One of the most amazing businesspeople anywhere is Richard Branson, head of the Virgin group of companies. I recently read his latest book, Screw Business As Usual, in which he promotes the idea of doing well by doing good.
Not one for empty words, Branson created Virgin Unite in 2005 to utilize the talents of all 200 of its companies in the name of good deeds and good business. It’s been a tremendous success and a model for all businesses, small and large. Reading his book, I wondered what public companies, if any, were following Branson’s lead.
One of the first businesspeople to do well by doing good was Josiah Wedgwood, founder of Wedgwood Co., maker of fine china. Wedgwood provided his workers (remember, this is the 1700s) with education, health care, proper food and nutrition, and housing.
In addition, he was a vocal member of the Anti-Slavery Committee, creating a medallion depicting a slave in chains with the inscription, “Am I not a man and a brother?” The medallion was freely given to anyone who shared his anti-slavery sentiment. However, it was also sold to those willing to pay, creating one of the first opportunities to do well by doing good.
Wedgwood’s efforts helped shed light on the abolitionist movement and ultimately led to the abolition of slavery by the British parliament in 1807. People like Henry Heinz, Milton Hershey and Estee Lauder would soon follow in his footsteps.
Sounding a bit like Facebook (NASDAQ:FB) co-founder and CEO Mark Zuckerburg, British management consultant Matt Stocker recently wrote this about purpose and profit on his blog: “A business must have reason to exist beyond that of making money and maximizing shareholder value. Profit cannot be the goal, vision, or the purpose of an organization.”
Richard Branson couldn’t agree more. As someone who writes professionally about companies, it pains me every time I see an example of a business simply out for the almighty dollar with no other purpose driving its employees. Those companies are doomed to failure.
Say what you will about Starbucks (NASDAQ:SBUX) CEO Howard Schultz, but he’s no dummy. He understands that the more his company is able to affect positive change both in the U.S. and elsewhere, the better it will do as a business, creating greater value for shareholders. Starbucks forgot its purpose in life several years ago, and the business suffered.
Starbucks-led programs like Create Jobs for USA might seem self-serving to some, but it’s raised $11.5 million to date which has resulted in $80 million in loans and an expected 3,800 jobs with plenty more to come.
Marc Gunther, who writes about sustainability, mentioned in a blog post last year that the idea came out of Starbucks’ existing loan program for farmers in coffee-growing countries. In 2011, it made $14.7 million in loan commitments and hopes to hit $20 million by 2015. Read the entire 2011 Global Responsibility Report.
Now, tell me Starbucks employees don’t go to work happier and more productive than the average person. It means something to affect positive change.
A company that isn’t public, although I wish it were, is Kimpton Hotels. Its corporate social responsibility program is called Kimpton Cares, and if you go to its website, you’ll find some incredibly insightful information. The partnership that catches my eye is the work it’s doing with Dress for Success, an international nonprofit that assists economically challenged women as they transition from unemployment to self-sufficiency. In addition to donating a suit to prospective job seekers, the group also provides career guidance through the Professional Women’s Group (PWG).
Kimpton donates $10 of your daily room rate when you stay at one of its 59 hotels across the U.S. and gives you a 15% discount for each night of your stay. Considering some of the women who benefit from Dress for Success go on to work at Kimpton, the program pays for itself. A win-win situation.
My final choice is a company I’ve followed for some time. Female Health Co. (NASDAQ:FHCO) is based in Chicago with manufacturing facilities in the U.K. and Malaysia. It created the FC1, the first-of-its-kind female condom in the mid-1980s, and it took 18 years and $140 million to become profitable. The condom protects against HIV/AIDS, other sexually transmitted infections and unwanted pregnancies. The updated FC2 was approved by the U.S. Food & Drug Administration in 2009 and is now available in 100 countries worldwide.
In places like Africa where the threat of HIV/AIDS is high, the product is a godsend. The FC2 is the second generation of female condom whose design is the same high quality and safety as the first but more affordable. Dr. David Holtgrave, chairman of the Department of Health Behavior & Society at the John Hopkins Bloomberg School of Public Health, performed a study that showed the FC2 prevented enough HIV infections to save $8 million in future health care costs at a cost of only $445,000.
This is a business that has endured a huge battle to get its product to market despite the fact it saves costs and lives. Finally, it’s reaping the financial benefits of its social responsibility. In 2012, FHCO expects to generate record revenues and operating profits. Good for it, and good for the world.
Finding good corporate citizens isn’t as easy as you might think. Despite annual corporate social responsibility awards, very few businesses, especially public ones, do a reasonable job highlighting the good works they do and why they do them.
If you want to invest in such companies, your best bet is to look through the holdings of ETFs like the iShares MSCI KLD 400 Social Index Fund (NYSE:DSI) and then go to a particular company’s website to read its corporate social responsibility report. Alternatively, here’s a list of companies that publish an annual CSR report.
As of this writing, Will Ashworth did not own a position in any of the stocks named here.