As this year’s Change the World List demonstrates, more and more corporate leaders are embracing a new best practice with profound implications for their companies and the wider world. In increasing numbers, managers are integrating societal needs into their corporate strategy, aligning their companies’ business missions with their impact on their communities and the environment.
Early next year, if all goes according to plan, Sir Andrew Witty will step down after nine years as CEO of GlaxoSmithKline, the world’s sixth largest pharmaceutical company. He’ll leave behind a company with an unmatched record for balancing scientific progress, social impact and the profit motive.
GSK has made a calculated bet on intellectual property leniency in poor nations, releasing drugs from patent protection and thus lowering their prices. That may depress revenue, but GSK says it doesn’t lose money in any market where it operates. And over time the approach builds goodwill and a strong market presence around the globe. “GSK has existed for 300 years,” Witty tells Fortune. “We think about how we can be successful, not just in the next year or the next two years, but in the next 10, 15, 20, 30, 40 years.” The near term looks good: GSK’s revenue grew 4% in the second quarter of 2016, as new product sales crossed the $1.5 billion threshold for the first time.
In March, GSK announced that it will no longer file drug patents in the lowest-income regions of the world—an integral part of its patient access strategy. The company is hardly a passive partner in these regions, however. GSK reinvests 20% of any profits it makes in the least developed countries into training health workers and building medical infrastructure. For instance, through a partnership with the NGO Save the Children, the drugmaker has trained locals to properly administer vaccinations and screen for conditions like malnutrition. ViiV Healthcare, an HIV therapy unit majority owned by GSK, struck a landmark deal with the government of Botswana in June to make the HIV drug Tivicay available as part of a national program to test and treat as many people as possible. And the company has strengthened its commitment to vaccine development, including the world’s first malaria vaccine, which could curb a disease that kills more than half a million people a year.
GSK has also leveraged products from its formidable consumer health business into medical solutions, creating the umbilical cord infection-fighting Umbipro gel out of a component in one of its mouthwashes. The product doesn’t need refrigeration and could save 85,000 babies per year, according to United Nations.
Food is more than just food when it’s fortified with nutrients that billions would otherwise lack.
Nestlé isn’t perfect—it’s the world’s leading seller of bottled water, for one thing—but the 150-year old Swiss company does get a lot of things right. It sources locally, boosting developing economies and the livelihood of smallholder farmers in more than 50 countries. It has worked to purge slavery and child labor from its supply chains. In its 16-year quest to become a “Nutrition, Health and Wellness” company, it has made concerted progress: cutting fat, sugar and sodium from thousands of products, while fortifying many others—192 billion servings worth in 2015—with essential minerals and nutrients that are in especially short supply in low- and middle-income countries. Such efforts are research-based and tailored to the needs and tastes of each market—Nestlé deploys iron-enhanced soup cubes in much of Africa to fight anemia, for example. And, with research partners, it’s working to bring nutrition benefits to the food chain more widely by developing biofortified crops (think pro-vitamin maize). Given the reach of the world’s largest food and beverage company, all this—which Nestlé tracks in its annual “Creating Shared Value” report (351 pages in 2015)—makes a difference.
Training 1.2 million women entrepreneurs (and counting) in 60 countries.
Turn five million mostly impoverished women into entrepreneurs within 10 years. That’s the ambitious goal that CEO Muhtar Kent set for the Coca-Cola Company back in 2010. By the end of 2015—the halfway mark, so to speak—the company had reached about 1.2 million women across 60 countries through the 5by20 initiative.
While there’s still a long way to go until 5 million, in 2015 alone the program made an impact on the lives of over 372,000 women—or an increase of 43% over the previous year. The exact resources provided depends on the woman’s business and her geographic location: A mango farmer in Kenya, for example, has very different finance and training needs from a Filipino sari-sari owner.
To cater to these needs, 5by20 partners with local government organizations and multinational NGOs—including UN Women and the Bill & Melinda Gates Foundation—to create market-specific programs. The strategy seems to be working, at least so far, and in some markets. An externally validated study of 5by20 participants in South Africa saw an average of 44% growth in business sales, while women farmers in Kenya saw their average incomes increase by 140% over the course of a four-year program.
A wood-pulp producer aims to spare Brazil’s forests from depletion.
Fibria, one of the world’s largest wood-pulp producers, has gone to great lengths to mitigate deforestation in Brazil. It exclusively grows eucalyptus, which grows faster than other pulp sources like pine, speeding the reforestation process. One-third of the land Fibria owns—285,000 hectares—consists of conservation areas from native forests. And its Forestry Savings Program, which celebrated its 25th anniversary last year, has helped provide local workers in the state of Espirito Santo, where Fibria’s huge Aracruz facility is located, with a total of nearly 900,000 hours of specialized training, much of it oriented around sustainable harvesting.
Betting that a better-paid, better-trained workforce will keep more customers satisfied.
No issue is more central to this year’s contentious U.S. presidential election than the anxiety of the average American worker about stagnating wages. But while Hillary Clinton and Donald Trump attempt to woo voters with their plans, Walmart is taking action. On Feb. 20, the world’s largest retailer gave more than 1.1 million hourly “associates” a raise as part of its $2.7 billion campaign, unveiled in 2015, to invest in its workforce. That same month, it launched “Pathways,” a program that will enroll 500,000 employees in its first year in a curriculum designed to teach job skills that could help them climb the income ladder. The investment appears to be paying off: Walmart says it has seen 90 weeks of increased customer satisfaction scores.
In a country with soaring household debt, a bank tries a softer touch with hardship cases.
In 2013, National Australia Bank—a member of the Australia’s banking “Big Four,” with $4.5 billion in cash earnings last year—undertook a radical redesign of their entire debt collection system. The bank brought in Kildonan UnitingCare, a renowned community service organization, to find new ways of helping customers deal with their financial hardships, a critical task in a country with around $2 trillion in household debt.
“People wanted understanding and respect from their bank in the event of financial vulnerability,” said Kildonan CEO Stella Avramopoulos, and NAB listened. It once took the bank 21 days to consider a hardship case; it now takes just 21 minutes on the phone. Loan defaults were reduced by $60 million last year, and complaints to the Financial Ombudsman Service have dropped from 60 a month to 11, the lowest in the industry.
NAB is also targeting specific social issues leading up to financial troughs. For example, grants of up to $2,500 are given to victims of domestic violence to help them leave a volatile situation, and the bank sets up an independent account to assist in the transition. “We are just trying to understand how to help our customers into a better place,” says Joseph Seychell, general manager of the hardship program.
Putting marquee technology at the service of students.
Education has long been a focus at IBM—back in 1946 the company joined forces with Columbia University to create the first academic program called “computer science.” But in recent years, Big Blue has ramped up its education efforts, not only working with an increasing number of high schools and universities to set up technical curriculum but also developing more and more software tools for educators.
It’s not a purely altruistic mission. In late 2015 CEO Ginni Rometty formed the Watson Education business unit, which aims to sell IBM’s much-hyped cognitive computing system to schools. The goal? Help educators improve and personalize student outcomes. Oh yeah, and show the world what Watson can do.
Fortune’s annual “Change the World” list is intended to showcase the power of capitalism to improve the human condition by identifying 50 companies that have made an important social or environmental impact through their profit-making strategy and operations.
Companies (501c3 organizations will not be considered) with USD$1Bn+ in revenue will be evaluated on 4 essential criteria:
Measurable contribution to societal impact
Scale of business results
Degree of innovation relative to the industry
Each year, Fortune looks for new companies with recent impact. Companies that made the list in one year are rarely considered for a second year in a row. The initial solicitation and assessment of nominees is conducted in partnership with FSG, a nonprofit social-impact consulting firm, the Shared Value Initiative, a global platform for organizations seeking business solutions to social challenges, and Professor Michael E. Porter of Harvard Business School. A team of journalists from Fortune then investigates each of the candidates independently. The final list of 50 is selected by the editors of Fortune based on the magazine’s own reporting and analysis.
Please contact Alicia Dunn at the Shared Value Initiative with any questions.
Thank you for your interest!