And we're back! India's recent CSR mandate

Wow!  So sorry - it has been a while.  But I'm back!  With a focus on International Business practices.  For those MBA students who plan to be corporate jet-setters - you better know a thing or two about the countries you plan to visit.  So today's focus: India.

The Ministry of Corporate Affairs (MCA) has made it mandatory for all companies to disclose to shareholders whether they have made a contribution of 2% of net profit toward corporate social responsibility efforts.  In 2009 MCA released the voluntary guidelines on Social, Environmental, and Economic Responsibilities of Business, but with this new mandate – the guidelines have been updated. 

According to the latest minister of company affairs, M Veerappa Molly, CSR is a “Western” idea.  It hasn’t taken off in India but Molly believes that companies need to start thinking about it.  Especially since, according to my research, India has just become a major economic player and needs to position itself as an inviting and friendly country in and with which to do business. However, Molly realizes that he cannot force these CSR guidelines on companies who may be international and are in India in order to escape regulations, or – on the other hand – are home-grown companies who have grown so rapidly and economically strong that they don’t want to rock the boat.

So - by requiring the companies to report their CSR efforts on financial statements, at least the stakeholders know what’s happening.   By releasing these guidelines – MCA hopes that the companies will look to the guidelines for reference, and over time, that these guidelines will become more refined and specific to certain sectors.  This is as close as the companies can get to hiring their very own CSO (Chief Sustainability Officer) saving the company millions of dollars in research and salary. 

Do people care?  Will top investors pull out of a company due to the lack of CSR efforts?  I am sure they realize that eventually the company will have to get on the bandwagon but for now a gentle urge toward those efforts will suffice.   However, especially with the recession still fresh in my mind – if a company is profitable - why rock the boat?  Of course, if CSR is a Western notion and is making its way around the globe – then it stands to reason that those companies may lose their hold and be less profitable (although- I feel that’s a long way off for some of the companies that make the cheapest products in their industry). So if the idea of decline is merely looming in the distance – what’s the rush?  And that may be what the new minister is doing by passing this new law.  He’s merely placing the thought in people’s minds – before it becomes mandatory.  It’s akin to setting your alarm clock 10 minutes before you actually have to wake up.  Therefore, when you press the snooze button, you don’t feel so bad.  Unfortunately, I think the world’s alarm clock for sustainable business practices and triple bottom line operations went off 40 years ago.  I guess we’re now just waking up  - better late than never…?

Sustainability conference

The best thing about the Bay Area is the fact that there is always something going on!  A couple of weeks ago I attended a great Sustainability conference at Mills College.  Had I known about their sustainable MBA program earlier – I may have considered it.  It’s not in the city, but the campus is gorgeous.  The conference was held on a Friday from 8 am to 5pm in their new LEED-certified building. 

The morning started off with a great panel with reps from Clif, Title Nine, and Eileen Fisher.  This was, in my opinion, the best panel of the day. There were a few things each person said that really inspired and excited me. 

So the panel was:

-       Kevin Cleary, Clif Bar

-       Susan Schor, Facilitating Leader & Chief Culture Officer, Eileen Fisher

-       Janis Abbingsole, Director of Operations, Title Nine

So the main takeaway from this panel was: it can be done.  Making a profit and doing good can work!  So how does each company do that?  Clif bar actually has a fully integrated model that includes 5 different components (going beyond the triple bottom line): People, brand, planet, community, and business.  Clif holds the company as a whole and every employee accountable to each of the 5 bottom lines.  Title Nine and Eileen Fisher mention that their integration isn’t as structured but rather just in everything that the company does.  Title Nine values independence.  The company always holds themselves accountable without answering to any others (such as outside lenders or a Board of Directors).  Eileen Fisher believes that work in a way of which you can be proud and the profits will follow. 

One thing that all of these companies have in common is their commitment to the people who work for the company and their community.  Eileen Fisher provides a physical allowance for employees; if your employees are sluggish or not taking care of themselves – how are they supposed to bring good energy to their workday? 

Title Nine makes sure to trust each other – they don’t answer to a Board of Directors or outside lenders.  The employees are encouraged to own their mistakes.  In fact Janis mentioned that her biggest mistake last year was hiring from the outside.  She should have hired from within, but even though the new hire turned out to be a mistake – it was a great learning opportunity.  Every person adds to the culture of the company and the wrong person can throw it all off.  Janis accepted her mistake and presented it at the company’s annual  “biggest mistakes awards.” 

Clif bar makes sure to promote from within.  On top of that, the employees are encouraged to give back to the community, on company time.  20 – 40 hours per year.  Clif believes when your employees are happy so is the company and encourages its employees to do things that make them passionate.  

Basically, what I learned was that I really want to work for any one of these companies! Their employees are happy, the companies are profitable, and the community loves them! It’s a win-win(-win)!

USF Professional Development Day

So on Friday, USF MBA students had a great day of presentations, panels, and discussions at the downtown Westin.  I arrived too late to hear the first presenter, but heard it was a great presentation.  I mostly heard that during our second presentation, because she was having a bit of difficulty grabbing our attention.  To be fair, we were all on twitter - #usfprofdev if you want to read more.  But, as I heard before, these days you have to assume your audience is otherwise engaged.  If they aren't, then they hide it well.  

Anyway - returning to the day - the 3rd and 4th speaker were fantastic.  

Mitch, formerly of VMWare, talked about the importance of start ups and working with them.  Working at one as an un-paid intern - I definitely understand the risk.  In fact, I think most interns understand this.  We love the company, the energy and the fact that we can take on so much responsibility in such a little time - but we also understand that this usually leads to little return.  Oh well, thus the life of a student.  I notice the same with non-profits.  And also, I can imagine some greener business models are met with either resistance (therefore not much revenue and a lot of risk) or are met with open arms at first until they need money.  Green is usually more expensive up front - but saves over time, people don't seem to like that.    

Moving on to our next speaker - economist, Jim Shaw.  He too has a hash tag #jimshaw.  One of our favorite professors.  He mentioned that a recession is like a cleanse.  I interpret this as the fact that possibly bailing some of the companies are not helping the cleanse, that the reason some industries drop is because they aren't needed anymore - so why are we holding on to the old way of life.  This reminded me of natural resources - we are so dependent on these resources, so we cling to them as they are being rapidly depleted.  So we need alternatives.  Of course, as my professor says, "If you get the business card of somebody when you need them, it's already too late"  So now that we are thinking about alternatives - it's too late.  (Of course, they were talking about this back in the 70s, but now it's much worse of course)  We need to make sure to integrate alternatives now - so that when the big cleanse comes, society as a whole and the economy doesn't get hit as hard is could.   Jim Shaw believes that the time is coming for that.  And it's already too late.  I agree we are in a crisis and it will only get worse -   the economy will collapse but so will society as we know it.  These alternatives to our current way of life better be ready - or  ready to grow and fill in the gaping hole the depletion of resources will leave.    

Gap's CSR Dilemma

There are many internships out there.  Which will you choose?  Whichever you can get?  Or one with a company that you truly admire? I myself would love to work for a socially responsible company, but I also just want a summer job.  One with pay.  I looked at Gap – but here’s my issue. 

I really like Gap.  My closet is full of Banana Republic clothes, a few things from Old Navy and Gap.  Gap, Inc. is a smart company.  They have a brand and product for everybody – from their Athleta line to their Piperlime shoes.  Not to mention Gap Body, Baby, men’s, women’s, etc. 

I liked Gap even more when I learned about their CSR efforts.  I was researching them for a summer internship and found their CSR page.  According to http://www2.gapinc.com/GapIncSubSites/csr/EmbracingOurResponsibility/ER_Our_Focus.shtml  Gap focuses on 4 areas: Supply Chain (from factories to farms to the stores, Gap treats their people with respect and dignity), Environment (reducing waste, saving energy), Employees (supporting their goals and passion), Community investment (support volunteering)

So this is all fantastic, of course I would have never known that Gap had these efforts unless I had already been researching the company.  Why don’t companies spend time and money to market these points?  In fact, some of Gap’s marketing would suggest the opposite.  Now the following example is not that big of a deal, but it was a big deal to me.  Last semester I walked past the Gap in union square often. There’s the Gap regular and then the Gap Body, which was promoting its athletic wear.  All three large windows had empty plastic 1-liter bottles lining the bottom.  It bothered me that their attempt to cut down waste did not include their window dressing.  The images and photos of beautiful girls working out behind these water bottles also included girls with plastic water bottles.  A simple solution to cutting down waste, staying true to their CSR efforts, and a way to make money would be to start selling reusable water bottles.  Gap Body could then line its windows with said bottles and use them in their ads (the additional revenue wouldn’t hurt).  Unless they really don’t care, but Gap will soon be accused of green washing.   I believe the company does good things: project red and reforming its factories - but isn’t it easier to start small?  Hopefully some day the CSR effort will reach the window dressers, marketing team, and buyers.  Maybe, I can help them get there?