March 24, 2014
From Lagos, Nigeria to Sao Paulo, Brazil; from one thriving, textured, expanding city to another: it was quite the geographic jaunt. I made the trip last week for the 8th annual GIFE Congress - a vibrant, multidisciplinary gathering of Brazilian social investors and heads of civil society organizations, academics, public policy makers and more. It’s the largest meeting of its kind in the country, and assuredly the most impactful.
I’m a Yale World Fellow, part of a network of more than 250 global leaders working innovatively toward positive change across the world. In that capacity and as co-founder and managing director of Alitheia Capital (a fund management and investment firm based in Nigeria), I sat on a panel on philanthropy and impact investment on the first day of the GIFE Congress.
Touching down in Sao Paolo before the conference, I expected to see and experience a metropolis similar to Lagos. While stories of booming economic growth paired with unfair economic and service distribution ring true for both, the infrastructure and development (at least aesthetically) of each city could not be more different. In fact, stacked next to Lagos, Sao Paolo is a developed world city.
But there was something familiar about the narratives and debates echoing the halls at GIFE: stories of the blending and blurring of lines between social businesses, non-profits and corporations. Inspired by the conversations, I want to share my thoughts with you here.
The general perception of social investment is that it’s simply “charitable work.” Corporations are expected to place their economic and social objectives in separate silos, the former taking priority over the latter. Social objectives are rarely executed at any meaningful scale and in fact usually relegated to the dark cellar of the ‘Corporate Social Responsibility’ department where they are not expected to have any impact whatsoever on profitability.
I simply disagree with this way of doing business. ‘Social-ness’ should be integrated into the fabric of how a company makes money – it does not need to keep the company from achieving its financial and economic objectives. Rather, when approached correctly, it should enhance the longevity of the company, and its ability to achieve more while ‘Doing Good.’ In other words, in designing products, distribution channels, value chains, business models and so on, a business should de-facto consider how its efforts in these and other areas can engage and/or serve the broader population - rather than just the privileged few.
Hearing and participating in the discourse on the Yale World Fellows sponsored panel (focused on strategies for driving inclusion in emerging economies) threw the idea of integrating ‘social-ness’ into a corporate’s being even more sharply into the light. Many emerging economies are growing at admirable rates, driving ever-larger wedges between the rich and the poor. In my work, I see so clearly that one of the drivers of that inequality is the staged, inauthentic way that businesses address social issues. “Let’s focus on money first, and return later to deal with the necessary ‘CSR,’” they say. Not only is it a shortsighted take on doing business, but they are also missing out on myriad possibilities and growth areas.
I expect my ‘purist’ colleagues to respond by calling this is a slippery slope. The more we blur the lines, the less likely it is that businesses will remain accountable and therefore the less likely they are to truly consider social-ness. I also expect my hard-nosed business colleagues to protest that they are not running charities. Let us be clear. My recommendation is not that businesses become charities. Instead I suggest they come to realize that businesses that have a social conscience are more inclusive and sustainable. They are ‘Good’ businesses and history shows us that such businesses tend to stick around much longer than their peers. As my GIFE co-panelist, Dr. Richard Foster of the Yale School of Management, said during one of our rich conversations: “It pays in the long run to run a business that does the right thing…”
My colleague and 2011 Yale World Fellow, Marcelo Furtado, illustrates this nicely with a case study of one of his campaigns during his time as the head of Greenpeace Brazil. Marcelo and his team mapped deforestation in the Amazon and identified that soya plantations were the new drivers of deforestation. In seeking to stop this trend, the team at Greenpeace approached the buyer at the top of the value chain, rather than the sellers of Soya in the Amazon. In its use of soya to feed chickens for its famous chicken nuggets, the company was contributing to deforestation. Instead of (like so many companies) balking at the find and refusing to adjust, McDonald revaluated its soya value chain and ‘encouraged’ its suppliers to change behavior to seek more environmentally friendly sources. This did not just transform McDonald’s value chain. A large swathe of the retail industry followed suit with soya exporters finding it necessary to respond to the new market standards set by a trendsetting company.
This way of doing business does not need to be reactionary, or happen only after a major reputational hazard. When ingrained in the development of a company’s business model, value-chain, practices, norms and all, it it so often beneficial to the longevity and good name of a company.
Businesses considering Corporate Social Responsibility simply a box to check, or perhaps a public relations necessity, would do well to adjust their mindsets – ahead of the curve.