Living proof of the power of capital?

This post comes from one of our occasional guest bloggers, Dr Laura Spence,from Royal Holloway, University of London. She's also the unofficial Crane and Matten photographer having been responsible for our latest profile pic to the right, (as well the one it replaced). Thanks Laura!

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While Crane & Matten have been enjoying a well earned break, I had an intriguing and thought-provoking week here in the UK. On Monday I was invited to a talk by Bill and Melinda Gates, the entrepreneur behind Microsoft and his wife. The purpose of their talk was to spread the word on an initiative called the ‘Living Proof project’. They asked the audience to tell the story further, which I am happy to do here.

Akthough focusing only on US investments, Living Proof reminds us of the progress that investment in sustainable development has resulted in over recent decades. The Bill and Melinda Gates Foundation have played a substantial role in these improvements alongside government aid and the work of charities and other institutions globally (though interestingly not much mention was made of the contribution, such as it might be, of business).

Some of the incredibly encouraging facts that Bill and Melinda presented are worth registering: 5.4 million child deaths were averted through immunisation between 2000 and 2009; we are nearing the eradication of polio; 98 million fewer people are going hungry in 2010compared to 2009; in Africa measles deaths dropped by 92% between 2000 and 2008.

No-one is suggesting that poverty and public health are not still critical problems globally, but progress has been made. Aid is a large part of the reason for these wonderful improvements in the lives of the poorest. Highlights of their talk can be seen at: http://www.one.org/international/livingproof/share/?rc=email , or for the full blown version, go to http://www.one.org/international/blog/?p=3988 .

Meantime, I have been pondering what it is that makes people like Bill and Melinda Gates, who have dedicated a large part of their lives to generating vast wealth, switch focus and seek to give it all (indeed, 95% in their case) away. They are not the only ones to take this route (think of James Carnegie, William Hesketh Lever, George Cadbury, Thomas Holloway). And I should say I don’t mean to have a dig at Bill and Melinda. I wish others would take a leaf out of their book. But what is it that motivates such a shift?

It would be easy to assume that in some cases it is to assuage guilt for spectacular financial success by means not always bathed in moral glory. Well, maybe. But there appears to be something more going on. Accepting moral responsibility for the power that wealth delivers must also play a role. Being released from the shackles of complex, large organizations with multiple priorities may be another reason. Or is it a question of the enormous gratification – better surely than any number of diamonds or private jets – that must come with saving lives? Perhaps ensuring a positive social legacy is also a driver. There again, thy may just be in a position to do good, and willing and able so to do. This phenomenon of refocusing on public good post-career is not just a privilege of the private sector. Pop stars, and politicians, all represented ably at the Bill and Melinda Gates talk, have also been known to do this.

You do have to wonder though, if some of the people we deem the most successful in our society have ideas of philanthropy in later life, why don’t they get thinking about what they can do NOW, with the tools at their disposal. Why do many of us fail to adequately ‘do good’ during our day jobs? This was part of the discussion at a workshop I was involved in last Wednesday on Social Enterprise. This enigmatic concept broadly encompasses the idea of an organization that has social or environmental drivers as the PRIMARY goal. It is a huge phenomenon and is an area to watch in terms of research and, more importantly, its actual impact on pressing global problems.

Last Wednesday also saw the UK government announce the details of a strategic spending review intended to reduce the UK debt, which will cause a great deal of pain over the next few years. While the axe has been taken to nearly every aspect of public spending and the benefits and welfare system in our country, miraculously the investment in foreign aid has been pretty much spared. Though I didn’t spot him there, maybe the Chancellor was listening to the message from Bill and Melinda Gates. I sincerely hope a few business leaders will too.

Laura Spence

Photo by Johnny Vulcan. Reproduced under Creative Commons Licence

Business ethics in 2010

Well it's been in gestation for a while, but we're pleased to announce that the 3rd edition of our business ethics textbook has been published today by Oxford University Press. Once more subtitled 'Managing corporate citizenship and sustainability in the age of globalization' it's a continuation of our efforts to provide an integrated approach to the subject of business ethics and corporate responsibility ... and this time we've gone for a fully international perspective. Or as we nicknamed it during development, a "rest-of-the-world perspective"  - i.e. one that offers a real alternative to a subject still dominated by parochial US textbooks.

This is the pre-publication proof of the front cover, showing an Angolan fruit seller supported by a microfinance scheme in Luanda. We thought it not only helped to highlight this global orientation but also worked well with a new case on microfinance we feature in the text titled "Targeting the poor with microfinance: hype or hope for poverty reduction?" It's a positive picture about an exciting development in business ethics ... but as you'd expect from Crane and Matten, the case itself eschews any easy answers.

Along with microfinance, we've got quite a bit of new content on social enterprise in general, and specifically on the ethical challenges of poverty reduction, affordable water access, and other development issues. Also new to the edition is extended analysis of the financial crisis, including new sections on the ethics of rating agencies and hedge fund ethics. No great surprises there we suppose, given the timing, but it was fun to put together a book that managed to include the intricacies of the ethics of finance along with content on ethcial sex shops, ethics in modelling, and the search for a treatment for "female sexual dysfunction" among others. As you might imagine we enjoyed researching some of these new parts.

There's also a whole lot of other new stuff in there, which you can read about on the publisher website and on the book's online resource centre which will be launched any day now. The biggest change in format though, apart from the extension of our international perspective, is a new feature called "Ethics online". This talks about some of the ways that digital technologies and new social media are reshaping business ethics practice, for example through CSR blogs, on-line diversity forums, ethical consumption sites, and web-based tools to assess your carbon footprint. This is something that nine years ago, when we started writing the first edition, we didn't even consider remarking on as a phenomenon in itself, but which now is pretty much a central part of the business ethics world.

Well anyway, that's probably enough from us talking about the new book (like all new parents, we can get a little over indulgent in praising our perfect little baby). But if you have any comments about it, good or bad, do let us know. Feedback of all kinds, is always welcome. And who knows, before we know it, we'll probably be worrying about all its little imperfections and planning a fourth edition. Roll on 2013!

Institutionalizing CSR through B Corporations

Spied over at CSRwire today was this interesting little video from CNN on the B Corporation phenomenon. For those who haven't run into this before (and we have to admit that included us until recently), B Corporations are, in the words of their inventors, "a new type of corporation which uses the power of business to solve social and environmental problems."

Hmmm, doesn't sound very new to us. Sounds suspiciously like CSR, or maybe social enterprise, or social business as Muhammad Yunus likes to call it. Well yes, in a way B Corporations are pretty much like these existing forms, except there are a couple of new twists. And it's these new features which account for some of the interest - both good and bad - that B Corps are beginning to stir up.

The first big difference is that B-Corporations are certified. As a company. To a single set of standards. Not a ranking. Not a product or site certification. A full company certification. Yes, you heard it right. This is a certification that once and for all seeks to distinguish the good companies from the bad. Or as the B Corporation website puts it, to "distinguish good companies from good marketing" 

Second, and this is where things start to get really interesting, B Corps are required to "amend [their] corporate governing documents to incorporate the interests of employees, community and the environment." Shareholder primacy out. Stakeholder governance in:

"The B Corporation legal framework specifically expands the responsibilities of the corporation to include these stakeholder interests.  By redefining the legal purpose of the company this framework makes it easier for good businesses to make decisions that support their social or environmental missions.  The framework also allows them to attract mission-aligned capital and maintain mission as they grow, scale, and even plan succession.  We believe that by creating B Corporations within existing corporate law we are providing a market-driven solution today for good businesses."

This is a novel idea. Working within the legal framework of corporate law to redefine the purpose of a company on an individual basis. So, the logic goes, even if the company draws in outside investment in order to grow, the founding ideals can be institutionalised and protected. Well that's the plan. As far as we know, the legal status hasn't been tested yet in the courts, but with an amended charter, signed off by the board, and approved by shareholders/members/partners, it looks pretty compelling.

B Lab, the nonprofit behind the initiative is lobbying for fuller legal recognition of B Corporations and has pushed for legislative changes in a number of US states, with votes on the proposals coming up sometime this year in several jurisdictions. The purpose is to establish some legal recognition for an enterprise that stands somewhere between a company and a nonprofit. Yes, a social enterprise, if you will.

From our point of view, the initiative is a much needed one - especially in a country like the US which, as with many others, doesn't yet have formal recognition for alternative organizations of this type. B Lab's rating system, though, however good it might be, is bound to have its critics. In our view, it is just too ambitious to try and rank a whole company in this way. A more focused approach that simply started with whether the product or service had a net social benefit would have been better. However, the legal twist is an exciting development for the CSR movement which too often gets bogged down in the shareholder-stakeholder battle. No surprise then that more than 285 US companies acrosss 30 or so industries have already joined the initiative and changed their articles of incorporation or partnership/membership agreement. We'll be watching closely to see how the courts respond. And if you want to hear more about the companies involved, here's another short video from the Little Films group on B Corporations.