Much of the news over the past few weeks has been focused on the issue of climate change. In the run up to the United Nations Climate Action Summit on 23 September, UN secretary-general António Guterres urged governments to present their plans to combat climate change with the goal of reaching net-zero emissions by 2050.
Regardless of directives (or lack of them) from the governing establishments, every business should operate as a force for social responsibility. This is not only the right thing to do – it can also help businesses do well commercially by doing good for wider society and the environment. Many organisations are realising that they should not just serve shareholders but have a positive impact on humanity and the planet, with some joining movements such as B Corporation.
According to research conducted by Reputation Institute, a New York-based global consulting firm, our decisions to interact with a specific company as customers, employees or investors are driven 60% by our perception of its reputation and only 40% by our perceptions of the products or services it sells. Additionally, employees working for socially-responsible companies are more engaged and there is ample research evidence on the benefits to organisations when engagement is high.
One example is US cloud computing company Salesforce. It gives 1% of equity and 1% of all employee time to NGOs, so far having given $75 million to support wider society. And its revenue has been increasing steadily.
Another well-known example is Unilever and its former CEO Paul Polman who went on a mission to substantially grow the company while reducing CO2 emissions. Engagement scores increased from 50 to 80 and share price increased by more than 300% during his 10-year term.
Leaders and organisations need to shift their mindsets and organisational cultures to new ways of working that are more focused on people, purpose and responsibility towards the wider society and planet. Organisations that do not get this are largely focused on short-term profit maximisation and it is rare for them to show responsibility towards wider society and, when they do it, is done to fulfil legislative obligations. Employees do what is expected of them to address social and/or environmental concerns and follow the rules and procedures, but they would not normally start their own initiatives related to corporate social responsibility (CSR).
On the other hand, there are organisations that have social and environmental responsibility embedded in their DNA. In those businesses the approach to CSR is authentic. Employees often start their own initiatives. They save the environment because it is the right thing to do, not because they are obliged to. They get involved in charity support because they genuinely want to make a difference to others.
In some highly-evolved organisations the desire to make a difference for humanity, save the planet from pollution and conserve energy becomes the reason for their existence.
Organisations need to be socially and environmentally responsible for both human and financial reasons. That is the only way forward to achieve a prosperous future for individuals, society at large and the whole planet, and leave a better world for younger generations.
Vlatka Hlupic is professor of leadership and organisational transformation at Hult Ashridge Executive Education and CEO of The Management Shift Consulting
