Linda Lattimore CSL Founder, Attorney, Social Entrepreneur
And the debate goes on in corporate America…
Can a corporation use the company’s revenue to finance humanitarian projects or ones that protect the environment? Or, is this considered a misuse of profits that should be returned to the shareholders in the form of dividends or an increase in the value of their investment? Who actually owns the funds that are invested in these projects? If the business of business is business, the business of non-profits is community and the business of government organizations is governance, should we blur the lines?
Despite the multitude of opinions on the matter, the “reasons for being” of each type of entity are in fact becoming less distinct. As we exit two decades of chaos in the business world, stock market and economy, the world of business has come face to face with the cold hard reality of both public distrust and the personal impact to the return on investment for its shareholders. And, the world of non-profit organizations has taken a serious financial hit thanks to a downturn in the economy reflected in a reduction in donor dollars and serious questions about their abilities to run their organizations efficiently. Even more fundamental, is the clear realization that the efforts of the non-profit world are not gaining momentum, rather taking two steps backwards in the face of rising global and communal problems. The citizen sector continues to demand transparency and solutions and the government sector is limited in its flexibility to move quickly as societal issues grow. It is becoming apparent to all worlds that their relationships need to be symbiotic, there are mutual benefits if they can work together.
The world of business has no choice, it must step in quickly with its manpower and funds and target and actualize solutions. Or, the result might be that their employees, customers and investors find themselves face to face with the very issues that need resolution, apathy notwithstanding. Historically, privately held companies have always had more leeway with regard to investing their revenues than publicly held companies, who were bound by tighter financial and regulatory reporting requirements and where the foremost concern was a hardy rate of return to the shareholders. But as shareholder profiles have started to change reflecting a growing interest in companies that work at achieving sustainability by looking at the triple bottom line, public company investments have started allocating their resources with an eye toward long term sustainability, not immediate return. And not for profits have started looking for additional sources of income to dissipating donor dollars. In effect, businesses must now be “renaissance companies”, widely diversified, accountable and interested in the welfare of all.
Companies that recognize that the landscape is changing are investigating the value of Corporate Social Responsibility (CSR) programs. In addition to being attractive to an upsurge of conscious investors, consumers are drawn to companies with socially responsible behavior which is seen as a value-add to the company’s products. Purchasing patterns are changing. Past decades of corporate debauchery have affected many buyers whose finances have been damaged, as have those of their businesses. They are looking for change and companies they can trust. If pricing is no object, and it’s becoming less so with cost comparisons at their fingertips on the internet, they will buy from the company that they admire and trust. Consumers are carefully researching who they want to do business with, not just the quality and characteristics of the products they want to buy and they are more steadily buying from “Values” driven companies as opposed to “Value” driven ones.
Employees, particularly the new Millennials, are asking to work for companies that show concern for their communities and the planet. The 2014 US Census was a clear reflection of the eroding of the Baby Boomers in terms of numbers in the workforce and the gradual creep in numbers of the latest generations taking their place. The Boomers (1946 – 1964) comprised approximately 24% and the Millennials were up to 29%. However, by 2020, 1/3 of all adults will be Millennials. Recruiting, benefit plans and employee engagement will need to be re-addressed as this new generation arrives and the impending talent gap is filled. The competition for talent in the workforce will be fierce as priorities shift.
Are we as attorneys and service providers prepared to guide our clients through the morass of new soft and hard laws emerging in the social responsibility space? Are we familiar with new alternative business structures? How will we handle conflicts between transparency and confidentiality, the gray area of shareholder return versus a positive community impact, conflicting social responsibility policies (between our clients or our own), just to name a few concerns.
And lastly, as our roles as leaders and the beacons of justice in a transparent world demanding ethical behavior expand, are we prepared to walk the talk and become part of this new community with a unified field of thinking who are interested in leaving a legacy of light and a better way for the generations to come.