Q&A with Alice Korngold, Author, A Better World, Inc.: How Companies Profit by Solving Global Problems...Where Governments Cannot

Alice Korngold, President & CEO, Korngold Consulting LLC, provides strategy advisory services and facilitates leadership strategy retreats for board members and executives from multinational corporations and NGOs. Her areas of expertise are strategy and board governance, sustainability/CSR, corporate-NGO partnerships, impact investing, and measurement and ratings.

Korngold advises the Drucker Institute and The Conference Board. Additionally, she advises NGO/nonprofit boards to help them achieve transformational change for strategic and financial success and sustainability. Korngold has also trained and placed several hundred business executives and professionals on NGO/nonprofit boards.

Korngold was named to The Guardian’s 10 Top Tweeters on Sustainable Leadership: from Al Gore to Sheryl Sandberg, Fast Company’s 25 of the Smartest Women on Twitter, The Guardian’s Twitter List: 20 Women in Sustainability for International Women’s Day 2014, and Guardian Sustainable Business’Top 30 Most Influential Sustainability Voices. She is the author of A Better World, Inc.: How Companies Profit by Solving Global Problems...Where Governments Cannot(Palgrave Macmillan, 2014) and Leveraging Good Will: Strengthening Nonprofits by Engaging Businesses (Jossey-Bass, A  Wiley Imprint, 2005).

Versaic: Why should companies invest in CSR? 

Alice: Companies that invest in CSR—finding innovative solutions to global challenges—can mitigate risks, reduce costs, and grow profits/value. This is demonstrated by dozens of case studies in my book, A Better World, Inc.: How Companies Profit by Solving Global Problems…Where Governments Cannot (Palgrave Macmillan 2014). 

Additionally, the world’s leading investment firms recognize the connection between sustainability and profitability. And what matters to investors must matter to companies, their CEOs and their boards of directors. The leaders of Carlyle, KKR, BlackRock, and Blackstone have all declared that incorporating environmental, social, and governance issues (ESG) into investment decisions helps to reduce risks and enhance returns for investors, while also improving communities worldwide. (Details are provided in my chapter in the new Handbook of Board Governance.)

Versaic: What brand and marketing value can CSR and Sustainability initiatives bring?

Alice: If you create a brand—an image—that is a clear and honest reflection of your company’s distinctive worth, and that is something that people value, then you increase the likelihood of growing profits. If you design an image that does not truly depict reality, however, then you risk being exposed. Volkswagen is a case in point; they created a brand to represent high quality and environmentally positive vehicles, but it was false.

In order to build and sustain a strong CSR and sustainability brand, the company must actually use its unique capabilities to find innovative solutions that improve people’s lives—that address vital economic, social, and environmental challenges.

Versaic: What advice do you have for brand marketers who are trying to make CSR or sustainability an essential part of the business?

Alice:

1. Look at the company’s priority goals for the next several years. These might be, for example, expanding into emerging markets, or broadening its consumer base to be more inclusive, or growing its high-tech workforce.
2. Consider how the company can apply what it does best to improve the lives of the people and communities it most seeks to engage—whether that’s helping to develop small businesses in emerging markets; creating a more diverse workforce to better understand and engage with a broader consumer base; or attracting and retaining the best employees by being the place where people find innovative solutions to global challenges.
3. Encourage the company to support a CSR strategy that will advance the company’s most important goals, and create the brand around that.
4. Make sure that your CSR initiatives are meaningful and have an impact. Nothing superficial or lightweight.

Versaic: What are the unexpected benefits or outcomes that you have seen for companies that have implemented CSR Programs successfully? 

Alice: There are many benefits for companies that implement CSR/sustainability approaches successfully, but these are not “unexpected” outcomes: the benefits are very much by design. The primary advantage to companies that integrate CSR/sustainability into the company’s core strategy—by finding innovative solutions to address global problems—is the opportunity to grow the company’s profits/value.

Relatedly, companies that implement CSR strategies successfully are in the best position to attract investment dollars (see Q1 above); recruit and retain the best employees; and achieve their goals to reach customers in new markets.

Versaic: What are some of your favorite CSR brands and what makes their programs so effective?

Alice: Many brands are achieving success with CSR/sustainability strategies. Unilever is one of the most iconic sustainability brands, and to my mind, one of the most worthy. Its vision is to “grow our business, whilst decoupling our environmental footprint from our growth and increasing our positive social impact.” As shown in my book, Unilever is effective for three reasons: 

1. The board supports Paul Polman’s (CEO’s) innovation and sustainability strategy.
2. The company partners with NGOs for their expertise, access, and credibility.
3. The company is effective in engaging stakeholders.

Another company that is notable for its CSR/sustainability strategies is Dow Chemical Company. To achieve its goals, Dow is “collaborating with like-minded partners to advance the well-being of humanity by helping lead the transition to sustainable planet and society.” One of their valued partners is The Nature Conservancy (TNC). Together Dow and TNC developed a methodology to value the impact of every major business decision on ecosystems and the environment. “This means thousands of projects every year will be evaluated for how they benefit from or impact nature – fundamentally changing the way Dow does business.” Dow also recognizes that board involvement, NGO partners, and stakeholder engagement are integral to the success of their sustainability commitments.

Versaic:  What are the 3 most important ways companies measure the success and how does that lead to value in the business?

Alice:

1. Reducing costs: Measure the extent to which the company’s sustainability strategy reduces costs; saving on energy expenditures is a good example. Lower costs result in higher profits.
2. Mitigating risks: Measure the extent to which the company’s sustainability strategy mitigates risks, such as the growing scarcity of natural resources that are required for production. Examples include water for food and beverage companies (PepsiCo, for example), and natural fibers for apparel companies (Nike, for example) and for paper manufacturers (Kimberly-Clark, for example). Risks such as these threaten the company’s value and also scare away investors.
3. Growing value. Companies win in the global marketplace by creating innovative products that solve economic, social, and/or environmental challenges. Companies must measure the success of each product and how its sales and profits contribute to the company’s growth and value. 

All of these examples are discussed in A Better World, Inc.: How Companies Profit by Solving Global Problems…Where Governments Cannot (Palgrave Macmillan 2014).

Additionally, a model to measure the benefits and impact of corporate volunteerism and philanthropy is provided in Leveraging Good Will: Strengthening Nonprofits by Engaging Businesses (Jossey-Bass, a Wiley Imprint, 2005). 

Versaic: How can companies truly differentiate themselves in how they communicate their CSR initiatives and results?

Alice: Companies are realizing that a variety of stakeholders can make or break their image and brand. So the only way for the company to establish a winning brand is to create an identity that is based on how the company will actually improve people’s lives and the world in which we live. If that identity is derived by engaging with stakeholders and meeting their interests, then the stakeholders themselves will help tell the story. And they are the most credible storytellers. This has been key to Unilever’s success. Unilever’s brand and effectiveness is touted by its nonprofit partners (Acumen is an example; read its CEO’s comments here regarding Unilever), the smallholder farmers who are the company’s suppliers, customers, investors, employees, and others. 

The reverse is also true. When companies do not engage with stakeholders and do not meet their interests, word spreads quickly on the Internet. In that case, the company’s brand is sullied, and the value is jeopardized. Volkswagen illustrates this phenomenon.

Versaic: What tips can you share with companies who would like to increase the impact of their CSR programs?

Alice:

1. CSR must be designed to help the company to achieve its foremost mission and goals. For example, if the company seeks to expand in developing markets, then the CSR strategy should support that goal. Perhaps by supporting small business enterprise development, innovating products that are better designed for new markets, providing STEM education for workforce development, advancing educational opportunities for girls and women, or improving healthcare.
2. Build a highly diverse and inclusive workforce, across all levels and divisions, and a highly diverse C-suite and board of directors. This is the only way the company will have the breadth and depth of experience and expertise and the variety of perspectives to imagine and accomplish what’s possible in the global marketplace.
3. CSR cannot be an isolated function. CSR must be seen as a collaborative approach across numerous areas including, for example, product development and innovation, business development, customer relations, human resources, communications, marketing, public relations, and philanthropy. 

 Versaic: Where do you see CSR going? What is going to be important 3 years from now?

Alice: CSR has already moved from the margins to the boardrooms at a few leading companies. (See examples like GSK and Johnson & Johnson in this article.) There are a few ways that CSR/sustainability is manifesting its presence at the highest levels of some companies:

1. The board of directors has a board committee that is specifically designated for CSR, sustainability, and/or innovation.
2. The company has a chief sustainability officer, and the CSO works with the board of directors CSR committee.
3. The CEO’s compensation is tied to the success of the company’s sustainability strategy.

Over the next 3 years, more companies will adopt these three important practices to ensure that the company is maximizing CSR opportunities to grow profits and value.