SRB mandatory for companies?

Last week I had the opportunity of meeting 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.

One CEO of a large resort chain in the Maldives said the climate change issues that the Maldives is up against must be publicised so that companies and nations become serious on environment protection and CSR.

 CSR to SRB

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

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

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).

Bigger than countries?

I guess this argument of Strategic Responsible Business (SRB) must be made mandatory if we are serious about the warnings coming from policymakers like in the Maldives, which is in fact said to become extinct due to global warming.

I would take this argument further as organisations of today are in fact financially stronger than countries due to the economic meltdown and natural calamities draining their resources.

If we take the works of eminent personalities in this area like 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 like 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)?

64% companies

If we dig deeper into this data, we see that 64% of the top 175 economic entities of the world are corporates that include big names like Apple, Toshiba, BMW, Aviva, Tesco, HSBC, Nestle, AT&T, 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 stronger.

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

May be another argument that can be pursued is if organisations like the United Nations must tap into the experience of these companies when deciding the new world orders for Socially Responsible Business(SRB) organisations, may be the world might be a more conducive place from an environment and social front.

From a Asian front, companies like Toyota valued at $ 221,760 million in GDP happen to be larger than economic entities like Egypt, Israel, Ireland, Chile, Philippines, Pakistan, Kuwait and even New Zealand, which sure points to the importance of a company like Toyota to be more involved at policymaking bodies like ASEAN and SAFTA.

I guess the launch of the Prius brand by Toyota on the positioning of being the lowest carbon emission 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 would consist of the top companies that will give leadership to the world rather than just country entities.

I feel this statement holds ground strongly 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 this to happen for corporate CEOs to take policy seats in powerful policymaking bodies? I guess time will tell us how this new thinking comes to light.

New world order

If I may quote one of my Harvard University lecturers, Marty Linsky, he said that now we must 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 spells out that a new ethos of working will have to come to into play if we are to save countries like the Maldives, which is threatened by global warming originating 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 steps

Given that Sri Lanka is also a small economy of around 60 billion 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 SBR on the areas of governance, stakeholder engagement, transparency and responsiveness.

3.Sri Lanka must work closely with the top 16% 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 has done with its Food City supermarket chain.

4.We must attract the carbon credit business to Sri Lanka from the Scandinavian countries. As at now, this funding is directed to Indonesia.

5.Maybe we can showcase our industrial strategies like Ceylon Tea – Ozone Friendly position and the apparel branding theme on Sri Lanka being an ‘Ethically Manufacturing’ destination so we 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 was presented with the Exemplary Leadership Award for 2012 at the Association of Business/Global Education Congress and the Chief Marketing Officers Council of Asia for his outstanding service in the public, private and international public sectors. He is an alumnus of Harvard University, Boston.)