Sustainability Consultant | Business Coach & Educator | Founder of The Academy of Human Potential.
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From tax breaks to maintaining a competitive advantage, embedding social responsibility into your business model makes sense on many levels. But, there are two key areas that I believe rise to the top of the list: your stakeholders and sustainable development.
For nearly 30 years, the United Nations has been bringing countries together for global climate summits called COPs (Conference of the Parties). The UN Sustainable Development Goals (SDGs) have opened the door for businesses worldwide to participate in global peace and development and consider the private sector to be an essential partner in sustainable development. This year’s COPs finance adviser, Mark Carney, stated that "every company, bank, insurer and investor will have to adjust their business models, develop credible plans for the transition and implement them."
Ninety-five percent of Fortune 500 firms have a stated commitment to the SDGs in their annual reports, and companies and investors have earmarked €7 trillion in investments to be SDG-compliant. Additionally, more than $2 trillion in projects and investments is benchmarked to sustainable social investments, and this figure is growing rapidly driven by a new generation of investors that demands more socially responsible companies to invest in.
Social responsibility is now a key part of any successful entrepreneurial venture. And a concept useful to understand how businesses identify and introduce innovations is sustainable entrepreneurship, also known as conscious entrepreneurship.
A conscious business model emphasizes the integration of economic, environmental and social responsibilities in a business's operations and, when structured properly, can make a tremendous positive impact and be a driving force in sustainable development. It comes as no surprise that stakeholder interest and sustainable development go hand-in-hand, as the environment remains a top priority for both Millennials and Generation Zs alike. A recent study found that 77% of consumers prefer to purchase from companies committed to improving the world, while investors agree that a company’s efforts to help improve society and the environment contribute positively to stockholders’ return on investments and influence their investment decisions.
Aside from the moral and financial factors, socially conscious companies often create positive work environments and have dynamic ideologies that attract top talent. A survey conducted last year found that 95% of employees think that businesses should benefit all stakeholders and not just their shareholders. This includes the customers, employees, suppliers and the communities they operate in. The best candidates are likely to select a company that plays an active role in their community and that dedicates a portion of its resources to helping others.
Business models should then be considered in conjunction with stakeholders, stakeholders' expectations and their expenditures when making corporate decisions. Stakeholder design is an approach that can be used to engage stakeholders in the development of your business model. This has the potential to produce solutions that improve stakeholders' well-being, strengthen relationships with them and develop market opportunities for your company.
There are three strategies you can incorporate into your business model:
1. Ask stakeholders what they want in the future (what problems they face) in order to address these goals effectively in a plan.
2. Discuss mutual goals with stakeholders when designing new products or services that will provide benefits to both stakeholders and your business.
3. Treat stakeholders as valued customers when creating new social movements or campaigns in order to make change across multiple constituencies simultaneously.
When stakeholders feel they are being heard, and decisions directly impact their lives, they are not only more likely to work with you but also more likely to promote your product or service. This helps ensure long-term success for stakeholders and for your business. With the combination of economic growth and equal opportunities, stakeholders' investments in businesses will be more proactive, and they will seek organizations that not only provide stakeholders with high-quality products and services but that are also responsible stakeholders themselves. As this trend continues, I believe that sustainable development will become a major vector for business activity and performance in the years to come.
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