The importance of being responsible

Citation

Jayne, M.R. (2003), "The importance of being responsible", Property Management, Vol. 21 No. 2. https://doi.org/10.1108/pm.2003.11321baa.001

The importance of being responsible

The importance of being responsible

As I write this editorial, the newspapers have reported that the largest public demonstrations ever, in the UK, have been held in London, with an attendance in excess of 400,000 people. Those demonstrating, have made a social and ethical judgement on the actions of the UK and USA Governments and the possible prosecution of a war against Iraq. You may agree or disagree on whether such a war is unethical but it is difficult to disagree that many people have taken a moral or ethical stance on the issue. For these people, the matter is of great importance.

Recent practices in the commercial world have also produced strong public interest in social and ethical issues. The collapse of Enron, the inability of Equitable Life and some providers of endowment policies and pension schemes to match their promises, are but a few. These matters may not have had the prominence that a possible war with Iraq has had, but they have been sufficiently newsworthy to feature regularly on television, radio and in the papers.

Such an interest in social and ethical issues has not always been so evident. I can remember a river which changed colour on a regular basis, depending upon whether the pitheads (black) or steel works (red) were being washed down. Few people complained when it changed colour then, but many would complain today. With hindsight, what was particularly unethical about past industrial practices, was the way that people and the environment were used – not "in the name of profit" but rather that profit was commonly made in ignorance or denial of the environmental and social costs. Private individuals had access to the privilege and power this gave, because they did not have to pay these costs. That does not mean that the costs were not paid, because they were. They were paid by employees injured by operating practises which would not be tolerated today, by employees who died early due to industrial diseases, by impoverishing and degrading landscapes and eco systems. These costs are still being paid when we decontaminate old industrial land.

So are things different today? The advent of corporate social responsibility (CSR), given weight by the 1995 Pensions Act, requires pension funds to state the extent to which environmental and social issues feature in their investment decisions. Research undertaken with my co-author, Glynn Skerrat, into the requirements of ethical fund managers and property investment, has found that ethical investments are considered to be the most important for good business in the long run. This would suggest that commerce and industry now consider social and ethical issues, and that they have some prominence in those companies likely to be most successful.

What has this to do with property? Property has a particular role to play. What we build can have long term consequences; witness the almost imperceptible rate at which the existing housing stock is being replaced. Many houses are still in active use long after their original intended lifespan while the high rise flats, built in the 1960s, have been demolished in large numbers. The UK railway system is still operating along transport corridors and structures developed in the nineteenth century, while many urban developments to which the railways gave birth, continue independently of any need for railway transport. What will be the future for the structures and property investment decisions which we make today? Might congestion charging be the death of traditional town centres? Can out-of-town retailing survive the current problems associated with the increase in vehicular road use? If the three most important factors governing the value of property are location, location and location, which locations are likely to prove sustainable? What about properties constructed on flood plains? If global warming continues and sea levels continue to rise, what will happen to properties nearest sea level and in low lying countries, such as Bangladesh? These are serious questions and their answers have important societal, ethical and environmental implications.

Property lies at the heart of most human activities, from brewing to sport, from hospitals to manufacture, from dwelling to leisure, from travel to burial; it is even a reason for war. The impact of societal, ethical and environmental issues on property investment should not be underestimated. Similarly, the effects of property investment decisions on society and the environment are not without ethical dimensions. Consequently, an understanding of societal, environmental and ethical issues is essential for informed property investment decisions. But it can sometimes be difficult to know what is ethical. If world leaders are to be believed, a war on Iraq can both be defended and opposed on ethical grounds. It can even be questioned whether it is right that industry should have to consider CSR issues at all. Adam Smith was of the opinion that industry should not be required to do so by government and that industry would pursue ethical issues through self interest. A case has been made that pursuing CSR is of interest or, perhaps more cynically, that CSR reporting is of interest, purely because it represents good publicity. It has been suggested that often volume is more important than content (The Economist, 2002a). The last CSR report produced by Enron was full of the ethical things they were doing while overlooking serious ethical issues closer to home. This implies that we should not take CSR reports at face value. In fact, it has been suggested that the concern with CSR reports and public opinion is dangerous, causing some companies to make incorrect (and possibly unethical) decisions in the name of ethics. For example, Reebok International withdrew sub-contracted work from a factory in Thailand because employees there worked in excess of 72 hours a week, even though the working terms and conditions were superior to those of most local employers (The Economist, 2002b).

Given the benefit of hindsight, it would seem that we ignore the social and environmental aspects of our property investments at our peril. The public are interested in social and ethical principles and are prepared to take action in their support, as shown by the recent anti-war demonstrations. The fact that it can be difficult determining whether a decision is ethical or not, does not mean that a decision cannot, or should not, be made, nor that the eventual decision has no value in the real world. If ethical investments are considered to be the most important for good business in the long run, then property professionals must ensure that they are fully engaged in the CSR debate. This will involve not only interpreting information but also ensuring the role that property performs is properly appreciated and taken into account.

Michael R. Jayne

ReferencesThe Economist (2002a), "Ethical reporting, irresponsible", The Economist, 23 November, p. 74.The Economist (2002b), "Reebok ethically unemployed, corporate social irresponsibility",The Economist, 30 November, p. 66.