Could European Companies Become 'socially responsible'?

I've been researching the possibility of proposing a new European CSR corporation to the European Community (EC). To date, all the legislation on Corporate Social Responsibility (CSR) is non-binding; however, the EU commission has published more than a dozen communications on the importance of CSR practices for European businesses.

One reason for this lack of binding legislation could be simply due to the fact that the EC does not have competence to address CSR issues. Nevertheless, the EC does have competence to create new companies. The EC enacted the SE (European LLC in 2001) and the SEC (European cooperative society in 2004). Therefore, I see no reason why the EC would be prohibited from creating a new 'socially responsible' European company. In fact, the majority of its Member States already have some form of CSR corporation so it would seem consistent with 'European personality.'

In my opinion, this new European CSR company would need to have the possibility to pursue both a legitimate business AND social purpose to the same extent. Although this would not exemplify the 'For-Benefit' archetype of the Fourth Sector, it would allow For-Benefit companies to emerge in a new legal arena where few barriers exist for social entrepreneurs who would like to do good and do well...

Any thoughts, comments, suggestions?

Have an amazing weekend!

-Alissa

Bye and Bye

Bye and bye, I used to try, to divide, to conquer and divine the lovely inclined shrine of a new corporate structure.

This new entity would emerge and change the world...but there was not enough light for me to truly see what lied ahead of me, so I stopped, sat, waited, and breathed...

Suddenly, a small light arrives, another and then another...and now I am able to see more clearly that we are embarking on this journey as a sacred community to create an entity with legal personality that will have the potential of impacting and transforming humanity.

But, the emergence of a more integrated culture of socially responsible corporations requires businessmen and leaders willing to look beyond what we see as reality and create what we dreamed a corporation should be.

This is how we see-with our mind's eye closed and with our hearts wide open. We are now part of a community-far beyond what we initially came here for but expecting more than the future generation can ever offer.

Be open to what may emerge-this is a very new and organic way of discovery-to let go of preconceived identity and grasp for a more wise society. Come with your knowledge, come with your background, come with your experience, and credentials and gifts and talents. Be open to what may emerge without trying to control the process of birth.

We are all a community of wanders who never really fit in...by and by...we are all being reunited-an emerging new sector of activity for all the world to see. You, and me...and the business community.

Bye and bye we will try until we die...

Faith-based Communities and the Fourth Sector

Here is a very interesting email I received on August 12, 2008 from Stan, an exceptionally intelligent and deeply spiritual man who dedicated a substantial amount of time to reflect on the Fourth Sector. Here is what he wrote (I've paraphrased some parts):

Hi Alissa,

I would say that the work you are doing has to do with the hoped for emergence of a robust Fourth Sector alongside the three existing sectors of organized human activity - public (government), private (business), and social (non-profit/non-governmental). One way to think about Fourth Sector enterprises is to think of them as hybrids between for profit and not-for-profit organizations. Fourth Sector enterprises generate a surplus of income over expenses based on value added work (as opposed to grants and donations of not-for-profit organizations). They then use this surplus of cash and/or other resources of value (including skilled personnel) to benefit needy individuals and/or communities. The development of the Fourth Sector is huge in its intended scope and impact on society. Even in its present infancy, it is surprisingly diverse and intertwined with all aspects of society as a whole. This is my understanding of the Fourth Sector.

Here are some random thoughts about what I think should characterize Fourth Sector endeavors. Listen well. Emphasize integrity over achievement. Emphatically foster face-to-face, heart-to-heart encounter. Aim at mutuality in relationship characterized by equality - not just feeling-good giver and grateful receiver. In multiple ways, intentionally preserve and strengthen families.

Click here for an article that underscores the need to listen well, treat the needy as equals and carefully consider family needs from their point of view:

Another way of viewing the Fourth Sector is people doing remunerative labor together to develop a surplus of valuable resources to benefit needy individuals and/or communities. This reminds me of the following Bible verse: "The one who steals must steal no longer; rather he must labor, doing good with his own hands, so that he may have something to share with the one who has need." (Eph. 4:28).

I think this verse can be applied to corporations as well as individuals. Greedy, exploitative individuals and corporations also bring about the following situation:
"There is abundant food in the field of the poor, but it is swept away by injustice." (Pro 13:23)

Instead, this is the attitude that God wanted among his people. Notice the basis for this provision for the poor - loyalty to God: "When you gather in the harvest of your land, you must not completely harvest the corner of your field, and you must not gather up the gleanings of your harvest. You must leave them for the poor and the foreigner. I am the Lord your God.’” (Lev 23:22)

We are fallen people living in a fallen world. I am all for working together with non-believers for the good of the world. But ultimately, our only hope lies in Jesus Christ. Good principles and good intentions will never be enough. Even God's perfect law, apart from the work and power of Jesus Christ was not enough: "The law of the Lord is perfect and preserves one’s life. The rules set down by the Lord are reliable and impart wisdom to the inexperienced." (Psa 19:7)

"For the law possesses a shadow of the good things to come but not the reality itself, and is therefore completely unable, by the same sacrifices offered continually, year after year, to perfect those who come to worship." (Heb 10:1).

Indeed, Hebrews 7:18-19 states that, “on the one hand a former command is set aside because it is weak and useless, for the law made nothing perfect. On the other hand a better hope is introduced, through which we draw near to God.

I would say that in some sense, our best intentions can serve as a "shadow of the good things to come but not the reality itself." Ultimately, our best ideal efforts will point out our helplessness to bring about an ideal society and lead us to Jesus or else it will lead us to cynicism and despair: “Is the law therefore opposed to the promises of God? Absolutely not! For if a law had been given that was able to give life, then righteousness would certainly have come by the law. But the scripture imprisoned everything and everyone under sin so that the promise could be given – because of the faithfulness of Jesus Christ – to those who believe.” (Gal. 3:21-22)

“For ignoring the righteousness that comes from God, and seeking instead to establish their own righteousness, they did not submit to God’s righteousness. For Christ is the end of the law, with the result that there is righteousness for everyone who believes." (Rom. 10:3-5).

If you agree that the four sectors we are discussing have to do with "organized human activity," then I would say that to make things complete we need to account for one more traditional sector. I say this because the Bible does not have a whole lot to say about government or business or non-profit organizations. But it does have something to say about families and extended families of tribes and nations.

It seems to me that the three existing three sectors have increased to a great extent by displacing and taking on some of the roles of family.

Question 1: Will the emerging Fourth Sector continue this process of displacing the original sector of family/tribe?

It seems to me that the Fourth Sector endeavor has more the sense of a movement rather than simply being an approach to doing business. As a movement, the Fourth Sector is surprisingly holistic in nature. It seems to me that driving force behind the Fourth Sector as movement is the need we have to belong to something great in the world, the need to perfect, to complete ourselves not just as individuals but as a social entity.

Question 2: Will the emerging Fourth Sector take on the role of secular church? To what extent will it displace religions of faith? I expect to see nominal Christians from mainline denominations whole heartedly embracing the goodness of Fourth Sector endeavors as embodying what it means to be Christian (and in the process forgetting that Jesus said that only God is good).

Here are some random thoughts about what I think should characterize Fourth Sector endeavors. Listen well. Emphasize integrity over achievement. Emphatically foster face-to-face, heart-to-heart encounter. Aim at mutuality in relationship characterized by equality - not just feeling-good giver and grateful receiver. In multiple ways, intentionally preserve and strengthen families.

One last thought - it is not human effort that brings about well-being (shalom) in society. It is obeying God. We all obey something. We will obey either the Spirit or the flesh. The result will be either life or death, blessing or cursing. No amount of human ingenuity and human effort will overcome the results of disobedience :

In order to understand exhortation to covenant obedience, read Deuteronomy 30:11-20.
It is interesting that God is more concerned about doing his will than he is about getting one's fair share or about getting ahead in life. Yet the Bible does have this to say about slaves. See 1 Corinthians 7:20-24.

More specifically, in verse 7:21, Paul says that "if indeed you are able to be free, make the most of the opportunity." It seems to me that a good deal of Fourth Sector effort may fall into this category. God can work powerfully even in bad situations, but if Fourth Sector efforts will bring freedom from exploitation to people, we should make the most of the opportunity to do Fourth Sector work together with those who are being exploited.

Finally, the year of jubilee was God's way of directing the nation of Israel on the one hand to trust and depend on him and on the other hand to be fair to the poor and needy. In God's economy, you cannot have one without the other. Let me restate that. In God's economy, if you really live out trust and dependence on God, you will necessarily work for fair treatment of the poor and needy. In God's economy, it is impossible to treat the poor and needy fairly apart from trust and dependence on him. Jesus knew that until he returned, people would not wholly trust and depend on him, that is why he said, "For you will always have the poor with you, but you will not always have me!” (John 12:8). I would say that the provisions for the year of jubilee go far beyond what Fourth Sector work envisions. For more information click here.


Well, that's it for now. Let me know if you have any questions or want to talk about any of this…

WHAT DOES IT MEAN TO BE SOCIALLY RESPONSIBLE ANYWAYS?

Socially responsible corporations became visible to the public in 1991 after the formation of the Social Venture Network ("SVN") and Business for Social Responsibility ("BSR"). Many people consider Ben & Jerry's the first "socially responsible" company through their introduction of the environment as the second bottom line. The notion of a double bottom line reflects the understanding that a company is not merely created to make a profit, but should also account for possible deleterious effects on the environment. Despite Ben & Jerry's novel addition of a second bottom line for measuring corporate success, the lack of guidelines for properly treating employees and subcontractors jeopardized the reputation of green companies as socially responsible businesses. As a result, in 1994, John Elkington added a new, third bottom line that focused on serving 'people' in addition to the planet and profit. This triple bottom line business model maintains fair and equitable business practices toward their employees, the community and the region in which a corporation conducts business.

During the emergence of triple bottom line companies, the term corporate social responsibility ("CSR") entered corporate dialogue. CSR is generally defined as an ongoing commitment by business to behave ethically and to contribute to economic development while demonstrating respect for people, communities, society at large, and the environment. However, the lack of a concrete definition has inevitably created a wide spectrum of interpretation. Muhammad Yunus, the 2006 Nobel Peace Price recipient, suggests that CSR companies take two basic forms: weak and strong. A weak CSR company has the motto: "Do no harm to people or the planet unless that means sacrificing profit." On the other hand, strong CSR companies are focused on doing good for people and the planet but not at the expense of a decrese in revenue. Yunus claims that the idea of CSR is ineffective and instead, advocates for a completely new entity, which he calls a "social business." A social business is a corporation that has the underlying objective to create a social benefit for those whose lives it touches and is cause-driven rather than profit-driven. Essentially, it primarily acts as a change agent for the world.

Yunus' model of a social business is similar to what Fourth Sector Network coined as a "For-Benefit corporation." For-Benefit corporations are a new class of organizations driven primarily by a social purpose. Unlike for-profit corporations, which are created solely to make a profit, For-Benefit corporations are econimically sself-sustaining and seek to be socially, ethically and environmentally responsible. The Fourth Sector community has agreed upon the ten essential characteristics for a For-Benefit corporation which I list on my website.

Because a For-Benefit corporation seeks to benefit stakeholders as well as shareholders, there is a risk that directors could be held liable for breaching their fiduciary duty to maximize shareholder profit. Although some legal scholars claim that a corporate director's only objective is to sustain monetary growth for the company and, as such, to increase company and shareholder value, courts have generally allowed directors to favor non-shareholder constituencies as long as it does not have a significant impact on shareholders. Currently, jurisprudence seems to suggest the court will be especially deferential when directors claim to have altruistic purposes that benefit the company because of the possibility that shareholders will eventually receive a higher return on their investment in the future.

The world is facing a radical transformation on an economic, social and personal level and much is left to be discovered in the legal and corporate arena. Eventually, For-Benefit corporations will be the new form and definition of social responsibility, but must work is left to be done to enact such a legal entity. Despite the long road ahead, I am confident that with each corporate decision made with the intention to create social benefits for those with whom it interacts,the world as we know it will never be the same.

Welcome All!

Welcome to Alissa's blog!

Many of you are interested in what I am involved with and have asked me about the new evolutions that are currently happening in the Fourth Sector, so I have decided to start a blog. My hope is that this blog will be a beacon of light calling all those interested in Fourth Sector Activity to come and seek solace in the knowledge that we are not alone.

I chose to name this blog the "Benefit Blog" which is a reference to what Fourth Sector Network has coined "For-Benefit" corporations. To find out more about these corporations, please visit www.fourthsector.net.

I divinely stumbled into the Fourth Sector about a year ago after which my life has been an adventitious series of serendipitous encounters exponentially unfolding at an accelerating pace. I am discovering that what I once thought was my own novel idea, conceived in controllable solitude is, in reality, one drop in an irrepressible wave billowing towards a divinely mysterious destination. And although the darkness that some call Future will not allow me to see the shore upon which this wave will arrive, I will do my best to try and stay afloat long enough to see the sand. May we all be encouraged to do the same...