Social Responsibility Writer's Prize 2007 - Tertiary Entry - Second Prize

Miss Sarah Elliott - University of Western Australia

MAKING STRIDES - The Philanthropic Approach to Corporate Social Responsibility: Business & the Community Partnership

Traditionally there existed a no man's land between big business and the community, and between government regulation and corporate practice. For decades the focus of the corporation was the 'pathological pursuit of profit and power'.1 Joel Bakan wrote the book The Corporation to elucidate how corporations elevate their financial interests above others, based upon the legal requirement to act 'in the best interest of the company'.2 Social responsibility was, and in various cases still remains, predominantly a superficial masks. Many CEOs and economists believed in giving every bit back to the shareholders without profit expenditure on other efforts.3 For some, this position culminated in corporate self destruction brought on by the gross victimisation of the individual, the environment and even the shareholder. Examples include Pacific Gas and Electronic Company Pty Ltd in California in 1993, which paid out 400 million to the cancer victims of the company's negligent contamination of drinking water. Closer to home was the collapse of Australian insurance company HIH in 2001, with debts of 5.3 billion achieved by found mismanagement and a 'cohort of brash men driven by a powerful desire to make as much money as possible'.4 James Hardie Pty Ltd is still compensating those generations of oblivious asbestos inhalers.5 And it doesn't stop there in 2007.

Where the trenches have been filled however, is in corporate secrecy and community passivity. We live in an 'activist' world where big business is no longer an impenetrable foreign entity. "On the consumer side we are hearing more and more that people care where a product is made and they care about who is making the product. With technology the way it is today, we are living in a world of great transparency. If something is wrong in a factory, the world will know about it. No body wants to buy a product with blood on it".6

Therefore, it has become clear to a leading set of CEOs that the shareholder is now only a part of a total stakeholder demand which has surfaced and is here to stay: that companies must generously and consistently support the communities in which they operate.

The Community Business Partnership

Corporate sponsorship has evolved from the one dimensional method of throwing money at a range of 'good causes', to the 'community business partnership'. The term partnership suggests something equal, aligned and with exchange, something that operates to everyone's net benefit. According to computer program entrepreneur and businessman Charles H. Moore,

"the good news for corporations is that giving back, when conceived and executed thoughtfully, creates a win-win scenario for businesses and the public. From eradicating disease and improving childhood literacy rates, to boosting employee job skills, opening new markets and heightening brand recognition, business and society stand to benefit greatly if companies can demonstrate programme effectiveness, fiscal accountability and good stewardship in their philanthropic contributions."8

Like any successful relationship however, a community business partnership requires communication, hard work, and trust. Yet musician Peter Gabriel said of his 1994 community organisation WITNESS that "you can often achieve more under the umbrella of, and with the support of a corporation with a conscience than you can without it".9 It is only by example, that the mutual long-term benefits each partner organisation stands to gain becomes clear. The following discussion will take a closer look at how two very different corporations and non-profits are still making strides in their community business partnership.

Mallesons Stephen Jaques & The Australian Red Cross

In recent months, the media has announced that lawyers are the most depressed professionals. the World Today with Jane Cowan reported in May of this year "they might have prestigious jobs and healthy pay packets, but a survey has found that Australia's lawyers are more likely than the general population to be depressed".10 It is no secret that being a lawyer demands enormous responsibility, deadlines and is a fairly 'cutthroat' industry. The Federal Government estimates more than six-million working days are lost as a result of untreated depression, and each depressed employee costs their organisation almost $10, 000 a year in lost productivity and absenteeism.11Amidst many law and social benefits that will outdo the stigma of intense pressure and weekend work. Yet this isn't enough to quell the statistic Jane Cowan gave us, which blatantly shows a very unhappy working group.

Mallesons Stephen Jaques is Australia's leading law firm. It can quite confidently report improved staff morale, enhanced team building and employee development as an outcome of the Mallesons Community Partner Program.12 Underlying this report is therefore the mitigated loss of $10,000 a year per satisfied employee. Interestingly, a firm with the dual vision of client service and attracting pre-eminent legal talent has chosen alleviating poverty and helping children at risk, as the focus of their partnerships.13 According to the National Bono Coordinator Jane Farnsworth, this was a distinct desire of Mallesons staff that a) spent a lot of time at work and wanted to see the organisation being involved in their interests, b) strongly sough avenues of engagement in the Community and c) identified social need as a priority area.14 This means that after research, planning and due diligence, Mallesons strategically partners with organisations in areas that ensure a very large firm with a diverse range of staff, 'from managing partners to messengers,' can make a meaningful contribution.15

Supporting charities such as The Australian Red Cross, Malleson's community partnerships are in place for a minimum of two years, characterised by their collaborative nature, multi-tier engagement and mutual long term benefits.16 To the non-profit these include pro-bono legal services by Mallesons volunteers, stable funding through the Workplace Giving Program to reduce operating costs and a direct link to Mallesons human resources. For Mallesons apparently depressing lawyers, the benefits are ten-fold. These employees now have a purpose, not just a job. Corporate philanthropy directly supports employee retention through skill-building, teamwork and morale. Renowned American writer, Mihaly Csikszentmihalyi wrote that "If the firms that employ an increasing majority of the population are driven solely to satisfy the owner's greed at the expense of working conditions, of the stability of the community, and of the health of the environment, chances are that the quality of our lives will be worse than it is now."17

Importantly, Mallesons addresses any potential conflict between the social objectives of big business and community organisations with a memorandum of understanding, Mallesons community relationship partners and tailored guidelines.18

Cultural differences can make for a stressful and short relationship as was seen in the 1995 Microsoft and American Library Association 'Libraries Online' Partnership.19 Although successful in its objectives, the approach of Microsoft at times made the non-profit uncomfortable, suspicious of Microsoft's motives and not conducive to teamwork.20 This is a reality that community/business partnerships can face and highlights the need for a careful alignment of values, activities, interaction at multiple levels and constant communication between partners. Mallesons continually monitor the effectiveness of the partnership, and have an arranged 'exit strategy' in place.21

International mining company Alcoa not only lists what they will and will not support on their website, but also states that "our sponsorship commitment is not limited to simply handing over a cheque. Alcoa adopts a genuine commitment to the sponsored project. We work with you to ensure mutually beneficial outcomes".22 They also require a sponsorship feedback process be complied with. At Hasbro, a 3 billion dollar toy company in America, the obvious organisations to partner are the ones that directly benefit children who are their market and their reason for success.23International internet network company, Cicso Systems focused on areas that technology and the Internet has left behind. It applies its technological know-how to a non-profit organisation that provides voice mail for the homeless, and seeks to put the deaf community on equal ground.24 Most companies and social sector organisations should therefore seek a limited number of these kinds of deep relationships, because they yield extra benefits for everyone who enters into them.25

The Coca Cola Company & WWF

Something that PF&E, HIH or James Hardie could have used was foresight. Building reputation beyond the four pillars of the corporation is not only the right thing to do, but is the profitable thing to do. A partnership between a business and non-profit will create trust in the community. "We don't see it as spending shareholder money, but crating long-term stakeholder value". 26 Chairman of DELL, Michael S. Dell not only seeks stakeholder value but felt that a more important question to ask regarding the cost of a sustainable community partnership program is not the cost of not implementing one.27 "If a corporation has a clan, good reputation when times are difficult, people tend to support that more they would necessarily support anybody else."28

An example of a corporation that has not always fostered community trust is soft-drink giant The Coca Cola Company. It came under scrutiny with allegations of human rights abuse in their Columbia bottling plant. This quickly developed into an international protest movement call 'The Campaign to Stop Killer Coke.' 29 Although the company denied all accusations, they had damaged one of their most valuable assets: their reputation. In June this year, Coca Cola entered into a ground breaking partnership with environmental organisation WWF in a multi-year agreement. The object is to conserve and protect freshwater resources, water comprising 290 billion litres in beverage production for Coca-Cola last year.30 So it makes sense to support an organisation such as WWF which for 45 years has worked to protect our environment. According to The Coca Cola Company CEO E. Neville Isdell, "this collaboration points the way to how private and non-profit sectors can and must work together to provide real and meaningful solutions to the world's water needs".31 The objective is double sided, improving production efficiency to create a sustainable practice for Coca Cola and working with WWF to replenish water in communities and nature through locally relevant projects.32 The partnership is a powerful mechanism for communicating to the public that Coca-Cola is a 'good corporate citizen'. Attitudinal survey after survey shows member of the public prefer companies that are seen to be positively contributing to the environment and society.33

The greater the community affected by a corporation's efforts, the wider the reputation and broader the trust. For Coca-Cola, this means consumers in more than 200 countries worldwide, and now includes 5 million WWF supporters. WWF will also benefit by a 20 million dollar grant and the resources of a multinational corporation at their fingertips, to continue to carry out their worthy objectives with increased efficiency, in one twentieth the time.34

And it isn't naïve to think that a corporation can work with the community to improve social or environmental adversity on a global scale. E Neville Isdell assured that "the partnership will focus on measurably conserving seven of the world's most critical freshwater river basins: China's Yangtze; Southeast Asia's Mekong; the Rio Grande/Rio Bravo of Southwest United States and Mexico; the rivers and streams of the South-eastern United States; the water basins of the Mesoamerican Caribbean Reef; the East Africa Basin of Lake Malawi; and Europe's Danube River."35 Furthermore, Cisco Systems chairman John Morgridge states that" we believe that by improving access to education and the Internet - the two equalisers in life - the networking academies can serve as vital catalysts for international economic development". Today there are Cisco networks in more than 160 countries.36

Conclusion

In 2005, the Corporations and Markets Advisory Committee (CAMAC) was asked to report on whether Australian companies should be encouraged to adopt socially and environmentally responsible practices and if so, how.37 The answer to those questions is a resounding yes, and through the mechanism of the business community partnership. Although examples have shown that the business community partnership requires careful planning, strategic selection and the alignment of values, the mutual long term benefits are abundant, and the scenario win-win. For the non-profit, this means consistent funding, resources and consultancy to operate more effectively and make a much bigger contribution, and long-term stakeholder value. CAMAC's final report concluded that where director's duties are wide enough in scope to take broader interests into account, there is no excuse for failing to assess and respond to a company's impact on the environment and social community.38

Notes

  1. Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (2004).
  2. In Australia this is found in section 181(1) Corporations Act 2001 (Cth).
  3. Alan G Hassenfeld, 'A Family Tradition: Hasbro - Why Give?' in Carlye & Benioff Alder, Marc The Business of Changing the World: Twenty great leaders on corporate philanthropy (2007), 13.
  4. Margot Saville, 'HIH: The Inside Story of Australia's Biggest Corporate Collapse'. Herald 2003.
  5. And countless other examples in Australia include One. Tel, Ansett, Lateral Trading, Water Wheel Holdings; the US includes World.Com, Tyco, Polaroid, Qwest, ImClone, and in the UK there was Griffin Trading, Universal Bulk Handling, Marconi/GEC, Polly Peck International, ITV Digital, RailTrack, and Powerhouse. Such examples of corporate collapse were listed in Gerald Acquaah-Gaisie, 'Toward More Effective Corporate Governance Mechanisms' (2005) 18 Australian Journal of Corporate Law 1.
  6. Alan G Hassenfeld, 'A Family Tradition: Hasbro - Why Give?' in Carlye Adler & Marc Benioff, The Business of Changing the World: Twenty great leaders on corporate philanthropy (2007), 13.
  7. Ibid. xi
  8. Ibid.xii.
  9. Ibid, 283.
  10. ABC, 'Study Shows High Rates of Depression Among Lawyers' discussed on The World Today with Jane Cowan (13 May 2007).
  11. Ibid.
  12. Jane Farnsworth, 'Examples From Practice - Mallesons Stephen Jaques' (Paper presented at Second National Pro Bono Conference: Transforming Access to Justice, 20-21 October 2003)
  13. Mallesons Stephen Jaques, Mallesons in the Community (2007), (http://www.mallesons.com/community/5502397W.htm) at 28 May 2007.
  14. Jane Farnsworth, 'Examples From Practice - Mallesons Stephen Jaques' (Paper presented at Second National Pro Bono Conference: Transforming Access to Justice, 20-21 October 2003), 3.
  15. Ibid, 8.
  16. Ibid.
  17. Woopidoo Business Finance & Motivation, Mihaly Csikzentmihalyi Quotes (2007) (http://www.woopidoo.com/business_quotes/authors/mihaly/index.htm) at 12 May 2007.
  18. The Memorandum of Understand set out: objectives, strategies and mechanisms for dealing with common issues in connection with the partnership; an agreed minimum term, bases for termination an a mechanism for periodic review, the respective agreed roles, including the appointment of a relationship partner as a central point of contact, together with key contacts in each state, identified area of support and the basis of ongoing development of the partnership and agreements about insurance, the parties' intellectual property and confidential information. Jane Farnsworth, 'Examples from Practice - Mallesons Stephen Jaques' (Paper presented at Second National Pro Bono Conference: Transforming Access to Justice, 20-21 October 2003), 6.
  19. Shirley Sagawa and Eli Segal, Common interest, Common good: creating value through business and social sector partnership (2000), 47.
  20. Ibid, 53.
  21. Jane Farnsworth, 'Examples From Practice - Mallesons Stephen Jaques' (Paper presented at Second National Pro Bono Conference: Transforming Access to Justice, 20-21 October 2003), 4.
  22. Alcoa Inc, Alcoa Sponsorship Guidelines (2007) (http://beta.alcoa.com/index.asp?page=/australia/en/info_page/partnership...) at 15 May 2007.
  23. Carlye Adler & Marc Benioff, The Business of Changing the World: Twenty great leaders on corporate philanthropy (2007), 8.
  24. Ibic, 191.
  25. Shirly Sagawa and Eli Segal, Common interest, Commond good: creating value through business and social sector partnerships (2000), 57.
  26. Carlye Adler & Marc Benioff, The Business of Changing the World: Twenty great leaders on corporate philanthropy (2007), 57.
  27. Ibid. 58.
  28. Ibid.
  29. David T.A Wesley & Henry W Lane, Killer Coke: The Campaign to Stop Coca-Cola (2007) (http://cases.ovey.uwo.ca/Cases/Pages/home.aspx?Mode=showproduct&prod=9B0...) at 18 June 2007.
  30. The Coca-Cola Company, The Coca-Cola Company Pledges to Replace the Water it Uses in its Beverages and their Production (2007) (http://www.thecoca-colacompany.com/presscenter/nr_20070605_tccc_and_wwf_...) at 6 June 2007.
  31. Chairman and CEO E. Neville Isdell, The Coca-Company, Remarks at the WWF Annual Conference (2007) (http://www.thecoca-colacompany.com/presscenter/viewpoints_isdell_wwf.html) at 6 June 2007.
  32. The Coca-Cola Company, The Coca-Cola Company Pledges to Replace the Water it Uses in its Beverages and their Production (2007) (http://www.thecoca-colacompany.com/presscenter/nr_20070605_tccc_and_wwf_...) at 6 June 2007.
  33. Business in the Community, Business in the Community: 25 Years of Business Impact (2007) (http://www.bitc.org.uk/resources/statistics_and_facts/responsible_busine...) at 15 June 2007.
  34. The Coca-Cola Company, The Coca-Cola Company Pledges to Replace the Water it Uses in its Beverages and their Production (2007) (http://www.thecoca-colacompany.com/presscenter/nr_20070605_tccc_and_wwf_...) at 6 June 2007.
  35. Ibid.
  36. Carlye Adler & Marc Benioff, The business of Changing the World: Twenty great leaders on corporate philanthropy (2007), 89.
  37. Ian Ramsay, 'Directors' Duties and Stakeholder Interests' (May 2005) Company Director Journal.
  38. Corporations &Markets Advisory Committee, The Social Responsibility of Corporations Report (December 2006).
Content Updated: 29 May 2012