Bangkok--25 Jul--Aziam Burson-Marsteller
Currently many businesses in Thailand appear to embrace orthodox capitalism's obsession with focusing exclusively on maximising short-term shareholder value. They are increasingly refusing to dismiss core elements of the Sufficiency Economy Philosophy (SEP) as being 'anti-consumption', 'anti-business', 'anti-profits' and 'anti-globalization'.
"Some of the biggest conglomerates in the world- Unilever and BMW come immediately to mind- are very profitable, consumption oriented and absolutely driven daily to enhance profits," said Dr Sooksan Kantabutra, Deputy Dean for Research, College of Management, Mahidol University and Board Committee Member, Thailand Sustainable Development Institute. "They and hundreds more like them all over the world are equally at the same time strictly aligned with sustainable leadership and business practices."
Early in his tenure as CEO of Unilever in 2009, Mr Paul Polman informed shareholders that they should no longer expect to see quarterly annual reports from the company and earning guidance. He advised shareholders to put their money elsewhere if "they don't buy into this long-term creation model, which is equitable, which is shared." Those same pronouncements from a CEO wedded to the US-Anglo short term oriented model would have seen him fired after one day.
Unilever's 10 year Sustainable Living Plan divides the company's growth from its environmental footprint. Ambitious goals were set in place to double revenues- it is still very much a profit oriented business- while decreasing the environmental footprint by 50% and sourcing 100% of its raw materials in a sustainable fashion. Still it remains a thriving business with considerable brand equity and annual pre-tax profits that during Mr Polman's tenure have increased from USD 6 billion to more than USD 8 billion. Polman's approach is consistent with the Sufficiency Economy Philosophy, said Dr Sooksan Kantabutra who pioneered Sufficiency Economy business research.
Awarded the top position in 2014 in its automotive sector in the Dow Jones Sustainability Index ( DJSI), Germany's BMW received praise for its outperformance against its peers in numerous sustainability metrics across its entire value chain from R&D to manufacturing to operations. The referenced metrics include, among others, tax strategies, social and environmental reporting factors, human capital development policies, performance scoring related to occupational health and safety, talent recruitment and retention.
In announcing that the company in 2015 had joined US President Obama's Business Act on Climate Pledge, Mr Harald Krueger, Chairman of the Board of Management of BMW AG stated: "Sustainability plays a central role for the BMW Group. We have set up long-term sustainability goals which have defined targets to 2020 and thereafter."
This commitment to sustainability at BMW did not just start recently. More leader than follower, the BMW Group is the only automobile company to be listed in the DJSI every year since 1999.
These commitments and investments have not in any way negatively impacted the automaker's bottom line. Quite the opposite in fact. In 2015 Group Revenues at BMW were up 14.6% to 92.2 Billion Euros with Group Profits in the same year exceeding 9 Billion Euros for the first time.
Sustainability is definitively not anti-business, anti-profit.
Of more local relevance the Siam Cement Group, consistently ranked as No 1 in the Dow Jones Sustainability Index in the the Construction Materials category was able during the 1997 financial crisis to expand its overseas market from 5 percent to 35 percent in just one year.
"Facing a huge offshore debt, SCG did not lay off any employees during the financial crisis. On the contrary, the company still continued to send its people abroad for expensive training at some of the world's best business schools. It took a long-term perspective by viewing staff retention and development as a long-term investment rather than as a sunk cost."
When the company dealt with the rapid baht devaluation post 1997 financial crisis by not taking the easy way out through selling its baht and buying US dollars. This sacrifice in turn benefited Thailand as a whole, given that selling its baht would have accelerated the pace of the already rapid baht devaluation.
Given its ability to attract investors who take a long-term view, SCG can formulate long-term strategies and plans that are not greatly affected by short-term decisions and events or by just maximizing short-term profits. Long-term strategies and plans are often involved with investments for future growth and competitiveness, such as business restructuring, innovation and R&D, knowledge management and employee development.
In 2007, SCG adopted a ten-year plan to become the ASEAN leader in sustainable business. The Group also plans to increase its R&D budget from a few hundred million baht to 1,000 million baht in five years. Business units were regrouped after the 1997 Asian crisis into core businesses. Those that did not generate revenue of at least 20,000 million baht were not considered as core, and many were sold. SCG is also the first industrial conglomerate in Thailand that specifically invests in sustainable development, including producing a sustainability report for shareholders.
"SCG considers employees its most important asset. It heavily invests in its people and pays employees at the 75th percentile of leading companies in Thailand. Unlike other companies in Thailand, the relationship between SCG's quasi-union and top management has been amicable. SCG used to have poor relations with the union, but has now learned from that mistake."
SCG firmly recognizes the value and potential of all its employees in every country where it operates. The Group develops employees through training and by providing scholarships for further studies at leading national and international universities, so that trainees can become the Group's future driving force. SCG's employee development efforts also include offering graduate study scholarships to employees for technical and MBA degrees.
Training at SCG is available to all employees, not just elites or managers, with budgets of hundreds of millions of baht 500 million baht for its lower-level staff alone. Training programs are organized into three broad categories: functional training for job-related skills, business management and leadership development, and overseas expansion to prepare selected employees to work abroad.
Self-governing teams and consensual decision making can also be observed at SCG. At one time, all previous top managers, including the CEO, volunteered to resign to allow a new group of top managers to take over. The previous top management team then became an advisory team to the new team. After the top management team resigned, the next levels of managers all moved up to a higher level, creating a spiral effect throughout SCG. Clearly, SCG has been running as a team-based system with internal succession planning.
Recent trends in Thailand among more leading corporates offers further measures of comfort. For instance the Stock Exchange of Thailand (SET) has become increasingly interested in sustainability issues In June 2012, SET's Corporate Social Responsibility Institute released guidance documents on CSR for listed companies and other interested organisations. These documents form one of the most comprehensive sets of such documents released by a stock exchange in Asia.
Sustainable enterprises endure over time and weather the inevitable headwinds (e.g. wars, depressions, recessions, oil crises and intense competition) that beset them, while at the same time outperform their peers. Similarly, Sufficiency Economy businesses can endure difficult social and economic crises because they are genuinely responsible for their wide range of stakeholders. These stakeholders necessarily include but are not limited to the highest ranking so commonly accorded to shareholders only in the 'profits first and only' US-Anglo model.