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When corporate giving makes business sense

Studies show businesses doing good are better off, including receiving better customer, employee impressions.

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As Singapore's largest grocery chain-store, FairPrice's long-standing commitment to environmental sustainability and corporate giving is a significant one.

"WE cannot ask consumers to be the only ones (reducing plastic waste), I think corporates also need to play a part. We are all in it together", said Seah Kian Peng, group CEO of FairPrice Group, when he launched an initiative of a per-transaction plastic bag charge to 25 Fairprice outlets on Nov 11. In a consumer sentiment study of more than 1,700 customers, over 70 per cent of them had expressed support for a plastic bag charge at supermarkets.

As Singapore's largest grocery chain-store, FairPrice's long-standing commitment to environmental sustainability and corporate giving is a significant one, particularly in spurring positive behavioural change among the more than 100,000 customers it serves daily.

When asked about the role that businesses can play as agents of change today, Mr Seah responded matter-of-factly: "What are they waiting for?"

The perennial question remains: "What is the social responsibility of business?" Famed economist Milton Friedman, in a 1970 New York Times essay, asserted that the sole social responsibility of business was "to increase its profits". Mr Friedman described business leaders who took a contrary view as "puppets of the intellectual forces that have been undermining the basis of a free society" and their opinions as a "fundamentally subversive doctrine".

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DIVIDENDS FROM DOING GOOD

While Mr Friedman's views on capitalism and monetary economics dominated the 20th century, his views on the social responsibility of business are clearly untenable today.

Studies show the dividends from corporations doing good are multi-fold. Customers with a favourable impression of a company's sense of social responsibility are three times more likely to be loyal compared with those with less favourable perceptions about a company's philanthropic efforts, according to a 2012 report from the Council on Foundations and Walker Information.

Similarly, employees with a favourable impression of their company's social ideals and actions are five times more likely to remain with their employer, according to a Deloitte study.

The same firm in 2019 also found that millennials will patronise and support companies that align with their values and may end a relationship when they disagree with a company's business practices or values.

Today, over 90 per cent of major businesses have specific programmes dedicated to corporate social responsibility (CSR). While this development is to be welcomed, I would argue that there is some truth in Mr Friedman's thesis that the business of business is business, in so far as recognising that corporate giving should not be seen as pure altruism.

Instead, businesses are better off uncovering ways to leverage their core competencies and competitive advantages. These could encompass a firm's networks, its access to capital, its employees and technology to help create practical, market-based solutions that benefit society.

Marc Benioff, founder and co-CEO of NYSE-listed technology firm Salesforce.com, is a believer that businesses hold the potential to be the greatest platform for change. In his latest book Trailblazer, Mr Benioff opined that innovative non-profits have historically achieved true sustainability by embracing a revenue-generating business model. In bringing a market-based approach to generating sustainable social impact, Salesforce pioneered a 1-1-1 philanthropic model that commits the company to give one per cent of equity, employee time and product to non-profits. This similar model has since been adopted by Google and other businesses.

With the level of pride and satisfaction that employees derive from Salesforce's sense of having a social mission, should it be surprising that the company has been, for successive years, named the best place to work in Singapore?

Another example can be seen in the actions of Databricks, a San Francisco company with a newly established Asia-Pacific headquarters in Singapore. The US$6.2 billion firm was ranked recently as one of North America's fastest growing companies for two consecutive years by Deloitte's 2019 Technology Fast 500.

Databricks founders are also the original developers of Apache Spark, the engine behind a technological phenomenon that has unleashed what the World Economic Forum calls the Fourth Industrial Revolution: Artificial Intelligence.

A decade since Apache Spark was developed, it remains an open source engine, hosted at the vendor-independent Apache Software Foundation to enable programmers, data scientists, engineers, and others in the broader community around the world to tap on it freely and build on the platform for the benefit of others.

POTENCY OF SOCIAL IMPACT

This open source community has since become one of the world's largest movements in Big Data, with over 1,000 contributors from more than 250 organisations. Today, Databricks continues to uphold this open development model and contributes heavily to the Apache Spark project through both development and community evangelism.

These accounts illustrate the potency of social impact from for-profit enterprises that integrate their core competencies and corporate giving.

Fortunately, more businesses in Singapore have recognised these win-win outcomes. A 2017 Corporate Giving Survey by Singapore's National Volunteer and Philanthropy Centre (NVPC) found that most corporate givers - 64 per cent of them - have integrated giving into both core business functions, as well as in long-term strategic planning and market expansion considerations.

The same study found that 66 per cent and 42 per cent of business that give through actions such as volunteerism and philanthropy respectively reaped a plethora of benefits ranging from higher employee morale and leadership, talent and skills development, to improved employee retention rates.

At the Institute of Public Relations of Singapore, we hope to help more business leaders and reputation stewards recognise that social and economic value creation ought to go together, and to be doing so genuinely.

Consider this: 70 per cent of the top 100 revenue-generating entities in the world are not nations but corporations. This underscores the immense level of predisposition of resources, economic muscle, and the implicit permission from their stakeholders for corporate leaders and employees to be courageous to effect real positive change for society.

  • Marcus Loh is a Fellow at NVPC's Company of Good Fellowship, and the President of the Institute of Public Relations of Singapore (IPRS), the national apex body for public relations and communication practitioners.
  • Company of Good Fellowship is a talent development programme grooming business leaders to catalyse change within their organisations, for the benefit of society. Applications are now open at https://www.companyofgood.sg/fellowship