Editor's Note: Entrepreneur Richard Branson regularly shares his business experience and advice with readers. Ask him a question and your query might be the inspiration for a future column.
Q: What should big business’s role be in promoting meaningful corporate social responsibility and good governance around the world? -- Dani, Uganda
When I was 16, I dropped out of school to start up a small magazine called Student. It was the height of the turbulent 1960s, and my friends and I wanted to give our generation a stronger voice. We didn’t stop there. Following the magazine’s success, we started a student advisory center where young people could get guidance on issues ranging from birth control to mental health. Looking back, it’s clear I’ve always felt that business -- small or large - has the opportunity and the responsibility to do good in a community.
Abuses are common, both by corporations and in the public sphere. So many readers of this column send me questions about how to deal with corruption and demands for kickbacks as they try to launch small businesses in countries where such practices happen all the time. Over more than four decades of doing business around the world, I have seen what happens when companies and corrupt officials conspire to serve their own selfish interests: They wreak havoc on our planet and its fragile ecosystems, destroy communities and perpetuate the cycle of poverty. As a result, many people distrust business and public institutions. And why wouldn’t they?
Such practices aren’t only morally wrong, they are bad for business. Business should be a champion of good governance, taking a strong stand against corruption and lobbying for a better world. We should be fighting to build and support strong and healthy communities because the people who live in them are our employees and our customers, our suppliers and investors; a business and the community it serves are interdependent.
These days, Virgin is a lot bigger -- we have launched more than 400 businesses over the years -- and we have learned quite a bit about the ways that big businesses can make a difference.
One is through sheer scale. Many large corporations control vast supply chains that involve thousands of smaller businesses operating in dozens of countries. Choices made by the management team at the top of the chain -- anything from using more sustainable raw materials to improving gender diversity -- trickle down through the entire system, and can often bring about change faster than governments can.
An example that I learned from was Wal-Mart’s decision a few years back to source and sell more energy-saving compact fluorescent light bulbs. Their suppliers weren’t happy, of course, but they went along with it and started shifting production within months. By comparison, it took European legislators years to reach consensus on phasing out inefficient bulbs. Effective environmental regulations are necessary, for sure, but big business can lead the way.
Taking a stand on something you know is right can lead to innovation and further business opportunities. Consider what Safaricom and Vodafone accomplished in Kenya and Tanzania with M-Pesa, a mobile payment and banking system. By providing branchless banking to people who previously had little access to financial institutions, the system has provided millions with new opportunities, which is driving economic growth and reducing poverty.
There is so much that large companies can do. A few years ago, we launched the Carbon War Room, an initiative to identify and scale up market-based solutions to climate change. The CWR team knew that the global shipping industry could save up to $70 billion per year and reduce carbon emissions and other pollutants by up to 30 percent if it shifted to more energy-efficient technologies and shipping vessels. Consequently, the team started working with some of the industry’s biggest players, governments and NGOs to break down regulatory and systemic barriers to making ships more efficient. The result: more than 4 million tons in greenhouse gas emissions saved thus far - with the potential for much more.
Human rights, gender equality, the rule of law and transparency, decisive climate action - these are just some of the areas where a big business can drive change, and at the same time shape its own long-term success.
But what does all this mean for small entrepreneurs? In the long term, value- or purpose-driven entrepreneurs stand a much better chance of succeeding in the global marketplace. As regulators everywhere tighten the rules, and as consumers demand more sustainable products and services, global brands will do their part to find suppliers and partners who can demonstrate that they value people and the planet as well as profit.
That’s already happening, which is great news for entrepreneurs determined to be a force for a good in the world. It’s excellent news for our society and the planet.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.