In addition to a positive ROI motive, according to Mark Horoszowski at Movingworlds.com there are 7 operationally motivated reasons backed by research for corporate socially responsible actions: 1. Consumers are demanding corporate responsibility. 2. People want to work at companies with world- positive missions. 3. Employees perform better when they engage in socially responsible activities and reporting. 4. Corporations develop new markets and improve operations by building and strengthening partnerships. 5. Social good fosters innovation and collaboration across organizations. 6. It can increase access to capital. (Impact investing is growing dramatically with investors) 7. It is a moral imperative. CSR programs build future capacity which fosters stronger income potential in the future. Measuring only current income generation is a short-sighted management philosophy. Maximizing today’s profit often comes at a cost of lower future income and stability. As the Harvard research shows, corporations that actively participate in social and environmental actions demonstrate stronger income and growth potential than their counterparts that negatively impact the earth and its societies. Not only are CSR investments smart business, they are imperative in promoting the changes needed to ensure our survival. Corporations produce just about everything we buy, use, and throw away; they play an outsized role in driving global climate change. Our corporations are also the sources of income generation for individuals, helping to create the income inequalities and wealth disparities we see today. Change in our world will come from changing expectations of individuals that will in turn drive a change of actions by our corporations. The Triple Bottom Line of Accounting Part of a good CSR program is the creation of a balanced reporting effort. Corporations have adopted the use of the Triple Bottom Line (3BL) accounting method which focuses on three distinct areas of impact: social (people), environmental (planet), and financial (profit). Measures of each area consist of the following: Profit, financial performance – The focus of these metrics is to develop strategic planning initiatives and focus key business decisions designed to maximize profits, while reducing costs and mitigating risk. Purpose driven
leaders are discovering they have the power to use their business to effect positive change across the globe while creating maximum value in their organizations. People, the social equity bottom line – As organizations start to embrace sustainable measures, the traditional focus on maximizing shareholder wealth is being replaced by the credo of creating values for all stakeholders of the company including customers, employees, and community members. This can be accomplished by ensuring fair hiring practices, encouraging volunteerism, or by creating strategic alliances with non-profits that share a similar purpose driven goal. Planet, our environment – Research shows that large corporations have contributed a staggering amount of pollution with over 100 energy sector companies responsible for up to 71% of all industrial emissions. While corporations create the largest impact, they are also at the heart of making positive change. Savvy business leaders have discovered the benefits of reducing their carbon footprint, thereby reducing costs. Adjustments like using ethically sourced materials, cutting down on energy consumption, and streamlining shipping practices are all cost saving measures that have huge impacts on our environment and the bottom line of their businesses. Adopting a 3BL reporting approach may seem idealistic in a world that often emphasizes profit over purpose. Research, however, shows that innovative sustainable companies have proven time and again that it’s possible to do well by doing good. The 3BL doesn’t inherently value societal and environmental impact at the expense of financial profitability; many firms have reaped financial benefits by committing to sustainable business practices. In conjunction with the 3BL a new type of organization, the B Corporation (B Corps), has entered the organizational mainstream. B Corps were first developed in 2007 by the State of Maryland. Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” The State of Wisconsin in 2017 was the 34th State to approve B Corps as an organizational form, thereby legitimizing the balanced business model.
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Center for Business and Economic Insight
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