CORPORATE SUSTAINABILITY:What it is & global trends

Corporate Sustainability & IR, SET 09/05/13

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INTERCHANGEABLE & RELATED TERMS

Corporate SustainabilityCorporate Social Responsibility (CSR)

Corporate CitizenshipCreative Capitalism

Why is this important ?

Creative Capitalism

Capitalism has improved the lives of billions of people — something that's easy to forget at a time of great economic uncertainty. But it has left out billions more.

So they are stuck in poverty, suffer from preventable diseases and never have a chance to make the most of their lives.

Governments and nonprofit groups have an irreplaceable role in helping them, but it will take too long if they try to do it alone. It is mainly corporations that have the skills to make technological innovations work for the poor.

To make the most of those skills, we need a more creative capitalism: an attempt to stretch the reach of market forces so that more companies can benefit from doing work that makes more people better off.

We need new ways to bring far more people into the system — capitalism — that has done so much good in the world.

BILL GATES, 2008, Creative Capitalism, Time

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Social Responsibility (SR-ISO26000)

Key information:

OrganizationOverall strategy & analysisGovernanceStakeholder engagementStandard performance indicatorsApplication Level

Application Levels

Key Discussions:

In / Out ProcessCore / Peripheral

Cost / Sustainable Profits

Strategic Sustainability (Porter & Kramer)

Strategic positioning

Inside-outOutside-in

Inside-out >

Outside-in >

Inside-out

Outside-inYours?:1.2......

Yours?:1.2.

Repositioning existing CSR activities

Conceptual trends

Shared ValuesSocial Enterprise / Social Biz

Hybrid-Value Chain

Policies and practices that enhance the competitiveness of a company while simultaneously advancing economic and social conditions in the communities in which it operates.(Porter & Kramer)

Shared Value

Find and expand the points of convergence between economic and social objectives, not assume tradeoffs or the need for redistribution

These points of convergence are growing (Porter)

Points of Convergence

Achieving shared value requires new thinking, new technologies, and new approaches to management

Shared value opportunities are even greater in developing countries (Porter)

Towards Social Innovation

1. Reconceiving products & markets2. Redefine productivity in value-chain3. Enabling local cluster development

3 Strategies

• Delivering unmet needs of the society.• Leveraging firm’s existing core capacity.

Examples• Vodafone’s M-PESA in Kenya, mobile banking/agro info services. 10 million customers, processing value of 11% of GDP.• Thompson Reuters’ mobile agro-information systems for farmers, resulting in 2 million farmers as customers while increase 60% of their productivity.

1. Reconceiving products & services

Examples• Wal-mart has saved 200 million in cost via reduction of packaging and transportation distance.

• Johnson & Johnson has saved 250 million in health care cost through employee wellness programme investment.

2. Redefine value-chain productivity

Thai Examples

• BangChak’s Community Gasoline Stations

• DTAC’s Agriculture SIM

2. Redefine value-chain productivity

• Support and investment in cluster / business ecosystem development in the firm’s strategic location.• Focus on the increase in efficiency, productivity and innovation.

Examples• Nestle’s Nespresso set-out to build agricultural, technical, financial and logistical firms and capabilities in each coffee region, increase efficiency and stability as well as quality of local production.

3. Enabling local cluster development

Companies setup with... • Social and environmental purpose• Clear solution models• Financially sustainable • Not maximizing profit / options for reinvestment and community investment

Social Enterprise / Social Biz

NGO / Non-profit

NGO with revenue activities

Social Enterprise

Firms with strong CSR

Normalfirms

ProfitSocial benefits

Spectrum of organization types

Source: fringer.org

Source: fringer.org

Hybrid Value-chain (HVC)

BIZ SE /NGOHVC

Scalability Access / Innovation

• Coleramica + Kairos = Viste Tu Casa (12M USD, 28,000 families) • Mortgage + Developers + CSO = HVCs (7,500 homes/apartments; 100M USD)

Low-income Housing

• Aravind + Dutsche Bank = 15M Eyes Fund• Grameen + Danone = Yogurt for low-income

Health

• Amanco + SEs = Drip-irrigation systems (56M a year) • Grameen + Telenor = Grameen Phone (27 million subscribers)

Others

CONCLUSION

Corporate Sustainability

Strategic fitStakeholders engagement

ImpactInclusive & sustainable growth

Sunit Shresthasunit@changefusion.orgtwitter: @sunit