The disparagingly insidious view on charity and social investments by business

Making money is different from investing money for larger good

I have always found it insanely ridiculous when well attired successful business persons, either holding very senior positions in corporate echelons, or more often than not, being leading dudes with more-wealth-to-flush-than-can- manage private equity superhero or their equally similar investment banking counterparts, say in public: “We are not about CSR. It is different from business and profits. We are here for making profits. We have our investors and shareholders to answer. Don’t even assault our moralities by telling us that sustainability and business core competency connect with social issues makes sense! Bottom of pyramid (BOP) is a farce. We can’t make money where people can’t afford to pay such that there is exponential return!”

The rambling goes on, outrageously silencing the lone voice, who displayed the courage to ask such a  BOP/social investment question to an investment savvy financial access and success  laden “business exemplified icon”, in a recently concluded conference on entrepreneurship.

What business and investment icons don’t understand

The historical assumption made by the well offs (and that includes the growing middle class) states that social discord and environmental degradation is an eventuality worth suffering to ensure double digit growth and economic returns, and as such is an external factor to business and commerce.

It’s true that if one decides to factor in all the social and environmental costs of doing business or running an industry into the equation, you would never ever have a product or a service ready for market. So essentially, you move on, believing in efficiency, productivity, speed and returns, above everything else, with the hope that the welfare state model will take care of societal anomalies and malaise through your tax payments and other levies. The more money you make, the more tax you pay, the more insidiously unaware  you become that you (the typical business icon/investment hero) are the cause of most of the havoc we see today globally in terms of disenfranchisement, discord, diseases, disadvantage and death. Call it 5D if you like management jargon!🙂

(On an aside, someone made an interesting point the other day: “Humanity is all about competing to ensure who dies later and who dies first!”

Indeed, 5D is a very harsh comment. But without doubt the true reality which we all face today. Coming to the earlier question of ‘can you manufacture/produce anything at all?’,’ the answer lies in have reasonable (and  not runaway ambitions ) for growth and making money, such that we are able to market our products and services with a clear conscience, knowing fully well that we are not worsening the already pathetic living and working conditions of the consumption class. And this is where BOP investments demonstrate their true meaning. That of selling at a price point which BOP communities can afford and more fundamentally selling a service or product which is need based and not advertising influenced or economic growth dogma driven!

(Would social enterprises of today also become the runaway double digit exponential growth corporation of tomorrow? Hopefully not, but if they are driven my venture funds and private equity investments, they certainly will! Please note Microfinance as a case in point…)

So, to finance professionals of all kinds, know that patient capital and patient returns is the only way to ensure that your investment does not create material harm on unsuspecting souls. All mainstream investments will need to have a growing component of socially responsible bottom of pyramid investments to eventually neutralize the social discord and tilt the balance more in favor of inclusive economic growth.

So let me end this peace with a teaser:

Is a green building really green?


Do corporations really believe in sustainability?

I believe the jury is still out! We are a long wait away from sustainability thinking achieving a semblance of seriosuness and sensitivy. Few Pointers:
– management does not begin the day with discussing sustainability and profits together, the two are still disjoint and severly disconnected. – a corporation’s approach to working with not-for-proft partners still hinges squarely on charity, making the NGOs more dependent on a non-sustainable donor driven future.
– Poverty alleviation, micro economic activity, livelihood generation, environment protection thus become inmpossible to tackle since the system is pitched aginst them.
– Ditto, many other social issues.
More later…

Location of sustainability function in a corporation?

The trend is to locate the sustainability vertical in the corporate affairs and / or communications function. While this is a good move when a company is in the process of setting up its sustainability practice and needs to communicate internally, externally and to the Board it’s ongoing efforts in seeding a social and environmental quotient, it’s detrimental in the long run to continue to preserve this location. As sustainability moves from philanthropy to a core business competency, it needs to be a seperate function with its own evangelist team and sustainable business verticals.

Are social sector skills relevant to the corporate sector?

This debate emerges when students keen on a career in sustainability and community work wonder if it’s better to move from corporations to NGOs or the other way round. The majority view leans in favor of business skills as more important than skill sets of NGO employees. So the overarching view is it’s all right to move from corporations to NGOs.

While true in some cases, this is not universal. Moving from community and issue based work to business jobs many a times is more rewarding. The multi-stakeholder relationships which a NGO manager deploys, the management of issues and solutions and corporate social strategy would not be possible without a grassroots mindset.