01 June 2010

How Do We Know if Businesses are Doing Good?

For some time now I have been trying to make a greater effort to listen to and interact with folks from the private sector who say they are interested in international development.

This is a set of people who I am not familiar with (I have never worked in the private sector) but a set that holds several of the keys to accelerating and decelerating global development.

The week before last IDS organised a public event at the Brighton Festival, a month long interaction between artists, scientists, and the general public. We invited Chris Davis from the Body Shop and Kate Harrison from Comic Relief.

Then last week I went to a Creating Shared Value Forum sponsored by the International Business Leaders Forum (IBLF) and (gulp) Nestle.

Chris Davis of the Bodyshop basically said that businesses were making am more positive contribution to society, that this was being driven by consumers, and that governments needed to do more to incentivize businesses towards more positive social and environmental outcomes, by for example investing in the start up costs of green technologies, and by incentivising differential maturation of company shares. He also said he wanted corporate social responsibility to engage more with climate change. He said the Body Shop was maintaining its commitment to doing good--but when I asked how the general public would know that, he did not have a ready answer. Admittedly this kind of credible, transparent signalling is difficult to do, but if corporations really want to build trust, this is what they need to do.

I went to the IBLF/Nestle meeting because I was curious. Ten years ago I would not have gone--had things changed? Reports consulted ahead of time, e.g from the Boston College Centre for Corporate Citizenship suggested yes. Nestle have moved from CSR (Corporate Social Responsibility) to Creating Shared Value (CSV). CSV says that for Nestle to be successful in the long run it "must consider the needs of two primary stakeholders at the same time: the people in countries where we operate and our shareholders". The company has aletered its articles of association to reflect these changed aspirations (although I have not checked it). The company seeks to invest in the overlaps of interests in these two areas. Nestle have identified water, nutrition and rural development as the 3 areas where this overlap has the greatest potential.

The conference was a disappointment--its clear that the organisers are out of touch with the cutting edge of developments in these areas in terms of the questions they posed and, in some cases, the panelists they invited. Moreover the idea of CSV seems to be "we will work in the overlaps where they exist" rather than "we will work to expand the areas of overlap".

Michael Porter of the Harvard Business School was present and characterised CSV as the next stage of capitalism--a way that businesses can rebuild trust after the financial crisis.

I was in a session on nutrition, and suggested that businesses could do the following things to advance nutrition:

Non-food businesses, helping the nutrition community in
  • Learning--about scaling up, about messaging
  • Linking--people to central strategies through ICT innovations (Nutrition Watch)
  • Leveraging--helping nutrition leverage non-nutrition resources
  • Leading--helping develop programmes for nutrition leadership
Food businesses should
  • Focus less on the Billion Bottoms (overweight) and more on the Bottom Billion who are hungry.

  • Unlike Big Tobacco, Big Food can actually produce healthy as well as unhealthy things. There is a real gap in the market for a Body Shop or John Lewis good corporate citizenship model of food production and processing.
But I was left with the same question I asked at the Brighton Festival--how do we know if CSV is causing Nestle to do anything differently?

Until independent accountability and transparency indicators are developed, we don't.

3 comments:

Al said...

I think my approach is simpler: ask a business consultant if a business is doing well. Kidding aside, the article makes valid points on how to answer that question with a bird's eye view.

california llc said...

Apparently since 2008 its never too safe anymore to just simply rely on a business consultant's view of how a business is doing. Remember S&P's perception of the Iceland market? Only to crumble big time.

Hannah Wilson said...

Texas corporation is very strict when it comes to its business process. They make sure that they monitor every progress, so that they'll be on track on where they're at and how their business is doing.