Not all global businesses are headed by forward-thinking leaders like Unilever’s Paul Polman or Marks & Spencer’s Sir Stuart Rose. But within large corporations there are often senior executives who understand that a move toward social responsibility and sustainability is the way forward. At the Global Social Business Summit in Germany in 2010, delegates were predominately from the nonprofit sector, but there were also a number of people from major corporations looking for ways to adopt social business initiatives and apply them to their own businesses.
A senior executive from one of the world’s top consumer goods companies said that he was looking for ideas about sustainable ways of creating social benefit. He shared that the global company he works for had shrunk its corporate social responsibility budget during the downturn and that it was now restricted to straightforward philanthropy in the form of charitable donations, disaster relief, and the like. He said his biggest issue, as an individual working in a huge organization, was how to move socially beneficial activities from being part of a siloed CSR operation to being part of the wider business, how to do that in a way that was sustainable, and—most difficult of all—how to convince the wider organization that it was not only possible but also desirable….
The executive at the summit said he was considering various options but that he didn’t really want to operate a distinct “pilot scheme” set to one side of the business. He wanted to understand how to make what he called the “jump” from sidelined CSR to incorporating social value into the mainstream business. “I need to know how to create social benefits in the markets that I am already in and with the products I am already selling,” he said.
While an understandable reaction, a pilot scheme is one way of experimenting to get proof of success: Adidas and Danone are both operating social business schemes, set up as discrete business units. The Danone scheme began after a meeting between Professor Muhammad Yunus, founder of the Grameen Bank, and Franck Riboud, chairman and chief executive of Groupe Danone, which resulted in the former convincing the latter to invest in a social business. The business provides fortified yogurt to malnourished Bangladeshi children.
One of the benefits of entering the Bangladeshi market and South Asia, where Danone previously had no presence, is that the company can learn more about the market and then apply those learnings to the broader business. So while the social business itself is thought to still be making a loss and has attracted a number of critics, there are other benefits to Groupe Danone. In another example Adidas has also embarked on a joint venture with Grameen, which sells shoes to poor people in Bangladesh for less than one euro a pair. The mission of the Grameen–Adidas company is to make sure that no one, child or adult, goes without shoes.
French water company Veolia has launched a joint social business with Grameen to serve poor people with nutrition and safe drinking water. Germany’s BASF SE and Intel of the USA have entered joint venture social businesses to produce chemically treated mosquito nets and provide information and communication technology for poor people, respectively.
These schemes are not without their critics, and commentators often query the “purity” of motivation behind some initiatives that involve big business. Some dismiss them as “tactical” and are skeptical that big business is fundamentally committed. It is easy to criticize a big brand attempting to do good on the grounds that there is something “in it” for the brand. I would say, firstly, who cares what the motivation is, or whether there might be some benefit to the brand, if the end result is good and creates positive change in the world? Secondly, the whole point is actually that there must be some positive benefit to the business or brand. If we truly want business to change, then socially beneficial business must add value to the company, otherwise it will be impossible to convince the more reluctant companies, shareholders, and board members that it is a viable route.
One senior executive working on Adidas’s footwear project in Bangladesh described difficulties with NGOs, financial institutions, and consumers in developed markets who question how committed big business really is to being part of changing the world. This points to the potential danger that, as business genuinely tries to be more responsible, rather than embracing and encouraging that, NGOs and other parties will actually distance themselves and criticize the attempts, thereby acting as a major dampener to the movement. Obviously, business needs to be genuine about it. But if it is, then its efforts should be welcomed. I am not suggesting that there should be no scrutiny or accountability, far from it, but if real people who are in need are getting real help in a transparent way, then this has to be a good thing.
My view is that these early drivers of a change of focus within the corporate sector and change for social good should be encouraged at every step. Yes, there will be failures. No, not everyone’s intentions will be as good as they should be. But only the inclusion of the corporate sector in the development of social business will ensure that social business, as a concept, will become truly mainstream and really can help effect positive change in the world.
David Jones is global CEO of Havas and Euro RSCG Worldwide, and cofounder of One Young World.
Excerpted from Who Cares Wins: Why Good Business Is Better Business (Pearson/FT Publishing, December 2011), this post is running simultaneously on this site and our sister blog, prosumer-report.com. Buy the book on Amazon.
Image credit: Creative Commons/DoubleGrande@flickr.com
