As aptly captured by Time magazine, 2011 was the 'Year of the Protestor.' From the Arab Spring to the UK riots to the Occupy Wall Street (OWS) demonstrations, 2011 witnessed an outpouring of popular discontent aimed at governments and businesses alike. But while OWS dominated headlines here at home with its anti-capitalism message, a quieter, but just as transformative story was taking shape in parallel: that of businesses leading the charge to make the world a better place for the majority. It is a variety of capitalism that would have been fundamental to Adam Smith but is exceptional among capitalists in the 21st century.
With little fanfare, corporations are responding to social challenges - from poverty, to environmental degradation and access to technology. 2011 may one day be remembered as the year when CEOs began to address many problems of society and the year when sustainability joined profit as a driving force of decision making in corporate boardrooms and value creator for corporate stakeholders.
Below are seven influential actions in 2011 that captured this emerging shift in business' relationship with society and caught my eye. With Rio +20 taking place this summer, look for the trend to continue in 2012.
1. Michael Porter and Mark Kramer's Creating Shared Value
The leading voices encouraging businesses to embrace corporate social responsibility (CSR) over the past two decades, Porter and Kramer published perhaps their most influential research to date in 2011. Their report is a pragmatic "how-to" for companies to integrate social challenges into their corporate fabric and thereby increase profits, shareholder value and long-term sustainability for their businesses.
2. Making the Business Case for Social Responsibility
Until this year, the economic benefits of incorporating sustainability in business practices remained largely unknown. As a result, CSR has been seen mainly as a PR tool, helping drive brand imaging. That is about to change thanks to two new Harvard Business School studies. In one study, three Harvard professors showed that over the last eighteen years the stock performance of companies that embraced environmental and social policies greatly outperformed similar companies that did not have the same ethics. Another study revealed that companies that successfully engage in CSR benefit from cheaper bank loans and higher levels of investments.
3. Rethinking the Role of Business
Calls for transforming business are coming from CEOs themselves. In an influential book published on the eve of Harvard Business School's 100th anniversary, business leaders across the world describe their visions for creating a more sustainable capitalist system by transforming their businesses into models of social responsibility.
4. Nestle: Encouraging Sustainable Agriculture
Nestle is one of the first major companies to embrace Porter's Shared Value Concept across its entire operations. In 2011, it operationally launched Nescafe Plan, a $331 million global initiative to boost productivity, sustainability and incomes of millions of farmers across the world. This year alone, they planted 4 million coffee trees in Columbia and began mentoring 10,000 cocoa farmers in Indonesia, the third largest producer of cocoa in the word.
5. Vodafone: Leveraging Cell Phones to Empower Women
Earlier this year Vodafone trained a group of women in Qatar, many of whom were never allowed to hold a job before, to operate their own Vodafone shop. The program is the first of its kind in traditionally conservative Qatar and the greater Middle East, and has empowered its owners and their customers to become more economically independent. In Egypt, Vodafone helped increase female literacy rates from the national average of 70% to 98% in the village of Siwa. These are just two of the dozens of projects within a larger global campaign launched by Vodafone, Hillary Clinton and the United Nations to empower women across the world.
6. GE's Ecomagination
A division of GE, Ecomagination, is leading the charge in providing finance for start-ups developing clean technologies and infrastructure. Over the summer, GE awarded its first Ecomagination Challenge Awards, a contest that will distribute $200 million to innovative start-ups. Going even farther, GE also established a $20 million fund to scale and commercialize the products identified by the challenge. The contest has turned the traditional R&D model on its head - moving energy and infrastructure research away from labs of governments or large companies into the outside entrepreneurial community.
7. Dow Chemical: Revitalizing Michigan's Battered Economy
Earlier this year, the US Small Business Administration partnered with Dow Chemicals and other businesses to establish a $130 million investment fund in Michigan that "will seek investments that would create jobs, diversify the state's economy and generate a profitable return." Dow's $15 million investment represents a growing trend of businesses partnering with Governments to address investment short falls in everything from infrastructure to small businesses. The CEO of Dow is encouraging other companies to pool their financial resources to help create jobs across the country, a move that will benefit companies, cash-strapped governments and ultimately, American workers.
So, as we enter 2012 perhaps we can be grateful for those corporations and individuals who have acted for the improvement of our society for all. As we enter an election year where the theme will be to divide us, it might be worth remembering that those being demonized are in many cases part of the solution not the problem.
Lynn Forester de Rothschild is CEO of EL Rothschild, LLC and the co-Chair of the "Better Values, Better Markets" Task Force at the Henry Jackson Society in London. You can follow her onFacebook, Twitter, and at Ldereport.com.
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