Top 10 reasons to align business strategy with social impact

As I've been talking with people about Fruitful's mission to advance "conscious capitalism," it's become clear that social impact is often perceived as a nice-to-have rather than a critical component to business strategy. Here are 10 reasons why you may want to help your company rethink that notion.

1. You're looking for profitable growth. According to Ethisphere, the world's most ethical companies have seen a growth rate twice that of the S&P 500. And A.T. Kearney recently reported that sustainable companies are outperforming their rivals during the downturn. 
2. You need to reduce operating costs. For example, Sun Microsystem's new datacenter in Broomfield CO saves over $1,000,000 in electrical costs and reduces Sun's corporate carbon footprint by 6%. Wal-Mart set a goal to reduce packaging in the supply chain by 5 percent by 2013. Reaching that goal would prevent 660,000 tons of carbon dioxide from entering the atmosphere and save the company more than $3.4 billion.
3. Your industry is contributing to social problems. Tobacco and lung cancer, fast food and obesity, oil and war, autos and global warming... it's tough when your entire category carries negative associations. Forward-thinking players in these categories should be thinking about how to disrupt their own businesses before someone else does. Examples include BP's investments in alternative energy, McDonald's healthy menu and the Toyota Prius. There's definitely still room for improvement, but hey, progress is progress.
4. Your brand or business is capable of being part of a social solution. GE was already in the business of solving energy and water issues, so it wasn't a stretch to create the Ecomagination commitment to become a leader in sustainable energy. Nike's brand is all about unleashing potential through sport, which is an umbrella that easily covers social issues like childhood inactivity.  
5. You're lagging behind committed competitors. In today's transparent world, you don't want to show up at the bottom of an industry review on CSR practices. To be on enlightened consumers' consideration sets, you really need to be in the top 2 or 3. Case in point: ClimateCounts pocket guide shows consumers how to "vote with their wallet" by presenting the best and worst companies across a range of industries in supporting climate change. 
6. You''re in danger of (or in the middle of) a PR nightmare. Nike got on the CSR bandwagon after being accused of child labor violations.  Unilever and Starbucks were more proactive, identifying social and environmental challenges in coffee and tea plantations and transforming potential liabilities into triple bottom-line advantage. Lately the financial industry has taken a big trust hit; look for more alignment with and promotion of ethical business practices here.
7. You're looking for differentiation in a highly competitive industry. Whole Foods disrupted the grocery market. Clorox' GreenWorks is a visibly different option in an overwhelming mass of cleaning products. UK retailer Marks & Spencer's Behind the Label initiative strengthened their brand and boosted profits by 28% in one year. One article notes that "by challenging consumers to 'Look behind the label' M&S has increased pressure on its competitors to demonstrate their own efforts."
8. You want a unified, passionate workforce. GE found that its Ecomagination initiative had a positive and unintended side effect; employees became more energized and broke down silo barriers to help contribute to the cause. According to Kellie McElhaney in Just Good Business, "GE's CSR program turned out to be one of the highest-impact internal unification strategies that the company has ever implemented." 
9. You need to boost customer loyalty. It costs more to gain a new customer than keep an existing customer, so loyalty is one of the easier ways to grow revenue. Loyal customers also serve as a volunteer army of word-of-mouth advocates. Goldman Sachs referenced studies that show consumers identify "being socially responsible" as the most likely factor influencing brand loyalty at 35%, compared with lower price (20%), easily available products (20%), product prestige (3%), company shares your values (14%) and quality (6%).
10. It's the right thing to do. You spend most of your life sitting behind a desk; why not make that time worthwhile?

Comments

[Nezam]

Thanks David Cameron, for responding to my points.

You said, Profit is Important. I agree, totally.

But I was thinking about the evolution of business yesterday. What I found interesting that,far at human history, Business was started with a need to dispose the excess production-when people was much more self sufficient. At that time, they found that, the transaction gave them some money beside disposing the excess goods. Profit was the secondary part at that time.

In second stage, The secondary motive of business, profit, became the focal point of business-which is now. What is the secondary motive of business today? I think doing good to society, that is CSR.

So, what is the third phase? I think, CSR will take over the profit motive. The connected world presents consumers instant access to information. So they can judge the company whether they are good citizen or bad. SO, some business will find it important to be socially motivated, which will ensure their survival, growth and sustainability.

This is just my hypothesis. Don't pay heed to these. Thanks.

[asdf]

fabulous post.

[David Cameron]

With all due respect to your view, Nezam, profit IS important.

Why? Two reasons come to mind.

One, while we can agree that socially responsible actions must be about more than profits, today's business world is all about making the business case for everything. We are ruled by profit and loss. Most corporations need to demonstrate a return to justify the reward of much needed capital from the financial community. Accountability is everywhere. We need to demonstrate value from every activity.

And two, sustainability. By demonstrating the return and reward from social initiatives, one can justify reinvestment.

Money is the HOW of business; but it's not the only WHY! So, yes, I can appreciate your point. But money is still the HOW and we must respect and work within that framework even as we build this notion of "conscious capitalism."

[Nezam]

First things first, Nice Write up!

Second thing is, Your view is very much profit motivated, highly mechanistic-my opinion. why?

in all of your first nine points, you talked about profitable growth, reducing cost, preemptive measure to be the first or improved in race,lagging behind competitors, boosting employee morale, new differentiation horizon, and finally customer loyalty. All of those points of motivation are only for one goal-Profit.

Why doesn't CEO think from some different view point?

you see, Business is the most viable organization after family in human history. sometimes it is proved more viable and stronger than family. Now a days, corporates are considered as "Legal Citizen". So, why they will not act as a human, or think as a human? Human acts both rationally and emotionally. Sometimes, corporate houses need to be irrational. Its for the sake of sustainability of earth, of mankind.

Its time for business to hold more responsibility than mankind. Because they did more loss to environment and affected the whole world more than any other entity.