Corpobligation: Bailouts for banks that sold questionable mortgages suggest that lenders can avoid responsibility for their financial choices. What does this say for their social and environmental choices?

• Today, the Federal Reserve has injected another $30 billion into the financial system.
• Moral hazard is the principle that individuals and businesses will take risks because they will not face the full consequences of failure. In the context of mortgage lending, banks may lend to higher risk borrowers in the quest for profits without adequate consideration of default risk because they know they will be bailed out by the government.
  
• In the words of a great Bird and Fortune sketch,

Financial crisis can be avoided "provided that governments and central banks give us, the financial speculators back the money we have lost...[T]his is rewarding the financial ingenuity of the markets...[W]e don't want the money to spend ourselves...we want it so we can carry on borrowing and lending money as if nothing had happened, without thinking too much about it."

See the video...

Corpobligation: Strong economic growth, a high Canadian dollar and low unemployment creates risks and opportunities,

depending on consumer choices

The higher Canadian dollar has turned the USA into a “candy store” and Canadians are expected to fly more than ever this holiday season. Greater wealth allows ridiculous decadence (pet psychiatrists and luxury condo developments). At the same time, economic wealth and consumer confidence allows us to make more sustainable choices and to make real changes in how we consume and structure our lives.

Corpobligation: CEO's or corporate leaders in the for-profit sector are receiving salaries over 30 times higher than in the non-profit sector

• Sarah Anderson, Christian Science Monitor has written a book and article that states:
  • "Overall, the 20 highest-paid executives of publicly traded corporations make, on average, 38 times more than the country's 20 highest-paid nonprofit leaders."
• Salaries are supposed to motivate behaviour and theoretically compensate employees for their contribution to a business, but how can salaries over 100 times those of the average employee be justified?
• Limits on CEO salaries could be based on reducing corporate tax deductions based on a multiple that relates CEO salaries to the average employee's earnings.
• Where is the corporate obligation? Corporate directors have an obligation to shareholders to look after their best interest. Can they justify astronomic salaries?

CO: International Financial Corporation a part of the World Bank has released a report on their project from the last 10 years, which highlighted successes and made recommendations. The only part that raises alarms is the term "disclosed"...

• Encouragingly, the IFC recognizes that income distribution matters: "Economic growth and its resulting market distribution of income matters in reducing the numbers of poor people." (Recommendations - Chapter 4)
• New York Times' reporter Celia W. Dugger (August 2, 2007) reports "The below-average results in Africa were driven by what the report said were “persistently high-risk business climates, together with below-average I.F.C. work quality, the willingness by I.F.C. to take greater project risks in the region and below-average project environmental and social compliance.”"

• Independent  Evaluation Group report asked:
  
  • "Whether IFC-supported projects have achieved sound development results
  • What lessons have been learned about private sector development through 10 years of evaluation
  • What the strategic implications are for IFC in improving its development performance in the years ahead?"
• The findings were almost universally positive and recommendations were provided:
  • "In its country strategies, ...work on the nexus of rural poverty and sustainable natural resources, on which poor people depend, and to identify and develop high-impact agribusiness and rural microfinance projects with widespread demonstration effects, while simultaneously providing leadership in promoting socially and environmentally sustainable practices.
  • Cooperate more with the World Bank"