Corporate Social Responsibility and creating shared value have shifted from being PR, media and marketing buzzwords to legitimate challenges facing businesses. Innovative and progressive companies are taking the lead and changing the way they are getting involved in social and environmental issues.
Annual lists of the world’s most innovative companies and leading global CEOs published by FastCompany, HBR and other think tanks are dominated by those that integrate social causes into their core business and corporate strategy. Social media has intensified the pressure on business leaders to make the right strategic move and has put them in the spotlight even for everyday decision making.
The historic UN Summit of September 2015 established the 2030 Agenda for Sustainable Development and the adoption of the 17 Sustainable Development Goals (SGDs) that went into force on January 1, 2016, stimulating action from governments and businesses to address five critical areas of importance:
Research has shown that businesses that proactively address social and environmental challenges stand to benefit in many ways:
- Consumers—there’s a growing concern among consumers who demand that companies actively participate in solving social and environmental issues. They want to see more of the products and services they consume support social causes; this increases their affinity and loyalty for a product or service and gives a positive image for the company. Consumers these days switch to companies or brands that support the causes they care about. But it is not just lost business that should concern companies. Consumer activism is on the rise; consumers are quick to take to social media to voice their opinions, boycott brands with irresponsible business practices, and encourage others to do so.
- Talent—it goes without saying, a business’s greatest asset is its people. A company’s participation in addressing social and environmental issues has become an important factor when people look for jobs. In today’s competitive job market, companies need to do more than just offer attractive paychecks and a plethora of perks to attract top talent, they need to show future employees that they care about social and environmental issues. Volunteerism, activities that benefit society or the environment, and companies with values like my own are what younger people are looking for when searching for a job. Studies have shown that people are willing to accept a pay cut to work for socially responsible companies. Social responsibility and creating shared value is changing how businesses are built and how they are perceived by the public. Furthermore, employees perform better on the job when they are also engaged in social causes on behalf of their employer. It boosts morale and loyalty, drives better engagement, and improves employee retention—all critical factors that enhance a company’s business efficiency, performance, and ultimately, its bottom line.
- Investors are attuned to sustainability and social issues; they are more concerned with how their investments are being put to use these days. Companies with strong social and environmental protection values are likely to have a high degree of transparency; those that don’t are considered poor investments and more likely to be left behind, and as a result perform poorly. Strategic focus on social and environmental causes shows that the top management recognizes the impact of non-financial issues on a business’s enterprise value and is seen as a good investment. Furthermore, impact investing is a growing trend among angel investors, venture capitalists, and even major banks that have created sizable impact investment funds. Impact investing is expected to grow exponentially in this decade, investors are proactive in their intention for positive impact and are constantly looking for businesses that can prove social impact.
The Sustainable Development Goals serve as a good guideline in helping businesses focus on what needs to be accomplished to solve the world’s challenges. Creating shared value is becoming an integral part of how businesses operate; the strategic actions they take have a long-term impact on their customers, employees, shareholders, investors, the environment, and society at large.
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