The business benefits of doing good | Wendy Woods

Summary

This talk emphasizes the need for businesses to address global challenges like poverty, hunger, and climate change through Total Societal Impact (TSI), rather than traditional corporate social responsibility (CSR). The speaker showcases how companies like Mars, Airbnb, and Standard Bank integrate TSI into their strategies, driving both societal benefits and business growth. Data reveals that companies excelling in TSI enjoy higher valuations and margins, highlighting that addressing social and environmental issues can be a profitable venture. The message encourages businesses and investors to adopt a long-term, innovative approach that benefits both society and their bottom line.

Takeaways

• 😀 Developed countries and charities contributed $200 billion to address global issues, but businesses invested $3.7 trillion in developing countries, showing the significant role business can play in solving global problems.
• 😀 While corporate philanthropy (CSR) is useful, it is not sufficient to drive long-term change. The real solution is integrating social and environmental goals into the core business strategy through Total Societal Impact (TSI).
• 😀 TSI goes beyond CSR by incorporating social and environmental considerations into all aspects of business, from supply chains to product design, manufacturing, and distribution.
• 😀 Companies that perform well on TSI often see a premium on their valuation and profit margins. For example, oil and gas companies with strong TSI practices have a 19% higher valuation.
• 😀 In industries like biopharmaceuticals and consumer goods, companies excelling in TSI see up to a 12% valuation increase and a 4.8% boost in margins.
• 😀 Small differences in margins can have a significant impact, especially in highly competitive industries like retail banking, where a 0.5% increase in margin can be crucial.
• 😀 TSI not only benefits society but also strengthens companies' financial performance. Companies that address environmental and social issues strategically enjoy higher margins and valuations.
• 😀 Investors are increasingly recognizing the value of TSI. A growing number of assets (over $23 trillion) are now in socially responsible investments, reflecting a shift towards long-term, socially conscious investing.
• 😀 Despite some hesitations, companies should not fear the business benefits of social impact. Innovating for social good can lead to growth, customer loyalty, and long-term success.
• 😀 Examples like Mars, Airbnb, and Standard Bank show how businesses can drive growth by innovating solutions to societal challenges, integrating social impact into their core strategies to benefit both society and the business itself.

Q & A

What is the core idea presented in the script?

The core idea is that businesses should integrate Total Societal Impact (TSI) into their strategies, rather than relying solely on Corporate Social Responsibility (CSR). TSI focuses on addressing global challenges like poverty, hunger, and climate change through business innovation and operations, while simultaneously providing financial returns.

Why is CSR (Corporate Social Responsibility) considered inadequate for solving global challenges?

CSR is considered inadequate because it is often incremental and not scalable enough to address the world's biggest issues. It can also be one of the first programs to be cut during economic downturns, making it a less reliable solution for long-term global problems.

What is TSI, and how does it differ from CSR?

TSI (Total Societal Impact) is a more holistic approach where businesses integrate social and environmental considerations into their core operations, such as supply chains, product design, and manufacturing processes. Unlike CSR, which is often a separate initiative, TSI directly ties societal impact to the company's strategic decisions and long-term growth.

How does TSI contribute to business growth and profitability?

TSI can contribute to business growth and profitability by addressing global challenges in a way that creates both social value and business benefits. Companies that prioritize TSI see higher valuations and margins, as they build sustainable practices that reduce risks, enhance brand value, and appeal to socially responsible investors.

What is the impact of TSI on the financial performance of companies?

Companies that perform strongly on TSI see significant financial benefits. For example, oil and gas companies that focus on environmental and safety practices see a 19% premium on their valuation. Other industries, like biopharmaceuticals and consumer goods, also benefit from improved valuation and margins when they prioritize TSI.

Can you provide an example of a company successfully implementing TSI?

One example is Mars, which works with NGOs to ensure sustainable cocoa farming, improve crop yields, and protect against environmental degradation. By doing so, they secure a stable supply of cocoa, benefit farming communities, and also reduce supply chain risks, aligning their TSI efforts with long-term business success.

What is the significance of the $23 trillion in socially responsible investments mentioned in the script?

The $23 trillion in socially responsible investments represents a growing trend where investors are increasingly considering social and environmental factors when making investment decisions. This shift reflects a larger acceptance of TSI as a valid approach to generating both societal benefits and financial returns.

How does TSI influence investor behavior?

TSI influences investor behavior by demonstrating that companies focused on social and environmental goals can yield improved revenues and operational efficiency. As a result, investors are incorporating TSI into their decision-making, with 75% of investors expecting companies with TSI strategies to perform better financially.

How did Airbnb integrate TSI into its business model?

Airbnb integrated TSI by enabling its community to provide housing for free during crises, such as disaster relief or refugee assistance. This initiative is closely tied to their core business strategy of expanding their platform by increasing the number of hosts and guests, thus driving growth while addressing societal needs.

What role did Standard Bank play in supporting black entrepreneurs in South Africa?

Standard Bank used a creative approach to meet South African regulations requiring banks to donate a portion of their profits to small, black-owned businesses. Instead of just donating, they invested the funds into an independent trust, which provided loans and technical assistance to entrepreneurs, successfully supporting economic development and aligning with their business strategy.