SRB mandatory for companies

by Rohantha Athukorala

Last week I had the opportunity to meet the Maldivian business delegation that was in Sri Lanka with their head of state, to sign a series of bilateral agreements with the Government of Sri Lanka. The CEO of a large resort chain in the Maldives said the climate change issues that the Maldives is battling with, must be publicised so that corporates will pay special attention to environment protection and Corporate Social Responsibility (CSR).

CSR to SRB

My mind went to the thoughts shared by my teacher Prof. Uditha Liyanage at a recent conference, where he advocated that companies must move from CSR to SRB, meaning Socially Responsible Business (SRB).

Prof. Liyanage's cutting edge thought was that CSR was incidental in nature and that the companies of tomorrow must have a more long-term perspective and for this, the underlining ethos should be strong business strategy linked to society that will make doing business good.

He also sketched out how Responsible Corporate Citizenship is in fact only the first step of the ladder and a typical organisation must upgrade to practices like Corporate Social Responsibility (CSR) and now the need of the hour is to practice Socially Responsible Business (SRB).

SRB must be mandatory

I guess this argument of Strategic Responsible Business (SRB) must be made mandatory if we are serious about the warnings coming from policy makers in the Maldives Islands which is to become extinct due to global warming. I would take this argument further as organisations of today are in fact financially stronger the countries due to the economic meltdown and natural calamities draining their resources.

If we take the works of eminent personalities in this area such as D Steven White, in his 'Global Economic Entities of the world', he says that eight of the top 50 economic entities of the world on Gross Domestic Product (GDP) are multinational corporations.

Wal-Mart is stronger on GDP than Norway and Venezuela. Shell is larger than Saudi Arabia and Argentina. Exxon is bigger than oil rich Iran and Thailand. GM is larger than Denmark. British Petroleum is ahead of large economies such as Greece and Colombia while China National Petroleum is way ahead of Finland, Greece, Malaysia, UAE, Portugal, Hong Kong and Singapore.

Now the question is what components of these large oil companies contribute to protecting the environment and society with Socially Responsible Business (SBR).

Sixty-four percent

If we analyse this data we see that 64 percent of the top 175 economic entities of the world are corporates that include big names like Apple, Toshiba, BMW, Aviva, Tesco, HSBC, Nestle, ATandT, Samsung and Ford. Hence it is very clear that these organisations have the power to set a new agenda to the world as they understand the ground realities better.

But, the question is will this new shape of Socially Responsible Business become a reality given the global economic melt down and the shrinking purchasing power of consumers.

Another argument that can be pursued is if organisations such as the United Nations can tap into the experience of these companies when deciding on the new world order for Socially Responsible Business (SRB), the world might be a more conducive place from an environment and social front.

From a Asian front, companies such as Toyota valued at $221,760 m in GDP happen to be larger than economic entities like Egypt, Israel, Ireland, Chile, Philippines, Pakistan, Kuwait and even New Zealand which points to the importance of a company such as Toyota to be more involved at policy making bodies like ASEAN and SAFTA. I guess the launch of the Prius brand by Toyota the lowest carbon emitting automobile, is the first step in this new direction for Socially Responsible Business (SRB).

Companies in the UN

If I may cite a statement made at the last conference on Global Compact, the Secretary General of the United Nations mentioned that one day the United Nations will consist of the top companies that will give leadership to the world than just countries. I feel this statement stronglyholds ground from an environment and social front if one is to practice Socially Responsible Business.

The million dollar question is will the top economies of the world allow corporate CEOs to occupy seats in powerful policy making bodies. I guess time will tell us how this new thinking comes to light.

If I may quote one of my Harvard University lecturers - Marty Linsky, he said that we must now move away from best practices to the next best practice, we must move away from developing solutions to trying out experiments, we must create chaos to come out with out-of-the-box thinking to run our organisations.These words of wisdom very clearly spell out that a new ethos of working will have to come to play if we are to save countries like the Maldives that is threatened by global warming that originates from socially irresponsible companies and nations.

But for this to happen, we have to get the top business of the world into the system so that words can turn ideas to action on the ground. I believe it is only then, that Socially Responsible Business can really surface in the new world order.

Next step

Given that Sri Lanka is also a small economy which is around 60b dollars and on the fast track development agenda some of the key actions could be as follows:

1) We must move the current Best Corporate Citizen competition staged by the premium business chambers to Best Socially Responsible Business (SRB).

2) Develop an architecture for SRB on the areas of governance, stakeholder engagement, transparency and responsiveness.

3) Sri Lanka must work closely with the top 16 percent corporates of the world and attract them to come and set up manufacturing bases in the new industrial estates but on the premise of Socially Responsible Business, just like what Cargills have done with their Food City supermarket chain.

4) We must attract the carbon credit business to Sri Lanka from the Scandinavian countries.

At present this funding is directed to Indonesia.

5) May be we can showcase our industrial strategies such as Ceylon Tea - Ozone-friendly tea and the apparel branding theme on Sri Lanka being an ethically manufacturing country so that we can take leadership on this front on the global stage for SRB.

6) Carve out an operational architecture on Social Responsible Business and include this in the National Budget of 2014 with specific financial and service support to the SME sector.

7) Develop a mechanism to evaluate the corporate and SME sector on this new way of doing business on SRB.

The author is an alumni of Harvard University (Boston).