2012-05-10

Co.Exist

Can Businesses Actually Make The World Better While Making Money?

Today’s corporate leaders believe businesses are better equipped to create social change than charities. But can for-profits really become for-more-than-profits?

When we think of businesses acting in the community, several images may come to mind: fundraising in the office for a charity, colleagues getting active with a day out volunteering or pro-bono services, or maybe a product line that ties sales to giving something to those in need.

Increasingly, however, today’s corporate leaders think their social action should become less about "giving" and more about "acting"—moving corporate activity into what was previously firmly charity or government turf.

A delivery service can use its infrastructure to transport goods for purchase, as well as to link up with charities and rural delivery systems to create a new network for delivering supplies for medical relief. A freight management firm can use its expertise in risk avoidance to minimize costs, as well as to consult with local government and NGOs and build a mutually beneficial partnership for improving road safety.

In a recent poll commissioned by our organization, The Social Investment Consultancy (TSIC), an overwhelming 91% of U.K. senior business leaders stated they believed businesses acting in such ways that use their core strengths would be more or effective in creating social change as compared with giving to charity. Only 9% felt charitable donations would be the most effective way for businesses to contribute.

While a stunning statistic on its face, in a sense it is not surprising that business leaders have moved towards thinking they can best contribute to social change through applying what they do best to the problem. This viewpoint fits with current thinking in corporate social responsibility practice, which has evolved significantly over the past decades from being primarily reactionary, to seeing real shareholder value in pursuing economic and social progress together.

The idea has gone mainstream. A recent Forbes Insights study of global executives found that 93% believed their company could "create economic value by creating societal value." Furthermore, 84% agreed that "companies need to evolve their giving programs from simply giving money to broader social innovation."

Yet while executives’ aspirations clearly have moved towards wanting to innovate in their approach to community engagement, are businesses actually doing this? And more importantly, are those who are doing it doing it well?

Our research and experience working in this space tells us that the answer to both questions at the moment is unfortunately, mostly no. Of the business leaders TSIC surveyed who stated they believed businesses could have a greater impact through applying their strengths for social change, only 64% reported they were currently focusing on using their business’s resources in this manner.

Furthermore, while notable exceptions exist, the social action undertaken by most businesses tends to involve searching for existing solutions and then retrofitting the business to contribute. As such, many of the businesses we meet today are nowhere near meeting their social potential. In order for them to do so, they need to begin by assessing what unique assets they already possess, and how those talents can be applied towards accomplishing social change in new ways.

So how do businesses begin to go about this? Rather than passing over charities or redoubling public or third sector efforts, we believe businesses must merge their organizational expertise with community expertise to best understand where they can have the greatest impact. This approach then enables businesses to take the lead in deciding how to creatively apply their resources and inviting charities and cross-sector organizations to contribute as partners—rather than waiting for such partners to ask businesses to help in some way.

At present, corporate cash donations represent less than 5% of all private philanthropy in the U.K., though corporations are investing huge amounts more in their infrastructure, staff, or developing in-house expertise. In order for business social action to have a meaningful impact, it thus needs to focus on creatively applying these much greater and more unique resources.

Arriving at a truly meaningful business social action platform however does require considerable energy from across the business and its leadership. It is not for the faint of heart, though companies such as Unilever have already taken bold steps in this direction through moving social impact away from a separate department or function and into how they mobilize resources and plan across their business.

We believe businesses of any size or industry possess unique talents and capacities that can be applied toward social change as much as toward making profits. We also believe today’s business leaders are ready to make the leap into the next stage of CSR—to create a world in which the distinction between businesses and social businesses disappears, and the economy becomes dominated by innovative organizations pursuing profitability, sustainability, and social progress together through their work.

The task today is to convert laudable aspirations into meaningful platforms. We hope to challenge businesses to do this thoughtfully.

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