The new wave of conscious consumption, driven largely by millennials and Gen Z, is pushing companies to innovate around social causes.
The Nielsen Global Corporate Sustainability Report found that 73 percent of millennials are willing to pay more for products sold by sustainable brands. Further, the study found that 81 percent of millennials expect companies to publicly share their corporate social responsibility efforts.
The cry for corporate social good is being answered by businesses around the globe.
In fact, The Conference Board’s report, Driving Revenue Growth through Sustainable Products and Services: Strategic Overview, found that, on average, 21 percent of corporate respondents’ revenue was generated from sustainable products. The study, which surveyed 12 Fortune 500 Companies across 6 industries including Allianz, Dow Chemical, IBM, Johnson & Johnson, Siemens, and others, also concluded that sustainable products grew 6 times faster than comparable offerings during the 3-year survey period.
What’s more, socially responsible business practices are leading to profitable shareholder returns.
A 2016 Deutsche Bank study, which compiled over 40 years of data and more than 2000 financial reports, found that 90 percent of the studies analyzed exhibited a non-negative relationship between Environmental, Social, and Governance metrics and financial performance. In other words, running a sustainable and socially responsible company is correlated with bottomline benefits.
This shift towards impactful innovation is causing a migration of funds and focus away from nonprofits and NGO’s, and toward social entrepreneurs.
Additionally, large brands are facing challenges from a pipeline of newcomers that are building businesses on the premise of social impact.
Here are a few lessons from for profit companies changing the social impact landscape and how they’re measuring success:
Design for change: Companies that look at problems as opportunities, apply creative thinking and make unexpected partnerships are better positioned to innovate for impact.
A brand doing a great job of designing for change is Adidas. The shoemaker recently partnered with nonprofit ‘Parley for the Oceans’ to launch the Adidas Parley, a sneaker made from recycled plastics. Each set of shoes avoids approximately 11 plastic bottles from entering the ocean, says Adidas.
The Parley is part of Adidas’ commitment to stop using virgin plastics in its supply chain, and to cut out plastics whenever possible. Further, the footwear and apparel brand quantifies its impact by identifying its 2020 Goals and Ambitions, and closely monitoring their progress in annual sustainability progress reports.
The takeaway is that innovative ideas can be inspired by looking at a problem and developing new products or services that can be part of the solution.
Create B2B tools to tackle big problems: Part of the reason millennials and Gen Z are so strongly driven by purpose is because the world faces an unprecedented number of crises. At the same time, the web and social media are giving us real time updates from around the globe.
While it’s overwhelming and unfeasible to tackle all of our world’s problems, companies that enable partners to leverage their products and services to address specific challenges can carve out a competitive advantage and scale social impact.
This is especially relevant to the digital first and software as a service (SaaS) spaces, in which product offerings have a myriad of uses.
One such company is IBM, who’s Watson Technology has been making incredible advancements in medicine and other fields. Of note, IBM is partnering with Quest Diagnostics to tackle cancer genome sequencing. By analyzing genetic alterations in tumor cells, then comparing them with healthy cells, the Watson AI Technology is able to identify the individualized treatment strategies most likely to succeed, as well as strategies to avoid.
IBM measures impact via its Corporate Responsibility Report, using metrics such as number of renewable kilowatt hours purchased, employee volunteer hours, and amount of grants given to provide evidence of impact.
Ultimately, empowering others to create a positive impact is an excellent way to scale social good and make meaningful business partnerships.
Lead with values and impact: While legacy brands can redefine themselves and create game-changing advancements, businesses that align with purpose from the get-go build a foundation of trust and consumer goodwill. This foundation also helps brands make faster and deeper connections with their target audiences, ultimately leading to larger profits and market share.
A company doing an excellent job of leading with values and impact is Brandless. The eCommerce consumer goods business is built on the belief that people deserve fairly priced quality products that don’t harm our bodies or our planet. Every item in their catalogue is sold at $3 and they claim to offer food, beauty, household, and other staples at an average of 40% less than competitors by cutting out the middleman and focusing on select products.
What’s more, through their nonprofit partner Feeding America, Brandless donates one meal to a person in need every time a customer checks out.
In terms of measurement, the company trademarked the term “brand tax,” which they define as, “the hidden costs you pay for a national brand.” The total value of “brand tax” savings will be displayed on each user’s account quarterly.
The company also showcases transparency by disclosing certification programs such as Good Manufacturing Practices, the EPA’s Safer-Choice Standard, The Forest Stewardship Council, no animal testing guarantees, and more.
The future of brand impact lies in turning problems into solutions, making purposeful partnerships, and creating businesses built upon the foundation of social good. According to the Global Reporting Initiative, 92% of the world’s largest companies monitor and report sustainability metrics. Corporate Social Responsibility is now an integral part of business today and will only continue to grow in coming years. If you’re looking to measure and improve your impact, The Sustainable Development Goals, The Corporate Human Rights Benchmark, The Sustainability Reporting Guidelines, and The Gallop Poll Employee Engagement Survey are great resources to explore.
Title image via iStock user kasinv.