Turns out being good is making money for successful brands

Out for drinks recently with a friend who’s working at a multinational ad agency, I had been going on a bit about CSR (Corporate Social Responsibility) and startups. When he asked if CSR programs actually had any bottom line impact for companies, I couldn’t come up with a better answer than, “Well yes, it builds brand equity.” 

I went to two leading studies tracking the legacy of CSR to the financial impact on companies globally. Interbrand has been measuring leading brands since 1984 so I looked at their report, Best Global Green Brands 2011 (which actually measures the wider impact of CSR, not just Green initiatives) and KPMG’s 2011 CSR report. 

Companies are not only doing ‘good’, they’re saving money

KPMG found that many leading brands increasingly see CSR as bringing financial value through direct cost savings as well as enhanced reputation. The effects of sustainability can include saved energy and resources benefitting the bottom line. And the effects of enhanced reputation to investors and consumers offers growth on brand value.

The U.S. multinational 3M reported that it successfully tied environmental performance to monetary and non-monetary performance for its employees. By identifying and using renewable materials to replace petroleum-based polymers and monomers in their products, the company showed double bottom line ROI with increased environmental impact and financial growth.

And while they’re making the world a better place, they’re making money too

Both reports uncovered that the companies that are integrating CSR through their structure understand that it builds long-term growth. 

Toyota is a great example of the kind of company where there’s a high level of literacy in sustainability with engagement and responsibility at every level. CSR is part of the workplace culture and everyday business. The company has focused on decreasing its environmental footprint through the supply chain while supporting employees and producing better cars that are more efficient. The effects have been better performance and sales with increased profitability and improved brand presence for the company. Earnings are reinvested to continue the innovation cycle. The company sees it as a ‘virtuous circle,’ feeding sustainable growth.

There's a new type of company where CSR is part of the brand, and they're REALLY doing well

Even more evolved are hyper-focused new companies formed around a purpose, with the social or environmental plan tied together intrinsically to the business model, its people and activities. These companies don’t talk about CSR, they talk about impact... and they’re healthy and growing. There's an overseeing body in the U.S., B Corporations, offering certification based on purpose, accountability and transparency. Their goal is to blend the best of public service and private enterprise to create successful for-profit purpose-based businesses. It’s meant to separate ‘good’ companies from those with good marketing. Patagonia and Method are two of the more recognizable brands that have become certified.

Revolutions Foods is one of the new B Corp companies that’s got social responsibility built into its DNA. Since 2006, they’ve been making healthy, good tasting meals for kids in low-income schools and families in California, Colorado and Washington D.C. 

Founder, Kristin Richmond, talks about what motivated her. “It was education reform, building better schools, creating access for students and primarily underserved communities—and then it was also food.” In Inc. magazine, she tells how the company created a business model that worked for them. Since partnering with a Whole Foods store in the Bay area to launch a pilot program in 2006, the company now employs 750+, feeds more than 120,000 kids each day and is projecting to close this year with $30 million in revenue. 

The future in new business models

Now that big brands have proven that CSR is profitable, it’s easier for early-stage ventures to get funding for new business models that answer questions such as, How can we get good food to kids at school? These new companies are making money by funneling their passion into creating new business models that are built for success, fully integrating CSR with financial sustainability.

Strong brands

9 Of The Tastiest, Craziest American Fast Food Exports shows how strong a brand needs to be when you start adding brand extensions or messing around with it. This shows some of the interesting menu items developed for other countries as these American fast food brands went international.

Though they're all moving away from the core offerings on the menu, they still fit within that envelope of what the brand stands for because the brand was strong enough to stretch out for other markets.

I'm not a fast food person but except for the frightening cheeseburger pizza in Dubai, I actually think a lot of these look pretty good. 

Update on Wednesday, May 23, 2012 at 12:26PM by Brenda

In a related story, The Globe and Mail reported today on the Canadian frozen food company, McCain, moving into India. After being in the country long enough to research agriculture, retail, at-home eating and purchasing habits, they settled on a breakfast dish that's custom-made for the market.

Branded McCain, they're not only launching a new brand to consumers in India but they're also carving out a new category in a country where frozen food of any kind is seen as suspect. Ironically, I guess, the breakfast food they've developed is made in a way that's superior to how modern at-home families cook because the company could more easily replicate the effects of how their mothers and grandmothers made it before modern moms cooked with food processors.

It's another example of taking a brand global, carefuly and deliberately; staying on-brand by knowing what your core brand stands for.

The Shower Principle

Saw this episode of 30 Rock when I was trying to solve something, looking for my 'Aha' moment. Jack Doneghy described the Shower Principle to Liz as he was wasting time putting in his office. He explains it's the term scientists use to describe moments of inspiration that happen when your mind is distracted from the problem at hand.

Apparently, "if the cerebral cortex is distracted by showering or putting then anther part fo the brain, the anterior superior temporal gyrus is activated. This is the site of sudden cognitive inspiration."

I'm not a neuroscientist so I did a little Wiki search on the anterior superior part of the brain he's describing and found it's actually responsible for the perception of emotions in facial stimuli but whatev. Use a bunch of words to make it sound like you've got science/numbers behind your concept. 

The scientific part is made up too but my point is that this gets at where the brilliant spark for creativity comes from. The inspiration happens by thinking a lot about something then stopping thinking about it. Why did that sound like Jenna.

Brand engagement

It's what companies of any size want to do. They want to be interesting; they want to be able to connect with people. They don't want to be pushing out a message  that's just noise.

Brand engagement is all about building an authentic story that can be supported through marketing, advertising, social media content, media relations. All channels and platforms; everywhere. It's about building presence and changing behaviour by changing perceptions.

It's about watching emerging trends and behaviours and knowing what action is going to cause a reaction. Especially in an always-on time where consumers can find you through a simple search, brand engagement is developing because advertising, social media and communications have become amorphous overlapping spaces rather than narrowly-defined parallel paths.

India's 2% Solution

A friend I worked with in advertising and I were chatting on Facebook. She's working on a couple of projects in India, one of them is an incubator for social innovation that she's been trying to launch. She was telling me she's a little closer because of a new bill enforcing CSR.

Every country has their own distinct culture of corporate responsiblity and philanthropy that generally has its roots in government policy and regulation. India has had a policy of companies investing 2% of their profits into CSR. In February, it moved from a suggestion to a bill.

Some quick online research into Indian sources revealed:

• That the move is seen with distrust by the corporate world of government intervention. J.J. Irani, the former director of Tata Sons, says, “People will find ways to skirt anything that is mandated.”
• Companies don't want to be made to give their profits "to charity."
• A philanthropic organization described it as "mandated corporate social responsibility."

It could be seen as a buisiness opportunity, rather than a punishment. From the government's interest, it's a sustainable way of supporting the social structure of a country that's in an economic boom. For corporate interests, it opens up opportunities for companies experienced in CSR, with proven results of corporate responsibility building brand reputation and bottom line growth, to demonstrate success and lead by example. I expect that the companies in India who have global presence will be the first to know how to build engaged CR strategies that will bring value to both the community and the company.

Update on Wednesday, February 29, 2012 at 9:13AM by Brenda

Here's a teaching moment: my 'quick research' involved two India-based blogs commenting on CSR that, on reflection, seem to be referencing each other, not journalism sources. In fact, the bill is up for discussion in parliament but there is such strong corporate resistance, it seems unlikely to pass. It gets almost no coverage from Reuters, who does have a presence in India.

Additionally, CSR is loosely defined in India. Many sources I read, mostly from a year ago, equated CSR with 'giving to charity,' rather than an investment in a company's future.

I thank my well-travelled friend for reading my post and correcting me.