The activists are in the boardroom

Rafael C Lopa 

Introduction by Mal Warwick, Chair, Resource Alliance

Rafael is currently involved in promoting Social Entrepneurship in the Philippines. Concretely, he sits on the board of ASA Philippines Foundation, a Non-governmental Organization involved in Micro-Financing for poor enterprising women. He is also on the Board of the PINOYME Foundation, a foundation that is in the process of setting up a Social Investment Banking Operation geared to further strengthen the Micro-Finance Institutions in the Philippines. Rafael serves as Chairman of MicroVentures, Inc. (MVI) a Social Business Enterprise geared to be the leading business partner of MicroEntrepreneurs. To date, MVI has pioneered the establishment of a network of small village/community based stores (or what we refer to as "Sari-sari Stores) owned by women micro-entrepreneurs catering to the Bottom of the Pyramid Market. He will be a featured speaker at the International Workshop on Resource Mobilisation (IWRM) in Kuala Lumpur, Malaysia, 22-25 May 2008. 

For many years activists have been working to raise awareness about societal issues and to rally support towards the causes that would address them.

As far back as the industrial revolution, labour movements worldwide campaigned for workers’ rights. More recently we have seen Greenpeace travel the world and carry out high-profile protest actions to draw attention to environmental causes. In 1985 LiveAid, organised by two western rock stars, raised funds for famine relief in Ethiopia. Women’s groups have mobilised to protest against gender discrimination, and consumer associations have lobbied for the withdrawal of goods that presented health hazards.

Over time different sectors or stakeholders of businesses and societies have demanded more accountability from these organisations as the quest for more progress, development, and democracy has developed globally.

According to Andrew Savitz in his book The Triple Bottom Line, we now live in the age of accountability, having seen more social movements emerge over the last 30 or so years than ever before. He notes that the wired world has multiplied the dissemination and absorption of information to levels that were unimaginable just a few years ago. Access to multi-media platforms creates a huge opportunity for anyone to inform – or misinform – a global public, and leaves the potential for very damaging and costly vulnerabilities. "The business environment today continues to evolve in ways that make the increasing demand for corporate responsibility dangerous to ignore and profitable to embrace," he states.

Before the 1990s only a handful of companies in the world made corporate social responsibility an explicit part of their overall management approach. One such is Johnson & Johnson in the US, where its CEO and founder’s son wrote in 1943 that the company’s first responsibility was to the people who use its products and services, the second to its employees, the third to the community and environment, and the fourth to the stockholders.

More recently French supermarket chain Auchan declared a boycott on Mediterranean bluefin tuna, which is an officially endangered species. Anita Roddick, who founded the Body Shop in the UK, ran the company on her principles of ethical consumerism, actively campaigning on environmental and human rights issues as well as waging war on animal testing.

Social activism such as this is finally getting the recognition it deserves with the Nobel Peace Prize being awarded to banker and economist Muhamad Yunus and microfinance and community development Grameen Bank in 2006 for "their efforts to create economic and social development from below."

In an article in Fortune magazine, Yunus asked questions to illustrate the new challenges for social change activists. "What if we lived in a world where companies didn’t measure their performance only in terms of revenue and profitability? What if pharmaceutical companies reported on their bottom lines, along with those familiar figures, the number of lives saved by their drugs every quarter, and food companies reported the number of children rescued from malnutrition? What if companies issue separate stock based on social returns, and people could buy the shares of those that saved more lives than others, or sell the shares of energy companies that polluted more than their competitors. What if, by raising 'social capital' and investing it in sustainable businesses without a profit motive, companies could reach into new markets, expanding their core businesses at the same time they improved lives?"

And Yunus is more than just words. He set up the highly successful Grameen Bank in Bangladesh, from which the model of microfinance has provided millions of enterprising women with opportunities that have dramatically improved their lives.

Now he has embarked on a more ambitious social business enterprise by inviting Danone to Bangladesh to build its first social business enterprise to produce yoghurt fortified to help curb malnutrition and sold at an affordable price. All revenue from the joint venture with Grameen will be reinvested, with Danone taking out only its initial capital costs after three years. The factory will rely on Grameen micro-borrowers buying cows to sell it milk, Grameen micro-vendors selling the yoghurt door-to-door, and Grameen’s 6.6m members buying it for their children. It will employ 15 to 20 women and provide income for 1,600 people within a 20-mile radius of the plant.

In the Philippines, social entrepreneurship is also gaining ground. In February 2006 President Corazon Aquino initiated a multi-stakeholder social consortium to complement the gains and successes of the microfinance sector. The Pinoy Micro-Enterprise (or PinoyME) consortium aims to participate in the battle against poverty by supporting initiatives to provide a livelihood for 5m poor but enterprising Filipinos (mostly, if not all, women) with financial and non-financial services. Integral to this effort is the mobilisation of 5bn pesos (roughly US$120m) in new capital for the next five years.

It has set up the PinoyME Foundation as its social business enterprise arm, tasked to develop alternative financial instruments in partnership with formal financial institutions geared towards mobilising the 5bn peso target. Its board is made up of captains of industry and former CEOs of Philippine and multinational banks. These leaders have provided seed funding along with their valuable time, networks, and expertise to establish the country’s first social investment bank, which will empower microfinance institutions in their initiatives for the poor. The PinoyME Foundation has established a partnership with the Bankers Association of the Philippines to package innovative financial products that could raise funds from the formal financial market. Zero coupon bonds and asset-backed securities are two in progress.

The consortium has also encouraged members to create a Business Development Services (BDS) committee to further engage micro-entrepreneurs to find ways to link to the mainstream market and develop their micro-enterprises. This has led to the founding of another social business enterprise, Microventures Inc (MVI), which aspires to be the leading partner of micro-entrepreneurs in the country.

One of the areas MVI looked at was the value-added chain of the retail trade. Close analysis revealed that as foreign and local manufacturing companies make a lot of money selling their goods to the huge bottom of the pyramid (BOP) market, the poorest consumers pay the highest cost for the goods they buy. To address this imbalance MVI launched its first micro-venture project in September 2007, giving birth to The Hapinoy Store.

The venture revolves around the strategic role that the sari-sari stores play in the value chain. At the point of sale to the BOP retailers, the micro-entrepreneurs allow a profit margin that lets their micro-business flourish. But the retail prices in the stores are determined by the costs of getting the goods through the multi-layered distribution chain from manufacturer to store. So the challenge is for the sari-sari stores to get goods in their stores at reduced costs.

This is where the idea of aggregating the sari-sari stores came into being. The law of supply and demand led MVI to play the leverage game and introduce a brand to the group of stores which will purchase huge volumes of goods. The Hapinoy Store was conceptualised and presented to manufacturers as the Philippines' largest sari-sari store chain, owned and run by disciplined micro-entrepreneurs and financed by micro-finance institutions.

So far MVI has signed up 1,500 stores and established distribution agreements with major foreign and local manufacturers that reach the BOP market, including Unilever, Colgate Palmolive, Nestlé, and Smart Communications (a subsidiary of the largest telecommunications company in the Philippines).

Globally there is a growing number of initiatives by entrepreneurs and CEOs of companies taking on not only the challenges of maximising financial returns on investments, but also social and environmental returns on investments. More promising trends also show that venture capital for innovative business ideas has morphed into social venture capital that funds innovative social business enterprises – otherwise known as socially responsible investments (SRIs) or venture philanthropy. Companies such as eBay and Google have set up such funds and are looking for social business partners all over the world.

One of the more prominent grant providers is the Bill and Melinda Gates Foundation. In a recent speech in the World Economic Forum, Bill Gates talked about "A new approach to capitalism in the 21st century" and coined the phrase 'creative capitalism', which he defined as "an approach where governments, businesses and non-profits work together to stretch the reach of the market forces so that more people can make a profit, or gain recognition, doing the work that eases the world’s inequities." 

Activism has really come a long way to effect significant societal change, but as the dynamics of the world become more and more complex, activism has to take on more creative and innovative forms. Rest assured there is hope: the activists are in the boardroom.