Positively profitable

Companies that take their social responsibilities seriously create profits for themselves and the communities they operate in, says Richard Costas

Illustration by Marlon Griffith

It took us 125 years to use the first trillion barrels of oil. We’ll use the next trillion in thirty. So why should you care?”

That may sound like a message from an environmental pressure group. In fact, these are the opening sentences of an advertisement by the Chevron Corporation, an energy company that does business in approximately 180 countries. The advertisement, in the form of a letter from the company’s chairman and chief executive officer, goes on to describe the challenges the world must overcome if it is to solve the problem of a soaring demand for energy and ever-scarcer oil and gas resources.

The company calls on “scientists and educators, politicians and policy-makers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy”. Once upon a time, an advertisement like this would have been remarkable. Traditionally, companies did not draw attention to problems, especially problems of such magnitude and so close to the heart of their own business.

Banks and other lenders used not to draw attention to the potential problems of personal debt, and energy companies did not draw attention to problems like energy shortages or the role of carbon fuels in global warming. But climates change in more ways than one, and nowadays companies are keen to show their concern about a whole range of issues, from HIV/AIDS to environmental protection and biodiversity.

More and more companies are not just saying that “corporate social responsibility” (CSR) is at the heart of their business — they are spending millions upon millions of dollars on exercising that responsibility. When firms spend that kind of money, we can be certain they are serious. Corporate social responsibility is now very much on the business agenda.

Mallen Baker is a development director for business in the community and creator of the Business Respect website (www.mallenbaker.net/csr/), which focuses on issues of corporate social responsibiltiy. He says, “Different organisations have framed different definitions — although there is considerable common ground between them. My own definition is that CSR is about how companies manage the business processes to produce an overall positive impact on society.”

In modern times, the idea that companies should be socially responsible owes its origins largely to pressure groups and non-governmental organisations. “Sensitively” designed property developments and landscaped highways, environmentally friendly cleaning products and biodegradable plastics have come about largely because of interested groups putting pressure on companies.

Individual consumers, sensitised by the pressure groups, have taken up the idea. Those consumers are now not only demanding products and services that avoid harm, but are insisting that businesses act positively for the good, that firms “give something back” to the communities in which they operate. That something may be anything from help for local schools or helping to educate people about HIV/AIDS, to supporting a wildlife reserve or providing transport for disabled customers.

Mallen Baker says: “One thing that is for sure — the pressure on business to play a role in social issues will continue to grow. Over the last ten years, those institutions which have grown in power and influence have been those which can operate effectively within a global sphere of operations. These are effectively the corporates and the non-governmental organisations (NGOs). Those institutions which are predominantly tied to the nation state have been finding themselves increasingly frustrated at their lack of ability to shape and manage events. These include national governments, police, judiciary, and others.

“There is a growing interest, therefore, in businesses taking a lead in addressing those issues in which they have an interest where national government has failed to come up with a solution. The focus Unilever [a producer of food, household and personal care products] has on supporting a sustainable-fisheries approach is one example. Using the power of their supply chain, such companies are placed to have a real influence. National governments negotiating with each other have come up with no solutions at all, and ever-depleting fish stocks. That is not to say businesses will necessarily provide the answers — but awareness is growing that they are occasionally better placed to do so than any other actors taking an interest.”

For multi-national companies and high-profile corporations whose business depends on their good name and the integrity of their brands, “giving back” to the community in which they operate can make a real difference to the bottom line. A responsible attitude towards issues such as climate change can also help a company’s profits directly.

Some companies are changing their businesses because of present or expected raw material shortages. What were once “oil” companies, for instance, are now “energy” companies. In November 2005, BP, an energy company with almost 103,000 employees operating in a hundred countries, launched BP Alternative Energy, which will “manage an investment programme in solar, wind, hydrogen, and combined-cycle-gas-turbine power generation, which could amount to $8 billion over the next ten years”.

Disappearing natural resources, in this case oil, and a growing public awareness of the polluting effects of hydrocarbons, have made BP’s change in focus inevitable. But the growing demand for alternative energy sources because of problems with hydrocarbons has created a market that makes it sensible for BP to change. On the first page of one advertisement for its new policy, the only message is “This time what we don’t produce is more important”. What is that product? Turn the page and the reader finds it is “Electricity with 90% less emissions.”

Another example of environmental awareness and good business sense coming together to produce change can be seen at General Electric Company (GE), which this year launched ecomagination (http://ge.ecomagination.com/), “an initiative to aggressively bring to market new technologies that will help customers meet pressing environmental challenges”.

According to Jeffrey Immelt, the company’s chairman and chief executive officer, “Ecomagination is GE’s commitment to address challenges such as the need for cleaner, more efficient sources of energy, reduced emissions and abundant sources of clean water.” “And we plan to make money doing it. Increasingly for business, ‘green’ is green.” By which he means that being environmentally friendly can lead to more “greenbacks” — an American term for dollars.An example of how corporate social responsibility can be good business in a very direct and tangible way at the same time as it helps the environment and the consumer.

And apart from making their products socially acceptable and environmentally friendly, energy and other companies spend large sums of money on individual projects and on the communities in which they are based and do business.

In Trinidad and Tobago, energy companies such as BP Trinidad and Tobago (bpTT), BHP Billiton Trinidad and Tobago, and the National Gas Company (NGC) are involved in everything from supporting local cultural activities to environmental and health issues.

BHP Billiton has organised wildlife workshops, helped to provide children with toys, food, and fun at Christmas, worked on sustainable agriculture projects to help farmers, helped in educational programmes about AIDS, and organised cricket seminars for young people, among other things.

bpTT has likewise been involved in a range of activities in Trinidad and Tobago, from involvement at the Galeota Point’s Nature Reserve, to making a US$10 million dollar investment in the University of Trinidad and Tobago and sponsoring cultural activities. bpTT created the “Spirit of Community” Awards “to highlight and assist organisations (non-governmental and community-based organisations) with visionary ideas and practices for addressing areas of societal concern with the hope of bringing recognition and credibility to these efforts”.

A positively profitable relationship for producers and consumers, perhaps.

 

NGC: “Improving the quality of life”

“The National Gas Company of Trinidad and Tobago, as a responsible corporate neighbour, has partnered with and embarked upon several projects focusing on the implementation of infrastructural and social development programmes within its pipeline and site communities. Communities from Guayaguayare to Point Fortin have benefited, and continue to chart their own paths toward self-sufficiency.

“The programme has two main elements. The first is a human capacity building programme, in which educational, training, employment, and micro-enterprise initiatives offered by NGC have helped residents earn a sustainable livelihood. The second has emphasised the enhancement of community facilities and social infrastructure for education, arts and culture, social services, and community development.

“In NGC’s Community Basketball Programme, 42 basketball courts were built or refurbished throughout Trinidad and Tobago, and NGC established a competition that engaged hundreds of players in competitive sport. Thanks to this programme, a number of young basketball players have won athletic scholarships abroad.

“Under the Marine Environmental Awareness Programme (MEAP), residents of coastal communities have been encouraged to protect the marine environment, and to find opportunities for earning their livelihood from the sea. Skills taught range from life-guarding to net and boat repairs and fish and food preservation. NGC is also committed to a policy of “no net loss” of forest resources, and has pledged to undertake the reaforestation of 300 hectares of designated land along its pipeline routes. The company’s ongoing social responsibility efforts focus on building relationships with people throughout Trinidad and Tobago, and improving the quality of life in communities where NGC operates.

BHP Billiton Trinidad and Tobago: “Focus on community”

“Following widespread consultation with stakeholders, BHP Billiton Trinidad and Tobago has decided to focus on community projects in the areas of education, the environment, and entrepreneurship. In the last two years, the company has supported dozens of programmes in the communities around its major operations: Mayaro and Guayaguayare, Toco, and Tobago.

“With BHP Billiton Trinidad and Tobago’s support, schools in Mayaro and Toco have welcomed the Arts-in-Action theatre company from the University of the West Indies Centre for Creative and Festival Arts into their classrooms to educate both students and teachers on a number of subjects. In the Toco area, BHP Billiton Trinidad and Tobago has also supported the global CETT (Centre of Excellence for Teacher Training) programme, which helps improve the way teachers teach reading skills.

“BHP Billiton Trinidad and Tobago works closely with organisations such as Nature Seekers, Save Our Sea-turtles, Tobago Fisheries, and the M2M (Matura to Matelot) Network.

“In the conduct of its activities in Tobago, BHP Billiton Trinidad and Tobago did research on the entire coastline of the island. The information gathered was published in the form of an interactive environmental coastline atlas, distributed to the Tobago House of Assembly, schools, NGOs, fishermen, and other interest groups.

“BHP Billiton Trinidad and Tobago’s entrepreneurship programmes include support for the Mayaro Women in Fishing Association, and for a cassava cultivation project in La Brea Village, Guayaguayare. In Toco, local residents created a long-term plan for a centre to stimulate business activity in the community. Thus the BITTS (Business Information Technology and Training Services) Centre was born.”

bpTT: “No harm, no damage”

“BP Trinidad and Tobago’s overarching policy for the environment is that no harm should come to people and no damage to the environment from the company’s operations.

“Before any new project is undertaken, studies are conducted to assess social and environmental baselines as well as potential impacts and the need for remediation. These Environmental and Social Impact Assessments (ESIA) are subjected to the highest levels of scientific scrutiny.

“Based on the ESIA process, which includes disclosure and consultations with the affected community, measures for mitigation are included in the project description and costs. Projects are also developed with standards for continuous improvement, continuous assessment, and auditing.

“In 1998, following almost thirty years of exploration and production in Mayaro-Guayaguayare, bpTT initiated a series of consultations with the community towards a working platform for sustainable community development. At the same time, a study was undertaken by the Institute of Business to assess the capacity and development needs of Mayaro-Guayaguayare. A complete household census of the area was conducted, as well as surveys of energy-based and non-energy based business — including fishing, tourism, agriculture — educational facilities, and entrepreneurial opportunities.

“The findings were followed by a series of conferences with non-governmental and community based groups. These created the platform for initiatives such as the Mayaro Resource Centre and the Mayaro Initiative for Private Enterprise Development (MIPED), which launched two funding programmes. HOPE is based on the co-operative village bank system that allows borrowers to access unsecured loans for small home-based projects through neighbourhood groups. A more conventional funding programme is available for bigger loans.

“The Mayaro Resource Centre houses the administrators of MIPED and provides classrooms for education, playing fields for sports, and conference and recreational facilities.”