Corporate Social Responsibility

How purpose can affect your bottom line

Drive revenue, increase customer loyalty, and heighten employee satisfaction

Over the past few weeks, the increase of COVID-19 across the globe has caused disruption to every business and consumer on the planet. The mounting evidence is clear, the widespread economic damage due to the outbreak is taking a toll on businesses.

The global health crisis has sent the stock market plummeting, ramping up the pressure on corporate executives to find ways to regain their footing. Companies of all sizes affected by the shutdown have had to painfully lay-off millions of workers. And economists estimate that the national count of those left jobless longterm by the virus will reach near 4 million according to a recent Oxford Economics report.

Meanwhile, supply chain disruptions and city lockdown orders have meant companies and medical facilities have struggled to keep up with the demand for essential products and services such as hand sanitizer, medical equipment, and cleaning products. During a crisis, governments and nonprofits usually take the lead to navigate social and environmental challenges. However, this is no ordinary crisis. The gap in leadership has opened the door for businesses to take definitive action to solve these problems.

The Rise of the Purpose Corporation

Since the advent of social media and with it the rise of consumer influence on business, there has been an increasing expectation of businesses' role in society. Since the Occupy Wallstreet movement, people have been calling on industry to play a bigger role in caring for their communities. Now the titans of industry have come onboard.

The call for corporations to clarify their contribution to society has been made by power brokers such as Larry Fink. In 2018, the Blackrock CEO made waves on Wall Street by asking his portfolio company CEOs to clarify their purpose and contribution to society. Then, in 2019, 200 CEO’s from the Business Roundtable (an association of CEOs of America’s leading companies) issued new guidelines for corporate governance so as to “modernize the principles of a corporation to more accurately reflect a commitment to an economy that serves all people.” In short, it redefined a business’s purpose from just driving profits to shareholders to creating value for all stakeholders.

While sparked by consumer pressure, these perhaps surprising moves can also be chalked up to the recognition that these are not normal times and this is not business as usual. Social and environmental challenges affect the economy and cause the degradation of business’ operating environment. Climate change, for example, has become a defining factor in any companies' long-term prospects so taking action is not only in the best interest of ourselves but our companies. But no crisis highlights this point more than the devastating effects of COVID-19.

Do Well by Doing Good

The directive for purpose-driven corporations has given rise to some changes in the way businesses operate. Charitable donations made by businesses rose by 5.4% in 2018 while individual donations decreased by 1.1%. There is a huge amount of creativity in the way people are choosing to help. Often businesses will donate to or find other ways to support nonprofits that align with their company’s mission and take precautions to ensure that they are supporting the right one.

There is growing evidence that doing good helps to drive revenue by increasing customer loyalty and employee motivation. A 2019 survey in Fortune magazine showed that 72% of consumers believe that a company should be both profit and “mission” driven. Impact Reporting UK reports 87% of consumers said they’d be willing to buy a product or service based on a company’s advocacy concerning a social matter. 88% of employees find work more fulfilling if they are given the opportunity to give back while 65% will refuse a job offer with a potential employer that doesn’t have strong CSR in place.

Advances in technology have also made it cost-effective and simple to launch a business philanthropy program. There is now a broad array of initiatives that can be easily implemented from charitable rewards for customers, to matching micro-donations, to innovative challenges with your team. A corporate contribution can go a long way in the business of doing good.

In this moment of crisis, senior executives have the premise and the business case to make decisions to help the people in their communities affected by the pandemic. There have been numerous heroic acts by corporate executives going above and beyond. While making it happen can sometimes be difficult, there is general agreement that a thriving ecosystem and economy is best for long term gains.

Real Solutions for Real Problems

Perhaps most importantly, we, yes you, business executives can take a moment while we are at home to ponder reinvention. How could we step up to fill an urgent need and bring these principles to life? Donated time, money or products are yesterday's measures. We look to problem-solving and value creation like we do in for-profit businesses.

So how are companies stepping up to help flatten the curve during COVID-19? Some are providing paid sick leave to employees and taking steps to provide similar benefits and financial support to temporary and contract workers too. Others are implementing paid sick leave for the first time. Large restaurant chains are even offering free meals to employees and their immediate families.

What is unique about their responses is that they sought to best fill the needs of people suffering in their communities. Their actions are not amorphous — these are examples of companies helping to solve real and urgent problems:

  • Netflix established a $100 million relief fund, which includes $15 million for donations to organizations already working to support out-of-work production employees.
  • Bank Of America offers homeowners relief allowing its mortgage holders to pause payments.
  • Chef and restaurateur Jose Andres transformed his restaurants into community kitchens to feed the poorest and most vulnerable.

Ultimately, success should not be measured by how much a business has given away in dollars, product or time, but its ability to solve real problems for all of its stakeholders.