Why we believe in Profit with Purpose.

In the Fall of 2008 we started PUBLIC. It was the height of the financial meltdown. Lehman Brothers collapsed a month before we launched and the world was in freefall. And despite having terrible timing we felt we were on to something, namely, that business must be and can be a major catalyst for social impact for one simple reason – their reach and scale to affect change is so much greater than both government and non-profit sectors.

We were inspired by the early adopters – Ben & Jerry’s, Patagonia, The Body Shop and Unilever – wanting to bring it to the mainstream. But we recognized that the market wasn’t ready because companies and charities still believed that the motivation to “do good” should be charitable and untainted from generating business benefit.

This is the essence of corporate social responsibility (CSR), a model and mindset based on the notion of reducing harm. Its posture is primarily a defensive one and is seen as an add on to what companies do. Social value is not the explicit goal of the enterprise and as a result, community impact sits outside of the revenue generating side of the business and is by necessity capped in terms of what it can contribute.

Our belief is that companies can be major creators of social impact. And to do so is not incompatible with making money. Quite the contrary. Integrating business benefit and community benefit is a mutually reinforcing and scalable proposition. But to do so effectively, community benefit becomes an explicit goal of the enterprise and society needs and challenges are factored into mainstream business decisions. We call this “profit with purpose” and believe it is the future of business.

Convincing companies they can achieve profit with purpose has not been easy. When we first starting selling this idea in 2008 and 2009 no one was buying. Things did not get much easier in 2010 through 2013. But in the past few years the market has started to respond to this idea and the last twelve months the shift has been palpable. Our growth has accelerated as a result.

The reason for the shift from CSR to Profit with Purpose are as follows:

Charity does not scale. Total charitable dollars generated annually in the U.S. is under $400 billion, which is $100 billion less that what is needed to educate children from kindergarten to grade twelve for one year. So if the motivation to act charitably, or better, create social impact is strong, the best way to do so is to figure out how the business can generate revenue through its community impact.
Our rapid pace, digital world is forcing companies to behave well and respond effectively (both proactively and reactively) in all aspects of their business. Gone are the days when they could offset their harm by giving back to community. Everything is on display (or easy to find out) and as a result, is forcing companies to look at how they behave inside and out and top to bottom. The recent moves to reduce additives in food, improve supply chains, pay fairer wages and engage consumers in issues is all part of the evolution taking place.
With greater transparency, awareness and engagement comes greater consumer, citizen and employee demand. Especially among Millennials. Consumers expect companies to behave in ways that generate positive impact. And importantly, are fine with them making money doing so as long as it is authentic and transparent. In a 2016 Havas’ survey, two-thirds of the global sample (more than 10,000 adults in 28 markets including Canada, the U.S., the U.K., Brazil, France and India) said businesses bear as much responsibility as governments for driving social change. And sixty-two percent said they’d like their favorite brands to play a bigger role in solving social problems. The same is true for employees. A 2015 Deloitte Millennial Survey showed that 75% of this generation believes businesses are too fixated on their own agendas, and not focused enough on helping to improve society. For business, these beliefs and expectations are increasingly relevant given that millennials will make up three-quarters of the workforce by 2030.
The good news about greater transparency and demand is that the businesses that have embraced it are winning. In every category and industry there are examples of companies that have embraced profit with purpose and are demonstrating amazing growth. Tesla is a leader in electric vehicles. Warby Parker is a disruptor in the eyewear business. TOMS shoes is now valued at $650 million. Life is Good, an apparel company that promotes optimism and positivity is a $100 million company. G Adventures is a leading adventure travel company that pioneered small footprint and social enterprise and today generates $300 million in revenues. And this is just a tiny sample of the many companies that exist today where social impact is an integral part of generating revenue and profit for business, rather than the add-on approach and expense associated with the CSR model.
In our increasingly noisy and competitive world brands are paying more attention to remaining relevant than ever before. And they recognize it is getting harder to do so evidenced by the Havas Meaningful Brand Survey that found that the majority of people polled (a) wouldn’t care if 74% of brands disappeared tomorrow and (b) believe that less than 28% of brands improve our quality of life and wellbeing. Doing a charitable activity or campaign doesn’t cut it anymore and may in fact breed consumer skepticism if the activity is fleeting and seen as inauthentic. What this suggests is that for business to remain relevant in people’s lives, it has to play a more meaningful role at both a personal and collective level. Social impact can do that especially if integrated with a company’s products or services.

We are excited by what’s to come. And honoured that we are contributing to the shift that is taking place in the market. We believe today, as we did in 2008, that the future of social impact will be led by companies and brands that understand profit and purpose go hand in hand. But key to this positive rapid growth and change is the commitment to authenticity, transparency, equity and reciprocity. We hope you will join us in making this vision a reality.

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