Driven By Purpose
Historically, it was thought that a company’s primary responsibility was to its investors and to “shareholder value” or “shareholder return.” Last summer, the Business Roundtable issued new guidance on corporate governance indicating that to be successful companies should not only focus on short-term profit margins, but also on long-term relationships with their customers, hometown communities, employees, suppliers, and the environment. It’s not only the right thing to do for the greater public good, but it’s good for business.
All this may seem like common sense, but too often, corporate social responsibility has been perceived less favorably than other business metrics. This is now changing. The updated recommendations, which urge companies to demonstrate values driven purpose, reflect studies that show customers admire and do business with sustainable and socially responsible companies.
In a recent study of 7,020 people in 14 countries, IBM and Morning Consult found that 80% of global respondents agreed with the statement that corporations have a responsibility to prioritize their employees, the environment, and their community as much as they prioritize delivering profits to their shareholders.
One of the largest drivers is creating quality jobs and skills and investing in the workplace. The fast pace of industry change and technical disruption across society demands a new focus on skills development and employee retraining. Programs like SkillsBuild and P-TECH are bringing the private and public sector together to come up with new structure changing solutions to today’s skills challenges.
For companies looking to expand their general brand favorability, the largest driving force of positive public perception globally is for businesses to incorporate environmental consciousness into their mission and values, with 78% of respondents saying they would feel much or somewhat more favorable toward an environmentally responsible corporation.
Nearly all agree that they are more likely to buy from companies that not only care about profit margins and shareholder return, but also demonstrate responsibility to their communities, suppliers, employees, and the environment.
Even with this valuable feedback from the general public, which suggest the kinds of social responsibility initiatives that are most important, companies may not know how to create such programs. To that end, in a new white paper, IBM suggests how companies might best design their programs for social good.
First, CSR programs can’t be an optional afterthought that has nothing to do with a company’s business model and core products and services. This makes their CSR efforts sustainable and scalable, and helps retain top talent. Second, companies need to place beneficiaries of their CSR programs — the “users” — at the center of their CSR programs. And finally, companies need to co-create and collaborate with internal and external stakeholders early and often during the CSR initiatives development process. Following these principles are more likely to produce resources for social positive impact that are useful, durable, designed thoughtfully, and truly address a critical societal need.
We are lucky at IBM in that corporate social responsibility is built into our business. Done right, any company’s CSR programs can attract the attention of socially and environmentally conscious clients, employees and suppliers, while truly making the world a better place.