TSIC is pleased to feature a guest blog from Claus Damwerth, formerly of LexisNexis in response to the TSIC Fuse report:

I certainly share your view that Corporate Social Responsibility and profitable business can and should go hand in hand.

From my experience with LexisNexis in Germany, but also from other large corporations I worked with in the past, I have seen that any investment is always driven by ‘business-first’ considerations rather than from a consideration of how a business can best meet community needs.

LexisNexis, for example, is promoting ‘the rule of law’ quite passionately, which basically says that a country which respects the rule of law will in the long-run do much better economically than a country which doesn’t have solid laws or doesn’t respect them. Nevertheless, I could not see LexisNexis being prepared to invest in expanding to a country which they believe would benefit from greater transparency and accessibility to legal codes and cases as a way to help the country develop in a more regulated, and therefore economically improved, direction. The investment would have to make commercial sense for LexisNexis first.

I have a friend who has invested in solar lamps to enable rural communities in developing countries to save money on kerosene – funds which rural families should then be able to invest into savings, setting up their own businesses, or simply consuming things they couldn’t afford before. His mantra has been to put ‘CSR first’ and then work out how to make it a viable business. Unfortunately, that friend has burned through a lot of his private money in the last 3 to 4 years and has come into a position where his business might not be sustainable in the longer run. He now is in a position where he can look back and say ‘at least I helped a few people’, but his original ambition to improve life of poor people on a larger scale might not become true.

In essence, I believe that socially-responsible and commerical business should coexist, and I also think that they do in many cases, but a company which doesn’t have a working business model that also supports communities is instead really a philanthropic organisation, and might cut spending to the project as soon as they can’t or don’t want to afford this kind of social support any more.

I believe that companies should be more motivated to look into areas where they usually do not operate, and they also should be encouraged to be the first movers in certain areas. There are so many business opportunities out there, but I have the impression that CEOs are sometimes just too reluctant to see the opportunity. They don’t want to take a risk which will be difficult to sell to their shareholders, and they evaluate potential investments based on internal standards (and that breaks a lot of business cases!) rather than basing them on what is good enough for the area they could invest in.

Looking at the three examples you provide in the report, the Pret A Manger example seems to me to be a philanthropic act which might also be seen as marketing spend to build their brand – in which case it is a pure business-driven decision using CSR. The Unilever example about reducing water consumption is an improvement for the environment, but I doubt that Unilever would produce these products if there wasn’t a business case behind it. Plus the reduced water consumption might be an important USP against their competitors to be successful in the Vietnamese market. In the Thompson Reuters example, the text already states that the company is making profits by providing a professional information service, which again is common nature when doing business.

Taking the last example, I think the difference between Thompson Reuters providing a professional information service in let’s say the UK and India is only that India is seen as a developing country, whereas the UK is a mature market. Nobody would ever claim that Thompson Reuters is providing research systems in the UK to increase livelihoods for UK farmers, even though these systems probably achieve the same improvements in the UK as in India. We just see Indian farmers as being more desperate and under-privileged than farmers elsewhere.

I think any business, whether it is producing washing powder or providing information, can be seen as practicing corporate social responsibility. However it is only when these activites are focused on developing countries or for poor people that we call it Corporate Social Responsibility.

If more companies were encouraged to incorporate into their business and develop products and services for those who are considered to be part of the bottom of the pyramid, we could really see changes for the better. And if these activities are then marketed as Corporate Social Responsibility to help building their brands, it might be an additional benefit for these companies.

Claus Damwerth, October 2012