This trend of mixing social and commercial goals has been a long time coming. It is impossible to operate as a business without considering significant social change in the operating environment, and how your organisation will relate to those changes. Many businesses are jumping to the front lines and advocating for social issues – as a result, they are stepping into the domain of social advocacy once left to NGOs. They would do well to learn from their experience in this field.
Businesses that ignore social issues are following the economist Milton Friedman’s famous, outdated advice that business’ sole social responsibility is to generate profit for its shareholders. This approach used to be the norm. The three sector approach, public, private and non-profit, assigns the responsibility for social change to the first and third sectors. From this perspective, engaging with social issues is too risky for businesses, might alienate some investors and customers, and is, frankly, none of their business. While some leaders and organisations still hold this position, others are taking a very different approach.
A recent case in Ireland was the marriage equality referendum, held two years ago. Businesses took a stand on the issue of LGBT rights, advocating a "Yes" vote – to legalise gay marriage. The Irish business association, IBEC, claimed that Yes was “Good for business, good for employees and good for Ireland.”
In retrospect, at least, this was a fairly safe issue. All the major political parties endorsed the Yes vote, and opinion polls showed a favourable outcome. Many Irish businesses already had equality policies, so marriage equality followed as a logical extension of those principles. But it was quite radical that businesses advocated any position on a social change that was pending a referendum – particularly one that ran counter to an influential and dominant institution, the Catholic Church in Ireland.
History, of course, offers numerous examples of socially responsible business, long before the term “corporate social responsibility” existed. Guinness, for example, built homes for the poor and provided nutritional and medical support to its employees and their families. Even in Jim Crow America, there are accounts of entrepreneurs practising today’s concept of “giving while living” before the term existed – Madam CJ Walker, for example, was a black female philanthropist who built an international beauty company that reinvested profits back into the community, educating and empowering black women especially.
More recently, businesses have engaged with environmental issues, in some cases because they were pressured to, in some cases following a catastrophe, and in other cases because their founders were also environmental activists. But what about social issues, which are highly charged and politicised, and riskier to take a stand on? These issues might not be directly related to business, as is environmental impact.
A fairly new phenomenon is the blurring of boundaries between sectors. Rather than three separate sectors (public, private, non-profit), organisations are seen to sit along a spectrum of the three. For example, social entrepreneurs set up businesses that combine social purpose with commercial interests, and are often publicly funded as well.
Social enterprises are businesses guided by social missions. The trick is finding a creative and powerful combination of social purpose and commercial interest. One fantastic example is Speedpak Group, an Irish company that hires and retrains long-term unemployed individuals through their businesses making rosettes and providing customised packing and storing solutions. They have found an innovative way to operate a business in which social purpose and commercial interests mutually reinforce each other.
It is a growing trend. Whatever role businesses take in addressing social issues, whether advocacy, service delivery or addressing unemployment in disadvantaged areas, it is a rapidly evolving space, not to be ignored. These are not shallow CSR plans, but examples of business as a social advocate.
Walking the talk
When it comes to addressing social issues, hypocrisy is the kiss of death. Experience shows that if you’re going to do values, you’d better walk the talk. Starbucks 2015 “Race Together” campaign, an effort to address racial inequality in the US, began with the idea of writing “#RaceTogether” on cups to open conversations about race. Things backfired when an infographic came out showing that senior executives were white, while low-paid barristas were black.
If a company commits to values, it has to actually believe in and live those values, showing integrity. If not, it can do great damage to a firm’s reputation, alienating customers and employees. It can even damage the cause.
It’s great to see so many businesses making a stand for the social good, but it’s equally important that they carry this out well. They could, for example, find out what the non-profits are doing. Chances are they have been engaged with the issue for a long time, and can share some of the complexities and nuances that take years to appreciate. This will help them to avoid mistakes and follow a basic principle of NGO operations: do no harm.