Introduction to Community Engagement and Investment

Sustainable entrepreneurship is based on the premise that companies need to move beyond focusing exclusively on short-term financial results for their owners and acknowledge and accept responsibilities to other stakeholders including investors, employees, regulators and society in general.  In fact, at its core, sustainability really is about the long-term wellbeing of society, an issue that encompasses a wide range of aspirational targets including the following based on the sustainable development goals (“SDGs”) of the 2030 Agenda for Sustainable Development adopted by world leaders that went into effect on January 1, 2016[1]:

• Ending poverty in all its forms, everywhere
• Ending hunger, achieving food security and improved nutrition and promoting sustainable agriculture
• Ensuring healthy lives and promoting wellbeing for all at all ages by ending preventable deaths and epidemics and achieving universal health coverage
• Ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all
• Achieving gender equality and empowering all women and girls
• Promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
• Developing quality, reliable, sustainable and resilient infrastructure, enhancing scientific research and significantly increasing access to information and communications technology (e.g., providing universal and affordable access to the Internet)
• Reducing income inequality within and among countries and empowering and promoting the social, economic and political inclusion of all
• Reducing inequalities of outcome, including by eliminating discriminatory laws, policies and practices
• Promoting peaceful and inclusive societies for sustainable development, providing access to justice for all and building effective, accountable and inclusive institutions at all levels  

The goals listed above are based on the recognition that society in general is vulnerable to a number of significant environmental and social risks including failure of climate-change mitigation and adaptation, major biodiversity loss and ecosystem collapse, man-made environmental planning and disasters (e.g., oil spills), failure of urban planning, food crises, rapid and massive spread of infectious diseases and profound social instability.[2]  There are also economic, geopolitical and technological risks, some of which, including the following, are especially problematic for businesses[3]:

• Failure/shortfall of critical infrastructure: Failure to adequately invest in, upgrade and/or secure infrastructure networks (e.g. energy, transportation and communications), leading to pressure or a breakdown with system-wide implications.
• High structural unemployment or underemployment: A sustained high level of unemployment or underutilization of the productive capacity of the employed population.
• Illicit trade (e.g. illicit financial flows, tax evasion, human trafficking, organized crime, etc.): Large-scale activities outside the legal framework such as illicit financial flows, tax evasion, human trafficking, counterfeiting and/or organized crime that undermine social interactions, regional or international collaboration, and global growth.
• Severe energy price shock (increase or decrease): Significant energy price increases or decreases that place further economic pressures on highly energy-dependent industries and consumers.
• Adverse consequences of technological advances: Intended or unintended adverse consequences of technological advances such as artificial intelligence, geo-engineering and synthetic biology causing human, environmental and economic damage.
• Breakdown of critical information infrastructure and networks: Cyber dependency that increases vulnerability to outage of critical information infrastructure (e.g. internet, satellites, etc.) and networks, causing widespread disruption.
• Massive incident of data fraud/theft: Wrongful exploitation of private or official data that takes place on an unprecedented scale.
• Rising income and wealth disparity: Increasing socioeconomic gap between rich and poor in major countries or regions.

Clearly the challenges described above are daunting and for most sustainable entrepreneurs it may be difficult to see how they and their businesses can play a meaningful role in address them.  While it is common for “society” to be identified as an organizational stakeholder, the reality is that one company cannot, acting on its own, achieve all the goals associated with societal wellbeing.   However, every company, regardless of its size, can make a difference in some small, yet meaningful way, and its leaders must understand the connection between the company’s success and a healthy society, a link that has been explained as follows:

“A healthy company requires a healthy, stable, safe, and resilient society.  Social unrest is triggered by many factors, the root cause of which is growing income and wealth inequality.  Companies can help reduce those chasms by contributing their fair share to fund physical and social infrastructure, a welfare social safety net, and quality health and education systems.  Much of a company’s reputation and social license to operate depends on how much it does on community and social issues, especially and how well it participates in collaborate efforts to advance society wellbeing, or at least does no harm to society.  A health, resilient society does not boomerang on businesses; instead, it provides a supportive nest for their operations.”[4]

Sustainable entrepreneurs are embedded in the communities in which they operate and as such need to take into account their relationships with local governments and the natural and physical environment in those communities as well as the quality of life provided for residents in close proximity to where the company operates and in distant areas where the company’s products and services can improve living conditions.  Individual organizations can and should pursue societal goals with respect to sustainability within their communities, and more and more attention is being focused on the impact that companies have within their communities.  Focusing on the community level allows an organization to set meaningful targets and implement programs that fit the scale of its operations and which can provide the most immediate value to the organization and its stakeholders.  Societal wellbeing projects and initiatives must ensure that the organization does not compromise, and instead improves, the wellbeing of local communities through its value chain and in society-at-large. 

While businesses generally benefit their communities by improving the standard of living and providing community members with products and services that fulfill their needs, companies can also contribute to society through philanthropy and corporate social responsibility (“CSR”).  Philanthropy can take many forms and includes donations of cash, products and employee time (i.e., volunteering) to charities and other nonprofit groups. Some companies enjoy engaging in cause-related marketing, which is essentially a partnership between a company and a nonprofit that calls for the business to market its products with a promise that a portion of the sales will be donated to the nonprofit.  This strategy certainly benefits the nonprofit; however, the company obviously hopes that it will see a positive uptick in sales and be able to add to its customer base.  CSR initiatives vis-à-vis the community includes recruiting and training disabled veterans and providing flexible schedules and benefits to Olympic athletes to support their training activities.

While the potential benefits of community engagement and investment for businesses are often framed as being readily apparent, it is useful to consider ideas about the specific aims and objectives of corporate community involvement.  One comprehensive list included making people inside and outside the community aware of various problems in the community; ensuring that investment and development efforts occur across all sectors of the community and in multiple areas including education, health, recreation and employment; motivating members of the community to participate in community welfare programs; providing equal opportunities within the community for access to education, health and other facilities necessary for better wellbeing; building confidence among community members to help themselves and others; generating new ideas and changing patterns of life within the community in positive ways that do not negatively interfere with traditions and culture; bringing social reforms into the community; promoting social justice; developing effective methods to solve community programs including better communications between community members and local governments; and creating interest in community welfare among community members and mobilizing those members to participate in the collective work for community development.[5]

The Conference Board reported on the collaboration between Points of Light and Bloomberg LP to identify the 50 most community-minded companies in the US for 2014 and noted that companies included on the list were typically strong with respect to one or more of the following[6]:

• Employer-led community programs positively impacted employee engagement, meaning that employees who participated in community engagement initiatives with the support of the employers scored higher on measures of morale, engagement, pride and productivity than employees who did not.
• Companies and communities found value in skills-based: skills-based volunteering strengthened employees’ morale and workplace skills while providing five times greater value to the community than traditional volunteering.
• Companies raised their voice to advance social change by taking national leading positions on social issues related to their own operations, thus taking advantage of their ability to contribute lasting solutions.
• Purpose was aligned with profit, with most of the companies integrating their community engagement into at least one of three business areas: marketing, skill development and diversity and inclusion.

Other noteworthy characteristics of the listed companies included extensive use of strategic community investment tools that went beyond grant giving to include employee time and skills and in-kind donations; development of institutional policies, systems and incentives to support the strength and longevity of their community programs; and systematic measuring of the business and social impact of community engagement work.

The importance of organizational attention to its communities is illustrated by the inclusion of community involvement and development among the core subjects (along with organizational governance, human rights, labor practices, the environment, fair operating practices and consumer issues) mentioned in ISO 26000: Guidance on Social Responsibility first issued by the International Organization for Standardization in 2010.[7]  In the overview of the subject included in ISO 26000, the need for organizations to focus on community involvement and development was explained as follows:

“It is widely accepted today that organizations have a relationship with the communities in which they operate.  This relationship should be based on community involvement so as to contribute to community development.  Community involvement—either individually or through associations seeking to enhance the public good–-helps to strengthen civil society. Organizations that engage in a respectful manner with the community and its institutions reflect and reinforce democratic and civic values.”[8]

Organizations have been launched and thrived in turbulent times; however, they cannot have a reasonable expectation of survival unless they are operating in a healthy, stable, safe, and resilient society.  As such, their own sustainability depends on their willingness and ability to contribute their fair share to improve and maintain the physical and social infrastructure of the world in which they operate and improve the wellbeing of the persons who will be their employees, customers and neighbors.  Additional business benefits to organizations pursuing and achieving societal wellbeing goals through the actions they take in their local communities include:

• Aligning the organization’s day-to-day actions in the actual environment in which it operates with its purpose and values
• Using the information gathered from engagement and consultation with community groups to make more informed decisions about projects impacting the community and gain a better understanding of the opportunities associated with acting responsibly vis-à-vis the community and the risks of failing to consider community concerns
• Building on responsible involvement in local political activities to avoid reputational and financial costs due to lawsuits brought by members of the local community and/or disputes with local regulators over violations of laws and regulations
• Expanding and improving the organization’s risk management practices by taking into account the consequences associated with failing to recognize and address the local impact of broader societal challenges in areas such as education and job skills training, health, income inequality and technology adaptation and diffusion
• Securing and supporting the organization’s social license to operate by gaining and maintaining the community’s acceptance of the organization’s operational activities and business practices
• Enhancing employee loyalty, involvement, participation, retention and morale through opportunities for employees to engage in the community and live and work in an area in which the organization is perceived as a valuable and responsible citizen
• Attracting goodwill in each of the communities in which the organization operates through the involvement of the organization and its employees in the community in day-to-day encounters and contributions, both philanthropic and investment, to causes and projects that support the wellbeing of the community
• Creating, protecting and improving critical local infrastructure and services upon which the organization and its stakeholders (i.e., employees, local customers and supply chain partners) depend for both business purposes and day-to-day living

Community engagement and investment activities provide organizations with important opportunities to leverage the impact of their contributions given that businesses typically rely on their local communities as a source of talent for the employee base, for contractors for services that the organization seeks to outsource and, of course, as a market for the organization’s products and services.  By contributing to educational and health programs in the community an organization can increase the skills base of potential workers, thereby reducing training costs when new employees are hired, and lower the risk of adverse impacts to productivity due to illnesses among its employees or their immediate family members, either of which can cause employees to miss time at work.  Organizations can provide financial support, as well as licensed technology, to launch a local network of engineers, scientists and/or software developers to generate innovations that not only benefits the organization but also provided new opportunities for other members of the community, thus improving overall community wellbeing.  Finally, the proximity of local customers makes it easier for organization to develop and communicate their marketing messages and seek and obtain feedback on the effectiveness of those messages and the quality and value of the product and services distributed by the organization.  In fact, one of the compelling reasons for investing in community involvement at all levels is the relative ease of collecting and analyzing information relating to operational performance.  Proximity to the human, technical and other resources that can be developed and nurtured through community involvement and development also allows organizations to move more quickly to seize opportunities and obtain a competitive advantage.

It should not be overlooked that community engagement and investment are not issues that organizations can master on their own: they need willing partners among the other community stakeholders.  One of the most important partners, of course, is the local government and organizations should seek to develop a program of regular communications with governmental officials to address a wide range of issues including infrastructure; basic educational and health services for local employees, their family members and potential customers; skills development programs for workers who would be a good fit for the organization’s talent pool; police, fire and other emergency services; and cultural and leisure opportunities that will draw prospective employees and customers into the community.  When an organization is already a significant employer for the community government officials should obviously want to take steps to keep the organization happy; however, those same officials also realize that they need to invest their scarce resources wisely and build a diverse portfolio of businesses so that the community is not overly dependent on a single company.  Organizations need to understand the political, economic and social context within which local government officials must operate and this means engaging with individuals and groups that are in positions to influence the views and actions of those officials.  Organizations do not vote, but they can reach out to those people who can and do make choices regarding candidates and ballot initiatives that are related to local laws and regulations and to investment in community development projects.

Community engagement must be a permanent part of the strategy and operations of any organization and this means identifying community stakeholders as soon as possible and moving quickly establishing communications and understanding their needs and expectations regarding the organization and how it will operate within the community.  Organizations need to under the issues that concern community members; the beliefs, values and experiences that drive the actions of community members and how community groups interact with one another.  Organizations also need to carefully select that best strategies for their relationships with their communities, typically choosing from among community investment, which is essentially a one-way process of providing information and resources to the community (e.g., information sessions, charitable donations, employee volunteering etc.); community involvement, which involves two-way communications, such as consultation processes prior to launching a major project; and/or community integration, which involves sharing information and consultation in advance of launching collaborative projects that are jointly controlled with, and often led by, community groups.[9]

This article is part of the Sustainable Entrepreneurship Project’s extensive materials on Community Engagement and Investment. and an excerpt from Community Engagement and Investment: A Guide for Sustainable Entrepreneurs by Alan S. Gutterman, which is available for purchase at various online booksellers.  Readers may also enjoy the author’s Responsible Business: A Guide to Corporate Social Responsibility for Sustainable Entrepreneurs.

[1] http://www.un.org/sustainabledevelopment/sustainable-development-goals/ 

[2] The Global Risks Report 2017 (12^th Edition) (Geneva: World Economic Forum, 2017), 61-62.  The Report and an interactive data platform are available at http://wef.ch/risks2017.

[3] Id. at 63.

[4] B. Willard, “Society Wellbeing” in Sustainability ROI Workbook: Building Compelling Business Cases for Sustainability Initiatives (May 2017 Edition) (the Workbook, which is regularly updated, is available for download, along with other information on corporate sustainability projects, at http://sustainabilityadvantage.com/). 

[5] http://www.studylecturenotes.com/social-sciences/sociology/339-aims-and-objectives-of-community-development

[6] Y. Turner, “The Civic 50: Best Practices in Corporate Community Engagement”, Giving Thoughts (The Conference Board, March 2015).

[7] International Organization for Standardization, ISO 26000: Guidance on Social Responsibility (Geneva, 2010).

[8] Id. at 60.

[9] Network for Business Sustainability, Engage Your Community Stakeholders: An Introductory Guide (September 14, 2012), https://nbs.net/p/engage-your-community-stakeholders-an-introductory-gui-615902ab-e363-47ff-a3fc-d87188938739