Thursday, May 8, 2014

Social and Environmental Awareness is the Ultimate Competitive Edge

The evidence is in and its not just the subjective opinions or even objective opinions for that matter of a select few.  It’s statistical.  It is woven into the numbers.  The money, the number by which we measure almost everything is showing us that social and environmental responsibility leads to higher profit margins.  How can this be?  Isn’t Social Responsibility a radical new train of thought that is reserved only for those, time and financially privileged enough to act accordingly so that they may add it to their marketing campaign.  Isn’t the road to financial success paved by shrewd decisions, cost cutting and ingenious marketing campaigns?  Isn’t the marketplace too competitive for compassion?

The world is a couple of centuries into an industrial age, where success is taught to hinge on some of the aforementioned questions.  But the whole time there has been a reoccurring theme, that can be seen by looking at the numbers.  An intention of compassion, even in the most cut throat of board rooms, leads to more sustainable profit.  Being compassionate is a sure way to gain an edge over a business’s competition…over the long term.  And there lies the trick.  We wake up in the morning worried about being able to retire comfortably, but yet, when we get to work, we bite and claw for short-term profit.  Short term is so yesterday.  Long term and sustainability is where it’s at!  Why?  Well, it just feels better.  Just like a warm cup of soup might feel better then if its cold.  We might have to wait a few minutes, but it feels so much better.  An old Afghan saying – “Patience is bitter, but its fruit is so sweet”

So where is the evidence.  It’s everywhere. Start by pulling up a chart of your favorite index and compare it to the ETF – DSI.  If you like what you see, I won’t have to get into too much more detail.

In 1999, Business Week posed the question – “Can business meet new social environmental and financial expectations an still win?”  This prompted a study which was published as Corporate Social and Financial Performance: A Meta-analysis, by

Marc Orlitzky, Frank L. Schmidt, Sara L. Rynes. This meta-analysis using 30 years of empirical data concluded that corporate virtue in the form of social and to a lesser extent environmental responsibility is rewarding in more ways then one. There is a positive correlation between corporate, social and environmental responsibility and corporate financial profit.

If you walk into a Patagonia store, ready to pay $200 for a new jacket, the sales associate will ask you about your existing wardrobe to help you figure out if you really need to buy their jacket after-all

Benefit Corporation or B-Corp is a corporate form for for-profit entities that want to consider society and the environment in addition to profit in their decision making process.


This is just a sampling of the evidence, but likely more then enough to think twice about the intention behind our next decision.

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