CSR Re-inspired

Highlights from the ORENDA Connections conference and 

why I believe in CSR again

If you have followed my posts throughout the past few months, you've likely caught on to the fact that I've become a tad cynical about corporate social responsibility (CSR).  Having gone through business school thinking optimistically that CSR is creating positive impact around the world, since graduating a year ago, my experiences and research have tainted this perspective.

This past year, I have delved deep into the web of social innovation.  I have spent countless hours at events that focus on social entrepreneurship and social finance.  I have read blogposts, books, and articles about grassroots organizations  and social entrepreneurs who are creating real system-changing impact on the world's most pressing social issues.  I have lived and breathed all that is Ashoka.  And I've seen reality snippets of the corporate world; its hypocrisy and wasted resources.

I guess this explains why in just one year, I went from the CSR end of the spectrum to the grassroots extreme.

But this past week I attended ORENDA Connections' CSR conference, In Good Company, and to my surprising relief, I was totally re-inspired by the power of CSR.

I have been following ORENDA's founder and CEO Peggie Pelosi since my studies at Ivey.  She is a true inspiration to me.  Peggie epitomizes the powerful woman determined to create positive change.  After a twenty-year career in sales, a life-changing experience in Uganda led Peggie on journey which culminated in the founding of ORENDA: A strategic CSR consulting company dedicated to helping companies leverage the power of CSR to create a meaningful connection between people and the places they work. (Read more about Peggie's interesting story here)

In Good Company drew speakers from major corporations across various sectors as well as smaller, emerging companies.  We heard from Microsoft, Canadian Tire Jumpstart Charities, Telus, Edelman Public Relations, L'oreal and Loyalty One to name a few.  And while I wasn't fully aligned with a few presentations, I took home some interesting learnings and was inspired by two companies in particular: Fifth Town Artisan Cheese, and Better the World.

Here are some fast facts that resonated with me:

- Catherine Hughes of Corel Corporation shared that they chose to partner with global charity Room to Read because the charity was adament that they would choose how and when Corel would interact with Room To Read's staff and children.  This criterion has led to an incredibly successful partnership. 

- Petra Cooper, founder of Fifth Town Artisan Cheese, has spent only $50,000 on marketing in all the years her business has been running...cumulatively.  So how do people know about this organic dairy farm that sells mind-blowing cheeses? How is Petra so successful?  She allocated those traditional marketing dollars to her focus on community.  She donates cheese to non-profit events and supports various other community initiatives.  She also sells the experience through her widely-acclaimed dairy farm tours. She may be extracting value from her CSR practices, but as long as it is authentic and creates impact, it works for me!

- Steve Croth of Better the World asked the participants if they brought their CEO's, CFO's, and other big guys/gals to the conference that day.  Not one person put up their hand.  He said that we're not bringing the right people to events like In Good Company, because everyone who was there has already bought-in.  We know that the real decisions start at the top, so let's change the target market of CSR events.

So simple, yet so brilliant.  This one really stuck with me.

- During the panel discussion, the speakers were asked the percentage of pre-tax profits that are spent on their CSR strategies.  While individuals from various large corporations answered this question quite precisely (Apprently "best practices" dictate it is 1%), Steve Croth said exactly what was on my mind: That number does not, and should not matter.  If you are dedicated to doing good, then do what it takes to do good. 

- Mikael Henry, Senior Vice President of L'Oreal's Professional Products Division made us laugh uncontrollably with his delightful French accent and witty jokes.  What resonated with me most, however, is L'Oreal's "Hairdressers Against AIDS" initiative.  I was taken by the creativity and simplicity of partnering with hairdressers across Canada to spread the AIDS message.  They're the ones who spend hours of  personal time with people, they're the ones are vented to. Check out this awesome program:

                    

So while I still see companies creating hypocritical CSR programs, In Good Company raised hopes that many companies are making lasting impact and are authentic in their socially responsible missions.   And while grassroots organizations and social entrepreneurs have the advantage of knowing their causes best, of little bureaucracy, and a sole focus on their missions, we must not forget the power of money....and it is the large corporations that have this advantage.  So if we can use this power and channel it effectively toward social missions, you may just find me back in the middle of that grassroots-CSR spectrum.

Governments look to boost charity financing

 We made it in the budget!

So the government is finally taking social finance seriously.

Check out this globe and mail article to read up on how social finance has made its way into Harper's budget. 

Yes, yes, I know he may not be in office much longer, but its great to see some steps forward.  It looks like some of our Social Finance and Innovation Tour government participants at HRSDC and Public Safety Canada have taken the lead in their organizations as well.

No matter the election results, let's keep the momentum going!

Here's the article:

Federal and provincial governments are signalling that they will make it easier for charities to run businesses and tap into financing normally reserved for corporations, as cash-strapped governments boost their reliance on the private sector.

Ottawa, Ontario and British Columbia have recently indicated they are looking for ways to bolster so-called social financing – essentially, what happens when money is invested to generate both a social and a financial return. click here to read more...

IT'S YOUR CANADA, WHAT DO YOU WANT TO VOTE FOR?

THIS IS AFRICA & A Social Enterprise Debate

Let's Drop the Word "Social"

On Saturday I attended re:Vision 2011, YSEC's second annual conference on social entrepreneurship.  There was a unique spirit in the room,  a buzz of excitement throughout the day as young social entrepreneurs (or those to-be) got hyped up by the inspiring speakers, networking with each other, and bouncing great ideas off one another. 

Throughout the day, however, I couldn't help but think back to another conference I attended just a few weeks ago, where a man who is making some serious change in Africa claimed his opposition to the concept of social entrepreneurship and social enterprise.

He has a very interesting opinion, and it is an important one to share as this field continues to flourish:

Tal Dehtiar, founder of Oliberté Footwear, caught my interest not only with his system-changing business model, but also with his heated opinions on aid and what a social enterprise really means.

Tal believes that aid does not provide sustainable solutions to major issues in developing countries (aside from natural disasters). Like I do, he believes that building businesses (and therefore creating jobs) fosters natural economic growth and empowerment.  We both developed some of our opinions on aid from a book I highly recommend called "Dead Aid", by economist Dambisa Moyo. 

Tal's belief in how to eradicate poverty and trigger growth in developing countries forms the basis of the Oliberté business model.

Oliberté Footwear is a shoe manufacturer.  Like the other big shoe companies out there, it has designers, suppliers, manufacturers, distribution systems, etc..

So what is the key difference between Oliberté and the Nikes of the world?

Oliberté's supply chain operates fully in Africa.  It is the first company to have a fully-operated shoe company based out of Africa and sold in the West... most of the big players in the shoe industry shift but one step in their manufacturing process overseas and call it CSR (corporate social responsibility).

Amidst the major challenges and constraints of building an entire business in many countries in Africa, Tal and his team found a way to make well-designed, fashionable shoes that are sold at price-points comparable to other high-end brands, at the stores we all know and love.  Oh yes, AND they are creating jobs, empowering individuals, and fostering growth in communities that are often perceived to be desperate (and might I add that women comprise approximately 50% of the workforce!).  

You ready to head to the mall yet?

Here's the way Oliberté explains their concept:

When we first shared the idea of manufacturing our footwear in Africa, many thought why? Why or how could anyone want to make shoes in a place full of so much poverty and corruption?

The answer was simple – we never have and still don't see an Africa that's categorised by negative generalizations. Oliberté believes that with the right partners, each country within Africa has the means to grow and support its people. So that's what we do – Oliberté partners with factories, suppliers, farmers and workers to produce premium footwear in Africa, but we do more than that. We work create fair jobs, with the goal of contributing to the development of a thriving middle class.

It is generally accepted that a thriving middle class is a key component to the success of any country. In Africa the middle class is increasing in size and one of Oliberté's goals is to support that growing middle class by building a world class footwear brand that can create thousands of jobs and also encourages manufacturers from other industries to work in Africa.Currently Oliberté operates in Ethiopia, Liberia and Kenya with the goal of expanding to Cameroon, Congo, Uganda and Zambia in the coming years.

So I'm sitting in the audience in awe, thinking "Wow! What an incredible social entrepreneur!"

But according to Tal, he is not a social entrepreneur, he is simply an entrepreneur.  

In Tal's opinion, he is running a shoe company that just happens to be having a huge impact in developing countries.  He thinks that every business should be treating its employees fairly and operating through sustainable supply chains, so to designate a separate concept to those businesses who happen to be operating the right way seems almost silly. It leads people to mentally separate ethics and business, when really, this is how business should intrinsically run anyway.  Of course, I agree with this, and value his opinion very much.

Tal said his parents immigrated to Canada and grew a business that employed many people. And according to most of us, they would not be considered social entrepreneurs despite the fact that creating jobs most definitely solves a social issue.  And because almost every company hires people, wouldn't, then everyone be a social entrepreneur?

Interesting opinion, and he almost had me sold.

But here's the the thing.  Ideally, yes, we all envision a world one day where businesses are run completely sustainably and ethically.  Unfortunately, that's not reality...YET.  But that's what the members of the social enterprise movement are working towards.  And we're going to need to coin this as a movement until the socially and environmentally detrimental companies change their values and practices.

So in my opinion, there IS a definite difference, and right now there needs to be one.  The social entrepreneurs and social enterprises (click here for my take on the difference between these two terms) are actively shifting mindsets of consumers and corporations. These are the innovators, the change leaders, the ones who are going to help us battle climate change and poverty.  And until our marketplace becomes fully ethical and serving people the way it was originally designed to, the "social" piece of the concept must remain.  There is a clear difference between an entrepreneur and a social entrepreneur...and Tal is a concrete example of the latter.  His business principles are leading by example.

My hope is that very soon, the concepts of social entrepreneurship and social enterprise cease to exist so that these organizations and companies that are driving system-change become the main-stream enterprises.  Let us all aspire to create a world where the word "social" is dropped...where instead, "social" implies the norm.

Until then, we have a lot of work to do my friends.

Green Tea Party, UNITE!

Why the Canadian government must listen to our voices on climate change

My head is exploding with new knowledge I gained this past week at two different conferences, both focused on social enterprise, sustainability, and all the other great conversations I like to cover here on Kaizen Crossroad.  With lots of different ideas and  opinions wafting inside, I will break the next few posts into themes I hope you will find both relateable and interesting.

I will begin with a feeling that has been irking in my gut for the last few weeks:

As an informed Canadian voter, I feel there is little I can do to make a large-scale impact on mitigating climate change.  I believe the change has to come from the government, and the government is simply not making climate change a priority despite the overwhelming and frightening proof of its importance.  Canada has the potential to make a significant difference; we have the potential to become a global leader on this issue.  But we're not, and I feel frustrated, scared, and to some degree, helpless.

I have expressed this uneasiness to several Canadian experts on the topic and have become increasingly heated by some astounding information.  In this post, I'd like to share 5 of my learnings from both Ivey's Innovation Day and Schulich's Net Impact GreenEdge Conference:

1. China plans to cut its emissions by 17% between 2011-2015, and 40% by 2020. The US military views climate change as  the #1 security threat, Saudia Arabia is building four new zero-footprint cities, India is providing tax incentives for green car purchases, and Canada falls in last place in the G20 on this issue.  Why aren't we taking leadership?

2. The solution to clean energy will come through a combination of wind, water, and solar energy (WWS).  However, as citizens we must realize that it's not just our sources of power that require reformation, it is our every-day, taken-for-granted behaviours toward food, mobility, and industry that will also need to shift.

3. Ron Dembo, founder of Zero-footprint, said that governments don't use appropriate decision-making tools when making decisions.  For example, we know that CO2 is at its highest level ever, but we don't know how exactly it will take effect.  So, the rational government would choose to err on the side of caution and invest in the worst-case scenario.  The rational government would hedge against the uncertain outcomes of CO2 emissions.

So, It's not whether we can live with the effects of climate change, the question is how much can we live with?  And in making these decisions, Ron says you must always hedge the impending risks (Bankers, I know you master the hedging craft...).

4. We are choosing to be energy inefficient in North America.  According to Jim Harris, one of North America's leading management consultants and former leader of the Green Party of Canada, if you add the total market cap. of GM, Ford, and Chrysler and multiply that number by 3, Toyota has a larger market capitalization and is the world's leader by far in energy efficiency.

(GM + Ford + Chrysler) * 3 < TOYOTA

Toyota Prius

 
5. There is an economic argument for mitigating climate change. While Jim Harris had a lot to say about this, I will share a couple of examples that stood out to me:

As you might know, most vending machines have a light that brightens up the front to make them look super flashy.   Well, I learned that the heat from that light necessitates the use of more energy to cool the drinks.  Walmart has several of these vending machines in each of their 9000 stores globally. So what did they decide to do to cut energy usage and costs?

Walmart decided to take out the lights of their vending machines and saved $1 million dollars.  Maybe just a small ripple for Walmart, but think about the cumulative potential of this by corporations globally! 

And just to prove the economic argument a little further, when GM went bankrupt a few years ago, they actually turned off the escalators at night to save costs. And I think we can all assume now that GM is back hot and heavy, those escalators are rollin' all night long. 

So let me get this straight. GM saved energy during difficult financial times in order to save money, but the second they are out of the red the energy waste begins again.  Unbelievable.

Alright, I will stop the facts there.  

When Nicholas Parker, co-founder of Cleantech Group and sustainability guru in North America, addressed my question of, "What can we, Canadian citizens, do to get our voices heard in the government", his answer had the whole crowd laughing:

"We need a Green Tea Party." 

No, not the ever-so-popular Japanese drink, and not the Boston Tea Party-like revolution... I don't even think he means a political party.  The point I took away was simply that we need a stronger and larger group of people to vocalize their concerns about climate change. The more people we have on board, the more tea we can throw off the boat.  (That's my terrible metaphor for "the bigger our chances are of getting heard and changing policy").

I've been taught recently the importance of leaving an optimistic tone when concluding a presentation or composition.  And so, I will say that we are reaching some positive milestones provincially.  

From a personal perspective, I have seen examples of progress both in British Columbia while on the Social Finance Tour and here at home in Ontario with the Green Energy Act.  And while I do see climate change as a responsibility and absolute priority at the federal level, I am encouraged by the advances of these two provinces.  Let's keep building this momentum.

I welcome your thoughts on how we can get our voices heard.  For now, I encourage you to fill out this leadnow.ca survey to contribute your values and priorities to the Declaration for Change.

Adding Value: An Enlightening Analogy

"We're going to make it in time, we're just going to have to change how we live our lives."

A couple of weeks ago, I was fortunate enough to have coffee with Tim Stoate, Associate Director of Toronto Atmospheric Fund (TAF).  For 20 years, TAF has been providing air pollution, energy use, and climate solutions to institutions around Toronto.  They have saved the city millions of dollars on energy costs and helped citizens live greener, healthier lives.

Basically, TAF was impact investing before I learned to speak.

I expressed my concerns to Tim about the cross-generational apathy toward the threat of climate change.  In my mind, there is only a finite amount of resources on earth, and without serious behavioural changes we are going to deplete them, ultimately killing ourselves.  Quite a cynical view for someone who is such an optimist!

Tim's response had a more hopeful yet realistic conclusion: "We're going to make it in time, we're just going to have to change how we live our lives.  It won't be perfect, we're just going to learn to adapt."

Then Tim presented what I see as a brilliant analogy.

He asked: In the three words, what is business really about?  What are the three things a business cannot live without?

Answer: Sales. Profits. Cash. 

He said, "Think about it.  When you peel off all the layers, what in business is not about sales, profits, and cash?"  Consistently working on each of these three things is how to keep your business model sustainable.

Then Tim asked me, "What value have we added to the earth, land, and water?"

I hesitated for a few moments, because I really was trying to think of something positive humans could have done.  But nothing came, and I answered, "None".  We do not add any value to the three very components that keep us alive.

And so there is a parallel between business and the environment. In business, we are so focused on adding value to procure sales, profits, and cash to keep the business sustainable.  And if you would never sacrifice the sales, the profits, and the cash, why would you sacrifice the earth, land, and water if these are the fundamentals that sustain our very being?

I think the problem is that the sales, profits, and cash are short term wins which is a huge motivator for companies.  People (mainly those in developed countries) do not yet see the consequences of climate change and so there is no motivation to change behaviours.  I look to the future generations and am very concerned that my kids will not enjoy the same opportunities my parents, grandparents, and I have had.  The proof is there, and the numbers aren't lying.

So what is Tim's conclusion?

  Add value to the earth, land, water, or one of them, because that's what will matter to people in 30 years. And it's the long-term goals that ultimately maintain sustainability, be it a business or the environment.

Social Impact Bonds: I Couldn't Disagree More

My response to those who condemn Social Impact Bonds

A few days ago I came across a post entitled "The Hidden Reality Behind Social Impact Bonds".  As I've mentioned several times, I believe the Social Impact Bond Model has true potential for progressing social finance in Canada.  The author of this article, however, has taken an extreme opposite stance, and I couldn't disagree more with his opinion.

If you aren't familiar with what a Social Impact Bond is, I suggest you read my explanation on a past post, "Social Impact Bond Model: 7 Easy Steps" before continuing. It's a short but comprehensive read, I promise.

Here's the part of the author's post that inspired me to explain why he is missing the whole purpose of Social Impact Bonds:

"Let’s take a systems approach to understanding the biggest flaw of the Social Impact Bond program. We have to ask the question, where does the money funding the Social Impact Bond come from? Obviously, it comes from the budget of the federal government. Now, where does the federal government get the money for its budget? It comes from taxpayer dollars. This is where a Social Impact Bond starts to make no sense at all.

Here is a more concrete example. Assume that a given program is successful in meeting its predefined measures. The program was funded by a private investor. The government now has to pay the private investor its profit, using taxpayer dollars. Taxpayer dollars are explicitly going into private hands through the use of the Social Impact Bond. On a side note, assume that a given program is bound for failure. What investor would invest in something with no return? One might as well donate money instead...The problem is when you or I are forced to pay a profit to that private individual via a tax. It is no longer a voluntary exchange..."

Alright, Let me begin by clarifying that the purpose of the Social Impact Bond is to SAVE the usually-wasted taxpayers dollars in the long-term.  If you look to the yellow-highlighted words, the author attempts to illuminate the absurdity of using tax-dollars to pay back investors.  In my mind, this is no "hidden reality"...in fact, using our money  to pay for private return is CLEARLY what is happening.  And it's happening because the investor was willing to take a risk on the given social program, it worked, and will now save taxpayers' money in the future because the government no longer needs to waste time or money on its traditional, failing methods.  The return paid to the private investor will be only a fraction of the total our government will save going forward... that's the whole point.  It's a math game.

Are you okay with that?

I certainly am.   

 

Now let's take a look at the words highlighted in blue, and remind ourselves that ANY investment, be it for high financial returns, blended value, or pure impact, involves risk. 

The author asks, "What investor would invest in something with no return?", and I respond, "Ugh, many people invest without receiving a return."  The risk factor is what drives the market to work.  Just as investors take on the risk of losing money in the stock market, investors in Social Impact Bonds take on the risk that the given social program/venture will not be effective.  But at least it will have allowed us to see what doesn't work, which will make for more effective solutions going forward.

And so to the question of "What investor would invest in something with no return?", my second response is: Impact Investors, of course.

And there are a growing number of these people.  We need them, because relying on donations and government grants does not allow for risk-taking in the non-profit world.  And without risk-taking, the big solutions won't come.  It works the EXACT same way in the main-stream business world. 

SO, as you might tell, I am a little heated by this topic.  But it's only because I believe in its potential and want taxpayers to understand the powerful influence of Social Impact Bonds and non-profit risk-taking.  

In Obama's recent budget announcement, $100 million is allocated to social impact bonds.  While this is only a meager .003% of the entire U.S. budget, it is at least a step forward.

 

Only time will tell how well the model will work and how taxpayers will respond.  

Stay tuned, it will be an interesting ride!

Social Entrepreneur vs. Social Enterprise

A Noteworthy Distinction 

As the field of social innovation grows, we are all still attempting to discern the jargon. What is the difference between the terms ‘CSR’ and ‘sustainability’? What about ‘social finance’ and ‘impact investing’? What does a ‘social business’ mean and how is that different from a ‘social enterprise’? What on earth does social innovation even mean?

Well, the answer is: No one really knows. 
(Sidenote: For the rest of this post I will use ‘social innovation’ as the big umbrella term for the others.) 

Sure, there are some well-articulated definitions out there, but these are merely opinions. From the research I’ve done and the network of social innovation professionals I have spoken with about this question, I have concluded that this sector is still very much in its infancy. And as any sector or industry develops, the structure behind its communication, efficiency, and norms develops with it. As such, the terms that describe the different pieces of this field are still building consensus. 

While I have my own way of defining each of the terms mentioned above, I would like to highlight my interpretation of the distinction between ‘social entrepreneur’ and ‘social enterprise’. In my mind, these are vastly different pieces of the social innovation puzzle and I feel compelled to explain why. 

Here it goes: 

Many people understand a social enterprise to mean a for-profit business model motivated by the shared value it procures. The idea is for the business operations to achieve a social mission while churning a profit (often a smaller margin than the traditional for-profit firms). The profit is the unique piece of the social enterprise that keeps it sustainable, as opposed to a traditional non-profit that depends on grants and fundraising. The profit is either reinvested back into the social enterprise to scale its impact, used to pay shareholders to pool capital, or invested in its affiliated non-profit  as unrestricted funding. 

A good example of a social enterprise is Potluck Catering, whose wonderful service I experienced in Vancouver for the Social Innovation and Social Finance Tour. Potluck’s revenue from its cafe and catering services is invested back into its 5 community social programs that are integrated into its daily operations. For example, Potluck provides a Life Skills Training and Employment Program that has trained and employed dozens of Vancouver’s downtown east-side residents with barriers to employment. Click here to learn about the other amazing ways they are giving back. 

I completely agree with this explanation of a social enterprise. Where I disagree is how people use the term social entrepreneur to describe the individuals who start-up these social enterprises.

Since the term ‘social entrepreneur’ was coined by Ashoka founder, Bill Drayton over thirty years ago, let’s take a look at how Ashoka explains this increasingly popular concept:

"Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change.

Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.

Social entrepreneurs often seem to be possessed by their ideas, committing their lives to changing the direction of their field. They are both visionaries and ultimate realists, concerned with the practical implementation of their vision above all else."

So to me, the social enterprise is about the business model, and the social entrepreneur is about the person.  And this person has a system-changing idea.  

The concept of system-change was quite fuzzy to me at the start.  I didn't see the full picture until I engaged with some of Ashoka's social entrepreneurs and understood the level of impact they are having on our society. Take Al Etmanski, for example:

Al is an author, advocate and social entrepreneur specializing in innovative, multi-sectoral  solutions to social challenges. He is President and co-founder of Planned Lifetime Advocacy Network (PLAN), which assists families across Canada and globally address the financial and social well-being of their relative with a disability, particularly after their parents die.  He proposed and led the successful campaign to establish the world’s first Registered Disability Savings Plan for people with disabilities.

Al identified a social gap, created a new idea to solve it, and changed the way individuals with disability can live as citizens.  I am completely inspired not only by his work, but also by his personal drive, perseverance, and entrepreneurial quality.  While I can throw out a ton more examples, I recommend you take a look at the Ashoka Global  website, where there are almost 3000 social entrepreneurs being show-cased. Now if you're looking for some inspiration, you know where to go!

So can social entrepreneurs start up social enterprises? Absolutely.  But not all social enterprises are started by social entrepreneurs.  It is this systems-change piece as well as the new idea that makes this distinction so clear in my mind.