Shervin Setareh – NGO-Business Partnerships and the Real CSR
Shervin Setareh is a project leader for a consulting firm in Copenhagen specializing in international development and globalization (Dalberg), where he gets to meld his interests in business, governance, and international development advising multilateral organizations and foundations on strategic planning, global deployment, evaluation of health-care pilots, and results-based management.
A young visionary, Shervin has considerable experience thinking up and executing projects centered on social, political and economic development, helping to launch the first corporate governance rating service in Europe, co-founding a NGO in Bosnia-Herzegovina for the training of youth in the grassroots implementation of community service, peace and human rights education projects, and recently developing a guide book that highlights best practice examples of partnerships between NGOs and UN agencies with companies on social and economic development projects. Ever on the run, EBBF (barely) managed to track him down to talk to him about some fresh ways to rethink business.
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EBBF: Let’s start by talking a bit about the business-NGO partnership guide you’ve been working on.
Shervin: We are currently working with a consortium of NGOs and companies to identify each player’s product line and assets, and to explore whether there are opportunities for collaboration that can both have positive impacts and be profitable. So, for instance, in this meeting NGOs discuss the problems they face in the field, companies get to know the assets the NGOs have, and we help determine what kinds of products or services the business could create that might be helpful for the community, and be profitable at the same time.
Traditionally, the business-NGO relationship is based on philanthropy, but it is increasingly diversifying into core business areas such as micro-finance. Businesses are currently looking to expand their work with NGOs on a wide range of issues, from getting help setting up a product to helping them market it, and so in order to know which NGOs to work with, they are interested in a rating of NGOs from the perspective of companies on categories such as accountability, adaptability, communication, and execution. This is the NGO Rating Guide we’re working on.
We’re now taking this idea one step further. We have partnered with some social networking guys called ‘Ethical Economy’, Global Compact and the Financial Times, and our idea now is to create an online platform whereby every citizen can rate NGOs and companies, NGOs can rate companies, and vice-versa. Everybody can rate everybody else, basically. If my name is X, I live in Madrid, and my perception of my electrical company’s ethics is 3, some colleagues in Barcelona give it a 1, the company eventually gets an average score for its ethics. So the company sees this, and some months later decides to do a project to improve the sewage system in a poor neighborhood, and as a result of this their ratings go up. So the value of their ethical performance goes up, just like a share. And you can compare its different ethical performances--transparency, ethics, accountability—with those of the Friends of the Earth, or with the Government of Barcelona or the Basque country. Also, through this rating companies can see what Greenpeace needs in terns of partnerships, and companies can look for partners who want to do similar things as them. This represents a leap forward, a much broader approach towards bringing transparency to an organization.
- Speaking at last year's EBBF-IEF conference
EBBF: Why is business pursuing this partnership?
Shervin: Businesses want it because there are areas where NGOs can come in and complement their work with the particular skills they have. They can give companies what you might call a ‘license’ to operate in unstable environments. Not the kind of license government gives you, but a kind of ‘ethical license’—a license to operate in eyes of the public. For example, if a company is operating in an area that is rather poor, extracting minerals, or oil and gas reserves, there may be criticism that ‘you just take and don’t leave any wealth here’, ‘you just extract wealth and pass on the profits to shareholders in the North’. In order to change this perception, companies can work with a local NGO which can help them obtain products and services locally. This way it won’t have to hire so many people from outside the community, and look for local procurement and local labor. If BP, Shell, Chevron operate in an area it is because people give them this ‘license’ to operate. If on the other hand, they disregard the population of the area around which they extract materials, and disregard the lives of their employees, they will lose this ‘license’: NGOs will paint their activities all over press, shareholders will sell shares, and the company will end up losing face and money.
Furthermore, the company also may not have capacity to operate well in an area. If an NGO knows the area well, then they can create a strategy together there. The NGO can help sell products in specific environments, or extract resources, and basically share information on how to conduct yourself in a given area. They often have a good grasp of the local environment and can provide information for ‘market research’, so to speak. Also, NGOs can function as channels for companies to give back to the society part of the wealth that their land and resources generate. And since the company will want the people who work for them to have a good standard of living and a safe environment, they may partner with NGOs to provide advocacy and education services. NGOs can also provide know-how related to offsetting CO2 emissions, or building a plant in a sustainable fashion, or restructuring in a more respectful and sustainable manner. Businesses can even invite NGOs to come help them understand development challenges, and to give them insights into what they could do in their product line that would generate employment for the people, provide products that those people need, and generate wealth for the community.
EBBF: One concept that is gaining renown in business and NGO circles is that of ‘Social entrepreneurship’. Is this what you are describing?
Shervin: Partly, but what I’m talking about is not only connected to start-up companies. Even established companies need to look at themselves, look at all the technical staff, and PR people they have, and to think about how to use their pipeline of assets (money, products, intelligence) in order to address the real needs of the world. Yes, they could just give an NGO a check. That NGO can then say ‘Thank you, we’re going to educate illiterate women’. This isn’t bad. But we need to go beyond this model: We need to start thinking about companies directly producing products and services that the community actually needs.
This is a new game in town. We just have to think and reach out—reach outside the predominant paradigm of doing business, making profit, and then giving back to the community. Why not provide products and services that are themselves a service to humanity? OK, generating wealth in itself is a service to humanity—and we’re at a stage where we need to generate vaults of wealth that can then fund projects that development green technology, for example—but why not build companies that do exactly this kind of thing from the very start?
We need renewable energy, waste management, water desalination systems, smart agricultural irrigation systems, a new transportation infrastructure based on vehicles that are more efficient and less damaging. Let’s not think about staying in the same company, making the same things, and just working more ethically. We are currently producing widgets, nuts, bolts—but are we really producing the things that are really useful in this world?
If the problems humanity is facing are so complex, how can we believe that we alone in business can solve them? Why not reach out to government, academia, NGOs and work together? How can we change the rules of the game? How can we pick everyone’s brain, not only the brain of the commercial world? These are some of the questions that I think we need to start asking ourselves.
What is interesting is that we are finding that when these two sectors work together a kind of symbiosis is created, wherein each part benefits from the other’s expertise and vision. There is still a lot of distrust between the two sectors so it takes time at first to get them to work together, but once they do they find that they are complementary and by working together they can solve many current problems.
- At the EBBF/IEF Conference
EBBF: You seem to be describing a new arena of business and NGO action, one that hasn’t really been explored much yet. What will help us move towards this new vision?
Shervin: One conception has to change: believing that all solutions are ‘in house’. We are talking about issues of open exchange, of open development. We should know that solutions need not come from inside the company. Why not start utilizing other people’s knowledge to come up with solutions for businesses or for NGOs?
We also need certain virtues, one is a sense of humility—you can’t know everything. Another is openmindedness, there can be people in other sectors that know more than you. Readiness to change is another, and being just.
What’s stopping us is the absence of, let’s say, guidance. The lack of interaction between those who know what’s required in the field, and those who are active in the corporate field. We need to have knowledge about the needs of people you didn’t service before, people who were considered not useful, because your products didn’t cater to that market.
An example. Muhammad Yunus is now working with a number of European companies, to bridge this gap, to help companies develop an understanding of what they need in the field. He can tell them, ‘If you can produce solar panels below a certain price x, I can assure you that it will be a big hit in Bangladesh because the purchasing power exists.’ So that is what is needed.
But to make this shift, you will have to have the desire to think about the well-being and real needs of others, not just your bottom line. So, first you need to want to know the needs of the people in the region, then you have to work with the correct partners in the region. If there is something you want to understand, then a kind of change of conscience and in your product portfolio will happen. But you have to want to change, which also requires a change of leadership.
EBBF: So what happens to the bottom line?
Shervin: I’m not saying that businesses should create unviable products. But they should talk to NGOs, to academia in order to understand the issues. You look in the pipeline and ask yourself: can we create a product that creates employment, wealth, and is both sustainable and financially viable? Maybe we can.
We have to shift from “Where can we make profit?” to “Where can we serve AND make a profit?” Because at the end of the day, when we serve and make a profit, we generate wealth. It’s societal wealth—prosperity, social cohesion, social peace, reduction of crime, improving health. A lot of things happen when you provide products to a community to take care of its health.
This is the input of every society. When you have a healthy society, you have healthy workers, better materials, more stable markets, less crime. But it only works if we think in the long-term. One entity that has a huge responsibility here is government policy, to give incentives for this kind of thinking, or open opportunities for it to evolve. If they help change the rules of the game, if government can help markets think long term, and disincentivize short-term thinking, it could give impetus to the whole aspect. What would be really helpful if more of these successful projects were promoted, and lessons could be learned from them. We need leaders who are doing this type of work to be celebrated.
EBBF: This also seems related to CSR, no?
Shervin: True corporate social responsibility isn’t about giving money to a local kindergarten and then inviting people from around the town for an annual feast. True CSR is to completely revamp the thinking of a company: “Let’s put all our minds, assets, and capacity to think about how we can best serve humanity.” If I’m Deutsche Bank, why not use this capacity to create a micro-finance investment fund. Use your banking knowledge and clients, to allow your clients to invest in a fund that gives loans to micro-finance organizations around the world. We should use our assets, to create something which Greenpeace, Care International can’t create, but we can.
Take Grameen-Danone. Instead of doing the typical CSR activity, they’ve done something based on their core unique assets: Mercedes can’t set up a mini yogurt business in the middle of Bangladesh! You have to think, What can you do with your core assets to create something that is directly serving your community.
I believe this is the future of real CSR, going beyond giving money to cancer research, or to a school. You can only go so far when giving money to some fund, but when you yourself develop a product which is at the heart of your organization, you have the motivation to want to sell it, promote it, and improve it. If you revamp the whole kind of corporate strategy and you imbue it with a spirit of service, saying ‘let’s use our unique combination of knowledge and assets to think about how to create the best products and services for this group of people’, at end of the day you are going to be profitable, have a big impact and give your employees a sense of meaning in what they do. I think this is the interesting part, changing the mindset and the heart of the entire company.
EBBF: The consulting company you work for seems to be thinking in this way, going beyond profits and thinking of ideas that are both profitable and useful for society. What helped you make this shift, what’s pushing you?
Shervin: A lot of us are coming from management consulting. We’ve spent a lot of time generating wealth for large corporate players. Since we’re also aware of and concerned about the pressing problems faced by millions of people who don’t happen to be wealthy, we’re thinking, ‘We realize that the problems are complex, and the solutions are too. So why don’t we try to use the same knowledge and network we have to create not only value for shareholders but for society.’ So we decided to help build a bridge between NGOs, business and society.
What I’d personally like to see happen is for business associations, business umbrella associations, CSR movements or those in the nonprofit field, to open their mind to this opportunity and realize how bridging the public and private sector and non-profit and for-profit world can actually generate a lot of innovation in order to find solutions that can serve the interests of society.
