Corporate social opportunity
Smart small and medium-size businesses know that innovative corporate social
responsibility can produce a competitive advantage.

BY SIMON LLOYD
BRW. 12 January 2006

This year, the British businesswoman Anita Roddick will mark the 30th anniversary of founding The Body Shop, a company that grew from a small shop in Brighton, England, in 1976, to a global retail empire covering 50 countries with more than 2100 outlets and sales of more than $700 million.

The Body Shop's sales message was always simple: it made high-quality beauty products that were not tested on animals, and a percentage of the company's profits would always be given to community causes. Thirty years ago, the term "corporate social responsibility" was
virtually unknown, and even today Roddick's concept remains one of the most innovative in retailing history.

Corporate social responsibility has gained enormous traction in recent years, thanks to burgeoning numbers of consumers who demand to
buy products from companies whose social credentials are responsible and trustworthy.
With the arrival of the internet information age, giving consumers the ability to research their products in detail, the onus on companies to demonstrate their corporate social responsibility is relentless. And one of the most important aspects of Roddick's brainchild is that a single
lesson from the foundation of The Body Shop is as relevant now as in 1976: that corporate social responsibility can be a powerful motivation for innovation, particularly among small to medium-size enterprises wanting to gain a sustainable competitive edge over rivals
in their sector.

Although giants in the global beauty industry such as Procter & Gamble have long since eschewed testing human beauty products on animals (because consumers no longer tolerate it), The Body Shop is, to this day, regarded by its devoted customers as innovative and
unique, both for its products and its social policies.

Smart small and medium-size enterprises can see the benefits that innovative corporate social responsibility practices bring to their communities, their consumers and their bottom line. Crucially, they also see how they can achieve a competitive advantage.
One of the world's leading thinkers in corporate social responsibility, the British businessman, academic and author David Grayson, was in Australia in December to address the 2005 Corporate Social Responsibility Summit in Sydney. He told delegates that small and mediumsize enterprises, in particular, should view corporate social responsibility as "corporate social opportunity".

"I believe that it will be in small and medium-size businesses around the world that we will see the most exciting developments in responsible business practice over the next few years," Grayson said.

He referred to a study last year by The Babson Centre for Entrepreneurship in the United States, which estimates that in the past 100 years, 95% of important innovations in products and services came first from companies with fewer than 20 employees. Grayson said: "If that
statistic is even broadly accurate, then expect to see small firms pointing the way when it comes to successfully integrating responsible business practice. Why? Because it is these businesses that probably see the built-to-last philosophy of the genius of the 'and' rather than the tyranny of the 'or.' A strong commitment to values and strategy in combination will produce the corporate social opportunities." Heather Ridout, the chief executive of the Australian Industry Group, the principal sponsor of the summit, says: "Corporate social
responsibility is no longer something business can safely put on the back burner. It is becoming recognised as an important driver of innovation, a new way to get into fresh markets, a means for companies to differentiate themselves, and it can be significant in attracting investment. Corporate social responsibility is also a good way for businesses to engage staff and the community and, properly implemented, can lead to reduced costs and improved profitability."

All experts in corporate social responsibility agree that it can no longer be regarded as a "bolt-on" concept, but must be embedded in a company's business strategy and culture.
Katherine Teh-White is the founder and managing director of Futureye, a firm that advises companies such as Alcoa, BHP Billiton and the Great Barrier Reef Marine Park Authority. She says small and medium-size enterprises are ideally placed because they are often more easily able to weld corporate social responsibility into strategy and culture than much bigger, established corporations trying to embrace the concept for the first time.

Teh-White says the innate nimbleness of small and medium-size enterprises also helps them to innovate around corporate social responsibility. "[They] have huge innovationopportunities. If they ask themselves 'what could we do as a brand that will build customer
responsibility. "[They] have huge innovation opportunities. If they ask themselves 'what could we do as a brand that will build customer loyalty and support by seeking to address the [social responsibility] issue?' then they can end up with niche brands that have an enormous
competitive lead.

"There is a lot of cynicism about big companies among consumers, which works to the advantage of smaller businesses adopting corporate social responsibility because they force consumers to ask the bigger companies 'gee, why aren't you doing this?'"
The right blend How does this work in practice? The coffee sector provides a good example. For the past few years, consumers in many Western countries
have become more and more agitated that big coffee producers are exploiting workers on plantations in Third World countries.

One of the biggest, Nestle, has endured several years of vocal consumer lobbying against this overseas and, to a much smaller extent, in Australia. In the meantime, smaller coffee companies have emerged with innovative blends and products that are explicitly "friendly" to
coffee harvesters in terms of pay and conditions. In Australia, for example, the Dome coffee company has achieved considerable success not only because its coffee products are innovative, but because the company demands socially responsible production.
In October, this worldwide consumer trend produced a startling response from Nestle. It announced a total overhaul of its social practices, including the introduction of a new Partner's Blend brand of coffee, which would conform to the Fairtrade standards prescribed by the International Business Leaders Forum, a non-government organisation based in Britain that promotes responsible business leadership and sustainable development. The forum's chief executive, Robert Davies, describes Nestle's policy shift as "a significant revolution".
Creating products whose innovation is based on social responsibility is one thing. How do companies use the same concept to be innovative with their processes?

Buderim Ginger, on the Sunshine Coast in Queensland, provides a perfect case study of how small and medium-size enterprises can use innovative processes not just to improve their social responsibility credentials but, referring to Ridout's comments, to reduce costs and
improve profitability.

In December, Buderim, an Australian Stock Exchange-listed business with sales in 2006 expected to exceed $40 million, announced the opening of a new waste-water treatment plant at its Yandina production site. It is the first of its kind in Australia, removing organic
pollutants produced by Buderim's ginger treatment processes by the use of organisms suspended above the ground. The plant will reduce by 22 million litres (a factor of about 20%) the amount of organic effluent Buderim discharges into the Sunshine Coast's sewerage system every year.

Buderim's managing director, Gerard O'Brien, says the plant cost $700,000, including a $150,000 Queensland Govern-ment ecoBiz grant.

"Companies like us have to have trust in the consumer's mind that the product will not only be good but is made in the right way," O'Brien says. "We are in a niche market and have had to be innovative in our product development. This [water treatment] initiative is a very public
example of our process innovation that is socially and environmentally responsible."

CHECKLIST
1 Who has an interest in our organisation and how do they perceive it?
2 Are our executives and key personnel trained in the latest thinking on corporate social responsibility and sustainable development?
3 How can we further embed sustainability and ¿pro-activity¿ into our organisation?
4 How does our performance differ between internal and external perceptions?
5 How can we realise the potential reputation and financial benefits of our leadership position?
6 Are there innovative cross-sector partnerships that we can be pursuing to realise our vision?

SOURCE: FUTUREYE

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