Societal investments increase profit and reputation of business
7. February 2019
The majority of business people consider money spent on cultural, social or environmental purposes as a kind of charitable program. WHY? We could answer with a question: would you believe in the link between investment in the societal good and a measurable return on investment (ROI) for the company involved?
As a matter of fact, “charity expenditures” are most likely to be perceived as “Green Washing” or “social washing”. Why have we reached this level of disillusion or fatalism? One answer could be to question the focus on the short-term perspective and on shareholder value. Anyhow, considering actions for the good of society and the environment as a cost to be charged on behalf of good conscience is too simplistic. A solution is to start considering societal initiatives like real investments with strong ROI at the end. It is by far a better way of re-considering the purpose of a business. Why?
Because societal and environmental investments increase profit and reputation of business!
This has been well documented over the past 10 years and it isn’t a utopian way of seeing the business world, wearing charity or philanthropy glasses. No doubt, there is positive impact on the profitability of a business investing into societal and environmental programs. On the one hand the corporations’ reputation in the market and the motivation of its employees are increasing. Results: revenue growth and cost reduction. On the other hand, considering society and business as an ecosystem unleashes the ability to create and innovate. Investing into its ecosystem means for a corporation to rethink its vision, integrate the values of all stakeholders and not solely focus on shareholder value in a short-term perspective. Depending on the organisation and business model a corporation decides to implement, the impact on profitability could reach up to +20%(*) Earning After Tax (EAT), reducing costs by -2,5%(*) of turnover and increasing turnover by +5%(*).
Society.Vision’s organisational model and approach, which brings business and non-profit organisation (NPO) together, provides these figures. The organisational format proposed creates a virtuous circle based on the increased meaningfulness and its internal and external impacts on the identification of customers, employees and stakeholders to the brand of the business. The identification process brings among others reputation, motivation, attractivity, satisfaction in the forefront of the business and positively influence basic KPIs such as productivity, access to market, brand awareness and others that all are measurable. The figures mentioned above are based on meta-studies, benchmarks and pilot projects.
The organisation format that allows cooperation between business and NPO promotes also the company’s innovation process. The main drivers are a broader knowledge of the ecosystem and the interactions between society, environment and business. It’s a creativity-based approach that opens up to a different way of thinking and that is less focused on until now a single financial and growth aspect of companies.
Overall, we can say loud and clear that there is another way of doing business for the benefit of all stakeholders. Let’s talk about the evolution of corporate culture to create positive impact on society.
Society.Vision advises business owners, CEOs and NPO management organisation on how to implement a new business model that has a positive impact on return on investment (ROI), return on society (ROS) and return on environment (ROE).
(*) Calculation based on universities meta-studies, benchmarks and pilot projects of Society.Vision