Profit, profit, and more profit. In the past, corporate profit tended to triumph over all, and conspicuous consumption was prolific; from expensive cars to luxury clothing and jewelry - money reigned supreme. However, the days of ranking profit higher than purpose seem to be numbered, and rightly so. With more and more consumers becoming aware of corporate greed, the popularity of socially and ethically-conscious companies continues to grow. It is becoming abundantly clear that purpose is winning over profit, and the benefits are profound: CEOs and companies have come to realize that ‘doing good’ is not only beneficial for people, the earth, and the environment, it is also good for the bottom line.
But how exactly can businesses act as a force for good? Gone are the days when Corporate Social Responsibility (CSR) alone was enough to curtail bad publicity and market companies as morally sound. Today, it is no longer enough for companies to do ‘good’ via CSR initiatives. In this article, we’ll take a look at how businesses doing good in the world organize themselves and become leaders within their fields, and examine proven processes, such as Appreciative Inquiry, that sustain positive outcomes for business as a force for good.
The History of the CSR Movement
First, let us take a look at the CSR movement, which for too many years was “the done thing” when it came to showing the world that you and your business were ‘’doing good’’. There is a long and varied history associated with the evolution of Corporate Social Responsibility (CSR), tracing back to several centuries ago. However, it wasn’t until the 1970s that CSR truly began to take flight, and the concept of the ‘social contract’ between businesses and society was introduced. By the 1980s, early CSR continued to evolve as more organizations began incorporating social interests in their business practices while becoming more responsive to stakeholders. Investment in CSR initiatives has continued to grow rapidly, especially since the 1990s, and CSR is still often seen as a marketing tool: 90 percent of the 250 largest global companies by revenue now publish detailed annual reports of their CSR practices. However, as we approach the government’s targets for net-zero by 2050, CSR is no longer enough.
_‘’An archaic and outdated term, CSR today merely resembles a marketing tool, allowing businesses to make symbolic gestures while, in the worst cases, enabling corporate inaction.’’ - Harry Matyjaszek
According to Fatemeh Momeni, CSR initiatives can lead to what researchers call moral self-licensing, where a positive action is offset by harmful behavior later on. In cases of moral licensing, company-sponsored social initiatives can trigger poor employee performance because doing good deeds in one area can encourage the employee to behave unethically in another. It’s clear that businesses need to go beyond the performative nature of CSR initiatives, and step into fundamental change behavior of the business itself, including addressing critical issues such as climate crisis, socio-economic disparity, societal and workplace inequality, and inclusivity. We see burgeoning opportunities for businesses to contribute that extend beyond traditional CSR, but the fundamental question remains: How can businesses step away from the performative nature of CSR initiatives? Thankfully, a new movement is starting to dominate the corporate landscape: ESG.
The Importance of the ESG Movement
ESG stands for Environmental, Social and Governance – three categories that enable businesses to measure the real sustainable and societal impact of their outputs. These three target areas need to see consistent improvement in order for real change to take place in the world around us. So what is the difference between ESG and CSR initiatives? While these both may sound similar in principle, the fundamental difference is that ESG is measured, quantifiable and criteria-led, allowing businesses to fully integrate better environmental, social, and governance strategies into their DNA. In fact, 93% of the world’s largest companies by revenue report on ESG, disclosing things like how many gallons of water they’ve conserved or how much plastic they’ve recycled. O'Leary and Valdmanis suggest three ways to align the work of corporations with creating a more sustainable, inclusive, and prosperous economy:
- Corporations need to publicly report on their social and environmental impact with clear, standardized, easy-to-understand metrics, such as carbon emissions, investments in training programs, and the proportion of workers earning a living wage.
- Corporations need to be held accountable. The latest commitments from business leaders to “do well by doing good” have centered on supporting workers, responding to racial injustice, and fighting climate change.
- Corporations that are serious about becoming more sustainable, inclusive, and socially responsible should consider putting their purpose into their charter and becoming benefit corporations. This new breed of companies is explicitly balancing profit with a stated public benefit, such as improving its customers’ health, creating good jobs, or restoring ecosystems.
It’s clear that businesses must go beyond the performative nature of CSR, and incorporate quantifiable, transparent ESG metrics into their practices - for the benefit of people, the planet, and the economy.
A Look at the Strengths-Based Approach - What Role Does Appreciative Inquiry Play in Helping Companies Act as a Force for Good?
When looking at examples of business as a force for good, the transformative impact of Appreciative Inquiry (AI) cannot be overlooked. Appreciative Inquiry is a strategic process of inquiry that maximizes a strengths-based potential for change. AI is practiced around the world to transform organizations, cities, and even countries, and expand leadership vision, set strategy and enhance the power of teams. David Cooperrider is the founding father of AI, and a Distinguished Professor at the Weatherhead School of Business, and Faculty Director of the Center for Business as an Agent for World Benefit. Today AI's approach to strengths-inspired, instead of problematizing change, is being practiced everywhere: the corporate world, the world of public service, of economics, of education, of faith, of philanthropy, and social science scholarship.
So why should businesses focus on incorporating strengths-based processes? Too often, businesses focus on the opposite of strengths - problems. The flaw of focusing on problems is that it amplifies them in the eyes of those involved, zapping their energy, confidence, and motivation. Not exactly a recipe for creative thinking or nurturing a growth mindset. Appreciative inquiry, on the other hand, helps organizations unlock innovation by increasing confidence:
_‘’Appreciative Inquiry can amplify what’s going right in your organization rather than fixing what’s wrong. Especially after a chaos-filled 2020, appreciative inquiry might be exactly what your team needs to propel your organization forward with a flood of positivity, innovation, and creativity. ‘’ - Mark Sparvell, Forbes Councils Member
Appreciative Inquiry is based on the belief that every team and every organization has great resources that are to be discovered (Cooperrider & Avital, 2004). The model uses the following four steps approach:
The first step – Discovery – is to reveal the company’s resources. Discovery asks the questions: What is already working well? Which areas of the business are currently strong? This exercise provides participants with positive emotions such as pride, joy, and appreciation and can have a profound impact on the result of the process.
Once an organization discovers its positive core in the first step, the next step is to imagine and envision its future. The second step – Dream – is all about wildly imagining “what could be”, in which every idea is worth noting and judgment is deferred. Images of the future emerge out of grounded examples from its positive past. These images are compelling possibilities precisely because they are based on extraordinary moments from an organization’s history. For many organization stakeholders, this is the first time to think “great” thoughts and create “great” possibilities for their organization.
In the Design phase, attention turns to creating the ideal organization in order to achieve its dream. Future images emerge through grounded examples from an organization’s positive past. Good-news stories are used to craft provocative propositions that bridge the best of “what gives life” with a collective aspiration of “what might be.”
Finally, the Delivery/Destiny phase represents both the conclusion of the Discovery, Dream, and Design phases and the beginning of an ongoing creation of an “appreciative learning culture.”
The Delivery/Destiny phase delivers on the new images of the future and is sustained by nurturing a collective sense of purpose. The momentum and potential for innovation are extremely high by this stage in the process. Because of the shared positive image of the future, everyone is invited to align his or her interactions in co-creating the future.
In Appreciative Inquiry: A Positive Revolution in Change, David Cooperrider writes: “In appreciative inquiry, the arduous task of intervention gives way to the speed of imagination and innovation. Instead of negation, criticism, and spiraling diagnosis, there is discovery, dream, and design.”
An incredible example of the power of Appreciative Inquiry in practice is the Fowler Center for Business as an Agent of World Benefit, which exists to create a world where business can prosper, human beings can flourish and nature can thrive. The Center practices, researches, and supports initiatives based on whole-system design for advancing the 'how-to' of flourishing enterprise, and works with businesses, organizations, industries, and economic regions to discover the power and promise of flourishing as an innovation engine for doing good in the world.
The Center conducts research and outreach to support its initiatives:
- The Global Forum Series convenes business and thought leaders from all over the world every three years to contribute to a tipping point in Business as an Agent of World Benefit.
- AIM2Flourish in which students around the world use Appreciative Inquiry to showcase breakthrough innovations that honor and scale for-profit businesses contributing to the 17 U.N. Sustainable Development Goals.
To summarize, Appreciative Inquiry helps organizations unlock innovation by increasing confidence. Creativity takes courage. It’s tough for anyone to feel courageous when they’re being told over and over again where they’re failing. When you gift your team permission to focus on their strengths, you innately boost their confidence, which expands their ability to develop innovations and invites new ideas.
How Do You Get Started Influencing Your Business to Focus on Purpose over Profit?
It should be clear by now that the potential is extraordinary for business to serve as a force for good, but in order for this to take place, it’s imperative that actionable steps are taken. Here are just a few ways you can accelerate your business in a purpose-driven direction:
- Establish your company’s raison d'être: What is your company’s core reason for being? According to Serafeim, organizations must identify a corporate purpose and build a culture around it, because a top-down approach to sustainability is not effective if it is not supported from the bottom up by a culture that supports ESG initiatives.
- Set clear and tangible goals: Goal setting is useful in helping companies progress with their ESG activities. Although top leaders should set ESG targets, unit heads and middle management should be empowered to figure out how to hit them.
- Introduce a publicly available impact score: Companies need to be accountable for their impact on the planet and society, and an impact score is an essential component of accountability.
- Take accountability for negative social impacts: It’s imperative that companies causing more harm than good are penalized for their negative impacts. Use a metric such as Impaakt.com to analyze impact scores.
- **Stop greenwashing: Greenwashing occurs when companies invest more money on marketing their products as “green” rather than doing the hard work to ensure sustainability. To make meaningful green choices, companies must acquire full visibility of their supply chains, adhere to their industry’s regulatory rules, and use data-based models.
- Become a Certified B Corporation: Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.
New Generations Want to Work for Businesses Doing Good in the World
Last, but not least, we want to emphasize another important reason why it is a good idea for businesses to be purpose-driven as a default. Many research studies have found that younger generations want to work for businesses doing good in the world. Millennials have a reputation for being values-driven in their approach to their money and their careers. For example, 86% of millennials would consider taking a pay cut to work at a company whose mission and values align with their own, according to LinkedIn’s latest Workplace Culture report. In fact, 79% of millennials are loyal to companies that care about their effect on the environment, and, according to Deloitte, 76% of millennials view business as a source of powerful and positive social impact.
_‘’Employees are agitating for decisions and behaviors that they can be proud to stand behind and gravitating toward companies that have a clear, unequivocal, and positive impact on the world.’’ - McKinsey Quarterly, 2020
In order to attract and retain younger working generations, it’s imperative that companies focus on company culture with a clear values-driven approach, innovation, collaboration, inclusivity, and an investment in professional development and the employee experience. Furthermore, younger generations are seeking flexibility within their roles, which need to allow for more remote work and fewer commutes. In summary, if businesses want to remain competitive, they must redesign their company from the ground up with a focus on internal culture.
Conclusion
It’s clearer now more than ever that a transformative shift is upon work culture. The era of performative CSR and prioritizing profit over purpose is fading, and an era of value-driven business practices is being ushered in. It’s no longer enough to focus solely on making big profits for your business and your shareholders or investors. Customers, clients, and employees – particularly those from the younger generations – also expect an organization to act as a force for good, or at least do no harm to society, though preferably actually contribute to the advancement and good of society and the world at large. From a corporate standpoint, businesses with a long-term perspective are coming to realize that their continuing success is largely dependent on operating values-driven, sustainable, and ethical practices.
In order for meaningful and sustained progress to take place, it’s imperative that businesses focus on quantifiable metrics such as ESG initiatives, take a strengths-based approach to business and employee performance, establish a purpose-driven direction, focus on strengthening company culture, and ultimately, use their business as a force for good.
