The role of business in society: Has the paradigm really shifted?
12 December 2016
Having worked in the responsible business and sustainability field for almost 20 years, I have been constantly informed by influencers that the ‘paradigm is about to shift’, ‘the tipping point’ has arrived and all businesses are ready to integrate corporate social responsibility (CSR) throughout the value chain – without it ever really coming close.
It is correct that Al Gore’s inconvenient truth opened up the minds of business leaders in a way never seen before, but progression in this area was brought to a halt by the financial crash.
This time, however, I feel that the momentum and recognition of the role businesses needs to play in wider society has never been more on the cusp of something so significant that (over time) traditional business models will be changing to a ‘shared value’ approach - where business successes will have a symbiotic relationship with societal improvements.
I believe that the shift began with an acknowledgment (finally) that despite years of implementing initiatives designed to make the companies more “responsible”, real progress on climate change and other global issues has remained incremental.
The new imperative for business leaders will be to embrace the idea that the viability of their businesses depends on solving the world’s most pressing societal risks or will become a risk to the success of their businesses, e.g. the motor industry not acting quickly enough to mitigate against emissions and subsequent legislation and regulation and insurers realising they must work with government to ebb the flow of climate change or be put out of business for good.
In addition, millennials in positions of leadership will re-think the value of stakeholders, based on the belief that external value (higher profits and better products and services) is created by recognising the interconnectivity of business and community and engaging employees to actively participate in improving both.
This idea is supported by the Harvard Business Review, in a thought piece written by William D Eggers, who asserts: ”A new economy is emerging at the borderlands where traditional sectors overlap. This economy trades in social outcomes, where doing good is as important to the bottom line traditional business models. “
This shift may sound daunting for an organisation that has just started its first five-year CSR or company strategy but will open the door for a more adaptable and agile approach to solving real issues.
Working closely with key stakeholders to understand areas that your business could influence is a first step. In fact, Paul Klein, writing for Forbes, clearly explains that conversation between stakeholders and a company is louder than it has ever been.
”In the face of oncoming activism and regulation, companies have an opportunity to bring more voices to the table and act quicker to issues important to your business,” he writes. They can give you a real insight to the opportunities that are out there.
Corporations are recognising that they are more productive when all sides are able to understand one another’s interests, aspirations, commitments and work. Our clients are asking us more and more to identify the material interests of their stakeholders and use more innovative ways of finding out what they really think.
They recognise that there are areas of social policy which they must address to keep their businesses successful. One of our clients has been so aware of the skills shortage in the local areas surrounding their operations they have developed (with the help of external experts) on-site education and employment centres to future proof their workforces for years to come.
Companies today track and report numerous financial, social and environmental metrics for evaluating social impact. What needs to be included to help move to a shared value model is to adapt reporting models to link business performance to social value creation.
FSG, the US-based social change organisation, supports this approach and believes that effectively measuring shared value starts with a well-developed shared value strategy. To develop such a strategy, companies must identify key social issues to focus on, plan the relevant business activities involved and model anticipated business and social benefits relative to projected costs.
By illuminating the direct connection between tackling social issues and achieving economic value creation, shared value measurement will diminish investor scepticism and ultimately transform how the investment community rewards companies that create shared value.
We have noticed that this trend is being reflected with the clients we work for. No longer are they finding a double-page spread of non-strategic KPIs acceptable, they ask us to define measurement in ways that demonstrate their overall value to society – their total impact.
There are always companies that stand out for the way they approach CSR. Some have adapted shared value as a way to do business and influence the bottom line. TOMS’ buy-one, give-one model is not only a viable way to create both commercial and social value but also a model of social entrepreneurship that is likely to increase in prevalence and power.
Trends in consumer behaviour, particularly in the millennial generation, which puts a high value on social issues, along with the model’s simple yet effective marketing message, provide a way for companies to leverage their core competencies for a social cause.
For example, Dell engaged with the start-up community since its beginning, but the company formalised its engagement through Dell for Entrepreneurs in 2013. This umbrella organisation runs a range of programmes, including Financing for Entrepreneurs, Start-up in Residence and the Women’s Entrepreneur Network (DWEN), which provide start-ups with access to a range of resources, from mentoring to marketing advice and ﬁnancial support.
We appreciate that these examples are mature in their CSR and sustainability journeys and it is a model that not all companies can transform into overnight. However, we at Simply Sustainable believe it doesn’t take too much work to understand your company’s material issues, social impact and the long-term risks and opportunities associated with not acting in the best interests of society.
Simply Sustainable has worked with many organisations to take a practical and business-focused approach to build sustainability into their operations. We work collaboratively with our clients to achieve lasting improvements in their sustainability performance to help maximise long-term growth.
Find out more at www.simply-sustainable.co.uk
By Nicola Stopps, CEO, Simply Sustainable