The future corporation

Gone are the days when social cause and profit orientation occupied opposite ends of a tense rope.

Today, not a few businesses all over the world are shaping up to realize their ultimate potential—to help create a sustainable world that is worthy of the dignity of every person. The enterprise’s motivation is not just to increase shareholder value but to improve the quality of life of a wider base of stakeholders such as the poorest of the poor.

Now that sounds grand. By poverty measures alone, almost half of the world is poor (about three billion). In 2006, three in every 10 Filipinos were classified as poor. How can businesses contribute to positive social changes?

Global social advocacy campaigns have helped communicate the very clear message that every sector—businesses not excluded—must act to help solve the ever-growing problems of our globalized community. The United Nations’ Millennium Development Goals is an example of a worldwide movement to create concrete solutions to our social woes, galvanizing nations toward a common direction.

More than the global economic crisis, threats posed by climate change seem to mobilize all, including responsible businesses, toward securing a sustainable future for all.

Engagement rather than polarization is the better response to solving our shared concerns. More and more, we see civil society organizations working in partnership with businesses to devise solutions to such problems as global warming, poverty, diseases, and ignorance and illiteracy. Decades ago, this was unthinkable.

This brings us to the emerging expectations of customers on what we can call the future corporation.

The future corporation is one that does not only cater to the needs of the customers. Corporations in the future will be preferred and valued because they are environment-friendly, they help the poor get out of poverty, they are great employers looking after the welfare of their workers, and they value communities as business partners not just consumers of their products. In short, they are responsible corporate citizens seeking not just profits, but double or multiple bottomlines from their operations.

Do such model companies exist? In the Philippines, there are admirable stories of companies that spend huge amounts of money investing long-term in sustainable products, services and processes. A local company replaces its technology infrastructure with solar- and wind-powered devices. It utilizes sari-sari stores as its primary marketing channel, in the process creating micro-entrepreneurs out of the common Aling Juana. These strategies not only made the company one of the most profitable firms in the Philippines; it has been recognized with global awards for its innovative business model.

Many companies are sharing their business with communities, building capacities of micro-businesses, and even turning them into their own competitors. These enlightened businesses are “creating space in the market” for smaller entrepreneurs. Many others are redesigning their products as green or eco-products; hard on the pocket at the onset, but forward-looking and more viable in the future.

Can micro-, small- and medium-scale enterprises (MSMEs) do the same? Members of the Philippine Business for Social Progress (PBSP) believe so, and this is the thrust of PBSP’s Enterprise Development Program.

The first of its kind in promoting corporate social responsibility (CSR) in Asia, PBSP has long supported MSMEs. It currently has a credit facility worth P700 million for enterprise development. PBSP has improved the productivity of SMEs and created jobs by lending capital amounting to P3.5 billion to SMEs. PBSP also gives professional business advice to MSMEs through its Business Advisory Program (BAP).

Beyond access to credit, improved productivity, and job creation, PBSP members also want MSMEs to become socially-responsible businesses.

At a recent PBSP forum, MSMEs demonstrated that they can be profitable, productive, and at the same time, stay the course of pursuing their social causes. MSMEs achieve double or triple bottomlines.

The Atlas Mining Cooperative for the Handicapped in Cebu initially employed 15 deaf-mutes and amputees to make wooden armchairs. Facing operations problems, Pacific Traders and Manufacturing Corp., a PBSP member, lent its operations manager to give volunteer advice to the group under the PBSP-BAP. The results were improved operations, increased production capacity, profitability, and more jobs created for the differently-abled.

In Davao City, once idle hands now turn garbage into fibers of handmade paper used to produce lampshades, frames, and other decorations, which are now exported to Europe, Japan, and Canada. The raw materials come from heaps of durian and other fruit peelings. The product was developed in the kitchen of Betty More, the enterprising executive director of non-government organization (NGO), KATAKUS. PBSP assisted KATAKUS through expert advice on marketing, production management, and leadership training. From a measly capital of P5,000 borrowed from another NGO, KATAKUS’ sales reached USD 28,000 in 2007.

(More about MSMEs balancing their social cause with profits in next week’s column).

Rowena Basco-Sugay holds a Master in Business Administration degree from the University of the Philippines. She writes about corporate citizenship, social enterprises, and culture-in-development, and is a manager at PBSP. PBSP may be reached at pbsp@pbsp.org.ph.