Business as a Force For Good

As an executive coach I often have private conversations with senior executives and CEOs about the broader role of business in our society. They often tell me how they believe that business can be a force for good, contributing to the betterment of society and the planet. At the same time they admit that they are constrained by the short term financial goals demanded by the board and their major shareholders. It seems shareholders are mostly concerned about the return on their investment and care less about how that is done.

That places even the most enlightened leaders into a grid lock, where the larger social objectives tend to fall by the wayside. This corporate system has been operating for a long time and today dominates the world.

The good news is that in the last decade a new breed of what are termed For-Benefit organizations are emerging. These organizations integrate both profit, as well as social and environmental purpose into their charter. They are called Benefit Corporations in the USA, Community Interest Companies in the UK, and Community Contribution Companies in Canada. These organizations are different from the standard Non-Profit companies, public and private corporations. That is why they are sometimes referred to as the “Fourth Sector”

 ref: The Fouth Sector Mapping Initiative .

 One example of such an innovative approach to business is Social Banking. Social Banking describes “banking and financial services whose main objective is to contribute to the development and prospering of people and planet, today and in the future” (ref: Institute Of Social banking). In practice it means distributing a large proportion of bank profits to social and environmental courses. There are a number of such banks operating around the world. One example is Tridos Bank headquartered in the Netherland, whose mission is to “make money work for positive social, environmental and cultural change”. Another is Vancity Credit Union in Vancouver, Canada.

Speaking to some to these companies I have found that given the recent financial crisis it is not necessarily easy for them to break through consumer’s distrust towards so called “evil banking” practices. Banking and social good is not easy to equate in many people’s minds. Yet in reality these banks are winning the hearts on millennials and have a growing membership at an astonishing rate.

The fact is that consumers do want to support businesses with just causes.

 “89% of Americans are likely to switch brands to one associated with a cause, given comparable price and quality, jumping nearly 35% since 1993” Cone Communications, Social Impact Study.

Another benefit of B-Corps is that you attract top talent. Many young, bright professionals are looking to work for an organization that truly serves society. 

Ref: gamechangers.co

Research shows benefit organizations outperform conventional companies on stock price by 12:1 . (decade-long study by John Kotter and James Heskett)

Finally you attract value aligned investors, which addresses the main issue I outlined in the beginning.

Ref: gamechangers.co

Even though individually such organizations only constitute a relatively small percentage of total market, the trend is growing. Combined they are now starting to get serious attention from both investors and consumers. As with any new initiative there will be early adopters and laggards. An interesting question would be what is the tipping point at which Benefit-Corporations shall become main stream?

 As I reflect on my conversations with my executive clients I realize that maybe many organizations simply do not have the right DNA and fertile environment to transform to a Benefit Company. Even if they do, they may simply take it on as a public relations exercise, which defeats the purpose. And yet I cannot help thinking that business and capitalism as a whole will evolve, becoming more socially and environmentally responsible. Years from now we may look back at our corporate and investment practices as archaic and antiquated just like we now look at our past patriarchal models of governing.

?Over the last 15 years Vitaly Geyman ( B.Eng. MBA) has worked with a select group of CEOs, executives and professionals around the world assisting them in strategic, value driven career and business development. Being himself a high tech executive, organizational development consultant and a life coach Vitaly developed a unique approach to Purpose Inspired career development.

Schedule a no obligation introductory session with Vitaly here: https://calendly.com/vitalygeyman/30min or contact him at vitalygeyman(at)gmail.com

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