solutions – clean food, clean energy, clean transport, fair wages, etc. Technology is being shared. The market demand is not localised but is emerging globally.

And it was another education to return to family and farm. It made me realise the value of family communities, what I must still relearn from my children and how important it is to engage with children. Parents' time with children can not be encouraged enough.

There is much to follow up on ... but that may be another story.

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New books from the trip:

the ecologist magazine – a bit inflammatory but very enlightening. Can be a bit too worrying! Recommended. (www.theecologist.org)

People Before Profit, Charles Durber – raises many valuable points but does not justify some of its critical opinion and rhetoric. Limited discussion of economics (and some misconceptions) but useful roundup of issues.

Awakening Greatness, Barbara Ray Gilles – award winning teacher, inspiring personal story, valuable lessons in collaborative learning, applicable to people heavy businesses. It is worth the read, especially for educators, trainers, parents. Education is certainly an area ripe for development – don't know a parent that can't suggest real improvements in their children's school that they wouldn't pay for.

Amazon.com or Amazon.co.uk

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