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As you start your business, you have many goals. You’re focused on devel- oping your business concept, getting funded, making money. What does social responsibility have to do with these?

Just as individuals have responsibilities to their communities, companies likewise have responsibilities and obligations to society at large. “Corpora- tions” are unique entities with many rights and privileges. Society, through its laws, grants “corporations” special and favorable benefits, such as the limits on personal liability of a corporation’s shareholders. Imagine, if you can, if every shareholder in a company had personal liability for that company’s actions: There certainly wouldn’t be much of a stock market. Every business, whether it realizes it or not, relies on the continuing support of society.

Moreover, being socially responsible is part of the overall health of your company. First, it establishes your company’s values and fosters your corpo- rate culture. Businesses that act with integrity and honesty are more likely to have their employees act with integrity and honesty toward the company and their fellow workers. Being a good corporate citizen makes it less likely that your company will get in trouble with regulatory agencies, arouse the ire of taxing authorities, or face law suits or fines.

Additionally, employees themselves get value from being part of an orga- nization that is committed to enhancing the social good. Programs that allow employees to be involved in community causes as part of their company activi- ties are viewed as a valuable benefit, much like other employee benefits. Pro- spective employees often look at a company’s values and social commitment when comparing job offers. Being able to attract and retain the kind of people you want is critical to the success and growth of your business, so your social commitment helps the long-term value of your company.

Social Responsibility & Sustainability

At the point in life where your talents meet the needs of the world is where God wants you to be.

— Albert Schweitzer

“Entrepreneurs are a great resource for community involvement; they can use the same kind of skills for building the community that they do for building a business.” Gib Myers Venture Capitalist

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Corporate social responsibility is:

n Good for business

n Good for the community

n Good for the economy

Being socially responsible is the right thing to do, and there’s always strength in doing the right thing.

What’s in it for You? Your business derives a number of benefits by being committed to social responsibility and involved in community activities and causes. Among your company’s direct benefits are:

n Visibility: gives your company increased visibility in the community and your industry; this can be particularly helpful to small, new companies, as community activities may be a very effective way to become known at less cost than other marketing methods.

n Positive Corporate Image: being seen as a good corporate citizen helps foster positive feelings about your company in the community and by potential customers, employees, and others.

n Recruitment Tool: aids your company’s effectiveness in attracting employees; potential employees often choose to apply to those companies whose values and social commitment they respect.

n Stronger Team: having shared values and shared activities helps develop cohesiveness and commitment among all your employees and management.

n More Satisfied Employees: enhances the work experience of employ- ees, not only by allowing them to be involved directly or indirectly in community/social affairs, but also by knowing they work for a company that acts with integrity in all its dealings; employees never have to lie for an employer.

n Contacts with Other Companies: by being active in community activi- ties, you and your employees will meet and work with people from other companies, giving you valuable contacts with potential strategic partners, customers, and suppliers.

being a Good “Corporate Citizen” The most basic component of social responsibility is being a good “corporate citizen.” Good corporate citizenship begins with a company’s own internal practices and policies. It starts with corporate integrity.

Aspects of being a good corporate citizen include:

n Obeying the law, acting ethically, and being honest and responsible in all your dealings;

“Community involvement becomes an asset of the company.” Gib Myers Venture Capitalist

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n Treating employees fairly and with respect; compensating employees fairly, and considering the well-being of employees as part of decision- making;

n Being honest and fair to your customers and suppliers, and in your advertising and marketing;

n Being cognizant of the impact your actions have on the environment; and

n Being involved in your community and concerned about the well-being of others.

ethics Most companies, especially large corporations, now develop clear ethics guidelines and policies. Because employees are faced with many situa- tions that have ethical implications, it is extremely useful to have a set of clear, consistent policies that are firmly and fairly enforced throughout the company on matters such as accepting or giving bribes, and the nature of gifts, gratuities, or special favors that will be given or accepted.

For a new or small company, an ethics policy doesn’t have to be complex, but laying out clear guidelines on certain issues, such as expense reimburse- ment policies and adhering to all laws, can help avoid conflict or legal trouble.

Describe your ethics policy as part of the Social Responsibility Plan Prep- aration Form at the end of this chapter.

Social Responsibility The term “social responsibility” can encompass or describe many of a company’s activities and attitudes. Often it is used to describe companies with very active social or charitable programs. Some companies, including many new entrepreneurial ventures, are developing creative ways to act on their social commitment and contribute to their community. For example, the online auction site eBay, before its IPO (Initial Public Offering) of stock to the public, set aside a fair amount of company stock to establish a philan- thropic foundation. As eBay’s stock rose dramatically, the value of its founda- tion also rose.

There are many ways your company can be involved in social responsi- bility activities. The first, of course, is to be a good corporate citizen. Beyond that, many companies want to take a more active role in their communities, often donating time or money to various causes and organizations. They may look farther — working to help address global concerns, for instance.

You have many options for choosing how your company can incorporate social responsibility. One of the best ways to decide on your social responsi- bility activities is to involve employees themselves in choosing the projects and policies and to discuss how your company’s values intersect with your programs.

“Create a culture of community involvement. Start early. Start easy. Some of the kinds of things you can do include goodwill drives for clothing, food, toys, blood, etc.; volunteering in a local elementary school; working on a park clean-up day or a Habitat for Humanity day.” Gib Myers Venture Capitalist

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While a company is young and/or small, you may want to limit your social activities to simple things: After all, you do have a company to build. You might only select one-time activities that could involve all members of your company as a team, such as participating in a walk for a community charity or volunteering one day to work on building a house for Habitat for Humanity. These can help promote team spirit, but the time commitment is clear and limited. You can also choose an ongoing project that is not too demanding; one new company gives one hour a week to help out at a local school. As your company grows, you may choose more ambitious projects.

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:

n People. How do you affect other people, whether your employees, your community, a specific group of disadvantaged people, or society as a whole?

n Planet. How do your actions affect the environment, not just now but in the future?

n Profit. How do you achieve financial sustainability since you must be profitable to remain in business? Without focusing on profits, no company can long meet any of its other goals.

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 just profits with their companies. They want to do something positive for humanity. Improve the world. 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 enterprise): 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 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:

“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

“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

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n Invent something. Create something new, which has not yet been devel- oped, to meet a social goal.

n Bring something to market. Take a new product that has been devel- oped by someone else and create a distribution, retail, or sales company to market that product.

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

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

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

Of course, any and all businesses can incorporate social and environmen- tal 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 manufactur- ing process — lowering waste and energy consumption, using environmen- tally 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 respon- sible, 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:

n Organic: for food products and produce.

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

n Fair trade: to ensure fair labor treatment, especially in international agri- culture.

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

n Energy Star: for lower energy consumption electronics and appliances.

“The new type of socially responsible organization gives people an amazing experience, not just intellectual satisfaction. ” premal Shah president, Kiva

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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, censor- ship may be prevalent, and bribery and corruption may be a frequent aspect of business life.

Responsible business people facing issues such as these must ask them- selves 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 prac- tices — 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 condi- tions worldwide. When you operate in the global business community, your actions — no matter how small — matter and make a difference.

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

The Social Responsibility Plan Preparation Form at the end of this chapter 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 building a corporate culture, attracting employees, and gaining visi- bility for the company. Every company should be a good corporate citizen, acting with integrity in all its dealings.

“I think a lot of people would like to do more for the community, but they’re afraid to bring it up.” Gib Myers Venture Capitalist

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Globalization: Global Social Responsibility

How will you respond to some of the social dilemmas your company may face when doing business internationally, such as below-living-wage pay scales, lack of labor protections, bribery, or lack of gender equality in the workplace?

If you are developing an international social venture, identify the social issues you plan to address:

enViRonMentAl GoAlS

 Energy reduction

 new energy sources

 Waste reduction

 Water purification and access

 Food purification and access

 improved production and agricultural processes

 other: _____________________________________________________________________________________

lAboR GoAlS

 living-wage pay scales

 gender equality

 Ethnic, religious, or other equality

 Eliminating child labor

 Healthy working conditions

 Ensuring fair trade practices

otheR inteRnAtionAl SoCiAl GoAlS

 improving human rights

 improving the treatment of animals

 Reducing censorship

 Eliminating bribery and corruption

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Social Responsibility plan preparation form

Describe the attributes of your social responsibility plan in the space below.

CoRpoRAte CitizenShip

Describe the ways you will ensure that your company:

obeys the laws: _________________________________________________________________________________

Treats employees fairly/with respect: ________________________________________________________________

Deals honestly with customers, suppliers: ____________________________________________________________

is honest in its advertising and marketing: ____________________________________________________________

Considers the impact of its actions on the community: ___________________________________________________

Acts with integrity in all its dealings: _________________________________________________________________

other: ________________________________________________________________________________________

ethiCS

How will your company handle issues such as:

gifts from or to suppliers/potential suppliers/vendors: ___________________________________________________

special favors, recreational outings, meals from or to suppliers/vendors, or customers: _________________________

Conflicts between laws in different countries where your company operates: ________________________________

selecting suppliers based on their ethics:_____________________________________________________________

Ensuring that subcontractors act ethically: ____________________________________________________________

Personal use of company property (e.g., company cars, phone, email): ______________________________________

Expense accounts: ______________________________________________________________________________

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SoCiAl ReSponSibilitY ACtiVitieS/pRojeCtS

What are your business goals?

 Visibility in community  Enhancing employee morale/employee involvement

 Visibility in industry  Developing contacts with other companies

 Aid in recruiting employees  other:________________________________________

in what ways will you participate?

 Donate money from operating budget

 Participate as a company in community events

 Donate a set percentage of profits/sales

 Donate in-kind products or services

 Allow employees to be active in projects on paid time

 Formulate socially responsible operations practices (e.g., waste disposal management)

 Encourage employees to be active on a volunteer basis/after-hours

 Encourage company personnel/management to serve on agency boards

 Donate company facilities for use by community

 Formulate socially responsible purchasing groups practices (e.g., environmental-friendly only products or type

of vendor)

 Donate product over-runs

 other: _____________________________________________________________________________________

What period of time are you willing to commit for? (e.g., day, week, year): ____________________________________

What types of concerns do you want to be involved with?

 Animal Welfare  Environment

 The Arts  gender Equality/issues

 Children  Health issues

 Community Enhancement and improvement  Recreation/Athletics

 Economic Empowerment  safety

 Education  other:________________________________________

Use this information as the basis of your plan’s Social Responsibility & Sustainability section.

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SAMple plAn: soCiAl REsPonsibiliTy & susTAinAbiliTy

SoCiAl ReSponSibilitY & SuStAinAbilitY ComputerEase is committed to making a positive contribution to our community, to being a good corporate citizen in all our actions, and to implementing environmentally responsible practices into every aspect of its operations.

Recognizing our responsibilities, ComputerEase has adopted a number of operational policies and developed a community involvement program. This program and these poli- cies reflect the reality that we are still a new, small company and our primary efforts are directed toward building and growing a healthy business.

Company philosophy Reflecting our desire to be a good corporate citizen, ComputerEase has adopted the following “Company Philosophy”:

— We will, as a company and as individuals, take responsibility for our actions;

— We will, as a company and as individuals, deal fairly and honestly with our customers, students, suppliers, the public, and each other;

— When making decisions, we will, as a company and as individuals, consider the impact of our decisions on others and on the environment;

— We will consistently try to give the highest level of performance to each customer and each student;

— We recognize that without profits our company cannot survive, so we will make our best efforts to increase the profitability of our company within an ethical and honest framework;

— We will give back to our community and society and make a positive commitment to its health and well-being;

— We will respect our co-workers and recognize their needs as employees and as human beings; and

— We will listen to each other.

Community involvement In developing our community involvement program, the staff of ComputerEase first looked to identify those ways in which we could use our corporate strengths (given our limited time and financial resources) to make a meaningful contribution to our community. We recognized that our unique strength is our ability to teach computer programs in an understandable manner, along with our Computer Training Center facility located in the heart of downtown Vespucci.

ComputerEase has entered into a partnership with the Downtown Vespucci Commu- nity Center to provide free computer training programs for inner-city youth, low- income residents, and “welfare-to-work” program participants. These training programs are held once a month at ComputerEase’s downtown Computer Training Center on days or times when the Center would otherwise not be in use (Sundays/

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SAMple plAn: soCiAl REsPonsibiliTy & susTAinAbiliTy

some evenings, etc.). ComputerEase management and instructors have volunteered their time to conduct these sessions, and the company, in turn, is contributing meals, transportation expenses for volunteer instructors, and an imprinted T-shirt for all program participants. ComputerEase will also donate all its older computers to the Community Center. ComputerEase will use up to 5% of its capacity on a pro bono basis to support these programs.

In addition to the project with the Downtown Vespucci Community Center, ComputerEase staff determined they would like to do a one-day community project each year to make a contribution together. The staff chose to participate in the annual Vespucci Friends of the Trees Arbor Day Planting & Picnic. As a team, we will work with other members of the corporate and civic community to plant trees in public parks, on boulevards, and in other locales.

Sustainability In assessing the impact of ComputerEase’s operations on the environment, we real- ized that our biggest opportunity for improving sustainability comes from curbing our energy consumption. For this reason, we will invest in the installation of solar panels on the roof of our new Training Center, which will generate 50% of our electricity. We will receive a government rebate for these panels and in 10 years, they will have paid for themselves. In addition, we will lease the most energy-efficient computers and other electronics to reduce the number of solar panels necessary to power our new building.

Employees and students commuting to and from our Training Centers also consume a great deal of energy. ComputerEase provides subsidies to employees who use public transportation. We also allow employees, depending on their roles in the company, to telecommute and work from home. As we move to more online training sessions, the number of commuter miles logged by both students and instructors will drop sharply.

In addition to reducing commutes, online training sessions also lend themselves well to our goal of becoming paperless. We now develop all of our new training materials, such as course manuals, with online-only publication in mind. This not only reduces our paper use and waste but saves a substantial amount of money. Our newsletters, billing, and payroll have also moved online. When we do purchase office supplies, we choose only products made of post-consumer recycled materials.

Beyond energy consumption and waste reduction, we recognized other areas of our operations that could be made more “green.” We worked with the city of Vespucci to establish an environmentally conscious e-waste program for electronic equipment. We send our old electronics to this recycling center if they are unsuitable for the Commu- nity Center.

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