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Community investments pay dividends

Direct investment by businesses benefits operations as well as the communities in which they serve.

Image denoting the concept of community

Image: Shutterstock/Rawpixel

This article originally appeared in the State of Green Business 2021. You can download the entire report here.

Corporate community investment historically has been the realm of philanthropy and volunteerism departments, but there are a growing number of examples where direct investment by businesses benefits operations as well as the communities in which they serve.

In 2019, the Business Roundtable redefined the purpose of a U.S. corporation as being "to promote an economy that serves all Americans." In a survey of 2,511 registered U.S. voters by Real Clear Opinion Research, 77 percent of respondents agreed: "The purpose of a corporation is to maximize financial returns for its shareholders, but also to deliver value to customers, invest in employees, deal ethically with suppliers and support the communities where they work."

When it comes to investing in employees, Tyson Foods faces the challenge of its plants being predominantly in rural areas with limited labor pools, and with many of its front-line team members recent immigrants. To address this labor shortage, the company launched the Upward Academy, offering free and accessible classes in English as a Second Language, High School Equivalency, U.S. citizenship, financial literacy and digital literacy. The program is still in its early stages but all signs point to the investment paying off in terms of employee engagement and retention, and leading to a stronger local community.

Purchasing and sourcing strategies are also getting realigned to support local communities as well as smallholder farmers around the globe. Supply experts at Sodexo, a French foodservice and facilities management company, have worked with the Sustainable Purchasing Leadership Council to target local and seasonal produce, working with local farmers and producers around each of its client sites. This approach evaluates environmental, social and economic impacts on the community and helps local businesses to thrive, which in turn benefits the company’s clients.

Corporate sourcing decisions can drive change for communities around the world. Companies such as Mars and Griffith Foods have established sustainable sourcing programs that seek to create societal value while generating business benefit. As noted in its 2020 annual report, Griffith receives high-quality raw materials from trusted partners while farmers receive on-farm and in-community support from a consistent buyer.

The alignment of capabilities and community is a growing business trend as companies move away from pure checkbook philanthropy.

In these and other examples, community investments typically start with nonprofit engagement, aligning with on-the-ground resources that provide local knowledge and connections. The alignment of capabilities and community is a growing business trend as companies move away from pure checkbook philanthropy.

Companies such as HSBC and PwC have shifted to a more strategic approach by integrating their giving and volunteering. HSBC envisions a Venn diagram of urgent needs and financial literacy, where the overlap identifies opportunities to help the underserved develop soft skills to boost employability and financial capability. PwC took a similar approach to combining philanthropy with volunteering, providing employees paid time to support educational initiatives in entrepreneurship and financial literacy, leveraging their consulting skills to better the community.

AT&T has reinvented its philanthropic approach so that it looks more like its store franchise model. AT&T Believes is a localized effort to create positive change in the communities where it operates, letting local employees determine how to best have an impact. Wells Fargo has launched pitch competitions to fund breakthrough ideas that promise new ways to create urgently needed affordable housing nationwide.

Such initiatives are part and parcel of recent efforts to measure the social contribution of business. There are currently few standards to guide and measure community investment and other social impacts. 

Danone, Patagonia and others have been certified as B Corporations, identifying them as businesses that meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose. B Lab, the organization behind the voluntary standard, offers an assessment tool that can start companies on their journey toward strategic community investment.

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