Previouis

Business for Good

Article by
Sam Butcher

What is business impact consciousness?

There’s a lot of talk around recently about Corporate Social Responsibility (CSR). While there are some who are saying CSR is dead, and others are saying CSR is more important than ever, they agree on one thing: We need a change in the way we see business. Tokenistic CSR won’t cut it anymore. Change is needed and it’s time we recognise that it will come with financial cost, and that’s okay. Why? Because it’s a good investment. Now let me add some nuance here - I’m not suggesting it will necessarily make your business more profitable (though there’s plenty of others who do make a case that it will do that too), but it’s a good social return on investment (I’ll explain that term more below).

Over the last 5-10 years, there’s been a huge array of people, businesses, NGOs, and governments that are taking a more serious look at the consequences of the way we’re living as a society. Thank goodness. And it takes all sorts of groups like this to make change happen. I’m all for it. But here at Redvespa, we’re business consultants and analysts, so we can’t help but come from the perspective of those in business. So this article is outlining our case for why we - a private, for-profit company - are passionate about being “in business for good”. Not being “Government for good” or “NGO’s for good”, but Business for Good

Business has often been based on a view of economics which believes that “greed is good” - so long as everyone does what is best for themselves, it results in “fair markets”. As someone with a degree in economics, I understand the intellectual argument for this idea better than I’d like to admit. But, like much of academia, something can seem like a great idea in a university where the layers of collateral damage and unintended consequences aren’t so clear. The problem comes when a worldview like “greed is good” is used to justify systems that result in our entire species being under threat from our very own selves.  

Every time someone refuses to buy plastic packaging, decides not to eat meat, or doesn’t buy products made by modern-day slaves, they’re making a stand. 

However, businesses have an opportunity to enable change that far exceeds that of any one individual in their personal life. Rather than suggesting that businesses continue down their highway to hell while they encourage their staff to be more socially responsible in their own time, we’ve chosen to make Redvespa a leader - inspiring our people to follow the business’ lead in taking a stand.

For us, being in Business for Good is our very own way of making a stand. It’s our way of saying “we won’t prioritise profit at all costs”. It’s our way of saying “people matter” and “we have an obligation to look after the environment as good stewards”. It’s our way of saying “greed is not good”.

Triple Bottom Line

Almost 30 years ago, John Elkington coined the phrase “Triple Bottom Line” (TBL). It’s an idea that summarises the fact that businesses typically look at only one bottom line: the profit on their accounting statements. But in a truly sustainable world, businesses should also consider the ‘bottom line’ of the net costs or benefits to society and the environment. It has become well-known terminology in the business world, and while some businesses may not quite get on board with its vision for the world, at least it made a splash in the pond of business thinking. 

However, when Elkington recalled the concept in 2018, fewer people heard about it. While Elkington stands by the importance and significance of the triple bottom line concept, he perceives that it has been misunderstood by the majority of those who have gone to implement it, and the concept, therefore, needs refinement. To quote his article “...the TBL wasn’t designed to be just an accounting tool. It was supposed to provoke deeper thinking about capitalism and its future, but many early adopters understood the concept as a balancing act, adopting a trade-off mentality.”

When one considers the level of existential challenges humanity has been facing in recent years (environmentally, socially, and ethically), Elkington’s legacy is an important one we need to hold on to. We need to let it provoke us to deeper thinking about capitalism and its future. His root argument is that it’s not about ‘weighing up’ profit vs social or environmental impact, as if it’s some kind of see-saw we can balance by making enough money that we can justify negative impact. Rather, it’s about shaping the entire way we do business to operate in harmony with environmental and social factors.

Social return on investment 

Investing in social equity is taking a view that any kind of decision should be made not only with regards to business returns, but with regard to social returns. A business idea may have the potential to turn a million dollar profit, but if its operation causes 2 million in social cost, then a social return on investment model would say it’s a really bad idea. Let’s take a look at the contrast:

There’s no shortage of businesses that make impressive profits but cause more harm than good. A personal favourite which I love to hate is gambling - of which pokies are the worst. 

In New Zealand, $987 million was wasted on pokies despite only 10% of the population engaging with this form of gambling. While 40% of profits from pokies is legally required to be returned to the community via funds and grants, the reality is that the net social harm from this industry is immensely greater.

On the other side of the coin you have a business like Banqer. As a for-profit business but also a B-corp and recognised social enterprise, Banqer offers a financial literacy technology solution for schools around New Zealand and Australia. The profit they make is important because it keeps the business running - but the social return of teaching kids how the economy works and how to handle their money is so much more than the businesses bottom line. Rather than profit being made at a social cost, their profits are the result of creating net social benefit. That’s the kind of business we want to celebrate!

The reality is that deep down, many of us intrinsically understand these ideas. But when it comes to business, the thrill of profit can so easily overshadow the truth about what matters: people, stewardship, sustainability, and wellbeing. 

Bringing impact into the small-business mindset

Now, we recognise it can be really hard for a small business to figure out how to think about impact. It can be seen as something that complicates what could otherwise be a very simple view of business as a tool for creating profit. But our goal is to make impact accessible. It shouldn’t need to be complicated. 

In small and medium businesses, teams are often very task-focused - and rightly so, they typically all need to be focused on delivery. You’ve got to get a deliverable out the door, make the sale, or fix the machine. It’s easy for everything to feel like it’s urgent. That’s not to say the same isn’t true for big businesses or the government, but the consequences of not being task-focused feel more tangible in a smaller business. Unproductive workers can’t hide quite so easily in a small business.

As a result, small and medium-sized organisations often spend less time thinking about the peripheral impact they’re having on their community, the environment, and the planet. Granted, there are countless examples of small businesses that go to extreme lengths to show their support for the community - and we celebrate those businesses! But impact isn’t just about being generous with profits. It’s about operating sustainably, with your customers’ and suppliers’ long-term good in mind. Ultimately, it’s about having a thoughtfulness about the way your business affects your community. 

At Redvespa, we’re passionate about unleashing business potential. One of the most important aspects of business potential that we see in New Zealand today, is the potential for businesses to raise their horizons beyond shareholder return, but instead focus on stakeholder return. Who does the business impact, in which ways, and how should we consider that in our business?

As the world shifts to gradually become more impact conscious, it’s an opportunity for small businesses to pivot. Whether they’re aware of it or not, they can be leaders in the field by making small changes to the way they operate and the way they present themselves. 

So, with all that in mind…
Are you in Business For Good?

Photo by Marcell Viragh on Unsplash

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