Yes, CSR is the answer to preventing the next crisis, because CSR if generally perceived as being about being responsible to stakeholders -which requires knowing what stakeholders think responsible is. And if you find some stakeholders that can define irresponsible -and related them to your company somehow; then that is where the risks are!
Stakeholder engagement, though, generally starts with talking to the main stakeholders and working out what the big issues are. Then engagement goes on two parallel tracks; one looking at engaging at those issues in depth across all stakeholders, and the other looking into depth at the key stakeholders (across the range of issues affecting them).
But for this to be effective, the little voices, the little stakeholders need to be heard. The one stakeholder that said that debt is bad, that debt and consumerism and endless retail growth is not sustainable -that stakeholder needs to be found and listended to, as wacky as that person might sound like. In reality there were not many stakeholders that said that debt was bad. The investors liked it if they saw greater profit (mistakenly it turns out); the government liked it if created more wealth (aka debt) and stimulated economic activity (aka unsustainable spending); customers liked it (who does not like buying?) and so on.
Finding the issues that will affect you, especially in an era where are few unhappy people can cause a big problem through the internet, is the nexy step for all the super-advanced companies with excellent stakeholder engagement. Yes they are aware of the current issues stakheolders have, but they are not doing well enough to spot the future ones -by talking to the minority stakeholders, who get crowded out from aggregated responses.
Go engage, but engage beyond the local level issues, the global issues, the 'expert opinion' issues and start to explore other industries that you never dreamed would affect you. Go explore the issue that no-one thinks is important -try to see if you can find any reason that it might be important. Go and spot trends through new media, employees and academics. Don't just predict and anticipate the future: predict and anticipate the issues in that future.
Showing posts with label CSR. Show all posts
Showing posts with label CSR. Show all posts
Thursday, October 16, 2008
Monday, October 13, 2008
CSR: back to basics
A few years ago, after a mistake in Texas cost BP its reputation, a bunch of money, and sadly the lives of several of its employees, BP had to go back to basics. It had to do two things: Firstly, obey the law and create a culture of obeying the law and doing the right thing. Secondly it had to re-understand risk. BP had done a good job of looking for opportunity but had forgotten about the risk element of CSR.
Now, a financial crisis has hit a lot of companies in the same way. Granted the risks that have unfolded are much more unforeseen than those that affected BP, but none-the-less, companies should have, through stakeholder engagement internally and externally, foreseen this as a risk and taken certain preventative measures. They have not, and the results are serious -not just a PR problem -for many companies they mark the end of the line, so to speak.
Several years ago SustainAbility reported that the economic dimension of the Triple Bottom Line was not being assessed with as much rigour as the Social and Environmental. They pointed out that most companies dealt with their financial reports separately and that the leading companies were looking at the economic impacts of their work, through suppliers, employees, trade etc. A few companies had looked at issues like taxation properly but, apart from that, not much else was being looked at critically.
Now we have found what they were missing: they were not finding that some critical risks to their firms, such as lack of capital, lack of cash and so on, were real risks. Risks that they needed to address. They did not. When such issues developed into reality the enterprises folded. They'd got so excited using CSR for business benefit they had forgotten about using it to minimise risk. Risk being something that is hard to quantify, but necessary, as we have found it recently.
So what will be next? What other crucial assumptions do businesses make, assumptions which provide risks, if something happens? Many companies have looked at terrorism and political risks; many have looked at pandemics too. Some have looked at oil and energy and transport prices; others have looked at trade barriers. Of all the key inputs, money, people and resources are the most important. Ironic that companies had neglected to really deal with the money input, of all the inputs.
Next might be some of the key resources or secondary inputs (inputs needed for money, people or resources). Likely contenders are water, food and energy, but there may be other likely issues too, by sector. The lesson for business is to take a long hard and deep look at the risks their businesses face from all angles; social, environmental, economic, political and anything else they can think of. In particular they need to understand what risks affect their stakeholders that might alter their stakeholder's actions, and thus affect the business: beyond employees and customers, think regulators, civil society or competitors.
Now, a financial crisis has hit a lot of companies in the same way. Granted the risks that have unfolded are much more unforeseen than those that affected BP, but none-the-less, companies should have, through stakeholder engagement internally and externally, foreseen this as a risk and taken certain preventative measures. They have not, and the results are serious -not just a PR problem -for many companies they mark the end of the line, so to speak.
Several years ago SustainAbility reported that the economic dimension of the Triple Bottom Line was not being assessed with as much rigour as the Social and Environmental. They pointed out that most companies dealt with their financial reports separately and that the leading companies were looking at the economic impacts of their work, through suppliers, employees, trade etc. A few companies had looked at issues like taxation properly but, apart from that, not much else was being looked at critically.
Now we have found what they were missing: they were not finding that some critical risks to their firms, such as lack of capital, lack of cash and so on, were real risks. Risks that they needed to address. They did not. When such issues developed into reality the enterprises folded. They'd got so excited using CSR for business benefit they had forgotten about using it to minimise risk. Risk being something that is hard to quantify, but necessary, as we have found it recently.
So what will be next? What other crucial assumptions do businesses make, assumptions which provide risks, if something happens? Many companies have looked at terrorism and political risks; many have looked at pandemics too. Some have looked at oil and energy and transport prices; others have looked at trade barriers. Of all the key inputs, money, people and resources are the most important. Ironic that companies had neglected to really deal with the money input, of all the inputs.
Next might be some of the key resources or secondary inputs (inputs needed for money, people or resources). Likely contenders are water, food and energy, but there may be other likely issues too, by sector. The lesson for business is to take a long hard and deep look at the risks their businesses face from all angles; social, environmental, economic, political and anything else they can think of. In particular they need to understand what risks affect their stakeholders that might alter their stakeholder's actions, and thus affect the business: beyond employees and customers, think regulators, civil society or competitors.
Sunday, August 31, 2008
What worth is CSR Assurance?
Recently a report came out about assuring CSR reports (i.e. verifying that the information in the reports are true) which was funded by CSR Assurance companies (hmmm), saying that not enough companies are assuring their CSR reports (surprise, surprise).
I would like to proffer that CSR assurance is actually pretty pointless and useless (in of itself) because:
1) How much time or effort do any of the assurers put into looking at any of the data to see if it is true; is it even possible to verify half the data anyway?
2) Is there any legal liability for assurers, like there is for assuring regular financial reports?
3) Does the assurance mean anything to the reader at all, or add any value to a CSR report?
Question 3 is rather interesting, because the best CSR reports now include all kinds of other methods of assurance, though not technically 'assurance' which for me are much more interesting and useful. These include comments from concerned employees or customers, (unedited) comments from critical stakeholder councils and even comments from a CSR expert on whether the key Reporting principles have been followed or not (e.g. GRI has several principles including materiality). Others include reports from SRI experts or other relevant shareholders.
All of these comments mean more than a statement that the numbers are correct, which i truly doubt, since many of the most important numbers are hard to measure and the rest rely on self-reporting from the company anyway (rather than some auditor going across the world to check on what the exact waste is from any particular machine and whether that is what it has been claimed to be).
So, nothing wrong with assurance, but i do not think it adds much value to a CSR report for external readers, and probably does not (in of itself) help a company improve itself internally. At least, in the press release, they admit that the quality of assurance varies widely, and also point out that many of the assurers are also the ones who help prepare the report!
I would like to proffer that CSR assurance is actually pretty pointless and useless (in of itself) because:
1) How much time or effort do any of the assurers put into looking at any of the data to see if it is true; is it even possible to verify half the data anyway?
2) Is there any legal liability for assurers, like there is for assuring regular financial reports?
3) Does the assurance mean anything to the reader at all, or add any value to a CSR report?
Question 3 is rather interesting, because the best CSR reports now include all kinds of other methods of assurance, though not technically 'assurance' which for me are much more interesting and useful. These include comments from concerned employees or customers, (unedited) comments from critical stakeholder councils and even comments from a CSR expert on whether the key Reporting principles have been followed or not (e.g. GRI has several principles including materiality). Others include reports from SRI experts or other relevant shareholders.
All of these comments mean more than a statement that the numbers are correct, which i truly doubt, since many of the most important numbers are hard to measure and the rest rely on self-reporting from the company anyway (rather than some auditor going across the world to check on what the exact waste is from any particular machine and whether that is what it has been claimed to be).
So, nothing wrong with assurance, but i do not think it adds much value to a CSR report for external readers, and probably does not (in of itself) help a company improve itself internally. At least, in the press release, they admit that the quality of assurance varies widely, and also point out that many of the assurers are also the ones who help prepare the report!
Monday, August 25, 2008
Responding to signals and feedback
One of the most striking concepts in Diamond's book is that of the rulers and elite of a society becoming too insular from the actual society and thus unaware of the signals of pending problems; once they realise, it is too late to change.
In this sense, we must wonder whether the elite of society would be the ones most able to survive a collapse (and if so, they have no motivation to prevent a collapse) or whether they too would suffer.
Somewhat related to this is that it seems businesses are being more responsive to the trends in society than elite or politicians are; maybe because businesses are thinking long-term and elite or politicians are not. Businesses might, though not democratically elected, be more responsible to their share holders and customers and employees (through active media, NGOs etc) and thus responsive to changes. However the problem with business is, though they need a successful civilization/society/economy in order to exist, their focus is not on the success of society, their focus will be on profits or some other metric that is rather selfish (as with selfish, nationalistic, governments).
In this sense are the current systems of global governance helping or hindering in any improvements in our responses to the obvious destruction we are causing?
It would seem that the global formal and informal governance systems are not up to the job, but they themselves will protect themselves (and resist too many calls for change or competition for governing institutions) and we will be unable to solve global problems collectively, or as individuals.
In this sense, we must wonder whether the elite of society would be the ones most able to survive a collapse (and if so, they have no motivation to prevent a collapse) or whether they too would suffer.
Somewhat related to this is that it seems businesses are being more responsive to the trends in society than elite or politicians are; maybe because businesses are thinking long-term and elite or politicians are not. Businesses might, though not democratically elected, be more responsible to their share holders and customers and employees (through active media, NGOs etc) and thus responsive to changes. However the problem with business is, though they need a successful civilization/society/economy in order to exist, their focus is not on the success of society, their focus will be on profits or some other metric that is rather selfish (as with selfish, nationalistic, governments).
In this sense are the current systems of global governance helping or hindering in any improvements in our responses to the obvious destruction we are causing?
It would seem that the global formal and informal governance systems are not up to the job, but they themselves will protect themselves (and resist too many calls for change or competition for governing institutions) and we will be unable to solve global problems collectively, or as individuals.
Saturday, July 26, 2008
Who is pressurising Chinese companies in Africa?
What comes into my mind when reading some of the endless articles of Chinese companies irresponsible practices in Africa, like this from Bloomberg news, is not the reasons why it is happening (of course there is pressure to keep costs low and pressure to access resources), not if Chinese companies are any worse than Western companies (either past or present) or other 'developing countries' companies (presumably not that much difference, but more Chinese companies out there and China is in the spotlight more) -but i wonder what the people running these companies are thinking.
I am a strong believer that people are inherently good, though also selfish. This thus means many people will put themselves over others, but if it is a matter of 'a bit more wealth' vs 'death for a child', i am mystified how people can, as human beings, make such a choice. The answer might be that such a choice never happens -that poor decisions create accidents, rather than people purposely acting irresponsibly knowing the impact it will have. Besides, if it is not forced labour, if it was so bad, wouldn't the workers find work elsewhere?
Is not this just the same as has happened (and still does happen, though not so explicitly any more) in China for decades? If China has improved (somewhat), will Africa improve too? Why did China improve and what lessons might this hold for Africa? Does Africa need a strong state to establish and enforce laws (though China's strong state only selectively enforced its own laws)?
Does Africa need more pressure from the West (presumably this makes no difference, as there has been pressure for a long time with no impact) or does Africa (note, the use of the term Africa in this post is inappropriate, but we will use it for simplicity) need other forms of pressure -from customers (Western end-customers might care; direct Chinese middle-men or end-Chinese customers probably do not care), from media (Chinese media will rarely criticize Chinese companies), from Chinese NGOs (are there any that do this kind of thing, apart from INGOs in China?) or from other groups..... I have to say, it does not look good.
The pressures that helped China clean up its act somewhat (some will say that it is still getting worse in China!) do not exist in Africa, so I am wondering how can we encourage some kind of pressure...from Chinese NGOs on Chinese companies, from Chinese media on Chinese companies, from Chinese government on Chinese companies or from any other source of pressure -ideally inside China and ideally with some actual leverage on Chinese companies in Africa. Any ideas?
On a slightly different note, many of the companies that get into the news about Africa are either state-owned, privately owned or micro entrepreneurs. What is the role of the Chinese government in monitoring these activities? Is there a role at all? For some activities, where there is funding from the Chinese state (through the export-import bank) there is a clear role and clear line of responsibility, and the Exim bank, as it is known, is claiming to take its responsibility seriously (though not as seriously as other International banking institutions that have signed up to the Equator Principles and similar collaborative agreements).
For the others operating in China, the government is unlikely to see a need to interfere at all. There is no such 'Alien Tort Act' for Chinese companies operating overseas, as there is for American companies; which can be prosecuted in the USA for irresponsible activities outside the USA. Any lawyers out there know of any Chinese legislation that could be use, say by an INGO, inside China to sue the companies mentioned in the Bloomberg report?
The limits of strategic community programs
In Asia businesses are starting to focus their community programs, make them 'strategic', leverage their limited resources as much as possible, instigate lasting and large-scale change, increase their community investments as the region's importance to their business grows and explore ways of distinguishing their programs from the rest as well as a number of other trends. This article aims to identify the limits of such trends in order to guide businesses as they develop their programs.
Best practise for an NGO: Identify the problem, identify the best solution, get the resources required to implement solution, use resources when needed (i.e. may vary depending on implementation progress).
Best practise for a business: Identify a problem related to the business (i.e. in the business's local community, related to business's line of work etc), identify what the benefit is to the business to adressing the problem, identify what resources the business has that can be used to address the problem (and that bring the desired benefits), provide said resources. Attach strings to ensure resources are used as benefits the business (i.e. location of implementation), as convenient for the business (i.e. volunteers) and to ensure appropriate use of resources.
Though the above statements are very brief, they describe the dilemna that exists whereby the way an NGO and the way a business addresses problems are very different, and can even be come incompatible in some cases.
Businesses should benefit from their community programs and they should seek to utilise their specific resources as best they can, but this may only be part of the solution. It is rare a business has all the resources to meet the NGO's needs -or the willingness to provide all of those resources.
The result is an imperfect provision of resources to the NGO, restricting an NGO's ability to tackle the problem as it would wish -but this is accepted as a sacrifice in order to get neccesary resources. In some cases NGOs can seek multiple resource providers and combine them, but in many cases this does not work due to business's requirements for 'exclusivity', location specificity, different financial and impact reporting requirements and so on.
Now this situation might only occur for so-called 'strategic' community programs, and not every program need be strategic as every program will vary by business type, location, sector, size etc.
Additionally it musy be recognised that though business can be the solution to many social and environmental problems (as well as economic ones), they cannot solve all of them. Though strategic community engagement is a good thing, as are other programs engaging with the environment and other issues, it must be recognised that there are other limits as to what business should or is willing to support.
There are other resource providers out there -each with different roles to play, resources that can be provided and interests including governmental funding, aid funding, individual charitable donations, foundation funding and so on. Some issues business will not touch, either becuase the link to the business is too weak, the issue is too sensitive or business does not have the required resources.
One benfit of a corporate foundation, especially for US companies, is that the foundation can have a wider remit and address issues the business might not want to. In fact the more strategic businesses become with their community programs, the more there seems to be the need, in Asia especially, to keep some money and other resources aside for non-strategic purposes.
Increasingly businesses are recognising the importance of actually engaging the community through employees as volunteers and this is a welcome move to adding value to communities and educating employees, providing them extra skills and so on. Unfortunately the side effect of this is that, in Asia, most businesses are therefore more willing to support programs in major cities close to where their customers, employees and target markets are. Indeed, in this case, a strategic community program can be crafted, and this should be encouraged.
The problem with this is that most of the social and environmental problems, in China, and other parts of Asia (though not all), are not in the major cities but in rural areas, away from the major cities. In these circumstances resources are not going where they are most needed and instead are going where is most suitable for businesses. Again, this is just good CSR, but is not good for development and this is the conflict.
In fact, in 1 example, businesses are falling over themselves to support migrant children because, as an issue, it is a hot issue, it is no longer politically sensitive, it is an urban issue and it is a ‘children’ and an ‘education’ issue. This is not a criticism for businesses who are supporting this issue and it is still worthy (though, increasingly less so as the government policy changes and government allocates more resources towards it, such as in Shanghai). It is especially a large issue in the smaller cities, though these are often places businesses are only just starting to touch with their community programs.
At the end of the day a little money can make a big difference and any difference a business can make is good for society and good for the business -inspiring employees, generating good PR and generating goodwill. So as businesses grapple with this issue of focussing their community programs but at the same time wanting to do what is best for development, they need to:
- Recognise the limits of what they can do
- Recognise the NGO perspective and needs
- Be flexible and explore different options and partners
- Recognise how important small grants (or volunteers, in-kind product etc) can be, especially in stimulating smaller NGOs' development (even if these small grants are not ‘strategic’)
- Explore partnerships with other businesses with complementary resources and aligned interests (i.e. pool resources)
- Explore supporting joint initiatives (e.g. Chambers of commerce, World Bank etc) in order to reduce transaction costs in developing suitable programs and to contribute to programs that otherwise are too big to do alone
- Continue to support employee driven local initiatives, even if not strategically aligned with the business
- Develop a coherent plan within different business units and within corporate foundations, so that where foundations are more separate from businesses, there is less overlap and foundations can focus on those areas business units might not be interested in
- Explore ways to support programs and projects that might not be such an obvious strategic fit, but can still be a good fit with a bit of thought making the partnership mutually beneficial.
.....For example, this could involve supporting programs in rural areas and sending volunteers there (and covering these costs and time off) for a number of days. Such volunteering activities can be used as team building activities as well as providing real eye opening experiences to employees and fully immersing them in communities for a longer time.
.....For example, looking at longer term secondments that can bring tangible benefits to the secondee, as well as the NGO.
This article is not a criticism of strategic community programs; it is an attempt to help explain the limits of such programs and to explore options for overcoming some of these limits. It is, though, intended to sow some ideas for readers to contemplate how businesses can be a part of the solution for those issues that many businesses are not yet part of –but that definitely still need solutions to come from somewhere. There are other resource providers for many of these solutions, but as we all recognise, there are some resources foundations, government etc just cannot provide that businesses can: be it brand awareness, staff expertise, technological expertise or a multitude of other useful resources businesses can apply to make the World a better place –for those in habiting it, and for the businesses that depend on it.
Friday, January 18, 2008
Making a difference to education
Always a hot topic and ultimately the bedrock of creating a sustainable society, for without quality and accessible education there can be no government officials, judges, teachers, doctors, engineers, journalists etc and it will be harder to reduce corruption and inequality or increase participation.
It is common to focus on helping those who really need it, and making a massive difference to those who are disadvantaged and lack the opportunities that others have. This is not a bad thing, especially if the school or students have (or will have) a relationship to the company, i.e. by being in the company's 'local community'. Scholarships can be great especially if they are motivating others as well as those who get the scholarship, and if they are really helping the needy.
But, for these initiatives, a holistic perspective must be taken. The most needy might not apply for the scholarship or be able to take advantage if they have to care for their family or must work to earn income for their family (so does one provide a scholarship to the student and also cover the opportunity cost of that student not generating income?). A school might look great, but what is the quality of the teaching? In many poor areas, even with trained teachers and good facilities, is there ongoing support for the teachers and are the children actually healthy enough to attend school and concentrate?
A school is not just teachers and students, it is also head-teachers, local education officials, parents and even sisters/brothers. All of these (and more) are stakeholders in the school to varying extents and through participation ideas and efforts from all can be generated and then implemented. But participation does not come naturally and must be facilitated to ensure those who do not want to participate, who are afraid to participate, who are unable to participate -do participate.
Support also must take a long-term and wider perspective in order to understand any side-effects from the program. An extreme case could be that the government has money for the school, but because of a corporation's contribution, that money ends up in someone's pockets, but to all affective purposes, what the money was earmarked for was achieved and thus the books can easily be amended! And what about the other schools, or the other students, that do not get the support of the company -how do they feel? How can the support in one location rub-off onto others? Anything is possible as long as such an approach is taken.
This kind of effort is not easy, and this is why companies rarely do this themselves and instead partner with another organisation, but a company needs to understand the issues to thus select a suitable partner and help that partner (whose capacity may well be weak, if they operate in an area that needs help). Reducing poverty is not easy and as with the case in China, the poor are often stuck in a rut. A certain proportion can get out of poverty relatively easily, but for the rest, it takes a long time and a lot of effort.
It is common to focus on helping those who really need it, and making a massive difference to those who are disadvantaged and lack the opportunities that others have. This is not a bad thing, especially if the school or students have (or will have) a relationship to the company, i.e. by being in the company's 'local community'. Scholarships can be great especially if they are motivating others as well as those who get the scholarship, and if they are really helping the needy.
But, for these initiatives, a holistic perspective must be taken. The most needy might not apply for the scholarship or be able to take advantage if they have to care for their family or must work to earn income for their family (so does one provide a scholarship to the student and also cover the opportunity cost of that student not generating income?). A school might look great, but what is the quality of the teaching? In many poor areas, even with trained teachers and good facilities, is there ongoing support for the teachers and are the children actually healthy enough to attend school and concentrate?
A school is not just teachers and students, it is also head-teachers, local education officials, parents and even sisters/brothers. All of these (and more) are stakeholders in the school to varying extents and through participation ideas and efforts from all can be generated and then implemented. But participation does not come naturally and must be facilitated to ensure those who do not want to participate, who are afraid to participate, who are unable to participate -do participate.
Support also must take a long-term and wider perspective in order to understand any side-effects from the program. An extreme case could be that the government has money for the school, but because of a corporation's contribution, that money ends up in someone's pockets, but to all affective purposes, what the money was earmarked for was achieved and thus the books can easily be amended! And what about the other schools, or the other students, that do not get the support of the company -how do they feel? How can the support in one location rub-off onto others? Anything is possible as long as such an approach is taken.
This kind of effort is not easy, and this is why companies rarely do this themselves and instead partner with another organisation, but a company needs to understand the issues to thus select a suitable partner and help that partner (whose capacity may well be weak, if they operate in an area that needs help). Reducing poverty is not easy and as with the case in China, the poor are often stuck in a rut. A certain proportion can get out of poverty relatively easily, but for the rest, it takes a long time and a lot of effort.
How can a corporation make a difference?
If a corporation takes a broad aim of 'to improve the environment, to support education, to increase transparency' or anything else, for various reasons -selfish and altruistic, what are its best options?
Well, ultimately the biggest difference occurs from systemic changes and behaviour changes -none of which are easy, but which a corporation can support by working with government, with business associations and with initiatives (i.e. research, pilots, advocacy).
The next step would be to support others that are helping make systemic change; they are often doing this by raising awareness or improving accountability (naming and shaming, for example) and this could be the media or civil society or initiatives to build participation in decision making. This, again, often requires supporting existing initiatives and helping scale them up -or it could be to seed something new (but that will be sustainable or will have a defined end date).
Next could be to improve the ability for enforcement of laws and to improve the ability to meet legal requirements or implement legal reforms which may mean supporting NGOs, training government officials, training teachers, supporting training institutes, organising skills sharing etc. Supporting Universities can be a good way to support promising research, build capacity in teaching institutions etc.
Next, is the difference the corporation can make itself through its operations and its products. Making its operations more sustainable (Reducing waste, improving safety etc) and by developing products that are more sustainable.
Finally, once the corporation has got itself to a decent level it needs to start helping others reach this level, it needs to raise the bar. Not only does this provide massive benefit for the company in terms of PR, but it also raises the standard and forces its competitors to meet it. Best practise needs to be shared and others inspired to achieve. Influence should be used, especially on business partners and suppliers.
Ultimately it is the market that affects businesses and if the market mechanism is used to force others to improve, whilst the corporation stays ahead of the market, the corporation will always be first to market (since it is creating the market!). It is thus in its best interest to effect legal change that influences the market and to support the implementation of that legal change.
Well, ultimately the biggest difference occurs from systemic changes and behaviour changes -none of which are easy, but which a corporation can support by working with government, with business associations and with initiatives (i.e. research, pilots, advocacy).
The next step would be to support others that are helping make systemic change; they are often doing this by raising awareness or improving accountability (naming and shaming, for example) and this could be the media or civil society or initiatives to build participation in decision making. This, again, often requires supporting existing initiatives and helping scale them up -or it could be to seed something new (but that will be sustainable or will have a defined end date).
Next could be to improve the ability for enforcement of laws and to improve the ability to meet legal requirements or implement legal reforms which may mean supporting NGOs, training government officials, training teachers, supporting training institutes, organising skills sharing etc. Supporting Universities can be a good way to support promising research, build capacity in teaching institutions etc.
Next, is the difference the corporation can make itself through its operations and its products. Making its operations more sustainable (Reducing waste, improving safety etc) and by developing products that are more sustainable.
Finally, once the corporation has got itself to a decent level it needs to start helping others reach this level, it needs to raise the bar. Not only does this provide massive benefit for the company in terms of PR, but it also raises the standard and forces its competitors to meet it. Best practise needs to be shared and others inspired to achieve. Influence should be used, especially on business partners and suppliers.
Ultimately it is the market that affects businesses and if the market mechanism is used to force others to improve, whilst the corporation stays ahead of the market, the corporation will always be first to market (since it is creating the market!). It is thus in its best interest to effect legal change that influences the market and to support the implementation of that legal change.
Thursday, September 20, 2007
CSR’s challenge in China
As Rich and others well know, business in China is moving rather fast. For most Multinationals they are under pressure to make profits in China, gain market share, open new branches or R & D Centres, recruit more (quality) staff and so on. The Olympics are around the corner which is adding extra pressure along with increasing numbers of high profile CEO and political visits because of China's growing importance in the World -environmentally, socially and economically.
What this means is that things like risk management tend to get pushed down the agenda (which is a big, big mistake), volunteering gets sidelined unless HQ orders everyone to do something on 'company's volunteering day' (as employees are too busy to take time off of work and companies unwilling to spend too much time organising anything) and community partnerships or other elements of CSR (like HR diversity programs or governance) tends to be dealt with rather hurriedly.
This is a missed opportunity for all concerned. Working on CSR is by necessity a long-term strategy. There is now a slow trend of companies in China to start to engage in more meaningful community partnerships, but only a slow trend. Most companies still lack the time, the ability, the people or the will to really engage meaningfully, even though the more meaningful the engagement the greater the benefits. Yes, more and more organisations are offering consultancy related to CSR in China, more and more are also providing outsourcing services (such as PR or legal companies, let alone those in supply chain areas); but the major issue is still there. Consultants or other agencies rarely train staff. They make suggestions that are accepted or otherwise or they implement directly and what is really needed is training (not just conferences) of staff dealing with these issues accompanied with high level support providing the time and will power to make something meaningful happen.
I expect that, for Foreign companies, their 'Global CSR people' will start playing a more important role in the future, as they recognise the limitations their China staff have and the environment these local staff operate in. It also means we will see more high level Global CSR meetings in China, attended by Global staff. By this i do not just mean the UN GC or those events, i mean meetings by WBCSD or BSR as well as smaller meetings. I also expect companies to start having their internal Global /Asia CSR meetings here more often. Unfortunately those people will still struggle to find a 'green' venue for their meetings too!
Tuesday, September 11, 2007
An inspiration, a hero, a role model.... Anita Roddick died yesterday
Anita Roddick, the founder of the Body Shop is one of the few people I could call either a hero, a role model or an inspiration to me. Way before people were talking about CSR she was doing it (1976) because it needed to be done for business reasons and for social and environmental reasons.
Her whole life has been devoted to issues she truly believes in and issues her company truly believes in. Lets just have hope in others like her and hope that there are many many more people like her still to come.
For Dame Anita, the truly exceptional entrepreneur, business and ethics came together. "Businesses have the power to do good," she wrote. "That's why The Body Shop's Mission Statement opens with the overriding commitment, 'To dedicate our business to the pursuit of social and environmental change.'" Capitalist with a Conscience
Her whole life has been devoted to issues she truly believes in and issues her company truly believes in. Lets just have hope in others like her and hope that there are many many more people like her still to come.
For Dame Anita, the truly exceptional entrepreneur, business and ethics came together. "Businesses have the power to do good," she wrote. "That's why The Body Shop's Mission Statement opens with the overriding commitment, 'To dedicate our business to the pursuit of social and environmental change.'" Capitalist with a Conscience
Saturday, September 01, 2007
Smoking in China
It is interesting to hear that 18 months after China ratified the WHO’s framework convention on tobacco control, China has now finally announced it is going to do something to meet its commitments. This is not just a ’smoke-free Beijing’ slogan which in effect means nothing; it is potentially a new law that can be relatively easily enforced. The government can stop companies from advertising and it can stop advertisers from accepting advertising; by enforcing the law from both directions it might actually be enforced -at least in the big cities. It will be interesting to see what happens in the countryside and what what strategy the tobacco companies come up with (maybe just focusing on promoting the brand of the company rather than its products, like Western tobacco companies; or maybe resorting to more underhand tactics and increasing promotion online, ‘on-the street’ or through other less regulated channels).
It is about time that China accepted that the profits the government makes from tobacco (taxes as well as from the State Owned Enterprises in the industry) and the number of people employed in the industry (including many poor urban residents selling cigarettes in tiny shops or from make-shift stands on the sidewalk) is not a reason to continue to support an industry which such devastating impacts on people’s lives, their productivity and their household economy (it is no wonder that most NGOs prefer to support women more than men when so many men spend their pocket money on cigarettes when women spend pocket money on food, education or clothes for the family).
I wonder, though, how the tobacco lobby in China (and though Western companies are a part of this lobby, evidently the major players are all Chinese) let this happen? China is a huge market for the tobacco industry and one of the few countries where (I believe) the number of smokers is growing. I also wonder how high up this decision goes and whether the decision was purely an economical one (i.e. taxes received =lower than cost to health system for dealing with impacts) or also motivated by other reasons.
Smoking itself is one of those industries CSR people love to talk about with the question: Can tobacco companies be responsible? In one way, the answer is no, since the companies’ product kills people that consume the product, and those who do not and particularly harms the vulnerable in a household (i.e. the women and children who suffer from second-hand smoke but do not smoke). In another way, the answer is yes, since the companies’ product is not illegal, employs millions of poor people (especially farmers and those involved in distribution) and contributes high taxes to the governments that need money for health sectors. Does anyone know of any Chinese Tobacco companies that have ever said anything about CSR (not just charity)?
Friday, July 27, 2007
A company's 'community'
It is often hard to define the community around the company -yes a company should be a good neighbour to its community, but a better word than community is influence. A company should do good within its sphere of influence which is wider than 'community' and therefore better for society, but it is also easier to identify a company's sphere of influence (through mapping) and where the leverage points are to make a difference in that sphere.
Risk and Opportunity
I fundamentally believe that CSR is about companies behaving responsibly; why would they do this? Simple: to reduce risk and find new opportunities. Those risks and opportunities can be related to PR, employees, sales etc etc. Though many companies like the word 'opportunity', others might not really understand the word 'risk', a good way of expressing this is to explain that it is all about trying to "pre-empt potential blindsides". In business, there is always something that will unexpectedly come up and affect you. It is necessary to try to anticipate these and act to mitigate their impacts.
Hence the importance of stakeholder dialogue so a company is more in touch with its stakeholders and able to better predict future 'blindsides'. It is crucial -start engaging today!
Hence the importance of stakeholder dialogue so a company is more in touch with its stakeholders and able to better predict future 'blindsides'. It is crucial -start engaging today!
Monday, July 23, 2007
Public health -the public's responsibility?
I've mentioned before how it seems that individuals are losing their responsibility and nowadays it is up to companies and governments to help/tell people how to live their lives responsibly. In a health context this is more extreme: if a person wants to be fat and eat junk food and not do exercise it is surely up to them. They need to make informed choices, for sure; once a government (or a company) has made the relevant information available, why should they still be involved?
Well, moving past this kind of health topic to ones of public health, like SARS or avian flu or HIV/AIDs, one can see that increasingly companies are having to play a much greater role; in a supporting role to gvernments to help governments deal with these kinds of crisese. Why? Because they will be affected -as with any CSR issue- they will start to be impacted through a lack of employees, customers etc. But where is the impact? This involvement is purely a risk management investment. But how many investments must companeis make in risk management? What companies can afford these investments and should they be bearing these costs, probably disproportionately?
Well, moving past this kind of health topic to ones of public health, like SARS or avian flu or HIV/AIDs, one can see that increasingly companies are having to play a much greater role; in a supporting role to gvernments to help governments deal with these kinds of crisese. Why? Because they will be affected -as with any CSR issue- they will start to be impacted through a lack of employees, customers etc. But where is the impact? This involvement is purely a risk management investment. But how many investments must companeis make in risk management? What companies can afford these investments and should they be bearing these costs, probably disproportionately?
Problems with strategic CSR
One aspect of Strategic CSR is when a company uses its core competencies to help society; such as trained staff or (customised) products. But it is easier to just write a cheque and give some money. Not only is this quicker and require less time from the company (as well as being simpler, since companies are not development experts) but normally it just requires 1 or 2 people to sign off on the contribution.
If you want to, say, develop a new toilet that is suitable for people that lack suitable toilets, you do not need to just talk to PR or Finance, you need to talk to Sales and Marketing, R&D and HR... in fact you need an internal project team that is committed to this (and thus more than just the CSR person!) and able to do this. Part of the ability issue is whether the company allocates these people to the project. This project may be great in many ways, but it is most likely not going to be as profitable as targeting rich people and selling them toilets (though, in the long-term it might be). So, a) how to build this consensus and commitment to this idea throughout the organisation that you need to deliver this project successfully, and b) how to get them committed to the project, compared to the other priorities the company has?
If you want to, say, develop a new toilet that is suitable for people that lack suitable toilets, you do not need to just talk to PR or Finance, you need to talk to Sales and Marketing, R&D and HR... in fact you need an internal project team that is committed to this (and thus more than just the CSR person!) and able to do this. Part of the ability issue is whether the company allocates these people to the project. This project may be great in many ways, but it is most likely not going to be as profitable as targeting rich people and selling them toilets (though, in the long-term it might be). So, a) how to build this consensus and commitment to this idea throughout the organisation that you need to deliver this project successfully, and b) how to get them committed to the project, compared to the other priorities the company has?
Corporations helping community or vice versa?
I fully believe that business can be the solution to poverty. The process is simple:
1. Identify the problem
2. Identify the solution (technological, training etc)
3. Innovate to provide the solution to the problem.
Point 2 is actually quite easy, and there are already solutions to almost every development challenge, be it finding water, preventing HIV/AIDs etc. Point number 3 is where the challenge lies. So far government has failed to provide the solution in most developing countries for various reasons (money, ability etc). Can business do better? Well they also need to overcome problems, such as providing the solution cheap enough, ensuring there are qualified people to distribute and provide the solution, ensuring the solution is suitable to local needs and so on.
If a company can do that, great. Companies can profit from helping the community. If they do that, then there is a clear motive for business to invest money in helping raise awareness of the problem, the need for their solution and their proposed solution (possibly through NGO partners).
This is the issue: when does this become unethical? Health companies already understand this uneasy balance when they go to doctors to tell them about their solution to a health problem. This means the doctor will use that product to solve the problem, but is it actually the right or best product -or just the only product the doctor knows about? How to stop the doctor accepting bribes for distributing that product and not another one? Will the patient lose the trust of the doctor knowing how closely associated the doctor is to the company (and companies often havea lack of trust)?
For me, working in an NGO, where we have the trust of the community, we would gladly like to (and already do, to some extent) promote certain products (and sometimes subsidize them) -in fact we are keen to help companies understand the problems and help them develop a solution, but where is the line between promoting something that will help solve a problem and becoming (in effect) a distributor for the company? How does this affect the trust the community has in us, if they link us so closely to a company?
1. Identify the problem
2. Identify the solution (technological, training etc)
3. Innovate to provide the solution to the problem.
Point 2 is actually quite easy, and there are already solutions to almost every development challenge, be it finding water, preventing HIV/AIDs etc. Point number 3 is where the challenge lies. So far government has failed to provide the solution in most developing countries for various reasons (money, ability etc). Can business do better? Well they also need to overcome problems, such as providing the solution cheap enough, ensuring there are qualified people to distribute and provide the solution, ensuring the solution is suitable to local needs and so on.
If a company can do that, great. Companies can profit from helping the community. If they do that, then there is a clear motive for business to invest money in helping raise awareness of the problem, the need for their solution and their proposed solution (possibly through NGO partners).
This is the issue: when does this become unethical? Health companies already understand this uneasy balance when they go to doctors to tell them about their solution to a health problem. This means the doctor will use that product to solve the problem, but is it actually the right or best product -or just the only product the doctor knows about? How to stop the doctor accepting bribes for distributing that product and not another one? Will the patient lose the trust of the doctor knowing how closely associated the doctor is to the company (and companies often havea lack of trust)?
For me, working in an NGO, where we have the trust of the community, we would gladly like to (and already do, to some extent) promote certain products (and sometimes subsidize them) -in fact we are keen to help companies understand the problems and help them develop a solution, but where is the line between promoting something that will help solve a problem and becoming (in effect) a distributor for the company? How does this affect the trust the community has in us, if they link us so closely to a company?
Monday, July 02, 2007
‘Strategic’ CSR in China
Why should a company ‘do’* CSR? Because it is in its own benefit to do it.
What CSR should it ‘do’? That which benefits the company the most.
The word strategy always sound good, and in a CSR sense, it means doing something that is of maximum, long-term, benefit. Strategic CSR is not, necessarily a strategy in itself, but a commitment leading to a direction identifying certain areas a company will focus on which will improve itself and society (either at the same time, or at a later date). Thus an investment in staff makes it easier to attract new staff, reduces staff turnover (and hence recruitment costs), increases staff morale and productivity etc. An investment in the supply chain improves partnerships with suppliers, increases their efficiency, reduces risks from being associated with suppliers who break the law etc.
In the last few years, a new are has developed focusing on strategic CSR within a company; normally including a team crossing the functions of sales, marketing, research & development and corporate affairs. The objective: to develop products that fulfill a societal need, and to deliver that product to those who need it, profitably. Simple examples would be a company that makes soap that has tremendous hygiene benefits. Thus by improving the distribution a company can get soap to more people who need it and by reducing costs poorer people can afford it. It might not be easy to do either of these, but it can be possible and should be attempted because if it can be done, sales can be increased.
Many multinational companies are now focusing on this area; though not so much in China (as they are still obsessed with the higher margin middle and upper class customers), but i am sure it will be an area to watch for more. Interestingly though, China’s very open capitalist market economy has led to many companies employing these kinds of strategies anyway, without having a dual goal of helping society AND making a profit. They just want to make a profit; but the side-effect is to help society. It is easy to buy things like soap in even the most remote areas of China.
What is next, is the products and services that are harder to distribute en masse and harder to profitably sell to the poor; such as water purification systems, education, sanitary toilets, advanced farming tools, good quality roads and so on. The list of possible products and services the poor do not have in China, but need to improve their lives is a long one. The challenge is to develop a needs-based product, get it to customers and sell it to them profitably (yet at a price they can afford -or possible along with micro-loans).
China, with a huge market offers significant opportunities to do this by achieving economies of scale and scope. It is, of course, also a country with 20 million people in absolute poverty and around 200 million in poverty -second only to India. However China also offers numerous challenges, such as Intellectual Property Rights and logistics. The challenge to entrepreneurs (and of course, current businesses) out there is look for the needs that poor people have and try to serve that need profitably.
*I dislike the use of the word ‘do’ but ‘do’ is the simplest word that everyone will understand. To explain how to ‘do’ CSR is not possible in a simple blog post; though use of the word ‘do’ does imply something very simple, it is indeed definitely not.
Friday, November 24, 2006
Supply Chain and Development
After a recent conference on Supply Chain Management I came to realise a few things. The most important is how great a lot of the stuff Brands are doing: they are (for various reasons) demonstrating fantastic leadership and I believe had made a big difference in the last 10+ years. There are of course multiple problems still to contend with; especially considering what they are doing is not driven my much local pressure; and most of what they are doing should, to some extent, be done by the government (enforcing Health and Safety laws, working hours laws etc).
There are some fantastic pilots taking place that really bring 'CSR' to local managers in factories and engage with all stakeholders in such programs (including, crucially, the workers) -so that the managers themselves see the business benefits of CSR -and are actually able to understand CSR as a holistic concept, rather than what they see at the moment (compliance, training etc). There is further to go, not least in addressing the scale-up challenges involved.
Scaling-up is the buzz word in the development world (where I work) and it is clear that the CSR world needs to take a leaf from the development world's book -or at least learn the lessons the development world has gained from many years of failures, and some successes attempting such grand initiatives. The Business world may be great at scaling up marketing, but scaling up CSR/development programs is different. For too long pilots have occurred in the supply chain and not expanded, there has been a lack of involvement of government, policy makers and academics, there has been limited attempts at partnership with other sectors (or with competitors) and not enough capacity building.
Maybe Supply Chain Staff should meet Marketing staff and realise that distributing products requires partnerships and adequate distribution channels, as well as effective communications, effective research and so on.
This takes me to the lesson the Supply Chain only seems to have recently learnt: the need to engage with stakeholders and more than this, provide for the stakeholders to make the decisions. In the development world the community is encouraged to make decisions -an example might be an offer of funding for a community to improve the community. Now, the funder might not actually care what the community chooses to do with the money, what they care about is the process the community went through to make the decision. Thus the community has buy-in and is accountable to itself as well as the funder, and the community will learn the lessons. At the conference people were finally talking about the need for a bottom-up approach; an engagement approach and so on.
There is of course a lack of people around who can facilitate this process, inspire the stakeholders to be involved, or trust the stakeholders enough! But, for Supply Chain Improvements to really take off, that is what must happen. The Buyers will need to reach a stage where they trust their suppliers and step back -audit less not more.
A Factory is different to a village community though, so Buyers need to empower the managers to willingly want to empower and engage with their employees and other stakeholders. Not much sustainable benefit to the buyers doing all the 'csr' on behalf of a factory they do not own! When a Factory manager spoke to us, he was not knowledgeable about CSR as a concept -and indeed most auditors are not 'csr experts' -they are auditors, and this is the problem. Most trainers (either from the company, ngos or consultancies) are training bits and pieces as required by whoever pays their services.
Development looks at comprehensive needs of a community, takes into account external factors, spends as much on research before a programme and evaluation after the programme (plus disseminating learning points) as the programme itself. Development requires spending LOTS of money, but aims to do small things well, then identify opportunities to scale-up -often involving government, business and other stakeholders.
The key to development though is that those being 'developed' want to be developed -they see the benefits, and this is not something the supply chain movement started with; and is something it has tried to create -Brands are having to go in and convince the factories of the benefits of CSR. Will this and other lessons be learnt? I suggest a dialogue between development NGOs and the Supply Chain actors; share some lessons, and then lets make sure that what is happening is sustainable. I don't believe much of the supply chain movement is sustainable. There are some fantastic examples, but these are few, and the sample a tiny proportion of all 'supliers' that exist -which is almost any company that sells something to someone!
Though the migrant workers complained at the conference about lack of training and how they wanted innovative training, career development opportunities and so on; they are much better off than in their villages -if not they would not be there. Ambition is a great thing. How about they take some of these lessons back to the factory outside their village, and take some leadership upon themselves? I think there needs to be some re-thinking about scaling-up. Let's hope that future conferences focus on that. Too much good stuff is happening to be wasted on having such low impact.
Is this great stuff bringing the whole field up? Maybe some of the factories in apparel, toys and electronics in a couple of geographical areas are getting better. Is the entire field of factories getting better, no matter where they are based or what product they are making? No, but some leaders need to start re-thinking, re-planning and being more ambitious.
There are some fantastic pilots taking place that really bring 'CSR' to local managers in factories and engage with all stakeholders in such programs (including, crucially, the workers) -so that the managers themselves see the business benefits of CSR -and are actually able to understand CSR as a holistic concept, rather than what they see at the moment (compliance, training etc). There is further to go, not least in addressing the scale-up challenges involved.
Scaling-up is the buzz word in the development world (where I work) and it is clear that the CSR world needs to take a leaf from the development world's book -or at least learn the lessons the development world has gained from many years of failures, and some successes attempting such grand initiatives. The Business world may be great at scaling up marketing, but scaling up CSR/development programs is different. For too long pilots have occurred in the supply chain and not expanded, there has been a lack of involvement of government, policy makers and academics, there has been limited attempts at partnership with other sectors (or with competitors) and not enough capacity building.
Maybe Supply Chain Staff should meet Marketing staff and realise that distributing products requires partnerships and adequate distribution channels, as well as effective communications, effective research and so on.
This takes me to the lesson the Supply Chain only seems to have recently learnt: the need to engage with stakeholders and more than this, provide for the stakeholders to make the decisions. In the development world the community is encouraged to make decisions -an example might be an offer of funding for a community to improve the community. Now, the funder might not actually care what the community chooses to do with the money, what they care about is the process the community went through to make the decision. Thus the community has buy-in and is accountable to itself as well as the funder, and the community will learn the lessons. At the conference people were finally talking about the need for a bottom-up approach; an engagement approach and so on.
There is of course a lack of people around who can facilitate this process, inspire the stakeholders to be involved, or trust the stakeholders enough! But, for Supply Chain Improvements to really take off, that is what must happen. The Buyers will need to reach a stage where they trust their suppliers and step back -audit less not more.
A Factory is different to a village community though, so Buyers need to empower the managers to willingly want to empower and engage with their employees and other stakeholders. Not much sustainable benefit to the buyers doing all the 'csr' on behalf of a factory they do not own! When a Factory manager spoke to us, he was not knowledgeable about CSR as a concept -and indeed most auditors are not 'csr experts' -they are auditors, and this is the problem. Most trainers (either from the company, ngos or consultancies) are training bits and pieces as required by whoever pays their services.
Development looks at comprehensive needs of a community, takes into account external factors, spends as much on research before a programme and evaluation after the programme (plus disseminating learning points) as the programme itself. Development requires spending LOTS of money, but aims to do small things well, then identify opportunities to scale-up -often involving government, business and other stakeholders.
The key to development though is that those being 'developed' want to be developed -they see the benefits, and this is not something the supply chain movement started with; and is something it has tried to create -Brands are having to go in and convince the factories of the benefits of CSR. Will this and other lessons be learnt? I suggest a dialogue between development NGOs and the Supply Chain actors; share some lessons, and then lets make sure that what is happening is sustainable. I don't believe much of the supply chain movement is sustainable. There are some fantastic examples, but these are few, and the sample a tiny proportion of all 'supliers' that exist -which is almost any company that sells something to someone!
Though the migrant workers complained at the conference about lack of training and how they wanted innovative training, career development opportunities and so on; they are much better off than in their villages -if not they would not be there. Ambition is a great thing. How about they take some of these lessons back to the factory outside their village, and take some leadership upon themselves? I think there needs to be some re-thinking about scaling-up. Let's hope that future conferences focus on that. Too much good stuff is happening to be wasted on having such low impact.
Is this great stuff bringing the whole field up? Maybe some of the factories in apparel, toys and electronics in a couple of geographical areas are getting better. Is the entire field of factories getting better, no matter where they are based or what product they are making? No, but some leaders need to start re-thinking, re-planning and being more ambitious.
Monday, June 05, 2006
innovation, CSO and BoP
I was having a discussion with a friend about Nike and it developed into a new realisation for me. I suddenly realised the obvious linkage between innovation, CSR as CSO (Corporate Social Opportunity -not as just a responsibility) and BoP. BoP is the Bottom of the Pyramid theory that is popular nowadays, as a reason to motivate companies to create more products to sell to the poor in society, since they have some money, and if companies can create accessible products for them, they will be able to improve their quality of life.
In Nike's case there is not such an obvious proposition. They need to keep their products at a certain price to maintain the brand's status as well as make a profit to pay for their manufacturing and marketing costs. The proposition would be that Nike could create another brand (not called Nike at all, or called Nike Base or something) that would be at prices to rival local products (or the fake brand's products!) but would be based on Nike's quality standards. The products might be made from cheaper materials and would be proftable because there would be no need for R&D costs, promotional costs etc. It would not have maybe the same design benefits -since many people at the BoP require products for their use, not for their image. Thus this would differentiate it from the main nike products.
The conundrum though would be how to not lower nike's brand globally whilst still being able to sell these new products at a profit.
The next line of thinking is how to not just sell products to the poor -the idea is that the poor will benefit from these products, by the way, not just be exploited. How can Nike help the poor make more money (either to buy their products, or just to become less poor)? This would require looking at new manufacturing or distribution models. For distribution, you could look at a simple coca-cola model, where local distributors would sell their products and make money by doing it. One may ask why would poor people need nike clothes.. quality is not that big an issue for clothes. The locally made ones might be very similar to Nike's.
What makes this interesting is to tie this in with one of the key aspects of Nike's brand: of an active life. Sports and physical activies DO have huge benefits for people -anod not just in keeping them healthy, but in bringing people together for team activities as well as developing individual skills (team-work, motivation etc) or inspiring young people. This is the problem fo r Nike. What they can bring to the poorer people is a brand that will inspire people to be active..but they would need to keep their brand on these lower costs products to do this. What's the answer? Comments please, but there might be one somewhere out there.. Alternatively a low cost retailer might want to create a new brand: the ethos of Nike, but at lower costs!
How else could Nike help poor people? Apart from paying them to be distributors, they could also pay them to do marketing, to be sports coaches (if there was a business case to this then leading to greater sales), or to be involved in manufacturing.
There has been renewed debate against global supply chains and for local supply chains. Global Supply chains are the best way to maintain quality and be cost efficient, but the goods have to travel with climate change impacts and affecting the time to market from production. Groceries is a key player in this discussion at the moment: sourcing locally rather than centrally. But what if Nike's products could be made locally in small workshops, in local houses -much like 200 years ago in pre-industrialisation times.. and what if this was more beneficial than centralising everything, someway?
The point of this post is to show that for any company there are various options of innovating that might provide new market opportunities. Of course none of these might be feasible.. why should nike bother about producing locally, let a local entrepreneur or a mother stitch her own clothes! But, what if companies started to investigate and ask themselves these kinds of questions, to explore all kinds of new opportunties? Then, with some radical thinking, some determination and some innovation, we could get something, maybe. Maybe it won't benefit Nike, but if it can benefit society, someone else can take it up!
In Nike's case there is not such an obvious proposition. They need to keep their products at a certain price to maintain the brand's status as well as make a profit to pay for their manufacturing and marketing costs. The proposition would be that Nike could create another brand (not called Nike at all, or called Nike Base or something) that would be at prices to rival local products (or the fake brand's products!) but would be based on Nike's quality standards. The products might be made from cheaper materials and would be proftable because there would be no need for R&D costs, promotional costs etc. It would not have maybe the same design benefits -since many people at the BoP require products for their use, not for their image. Thus this would differentiate it from the main nike products.
The conundrum though would be how to not lower nike's brand globally whilst still being able to sell these new products at a profit.
The next line of thinking is how to not just sell products to the poor -the idea is that the poor will benefit from these products, by the way, not just be exploited. How can Nike help the poor make more money (either to buy their products, or just to become less poor)? This would require looking at new manufacturing or distribution models. For distribution, you could look at a simple coca-cola model, where local distributors would sell their products and make money by doing it. One may ask why would poor people need nike clothes.. quality is not that big an issue for clothes. The locally made ones might be very similar to Nike's.
What makes this interesting is to tie this in with one of the key aspects of Nike's brand: of an active life. Sports and physical activies DO have huge benefits for people -anod not just in keeping them healthy, but in bringing people together for team activities as well as developing individual skills (team-work, motivation etc) or inspiring young people. This is the problem fo r Nike. What they can bring to the poorer people is a brand that will inspire people to be active..but they would need to keep their brand on these lower costs products to do this. What's the answer? Comments please, but there might be one somewhere out there.. Alternatively a low cost retailer might want to create a new brand: the ethos of Nike, but at lower costs!
How else could Nike help poor people? Apart from paying them to be distributors, they could also pay them to do marketing, to be sports coaches (if there was a business case to this then leading to greater sales), or to be involved in manufacturing.
There has been renewed debate against global supply chains and for local supply chains. Global Supply chains are the best way to maintain quality and be cost efficient, but the goods have to travel with climate change impacts and affecting the time to market from production. Groceries is a key player in this discussion at the moment: sourcing locally rather than centrally. But what if Nike's products could be made locally in small workshops, in local houses -much like 200 years ago in pre-industrialisation times.. and what if this was more beneficial than centralising everything, someway?
The point of this post is to show that for any company there are various options of innovating that might provide new market opportunities. Of course none of these might be feasible.. why should nike bother about producing locally, let a local entrepreneur or a mother stitch her own clothes! But, what if companies started to investigate and ask themselves these kinds of questions, to explore all kinds of new opportunties? Then, with some radical thinking, some determination and some innovation, we could get something, maybe. Maybe it won't benefit Nike, but if it can benefit society, someone else can take it up!
Thursday, March 09, 2006
CSR at Board Level
Where does CSR sit at Board Level? Well probably under the External Affairs team, or maybe there is a specific person responsible for CSR. If there is, what are they called?
A survey of 100 fortune 500 companies could reveal some interesting results. In the meantime I'd like to propose whether the title means a lot or not. Personally I don't think the title means all that much. What is most important is the job description and the responsibility/respect the person has. However the job title might imply these. Thus there may not be much difference between CSR or CR but there is for Community Affairs and Legal (which may also be responsible for CSR).
A few leading companies have redefined 'CSR' as CR or R or many others (some including ethics which is to be aplauded). One that I like is CSO: Corporate Social Opportunity, thus someone's 'CSR' report was titled CSO: Turning Corporate Social Responsibility into Corporate Social Opportunity (it may have been P&G I am not sure). Although this may work for some, for others they may not have the ability to capitalise on CSR as core to their strategy and a source fo comparative advantage or innovation.
What I would encourage for companies not yet at the CSO level is another title; one that is more short term focused, more financiall and legally focused -and thus easier to define a short-term business case: Risk Management. Whilst investigating our own CSR report, we've realised there will be a number of various focuses. 1 is what we are doing badly, not as well as we want to, or can do better and achieve more. Another 1 is what risks we face now that we are not addressing and what ones we should be anticipating in the future.
Risk Management is a really great way of defining the most pressing aspect of CSR: the one with the most examples, and the one that can most easily be understood by other Board level Directors.
A survey of 100 fortune 500 companies could reveal some interesting results. In the meantime I'd like to propose whether the title means a lot or not. Personally I don't think the title means all that much. What is most important is the job description and the responsibility/respect the person has. However the job title might imply these. Thus there may not be much difference between CSR or CR but there is for Community Affairs and Legal (which may also be responsible for CSR).
A few leading companies have redefined 'CSR' as CR or R or many others (some including ethics which is to be aplauded). One that I like is CSO: Corporate Social Opportunity, thus someone's 'CSR' report was titled CSO: Turning Corporate Social Responsibility into Corporate Social Opportunity (it may have been P&G I am not sure). Although this may work for some, for others they may not have the ability to capitalise on CSR as core to their strategy and a source fo comparative advantage or innovation.
What I would encourage for companies not yet at the CSO level is another title; one that is more short term focused, more financiall and legally focused -and thus easier to define a short-term business case: Risk Management. Whilst investigating our own CSR report, we've realised there will be a number of various focuses. 1 is what we are doing badly, not as well as we want to, or can do better and achieve more. Another 1 is what risks we face now that we are not addressing and what ones we should be anticipating in the future.
Risk Management is a really great way of defining the most pressing aspect of CSR: the one with the most examples, and the one that can most easily be understood by other Board level Directors.
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