Climate change, poverty, war, income inequality – someone needs to do something. But who? We asked three leading social enterprise specialists based in Australia who they think should save the world.
In between the schmoozing and the skiing at the recent World Economic Forum at Davos, Melinda Gates, co-founder of the Bill & Melinda Gates Foundation, cut through the endless hypothesising with just nine words. “Goals are only wishes unless you have a plan,” she said.
But whose job is it to formulate those plans? And if, as the heads at Davos hinted, the world needs saving – from climate change, poverty, war and income inequality – whose responsibility is it? Can we – should we – rely on government? The private business sector? Charities? The digital revolution has given us as individuals more awareness of these issues than ever before, so is it our responsibility? And if it is, can we really make a difference?
As Cambridge Judge Business School launches its new Master of Studies in Social Innovation degree programme (later this year), and following a recent trip to Australia by CJBS faculty, we asked an academic, a business-woman and a social entrepreneur all based in Australia who they think should save the world.
Simon Bell is a Fellow at Cambridge Judge Business School and professor of marketing at the University of Melbourne. As Melbourne’s Director of Executive Education, he has worked with firms including PWC, Goldman Sachs, Shell and IBM. His specialisms include customer satisfaction and loyalty.
“If you’d asked a business student 20 years ago whose job it was to save the world, they’d have said governments. Government regulated industry and firms complied with their legal obligations while focusing on doing what they do best – generating returns for shareholders. As Milton Friedman famously told us: ‘There is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits’. The thinking was very definitely that it’s not the shareholders’ responsibility to think of wider society.
But in the last two decades, all that has changed. Millennial consumers are much more savvy than Generation X or the Baby Boomers, especially when it comes to the environment, community, social issues, legal issues. We now have a more alert, sensitive generation of consumers who understand the nuances of products – how they’re built and the working conditions of the people who make them – and they think about what they buy far more than, say, my generation did. And with that information, people take on a responsibility. If they don’t like or agree with what a particular firm is doing or what it stands for, they’ll have no hesitation boycotting it.
The power of consumer knowledge also makes corporates more aware of their obligations. Consumers are sceptical about ‘green-washing’ – it’s not enough merely to be seen to be doing something. And this has in turn led to a trend away from companies using ‘bolt-on’ strategies to show how responsible they are. Previously you’d have had businesses choosing a ‘mission’ or charity to which they’d donate money; or they might allow their employees, for example, to dedicate one day a month to work with a homeless shelter or teach street kids. These schemes can certainly make a difference, but many companies now have recognised that it makes more sense to integrate environmental or ethical responsibilities closer to the core of what they do. Social responsibility for many contemporary firms is, therefore, less of an afterthought and more integrated into their DNA.
Tesco and Currys, for example, can’t eradicate poverty, so they don’t try – and nor should they. Businesses should stick to what they’re good at while making sure that they are doing the sorts of things that make the world a better place to live in. Businesses know how to reduce costs, for example, so they can apply this discipline to reducing their carbon footprint. Firms know how to manage a supply chain, so many are now applying those skills to review how ethical their supply chain is. They encourage sustainability in other ways. Costco pays a living wage and gives its staff healthcare – that’s making a difference but, importantly, it’s aligned with what the firm is good at doing.
Of course this means that some of the larger goals such as the alleviation of poverty are now orphaned but that’s not necessarily a bad thing because it puts that responsibility back on governments who, through coordinated action, are better able to meet these challenges. No company can ensure the eradication of type 2 diabetes but they might be able to ensure their products are more nutritious – that’s a more proximal but no less important contribution to the larger goal.
When it comes to consumers’ sensitivity to social responsibility in business, I’d say Australia is ahead of the US but behind much of Europe and a long way behind Germany. What is interesting is that while we are sensitive to environmental and social issues, the levels of philanthropy in Australia are still very low. While they are happy to support social causes with their consumer choices, you don’t see the public falling in with cash donations. ‘Don’t ask me to give any more,’ they say. ‘I’ve paid my taxes.’
But saving the world through ethical consumption is a long, slow journey, particularly when customers will pay only for goods with a private benefit – that is, a benefit from which others can be excluded. And this is further complicated by firms chasing solutions to problems that predominantly wealthy consumers face. Pharmaceutical companies are still chasing cures for baldness and erectile dysfunction, not AIDS or malaria, because AIDS and malaria, by and large, do not kill wealthy people.
We are learning to take responsibility as consumers and firms are getting better at taking their social responsibilities more seriously, but there’s still a long way to go.”
The enlightened capitalist
Vanessa Pearson (Cambridge MBA 2001) is a co-founder of the Diversified Property Group, a for-profit group which is revolutionising sustainable communities in the suburbs of Sydney. Cambridge alumna Pearson admits it was a risky business decision to build luxury energy efficient housing estates. But their sustainable homes have empowered their clients to reduce their carbon footprint.
“I believe it is the moral responsibility of everyone to ‘save the world’, and we all need to take ownership of the problem. There is a growing market of people looking for a responsible way to live.
An excellent example of this is ‘Clean Up Australia Day’. Yachtsman Ian Kiernan was appalled by rubbish in waterways and parks so he set about convincing a nation to clean up their own neighbourhoods. The first year, around 300,000 people participated. Now, some 20 years later, the initiative is worldwide, reaches 80 countries and involves approximately 30 million people. Kiernan has taught us that people like to be empowered with achievable solutions that benefit the wider community.
This principle also transfers through to enlightened capitalism, where ‘for-profit’ businesses provide products and services that are also socially responsible. As property developers, we have become very focused on seeking to solve environmental and social issues as a part of our corporate mandate, as opposed to traditional business models that focus on yield targets.
We found our ‘enlightenment’ from the voice of the next generation. Actually, it was a lack of voice. My young niece refused to speak to her Daddy (my business partner) until he helped the environment. At first we thought the idea of integrating luxury housing with sustainability for profit was too risky. No one had done it on a large scale before. Our test project needed to be a debt-free investment of A$40m as at the time financiers wouldn’t back such a radical project. The estate was appropriately called ‘Bel-Air’ or beautiful air.
The prototype houses gained support and momentum from our suppliers, trades people, consultants and sales people. Everyone was equally excited to create the first energy efficient housing community. Soon we were receiving international attention and Rosario Marin, 41st Treasurer of the United States, joined our advisory board. Rosario has brought a wealth of knowledge from her time working in Governor Arnold Schwarzenegger’s Californian government to mandate minimum sustainable standards in construction. Furthermore, as a long term advocate of children with special needs, she has encouraged us to focus on social issues, in particular including accessible housing into each of our housing estates.
We started marketing the estate by educating prospective clients about the energy payback period, i.e., the amount of time it takes for savings on energy bills to offset the initial capital outlay. However, I don’t believe economics was at the heart of their motivation. I believe our clients care about making a difference and are happy to do their part for the environment. In a way we have made it achievable for them to reduce their carbon footprint by optimising their energy consumption.
After a few years the business model has stabilised and in itself has become sustainable. We have now rolled out an additional A$100m investment with another A$100m planned in the coming years. Looking forward our company will continue to focus on environmental and social issues for communities.
No doubt regulatory authorities will be looking to our estates to adopt and mandate some of our practices and roll it out into the general community. It feels good to make a difference.”
The social entrepreneur
Audette Exel left her post as managing director of Bermuda Commercial Bank in 1998 to found the Adara Group – a “business for purpose” set up for the sole purpose of funding the work of its own international development projects. Since then Exel estimates the organisation’s health, education and community projects have touched hundreds of thousands of people in poverty in Uganda and Nepal. The company’s mission is also to “change the way people think about the role of business” and the “power of business/non-profit partnerships”.
“Whose job is it to save the world? Well, our present world is unsustainable and change is necessary for the survival of each of us – so it’s up to us all as individuals to make a contribution. Finger pointing doesn’t help: it’s everyone’s role, and in everyone’s interest, to “save the world”.
I can’t remember ever not being appalled at the way the world works. The planet’s richest 62 people have a combined wealth equal to that of the poorest three-and-a-half billion. How can we live with that?
Part of the barrier to the solution is that word ‘responsibility’ – it is too didactic and colours the conversation. Everyone has a responsibility. But better than that – way better – they have an opportunity. People ask me about ‘devoting my life’ to Adara and the ‘sacrifices’ I’ve made – they’re puzzled I don’t draw a big salary, or that I’ve driven the same car for 15 years. But I’ve had a joyous time doing what I do, meeting wonderful people, changing lives, so why do people think I’ve sacrificed anything?
Acting to save the world is a joyous, powerful choice. The first thing we need to do is overcome a big trap in our consumer-driven world, in which we lose track of what is enough to be happy. How much do we really need? That car gets me from A to B and I love it – why do I need a new one?
As it is up to all of us, business has a huge role to play in saving the world. The internet has brought a sea-change in our understanding of the global community. Everything is now transparent – the problems and the solutions – and corporates do find themselves now held to account and made to act responsibly, which is a great thing.
Indeed, we have come so far that any single stakeholder who believes Milton Friedman’s quote – that businesses’ only obligation is to deliver a profit – is now seen as almost sociopathic. Transparency has given us visibility to and by so many stakeholders – environment, consumers, staff, community, shareholders and countless others – that business nowadays has a quite different level of ethical responsibility. This can prompt a battle between self-interest and wider stakeholder interest and there is some greenwashing still, but increasingly firms are examining the sustainability and ethics of their products and practices. And then you have other individuals taking a more global approach with the decision to give away huge amounts of money or shares in their companies – and people like Mark Zuckerberg making it cool to do so. And as the momentum shifts further, the dinosaurs who still follow the old way will die out.
But let’s not forget politicians – it’s their job too. Again there is the internal power struggle; it’s in the interest of parliamentarians to remain popular and electable, conflicting at times with longer-term community and global interests. It takes courage for government to deal with refugee crises, holding human rights aloft, or global poverty, and it risks unpopularity by meeting our international obligations and supporting other countries far away. But again, it’s not only about ethics, it’s about necessity – not dealing with these issues breeds disillusionment, dysfunction, terrorism, pandemics and the mass movement of people, which has an impact on social structures from one end of the world to the other.
Ultimately acting for the greater good is acting in our own self-interest. Things need to change and if you’re standing on the tracks and the train is bearing down on you, putting up a tent so you can’t see it is not going to be enough.
We need everyone to see the opportunity, and take the responsibility, to save the world. We are all pieces of the puzzle. People have the power to effect change locally, nationally, globally, doing whatever fits their truth. The media, too, has a huge responsibility to tell good, honest stories and to open people’s minds and thinking to alternate ways of viewing a problem.
Every one of us has a different skill, and the power to effect change. As a well-known Jewish saying tells us: If you can’t save the world, save one life. If we all did that, imagine the impact we’d have. We all have the power. So just start. And you’ll find that it doesn’t feel like an obligation.”