The way forward for competitive and innovative businesses Socially Responsible Business: Training for young business leaders and entrepreneurs-in-making Join United Nations ESCAP at APBF 2014 UNITED NATIONS ESCAP E B A C Business Advisory Council http://apbf.unescap.org
EBAC publication by the Sustainable Business Network (SBN) Task Force on MSME s & Entrepreneurship in Business and Development
Why Socially Responsible Business? This brochure aims to make a regional call for equipping young entrepreneurs with relevant education and capacity-building for Socially Responsible Business. The notion of Socially Responsible Business (SRB) is gaining relevance in the agenda of regional and global sustainability and development. SRB is defined as both a for-profit venture for social and environmental sustainability and an approach to sustainable business practices that seeks to leverage business for a more just and sustainable world. 1 The international business environment has undergone major transformations that require more nuanced knowledge about increasing social and environmental sustainability demands. This brochure aims to make a regional call for equipping young entrepreneurs with relevant education and capacity-building for SRB. Young entrepreneurs and business leaders must be equipped with the right skills to understand the way SRB can be embraced and integrated into daily business operations of micro, small and medium enterprises (MSMEs) as well as large and multinational corporations. SRB education and capacity building are important to help businesses account for social and environmental demands and overcome the challenges of inclusive and environmentally sustainable development. Ensuring adequate SRB education for young entrepreneurs and business leaders allows companies to leverage the full potential of SRB principles. SRB realigns the entire bottom line of the business by covering economic, social and environmental agendas and reconnects the company s success with the community s success at large. Integrating SRB into business strategies and operations assists companies to move rapidly from mere policy to practice to meet consumers and external stakeholders expectations. SRB is not only an approach to mitigate business-led negative externalities, but it is also a more proactive approach that seeks to directly address at social and environmental issues and ensure that surrounded communities and external stakeholders, particularly 1 Social Venture Network. Retrieved on 7 November, 2014 from http://svn.org/. 3
those impacted by business operations, receive immediate and enduring benefits rather than shortterm charitable donations. 2 SRB goes beyond old forms of corporate philanthropy and is becoming an emerging approach to sustainable business practices that highlights the role of the private sector at the forefront of inclusive and sustainable development. Other approaches such as corporate social responsibility (CSR), socially responsible investment (SRI) and emerging phenomena such as social enterprises (SE) also encourage companies to produce financial, social and environmental value. 3 By definition, CSR is a corporate social action intended to create positive social impact. CSR transcends community relationships 4 and should aim to enable communities to sustainably tackle development and poverty challenges. 5,6 Following traditional CSR approaches, the notion of SRI is conceived as an investment process that seeks to achieve social and environmental objectives alongside financial ones. 7 Similarly, the recent growth of social enterprises is understood as a financially self-sustainable and non-dividend giving entity. Profits derived from social enterprises are reinvested in the business itself, with the aim of increasing social impact by expanding the company s reach, improving the products or services and supporting its social mission. 8 Although there is a large untapped potential for fostering the synergies between these approaches, SRB is itself a holistic approach towards sustainable business practices that transcends old forms of corporate philanthropy. The journey towards this newly emerging approach must have leadership, innovation and new skills. There is also a need for the redefinition of stakeholder engagement dynamics and relationships amongst key public and private parties including investors, employees, suppliers, customers, governments and civil society actors. This may seem a challenge when companies are struggling to adapt to rapidly changing conditions in the global business environment, such as fiscal austerity and economic stagnation in major markets around the world. Young business leaders are instrumental to helping companies go forward and undergo these major challenges. They should be equipped with adequate knowledge and the right skillset to incorporate SRB in order to deal with the rapidly changing business environment effectively. 2 Warhust, A. (2001). Corporate Citizenship and Corporate Social Investment, Corporate Citizenship (28), 57-73. 3 UNIDO (2014). CSR. Retrieved on 5 November 2014 from http://www.unido.org/en/what-we-do/trade/csr/whatis-csr.html. 4 Carroll, A. B. (1998). The Four Faces of Corporate Citizenship. Business and Society Review. 100. I: 1-7. 5 Tracey, P., Phillips., N & Haugh., H. (2005). Beyond Philanthropy: Community Enterprise as a Basis for corporate citizenship, Journal of Business Ethics, 58, 327-344. 6 Muthuri, J. N. (2007). Corporate Citizenship and Sustainable Development - Fostering Multi-Sector Collaboration in Kenya, Journal of Corporate Citizenship, 28(12), 73-84. 7 ESCAP (2011). Promoting Sustainable and Responsible Business in Asia and the Pacific: The Role of Government, A report of Investors for Development Project (I4D). 8 Yunus, M. (2006). Social business entrepreneurs are the solution, in Alex Nichholls (ed.), Social Entrepreneurship: New Models of sustainable Social Change, New York: Oxford University Press, pp 39-44. 4
Mission of this Brochure This brochure strongly recommends that business schools and training institutions provide young business leaders with relevant SRB education and training. In this context, this brochure provides recommendations on the need to foster relevant education for SRB and introduce the Ahmedabad Charter goals and UN Global Compact principles as the baseline of SRB education and capacity building. It also seeks to propose potential capacity-building areas for increasing young entrepreneurs understanding of SRB. Those areas include, but are not limited to, socially responsible investment, stakeholder engagement and management, supply chain sustainability, workplace diversity, workforce protection, energy-models and strategies, etc. This brochure also underlines the importance of SRB and the need to imprint its principles and norms upon young business leaders and entrepreneurs-in-making. Business schools, tertiary education institutions and training institutes are considered the most appropriate and effective organizations to carry on this mission. This brochure strongly recommends that business schools and training institutions provide young business leaders with relevant SRB education and training. Schools and institutes may devise suitable platforms - such as courses and classes, interactive seminars, orientation programmes, online training, workshops and speaker series - to increase young entrepreneurs understanding of SRB and its importance for fostering sustainable business practices. Hence, this brochure also seeks to make a call for the establishment of comprehensive SRB programmes in all major business schools and training institutions in the Asia-Pacific region. 5
The Rationale of SRB Education The Ahmedabad Charter Goals The call for pushing forward governments, business schools and training institutions to promote SRB draws from the goals of the Ahmedabad Charter. Drafted in 2013, the Ahmedabad Charter is the outcome of the flagship event organized by the Sustainable Business Network (SBN) Task Force on MSMEs & Entrepreneurship in Business & Development of the ESCAP Business Advisory Council (EBAC), jointly with the Entrepreneurship Development Institute of India. The activities of the Task Force are targeted to foster MSMEs development and entrepreneurship in business for inclusive and sustainable development. The Task Force promotes entrepreneurship culture, CSR, social responsible investment and responsible and sustainable business practices. The Ahmedabad Charter lists four pillars, which are in line with the UN Global Compact principles: Ahmedabad Charter: The Four Pillars Promote corporate social responsibility and encourage ethical practices for holistic social progress and advancement in Asia and the Pacific. Enjoin upon the Governments, business schools and training institutions and international agencies to promote socially responsible investments and business development services for promoting a responsible business culture. Profess, practice and facilitate establishing conditions for maintaining best practices in human rights and labour relations for attainment of high standards of social progress and harmony. Undertake concerted efforts to put in place as also strengthen sustainable business practices that advocate efficient use of resources for a safer and greener environment. Source: Adapted from Entrepreneurship in Socially Responsible Business for Development in Asia and the Pacific Region and Young Business Leaders Programme 9 9 ESCAP, EBAC and Entrepreneurship Development Institute of India. (2013). Entrepreneurship in Socially Responsible Business for Development in Asia and the Pacific Region and Young Business Leaders Programme, Ahmedabad. Retrieved on 10 November 2014 from http://www.ediindia.org/doc/post-workshop- Report.pdf. 6
The ten principles of the UN Global Compact, on which the Ahmedabad Charter is based, encourage companies to embrace, support and enact a set of core values in the areas of human rights, labour standards, the environment and anti-corruption. These principles are listed below: UN Global Compact: The Ten Principles Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labour Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. Source: Adapted from UN Global Compact: The Ten Principles 10 10 United Nations Global Compact. (2013). Global Corporate Sustainability Report. New York: United Nations Global Compact. 7
Proposal In order to overcome the challenges of a dynamic economic environment, SRB principles need to be imprinted upon the young generation of business leaders and entrepreneurs-in-making. The SBN Task Force on MSMEs & Entrepreneurship in Business & Development strongly encourages business schools and training institutes to modify and advance their academic programmes to implement SRB concepts on the basis of the four pillars listed in the Ahmedabad Charter. Some of the proposed courses are as follows: Socially responsible investment This course is intended to explore the long-term benefits of net impact investment and shared value to investors and society. It also seeks to train students in valuing and actively investing capital in new ventures, businesses and funds that create positive social and environmental impact as well as financial returns. Noble thinking This course is intended to explore and discuss game-changing ideas that have a profound impact on the way the world does business. It gears students to think out of the box and indulge in long term thinking that can positively impact wider society. Business, government & society This course seeks to build knowledge about the economic impact of social factors on enterprises and the responsibilities of corporations to stakeholders and the contexts where they operate. It is also intended to develop a better understanding of multi-stakeholder collaboration processes for the fostering of sustainable business practices. 8
Managing change Implementing SRB concepts in businesses requires significant changes in business models, operations, human resources management and organizational structure. Therefore, this course is aimed to design and develop a change management programme, helping students become effective agents of change. Supply chain sustainability This course aims to study the benefits of supply chain sustainability and develop methods to develop socially and environmentally sustainable supply chains by reviewing value creation and costs incurred. It also seeks to increase students understanding of the benefits derived from business cluster development and sourcing locally to reduce transportation and environmental costs. Managing workplace diversity Socially responsible businesses employ individuals with diverse knowledge, expertise, opinions and backgrounds. This course equips students with skills to maximize positive effects of informational and social diversity on performance, market access and decisionmaking. It also seeks to increase awareness of various psychological barriers that could prevent people from leveraging diversity to achieve high team performance. Energy models & strategies This course provides students with an introduction to the energy sector and focuses on its newly emerging challenges such as market restructuring and development of low carbon technologies. Some of the topics covered are as follows: costs and risks of new and old technologies for electricity, carbon finance, renewable finance and innovations in low carbon technologies. 9
The Time for SRB is now The ESCAP Business Advisory Council (EBAC), in partnership with leading businesses, provides assistance for promoting and increasing understanding of the concept of SRB at business schools and training institutions. Young business leaders are called upon to play a role of agents of change by implementing SRB principles and promoting a forward-looking business landscape in Asia and the Pacific. Providing young business leaders with relevant SRB education and capacity building in business schools and training institutions has the potential for fostering greater change and inclusive development in the region. Integrating SRB into business agendas is no longer an option but a requirement for all companies to become more competitive and innovative in the long-term. The ESCAP Business Advisory Council assists relevant organizations to promote the development of initiatives intended to provide education on and capacity building for SRB. The EBAC operates through the Sustainable Business Network (SBN) and Task Forces such as the MSME Task Force. A brief description on how these three operate is contained in figure 1. More information can also be found at http://ebac.unescap.org/. Dr. Ravi Ratnayake, Director, Trade and Investment Division, UN ESCAP We are all aware of the crucial role of the private sector in development. Yet, the engagement of business should be socially responsible. This is the way forward, which even goes behind the traditional principles of CSR. 10
Figure 1: Introduction to EBAC, SBN and MSME Task Force EBAC ESCAP Business Advisory Council (EBAC) aims to provide support and in-kind contributions for engaging on development issues affecting the region. " It provides advice to ESCAP Secretariat on its programmes and projects." It assumes ownership and determines the strategic direction of the Asia-Pacific Business Forum, a regional multi-stakholder forum." SBN MSME Task Force Sustainable Business Network (SBN) promotes the active engagement of the business sector in addressing the issues of environmental sustainablity and social inclusiveness in business in the Asia-Pacific region. " It mobilizes businesses in the region across sectors and countries as an active participant in promoting inclusive and sustainable development." It acts as a force of change for business in the Asia-Pacific region by highlighting the need for businesses to adopt responsible and sustainable business practices based on exisitng CSR instruments." It acts as a dialogue partner with governments and voices the perspectives of the business sector regarding inclusive and sustainable development issues." It promotes cooperation among businesses and facilitates exchange of knowledge, ideas and experiences across borders among businesses to identify best practices." It assists in resolving issues in the sustainable and inclsuive development of MSMEs in the Asia-Pacific region." The MSME Task Force proposes actionable options to address relevant contemporary issues on Multionationals; micro, small and medium entreprises (MSMEs) and entrepreneurship development. These actions include but not limit to dialogues and capacity building activities, organizing networking events, providing speakers and/or participating on self-funding basis ESCAP/EBAC meetings related to their respective areas and facilitating research in their areas of focus. " Source: Adapted from the website of the EBAC 11 11 ESCAP (2014). ESCAP Business Advisory Council. Bangkok. Retrieved on 10 November 2014 from http://ebac.unescap.org/. 11
Contact If you are interested in and would like to know more about this initiative, please get in touch with either of the following contact points. Dr. Sailendra Narain Chairman Task Force on MSMEs & Entrepreneurship in Business & Development Sustainable Business Network Email: snpn@vsnl.net Dr. Dinesh Awasthi Director-EDI & SRB Nodal Institution Entrepreneurship Development Institute of India (EDI) Bhat - 382 428 Dist. Gandhinagar Gujarat, India Email: dinesh@ediindia.org Mr. Masato Abe Economic Affairs Officer Business and Development Section Trade and Investment Division UN ESCAP Email: abem@un.org Join United Nations ESCAP at APBF 2014 EBAC publication 2014 http://ebac.unescap.org/ Photo credits: EDI EBAC Secretariat United Nations ESCAP Trade and Investment Division http://apbf.unescap.org Business and Development Section Bangkok, Thailand Email: apbf@un.org Fax: +66-2-2881026