Communities: Key Stakeholders in Corporate Purpose
In a headline-making Business Roundtable announcement, nearly 200 CEOs pledged to “lead their companies for the benefit of all stakeholders.” This announcement has received considerable press and generated healthy discussions in the media about its merits embracing a stakeholder approach, which acknowledges that many groups — not least of them communities — are integral to defining a sustainable corporate purpose.
University of Virginia Darden School of Business faculty have been teaching stakeholder theory to MBA students for decades, emphasizing the importance of all stakeholder groups. Among them: customers, employees, investors, suppliers, governments and communities. While the first several stakeholder groups are well known and discussed frequently within business circles, the idea that communities are important and distinct stakeholders — ones that affect, and are affected by, companies — has not always received as much attention. The Business Roundtable announcement suggests that this is beginning to change. Of particular note, organizations like the U.S. Chamber of Commerce Foundation (USCCF) have been highlighting the importance of communities as key stakeholders for corporations for many years.
This year I had the opportunity to serve as a judge for a USCCF Citizens Award and attend the foundation’s 2019 Corporate Citizenship Conference. Of the Business Roundtable announcement, USCCF Senior Vice President Marc DeCourcey pointed out at the conference that “executive affirmation is so critical.” Additionally, he emphasized that “the companies on that list … in this audience … on this stage, have been at this for a long, long time.” For 20 years, a healthy mix of cross-sector leaders from government agencies, nonprofits and the private sector have come together to share and discuss emerging trends centered around corporate citizenship, corporate philanthropy and corporate social responsibility.
One recurring theme at the conference was that corporations are moving away from low-involvement “checkbook philanthropy,” in which they simply provide funding to a wide variety of philanthropic organizations. They are instead becoming more strategic and selective with their social impact initiatives, focusing on fewer projects that are larger in scale and longer in duration.
Another, related theme was that the issues facing communities across the United States are too large and complex for one organization to solve alone. Social and public sector partners can provide the resources and expertise private sector business leaders need to achieve their social impact goals.
Kroger’s Investments Display Purpose Beyond Profits
The Corporate Citizenship Conference highlighted many successful corporations spearheading strategic cross-sector partnerships to address critical community needs, but one received the distinction of earning USCCF’s prestigious 2019 Citizens Award for Best Community Improvement: The Kroger Company, with its Zero Hunger | Zero Waste initiative.
As the initiative’s website notes, “There is a fundamental absurdity in our food system: 40 percent of the food produced in the U.S. is thrown away, yet one in eight Americans struggle with hunger.” Since this initiative was launched in 2017, it has “rescued 190 million pounds of food companywide and donated 650 million meals.”
The initiative’s social impact plan is multifaceted and involves multiple stakeholders. Among its activities:
- Offer incentives for innovation: The Kroger Co. Foundation established a $10 million fund with which to award grants for innovative projects preventing food waste.
- Accelerate food donations: With the help of customers, associates and other partners, the initiative works to build momentum in feeding those in its stores’ local communities.
- Increase healthfulness of food: Donations of nutritious, balanced meals are provided to local food banks, including fresh meals as well as nonperishable foods.
- Advocate for solutions: The initiative lobbies for funding of federal hunger relief programs and public policies that encourage recycling and composting.
- Spread the word to other stakeholders: Food waste solutions are shared with retailers, restaurants, local governments and within the company’s supply chain.
Kroger has already achieved impact, and its goals are ambitious: By 2025, the initiative aims to eliminate hunger in its communities and end food waste produced by the company — no small win for sustainability, given the huge ecological footprint of food production. To effect these massive changes for people and the environment, Kroger is collaborating with nonprofit partners, including Feeding America, a nationwide network of food banks, and leading conservation organization World Wildlife Fund.
Kroger’s Zero Hunger | Zero Waste initiative is just one example of a company thinking about its community stakeholders and not solely about profits, appreciating the positive impact it can have on its communities.
A Welcome New Chapter for Corporate Purpose
Historically, many business leaders have cared about their impact on communities and thought of them as stakeholders. However, the Business Roundtable announcement and a trend toward more integrated inclusion of community needs in long-term corporate strategies are positive developments for the evolving story of corporate purpose.
There is still plenty of work to do to solve many of our most pressing community challenges, and corporations cannot solve them alone. It is likely that strategic cross-sector partnerships will continue to gain in prevalence as corporations strive to think more strategically about whether the impact of their community initiatives are producing meaningful and measurable positive results. Our community stakeholders are counting on it.
This article was developed with the support of Darden’s Institute for Business in Society, at which Andrew Sell is associate director of research initiatives.