The rise of the socially responsible business

Business leaders increasingly view societal impact programs as helpful to both society and their bottom lines.

During 2018, a growing number of CEOs took public positions to encourage their companies – and those of other business leaders – to define their organisational purpose and work toward making a positive societal impact on topics ranging from diversity and inclusion and education to climate change and voting.

Such a shift suggests that a new, purposedriven mindset has moved to the forefront of C-suite agendas and become an important element of integrated business strategies. A new global survey of 350 business leaders conducted by Deloitte Global and Forbes Insights ¹ seems to confirm this shift, with 93 percent of respondents believing companies are more than mere employers; they are societal stewards. Currently, 59 percent of respondents devote between 1 and 5 percent of their revenues to programs with a purpose, according to the survey, with twothirds of them reporting increased budgets for such programs over the past two years. Ninety-five percent of respondents are planning to take bigger stands on social issues in the coming year.

“I find it empowering to hear business leaders discussing societal impact and inclusive growth alongside more traditional priorities,” says Deloitte Global Chairman David Cruickshank. “This exemplifies a shift in the relationship between purpose and profit. They no longer have to be adversarial priorities – purpose and profit can coexist within the same business strategies.”

Indeed, these societal impact programs aren’t exclusively motivated by altruism: Fifty-eight percent of executives surveyed view a program’s success based on the “positive impact on the bottom line,” roughly equal to “positive impact on beneficiaries’ lives” (55 percent). Respondents also indicate talent-related challenges such as computer literacy and technology access are a higher priority than issues that require global scale and have less tangible demonstrated results (such as global warming or poverty).

Regardless of the reasons, the research suggests 2019 will see even more vocal and action-oriented C-suites as the rise of socially responsible business increases as a priority. It also raises the question: Can long-term views on social impact coexist with short-term demands for financial performance?

Change Starts at the Top

According to the survey, 46 percent of executives believe CEOs are the main drivers for societal impact programs in their organisations. However, recognising the CEO as the main driver of social strategy can be a mixed blessing when it comes to moving from vision and leadership to designing and executing a strategy with measurable results.

According to the survey, 45 percent of executives say businesses are investing more in social impact because they have the financial resources to do so. This creates an interesting dynamic for CEOs leading societal impact programs while simultaneously charged with delivering short-term returns for shareholders. These CEOs will want to find a balance that allows for meaningful societal impact investment and shareholder satisfaction.

While CEOs are evaluating their organisational purposes and considering their social impact, these long-term visions can only materialise if organisations have strong foundations to implement strategies.

The Correlation Between Doing Well and Doing Good

Companies are taking a pragmatic approach to measuring the success of their societal impact programs, ranking factors such as profitability, employee retention, and client acquisition/retention as essentially equal to factors such as the number of beneficiaries helped, locations affected, and dollars donated. This seems to indicate many executives believe doing well and doing good go hand-in-hand.

Two findings are worth noting. First, employee retention tied for second regarding how leaders assess societal impact programs. This is consistent with previous Deloitte Global research that showed employee engagement ranked first among factors used to value ROI among inclusive-growth initiatives. Second, companies are significantly more likely to target communities in which improvement may ultimately benefit the company. A place where a company has operations is considerably more likely to receive help than a generic location (64 percent vs. 28 percent), even if the need in the latter is greater.

It’s not surprising, then, that talent-related programs are the ones getting the most attention. According to the survey, computer literacy and access to technology are the areas companies tend to consider most urgent, followed by education and job and skills training. While these initiatives have a social benefit – more equal access to opportunities, alleviating income and gender inequality – they also can help companies create a workforce ready to face the challenges of Industry 4.0. Indeed, the survey finds nine of 10 organisations have formal programs to directly address job-creation opportunities and mentoring programs for people in underserved communities.

A Collaborative Solution

Despite the focus on talent-related societal impact programs, a report from Deloitte Global and the Global Business Coalition for Education estimates that more than half of the 2 billion youth worldwide will not have the necessary skills or qualifications required to participate in the workforce by 2030. To help ensure the next generation is prepared, businesses may want to establish partnerships both within and across industries.

Though business collaborations have been around for a long time—and have been made easier by technologies to help create entire ecosystems of participants—they are much less common when it comes to societal impact programs. Generally speaking, business leaders prefer collaborating with not-forprofits and nongovernmental organisations rather than other companies.

Companies also don’t seem to consistently vet their vendors and other business partners for their societal impact. While twothirds of survey respondents factor a company’s values or social impact programs into their buying or partnership decisions, fewer than a third see social policies as an impetus for deciding to work with one vendor over another.

While companies seem to be growing more steadfast about their dedication to social issues, it is often with an eye toward how those initiatives can benefit the organisations’ longand short-term interests. That’s not surprising given the individual in charge of setting social agendas is also the person responsible for providing shareholder value: the CEO.

Some business leaders, however, are more successful at striking a balance between short- and long-term success with societal impact programs than others. Making social programs part of companies’ core strategies can help organisations lay the groundwork for programs that extend beyond an individual CEO’s tenure.

There also seem to be opportunities for businesses to play a bigger role in society as active stakeholders in some of the most pressing global issues. To succeed at such an elevated level, executives may want to think more broadly about how they interact within society at large and begin collaborating with others—both within and outside of their business ecosystems—to achieve maximum impact.

1. Findings are based on a survey of 350 global executives conducted by Forbes Insights and Deloitte Global