Nearly 200 chief executives from some of the world’s largest companies met in August as part of the Business Roundtable. Discussing the most pressing issues facing modern corporations, their manifesto signaled a departure from old-school corporate philosophy. Its primary message? Shareholder value isn’t everything.
Regardless of how far-reaching their call for change is, the reality is that consumer demands and shareholder demands are often at odds. Ignoring the former to appease the latter is a recipe for disaster.
When Dollars Don’t Make Sense
Profitability is no longer a matter of selling good products and making sound financial decisions. Today’s consumer-driven marketplace — increasingly wary of corporate motives — rewards transparency, authenticity, and benevolence. It penalizes companies that don’t live up to these values.
As society grapples with issues like income inequality and environmental degradation, companies have found themselves needing to prove they care. For some, this means rethinking partnerships, processes, supply chains, and entire business models. For others, it means doubling down on marketing and PR messaging. But for nearly all, it means implementing corporate social responsibility initiatives. They have to demonstrate their commitment to employees, consumers, and the planet — even if it could mean smaller shareholder payouts.
Elina Tang, a marketing professor and consultant for the American Council on Education, believes these initiatives are now a cornerstone of good business. “Today’s consumers want companies to be honest and transparent with what they do,” she says. “In addition to demanding products or services that are accountable for social and environmental impact, they are becoming more aware of the importance of CSR and are eager to be a part of it.”
Companies able to show the world that their business decisions are grounded in shared values stand to build stronger customer relationships. Ignoring consumer perceptions risks losing customers. If you haven’t given much weight to corporate responsibility, it’s time to show the world you care. Here are three ways to do that while improving your business:
1. Pursue value-aligned partnerships.
Your company is only as good as the company it keeps. Any business supporting a cause should start by partnering with organizations fighting the same battles. One way is by establishing long-term community partnerships with charities and nonprofits that share your values and concerns. Partnering with reputable organizations to address societal issues can create valuable business opportunities. It’s equally important, however, to cut partnerships not based on shared values.
Patagonia did exactly that with its announcement that it would no longer produce co-branded products with environmentally unfriendly firms. The company wants to be a beacon of environmental stewardship, making it selective about its corporate partners. By focusing on organizations prioritizing sustainability and social responsibility, the apparel maker is sending a strong message about its priorities.
2. Invest in education.
Generation Z is most likely to spend its money with brands supporting social causes. Gen Z is also the workforce of the near future and part of the solution to the oft-discussed skills gap. With businesses facing a critical shortage of STEM talent, advancing science, technology, engineering, and math education is a good cause — and good business sense.
The Intel Foundation, a nonprofit funded by the Intel Corporation, sponsors programs like She Will Connect to further STEM education among girls. It demonstrates how a company can effect change among young people while promoting core values like innovation and technological expertise. Linda Ingersoll, chief engagement strategist at MDR, the education division of Dun & Bradstreet, believes corporate initiatives like these yield lasting results. “Lighting the STEM spark at an earlier age for skills that will be in high demand for the foreseeable future is one way you can support CSR initiatives, teachers, and their students, while contributing to your workforce pipeline,” she says.
3. Make a social cause your differentiator.
Donating to and supporting social causes benefits society, but it also generates consumer goodwill. Modern consumers want to do business with companies that share their values. That’s why businesses built around a specific mission — beyond shareholder value — often have an easier time attracting customers.
Snack food company This Saves Lives, co-founded by actress Kristen Bell, is on a mission to end childhood malnutrition. For every snack bar it sells, it donates to areas most affected by malnutrition. From marketing to packaging, everything centers on fulfilling this mission, making its granola bars stand out among similar products. That’s good for business — and ends up being good for everyone.
Corporate social responsibility isn’t a fad. It’s a consumer demand extending to virtually every company. Luckily, there are countless ways to improve the world while improving your business. If you want to be successful now and in the future, give consumers what they want.