Thestar.com > Business
Feb. 24, 2002. 01:00 AM
More to business than mere profits
David Crane
MOST BUSINESSES make an important contribution to society simply by doing what they were set up to do - deliver a product or service of value to others, generate employment and create wealth for shareholders.
But today, we expect more. After all, businesses are more than just economic institutions; they are also social entities whose activities in turn have wide-ranging impacts on society. While there is a simplistic view that the only purpose of business is to generate profits for shareholders, most people regard this perspective as antediluvian.
This was well-put by Allan Taylor in the mid-1990s, when he was chairman of the Royal Bank. In the Wilder Penfield lecture, Taylor argued that –quote - the modern corporation is something more than an economic institution - it is clearly a social one as well –unquote - and so - quote - it must accept community responsibilities as well as private obligations, and play a role in insuring and strengthening the society which gives it existence.-unquote. Business does not operate in a vacuum - it is part of the society in which it operates and its health depends on society s health.
We expect businesses to behave in an ethically responsible and transparent way and to obey the law. We expect them to treat fairly their employees, suppliers, customers and the communities in which they operate. We expect them to respect human rights and to care for the environment.
We also expect them to engage in philanthropy, putting something back into the community beyond the taxes they pay, in acknowledging they benefit from healthy communities.
Corporations are often in a unique position to help because they have the expertise and money that can solve a difficult problem. So, supporting good causes should be part of the mission of every business - not to replace government but to work with social entrepreneurs to deal with specific challenges, from early childhood development, help for troubled teens or assistance to single parents to environmental projects, the arts, education and health.
Imagine, an initiative of the Canadian Centre for Philanthropy, promotes partnerships between corporations and charitable organizations. More than 550 companies have joined, endorsing Imagine s benchmark of giving 1 per cent of pre-tax profits to the community (http://www.imagine.ca/).
Last week, Imagine announced the five companies that won New Spirit of Community awards for innovative partnerships between companies and non-profit organizations:
Bell Canada (Quebec) and Ordinateurs pour les écoles du Québec for their Computers For Schools program, which collects and refurbishes used computers for schools and libraries. It also trains and supports school dropouts in a program that returns them to school in the morning and to work on overhauling computers in the afternoon.
Canadian Imperial Bank of Commerce, Big Brothers Big Sisters of Canada and YMCA Canada for their CIBC Youthvision scholarship program, which provides financial assistance to young people to encourage them to stay in school, starting in Grade 10. Some 30 scholarships of up to $35,000 are offered annually to cover up to four years of tuition in a post-secondary institution, summer internships at YMCA agencies to earn money to stay in school, and ongoing mentoring through Big Brothers/Big Sisters.
Clarica Life Insurance Co. and 11 charities in Kitchener-Waterloo for Clarica Community Resource Centre: a neighbourhood of services. Clarica refurbished 10 homes next to its head office for rent-free use by 11 local charities. The homes had been slated for demolition by Clarica as part of an employee parking lot expansion but were saved when community activists objected.
Enbridge Inc. and the Aspen Family and Community Network for their Families in Transition program. The project provides transitional support to homeless residents of Calgary, supporting 30 families at any point in time.
Fairmont Hotels & Resorts and the Canadian Women's Foundation for their Adopt-a-Shelter program. The hotel chain donates furnishings, bedding and household items to shelters for battered women. Each Fairmont and Delta Hotel is paired with a local women's shelter.
These are programs that complement, rather than replace, government programs and have the advantage that they can be entrepreneurial in a way that most government schemes cannot.
There's no conflict with shareholder value.
As Royal Bank CEO Gordon Nixon told his bank's annual meeting a couple of days ago - quote -We believe shareholder value can best be created by committed employees, serving satisfied clients, within vibrant communities. - unquote
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David Crane is The Star's economics editor. His column appears Tuesday to Thursday, Saturday and Sunday. He can be reached at crane@interlog.com by e-mail.