In the last four days that I’ve been back in the states I’ve had to pay for bags three times (at CVS, Ikea and Trader Joe’s). It’s a surprising and welcome development, particularly as I’m not in California or Boulder, but in Washington, D.C.

My reaction to the pay-for-bag-system has also evolved in step with consumer and business attitudes. I remember being charged for bags five years ago at Ikea (this time in California, after another move) and feeling indignant. How could the store charge me, a customer, for a bag to carry what I had just paid them for? Of course, later I settled into the routine of bringing reusable bags to the store with me when it wasn’t needed. And it became a point of pride, a small, visible signal to myself that I was being responsible. The stores neither encouraged my actions nor rewarded them.

But now that’s changing.  Trader Joe’s charges 5 cents per bag and credits you 5 cents for every bag you bring. As my better-late-than-never-sustainability-practicing husband pointed out, “That’s a 10-cent cost for every paper bag you use.”  CVS sells Greenbagtags to attach to any reusable bag for 99 cents and rewards you with a $1 credit every fourth time you use your bag. Each tag sold also triggers a 5 cent donation to the World Wildlife Fund.

So why are companies getting in the game?  Is it saving on bags? Customer loyalty (e.g., CVS’ Greenbagtag program)? Public image? Market relevance? Each factor in itself is reason enough because there’s adequate social proof to enforce the practice of reusable bags, which means that customers are less likely to view this restriction as negative. But what about Ikea five years ago? Surely I wasn’t the only customer irked I had to pay for bags.  What was the value of the risk for Ikea?

The value is in what the company stands for: less waste, sustainable sourcing and labor (as well as inexpensive well-designed products).  Last month, Ikea announced that by January it will no longer sell lights that use incandescent bulbs.  That’s also a brazen step sure to bug some consumers.  Five years down the road, however, it will likely seem de riggueur as consumers reap the financial savings of energy-efficient lighting.

In a market that is so consumer driven, it’s exciting to see companies influencing consumer behavior for the better.  And it’s a good business strategy. When Nike makes a product that gets me running more and Ikea improves the way I light my home, I am grateful (and a loyal, evangelizing consumer).

I came to the whole idea of social impact and business after several frustrating experiences–working for a business lobbying organization that (not shockingly) ran against my values, becoming privy to the status quo inefficiencies of traditional international economic development and suffering alongside my nonprofit clients as they focused more on fundraising and philanthropic realpolitik than constituent services.

I happened on the idea that business can be a force for social change in January 2008 and launched this blog, Cause Capitalism, to catalogue my discoveries and channel my thoughts.  Today, two years, eight months and 227 posts later, I’m taking an apt moment to reflect on salient points I’ve learned along the way.

‘Why apt?,’ I’ll ask rhetorically.  Because this week I’m leaving Buenos Aires where I’ve spent the past 1o months interviewing entrepreneurs and writing nearly daily on ‘the whole idea of social impact and business.’  I’m moving to Washington, D.C. to work with Ashoka’s Changemakers, and I’m darn thrilled about it.  I’ll be working with companies and foundations to launch competitions that source entrepreneurial solutions to some of the world’s social problems.

To be clear, the following list is not a eulogy.  I’ll continue to develop Cause Capitalism as a resource for socially driven entrepreneurs and companies (with a new site coming soon).  Here are my top-five observations on a macro level (numbers 6 and 7 would be the importance of cross-sector collaboration and long-term investment).

1. Socially proactive companies are not a replacement for nonprofits. This came as slow learning to me.  I used to think, Ah-hah! If businesses can make a profit and positively impact society then there’s no need for nonprofits. I realize now how untrue that is.  There are many issues, sectors and populations that can’t currently (and may never) support for-profit solutions.
2. The business case for sustainability is stronger than it was two and a half years ago. Not only are many resources (and disposal of their by-products) more expensive, consumers and employees expect businesses to be good citizens at a minimum and societal caretakers more often.
3. Particularly in a business setting, what’s measured is valued. Social business isn’t a moral perk, it’s a strategic approach to sustainable profit. It can make you feel great, but that’s only one of sustainability’s outcomes, which all need to be measured and then communicated and improved upon.
4. Transparent authenticity counts most. Yes, transparency and authenticity may be hackneyed words now, but man are they critical (BP is a smashing example of a company that was not honestly committed to sustainability but marketed itself as one that was. It also didn’t act transparently in the wake of the oil spill, hedging facts and shirking full responsibility).  If your company is truly pushing sustainability, there’ll be inevitable failures as you test and try new ideas. We all know the merits of failure, so no Churchill advice on learning from it here; just remember: whether your hiccup is public or private, be open and honest about it.
5. We’re just getting started. It’s been fascinating for me to see the surge in recognition, expectation and practice of socially responsible business. We have more data from consumers and businesses that reinforces the efficacy of sustainability as a business practice and business as part of the social solution.  We have new certifications and structures to support socially innovative businesses, like B Corp and L3C, and a growing pool of businesses are looking for ways to serve basic needs of four billion people at the base of the pyramid.

Know a person or business I should meet or be aware of in D.C.?  Drop me an email! olivia[at]causecapitalism[dot]com.

There’s a market at the bottom of the economic pyramid valued at $5 trillion dollars.  But the real allure of this market, at least for me, is the opportunity to help its 4 billion people access healthcare, educational and basic living services.  How can businesses access this market and how can they do it without exploiting the market’s individuals?

This question led me to Unmesh Brahme who focuses on how companies can become involved in base of the pyramid (BoP) business as a way to alleviate poverty. But what really sold me on Unmesh as an interviewee for Cause Capitalism is his combined experience in international corporate social responsibility and cause marketing (he set up Ogilvy & Mather’s and HSBC’s sustainability programs in India) and emerging economies through work with Oxfam and the World Bank.

Unmesh gave a fantastic interview, sharing a cause marketing campaign he led that took place on farms rather than supermarket shelves, offering up entry points to the BoP market for businesses and speaking about his shifting perspective on sustainability, CSR and management education. It’s absolutely worth a listen.  Right-click and download for the MP3 or click the player below.

Download audio file (Cause-Capitalism_Unmesh-Brahme.mp3)

I’ve highlighted specific points below, which I hope will draw you into the larger conversation.

• Unmesh led an interesting campaign with Castrol in India. By asking Castrol, What’s your brand problem? he realized that they lacked brand saliency with farmers during draught times (Castrol sold motor oil for farm machinery). Instead of investing in TV, print or radio advertising, Castrol used its marketing budget to help farmers conserve rainwater.  The outcome was increased brand awareness and preference among rural communities and increased water supplies.
• Until recently, Unmesh thought that the true mark of a sustainability company would be its elimination of a CSR department.  Conversely, he now he sees the need for an executive level CSR/sustainability function (on par with a CFO) to advocate and influence social responsibility, particularly when it may conflict with short-term profit.  In one word, this role might be described as a ‘challenger.’
• CSR should be removed from corporate communication or community affairs to be more operational, to influence internal decisions rather than external perception.
• Companies looking to engage BoP markets need to understand the purchasing power of these markets and align their services with local income levels.
• Critically, if companies see BoP populations as only a market to sell to, they’ll likely exploit it.  They should first look closely at local social and environmental needs and then develop relevant products (affordable housing vs. televisions, for example).
• Unmesh suggests answering these questions as you consider creating a BoP business or product:
  • Can consumers pay for your product/service over a sustainable period of time?
  • Is a community-based ownership model a viable solution?
  • How has the community approached the relevant issue (electricity and water supply, housing, healthcare, etc.) over time?
  • What’s the community’s level of social/environmental acumen?
  • How can local NGOs and the government support and contribute?

If you like this interview you can thank Unmesh on Twitter like this.

About Unmesh Brahme
Unmesh is the founder of U:Reciprocal Sustainability Group and the co-founder of Climate Civics Institute, an initiative he developed as a Yale World Fellow.  He set up HSBC’s microfinance and climate portfolio in India as senior vice president of corporate sustainability.  Before that, Unmesh ran Ogilvy & Mather’s CSR program, where he worked with USAID, Unilever and Castrol.  You can follow Unmesh on Twitter at @UnmeshB and read his blog.

BoP figures taken from World Resource Institute.

I’m stymied by another article from The Wall Street Journal challenging the plausibility and benefit of corporate social responsibility.  In “The Case Against Corporate Social Responsibility“ Aneel Karnani takes the Friedmanite view that companies are primarily responsible for maximizing shareholder profits.

To make his point that profit trumps social good, he focuses on the relationship between company executives and shareholders, “Even if executives wanted to forgo some profit to benefit society, they could expect to lose their jobs if they tried—and be replaced by managers who would restore profit as the top priority.”  This argument is untenable because in reality businesses are judged by more than shareholders–namely consumers.  And increasingly, consumers are choosing not to support companies that exploit the environment, employees, suppliers–even customers’ own health.  The relationship between Nike and its shareholders was irrelevant, for example, when Nike lost licensing agreements and student groups and advocacy organizations pressured the brand to compensate Honduran workers who lost their jobs when two subcontractors closed their factories. In the end, Nike gave $1.54 million as a relief fund for the workers. Karnani fails to mention these myriad drivers of business decisions. (Although whether this was an act of corporate social responsibility or a case of back-up-against-the-wall is another debate entirely).

What I find more amazing than Karnani’s neo-Friedmanite argument is his belief that CSR is ”an illusion and a potentially dangerous one.”  He writes, “As society looks to companies to address these problems, the real solutions may be ignored…. The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds.”

Even if this were true (and I believe we have ample problems that require numerous solutions and partnerships between all sectors), there’s an ocean between using business to save the world and accepting that business bears no responsibility for its impact on society and the environment.  Somewhere in this ocean is corporate social responsibility.

Perhaps in the end Karnani and I stand together against corporate social responsibility. He believes it’s an impossible expectation and I believe it’s not enough.

Image credit: Homedir

“CSR in my mind is defunct now… Compartmentalizing the socially responsible is not the way to go. I think the model for starting employee engagement activities has to be embedded in everything you do.”

Richard Branson isn’t the first to make this statement.  It’s hardly heretical anymore. Campbell’s Vice President for CSR Dave Stangis seems to agree,

“The mark of success for this generation will be cannibalization of the sector as CSR becomes integrated into a company’s functions just like human resources, finance or quality.”

But is it true? For companies of all sizes, markets and combinations of stakeholders?

Branson and Stangis advocate this approach as leaders within large, publicly traded companies, pointing to fully embedded integrated sustainability as a viable approach for companies beyond the ilk of TOMS Shoes or Ben and Jerry’s.

Until recently, Unmesh Brahme shared their point of view. Unmesh developed Ogilvy & Mather’s and HSBC’s CSR programs in India and worked with Oxfam and the World Bank before that, which means diverse experiences shape his perspective.  Brahme explained that up until several weeks ago he thought,

“The real identifier of a sustainable company would be the elimination of its CSR department.”

But lately he views a chief sustainability officer (or comparable position) as necessary to advocate sustainability in cases of conflict with direct profit or stakeholders.

Can a company’s many parts–employees, management, green teams and external stakeholders– push forward sustainability together, or does sustainability need an internal champion whose unequivocal role is to stand up and fight in times of conflict?

The ultimate aim of sustainability in business is to use it as a strategy to optimize value for all stakeholders (including employees, community or society and environment).  Today, there are conflicts of interest that sometimes arise between stakeholder interests, but will there always be? Maybe the statement to make is that sustainability and profit won’t diverge, but instead both grow from the same action. Is that even heretical enough?