The need for businesses to focus on corporate social responsibility has never been more urgent, and the case for doing so has never been stronger. The quadruple whammy of the COVID 19 pandemic, expanding income inequality, the racial justice movement, and climate change are driving corporations, large and small, across the U.S. and abroad, to reevaluate and strengthen their commitments to addressing these issues.
Employees and consumers alike care deeply about businesses’ commitment to social purpose and community impact and are willing to adjust their employment preferences and purchases accordingly.
The data is clear:
- The 68 million members of Generation Z, born between 1997 and 2012, already make up 24 per cent of the global workforce. An overwhelming 90% of them believe companies must act to help with social and environmental issues and 75% will do research to see if a company’s stated mission matches its actions. One study found that Gen Z is “The first generation [of employees] to prioritize purpose over salary.They read mission statements and values documents to select where they work and want their employer’s values to match their values.”
- After learning a brand supports a social cause and/or is socially responsible, Gen Z consumers are 85% more likely to trust a brand, 84% more likely to buy their products and 82% likely to recommend that brand to their friends and family.
- The 72 million members of the millennial generation, born between 1981 and 1996, already comprise half of the U.S. workforce and, by 2025, are projected to be 75 per cent of the global workforce. Eighty-three percent of millennial employees claim more loyalty to a company that helps them contribute to social and environmental issues and 88 percent say their jobs are more fulfilling when they are provided with such opportunities. Most would take a pay cut to work at an environmentally responsible company.
- 91% of millennial consumers would switch from a product they typically buy to a new product sold by a “purpose driven company.”
- 80% of all consumers agree that businesses must play a role in addressing societal issues; they want companies to take actions which not only increase profits, but also improve social conditions and make the world a better place. A poll of nearly 19,000 consumers from 28 countries, across all demographics, found that 70 percent of purpose-driven shoppers would pay an added premium of 35 percent for recycled or eco-friendly goods.
- Almost 60% of Americans said they would “choose, switch from, avoid or boycott a brand based on its stand on societal issues with which they disagree.” Consumers are four to six times more likely to buy from, trust, champion and defend companies with a strong purpose.
- Finally, purposeful brands grow twice as fast as their competition. Over a period of 12 years, brands with high perceived positive impact have a brand value growth of 175%, versus 86% for medium positive impact and 70% for low positive impact.
Many Ways to Make an Impact
In addition to the holy grail of making cash donations to nonprofits, companies can increase financial support and opportunities for employee volunteerism; establish or increase a program to match employees’ donations; donate employees’ unique skills and services; contribute products and services; host internal drives for food, clothing, books, etc.; expand support for employee mental health care; provide education assistance for employees and their children; evaluate the impact of their own investments on climate change, racial justice and income inequality, and, of course, increase pay and health care benefits.
To be effective in making philanthropic decisions, businesses should develop an articulated plan that will:
- Engage all internal stakeholders – from the C-Suite to entry level employees.
- Consider the views of external stakeholders, including members of the communities it wishes to serve as well as neighbors, customers, nonprofits and shareholders.
- Identify the reasons for giving – comprising a range including employee recruitment, retention and engagement; customer attraction and loyalty, and reputational risk management.
- Align all of the company’s resources, including human and intellectual capital, products, skills and volunteerism, as well as financial capacity, towards philanthropic initiatives.
- Develop a communication plan that incorporates genuine ways to tell the businesses’ philanthropic story.
- Design and execute a strategy for impact including analysis and planning around objectives, deliverables, outcomes and metrics.
In his 2021 letter to CEO’s, BlackRock’s Chairman and CEO, Larry Fink, stated: “The more your company can show its purpose in delivering value to its customers, its employees, and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders.”
This post originally appeared in The Denver Post on May 9, 2021, and is posted here by its author with permission.