Your business can facilitate social change by doing what it does best
Article By: Tania Carnegie
This article was originally published on The Globe and Mail, Wednesday, Sep. 23, 2015 4:00AM EDT. http://bit.ly/1R6a6bM
Remember corporate social responsibility? In the early 2000s, the idea of aligning a company’s donations and expertise with its industrial interests, or issues considered significant to the business, cast a new light on the age-old practice of corporate philanthropy.
Fast-forward a few years, however, and CSR is already giving way to an even more elevated concept, as leading enterprises and investors worldwide seek profit in efforts fundamentally aimed at achieving social good.
Is this trend good for business? Indicators would suggest so. a trend noted in the Harvard Business Review and discussed at the World Economic Forum.
Fortune magazine recently issued its first “change the world” list of 51 companies that have made a sizable impact on major global social or environmental problems as part of their competitive, profit-making strategies. The list includes companies such as Vodafone Group PLC, Safaricom Ltd., Toyota Motor Corp., Cisco Systems Inc. and Facebook Inc.
Instead of thinking about how their companies “give back,” or wrestling with how to increase a return on philanthropic investments and employee volunteerism, these businesses consider how their enterprises can be a catalyst for positive social change by doing what the business does best. And by collaborating, as business partners, with non-profit groups and social enterprises, and leveraging each other’s intellectual expertise, further gains are possible.
This movement is taking shape most notably in Europe and the United States, but most companies have an inherent ability to create social value.
Canadian multinational Maple Leaf Foods Inc., for example, is seeking to address a global need. Chief executive office Michael McCain, in a company video posted online, recognizes that with the world’s population expected to grow by two billion by 2050, the world will need 60 per cent more food. Maple Leaf’s answer? Invest in ways to enhance sustainable food production and combat waste and food insecurity – an approach in which the company also sees a recipe for its own sustainability and prosperity.
Now consider the countless companies that actively pursue their fortunes in areas such as health care, education and renewable energy simply because they believe them to be profitable. Imagine how their competitive advantages could potentially multiply simply by integrating an authentic corporate social purpose into their business practices.
According to Morgan Stanley’s 2015 investor survey, demand for investment opportunities in companies that focus on making positive social or environmental contributions is increasing. The survey found that 71 per cent of investors are interested in sustainable investing (defined as investments that aim to achieve market rate returns while pursuing social and/or environmental impact). Nearly half (45 per cent) believe that sustainable companies are more innovative, and 72 per cent agreed that good environmental, social and governance factors can lead to higher profitability and are better longer-term investments.
These findings are consistent with a recent survey of investment professionals by the CFA Institute and the Investor Responsibility Research Center Institute, which found that nearly three-quarters (73 per cent) of respondents factored environmental, social and governance into their investment decision-making process.
Such results indicate that investors and consumers are paying attention, especially younger people. Some 84 per cent of investors surveyed byMorgan Stanley indicated an interest in sustainable investing, as well as being more likely to integrate sustainability into their purchasing decisions. Ultimately, these drivers may have a direct impact on the bottom line of companies and their financing options.
In addition to this investor interest, 81 per cent of respondents to the 2015Edelman Trust Barometer believe that a company can take specific action to both increase profits and improve the economic and social conditions in the community where it operates, dispelling the view that social good and positive financial returns are incompatible.
Little surprise then, that Vancouver City Savings Credit Union, Canada’s largest community credit union, is building a values-based investment portfolio, one of the strategic initiative identified in its three-year plan. The goal is to diversify Vancity’s balance sheet and ultimately earn a greater return through assets that build healthy communities through positive impact.
Herein lie the core values of a movement that seeks to craft and institutionalize a new purpose for business and definition of success – one that goes beyond being charitable or responsible.
World leaders will come together Friday at the United Nations to commit to 17 sustainable development goals – a set of targets developed with the corporate sector – that seek to achieve three broad objectives over the next 15 years: end extreme poverty, fight inequality and injustice, and fix climate change.
Rest assured that forward-looking companies are imagining how they can win by leveraging their resources, networks and the transformative power of the markets in the pursuit of these goals.
Looking at such pressing issues in this way presents an opportunity for any business to think creatively about how its products and services could offer market-driven solutions to the world’s greatest challenges.