Corporate Sector Leadership in Social Responsibility
S. Bruce Schearer is President of Synergos.
Thank you so much for inviting me to be with you today. It has been many years since I last visited Thailand, and here in Bangkok I find I must peer down from the tall buildings to see some of the old city that I remember still tucked in the spaces in between. The changes in the city amaze me, and I suppose that nowhere are the impacts of the global market forces and the role of business more evident.
Yet at the same time, as we all know, these market forces are having harmful effects as well. The growing gap between those who are fortunate enough to participate in the market economy and those who are excluded and marginalized is causing both pain and threat. And the great beauty and dignity of Thai culture is being weakened by these same globalizing market forces.
So this is a moment of great opportunity and crisis, one that requires dynamic leadership from the business sector. I am no expert in either business or its global corporate responsibility efforts, but I have been a close observer of these efforts for some time. So today, as you who make up the Business Group for Thai Society debate what your future activities and program will be, I thought it might be useful for me to share some of my observations from other places around the world. In particular I would like to talk about some specific examples of how businesses around the world are forming alliances to consider how they can work together to make a positive difference in the communities where their employees and customers live and work.
Let's take a look at five examples of business alliances -- where business men and women are working together on social and environmental issues in their communities. These actions are taking place all over the world, and today I will briefly describe alliances in the Philippines, South Africa, Brazil, Peru and the United States.
Let's begin the tour in Asia with a group that many of you in the room know well. This organization, Philippine Business for Social Progress (PBSP), is one of the oldest and most successful business organizations focused on corporate responsibility. As such it has served as a business collaboration model around the world for decades.
In 1970 leaders from 50 Philippine corporations came together to design a response to the worsening political and social situation. Poverty was widespread, inflation rampant and the business community was widely regarded as one of the major factors contributing to the unequal distribution of wealth. Fear may have been one of the motivations for getting together, but the business men who gathered quickly saw a way to turn a crisis into an opportunity. Fromthe very beginning, business leaders were expected to contribute not only financial resources but time commitments as well. Also, these men saw the importance of building a “learning culture” into the organization. Members brought their planning discipline and other technical expertise to the challenges that faced PBSP at its outset.
Today, nearly 30 years later, PBSP has over 170 members, nearly 300 staff members and supports viable programs in 13 provinces in the country. Member companies each set aside 1/5 of 1% of pre tax income to support socioeconomic development programs. Perhaps even more importantly, at any given time at least 50 chief executive officers are taking time out of their busy schedules to work with PBSP projects.
A core PBSP strategy is Area Resource Management (ARM). This approach involves organizing poor communities and helping them gain access to basic resources, infrastructure and social services, new skills and technologies, credit and markets.
PBSP has also established a Center for Corporate Citizenship. Its purpose is to promote the practice and critical review of corporate citizenship among the chief executive officers and top managers in the Philippines.
How else does PBSP measure its success? Here are just a few statistics that indicate the extraordinary impact PBSP has had. During its existence, it has channeled over $32 million in loans and grants. With these resources it has supported over 3,800 projects reaching nearly two million poor households in rural and urban communities across the country. During that time PBSP has worked with 2,000 NGO partners. Finally, since 1990 $40 million have been made available in loans for small and medium sized enterprises in the countryside, generating over 45,000 full-time jobs.
Two years ago, based on its success at home, PBSP's board approved plans to extend a hand to business groups in neighboring countries seeking to start similar efforts.
Now let's shift to South Africa. As you well know, South Africa is a country that has gone through a remarkable political transformation over the past decade. But ongoing challenges are taxing the new government, which is trying to strengthen their newly emerging democracy and rely on a market-based economy. Concerned business leaders in the country recognize that, as one business executive put it, capitalism is now on trial in South Africa, and its success or failure depends very much on actions taken by the business community.
In the midst of these challenges, two business groups in South Africa are providing a vehicle for concerned business leaders to work together to address some of the immediate problems that the country faces in these transitional times. They are the Southern African Grantmakers Association and the National Business Initiative.
The Southern African Grantmakers Association -- SAGA -- was formed in 1995 and already has over 50 corporate members. Its membership is growing even at a difficult economic time when levels of funding for social investment programs are dropping. SAGA is making its mark in the South African society by contributing to strengthening the regulatory environment for nonprofit organizations. It played a major role in the formulation of the Non-Profit Sector bill which was signed into law by President Nelson Mandela in November 1997. It has also contributed to building professionalism within the grantmaking community by recognizing the achievements of grantmakers in their communities and publishing Guidelines for Good Grantmaking.
Recently it is partnering with international organizations to share experiences and learn from others around the globe about the creation of community foundations, and it is working with a number of communities and businesses in South Africa to start up local examples.
Another influential group in South Africa is the National Business Initiative -- NBI. It was formed in 1994 and now has over 170 members. Working together these members have set priorities for collective action. They have chosen to focus on education, local economic development, housing delivery and local government capacity building. NBI's key strategies include working in partnership, developing training tools and guidelines so that programs can be replicated in other communities. NBI programs attempt to build an entrepreneurial culture in the communities and government agencies they work with.
In the few short years of its existence, NBI has already realized results. The overwhelming majority of South Africans need assistance with their housing requirements. NBI established a Housing Delivery Support Team which brought in private sector expertise to assist the government in responding to the housing backlog. As a result, the number of housing subsidies has increased from 200,000 in August 1996 to 730,000 in February 1998. In education, the provincial governments and NBI member companies established an Education Quality Improvement Program and are beginning to replicate the program in 50 schools. NBI has also helped train 175 Local Economic Development facilitators. These facilitators go back into their communities with educational kits prepared by NBI to begin the development process. Another program worth mentioning here is the partnership NBI has established with Deloitte & Touche and the International Republican Institute which has created a handbook on local government financial manageme nt.
It is clear that these two business associations are bringing about real change in South Africa.
Let's head now to South America. I'd like to mention two important organizations in Brazil that are affecting business policies and practices. Both are very new organizations. The first is GIFE, the Group of Institutes, Foundations and Private Enterprises. The second is the Ethos Institute.
GIFE was formally created in 1995 by representatives of 25 institutions. Many of these institutions were corporate foundations. GIFE's aim is to promote social development practices that represent innovative solutions for the improvement of life, that are potentially replicable and that contribute to the sustainability of communities. In particular, it seeks to encourage corporate philanthropy and community relations.
It has three primary strategies: to stimulate the development of new paradigms of sustainable social development, to create a national reference center on philanthropy and to offer courses and seminars to provide networking and learning opportunities.
GIFE now has 39 members. These members donate a total of $300 million in financial and technical resources for development programs and projects throughout Brazil. GIFE's core focus is on corporate philanthropy and what a corporation does in the community.
More recently another business group has emerged, called The Ethos Institute, that is concerned with internal corporate practices such a labor and environmental practices. It is worth recounting how Ethos got started.
In November 1997 a number of individuals and organizations concerned with corporate social responsibility in the Americas co-sponsored a meeting in Miami, Florida that brought together over 150 prominent business leaders from the region to discuss ways to promote social and environmental responsibility in the countries represented at the conference.
The follow-up from this meeting has been remarkable.
An informal steering committee was formed at the conference to support a network of business organizations in various countries throughout the Americas. This network is known as EMPRESA: The Forum of Business and Social Responsibility in the Americas.
Individuals on this steering committee returned to their own countries after the conference and in a few short months has begun building in-country alliances of business people who share concerns about corporate responsibility. One of these individuals was Oded Grajew, a businessman already renowned in Brazil for his work to establish the Abrinq Foundation, a world class organization focusing on the rights of the child.
He returned to São Paulo, Brazil after the Miami conference and together with like-minded business people founded The Ethos Institute. The idea has taken hold in Brazil: the organization now has over 90 corporate members.
The first programmatic priority of Ethos is to take primary responsibility for organizing a follow-up conference to the one held in Miami in November 1997. This next conference is scheduled for June 23-25 in São Paulo.
Ethos will also be developing programs to encourage shared learning among Brazilian business people by disseminating information, organizing conferences and workshops, providing technical assistance, publicizing the importance of these issues and promoting cross-sector partnerships to achieve mutually beneficial results.
Very often the vision and determination of a one or more business leaders triggers broad-based collective action. Peru, for example, in the early 1990's was in the midst of a dramatic political and economic transition. President Fujimori had ended years of close government control of the economy and opened the country to global market forces. At the same time, he brought a longstanding war with the Shining Path to a conclusion.
Business began to flourish, but poverty and lack of development remained a major problem. A group of young entrepreneurs in that country came together to develop a collective vision that would engage the burgeoning business community in stimulating national development efforts.
What has emerged is a group called Peru 2021 after the date of Peru's 200th anniversary of independence.
This group began by imagining what they wanted their country to look like by that anniversary. Specific goals have been created about what kind of schools and education levels, what kind of communities and health and food security and natural environment, and what kind of business environment and leadership. Then they conducted baseline studies of current conditions in each of these areas, and, using these, developed very concrete action plans for making tangible, measurable progress in each of the sectors.
Today, hundreds of businessmen and women are working together to transform Peru into that new vision.
Now let's move to the United States. I'd like to tell you a bit about a business group there called Business for Social Responsibility (BSR).
BSR is a membership organization for companies of any size and from any sector. It started just seven years ago when a group of 55 socially responsible business people determined that businesses needed an organization to focus on issues of corporate responsibility. Originally, these business men and women envisioned an organization that would influence public policy, but as the months wore on it was clear building consensus within the group on important policy issues was going to be very difficult. Instead, what seemed to be more important was to have an organization that could provide information on important social and environmental issues affecting business to companies who could then use the information for their own purposes.
The time was right. What began as a group of entrepreneurs who believed in the importance of focusing on social and environmental responsibility has now grown to an organization of 1400 members. Corporate members represent over $1.5 trillion in revenues and six million employees.
What does BSR do? It has many functions. For one thing, it provides resources and training for its members including newsletters, conferences and specialized studies. It has established programs on the environment, human rights and community economic development.
It provides a news monitoring service for members that summarizes relevant news articles in over 150 publications. It helps business people understand benchmarks for performance and disseminates ideas about what type of programs have worked for other companies.
BSR also holds an annual conference in November. In 1998 the conference took place in Boston. It was attended by over 850 people from 32 different countries. There were capacity-filling crowds at all of the sessions.
At the conference it launched an important new informational resource available to anyone around the world that has Internet access. It is a new web site called The Global Business Responsibility Resource Center, a $5 million project designed to help businesses get the information they need to establish responsible business policies and practices. The information on the site covers a wide range of topics from community involvement strategies to human rights and is continually being expanded. This website Center was launched late in 1998 and is still under development. However, it already contains extensive information on a variety of topics and lots of links to other useful Internet sources. Information about this Center and BSR itself can be found at www.bsr.org.
What do all of these examples of business collaboration mean for us here today? I'd like to suggest a few possible lessons drawn from the examples I've presented:
For me, the most important conclusions that can be drawn from the examples I have presented are illustrated by one more example:
In the late 1980s, the city where I live, New York, had come to be a disagreeable, dangerous place. Homeless people and street beggars were everywhere, crime had reached new highs, drug trafficking was destroying neighborhoods throughout the city, and businesses were starting to move out.
The business leaders of the city knew they had to take action. Government wasn't strong or effective enough to change the situation, nor were the private community action groups and foundations. So they joined together to form the New York City Partnership, a coalition of over 100 of the city's major businesses, with the very concrete, simple mission of making New York a great place to live, work and do business.
Today, New York is just that, and the transformation is the product of the catalytic and very substantial efforts of this group. What they did is what any business group can do: they chose a social problem whose solution would fundamentally benefit business as a whole, a problem that no one business could solve alone. And then they organized themselves and used their business skills and resources to solve the problem.
I hope these examples will be of use to you at this difficult time in Thailand as you search for ways the business sector can contribute to thee national efforts to build a strong future. If we at Synergos can be of help in anyway in providing additional information about these or other examples, we would be very happy to do so.
Many thanks again to Dr. Juree Vichit-Vadakan and to all of you for inviting me here today.