The “Business for Good” model proposes that a company can create social impact and also generate profits for its shareholders. This model has the potential to tackle global and local social issues using business rather than the traditional corporate philanthropy.
The focus is on creating ‘shared value’, which translates to judiciously blending profits with societal progress. Harvard Business Review states that, “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”
Advanced ‘Business for Good’ models have a clear objective and are well aligned with the company’s mainstream business. These models find an integral place in the commercial business space because the way you operate your business creates added value. More companies are now focusing on rebuilding business models around social good which gives them an edge over the competition and amplifies success.
It is heartening to see an increasing number of companies adopting the concept of Business for Good. Indian corporates are also increasingly integrating their business models with social purpose and restructuring the way their companies do business.
Providing affordable services to underserved customers
Aravind Eye Care System, the largest and most productive eye care facility in the world provides free eye care and surgeries to 70% of its patients who are either poor or non-paying. Despite this, the firm has been steadily reporting an operating profit margin of 40%. Aravind has been successfully executing its business model by using the cash flow from the paying customers to subsidize services to the deprived. It is a brilliant example of a hybrid, self-funding business model that markets the company’s services and products to the underserved communities and also addresses a social problem.
Expanding customer base through social marketing
A successful example is Lifebuoy’s “Swasthya Chetna”, a health and hygiene initiative by Hindustan Unilever Limited which educated people in rural and urban India on the importance of adopting good hygiene practices. The program spread awareness about the adverse effects of germs and promoted washing hands and bathing with soap to prevent diseases like diarrhoea. This initiative helped Lifebuoy (market leader) to grow and expand its market by creating more users for its brand, while also communicating the significance of hygiene and its impact on health especially in the rural communities
Mainstreaming environment and social concerns
Banks play a vital role in directing funds to projects which have the potential to impact society/environment and therefore have a critical role to play in areas such as Climate Change and Environmental finance. Banks in India are increasingly incorporating environmental and social aspects in their credit risk framework. This not only helps reduce project vulnerability but also prevents potential negative risks to the environment and society. Banks have the opportunity to play a catalysing role in spurring the adoption of such principles given their considerable influence among the relevant stakeholder community.
In recent years, India has seen a rapid growth of start-ups and social enterprises that thrive on the Business for Good model. However, it is crucial to create a strong and supportive ecosystem for its growth. Government initiatives like Start-Up India, incubators like Villgro, UnLtd India etc, along with academic programs on social entrepreneurship and business for good have an important role to play in developing this ecosystem.
Corporates bring strategic thinking, processes, and structure which have the potential to accelerate and complement the efforts of government and NGOs. The ‘Business for Good’ concept which fundamentally restructures the DNA of companies and places social impact at the heart of business is good for business and can emerge as a sustainable and scalable solution to catalyse India’s inclusive development.
Prerana Langa is the CEO of Yes Foundation, social development arm of Yes Bank. She developed YES! i am the CHANGE, a mindset transformation project, innovatively using the medium of films to ignite the spirit of driving positive social change amongst the youth enabling them to become agents of social change.
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The CSR Journal Team