- There are a lot of compelling reasons for businesses to embrace socially responsible practices in 2021.
History will mark the many changes brought on by the civil unrest and the problems the pandemic caused for businesses in the past year, and those trends also promise to forever change the way businesses operate.
The more socially conscious business is an expectation now from many employees, investors, and customers in the wake of the global COVID-19 pandemic and social unrest throughout the country.
You can find a number of large socially conscious businesses such as Dr. Bronner’s, Ben and Jerry’s and LEGO. However, there are also a lot of smaller socially conscious businesses as well. They are becoming even more common these days.
In 2020, businesses witnessed how these major events transformed expectations about how they operate. Adapting socially conscious business practices is the key to meeting these new demands from workers, shareholders, and consumers.
For example, businesses are responding to these new expectations by pivoting to a more socially conscious supply chain that integrates environmental, social, and good governance factors into the goods and services they provide. Also, check out some of the best socially responsible companies that are making an impact.
The point is businesses have realized they cannot operate in a vacuum. They must recognize concerns raised by protests of those protecting the rights of minorities such as groups promoting Black Lives Matter or Asian communities targeted with violence. They cannot ignore how the pandemic highlighted the needs of those using food banks for the first time or forced millions into unemployment after a lifetime of work. They must address diversity and inclusion in the workplace as employees become more aware of systemic discrimination at times perpetuated by outdated corporate practices. And they must accept growing concerns about how their operations affect the global environment as more consumers demand acceptance of green policies to reduce waste and their own carbon footprint.
Here are some important trends to consider as businesses rise up to meet these new expectations.
Companies that make transparency a priority are satisfying demands from consumers and shareholders who want to know more about how they operate. There is little tolerance now for backroom dealing and closed corporate boardrooms. The evolution of access to digital information has driven much of this, giving more insight to those outside the corporate leadership of business operations. But calls for more regulatory oversight across the globe also contributed to the need for more transparency. As a result, companies are starting to offer more information about environmental, social, and governance practices as a way to promote and affirm their socially responsible behavior. Workers also are demanding a greater role in decision-making through an increase in union activities and more proactive challenges to company practices that they believe undermine their values and employment.
As concerns about climate change continue to increase, companies are confronting those concerns by acknowledging how their actions may contribute to the crisis and help address it. In some cases, businesses are rethinking how they operate, considering changes in the workplace that can reduce their reliance on energy, converting to the use of shipping and transportation services that rely less on non-renewable resources, and working with vendors who also follow these practices as a way to expand awareness and increase their impact toward adoption of more green technology throughout the corporate setting.
Some of these practices include the use of recycled products or implementing strong recycling programs at their company; converting to the use of vehicles and equipment with cleaner emissions; reducing their carbon footprint by allowing employees to work remotely as much as possible, and obtaining energy-efficient certification for their buildings. These actions also are helping businesses save money while making a strong statement about their commitment to socially responsible behavior.
Local is the new global
Companies can make a difference in the communities they serve, even those with global operations. This trend is the result of consumers and shareholders demanding that companies assume a larger role in serving the communities where they operate. This can include everything from bringing local businesses into their supply chain to making sure that they hire and promote from the local workforce instead of internal transfers from other national or global operations.
Companies also are engaging with community programs that serve the specific local needs of the areas they serve, like education, poverty, and social justice. This can be in the form of supporting local charities or nonprofits, as well as partnering with other businesses or groups in the community to serve local programs that support residents. Some businesses also have become involved with projects that serve specific lower-income communities, expanding opportunities for employee volunteering for local programs and rewarding workers who take the initiative to serve their community.
Making diversity and inclusion a priority
Civil unrest across the country has underscored inequality in many communities, while the pandemic also highlighted disparities in health care for millions of minorities who have been disproportionately affected by COVID-19. Companies are tackling these issues by making diversity and inclusion a priority in their own businesses. Corporate social responsibility comes in the form of mandating efforts to seek a more diverse pool of job candidates, including active participation in minority trade associations that can help corporate recruiters. This commitment has helped to expand economic opportunity and access to better health care to many who otherwise have not been part of their business operations.
The promotion of women and minorities also has helped to reduce pay gaps among some employee groups, while companies also rewrite their employee handbooks to make it clear they will not tolerate insensitive or offensive behavior aimed at minority groups in their workforce or community. The result is likely to help make management in these companies more diverse, reduce gender and racial pay inequities, and expand the voices heard when important corporate decisions are made.
Seeking purpose over profits
The expanding awareness of social trends and global practices has made investors savvier. It has also created a marketplace for investments in companies that practice what these investors want to see them preach. No longer are investors only seeking the most profit they can find from a company. Many are now choosing to put their money into corporations that have willingly embraced social justice causes, environmentally-friendly practices, and policies that promote equality.
Investors seeking to support socially responsible companies are looking for financial returns and social change, two things that they believe are not mutually exclusive and that is no longer considered radical in the investment community. There are studies showing more investors are embracing those points. Morningstar reports that sustainable open-ended mutual funds and exchange-traded funds grew from 111 in 2014 to more than 300 in 2019, according to the website NerdWallet.
Employees and consumers respond
The good news for companies that eagerly embrace these socially conscious behaviors is that they are learning it makes great business sense. The practices are improving the working conditions of employees, who report more job satisfaction and a greater sense of creativity in their workplace when their company commits to more socially responsible practices. Companies that offer employees opportunities to serve their community, insight into diversity and inclusion practices and a voice in ways to increase socially conscious practices are reporting greater job satisfaction among their workers. And that improved job satisfaction translates into improved job performance and productivity, studies have found.
Customers also are responding to corporate efforts to embrace socially responsible practices and policies. Most customers say they would be willing to pay more for products from socially responsible companies and a 2016 Nielsen survey found such corporate behavior increases customer loyalty.
Legacy of change
Despite the physical and economic suffering brought on by the COVID-19 pandemic and the turmoil experienced from social unrest, there is good news as the country emerges from these crises. The change brought on by these experiences continues to be challenging as millions of people await vaccines developed to stifle the nation’s health emergency caused by the coronavirus. While awareness of social injustice and economic equality has increased, efforts continue to address these problems and communities continue to struggle over the best solutions.
But the corporate community has engaged in these important issues, in some cases leading by example to help address concerns. Even as states reduce their mandates issued earlier to combat the spread of COVID-19, businesses continue to promote healthy practices like the wearing of face masks to protect their customers. As state and federal lawmakers consider policies aimed at reducing economic inequality, some businesses like Walmart and Costco are increasing their wages for workers as a step toward expanding income opportunities.
These practices continue the commitment started earlier by companies eager to promote the value of a socially responsible business.