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Doing Good Makes Good Business Sense

The capitalist system has flourished for centuries. Businesses succeed based on their ability to manage resources, people and production processes and find customers to consume their products and services. However, we are now entering an age where resources are no longer in abundance. The environmental impacts of climate change are alarming and companies are widely perceived to be prospering at the expense of the broader community. It is time for new way to view capitalism; society’s needs are large and growing, while customers, employees, and the next generation of young people are asking business to step up.

Local, national, and global problems cannot be solved by governments and not-for-profits alone. Many believe that businesses will have a greater impact than any other organisation or government in solving society’s biggest challenges. These people and businesses are not dreamers with unrealistic expectations disconnected from the reality of running a business. They are CEO’s of major corporations and successful companies -big and small- around the world. And the economic benefits of doing good as a part of your business model is proven. Nielsen’s The Sustainability Imperative, shows global consumers say they will pay more for sustainable consumer brands. The evidence is clear: sales of consumer goods with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%.

Moving Away From the CSR Model

There is a major shift away from Corporate Social Responsibility (CSR) programs. These were, and in many ways still are, ways for companies to give back while maintaining the mentality “deliver shareholders returns at any cost”.

Unilever is aiming towards bringing safe drinking water to half a billion people around the world by 2020. This is not philanthropy, rather a part of a global strategy. Fifty-five percent of Unilever’s global revenue now comes from emerging markets. It’s imperative that they ensure healthy communities, not just for the betterment of humankind, but to ensure long term business growth.

Evidence Supporting Business as a Force for Good

Here it is worth noting that it makes good business sense. A business needs a healthy community to create demand for products. A community needs successful businesses to provide jobs and feed the economy. From a strategic standpoint a successful brand needs to create a value proposition that gives it a competitive advantage. According to another study , 55 percent of global online consumers across 60 countries are willing to pay more for products and services from companies that are committed to positive social and environmental impact. This provides a pretty compelling case that doing good is attractive to customers and can differentiate you from competitors.

The Giving Numbers report found “CEO’s identified employees as the most important stakeholder influencing decisions to expand community investments.” Reports show that employees want to work for companies with good values. Many companies link giving budgets to business performance—among companies giving at least 10% more since 2010, median revenues increased by 11% while revenues fell 3% for all other companies”

Strong Governance & Certification

One way to ensure companies scale up while retaining commitment to their mission and values is through a structured and legitimised governance structure. One certifying body that is growing around the world and here in Australia is B Corporation. Through their certification process companies can measure, track, and improve their impact on people and the environment. Becoming a B Corp is more than a statement. It is a commitment at the heart of business to not cause harm to people or the planet in the process of doing business.

In Australia, the social enterprise sector is on a rapid growth trajectory. There are around 20,000 social enterprises operating across Australia. A quarter of these are located in Victoria and the majority, like most businesses, are small to medium sized enterprises (SMEs) with less than 200 employees. They are showing that small businesses can create an impact within our society, while being efficient and profitable at the same time.

The Main Point

We live in a hyper connected world that is confronted by very real issues of poverty, access to education, basic health, scarcity of natural resources and climate change. Business has the power to positively impact these societal issues, at the same time as creating profit and ensuring sustainable long term growth. It’s about delivering to all stakeholders (customers, communities and future generations), not just shareholders.

By Rusty Benson | Director

Image by Volkan Olmez