Business Beyond the Bottom Line – The Key Purpose for Business
Asia Plateau, Panchgani
7 – 11 November 2013
Report from the Panel discussions
Participants from around the world joined to discuss the popular conversation of ‘Business Beyond the Bottom line’. The world is gradually moving into an era of greater socially minded business practices – ethical leadership, values in business, long-term sustainability, corporate social responsibility and social enterprises are becoming hotly discussed topics.
So what is beyond the bottom line? What is the purpose of businesses? Can they satisfy shareholders as well as other stakeholders, specifically the community? These were some of the themes that emerged when examining beyond the bottom line of businesses.
The first panel session, chaired by Professor Shukla, was held on 8 November and featured two speakers from India: Suresh Vazirani, Chairman and Managing Director of Transasia, and Shishir Joshipura, Managing Director of SKF India Ltd, and Bedan Mbugua, General Manager of Royal Media, Kenya’s largest media organisation. The discussion was based around Corporate Social Responsibility (CSR), the human processes within business and how one core purpose of a company is to give back to society.
It was agreed that it is unethical for businesses NOT to make profit; profit makes businesses sustainable and without having a strong bottom line a business can’t implement CSR practices and therefore cannot move on from the ‘bottom line’. However, profit is just part of the picture.
Founder of the UK think-tank Tomorrow’s Company, Mark Goyder, raised a key theoretical point - that there are two types of CSR: i) compliance CSR and ii) conviction CSR – and each have significant difference when talking about and implementing the concept. He also posed an interesting and profound question: do we live to eat, or do we eat to live (the role of profit and purpose)?
Although essential, CSR does have its flaws, or at least the way the concept is implemented in some companies. It can be a mask to hide behind, a tick-box exercise and written into policies because ‘everyone else is doing it’ rather than implemented with integrity, conviction and from the heart of leaders. Is CSR beyond the philosophy or within the philosophy of business? Is CSR a mindset or an act?
Good governance within CSR is based upon leadership behaviour and leadership concerns stakeholder relationships – including that with the community and environment (also a stakeholder of a company). It is to be remembered that CSR is not just external and outside the business, it involves employees (the core asset of a firm) – therefore it is also internal. It has to be holistic and for all stakeholders. If you want to move business beyond the bottom line: listen to all your stakeholders.
An interesting moral question was raised by the Mumbai businessman Suresh Vazirani: should a business with a social purpose spend money on CSR? For example, should the price of a – currently affordable -- health product aimed at the disadvantaged in society increase? This money would (indirectly) be paid for by the customer. The flaws of the term CSR and its definition emerged out of this discussion. Why does a business with a social purpose feel the need to have ‘CSR’ when, before the term was even popularised, the company was doing good work for society?
Academics, politicians and multinationals all have their own meanings of CSR but does this trend of debating and defining the term actually take away from the essential significance of it: for businesses to be ‘good’ to society. Bill Gates recently said, ‘Industry has no purpose unless it answers the problems of our world.’ Does this statement answer the question of what is beyond the bottom line of business?
The second session on 8 November saw businessman Vivek Asrani and Rahul Bharti from India and Mr Hironori Yano, Chairman of IofC Japan, take to the stage.
The Chair opened with the question: what is the core purpose of business – to create value, to sustain society, to benefit the community, to satisfy shareholders? The common opinion that emerged was along the lines of previously discussed ‘CSR’. Vivek Asrani moved away from labelling it CSR and stated, ’Any disconnect between business and community well-being has great, negative consequences for all.’ In line with what Bill Gates said, businesses have to find answers to societal problems; a business is a citizen of society, it therefore has a role to play not only to itself and its shareholders but also with respect to the environment in which it operates.
The reason why is it necessary for a company to have a purpose beyond profit is that a business that does not have such a purpose will not maximise its potential. Businesses have two primary responsibilities: 1) make sure that it is strong and sustainable – this is where profit comes into it; and 2) to create an impact that is beneficial to people and society – where purpose comes into it. There needs to be an alignment with business and purpose, otherwise the business loses its soul.
In an ideal, just and equal world, a medium-sized business entrepreneur and an international manufacturer would each strive for the same goal: to bring wealth (profits) and relieve society of poverty. However, the status quo largely remains; there are shareholders to consider and all too often the focus is on short-term profits. This was the disconnect in the discussion; the phenomena that business has a larger purpose than profit conflicts with the essence of capitalism.
Nonetheless, there is a social enterprise movement around the world, this urge for a social purpose in business. As Mr Asrani stated, ‘the higher the purpose, the greater the impact – particularly with business. We must use businesses to build a better world for all.’
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