Blogpost October 2017

by Maximilian Grimm

 

Companies have to rethink their role in society

Our benchmarking study on Corporate Citizenship Engagement of the DAX 30 companies shows that German corporations are actively engaged in society beyond their economic activity; nevertheless, they should do more than just reducing their negative impacts on society or environment or contributing cash donations to NGOs. Companies will need to take their social engagement activities to the next level by deploying their core products and services for the good of society.

Since the adoption of the Sustainable Development Goals (SDGs) in 2015, there is widespread consensus that companies need to contribute to global sustainable development. While many of the SDGs have a particularly high relevance for countries in the global south, a study conducted by the Bertelsmann Foundation shows that also Germany has major challenges with respect to inequality and social exclusion: While material wealth is higher than ever and aggregate economic development is steadily increasing, questions regarding social justice become more central as growing inequality and risk of poverty jeopardize the positive overall development.

In the aftermath of parliamentary elections in Germany, the current public discourse primarily focuses on politics to offer solutions and take action for these challenges. However, the debate should not divert from the fact that companies also bear responsibility to tackle existing societal challenges and that society expects them to do so. According to Edelman’s trust-barometer, three quarters of respondents believe that companies should focus not only their own profits but also on strengthening economic and social conditions in their communities.

In this respect, German companies have a lot to learn from progressive French and Belgium companies that consciously tackle existing challenges and build innovative business models that are at the nexus of shared financial, strategic and societal values. Companies like the food corporation Danone, or the automotive group Renault do not limit themselves to separate philanthropic initiatives but rather develop innovative and inclusive business models (more here) or adjust existing models to also serve the needs of low-income households.

Calling on companies to contribute to the well-being of society is not a burden but a chance to move potential into reality. Of course companies should not abandon existing effective activities, but rather add to these current efforts with new and innovative programmes integrated into their core business.

In the long run, we have to distance ourselves from the conviction that financial return and societal added value are separate parameters, especially as companies have immense competence and skills which they can bring to the common good.

With our project Mehrwert² (value²) from Beyond Philanthropy and Social Impact, we strive to collectively initiate support for German corporations so that they can develop such innovative programmes. As a first step, we have published our study, "Soziale Innovationen für Unternehmen und Gesellschaft“ (Social Innovation for companies and society) with the support of the BMW Foundation.