At a 2012 farewell ceremony for the general manager of Sorwathe S.A.R.L. in Kinihira, Rwanda, villagers turned up in large numbers. They brought gifts for the head of the tea-producing joint venture of Connecticut-based Tea Importers Inc. and the Rwandan government.
The manager was well liked and respected, but “to me, that was also evidence” of the community’s loyalty toward the company, said Tea Importers head Andrew Wertheim. He said the loyalty had been earned by the company’s treatment of its workers and their communities.
In the early 1970s, Wertheim’s father, Joe, who had imported tea from Rwanda, was invited by the country’s government to set up a tea-processing operation in a remote area. To make it happen, Sorwathe built roads and brought electricity to the area. Later the company built schools and a medical clinic to improve the lives of the impoverished local population and ensure a skilled and healthy workforce.
Villagers viewed Sorwathe’s initiatives as an extension of the company’s goodwill toward them. Rohith Peiris, who replaced the outgoing manager, remembers the company bringing fresh water to local villages as “a big moment” in villagers’ lives.
Later, the company led campaigns to eradicate illiteracy and child labor.
Andrew Wertheim believes the factory survived the 1994 genocide and turmoil (although it was damaged) because of the support and loyalty of the local community.
Sorwathe is one of a growing number of companies that are known for their active corporate social responsibility (CSR) or corporate stewardship. These businesses win employee loyalty through friendly labor, environmental and social policies that range from recycling to assuring workplace safety to preserving the environment.
In the early 2000s, CSR often was dismissed in the U.S. as an invention of public relations wizards. It was an effort to repair sometimes tarnished reputations and differentiate a company from its competitors, critics said.
Today many businesses embrace responsible corporate stewardship as a smart business practice.
Water and energy conservation, road repairs, and health care for workers help local communities while reducing business costs and increasing workers’ engagement. Socially responsible businesses attract and retain motivated workers. In the long run, these companies also tend to be more innovative, says Susan McPherson of the consulting firm Fenton Communications. Coca Cola, Intel, Procter & Gamble and Microsoft, among others, have been recognized for their stewardship.
Millennials are coming
For today’s university students, contributing to a broader environmental consciousness and awareness of global poverty is more important than having a prestigious career or acquiring wealth, says Cliff Zukin, professor of political science at Rutgers University.
Since millennials — people born between the early 1980s and the early 2000s — will make up nearly half the workforce by 2020, CSR will be even more relevant in the near future.
Millennials differ from previous generations, according to researchers and millennials themselves.
- As workers, they nudge their employers to take responsibility for employees, for society and for the world in general.
- As consumers, they tend to purchase products from companies they value for their “stewardship credentials.”
- As entrepreneurs, they search for opportunities to do good while doing well.
Triple bottom line
Research demonstrates that stewardship initiatives produce measurable benefits for large corporations, their stockholders and local communities. More companies than ever publish annual reports to communicate progress they make on CSR.
But smaller and medium-size enterprises should also care about responsible stewardship, because they typically are more dependent on their workers, local communities and land, says Molly Brogan of the National Small Business Association.
And CSR can be a competitive advantage for smaller companies, adds Christine Arena, author of The High-Purpose Company. By being more agile they can strive for synergy among financial, social and environmental goals.
Called a triple-bottom-line, this approach calls on businesses to strive for financial as well as environmental and social gains. Many idealistic, driven entrepreneurs pursue it.
Ryan Black started Sambazon in California to market drinks, snacks and supplements based on the Amazonian açaí fruit, which according to the company provides health benefits.
In the past few years, Sambazon registered revenue growth ranging from 19 percent to 30 percent while sustainably managing more than 800,000 hectares of Amazon rainforest in Brazil. Black’s business also invested in local schools, medical clinics and community centers near its Brazilian processing plant.
Troy Wiseman founded EcoPlanet Bamboo to provide a sustainable fiber derived from bamboo to industries that source wood and fiber from tropical forests. For him, business is intrinsically intertwined with his personal mission: to reduce deforestation and poverty. EcoPlanet set up its bamboo plantations in Nicaragua on land degraded by deforestation and opened a school to teach its workers and their family members skills necessary to make artisan bamboo furniture and handicrafts.
Asked about his credo, Tyler Gage, co-founder of Runa, said: “Follow your heart and trust your intuition.”
Runa, which markets products made of the caffeinated Amazonian plant guayusa, pays its suppliers, Kichwa tribe farmers in Ecuador, a fair-trade price. The company also donates a share of its sales to a social fund Kichwa communities can invest in bettering their lives.
Smaller companies sometimes believe they can ill afford social or environmental investments. But it doesn’t take a lot to help the local community, McPherson said.
Small businesses with limited resources can find ways to reward employees who do volunteer work to improve their communities. Or “send, say, a bulldozer to help the school or build a road,” said Marty Williams, chief executive of Sahlman Seafoods Inc., based in Tampa, Florida.
Sahlman operates a shrimp farm and processing plant on a remote island in Nicaragua. It has provided electricity to a local health center, helped modernize school buildings, and offered scholarships for the best students.
A lack of expertise in social and environmental issues is no obstacle: A company can partner with a specialized nongovernmental organization (NGO) or government agency, McPherson said.
Developed countries’ companies are well positioned to introduce social and environmental practices into host countries.
“We pioneered many employee benefits” in Mongolia, such as in-house lunches and on-site medical services, says Robert Barrows, former vice president of Wagner Asia Equipment, LLC.
And what one company does sometimes sets standards for an entire industry in the host country. Competitors followed suit when Sambazon launched sustainable forest initiatives in Brazil and when Sorwathe struck a collective bargaining deal with its workers in Rwanda.
Investing in socially responsible projects can also win a foreign company favorable treatment by a host government. For example, Nevada-based Transnational Group’s dealings with government officials in Cameroon became smoother once the company started operating a subsidized city bus system in the capital city of Yaoundé.
But gaining the trust of the local community is key to successful overseas ventures.
“Once you have [locals’] confidence,” said Rohith Peiris, general manager of Sorwathe, “all other issues fall by the wayside.”
All companies mentioned in this article except Runa are recipients of the U.S. Secretary of State’s Award for Corporate Excellence.