Corporate Social Responsibility is a term; we need to explore more and more. The term CSR itself came in to common use in the early 1970′ s although it was seldom abbreviated. The term stakeholder means those impacted by an organization’s activities, was used to describe corporate owners beyond shareholders from around 1989. One of the majorities of CSR projects are established in Africa. A more common approach of CSR is through the giving of aid to local organizations and impoverished communities in developing countries. Some organizations do not like this approach as it does not help in building the skills of the local people, whereas community-based development generally leads to the core issue and strengthens the basic mechanism or simply train them to earn a living. That’s where the term; ‘Creative Capitalism’ works. Its works on the simple concept; fortunate helping the less Fortunate.
Capitalism has improved the lives of billions of people – something that’s easy to forget at a time of great economic uncertainty, but it has left billions more. These are the people who have great needs, but they can’t express their needs in a way which may matter to markets. Markets seem to avoid the needs as it doesn’t bring profit and hence poor always tends to remain poorer. It’s where International Non Governmental Organizations come to play and try to make a difference. But today Corporate Social Responsibility seemed to break that ‘tax free’ attitude and has come for the betterment of the World as more World Business Leaders tries to come forward with their aim to improve the smaller parts of the World where there presence is left.
Even if there are many allegations to the fact that CSR is for branding and bring a good image to the members of the public as well as to the stakeholders, but there are always positive things attached to it. CSR contributes for the betterment of atleast few marginalized sections of the Society. Well, in practical the number far exceeds our imagination. For example Mittal Steel at Kazakhstan owned and operated a Steel Plant and to make the place better Mittal Steel also renewed the tramways, the power plants, the hotels and the Stadiums and developed Social activities such as children’s camps. This was a need for the ordinary people of good infrastructure, good education. A dream of theirs filled by one Corporate through their CSR. That’s development. Today the Steel plant runs efficiently
and Mittal Steel is able to positively impact the livelihood of the community more broadly while continuing to improve the plant. This is what good CSR is all about. Helping the targeted communities and also doing Business. A win and win situation for both the community as well as the Corporate.
Now, when Mr. William (Bill) H. Gates, Chairman, Microsoft brought out the concept of ‘Creative Capitalism’; little did he think that it will bring a new wave throughout the World. Creative capitalism is not a short term goal. It’s something, which we have planned for long term management of the issues, which we are addressing now. Hence the results may not show its flavor in the present as we still believe in our notion of giving relief to the persons who are in urgent needs, but will give dividends in the future. The problem lies in the fact that we think of providing fish to the people rather teaching the ways to catch fish. We have to do the latter and that’s what Creative Capitalism is all about. Almost one billion people live on less than a dollar a day. They don’t have nutritious food. They don’t have proper house to live in. The amazing innovations that we are proud of i.e Computers, Good Food, Technologies etc generally passes by. They remain in the same place with no growth. Yet, when we talk about CSR, we talk of elevating the lives of those who are
not so much fortunate and try to show them light.
The best part of creative capitalism is; it’s not about doing more philanthropy or asking companies to be more virtuous. It’s about giving them a real incentive to apply their expertise in new ways, making it possible to earn a return while serving the people who have been left out. As, Mr. Gates point out that in Microsoft they used corporate philanthropy to bring technology to people who can’t get it otherwise, donating more than 3$ billion in cash and software that solves problems and recently they had realized that they aren’t bringing enough of that expertise to problems in the developing world. So, Microsoft is working on projects like visual interface that will enable illiterate or semiliterate people to use a PC instantly, with minimal training. Hence they are contributing.
So, even if Creative Capitalism is becoming a major part of CSR, yet there are objections. According to the Chittagong University Economics Professor, Muhammad Yunus, the Father of Micro-credit and a believer of ‘Social Business’ states that the word ‘Creative’ means the very essence of progress. So, capitalism has to be created too. But the question lies in the fact that; if this creativity should be put in the present restrictive format and define newer boundaries for capitalism. We simply need to look at the term in a new way.
A man who states that ‘Social Business’ Enterprise is better than ‘Creative Capitalism’
There are reasons for it. It’s always in the minds of the people that can an organization make profits and contribute to social development as well? It’s an issue as, when one thinks of Social Development, one have to san profit. Inspite of lots of emphasis on CSR, there is a dilemma as to exactly how much we can comply our own profits for the social upliftment of people. Some critics of CSR have claimed that it is distraction from the essential activities of a business. Others struggle over constitutes appropriate CSR activities, taking into account the multiple and sometimes conflicting, expectations of customers, employees, stockholders and community members.
The CSR framework comprises of Employees, Customers, Stockholders, Environment, Business Colleagues, Communities and Society. The outcomes of the Corporate Social Responsibility are Stakeholder’s Trust, Organization’s reputation/rewards, Financial Benefits, Competitive Advantages, Business Leadership and Community Growth.
Corporate Social Responsibility has become an inescapable priority for business leaders across the globe. Governments, activists and the media now hold companies accountable for the social consequences of their actions and favorable publicity is often bestowed on companies with CSR programmes. But the fact lies as to how we can do a better CSR. Is it creative Capitalism or Social Business that will be given a priority? Bill Gates observes that global economic conditions have been improving, but that not everyone was sharing in the benefits. He argued that market forces typically focus the most energy on solving the problems of the relatively well-off. For example, treating baldness in the developed world receives more attention than curing malaria in the developing world!
Talking Social businesses are designed exclusively to maximize benefits to customers, rather than maximizing profits. Social businesses serve social needs in a businesslike manner. Such a business is sustainable and makes a profit, and the investor gets back the capital he invested, over time. Profits in a social business are entirely reinvested to expand the existing social business or start new ones. A charity dollar can be used only once, but a social business investment dollar is recycled indefinitely. Current tax laws offer tax benefits to charitable organizations. New tax laws are needed that put social businesses on at least an equal footing with charities.
While CSR is giving ready made food to the people, but creative capitalism deals with things wherein we teach the target group how to cook food. This gives much more credibility to the idea of helping the needy. Slowly, if this method is adapted then it will also benefit the corporate. Basic idea being educating the masses and sharing knowledge to help the needy so that they can make their own living.
Even employment in different forms can be generated. Later the corporate can generate their brand as well and make profits. According to Bill, he observed that global economic conditions have been improving, but that not everyone was sharing in the benefits. He argued that market forces typically focus the most energy on solving the problems of the relatively well-off. For example, treating baldness in the developed world receives more attention than curing malaria in the developing world.
Now let us take the example of “Social Business”. It is the use of money, without any profits. If we take the example of Grameen Banks then the following points are to be considered.
Now let us take the decisions as to how the system works here:
a) We shall follow and advance the four principles of Grameen Bank — Discipline, Unity, Courage and Hard work – in all walks of out lives.
b) Prosperity we shall bring to our families.
c) We shall not live in dilapidated houses. We shall repair our houses and work towards constructing new houses at the earliest.
d) We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus.
e) During the plantation seasons, we shall plant as many seedlings as possible.
f) We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our
g) We shall educate our children and ensure that they can earn to pay for their education.
h) We shall always keep our children and the environment clean.
i) We shall build and use pit-latrines.
j) We shall drink water from tube wells. If it is not available, we shall boil water or use alum.
k) We shall not take any dowry at our sons’ weddings; neither shall we give any dowry at our daughters wedding. We shall keep our centre free from the curse of dowry. We shall not practice child marriage.
l) We shall not inflict any injustice on anyone; neither shall we allow anyone to do so.
m) We shall collectively undertake bigger investments for higher incomes.
n) We shall always be ready to help each other. If anyone is in difficulty, we shall all help him or her.
0) We shall always be ready to help each other. If anyone is in difficulty, we shall all help him or her.
p) We shall take part in all social activities collectively.
Though all the points above are based on nations which are developing or undeveloped countries, yet we can try to incorporate some good points, so that we can merge Creative Capitalization with Social Business. As Social Business may not be followed by Business Managers, as in that case, there may not be any profits or brand names. Hence it should be a mix flavor of ‘Creative Capitalism and Social Business’.
Before going into the details lets quickly go through the points which have changed the lives of millions of people living at or below poverty line; Microfinance and the concept of Grameen Bank. The Founder of it states that “We will create a Poverty Museum by 2030. We will start with Bangladesh”.
Here are the salient features of the concept of trust based banking; ‘Social Business’.
1) The Grameen Bank issues loans using very simple trust-based financial arrangements; no legal documents are involved because, in part, Grameen’s borrowers are poor and have no collateral. So, Grameen relies on trust and the positive incentives of continued access to credit and other support to ensure repayments and Grameen’s repayment rates have averaged better than 98 percent. Because Grameen’s loans are based on trust and positive incentives and no legal documents, Grameen has never used lawyers or courts to collect any of its loans. Grameen has about 7.5 million borrowers in Bangladesh, and has loaned approximately $7 billion since its inception, with an average loan size of about $150.
2) When a potential borrower wants a loan, she has to form a group of five or join such a group of borrowers from her neighborhood and agree to meet with that group once a week. Each loan is made to an individual in the group and is the responsibility of that one individual, but others in the group cannot get their next loans if any member of the group is late in her payments.
3) Grameen’s borrowers are also required to maintain a regular savings plan, and today its borrowers and their no borrowing neighbors as a group have $150 in savings for every $100 in loans outstanding. Today, the Grameen Bank is funded by the savings deposits of the poor. It has been profitable for all but three of the last twenty-five years.
4) Grameen has issued more than 600,000 housing loans at 8 percent and about 20,000 educational loans at 5 percent. Grameen also has arranged loans for about 100,000 beggars, whom it calls; struggling members. We need to gather resources, people, facilities and funds. Corporate Social Responsibility will always continue to be the essential part of the business activity and with the advancement of globalization, technology, stakeholders, perceptions and knowledge and the pressure that is generated by limited natural resources.
Now if we merge the points of “Social Business’ and ‘Creative Capitalism’ then one can make wonders, wherein the powerful Corporate World and the least developed people are benefited. Its then we can do a perfect CSR; CORPORATE STRATEGIC RESPONSIBILITY.
Disaster Management Specialist and Consultant