Ethics & Social Responsibility Plan

Social Responsibility

Triple Bottom Line Increasingly, companies judge their performance not merely on profits, but on the concept of the “Triple Bottom

Line” — or People, Planet, Profit.

TRIPLE BOTTOM LINE

As you build your business and your business plan, consider your triple bottom line and not just a financial

bottom line.

Social Ventures Many entrepreneurs want to achieve more than merely profits with their companies. They want to do something

positive for humanity — improve the world, or make the planet a cleaner, greener place. These companies make

social goals an integral part of their company mission.

There are different approaches to being socially responsible in business:

1. Social ventures (or social entrepreneurship): creating a business with a primary purpose of achieving a social

or environmental goal but that embraces a profit motive and utilizes the best business practices. For example, you

may have a company that wants to build affordable housing for low-income families but still make a profit for

yourself.

2. Socially responsible companies: running a business whose products or services are specifically oriented not

toward a social mission but toward using business practices that achieve positive social goals. For example, you

may have a construction company building market-rate homes but primarily utilizing recycled and

environmentally sensitive materials.

“If the plan is well thought out and the social responsibility component is an added benefit, then it has the impact of making everybody feel good. But if the social good detracts from the competitiveness of the

company, then it’s not considered a positive. For instance, a company building software and arbitrarily

deciding it wouldn’t sell to the military, confining its market, would be considered a negative.”

Mark Gorenberg

Venture Capitalist

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If you do want to create a social venture or social enterprise, you have a number of strategies for achieving

social goals. Consider the following five major strategies for social entrepreneurs:

■ Invent something. Create something new, which has not yet been developed, to meet a social goal.

■ Bring something to market. Take a new product that has been developed by someone else and create a

distribution, retail, or sales company to market that product.

■ Create new services. To meet a social goal, develop new services that haven’t been offered before.

■ Provide services. Offer established services that meet a social goal.

■ Adapt an existing product. Take an existing product but slightly change its properties or use so it can achieve

social goals.

“It’s a pretty tricky thing to put social responsibility in a business plan. As a venture capitalist looking at the plan, you still say, ‘What does this mean for this team? Are they going to get carried away with this and

not be as focused as I want them to be?’ It depends on the strength of the team, and whether you have a

really good team that knows what it’s doing.”

Gib Myers

Venture Capitalist

Of course, any and all businesses can incorporate social and environmental responsibility into their goals and

operations, regardless of the product or services they sell. For example, you might be manufacturing soap, and you

can look for ways to reduce the environmental impact of your manufacturing process — lowering waste and energy

consumption, using environmentally sensitive raw materials, and the like.

Remember, one of the most important social goals you can achieve is to create good jobs. If you build a company

that pays employees a living wage and treats them with respect and dignity — especially if you are able to sustain

those jobs over time — you have made an immeasurable contribution to society. You can always be proud of

achieving that social goal.

Socially Responsible Certifications If you are positioning your company and/or its products as socially responsible, many of your customers will want to

know that you truly practice what you’re promoting. To that end, there are a number of organizations and

governmental or quasi-governmental entities that can certify you in specific areas of social responsibility. You may

need to or want to get the benefit of getting certified by one of these trustworthy groups. Many consumers look for

such certification before deciding which companies to do business with or which products to purchase.

Investigate the types of certifications available in your industry and for the social goals you are attempting to

achieve.

A few of the types of certifications you can get are:

■ Organic: for food products and produce.

■ LEED: green building certification (stands for Leadership in Energy and Environmental Design).

■ Fair trade: to ensure fair labor treatment, especially in international agriculture.

“Social entrepreneurs have the edge over traditional entrepreneurs because they bring a passion to their work that is fueled by a belief in what they are doing. I appreciate the benefits of money, but if building

Honest Tea were only about making a payday, I would have switched to something easier long ago. The

only risk with social entrepreneurs is that they occasionally let their passion cloud their judgment.”

Seth Goldman

Cofounder, Honest Tea

■ Humane certified: to ensure that farm-raised animals are treated in a humane and decent manner.

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■ Energy Star: for lower-energy-consumption electronics and appliances.

Globalization: Social Responsibility If you are doing business internationally, you may encounter a number of issues relating to what type of corporate —

and world — citizen you are or want to be. You may particularly face social and ethical issues in developing

countries. For instance, in countries where economies are less developed, there may not be very strict labor laws, pay

scales may be below a living wage, working conditions may typically be unhealthful, children may work in factories,

production practices may be environmentally harmful, censorship may be prevalent, and bribery and corruption may

be a frequent aspect of business life.

Responsible businesspeople facing issues such as these must ask themselves how they are going to deal with

these situations from both a business and a moral perspective. Do you want to be part of improving the lives and

conditions of those who work for or with you? Or do you want to just accept the status quo?

Keep in mind that going along with socially irresponsible practices — even if they are the current standard in the

countries where you operate — may put you and your company at risk. You may find your company the focus of bad

publicity in your home country, the target of strikes or political unrest in the countries where you’re located, or the

cause of low morale and disgruntlement from your own employees who find such practices hurt their pride in their

country and lower their motivation and productivity.

By contrast, promoting positive socially responsible business practices helps make you a force for improving

working and environmental conditions worldwide. When you operate in the global business community, your actions

— no matter how small — matter and make a difference.

“We are looking to contributing to building a ‘virtuous supply channel.’ Fair Trade tea gardens are raising the bar. In addition to providing working conditions that meet International Labour Organization

standards, Fair Trade gardens allocate an additional royalty paid by brand owners (like Honest Tea) that

puts the children of tea pluckers on a path away from the tea garden.”

Seth Goldman

Cofounder, Honest Tea

Social responsibility activities frequently encompass global goals or are directed toward global concerns.

Fill out the Global Social Responsibility worksheet on page 260 if you plan on conducting any business

outside of your own country. The Social Responsibility Plan Preparation Form on pages 261–262 can assist you

in outlining your company’s social responsibility activities.

Chapter Summary While a new business should not be overly focused on social issues to the extent that it takes attention away from

more fundamental business concerns, being socially responsible brings many benefits to your company. It aids in

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building a corporate culture, attracting employees, and gaining visibility for the company. Every company should be

a good corporate citizen, acting with integrity in all its dealings.

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