What distinguishes a successful company from any other?
It is that the former gets satisfied customers first and gets more of them.
Therefore, to become a recognized successful company, you need to develop and implement a strategy that looks towards tomorrow.
Not yesterday; regardless of how positive and gratifying yesterday was.
Learning the lessons of yesterday is highly positive and rewarding; living in yesterday (believing that yesterday was better than today) is highly destructive and is like digging your own grave.
If you understand anything about today and tomorrow’s market trends, you want to become a ‘citizen company’.
Developing a strategy built around true social-oriented behaviors means having a strong promotional tool which may shape a business's reputation, allowing a unique positioning in the market, thus giving an organization a competitive edge.
Although each business has their very own reasons and motives for becoming eco-friendly and sustainable, we will discuss here some of the most important advantages to converting into an even more sustainable-oriented (citizen) firm.
Nowadays, we see more and more companies, startups and well established corporations alike, developing so-called ‘green’ products and services, hence addressing customers’ new concerns and a demand that is getting stronger year after year.
From a niche market only few years ago, green business (also called ‘fair business’) is becoming substantially more profitable, while being already a proven effective marketing tool.
Fortune 500 socially responsible companies: no longer a mystery
Social entrepreneurship is a substantial matter of interest in lots of social and civil organizations and has a significant effect on many parts of the society.
Being socially active, and not only communicating as a ‘green company’ without any real commitment, ensures that prospective customers change into long-term clients and become your best brand promoters.
The great advantage for a corporation to become an active ‘citizen company’ is that most of their workforce become more engaged with their firm, their motivation increases, henceforth enhancing their quality of work which leads to a more satisfied clientele, leading to stockholders getting a continual outstanding return on their investment.
The most satisfying, and in some way surprising, is that green companies’ shareholders – such as suppliers never interested before by fair trade – eventually become more inclined in providing a better service, better rates and developing long-term beneficial partnerships!
In 2014, Fortune 500 companies in the USA and UK alone spent over 15 billion US dollars in Corporate Social Responsible (CSR) activities.
Oracle, Merck, Johnson & Johnson, Prudential are only a few of the Fortune 500 companies who are aggressively investing to become active and recognized citizen corporations.
“Transient investors may not care, but long-term shareholders increasingly see environmental and social governance as a key indicator in terms of investment.
Back in the 1990s, analysts might put a “sell” recommendation on companies with a strong CSR rating as they saw it as wasting investors’ money. But that negative impact has been neutralized in more recent years, and some analysts now view CSR activity more positively,” remarked Ioannis Ioannou of the London Business School (Financial Times, 12 October 2014).
What’s more, up to 34% of Fortune 500 CSR activities funding comes from employees’ volunteer work and fundraising undertakings, hence demonstrating their attachment to such schemes and therefore to their company – which directly reflect into their performance.
If you read nothing else today, read this report on being a socially responsible company
Ten years ago, you could hardly talk about environmental issues or social and ethical auditing in a business environment without being looked at as a lunatic, or as a dangerous activist ready to spend their corporation’s money without any expected return.
Today, the business paradigm changed totally:
Those companies who are managed as per the ‘old fashion’ mode are now negatively considered by investors, as they are seen as not being able to procure secure, well-compensated employment that is significant to make stockholders wealth, as well as to create goods and services which truly satisfy customers wishing to spend their money (regardless of their buying power) in a way that make them ‘feel responsible’:
By purchasing such products, they feel they are playing their part in favor to the environment (green), humanity at large (fair trade), etc.
You now understand better why a continuously increasing number of businesses have taken a heightened interest in CSR.
A new business model, complete with its original marketing and communication tools, tone of voice and more have been developed to better address customers’ expectations:
Therefore, you will conclude that being a citizen company is a new and effective way to be successful and increase profit, as it addresses customers’ new demands and increases employees’ motivation and satisfaction with their employer.
Well, the answer is ‘Yes’.
But also ‘No’.
‘Yes’ for all the reasons we discussed above, and ‘No’ because it is a bit more complicated than that:
“CSR is an old-fashioned idea that needs to be upgraded,” says Eric Orts, professor of legal studies and business ethics at Wharton School of the University of Pennsylvania, and director of the school’s Initiative for Global Environmental Leadership.
“For companies to take CSR seriously, it has to be integrated into the DNA of the enterprise. Companies need to say: ‘We want to make money, sure, but we also care about our effect on society and the environment. And that comes through in the kinds of jobs we provide, the kinds of products we make and the ways in which we use resources.'” (Time, 28 May 2012)
In other words, to be profitable in the long-run, a company that aims to earn the title of ‘citizen’ must build its policies and approaches around a clear CSR understanding and well designed motivating strategies.
Some corporations understood these rules perfectly, and even go a step further:
Do not attract investors that are not into CSR, they say, as your consumers will make you pay dearly.
For instance, Fortune 500’ Unilever’ CEO Paul Polman really spoke the language of CSR as value when he made an ambitious sustainability and anti-hunger plan an investment prerequisite.
“If you don’t buy into this [program], I respect you as a human being, but don’t put your money in our company,” he said (SCSR, 23 March 2011).
According to a Havas Media Lab 2011 report, more than half the consumers surveyed want to reward responsible companies by buying their products.
53% would even pay a 10% premium for those products!
But the benefits don’t stop at the check-out line.
They extend to stock value as well, as suggested by Harvard Business School data confirming that this new species of socially responsible company gets more favorable ratings from securities analysts.
Furthermore, the Harvard report specifically underscores the difference between yesterday’s CSR, which was largely based on gratuity (corporation or its employees give – time, money to charities, etc.), versus today’s model based on impact (corporation develop ‘green’ products and services that have a real impact on people/clients’ lives).
The study notes that the former were often perceived by the markets as “value-destructing” while the latter is now seen to be “value-creating.”
Today’s analysts know that high-impact products generate revenue simply because they work better even as they provide the tools with which society can improve itself.
“It doesn’t matter what you sell. People are looking hard at how you do business and the companies that do it best win the CSR race, ahead of those for whom “corporate giving” is the only index of corporate responsibility,” concludes Richard Levick, named as one of ‘the 100 most influential people in the Boardroom’ (Forbes, 11 January 2012).
Is your company turning 'green'?