Tag Archive: Social investments

A Game Plan For Technology Companies To Actually Help Save The World

Smartphones, computers and social media platforms have become indispensable parts of modern life, but the technology companies that make them and write their software are under siege. In any given week, Facebook or Google or Amazon does something to erode public trust in them. Now could be a moment for the industry to make good on Bill Gates’s promise of technology to do good, by “unlocking the innate compassion we have for our fellow human beings” and improving the world – or Mark Zuckerberg’s dream of building a “new social infrastructure to create the world we want for generations to come.”

Around the globe, countries and societies are falling behind on reducing social inequalities and meeting goals for economic development and environmental sustainability. The Intergovernmental Panel on Climate Change is issuing increasingly dire warnings about the effects climate change will have on human life on Earth – the beginnings of which are already unfolding.

I lead a major research initiative called The Digital Planet at the Fletcher School at Tufts where we study how technology is changing lives and livelihoods around the world. Here is an outline of how technology giants or nimble startups could help make Gates’s and Zuckerberg’s promises a reality.

Identify a big hairy problem

There is a long list of global problems to combat, including hunger, drought, poverty, bad health, polluted water and poor sanitation. One that’s connected to all the others is the recent bombshell news that climate change is accelerating: Over the next 20 years, Earth’s atmosphere will reach average temperatures as much as 2.7 degrees Fahrenheit above preindustrial levels. Consequently, extreme weather and natural disasters, food shortages, inundated coastlines and the near-elimination of coral reefs will likely happen even sooner than previously anticipated.

The scope of climate change gives companies like Google, Facebook and Amazon excellent opportunities to find specific approaches that would have meaningful effects.

Trace the root causes

There are, of course, many elements driving climate change. Consider the agriculture sector, which produces one-third of all greenhouse gas emissions. Farms emit the largest share and could benefit from a range of technologies, such as data analytics and artificial intelligence. As a bonus, innovating in agriculture could help feed more people.

Identify how technology can make a big difference

Technological tools could help farmers collect and use data to manage their crops more precisely in ways that would reduce greenhouse gas emissions – such as using less fertilizer and plowing and planting fields more efficiently. Specifically, better data on soil and plant health could help farmers know where they need to increase or decrease irrigation or pesticide and fertilizer use. These practices save farmers money and increase farms’ productivity, generating more food with less waste.

Recognize how you can make money from it

If companies are to get involved, there needs to be an opportunity to earn money – and the more, the better.

One estimate suggests that making changes in farming and food practices that enhance productivity, promote sustainable methods and reduce waste could produce commercial opportunities and new savings worth US$2.3 trillion overall worldwide annually.

Our research team, in work that is ongoing, has estimated that of that $2.3 trillion a year, $250 billion could come from the application of artificial intelligence and other analytics for precision farming alone – $195 billion of which would be in the developing world, with $45.6 billion in South Asia and $13.4 billion in East Africa. Other estimates for the effects of AI and analytics are less specific, but still within the same range – between $164 billion and $486 billion annually. There is indeed money to be made by technology companies interested in developing climate-friendly, productivity-improving interventions in agriculture.

Innovate to overcome the many barriers to change

Before the commercial value can be unlocked, however, there are many barriers to consider. Many rural areas, even in the developed world, don’t have affordable high-speed internet connections and, particularly in the developing world, the farming community is not as technology savvy as other professions. Further, farming practices have been handed down through generations and the idea of using data to make modifications to such long-held beliefs and methods can be countercultural.

In addition, there are many practical realities: 83 percent of the world’s cultivated land is fed only by rain, with no irrigation systems to make use of better data. Beyond that, in most parts of the world, seeds and fertilizer are not high-quality, lowering crop efficiency. Further, a lot of farms’ output is wasted because of lack of refrigeration and slow transportation from fields to consumers.

With all those obstacles, it is understandable that investments in data-driven agriculture dropped 39 percent from 2015 to 2016.

There are groups still working, though. FarmBeats is a Microsoft project that combines low-cost sensors in the ground with drones that both create aerial maps and act as wireless data relay points. Nigeria’s Zenvus and India’s Aibono analyze soil data. Kenya’s FarmDrive develops credit scores for people without formal bank accounts or standard borrowing histories by using alternative data, like mobile phone and social media activity, together with local agricultural and economic information. Ghana’s Farmerline tells farmers about weather forecasts, market information and financial tips.

These are creative efforts to solve deep and complex problems, but clearly there is room for large, well-resourced technology companies to step in, make a difference with big ideas, deep pockets and global support.

Invest in partnerships

Technology entrepreneurs will need to develop business models and organizational structures that are better at collaborating with local agricultural communities and businesses, to navigate personal and political relationships as well as regulations and government programs. Technology will not, on its own, be some sort of silver bullet that will unlock prosperity.

Changing technology companies into agents for widespread global good will not be easy – and it can be done in areas beyond agricultural innovation, too.

There has been no shortage of talk about these ideas: 50 CEOs met with French President Emmanuel Macron to discuss socially positive technologies; World Economic Forum events around the world discuss societal benefits of a Fourth Industrial Revolution; and some companies, such as Ericsson and SAP, are already committed to fulfilling United Nations goals for global sustainability.

We still have a long way to go. There is still a chance for technology companies to move fast and fix things by truly helping save the world – but sea levels are rising, so the time is now.The Conversation

Bhaskar Chakravorti, Dean of Global Business, The Fletcher School, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

How social investment projects started making sense for big companies

Carol A Adams, Durham University; Brad Potter, University of Melbourne, and Jodi York, University of Melbourne

Companies are cottoning on to the idea that social investment projects can be good for business even if they don’t show up in the balance sheet. There has been a shift in corporate thinking about how value is created. The evidence increasingly shows that more meaningful social investment projects are being envisaged and put in place.

If you have worked for a big company, you might be familiar with the old style of corporate social investments. They might include small community projects and volunteering days for employees. These barely make a dent in profit and loss accounts and have been seen for the peripheral, feel-good fluff that they are – great for boosting staff morale but perhaps not much else.

We have looked at the experience at companies such as Heineken, Unilever, GlaxoSmithKline (GSK) and the National Australia Bank (NAB), one of the world’s top 50 banks. And they have started to see social investment linked to their operations as a genuine value creator. They don’t yet have the comprehensive data to prove it, but they all say they believe it improves reputation, attracts customers and employers, and builds trust and resilience to see them through difficult times. In other words, it has a value.

Sticking their neck out?
Glauber Ramos/Flickr, CC BY-NC

A new era

It has been a notable change that social investment initiatives have been detailed in these companies’ annual reports in a way which explicitly links them to increased corporate value.

Unilever’s Shakti direct-to-consumer distribution scheme, for example, recruits Indian female micro entrepreneurs. Local distribution programmes such as this add €80m in incremental turnover for the company, while providing a livelihood for people who may not otherwise find work. Its Hygiene Education Programme in Vietnamese schools contributed to volume growth in the Vietnamese market. Linking Unilever Brands with social investment programmes has been part of their growth strategy.

The GSK Access to Medicines programme, meanwhile, flexibly prices drugs for different markets and benefits the developing world, where drug affordability is a key issue. At the same time, it allows GSK to achieve one of its strategic priorities, moving away from reliance on the “white pill and Western markets” model. GSK acknowledges that “fulfilling social responsibilities” is part of being a successful and sustainable business. While there are obvious difficulties in putting an exact financial value on this, the simple acknowledgement of its value is an important step.

Affordability: a pharmacy in Eritrea.
Barbara Durand/Flickr, CC BY-NC-ND

Heineken’s impact in African communities is largely mediated through their suppliers and distributors, so they have set a target to expand local sourcing of raw materials in Africa and have implemented farm training affecting 30,000 African households. This increases the reliability of supply and reduces transport costs.

Australian bank NAB claims that its Fair Value Agenda makes banking fairer, simpler and more affordable by relieving financial hardship and debt collection. Responsible lending is seen as a source of competitive advantage; a way to distinguish the bank from other large institutions. It helps the bank deliver on a strategic priority of enhancing NAB’s reputation.

Companies are also realising the importance of partnerships in social investment activities. NAB’s community finance store, Good Money, was set up in partnership with the Victorian government and Good Shepherd Microfinance. It offers financial counselling and access to cheap, small loans to people on low incomes.

Melbourne: home of NAB.
Photo by Jack Adams @jadams_adventures, Author provided

Change in thinking

Key to these changes in the approach to social investment is a shift in corporate reporting which has pushed companies to rethink what drives value creation – and indeed what value creation is. The balance sheet conveys only part of a company’s value, and investors are seeking information on activities which contribute to forms of value which are not easily translated into monetary terms from one quarter to the next.

Unilever and NAB have followed guidelines in integrated reporting led by the International Integrated Reporting Council (IIRC) and supported by professional accounting bodies around the world. Any company that wants to be able to say it complies with the International Integrated Reporting Framework must report how they create value in broad terms and think about their business model and strategy in terms of multiple ideas of capital. That means incorporating human capital, natural capital, social and relationship capital, and intellectual capital, as well as thinking about money flows and profit accumulation.

It is catching on. Heineken and GSK have not been directly involved in the IIRC’s work, yet over the period of development of the Framework, their reporting has changed significantly to adopt many of its features. The influence of reporting on aligning social investment strategy with business strategy should be welcome news for firms seeking to change but lacking the capacity or know-how for disruptive transformation.

Our study examined various types of reports published by these four companies over the period of development of the Framework and saw a small, but noticeable shift. Social investment by companies is moving away from its previous role as a philanthropic act, outside of strategy, which is leveraged for marketing benefit after the fact. Increasingly, it now sits inside strategic decision making and, as with NAB’s community finance store, partners are brought in to make the delivery more targeted and effective.

The companies at the forefront of this are integrating social investment with business strategy, actively seeking to demonstrate that their social investments are purposeful, accountable, respectful, ethical, and contribute to long-term business success. Social investment is featuring in the overall value creation story woven through their reports. It is important to note that this is generally not audited and concern remains that reporting may be prone to exaggeration. But it is no longer being pasted in as an afterthought, unconnected to success on the bottom line.

The Conversation

Carol A Adams, Professor of Accounting, Durham University; Brad Potter, Asssociate Professor, University of Melbourne, and Jodi York, Research Fellow, Social Investment, University of Melbourne

This article was originally published on The Conversation. Read the original article.