Doing good isn't bad for business

Lynette Khoo, Business Times 15 Dec 07;

CORPORATE social responsibility has become a sexy term nowadays, with more businesses eager to incorporate social responsibility into their practices.

But the next step - businesses becoming social enterprises - still seems remote. Many assume that profit making does not go hand-in-hand with social objectives - a view aired at this year's Social Innovators' Forum. But that perception is a myth.

Instead of sticking to a single bottom-line, social enterprises tend to look at two key performance indicators - profits and social impact.

The Body Shop, for instance, is a global manufacturer and retailer of beauty and cosmetics products founded on five values: protection for the planet, fair trade, defence of human rights, enhancement of self-esteem and aversion to animal testing. It claims that the making of its cosmetic products involves no cruelty to animals, and that the ingredients it uses are obtained fairly. These qualities have actually become a successful branding tool.

Its charity, The Body Shop Foundation, provides financial support to pioneering, frontline organisations that have otherwise no chance of conventional funding. Still, The Body Shop's operating profit has surged 173 per cent from 2002 to £41.5 million in 2006.

Locally, Bizlink Centre was set up to provide employment for people with disabilities. This non-profit organisation, which has been in the black since day one, currently has a surplus of $250,000. It went on to secure a contract to provide corporate gifts made by disabled persons for the International Monetary Authority/World Bank meeting held here last September.

Gateway Entertainment, which performs magic shows and produces drama feature films, also saw its Project Smile break even from the day it started with the help of corporate sponsors and the Ministry of Community Development, Youth and Sports.

An afterthought

But for most outfits, socially responsible practices are often an afterthought rather than an objective that goes hand-in-hand with the goal of profit-making. Many believe, mistakenly, that serving social needs requires financial sacrifices. Companies need to snap out of this mistaken paradigm while consumers must shed the notion that products from social enterprises are of inferior quality.

Singaporeans often expect the government to take the lead. The recent recommendations by the Social Enterprise Committee (SEC) chaired by Philip Yeo to create a culture of social entrepreneurship is certainly a step in that direction.

One way is for businesses to to invest in existing social enterprises to maximise their value or to partner social enterprises or charities and provide them expertise and business mentoring.

The SEC recommendations to set up a Social Enterprise Association and a Social Enterprise Centre provide an institutional base for further action.

To speed up the process, perhaps more incentives could be given to commercial companies that partner with charities or social enterprises.

Another SEC recommendation that proposes profit-sharing for social enterprises funded by the Comcare Enterprise Fund (CEF) after a specified time period is also worth looking at.

Businesses will do well to realise that they can shape this movement without jeopardising their margins.