Ideas & Debate

The rise of social, environmentally conscious business

csr

Nation Media Group (NMG) Regional Business Manager, Coast Region Naomi Mbuvi (left) leads the NMG team to give out Kshs 200,000 textbooks to pupils at Mwangala Primary School in Mombasa as part of the Corporate Social Responsibility (CSR) on 7th July 7, 2017. FILE PHOTO | NMG

Until about two decades ago when Sir John Elkington coined the term Triple Bottom Line emphasising the triple play of People, Planet and Profit in business -- few people paid attention.

This thinking challenged the then dominant 20th century mind-set of companies long advocated by Milton Friedman, who believed that business had no role to play in addressing social and environmental challenges despite being the largest consumer of resources and human capital. These challenges, according to the dominant view, were left for government and civil society.

Fast forward to the 21st century and Sir Elkington’s philosophy is fast gaining currency not only in the developed world, but also developing markets, such as Kenya.

Increasingly, businesses are recognising that despite massive prosperity and technological innovation, globalisation is intensifying, spawning complex issues calling for attention from different players. From massive environmental depletion and degradation due to unsustainable extractive practices without replenishment to a litany of social ills, the world faces many challenges.

As a result, businesses are beginning to consider their impact on society and the environment. This has led to the emergence of environmentally and socially conscious enterprises. This has been further catalysed by factors whose intensity vary by market.

For starters, today’s consumer is conscious and informed.

There is growing demand for socially responsible brands by the consumer, due to influences from other parts of the world. It is no longer enough to extol price and product features as unique selling points.

Fidelity to the firm’s social and environmental impact is a crucial differentiating factor and firms that pay attention to these stand a better chance of winning, nurturing and sustaining customer loyalty.

The interest in social and environmental impact also exists amongst staff. Today, there are workers who want to do more than just earn a livelihood —they want to work for socially ethical companies.

In fact, research by PwC has found that for millennials particularly, it is important for an employer’s corporate responsibility values to be in sync with theirs. Sometimes, this kind of employees are willing to take less compensation in exchange for a purpose driven and positive work environment.

Then there is the influence of development agencies, who have lately been actively engaging for-profit companies in development programmes. Under the Sustainable Development Goals, launched by the United Nations in 2015, the global body calls on private for profit companies to participate in achieving some 17 goals, a major shift from the Millennium Development Goals. Many forums exist to drive this agenda.

A combination of these factors has made the Triple Bottom Line thinking a common feature, especially among listed companies. Talk of sustainability, with people, profit and planet features prominently in their communication to investors and clients.

Companies such as Safaricom and KCB have gone a step now to publish annual sustainability reports outlining their social and environmental footprints.

Top management is evolving from thinking that environmental social and governance impact should be part of Corporate Social Responsibility (CSR) programmes, to placing it as core to their operations. It needs to be integrated across the business as a driver of value and competitive advantage.

This is the future of business— from large corporates to SMEs and start-ups. Social and environmental impact can no longer be ignored. The business model of the future is one that is keen on not only maximising profit, but also positive impact that benefits people and the planet.

Business has to take the lead in prioritising an inclusive economy, where enterprise plays a role in promoting the greater good, broadening prosperity and tackling inequality.

B Lab East Africa is one of the organisations championing the use of business as a force for good. It offers B Corp certification, in addition to helping businesses to measure their social and environmental footprint.The B Corp movement is a global certification system for businesses that meet the highest standards of social and environmental performance, accountability and transparency.

Recently, two Kenyan firms— -Daproim Africa Limited, an outsourcing social enterprise, and Eco2Librium, a renewable energy and conservation enterprise in Kakamega, were recognised amongst the top 10 in different categories that are generating profit while minimising harm and seeking to maximise the positive impact of their businesses.

Instead of limiting negative externalities, they actively and purposefully seek a regenerative economy by operating their businesses in more thoughtful and rigorous ways.