How Social Business create Change

February 24, 2012 | By More

Muhammad Yunus with Prof Wong Poh Kam at Singapore's Social Business Forum 2012

When we talk about Social Business in this site and others, often our mind is focused on the less fortunate who need the benefit. At a recent talk by Nobel Laureate Prof Muhammad Yunus in Singapore, he brought attention to another entity that could be affected in unexpected ways – the multinational corporation whose focus has been profit, dividends and shareholders.

Prof Yunus related how the USD$1 million joint venture, Grameen Danone, was created to help undernourished children when the CEO of Groupe Danone, Franck Riboud asked to meet with him. [Read about how they met and created Grameen Danone here.]

Grameen Bank was able to write the cheque for half the amount almost immediately but nothing happened for months at a company with EUR€17 billion in sales. It turned out to be a major problem for Groupe Danone.

A Social Business, as defined by Prof Yunus, allows investors to get back their initial investment amount only. No dividend is permitted beyond that. [Read more about the 7 principles of Social Business here.]

The author with Prof Yunus at GCL@NUS Boot Camp 2012

This rule was a major problem for Danone. The fiduciary duty for Directors of any company is to generate profit for the shareholders as in any typical profit-making, profit-maximising company, of which Groupe Danone is one. Company lawyers advised against making an investment that knowingly do not distribute dividends.

After much discussion, the solution found was to ask every shareholder permission if they will donate their next dividend cheque specifically for this purpose. A letter was sent out prior to the next shareholders’ general meeting describing the project with Grameen and the proposal. The response was overwhelming – over 95% said yes, and the amount collected exceeded EUR€35 million!

However, this created an internal problem. Danone’s 100,000 or so employees felt left out. They too want to do their bit of social good. Another letter was subsequently sent out to all company employees allowing them to participate too – and Danone collected EUR€30 million from them.

The lesson here is that people generally want to do good for the good of others – whether they are in big or small companies, shareholders or employees, well-to-do or not. It is about providing them with the opportunity. Profit-making companies can too.

Danone’s COO Emmanuel Faber described at the Social Business Summit 2012 that they ended up creating a Social Business Fund with the EUR€65 million to help other Social Businesses get off the ground. Employee and shareholder interest in social responsibilities rocketed with grassroots activities in the furthest corners of the company. [Come back soon to read more about what a Social Business Fund is.]

Danone COO Emmanuel Faber (middle) at the Global Social Business Summit

As Prof Yunus explained, he did not set out to change how things are done in Danone. He was merely interested in solving the problem of child malnutrition in Bangladesh. The impact of that is to also give meaning to the lives of employees and shareholders half a world away.

Find out how Danone employees and shareholders have created their own social community with Danone)(Communities.   That is the positive unintended impact of Social Business.

You, too, can make a difference. Find out how today.

Read more about how to start a Social Business
and other related articles.

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Category: Social Responsibility

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About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

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