Creating Value for Society

“It is in the enlightened self-interest of business to forge economic growth models that create larger societal value than shareholder value alone.”

I doubt if there are many on Wall Street who agree with this opinion, which was put forward in this article by S. Sivakumar, group head of the Agri & IT businesses of Indian conglomerate ITC. But then, I’m not sure anyone on Wall Street really cares about shareholder value either. Accumulating personal wealth seems to be their driving force.

The Great Recession being felt worldwide can be laid at the doorstep of corporate—and personal—greed, housed by soulless companies like Goldman Sachs, Merrill Lynch, Bank of America, and others. By wrecking the economy for the 99%, they spawned Occupy Wall Street, a movement that has become an international voice against the damage being caused by these companies.

Sivakumar’s company is a refreshing alternative to Wall Street gluttony. ITC has been “water positive” for nine years (created twice as much freshwater potential than it has consumed), “carbon positive” for six years (sequesters twice as much carbon as it emits), and “solid-waste-recycling positive” for four years (recycles all wastes from its industrial operations). “In addition, these innovative business models have led to the creation…

Corporate Social Responsibility Is Unstoppable

“While consumer power for a better world is still nascent, it’s poised to skyrocket. Consumer pressure will greatly expand the breadth and depth of CSR, forcing companies to willfully change their practices,” writes Simon Mainwaring in his new book, We First, excerpted here in Fast Company. (Note: If you want proof that the corporate social responsibility (CSR) movement Mainwaring describes has gone mainstream, consider that his book is ranked #19 for all books on Amazon.)

According to Mainwaring:

• 83% of consumers are willing to change their consumption habits if it can help make tomorrow’s world a better place to live.
• 61% have sought a brand that supports a good cause even if it was not the cheapest brand.
• 64% would recommend a brand that supports a good cause, up from 52% last year.
• 56% believe the interests of society and the interests of businesses should have equal weight in business decisions.
• 67% would switch brands if a different brand of similar quality supported a good cause.

The data point to a warning for companies that choose to ignore CSR and to an opportunity for those that embrace it. More and more consumers are factoring corporate social responsibility into their buying decisions.

Mainwaring believes the consumer drive for CSR will…

Baldrige Model: How do you govern and fulfill your societal responsibilities?

Item 1.2 in the Baldrige Criteria asks key questions about your organization’s governance system, legal and ethical behavior, and societal responsibilities. The following processes, best practices, and problem areas look at critical issues in this part of the Baldrige model.

Your organization needs processes for:

• Management and fiscal accountability
• Transparency in operations and in the selection and disclosure polices for board members
• Independent internal and external audits
• Protecting stakeholder and stockholder interests, as appropriate
• Evaluating the performance of senior leaders and the board
• Using senior leader and board member reviews to develop and improve performance of these leaders and of the leadership system
• Preparing for and addressing any adverse impacts on society of your products and operations
• Promoting and ensuring ethical behavior in all interactions
• Contributing to the well-being of your environmental, social, and economic systems
• Actively supporting and strengthening your key communities

Best practices to consider:

• Key measures are identified for evaluating the performance and improvement of leaders and of the leadership system.
• Senior leaders and board members use formal processes for reviewing their performance and that of the leadership system and use the results of those reviews, which are typically annual, to improve personal and organizational performance.
• Key processes, measures, and goals for achieving and surpassing regulatory and legal requirements and for promoting…

Porter: CSR Is Dead End

In an interview on HBR.org, management expert, author, and Harvard professor Michael Porter said that CSR (corporate social responsibility) is a dead end. “For folks in the CSR world,” he added, “the real impact isn’t on charitable giving but mobilizing the business itself.” (video and article available here)

Porter and partner Mark Kramer argue for a principle they label “shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress.” As they see it, “shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”

It’s not exactly a catchy name, nor is it a new concept, but if Porter and Kramer can get more companies to focus on the needs and challenges of society—rather than creating a demand for something we don’t really need—they will help CSR move to the next phase.

I would call that next phase corporate social profitability (CSP), since both companies and society benefit.

If you want to know what CSP looks like, consider the case of Dannon yogurt in Bangladesh, which I wrote about here. Danone teamed up with Grameen Bank to develop…