In spite of the political debate around capitalism and socialism in the United States, more and more businesses are going in a particular direction: toward a focus on social good.
“Conscious capitalism” and “social entrepreneurship” are just a few of the phrases describing holistic business practices focusing on environmental sustainability and fair trade. These are codified by B-corporations and the increasing importance of corporate social responsibility (CSR) as a metric.
Facing the Problems
Climate change. Pollution. Massive income inequality. These world-affecting issues are what “business as usual” has created for our society.
“We don’t have to look further than the last 50 years to see the damage that companies have done to both people and the planet,” says Sandra Nomoto, CEO of Conscious Public Relations Inc. Prioritizing profits over people has always had disastrous effects, and the impact is increasingly apparent in the devastation wrought on our environment, the use of veritable slavery to produce goods and more.
“We’ve exchanged balance, harmony and mutual interests for a system that externalizes costs, plunders natural assets in a race to the bottom, and idolizes individual achievements over working together,” says Alan Majer, Founder of Good Robot. “In short, we’ve forgotten where we’ve come from, and how we got here.”
“For too long, exploitative capitalism has been the model and has used the levers of power to crowd out humanistic forms of capitalism,” claims Jennifer Hancock, Founder of Humanist Learning Systems. “To put it bluntly, people are fed up with exploitative capitalism [and the various forms of supremacy exploitation leads to]… People want companies working for the public good because the ones that aren’t are actively harming us. This is why there is a move away from exploitative capitalism to humanistic capitalism. It’s about survival of the species at this point.”
A Shift in Values
The paradigm of business is changing—and we need it to. Because corporate irresponsibility could be on the verge of destroying the world as we know it.
Recently, there’s been a huge response from the business world to address these problems. Actions like forming B-corporations, social entrepreneurship, cause marketing initiatives, corporate social responsibility and impact investing strategies.
The rapid pace of change is impressive.
Of all the social enterprises popping up in the United States, more than 60 percent have been created since 2006. And 29 percent since the turn of the decade. In the European Union, one in four new companies claim to be social enterprises. 81 percent of companies in Canada now have a social purpose, with 26 percent focusing on employment development and 27 percent aligning themselves with environmental sustainability. Social enterprises in Australia comprise about three percent of the GDP. And 18.1 percent of entrepreneurs in Senegal are pursuing social enterprises.
On the consumer side, the general public is paying more and more attention to the impact businesses have on the world. And they’re more empowered than ever to hold them accountable.
“The growing interest in socially responsible entrepreneurship reflects the shift in our societal values and a greater awareness of the impact we have on the world,” says Net Impact LA’s Co-President Donna Kwok. “People have lost trust that businesses will do the right thing since most have prioritized profits over people and the planet. Consumers and entrepreneurs alike are seeking ways to make a positive difference. By incorporating social good into their business models, new entrepreneurs essentially have an opportunity to right the wrongs of the past and build businesses from the ground up that are both purposeful and profitable. In the current wave of conscious consumerism, entrepreneurs also recognize that success in the future is tied to having an authentic cause or mission and it is something many investors are now looking for.”
“Companies care about social responsibility because customers do,” says Alexander S. Lowry, Director of the Master of Science in Financial Analysis Program at Gordon College. “In this electronic age, consumers are far more savvy and can search for a company’s record and labor practices any time they want. Then, they’ll take to social media to talk about it—using those platforms as a powerful tool to spread the word, positive or otherwise.”
“We’ve seen up to 30% revenue growth for companies when they integrate social impact into the DNA of their company,” says James Citron, CEO of Pledging, a platform that allows Shopify users to integrate charity donations directly into the checkout processes of their online stores. “Making a donation to a nonprofit with every product sold empowers the customer with the knowledge that they are doing something good for the world. In turn, they become more loyal customers, they tell their friends about it, and it ends up increasing sales because the product does something good for the world.”
“Additionally, companies are using social responsibility as a recruiting tool, and prospective employees name a company’s stature in the community as the second most important driver of employee engagement,” Lowry continues. “Millennials are especially focused on CSR. That’s because the millennial generation has lived through a lot of disasters (political, natural and corporate) and feel a sense of empowerment to make the world a better place. What may have started out as a knee-jerk reaction [on part of companies] has become a new business standard.”
Change From the Inside
“I believe the biggest reason pushing businesses to be more socially responsible and conscious come from the employees,” says Ryan Jeffery, Founder & Co-CEO of Insight. “More than ever, employees are looking for an opportunity to contribute to something bigger than themselves and make a real impact. And today, employees don’t just expect it—they are demanding it. Their career decisions are driven towards companies that have the foresight and character to provide it. It’s why IBM gives top employees a month to do service abroad. Employees there are expecting that they’ll have the opportunity to make a real impact (both at their job and outside of it).”
“In the next five years, business movements and networks like B Corporation, Conscious Capitalism, the Social Venture Network, 1% For the Planet, and Fair Trade certification (and the various product certifications) are going to be mainstream and expected of companies,” Nomoto theorizes. “In the next decade, I expect every company to have some sort of social and environmental impact policy, initiative, or program that both consumers and incoming employees will ask about. If companies do not step up in this area, I expect them to eventually go out of business due to consumers redirecting their loyalty, and younger generations of employees opting for more progressive employers.”
“For the most part, people just want to work at a place that provides purpose and an ability to make the world a better place,” says Jeffery. “So companies will continue to make this a priority and change the world in the process!”
The views and opinions expressed are those of the guest author and do not necessarily reflect the views and opinions of MindShift.money.
image credit: Bigstock/AYAimages
Dustin Clendenen is a big picture thinker with an obsessive attention to detail. As a writer, editor and publicist, Dustin passionately promotes social good, entrepreneurship and financial literacy. He’s based in Los Angeles, CA and studied writing at Columbia College Chicago.