Publication

What the region needs from the private sector

23 2017 March
INCAE Executive Education

A popular saying goes that "each people has the government it deserves", which suggests that our bonanzas and miseries depend on what governments do or do not do.

The weakness of this argument is that any outside observer would think that citizens, businesses, entrepreneurs and civil society organizations do not have much to do with this.

Nothing is more false, what we have we have chosen (fortunately now we change presidents and congress in almost all of Latin America via elections) and also we all have rights and obligations in our societies, the bad thing is that we all think about our rights, but only very few do it in our obligations.

I think that as a society we are not doing a good job. We should also talk about Citizen Responsibility and Government Responsibility, although for now I will only refer to the responsibility of companies. Let us not lose sight of the fact that our environment has become complicated since we are living in the most dangerous region in the world in terms of assassinations for countries that are not at war.

For more than a decade we have been talking about CSR or CSR (Corporate social responsibility o Corporate Social Responsibility). The truth is that this concept is embedded in a broader one, that is, the concept of sustainability. According to this, companies seek to grow and report competitive profitability to their shareholders, but at the same time contribute to a better society and a better environment. That is to say, there are three dimensions of performance: economy - the traditional one - but also a social and an environmental dimension (the so-called "Three Ps of People, Planet and Profits").

What is the most important of the three? The correct answer is all three, since the financial assets of a company would not mean much without social assets (workers and consumers) and environmental assets (sources of raw materials, good quality water and air).

However, from the point of view of sustainability, the situation of the countries of the region is even more worrying. According to the 2014 EPI (Environmental Performance Index) published by Yale University, out of a total of 178 countries, the best Central American is Costa Rica (54), followed by Panama (58), Nicaragua (90), Honduras (97 ), Guatemala (98) and El Salvador (115). The most important competitiveness indices are telling us that we are lagging behind. 

What can we do as companies? Unfortunately not all of them have the leadership required to put sustainability into practice. Corporations that are best equipped to do so as they have the technology, the globality, and the motivation to pursue a sustainability strategy they have not necessarily incorporated it into their "DNA", showing different levels of commitment.

Leadership in sustainability implies an effective process to develop it throughout the corporation, measure its performance and link it with financial performance (create the so-called “business case”). It is not at all illegitimate to think of sustainability – CSR as a good possibility of differentiation to achieve a greater competitive advantage or simply to think that it is the “cost” of doing business to build an image of a good corporate citizen.

The companies of our region should see as a strategic element to compete, the insertion of The sustainability in your DNA. They must be convinced that through its correct application they can improve their competitiveness since it allows them a rigorous examination of their products and processes and in this way they find cost savings through the improvement of product design, improvement of its quality and service. , improving its production efficiency and yields and at the same time also making improvements to the environment on which it depends. It also allows more satisfaction and retention of customers and employees, the improvement of social and environmental performance and finally the increase in profitability.

Let's improve our competitiveness as countries and as a region. Together all sectors of society can achieve this.

Article published in the "Book of CSR projects in Central America and the Caribbean".

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