Corporate responsibility doesn't have to involve a sacrifice or trade-off. The best programs work because firms make doing the right thing a key part of their operations. Ways to steer your firm in that direction:
Make it vital. Firms must look at doing the right thing as key to their strategy. "If these interests are peripheral and you have a bad year, it's the first thing to be cut," said Christine Arena, a San Francisco-based corporate strategist and author of "The High-Purpose Company." "It has to be mission-critical."
Procter & Gamble PG sees environmental concerns as the right way and has set aggressive targets for green product sales. It wants to hit $20 billion in green sales by 2012. "They're using it in an effort to improve growth," Arena told IBD.
Meet customer demand. Firms are facing heightened pressure to do the right thing, says Andrew Savitz, a Boston-based consultant at Sustainable Business Strategies and author of "The Triple Bottom Line." "Companies are turning this into an opportunity," he told IBD. "I call it sustainability jujitsu."
Watch the bottom line. Wal-Mart WMTput out guidelines in which it rates suppliers by the amount of packaging they use and how energy-efficient it is. The firm expects the move to save $10 billion, including $3 billion for Wal-Mart alone. "It's not philanthropy; it's smart business," Savitz said. "Companies are defining the sweet spot, that intersection between their business interest and the needs of society."
Look for shifting tides. Arena says firms should aim to meet changing demands by doing the right thing. Carmakers, namely Toyota TM, took advantage of the move to save fuel by launching hybrids. Others are now trying to catch up.
Arena says people can debate whether General Electric GE acts in a responsible way after its deals with Iran. "But GE is strategically responsive to the ways the world is changing, in a manner that protects shareholders," she said.
It has invested heavily in its ecomagination effort, which includes building wind turbines and helping build the water supply. That unit, Savitz said, "is growing like crazy."
Ask yourself key questions. Arena says the best companies come up with answers to:
What are our greatest strengths?
What problems that affect stakeholders are we best positioned to solve?
Do a deep analysis. Look at what you make and how you make it, Savitz says. Then think about new products and services.
Caterpillar CAT buys back old tractors, rebuilds them and sells them. "They're making tons of money on this, and they're saving the environment," he said.
Identify a big mission. Firms should look past the dollars they crank out to find out what makes them invaluable to people, Arena says. Many firms, such as General Electric, have statements of purpose. Procter & Gamble aims "to improve the everyday lives of the world's consumers."
Recruit better. Studies show young people want to work for firms that do the right thing. So running your firm that way could help you draw top talent.
Source: Investor's Business Daily
