The GSC 3S Award Corner:

3S People, 3S Community, 3S Environment – Sustainable & Socially Responsible Sourcing!

The GSC 3S Award Gala Event provided an opportunity for thought leaders in sustainable and socially responsible sourcing to network and celebrate the winners of the GSC 3S Awards:

As readers of the newsletter and GSC website know, the 3S Awards is an international awards program that showcases projects that bring sustainable and socially responsible sourcing principles into daily practices. The awards will recognize both individuals and organizations, that have not only worked to innovate, improve and implement 3S practices but to bring about social and economic benefits in tandem.

2012 WINNERS: 
Empowered Woman Award: HarVa
Out-of-the-Box Award:
prAna
People’s Choice Award:
Digital Divide Data

Community Engagement Award: Alter Eco
Employee Engagement Award:
VOS

To learn more about our winners, you can not only click on the website links but look at the 3S Awards. 3S Award Site.

To add to our knowledge and understanding about these firms and what they have achieved, this month and next, we are delving into details about these winners through interviews conducted by Luiza Oleszczuk.   Three of these interviews will be published in this month’s newsletter; the remaining two will be published in the next issue.  It is interesting and eye-opening to see the range of approaches and answers, the impetus and motivation and the drive to create and implement sustainable and socially responsible sourcing.

Interviews with the 3S Award Winners:

HarVa:  Winner of the Empowered Women’s Award

HarVa means Green for the villages and stands for “Harnessing Value” of rural India. Founded in 2010 by Ajay Chaturvedi, an Indian educated in the United States, the company is a rural start-up that focuses primarily on skill development, BPO, community-based farming and microfinance.  Currently HarVa employs some 370 people around rural India.

Mr. Chaturvedi, who had worked for global corporations like Citi and IBM before moving back to India to found HarVa, claims to believe in “the power of cost-effective innovation on all aspects that will lead to value creation across the world, especially in India” and supports “the Socio-Capitalistic business models as the drivers of inclusive growth,” according to HarVa’s website. He also thinks that the real growth in rural areas across the world and in India is yet to come and is possible only when “we get into the real fabric of the country and not just overlay thoughts and patterns from the developed nations.”

The company’s next great goal is to employ 10,000 women in HarVa’s rural BPO’s in the next five years, “Essentially creating a Digital network for our local communities,” as Mr. Chaturvedi  put it.

Mr. Chaturvedi was already awarded the CNN IBN Youth Icon and Young Indian Leader of the year awards in 2011 and has recently been nominated for the title of “Amazing Global Indian” by Times Now. Now, HarVa has received the 2012 3S Empowered Woman award in October, from the Global Sourcing Council (GSC), a non-profit organization with an educational mission to promote the values of Sustainable and Socially Responsible Sourcing among businesses, trade organizations, government agencies, and other non-profit organizations. Upon receiving the award at the Citi Executive Conference Center in New York City on Oct. 22, Mr. Chaturvedi gave the following interview.

What pushed HarVa towards pursuing goals in sustainable and socially responsible practices, as opposed to a strictly profits-based model?

We’ve heard capitalism being blamed across the world in the recent occupy movements and so have we seen the businesses being criticized for romanticizing the poor. We are neither. HarVa calls itself a for-profit rural enterprise that follows its unique ‘socio-capitalistic’ business model. The essence and inspiration of our organization lies in the concept of creating and harnessing value out of places where none or little existed and operating profitably. We do it not just to empower the poor but because it makes sense to engage the so-called ‘invisible’ communities into mainstream economy for inclusive growth.

 

How do you understand corporate social responsibility? How do you understand sustainable sourcing practices?

CSR extends far and beyond the boardrooms and ‘stakeholders’ of any organization. The real stake for a sensible organization is to be responsible and engage the community in a manner that the society benefits from it. We’ve all recently seen the ‘sustainability mandate’ in all private corporations but I believe that is something of core importance and had been overlooked till now. Even in present day CSR is an agenda for corporations but not a sense of co-operation.

 

We think that sustainability is achieved when you create an ecosystem of value and business co-creation and source your business in a manner that is rewarding both socially as well as financially. That is what HarVa stands for and what we believe is a sustainable sourcing practice.

Did you – at any point – come to regret that your company is following this path? What were some of the biggest rewards?

Personally I’ve never regretted the decision I took to found HarVa and the direction we have set out on. Beyond just a business model, it is a profound spiritual calling where some things are just known. On a more materialistic level, we’ve been on a bumpy ride. The biggest challenge for us was to head where no roads had been laid without a set standard. But then again, that also has been our biggest strength that allowed us to be innovative and unique. The biggest reward for us in our journey so far has been the trust we’ve built with our employees and the innovation that leads to value creation. To put in a crux, it has been a roller coaster ride and fortunately an amazing one that pushes us forward every time.

What do you think sets you apart – as far as business model is concerned – from other companies from your sector?

As I’ve already mentioned, we follow ‘socio-capitalistic’ business model and strongly advocate being more than profit. I am of the opinion that capitalism is not bad, but it has to be channelized well for us to make profit for the society. At the end of the day, I believe all businesses need to have enough money to keep operating or they will inevitably close. Unfortunately, most businesses operating in our space operate with the agenda of just ‘doing good’ and capitalize on the untapped market and that is what sets us apart. HarVa does not go in for the opportunity but creates where others failed to see any. Another important point that sets HarVa business model apart is that we do not look at the markets we source from as a consumerist economy to start with. We probably will come back around to tapping that consumer market in a couple of years after we have seen sustained development but not start out with it.

What do you think can be done to make the business world aware of the need for corporate social responsibility?

Well, for starters I think it’s essential that the corporations look at CSR as not a mandate that they have to publish in their annual reports but as a strategy for business development. Not look at Inclusion as an after-thought. Business world needs to embed co-invention and business co-creation that could bring them into close, personal business partnerships with the communities. There should be a deep dialogue with the poor that results in shared commitment which is born out of mutual sharing and learning. I think the need of the hour is to creatively marry corporations and community resources, capabilities and energies to bring out true CSR.

 How is caring for local communities with which you do business influencing the business outcomes in case of your company, or in general?

Caring and respecting our employees and their local environment is of utmost importance to us. I believe that human capital is of far more importance to us than the financial gains. Collaborating with the community and engaging them in mutual harnessing of value has been our biggest asset. It has allowed us to understand their ecosystem and thus modify ours according to our needs for better results and productivity. We think that we now need to shun the set beliefs and start a deep conversation with communities for innovation and invention. The trust we build in local communities helps us understand them and work towards inclusive growth in a real manner.

prAna: “Out of the Box” Award

 Founded in 1994 by Pam and Beaver Theodosakis in Carlsbad, California, prAna currently has 125 employees and operated in the USA but sells globally.  For sustainable sourcing, praNa has partnered with Fair Trade USA as well as the Fair Labor Association.

Can you tell us about the element of inspiration and purpose that pushed your organization towards pursuing goals in sustainable and socially responsible practices, as opposed to a strictly profits-based model?  

PrAna has always been a company with a conscience, the intention of the brand was never just to sell clothing.  Born from the experience of people with active pursuits, an optimistic outlook on life, a deep connection to nature and our responsibility to it, prAna has inspired bringing like–minded individuals together over the last twenty years. Over time we have been formalizing our approach to sustainability integrating it into the materials we select, the places where we manufacture and how we do business. It is a constant learning process for us and a journey we are inspired to take.

 What do you understand by corporate social responsibility? What do you understand by sustainable sourcing practices?

Social and environmental responsibility does not stop at our company’s doors. It is essential that we take responsibility all the way through our supply chain on the impacts our business decisions have on the people and environments where our products are made.  Specifically with sustainable sourcing we have realized that we need to formalize our intentions. So while there has been a desire to source form suppliers that meet a certain standard of ethics, we have to put that into practice. That is why we have adopted a policy and procedure internally to review and assess performance regarding sustainability and include that in our sourcing decisions.

Did you – at any point – come to regret that your company is following this path? What were some of the biggest rewards?

There have been no regrets about trying to do the right thing and helping people improve their livelihoods. But it has not been the easiest path. Many times we have had product come from rural areas where it was wrong or late and we have had to explain this to our customers and have them understand the bigger picture of what we are trying to accomplish. But the biggest rewards is when we see our suppliers make the improvements that have been needed to either improve conditions for workers or their own business so that they can continue to stay in business.

What do you think sets you apart – as far as business model is concerned – from other companies from your sector?

We stand out in the outdoor industry as one of the few brands that has put social responsibility front and center. Many brands just focus on environmental responsibility, but prAna has been a pioneer in this focus.

What do you think can be done to make the business world aware of the need for corporate social responsibility?

In many cases corporate social responsibility just makes common business sense. There is a say “you pay for it somehow” so if a company just chases cheaper prices they are paying for those cheaper prices in another way be it handling issues with activists, worker unrest, environmental degradation, or even PR to protect the brand image. 

By seeing a holistic perspective of your business and making decisions that are good for everyone along the supply chain your business will be more successful. Otherwise good partners will go out of business and not help your company meet its goals.

How is caring for local communities with which you do business influencing the business outcomes in case of your company, or in general?

We are excited to tell the stories of change in the communities that we work with. The impact of our Fair Trade program has seen a 95% increase in financial contributions to workers since the first season providing Fair Trade Certified Apparel. This helps motivate the teams internally to talk about the Fair Trade program and what this means to work for a company that is taking a leadership role in providing Fair Trade Certified apparel in the market.

Digital Divide Data:  Winner of the People’s Choice 

In 2001, Jeremy Hockenstein, CEO of Digital Divide Data (DDD), then a business consultant, visited Cambodia, where  the mixture of poverty and progress caught his attention and became the inspiration for the company. Mr. Hockenstein noticed that – despite the existence of computer schools – there were few IT jobs available to graduates and no school-to-work programs to transition them into employment in the formal sector. The young people had limited opportunities to join the workforce and take part in the economic growth of a nation emerging from colonialism and war.

Mr. Hockenstein and a group of his friends – Jaeson Rosenfeld, Kathryn Lucatelli, Scott Keller, Vernon Naidoo, and Shawn Fremeth – committed to helping address this issue. They shared the belief that disadvantaged people can drive economic growth if they have the necessary skills, knowledge, and market access to generate income that lifts them out of poverty. They established Digital Divide Data (then called Follow Your Dream Cambodia) to offer youth a chance to join the digital economy and improve their standard of living. The founders sought to provide jobs and contribute to the country’s development by applying India’s business process outsourcing (BPO) model.

Digital Divide Data today operates in Cambodia, Laos and Nairobi, Kenya. DDD has successfully delivered hundreds of projects to international and local clients while employing over 1,000 staff. The jobs crated have enabled hundreds of families “to break the cycle of poverty and to build a better future,” they claim.  DDD founders are aiming to earn $10 million annually by 2016, which would enable them to graduate 350 youth each year from the work-study program the company offers.

The below interview is with Michael Chertok, Chief Development Officer at Digital Divide Data.

How do you understand corporate social responsibility? How do you understand sustainable sourcing practices?

Corporate social responsibility is a self-regulating mechanism that businesses observe to ensure that they comply with the law, ethical standards, and international practices. Companies carry out CSR to embrace their responsibility to create positive impact through activities, projects, and programs geared towards employees, communities, consumers, the environment, stakeholders, and the public.

Digital Divide Data helps companies demonstrate CSR in the way in which they source business process services.  By sourcing a range of content processing services from DDD, companies receive quality services at a competitive price—and their sourcing business contributes to developing the skills of youth in developing and emerging market countries.

At DDD, social responsibility starts with recruiting disadvantaged youth in developing countries and equipping them with the skills, education, and training they need to thrive in the BPO industry. With employment in our business, they build skills that enable them to earn incomes four times greater than the average regional wage. Some of them move on to occupy managerial positions within DDD; many take professional roles in other businesses, government and NGOs.

Digital Divide Data’s model views sustainable sourcing as a development opportunity for the people working in the sourcing industry. While employment in sourcing is often viewed as a temporary job for recent college graduates, DDD sees a job in sourcing as a long-term opportunity to gain professional workplace skills, personal development and financial independence. DDD has made a commitment to make sure women and people with disabilities can participate in this opportunity.  Half of the youth we employ are young women and about 10% have physical disabilities. In spite of how society may regard their gender or physical disability, DDD’s employees are able to put food on the table, send siblings to school, give money to their parents, and gradually improve their families’ standard of living.  Sourcing services from DDD enables clients to achieve this level of long-term impact through their business.  This is an essential component of CSR–and the potential of sustainable sourcing.

Did you – at any point – come to regret that your company is following this path? What were some of the biggest rewards?

Digital Divide Data pioneered the impact sourcing model, having operated this way for 11 years. While the journey has had moments of challenge, we have never regretted taking the sustainable sourcing path. We have reaped enormous rewards from seeing DDD graduates grow and succeed and we continue to be inspired by their individual stories. The story of Changtheng Heng is just one example:

In 2003, Chantheng Heng started working at DDD Cambodia as an operator, leaving behind a life selling  rice and bread that promised only hard labor and low wages and no chance to shift her circumstances for the better.  Her persistence and fearlessness paid off and she was soon promoted rapidly within DDD. Seeing her excel in IT systems management, DDD supported her studies, as she completed a degree in Computer Science. Using the skills and education she acquired through DDD she is now a trainer for government officials to officials to implement software systems using the Khmer language. She advanced to designing and developing the Cambodian Ministry of Education’s Master Plan for Technology in Education while completing a master’s degree in comparative local development. Today, Chantheng has the privilege of serving as the Deputy Program Manager for the Open Institute, where she creates proposals for Information and Communication Technologies (ICT) development in Cambodia.

Chantheng remains grateful for having crossed the opportunity divide and for DDD’s help in advancing her to where she is now. “I believe women have to have their own skills, have a better education, get the career they want, and learn anything that will allow them to be free.”  Chantheng and more than 500 other graduates like her inspire us every day to do what we do at DDD.

 What do you think sets you apart – as far as business model is concerned – from other companies from your sector?

What sets Digital Divide Data apart from other companies is our long-term commitment to the development of our staff, including enabling them to gain access to higher education. DDD not only employs disadvantaged high school graduates in our BPO business but also sends them to universities to complete their degrees over about four years. More than 500 young people have graduated from DDD’s work/study program with college degrees. The flexibility of our staff’s work hours allow them to perform their data management operator jobs for half of the day and go to school for the other half. DDD supports a portion of their college education costs through scholarships; operators pay a portion with their earnings, sometimes supplemented by financing through low-interest loans from our financial institution partners.

 What do you think can be done to make the business world aware of the need for corporate social responsibility?

The challenge is not so much to raise awareness in the business world about the value of CSR; there is already a fairly wide awareness of CSR. We believe the current challenge is to help companies see the opportunity to engage in CSR practices in their procurement practices. Many companies see CSR as an isolated division of a company that runs periodic programs. We are excited about companies that integrate principles of CSR into how they do business. For example, DDD and other sustainable sourcing companies could create more jobs and more opportunities for the disadvantaged if they could rely on recurring client work. There is an opportunity for companies to act on their CSR principles by making decisions to contract with companies like DDD that not only deliver high quality services at a competitive price, but also produce social outcomes. We would like to see more companies embracing CSR in their purchasing decisions.

How is caring for local communities with which you do business influencing the business outcomes in case of your company, or in general?

We have had the privilege to forge client partner relationships with companies and organizations that share DDD’s commitment to sustainable sourcing and social impact. We are especially proud of many of our local clients in Cambodia, Laos and Kenya whose projects deliver much needed business services.  For example, for nine years, Mobitel, one of Cambodia’s largest telecommunications companies has been sourcing work from DDD.  Their business has provided a first work opportunity for hundreds of youth.  We thank our clients for their business, which helps us sustain our programs.

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