Companies that create value for society use business thinking to solve the problems that have traditionally been considered social issues. By creating products or services that tackle humanitarian or environmental issues, companies are not just donating money they made by any means possible.
Big businesses often get a bad reputation when it comes to creating value for society. We’ve all heard of energy companies polluting the ocean and air, clothing companies’ questionable production practices, and food-packaging companies using far too much plastic. The spotlight is always on them as the henchmen of capital greed who wreak havoc on our planet and people.
But what about the good guys? There are many philanthropic companies with noteworthy policies that really do create value for society.
Corporate Social Responsibility: what is it?
Corporate Social Responsibility (CSR) was first suggested by philanthropists like Andrew Carnegie in the 19th century. While it was originally an entirely charitable venture, it soon morphed into a business strategy. Over time, it became a new way of thinking about building a business, and has paved the way for some of the most disruptive and successful businesses today.
As a practice, it began in the 1950s, when Howard Bowen introduced the idea of using CSR in his book Social Responsibilities of the Businessman, where he claimed corporations have a responsibility to the republic. In the 1970s, the US Committee for Economic Development took this concept further, developing a “social contract” between businesses and society. Here, they declared that businesses have an obligation to create value for society beyond simply providing goods and services for sale.
These ideas were developed into theories and models throughout the late 20th century. Theorists and business experts began exploring how executives were incorporating CSR into their companies, and how CSR practices were influencing business outcomes. CSR became an important part of business strategy in the 1980s and 90s, with companies using socially responsible policies or actions to generate good PR and increase profit.
Creating shared value: the next step
Nowadays, the concept of CSR has changed as businesses become more focused on Creating Shared Value (CSV). With CSR, corporations might contribute to societal or environmental causes, but their sole responsibility is still to provide profit to shareholders. But then companies realized they could create value for society while simultaneously making a profit.
Essentially, CSV is about changing the world through a change in capitalism. Harvard Business School professor Michael Porter explains, “The basic idea, which we call creating shared value, is about applying the capitalist model to address issues in society: issues like hunger, issues like environment, issues like water, issues like health… It’s not taking money from capitalism and investing, it’s actually rethinking how we practice capitalism.”
CSV companies use business thinking to solve the problems that have traditionally been considered social issues. By creating products or services that tackle humanitarian or environmental issues, companies are not just donating money they made by any means possible. With CSV, they are making money in a way that also creates value for society.
Five inspiring companies that create value for society
So, what are the best companies today that are helping society while also creating a profit?
Alibaba is one of the best-known e-commerce sites in the world. Along with the massive platform connecting buyers to sellers, the company is working to add value to the community through an advance in its popular map service, Auto-Navi.
This year, Alibaba added a feature to the service to entice users to travel to economically depressed areas. The “poverty alleviation map” highlights different points of interest, like restaurants, gas stations, and stores, prompting travelers to visit small towns in the countryside.
The feature not only adds value to Alibaba’s map app, it also creates opportunity for economic growth in remote villages, which may have otherwise been overlooked.
Bank of America recognized the need to support environmental initiatives. So, they began a program that would both attract new clients and help businesses move forward with their green projects and renewable energy innovations.
Since 2013, their “green bonds” project has raised $442 billion, connecting investors with businesses working to foster the renewables revolution. They have been able to play a key role in enabling green business practices and innovation to flourish, while adding a profitable new area of businesses to their company.
For electric vehicles to become popular, there needs to be more car-charging stations. ABB, the Swiss-Swedish multinational robotics company based in Zurich, has taken advantage of this need.
Since 2015, they have installed 7,000 charging stations around the globe, which promotes the use and growth of electric cars. They will continue with initiatives that add value to society (and their profit margin), with a plan to install hundreds of new charging stations in the US in the coming years.
Weight Watchers has always worked to help people lose weight. But recently CEO Mindy Grossman changed the company’s mission from helping people shed those extra pounds to becoming a holistic partner in fostering health and wellness.
They have redefined their mission: “We inspire healthy habits for real life.” As good as their word, they now work with individuals and communities, while modifying all products and programs to fit the new purpose. With this new approach, Weight Watchers is making a bigger and better impact in people’s lives while strategically growing the company.
5. Reliance Jio
Reliance Jio, established in 2016, has built a revolutionary, fast, and reliable 4G network in India, offering the population a low-cost option for Internet access. In 2016, only 153 million out of 1.3 billion people had access to mobile internet, and they paid high prices for poor service.
Now, the company offers very low-cost smartphones, data starting at four cents per GB, and fixed broadband service. Because of this, Reliance Jio is able to make a profit while giving huge segments of this population access an essential tool in today’s digital world.