Why you should care?When we buy from and build socially responsible and sustainable businesses, we all benefit.
by Cindy J Lin
As we slowly return and adjust to a new way of doing business, it’s even more imperative we make choices that matter. We hear more and more about businesses or brands who are socially conscious or sustainable. But, what does this mean and how do we define a social good business?
About two years ago, I started HOVE Social Good Intelligence, a social impact tech company using integrated data analytics to connect people to social impact metrics. The goal was to incorporate interdisciplinary data, business activities and consumer behavior to show the net positive impact from our collective sustainable and community driven habits. We identified the growing market gaps between consumer desires, available goods and services offered, and evaluated the data needs among social or purpose driven businesses. Consistent with many survey studies, we observed consistent consumer demand for businesses to address social and/or environmental problems. Goods and services that describe their social or sustainable activities appear to outperform the growth and sales of conventional products.
A myriad of certifications and high level large company assessments, such as Corporate Social Responsibility (CSR) Reporting exist to evaluate how a business conducts its manufacturing and financial operations. In theory, this is an important and necessary activity for any business to self-assess and ensure its operations are efficient and responsible. Many large corporations complete these assessments annually and make improvements or decisions that better meet their business goals. However, to date, there are no set of standards on how a company self-reports or self-evaluates. Often, CSR reports are completed for investors and shareholders, and may or may not include worker, social and environmental practices that support a better society or planet.
An accessible, simplified and targeted social responsible certification is the B Corp Certification. This certification is helpful and evaluates a company’s governance and how it treats its workers, community, environment and customers. Although any company can take the B Impact Assessment, the certification requires a third party audit to confirm the company assessment results.
As a social impact tech company, we have spent an enormous amount of time evaluating what can be better for consumers as they evaluate their purchase choices. Companies getting certified themselves is important (e.g., USDA Organic, Leaping Bunny, etc.), but the challenges for businesses are potentially huge. Most certifications or seals of approval require significant time and resources. In fact, our review of approximately 100 certifications in the social good space showed that some 60-70% of them require a fee or cost of some kind. And although this makes sense, because it costs money to hire a third party consultant or dedicate staff to process paperwork, it becomes another cost for businesses. And when you are a small to medium sized business trying to survive and keep up with the competition, it may not be cost-feasible for the business (versus offering other benefits or decent salaries for example) when it is working to make consistent and reasonable profit margins.
Another challenging obstacle for businesses is determining how best to communicate its achieved certifications to their existing or potential customers. People may not recognize, understand or have the time to research the hundreds of certifications, labels or seals of approval, and what they mean.
To simplify the process for consumers and businesses, we developed the Social Good Optimization Data (SoGood) Assessment tool to clearly define what it means for a business to do good for people and the planet. We investigated in depth the key attributes of a purpose-driven business and evaluated the many diverse ways these businesses make a positive impact in the world. After assessing over 1200 businesses, we discovered that social good businesses incorporate two conceptually related areas: giving back to a community and adopting sustainable practices.
A sustainable business is one that adopts socially and environmentally friendly practices to minimize harm and/or improve the state of our natural resources, which would directly benefit our profits, planet and people.
A give back business is one that adopts a practice of giving back to the local or global community in some way. This can include dedicating a portion of the profits (e.g. percentage or set amount) to a charitable or local community organization. The overarching goal of giving back to the community is to fill an observed gap in our society and ensure that we grow and thrive across all sectors. The areas of giving back can cover education, hunger, health, job opportunities, advocacy, and so much more.
In fact, when we reviewed businesses and their positive impact activities that go beyond their business operations, we find businesses have unique purpose-driven goals, all centered around building social good. This is a universal trait. Our detailed assessment of purpose-driven businesses show that every social good business incorporates three primary principles.
(1) incorporates social responsibility in its DNA (i.e. mission, vision, strategy, business design);
(2) connects its purpose-driven goals into concrete practices (e.g. gives back to the community, adopts sustainable practices, partners with organizations working directly to address a social challenge); and
(3) translates its positive social or environmental impact into metrics and/or impact stories transparently.
In 2020, BlackRock CEO, Larry Fink, overseeing $7 trillion of assets, announced he will make investment decisions with environmental sustainability as the core goal, and will drop investments that are sustainability risks, including coal producers. He states, “awareness is rapidly changing and I believe we are on the edge of a fundamental reshaping of finance”.
In a time when many of our societal problems still persist and when even large corporate entities see the human, environmental, and economic benefits of shifting our traditional commerce towards a sustainable future, isn’t it time that all businesses, small to large and organizations, start changing the model towards social good? Evidence continues to show that an invested and well-planned future means a thriving economy and improved human well-being.
In a period of uncertainty and economic strain, here are critical reasons for why building a social good business creates real competitive advantages.
If you are a business, small, medium or large, it’s important to meet your customers’ demands. And savvy consumers these days demand quality and purpose. If you are a consumer, push and demand more from your brands and companies. It works.
Dr. Cindy J Lin is the founder and CEO of HOVE Social Good Intelligence. She previously worked at the US Environmental Protection Agency solving tough environmental and scientific problems encountered on national and international projects.
HOVE Social Good Intelligence, a unique tech for social impact and data analytics company, created Hey Social Good. Hey Social Good is committed to helping consumers easily find and rank the best companies and products that are helping the planet and people thrive.
Keywords: social good, social responsibility, business, sustainability
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