The KWHS Essay Contest: Social Responsibility in the Corporate World

In preparation for its launch, Knowledge@Wharton High School held a contest in which it invited high school students from across the U.S. and the world to submit essays on their choice of two topics: “Starting a New Business” or “Socially Responsible Business.” From the several hundred entries, judges chose four high school students (two each from grades 9-10 and 11-12) as winners in each of two topic categories. Below are the four winning essays in the “Socially Responsible Business” category, which asked students to highlight a private sector company that has created a lasting positive impact on the community – local, national and/or global — through socially responsible policies.

The essays have been lightly edited for length and KWHS style.

Socially Responsible Business
11^th/12^th Grade Winners

First Place
Matthias Nikaj
Francis Parker School, San Diego, Calif.
“Development from Below: The Grameen Bank Model for Alleviating Poverty”

On October 13, 2006, the Nobel Committee announced it would award the 2006 Nobel Peace Prize to Bangladeshi banker and economist Muhammad Yunus for his “efforts to create economic and social development from below…” through his pioneering approach to micro-credit. In 1976, Yunus started his Grameen Bank Project as an experiment in providing small loans to poor rural communities in Bangladesh without collateral, which had traditionally hampered the ability of the poor to take loans.

By 1983, Grameen Bank had become an independent bank, and, by 2007, it had provided loans to more than 7.3 million people, with over half breaking the cycle of poverty within five years of taking a Grameen loan. Remarkably, Grameen’s payback rate is roughly 90% to 95%, and in the fiscal year 2006, the bank’s revenue reached $92.3 million — remarkable considering the bank targets exclusively the lowest classes of Bangladeshi society.

Grameen Bank’s success in combining social responsibility with a profit-motive lies in three innovative techniques. First, the bank has eschewed the standard system of collateral in favor of a trust-based lending system, thereby freeing up its ability to deal with poor rural communities. Second, to keep up payback rates and encourage fiscal responsibility, Grameen has adopted solidarity lending. Through solidarity lending, Grameen lends money to ‘solidarity groups,’ usually of around 20 to 30 people, as opposed to individuals. In so doing, the bank exploits social capital and peer pressure by fostering mutual support within the group and a ‘spirit of repayment.’

Solidarity lending works well in the tribal and communitarian mindset of many rural communities, where notions of ‘shame’ and ‘honor’ are a key part of life. Beyond solidarity lending, however, Grameen Bank takes a more holistic approach, creating a social compact, the “16 Decisions,” between the bank and the community – perhaps its most innovative contribution to micro-credit. The 16 Decisions, which vary from “Prosperity we shall bring to our families” to “We shall build and use pit-latrines,” set up guidelines for the generation and growth of wealth within the community. This social compact, based on trust, replaces the legal system of secured transactions favored by larger banks.

The key to Grameen Bank’s success lies in its ability to understand the local and cultural dimensions of its customer base and adapt its business model accordingly. The system of credit developed in New York and London may be entirely ineffective in the Tangail District of Bangladesh and, similarly, what works in Chittagong may not work elsewhere. In rural Bangladesh, the core social unit is not the individual, but the extended family. Within that dynamic, individuals act for the benefit of their family and avoid certain actions to not bring ‘shame’ on their clan. Grameen, through solidarity lending, targets extended families instead of individuals. Its 16 Decisions make full use of familial bonds for business purpose, stating, “We shall collectively undertake bigger investments for higher income,” and, “If we come to know of any breach of discipline in any centre, we shall all go there and help restore discipline.”

Nevertheless, Grameen has not gone without criticism. Akhtaruz Zaman, a director at Bangladesh’s Central Bank, complains that “They are regulated, but they are regulated by themselves.” The lack of oversight has led some to suggest that many of Grameen’s statistics are exaggerated, and that Grameen relies heavily on charitable contributions from philanthropic foundations, such as the Bill and Melinda Gates Foundation, which gave $1.5 million to Grameen in 2005. Moreover, Grameen defines “defaulting” on a loan as not having paid the loan back within two years, as opposed to the traditional one-year definition used by most banks.

Another major criticism of Grameen has been that its merger of economic and social policy within its business goes too far. Jeffrey Tucker, of the Mises Institute, writes, “[Grameen’s] ‘16 Decisions’ that must be adopted by all borrowers read like a party platform for collectivist regimentation… a very strange ‘bank’ indeed!” Moreover, Grameen has a tendency to challenge accepted social norms in Bangladesh. Approximately 97% of its borrowers are women, which has created some tension in the patriarchal Bangladeshi society. One of the 16 Decisions is, “We shall not practice child marriage,” which seems to have little to do with the prospective value of borrowers.

Grameen’s union of social and fiscal policy presents the potential to create positive social transformation in some of the world’s poorest communities. Companies who wish to follow in Grameen’s footsteps, however, must be careful to not lose economic viability in the face of social experimentation. Though a ban on child marriage is laudable, tying it to one’s ability to take a loan may constitute an overreach.

To Grameen’s credit, many of the critiques leveled at the company dissipate when one takes into account the local conditions under which it is operating. A rural Bangladeshi woman will most likely take more time to repay her loan than a corporate lawyer in Tokyo. In that sense, Grameen’s redefinition of “defaulting” on a loan is excusable. Additionally, though charitable contributions do provide the bank with a sort of guarantee on its loans, these contributions are not enough to account for the entirety of Grameen’s success and profit. Overall, the Grameen model is a creative and sustainable engine for what the Nobel Committee called, ‘development from below.’ The micro-credit industry has boomed in recent years as more and more companies realize small loans to the poor can work and even be profitable.

In the summer of 2008, I witnessed the rise of microfinance firsthand when I interned at Raiffeisen Bank’s newly started microfinance segment in Tirana, Albania. Raiffeisen, a major European bank with net income of $2.4 billion, launched its micro-credit segment, focusing almost exclusively on loans to small businesses and rural borrowers in response to the success of ProCredit Bank, a microfinance bank operating in 22 developing countries that is organized partly around the principles of Grameen.

Microfinance is an original and profitable way for companies, especially banks, to expand their business while promoting larger social goods. As the power of corporations and their influence rises with globalization, companies like Grameen Bank provide a positive example of how the force and dynamism of the free market can be harnessed for the greater good of all.

Second Place
Sharvani Srivastava
Mira Loma High School, Sacramento, Calif.
“The Milk of Farmers’ Labor: Corporate Social Responsibility Under the Gujarat Cooperative Milk Marketing Federation Limited”

After visiting countless traders, the exhausted milk farmer walked home with a mere five rupees in his pocket. The desperate farmer had sold the owner of one shop seven liters of milk for a meager amount of money since the owner claimed he already had an excess of milk. As the farmer walked home, he knew his family would have to go hungry another night. This same situation could be seen in the lives of many milk farmers in Gujarat, India, in the 1940s as thousands of dairymen were exploited by milk distributors, who made the profit while the producers were left with nothing. From this hopeless situation grew a new company, the Gujarat Cooperative Milk Marketing Federation Limited (GCMMF), to help the poor farmers rid themselves of the manipulative middlemen. Since then, the GCMMF has not only survived, but also flourished due to its dedication and sincerity towards socially responsible policies while maintaining high profits.

Many companies today give back to society after becoming successful. However, few companies have been started to not only make a profit, but also help society simultaneously. The GCMMF is entirely based upon the latter form of corporate social responsibility. To rid the world of poverty, “each…‘microconsumer’ must have access to world-class products and services. Simultaneously, ‘microproducers’ must have access to global markets for his or her labor at fair prices,” said author C.K. Prahalad. In the GCMMF, the milk producers sell directly to the consumers to eliminate the exploitation of the middlemen and allow the milkmen to earn a wage 15% higher than the national average. The GCMMF adheres to strict international quality control standards and markets these high-quality goods under the brand Amul.

Unlike most high-quality products, Amul products are available not only in large cities, but also in villages throughout India for low prices so all microconsumers, even the poorest classes, are able to afford world-class nutritious food. Through free programs such as Amul, Yatra and 35 other women leadership programs, the GCMMF teaches the rural masses modern management techniques and the latest technology in agriculture so as to give those without many opportunities, such as  of education, equal footing with those who do. Other accomplishments of the GCMMF include the Internet Sewa Program, which places one computer with Internet connection in villages, and the donation of dairy products worth one million rupees to flood victims in India. The GCMMF is also helping Thailand, Malaysia and African countries to establish similar companies in their own countries so as to reduce poverty throughout the world.

For a business to be successful, it must achieve its business goals. The business goals of the GCMMF are the incorporation of more farmers into the company, a growing milk supply and the expansion of the company and its profits. Although it may seem like the GCMMF earns little profit due to its social policies, in actuality, the company has a large income. In 2007, the GCMMF had revenues of US$1.325 million, and has grown from selling only fresh milk to selling more than over 80 products.

The reason for the GCMMF’s successful mixture of a profitable and beneficial business is the very basis of the entire company. With the business goal of a growing labor pool, the company earns revenues from more people producing more milk; it fulfills its socially responsible goal because more farmers earn a fair wage. With the increased amount of milk that is sold, a high profit can be earned while lowering the price. A lower price increases demand. As a result, the GCMMF can sell more of its products and help its community since even the poor can afford the products.

Furthermore, the management program that the GCMMF employs increases the profit of the company through increased sales as well as furthers the development of rural areas through education. Another unique aspect that allows for the flawless integration of charity and business in the GCMMF is that the farmers are part owners of the company, and they work towards the betterment of themselves and their community rather than towards public attention. Unlike other companies, the GCMMF did not need to incorporate its social policies into its business strategies since its business strategies were its social policies.

When looking at socially responsible policies of the GCMMF, it is difficult to identify any mistakes the company has made. The GCMMF has not lost a chance to earn higher profits or a chance to help its community. Other companies can also adopt socially responsible policies that are equally helpful to their communities. No matter how much money is given to charity, one of the primary features of social responsibility is caring for the employees so they, too, can lead a suitable life. Also, a company should ensure that the aid given suits the needs of the recipients so development can take place. A company should always choose to improve a part of society it passionately believes needs improvement, and only then with proper motivation, can true progress be made.

Socially Responsible Business
9^th/10^th Grade Winners

First Place
Kyle Davidson
Penncrest High School, Media, Pa.
“Golden Arrow Goes Green”

The company I chose that is going eco friendly is the Golden Arrow Hotel in Lake Placid, New York. I believe this company’s policy is to continually become greener and greener and help the world. Golden Arrow is helping protect Adirondack Park, which is the most protected area in the United States. The park is larger than Yellowstone, Everglades, Glacier and Grand Canyon National Parks combined. By going green, the company is trying not to pollute the park, which can be seen from the hotel. I believe they are doing a great job. Additionally, Golden Arrow is trying to spread eco friendliness to other hotels in New York. Golden Arrow is a wonderful example of a green hotel, as you will see in this paper.

The Golden Arrow is the region’s first hotel to be rated “four out of five leaves” by Audubon International. Only about 10 hotels have also been rated this high. The Golden Arrow Lakeside Resort is trying to go greener each year. When light bulbs at the hotel burn out, the hotel replaces them with energy efficient fluorescent light bulbs. The company buys all of their eco friendly light bulbs from the Boy Scouts, which help their community while helping to keep the hotel green. The hotel only buys carpet from companies that recycle carpets or use other recycled materials. The heating and cooling units are very energy efficient. The hotel has an allergen free floor that contains bamboo, which is a renewable resource.

Golden Arrow also uses water-efficient toilets and showers and relies on recycled paper and tissue as well as cleaning agents that do not affect the earth. Golden Arrow tries to recycle as much as they can. The hotel even encourages their customers to recycle by placing recycling bins in their rooms and near the vending machines. The company now sends out double the amount of recycled plastics as compared to before they encouraged their customers to recycle. So now, there is not as much plastic going to the landfills.

When the employees have a meeting, only organic and locally produced food are served. Golden Arrow’s beaches are made from crushed limestone, which helps prevent acid rain from going into the lake. Wow! They are even trying to improve their lake! The hotel has plants on some of their roofs, which provides oxygen, insulates the roofs, which helps with cooling and heating, and prevents rainwater run off. Golden Arrow only uses real silverware, plates and glasses, thus eliminating additional plastic from going to landfills. The company is putting in 15 new rooms so that when guests are not in the room, the air or heat will turn down automatically. If customers arrive at the hotel by foot, bicycle or a hybrid car, the company will give you a “Thank you for being kind to the Earth” goody bag. All around the hotel, there are picture frames that have “fun facts” about the hotel. The guests look for the answers, and if they get the questions right, then they get an Earth prize. A staff member created Mr. Green, who is the hotel’s mascot. Kids get a coloring book to color in Mr. Green, and in the back of the book there are suggestions on how to go green at home.

The washers and dryers used by the hotel are the most efficient on the market. The company fills their washers and dryers to the very top before doing a load. When possible, Golden Arrow uses cold water to wash the laundry.

For Christmas 2006, the hotel sent out Christmas cards to all of its repeat guests. For each card returned, the hotel donated $5 to a wildlife fund, thus encouraging their customers to help Golden Arrow help the planet.

I believe what the hotel is doing is great. They are trying to help the environment but also encourage and educate their customers to help the environment. I hope more hotels go green like the Golden Arrow. Companies cannot make the excuse that they may lose customers because Golden Arrow can be used as a model. They have not lost customers and are operating well. In this economy, companies might not want to make the changes, but they should try to go green over time. I believe that going green could also save the companies money in the long run by being more efficient. I personally did not know that hotels could go to these lengths to be green, and I am pleasantly shocked that a hotel would go this far to help the environment. On top of all that, the Golden Arrow is trying to come up with new ways to go green every day. The company is running and is still making a profit.

Second Place
Zoe Zhang
Bergen County Technical Schools, Teterboro, N.J.
“Suiting Up”

My father arrived in this country nearly penniless. He lived in his aunt’s house and got his master’s degree while working as a teacher’s assistant. When he graduated, he was as destitute, if not more, than when he first got off the Boeing that had ferried him from Beijing to New York City. Broke and surviving off his aunt’s generosity, Dad was desperate for a job.

Typical protocol for an interview declares that punctuality is a must; he somehow managed to arrive late because, as Dad admits to me sheepishly, he didn’t know how to knot his tie properly. Though being late seems to violate every rule in the book, his logic was that it would make a bad situation worse by failing to arrive properly dressed. As a teenager who tried to wear jeans to a wedding, I thought the whole concept of there being a “right” thing to wear was absurd. It wasn’t until I saw a commercial for Men’s Wearhouse’s National Suit Drive that I saw the importance of dress and its impact on first impressions. One could call it an upsetting example of how superficial society is, or one could say the idea exemplifies the importance of proper garb. Either way, all would agree that a man who shows up at a job interview dressed in a sweatshirt and a pair of Levi’s is probably not walking away with the job.

My father was fortunate enough to have a male cousin from whom he could borrow a sports coat and a pair of dress pants, but for many others, the closest thing they have is a duffle coat and a pair of khakis. As a girl who detests formalwear of any type, I have never set so much as a toe inside Men’s Wearhouse, but I know from my mother’s accounts that a suit going for $50 or $80 is a great deal. Though Men’s Wearhouse’s goods are not for the unemployed, the clothing retailer is still helping to dress them up for their big day.

This is the first year that Men’s Wearhouse is sponsoring a National Suit Drive, though they have been helping to provide professional attire to the unemployed seeking to enter the workforce for nearly a decade. Through its campaign, North America’s leading specialty retailer in men’s dress apparel collects gently worn professional wear and distributes them to over 120 non-profit organizations, who in turn give them to jobless men seeking a favorable first impression. Men’s Wearhouse has also spearheaded the Capitol PurSuit Drive in Washington, D.C., gathering more than 10,000 clothing items in one day.

Men’s Wearhouse describes its efforts as “the first step towards a second chance” for at-risk men and youth. The reasoning behind the campaign is that if a person has a stable, reliable source of income, he is less likely to resort to illegal or immoral approaches to making money. Men’s Wearhouse staunchly believes that having a job once again will help a person take back control over his life.

It seems ironic that a retailer making its revenue solely from selling professional attire would be advancing a program that provides clothes for free. While there is irony, it’s also indubitable that none would know the significance of a suit better than Men’s Wearhouse. They understand it so well that they offer a 10% discount to all who donate, and also pledge to contribute a dress shirt for every suit they receive. Men’s Wearhouse obviously wants their suit drive to be a success, because they also paid for valuable primetime commercials to make everyone aware of their campaign.

Throughout the nine years that Men’s Wearhouse has helped underserved men, it has collected more than 65,000 articles that can help lead these men towards the path of self-sufficiency. Though thousands of men will have access to donated suits, women obviously can’t be expected to arrive at an interview in men’s clothes. I believe that Men’s Wearhouse should challenge another company, such as Liz Claiborne, to stage a similar campaign for women. Together, the two retailers could do a world of good for disadvantaged people looking for an opportunity to turn their lives around.

Any act of corporate responsibility should be sincere and deeply rooted. Men’s Wearhouse isn’t just involved in a single, month-long suit drive. It also participates in a variety of programs, from Day of Self Esteem to the Capitol PurSuit Drive. One month of aiding the disadvantaged is just another excuse to stick a segment about it in the company’s next commercial. The success of a program also depends heavily on the setting of the project. By staging the PurSuit Drive in our nation’s capitol, the multitude of lobbyists and political staff who are used to being trussed up in formalwear helped make the drive a success.

Men’s Wearhouse has helped a huge amount of people become self-sufficient, productive members of society, and through their efforts, they have made customers more willing to walk into their stores and buy something, thanks to the 10% discount they received for donating an item. In this economy especially, any discount is welcomed. Men’s Wearhouse’s “second chance” program works in many ways, from helping the truly needy to becoming a smart, intelligent way to produce more profits.

Oh, and Dad? Thanks to his properly knotted tie, he got the job.

Related Links

• The KWHS Essay Contest: “Starting a New Business” Winners
• Wharton Announces Essay Contest Winners
• Grameen Bank
• Gujarat Cooperative
• Golden Arrow Lakeside Resort
• Men’s Wearhouse National Suit Drive
• Corporate Social Responsibility and Sustainability News