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The triple bottom line
- 1. MANAGING THE TRIPLE BOTTOM LINE MARCH 15, 2016 DOGWE, ALEXIS EUSEBIO, CAMILLE GONZALES, MAURICE TANDOC, LESLEE MAY TATING, AL MARIE UNIVERSITY OF THE PHILIPPINES TECHNOLOGY MANAGEMENT CENTER Under the Management of Prof. Ed Cruz
- 2. OUTLINE A. The Triple Bottom Line B. Corporate Social Responsibility C. Serving BOP Markets D. The Digital Divide E. Responding to Global Climate Change in the Corporate World F. Framework for Navigating Ethical Issues
- 4. PEOPLE oSocial structure of the organization oStakeholders of the project oEnsures fair trade and ethical practices are observed within the eco-system of the organization
- 5. PLANET oFor a business to survive, it has to earn profit but needs to understand sustainability oSustainability
- 6. PROFIT the economic value created by the company, or the economic benefit to the surrounding community and society Source: Triple Bottom Line Definition | Investopedia http://www.investo pedia.com/terms/t/triple- bottom- line.asp#ixzz42hNc6nyu
- 7. DOMAINS
- 12. BUSINESS INITIATIVES THAT MOLD ECONOMIC OBJECTIVES WITH SOCIAL WELFARE
- 13. RECAP 1. People 2. Planet 3. Profit Triple Bottom Line Corporate Social Responsibility Business initiatives that mold economic objectives (profit) with social welfare
- 14. RECAP oEconomic oCompetitive oRegulatory oSocio demographics oTechnological oNatural Resources Key Domains for the Triple Bottom Line
- 15. DEBATES & CRITICISMS, DESIRED OUTCOMES, DOMAINS, MODELS & APPROACHES OF CSR
- 16. DEBATES AND CRITICISMS OVER CSR Should firms engage in CSR?
- 17. DEBATES AND CRITICISMS OVER CSR Is it truly CSR if company benefits?
- 18. DESIRED OUTCOMES OF CSR Business Goals Driving revenue growth through CSR initiatives Social Goals Improve quality of life and to build capacity in disadvantaged communities
- 19. CSR DOMAINS PEOPLE People includes employees, suppliers, customers, people in the local community where the business operates, or society as a whole. PLANET Engaging in environmentally responsible, sustainable business practices.
- 20. CROPITAL
- 21. MODELS OF AND APPROACHES TO CSR Business Case Model The ability of CSR to create positive business results CSR is viewed as relevant only when it translates unambiguously to competitive advantage.
- 22. MODELS OF AND APPROACHES TO CSR Social Values Model Social issue is the “force” that drives the organization
- 23. MODELS OF AND APPROACHES TO CSR Syncretic Stewardship Model Syncretize means “To unite and harmonize” Combines, integrates, negotiates and balances the competing claims of varied stakeholders. Model 1: Business Case Model 2: Social Values Model 3: Syncretic Stewardship Model
- 24. MEASURING OUTCOMES AND EFFECTIVENESS OF CSR INITIATIVES
- 25. MEASURING OUTCOMES AND EFFECTIVENESS OF CSR INITIATIVES How does a company evaluate its performance for the triple bottom line? How does a company's social performance relate to its financial performance?
- 26. EVALUATING TRIPLE BOTTOM LINE PERFORMANCE AccountAbility and CSR Network: Strategy, Governance, Stakeholder Involvement, Follow- through Vodaphone (#5, with a score of 66.3) Deutsche Telekom (#33) GE (#13, with a score of 59.1) Sony (#34) Toyota (#38) HP (#24) Siemens (#41) Toshiba (#30)
- 27. EVALUATING TRIPLE BOTTOM LINE PERFORMANCE
- 28. EVALUATING TRIPLE BOTTOM LINE PERFORMANCE o Companies must evaluate their social and environmental performance o A company should proactively monitor its own performance, using one of the generally accepted frameworks
- 29. EVALUATING TRIPLE BOTTOM LINE PERFORMANCE AccountAbility's AA1000 standard Verite's Monitoring Guidelines to assess sweatshop labor and labor abuses Social Accountability International's SA8000 standard for human rights The FTSE4Good Index, an evaluation of CSR performance of companies GlobeScan's Corporate Social Responsibility Monitor SOCIAL ACCOUNTING
- 30. EVALUATING TRIPLE BOTTOM LINE PERFORMANCE Environmental Guidelines oThe Global Reporting Initiative's Sustainability Reporting Guidelines oCERES oInstitute 4 Sustainability oGreen Globe Certification/Standard oThe ISO 14000 environmental management standard
- 31. CORPORATE SOCIAL PERFORMANCE AND ITS FINANCIAL PERFORMANCEattract quality employees and customer loyalty VSadditional leverage create new opportunities raise the firm's costs unnecessary expenditures detract from its focus on profit
- 32. CORPORATE SOCIAL PERFORMANCE AND ITS FINANCIAL PERFORMANCE From Innovest Rankings: Companies that received relatively high scores for corporate social responsibility (including BP and Sony) but whose financial (stock market) values did not perform well. Companies that received lower scores for corporate social performance (including Apple and Nintendo) but whose stock market prices did perform well.
- 33. BEST-PRACTICES CSR FOR HIGH TECH COMPANIES
- 34. BEST-PRACTICES CSR Link CSR to Business Strategy Supply/input conditions Microsoft - information technology education infrastructure GlaxoSmithKline - access of poor people to medications and vaccines attract scientists. Demand/customer conditions Competitive context Supporting infrastructure
- 35. BEST-PRACTICES CSR Measure the impact of CSR Balance competing stakeholder interests Collaborate with relevant partners
- 36. BEST-PRACTICES CSR Beware of unintended reputation effects (Hypocrisy) oFocus CSR initiatives into areas unrelated to the firm’s business oAvoid using socially responsible behaviors for compensating socially irresponsible ones
- 37. BEST-PRACTICES CSR Embed CSR in senior leadership and in organizational reward Link CSR to Innovation
- 38. SERVING BOP MARKETS CSR & Social Entrepreneurship
- 39. BOP: BASE OF PYRAMID
- 40. PHILIPPINES & USA LOWER CLASS (< $35k annual household income) MIDDLE CLASS ($35k - $200k annual household income) UPPER CLASS (> $200k annual household income) 5.6% 60.6% 33.8% Gov’t / NGO Assistance NGO Corp Donations/ Philantrophy Enlightened CSR/ Social Entrepreneurship
- 41. DOMAINS FOR INTERVENTION 2 Dimensions: 1. Happens in top or base of the pyramid 2. Caused by a crisis or is chronic CRISIS CHRONIC BOP TOP 1 2 3 4 AID/DONATIONS CAPACITY BUILDING
- 42. THE 10 GREAT DIVIDES 1. Demographic Divide 2. Financial Divide 3. Nutritional Divide 4. Natural Resource Divide 5. Environmental Divide 6. Health Divide 7. Gender Divide 8. Educational Divide 9. Digital Divide 10. Security Divide
- 43. BUSINESS MODELS TO SOLVE BOP BOP 1.0 “Selling to the Poor” Potential customers Deep listening Reduce price Redesign packaging Extend distribution Mediated by NGOs BOP 2.0 “Business Co- Venturing” Business partners Deep dialogue Expand imagination Build shared commitment Marry capabilities Direct, personal relationships facilitated by NGOs “ENLIGHTENED” CSR View of People Model of Engagement Business Solution Nature of Relationship
- 48. BUSINESS MODELS TO SOLVE BOP Power of small businesses to create innovative solutions Belief that everyone has innate capacity to contribute to development Primary focus is value creation Willing to share insights & innovations SOCIAL ENTREPRENEURSHIP Phase I: Opening Up Phase II: Building the Ecosystem Phase III: Enterprise Creation CO-CREATION
- 49. SOCIAL ENTREPRENEURSHIP LEVERAGED NONPROFIT VENTURE Drive adoption of innovation Requires external partners for support One Laptop Per Child Organization HYBRID NONPROFIT VENTURE Recover portion of cost Sets up several legal entities Envirofit Aravind Eye Care SOCIAL BUSINESS VENTURE For-profit business setup Reinvest profits to grow the venture and reach more people
- 50. 5 KEY AREAS TO CONSIDER DISTRIBUTION • Poor roads, high transportation cost • Localize value creation PRICING • Price needs to be slashed • “Surplus revenue” to subsidize • Community based pricing OPEN SOURCE & LICENSING • Rely on open source models to reuse, adapt or modify RESPONDING TO FAILURE • Fail early & fail fast • Learning labs for new insights MEASUREMENT CHALLENGES • BOP impact assessment framework 1 3 2 4 5
- 52. THE DIGITAL DIVIDE Disparity in technology access between: o Socioeconomic groups o Geographic areas o Ethnic groups o Countries “if technology revolution leaves some behind, all will suffer”
- 53. SOLUTIONS TO THE DIGITAL DIVIDE Public Policy Nonprofit Ventures Training & education Market-based solutions Mobile telephony Mobile Telephony • Cheaper phones • Market preference over other gadgets • Provides access to different apps
- 54. UBP + GLOBE = VIDEO
- 55. RESPONDING TO GLOBAL CLIMATE CHANGE IN THE CORPORATE WORLD
- 58. ADDRESSING ENVIRONMENTAL IMPACTS Cap and Trade Carbon Offsets Best Practices Environmental Strategy: Four-Step Approach Natural Capitalism
- 59. CAP AND TRADE
- 60. CARBON OFFSETS
- 61. BEST PRACTICES ENVIRONMENTAL STRATEGY: A FOUR-STEP APPROACH Quantify the company’s carbon footprint. Assess carbon- related risks and opportunities. Adapt the company’s business strategy. Stay ahead of competitors.
- 62. NATURAL CAPITALISM Dramatically increase the productivity of natural resources Shift to biologically inspired production models Engage in “solutions-based” thinking Reinvest in natural capital
- 63. CHALLENGES FOR ENVIRONMENTALLY RESPONSIBLE BUSINESS PRACTICES unintended consequences • Use of crops for human consumption for processing biofuels greenwashing • energy-efficient electronics that have hazardous materials • products claiming to be “organic” without verifiable proof fairness and equity for developing nations • growth in China, India and other developing countries cause GHG emissions to also rise (1/3 of global emissions as of 2004)
- 65. FRAMEWORK FOR NAVIGATING ETHICAL ISSUES Identify all stakeholders who are affected by the situation For each stakeholder group, identify its needs and concerns, both if the decision is implemented and if decision is not implemented. Prioritize the stakeholder groups and perspectives. Make and implement a decision.
- 66. FRAMEWORK FOR NAVIGATING ETHICAL ISSUES Case Study: Merck and the Cure to River-blindness in 1978, onchocerciasis or “river-blindness” plagued at least 85 million people caused by a parasitic worm carried by a tiny black fly that thrives along fast-moving rivers the larvae the adult worm reproduces invades the eyes and often cause blindness disease was so prevalent that children thought blindness is part of growing up Merck has discovered that a drug which was used to eliminate insect-borne parasites in cows also has properties that can eliminate the cause of river- blindness
- 67. FRAMEWORK FOR NAVIGATING ETHICAL ISSUESIdentify all stakeholders who are affected by the situation• shareholders • public at large • Third World population • government • employees For each stakeholder group, identify its needs and concerns, both if the decision is implemented and if decision is not implemented. • negative impacts on profits vs negative publicity • favorable vs insincere • quality of life enhanced vs backlash against corporations in developing countries • expedite approval process vs possible intervention to require licensing • belt-tightening/ lay- offs vs de-moralization Prioritize the stakeholder groups and perspectives.• “We try never to forget that medicine is for the people. It is not for profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.” Make and implement a decision.• pursue the study of the drug
- 68. WRAP-UP People • Corporate Social Responsibility • Social Entrepreneurship • Serving BOP Markets • Bridging the Digital Divide Profit Planet • Corporate Social Responsibility • Environmental Strategy Best Practices • Natural Capitalism • Cap and Trade
- 69. REFERENCES 1. Marketing of High Technology Products & Innovations by Jakki Mohr et al. 2. http://www.investopedia.com/terms/t/triple-bottom-line.asp 3. The Economist – The Triple Bottomline 4. https://www.cdp.net/CDPResults/carbon-action-infographic- 2015.PDF
Notes de l'éditeur
- It aims to measure the financial, social and environmental performance of the corporation over a period of time. What you measure is what you get, because what you measure is what you are likely to pay attention to.
- Use child labor as an example and Blood Diamond When employees and stakeholders are engaged, there is drive to create revenues to achieve the objective of the company. - Growing awareness of corporate malpractice in these areas forced several companies, including Nike and Tesco, to re-examine their sourcing policies and to keep a closer eye on the ethical standards of their suppliers in places as far apart as Mexico and Bangladesh, where labour markets are unregulated and manufacturers are able to ride roughshod over social and environmental standards.
- Being environmentally conscious is one way of considering operating efficiency. Example: When an organization purchases office supplies made from recycled materials, not only does it save the trees (paper), it also works with Finance on minimizing costs for the company. Recycled office supplies are usually lower in price.
- CSR is different from Corporate Sustainability. Corporate Sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.
- Yes. The company has multiple benefits. No. Primary role of the business is to serve a company’s stockholders. CSR is just superficial window dressing CSR is an attempt to preempt the role of government as a watchdog of the society
- Fair trade, no child labor, safe working environment, corporate philantrophy
- Play Rachel’s video
- 60% of total population at the bottom
- Philippine setting (source: NCSB – national statistic coordination board) Developed countries (source: US Census) Why we serve them? Sheer size of market – expanding your market reach Goal: Move them up to create a diamond How to help them? Public aid/assistance to market-based approach Market-based – use business tools to work with the market: CO-CREATION Effect: increase opportunity to earn income and empower them to move up the ladder Source: “Will the Recent Robust Economic Growth Rate are Burgeoning Middle Class in the Philippines” by former NSCB Sec-Gen Romulo A. Virola, et. Al http://www.myfinancemd.com/aldub-and-philippine-tax-reform/ http://www.rappler.com/thought-leaders/65114-filipino-middle-class-over-taxed
- Problems can be characterized on at least 2 dimensions Crisis – typhoon, earthquake, tsunami Chronic – hunger, poverty, illiteracy
- Another way to dimension the chronic problems of the BOP Demographic trends – aging of population, rural vs urban Inequities in wealth distribution Famine, hunger, malnutrition Abuse of resources essential to living – energy, clean air, water Sanitation, waste, toxins - Need for environmentally sustainable practices Access to health care & medicines, spread of diseases (malaria, Equality for women Learning opportunities for everynoe Access to information communications & technology Poverty is a threat to world peace – need to bridge financial divide
- 1st generation BOP failed – only goal is to sell to the poor, if they are able to sell to them, it will solve the problem If they all become consumers, we would have a problem on supply & demand – raw materials, waste management, danger to climate BOP 2.0 engages in Co-creation which creates enduring community value – marrying resources & capabilities of the firm and community – promoting innovation that is tailor fit to the local needs (embed / localize)
- Before you start the presentation, probe and ask questions. Sample questions that can be asked from the client: Ask how the organization raise funds? How do they collect donations? Do you get donations frequently? What do they do? Proponents of the organization? Abroad or local? Do they have a website? Who maintains / handles the site? Did you hire a web developer? Do you have someone in-house IT? Let them talk. Listen then when they are ready to listen to us, introduce UShare. Ushare started as a spark of an idea. Non-profit organizations form a unique segment who are in the business of gathering donations- locally and globally. Let me show you what we’ve done for our UShare clients:
- One major Non profit organization is Red Cross. We enabled UShare in Oct 2011 and in Dec 2011 the Tragedy of Sendong happened. Ushare was up and running in red cross that enabled them to collect 2.4M in 4 days. For the Yolanda Typhoon, Red Cross through UShare, received more than Php140M in 17 days from all over the world. With online, with more payment channels, people gave more. This is a case that Ushare is in action.
- More executions: Most bigger NPOs have their website such as ABS CBN so we empower them with a donation button.
- Caritas Manila is also a major NPO that is using UShare.
- LEVERAGED Market: poorest of the poor / those with no access and who cannot afford Goal: adoption of innovation that addresses a social need – multiplier effect thru communities & organizations Support: financial, political, in kind/donations low-cost laptops for school children thru governments in developing countries HYBRID Recover thru selling goods & services Legal entities: income generation & fund raising/charity SOCIAL Setup from the outset but they think differently from mainstream businesses on the profits Goal is to drive social/environmental change and not to maximize shareholder returns http://www.schwabfound.org/content/what-social-entrepreneur
- Consider in the BOP market initiative Distribution: capacity building & training; Build local ecosystem of vendors; franchising Pricing: surplus from wealthy customers to subsidize for poor; Open source: rely to reuse, adapt & modify existing innovations – i.e. GSK working with local companies to produce generic drugs Failure: learn from failure, it is part of success; new insights can be applied to established markets not just BOP
- Disparity can manifest in diff. ways, between different: socioeconomic: affluent vs poor / income brackets Geographic: urban vs rural Ethnic: caucasian vs african Countries: developed vs developing Technology is a key enabler to close the different divides. Providing access to technology could stimulate economic development.
- Public policy: internet access to all – Philippine project: Market preference: due to cost, convenience, no need for literacy (unlike computers) Access to diff apps that improve lives: jobs, medical care, remittance of money, chatting with family abroad
- Even with thousands of ATMS, do people have bank accounts? Only 26.6% have bank accounts, much less ATMs In far-flung places where ATM penetration or credit card acceptance is low, need creative solutions to enable financial transactions. There are over 600 banks and 6,300 non-banks with quasi banking funtions 36 Universal banks, 71 thrift banks, 533 rural banks, 6,300 non-banks with quasi banking functions ALL LICENSED BY THE CENTRAL BANK NO ONE INSTITUTION OR ORGANIZATION CAN DO IT ALONE Now I would like to share with you the story of TSPI and their customers, the nanays. TSPI is a client of Unionbank, their clients are in remote areas. The challenge was how to help our client with their business. And this is that story.