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Pioneering experiments Down Under

From laggard to leader:

Pioneering experiments Down Under

How Australia is innovating on climate policy and social enterprise

Blog by Wayne Visser

Part of the Searching for Sustainable Business series for CSRwire

Moving beyond denial to innovation

I first visited Australia at the invitation of Leeora Black, Director of the Australian Centre for CSR (ACCSR) to deliver a keynote address on ‘Leadership for social responsibility’ at their 2010 ACCSR conference, and to teach a course at La Trobe Business School, where I went on to take up a three-year Visiting Professor role. A year later, in 2011, I also spoke at the launch of the ACCSR State of CSR report, an annual survey of CSR professionals in Australia.

The ACCSR remains one of the most credible voices on the scene. In their most recent 2012/2013 State of CSR report, they identified the corporate leaders in social responsibility in Australia and New Zealand – companies that are integrating CSR into their core business activities and strategies – to be ANZ, Patagonia, Interface, Rio Tinto, Marks & Spencer, Stockland, National Australia Bank, Unilever, Nike and Westpac.

Looking to the year ahead, survey respondents told ACCSR that ‘building internal understanding and support for our CSR/sustainability approach’ was the highest priority, followed by managing regulatory impacts and measuring impacts and outcomes of CSR initiatives. For New Zealand, their top priority was ‘reducing or eliminating any negative environmental impacts of our business’ and ‘improving or beginning our organisation’s sustainability reporting’.

All this points to the steady maturing of CSR in Australia and New Zealand, towards what a more strategic approach. Certainly, they seem to have made up considerable lost ground since I first visited. In 2010, I sensed a huge frustration among people working in sustainable business in Australia. After about ten years of severe drought, fatalities from runaway bushfires in Victoria in 2009, and unprecedented flood and storm damage from Tropical Cyclone Yasi in 2011, most Australians still seemed to be in a state of climate change denial.

The biggest reasons cited were an unsupportive (some even said backward) government and policy, and the negative lobby power of Australia’s two biggest industries – extractives (mainly mining) and agriculture. At the time, the opposition party was scoring cheap political points by saying that everything to do with climate change was a tax, and hence to be avoided. They conveniently forgot to mention that, according to the Stern Review, climate change may cost around 1% of GDP now, but could cost as much as 20% of GDP later if action is stalled.

Since then, Australia has moved from laggard to leader by putting a price on carbon – the legacy of ousted prime minister Gillard. The initial fixed price of $23 per tonne of carbon rose to $24.15 for 2013-14 (which is four times the European rate and almost double California’s price) and is set to rise again in a year, before the government introduces its own national emissions trading scheme (ETS), linked to the EU ETS. There is some debate about whether these commitments will survive the next elections, but early indications are that carbon pricing will stay, albeit at a lower market price.

An experiment in generosity

Besides the focus on climate change, one of the highlights of my 2010 trip was spending some time with Shanaka Fernando, founder of the Melbourne-based restaurant chain, Lentil As Anything, who was introduced to me by an academic colleague, Colin Higgins, now at Deakin University. Fernando is one of those rare pioneers who are prepared to live by their convictions, flaunt social convention and challenge the status quo. All of these are demonstrated through his social enteprise, a restaurant called Lentil As Anything.

I call it a social experiment, because the business goes beyond simply being a social enterprise. In common with other social businesses, Lentil As Anything embraces the entrepreneurial spirit while it ‘seeks to have a significant, positive influence on the development of the community’. But there is something unique, more challenging, more sublime and more subversive—it gets to the heart of human nature and the essence of Western capitalism. I am talking about generosity and money.

Through Lentil As Anything, Fernando is trying to foster a culture of generosity. What would happen, he wondered, if there were no prices? What if people only paid what they could afford, or what they thought the food was worth, or what they were inspired to pay? Is there enough generosity left in Western society to run a viable business on the principle of giving and sharing, rather than profit maximisation? Would the ‘free rider’ problem kick in, with people taking advantage of the ‘free’ food?

According to Fernando, all kinds of interesting things happen when people are faced with ‘the magic box’ – the mini treasure chest that people can place their donations in as they leave. A few (very, very few) take advantage. Some, who genuinely can’t afford to pay, offer to chop vegetables or do dishes. Others make their own assessment of what is a fair price to pay. Some are quietly generous, while others make a theatrical gesture of placing their donation in the magic box.

But it goes beyond the money. Other unexpected things happen too. As you look around, you notice that this is not a ‘people like me’ experience, where those from your own socioeconomic or ethnocultural strata surround you. Lentil has succeeded in mixed it up, cutting across traditional divides. And because of the philosophy of the place, you may find a wealthy businessman striking up a conversation with a subsistence artist.

When you create these kinds of creative connections, it is a potent recipe for innovation, for rediscovering what it means to be human. Fernando insists that Lentil is first and foremost about good food (interestingly, vegetarian food, because that is the most inclusive, making concerns about halal or kosher or meat-based preparation irrelevant). But it is clearly more than that. It is an invitation to restore our faith in the essential goodness of humanity and the wholesome nature of community.

As the world recovers from the age of greed that culminated in the global financial crisis, it is refreshing to be reminded of the rightful place of money in society. Money is always a means to an end; never the end in itself. Melbourne – and indeed the world – would be a poorer place if brave experiments such as Lentil As Anything were allowed to fail. Let us make sure that, in the battle of generosity versus money, generosity wins hands down.

After my 2010 visit, I concluded a blog on sustainable business in Australia entitled ‘Too much sunshine?’ with the cheeky words: ‘Why worry about disaster scenarios for 2050 when the sun is shining, the skies are blue and there’s a great sports game on? CSR what? Surf’s up!’ Today, happily, I take those words back. It seems that we can all learn a thing or two from some of the brave experiments in social responsibility happening in the land Down Under.

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Cite this blog

Visser, W. (2013) From laggard to leader: Pioneering experiments Down Under, Wayne Visser Blog Briefing, 21 August 2013.

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August 21, 2013

CSR 2.0: Part 8 (Video)

Extract from a presentation by Dr Wayne Visser at the Korea Social Responsibility Institute (KOSRI) 2012 conference in Seoul.

CSR 2.0: The Future of CSR — Part 8 (Implementing CSR 2.0)

August 21, 2013August 21, 2013

CSR 2.0: Part 7 (Video)

Extract from a presentation by Dr Wayne Visser at the Korea Social Responsibility Institute (KOSRI) 2012 conference in Seoul.

CSR 2.0: The Future of CSR — Part 7 (Principles of CSR 2.0: Responsiveness & Glocality)

Continue watching: CSR 2.0: The Future of CSR — Part 8 (Implementing CSR 2.0)

August 21, 2013August 21, 2013

A giant leap backwards on CSR

A giant leap backwards on CSR:

India’s great missed opportunity

How India’s new mandatory CSR legislation and ‘clean green’ policies are taking companies in the wrong direction

Blog by Wayne Visser

Part of the Searching for Sustainable Business series for CSRwire

Misguiding the arm of the law

In my last blog on sustainable business in Nigeria, I ended with the call for better policy on corporate social responsibility (CSR) – and a caution against mandating CSR directly, as Nigeria has proposed. This is unfortunately a lesson that India has failed to heed. In the past week, major reforms to the country’s Companies Act of 1956 were approved. Many of the changes are a laudable attempt to bring India’s business sector up to date with international trends in corporate governance, transparency and anti-corruption.

Sad to say, however, through this legislation, India is taking giant leap backwards on CSR. The new Companies Bill requires companies with profits over 50 million Rupees (USD 816,000) in the past three years to spend at least 2% of their profits on CSR. At a time when most of the world has moved beyond defensive and philanthropic modes of CSR, towards promotional, strategic and transformative approaches, India’s policy virtually guarantees that its companies will remain stuck in an out-dated charitable mind set.

The Indian legislation allows companies the freedom to choose the issues that their CSR efforts will tackle, which at least in theory allows some scope for strategic alignment of social and environmental issues with business activities. The policy also suggests that failure to spend the required percentage on CSR – or to adequately explain the reasons why – can result in penalties. However, the problem in India as in many developing countries is that the capacity to monitor and enforce is severely challenged by weak, failing or corrupt governments.

India – along with Nigeria and Malaysia, who are also pursuing the mandatory CSR line – should learn from the United Kingdom’s mistakes. Britain created something similar – a Minister for CSR – in 2003, and eventually abandoned it in 2010 as a largely ineffectual strategy. The reason it failed in the UK, and will most likely fail in India, is the same reason that CSR departments often fail in companies: lack of integration into the core functions of the organisation, and lack of political or economic clout.

In my view, governments should focus on effective regulation of the issues that sustainable business is trying to address (biodiversity loss, labour conditions, climate change, transparency, etc.) rather than regulating sustainable business activities per se. India could have learned valuable lessons from South Africa’s corporate governance reforms, which integrate sustainability, or from the UK and USA’s legal reforms on social enterprise, or from Canada and Spain’s community development companies. Instead, by regulating CSR directly, they are more likely to create bureaucracy, stifle innovation and invite corruption.

Strengthening inclusive business

There are some more other aspects of the new Companies Bill, which could inadvertently have a bigger positive impact on socially responsible business than its mandatory ‘CSR tax’. For instance, the ability to file class action suits has been bolstered, which could allow stakeholders to take legal action against irresponsible companies. The bill also requires that companies disclose the difference in salaries between directors and employee, thus addressing one of the most neglected issues in CSR and sustainability, namely equitable income distribution.

This equity clause comes closer to the transformative agenda that is so urgently required in CSR, not only in India, but around the world. It builds on the promising trend of inclusive business that has been building in India over the past decade. Long before Michael Porter and Mark Kramer’s idea of ‘creating shared value’ (CSV) was introduced, India became a seedbed of innovation for ‘bottom of the pyramid’ (BOP) strategies, following work by CK Prahalad, Stuart Hart and others.

One of the BOP cases I investigated in some detail when I did my CSR lecture tour of India in 2010 is A Little World, a rural microbanking enterprise. Anurag Gupta, the Indian social entrepreneur who founded the company, has used mobile phone and biometric scanner technologies to make banking accessible and affordable to poor households. As a result, a ‘mini-branch’ costs only USD80 to run per month, and millions of illiterate, undocumented villagers can get low-value bank accounts for the first time in their lives. The case study is written up in detail in my book, The Age of Responsibility, and remains a great example of inclusive business.

Green does not always mean good

There are also many inspiring examples in India of how clean technologies like renewable energy and water purification are bringing vital utilities to poor households. However, research by fellow Cambridge academic, Emma Mawdsley, suggests that some of these success stories mask ongoing inequalities of development in Indian society. She presents extensive evidence of how, for example, Delhi’s ‘clean, green’ campaign has mainly benefited the middle and upper classes, while the poor have suffered.

This pattern of social injustice is reflected in the way Delhi is tackling its air pollution problems, with policies that impact badly on the poor. Small polluting industries were relocated with little or no compensation for owners or workers. Older vehicles that do not use Compressed Natural Gas (CNG) sold to other city transport fleets, thus displacing rather than reducing pollution. Even the focus on air pollution represents a middle-class priority, rather than the most pressing need of the poor—clean, available water.

Looking at the issue of water, Mawdsley is similarly critical. The poor are often criminalised for water theft (estimates indicate that as much as 50% of Delhi’s water is unaccounted for in official meter readings and thus ‘wasted’), while the authorities turn a blind eye to middle- and upper-class illegality. This common practice involves the falsification of meter readings and technologies that can enhance water amounts extracted from already legal connections or from illegal/unregistered ground water sources (through tub and bore wells).

Mawdsley concludes that ‘the pursuit of profitable environmental policies, technologies and change is desirable if we are to move towards greater sustainability, but the political and social nature of their impacts must be recognised. “Green” does not automatically mean “good”. There will always be winners and losers, but there is a real danger in India at least that the drive towards greater sustainability will have some regressive social outcomes.’

From my own experiences and research, I believe India is certainly a space to watch on sustainable business, and its progress is far from being a foregone conclusion. Whereas there is a sense of order and control in China’s great transition, India is far more chaotic and unmanaged (or unmanageable?). It is almost as if there is a grand experiment in sustainable business – democratic, messy, ad-hoc Indian style, versus controlled, managed, sanctioned Chinese style. Which will prevail is a question for future historians. I think it’s too soon to place bets on either. If we’re lucky, both will succeed in their own way.