corporate social responsibility

Quotable: Employees vs. Citizens

Companies aren't just people -- they're actually whole countries.

In his latest series on Foreign Policy, David Rothkopf sheds some surprising—and not-so-surprising—light on just how much power super-companies actually wield. "Supercitizens and Semistates" profiles some of the world's largest corporations:

Over the last century, the world's biggest private-sector organizations have come to dwarf all but the largest governments in resources, global reach, and influence.

In his article, "Inside Power, Inc.," Rothkopf writes, "Striking the right balance between private and public power is the fundamental challenge of our age. Find the sweet spot -- prudent regulation, empowering citizens to compete, fostering economic dynamism, and fairness for all -- and your society will thrive in the 21st century. Get the equation wrong, and the results will be measured in social instability, diminishing prosperity, and declining ability to shape your destiny. Choices that seem entirely domestic in nature will have massive geopolitical consequences."

"...For the majority, the disenfranchised who make up today's 99 percent, the hybrid capitalism likely to emerge from the current competition in the global marketplace of ideas may well be a fairer, more sustainable alternative.

Editor's note: David Rothkopf is CEO and Editor-at-Large of Foreign Policy. He is also President and CEO of Garten Rothkopf, an international advisory firm specializing in transformational trends, especially those associated with energy choice and climate change, emerging markets and global risk.

Join us April 12 to hear "Where are we now? A day in the life of a volatile world economy," a lecture by Jeffrey Garten, chairman of Garten Rothkopf, at Mercy Corps.

From Bhutan to Foxconn, corporate responsibility is big business

A new company attempts to satiate the European appetite for hazelnuts with an all-encompassing bussiness model. Photo: Thatcher Cook for Mercy Corps
A new company attempts to satiate the European appetite for hazelnuts with an all-encompassing bussiness model. Photo: Thatcher Cook for Mercy Corps

The bottom line of any profit-making scheme is profit. Increasingly, consumers are demanding even more than that.

A new for-profit in the Southeast Asian nation of Bhutan is one of many new companies developing a more holistic approach to business. Mountain Hazelnut Venture’s goals are lofty: combat deforestation by planting 10 million hazelnut trees in the next five years, employ and empower 15,000 small holding farmer households with fair wages in rural Bhutan and supply the European hazelnut demand by exporting 40,000 metric tons of hazelnuts by the year 2020. Oh, yeah—and also turn a profit.

Mountain Hazelnut Venture is one of many emerging companies whose goals include the triple-bottom line of corporate social responsibility: people, planet and profits. The term corporate social responsibly, or CSR, has been around for decades, but the evidence that corporations are moving towards increased emphasis on CSR is mounting.

CSR is itself becoming big business. The Wall Street Journal releases a weekly “Corporate Social Responsibility Weekly Recap.” The title “CSR Specialist” is a nascent career choice. Many companies, like Nike, even release an annual corporate responsibility report, which they allow to be dissected by the public.

Of course, paying Bhutanese farmers to plant trees is only one way for companies, big or small, to be socially responsible. In 2007 the Center for Global Development released a report defining corporate responsibility as standards compliance, charitable giving, resource engagement, commercial leverage and policy advocacy. A recent article from International Development explains how each of them is defined in today’s corporate culture:

Standards compliance: Companies adhere to higher standards of business practice, including labor rights, working conditions, environmental protection or anti-corruption.

Charitable giving: Companies provide direct financial support to public organizations or nonprofits that work on issues reasonably aligned with the company’s interests and corporate culture. It is deemed the most straightforward way for a company to contribute to development efforts.

Resource engagement: Companies donate their own goods, services and expertise. According to CGDev, this approach “arguably provides greater leverage to development activities than cash because it brings to bear a company’s particular competitive advantages.”

Commercial leverage: Companies leverage their commercial presence to support efforts that can improve the lives of people they employ and communities where they operate.

Policy advocacy: Companies use their influence to lobby home and host governments and the international community for better policies.

While it is important to praise corporations that follow these standards, corporate social responsibility did not happen in a vacuum. Decades of public outcry, consumer habits and a growing sense of global awareness have played a part in the phenomenon.

This week, after months of public scrutiny, Foxconn Technology, a Chinese supplier of Apple computers, announced that it would be raising wages for assembly line workers by 16 to 25 percent.

As consumer awareness and activism grows, corporate responsibility is not only an important aspect of a successful business model, but also a key tool in global development and poverty alleviation.

Changing the Way They Do Business

This pharmacy at the Evangel Hospital in Jos, Nigeria could be one of the beneficiaries of cheaper drugs and better facilities from GSK. Photo:<a href="http://www.flickr.com/photos/blyth/1439256349/"> MikeBlyth (flickr)</a>
This pharmacy at the Evangel Hospital in Jos, Nigeria could be one of the beneficiaries of cheaper drugs and better facilities from GSK. Photo: MikeBlyth (flickr)

Pharmaceutical companies are often seen as villains for making life-saving drugs so expensive the poor can't afford them. But what if a new CEO was making drugs more affordable and sharing secrets that would lower profits but result in more cures?

Andrew Witty is the new chief executive of GlaxoSmithKline (GSK) — the second largest drug company in the world. Witty recently outlined his plan to radically shift GSK policy to make four major changes that will help the developing world:

1. Slash drug prices to 25 percent (or lower) of their current U.S. and UK levels in the world's 50 poorest nations, and make drugs more affordable in middle-income countries like Brazil.

2. Reinvest 20 percent of drug profits made in developing countries to support health clinics and pay medical workers in those same countries.

3. Place their research on neglected diseases (with the exception of HIV) into a patent pool to share with other scientists to dramatically speed up medical breakthroughs.

4. Invite researchers from other governments, companies, and NGOs to participate in their research on tropical diseases at their institute at Tres Cantos in Spain.

So why would GSK do this? Witty told the Guardian he was so tired of hearing speeches about how terrible it is that there has been no progress in tuberculosis research or treatments for other diseases that he decided to do something about it.

We work like crazy to come up with the next great medicine, knowing that it's likely to get used an awful lot in developed countries, but we could do something for developing countries. Are we working as hard on that? I want to be able to say yes we are, and that's what this is all about – trying to make sure we are even-handed in terms of our efforts to find solutions not just for developed but for developing countries.

Lowering drug prices will help — but without adequate health care infrastructure, even cheaper drugs might not be accessible. That's what makes reinvesting profits to support clinics and pay medical workers' salaries so important, because it will increase access to these drugs.

But the most important change Witty has proposed is sharing GSK's research. By placing their research into patent pools, GSK will dramatically increase the speed of early-stage R&D activities and the likelihood of finding cures to neglected diseases.

"This is a gutsy move in a commercial world" said Mike French, World Vision's director of advocacy. "Witty has demonstrated a willingness to make saving lives a business goal along with making money."

Is corporate responsibility good for business?

Topics: Corporations

An Economist article from late January looks at the popularly supported concept of corporate responsibility and what that means for corporate profits.

If companies need to be vigilant about the limits of CSR, the same applies even more to society as a whole. A dangerous myth is gaining ground: that unadorned capitalism fails to serve the public interest. Profits are not good, goes the logic of much CSR; hence the attraction of turning companies into instruments of social policy. In fact, the opposite is true. The main contribution of companies to society comes precisely from those profits (and the products, services, salaries and ideas that competitive capitalism creates). If the business of business stops being business, we all lose.

Toyota Makes India its Home and Offers Training to Youth

Topics: Corporations, Education
Countries: India

Today Business Week takes a look at Toyota and corporate responsibility:

Harish, who comes from a family that lives below the poverty line of $177 in annual income, was a good student but had no particular ambition. Then, last April, his schoolteacher alerted him to an advertisement by Toyota in the local paper. The automaker was inviting applications from 17-year-old, poor and needy students for factory training. It was offering free board, lodging, and education, plus a monthly stipend of $38. There were 5,000 applicants, and Harish was one of 64 boys from the southern state of Karnataka who made it to Toyota Tech, the training institute that opened last August as Toyota's first outside of Japan.

He now wants to be an automotive engineer. "I am so happy and can't believe," says Harish in his broken English about how his life and dreams have changed. They sure have. His mother and grandmother earn 65¢ daily as farm laborers, a brother is a bus cleaner, and a sister is training to be a nurse. But Harish is determined to change his life thanks to Toyota. In the three months he has been at the institute, he has saved $8 to give to his mother. "I want to make her proud," he says, outlining his determination to excel in his three-year course and bag the $180 and $230 fellowships for assiduous students.

From the Archives

When Business Turns Green

Previously filed under: North America, Environment
By incorporating sustainable practices, UPS helps the environment while saving money.

From the Archives

Leadership in Botswana

Topics: HIV/AIDS, Corporations
Countries: Botswana
Previously filed under: Africa, Health
Corporations are increasing their involvement in fighting HIV/AIDS, both as a dimension of social responsibility and as an effort to protect their workforce and clientele.

From the Archives

Good-Looking Samaritan

Topics: HIV/AIDS, Corporations
Countries: South Africa
Previously filed under: Africa, Health
South African businesses are stepping up awareness campaigns about HIV, as high-risk youth become increasingly impervious to messages from traditional sources.

From the Archives

Financial Terms and Institutions

Previously filed under: Definitions
International finance can be difficult to understand, but here are some simplified definitions and articles on institutions such as the IMF and ideas like microfinance.

From the Archives

Microinsurance Key to Protecting the Poor

Previously filed under: Africa, Book and Film Reviews
Protecting the Poor is a book of lessons learned and technical guidance for insurance professionals and practitioners.

From the Archives

A Model to Eradicate the Gulf Between Doing Good and Doing Well

Previously filed under: North America, Success Stories
Entrepreneurs can make a profit and still provide public services.

From the Archives

Corporate Responsibility and Globalization

Topics: Globalization, Corporations
Previously filed under: General Globalization
A new business structure appears to be on the horizon as large corporations are now integrating activist demands into their business plans.

From the Archives

Make Poverty Business

Previously filed under: North America, Book and Film Reviews
This book offers an alternative approach to the reduction of global poverty, motivating businesses to combine profit with socially responsible practice.

Stories We're Watching

Jobs for Billionaires - By Joshua E. Keating

Foreign Policy - Thu, 05/24/2012 - 07:25
A few problems back here on Earth in need of some serious capital.

Panda glasses are Toms shoes for your face

Washington Post - Innovations - Thu, 05/24/2012 - 02:30
Growing up in a Chinese home, Vincent Ko saw the many uses of bamboo — in the kitchen utensils, decorations and even furniture. Years later, as a recent Georgetown University graduate, Ko began to wonder if the trendy Asian grass had a place in fashion — in sunglasses, to be exact.

Old Ways Disappearing In The New Mongolia

NPR - Thu, 05/24/2012 - 00:17
With desertification, drought and a booming mining industry, Mongolians are leaving the traditional life of herding. Herdsman Bat-Erdene Badam says he will be the last in his family to tend livestock. His children are trading in their nomadic lives for more stable, often urban jobs.

Two Worlds, One Climate - By Peter Passell

Foreign Policy - Wed, 05/23/2012 - 14:35
Forget Kyoto. There’s a much better way to persuade the developing world to fight climate change.

Brazil and China, Oiling the Wheels of Business

Inter Press Service - development - Mon, 05/28/2012 - 06:21
China's voracious demand for energy has prompted it to embrace Brazil as a major oil partner, fuelling the dramatic expansion of Chinese companies in this South American country. But while some see this as a boost to the Brazilian economy, others fear that it poses a risk to this country's future self-sufficiency.

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