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The old model of philanthropy just isn’t working — the standard loop of fundraising and donating can make progress painstakingly slow, a pace that can’t keep up with the complexity and rapid-fire, exponential growth of our social and environmental challenges. From my perspective, the old model of business isn’t working either. These days, consumers are more informed, hold higher expectations and, through the internet, have the power to learn much more about brands than they ever have before. In terms of the food industry, I’ve found many people want to know not only what goes into the food they eat but also the broader social and environmental implications of their consumption all the way up and down the supply chain. People want to vote with their dollars and to purchase products with purpose; according to 2015 Nielson Global and Corporate Sustainability Report, almost three out of four millennials surveyed were willing to pay extra for sustainable products. As the CEO of a for-profit beverage company that works with a nonprofit, I believe the new model is a blend of business and philanthropy that blurs the nonprofit/for-profit line. Here are the essentials of this new model:
A Multidimensional Bottom Line
The old model of business focused on one thing: how to maximize profits. Usually, this seemed to involve corner cutting and short shrifts, and the top few were the primary beneficiaries. That is no longer acceptable. Now, companies are rewarded for non-monetary achievements, like being the best place to work or displaying sustainability and environmental leadership as a B Corp. This, in turn, can translate into a different kind of competitive edge, such as being able to retain an innovative workforce and earn consumers’ trust. In the new model, the bottom line encompasses so much more than money. It addresses the needs of all stakeholders — the consumers, the employees, the retailers, the growers, the investors and the Earth.
To ensure your bottom line is multidimensional, you should not only include impacts in your vision and mission statement but also commit to your corporate direction and create measurable long- and short-term milestones that are as valued as your financial goals. For example, if your mission is to end poverty, then you can commit to specific poverty-alleviating goals for year one, year five and beyond, and make your compensation and that of your team dependent on meeting those milestones. Whatever your mission is, you should live it, breathe it, make it an essential part of your business plan.
I found the old model of business tended to be myopic and focused on quick fixes and fast turnarounds. As a global climate crisis looms (as reported by The New York Times) and income disparity may be becoming more entrenched (as illustrated by the Economic Policy Institute), short-term goals are no longer tenable. Simply put, I believe we are being forced to recognize that the Earth’s resources are finite, and without them, businesses and society as we know them could cease to exist. The new model I envision invests in a sustainable system of production by using practices such as impact sourcing and regenerative agriculture, which not only grow the business but grow the livelihoods of those in the supply chain and heal the land.
With so many complicated issues to consider, it’s easy to feel overwhelmed. The key is to pick a solution, no matter how small, and start there. Find a manageable point of entry, like buying eco-friendly paper products and energy-efficient light bulbs for your headquarters. Expand from there by forming a committee with passionate employees to work on evolving the company’s impact and hold it accountable for following through. Just start somewhere — and eventually you might grow your efforts to retrace your supply chain and make sure everyone on it has a living wage, explore new sustainable options, or invest in infrastructure to support your workers’ communities.
I believe the old model of business relied on opaqueness — a veil over how the sausage got made. Now, I’ve noticed that many consumers demand transparency, and it is much more difficult for companies to hide unethical practices, whether they are sanctioned or not. Anyone with a smartphone can start a snowballing of bad press — see the struggles of Uber and Alaska Airlines, for example. Hopefully, such public criticism leads to corrective measures, but it’s preferable to start and then stay in good standing. But don’t talk about your efforts until you’ve actually taken action — consumers can often smell a fake from a mile away, and empty words have a tendency to come back and bite those who speak them. Establish a real and ongoing relationship with a shelter for survivors of domestic violence before you talk about it in your newsletter; post photos of your team planting trees on social media only if it’s going to be an annual or monthly event, rather than a one-time event. Whatever you do, take action first so that you can honestly demonstrate how your business creates positive change before you publicize it.
January 3, 2019 at 08:11AM
Forbes – Entrepreneurs