Dialogue Q1 2019

Page 58

FINANCE

58

The case for CSI

Corporate social impact combines social good with financial success, says Scott Saslow

The word that often follows ‘corporate social’ is ‘responsibility’. Why? Corporations – presumably due to their huge treasure troves of cash and other resources – have a responsibility to give some of that back to the community. In some cases, the money goes back to those the corporation accumulated its riches from in the first place. The subtext is that the corporation does not have to give back to the community – and when it does, it is being kind. It is thinking about the greater good; it is not solely focused on making shareholders wealthy. This view is quickly fading. What corporations have is a large business opportunity with respect to corporate social impact – doing good and making money. Social impact encompasses both social and environmental topics. So, in addition to the private sector donating the resources and capabilities to address problems, they now have something else: a financial incentive.

Not your father’s CSR

Historically, and even now in most cases, Corporate Social Responsibility (CSR) translated into the companies involved providing grants of resources to not-for-profit and other community organizations. These include corporate philanthropy, employee volunteerism and product donations. In the US, Fortune 500 companies spend approximately $15 billion a year on CSR programmes, of which about 70% is in the form of product donations. Many organizations Dialogue Q1 2019

have formalized programmes for employees to volunteer, and the smallest slice of CSR is in the form of cash donations (only 15% of the total). As many CSR and community relations professionals will attest, the dollars are increasingly very hard to come by, and tend to be subject to the financial health of the company and the whims of senior leadership. To be clear, there are some innovations in CSR. Let’s look at Pledge 1%, which started out of the tech giant Salesforce as a programme to provide 1% of equity, 1% of employee time, and 1% of product (software) to a foundation to grow and serve the nonprofit community. Pledge 1% has spun out from Salesforce to allow it to encourage other companies to do the same, and now has over 1,000 companies – mostly privately held – which have pledged to do the same. Yet the real innovation is in corporations large and small, across every industry, finding ways to simultaneously make a positive social and financial impact, and in ways that complement each other. We term this CSI – Corporate Social Impact. Whereas CSR budgets are often relatively small and hard to increase, CSI is by definition profitable, sustainable and scalable.Too good to be true? Let’s unpack this a bit.

Sizing the opportunity

While CSR budgets in Fortune 500 companies are roughly $15 billion, total expenses of those same companies are roughly $12 trillion. That total spend represents millions of decisions –

Corporate social impact (CSI) is profitable, sustainable and scalable