Sustainability to Social Change, Lead Your Company from Managing Risks to Creating Social Value by Bradley Googins and Philipp Mirvis
Recommendation
Psychologist Phil Mirvis and strategy professor Brad Googins exhort business leaders to step up their social and environmental activism, while making their firms better places to work. Using eye-opening statistical data, survey results, and examples from progressive firms and executives worldwide, they illustrate what’s possible and, to an extent, how to do it. Multiple assessments let you gauge your firm’s readiness for action and hundreds of tips help you increase pay equity, office inclusion, and environmental and sustainability impacts.
Take-Aways
- Today’s social, work and environmental change demands a radical response from business.
- Examine how you treat your workforce – you’re more likely now than ever to lose your best people.
- Active support for social and environmental causes presents unlimited business opportunities.
- Replace sustainability goals with regenerative ones.
- Firms committed to environmental and social causes beat their competitors.
- Restore a damaged reputation through authentic commitment to social and environmental justice.
- Profits follow purpose, but you won’t win customers merely by doing good.
Sustainability to Social Change Book Summary
Today’s social, work and environmental change demands a radical response from business.
The world today suffers from persistent racial and gender inequities, rampant disinformation, toxic cancel culture, destructive wealth gaps, and disruption from the sudden shift to remote and hybrid work. In the face of these challenges – and the existential threat of climate change – wise organizations recognize they must change rapidly or face significant consequences.
Consumers, employees and other stakeholders worldwide increasingly demand more from businesses than “do no harm.” They expect proactive advocacy and action from business leaders to right the wrongs of the past.
“A new kind of capitalism must take hold in which businesses, NGOs and governments worldwide work together to address global health, climate change and equitable growth.”
Fifty years ago, economist Milton Friedman told CEOs that their sole responsibility was to maximize shareholder profits. Over the past 40 years, that approach has made the rich richer at the expense of the poor and middle classes. For example, today, 69 out of 100 of the world’s richest “entities” are businesses, not countries. And in the United States, 40% of Americans surveyed would not be able to come up with $400 in an emergency.
Capitalism faces increasing scrutiny. Edelman’s Trust Barometer, for example, found that only 20% of individuals surveyed believe the current economic system benefits them. Worldwide, most people don’t trust business and believe capitalism does more harm than good. A growing number of CEOs now reject shareholder capitalism in favor of a conscious capitalism that takes multiple stakeholders into consideration, including employees, suppliers, the community, the environment and investors. B-Corporations, now in the thousands worldwide, generate returns for shareholders and other stakeholders. In 2019, 180 CEOs of the world’s largest companies pledged their commitment to stakeholder capitalism.
Examine how you treat your workforce – you’re more likely now than ever to lose your best people.
SAS Institute, an analytics software company, provides employees with a 35-hour workweek, free on-site health care, subsidized child care, generous pay, vacation and other benefits. It has competed in the challenging IT space for decades while experiencing only one-tenth of its average industry turnover. Take SAS as a model and support work-life balance. Encourage collaboration and collegiality. Give employees meaningful work, including opportunities to volunteer during paid work hours.
“Employees who volunteer for community service through their employers are more satisfied and have higher commitment than those who do not volunteer.”
Go beyond diversity and inclusion to ensure your employees know they are welcome and belong. Reconsider outsourcing work overseas or relying on underpaid gig workers. Consider how you can support local small businesses and/or employ ex-offenders or other marginalized groups. Bear in mind that American employee-owned firms – which include 32 million employees – earn consistent revenues and profits, suffer less turnover and pay their employees one-third more than average.
Give employees a shared mission to rally around by making purpose a cornerstone of your business. Purpose communicates your vision and values – your reason for being – to customers and other stakeholders. Involve employees and stakeholders in defining your purpose, then communicate it widely and often. For employees to commit and engage fully, they need to know the “why” of their work, beyond profits. Customers don’t buy what you sell, they buy why you sell it. They want to connect what you sell to your societal purpose.
Active support for social and environmental causes presents unlimited business opportunities.
Consumers today pay close attention to the issues that are important to them. For example, almost one-third of consumers assess a firm’s environmental record before doing business with it; 87% purchase products because they identify with a business’ stance on issues; fully 90% expect worthy environmental stewardship; and 70% want to work for firms with a “powerful social conscience.” Between 80%-90% of young workers commit to brands that care about social and environmental issues, whether as consumers or employees. Almost 90% expect firms to take into account the environmental effects of their products.
“Reputation, trust, and other intangibles drive business value.”
Beyond consumers and top talent, virtuous businesses may have greater success attracting investors. Over the past 50 years, the market value of public companies has shifted from an overwhelming emphasis on tangible assets – such as buildings, inventory and land – to intangible assets like talent, innovation and relationships. Active support for social and environmental causes presents unlimited business opportunities. Investors have poured trillions of dollars into purpose-driven social impact firms, and support the green economy, which currently exceeds $4 trillion annually.
Consider Novo Nordisk, a maker of insulin and treatments for diabetes – a rapidly spreading condition, worldwide. Despite earning billions helping people live with the disease, Novo Nordisk made defeating diabetes its mission. Other companies, such as Salesforce, audit their demographics and compensation systems annually to boost hiring of underrepresented groups and to ensure fair pay. Leaders’ bonuses depend, in part, on their progress in achieving diversity and equity targets.
Firms must engage their workforce, invest in worker development, provide good-paying jobs, create sustainable and healthy products, and repair the Earth and its environment. No longer can leaders expect applause simply for refusing to sell tobacco products, as has CVS, or assault rifles, like Walmart.
Replace sustainability goals with regenerative ones.
Firms must identify and pursue a larger, shared purpose that serves multiple stakeholders, including the Earth itself. Corporate leaders, who themselves often earn more in a single day than their average employee earns in a year, must commit to narrowing the wealth gap.
“To maximize your company’s positive impact, rather than minimize its negative impact, calls for a paradigm shift.”
Increasingly, firms replace sustainability goals with regenerative ones. Twenty years ago, for example, Dow Chemical set energy reduction goals and aimed to reduce chemical leaks. In achieving these goals, it saved $5.5 billion and prevented environmental damage. But when Dow’s VP of sustainability sought to extend these goals, stakeholders wanted more; they demanded a radical shift – from looking at the firm’s sustainability footprint to its positive social impact “handprint.” That shift demands a regenerative mind-set.
Many corporate leaders created internal “green teams” to push beyond sustainability and contribute to a thriving society and planet. The shift from footprint to handprint requires an outward focus, too. CEOs and executives must become community leaders and find common cause with other organizations to form coalitions that lead the charge, using corporate influence and resources to help repair society and the environment.
“Sustainability is not sufficient: The planet needs to be repaired, restored and regenerated.”
Today, employees and consumers expect firms to aim big by shifting rapidly to renewable energy sources and engaging in restorative environmental practices, such as replacing forests and wetlands, or helping to remove and sequester carbon emissions from the atmosphere.
Firms committed to environmental and social causes beat their competitors.
The purpose-driven approach – which calls for executives to embrace social and environmental change, positive products, equity and employee engagement – opens new markets and revenue streams, offers differentiation, lowers the cost of customer and talent acquisition and retention, and helps build loyalty across stakeholders. It might also prevent consumer boycotts, employee activism and the forced resignation of founders and CEOs who offend new social norms.
“There is a direct line of sight from producing healthier, socially useful, and environmentally friendly products and services to revenue growth.”
When investor James Rhee became CEO of Ashley Stewart in 2013, for example, the company, which sold plus-size clothing to Black women, was losing market force. Rhee toured the brand’s hundreds of stores in America, emphasizing inclusion and kindness, asking for ideas and listening to the answers. Rhee closed many stores, but revived the firm by reinforcing Ashley Stewart’s culture of supporting minority, inner-city women by extending credit, service and trust to customers and employees who often faced exclusion elsewhere.
Restore a damaged reputation through authentic commitment to social and environmental justice.
Consumers and the media criticized Nike in 2009 for its dependence on low-wage workers in its supply chain who labored under dangerous conditions. Nike has since built a reputation for fair pay, environmental stewardship, social justice, and better and safer work conditions. Perhaps most visibly, it signed ex-NFL quarterback Colin Kaepernick – who took a knee during the national anthem in response to police shootings – to star in a “Just Do It” campaign.
Anyone starting a business should place regenerative capitalism at its core. To navigate challenges, assess trends and market shifts, include stakeholders in re-imagining your future, and emphasize continuous communication and learning.
“Change making companies are turning to regenerative practices that aim to restore and even enhance the world we live in.”
Encourage social and environmental leadership throughout your organization. If total transformation proves too disruptive, start with one component or aspect of the business, such as employee volunteerism, eliminating environmentally harmful packaging or addressing inequities in your workforce. Engage in more generous corporate philanthropy, like Patagonia, for example, which, for decades, has donated a full 1% of revenues – not merely profits – to environmental causes.
Consider focusing your initial efforts on a single community at first, as JPMorgan Chase has done with Detroit through large investments, technical assistance, job creation and mass employee volunteerism. The majority of workers in global supply chains face exploitation. Audit your firm’s supply chain to eliminate abuse, and seek ways to actively improve conditions for workers across your supplier base – domestically and abroad.
Determine how you might adapt your products to further social or environmental improvement and to engage customers. Food and beverage company Danone, for example, which pegs one-third of its leaders’ bonuses to meeting social goals, introduced feed for cows that improves their nutrition and reduces methane emissions. Design eco-friendly products, sourced ethically, that permit full recycling.
To amplify your efforts, join a collaborative coalition of businesses and NGOs such as Business for Social Responsibility in the United States, the Asian Forum for CSR, or the international Business for Inclusive Growth partnership led by the Organisation for Economic Co-operation and Development (OECD).
Profits follow purpose, but you don’t win customers merely by doing good.
Today, what you say and do comes under more scrutiny than ever before. Infuse your “why” throughout your culture to ensure consistency between your policies, how you operate and your stated values, mission and purpose. Don’t make profits your “why,” but avoid giving activist investors or raiders the opportunity to take over. You can’t do good if your business fails.
Consumers call out firms that engage in “slacktivism” – support for issues in words only. Chevron, for example, lost customers when it claimed a commitment to renewable energy even as it divested itself of those assets.
“In today’s cynical and social media-saturated environment, whenever your company touts its good intentions, you better have the bona fides to back them up.”
Back up your “why” with a public agenda for action. Demonstrate your commitment by aligning strategy, communications, the movements and coalitions you support or join, and other actions to your greater purpose.
About the Authors
Philip Mirvis is an organizational psychologist with the Global Network on Citizenship and Babson College. Bradley Googins is a visiting strategy professor at the Catholic University of Milan.
