by: Jennifer Rice
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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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."
- 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."
- 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%).
- It's the right thing to do. You spend most of your life sitting behind a desk; why not make that time worthwhile?