How many brownie points does your company get for social impact this year?
A corporate ledger to balance good and bad deeds.
Hey folks. This is the 3rd edition of The Great Near. Today’s post is a continuation of last week’s post on Google Trends and corporate social impact. Burger King’s latest campaign had me thinking about why we celebrate some forms of corporate social responsibility and pick apart others. How can we put these seemingly good deeds into context?
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There was a lot of buzz around the last post, so I thought we’d spend more time on it. I had something else planned for today on BIPOC-owned small businesses and the reasons why financial products aren’t structured to meet their needs, but we’ll get to that soon.
The same day we launched The Great Near, this happened.
I know. I KNOW.
Don’t worry, Burger King was only making a statement for International Women’s Day around advancing women’s rights in the culinary profession. 😅 (My favorite Twitter response was something along the lines of “They could have just gone with Burger Queen.”)
Burger King U.K. has since apologized for this and deleted its International Women’s Day tweet. If you’re curious why they took out a full-page ad in the New York Times, it’s because they launched a scholarship program for two of their most “qualified employees” (presumably women) to receive a $25,000 scholarship award to “enroll in an accredited two or four-year culinary program or university in the United States.” Burger King is accepting applications from the first 50,000 workers, and asking for a personal statement on how they “embody the Burger King brand values of dreaming big, meritocracy, and authenticity.”
If you’re thinking, “Doesn’t a two or four-year culinary degree usually cost way more than this?” you would most likely be right. If you’re also thinking, “Just $25,000? Didn’t they generate $1.78 billion dollars in revenue in 2019?” or “Couldn’t they just use this money to pay their staff more than $9.23/hour?” or “50,000 people writing personal statements for two scholarships?” Yes, yes, and yes.
Twitter had a field day ganging up on Burger King, but this clumsy strategy is not the first of its kind. Let’s call it what it is: manipulating consumers to believe they’re supporting a gender-inclusive, socially-conscious company every time they buy a Whopper.
Burger King’s faux pas is revealing of a larger trend: diversity initiatives are becoming the new greenwashing. What can we do to collectively discourage this behavior? If most people don’t have the time or interest to pick apart these campaigns, how can we expose performative social impact?
Where it gets complicated
You might not think of Burger King as a paragon of responsible business, but their corporate social responsibility page disagrees. In their eyes, they’re leaders of stakeholder capitalism, supporting all people from employees to suppliers who are the “cornerstones of [the] business.” Hmm.
Social impact, of course, isn’t clearly defined. Capital allocators, from fund managers to venture capitalists, set their own definitions to build “impactful” products that often require them to prioritize one form of impact over another.
A fund manager, for example, might include a company in their “gender-diversity" portfolio based on an index of companies with above-average representation of women in senior leadership. That same company might also be a major instigator of the opioid crisis. This is problematic for a product sold to consumers as socially responsible. (MSCI, an industry tool for investors, gives this fund a AA rating for ESG.)
Few people do this due diligence, and I don’t blame them. The process is time-consuming and convoluted. When it comes to investing or choosing where to spend money, individuals don’t use indices to make decisions. Our loyalties swing with the news that we happen to receive, and even then, it’s not an exact science. If 40% of consumers try to select brands that reflect their values, how can they avoid getting swindled by these rosy campaigns?
A new corporate ledger
If only it were as simple as doling out brownie points for every good and bad deed in some capitalist version of The Good Place, the TV series where humans are assigned a score based on the morality of their conduct in life. Take Amazon as an example.
Amazon launches a $25 million relief fund…. +50 points!
Amazon invests in staffing and surveillance technology to track labor organizers and union threats… boo, -300
Amazon donates technology worth $2 million to local schools… +10!
Former CEO Jeff Bezos brought in 1.2 million times the median employee salary… -800
Amazon commits to using 100% renewable energy by 2025… +0 (I’ll believe it when I see it)
Jeff Bezos donates $10 billion to climate justice… +100 (this is a lot of $ from the right hand, but what about the left hand?)
As of 2020, Amazon’s leadership team is 86% white… -200
If you’re keeping track, we’re at -1,140, even after all those good deeds! Obviously, this ledger is grounded in my personal values and it doesn’t translate to a proper system. Still, the thought experiment can be helpful to uncover hidden behavior as we attempt to make ethical decisions about the companies we support.
Could I be wrong about Amazon? Vanguard thinks so.
As of this posting, Amazon is a major holding in at least three socially responsible funds, including Vanguard’s ESG U.S. Stock ETF (ESGV), Impact Shares NAACP Minority Empowerment ETF (NACP), and Parnassus Core Equity Fund (PRBLX). This is a good time to check the fine print of your investments.
This doesn’t have to be so hard
Here are three questions you can ask to start uncovering a company’s true impact:
How diverse is the company’s board or C-suite? If the answer is “not at all,” how is the company taking active steps to remedy this?
What is the compensation ratio between executives and employees? (Don’t forget gig workers.)
How do a company’s products and services affect the environment?
These questions aren’t exhaustive, just a place to start. You don’t need a Master’s degree in environmental management to ask yourself if Amazon could take a more sustainable approach to product packaging. The answer might not feel good (who wants to give up Prime), but it might inspire us to buy that cookbook at a local bookstore instead.
My unsolicited advice to companies: before changing the world, change the lives of your employees. Meaningful corporate reform means shifting power, specifically to people of color and other workers locked out of opportunities to build wealth and stability. It means boosting wages and employee benefits. Recruiting people of color to leadership positions beyond “Diversity Coordinator.” Stopping your efforts to crush unions.
Asking these questions and calling out companies to do better — especially after a big charitable commitment — is one way that we can all encourage a more responsible era of corporate behavior.
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Who’s taking action to change this?
American Economic Liberties Project is tracking big tech abuses that stem from monopoly power at Amazon, Apple, Facebook, and Google. AELP fights for policy change to protect employees and consumers.
B Corp legally requires companies (that seek a B Corp certification) to consider the impact of their decisions on workers, customers, suppliers, community, and the environment. An easy place to support B Corps is at the grocery store where you can look for the “B” label on products.
Common Future works with a national network of organizations building a more equitable economy. Many organizations in this network classify themselves as entrepreneurial support organizations or ESOs. This means they support or invest in small businesses to build thriving, local economies. These organizations don’t just talk about responsible business, they demonstrate what is possible:
ICA is a Bay-Area accelerator providing coaching and capital to businesses, focusing on those founded by women and people of color. They’ve invested $50M in 600 companies committed to closing the racial/gender wealth gaps by creating quality jobs (living wages, benefits, and other wealth-building opportunities). You can support these conscious small businesses by shopping in their marketplace.
Detroit Community Wealth Fund is paving the way for community-based businesses in Detroit. They help people develop cooperative businesses that are collectively owned and operated by their workers, and they “put finance in the hands of working people without making them put down collateral or take on the burden of debt that may threaten their wellbeing.”
Loiter! is a new East Cleveland venture that I’m excited about. They’re building an ecosystem of community-owned businesses to change the narrative about East Cleveland, including a mixed-use grocery store/cafe and a media platform. It’s still in the early stages, but I recommend following their journey.
Who else is talking about this?
Chief Executives for Corporate Purpose is a CEO-led coalition that believes a company’s social strategy determines the company’s success. They are part of a national coalition called Imperative21 that is accelerating the transition to stakeholder capitalism (Common Future is a member!)
HEATED is one of my favorite substacks that exposes corporate greenwashing, including the climate-unfriendly actions behind feel-good campaigns like this.
Anand Giridharadas is a notable whistleblower of this behavior. He’s known for his book, Winners Take All, and his blog, The.Ink. Both are great resources to understand hidden systems of wealth and power, especially in philanthropy. In fact, his newsletter last week shared a speech that echoed the refrain of this post:
“Many of today’s most prominent attempts to change the world are afflicted by this uneasy duality. It’s a bank that recklessly speculates, helps cause a financial crisis that costs multitudes their small business, pays a fine for it, and then is celebrated widely in change-making circles for a program mentoring small-business owners. It’s a tutoring program for poor kids in a place like Bridgeport, Connecticut, that attracts affluent volunteers from Greenwich, who would revolt if you proposed to help those same children by funding public schools equally, not by local taxes. It’s a belief in changing the world, so long as it costs you nothing.”
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What’s Up This Week? 👀 ✨
Caught my attention
Goldman Sachs is investing $10 Billion in their 'One Million Black Women' initiative. This is the largest investment ever made to support Black women, and it’s been widely celebrated. I’ve seen folks take different stances on this. Astrid Scholz from Zebras Unite said on Twitter: “Now that’s finally beginning to be the right number of zeroes in an initiative by a major financial institution.“ She’s right. While Goldman Sachs can make other meaningful reforms to the way they do business, this is a very good start. On the flip side, remember that Goldman Sachs has $2.1 trillion dollars in AUM, meaning $1 billion/year is roughly .05%. This is pennies for one of the largest investment banks in the world.
A deep dive
I am always inspired by Oscar Perry Abello’s writing in Next City. He covers “community development finance, community banking, impact investing, economic development, housing, and more,” masterfully blending local news with data and historical context. There’s no better way to orient yourself around these topics than to read everything Oscar writes.
Someone you should know about
You should know about Tomás Durán! Tomás is the President of Concerned Capital and a Common Future Social Entrepreneur in Residence. He is one of the leading voices encouraging employee ownership transitions. Our country faces a “silver tsunami,” where business owners are rapidly aging out of the workforce. Tomás works with owners and employees to facilitate ownership transitions—a great strategy to preserve local jobs and offer workers a pathway to building wealth. Here’s one of my favorite reports from Concerned Capital on the technicalities of “worker to owner conversions.”
until next time,
-Caitlin