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HEC Paris in Qatar has hosted a ‘masterclass’ by Professor Frederic Dalsace, holder of the Social Business Enterprise and Poverty Chair at HEC Paris.
The topic was ‘Why should firms be concerned about the fight against poverty?’.
Professor Dalsace believes that firms should be concerned about the fight against poverty. “Poverty is relative, of course, where someone who could be considered poor in one country might not be considered poor in another part of the world.”
Nonetheless, argued the professor, there is room between markets and philanthropy for firms to fight poverty.
More and more firms are ‘joining the fight’ – the professor cited “Essilor” in India, “SC Johnson” in Kenya and “Danone” in Indonesia – and that in these cases, and others like them, profit is not seen as a
What, then, is the motivation? “We have to go beyond public relations or corporate social responsibility,” said the professor, “and break down the motives into moral imperative, economic motivation and evolutionist obligation.”
“Moral imperative argues that the poor are subsidising the rich by having to pay more money for utilities despite having smaller incomes and, generally, smaller houses. Typically, smaller houses cost more per square metre than larger ones, and the paradox is that smaller dwellings are relatively more expensive. Additionally, offers that may be available on the Internet will simply bypass those who don’t have Internet access – invariably the poor. These are examples – there are many more – of ‘poverty penalties’, which are a byproduct of capitalism.
“Economic motivation argues that it is in firms’ interests to help poor people for five main reasons. One, benevolent firms can achieve better access to markets through enhanced image. Second is the effect on the ‘bottom line’ – the fortune is historically found at ‘the bottom of the pyramid and where growth (due to demographics) can be found. Thirdly, ‘necessity is the mother of invention’ and so new developments can be found in unlikely places. Fourthly, impact on motivation – getting the rate for the job – helps to connect the employee with the company, increasing motivation, and, finally, a caring reputation builds social capital and opens doors.
“Evolutionist obligation recognises that in demographic, energetic, ecological and social regards, things have to change and that the status quo is not an option. Firms need to make this happen,” said the
In summary, the professor argued: “Time has come where firms have to change the mentality that says that ‘the business of business is business’. It is thus understood that firms need to fight poverty for their own well-being as well as that of society. Further, that firms possess the most dominant power to make the changes needed to fight poverty – that they can either lead the way or wait for their competitors to leave them behind.”