The Case for Corporate Social Opportunity

It is dismaying that there are still those who believe in the fallacy that profits and social value are more often than not a zero-sum game. When Dr. Karnani argues in an August 23 WSJ article that Corporate Social Responsibility is either irrelevant or ineffective, he highlights only the over-simplified examples that make his case. Fortunately, there are many in today’s marketplace who don’t subscribe to his theories.

Karnani argues that businesses only work in their own self-interest and are never truly inspired by the desire to create social good. But even Adam Smith acknowledged in The Theory of Moral Sentiments that self-interest alone does not drive all behavior. Rather empathy, sympathy, love, friendship and a desire for social approval all have their place.

Certainly there are companies whose CSR programs are only focused on improving public perception or preempting industry regulations, but there are many brands who look at it as social opportunity rather than social responsibility, and the marketplace has rewarded them for it.

In Firms of Endearment, Rajendra S. Sisodia, David B. Wolfe and Jagdish N. Sheth define Firms of Endearment as companies that “seek to maximize their value to society as a whole, not just to their shareholders.” These Firms of Endearment, which include such purpose-driven juggernauts as Google, Patagonia, Southwest and Whole Foods, returned 1025% over the last 10 years, compared to only 122% for the S&P and 316% from the companies profiled in Good to Great. With 90% of Millennials reporting in the Cone Millennial Cause Study they would switch from one brand to another based on the brand’s support of a good cause, the performance gap will continue to grow larger over time.

The businesses that are best able to seize social opportunity are those who focus on social good that is authentic to their founding ethos. They aren’t forcing a square peg into a round hole. Instead they’re focusing on making positive social impact through sound business decisions that are in keeping with what their founders intended.

Pepperidge Farm’s founder Margaret Rudkin started baking breads intended to make her son’s life better by alleviating his allergies. Today Goldfish, a Pepperidge Farms snack brand, makes kids lives better not only by taking the trans fats out of their crackers, but also by encouraging optimism and positive thinking through their website, www.fishfulthinking.com, and investment in City Year, an organization that helps teachers in schools with at-risk children. Following its embrace of its own ethos and pursuit of this social opportunity, Goldfish enjoyed 15% growth in a category growing at only 3%.

Truly purposeful corporate social responsibility yields other benefits not acknowledged by Karnani. Another Cone statistic showed that 79% of Millennials “want to work for a company that cares about how it impacts or contributes to society.” Thus, authentic and meaningful corporate social responsibility also aids in recruiting and employee engagement.

Still don’t believe you can do well by doing good? Then as Whole Foods founder and CEO John Mackey points out in his 2005 debate on the social responsibility of business, you can voice your protest by investing elsewhere. Investors in purposeful brands like Whole Foods have hardly run for the hills in the face of their explicit socially responsible policies.

Corporate Social Responsibility should never take the place of other societal entities such as NGOs or governmental agencies whose aims are to work for the good of society. Governmental regulations, as well, should continue to be in place to ensure that those acts that are in opposition to immediate profits are still undertaken by companies. However, we sell ourselves and our businesses short by assuming that they cannot find ways to do well by doing good. Corporate social responsibility is here to stay and as more businesses realize they can grow their bottom lines as they seize social opportunities, our economy and our society will be better for it.

Joey Reiman

Joey Reiman
Thinker & CEO

Joey Reiman is the leading authority on purposeful excellence in business. He is author of Thinking For A Living, CEO of the global marketing consultancy BrightHouse www.thinkbrighthouse.com and teaches purpose and ideation at Goizueta Business School at Emory University. Fast Company named Joey Reiman as one of 100 people who will change the way we work and live.

Lindsey Viscomi

Thinker & Senior Strategist

Lindsey Viscomi

Lindsey Viscomi is a senior strategist at BrightHouse. While at BrightHouse, Lindsey has worked with numerous global clients including Procter & Gamble, McDonald’s, and Newell Rubbermaid. She has a Masters in Business Administration from UCLA’s Anderson School of Business and a BS in business with highest honors from the University of North Carolina at Chapel Hill. She is an Atlanta native, avid traveler and food blogger.