Corporate intervention and social business

Devastation of economic and social fabric due to floods demands international and local collaboration for survival.

LONDON: The recent floods have devastated the economic and social fabric of Pakistan, where the immediate phase demands international and local collaboration to ensure survival.

There are several questions to be asked and many answers pending as to what will happen when life will settle down for its active volunteers, when flood stories will not make headlines and when international assistance will dry out.

However, the purpose of this article is to address our persistent social concerns predating the recent floods or the 2005 earthquake.

Whether it is literacy, housing or nutrition, innovation is crucial, which demands that the corporate sector increase its stake in its surroundings.

Mundane terms such as ‘corporate social responsibility’ need to be debunked and replaced with active, accountable and action focused phrases, as there is no external responsibility. It is as personal as it gets – the outcome of society is as internal to each organisation as its profits.

Breaking the stereotypes

In a country like Pakistan, where the track record of governments in dealing with day-to-day social issues can at best be explained by ‘limited resources and too much to deal with’, the corporate sector needs to overcome the vacuum and play a unique and integral role – fill in the gaps left by the government or other institutional partners.

Why blame repeated governments for one thing or the other? What we need is solutions, not bickering.

We live in an interconnected world where numbers mean power and existence means value. It is time to take real ownership, not make half-hearted attempts.

In fact, corporate intervention makes sense from a business point of view as it feeds directly into profits of firms through enhanced goodwill and creation of new customers, while setting the premise for economic and social stability leading to investment, a favourable ecosystem, resolved supply of labour and a strong socio-economic multiplier – all crucial for long-term success.

In addition, partnerships can be formed to reduce individual investor risks.

Moreover, the demarcation between business and social sectors is purely perceptive. In general, education, health and crime are referred to as ‘social’ whereas housing and automotive noted as ‘business’.

However, if defined by need and underlined by the popular term roti, kapra aur makan, scope for social activity should also exist in real estate, clothing and food.

Options for interventions

Pakistan has an active corporate sector where some have also established not-for-profit firms, which purely run on donations – a dicey proposition for innovation, efficiency and sustainability over the long run.

Therefore, why not make an investment which would be self-sustainable: a social business.

Danone, a French dairy food company, provides an example of one form of social business through establishment of a yoghurt company in Bangladesh to tackle child malnutrition.

Similar examples can be proposed in real estate, providing affordable housing to the poor, or a clothing line which sells at cost.

The objective is to set up a no-loss, no dividend enterprise which charges a price equal to cost and breeds on non-profit incentives, purposed to increase market access for the poor, address a social concern and most importantly, ensure sustainability to guarantee a dynamic and ‘going-concern’ value.

The clock is ticking and the time is now – let’s set new examples for the world to follow.

Published in The Express Tribune, August 30^th, 2010.