I came to the whole idea of social impact and business after several frustrating experiences–working for a business lobbying organization that (not shockingly) ran against my values, becoming privy to the status quo inefficiencies of traditional international economic development and suffering alongside my nonprofit clients as they focused more on fundraising and philanthropic realpolitik than constituent services.
I happened on the idea that business can be a force for social change in January 2008 and launched this blog, Cause Capitalism, to catalogue my discoveries and channel my thoughts. Today, two years, eight months and 227 posts later, I’m taking an apt moment to reflect on salient points I’ve learned along the way.
‘Why apt?,’ I’ll ask rhetorically. Because this week I’m leaving Buenos Aires where I’ve spent the past 1o months interviewing entrepreneurs and writing nearly daily on ‘the whole idea of social impact and business.’ I’m moving to Washington, D.C. to work with Ashoka’s Changemakers, and I’m darn thrilled about it. I’ll be working with companies and foundations to launch competitions that source entrepreneurial solutions to some of the world’s social problems.
To be clear, the following list is not a eulogy. I’ll continue to develop Cause Capitalism as a resource for socially driven entrepreneurs and companies (with a new site coming soon). Here are my top-five observations on a macro level (numbers 6 and 7 would be the importance of cross-sector collaboration and long-term investment).
- Socially proactive companies are not a replacement for nonprofits. This came as slow learning to me. I used to think, Ah-hah! If businesses can make a profit and positively impact society then there’s no need for nonprofits. I realize now how untrue that is. There are many issues, sectors and populations that can’t currently (and may never) support for-profit solutions.
- The business case for sustainability is stronger than it was two and a half years ago. Not only are many resources (and disposal of their by-products) more expensive, consumers and employees expect businesses to be good citizens at a minimum and societal caretakers more often.
- Particularly in a business setting, what’s measured is valued. Social business isn’t a moral perk, it’s a strategic approach to sustainable profit. It can make you feel great, but that’s only one of sustainability’s outcomes, which all need to be measured and then communicated and improved upon.
- Transparent authenticity counts most. Yes, transparency and authenticity may be hackneyed words now, but man are they critical (BP is a smashing example of a company that was not honestly committed to sustainability but marketed itself as one that was. It also didn’t act transparently in the wake of the oil spill, hedging facts and shirking full responsibility). If your company is truly pushing sustainability, there’ll be inevitable failures as you test and try new ideas. We all know the merits of failure, so no Churchill advice on learning from it here; just remember: whether your hiccup is public or private, be open and honest about it.
- We’re just getting started. It’s been fascinating for me to see the surge in recognition, expectation and practice of socially responsible business. We have more data from consumers and businesses that reinforces the efficacy of sustainability as a business practice and business as part of the social solution. We have new certifications and structures to support socially innovative businesses, like B Corp and L3C, and a growing pool of businesses are looking for ways to serve basic needs of four billion people at the base of the pyramid.
Know a person or business I should meet or be aware of in D.C.? Drop me an email! olivia[at]causecapitalism[dot]com.
There’s a market at the bottom of the economic pyramid valued at $5 trillion dollars. But the real allure of this market, at least for me, is the opportunity to help its 4 billion people access healthcare, educational and basic living services. How can businesses access this market and how can they do it without exploiting the market’s individuals?
This question led me to Unmesh Brahme who focuses on how companies can become involved in base of the pyramid (BoP) business as a way to alleviate poverty. But what really sold me on Unmesh as an interviewee for Cause Capitalism is his combined experience in international corporate social responsibility and cause marketing (he set up Ogilvy & Mather’s and HSBC’s sustainability programs in India) and emerging economies through work with Oxfam and the World Bank.
Unmesh gave a fantastic interview, sharing a cause marketing campaign he led that took place on farms rather than supermarket shelves, offering up entry points to the BoP market for businesses and speaking about his shifting perspective on sustainability, CSR and management education. It’s absolutely worth a listen. Right-click and download for the MP3 or click the player below.
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I’ve highlighted specific points below, which I hope will draw you into the larger conversation.
- Unmesh led an interesting campaign with Castrol in India. By asking Castrol, What’s your brand problem? he realized that they lacked brand saliency with farmers during draught times (Castrol sold motor oil for farm machinery). Instead of investing in TV, print or radio advertising, Castrol used its marketing budget to help farmers conserve rainwater. The outcome was increased brand awareness and preference among rural communities and increased water supplies.
- Until recently, Unmesh thought that the true mark of a sustainability company would be its elimination of a CSR department. Conversely, he now he sees the need for an executive level CSR/sustainability function (on par with a CFO) to advocate and influence social responsibility, particularly when it may conflict with short-term profit. In one word, this role might be described as a ‘challenger.’ [click to continue…]
There are some myths about social responsibility and business that I need to dispel. There’s too much potential innovation, human fulfillment, environmental and social degradation and dollars at stake to let them linger.
You–reader of this blog and likely social entrepreneur–can spot their untruths. But what about the millions of business in the United States that can’t?
- That think social responsbility is just a moral argument and not a profitable business strategy?
- That label it a marketing trend?
- That think it’s just for the robber-barons out there?
- Or that are intrigued, but think social responsibility costs money?
Can you help me reach them? It’s quick and painless and I’ve signed up to do the heavy lifting. I’ve proposed a panel, Your Business + Social Mission = Happiness + Ka-Ching, at South By Southwest Interactive in Austin next March. Whether my panel is selected and my message reaches these businesses depends in part on audience votes, like yours.
Here’s what attendees will learn:
- Specifically how their company will gain a competitive advantage by having a social mission
- What type of social mission is right for their business’ size and product
- What the best programs to start with are
- How they get buy-in from management or co-founders
- How to be socially responsible without a budget
If you think these are important questions to help businesses answer, please take 30 seconds to vote for the panel before Friday, August 27. If you have time to spare, why not leave a comment and tweet it? Here’s a handy link: bit.ly/Vote4GoodBusiness.
*I wanted to bypass the “I hate to ask…and down with these voting mechanisms, but can you help…” in the body of this post, but it’s true. I don’t take my request or your support lightly. I hope I haven’t spooked you. And thanks.
I’m stymied by another article from The Wall Street Journal challenging the plausibility and benefit of corporate social responsibility. In “The Case Against Corporate Social Responsibility“ Aneel Karnani takes the Friedmanite view that companies are primarily responsible for maximizing shareholder profits.
To make his point that profit trumps social good, he focuses on the relationship between company executives and shareholders, “Even if executives wanted to forgo some profit to benefit society, they could expect to lose their jobs if they tried—and be replaced by managers who would restore profit as the top priority.” This argument is untenable because in reality businesses are judged by more than shareholders–namely consumers. And increasingly, consumers are choosing not to support companies that exploit the environment, employees, suppliers–even customers’ own health. The relationship between Nike and its shareholders was irrelevant, for example, when Nike lost licensing agreements and student groups and advocacy organizations pressured the brand to compensate Honduran workers who lost their jobs when two subcontractors closed their factories. In the end, Nike gave $1.54 million as a relief fund for the workers. Karnani fails to mention these myriad drivers of business decisions. (Although whether this was an act of corporate social responsibility or a case of back-up-against-the-wall is another debate entirely).
What I find more amazing than Karnani’s neo-Friedmanite argument is his belief that CSR is ”an illusion and a potentially dangerous one.” He writes, “As society looks to companies to address these problems, the real solutions may be ignored…. The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds.”
Even if this were true (and I believe we have ample problems that require numerous solutions and partnerships between all sectors), there’s an ocean between using business to save the world and accepting that business bears no responsibility for its impact on society and the environment. Somewhere in this ocean is corporate social responsibility.
Perhaps in the end Karnani and I stand together against corporate social responsibility. He believes it’s an impossible expectation and I believe it’s not enough.
Image credit: Homedir
“CSR in my mind is defunct now… Compartmentalizing the socially responsible is not the way to go. I think the model for starting employee engagement activities has to be embedded in everything you do.”
Richard Branson isn’t the first to make this statement. It’s hardly heretical anymore. Campbell’s Vice President for CSR Dave Stangis seems to agree,
“The mark of success for this generation will be cannibalization of the sector as CSR becomes integrated into a company’s functions just like human resources, finance or quality.”
But is it true? For companies of all sizes, markets and combinations of stakeholders?
Branson and Stangis advocate this approach as leaders within large, publicly traded companies, pointing to fully embedded integrated sustainability as a viable approach for companies beyond the ilk of TOMS Shoes or Ben and Jerry’s.
Until recently, Unmesh Brahme shared their point of view. Unmesh developed Ogilvy & Mather’s and HSBC’s CSR programs in India and worked with Oxfam and the World Bank before that, which means diverse experiences shape his perspective. Brahme explained that up until several weeks ago he thought,
“The real identifier of a sustainable company would be the elimination of its CSR department.”
But lately he views a chief sustainability officer (or comparable position) as necessary to advocate sustainability in cases of conflict with direct profit or stakeholders.
Can a company’s many parts–employees, management, green teams and external stakeholders– push forward sustainability together, or does sustainability need an internal champion whose unequivocal role is to stand up and fight in times of conflict?
The ultimate aim of sustainability in business is to use it as a strategy to optimize value for all stakeholders (including employees, community or society and environment). Today, there are conflicts of interest that sometimes arise between stakeholder interests, but will there always be? Maybe the statement to make is that sustainability and profit won’t diverge, but instead both grow from the same action. Is that even heretical enough?
How do you engage employees in your company’s sustainability efforts, particularly when you’re just starting out? It can be trickier thank you’d think. In Strategy for Sustainability Adam Werbach reminds us that,
Just as sustainability does not work for businesses unless it serves business needs first, sustainability does not engage individuals unless it first and foremost solves problems they experience in their lives.
So, how can you make sustainability personal and create the best conditions and incentives for engagement?
- Make it voluntary. Forcing people to care about something is a short-cut to resentment and inaction.
- Localize it. What matters to the team, to the community, to your customers that employees can connect to? Sometimes it’s as narrow as distinct employee interests (eating organic or reducing office waste, for example). The more localized you can take sustainability, the more personal it becomes.
- Start with what you care about. To make it personal, start by being personal. Share what issues you’re passionate about and how you first became involved.
- Don’t pretend to know it all. Leadership and communication style is a primary influencer engagement. Inspire and listen rather than preach, scare or guilt. Your first job is to inspire possibility.
- Demonstrate the effect of action. One company piled up a day’s worth of trash to show the potential of what can be eliminated through recycling, composting and product choices.
- Make it a cross-functional effort. Involve people from different departments and seniority levels from the start.
- Publicly solicit, display and respond to ideas. After brainstorming sessions or employee surveys, list the ideas in a public place, respond to suggestions and questions and let employees know why some ideas can’t be implemented.
- Solicit input from outside stakeholders. How have other companies launched successful sustainability initiatives? Are there vendors, organizations or community groups that you could partner with locally?
- Give employees a place to start now. Even if it’s a small step. My grossest criticism of Michael Moore is that his movies fire me up and then leave me with nothing to do with the indignation he’s inspired. I’m left feeling manipulated and hopeless. What can employees do right away to capitalize on their interest and the momentum of the initiative?
- Start small for early success. Hitting your target early on builds momentum and confidence.
- Make it regular. Repeated activities or long-term goals are more inspiring and allow people to connect more personally than a morning of cleaning a park every quarter.
- Reward the most effective departments or teams. (Tying sustainability goals to individual compensation and bonuses is also very effective, but is more involved).
- Build company culture around sustainability goals. Whether it’s office parties, charity drives or 401(k)s, look for ways to align them with the company’s sustainability initiatives.
These are just a handful of tactics and ideas. I’d love to know what’s worked for you. What hasn’t?
Does a history of progressive social and environmental responsibility compensate for recent environmental abuse?
Green Mountain Coffee is staring into the face of this question now with criticism of its environmentally noxious single-use coffee pods that work with its Keurig brewing system. Last year, more than 80% of Green Mountain’s $803 million in sales came from the nonrecyclable, nonbiodegradable coffee pods. A New York Times article says this year the company “expects to sell nearly three billion K-Cups, the plastic and tinfoil pods that are made to be thrown away — filter, grounds and all — after one use.”
Since its founding in 1981, Green Mountain Coffee has practiced progressive sustainability. It offsets 100% of direct greenhouse gas emissions, contributes 5% of pre-tax profits to nonprofits, runs a biodiesel fueling station and developed a hot-beverage cup with a compostable lining. I regret that I didn’t cover this when I interviewed Mike Dupee, Green Mountain Coffee’s vice president of CSR because I think he would have given it a fair shake.
This brings up several questions:
- Does this discount Green Mountain Coffee’s other sustainability initiatives?
- What’s the proportion of impact to image?
- How should Green Mountain Coffee handle this?
- How does brand acquisition impact the parent brand’s sustainability image?
- Does this discount Green Mountain Coffee’s other sustainability initiatives?
Not at all. $2 million in support of supply-chain communities is still $2 million. But, conversely, the company’s history of social good doesn’t neutralize the environmental cost of its products. There isn’t a sustainability ledger that balances good actions against bad.
- What’s the proportion of impact to image?
This is the ever-delicate balance of impact to image of impact. I argued that Microsoft’s and CVS’ social impacts outweigh the public’s perception of them. But more frequently, brands have a disproportionate focus on image over impact. Reputation is a benefit of corporate social responsibility, but it’s also an objective. [click to continue…]
Microsoft has something up its sleeve.
A roiling, innovative and effective CSR strategy, which, even among CSR wonks, has gone largely unnoticed.
Over the past weeks I’ve had the opportunity to speak with several executives in Redmond, Washington, and Buenos Aires, Argentina, helping to shape Microsoft’s corporate citizenship strategy. Admittedly, I went into these conversations expecting an exchange drenched in PR-ese and trumped up sound bites. Instead, I got an inside look at how Microsoft uses technology and partnerships (with global NGOs, governments, vendors and employees) to drive social change that left me impressed and eager to share some of Microsoft’s techniques.
When I spoke with Dan Bross, Senior Director of Corporate Citizenship, I had two immediate questions:
1) Why hasn’t Microsoft been more vocal about its citizenship programs (from skills training for unemployed Americans to mobile banking in Africa to public cellphone booths in Haiti)? And,
2) What can other companies learn from Dan’s experience building Microsoft’s corporate citizenship program?
Microsoft formalized its corporate citizenship initiative in 2003. Over the past seven years Dan says, “We have chosen to use resources to develop and improve programs, rather than talking about them.” Fair enough. It’s a sound strategy to build the community clinic before cutting the ribbon. Based on my conversations and recent media, it seems it’s ribbon-cutting time as Microsoft looks to raise awareness for its programs and serve as a guide for other companies.
So what can you and I learn from Dan’s experience forming Microsoft’s corporate citizenship strategy?
- Understand your company’s values, mission, products and services.
“Very clearly and early on, we determined that we could make the biggest difference in addressing societal challenges in the areas of skills training, workforce development and education,” says Dan.
- Tap appropriate internal stakeholders to co-create the program.
Since Microsoft’s efforts would focus on skills training, workforce development and education, Dan reached out to colleagues in community affairs and the education and partner groups (which oversee skills training and work with Microsoft’s 700,000 global business partners, respectively) to provide feedback and insight from their work.
- Look at opportunities and challenges to determine what to prioritize then develop a timeline.
Dan and his colleagues developed an annual, two-year and four-year execution plan.
- Focus on the outcomes.
Take workforce development. Dan says it’s easy to count the number of people trained or number of downloads of Microsoft’s curriculum under its Elevate America program, “But what those metrics don’t tell us is the outcome associated with the training that someone may take. Did he or she get a job? Was it a better job? How long did he or she keep the job? Did it pay better than the previous job? We need to understand these outcomes so we can improve the program.” Measurement is tough. Even Microsoft, a company that has a combustible level of combined IQ and resources is partnering with the academic community to look for more effective ways to measure outcomes.
- Develop citizenship/CSR heads in each office (if applicable).
Microsoft has citizenship leads in each of its 110 subsidiaries. Based on Microsoft’s global priorities, these leads develop programs that meet the needs of their local communities. Jorge Vega Iracelay, who directs Microsoft’s citizenship initiatives in Argentina, prioritized job creation through skills training and access to computers. Jorge and his team are working with the national governments, more than 100 NGOs and over 300 suppliers to meet their goal of creating 45,000 employment opportunities and bridging the digital divide by bringing computer access to 38 million Argentineans by 2015. Dan says this approach allows for flexibility; headquarters provides the strategic guidelines, but there’s room for each subsidiary to approach local issues uniquely.
Across functions and regions, Dan was able to thread together a comprehensive corporate citizenship program that guides initiatives in 110 countries and touches 85,000 employees. When you look at the breadth of programs that Microsoft has, of which I’ve just named a few, you realize how impressive this task was. Still, Dan admits it wasn’t without its missteps.
“We did not fully appreciate the interest our employees had in this work [when we formed the program] in 2003. And quite honestly, we did not fully communicate [our citizenship initiatives] as aggressively or as thoroughly as we should have. Over the past seven years we have devoted increasingly more resources to share how our citizenship work joins with our business goals and objectives. Now, we regularly hear from employees who aren’t shy about sharing how they think we can be doing a better job with our citizenship efforts.”
This past week I’ve run into a lot of misconceptions about social responsibility and business. Taken from conversations with professionals “outside the sector” to those influencing it, from articles, blog posts and comments, here are this week’s top-eight fallacies about corporate social responsibility (CSR).
..
- It’s a new movement, so there’s time before my company needs to get involved.
“New” may be relative, so semantically, I’ll let that stand, but standing to the side to observe whether this “trend” will stick is already proving a poor business strategy. CSR isn’t an emotional (or guilt) driven program; it’s a pragmatic approach to maximizing stakeholder value. Here’s a quick look at 15 benefits.
- CSR = a giving or employee volunteer program.
CSR is a comprehensive strategy, of which employee volunteer projects and clothing drives can play a part.
- It robs shareholders.
Used correctly as a strategy to grow a business (through innovation, market growth, secure supply lines, alternative resource use, risk mitigation, etc.) CSR enhances a company’s value and shareholder profits.
- CSR is about reputation and cozying up to consumers.
As the most public-facing side of CSR, publicity and marketing get a lot of attention, and no doubt, they’re key benefits of running a sustainable business. But they’re far from the whole enchilada.
- You can charge more for social good.
Having a social mission can “open the door” and start a conversation with potential customers, but to win the deal, companies absolutely need to be competitive on quality and price.
- Conscious capitalism is a diversion that makes consumers feel they’ve done their part.
This is an interesting argument and while I think specific instances support it, it’s a cop out. Capitalism isn’t the ultimate solution, but it’s a powerful tool to wield societal and environmental change.
- Milton Friedman says….
Every debate on corporate social responsibility includes Friedman’s stance that a business’s social responsibility is to increase its profits. With due respect to the Nobel Prize winner, that was 39 years and 11 months ago, at a time when cars spewed uncapped emissions and doctors endorsed cigarettes. Times have changed.
- Everybody already knows the value of running a sustainable business.
This is my own misconception, which became clear this week as I talked with people outside of my social business cocoon. There’s still a lot of leading-by-example, data collection and storytelling to be done, and while I believe it’s inevitable, I’m all for doing my part to press on the accelerator.
I created Cause Capitalism to show you how to grow your business by incorporating a social mission. 
