Businesses as Stewards and Stakeholders: A Report of the Surgeon General

Under the direction of Professor Greg Fairchild, who served as its senior scientific editor, Darden faculty (including Fairchild and Professor Andy Wicks) and researcher Andrew Sell at the Institute for Business in Society contributed to the U.S. Department of Health and Human Services’ Community Health and Economic Prosperity: Engaging Businesses as Stewards and Stakeholders — a Report of the Surgeon General.1  What follows excerpts the report.

The health of Americans is not as good as it could be and is worse than the health of populations of other wealthy nations. America’s lower health status, referred to as the U.S. health disadvantage, inflicts costs on individuals, families, businesses and society.

The Surgeon General recommends the following actions to strengthen community health and economic prosperity, develop a competitive business advantage, and build resilience for both community and business. These approaches can help solve the U.S. health disadvantage and help companies account for the interdependence between business and society, and between community health and economic prosperity, when making business decisions. Ultimately, these strategies can ensure that vital conditions are met for all Americans.

1. Learn More About Your Stakeholders

Stakeholders are all those who participate in a business and are essential to its success — including everyone from employees to suppliers to investors.

• Fully understand the cost of poor health and other community challenges and the impact of these challenges on your company. Understanding the broader community you live in and developing business models that work to enhance that world help make explicit the connections among good business practices, profitability, and responsibility to community and society.
• Join the dialogue on community health, wealth and well-being. Even before the events of 2020, communities, businesses and leaders were engaged in conversations about how to create a more equitable, just and prosperous society.

Example: Hillenbrand Inc. established such a dialogue in its community of Batesville, Indiana. The Hillenbrand Community Leadership Series annually assembles 20 people from the company and community to engage in strategic discussions with business and civic leaders. The group is often used as a “think tank,” studying large issues facing the community, including diversity and inclusion, workforce skills and the development of a vibrant downtown.

• Meaningfully engage all stakeholders on ways to optimize value. Doing so brings innovative ideas to the fore, increases productivity and commitment to the enterprise, improves business practices and creates more sustainable operations.
• Identify the interdependencies between your company and your stakeholders and between your business and society. Businesses depend on their stakeholders in order to exist and earn a profit. Businesses depend on society for essential infrastructure; a skilled workforce; a fair, transparent and well-functioning legal system; and education and training of the labor pool. Society and stakeholders depend on businesses — for jobs, goods and services, tax revenue and to bring innovations to the market.

2. Foster a Culture of Stewardship

Stewardship refers to a company managing its impact on society. System stewardship is the role of enterprises and organizations in solving problems that government alone cannot solve.

• Embrace the positive role of business to strengthen communities. Businesses are perhaps the most powerful institutions on earth.
• Support local, state and federal policies that meaningfully increase economic opportunities and equitably improve the health of communities, employees and families. Government policies (including spending) have the potential to strengthen communities, reduce inequality and expand opportunity.
• Use hiring and procurement tools to strengthen communities and explore opportunities to unleash untapped potential at the local level. By investing in small businesses and entrepreneurs that may have difficulty accessing capital, businesses can solve hiring and supply-chain problems while strengthening communities.

Example: Businesses like Greyston Bakery, Belden Inc., Bank of America and Hyatt Hotel specifically hire individuals who may be passed over by other employers due to such barriers as lack of education, previous incarceration and substance misuse. As these companies have discovered, such employees often prove to be highly effective, productive, dedicated and loyal, and having jobs and incomes increases their potential as consumers.

• Invest business profits in strengthening communities. Increasingly, both for-profit and nonprofit businesses are recognizing the potential to improve community conditions, especially affordable housing, while also receiving a financial return.

Example: UnitedHealthcare, a large for-profit health insurance company, provided a low-interest loan to a nonprofit partner to acquire nearly 500 units of rental housing. Up to 100 units are set aside for UnitedHealthcare clients at reduced rents and will include vital supportive services. In addition to loan repayment with interest, UnitedHealthcare already sees improvements in client health and associated cost reductions.

3. Develop Strategic Cross-Sector Partnerships

Businesses that wish to engage with and invest in communities need not go it alone or figure out what to do from scratch. Effective partners for business include community development organizations, philanthropic foundations, government agencies (including public health) and other businesses (including social enterprises).

• Collaborate with local, regional and national partners from across sectors to implement effective solutions. Complex societal challenges — like opioid misuse, disengaged young people and even lack of access to broadband internet in rural areas — demand resources, knowhow and creativity that multiple organizations working together provide.
• Partner with community development corporations (CDCs) and community development financial institutions (CDFIs). Collaborating with these partners accelerates the work of increasing opportunity and brings specialized skills, financial expertise and resources, and deep community knowledge and trust.

Example: Morgan Stanley, an investment bank and financial services company, partnered with Local Initiatives Support Corporation, a national CDFI, and the Kresge Foundation to create the $200-million Healthy Futures Fund (HFF), which supports financing of community health centers and affordable housing in underserved areas. So Others Might Eat, a nonprofit community development corporation, used funds from HFF to develop the Conway Center in Washington, D.C., which provides homeless families with affordable housing, a health center and job training — all adjacent to a transit station.

4. Measure Performance Using Meaningful Indicators of Community Health and Well-Being

Many companies have key performance indicators to evaluate performance in major areas of business operations.

• Ensure that philanthropic giving strengthens community health and economic prosperity.

Example: To spur job creation in struggling communities after the Great Recession, Starbucks collaborated with the Opportunity Finance Network on an initiative called “Create Jobs for the USA.” By carefully measuring and reporting loans made and jobs created or retained, Starbucks was able to assess the impact of its investment on communities.

• Redefine productivity in the value chain to include the economic costs from societal problems. Addressing problems— for example, by using resources more efficiently or implementing stronger employee health and safety protections — can optimize productivity and benefit both business and society.
• Align wages, salaries and benefits with the needs of a healthy, equitable and prosperous society.  Doing so can turn an arduous and repetitive job into an opportunity and a livelihood.

Example: The Wonderful Company, an agricultural company, recognized the value to people, community and company of providing a $15 minimum wage to its farm workers. The more robust wage structure helps workers and their families meet basic needs for housing, healthy food, transportation and quality child care.

• Create shared value for companies and communities by combining social purpose with business opportunities.

Example: First Step Staffing is a social enterprise providing employment services for people transitioning from homelessness, including veterans and formerly incarcerated individuals. It serves business clients in need of reliable staff, is itself a successful business and welcomes investments from other businesses as it grows.

Conclusion

As a powerful force for good, businesses have multiple opportunities to increase the health, wealth and well-being of people and places, especially those that are not thriving; to expand business opportunity; and to increase business and societal value. With growing awareness of interdependence, greater engagement of all stakeholders, and an alignment of business earnings and societal gains, partnerships and investments can ripen into healthier people and communities, a more equitable and just society and a sustainably prosperous economy upon which everyone depends.

For more information, please see the business digest version of the report or full report of the U.S. Department of Health and Human Services.

• 1U.S. Department of Health and Human Services. (2021). Community Health and Economic Prosperity: Engaging Businesses as Stewards and Stakeholders — A Report of the Surgeon General. Atlanta, GA: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, Office of the Associate Director for Policy and Strategy.