Why Business Must Embrace Social Impact

Lou
Kotsinis

As a social impact marketing agency, we get asked a lot about the benefits derived when a business chooses to focus on a higher purpose, and not just profit.

What’s in it for them? How does doing “good” impact the bottom line? And, if they emphasize both purpose and profits, won’t profits end up getting the short end?

The most direct answer I can give to all of these questions is illustrated through a story about an iconic American brand.

In 1930, as the United States entered the worst economic depression in its history, W.K. Kellogg, the founder of Kellogg’s cereal company found himself in a quandary. With millions out of work, demand drying up, and the country in a panic, Kellogg, like other industrialists of the time, had to respond to keep his business viable and to contribute to a national recovery. His answer?

“I’ll invest my money in people.”

The Beginnings of Corporate Social Responsibility

Kellogg, according to one journalist, “was committed to ensuring that the immense wealth produced by his company benefited his employees and the country.” In practice, that meant providing his employees:

• Free kindergarten, nursery, and daycare
• Comprehensive “medical, dental, and nutritional” benefits to all employees and their families
• A “ten-acre garden” that was available for “the enjoyment and recreation of workers”
• Good wages to his factory workers, his executives, and his support staff
• Replacement of the traditional three, daily eight-hour shifts with four, six-hour shifts (This allowed everyone working at Kellogg’s to remain employed and for Kellogg to hire local out-of-work individuals on a part-time basis)

Kellogg focused on putting profits toward improving the lives of his employees and building and sustaining the community in Battle Creek, Michigan – which in turn benefited the nation as a whole.

It may seem strange to many people today that such a large company — the very definition of a capitalist enterprise — would make such strides toward the health and well-being of its employees. But it shouldn’t. Because this is the way it used to be.

During and immediately after World War II, American corporations began to emulate Kellogg’s example, implementing changes in their compensation practices and in their approach to employee well-being. It’s here that the beginnings of “corporate social responsibility” (CSR) began to take form:

Hormel (best known for the product “Spam”) did their part for social good during the war by partnering with the government through the Lend-Lease program, which provided essential food supplies and sustenance for those directly affected by the war.

IBM would hire its first black sales representative in 1946, almost two decades before the Civil Rights Act of 1964, and continue to emphasize social impact throughout its history. In 1962, they codified what had been an unwritten set of core values, including “respect for the individual.”

In 1953, economist Howard Bowen described corporate social responsibility as “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.”

This is often considered the beginning of the modern era of corporate social responsibility, as businesses became increasingly socially aware and active. Coca-Cola President J. Paul Austin, for example threatened to move Coke headquarters when Atlanta business elites refused to support a 1964 gala honoring native son Martin Luther King Jr.

Actions such as these had a powerful impact on society; the middle class thrived. And yet, somehow, over the ensuing decades, we lost our way. Profit beat purpose. The only metric that seemed to matter was shareholder value. But the pendulum has now started to swing back.

The Times They Are a-Changin’

I would argue that this change is occurring because businesses are aware that they’ve lost their sense of purpose and are witnessing the consequences. We now find ourselves in a world where business must act with social impact in mind — not simply because they want to, but because they have to. Consider:

A widening economic gap
The share of American adults who live in middle-income households has decreased from 61% in 1971 to 51% in 2019, while income growth has skyrocketed for the top 5%. With the impact of the Great Recession still being felt across the world, income inequality is only getting worse.

Climate Change
We’ve been aware of climate change since the late 1800s (the effects of which simply weren’t being felt in Kellogg’s time). Today, climate change has accelerated to a point where inaction threatens the survival of the planet – something that will clearly affect “the bottom line.”

Considerations of equity and equality
Although strides have been made in America’s struggle against racism and in support of equity and equality, there remains so much more to be done, as non-white, non-binary communities still face significant challenges.

The Benefits of Social Impact for Business

I believe that just as in mid-20th century America, when business engaged in corporate social responsibility because it was the right thing to do, contemporary entrepreneurs and business owners see that business can once again be the driver to make the world a better place. This approach moreover, needn’t run counter to profit-making (on the contrary, profit is the sustaining factor in a businesses’ ability to do good) but rather help to reinforce businesses’ sense of purpose and societal responsibility.

This is, in short, why we’ve chosen to be a social impact marketing agency. Because in the end, we believe that business can be a force for good. Business can be the catalyst that creates a:

• more prosperous, stable, growing nation
• more sustainable environment
• level-playing field for all who seek opportunity
• thriving middle class

An ethically-run business that looks out not only for its bottom line, but for its employees, its community, and the planet as a whole, isn’t “socialist” or misguided — it’s frankly the most American of concepts. And we here at BCS Interactive are determined to help businesses, and anyone committed to these critical goals, get there.

TAGS: purpose-driven business, purpose-driven organizations, social impact for business, social impact marketing agency