A few years ago, a plastic bag ban in local supermarkets created waves in Australia. But the fact is, the trend toward social responsibility – and social enterprises – is a global one.
Environmental and social issues in Australia are centre stage, with no signs of fading to black anytime soon.
To complicate matters further, the lines are blurring between who is accountable for what.
Apropos to this, according to Edelman’s most recent trust survey of over 33,000 people in 28 countries, there’s been a “global implosion” in trust.
Government and media are the least trusted, with corporations faring just a tad better.
Regardless of geography, nobody trusts anybody right now—which brings us back to the plastic bag example.
As you likely recall, many were questioning the true intentions of Australian supermarkets. Were Coles and Woolies doing it for the money, or to save the planet?
Must the two be mutually exclusive, or does leadership of a social enterprise demand both perspectives?
No Looking Back.
Harvard Business School’s National Economic Fellow, Rebecca Henderson, claims that the shift happening in the social enterprise space right now is a game-changer akin to the transition from analogue to digital.
It’s not possible to look back for two main reasons:
- The growing numbers of millennials in the workforce persist in demanding social responsibility from their employers
- The painfully obvious inability of government to meet society’s needs in the event of an environmental disaster (think Trump during Hurricane Maria in Puerto Rico).
Still, Henderson cautions her students to put the health of their business’s bottom line first.
Just as you can’t take care of others if you’re unwell yourself, you can’t save the planet if your business goes belly up.
And in fact, research conducted just last year by Tim Hubbard, Management Professor at Notre Dame, reveals that walking this line is a risky endeavour for any CEO striving for social enterprise
According to Hubbard:
“We see this double-edged sword where if the firm is doing well, investments in corporate social responsibility can buffer a CEO from dismissal. But on the other hand, if there’s negative financial performance, it can really set the CEO up for a situation where they could likely be terminated.”
Digest that with this morsel, again from the Edelman Trust Survey: since 2017, CEOs recorded a seven-percentage-point gain in trust.
While it’s not a massive uptick, it’s significant considering trust is so lacking in our world right now.
(Related Article: Many ASX100 Companies Still Don’t Know How To Compete In The Digital Age).
Enter The Social Enterprise.
This could explain why, in part, the ‘no turning back’ mentality recurred in Deloitte’s 2018 Human Capital Report entitled The Rise Of The Social Enterprise.
The introduction to their annual global survey with over 11,000 corporate leaders also warns of “seismic change” away from the profit-driven business as usual.
Deloitte defines a social enterprise as an organisation whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network.
Blackrock CEO Larry Fink’s annual letter to CEOs beats the same drum. Essentially, Fink told them point blank that if they fail to embrace social responsibility, Blackrock will no longer support their investments.
(Related Article: Dirty Truths About VW’s Emissions Scandal).
How that plays out in real-time is anyone’s guess. But, according to the New York Times’s analysis of his letter, his main message was a first for capitalist society.
Companies need to figure out a way to do well … and do good.
Best Examples Of Social Enterprises.
Based on a study released by the Reputation Institute, Forbes gave its annual shout-out to the top 10 companies with the best CSR reputations.
- Lego (on a mission to use all sustainable materials by 2030) and Microsoft (its commitment to enhancing education) topped the list.
- Apple, Samsung and VW all took a nose dive. A culture of secrecy, an exploding smartphone and the remnants of an emissions scandal were to blame for the dips.
A couple of years ago, Fortune held their annual CEO Initiative Event. The topic was … you guessed it … doing well and doing good.
One of the toughest questions asked of the CEOs in attendance was, how can business leaders make a difference?
- JPMorgan Chase CEO Jamie Dimon committed to revitalising Detroit. But Dimon didn’t just write a check. Instead, a team from Chase worked with the city of Detroit, donating its own data tools and resources to aid the city government in its investments and planning.
- Chobani CEO Hamdi Ulukaya described one of the best accomplishments of his career – building a little league baseball field for his local community in the small upstate New York town where he founded his company.
- Indra Nooyi of PepsiCo shared that purpose is now a part of her corporation’s core business versus just a pet project, as it was for her predecessor. In fact, their entire CSR mission is called Performance with Purpose, making that sought-after link between the bottom line and society.
However, you don’t need to be a CEO of a Fortune 500 company to get social enterprise status right.
Developing A Sense Of Larger Purpose.
Still not sold on the power of purpose to fuel your social enterprise?
Check out our interview with Cathy Burke, CEO of the Hunger Project Australia.
In Cathy’s work with leaders in remote villages as well as high-powered boardrooms, purpose emerged as the one necessary component of strategic leadership. She also notes an interesting trend to watch – CEO activism.
And indeed, we saw this play out with gay marriage in Australia last year.
But nothing stunned quite like Mark Zuckerberg testifying before the US Senate this autumn.
Facebook In Hot Water.
Imagine the personal impact of having created a business that spread fake news AND released private data. Both of which impacted Trump’s election as well as Britain’s Brexit vote.
Talk about failing at the social enterprise game.
Moreover, according to a New York Times article published after the trial, the data leak and American / British political implications weren’t the extent of it.
Organisations working in Myanmar berated Facebook for not doing enough to stop the prevalent hate speech known for inciting violence there.
As his company is a dominant source of news and information in Myanmar, Zuckerberg wrote back personally with an apology.
One would think Zuckerberg, of all CEOs, would get that there’s no hiding from public scrutiny in the transparent digital world he helped proliferate.
That corporations are now, like it or not, social enterprises — global citizens whose decisions impact society for good, or ill.
Ah, the irony.
The Deloitte study asks every CEO to “look in the mirror held up by society.”
Do you like what you see?
State Of Your CSR Program.
What’s the state of CSR at your company – pet projects of the C-Suite, or integrated into your core business strategy?
Do your employees understand why it’s important, and what role they play?
Dan Amos, CEO of Aflac, 11-time recipient of Ethisphere’s World’s Most Ethical Companies award, shared this advice on creating a culture that fosters a social enterprise mindset authentically::
- Your culture begins at the top. Building a culture of ethics will not work if leaders are not providing the moral compass.
- Communicate and celebrate responsibility. Regularly.
- You cannot be partially ethical. Because that means you are partially unethical.
Understandably, the urgent need for this culture shift can feel overwhelming for any leader looking to make sound choices for the long-term.
Putting Your Company On Course.
That is, are you doing well and doing good? Consider these 5 questions:
- What are the one or two critical business areas where your work touches society?
- What key opportunities exist for your business, and your community, if only you could creatively adjust the relationship?
- What are the core long-term issues for both sides that can be positively impacted as a result?
- What resources or capabilities do you need to make this happen?
- What are you in a unique position to offer the world should this pursuit be successful?
Remember that leading a social enterprise in Australia isn’t about a quick fix, a PR campaign, feeling good, or looking good. The power lies in the long-term, mutual benefit for every stakeholder involved.
Of course, we can’t all be Mark Zuckerberg with the funds and resources to hire ex-Presidential speechwriters to ease the aftermath of poor decisions.
But we can do one thing that Zuckerberg apparently neglected to do:
Plan for a shared future.