Where are you on the journey?
I have a penchant for simple models and frameworks. In developing a presentation recently I used what I perceive as a three stage evolution of the corporate responsibility journey; (1) how we give it away, (2) how we spend it and (3) how we make it. The “it” of course is money.
Stage 1; How we give it away. The traditional mode of corporate responsibility delivered through philanthropy, community investment and volunteering. We make a profit and then we find ways to give it away for the good of society, sometimes referred to by the phrase ‘giving back to the community’, which carries the unfortunate (and I hope incorrect) implication that we took it away in the first place. Strategic philanthropy is an enhancement in which giving is aligned with core business objectives and competencies.
Stage 2; How we spend it. All the ways in which we spend money. These are the realms over which we have the most direct control. This includes environmental management of our operations, energy and carbon footprint reduction, HR related issues such as diversity and employee wellbeing and business practices such as bribery and corruption. Another component of Stage 2 is looking along our supply chain (where we also spend a lot of our money) and influencing our vendors to align with our values.
Step 3; How we make it This is where the most advanced companies are now exploring as they build sustainability into their core strategy for making money. Unilever, P&G and GE come to mind. Stage 3 is encapsulated by the concept of Creating Shared Value (CSV); identification of opportunities to make money at the intersection of profit and positive value to society or environment by analyzing the financial, societal and environmental implications of an investment and prioritizing those with double or triple bottom line benefits.
The challenge for Step 3 is how we address the dilemma of what to do where profits and positive value to society do not intersect. What to do if portfolio components or potential investments are delivering a return for investors but do not bring net positive societal/environmental value. Perhaps in software terms this is Release 3.5. Status; ‘under development.’