Companies have to rethink their role in society
Date: May 9, 2018
Beyond Philanthropy’s benchmarking study on Corporate Citizenship Engagement of the DAX 30 companies shows that German corporations are actively engaged in society beyond their economic activity; nevertheless, they should do more than just reducing their negative impacts on society and environment or contributing cash donations to NGOs. Companies will need to take their social engagement activities to the next level by deploying their core products and services for the good of society. And as a social impact consultancy and founding member of CECP’s Global Exchange, we at Beyond Philanthropy are convinced that companies can be a force to do good.
In our recently published study Value2: Social Innovation for Companies and Society, we have taken a closer look at the Base of Pyramid concept and explored its feasibility for an industrialized country such as Germany. The result: the 16M people (~20 % of Germany’s population) at risk of poverty and social exclusion spend more about 80 – 120 bn EUR annually on basic needs. This led us to the conclusion that there is ample demand and opportunity for business to develop innovative products and services that simultaneously increase the quality of life for low-income households and generate business value. Now, we are looking forward to working with bold and ambitious companies to develop social innovations with value for society and business.
Since the adoption of the Sustainable Development Goals (SDGs) in 2015, there is widespread consensus that companies need to contribute to global sustainable development. While many of the SDGs have a particularly high relevance for countries in the Global South, a study conducted by the Bertelsmann Foundation shows that also countries like Germany have major challenges with respect to inequality and social exclusion: While material wealth is higher than ever and aggregate economic development is steadily increasing, questions regarding social justice become more central as growing inequality and risk of poverty jeopardize the positive overall development.
In the aftermath of parliamentary elections in Germany, where Angela Merkel won her fourth term, but also nearly 6 million people – more than 12 percent of voters – casted their ballot for the right-wing party Alternative für Deutschland (AfD), public opinion is that it rests on political leaders to offer solutions and take action for these challenges. However, the debate should not distract from society’s expectation that companies also bear responsibility to tackle existing societal challenges. According to the 2018 Edelman Trust Barometer, three-quarters of respondents believe that companies should focus not only their own profits but also on strengthening economic and social conditions in their communities.
In this respect, German companies have a lot to learn from progressive French and Belgium corporations that consciously tackle existing challenges and build innovative business models that are at the nexus of shared financial, strategic and societal values. These companies do not limit themselves to separate philanthropic initiatives but rather develop innovative and inclusive business models or adjust existing models to also serve the needs of low-income households. For example, the French car manufacturer Renault offers low-income households low-cost cars and repairs through “Mobiliz”, a cost-covering, inclusive business model. Blédina, a baby food-brand by the French multinational food company Danone, offers discounted baby food to low-income households. Next to the obvious societal impact, both approaches also benefit the companies by opening up new customer segments, increasing employee motivation, image and reputation.
Calling on companies to contribute to the well-being of society is not a burden but a chance to move potential into reality. Of course, companies should not abandon existing effective activities, but rather add to these current efforts with new and innovative programmes integrated into their core business.
In the long run, we have to distance ourselves from the conviction that financial return and societal added value are separate parameters, especially as companies have immense competence and skills which they can bring to the common good.
Maximilian Grimm is a consultant at Beyond Philanthropy, a consultancy for social innovation, CSR, and philanthropy. He specializes in the corporate and corporate foundation sector, supporting clients in the development of CSR strategies, social innovation approaches as well as the design of high-impact programmes. For instance, Max has supported a large German technology conglomerate to drive social innovation within the company or supported a leading insurance company to globally implement its new social innovation initiative. Also, he worked with one of the largest European holding foundations on the development and design of an impact-driven social investment strategy. He is also Co-Founder and fellow of NAHhaft, a social start-up focusing on sustainable and responsible food and agriculture.