Leanda Lee
Major transformations in the way businesses interact with their communities and the acceptance of responsibilities to all stakeholders have been spearheaded by major disruptions, critical incidents and tipping points.
Not having always been the case, we now endorse the idea of a company having social responsibilities (CSR). In past times, laws have been in place to safeguard a company’s primary responsibility – only to its shareholders.
CSR has become an inescapable priority for businesses in pursuit of political legitimacy and community-based license to operate. These benefits of CSR, along with justifications around moral obligations and securing insurance that a good reputation provides, have one great failing; they are based upon the belief that there is a tension between the interests of business and those of society. This perception is not so different from the worn-out idea that philanthropy is a tax on shareholders that earlier laws seen in some jurisdictions were to protect against.
It took community outcry against some horrific incidents and crises before firms started to understand their impact on the world. Minamata disease (mercury poisoning from industrial wastewater), Nike’s sweatshops, the Bhopal Disaster, Exxon Valdez oil spill – these cases are repeatedly put forward to impress upon corporates how bottom line profitability comes with broader responsibilities.
The scope of responsibilities has increased over time, from the rights and welfare of employees, environmental impact, to abuse of natural and human resources up the supply chain. Sustainability is to be managed along with profitability. The triple bottom line (social, environmental and financial) are now important measures required by many jurisdictions, investors and customers in strengthening corporate governance.
We have thus seen a convergence of corporate and social interests, and CSR has become a source of opportunity, innovation and competitive advantage: Fair Trade Certification, Organic Cotton Accelerator, B Corporations come to mind. Responsibility to the broader community can become part of the business strategy, integral to the business model and therefore sustainable in the long term as it defines corporate performance.
In Macau, Venetian’s SME program supporting local enterprises to deliver products and services to set specifications, quality and timeliness exemplifies this. Cynically, the program can be viewed through the earlier prism of complying with governmental pressure to ensure operational legitimacy. Offering a system of training, financial and technical support to small local business, however, has immediate and long-term impact on the corporate’s own supply chain efficiencies.
There is yet another major transformation upon the horizon. We have seen the evolution of the scope of corporate responsibility from shareholders only to any impact starting at the top of the supply chain (raw materials) to the point of after-sales service to the customers. The new wave of pressure now focuses on the other side: downstream, both figuratively and physically.
The profitability that our consumption enables creates waste and environmental destruction that has been palmed off to governments, NGOs and consumers to solve, and innocents are caught in the detritus. These groups are losing the war on clearing up after the consumption that has enabled convenience, wealth creation and pulled others out of poverty: herein a moral and systemic dilemma.
The overfilled landfills constitute a tipping point; ferry accidents between here and Hong Kong due to flotsam may be some of the critical incidents; and should we continue not capturing and retaining in our economies the value of our resources – both natural and economic – we shall start to see major disruptions to the way we live, work and play.
The War on Waste is gaining traction because the tipping points, the critical incidents and disruptions are becoming visible. One campaign in this war is #PlasticFreeJuly. This year over a million people from 130 countries will say no to single-use plastic thus helping to expand the sights of corporate responsibility downstream.
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