SOURCE: Carol Cone ON PURPOSE
DESCRIPTION:
CSR, ESG, social impact, corporate citizenship … The more accepted “purpose” becomes as a core business strategy, the more challenging it becomes to define “it.” Over my 30-plus years of shaping the practice of linking businesses with social and environmental issues, I’ve seen many phrases used (and misused).
While some terms have stood the test of time, others are now outdated. No matter what terminology used, you and your colleagues should have a shared understanding of what “purpose” means in your organization to gain its greatest benefits. It’s critical to have consensus on the objectives for this strategy, which stakeholders to engage, and desired results. Otherwise, your purpose-related strategies may not deliver.
To help your journey, consider this an up-to-date glossary for responsible business professionals, presented in alphabetical order.
Brand purpose: What a brand stands for and how it strives to achieve business and societal benefit. Well-executed brand purpose adds value to a brand, often with the goal to build and deepen relationships between the brand and consumers.
Cause branding: An evolution of cause marketing, cause branding is a phrase I developed in 1998 to coincide with our third national research study. As I wrote in the early 2000s, cause branding is “a powerful positioning discipline used to enliven brand equity and enhance corporate image with significant bottom-line and community impacts.”
Cause marketing: Initiatives or campaigns “implemented by for-profit businesses that seek to better society,” often involving a nonprofit partner or giving mechanism integrated at point-of-sale. Think: donations at the register or a percent of proceeds going to a cause. Usually periodic and transactional.
Corporate citizenship: Boston College’s Center for Corporate Citizenship defines the practice as “how a company exercises its rights, obligations, privileges and overall responsibility within our local and global environments. Great corporate citizenship goes beyond a focus on addressing surface-level sustainability efforts with today’s leading responsible corporations drawing on the collective impact of a variety of initiatives that address an array of trends and emerging issues.”
Corporate social responsibility (CSR): CSR constitutes a “self-regulating business model that helps a company be socially accountable – to itself, its stakeholders, and the public.” This term was originally popularized in Europe in the 1980s and grew in the US in the 1990s, with a focus on philanthropy and community engagement. However, CSR does not necessarily include operational, governance and environmental components. Beware confusing CSR with broader concepts of corporate responsibility or ESG.
ESG: ESG stands for the environmental, social and governance-related commitments, programs, policies and practices to measure the sustainability and ethical impact of a business or company. ESG comprises a set of financial and non-financial factors that are increasingly being considered by investors as part of their analysis to identify material risks and growth opportunities within organizations and sectors.
Greenwashing: Conveying the impression of sustainability or being environmentally friendly to take advantage of the “halo” effect that such actions bring to a company. Investopedia notes that greenwashing is “considered an unsubstantiated claim to deceive consumers into believing a company’s products are environmentally friendly.” Or said another way, disinformation disseminated by an organization to convey an inaccurate, environmentally responsible public image (see recent examples from Innocent and KLM). Cousins to greenwashing include “purpose-washing” — bestowing a fake commitment to embrace society and/or the environment within a business or brand.
Movement marketing: The practice of applying marketing principles to generate, sustain and amplify movements linked to a relevant cultural and/or social issue. Movement marketing aims to tap into shared values, passions and objectives between organizations and society.
Philanthropy: Philanthropy involves “charitable acts or other good works that help others or society as a whole.” Corporate philanthropy typically involves grant-making, financial gifts to nonprofit organizations, and other activities that are largely a one-way (corporation to nonprofit) exchange.
Purpose: An organization’s aspirational reason for being, beyond profits — grounded in humanity.
Reputation: Corporate reputation is determined by a variety of factors. Reputation Leaders frames it as the overall image of a company, which rests on four pillars: brand, people, purpose and profit. Stakeholders assess reputation from their personal experience and trusted third parties to evaluate how a company performs, how it conducts itself, and how well it communicates.
Shared value: Often used in the context of mutually beneficial partnerships between corporations and nonprofits, shared value is actually a broader approach to business which involves “pursuing financial success in a way that also yields societal benefits.” This is not about shared values, but rather an approach to business fundamentals — such as how products interact with supply chains.
Social impact: Sometimes used alongside “business impact,” the term social impact refers to “a significant, positive change that addresses a pressing social challenge.”
Stakeholder capitalism: A movement spearheaded by organizations including JUST Capital, stakeholder capitalism is a system in which corporations are oriented to serve the interests of all their stakeholders — including communities, employees, customers, the environment, and others — not just shareholders.
Sustainability: The United Nations Brundtland Commission proposed the following definition of “sustainability” in 1987: Sustainability is “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” This definition has withstood time, and is used by academics, policy leaders, and leading businesses today.
Did we miss any terms or phrases? Any you would update in our next edition? Drop me a line at @carolcone.
KEYWORDS: Purpose, esg, csr, Reputation, sustainability, Carol Cone ON PURPOSE
