Corporations are the only thing that can save the world

We’ve always looked to non-profits and governments to solve our most daunting challenges, when we should be looking to the business sector for solutions, says Alice Korngold.

Corporations will save the world
Solving the world's problems is good for business, such as how improving energy efficiency in commercial buildings, like what Johnson Controls is doing with the Empire State Building, leads to cost reduction. Image: Shutterstock

Thirteen months ago, after reading a draft of my book, A Better World, Inc.: How Companies Profit by Solving Global Problems … Where Governments Cannot, a colleague said to me: “Okay, Alice, you provide many great insights and observations, but what’s your big takeaway?” To answer his question I had to zoom way out, and when I did, the answer became glaringly obvious: Only global corporations have the resources, global reach and self-interest to build a better world. 

Governments are limited by borders, and the international community has failed to come to binding and actionable agreements. Non-governmental organizations and nonprofits have made great strides in advancing the human condition, but lack the resources and scalability sufficient to make transformational progress.

My conclusion about corporations rang true based on all of my research, but it startled me to make such a statement — it felt like some sort of heresy. We all know that too often elements of the corporate sector have been responsible for creating the human rights abuses, environmental degradation and economic injustices that plague the world today — and some continue to do so.

Yet, my research provided extensive evidence that some leading companies are finding solutions to the world’s most daunting challenges — and that these multinational corporations have the vast financial, technological and human capital; the global footprint; and the profit incentives and market forces necessary to make change on the level needed as we face so many problems at once, such as climate change, ecosystems degradation and poverty, and issues around education, health care and human rights. NGOs, nonprofits and governments simply do not have all of these.

Companies are not doing good just to be nice. Global problem solving is good for business for three reasons

That said, the evidence also shows that companies are only successful in global problem-solving when they partner with NGOs and nonprofits, and sometimes with other companies; engage effectively with stakeholders; recognize that sustainability is a matter for board governance; and commit to accountability and transparency.

For example, Allan Pamba’s work at health-care company GlaxoSmithKline — in partnership with telecommunications company Vodafone — is saving the lives of newborns by increasing the uptake of DPT vaccines in Mozambique. By registering pregnant women on the health ministry database when they deliver their babies, alerting the mothers via text messages about the availability and importance of vaccinations, and texting reminders when it’s time for each of the follow-ups for the DPT series, GSK aims to increase the uptake for the third dose from 76 per cent to 86 per cent. “Seven million children die every year before their fifth birthday, many of these from vaccinable diseases,” explains Pamba. “A 10 per cent increase in vaccine uptake could result in hundreds of thousands of lives saved every year.” Through this mobile-enabled vaccination program, GSK and Vodafone are providing a sustainable business solution that involves community health-care workers on the front lines and engages mothers in taking responsibility for saving the lives of their children.

Pamba grew up in Kenya and worked in clinical care in the country for government services, mission hospitals and research hospitals. “As a child, I grew up in an environment where all I saw was donated aid,” he says. “I fell into a trap of ‘give me, give me.’ As a young physician I recognized that that doesn’t work. I woke up to the fact that for solutions to be sustainable, you need to earn and buy. That’s why I support this approach. It gives people their dignity.”

The GSK and Vodafone model is also good for business. “We are not a charity. We are a business,” Pamba says. “But we measure our success by the volume of medicines and vaccines that we get through into the 50 least developed countries, rather than the profit we make. Our target — set in 2010 — is to grow the volume fivefold by 2015. In the short time that we’ve existed at the company, we’ve become the fastest growing unit at GSK.” For Vodafone, the mobile company generates revenues through text message traffic.

So, as you see, companies are not doing good just to be nice. Global problem solving is good for business for three reasons. First, companies like GSK and Vodafone profit, while building their long-term value. Second, companies benefit by mitigating risks. Nike, for example, is investing in the development of a global supply chain of sustainable materials for apparel and footwear since it realizes that the natural materials it had been using in the past are becoming scarcer. Nike’s commitment to sustainable materials is vital for the long-term success of its business while also being good for Earth’s ecosystems. Third, companies benefit by reducing costs. Johnson Controls, for example, is retrofitting old buildings for energy efficiency — buildings such as the Empire State Building in New York City and the Inorbit Mall in Mumbai. Energy efficiency is cost effective for business tenants and so beneficial for commercial real estate companies; it’s also good for the world, especially since 70 per cent of people will live in cities by 2050, and the building sector consumes 40 per cent of the world’s energy.

None of this is to say that governments and NGOs do not have a role to play in improving the world. Indeed, they also have essential functions

Investors, consumers and employees are rewarding companies for their global problem-solving strategies. Not only are socially responsible investment assets estimated to be as high as $30 trillion, but even mainstream investors are recognizing the importance of companies investing in sustainability. According to the nonprofit sustainability advocacy group Ceres, mutual funds are showing record high support for climate change shareholder resolutions. And consulting firm Ernst & Young’s 2014 proxy preview shows increased investor attention to sustainability and board governance and accountability.

Consumers care as well. Deadly factory fires and other horrendous human rights violations tarnish the reputations of companies, while goodwill is generated by companies such as Unilever, where the CEO Paul Polman has committed the company’s mission and strategy to sustainability. Employees, too, prefer to work with a sense of purpose and for companies that are doing good in the world.

None of this is to say that governments and NGOs do not have a role to play in improving the world. Indeed, they also have essential functions. Government needs to set regulatory boundaries and hold companies accountable for their business practices. NGOs and nonprofits have been and will continue to be keepers of the flame, focusing society on pressing issues, providing experience and expertise, and ensuring that all members of society are included.

But let me be clear: The biggest opportunity we have to solve our most challenging problems comes from multinational corporations, some of which are becoming the most powerful drivers in building a better world.

Alice Korngold is a consultant and author. This post originally appeared in Ensia.

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