16 November 2011
Two weeks ago in London, the Battle of Ideas took place - a festival which seeks to debate the challenges facing society and understand what lies behind the headlines. SABMiller's Corporate Affairs Director, Sue Clark, gave a speech as part of one of the keynote sessions, Profiting responsibly? Business in the big society, which looked at questions such as how business should contribute to society, given the increasing public cynicism about fat cats and powerful corporations; and whether making profits and helping society are mutually exclusive.
In her speech Sue argued that there is no conflict between what is good for a business like SABMilller and its shareholders, and what is good for society.
It's been impossible in the last few weeks to turn on the TV or open a paper without being confronted by images of young people protesting about the role large corporations have played in the global economic crisis.
But the irony is that these same protesters, while attacking rich corporates and CEOs, happen to sport iPads, iPhones and other innovative, technological tools that entrepreneurs have worked so hard to invent, build and distribute to consumers.
This powerfully illustrates a point that is so often forgotten - that businesses are not something separate from society. Businesses make products and provide services that people want and are therefore prepared to pay for. In the case of SABMiller, we brew beer, and people who chose to drink it do so because they enjoy it.
Consumer companies like ours are only successful if we're sensitive to the needs, the demands and, most importantly, the values of our consumers. Consumers vote on companies every day when they buy their products: they only vote on governments every four or five years. If we don't reflect societal values and concerns, we don't have a business - it's that simple.
We do not believe that there is a conflict between what's good for our business and our shareholders, and what's good for society.
SABMiller is a global brewer with African roots and around 80% of its business in emerging and developing markets. Our beer is brewed locally and sold locally. We know that our business will only grow if the communities in which we work are also healthy and growing.
So we have a strong motivation to invest in and grow our local supply chain - and to support the individuals within that supply chain. Today we have a network of smallholder farmers across Africa and India whom we've lifted out of poverty and into commercial markets by providing them with seeds, helping them improve their agricultural methods and giving them access to markets for their products.
We've adopted these same practices all along our value chains, right through to distributors and retailers. This shared-value approach has enabled us to deliver above-average returns to our investors, year in and year out. This link between companies, investment, economic growth and jobs is particularly clear in developing markets. And research shows that business is seen in a much more positive light in these societies.
This link is less obvious in more developed societies, where governments and their agencies are more active and where there's typically a social safety net. The fundamental role of business as the generator of wealth is largely forgotten and, at best, severely under-rated.
Business itself has allowed this to happen and one of its worst mistakes has been to embrace the language of Corporate Social Responsibility. In so doing, it seemed to acknowledge that there was something wrong with business, that making profits was not socially acceptable and that it had to atone for what it was doing. Only by doing other things beyond making a profit could business be seen to be socially responsible.
In fact, the biggest contribution that a business can make to society is to carry out its business - and do so in a responsible way. The impacts are highly visible: creating jobs, paying taxes, supporting local supply chains, training employees, innovating products ... and let's not forget the pivotal role played by Facebook and Twitter during the Arab Spring.
But some of the benefits are less clear. For example the role of business in emerging markets through applying first-world standards, supporting equality by providing roles for women, promoting ethical practices in local suppliers, building capacity in government institutions, helping to provide stability in post-conflict environments and even feeding workers and their families during difficult times - as SABMiller did in Zimbabwe.
The CSR industry has led to companies focusing on and prioritising individual projects or charitable contributions. There's nothing wrong with these per se, but their impact is a fraction of what corporations are doing through their core business activities. And of course, when times are tight and budgets are stretched, it's these 'add-ons' that are the first to get cut.
By adopting many of the ideas, words, policies and mindsets of CSR, business leaders and their companies appear to be choosing an apologetic approach to competitive capitalism rather than engaging in the real debate about how companies can and do contribute to society.
So what does society want from business? On the one hand, it seems business is increasingly being asked to step in and fill gaps in social services while solving many of the problems which traditionally would have been the remit of national governments. On the other hand, business is accused of being too powerful and extending its role too broadly in a way that is anti-democratic. As a result, some think that what's required is penal regulation and state intervention.
Are we clear what we want business to do? Companies cannot be drivers of economic recovery if they're asked to take on costs that blunt their competitiveness. Are we in danger of killing the goose that lays the golden eggs?
To return, then, to where I started - with the young men and women protesting against big business. What is one of their key demands? Job creation. And that's not a surprise, as in Britain alone there are currently a million young people under the age of 25 who are unemployed. That's far too many. But where are these jobs going to come from? The answer is from businesses, small and large.
In short, if we want a big society that includes everybody, we need a strong, thriving business sector at its heart.