Modern CSR: Not philanthropy; business development

Social investment in innovation and your future profit

Dr. D. Michael Shafer, DirectorWarm Heart Foundation

A.Phrao, Chiang Mai, Thailandwww.warmheartworldwide.orgd.michael.shafer@gmail.com

My name is Michael Shafer and I am a do-gooder who runs an NGO.

So pay attention to what I am about to say.CSR is investment, not charity.Invest in what you know.If it’s not profitable, it’s not a good idea.Invest in your own future.

Down at the base of the pyramid, we need innovative, strategic investments by companies with a long-term profit motivation to stay engaged in our communities.

Please don’t waste your money

Where I live is beautiful

The mountains are beautiful

The view from the mountains is beautiful

But the roads go no where

There’s nothing to do

One third of the population livesbelow the poverty line

Because there are no jobs

Most adults leave to find work

The women, children and elderly left behind suffer the poverty

PoorAverage income 72% of the national

averageAverage monthly wage less than $7030% live on less than $1.70/dayMore than 1/3 of people own no land

Illiterate13% never went to school; another

69% went no further than 4th gradeUnderserved

Highest infant mortality rate in Thailand

My district is typical of N. Thailand

Or about northern ThailandOr about ThailandWe are where you work, too.Worldwide three billion people live in the

rural peripherySo what do we want and need?And what do we not want and need?

There is nothing special about where I live

Most charitable donationsNice, but seldom costless or easily deployed

Computers – without a network admin or provisions for repair and replacement

Toys – without batteriesSoftware – to perform unheard of tasks

This stuff can be nice and often useful – but donations alone do nothing to increase a community’s capacity to sustain itself.

What we don’t need

CSR that’s all about you:◦ Reusing your grey water◦ Switching to high-efficiency LED bulbs◦ Reducing packaging

These are all great for global welfareBut they are just smart business

decisionsSpend less on water, electricity and packaging

They don’t do anything for us.They aren’t social.

What else we don’t want

We want CSR that provides sustained improvements in community quality of life.

We want you to define CSR as:Investment in innovation that improvesyour bottom line by reducing costs and/or improving supply and/or expanding markets and/or increasing customer loyalty AND provides training, creates jobs, opens access to markets and to goods, improves community quality of life and the environment.

Why? Because:CSR programs that are not profit-driven have no legs;CSR programs that are profit-driven create

social wealth, not just social value.

What do we want?

Talk about what you want.Talk about what we want.Talk about how innovative CSR

investments can work for both of us.

Today’s plan

SupplyIncrease supply. improve supply chain, ensure future

supplyCost reduction

Reduce production, distribution, waste disposal costsReduce human capital costs. access trained manpower

DemandEnable/access base of the pyramid market

CustomersRaise brand image, customer loyalty in existing marketsBuild good will with potential/future customers

GovernmentsImprove government relationsCreate opportunities for government contracts

What you want

Meaningful trainingTraining geared to specific, real jobs

Quality jobsJobs that offer good pay and benefits

Access to marketsEscape from middlemen, access to market data

Access to goodsAbility to buy and use broader range of products

Better quality of lifeElectricity, access to basic medical services, TV

What communities want

No real world vocational-technical training

No quality jobsPoor roads, crippling transportation costsHigh potential demand for consumer goods and entry level consumer durables

High underserved demand for basic services

What we have

Invest in your own needs and future in ways that meet community needs.

For example, invest to:Diversify supply and ensure future supply security;Cut training costs by making training programs profitableExpand your market by enabling consumersShow customers your engagement in the community

and win the goodwill of future customers by delivering value

Improve access to government by solving a key problem with cost savings

Build a new product line while reducing green house gases

How can CSR marry wants and needs?

Problem: Rising demand, uncertain supply, global warming threats to current production methods and sources of supply for corn and rice

CSR investment: Develop ag extension capacity to teach farmers low water, minimal agro-chemical production techniques

Your pay-off: Bigger, more stable supply, risk mitigation, existing and future customer loyalty, environmental improvement

Community benefit: Meaningful training, quality jobs, market access, risk mitigation

Securing future supply: the snack food industry

Problem: Lack of and/or high cost of training qualified house, garden, front desk and wait staff

CSR investment: Build eco-lodges that combine training facility with profit-making operation

Your pay-off: Reduce net cost of training, provide new, in-house destination to guests, earn customer loyalty through customer participation in program

Community benefit: Meaningful training with follow-on jobs, local jobs for suppliers

Reducing training costs:the hospitality industry

Problem: Huge rural market cannot be tapped because potential customers do not have electricity to run refrigerators, TVs, DVD players

CSR investment: Build and provide village-scale biomass power plants to rural communities

Your pay-off: New product for government buyers; large, newly enabled customer base; tremendous goodwill

Community benefit: Real training with follow-on jobs; access to goods; improved quality of life.

Creating new customers: the consumer durables

industry

Problem: Packaging is costly, environmentally unfriendly & provokes protest; poor consumers pay more for small packages & buy less; small shop keepers under-stock

CSR investment: Develop and distribute branded, re-usable bulk and retail packaging system

Your pay-off: Lower packaging costs, higher sales, goodwill among new customers and loyalty among existing customers; major environmental impact

Community benefit: Better access to goods, lower costs; reduced air pollution from trash burning

Winning hearts and minds: packaging

Problem: Poverty & geography limit patient access; health focus on urban areas; ministry purchasing departments hard to access

CSR investment: Develop automated, cell-phone connected, village deployable patient vitals taking instrument packages

Your pay-off: New product for Ministries of Public Health that fills gap in health coverage at lower cost than alternatives

Community benefit: Improved quality of life with remote monitoring of infants’ progress, hyper-tension, diabetes, COPD, other chronic conditions

Opening Ministry doors: the medical devices industry

Problem: Oil, gas & coal identified as primary sources green house gases, public resistance to old & new facilities, target of environmentalists

CSR investment: Build community-based, ag waste fired biomass power plants in peripheral areas

Your pay-off: Low cost, carbon negative additions to generation capacity, current & future customer support, response to environmentalist attacks

Community benefit: Meaningful training, quality jobs, valorization of ag waste, access to electricity, ability to buy household durables, improved quality of life

Cleaning up the environment: the electrical

power industry

Can we balance innovation, access and eco-imagination?

Innovate goods and services for profit that also meet social needs?

Absolutely –this is how your expenditures on CSR are transformed into investments in our communities.

So remember: We want you to thinkProfitsInnovationStrategicLong-term

Back to the beginning

This PowerPoint is brought to you by Warm Heart Publications.

Warm Heart is a grassroots community development organization serving the world’s 2.5 billion poorest people – rural small farmers.

In addition to publications such as this one for developed world audiences, Warm Heart Publications’ Educational Program publishes a wide range of simple but accurate materials for small, rural farmers. This program begins from the assumption that rural people are interested in the big issues affecting their lives and want to understand them.

Publications in the Warm Heart Educational Program for Small Farmers cover issues as diverse as the basics of soil health and plant nutrition to mitigating the consequences of climate change and how biochar works.

Modern CSR: Not philanthropy; business development

Warm Heart Publications

To learn more about Warm Heart, please visit:www.warmheartworldwide.org