How to Bake Social Responsibility Into Your Business, From the Start
Terms like social responsibility and social impact have been labelled as jargon. Once something becomes jargon in an already polarized society, creating consensus around the definitions of the terms becomes challenging. Covering the fundamentals always helps. Before we outline the four fundamentals, you need to understand, as a founder or leader of a business, how to bake in social responsibility from the start. We're breaking down what this means and other terms you may hear and could get more familiar with as you move through your journey of understanding the social responsibility spectrum of engaging with social and environmental good as a business.
WHAT IS SOCIAL RESPONSIBILITY WITHIN THE BUSINESS CONTEXT?
A quick Google will tell you that social responsibility is when a business grows in emerging markets by investing in and organizing around sustainable and inclusive business activities. It's important to note that Corporate Social Responsibility (CSR) is extensively written about, researched, and an entire area of study in business strategy with broadly three theoretical approaches. The Stanford Social Innovation Review is my database of choice for diving deep into theory, practice, research, and opinions of leading practitioners and thinkers in the discussions around business and impact, stakeholders' ethics, and meatier questions. Peter Karoff, a leader in corporate philanthropy, wrote a piece in 2012 called CSR Rule #1: Do No Harm. This article is a great place to start if you're looking back at the past twelve years of discourse in corporate social responsibility.
WHAT OTHER TERMS MAY I ENCOUNTER IN MY IMPACT LEARNING JOURNEY?
Importantly, there are also terms used in the space that are legal corporate structures in each province. The legal 'containers' for social enterprises are still relatively new in Canada, with BC being the first province in Canada to offer the Benefit Company option in 2020, not to be confused with a Community Contribution Company (C3) or B Corp certification. If you are interested in incorporating your business as a non-public benefit corporation under the Ontario Not-for-Profit Corporations Act (ONCA), a benefit corporation in British Columbia, or a B Corp certification, there are some great resources you can dive further into written by, or for, lawyers.
Environmental, Social, and Governance (ESG), an investment philosophy, has become a term where its considerations are often lumped into general impact conversations. These regulatory frameworks exist to keep public corporations accountable. They are focused on disclosure of industry-pre-determined baselines and metrics of what is acceptable business practices, such as guidance from the Modern Slavery Act or the Pan-Canadian Framework on Clean Growth and Climate Change, which outlines Canada's commitment to reduce greenhouse gas emissions and transition to a low-carbon economy. Regardless, the acronym has seeped into day-to-day conversations and civic discourse, predominantly in the United States, alongside another impact-lensed acronym terminology, DEI, or diversity, equity and inclusion, as part of America's Culture War. About a year ago, The Daily, a New York Times podcast, published "What is ESG and Why are Republicans so Mad About It?" a podcast worth listening to.
WHERE DO I START WITH “BAKING” SOCIAL IMPACT INTO MY BUSINESS?
At its most Google-able level, the following questions become: how much do you support and organize, and what are inclusive and sustainable business activities? It ultimately comes down to the intent of how you build your business, which includes the four "Ps" - people, product, planet, and profit.
Invest and organize your impact journey: The first thing you can do is define what impact means to you as a leader and set milestones for your learning. You don't have to be an expert. You will make mistakes as you build your business. The important thing is that you course correct when you understand the net-negative effects an aspect of your business is having. This requires being hyper-conscious as you build. Founders usually have blinders on to get their product or service to market, raise capital, and get those early adopters. If you carve out time to learn about impact in your line of business, you're taking a great first step. Leading with purpose is a newer term in the space, and that starts with you.
Invest in your people and how you want to organize your team: Your people are your greatest asset and whose lives you and your business directly impact the most. As an employer, people's livelihoods depend on you. Understanding how you want to structure just and equitable employee stock option plans or employee ownership structures, set baselines for equal pay across roles and for CEO to lowest-paid employee ratios, being a living-wage employer, and setting anti-bias, harassment, and whistler-blower protection policies beyond the bare-minimum requirements are also a part of the impact. Other policies that increase the quality of living include flexible and remote working opportunities in businesses that can do that, four-day work weeks, or other flexible scheduling practices where a business allows. Ultimately, your impact on people can be measured by how much wealth is spread to those who work on your products and services and their increased quality of life, which directly impacts their communities.
Invest in measuring how your product or service has net positive impacts on consumers and the planet: Being conscious about the role of your product on individuals, communities, and the planet is a great responsibility. Depending on your line of business, this includes choices from manufacturing to the supply chain, your product's life-cycle, its waste creation, and other environmental concerns in the production beyond the industrial requirements. The Climate Neutral Certification is a rigorous peer review standard where you can start. The US-based organization 15 Percent Pledge mobilized companies to make shelf space for Black-led businesses, which has also been translated to commitments to sourcing content creators and suppliers from the Black economy. With the rise of artificial intelligence in creating business solutions, it is now easier than ever to operate a lean business. In software, it's not always as easy if you are not already developing an impact-oriented solution. Impact-oriented tech solutions focus on providing digital access and services to problems or populations often underserved, underrepresented, or under-researched related to social and environmental needs. As a tech company, you can start by understanding what the data you collect tells you about your product’s impact on people's lives and their behaviou, and if it's improving their overall health outcomes, for example.
Invest your profit back into impact: If you're a profitable company or have the revenue to invest, investing back into the impact sector can be one the most effective ways to drive social responsibility. Impact investment is well underway in Canada and there are many ways in which you can put the profits from your business to further drive impact in your community. Outside of traditional impact investments with expected returns, you can think of investments as initiatives to develop your business’ impact infrastructure. In Canada, you can invest in becoming a Progressive Aboriginal Relations™ (PAR) through the Canadian Council for Aboriginal Business, investing in, “sustained leadership in Indigenous relations and their commitment to working with Indigenous businesses and communities has built the business case that other companies aspire to achieve.” There are a handful of organizations that have created movements around donating percentages of sales or revenue to various causes. 1% for the Planet asks businesses to commit 1% of their annual revenue to grassroots environmental nonprofits making a difference on the ground through monetary donations, volunteer time, in-kind donations, or other forms of approved promotional support. Organizations like the Founder’s Pledge and the Upside Foundation of Canada help founders steer long-term returns to charities.
You have to start somewhere, and no one is expecting perfection. Identify where you want to make an impact, which can either be in what your product is doing for people, how you are leading a company, or how the profits of what you are doing get reallocated. While it's not the norm, impact offsetting also exists and happens in businesses today. Ultimately, not all founders build with the intention of making an impact in the long term. Some tech solutions are just features of larger cloud services that have previously been created. It comes down to being conscious of, and having a plan around the potential of each area outlined above then measuring your progress as you build to leverage data and continue to improve on your potential impact.
Featured image by Vonecia Carswell on Unsplash.
