CSR and Sustainability

How can companies prove their value in emerging markets?

In my last post I mentioned some shenanigans going on in the India CSR policy arena.

Whether all of these actually end up being forced on companies remains to be seen.

Either way, there is one fundamental, and complex lesson for large companies here:

No matter how much better company
practices are becoming, no matter how good your sustainability reporting or
even stakeholder relations are, you can never underestimate the lack of
knowledge and understanding in some sections of government of the right role of
business.

I’ve spent a lot of time in emerging economies,
MINT nations, BRICs, whatever we call them, in recent years (lean markets is
another interesting possible term) and some of that time with Government
ministers and officials. Spending time with these folks, a few things have
become very clear to me. Notably:

1) Senior Government officials are about as
time-poor as people get. This means many of them have missed out on learning
about the complexities of the fast evolving business and society debate in
recent years.

2) As a result many rely on political populism,
on reactionary views based on recent events and on their past education, which
may have taught older socialist views or ‘zero sum game’ 1980s capitalism
models as the way forward. (Both of which are now accepted to be simplistic).

3) Much of the information they see is filtered,
and they make quick decisions all the time. They often have to. Social media or
traditional media (in democratic states) often forces the pace given the social
unrest it often causes.

4) Many of the good simple ideas around business
policy that the progressive smart officials or politicians out there come up
with, (and there are many of these) get watered down and lost in bureaucracy.

5) Many do not yet understand the emerging links
between sustainability and foreign direct investment. It’s clear to me that
increasingly companies link a solid business environment with good frameworks
that can stand a change of government or major event. Whilst large companies
are increasingly linking business investment (the FDI all governments want)
decisions with frameworks that include (or exclude) sustainability / CSR
related policy, Governments are often not doing the same, for the reasons
above.

What does all this mean? Quite simply, it says
to me that companies must do a much much better job of demonstrating their
value in the volatile emerging markets where they operate. Not enough
businesses yet understand this, and how to do it. (GSK’s travails
in China show serious corporate risk
in action)

There’s no proven way, but I’ll end this post
with a few links to examples which I think may help provide some idea of the
way forward below.

These impact reports mentioned below, of course,
are only part of the equation. Many of the leading companies now understand
they must play a positive role in development that works for them and the
countries they operate in.

Many understand that proving your value on a
regular basis is now part of the cost of doing business and can lead to
business opportunities, particularly through innovation.

The next stage is working out not only how to
communicate your current value, but to play a positive role in the frameworks
that will improve conditions, not just for individual companies or even
sectors, but for countries as a whole. That’s probably the hardest conundrum
facing CEOs today. Most instinctively shy away from conversations about
contributing to national competitiveness, and for good reason in a traditional
sense.

But left to themselves Governments and their
officials, with every more demanding populations and ever present NGOs talking
into their ears, may come up with plans such as in India recently.

Those kinds of ideas are potentially much worse
for business than the risks run by careful engagement in the public policy
debate. This is where collaboration and partnerships can make a big difference,
if companies can resource their negotiations and involvements and consistently
promote them correctly. Most currently, do not. This is why good initiatives
become written off as temporary PR.

There are ways beyond impact reporting to get
involved in shaping the debate, ways beyond just engaging industry associations
or a handful of NGOs to help argue the case for well thought through business
policy frameworks.

Producing the kinds of impact reports
put out by the likes of SAB Miller, Heineken, Standard Chartered, Unilever and
the like are an improvement on current practices. But let’s be honest, the
state of the art is fairly woeful, because companies are slow to make the
strategic link high enough up the food chain, that sustainability is something
they need to much more overtly link with their long term planning and investment
decisions. The key word above is “overtly”. Business must work out more
effective ways to constantly communicate with Governments in emerging markets
on this topic. Doing so consistently can help better decisions to be made for
the long term.

I am working with some companies, and one
Government, soon I hope two, to try out some methods and see what can work
better than the above. I will report back in due course on my blog, I hope with
good news.

Here’s those examples of impact reports I mentioned, some of which you may have seen before:

http://www.standardchartered.com/sustainability/news/20101014/en/index.html

http://www.unilever.com/sustainable-living-2014/enhancing-livelihoods/understanding-our-economic-impacts/unilever-in-vietnam/

http://www.sabmiller.com/files/reports/accra_brewery_report.pdf

http://www.sustainabilityreport.heineken.com/empower/heineken-cares/economic-impact-assessments.html


http://www.wbcsd.org/Pages/EDocument/EDocumentDetails.aspx?ID=15357

1 Comment

  1. There would appear to be many ways.

    Check out the Uni of Qld and the research they have done over the past decade to engineer sustainability into operations and projects. http://jktech.com.au/susop-case-studies.

    We model sustainability variables as part of mine planning optimisation to include the impacts on energy, carbon footprint, water, jobs, royalties, etc. see the vid on our home page for a summary

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