Can Big Corporations Save Us from Climate Change?
Hope is a rare commodity in these times. Despite the growing awareness of the global socio-economic-environmental challenges, the poor economic climate is causing philanthropy budgets to come under pressure — for individuals, governments, and not least, corporations. With respect to the last, it portends the end of CSR as we know it — which could, paradoxically, be a good trend. As traditional CSR that are token acts of corporate goodwill become financially burdensome, the need arises for “a system that draws in innovators and businesses… [with] a twin mission [of] making profits and also improving lives for those who don’t fully benefit from market forces”, as Bill Gates expressed cogently in his 2008 Davos speech.
(RELATED: Read more about how millennials are demanding change in the way corporations pursue CSR.)
Since then, several big corporations have come a long way in giving us a glimpse of how aligning core business strategies with addressing social and environmental challenges is not only possible, but can generate sustainable positive impact for both their business and social bottom line.
One of them is Sweden’s IKEA. As the world’s largest home furnishings retailer, they boldly announced their sustainability strategy “People & Planet Positive” in 2012. It promises to transform their entire supply chain by 2020, so that 100% of their wood, paper and home furnishing materials will come from more sustainable sources. Although this seemed like a loss-making initiative, IKEA definitely saw business opportunity in the venture since they had planned to double revenues by the same year too.
One of these sustainable sources is Viet Trang, an impact enterprise based in Vietnam. In 2008, Viet Trang began receiving orders from IKEA to produce cushions and carpets made from seagrass without using environmentally-harmful dyeing chemicals. Viet Trang hires previously unemployed rural women who live by the coast to weave these handicraft. However, before large corporations like IKEA provided a steady demand for their products, the declining seagrass market was undermining the already meager livelihoods of the women, and also gave no incentive for locals to protect seagrass fields, which are critical to protecting the coastal ecosystem from salt invasion. Now, as a result of IKEA’s ethical buying power, local women are empowered, coastal resources are protected, and a large corporation grows its core business by aligning company values with the evolving demands of customers to save people and planet.
Watch how Impact Assessments help innovative enterprises like Viet Trang magnify positive social and environmental impact.
However, corporate attempts to “green” the supply chain are not always this rosy. Coca-Cola is one example. As the world’s largest beverage company, maintaining a supply of clean water is absolutely crucial for their production. Yet, water is also a point of controversy and criticism for the company’s brand. It was especially serious in Kerala, India, where there were complaints of groundwater depletion in the vicinity of the bottling plant. Wastewater released from the plant to the environment were also reported to have caused higher-than-permitted levels of contamination to the surrounding water bodies on which the farmers and community relied on. In the face of accusations and protests, Coca-Cola India remained undeterred in their attempts to push for sustainable manufacturing operations.
Thus Coca-Cola’s Global Water Initiative launched in 2004 evolved into the current Water Stewardship Initiative. It aimed to make the company water-neutral in its manufacturing and bottling operations, and even proved in 2015 that they had already met their target of replenishing 100% of the water used in their global sales volume. Nevertheless, critics continue to accuse Coca-Cola of greenwashing. As such, Coca-Cola cannot be content to only align their core business of beverage production with the environmental challenge of water scarcity. They, and other large corporations, need to be transparent and sincere in assessing the impact of their sustainability initiatives, so as to improve their brand image through real and sustained environmental impact.
(Related: Read more about how Shujog provides third-party, independent Impact Assessments that enhance the transparency and accountability of impact ventures.)
These are a couple of examples of corporations who are rethinking social and environmental challenges as business opportunities, and are being creative in finding alignment with their core business strategies. The very idea of CSR itself can be much more than extra costs or charity — it can be a source of opportunity, innovation and competitive advantage.
As Michael Porter and Mark Kramer concluded in a 2006 article published in the Harvard Business Review, “if . . . corporations were to analyze their prospects for social responsibility using the same frameworks that guide their core choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed — it can be a source of opportunity, innovation, and competitive advantage.” Amidst the many disappointing greenwashing CSR campaigns, hope is rising that big corporations can and must do good — not only to save the world, but also to save themselves.
Sarah Koh
Research and Programs
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
References:
https://ssir.org/articles/entry/corporate_impact_venturing_a_new_path_to_sustainability
http://www.echoinggreen.org/sites/default/files/The_Social_Intrapreneurs.pdf
http://www.value-chains.org/dyn/bds/docs/794/Sea_Grass_Final.pdf
http://oikos-international.org/wp-content/uploads/2013/10/oikos_Cases_2009_Coca_Cola_India.pdf
http://centres.insead.edu/social-innovation/what-we-do/documents/INSEADSocialInnovationCentre5912-Accenture-A-CS-EN-0-06-2014-award-w.pdf
Originally published at impactquarterly.asiaiix.com on December 20, 2016.
