The Social Value of Business

Not so long ago the idea that business should have a social value was seen an anathema.  

The accepted model was that business could get on with making profits, at virtually whatever social cost as long as they paid taxes.  Governments, charities and social enterprise would clear up the mess.

The financial and environmental crises have changed all that.  Now we hear a growing consensus that businesses in general and especially banks should have a social purpose too.

As we have seen, the effects of clever banking practices such as securitisation, derivatives and hedge funds have shown that the banks can create far more “mess” than governments are capable of clearing up.

The same challenge can also be laid at the door of many other industries such as industrial farming, car makers, airlines, oil companies and so on.  These industries have sought to maintain a polluting, fossil fueled status quo, long after the point where it became clear that clearing up the mess is one of the biggest challenges human society is ever likely to face.

The change process started over ten years ago, when many businesses saw the writing on the wall and embraced the Corporate Social Responsibility or CSR movement.

The benefit of CSR to business, is that the risks factors of increasing regulation, harder staff recruitment, motivation and retention and negative media can be mitigated by a strong CSR policy.  The business, meanwhile, can carry on in what Joel Bakan described in his 2003 book and film “The Corporation” as it’s psychopathic self interest.

On the whole, apart from things like CSR, businesses have been reluctant to move on from their wealth redistribution model, taking value from the environment and population and funneling it towards the shareholders and a few senior executives.  

However, we are now beginning to see a shift.  Some of the most successful businesses in the world are based on an authentic and socially positive purpose - like Google, Apple and Interface Carpets.  Legions of new businesses are being formed with authenticity as a core value.  And we are seeing increasing media commentary about the benefits and opportunity of doing business this way.

The point is this; Your business will be more profitable if it solves problems for people and society than if it creates them. 

As I wrote last week solving the climate climate change problem is an opportunity for business - not a burden.

Financial institutions that deliver social value are an opportunity - not a burden.

Non polluting business is an opportunity - not a burden.

And the same goes for virtually all of the challenges faced by our society - they are opportunities that can be profitably solved by business.

All we need to do is to identify the challenge we are most strongly motivated by and focus our business on solving it in a profitable way.