Profit vs. Corporate Social Responsibility

“We do business for profit”, that is one common statement I hear from entrepreneurs.

Though making money is not necessarily bad, governments, specially that of the first world, have set guidelines to ensure a minimum Corporate Social Responsibility (CSR) is observed.

To some, CSR and profit making don’t mix well.

I came to hear an interesting commentary in AM radio of the TRO (Temporary Restraining Order) issued by the Supreme Court on the implementation of the RIRR (revised implementing rules and regulation) of the Philippines’ milk code.

As a backgrounder, the Milk Code and RIRR, among other things, would like to imbibe breastfeeding in the culture of the Philippines, citing results of medical and scientific studies. The RIRR would effectively prohibit and/or regulate the the marketing of infant formula to children up to three years of age. Likewise, consistent with the findings of international experts, milk formula companies are required to put up labels warning that their products “may” contain either “Enterobacter sakasakii” or “salmonella.” The United Nations’ Food and Agriculture Organization and the World Health Organization earlier found that “intrinsic contamination of powdered infant formula sakasakii and salmonella is a cause of illness and infection.”

Because of this, the Pharmaceutical and Health Care Association of the Philippines (PHAP), composed of the providers of medicine, medical and other laboratory equipment such as Abbot Laboratories, Wyeth Philippines, Mead Johnson, AstraZeneca Pharmaceuticals, Bayer Philippines, Novartis, GlaxoSmithKline, Mercury Drug Corp. and other broad-based healthcare companies which produce and/or distribute pharmaceutical, medical and nutritional products, have petitioned the Supreme Court to issue a TRO. Believing the RIRR went beyond the provisions of the Milk Code, which in effect, amended the Executive Order 51, that came into force on July 7 and the amendments made are unconstitutional.They further believe that the enforcement of the RIRR will unavoidably affect the investment and expansion plans of key milk manufacturers in the country as they may opt to cut down productions, put on hold expansion plans and lay off employees in the process due to the new restrictions.

Likewise, on Aug. 11, The Chamber of Commerce of the United States of America called President Gloria Macapagal-Arroyo’s attention to the Department of Health’s revised implementing rules and regulations covering the marketing of milk formulas. Said on the Philippine Daily Inquirer’s report “It has been brought to my attention that a recent regulatory decision by an agency of your government would have unintended negative consequences for investors’ confidence in the predictability of business law in the Philippines,” Thomas Donahue, chamber president and chief executive officer, said in the letter, a copy of which was obtained by the Inquirer.

Because of these, the issue caught the attention of international eyes and support for the Philippine Gov’t, who stood pat in the middle of pressure, poured in.

In the middle of all of this, and the reason why I wrote this blog entry, is the stand of Nestle Philippines supporting the Philippine Government on this issue. This is Corporate Social Responsibility in action.

These restrictions of the RIRR has been in place in first world countries, according to the program of VP Noli De Castro over DZMM. Therefore, not new to the Chamber of Commerce of USA and PHAP. What the DOH and the Gov’t. would like to accomplish is simply to promote breastfeeding. Mothers milk, per the discussion with the DOH secretary would:

• Address the malnutrition problem
• Literacy problem (malnutrition is the major reason for student drop out)
• Birth spacing (this is the safest means of family planning)
• Economics (mother’s milk is free and will flow as long as the milk is consumed)

Interestingly, according to DOH Secretary, the rich who have the means to purchase the expensive infant formula are the ones breast feeding. The lower and the middle class are the ones buying the expensive milk. Thru the RIIR, people will have access to the right information.

I would like to see what value this will add to nation in general, and the mothers in particular.

Update 10/10/07: The Supreme Court of the Philippines has ruled that a total total ban on infant formula ads is illegal. The TRO was likewise lifted to pave way for revision based on this ruling and for implementation.