In my Social Entrepreneurship class, I share with my students a continuum that places for-profit companies on the left and charitable organizations on the right. In recent years, for-profit companies and nonprofit companies have been moving toward the middle of the spectrum. Nonprofits are rapidly adopting more habits of the business sector. And now businesses are awakening even more to the value of “doing good.” So much so, I am now also teaching Corporate Social Responsibility and Ethical Leadership at a local business school. (We also recently loved sharing a high-level overview with a very enthusiastic “class” at the North Dallas Chamber of Commerce – we’re sharing our slides for your enjoyment as well.)
August 19, 2019 was a turning point in American capitalism when the influential Business Roundtable adopted a “Statement of Purpose of the Corporation,” which committed corporate America to not only maximize profits, but also create value for all stakeholders, including supporting the communities it serves.
A number of trends are accelerating this movement in the for-profit sector. First, customers are demanding it. A study by Havas, “Project Superbrand: 10 Truths Reshaping the Corporate World,” found that two in three consumers believe that business is just as responsible for positive social change as government. In addition, according to a new study, consumers will not only reward companies for their behavior (26%) but will also punish companies for their behavior (28%). Fueled by a marketing shift that is focused on customer experience, positive corporate social responsibility is upgrading from good PR to an essential corporate strategy.
Example: Many restaurants, large and small, are not only selling the value of their product itself, but where their product is coming from (e.g., farm-to-table, organic, fair trade). This is supported by a rising trend among consumers (6 in 10) saying that it is important for food to be produced in a sustainable way.
Second, as companies fight for talent, employees are choosing companies that are “doing good” and investing in them and the community. A study by Cone Communications on “Employee Engagement” found:
- 55 percent of job candidates would choose to work for a socially responsible company – even if the salary was less.
- 51 percent of candidates (and 66 percent of millennials) would not work for a company that doesn’t have a strong social or environmental record.
- 70 percent not only want to know that their company is doing good, but they also want to be part of the work.
Example: For-profit innovator ORIX USA, which we profiled in the past, uses a unique “bottom-up” approach to corporate giving. As a result of their approach, ORIX USA’s employees volunteer twice as much as the national average. Now, statistics show that employee volunteerism has proven to reduce a company’s turnover rate by 50%.
Third, Wall Street is paying attention. In 2016, Fortune magazine which has been publishing the “Best Places to Work” list since 1998, launched a new list – the Change the World List. Economists Scott J. Callan and Janet M. Thomas have noted that “empirical evidence … indicates that firms need not view social responsibility and profitability as competing goals.” Based on our own research, we have found that 67% of new business owners and social entrepreneurs are designing (or re-designing) companies to ensure this is the case.
Finally, business owners and social entrepreneurs are designing (or redesigning) companies that occupy the middle portion of the spectrum. These companies operate as Benefit Corporations, for-profit companies that are dedicated to not only doing good, but also doing no harm to their communities.
Example: Recently, B Lab just released its list of “Best for the World” companies, and Social Impact Architects, a certified Benefit Corporation, is honored to be part of that list. We have joined the ranks of companies like Patagonia and Etsy, which have baked social good into their DNA. We are also transparent and have undergone an independent assessment of our efforts to impact our community, the environment and our employees.
Corporate social responsibility is getting an upgrade – for good. This “movement to the middle” means we now have an army of for-profit companies wanting to make a difference in their communities. It is an excellent opportunity for the social sector to partner with them – not just to get sponsorships for our next fundraising events, but to help shape their corporate strategy. Consider the possibilities. What if we could help them hire employees at a living wage? What if we leveraged their talent for our nonprofit boards and projects while helping build their employees’ leadership skills? What if we partnered with their employee assistance program (EAP) to help their employees access important services (e.g., financial coaching, mental health referrals)?
If we act as one team to fight for our causes, we can create a new paradigm where people and planet can co-exist with profits. We would love to hear how you are working with local companies – large and small – to make a difference in your community.
Love this post and your points! Conscious Capitalism is definitely a driving force as well and it has been fun to witness this groundswell in Dallas. Thanks for spotlighting ORIX USA too. A great company!
I wonder how much of this is skin deep. Anand Giridharadas http://www.anand.ly/ convincingly argues that it is just that. I would argue that giving in the amounts AT&T does, while advocating for the Trump tax cuts, which AT&T did is also a form of cowardice.