For business globally the COVID-19 pandemic has changed everything and disruption has been felt by all. This crisis has accentuated social inequality at every level, created economic fears, and changed how we live, whom we support, from whom we purchase, and the kinds of business relationships we want.
Business practices are questioned, and terms such as greenwashing and social washing have become buzzwords.
Greenwashing presents businesses or their products as more green and ecologically aware than they are. Labels such as ‘sustainable’ or ‘environmentally friendly’ lure consumers, but are not always deserved. Social washing is similar, but relates to treatment of human capital.
Expectations that businesses will prioritise the wellbeing of their employees and show social engagement with communities have become of far greater significance over recent months than might otherwise have been expected.
The pandemic has forced companies radically to rethink ways of working, and to make changes that might be at odds with the primary importance of shareholder return. The needs of all stakeholders are suddenly in the spotlight.
People want, increasingly, to check a business’s credentials before giving money to it. Does it pay employees a genuine living wage reflecting the realities of life? Have any wage reductions been applied fairly and at all levels? If government aid has been provided to protect wages, has it been used properly?
If health insurance is an employment benefit is it fit for purpose, or will it turn out not to provide cover when the employee actually needs it? Are holiday entitlements fair and equitable for employees on different types of contract? Has a business behaved reasonably to its customers during the pandemic?
All of these questions matter, but since few people can investigate for themselves there are organisations carrying out precisely such detailed assessments on the consumer’s behalf.
Certifications by B Corp, Certified USA Social Enterprise or Certified UK Social Enterprise are three of the most trusted benchmarks for businesses walking the walk as well as talking the talk, where ethical practices are concerned. They assure consumers that no green or social washing is going on. So what might this mean for your organisation?
Three terms matter here: Corporate Social Responsibility (CSR), Responsibility and Purpose. I will explain these in order, but a progression from one to the next should be seen as the ‘purpose pathway’ that organisations need to follow.
Corporate Social Responsibility acknowledges a business’s philanthropic, activist or charitable responsibility to society, but it is limited in impact and often ends up as part of a marketing strategy. It can also be a form of greenwashing, since almost any business can look good if it can simply demonstrate that it is offsetting negative impacts of its work.
Businesses releasing pollutants into the atmosphere might, for example, commit to planting trees. So CSR is a first step only: an important one, granted, but rarely one with a fundamental effect on what a business actually does.
Step two is Responsibility. A ‘responsible’ law firm, for example, acts in the genuine interests of its clients and does not generate unnecessary work to earn more fees. It takes a moral line in the advice it gives, prioritises gender equality and diversity in recruitment, and seeks to change the way things are actually done.
The final step, Purpose, turns responsibility practices outwards to effect change throughout a business’s sector and among its connections. Continuing our example, a ‘purposeful’ law firm is not content to be responsible by itself.
It works to communicate the benefits of its philosophy to other businesses with which it is involved, and actively encourages and facilitates their getting onboard. So we see a pathway from the moderately impactful CSR, through the notably impactful responsibility to the change-effecting purposeful.
All too often such considerations get sidelined to a marketing department or an individual’s area of responsibility, rather than being central to the thinking of an entire business. To be genuinely responsible, let alone purposeful, a business needs everyone to think in a similar manner and see the value. Because there is value.