Moving Mountains

Patagonia founder Yvon Chouinard sent shockwaves across the internet last year when he announced his decision to forfeit all future profits to fight the climate and crisis. Even for a company with deep roots in the sustainability space, this bold next step in Patagonia's mission is emblematic of a greater inflection point happening in the corporate social responsibility (CSR) space, stemming from years of social upheaval.

Nathaniel Wright, associate professor of public policy and an expert in charitable giving, studies the drivers of charitable behavior, strategic philanthropy, and nonprofit performance and accountability. What’s happening now in the private sector right now, he said, is an expedited version of what has taken place in the nonprofit sector over the past few decades following scandals like the mishandling of 9/11 donations.

“What I see in the nonprofit world is that a lot of Gen Z and millennials, they want to know that if they donate 10 bucks, their donation is actually going toward working hard to create positive change. I don’t think it’s any different in private enterprise,” said Wright. “We’re in the ‘George Floyd era’ in terms of how Gen Z and millennials are really putting pressure on private enterprises to think about how they can adopt a corporate social responsibility model.”

2020 was a watershed year for corporate social responsibility, said Wright. The pandemic, death of George Floyd and ensuing Black Lives Matter movement, a contentious election, and record-breaking number of extreme weather events forced companies to take a stance for the values they espoused, setting the stage for a new era of accountability.

“Individuals want to know that if I buy your product, your values represent what I stand for,” Wright said. “If organizations are not addressing social issues that are important to their consumers, it’s hard for them to be profitable, it’s hard for them to be sustainable.” 

While tax-exempt organizations are required to disclose their finances through audited statements each year, disclosure of social responsibility metrics has historically been voluntary. In the absence of any mandated accountability measures, says Wright, younger, more tech-savvy generations began using their investigative tools to expose where brands have undelivered on or contradicted their promises to do good. Their criticism gave rise to a new vernacular that includes words like “greenwashing,” “performative allyship,” and “virtue signaling” to call out companies that fail to commit to their stated values.

“Companies are a lot more visible because of the internet. It’s easy to Google a company and get a sense of what their values are,” said Wright. “Individuals have really taken to social media to point out corporations who don’t walk the talk.”

Today, said Wright, stakeholders such as consumers, investors, employees, and suppliers know that failure to address social and environmental can have significant and wide-ranging impacts on a corporation’s financial performance. In fact, a study by BlackRock found that 81 percent of purpose-driven companies with stronger environmental, social, and governance (ESG) profiles outperformed their counterparts in 2020, despite a market downturn. While CSR activities can vary drastically from company to company, ESG data offers a standardized framework that socially conscious investors can use to screen investments.

“The future of finance goes hand in hand with social responsibility,” said Wright. “As we continue to see how a company’s CSR efforts influence business outcomes and make it more attractive to potential employees, consumers, and investors, it only makes sense that financial viability be measured in the context of these sustainability and ethical concerns.”

CSR is no longer a charitable afterthought or fringe benefit, said Wright, but a deep-seated ethos that permeates every part of its operations, from its supply chain, to hiring practices, representation in marketing, and more. Today’s corporations are expected to not only acknowledge ways in which they have upheld systems of injustice and caused harm to people and the planet, but to use their resources, power, and brand to address those issues, said Wright.

“For example,” said Wright, “instead of joining the board of a major foundation or hospital, corporations are now asking their employees to work with nonprofits serving some of the most distressed communities throughout the country. Here in Camden, Subaru is serious about encouraging their employees to be engaged in the community, to really think about their service, and ensuring they are having a positive impact throughout neighborhoods in Camden.”