Social Responsibility Leads To Bigger Profits

I think they got it! Two items this week give me confidence that there’s been a sea change in corporate thinking: The planet and the customer now count. It’s a business model that small businesses can profit from as well.

Back in ‘05 or so, Walmart got on the green bandwagon, designing greener packaging, cleaning up its supply chain, and generally opting for sustainability. It did not do this to help the environment; it wanted to improve its bottom line. And it succeeded.

A new book, Force of Nature, by Edward Humes, tells the story about how an environmental guru – Jib Ellison – showed Walmart that reduced waste means increased profit. Less packing means lower cost production and lower cost disposal. The book details millions of dollars in savings by focusing on sustainability and what triple-bottom-line companies call “planet” in their people, planet, and profit trilogy.

What’s more, Walmart is aware that consumers, especially women and the upcoming millennials, are values-driven and care about sustainability. Their loyalty will be affected by Walmart’s social responsibility. Their loyalty equals Walmart’s future sales.

The motives for change may not appeal to the purist but it’s the “planet” bottom line that counts here. The motive may be one kind of green but the result is another kind.

The second example of long-term profits guiding more socially responsible action is PepsiCo, as detailed in Snacks For Fat Planet article by John Seabrook in the May 16 New Yorker.

PepsiCo has vast research facilities dedicated to developing more healthful yet still flavorful snacks. More and more people are considering the health effects of their food and taking supplements.

PepsiCo’s new products are being created under the guidance of its first woman CEO, Indra Nooyi. Detractors, the article says, are not impressed by PepsiCo’s efforts to develop healthy snacks but some view the obesity problem as too big for governments to deal with alone. People snack. They will continue to snack. They want their snacks to taste good. Sounds like a business opportunity to Nooyi … and to me.

It also sounds as if PepsiCo now “gets” that the well being of customers counts. Being a good business leader, mindful of fiduciary responsibility, requires long-term thinking, consideration for customers, and for the planet.

Oh, my! We’re back at that triple bottom line again, aren’t we?

Do you think corporations are taking their responsibility to society seriously? Does their motive matter if the impact is good?