BY SAMUEL GREENGARD
Socially responsible projects can be good for the world—and the companies launching them.
VERGHESE JACOB WANTS TO CHANGE INDIA one rural village at a time. The lead partner for Byrraju Foundation will tell you the poverty line in India is $1 per day, and yet millions of people still live beneath that threshold. “Indian cities have benefited greatly from the growth and prosperity of Indian companies,” he explains. “So, it's important to give something back and improve living conditions in villages.”
For Byrraju Foundation, that means launching a barrage of life-altering projects. The not-for-profit organization is funded by Ramalinga Raju, chairman of Hyderabad, India-based IT provider Satyam Computer Services Ltd. And over the last six years, it has constructed water-treatment plants, developed medical clinics, supported schools and created jobs in more than 170 villages throughout the state of Andhra Pradesh.
Call it compassionate capitalism. Companies are discovering projects can not only help the bottom line, but when done right, they just might make the world a better place.
“Today, companies are expected to take more responsibility for themselves, for their conduct in society, and for the social and environmental impact they make,” says Christopher Pinney, director of executive education at the Center for Corporate Citizenship, Carroll School of Management, Boston College, Chestnut Hill, Mass., USA. “It's no longer acceptable to ignore pressing social and environmental issues or think of [such] projects as little more than a way to gain attention through public relations.”
Of course, there's nothing wrong with getting some free publicity out of the deal, but corporate social responsibility (CSR) projects must offer viable answers to real issues.
Today, companies are expected to take more responsibility for themselves, for their conduct in society, and for the social and environmental impact they make.
—CHRISTOPHER PINNEY, CENTER FOR CORPORATE CITIZENSHIP, CARROLL SCHOOL OF MANAGEMENT, BOSTON COLLEGE, CHESTNUT HILL, MASS., USA
“There's a growing emphasis on solving high-value problems,” says Arthur C. Brooks, Ph.D., professor of public administration at Syracuse University, Syracuse, N.Y., USA.
And as tempting as the glory of resolving the world's troubles may be, CSR projects should still align with the company's strategies and objectives.
At Byrraju Foundation's Centre for Rural Transformation, there's a fundamental understanding that poverty, illiteracy and poor health drag down Indian society—and impair the ability of corporations to find the labor pool required to compete in the emerging digital economy.
“A more prosperous and better educated India puts Satyam and others in a better position to compete in the world economy,” Mr. Jacob says.
Starting in 2001, the foundation's trustees and leaders have identified major problems in rural villages and looked for innovative ways to help them achieve a sustainable economy and self-sufficiency.
This approach has guided Byrraju Foundation's project selection. Water-treatment plants, for instance, reduce disease and sickness, as well as allow villages to profit by selling surplus bottles to their neighbors. Broadband Internet access in villages has enabled business centers to provide employment for residents, who handle document scanning, transaction processing and other back-office functions. These people gain skills and income—and the money they generate helps spouses and others open small businesses. “It puts money back into the rural economy and reduces the influx of people streaming into cities looking for menial jobs and living in substandard conditions,” Mr. Jacob says.
Embracing a CSR initiative isn't for the faint of heart. The political and sociological implications are enormous. “Before an organization can choose a path for CSR, it must understand its core impact,” Mr. Pinney says. “It must understand how people use its products and services and how its footprint—labor practices, facilities and people—affects society.”
All the traditional rules of project management still apply. The project should reflect the values and mission of the company, and spin a tight orbit around supply-chain practices, performance targets, policies and practices, Mr. Pinney says.
Almost everyone would agree working to save the rainforests is a noble and worthy cause, for example. But it also makes good business sense for Chiquita Brands International, a Cincinnati, Ohio, USA-based food grower and distributor operating in 70 countries. Those rainforests, after all, surround the areas where the company produces many of its products. So the company launched the Nature and Community Project in Nogal, Sarapiquí, Costa Rica. The effort is in partnership with Swiss retailer Migros, The Rainforest Alliance and GTZ, the German Agency for Technical Cooperation, which promotes sustainability.
The project's goal is to introduce long-term biodiversity, conservation methods and environmental education as well as promote additional local income opportunities in areas where rainforests and natural habitats are threatened in the Sarapiquí region, says Jennifer Dinsmore, project manager.
So far, she and her team have planted more than 20 hectares of native trees in biological corridors, connecting more than 600 hectares of previously fragmented forests. The project also helps individuals launch small businesses in areas as diverse as sewing and recycling.
As with any project, companies should set up governance structures. Ms. Dinsmore reports to a steering committee that oversees the Nature and Community Project and provides quarterly updates to others at Chiquita and the partner organizations. And she strives for maximum transparency through reports and supporting documents. In the field, she relies on a team of experts, including a social worker, an environmental education teacher, a biologist, a forestry engineer, an agronomist, an accountant and maintenance employees.
IMAGE COURTESY OF CHIQUITA
>Environmental education is one of the major charters for the Nogal Nature and Community Project in Costa Rica. Above, Jorge Bogantes conducts a tour of the project for local school children.
Chiquita plans to eventually spin the project into a separate foundation. But even now it has its own objectives and budget and is not part of the company's day-to-day banana operations, Ms. Dinsmore says. “We as a team have to be very careful and transparent as we work with donated funds and represent many organizations,” she says. “Our actions make a huge difference for the biodiversity we are working to protect and the families we hope to help.”
CSR projects take on a whole new level of complexity when diverse teams operate in far-flung locales with radically different cultural values. Tracking results can become even more of a challenge, and what works in one country may lead to headaches and breakdowns in another.
The Greater Good
Corporate citizenship doesn't have to mean sacrificing ROI. Here's how to make socially responsible projects pay off.
- Frame the project. Know what you're trying to accomplish and how you want to achieve results.
- Understand and respect cultural differences. A top-down approach is likely to result in failure—and standard business practices aren't always effective. Make it a point to build the program around local cultural values.
- Encourage local involvement. Understand unique problems and roadblocks that can trip up an initiative. Solicit input from employees and others in the field. You'll gain great ideas and better align strategies with goals.
- Establish metrics. Make sure you have ways to receive feedback on performance, including so-called intangibles. Metrics and industry benchmarks can put things into perspective and guide decision-making.
- Monitor results. Use project management software, business intelligence tools and dashboards to monitor performance. But also establish a cross-functional team to oversee the initiative and provide perspective.
- Communicate and collaborate. Look for opportunities to educate workers and those affected by a project. Also, work closely with partners, including government agencies, non-government organizations and other companies.
- Remain flexible and be patient. Change doesn't happen overnight—and it may be necessary to adjust and refocus an initiative. Set expectations accordingly, keep stakeholders informed and celebrate successes.
So when Green Mountain Coffee Roasters, a Waterbury, Vt., USA-based packager and reseller of premium coffees, decided to embark on a fair-trade and CSR initiative in the early 1990s, it built a platform for managing projects—and relationships.
The firm relies on a multidisciplinary team—now comprised of approximately 15 members—to make recommendations about investment, business and project decisions. Rick Peyser, director of social advocacy and coffee community outreach, leads meetings every two or three months, reviews budget proposals and checks on project updates from the field. Green Mountain collects its own data, but also taps into outside nongovernmental organizations to provide on-the-ground reporting about growing methods and supply-chain practices.
Today, Green Mountain buys coffee from approximately 100 farmers in Latin America, Africa and Asia. The company contributes five percent of its pre-tax profit to fund community improvement projects in the United States and where its coffees are grown. The efforts include helping to build schools, outfit medical clinics, construct roads and address other pressing needs.
That's Great, But ...
When companies do decide to tackle CSR projects, they're looking for more than “warm and fuzzy” feelings. They're also determined to maximize their ROI from the projects, which isn't always easy.
Byrraju Foundation uses a Six Sigma approach—with more than 1,200 metrics—to manage processes and measure results across a litany of projects in its rural development portfolio.
From the very beginning, project management has ranked as a core consideration. Senior executives at the foundation serve as “mini-CEOs” and bear end-to-end responsibility for various facets of the initiative. The organization uses a formal review process, tracks metrics using sophisticated business intelligence and knowledge management applications, and relies on Gantt charts and project management software. Leaders also keep a close eye on how to maximize the partnerships and alliances it has forged among 120 organizations, including Microsoft, IBM, Intel, Oracle and Stanford University.
>Byrraju Foundation's projects have supplied safe drinking water for 600,000 people in rural villages throughout India.
IMAGE COURTESY OF BYRRAJU FOUNDATION
It is also very important to track metrics and returns that measure how the organization is impacting and improving people's lives —VERGHESE JACOB, BYRRAJU FOUNDATION, HYDERABAD, INDIA
So far, the CSR program's results have been impressive. Among other accomplishments, the foundation has:
- Achieved near 100 percent literacy in 114 villages
- Supplied safe drinking water for 600,000 people
- Provided education to more than 120,000 children at 242 schools
- Created more than 7,500 jobs.
Its work has garnered awards and recognition from the World Bank, UNESCO and the president of India.
Byrraju Foundation regularly compares its metrics to industry benchmarks and best practices. Yet, Mr. Jacob adds, companies mustn't dismiss the intangibles. “It is also very important to track metrics and returns that measure how the organization is impacting and improving people's lives,” he says.
There may also be some other less obvious benefits. When Gretchen Crosby Sims, Ph.D., examined corporate citizenship initiatives as part of a doctoral dissertation a few years ago, she found CSR projects also lead to political gains. “The relationships that business leaders develop through their civic engagements can pay substantial political dividends,” says the education program manager at Joyce Foundation. The Chicago, Ill., USA-based group promotes public policies to improve the quality of life in the U.S. Great Lakes region.
In many cases, it's impossible to break down a CSR initiative in dollars, yen or euros, Mr. Pinney says. However, by establishing metrics, benchmarks and goals that align with the business, it's possible to aid society, create a better industry environment and gain benefits for the corporation. Success often hinges on maintaining a robust data repository, using software that supports performance management and budgeting, and providing real-time snapshots of progress.
Moreover, it's paramount for companies to focus on partner relationships, remain flexible, ensure there's ongoing internal support for the project, and look beyond the flat earth of public relations and into the realm of education and enlightenment.
To be sure, when organizations put all the pieces together, everyone wins. “Companies aren't in the business of giving money away,” Mr. Pinney says, “but it's absolutely their business to invest in the communities in which they conduct business.” PM
Samuel Greengard is a West Linn, Ore., USA-based journalist who covers business and technology.
PM NETWORK | JUNE 2007 | WWW.PMI.ORG