DP#3: Everybody knows, but just a few acts

It is known that one of the challenges that the financial crisis made more visible is the achievement of sustainable, efficient and responsible business. The crisis always highlights what is being under shades; what had being said (or done) but just almost listened (or perceived).

During the last 10 years (or more) there has been an increasing proliferation of, what is called, Corporate Social Responsibility- CSR. Conferences, books, consultancies, initiatives, programs, etc., acquire higher relevance through time. There were hundreds of understandings and definitions, however they shared common denominator: to go beyond business in business.

Under this term, as I mentioned, there are hidden many conceptions and different understandings, just like it happens with some complex issues that society have been creating. Aware of the risk that this could suppose, I offer to classify these understandings in two approaches.

On the one hand, it is what I call the compulsory approach. This is related to what is a pre-requirement for any business performance, from a legal and ethical point of view. The compliance with the law, respect of human’s and labor rights, good practices of corporate governance, the protection and care for the stakeholder’s interests, are some examples of what is mandatory. On the other hand, there are some CSR notions that claim companies for an “add on”.  This complementary field refers to activities that are outside the pure business orbit and could be translated as “added value initiatives” that companies voluntary decide to give. For instance, strategic social investments on education or health projects, creation of private foundations, donations or philanthropic aid.

It is true that go beyond business in business is important. For so, the compulsory issues are an imperative ones and the complementary ones are very desirable. Nevertheless, there is something missing. What about the business itself? For going beyond something it is precise to have that something.  Financial crisis show us what was evident. The main responsibility for business is doing business good. Please don’t get confuse between doing good business and doing business good. Here, good is an attribute for behavior that is based on ethics.

Doing business good is about understanding the social role of business form the core of its own activity. The real concerning is the social impact of business. This analytic perspective turns into a management one, when companies not only accepted (be aware of it), but also adopt it, put it in practice. This implies to question the why, how, and for who produce, facing the social at the moment to make decisions.

As Jane Nelson explain, the role of private sector in development regards to the responsible management of the impact of their core business operations, in the workplace, in the marketplace and along the supply chain. She proposes eight socio-economic multipliers based on a responsible, efficient and profitable mainstream performance: the generation of income, production of safe products and services, creation of jobs, investment in human capital, establishes local business linkages, spread international business standards, support technology transfer and build physical and institutional infrastructure. By optimizing these multipliers, it is possible to create both shareholders value-added and societal value-added, which we define as the creation of wider economic, social and environmental value. (Nelson 2003)

And I go a little bit ahead of.

Businesses are in essence the main agents in the creation and primarily distribution of wealth. So, poverty and inequality in income distribution, some of the main concerns of Latin America, are not estranged problems for it.

Furthermore, as companies are the producers of goods and services, society have leave them the task to administrated the scare resources (in economic language) to reach the “optimal” in terms of needs’ satisfaction. It is obvious that the social impact of fine jewels and low-cost and high quality drugs are completely different. Naturally, the priorities of each country could differ; however, regarding general concerns, what should be the role of the entrepreneur sector in financial inclusion, hunger and food commercialization or housing deficit?

In addition, companies have the responsibility for being an appropriate scenario for the professional and personal development to for its workers. Respecting their rights, assuring fair conditions are some of the main issues.

But business also could address their “power and influence” to promote and advocate for the common good. Moreover, they should participate in the solution of the main problems that society face. As someone said, there are not wealth companies in sick societies.

There is a connection between societal and economic progress. Economic growth and social progress share the same end; so they should reinforce and improve each other to increase opportunities and assure people’s capabilities. In words of professor Porter, the point is the creation of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.

I want to end recalling Leonard Cohen: “Everybody knows the fight was fixed, the poor stay poor, the rich get rich. That’s how it goes. Everybody knows….. Everybody knows that the boat is leaking, without knowing where, that we are loosing the horizon. However, knowing is not all, it is necessary to take a step forward to think (including re-thinking) and act. Corporate Responsibility starts from a personal responsibility.

Ps. I want to tell you about an interesting business case. Fundación Social is the organization that contributed to “wake up” the passion that I fell for development and private sector (because it is a passion!). Fundación Social is a Colombian nonprofit organization with the ultimate goal to overcome the structural causes of poverty in order to promote the creation of a just, supportive, productive and peaceful society. While it is an NGO, the Foundation is also the matrix of a group of enterprises, since it regards the entrepreneurial line of action as a substantial component, essential to its action in society. The Foundation does not consist of a group of companies, all of which have a foundation; instead, it is a Foundation that has a group of companies. For them, “businesses were not simply a source of funds; they were in themselves an essential component of the social intervention strategy directed to overcome structural causes of poverty, the very raison d’etre of the entire organization.”

Fundación Social pursues its model of social intervention through three instruments: (i) direct social projects; (ii) business activities; and (iii) influence in society.  It works directly with the poor creating conditions for development helping them to overcome the structural causes of poverty with integral local development initiatives. Companies of Fundación Social offer products and services (mainly in the financial sector) directed to sectors not adequately serviced by the traditional formal market offerings. Profits received by Fundación Social as a shareholder, were used to finance its growth strategy and to fund social projects. The organization also created influence in society by inviting society to participate in debates and solutions to major social issues.

The Foundation has more than 7.500 workers (62% of it are women), 4,7 millions customers on 63 cities nationwide, 63% of them has less than 2 minimum legal wage (around 400 Euros).

For more information: www.fundaciosocial.org or just ask me!

References

Cortina, Adela. ¿Ética económica europea?. EL PAÍS . Opinión – 20-10-2007

Kliksberg, Bernardo: “Más ética, más desarrollo”. Temas Grupo Editorial SRL, Buenos Aires. 2004

Nelson, Jane: “Economic Multipliers”. IBLF, 2003

Porter & Kramer: “Creating Shared Value. How to reinvent capitalism—and unleash a wave of innovation and growth”. Hardvard Business Review. January – February 2011.

Cohen, Leonard. Everybody knows. http://www.youtube.com/watch?v=XDphyrGiaJE

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