Business success increasingly is a product of being a good corporate citizen. As a growing number of companies are learning, integrating social and environmental goals into their business strategy can yield marketplace returns and boost shareholder value.
These trends reinforce years of research that consistently has found that socially responsible companies do a better job attracting employees, customers, and investors, and keeping them satisfied and wanting more. A 2008 Cone Corporate Citizenship study found that 85% of Americans had a more positive image of a product or company when it supports a cause they care about. Nearly 90% of Americans stated that it is important that business, government, and nonprofits collaborate to solve pressing social issues. And 79% of Americans said they would likely switch from one brand to another if the other brand is associated with a good cause.
A key way companies are becoming more socially responsible is by being more strategic with their philanthropy.
In the past, many companies tried in a general way to keep their philanthropy in sync with the focus of their business. A food manufacturer might use its corporate giving to support a food bank or food pantry, for example, or a power company might support environmental causes or education in math and engineering. Successful companies place a high priority on solving business problems. Whether developing a new product, service or market, or addressing such issues as production, distribution, marketing, finance and human resources, companies look for solutions by using their best thinking, applying sound business processes, and investing the resources that are needed.
In recent years, however, rather than simply treating their philanthropy as a marginal asset to merely generate some positive publicity, many companies have recognized that philanthropy can be a valuable asset to help address significant business problems.
Using an approach known as “sustainable value creation” — a concept developed by the Committee Encouraging Corporate Philanthropy in partnership with McKinsey & Company and Accenture — companies begin by identifying a social or environmental problem that represent an obstacle to their business. They then use their business processes and invest their resources to develop a philanthropic strategy that will put their corporate giving and volunteerism to work in helping to address the problem. That philanthropic strategy is soon built into their overall business strategy. And they often form long-term partnerships with nonprofit organizations with expertise in the issue.  It’s all about redirecting business efforts in a way that both makes money and empowers communities.
A powerful example appearing in Accenture’s “Business at its Best” report is of Pepsico supporting corn farmers in Mexico in order to improve the quality of corn supplied back to them while creating economic benefits for small farmers and raising local community living standards. Another case study focuses on Novartis’s establishment of a system of health educators in rural India to support improved access to medicine. A third chronicles S.C. Johnson’s Community Cleaning Services program based in Kenya which teaches locals how to sanitize public and shared lavatories — effectively reducing preventable, sanitation-related deaths and diseases. All of these initiatives bolster business while stimulating local economic growth and increasing health benefits.
Such integrated approaches can yield multiple returns on investment. Business improves. Shareholder value increases. Customers and employees are happy. The world becomes a better place. And philanthropic resources are highly productive. As reported by faculty at Harvard Business School, point blank, “Firms that embrace corporate social responsibility practices significantly outperform rivals that don’t embrace those practices, as measured by both financial and stock market returns.”
In a global marketplace that has become fiercely competitive, companies no longer can afford not to make the most of every resource at their disposal. By striving for social responsibility and treating corporate philanthropy as a strategic asset, companies can do better on their bottom line by doing good in the world.