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Sep 28, 2016

Many Ways for Companies to Demonstrate Their Social Responsibility

I am grateful that so many companies want to be listed in the Center for Social Enterprise Development’s social enterprise directory.  The frustration, for them and us, is that some are not social enterprises but they are committed to being socially responsible.

Their desire to be labelled as social enterprises is part of the downside of the growing popularity of social enterprise.  Similarly, it is the downside of the popularity of entrepreneurship.  I hope that “entrepreneur” is not becoming the requirement to be considered a serious businessperson.  And I hope “social enterprise” is not becoming the requirement to be considered a responsible business.

From my perspective, a social enterprise is a profitable business that directly creates social impact that is distinct from the value proposition of its product or service.  In essence, a social enterprise has two value propositions:  its product or service to the buyer, which is separate from the social impact by the business on the community either directly or through significant transfer of profits to a nonprofit’s mission.

There are many products or services that are highly beneficial but do not create a social impact separate from the product or service.  Any business in the healthcare field has a product with social value.  The question is whether the company is committed also to creating a social impact.  Does it transfer a majority of its profits to other nonprofits?  Does it employ a significant number of disadvantaged workers and expend the resources necessary to make those employees productive?

On the other hand, there are other ways for a company to demonstrate that it is a “good guy” other than being a social enterprise.

The nonprofit B-Lab has a certification process that scans compensation systems, philanthropy, environmental friendliness, and a number of other screens.  A company that survives their gauntlet of tests is awarded a “Certified B-Corporation ” moniker it can put on its stationery and web site.

A membership organization called Conscious Capitalism is forming local chapters.  Conscious Capitalism ascribes to four principles:  higher purpose, stakeholder orientation, conscious leadership, and conscious culture.   A company can join a Conscious Capitalism Chapter and mix with other like-minded companies to advance its higher purpose.  Those near Cleveland, Ohio can attend a Conscious Capitalism Bootcamp October 27  provided by Jeff Cherry’s Conscious Venture Lab from Maryland.

So we should celebrate all three ways in which companies can demonstrate their higher purpose.  Not all “good” companies are nor have to be social enterprises, but that label should not be the only test we use in deciding to which companies we want to give our business.

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Allen Proctor, President & CEO

Center for Social Enterprise Development