The CSR Tipping Point

Earlier this week IBM released a report titled “Attaining sustainable growth through corporate social responsibility”.  The report, based on a survey of 250 business leaders worldwide, reveals that a majority of companies understand the financial value of CSR.  68% of those surveyed utilize CSR as an opportunity and a platform for growth.  While most of us in the CSR/social entrepreneurship space have known the financial value of social strategies for some time, this survey is evidence that the market has finally caught up.  IBM’s investment in this research and in their newly established CSR consulting practice is further evidence of how companies have seen the “green light” of CSR.  It will be interesting to see how CSR evolves as it becomes a mainstream business strategy- hopefully the positive momentum towards creating both social and business value will persist during our current economic downturn.  

-Aneesa Arshad

 

GE’s Profitable Imagination

Earlier this month GE CEO Jeff Immelt announced a new healthcare initiative called “Healthymagination”.  Modeled after the successful Ecomagination, Healthymagination aims to do three things- lower health care costs, make care more broadly available and improve quality.  Under the catchphrase “health means wealth” GE is targeting the 2 billion plus people at the BoP who have no access to healthcare.  An example of a Healthymagination product is the Lullaby Warmer which keeps infants warm after they are born.  Immelt notes that this product makes healthy margins and also lowers infant mortality rates.  

While GE’s products are targeted to developing countries, there is also potential to tap into the US market.  My colleague, Eileen Yang, notes the “trickle-up effect” in which innovative products developed for emerging markets enter developed markets.  “One example of trickling-up is GE’s affordable and light-weight electrocardiograph (ECG) machine; originally developed for traveling medical practitioners abroad it has found relevant and growing demand in resource-constrained hospitals and health centers here in the US.”  

More companies should follow GE’s example of developing submarket products.  Companies should set revenue targets high- in Immelt’s case he wants to grow revenues from the health care business by 2 to 3 times in the next few years- and start serving the developing world.

-Aneesa Arshad

 

Measuring the Business Value of Social Impact

Jason Saul, CEO of Mission Measurement gave a speech on “Measuring the Business Value of Social Impact” at the Boston College Center for Corporate Citizenship annual conference last week.  

This BCCCC blog post highlights Saul’s message of using business outcomes as a lens to identify metrics.  Join the discussion!

 

Academic Perspective on Measuring Social Performance

Ronnie Chatterji, Assistant Professor at the Fuqua School of Business, offers some interesting thoughts on measuring social performance.

-Aneesa Arshad

 

The Proliferation of CSR Rankings

Earlier this week I attended a webinar sponsored by Boston College’s Center for Corporate Citizenship titled “The Power of Lists: Corporate Citizenship Rankings, Awards & Indices”.  The webinar featured directors of corporate affairs functions from UPS, GE and IBM.  Below are my high level takeaways from the webinar:

• There is little correlation between the increase in the number of rankings and indices and the quality of information available related to the citizenship activities of corporations
• The methodologies used by many of the rankings and indices are questionable and there is a lack of transparency
• There is a growing demand for detailed customized data from corporations and the main motivation for corporations to provide this data is reputational 
• Besides increasing brand awareness and prestige, few of the rankings provide feedback to the companies based on the survey results
• The Dow Jones Sustainability Index has established itself to be of critical priority to many corporations
• Almost all of the rankings focus on risk management; growth, return on capital and management quality are not factored into the rankings 
• Despite the proliferation of rankings and indices, there is a need for a methodology that focuses on value creation as opposed to risk mitigation; this type of approach will help us identify which corporations have the most robust social strategies

-Aneesa Arshad

 

Social Entrepreneurship and the Millennial Generation

If the millennial generation provides any indication of what’s to come in the social entrepreneurship movement, the future is bright.  This past week, em[POWER], a new enterprise I am helping launch, entered the Dell Social Innovation Competition and the MIT Clean Energy Competition.  While I was somewhat familiar with these competitions, I’ve been blown away by the quality and quantity of submissions.  There were over 500 submissions to the Dell Competition, with teams from as far as India “unleashing their energy, idealism, and public-spirited thinking to affect change in areas of critical human need.”  While the Dell submissions address a wide range of social issues, the 25 semi-finalists in the MIT Clean Energy Competition are all focused on innovative solutions in transportation, renewable, energy efficiency and infrastructure, clean hydrocarbons and biomass.  I highly recommend reading through some of the submissions!  

-Aneesa Arshad

 

Selling Your Impact Workshop at NYU Stern School of Business

Selling Your Impact Workshop: How to Raise Money by Demonstrating Results

A workshop for social entrepreneurs

Friday, April 24th, 9:00-5:00pm

NYU Stern School of Business

Is your social enterprise really making a difference?  

Many social entrepreneurs still answer this question by offering anecdotes, donor lists and press clippings as proof they’re getting the job done. But, the rules have changed.

Donors are increasingly demanding hard evidence that their dollars are being used to achieve maximum social impact. As a result, today’s competitive fundraising landscape requires that social enterprises-no matter their size or focus-be able to measure their results.  This intense, one-day workshop will show you how to meet this challenge. Leading social sector expert, Jason Saul, will:

• Teach you how to define the right outcomes for your organization.
• Give you the tools to start measuring performance today.
• Empower you to create a results-oriented, high-impact organization.
• Help make your organization more responsive to donors and better able to withstand the trend toward increased scrutiny.
• Share real-world examples of organizations that have conquered measurement and have been able to raise more money by selling their impact. 

About the Speaker:

Jason Saul is the author of the book Benchmarking for Nonprofits and a nationally recognized expert on performance measurement.  He has helped thousands of organizations revolutionize the way they think about their work, including: Easter Seals, Boys and Girls Clubs of America, The Humane Society, Keep America Beautiful, Ronald McDonald House Charities and The American Red Cross. For one day he will share with you the same strategy that leading change makers are using to revolutionize the social sector.

Be Sure to Register today, click Here

Early-Bird Price, Before March 24th, $295

After March 24th, $350

All major credit cards are accepted

 

Lunch and workshop materials are provided

 

Generating Social Value in Emerging Markets

In providing products and services to the 2.5 billion people living on less than $2 per day- the bottom of the pyramid (BOP)- corporations can fight poverty and  generate new revenue streams.

I will be the first to admit that I get really excited about the implications of the above statement.  The idea that multi-national corporations can alleviate poverty and make money at the same time presents a simple solution to a seemingly unsolvable problem.   It is time, however, for us to take off our rose-colored glasses and realize that the implementation of this theory is more complicated than we think.  

First, as Aneel Karnani argues in the winter issue of SSIR, we are “romanticizing the poor”.  The poor have a low savings rate and little untapped purchasing power and while corporations can generate new revenue streams by expanding into emerging markets, the profit margins are not as high as people suggest.  Second, innovation and intent are imperative in order to create high social and business value.  If creating social value is not a priority and a company is simply expanding its existing products into emerging markets, there will be minimal returns.   

Thus thought leaders and corporations should set realistic expectations for what type of social value to expect from expansion into emerging markets and companies should push the envelope in innovation to generate the desired returns.

Case Study: Diageo

UK-based Diageo, one of the world’s largest alcohol providers, is a good example of a company that has generated significant business value from its presence in emerging markets and that does not try to oversell its social contribution.  Since 2003 Diageo has released numerous corporate citizenship reports including geographic-specific reports.  In 2008, for example, Diageo released its Africa Corporate Citizenship Overview, which covers the business’ impact on water, developing skills, local sourcing, encouraging inward investment, environmental performance and responsible business.  The metrics that Diageo used to communicate its progress include:

-£317 million paid in tax to African governments

-48% of senior management roles held by African nationals

-1.6 million Africans provided with clean water since 2007

-£25 million invested in water treatment plants in five countries

These metrics are clearly a result of Diageo’s business strategy of selling its brands in Africa.  There are no metrics around poverty alleviation, as that is not Diageo’s primary objective.

Companies need to accurately track and communicate social value creation.  If they are not satisfied with their outcomes, they should innovate and expand their product offerings as opposed to stretching their results to satiate their do-good desires.

-Aneesa Arshad

 

Podcast of Jason Saul’s Keynote at Ross Net Impact Forum

Jason Saul, CEO of Mission Measurement, gave the keynote address at the Ross School of Business Net Impact Forum last month.  Listen to the podcast to learn more about the new role of corporations in society.  

Download podcast here

 

Wal-Mart CEO Leaves Green Mark on Company

Since Wal-Mart first announced its sustainability goals in 2005, the world’s largest public corporation (by revenue) has quickly become the poster child for corporate social responsibility.  Much of this success can be attributed to the foresight of Lee Scott, the newly retired CEO of Wal-Mart.  A recent New York Times article spotlights Scott and his legacy of corporate responsibility.  

In his last public speech as Wal-Mart chief, Scott said “There is no conflict between delivering value to shareholders, and helping solve bigger societal problems.”  The increased revenues and cost-savings resulting from recycling efforts, improved employee health insurance, reduced packaging, fleet efficiency, and the greening of Wal-Mart’s supply chain are a testament to Scott’s statement.

According to the NYTimes article, Wal-Mart and McDonald’s are the only two companies in the Dow Jones industrial average whose share price rose last year.  In addition to improving Wal-Mart’s bottom line and changing the image of the company, Wal-Mart’s sustainability standards have forced leading suppliers like GE and P&G to change their own business practices.  

Although many still criticize Wal-Mart for its low wages and the selective greening if its suppliers, Scott’s leadership has led Wal-Mart in the right direction and he has proven the business case for corporate responsibility.  

-Aneesa Arshad