Daryl Brewster, chief executive of CECP, a coalition of CEOs who believe societal improvement is an essential measure of company performance, suggests how corporations can connect with core business to assess the value of societal investment
Leaders of the biggest, most complex companies in the world are discovering that a thoughtfully designed programme, which leverages the unique assets of the business and applies them to the specific needs of communities, can have societal and business benefits that will create long-term financial value.
Community engagement can provide novel pathways towards meeting strategic business challenges, such as attracting investors, engaging employees, improving trust, connecting with customers, entering new markets, mitigating risk and building brands.
It is upon measuring the business value of community programmes that commitments are sustainable and consistent, and receive the support of C-suite executives.
Survey data from the world’s largest companies and studies from cross-sector leaders, when taken together, make it hard to ignore the mounting evidence that investing in communities is good for business – and is a clear competitive advantage that customers, investors and employees are demanding.
A 2011 Harvard Business School study showed companies that prioritise environmental and social performance, financially outperformed those that do not. CECP data shows companies that increased giving since 2010 improved business performance; companies that increased giving by more than 10 per cent since 2010 increased median revenues by 11 per cent from 2010 to 2013.
Investing in communities is good for business – and is a clear competitive advantage that customers, investors and employees are demanding
According to a UnitedHealth Group study, 76 per cent of people who volunteered say that it has made them feel healthier, which drives lower healthcare costs. Volunteers also reported better time-management skills, colleague relationships, people and teamwork skills, and professional job skills.
And direct interaction between community initiatives and employees is on the rise. According to CECP, 34 per cent of companies in 2010 offered a pro bono service programme, a type of non-cash giving that relies on the application of the day-to-day skills of employees; by 2013, 50 per cent of companies were offering this.
According to the Edelman Trust Barometer, 84 per cent of global citizens are counting on businesses to address societal challenges while pursuing their own interests.
Some 55 per cent of global consumers say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact, according to Nielsen.
Encouraged by this mounting research, companies are experiencing the win-win of investing in communities and their business.
Companies are entering new markets as they invest in global communities. Mosaic offers interest-free loans to farmers in India, Guatemala and eight African countries, which saw a three to five times increase in crop yields.
Companies are managing risk through programmes that address a core business challenge. Toyota created the Collaborative Safety Research Centre, a facility that shares knowledge with researchers and other automotive companies.
Brands are built and sustained through meaningful commitments to the community. IBM created the Smarter Cities Challenge, a grant competition that sends IBM staff to cities around the world to address community issues, such as creating an advanced video analysis system to rapidly investigate crimes across a European rail network.
While a company needs to stay focused on the activities that bring investor returns and strengthen the company, engaging with the community is no longer an either-or proposition. Today’s business is inextricably linked to the communities around it and evidence shows that the two can reinforce each other for their mutual benefit. Leading companies are seizing the possibilities and seeing community engagement as a win-win to community and business.