Business Sustainability and Emerging Markets

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A presentation providing an overview of drivers, trends and actions in business sustainability / corporate responsibility in emerging markets: China, India, Brazil and South Africa, and some conclusions.

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Business Sustainability and Emerging Markets

  1. 1. Emerging markets & business sustainabilityToby Webb, Founder/Chairman, Ethical Corporation,CEO and Founder, Stakeholder Intelligence
  2. 2. Background Founded Ethical Corporation 2001 80+ CR management conferences world-wide 8000 articles & lots of reports Interview 800+ executives per year: Reports, articles, conferences 3000 Corp customers globally, expert analysts around globe Lecturer, Corporate Responsibility, Birkbeck College (London) Co-chaired independent working group on CSR for UK Government 2006-8 for David Cameron / Oliver Letwin Founder/CEO of Stakeholder Intelligence: Bespoke company training & contract research. 30 experts round the world: China, SA, Brazil, Russia etc
  3. 3. China & sustainable business Key difference: Often about Government vs. People rather than Campaigners vs. Corporations In accidents and scandals, Government increasingly takes the blame Often attempts to deflect, sometimes onto Western companies Western firms subscribe to ‘local guy stitch up’. Despite systemic problems, Western managers excape censure and a local guy goes to jail Suits Chinese government: Let blogosphere hammer foreign brands as pressure release, but does not affect FDI Emerging middle class way more powerful than Government realised Major crackdown beginning on freer speech across board just announced ‘Soccer Mom’s and emergent middle class professionals are the game- changer: Recent examples in Dalian, high street rail crash demonstrating powers HSBC/Climate Group research: 57% of Chinese surveyed believe climate biggest issue they worry about today (2010) 65,000 serious incidents of social unrest in 2005: Then records stopped…
  4. 4. Brazil & sustainable business Very advanced CR/SD culture: 7 companies in the Dow Jones Sustainability World Index. China and India = 1 company each Long tradition of private philanthropy: big biz. large scale social projects 2009 Greenpeace ‘Slaughtering the Amazon’ report changed the game Showed cattle farming major cause of deforestation in Amazon: Result: three of Brazil‟s top supermarkets – Pão de Azucar, Wal-Mart and Carrefour - banned beef products. Four biggest meat producers – JBS-Friboi, Bertin, Minerva and Marfrig – adopted new environmental standards. McDonald’s, Timberland, others also pushed by GP on leather, soy chicken feed and other Amazon issues from 2006 to 2010 1,352 company members of leading CR organisation: Ethos Institute, NGO pressure vital in Brazil. Business rarely reacts on SD unless profits are threatened Deeply capitalist country: Instinctive mistrust of state intervention. Bottom line driven corporate responsibility
  5. 5. India & sustainable business Culture counts: Hinduism calls on its adherents to “give to all, be they recluses and Brahmins [priests] or wretched, needy beggars” 220 million of India‟s 1.2 billion under poverty level: Millions of others close to it Massive and systemic public sector/business corruption challenges Tata: 28 companies, £50 billion revenues. Deep culture of philanthropy since foundation. Birlas, Bajaj families similar ethos “Bottom of the Pyramid” coined by CK Pralahad, for India, now global. Prime example: ITC’s e-Choupal project for rural poor highly successful and profitable India‟s share of the USD 2.2 trillion market for low carbon goods and services in 2020 could be as much as USD 135 billion + 10.5 million green jobs. Fastest growing, according to HSBC Ongoing Maoist violent insurgency much bigger than known in West. Land disputes said to play significant role in recruitment
  6. 6. India & sustainable business India now fifth in the world in terms of wind energy production Hindustan Unilever: 2002 campaign RE soap usage. Reduced size and cost of Lifebuoy soap brand. Significant reduction in diarrhoeal disease. Led to a 20% upsurge in localised sales Chotukool refrigerator world‟s lowest-priced model:(£48) Tablet computer now sold at $45/35 to students and others Mahindra World City project: Residential, business facilities in “environmentally and socially sustainable way” Still open to debate as to effectiveness Vedanta and other mining firms increasingly controversial:People vs. Land vs. Resources + corruption + oligarchs = Protest and action = Corporate Risk Vigorous debate about mandatory CR „laws‟ and transparency
  7. 7. South Africa & sustainable business South African companies trying to confront apartheid legacies that government has yet to resolve Africas largest and most industrialised economy as well as the 12th largest emitter of greenhouse gases globally Heart of the economy is a small core, accounts for 10-15% of the population. 85% of the population in abject poverty Grip of Trade Unions presents major challenges: ie removing poor teachers: Leads to deeply uneducated public sector: Deeply corrupt and protected Corporate giving has been rising: 24% year on year to 5.1bn rand ($690m) for 2008-09 Business understands the need to balance green, economic and social, Government only interested in economic and social Corporate responsibility efforts directed towards taking over, or propping up failing and under-capacitated government service infrastructure
  8. 8. South Africa & sustainable business New black elite created by Black Economic Empowerment Forced some government-owned companies, such as power utility Eskom, to hire foreign non-whites to meet these racial targets Mining companies improved their environmental, social and governance performance. Also confronted government over HIV/Aids: one in three mine workers infected Anglo-American lead way with "Zimele" scheme, SAB Miller helping SMEs get on their feet Middle and upper classes tiny: so less pressure outside government on business Companies find unique business cases: Massmart’s employees made clear that they saw nothing unethical in stealing as long as the company did not make any investment in its local communities Some are innovating profitably: Woolworths, third largest food retailer now sells about $140m worth of organic and free range products.
  9. 9. Emerging Markets: 10 Key lessons1 Corporate responsibility and sustainability issues are VASTLY different around the world (Even in Europe)2 Global principles with local implementation, combined with „red line‟ areas of ethics (ie bribes) and overall targets, are only way large companies can operate successfully and sustainably3 The world is a lot more left wing than the UK and USA!4 Governments are much less predictable on sustainability issues: ie reporting requirments5 Institutions as we know them often do not exist6 Stakeholders are less predictable issues can escalate very quickly7 Culture counts, more than anything: Local knowledge essential8 Agendas are mixed: But skills, education and jobs are always Number One9 The greener agenda is understood and often consumers are less sceptical than in West10 Get ready for a bumpy road ahead: Global business = Global complexity!
  10. 10. Further resources: Ethicalcorp.blogspot.com (Toby Webb‟s Smarter Business Blog) Slideshare.net/tobiaswebb (Lots of presentations) www.ethicalcorp.com (Search for „Country Briefings‟) Contact me: Toby.Webb@ethicalcorp.com Twitter: tobiaswebb76 +44 (0) 7912 770277

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