Ej Qua Hiansen l October 20, 2023 l The Manila Times
I RECENTLY attended the Asian Forum on Enterprise for Society (AFES) as organized by the Ramon V. del Rosario Center for Corporate Social Responsibility (CSR) of the Asian Institute of Management. The theme was “Boosting Innovation and Inclusion Together” and it brought together speakers and panelists from around the world to discuss how businesses could better fulfill their roles in society as value creators and positively impact society.
One highlight for me was the Keynote speaker, Peter Brabeck-Letmathe, the chairman emeritus of Nestlé and an active member of the Foundation Board of the World Economic Forum. Peter championed the idea that business should be responsible for creating shared value across its value chain and that business could indeed be a force for good, sharing examples from his experience in Nestlé.
The paradigm that many businesses have followed was posited by Milton Friedman in 1970 when he stated that “the social responsibility of business is to increase its profits.” This led to an era of profit maximization while the concept of business as a source for good has been gaining acceptance in recent times. In 2019, many American CEOs (chief executive officers) signed a “Statement on the Purpose of a Corporation,” which stated that companies should deliver value to all stakeholders.
These led me to reflect on how to operationalize these concepts, the first being that the actions of a company should really be aligned to its mission, vision and values. Profit maximization is not commonly found in the mission statements of corporations yet it ends up becoming an objective. While profit is important, especially as a way to incentivize investors and to make a business sustainable, business should also seek to maximize impact and value creation.
One such way we can do this is to look at how we balance our portfolios. Are we investing in businesses that are aligned with our objectives? Further, there are a lot of investment opportunities if we look at the fundamental needs of society, especially in a country like the Philippines. An example of this would be Phinma’s entry into accessible education whereby focusing on providing quality education at low price points has led to the development of Southeast Asia’s largest network of tertiary education institutions. Another example would be the widespread adaptation of GCash during the pandemic as people sought ways to transfer payment without the physical exchange of cash. Prior to the pandemic, I hardly knew any users of GCash and now it is more surprising when I encounter someone that does not have GCash.
Business can also be a force for good in how we treat our employees, by providing them gainful employment with competitive benefits and appropriate training so that they have career opportunities. A happy and engaged workforce becomes the top ambassadors of a company, especially when the company is genuine in wanting to be a force for good. Volunteer programs of companies are other ways in which this can be actualized. Annually, we see many companies actively participating in the Brigada Eskwela program of the Department of Education, enabling their employees to give back to their communities.
In an increasingly volatile environment, we in the business community have a role to play in society, especially by allocating capital toward areas most in need. Instead of doing this purely through CSR initiatives as in the past, this allocation of capital for social purposes should form part of the corporate strategy as we create shared value and hopefully shared prosperity for all.