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Innovation Changes Corporate, Social Landscapes

Innovative Firms Change Corporate, Social Landscapes

Innovative U.S. companies are transforming the business paradigm through products, services and operations that address social and environmental problems. Such companies engage voluntarily around the world in enterprises as diverse as preserving wilderness areas and providing information technology training for underprivileged populations.

Some companies view such projects as part of corporate responsibility, also known as corporate stewardship or citizenship, for the impact of their activities on stakeholders and the environment that goes beyond their statutory obligations.

The most advanced firms, however, have been reinventing themselves as socially conscious organizations focused on pursuing profit-making strategies that have a positive impact on the social and physical environment, according to experts.

These trends have been reinforced by socially conscious investors and consumers, as well as by more general trends such as a stronger demand for corporate transparency and worldwide pressure to eliminate poverty, protect the environment and address climate change.

In 2006, U.S. corporate shareholders submitted a record number of corporate governance, social and environmental resolutions. Assets of socially conscious U.S. investment funds at $178.7 billion in the same year were almost 15 times larger than in 1995, according to the Social Investment Forum, an association of investors.

True socially conscious companies invest millions of dollars in efforts to prevent workplace injuries, reduce toxic and greenhouse gas emissions, and advance other worthy goals, according to Christina Arena, the author of The High-Purpose Company. They embrace a true commitment to innovation, sustainability and a long-term strategy rather than gimmicks and market ploys designed to boost a company's image or increase sales, she told USINFO.

Smaller business enterprises, which have more leeway, flexibility and agility, can go even further by creating nontraditional business models that seek the synergy among financial, social and environmental goals, Arena said.

Ryan Black says that the distinction between traditional small- and medium-size firms and not-for-profit nongovernmental organizations (NGOs) narrows as companies pursue objectives usually associated with NGOs and NGOs adopt some private-sector financial and organizational practices.

Black, the founder and chief executive officer (CEO) of Sambazon, told USINFO that the business model of his firm is based on a triple bottom line: financial, environmental and social.

"We have a different definition of success," he said. "Being financially strong but weak on ecological conservation and social equality is not a success for us."

Sambazon supplies and markets organic products made of the açai fruit from the Amazon rain forest in Brazil. The company helps protect biodiversity of the jungle by making growing native palm trees that produce the açai berry more valuable than cutting the trees down.

Arena said that in the developing world, where corporate governance and transparency requirements are often lax, U.S. and other developed countries' companies often are tempted to make fast money without regard for labor and the environment. Those businesses that stick to their credo in developing countries deserve all the more praise, she said.

The State Department honors such companies through its annual Award for Corporate Excellence (ACE). General Electric (GE), for example, received a 2007 award for its extensive housing, educational and other programs designed to assist in post-tsunami recovery in Indonesia. And a year earlier, in addition to Sambazon, the financial giant Goldman Sachs was an award winner for its contribution to the creation of a vast protected wilderness area on the Chilean side of the Tierra del Fuego island and General Motors for assisting in reintegrating former members of paramilitary forces into civil society in Colombia.

At a November ACE ceremony, Secretary of State Condoleezza Rice said that GE and another 2007 award winner -- Transnational Automotive Group (TAUG) -- embody the "best of the American spirit: capitalism, compassion and contribution."

Arena said that a socially conscious company is unlikely to be another corporate fad because more and more companies realize that contributing to positive social change can be associated with financial benefits.

According to a 2004 study by University of Redlands researchers, companies with strong social and environmental records also tend to profitable.

TAUG makes profits on intracity and intercity bus services it launched in less than a year in Cameroon. The company says the safe, secure, affordable and reliable transportation it provides in places where only bare-bones services were available advances development by increasing work force mobility and facilitating access to education.

"A core shared tenet of our company and the ACE program is that of changing lives for the better," the company's CEO, Ralph Thomson, said at the award ceremony.


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