What To Consider Before Launching Your Brand’s Social Impact Initiative

Jeff Berkowitz is founder and CEO of Delve, a competitive intelligence firm that helps companies navigate political and reputational risks.

With brands taking greater leadership roles in society, they’re now expected to engage on a wider range of issues, including those not directly related to their business. A variety of stakeholders will encourage an organization to lead with social impact as much as they do the products they make or the services they provide. Employees, investors, advisers, community activists, policymakers and even executives see how critical dedication to shared social values can be not only to a company’s corporate culture but also to its bottom line.

In a deeply divided nation, such corporate activism can present challenges to organizations once reticent to take public stands on contentious issues but now thrust into today’s political and social debates. As Axios reported, a recent survey warned about “the danger of speaking out impulsively on issues that aren’t core to the business.” According to Fox Business, the survey found that while 63% of corporate executives think “companies should speak out on social issues,” just 36% of voters agree. Even worse, only 39% of voters think corporate communications of social issues is effective.

Here are three practices executives must adopt to shape their organization’s social impact in a thoughtful and authentic way that minimizes risks and increases the likelihood their efforts will be well-received.

Know your history before you engage.

All organizations have a history, and those with longer ones know just how messy and complicated they can be. While a company might declare publicly its values aligned with employees, stakeholders and the public, a scandalous brand history can send mixed signals and distract from present-day goals, especially in the age of capable digital sleuthing.

If you proudly proclaim that you’re “advancing women” and that you’re creating a “more equal business,” a decades-long history of company sexual harassment and discrimination lawsuits can send mixed signals about your dedication to such principles. Or if your founder held well-documented racist views, even if expressed a century ago, the task of convincing people you’re serious about racial equality is a lot harder. In both cases, you should probably avoid leading the public charge for “diversity, equity and inclusion,” lest you expose your company to accusations of hypocrisy and insincerity that can hinder its future.

Don’t sign up for principles before you understand their implications.

Social impact isn’t just merely flowery statements. It entails concrete actions. So before endorsing broad proclamations, companies need to understand the expected actions those proclamations may entail.

The Business Roundtable learned this lesson when launching a revised “Statement on the Purpose of a Corporation” that broadened the purpose of companies from serving shareholders to recognizing the importance of a wider range of stakeholders. While well-intentioned, U.S. Senator Elizabeth Warren (D-MA) quickly pounced on the pronouncement, challenging the CEOs group to fully endorse her legislative agenda if their statement was more than “an empty publicity stunt.”

Likewise, many corporations are now adopting principles related to “Environmental, Social and Corporate Governance” (ESG). Many banks, for example, have adopted the “Equator Principles” for navigating social and environmental issues related to financing large infrastructure and development projects. However, activists’ interpretation of these principles is far different than the banks’ more balanced approach to supporting important projects across economies.

More recently, 100 CEOs signed a public letter defending the democratic process and voting rights. Yet behind the letter’s reasonably stated principles are highly charged partisan clashes. When the Georgia legislature considered election law reforms, activists threatened a boycott of the state, and several prominent Atlanta-based companies found themselves under intense pressure to act. Speaking out against the bill, however, carried its own cost. Delta Airlines, for example, saw Georgia state legislators threaten to revoke a jet fuel tax break worth tens of millions of dollars to the company. This was all for a law with facts that did not live up to the activist or media claims and that the airline already had worked to improve.

Actions speak louder and longer than words.

Today’s consumers, media and activists are savvy and expect companies to live by their stated principles. In practical terms, that means a lot less “saying something” — either with words or a check — and a lot more “doing something,” even and especially when that involves hard changes and choices. These decisions must be made for the long haul, not simply in response to a negative news story or a social media trend.

In the wake of the #MeToo movement and racial justice initiatives after the death of George Floyd, many companies have bolstered their public-facing commitments to “Diversity, Equity and Inclusion,” promising better opportunities for women, people of color and other minorities. Others wrote checks to popular nonprofit groups offering to show their support.

As organizations make these big gestures, their employees, customers, investors, the media and the public are all watching. While words and a few donations may express earnest solidarity, companies will ultimately be held accountable for how their efforts translate into real results within the companies and the communities in which they operate. Companies must ensure their actions speak louder than their words, or at least live up to the scrutiny of those words, whether it is in their boardroom and C-Suite, how they treat customers or how (or if) they truly invest in underserved communities.

Today, there is a strong desire for companies to become more purpose- and mission-driven, highlighting their care for social impact. Yet using appeasing words that seem popular is fraught territory if your corporate history and ongoing business practices do not match those words. Adopting the three steps above will ensure you are making the right impact.

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