Table Speech

“Vocational Service Month” Meeting
“Social Innovation Spread through CSR”

October 8, 2008

Ms. Mizue Unno,
Managing Director,
So-Tech Consulting Inc.

1. Why is CSR being questioned now?
In order for companies to be sustainable, society must also be sustainable. People in business have a responsibility to make efforts toward solving the problems of society. This is Corporate Social Responsibility (CSR).
Many problems are arising with respect to the quality of a company’s product that the company is not able to solve just on its own. Collaborative responses with related companies are sought. The scope of management control needs to be expanded to include overseas companies (suppliers) from which raw materials are sourced. The critical nature of CSR exists therein.

2. Events Happening outside of the Industry
In April 2006, Kofi Atta Annan, the United Nations Secretary-General announced the “Responsible Investment Principle” at the New York Stock Exchange. It was a desire that investments be made based not just on financial reasons but also taking environment, society, and governance into account. Under the International Organization for Standardization (ISO) also, the formulation of CSR international standards at the guidance level is being examined.
There are also moves to apply the scope of CSR not only to “corporations” but also to include a variety of organizations. The scope includes human rights, labor practices, organizational governance, business practices / market rules, community participation, and consumer issues.

3. Development of CSR
In companies, there are management philosophies and corporate strategies. With business activities executing strategy, there is associated CSR. Corporate governance is positioned as supporting CSR in business activities from the perspective of internal control. Separately from business strategy, it is important also to actively pursue CSR that is peculiar to the business.
The perspective that management of CSR does not focus strictly on the control of negative effects on the society, but also positively provides benefits, must be kept in mind.
A strategy having the “environment” as a pillar is also needed.
A certain food manufacturer is undertaking sustainable support for agriculture through their principle of the Concept of Shared Value Creation with the farm workers from whom the company procures agricultural products. It is a mutually cooperative business model that places focus on not just social contribution but also on enabling perpetual management of the said company.

4. CSR in the Emerging Markets Businesses
Focus is being placed recently on a business model that is referred to as the Bottom of the Pyramid. This refers to a business that is built bit by bit by the many billions of poor people at the bottom rung of the economy. In this business, private enterprises play the leading roles. Not only corporations, but collaboration with powerful individuals and the community are needed. It is not centralization but it is a dispersed networking type of building. I am also looking forward to social entrepreneurs playing a role in this business model. The most important aspect is that it emerges from among the motivated people in the community. If social entrepreneurs in the village work together with the people in the community, and take action, this creates social change. This is social innovation.
Thinking only of business will not lead to success. We must think of how to change the community and society together with the people of the community. Community economic development and social innovation are but one and the same.
Public Private Partnerships(PPP)are a concept of advancing economic development and social reform in cooperation with not only government and public servants but also civil organizations and social entrepreneurs. A particular example of PPP is micro-finance, such as done by the Grameen Bank in Bangladesh.
In developing countries, PPP organizations created by entrepreneurs who bind the community and local organizations that actually meet in a communal style, in a circle sitting on the ground, working in cooperation with companies, are said to be the next model.
What are being sought are not actions solely by corporations, communities, or consumers but thinking of collaborative efforts among them. As the next step, the road to CSR will emerge. This, I think, is CSR that drives social innovation.