The Language of Social Impact vs. Real Change
After working with hundreds of senior executives across many industries in the public and private sectors, I have come to believe that truly transformational leaders are rare. More common are the executives who are aware of the urgency to solve humanity’s hardest problems and who know that hard decisions must be made yet are unwilling to make them. Even if their public persona is “visionary” or “change-making,” a different story unfolds behind closed doors. These roles are designed to maintain the status quo. Many of these executives hide behind process, structure, regulations, or economics instead of doing the work to figure out a way to make real change happen.
As a strategic advisor for more than 20 years I have been fortunate to work with executives who are determined to truly transform their organizations. Though few and far between, these leaders are out there and they intuitively know they must make hard decisions to secure the viability of their organizations. They have an inherent sense of urgency, driving them to search out new ideas and opportunities for a successful future.
Meaning Within the Change Rhetoric
Since the publication of my new book Convergence, I have been asked about the differences between the many ways corporations claim to be accountable: from Corporate Social Responsibility (CSR), to the focus of ESG (Environmental, Social and Governance), sustainability, stakeholder capitalism, and the phrase “human-centric.” I’ll admit, the swirl of terminology is confusing. We have a long list of nuanced terms, all attempting to describe a common intent. Lexicon matters, but in this case, the issue at hand is less about clarifying an idea and more about signaling the confusion that makes it hard for businesses to know what to address.
Over the past several decades, the social and environmental responsibilities of business have been up for debate. If consensus exists about where businesses should be focusing their energy, it’s around the fundamental idea that corporations are obliged to work simultaneously for the betterment of people and profit. In this case, ‘people’ should include employees, customers, suppliers, and the communities touched by the business operations. Countless programs, processes, and functions have sprung up to address the need, only to extend the spectrum of terms and make the challenge more perplexing.
When we stand back from the fray to take a critical view, a bigger question than terminology arises—are these efforts and conversation points creating the impact that is needed? Work for the betterment of people while still making profit is simple enough to say but considering that most companies organize and optimize to maximize shareholder profit, doing it well is tremendously challenging. A shareholder priority benefits a few rather than acting for the good of the many.
We have to ask whether the effort and energy put into CSR, ESG (or whatever term you want to use) is creating the value or change that we need from business?
Meaning and Truth in Change Language
In the 2021 Harvard Business Review article, Overselling Sustainability Reporting, Kenneth P. Pucker argues that the answer is no. Much of the effort businesses are placing on sustainability is not making the impact many believe is being made.
Pucker points out that the number of companies filing CSR reports has increased a hundredfold in the past two decades. Socially responsible investment has grown to more than $30 trillion. But during this same 20-year period, carbon emissions have continued to rise, and environmental damage has accelerated. Other gaps between reporting and impact continue to widen, including the gap between the median CEO compensation and median worker pay.
It is disheartening to see that effort for betterment may be misplaced. The cynic might even go so far as to say the purpose of many sustainability activities is to make customers and employees feel good while deflecting from the hard work of determining how to make a real impact on the problems that need to be solved.
Questions (and even occasional pushback) that have come up during book talks make sense when you consider that many people believe that initiatives, reporting, speeches, and proclamations about doing good for social and environmental issues equate to actual progress and impact. Questions like, “don’t most companies already report their corporate responsibility efforts?” and comments such as, “I believe most companies already have robust diversity and inclusion plans and goals,” prove the disconnect between reporting and impact.
We need to practice measuring the impact of the efforts rather than the plans and activities. Businesses require new mental models to make that shift. They must remove outdated organizational beliefs and behaviors that get in the way of optimizing efforts for impact. Without intentionally working on setting a vision for measuring impact and “tidying up,” many organizations will fall into a habit of holding tight to outmoded approaches and operations that place priority on measuring activities instead of outcomes. The remnants hinder progress, create confusion and conflict, and get in the way of achieving necessary change for real impact to better humanity.
Disconnects Between Language and Impact
Here’s a simplistic example to illustrate the point. Rather than reporting on how many scholarships they funded in a year, a business donor could continue to monitor the efforts and outcomes of recipients over the long term to determine the actual impact that their support created. Did the recipient go on to help develop an innovation to replace plastics? Did they go on to become a researcher who helped determine the cause of Alzheimer’s? The real importance is not that someone wrote a check; instead, it is the impact of the work that the funding supported.
Consider Coca-Cola’s response to its use of single-use plastics. The beverage company produces approximately three million tons of plastic packaging a year—equivalent to 200,000 bottles a minute. This volume makes the company one of the most polluting brands in the world. The company has pledged to use at least 50% recycled material in its packaging by 2030. Does their solution make the issue someone else’s problem? And while the promise is significant, is it enough? Current estimates show that fewer than 10% of all plastics are recycled. The question becomes whether recycling is the best answer or if Coca-Cola would do better to produce new lightweight packaging solutions that would replace plastics altogether?
Tracking, monitoring, and reporting impact mandate a future focus on the responsibilities of a company and on the leaders who are making decisions. Taking the long view means we must consider how today’s decisions will impact timeframes in ten, 15, even 20 years. These capabilities must also extend beyond the CEO or senior leadership. Focusing on the betterment of employees, customers, suppliers, and communities requires that everyone in the business organization understands that the purpose of their existence extends beyond anyone in the leadership or shareholder cohorts.
Where Real Change is Happening
The challenge is massive, but progress is happening. We see it in efforts like the AWS International Water Stewardship Standard. Leading food companies, including General Mills and Nestle, have adopted the standard to gain an understanding of their water use and impacts. It’s a way they are working collaboratively and transparently for sustainable water management. The agricultural industry uses approximately 70% of the world’s fresh water, making it essential for leaders of food companies to address water stewardship issues. It also is critical for manufacturing. But even more importantly, we need water for drinking, sanitation, growing food, creating energy—it is as necessary for life.
I call this being human-centric. Among the terms on the consciousness list, this is the only one that leaves no doubt about the purpose of the effort.
To be sure, entrenched ideas and ways of doing business are hard to overcome. Change is hard, and few dare to lead in the endeavor. But transformational leaders are out there stepping up the challenge and showing us that it is possible to create real impact. They see past checklists, debates about definitions, and reporting that gives pats on the backs and tells each other that we are doing well because we did something. These are the people we can observe and whose examples we can follow as we set out to solve the hard problems humanity faces.
Deborah Westphal is a leader in future-focused strategy. In her book Convergence, she leverages more than 30 years of experience helping the world’s most innovative business and government leaders to challenge biases, ignite ideas, and build connections. She delivers this rich insight with an empathetic and thought-provoking writing style to chart a path for readers. Throughout the book, personal stories and historical examples highlight convergences that span the globe, impacting everything from global supply chains to climate change, and reshaping the future of business, technology, and humanity everywhere.