BlackRock founder and chief executive Larry Fink’s “A Sense of Purpose” letter to the world’s largest public companies laid down the gauntlet this week, calling for sustained, measurable social responsibility. As when my kids finally have breakthroughs (this week’s included fractions and proper free-throw form), my long-suffering, internal reaction was of the “dear god, finally!” variety.
Fink writes, “society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” Not to diminish my appreciation of Fink’s leadership, but, seriously...FINALLY!
This groundbreaking moment for Wall Street results from evolving societal opinions and a changing investor tax code (and most likely some exhaustion with the government, as noted in Andrew Ross Sorkin’s New York Times piece earlier this week). The private sector is listening to constituents and finally recognizing the business case for doing good.
A recent study reports 87% of respondents in the U.S. agree “business needs to place at least equal weight on society’s interests.” The surge of millennial buying (and investing) power is also affecting the need for social responsibility – 93% of millennials state they would boycott a company for irresponsibility.
We’ve also seen a record worldwide drop in confidence across institutions including government and media. Edelman’s 2017 Trust Barometer found that trust in media is at an all-time low in 17 countries. Only 41% trust government, making it the least trusted institution in half the countries surveyed.
Despite the waning confidence in “the system,” business is viewed as the only sector that can make a difference – three out of four respondents agree a company can “take actions to both increase profits and improve economic and social conditions in the community where it operates.”
The rationale for aligning with cause is stronger than ever. And Mr. Fink is not only allowing public companies to focus on benefitting society, but is actually requiring it. Many companies understandably ask themselves “how?”
This challenge could overwhelm anyone – there are many social issues and customer demographics to consider, many nonprofits to partner with. What’s the first step?
Analyze. As a corporate and celebrity philanthropy consultant, too often I see well-meaning philanthropic companies commit dollars without strategy behind the contribution. To ensure philanthropy is sustainable, a company needs to understand why it is doing it in the first place. Are you an organization with a low-wage workforce and if so, would focusing on workplace health or childcare resources help increase employee engagement and retention? Are your core consumers families who care about education and want to support kids in need? What kind of difference do you want to make and how can you do that in an efficient, effective way? The questions are simple enough, but getting to the answers can be complex.
Beyond the research and strategy development phases, implementation is equally important. There are thousands of non-profit organizations and programs to potentially partner with, hundreds of celebrities to align with to amplify your message, a growing number of communications channels through which to tell your story. The best thing companies can do is commit to the plan in a meaningful way, and adjust throughout the process based on learning and an evolving landscape.
There are also many ways to effect change beyond monetary donations – in fact, we rarely recommend donation without accompanying communication, employee, advocacy and/or product donation strategies. These are important options that vary significantly between companies.
Commitment also means instilling the right infrastructure to maintain your philanthropic campaign and achieve your goals. Even organizations with CSR departments often need to adjust when they reassess and redirect their charitable efforts. And social good divisions that operate divorced from the business unit in terms of goals and resources are typically ineffective.
Finally, consistent evaluation and reporting are essential to long-term success in any business function and philanthropy is no exception. Despite decades of smart thinking and execution in the area, philanthropy is still a bit of a “Wild West” – with that comes constant change. Any company seeking to operate more responsibly should approach it with a business mindset. Traditionally, charitable campaigns have received very little funding and resources because c-suite executives don’t want to cut into their companies’ bottom lines. Thanks to Mr. Fink, companies now have more “permission” to include social impact as a metric for business success.
For more information about Global Philanthropy Group’s services and experience, visit GlobalPhilanthropy.com.