This article was originally published on Vicente Sederberg LLP and appears here with permission.
Corporate Social Responsibility programs have long been known to yield wide-ranging returns on investment, including higher valuations, increased market share, and improved recruitment and retention of talent. But far too often, these programs are “bolted on” rather than “baked in,” shortchanging companies on ROI and long-tail marketing benefits.
Thoughtful CSR programs that are strategically integrated throughout an entire organization, on the other hand, often become synonymous with a company and yield the most dramatic benefits. Examples of this baked-in approach include Patagonia’s “Action Works,” Salesforce’s “1-1-1” philanthropy model, and Toms Shoes “Buy-One-Give-One” program. In each case, the CSR program leverages the company’s primary business and employees for good, as opposed to merely serving as a philanthropic account.
How does a company develop such a program?
It is one thing to implement a CSR program, but quite another to integrate a CSR program into a company’s DNA. Perhaps the best place to start is with its stated mission, vision and values, all of which present opportunities to build CSR directly into the company’s business.
A good example of this is highlighted in Marc Benioff and Karen Southwick’s 2004 book, Compassionate Capitalism: How Corporations Can Make Doing Good an Integral Part of Doing Well, which tells the story of LensCrafters, the standard community vision center found in strip malls and shopping centers throughout the U.S. Through its LensCrafters Foundation and One Sight program (formerly known as Gift of Sight), the company not only gives away and recycles tens of thousands of pairs of eyeglasses every year, but also offers employees the opportunity to travel to developing nations to provide free medical care and eyewear to children in need. This is directly in line with the company’s mission of “help[ing] the world to see,” despite not having any retail presence outside of the U.S. Not surprisingly, LensCrafters is a regular honoree on Fortune magazine’s top 100 U.S. companies to work for.
With the growth of “net positive” capitalism, which has been championed by corporations such as Unilever, more companies are starting to see themselves as more than just “makers” and “takers”—they want to be holistic problem-solvers. Their long-term mission is not only to benefit shareholders, but to benefit all stakeholders. They foster transformative change and produce societal solutions rather than simply addressing the issues posed by their own actions.
For example, a pharmaceutical company could commit to working with pharmacies and supermarket chains to ameliorate the growing problem of ecosystem contamination by collecting all unused prescription drugs, rather than recovering only drugs the company produced. Or a toy company could create a toy recycling program that accepts all toys and games instead of just those it manufactures. These would be integrated programs, directly related to their businesses, that solve larger, industry-wide problems and result in net-positive outcomes.
An opportunity for the cannabis industry
The nascent cannabis industry has a golden opportunity to lead in creating integrated CSR programs that are also net positive. It also has a lot of motivation, as cannabis companies are horribly exposed to public relations nightmares and investor backlash.
For example, a major concern for the industry is that of single-plastic waste. It is an issue that a few start-up packaging companies are attempting to address mainly through biodegradable/compostable solutions. This gap in large-scale integrated CSR programs presents an opportunity to build robust, integrated, and net-positive sustainability programs on the front-end as far as design, manufacturing, or distribution of products, as well as on the back end to ensure that the end use of these products isn’t simply adding to landfill waste.
Given the early-stage nature of the industry, there are only a few large-scale packaging companies that hold a substantial and captive market share. What if one of those industry leaders started on the road to net positive now with an integrated CSR program that involved not only a marked investment in research and development around sustainable packaging but also launched a program resulting in the collection, reclamation, and recycling of their own products? They could join the ranks of companies like Coca-Cola, Diageo, Danone, Walmart, Nestle and H&M and endorse the Ellen Macarthur Foundation’s Statement on Extended Producer Responsibility. They could easily create an impactful and integrated CSR program that addresses waste issues from their products, while at the same time inoculating the company (and business customers they serve) from negative blowback.
Challenges abound, but they can be overcome
Of course, to make these efforts work financially, multiple stakeholders need to be prepared to sound off and contribute to the advancement of the issue. Cannabis consumers need to demand better packaging, as do cannabis retailers, cultivators, and manufacturers—and possibly pay a bit more for it. With barriers such as 280E still holding most companies back from maximizing profitability, simply putting costly innovations on one company or segment of the industry wouldn’t be practical, fair, or prudent. Even in the drive for net positive companies, big issues need to be solved through the cooperation of multiple stakeholders.
The bottom line is that the cannabis industry still needs to win hearts and minds in this country and beyond. Commitments to philanthropy in license applications no longer cut it in the court of public opinion or in the eyes of a growing activist populace. Companies that lean in on CSR programs by integrating them into their business will ultimately be the winners—with consumers, employees, investors, and communities. Those companies that make it a point to manage their own external impacts and take it one step further by helping to mitigate societal issues, will be placed on pedestals, and be lauded in the Harvard Business Review.
What type of industry do we want to see? Who do we want to support as consumers and employees? What types of businesses do we want to lead?
