Business for good: can you be profitable and ethical?
Patagonia, Ben and Jerry's, Timpsons: all big success stories and all known for doing 'good'. But is there really any such thing as conscious capitalism? And, when you’re running a business can you really be profitable and ethical at the same time?
Conscious consumers are definitely on the rise, according to Forbes 80% of consumers want companies to 'stand for something' and ethical spending has risen almost fourfold in the past 20 years according to a report from Co-op.
When it comes to choosing where to pursue their career, more and more employees are also looking beyond salary and perks – LinkedIn’s latest Workplace Culture report shows that 86% of millennials would consider taking a pay cut to work at a company whose mission and values align with their own.
So, can and should businesses be shifting their focus to do more ‘good’?
What is 'ethical'?
There’s a great piece by Bird Lovegood in the Good Business Festival Journal that asks: 'how can we be ethical if we don't know what it means?'. 'Good', 'ethical' and 'responsible' are words often heard but not always understood. They mean different things to different people and without a common understanding it's hard to use them as a measure for success.
Lovegood talks about a sliding scale of 'Life enhancement' as a way to assess whether a strategy, practice or product is ethical. If something enhances all life – not just the life of the business, your customers, or a section of society, it’s probably ‘good’. It’s a great north-star to keep in mind when thinking about the ‘good’ in your business.
The right time for action?
2020 was a year like no other and global events shone a spotlight on the businesses that played a social role, those that went beyond their core offer or standard services for the good of others. It was a year where more and more brands and businesses took a stand on diversity and inclusion, put their people first, and took making their mark on society seriously.
It was also a year when those who paid lip service, paid the price. Internally and externally people want authenticity. If you have sustainable credentials shout about them, if supporting young people into work is part of your core purpose tell people. But, if you're 'good' credentials look tokenistic it won't cut it.
The business benefits of 'good'
Most of us want to leave the world better than we found it. But business leaders don't just answer to society, they answer to boards, to clients, to shareholders and ultimately to profit margins.
So what are the business benefits of 'good'?
- A study from Nielsen found that 66% of respondents were willing to pay more for a product based on its sustainability.
- A public commitment to a cause can increase awareness of your business in different sectors and communities.
- Social responsibility can improve your public image and perception - whether it's through press and PR, social media or through connections.
- Sustainability initiatives can contribute to short and long-term cost savings.
- There is a growing investor community with a focus on financing businesses with strong social responsibility values.
- Perhaps most crucially, building a profitable but responsible business helps with recruiting and retaining the right talent. It creates a sense of belonging and culture in your team based on shared values.
How to marry profits and ethics
Becoming a true mission-minded organisation is intrinsically tied to your purpose. In many of our Gather programmes we discuss the importance of purpose and putting it at the heart of your business. If you want to be an authentically 'good' business, it needs to be reflected in everything you do – and for that it needs to be reflected in your purpose.
Authenticity is key here, as is realism. As a digital, creative or tech business it might only be possible to make an impact on a small scale, but if that impact is authentically linked to your purpose it can make a real difference to your business.
To B Corp or not to B Corp?
If you’re putting ethics at the heart of your business, it’s worth considering becoming a B Corp. B Corps aren't new, they've been around since 2007, and the likes of Ben & Jerry's, Abel and Cole, and Patagonia are proud owners of the accreditation but there are plenty of smaller outfits in the community too.
Certified B Corporations must show they have a positive impact on workers, communities and the environment. To achieve B Corp status, it takes rigorous assessment by an independent third party, but it's a serious signal of intent.
And when you're an accredited B Corp, you're part of a community of businesses who share similar beliefs and are an active movement. So, beyond the accreditation itself it's a pretty exclusive club that offers great networking opportunities and links to like-minded leaders.
Becoming a B Corp is a lengthy process, and it won’t be the right option for every business, but it sends a very clear message internally and externally about the seriousness of your ethical position.
Corporate citizenship in the spotlight
The world has shifted over the past year and the relationship between business and society with it. It’s hard to predict how this demand for a ‘new normal’ will play out, but there is undoubtedly an increased expectation for businesses to be good corporate citizens. And if that continues, the question may not be ‘can your business afford to be ethical’ but rather ‘can your business afford not to be?’.
Join Gather’s community of like-minded leaders to keep this conversation going, to share ideas, discuss trends and get support for you and your business.