Category: Corporate Responsibility

Socially Responsible Companies Are Changing the World

May 15, 2023 Corporate Responsibility

Jeff Bartel

Chairman and Managing Director

In recent years, socially responsible companies have become increasingly popular, and for good reason. These businesses prioritize their responsibility to the environment, society, and their stakeholders. They understand that they have a significant impact on the world around them and strive to make positive changes.

The Business Case for Social Responsibility

Harvard Business School recently published an article that states a majority of American consumers (55%) believe it’s important for a company to take a stand on key social, environmental, and political issues. This is not the only reason businesses should be embracing a greater sense of purpose with their values. Companies that prioritize social responsibility can see benefits in several areas, including:

  • Financial Performance: Companies that prioritize social responsibility often see an increased financial performance, as they are more likely to attract investors, customers, and employees who share their values.
  • Brand Reputation: Socially responsible companies often have a better brand reputation, which can lead to increased customer loyalty and positive word-of-mouth marketing.
  • Employee Engagement: Employees are more likely to be engaged and motivated when they work for a socially responsible company, which can lead to increased productivity and lower turnover rates.

Characteristics of Socially Responsible Companies

Socially responsible companies typically exhibit the following characteristics:

Environmental Stewardship

These companies prioritize sustainability, reducing their carbon footprint, and promoting environmentally friendly practices.

Social Justice

Socially responsible companies focus on equity, inclusion, and diversity. They work to create a workplace culture that is respectful and supportive of all individuals.

Ethical Business Practices

These companies are transparent in their operations, follow ethical business practices and uphold the highest standards of integrity.

Corporate Social Responsibility

Socially responsible companies contribute to the communities they serve and invest in philanthropic initiatives that have a positive impact on society.

How Businesses Benefit from Being Socially Responsible

Businesses that prioritize social responsibility not only do the right thing but also stand to gain several benefits. 

  • Attracting & Retaining Top Talent – In today’s world, employees want to work for companies that share their values. Socially responsible companies are seen as being more ethical, and this makes them more attractive to potential employees. They are also better equipped to retain top talent because employees are more likely to stay with companies that demonstrate a commitment to social responsibility.
  • Enhanced Reputation – A company’s reputation is an essential asset that can impact its ability to attract and retain customers, suppliers, and investors. Socially responsible companies enjoy a good reputation, which helps them attract new customers, retain existing ones, and establish long-term relationships with suppliers and investors.
  • Customer Loyalty – Over time, consumers are becoming more aware of environmental and social issues. They prefer to do business with companies that share their personal values. When a company demonstrates its commitment to social responsibility, it can also establish a deeper emotional connection with its customers. Leading to increased loyalty and a stronger customer base.
  • Reducing Risk Exposure – Socially responsible companies are better equipped to anticipate and mitigate risks related to environmental and social issues. This includes minimizing the risk of negative publicity, legal action, and regulatory sanctions. By being proactive in addressing social and environmental concerns, companies can avoid potential risks and protect their brand reputation.

How the World Benefits from Socially Responsible Companies

Companies that exhibit ethical and social responsibility have a positive impact on the world. One important way they do this is through environmental sustainability. These companies are promoting sustainable practices and working to reduce their carbon footprint by investing in renewable energy, reducing waste, and conserving natural resources.

In addition to environmental sustainability, the companies are also promoting social justice by creating safe and supportive workplaces, reducing discrimination, and increasing access to education and training. This is all done with the goal of promoting equity, inclusion, and diversity.

But the impact that these companies have are not limited to their internal operations. They also exercise a philanthropic responsibility by investing in initiatives that support the broader communities they serve. They contribute to charitable causes, support local businesses, and volunteer in their communities. All of these efforts help to create a more sustainable and equitable world and demonstrate the power of socially responsible business practices.

Examples of Socially Responsible Companies Changing the World

An article on Forbes recently mentioned an interesting case study. A high-end device manufacturer that implemented a more inclusive practice of publishing their instruction manuals in more languages. This saved the company $250k.

Companies are increasingly realizing the advantages of social responsibility and taking steps to adopt stronger practices. Here is a look at some other elite companies and how they are being socially responsible:

Patagonia 

This outdoor clothing company has put environmental sustainability at the forefront. They have reduced their carbon footprint and encouraged sustainable practices throughout their supply chain.

Ben & Jerry’s

This ice cream company has a long history of social activism, supporting causes such as marriage equality and climate justice.

Unilever

This consumer goods company has a sustainability program. Its aim is to reduce environmental impact and increase social impact. It sets ambitious targets across its supply chain and operations. Unilever aims to achieve net-zero emissions by 2039 and has made significant progress towards this goal.

3M 

This manufacturing company is dedicated to sustainability practices and social justice. It strives to lessen its environmental impact while tackling social issues like income inequality and access to education.

Tesla

This electric vehicle manufacturer is dedicated to reducing the world’s dependence on fossil fuels and creating a sustainable energy future. Their other efforts include a zero-waste program and using sustainable energy sources to power their factories.

Challenges of Socially Responsible Companies

Implementing social corporate responsibility policies is not always easy. Here are some challenges companies may face:

  • Resource constraints: Implementing social responsibility policies can require significant financial and human resources.
  • Conflicting stakeholder interests: Stakeholders may have conflicting interests, and it can be challenging to balance these interests while maintaining a commitment to social responsibility.
  • Measuring impact: Measuring the impact of social responsibility policies can be difficult, making it challenging to assess their effectiveness.

Expert Guidance for Implementing Socially Responsible Corporate Policies

Executives that are interested in making their companies socially responsible can take several steps to achieve the objective.  These efforts include defining their values, setting goals, engaging stakeholders, taking action, being transparent, and monitoring and evaluating their policies.

Define Your Values

Identify the values that are important to your company and determine how you can integrate them into your operations.

Set Goals

Evaluate your company’s impact on the environment and society, and identify areas where you can make positive changes. Establish specific, measurable goals that align with your values and track your progress over time.

Engage Stakeholders

Involve stakeholders in the development and implementation of social responsibility policies. This can include employees, customers, suppliers, and community members.

Take Action

Take concrete steps to address the areas where you can make positive changes, such as reducing your carbon footprint, promoting diversity and inclusion, and supporting social causes.

Be Transparent

Be open and transparent about your company’s social responsibility initiatives. Share your progress, successes, and challenges with your stakeholders.

Monitor and Evaluate

Regularly monitor and evaluate the effectiveness of your social responsibility policies. Use this information to make improvements and adjust your strategy as needed.

The Future of Social Responsible Companies

Socially responsible companies are changing the world in meaningful ways, and they are also making good business decisions. By prioritizing social responsibility, companies can see benefits in financial performance, brand reputation, and employee engagement.

Innovations in Climate Change Adaptation and Mitigation

March 15, 2023 Sustainability

Jeff Bartel

Chairman and Managing Director

Global warming and its impact on the planet, its denizens, and the ecosystem has been a mounting apprehension for decades. Despite years of attempts by the scientific community to counteract or, at the very least, moderate climate change, it remains a pressing concern. However, the recent emphasis on climate activism, climate change adaptation, and mitigation has assumed even greater significance.

There has been a considerable advance in technologies designed to reduce the impact of climate change and help the planet and its inhabitants adapt to these changes, with millions, if not billions, expected to be affected by these innovations.

Aerial view from drone of a part of a road junction. Transportation and infrastructure concept

Green Infrastructure as a Climate Change Adaptation

Green infrastructure is quickly becoming a popular tool for minimizing the impact of climate change, such as rising temperatures and extreme weather events. Green roofs and trees can be strategically used in urban environments to reduce the effects of increasing temperatures. As another example, shorelines can be protected from erosion and damage by buffers and dunes.

Innovations in green infrastructure are being utilized to tackle issues with stormwater drainage. Traditionally, towns have depended on gray infrastructure, such as pipes, tunnels, and gutters, to direct water to waterways and local treatment plants. This outdated system can increase the risk of water pollution and overburdened treatment facilities. 

Green infrastructure, such as permeable pavements, green parking lots, and rain gardens, is being installed as cities adapt to climate change. Green infrastructure also includes plants and oil systems that absorb, evenly distribute, and efficiently use stormwater as it falls.

Solar panel, sun battery, alternative renewable energy. Ecology electrical station

Renewable Energy’s Role in Climate Change Adaptation

The perception of renewable energy as a novel technology is a common one. However, it is essential to acknowledge that wind and solar power have been efficaciously energizing homes and cities for several decades. The innovation designed to reduce dependence on traditional energy sources, such as coal, gas, and oil, is rapidly advancing and helping climate change adaptation. The first cargo ship equipped with a wind-powered propulsion system set sail in October 2022.

Energy-harvesting yarn stands as yet another remarkable stride in the progression of renewable energy. Researchers from the University of Dallas invented a “stretchy yarn made of carbon nanotubes.” This yarn, which is 10,000 times smaller than a strand of hair, can convert mechanical motion into energy. Advanced technologies like this can help reduce greenhouse gas emissions, make electric power more affordable, and expand access to electricity in areas lacking.

Climate Change Adaptation with Carbon Capture and Storage

Climate change is considered primarily caused by carbon dioxide, one of the most significant greenhouse gases. Carbon Capture and Storage (CCS) is specifically designed to help reduce CO₂ emissions through carbon sequestration. This climate change adaptation method captures carbon dioxide at power plants and reroutes it to underground reservoirs.

Currently, CCS solutions can only capture about 55% of CO₂ from these plants, but the future goal is to maintain a 90%-100% capture rate. With this objective in mind and the need to mitigate the impact of greenhouse gases on the climate, we expect that investment in energy storage will grow to nearly $620B by 2040.

Climate-Smart Agriculture

According to recent studies, more than 800 million people worldwide go hungry. In addition, it is predicted that global food production will need to rise by more than 60% by 2050 to feed the world’s growing population. While there are many reasons for food insecurities worldwide, climate change is a significant culprit. Rising temperatures and extreme weather systems are impacting agricultural lands and production outcomes.

Investments in climate-smart agriculture innovation are leading the way to help overcome some of these challenges. Examples of climate change adaptation through climate-smart agriculture include the invention of drought-tolerant seeds and advanced irrigation systems. These techniques are helping more than 300,000 farmers in Niger sustainably farm nearly 80,000 hectares of land. Other scientific adaptations in climate-smart agriculture include low-carbon farming, precision agriculture, sustainable cattle ranching systems, and innovative feeding strategies.

Green Finance as a Climate Change Adaptation

The Paris Climate Agreement set lofty goals for climate change mitigation and developing adaptation strategies for climate change. However, reaching these goals requires more than just government grants and climate change policy — it also requires green, sustainable finance. The good news is that worldwide green finance has increased 100 times over the last ten years. This financing includes a combination of green bonds, traditional loans, and private equity.

Investors are choosing to invest in everything from green infrastructure and renewable energy to CCS and intelligent agriculture. Additionally, banks increasingly use multifaceted risk assessments to identify potential climate-related risks. These assessments can help owners and developers work on ways to mitigate these risks, develop climate change adaptation strategies, and minimize their impact on climate change.

Climate Change Mitigation and Innovation

Issues such as food insecurities, rising temperatures, rising ocean levels, and extreme weather events will continue to drive climate change mitigation and adaptation.

As the weather gets warmer, you can use green financing to adapt to climate change. Whether investing in green bonds, green stocks, or green financing, you can be sure these funds can go a long way in helping the world mitigate and adapt to climate change. Contact Hamptons Group to explore your investment options.

Venture Philanthropy and Societal Issues

December 1, 2022 Corporate Responsibility

Jeff Bartel

Chairman and Managing Director

Venture capital, the investment in for-profit companies, has a counterpart focused on societal change. Venture Philanthropy aims to invest in non-profit agencies and organizations. It is akin to a charitable donation but with an eye on the organization’s overall success in spearheading societal change. Since it is an investment, in addition to the goodwill provided and the expanded efforts by the organization, you may earn returns.

The venture philanthropy model’s role in today’s society has taken on new significance, and determining if this is the right investment option for you requires due diligence.

The Societal Need for Venture Philanthropy

When done correctly, venture philanthropy can be a win-win for organizations and investors. The organization can secure capital for a cause or campaign, such as SPOs, without the expense of hosting major fundraising events. Investors can invest in organizations that are most important to them.

This alternative funding option for non-profit organizations is vital considering today’s economic climate. Inflation concerns, in particular, are making some people hesitant to donate vast amounts to charities, as in the past. However, since social venture philanthropy is about investing, not donating funds, it opens the door for more funding.

Issues Where Venture Philanthropy Can Make a Difference

The options for venture philanthropists are nearly as plentiful as there are agencies seeking funding. However, several leading causes historically tend to receive more social impact venture capital, such as:

  • Provide Better Healthcare Opportunities
  • Minimize the Impact of Climate Change
  • Improve Public Safety
  • End the Cycle of Poverty
  • Fund Racial Justice
  • Acceptance and Equality
  • Community and Economic Development Projects
  • Enhance Education Opportunities for Everyone

One of these venture philanthropy sectors that is expected to grow significantly in the upcoming years is climate change funding. While in 2020, climate change organizations only earned $1.4B in venture philanthropy, interest in this area could increase in the upcoming years. As the impact of climate change, such as global warming, becomes more widespread, investors will likely take an increased interest in this type of investment.

Venture capital funding has a greater social impact.

Influence of Venture Philanthropy on Nonprofit Funding

Until recently, many non-profit organizations and foundations have relied heavily on governmental grants, donations, and fundraisers. Today, however, with inflation concerns hindering fundraising efforts and government grants decreasing in size and volume, these organizations have found alternative funding through venture philanthropy. While effective at generating capital, the increase of venture philanthropy is impacting how these non-profits operate and manage their organizations.

First, venture philanthropy has impacted risk management. Before, organizations faced minimal risk because grants were guaranteed. However, with venture philanthropy, these organizations must answer to their investors, who are goal-oriented and looking for sustainability.

Secondly, many high-level investors would not prefer to invest and then sit back and see what happens. Instead, they want an active role in the agency, which frequently means serving on the organization’s board of directors. This practice gives investors direct access to influence the path these organizations take.

The Role of Impact Accountability

Venture philanthropy also holds these organizations and foundations accountable for meeting goals and producing innovative ideas. While accountability is not a new concept for non-profits, as they were required to show outcomes and meet goals to obtain and maintain grants, venture philanthropists want more. First, they want to know that the organization is meeting goals and developing new ideas. Still, they also want to see the precise impact on the world.

This expectation can be more difficult for non-profits to meet. Since there are no standardized methods for showing impact, even among non-profits, it is up to each organization to determine the best way to show potential investors the impact they are making.

Measuring the Effectiveness of Venture Philanthropy

While measuring impact can be difficult, it is possible. There are two standard methods non-profits use to help investors better understand and measure the organization’s goals and achievements. These are:

Evaluation Assessment

Evaluation Assessment is the most commonly used and well-known method for measuring outcomes and determining impact. With this method, the organization releases periodic reports with analytical data based on pre-determined metrics to measure results. This gives investors and other stakeholders a glimpse of how the organization performs.

While informative, these reports can be misleading by making the investor believe the results are better than they are.

Process Evaluation

Process evaluation is a unique assessment technique that allows investors to track the success and failure of the organization or project on an ongoing basis rather than simply providing data at the end of the project. This method is especially beneficial when raising capital for long-term project investors, this offers an excellent opportunity to evaluate the organization’s status at any time. It can also shed light on internal and external challenges that may impact results.

There is no denying that venture philanthropy changes how non-profit organizations and foundations obtain capital, measure results, and operate their agencies. This option also allows investors to make an impact in the world while maintaining more control over what investments fund. As an investor, it is essential to research each social purpose organization before investing in it to ensure it can live up to your specific expectations.

The Need for Agile Corporate Performance Management

September 29, 2022 Corporate Management

Jeff Bartel

Chairman and Managing Director

Agile corporate performance management is essential for the modern dynamic marketplace, requiring adaptability and alignment. It is relevant for adapting to extreme shifts in market conditions like the COVID-19 pandemic. Agility in business enables employees to maintain or increase performance even in the context of a business’s evolving needs. Thus, business performance management approaches are for companies that have aligned business priorities with employee goals to propel the company forward.

Strategic Corporate Performance Management

In an agile business model, corporate performance management (CPM) entails breaking down your company’s strategies into operational objectives and indicators. The strategic approach enables your organization to maintain efficiency through all transformational periods, remaining effective in every next normal.

CMP is also significant for budget remodeling, cost reduction, improved KPI alignment, an upgraded organizational strategy, and a refined financial planning process. In addition, a framework is crucial to ascertain your enterprise performance management. Therefore, strategy execution is of fundamental importance for senior executives today.

How do you implement your strategic plan? Strategy execution involves ensuring your organization’s goals, metrics, and projects align with your strategic priorities and concentrate on key business drivers. Many organizations join the corporate performance management market size by dedicating an entire performance management department to achieve agility in business.

The performance management cycle is a four-phase closed loop. It contains:

Strategies and Objectives

The first step of the corporate performance management framework is setting the organization’s strategies and objectives. Next, identify the goals and strategies that support your organization’s corporate purpose and financial performance that align with the framework to maintain business agility in every wind of change. You can quantify them as projected revenue or growth, ROI, market share, customer satisfaction and retention, carbon emissions, employee retention or diversity, workforce incidents, and many more.

Targets and Metrics

Establish key business drivers that help achieve your objective and strategies. Business metrics measure values, indicating the organization’s progress concerning its strategic goals. Therefore, understanding the relevant KPIs for your business is essential.

Performance metrics used in corporate performance management include;

  • Financial metrics – financial corporate performance management entails using data from the company’s books of accounts, income statements, balance sheets, and cash flow statements or budgeting and forecasting data like earnings, expenditures, and inventory reports.
  • Internal metrics – analyzes the quality of corporate management performance through employee performance.
  • Customer satisfaction and loyalty – are critical indicators of the business’s health and performance.
  • Compliance metrics – measures how well your organization follows employment regulations, financial reporting, and environmental rules.
  • Strategic metrics – indicates how well your organization executes strategies implemented by management to attain immediate targets and achieve long-term goals.

Execution of Strategic Plans

Develop an annual execution plan using business drivers, short and long-term goals, and targets.

 Measurement and analysis create a continuous performance management process.

Measurement and Analysis

Develop systems and methodologies for measuring KPIs for the business’s financial and operational plans. Use any relevant data that supports business performance management, converting it into actionable business information that is quantifiable to gauge the success of the objectives and operations.

Measurement and analysis create a continuous performance management process. Each evaluation comes with adjustments to maintain the success of the strategies. Traditional analysis processes take time to bring results. Agile business intelligence is a better alternative for real-time analytics.

Agile Business Philosophy Creates Corporate Adaptability

Agile for business means easy adaptability through change. It shifts attention to people and interaction instead of tools and processes.

Agile boosts a business’s velocity to adaptability and sustainability in a volatile business market. Therefore, your firm develops an enduring competitive advantage and a dominant position in the market.

Rapid feedback systems are indicators of an agile business. The resulting ecosystem from such mechanisms fosters interactions, enhancing trust among stakeholders. Feedback loops also encourage collaboration. They also lead to quick problem identification and the implementation of mitigation strategies.

Agile processes facilitate high communication rates through feedback loops. The constant communication enables stakeholders to stay updated on changes. It is easy to trace errors and implement changes.

Why Your Company Needs Agile Corporate Performance management

Employees respond positively to agile enterprise performance management because it encourages communication and collaboration. Employees can take part in the change process.

An agile enterprise and corporate performance management also enhance work efficiency by keeping employees focused on ongoing tasks instead of multitasking. Face-to-face interaction also increases productivity since it encourages collaboration.

The agile approach also provides the feedback employees want. The process encourages participation by integrating real-time feedback into the employee’s workflow instead of the traditional receiving orders from management. The two-way conversational approach also nudges employee’s in the right direction.

Furthermore, employee performance improves based on collaborative and communication efforts. They get timely feedback and are empowered to ask pertinent questions about performance.

Three Keys to Implement Agile Corporate Performance Management

  • Linking goals to business priorities – the best corporate performance management approaches align business goals and operations to their purpose and vision.
  • Another best corporate performance management practice is training managers on interactive and collaborative skills to improve employee interaction.
  • Differentiating consequences – differentiate rewards for extreme performances.

What Does a Chief Sustainability Officer Bring to the C-Suite?

September 14, 2022 Sustainability

Jeff Bartel

Chairman and Managing Director

Sustainability is no longer an issue that anyone can ignore. From investors to consumers, stakeholders at all levels increasingly demand a shift toward sustainable business models from investors to consumers. A Chief Sustainability Officer addition to your C-suite provides your organization with insights and strategies that accelerate sustainability practices. These, in turn, can boost profitability. Explore how a CSO officer can impact your organization to determine if you should add this C-suite executive position.

The Mandate of a Chief Sustainability Officer

The role of the Chief Sustainability Officer is diverse. For example, ESG risks vary by organization and industry. Additionally, priorities and corporate sustainability goals likely differ based on company culture and organizational leadership goals.

While the mandate of the CSO varies by organization, some key responsibilities typically fall within the scope of this role. Exploring these elements makes understanding how a CSO can support your organization.

Cheif Sustainability Officer Insights

Sustainability is a complex concept heavily influenced by the external environment, including expectations from stakeholders, ESG risks, and external changes such as updated regulatory mandates. A Chief Sustainability Officer gathers insights from the outside world relating to those influences. They identify environmental risks and collect data on how others respond to those factors to help them anticipate needed changes. Then, looking inward, the CSO can assess how well prepared the company is to navigate those coming changes.

The CSO brings all this environmental insight to the leadership team. They educate the C-suite executive team on the ESG risks that could affect the organization and the changes the company needs to make to keep up with outside factors. They provide thought leadership to help the executive team navigate these issues and synthesize all the information to make it worthwhile.

ESG Governance

Another critical role of a Chief Sustainability Officer is to implement a system of checks and balances in corporate decision-making. They develop and implement governance guidelines that ensure environmental risks are given adequate consideration when making decisions.

CSOs also participate in governance activities and groups to guide and develop the sustainability agenda. For example, they might lead various committees, including ESG risk or audit councils.

ESG Strategy

Your corporate sustainability strategy requires a balance of changing with the outside forces and maintaining profitability. CSOs help to develop and implement the strategy for your organization, often supporting the CEO in strategic development to minimize environmental risks. Prioritizing ESG concerns helps create a customized approach for your organization.

How a Chief Sustainability Officer Contributes to Corporate Governance

The Chief Sustainability Officer is a C-suite fixture with a core responsibility in corporate governance about sustainability. A CSO brings the following strengths to your organization’s corporate governance.

Agile Critical Thinking

A Chief Sustainability Officer implements agile critical thinking to help you adapt in quickly changing environments. Agile critical thinking requires logical reasoning to understand a problem or situation deeply. It uses a framework with specific steps to use critical thinking effectively.

To use agile critical thinking, the CSO needs a strong understanding of your business, including the culture, risks, stakeholders, and other essential details to better understand organization-specific ESG concerns. Then, they collect and analyze the evidence for taking appropriate reactions. Remaining agile throughout the process allows the CSO to interpret and apply changes and new data as it arises.

Exceptional Communication

Corporate sustainability initiatives might originate with your CSO, but the responsibility for implementing a corporate sustainability policy and reaching related goals filters out to the C-suite and beyond. An effective Corporate Sustainability Officer has excellent communication skills to educate the team on the key issues. They not only need to disperse insight and data in a way that people outside the sustainability bubble can understand, but they also need to exert their influence to get others on board with corporate sustainability goals.

Flexible Management Style

Successful Chief Sustainability Officers embrace and incorporate a variety of managerial styles to facilitate sustainability in corporations. These styles allow the CSO to become a catalyst for long-term, radical change. Key management styles for a sustainability director include:

  • Agitator: This type of leader aims to disrupt, pose questions, and challenge the status quo to create change. They bring up issues publicly to draw attention to the problem and rally people around making the desired change without presenting solutions.
  • Innovator: Innovators work to create solutions for the identified problems. While generating those pathways, they look for potential issues and other options to avoid roadblocks.
  • Orchestrator: This type of leader helps coordinate the different parts of the solution to make it happen.
  • Executor: When someone takes on the executor role, they put the solution into effect while instructing and managing the people making the changes happen.
  • Facilitator: Facilitators serve as mediators, invite input from others, and encourage others to promote collaboration.

An experienced CSO knows when each style is required based on the organization’s needs and specific situation. As a result, they often move between different leadership styles to get the desired results.

High-Commitment, High-Performance Management

August 31, 2022 Investment

Jeff Bartel

Chairman and Managing Director

High-commitment, high-performance management organizations (HCHP) sustain performance over long periods by concentrating on three organizational pillars. These pillars are crucial to creating a long-term vision that looks at big-picture growth and longevity rather than the bottom-line needs of this year or quarter. HCHP organizations are characterized in part by:

  • A sustained commitment from all levels, including investors and customers, to organizational excellence and shared missions
  • Long periods of achievement that exceed expectations and can be described as excellent
  • Clear goals that are tied to big-picture organizational success and can be dropped down to support relevant team and individual goals at every layer
  • An emphasis on continuous learning and improvement throughout the organization, including skills development, process improvement, and growth

The pillars of high-commitment, high-performance management are performance alignment, psychological alignment, and learning and change.

Performance Alignment

At the most basic, performance alignment is about getting the ducks in a row within an organization so everyone can focus well on a shared winning strategy. That being said, this pillar does not look to dictate single-minded paths from the top down. Instead, leaders and those on their teams work together to create a business strategy that supports success.

That strategy becomes the beacon for all paths to support the big-picture strategy. The business goal must be communicated to stakeholders at all levels. Stakeholders must have goals that serve them individually while supporting the business’s goals. When performance is aligned across the organization, success for the business means success for everyone, and success for one means the support of business success.

High-Performance Management in the Organizational Chain

To achieve high performance as a business, every link in the organizational chain must also be high-performance. That requires alignment across overall strategy and goals, specific, well-documented roles and responsibilities, and rules for decision-making.

Some common challenges for creating a high-performance culture include:

  • Putting the right leaders in place
  • Getting (and keeping) commitment from teams and people at all levels of the organization
  • Managing the communication and collaboration required for seamless performance alignment
  • Building and supporting the processes and tools required for this intense alignment

Psychology Alignment

It is not enough to set shared goals and align performance across all levels of an organization. If performance alignment is the structure by which high-commitment, high-performance firms are built, psychological alignment is the glue that helps hold it all together.

High-performance management practices require leadership to empower employees and trust them to make decisions. Ensuring everyone is aligned to a higher purpose can help build that trust because everyone is working toward the same common goal — and that goal is greater than the company’s bottom line.

While many employees certainly will understand that driving revenue or profit margins can be suitable for everyone, the ability to make a difference often pushes teams to do more than they would if business performance were the only drivers on the table. Under this pillar of high-commitment, and high-performance management, leaders provide a sense of higher purpose and a shared cause that can rally all stakeholders to action.

Common Goals in High-Performance Management Organizations

Building a better world and pride in performance are two common goals that work well for psychological alignment.

The first involves finding a mission the business and its employees can get behind. Environmental actions, such as reducing carbon footprints, or philanthropy, such as giving back to the local community, are two examples of building a better world.

Pride in performance ties psychological alignment to the business’s brand reputation or the quality of its products. It makes people proud to call themselves an employee and creates a culture where team members strive for excellence so they can be part of that legacy.

Some common barriers leaders can face with psychological alignment include:

  • Finding the right shared values to motivate employees and stakeholders while supporting business goals
  • Balancing profits and other business needs with action on visions and values
  • Maintaining a brand reputation in keeping with the shared values used for psychological alignment, as deviation from the path could mean public relations and employer branding challenges
Trust is an essential element of high commitment, high performance management

Learning and Change

Trust is a critical commodity in any high-performance management model, and one-way leadership can court the trust of team members is by ensuring opportunities for learning and change. In an HCHP organization, learning and growth are organic components of all processes, and everyone works to ensure access to knowledge and opportunity for growth across all levels.

In a high-performance culture, leaders have collective, public conversations with key lower-level stakeholders about what stands in the way of success — for individuals, teams, and the company. As a result, the business is transparent about clear goals and fair performance evaluations for individuals, and it is clear that importance is placed on providing growth opportunities. This emphasis on learning and change can help reduce burnout, support employee retention, and loyalty, and create growth patterns for individuals, teams, and the business.

Some common challenges businesses can face related to this pillar include:

  • Finding the time and resources to support learning and skills development
  • Creating transparent and fair practices for selecting high performers for opportunities
  • Driving the type of overall growth that makes room for team and individual growth

The Impact of Social Venture Capital on Society

August 18, 2022 Risk Management

Jeff Bartel

Chairman and Managing Director

Venture Capital as a Force for Societal Change

While traditional venture capital investment continues to provide investors with opportunities for financial reward, impact investing and social venture capital are beginning to take center stage in the investment arena. Venture capital projects with a potentially positive impact on society provide investors with an opportunity to return profits while supporting the most critical, necessary societal changes. Often supported by both the public and the public sector, there are many advantages to social venture capital. 

Trends in Social Venture Capital in 2022

Venture capital grew throughout 2021 and into 2022 after exiting the disruptions of 2020. It was up $332 billion in the first three quarters of 2021 compared to the same period in 2020, and early-stage funding was up by more than 100%. Despite that growth, venture capital did not see the types of growth in ESG considerations that other investment areas did. That creates a significant opportunity for growth in social venture capital in 2022 and beyond.

Over the past year, movement in social venture capital indicates many firms and sectors are poised for that growth. Venture capital collaborations are moving to improve practices across the industry to support diversity and other critical missions, and many firms are hiring directors of sustainability and other professionals meant to steer investments and initiatives in ESG directions.

What Are the Main Advantages of Social Venture Capital?

Social venture capital offers many benefits for firms, businesses, entrepreneurs, and the community or society. Some of the benefits of social impact investing and social ventures include:

  • Better access to funding sources. Governments and other agencies offer incentives for social impact investment, making investors of all types more likely to enter the pool. In addition, channels such as crowdfunding and angel investments are typically easier to access when a mission backs the venture.
  • Increased service to the community. Services developed in social impact finance tend to be more relevant to community needs and more likely to solve known social or environmental problems.
  • Easier buy-in. ESG venture capital firms act on agreed-upon environmental, social, and governance missions. Because of that, it is easier to get buy-in from all stakeholders because the mission is clear, and most people can stand behind it.
  • Greater diversity. Consumers increasingly buy from brands they believe support important missions and social responsibility. Social venture capital tends to lead to increased diversity naturally.

Does Social Venture Capital Have Any Disadvantages?

Social venture capital is not without disadvantages. For example, social entrepreneurs relying on social venture capital may give up control to get funding. In addition, a lack of historical case studies may make it difficult for social entrepreneurs to convince potential investors. This may be challenging until social venture capital becomes a long-term trend.

The Dual Nature of Social Impact Investing

One of the challenges leading to investor hesitance for social impact investing is its dual nature. Investors and venture capitalists historically were concerned with the return on their investments. The bottom line can not be ignored, as investors that pour money into ventures that do not perform go out of business quickly. But social investors are also concerned with how the venture performs with regard to social or environmental factors, including diversity, sustainability, reduced emissions, or policies that provide for the community.

A business woman investor examines solar panels while holding her notebook with social venture capital impacts listed.

Social Impact Investing To Cool the Planet

One growing area of social impact ventures has to do with the environment. Social entrepreneurs are leveraging innovation, sustainability, and other processes to create products or provide services in a way that safeguards the planet. Climate impact investors are putting money behind those efforts, funding businesses and efforts that keep the planet central to all missions.

Venture Capital to Reduce Poverty

In the same way, for-profit and nonprofit venture capital investors seek to improve the quality of life of people across all borders. For example, many are looking at ways venture capital can reach the poor in developing countries. Funds from private and public sources are being used to educate and train people in these nations to help them develop businesses, local economies, and even entire infrastructures that might lead to longer-term profits or prosperity. Again, the efforts come up against significant challenges, including currency risk, cultural barriers, and long-term poverty that can be difficult to change.

Removing Barriers for Minority Entrepreneurs

Women, Black, LGBTQ, and other minority entrepreneurs have historically found it challenging to get funding for several reasons. First, historically, not many partners in venture capital and investment firms match these demographics. People often invest in ventures that make them feel comfortable, which can mean a trend of investors funding ventures for and about people that look and act as they do.

Cultural and societal barriers, including systemic racism, also play a role in reduced funding opportunities for minority entrepreneurs. However, as more investors seek social impact ventures and awareness about diversity needs continues to rise, those trends are changing. As a result, venture funding to minority businesses has been up in recent years, though there is still a lot of ground to cover, as it remains small compared to the entire funding pie.

How Do You Measure the Impact of Social Venture Capital?

The first step in measuring the impact of social venture capital is to define why it matters and what success looks like for all involved. The second step is finding a numeric measurement that can help indicate performance.

If someone is trying to create more diversity, a good metric of success might be how many of their venture investments are run by or related to minorities. Investors interested in climate impact investing might want to measure the emissions associated with their portfolios.

Going beyond measurement, social venture capitalists might rely on case studies to demonstrate success in a more narrative format. Case studies can raise additional awareness and funds and illustrate the impact on investors and other stakeholders.

Examples of the Effects of Social Virtual Capital on Society

Social virtual capital has plenty of positive effects on society. For example, a venture capital fund that seeds startups helps businesses get off the ground. But a social venture capital fund that specifically seeds startups with a community mission does more than that: It helps a business help others. Likewise, a social impact investor that puts money behind ideas that introduce sustainability into sectors that do not tend toward eco-friendly processes helps those businesses grow and protect the environment.

Ultimately, social venture capital can change the world. Investors must do so, however, with one eye focused on change while the other eye remains trained on the bottom line. It can be a problematic duality to walk, but it is critical to the future success of communities, nations, and even the planet.

Reacting to Recent Trends in Shareholder Activism

July 18, 2022 Sustainability

Jeff Bartel

Chairman and Managing Director

Shareholder activism was robust from 2017 through 2020. Though it saw some decline in 2020, partly due to economic and business disruptions related to COVID-19, activism is bouncing back. Large-cap companies in the United States saw a 30% increase in activist campaigns in early 2021 compared to the same period in 2020. The expectation is that shareholder activism will continue to rise. Understanding shareholder trends and reacting proactively to them is essential for businesses, investors, and governments.

Shareholder Activism in 2022

M&A and shareholder activism trends in 2022 continue to follow paths set in 2021 and even earlier. However, the evolution of societal, economic, and political factors continues to play a role in how these paths develop. Some types of shareholder activism investors and businesses can expect through the rest of the year and the immediate future include:

  • ESG as a continued focus. Record numbers of ESG-related proposals were presented and successfully won shareholder support in 2021. That trend is expected to continue, especially given that governments and other agencies are pushing these agendas alongside private equity and activists.
  • M&A activities leveraged as change mechanisms. M&A activity continues to be a driving force in shareholder activism, with hostile takeovers and board member removal used as change mechanisms to drive desired future states. For example, when Senator Investment Group failed to secure CoreLogic due to the CoreLogic board voting down the proposal, it teamed up with activist shareholders to vote out members of the board and replace them with people willing to vote in the acquisition.
  • More shareholder support for social and environmental activities. Board takeovers and other changes managed through shareholders and voting are likely to increase with growing support from shareholders in certain areas. In addition, shareholders are increasingly stepping up to champion environmental and social proposals—a fact that boards, other investors, and businesses must take note of to continue with success in 2022 and beyond.
  • More activist efforts are succeeding. Historically, boards and businesses could count on activist efforts to fail in most cases. But the David and Goliath dynamic has slipped, and shareholder activism holds more power than existing structures. As a result, business leaders and others should not act on the assumption that activist efforts are likely to fail.

Growth of ESG Shareholder Activism

Investors’ desires to back personal and societal missions with money have increased, creating a significant force in the changing balance of power that ensures more activist efforts succeed. These factors have, perhaps, the most current momentum in two areas: climate change and social justice.

Activist investors and activist shareholders are putting pressure on firms of all types to go green to reduce emissions and carbon footprints, reach toward Net Zero futures, and reduce risks associated with climate change. Tactics used by these investors range from creating awareness for their missions to negotiating with firm management to make change happen. For example, they may put proposals in front of boards or other shareholders for votes. They can even go so far as hostile takeover activities such as voting out board members or arranging proxy votes to orchestrate change.

One interesting note in 2022 is that this type of environmental-economic activism is taking a top-down journey. The greenest companies have become too expensive for some investors, and shareholder activists may find they have done all they can with such firms. The dollars, then, are trickling down to investments where ESG is fledgling and shareholder activists can make more significant changes.

Social justice is another rallying point for shareholder activists, who look to embed missions related to economic and social equality into firm activities and growth. In many cases, shareholders support these proposals because failure to engage in social justice is seen as a risk for modern businesses, especially as business partners and consumers become increasingly aware of such activities.

M&A Shareholder Activists: Firms Should Remain Vigilant

It is increasingly important for firms to be aware of shareholder activism and its potential impact on M&A activity. Activist investors are increasingly driving M&A activity, selling, or breaking up companies to achieve desired results for social or environmental concerns. 

Firms should always remain aware of potential shareholder activism and how it might impact mergers, acquisitions, or overall business growth. However, before launching any effort, firms should take time to analyze weaknesses, particularly concerning ESG, and understand shareholder desires and makeup. Looking for shareholder positions of strength that can leverage to force M&A activity to move in a specific direction can help firms understand where weaknesses are and what potential paths shareholders might try to push the business down.