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5 ways social washing is damaging consumer confidence

Social washing is the new buzz word that has emerged from the misrepresentation of companies appearing more socially responsible than they actually are. You may have heard of greenwashing when companies put marketing-friendly words such as “sustainable,” “natural,” “green,” or “environmentally-friendly” on labels to misguide consumers into making them think that these products are eco-friendly or green, when in fact they are not. Social washing is the same, except it relates to the treatment of human capital.

If shopping with values and purpose wasn’t hard enough, now companies are tricking consumers into thinking that employees and community are their top priority.

COVID-19 has provided consumers the rare opportunity to evaluate the legitimacy of a company’s commitments to social good and assess that company’s priorities. The impact of shelter-in-place orders has forced companies to make difficult decisions that can place the interests of their shareholders in conflict with those of their employees and communities. The spreading pandemic is prompting companies to put a greater emphasis on human beings and consider how the treatment of all stakeholders is being scrutinized by the general public.

Here are 5 easy ways we, as consumers, can spot social washing, in the hope that we all come to the realization that by recognizing these tactics, we will choose to either not support these companies with our wallets or to outwardly expose their misguided practices to the public via social media.

  1. Living wage

    Check to see if a company as a living wage policy (don’t get this confused with minimum wage). Any company that doesn’t pay their employees enough to meet their basic needs shouldn’t claim to have an “inclusive company culture” on their job postings.

    Understandably, if, during the pandemic, a company is forced to reduce pay, check to see how they are handling the reductions, and if they are being equitably shared by top management and rank-and-file workers.


  2. Paycheck Protection Program Pirating

    Many companies had to lay off or furlough a majority of their employees at the beginning of the pandemic. The first federal stimulus package introduced the Paycheck Protection Program (PPP), which allows loan forgiveness for payroll costs — including salary, wages, and tips. This program was designed to bring people back to work, but a closer look at the facts shows us that some companies that received millions from the $517 billion program have not retained most of their staff on the payrolls.

  3. Adequate and affordable health insurance

    One of the central promises of Obama’s signature healthcare law was to prevent Americans from going broke paying for essential healthcare procedures. But some of the country’s largest health insurance companies have developed and marketed a variety of plans that allow employers to avoid the expense of adequate insurance that often covers only preventative care options such as check-ups but not things like hospitalization and surgical operations. Employees are being exposed to bankruptcy-causing medical bills as if they had no insurance at all.

  4. Treatment of customers

    We have all been affected by the pandemic-induced economic shutdown in some form. How are you, your family, and your friends being treated by your favorite stores and service providers? For example, is your auto insurance company taking into account that you have been working from home and quarantining since March? Think about how many times you have driven your vehicle and if you really needed to pay top dollar for coverage.

  5. PTO vs. Paid Holidays

    Companies using the PTO protocol, that close their operations for certain holidays like Christmas and New Year’s Day do not pay their hourly employees for these “closed for business” days. If hourly employees can’t afford a gap in pay, they are forced to use their PTO days. This, in turn, makes employees reluctant to take time off when they’re sick if they want to save some time for vacation days.

    I worked for a company that used this loophole tactic. After using my PTO days to cover the 5 non-paid closed-for-business holidays, I had 5 days left to use for vacation days with my family each year. If I got sick, I came into work anyway because I didn’t want a gap in pay. Needless to say, employee retention and wellness weren’t a priority with that company.

Some companies will come out of this pandemic with positive long-term economic prospects based on their actions in supporting their employees and communities, while others will likely suffer lasting reputational and financial effects. Now more than ever we need to applaud the companies that are legitimately doing social good by supporting them and advocating for them.

There are a few rigorous and holistic certifications that are verified by a third party and were created to take away all the guesswork for consumers. B Corp Certification and the Certified USA Social Enterprise (sister affiliates are Certified UK Social Enterprise and Certified Canada Social Enterprise) are two of the most trusted distinctions that I look for in a company. If you see businesses with these certification logos on their websites or packaging, you can be positive that you are not being social washed or greenwashed.


Jennifer Moreau Chick

As the Founder and CEO of World For Good, Jennifer Moreau-Chick helps readers learn about how to elevate social and environmental sustainability in the business community so companies can differentiate themselves from their competitors. She has been featured in Conscious Company Magazine as a leader in social impact, in Conscious Magazine and has worked as a Marketing Director for 3 certified B Corporations for the past four years.

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Our “new normal” demands a triple bottom line

graffiti wall walking woman

This month we watched hotels, restaurants and other non-essential businesses close their doors and lay off staff. Business owners must now analyze how the global pandemic disrupted “business as usual” to create space for systematic change in the operation of companies. When the economy resumes, businesses have a unique opportunity to evaluate operations and pivot to a triple bottom line approach. Because when companies value people, planet, and prosperity over profit alone, we all win.

After working as the Marketing Director for the only bank in the Southeastern United States that operated with a triple bottom line, I can attest that companies that are purpose-driven gain more trust and lasting brand supporters in their industry than any other.

 

The Triple Bottom Line

The triple bottom line (TBL) was coined in 1994 by John Elkington and is a framework or theory that recommends that companies commit to focusing on social and environmental concerns just as they do on profits. The idea was that a company can be managed in a way that not only earns financial profits but which also improves people’s lives and the planet.

If a company focuses on finances only and does not examine how it interacts socially, that company cannot see the whole picture, and thus cannot account for the full cost of doing business. A wholistic approach is essential to running a business when you want to increase your consumer base and your profit.

 

People + Planet is the same as Social + Environmental Resiliency

Photo by Carl Heyerdahl on Unsplash

Companies should be working in tandem in three areas:

  • Prosperity: The traditional measure of corporate profit
  • People: Measures how socially responsible an organization is
  • The Planet: Measures how environmentally responsible an organization is

By focusing on these three interdependant elements, triple-bottom-line reporting can be an important tool to support a firm’s sustainability goals.

 

A Company Will Be Non-Existent Tomorrow if the Triple Bottom Line isn’t Baked into the DNA of the Company

What’s Holding You Back?

Cost

Sure, it can be challenging to switch gears between priorities that maximize financial returns while also doing the greatest good for society. For example, it’s hard to justify the cost of implementing a living wage to all employees in the short term, but when you take a step back and give it a chance to marinate, you’ll see that the benefits far outweigh the initial cost. You’ll find that employee turnover will lower, causing the company to save money on recruiting, onboarding and training new talent. According to a benchmark report from SHRM, the average cost per hire across organizations and industries is well over $4k.

Shareholder Hesitation

More than ever before, board directors and CEOs find themselves with a unique platform and an expectation from growing numbers of employees and consumers to shape societal discourse, going beyond traditionally defined Corporate Social Responsibility.

When you share how potential investors view CSR, your board of directors and shareholders will likely react favorably to the triple bottom line principle. In an article in Corporate Board Member, they report that “there is a growing number of socially conscious investors who see positive environmental, social, and governance issues as critical for investing, in addition to meeting financial performance goals. Today’s investors are not only avoiding putting their money into industries that do not align with their values (fossil fuels) but are also using their influence to push for positive corporate change with a broader scope of social impact.”

 

Change Your Business For Good

Easy wins to get started on your purpose-driven pivot.

The University of Scranton recommends evaluating your business’s initial triple bottom line with the following measures:

Economic measures

  • Average incomes
  • Local Supply Chain
  • Revenue by sector

Environmental measures

  • Greenhouse gas emissions
  • Amount of waste generated
  • Use of post-consumer, recycled material
  • Water and electricity consumption
  • Fossil fuel consumption
  • Waste management

Social measures

  • Company-wide community volunteer hours
  • Employee healthcare
  • Diversity & inclusion
  • Job growth rate

 

Greenwashing is not acceptable: Companies need to build and maintain trust with all stakeholders

Photo by David Travis on Unsplash

Measure What Matters

Of the three branches of the triple bottom line, only one is easily measured, which is one of the leading complaints about this approach. Profits are measured in dollars, but how do you measure social capital? Or the environmental impact? Plus, consumers in post-pandemic will not be looking at your profit line, but rather your commitment to your stakeholders.

There are two globally accepted standards for the measurement that encapsulate the three categories – The B Impact Assessment (BIA) and the Sustainable Development Goal Action Manager (SDG AM). Both assessments are created by B Lab, both share fifty percent of the same questions and aggregate the answers into each other. Both of these assessments are very credible, but I’m more familiar with the BIA, so that’s what I’ll touch on.

In an interview with Fast Company, Andrew Kassoy, co-founder of B Lab stated “I think one of the greatest hurdles is knowing where to start. There are so many ways a company can make an impact and so little direction on how to measure and manage social and environmental performance. However, with bimpactassessment.net, we hope to encourage all businesses to measure what matters using the free and confidential B Impact Assessment.”

The BIA was created in 2006 as a DIY tool for measuring company impact in five categories: workers, governance, community, environment, and suppliers. Today, over 70,000 companies use this tool to benchmark and track performance. Businesses that have already adopted the triple bottom line and are ready to take things to the next level may want to consider becoming a Certified B Corporation.

You answer a series of questions to evaluate your company and learn ways you can improve. It will also reveal how your company stacks up against the competition. You can take your score in each of the five categories and compare them to other Certified B Corporations, like Patagonia or Ben & Jerry’s.

To qualify for B Corporation certification, your organization needs to score at least 80 out of 200 points on the B Impact Assessment. The information is self-reported, but each year, B Lab randomly selects 10% of its certified companies for onsite reviews. Over 3,285 companies in 150 industries and 71 countries have achieved certification as a B Corporation.

Companies making decisions to benefit not only their shareholders, but also their employees, customers, suppliers, and the community more broadly will over the longer term maximize both stakeholder and shareholder value. This is the triple bottom line, and this is what consumers are expecting from companies in our “new normal”.

 


As the Founder and CEO of World For Good, Jennifer Moreau-Chick helps readers learn about how to elevate social and environmental sustainability in the business community so companies can differentiate themselves from their competitors. She has been featured in Conscious Company Magazine as a leader in social impact and has worked as a Marketing Director for 3 certified B Corporations for the past four years.

Visit her blog here.