The new business norm

Business is business – and it’s a global force. Now people around the world, including in Indonesia, are making it a force for good.

The new business norm

In August 2018, the first B Corp event was held in Jakarta to socialize the presence of B Corp certification in Indonesia. Today, there are only two Certified B Corporations in the market, however the number is expected to grow. Although two seems like a small number to start with, as of now there are about eight million people who are involved in social entrepreneurship in Indonesia, or about 3 percent of the population, showing the innate desire to work in businesses that also have a social impact on their communities.

Next to that, the growing number of unicorns such as Go-Jek, where social progress is inherent to business progress, shows how the B Corp spirit is already living and breathing in the Indonesian business world. Indonesia is and should be a promising market for more Certified B Corporations to surface.

About B Corp

Let’s understand a bit more about what B Corp is about. B Corp is a certification that is given to companies by a nonprofit organization called B Lab. B Lab serves a global movement of people using business as a force for good. Using business as a force for good is in essence accelerating a global culture shift: to redefine success in business and build a more inclusive and sustainable global economy. The ambition of Certified B Corporations is to balance profit and purpose by meeting the highest standards of verified social and environmental performance, public transparency and legal accountability.

The B Corp community invites people to take business to the next level, understanding that society’s most challenging problems cannot be solved by government and nonprofits alone. The B Corp community works toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities and the creation of more high-quality jobs with dignity and purpose. By harnessing the power of business, B Corp businesses use profits and growth as a means to a greater end: positive impact for their employees, communities and the environment.

B Corp forms a community of leaders and drives a global movement of people who envision a global economy that uses business as a force for good. This new economic model is purpose-driven and creates benefits for all stakeholders, not just shareholders. In simple terms, it transforms the old model of maximizing profits for shareholders to focus on benefits for all stakeholders, moving from the exclusive gain of the few to the greater good. These key values and aspirations are embedded in the B Corp Declaration of Interdependence, which states that B Corporations and leaders of this emerging economy believe:

  •  That we must be the change we seek in the world.
  •  That all business ought to be conducted as if people and places mattered.
  •  That through their products, practices and profits, businesses should aspire to do no harm and benefit all.
  •  To do so requires that we act with the understanding we are dependent upon another, and thus responsible for each other and future generations.

Using business as a force for good is also a long-term commitment. In order to maintain the commitment and renew this spirit, B Corp certified companies are required to go through periodic recertification. The recertification process has been changed from every two years to every three years, which means companies will be required to be recertified every three years. B Corp certification will bring a new level of focus and set of norms to Indonesian businesses. “Using business as a force for good” invites transformations in the way business should operate.

From powerhouse to positive 

If businesses used to get away with earning respect because they were powerful and rich, today they earn it from being a dynamo for positive change. That means being more responsible in the way they treat employees, communities and the planet. Take Patagonia and how it has established new norms within the global clothing industry. In a world where fast fashion is the trend, Patagonia stands for the concept of “built to last” fashion.

The logic of B Corp is to invite businesses to take a bolder role as a real player and solution provider in the quest to put our world on a better course. Take TOMS, known for its for-profit “One-for-One” model, where for every pair of shoes sold, TOMS will donate a pair of shoes to a child in a developing country. Since its creation in 2006, the TOMS community has provided shoes, sight and safe water to millions of people around the world. As TOMS says, it is bigger than the shoes, it is what we do in them. What TOMS has built is a great example of inclusive economy, showing that business success can include more people and communities benefiting from that success. 

With the new way of thinking and operating, businesses should embrace social leadership beyond financial gain. If in the old days, businesses put more weight on making profits for shareholders, today the B Corp model emphasizes that aside from financial gains, every business should be a force for good for as many people and communities as possible. Businesses should aim for financial growth that is in harmony with societal growth. The power of business should be put at the service of nurturing its ecosystem – solving issues, improving lives and caring for the environment. The transformation required is from focusing on profit to putting purpose at the center of its ecosystem.

Today, there are more than 2,600 companies from 60 countries that are B Corp certified. In Asia, there are 81 B Corp certified companies in 17 countries, which seems like a relatively low number.

 

 

However, this number has grown tenfold since 2014. In Indonesia, there are two companies ahead of the curve that are B Corp certified: Percolate Galactic, a creative digital agency, and Danone Aqua, the largest packaged water producer in the market.

Looking at business as a force for good cannot be separated from the context of the United Nations Sustainable Development Goals, which address three dimensions of sustainable development: economic, social and environmental. With a large population of 265 million people, it is essential for Indonesia to look at the sustainable goals for the benefit of its own society. Today, it is known that the balance of economic, social and environmental development is yet to be achieved. The presence of B Corp is aimed at changing business orientation to focus on the welfare of the many instead of the few, and the well-being of earth as a place where we all live, instead of a planet of exploitation.

The fertile grounds

Different markets have different urgencies to bring a positive impact. In Indonesia, the following issues are in need of immediate attention, where business can start playing a major role to provide solutions:

1. Poverty. There were 26.5 million people living below the poverty line in Indonesia in 2017, or 10 percent of the country’s population. More than two-thirds were farmers living in rural areas. Next to this number, an intriguing fact is that the four richest men in Indonesia have more wealth than the poorest 100 million. Oxfam reported that the gap between rich and poor in Indonesia is the fastest growing in Southeast Asia. 

It is obviously a major issue in Indonesia, but the B Corp paradigm can help businesses set goals to help the poor get better access to better incomes. An inspiring example can be seen in TaniHub, a company that may not be B Corp certified today, but its simple mission surely embodies the B Corp way of doing business. TaniHub’s mission is to empower local farmers to get better market and financial access. Next to being simple, this mission is life-changing. Among poor people in rural areas, more than two-thirds are farmers. TaniHub, utilizing digital innovation, helps connect farmers directly to customers, MSMEs and regular consumers without the need for middlemen, who normally take a significant cut for the fresh produce being sold by the farmers to the market. This indirect chain has had direct negative impacts on farmer incomes for years. One hopes that the likes of TaniHub will improve the incomes of farmers and in the long term contribute to solving poverty in Indonesia.

2. Stunting. Today, 37 percent of Indonesian children below 5 years old (about eight million) are stunted. The impact of stunting is not only about the height and weight of the child; more importantly, when a child is stunted, brain development is impaired, and this will impact his or her future. The prevalence of stunting in Indonesia is just heartbreaking and apart from initiatives by the Ministry of Health, there are not many efforts by the private sector to address this major issue. The main reason could be lack of awareness of the issue and possible solutions, poor diets of mothers and babies, or generally unhealthy eating habits. With the B Corp spirit, one could imagine there are businesses that could contribute to solutions. Can nutrition or food companies leverage digital innovation to educate mothers and families about stunting, its symptoms and how to avoid it? Who are the stakeholders that need to be engaged in this journey? It is a massive issue to be tackled, and therefore it is key for businesses to be part of the solution. 

3. Unhealthy eating habits. The worsening unhealthy eating habits in Indonesia can be seen from the increasing rates of obesity, heart disease and diabetes. Obesity rates are on the rise, increasing from 19 percent to 26.6 percent in the past 10 years. Cardiovascular disease is responsible for 37 percent of deaths in Indonesia. It is surely difficult to identify causes of death, and every individual’s lifestyle and health history are big factors. Most people, for example, are not aware of the difference between freshly squeezed juice and bottled juice drinks, including the sugar content. 

4. Plastic pollution. More bad news: Indonesia is second only to China as the world’s largest contributor to plastic pollution. Between 1.15 million and 2.41 million tons of plastic waste contaminate the oceans each year. Indonesia is estimated to contribute roughly 200,000 tons of waste from its rivers and streams. The Citarum in West Java is listed as one of the most polluted rivers in the world. Looking at this pressing issue, companies such as Danone Aqua have taken an exemplary step by pledging to recover and recycle more plastics from the environment by 2025. Within the next seven years, it will recover more plastic than it uses and increase the proportion of recycled plastic in its bottles to 50 percent from 11 percent at present. Danone Aqua is a B Corp certified company; needless to say it has embraced the B Corp way of doing business. Contributing to the plastics scourge can also come in other ways. For example, the Indonesian company Avani Eco created an alternative packaging material using cassava. The more companies that play roles in contributing to such major issues, the closer we will get to solutions. 

Indonesian culture

The success of certain initiatives also lies in the cultures in which people operate. In the context of Indonesia, there are fundamental qualities where using business as a force for good should prosper. 

1. Love for progress. Indonesians love to progress. But how does progress fit in a culture where a comfort zone is indulged in? The progress that Indonesians are holding onto is step-by-step progress – every step counts to get to a better place. The key is being better versus being the best. The idea of progress is not necessarily about achieving the best result, but making things better. 

Across many qualitative research studies that I have conducted, speaking to hundreds of Indonesians, the majority state their desire for progress, “hidup itu harus maju”; life is about making progress, so they say. To give us a bit of flavor, take Tika, a woman who lives in East Jakarta and runs a small beauty

The four richest men in Indonesia have more wealth than the poorest 100 million.

parlor aside from taking care of her family. Her husband lost his job a few years ago, just after they had a baby. She was awakened by the fact that it was in her hands, too, to change things and make everything better. Starting with a one-seat makeup and blowout hair service in her living room, Tika finally began to make money. From there, she was able to rent a place. When she was able to save up a little bit, she took a beauty course to expand her services for her local clientele. Her business keeps growing and so does her income. Along the way, she hired relatives who needed extra money to pay for evening higher education classes. The domino effect was triggered by the simple spirit of making things better, of progress. 

2. Everyone is a community. Indonesians’ attachment to the people around them – family, neighbors, community – actually comes from a positive spirit that everyone is community. Indonesians believe that one should not progress alone. When one is making a step forward, it is natural that they bring the people around them forward too. This is why the philosophy of gotong royong, or building something together using the power of collaboration, is natural and part of the way people and communities work.

In one of my visits to Indonesian communities, I was taken aback, in a positive way, by Rohani, a woman who runs a PAUD, a local early childhood education center. She is self-funding the center despite her limited means. The story began when Rohani realized that children in her neighborhood were mostly playing around; many did not go to school. Generally, the parents were working as laborers, janitors or laundry workers. Since the parents themselves had limited vision about the importance of education, they did not really encourage their children to go to school, which was also quite far from their neighborhood. 

Rohani, a teacher, realized the importance of changing the lives of these children. Instead of forcing them to go to school, she brought the school to them. Her 30-square-foot living room, where her family eats dinner, is used as the local PAUD center during the day. The parents of the children are asked to pay what they can so Rohani can buy stationery and study aid materials. Starting with three students, today there are more than 20, divided into morning and afternoon classes. After running the center alone, Rohani invited her niece, who is studying to be a teacher, to assist with the classes. The money is not a lot and sometimes Rohani uses her own funds to keep the PAUD running, but it can already sustain itself and she is able to pay a small salary to her niece. Rohani told her story as if it was all normal. I then realized that her outstanding deeds come from an inclusive mind-set. Using business as a force for good can naturally flourish when people operate as a community, because in that community everyone matters. 

3. See business as a force for good. In some cultures, business is seen as a negative force, coming from the fact that businesses are typically big organizations that focus on profits and not people. In Indonesia, however, that sentiment is not necessarily the case, as many appreciate that businesses give opportunities to people to earn a living and learn new skills. It is inherent in the Indonesian mind-set to build business as a force for good.

Today, there is probably no better example than Go-Jek. A local business that started with a simple idea today has helped millions of Indonesians and beyond earn a better living, have a better life and increase their dignity. Many people do believe that this should be the power of business, but the more people who do believe, the more business will rise to be a force for good. On a recent trip to Singapore, trying out Go-Jek services, I was impressed by how Go-Jek drivers speak about the company. One of the main reasons the drivers said they joined was because Go-Jek’s reputation has preceded it. It is known as a company that has helped millions and that treats the people in its communities with respect and fairness. With that hope, they joined the platform; they also said they refuse to work for companies that do not respect their community, and with Go-Jek they are hopeful that is not going to be the case. 

Today, using business as a force for good is probably the best redefinition of what businesses should stand for. This calls for three transformations: from a force to a positive force; from exclusive to inclusive; and from profit to purpose. In Indonesia, one can observe that the spirit of using business as a force for good is relevant in the mind-set of people and the mentioned transformations are really happening. What needs to happen next is for businesses to embrace the transformation and nurture it in the long term. Being a B Corp Certified Company will help them nurture their vision, ambitions and actions.  



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