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Leadership
5 Reasons Why Impact Is Competitive:
Insights from the World’s Top CEOs

Corporate social and environmental responsibility has developed to a point where the world’s leading CEOs believe it is essential to their companies’ long-term business success. The movement is growing, and companies around the world are approaching social and environmental problems as opportunities to drive profit as well as progress for humanity.

Corporate social and environmental responsibility has developed to a point where the world’s leading CEOs believe it is essential to their companies’ long-term business success. The movement is growing, and companies around the world are approaching social and environmental problems as opportunities to drive profit as well as progress for humanity.

The business community is undertaking amazing efforts to build a better world, such as the RE100 initiative - a conglomerate of businesses committed to achieving zero emissions. The group recently reached 100 members, including 30 Fortune 500 companies, and collectively demands 145 terawatt-hours of clean power yearly (roughly equivalent to 40 percent of total U.S. energy consumption).

It follows that impact is driving innovation; therefore, it is essential to both brand image, the future of our planet, and the bottom line.

In the words of the world’s best-performing CEOs, here’s why impact is competitive:

1) It Drives Innovation

While Milton Friedman thinking, which supports profit for profit’s sake, might question the business case for sustainability and social initiatives, today’s progressive and profitable business leaders view sustainability not as an obstacle, but as a spark of innovation.

In the words of Nike CEO Mark Parker: “Nike succeeds because we’re obsessed with innovation. We are relentlessly curious about our world and how we can make it better. We apply that curiosity to our sustainability efforts, and we continue to learn what is required for real, meaningful progress.”

According to Parker, companies can’t scale without investing in sustainability. “I believe that any company doing business today has two simple options: Embrace sustainability as a core part of your growth strategy or eventually stop growing.”

2) It Hedges Against Regulatory Risks

Although competition is essential to progress, we must realize that we are all constrained by the carrying capacity of our planet. Thus, there is a finite amount of resources the world can give, and a limited amount of pollution the planet can take. Further, the more fragile the world becomes, the more expensive it will be to do business.

“If we keep polluting, stricter regulations will be imposed, and energy consumption will become more costly,” said Lars Sørensen, former CEO of Novo Nordisk and Harvard Business Review’s top performing CEO of 2016. “The same thing applies on the social side. If we don’t treat employees well, if we don’t behave as good corporate citizens in our local communities, and if we don’t provide inexpensive products for poorer countries, governments will impose regulations on us that will end up being very costly.

“Corporate social responsibility is nothing but maximizing the value of your company over a long period of time, because in the long term, social and environmental issues become financial issues.”

3) It’s Good for Business

There is a political debate about whether or not to invest in decarbonizing our energy sector, which would increase social services for underserved communities and preserve natural resources. At the end of the day, caring for the earth and humanity is not only the right thing to do, it also builds brand image and makes good business sense.

“This has no political connotations at all,” said Carlos Alves de Brito, CEO of AB InBev, the world’s largest beer company. “We just think this is good for our business and the environment.”

With renewable energy prices plummeting and companies already seeing millions of dollars annually in energy-related cost savings, it’s hard to argue with him.

4) It’s Good for PR

Business takes place in the world and, more specifically, in communities. Therefore, creating true value in society is an excellent way to create a positive reputation, generate consumer goodwill and carve out a competitive advantage.

Salesforce CEO Marc Benioff said, “Businesses cannot be extricated or disintermediated from the communities they serve. Businesses who do that will do that at their own peril. They will draw fire. And companies who are integrated will be lauded by their communities and not draw fire. In San Francisco, rarely is Salesforce called out as somebody who’s doing something against the city. We’re working to make the city better.”

“The business of business is improving the state of the world,” Benioff has noted. As We First ideology articulates, and Benioff also said, “To be truly successful, companies need to have a corporate mission that is bigger than making a profit.”

5) It Supports a Thriving Economy

No matter how big a company gets or how profitable shareholder ROI is, companies need a strong middle class of consumers to keep business booming. Therefore, in the long run, what’s good for society is also good for business.

Howard Schultz, CEO of Starbucks, said, “The future of America is not an entitlement.” Schultz believes that “we have been given a treasure chest of gifts and opportunities, but some people are being left behind, and success is not sustainable unless it is shared.”

Increasing consumer demand for responsible business, coupled with technological innovation and global interconnectivity, social impact has become inseparable from corporate success. And this new idea of success is not only being defined by rating systems, such as Radley Yeldar’s Fit For Purpose Index, and propelled by coalitions such as RE100 — it is an integral part of staying competitive in today’s fast-paced business environment, and compelling top business leaders to heed the call to serve a higher purpose.

This post first appeared on the We First blog on July 17, 2017.

Jed Wolf is a contributing writer at We First, the leading consultancy that builds purpose-driven brands. We First provides strategy, training and content that helps organizations define, integrate and share their purpose to accelerate growth and impact.

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