Business With Purpose: Combining Efforts to Achieve a Greater Good
Today’s brands have come to understand that it isn’t enough to just make profits, to expand their market, or to establish prestige, there is also a moral imperative to demonstrate that a company cares. The phrase “Business with Purpose” is emerging as a statement of a company’s commitment to step up and to demonstrate concern or interest attached to something that is considered socially important. This might include topics ranging from global warming and forced labor, to more community-related issues such as the “me too” movement, or racial injustice and homelessness. There are three ways in which a brand addresses their acceptance of a business with purpose emphasis, including corporate compliance, Environmental, Social and Government (ESG), and corporate social responsibility (CSR).
The first approach, corporate compliance, offers effective oversight to protect a company by upholding both internal policies and rules, and federal and state laws. This emphasis helps an organization avoid lawsuits, legal actions, fines and the potential for naming and shaming. Most compliance programs have an inward emphasis, that addresses private and confidential matters. But with new legislation like the California Transparency in Supply Chain Act and the UK Modern Slavery Act, companies are now mandated to outline the compliance steps they are taking to offer transparency for consumers.
The second approach, ESG, refers to a category that is often referred to as “sustainable investing.” This is an umbrella term for investments that seek positive returns and long-term impact on society, environment, and the performance of the business. Within this category, the environmental and governance elements are well-established with a range of standardized metrics available to measure impact. The “S” element tends to be less operational. Most ESG efforts focus on the investment sector to demonstrate that a brand is moving towards sustainability and to reflect its desire to make the world a better place.
Finally, the third approach, corporate social responsibility (CSR), focuses on how well a company is making a positive impact on society and the environment. Examples of CSR include: company donations to charity, including cash, goods, and services, sometimes via a corporate foundation; company-organized volunteer activities, sometimes while an employee receives pay for pro-bono work on behalf of a non-profit organization; and ethically produced products which appeal to a customer segment. Unlike both the corporate compliance and ESG categories, this third component has more of an outward public focus.
Within most companies, each of these approaches tend to have a dedicated set of staff or departments that work independently to address the criteria for the respective method. The justification for this is that they each respond to a different set of constituents. While this separation is common, there is a case to be made for there to be a more unified approach that combines these efforts together to fulfil the criteria for a “business with purpose.”
As an example of how combining efforts can add value, following the 9/11 terrorist attacks against the two World Trade Center towers in New York City, the US government brought together 22 federal agencies to meet the department’s mission to “safeguard the American people, the homeland, and US values.” A sample of these agencies include: U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection, Federal Emergency Management Agency, U.S. Immigration and Customs Enforcement, the Transportation Security Administration, and the U.S. Secret Service. To increase information sharing and operational redundancies, homeland security was set up to “ensure a homeland that is safe, secure, and resilient against terrorism and other hazards where American interests, aspirations, and ways of life can thrive.” This approach allowed the strengths of each of these entities to combine to achieve a more comprehensive outcome.
While there is still a strong case to be made for the independent departments/staff to continue supporting each of the three components outlined above, at the same time, more emphasis on a complimentary, supplementary, combined approach to link each of the efforts also has merit. Advantages include: a more comprehensive analysis of interrelated factors allows an organization to demonstrate its internal and external sustainability efforts from top to bottom, it allows a business to increase its transparency in highlighting that every aspect of their business is open to oversight and scrutiny, and it allows for information and data from all three approaches to be combined, analyzed and used to ensure a robust assurance of business for purpose. In this way, 1 + 1 = 11 instead of 2 if the right consolidation of these factors is achieved because their synergistic effect can offer a significant advantage to those companies that choose to move beyond superficial transparency to full disclosure.
More and more companies are coming to realise that their efforts do not have to solely revolve around maximising profits and expanding their business. There is an emerging trend among companies based in Asia to integrate the idea of “doing something for the greater good” into their corporate DNA. This goes beyond simple web-based CSR statements related to an organisation’s policies and values, to integrating social values into action. This approach has a positive impact on the following areas: attracting young, talented employees who care about social issues; retaining employees; increasing staff morale; attracting potential investors; and connecting with socially conscientious customers.
Doing good and being profitable are not mutually exclusive. In fact, they can be complementary, and can even offer a competitive advantage. Consumers respect companies that take a social stand. In addition, many employees express great pride and satisfaction when their leaders demonstrate that they care. There is something inherently noble about a company taking on important social issues and publicly saying: “We feel that this is wrong and we feel compelled to do what we can to be part of the solution.”
Thus, finding ways to combine corporate compliance, ESG and CSR efforts together in a packaged approach can offer an effective pathway forward to achieve the noble objective of a business with purpose.
Author – Matthew Friedman