While other business owners aren’t lining up just yet to donate their companies to noble causes, some say the move will, at the very least, push corporations to rethink how they engage with the planet. “We should all learn from this that it’s not enough to just be ‘worried’ about the environment, but that companies and the people who work in them should participate as actors in the care of the environment,” Fred de Gombert, CEO of Akeneo, a product information management firm, told MarketWatch.

Some are already following Patagonia’s lead in that respect. Faith In Nature, a British beauty company, announced last week that it has appointed a director on its board who will represent nature. 

As for Chouinard, the 83-year-old billionaire will be sacrificing assets estimated at US$3 billion and profits of $100 million a year that will go to the trust and non-profit to fight climate change and lobby for environmental and social justice. Chouinard’s wife and children, who share Yvon’s distaste for massive wealth, were in on the deal and will oversee the trust. 

“The Chouinards are renouncing their status as one of the wealthiest families in America,” said The New York Times – noting that “it felt like a very un-billionaire-like way to fight climate change.” 

Chouinard has never accepted conventional labels, describing himself as a misfit, dirtbag, rebel and craftsman. When his Quebec-born father moved the family from Lewiston, Maine, a francophone border town, to Burbank, California, seven-year-old Yvon only spoke French. He avoided his schoolmates and found his home in nature. In high school, he learned to climb steep slopes to explore falcon aeries. Always, he says, “I remained at the edge of things.” 

We should all learn from this that it’s not enough to just be ‘worried’ about the environment, but that companies and the people who work in them should participate as actors in the care of the environment.

-Fred de Gombert, CEO of Akeneo

As a young man he embraced the mountains, living rough in the woods of Yosemite and British Columbia while pioneering new climbing routes and techniques. At first, he funded his lifestyle by blacksmithing, forging his own axes and pitons (climbing spikes) in his parents’ backyard. “I never intended for this craft to become a business,” Chouinard wrote, “but every time my partner Tom Frost and I returned from the mountains, our heads were spinning with new ideas for improving the existing tools.” 

On a 1968 road trip to the mountainous Patagonia region of southern Argentina, confined to an ice cave for weeks waiting for the weather to change, Chouinard resolved to launch a new retail brand to sell high-quality outdoor wear. Its innovations included better insulating and water-wicking materials to help explorers do more in the outdoors. The company (which topped Corporate Knights’ Green 50 ranking of corporate planet-friendly action in 2020) also adopted Chouinard’s counter-culture ethos, fighting to conserve local watersheds and promote more sustainable agriculture.  

In 1986, Patagonia became the first major clothing brand to donate 10% of profits to grassroots eco-activists. Later it upped that ante, to 1% of sales, to providing more consistent support. In 2002, Chouinard formed “1% for the Planet” to encourage other companies to make the same pledge; it now has 4,800 business members in 60 countries, including 359 from Canada. “This is not philanthropy,” says Chouinard. “It’s paying rent for our use of the planet.” 

Chouinard took that commitment a step further in his September announcement that “the earth is now our sole shareholder.” His family transferred all company voting stock (about 2% of overall shares) to the Patagonia Purpose Trust, which will ensure that Patagonia keeps operating according to its values of social responsibility. The Chouinard family donated the other 98% of Patagonia to the Holdfast Collective, a new non-profit that will receive any profits the company doesn’t need for internal use and decide how to invest it to combat climate change. 

While critics noted that the deal enables the family to avoid paying hefty estate taxes, defenders said that since the sellers had accepted not one penny for their shares, no taxes were due. Chouinard insists the arrangement ensures that max profits go straight into social action – without being taxed first while passing through shareholders’ hands. It  will also protect against what he sees as capitalism’s biggest flaw: the chance that future leaders would compromise Patagonia’s principles. Ultimately, he hopes his move will inspire others to take outrageous actions of their own.

But former NBC News anchor Tom Brokaw, a longtime climbing buddy of Chouinard’s, explained the manoeuvre best: “He knows his time is running out on his crusade to save the planet. He’s trying to do his part, and he’s impatient with the rest of us.” 

The post Patagonia made Earth its sole shareholder. Will other companies follow suit? appeared first on Corporate Knights.

The moment, some believe, is ripe for business schools globally to embrace social purpose.

“Business schools should be positioned at the nexus of business, government and civil society,” observes Dan LeClair, chief executive officer of the Global Business School Network, a non-profit that promotes management education in the developing world. “Unless we do that and unless we work with business, government and civil society, we will not move the needle on critical societal issues.”

Change is coming, as students prod schools for socially relevant curricula and employers seek graduates as attuned to social inequities as profit-and-loss statements. Business school accrediting bodies have added their voice to the choir. In 2020, the Association to Advance Collegiate Schools of Business (AACSB International) set standards for schools to identify how they will create social impact through teaching, research and community engagement.

“It’s not ‘Tell us a list of the good things you are doing’; you have to have a robust strategic plan,” says Stephanie Bryant, executive vice-president and global chief accreditation officer for AACSB, itself committed to “transform business education globally for positive societal impact.”

Some schools are adopting strategic plans to guide their aspirations on social purpose. Last fall, led by freshman dean Dana Brown, the Sprott School of Business at Ottawa’s Carleton University released a five-point plan for curricula upgrades, expanded research, and new partnerships with under-represented groups by 2025 to deliver “business for a better world.”

Over time, all courses will incorporate critical perspectives on the purpose of business and train students to evaluate the social and environmental impact of corporate decisions, with minors in technology entrepreneurship and social innovation focused on positive change.

Along with proposed research chairs in business environmental sustainability, as well as equity and inclusion, Sprott recently partnered with Indigenous Works, a national social enterprise, to create an innovation strategy that promotes economic well-being for self-identified First Nation, Métis and Inuit people. In December, with federal government funding, the school announced a national research initiative with the Dream Legacy Foundation to develop a national Black entrepreneurship hub. Sprott’s strategic plan began with a question: “What do we want to be doing better?”

“Business schools should be positioned at the nexus of business, government and civil society. Unless we do that… we will not move the needle on critical societal issues.”

-Dan LeClair, chief executive officer of the Global Business School Network

Brown says the school knew it wanted to incorporate a different way of learning for students that would create experiential learning opportunities at home and abroad. “Our students need to be empowered to build purpose in their life and career.”

Other schools are adopting partnerships to reimagine the status quo. In recent years, Calgary-based Trico Charitable Foundation has collaborated with the Haskayne School of Business at the University of Calgary on curriculum, research and outreach activities. “For some time, I have been a big believer in business schools and post-secondary institutions in general as meccas for social impact,” says Trico executive director Dan Overall. In November, in an event held every two years, the school and the foundation held a two-day conference for social entrepreneurs at all stages of development.

Last year, France’s Grenoble School of Management became its country’s first major business school to earn “Société à mission” status, joining more than 100 companies pledging to operate in support of society and the environment.

In doing so, the school commits to generate content and research that seek answers to environmental, social and economic challenges and to contribute “to a world that is more resilient, more just, and peaceful and more responsible.”

Themes of sustainability, corporate social responsibility, inclusion and diversity weave through the curriculum. An undergraduate course on “sustainability as a strategic lever for companies” explores corporate practices (good and bad) that play out in global circumstances of poverty, social inequality, resource scarcity and climate change. For an MBA course on sustainability-driven business, students examine the role of entrepreneurship in promoting social impact initiatives.

School officials currently are assessing all courses to ensure consistent application of the five Société à mission objectives (promotion of ethical behaviour, diversity, inclusion, economic peace and recognition of the climate emergency), linked to the United Nations’ Sustainable Development Goals (SDGs). “While there is already a broad selection of modules, we are harmonizing and ensuring that each program has the appropriate content,” says Julie Perrin-Halot, associate dean and director of quality, strategy and international issues.

With a school focus on planet and people first, she says, “profit is no longer an end; students understand it is simply a means.”

A few schools are expressly adding social impact to their program lineups. Boston University’s Questrom School of Business delivers a two-year social impact MBA. For the program, which shares core content with the school’s regular MBA, students take at least four social impact courses, including environmental, social and corporate governance; purpose-led marketing; and leading mission-driven organizations.

In Newfoundland, Memorial University’s Faculty of Business Administration designed its MBA in social enterprise and entrepreneurship for graduates to lead enterprises that respect people, planet and profits.

As schools revamp curricula, calls mount to rethink traditional research and academic promotion practices. “We have to change our evaluation and reward system; it is just that simple,” says David Reibstein, chairman-elect of Responsible Research in Business and Management, a scholars’ network that promotes research for impact, not just journal citations.

“We need leaders in business schools who say, ‘[Social impact] is important and something that we will encourage and reward,” says Reibstein, a marketing professor at the University of Pennsylvania’s Wharton School of Business and former chairman of the American Marketing Association.

“Profit is no longer an end; students understand it is simply a means.”

-Julie Perrin-Halot, associate dean of Grenoble School of Management

Amid some progress, he cites a peer-reviewed academic journal’s decision to accept scholarly papers on how marketing can contribute to a better world. “They got more submissions than for a normal journal,” he notes. “How fantastic is that?”

Some academics successfully pivoted years ago. In 2001/2002, Texas A&M marketing professor Leonard Berry spent his mid-career sabbatical at the Mayo Clinic to pursue his research interest, service delivery, studying how the renowned health organization treats patients and their families.

“The best way to learn deeply about a problem I want to contribute to solving is to go to where the problem occurs,” says Berry, who credits his school culture for enabling his non-traditional approach. “I was willing to leave my office.”

Earlier this year, Berry and top academics from the U.S. and Europe co-wrote a paper for AACSB International urging researchers to incorporate impact in subject disciplines. “As business school faculty, we can produce research that convinces managers to cease practices that cause harm, such as mistreating employees, polluting airways and rivers, or depleting resources,” the professors wrote.

Elsewhere, schools look beyond the ivory tower for impact. Since 2016, the University of Sydney Business School has offered an MBA course for students to work in Bangalore, India, to help scale up social entrepreneurs. In another unit, students visit Indigenous communities in New South Wales to assist start-ups and learn about First Nations culture. The school partners with an Australia-based United Nations women’s advocacy group to offer scholarships – 20 since 2014 – to women in specialty MBA programs. Recently, the school published an employer guide for hiring refugees. “Issues of inclusion and social impact are dramatically changing the landscape, with climate change an important driver as well,” says the school’s MBA director, Guy Ford.

In the United States, Sloan School of Management, the business school of the Massachusetts Institute of Technology, created a global platform for social impact through its Regional Entrepreneurship Acceleration Program (REAP). Since 2014, teams of decision-makers from government and academia, venture capitalism and social entrepreneurships from around the world (each with its own regional challenge) participate in Sloan-led workshops over two years. With access to Sloan professors, experts and each other, the teams identify solutions for their regions.

In 2016, a team from Nova Scotia participated in REAP and later established Onside, a non-profit, to foster local social enterprises. New projects designed to narrow the rural–urban economic divide between Halifax and the rest of the province are set to be announced in February 2022. Onside executive director Alex McCann says the REAP format encourages local collaboration while also learning from global counterparts. She credits Sloan with looking for new ways to support businesses “as a force for good and [to] have impact in a positive way.”

The message for business schools worldwide is clear: pick up the pace.

Jennifer Lewington is an intrepid reporter and writes regularly on many topics, including business school news.

The post As corporate leaders pledge to embrace purpose beyond profit, are business schools keeping up? appeared first on Corporate Knights.

Despite the increased demand for purpose-led businesses, many corporate leaders continue to miss the mark on how to embed purpose into their organizations’ DNA. They’ve learned how to say the right things; they have been less effective at actually co-creating a better society. It may be tempting for a corporation to slap a statement of purpose on its website without transforming its business practices, but employees and customers are increasingly holding companies accountable for not following through. Big-ticket charitable donations for Black Lives Matter or encouraging employees to volunteer in their local community may make for feel-good headlines, but without deeper change they risk being derided as tokenistic marketing ploys – as was the case with a Pepsi ad pulled for co-opting the BLM protest movement.

To uncover why many companies are failing to embed social purpose into their business, we have to unpack the foundational systems used to do business, so much of which in North America is built on an economic system founded on slavery. In many ways, 21st-century business models echo the slave practices of generations past – so much so that we now call the worst corporate practices in distribution warehouses, on fishing vessels, in cocoa plantations and in sweatshops “modern slavery.”

The most striking parallel between slavery and contemporary business management can be found in the “task idea,” which 19th-century management pioneer Frederick Winslow Taylor described as “the most prominent single element in modern scientific management.” The task system is closely identified with Henry Laurence Gantt. Born to a slave-owning family in Maryland, Gantt developed a “task and bonus system,” which paired a flat task and a time wage with bonuses for overwork. It has a much longer history beyond Gantt and Taylor, and was one of the principal methods of organizing labour under slavery.

Management tools can separate us from our humanity.

—Caitlin Rosenthal, author, Accounting for Slavery

Contemporary business leaders are still trained to see “bonuses” as an essential management tool to reward overtime. The concept has been entrenched in our work culture across industries and has rarely been called into question. In the apparel industry, for instance, the concept typically drives the use of “piece rates,” where workers are often paid less than the legal minimum wage to try to meet gruelling production targets.

In addition to his task and bonus system, Gantt also developed a horizontal bar chart to track every worker’s progress for the day. The Gantt chart is still a popular scheduling tool, though business textbooks rarely highlight the slavery-era roots of these management systems.

“Our management tools can separate us from our humanity,” Caitlin Rosenthal told the Harvard Business Review. Rosenthal, a professor at the University of California, Berkeley, and the author of Accounting for Slavery: Masters and Management, studied account books from American plantations and found that slave owners developed management tools that are still in use today, including depreciation and standardized efficiency metrics – tools that “help maximize the value and the surveillance of human capital.”

“If you want to use those metrics for different purposes, then it’s going to be a difficult job,” Rosenthal added, calling it an “uphill battle to turn metrics produced to reveal profit into something that can help us to be more humane.”

Perhaps, then, we shouldn’t be surprised that today’s corporations are struggling to add social purpose on top of existing structures. That wasn’t the purpose of the modern corporation – companies aren’t built to be socially driven.

Fishing for change

In an era where employees and customers expect more from businesses, it may be time to reconsider how we incentivize labour. Giving employees an opportunity to make a difference at work, providing a platform that allows each employee to express their individual capability, and ensuring a collaborative environment to achieve more than each employee could do on their own are all things today’s business leaders must now see as a core element of their management strategy. Combining compassion with accountability can go a long way to creating a psychologically safe workplace and motivating teams.

Instead of a bonus program based on efficiency or overwork, how about a profit-sharing or stock-option plan? That was the thought process of Eileen Fisher, a pioneering designer who responded to an emerging contemporary feminist sensibility that demanded easy-to-wear professional clothing. In the 1980s, Fisher started a clothing company that shared her name, and as her success grew, she thought about what would happen to her company after she retired. At first, selling seemed like the best option. She tested out the viability of an IPO: “I remember being up on stage and looking out at a roomful of men in suits – no women wearing my clothes, no conversation about clothes. It was all about the numbers. It was really just about the money,” she told CNN last year.

Knowing that investor-controlled, capital-focused companies hinder leaders’ efforts to adapt to a world of finite resources and growing inequality, Fisher decided to sell shares to employees instead of going public, and today 40% of the company is held by its employee stock ownership plan (ESOP). Her decision allowed her to keep her company’s actions aligned to its purpose. Eileen Fisher was also one of the first clothing companies to offset 100% of its carbon footprint, and it’s become a pioneer in advancing localized, sustainable production.

In a world that is dynamic and hyper-connected, and where companies are being held accountable not only for outputs but, more importantly, how those outputs are achieved, are organizational charts still relevant? Employees often have hybrid responsibilities that make it difficult to categorize them on an organization chart. Shifting a business’s structure toward one that drives profit through purpose is an evolution that will require fundamental operating and cultural changes, and it’s a difficult first step to navigate.

Purpose-driven companies are thriving

One of North America’s original purpose-driven companies, Dr Bronner’s, has become a leader in the personal care industry, with more than US$120 million in sales annually, by staying true to its original mission of serving people and the planet. In Honor Thy Label, a book released earlier this year, the company’s vice-president of special operations, Gero Leson, details the challenges of building – and ethically scaling – organic, fair trade and, most recently, “regenerative organic certified” agricultural supply chains across the Global South when those supply chains did not yet exist. The company motto of “all-one!” has permeated its business model in which social responsibility and environmental consciousness serve as uncompromising components of corporate structure, both in its global supply chains and at home in California. In a country where the median CEO-to-worker pay ratio exceeds 300 to 1, Dr. Bronner’s capped CEO salaries at five times that of their lowest-paid workers, who make a minimum wage of $18.71 an hour in a state where the minimum wage is $14.

You can call almost anything ‘purpose-aligned.’ We [prefer] ‘purpose-driving.’

-Maureen Young, director, Coast Capital Savings, Social Purpose Office

In Canada, where B.C.’s Coast Capital Savings is expanding its footprint, the credit union is leaning into social purpose, placing it firmly at the centre of its business strategy as it grows into a national organization. On top of the 10% in profits that Coast Capital Savings already invests into its communities, it’s applying a purpose lens to everyday business decisions, putting programs, initiatives and products into three categories: purpose driving (helping to advance the social-purpose economy), purpose neutral and purpose contra (or detracting from their mission).

“We initially used ‘purpose aligned’ as opposed to ‘purpose driving’ and quickly realized it was a weasel word,” says Maureen Young, director of Coast Capital Savings’ Social Purpose Office. “You could call almost anything purpose aligned. We eventually landed on purpose driving – placing an emphasis on maximizing purpose-driving actions and surfacing purpose contra and addressing them quickly.”

Corporate leaders that do the hard work of tying social purpose to all aspects of business with committed leadership and financial investment have generated sustained results, stayed relevant in a rapidly changing world, and deepened ties with stakeholders. The 2018 Global Leadership Forecast found that firms without a sense of purpose underperform the market by 40%, while purpose-driven companies outperform the stock market by 42%.

The future is tenuous but also ripe with opportunity for those who understand the need to truly connect with stakeholder expectations and are not afraid to turn business-as-usual on its head to create a human-centred economy. This may now seem like an option, but soon it will be the only way forward.

Shilpa Tiwari is executive vice-president of social impact and sustainability at Citizen Relations and the founder of Her Climb.

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Benevity began above a shawarma shop in 2008. Former CEO Bryan de Lottinville launched the firm to boost companies’ charitable contributions by helping them see social purpose as an investment, not a handout. Today, Benevity helps companies increase employee and customer engagement with a “gamified” platform that makes it easy and fun for firms, staff and clients to pursue their interests in donating to charity, volunteering, grant-making or taking positive social action. It then tracks the impact of their contributions. Benevity says companies that engage their people in social missions enjoy 57% lower employee turnover – and that saves major clients such as Microsoft, Apple, Telus, Kroger and Visa tens of millions of dollars a year.

With more than 650 employees and two million users, Benevity has processed donations worth more than $7 billion to 300,000 global charities. In December, Benevity became a rare Canadian “unicorn” – a company worth more than $1 billion – with its purchase by London-based private-equity firm HG Capital. Two months later, HG brought in some new partners, including two “strategic minority investors”: Bono and Skoll’s Rise Fund, and U.K.-based Generation, an impact-investment firm cofounded by Al Gore.

About the same time, de Lottinville stepped down as CEO. He was replaced by Benevity’s chief financial officer, Kelly Schmitt – a welcome sign that the new owners want current management to lead the company forward. And that’s important, because the plague year 2020 made many organizations value shared purpose. “It was the year that cemented the new role of business as a source of trust, hope, connection and empathy,” says Benevity’s chief impact officer, Sona Khosla. Now, she says, organizations have to develop systems to support those ideals. That means Benevity is expecting another big growth year; it plans to hire 300 new employees.

Khosla is also overseeing a new research arm, Benevity Impact Labs, which monitors industry trends, collects data and explores new issues, such as mental health, to help organizations better understand and measure social action. “We want people to support causes they care about, when they want to,” she says. “We’re using capitalism for all it can do.”

Benevity sees vast opportunities to expand by being a force for good. Beyond “HR,” it is helping clients embed purpose in their product and marketing experiences. The company offers workbooks and toolkits to help companies lean into events such as Pride or Earth Day, and it’s now helping clients evolve “corporate social responsibility” initiatives into strategic ESG (environmental, social and governance) programs. At the far end of the supply chain, Benevity is increasingly doing the cheque-processing for small charities, relieving corporations of a frustrating chore while helping struggling non-profits get paid sooner.

Bono hasn’t stopped by Benevity’s offices on the banks of the Bow River. Al Gore hasn’t dropped in for coffee. But leaders from Generation and Rise now sit on Benevity’s board, so the new advisors seem serious about helping. And why not? As Khosla says, most companies with ESG programs can measure their governance and environmental progress – but have no clue how to measure social impact. (Many charity professionals still refer to “the giving glow.”) Benevity is leading the race to promote, quantify and normalize goodness. If that doesn’t deserve A-list support, what does?

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