The Challenge for Business and Society

A roadmap to improve corporate social responsibility

The 2016 U.S. Presidential Campaign focused a good deal of attention on the role of corporations in society, from both sides of the aisle. In the lead up to the election, big companies were accused of profiteering, plundering the environment, and ignoring (even exacerbating) societal ills ranging from illiteracy and discrimination to obesity and opioid addiction. Income inequality was laid squarely at the feet of us companies. The Trump administration then moved swiftly to scrap fiscal, social, and environmental rules that purportedly hobble business, to redirect or shut down cabinet offices historically protecting the public good, and to roll back clean power, consumer protection, living wage, healthy eating initiatives and even basic public funding for public schools. To many eyes, and the lens of history, this may usher in a new era of cowboy capitalism with big companies, unfettered by regulation and encouraged by the presidential bully pulpit, free to go about the business of making money—no matter the consequences to consumers and the commonwealth. While this may please some companies in the short term, the long term consequences might result in just the opposite.

And while the new administration promises to reduce "foreign aid" and the social safety net, Stanley S. Litow believes big companies will be motivated to step up their efforts to create jobs, reduce poverty, improve education and health, and address climate change issues — both domestically and around the world. For some leaders in the private sector this is not a matter of public relations or charity. It is integral to their corporate strategy—resulting in creating new markets, reducing risks, attracting and retaining top talent, and generating growth and realizing opportunities. Through case studies (many of which the author spearheaded at IBM), The Challenge for Business and Society provides clear guidance for companies to build their own corporate sustainability and social responsibility plans positively effecting their bottom lines producing real return on their investments. This book will help:

• Create an effective corporate social responsibility and sustainability plan
• Provide long-term bottom line benefit
• Protect and enrich brand value
• Recruit and retain top talent

Perfect for CEOs, CFOs, Human Resource/Corporate Affairs executives, but also for government and not-for-profit leaders, this book helps you come up with a solid plan for giving back to society, producing real sustainable value.

Foreword ix

Acknowledgments xiii

Introduction 1

Chapter 1: The Good, Bad, and Ugly: A History of Corporate Behavior 17

Another Way of Proceeding 23

Public-Private Partnership Before the Phrase Was Coined 32

Discrimination and Jobs Are the Same Issue 37

Gender Equality 41

Environmental Leadership 42

Supply Chain Practices 46

Lessons Learned and Strategies Used 48

Can We Intelligently Regulate Business? 53

Can Ethics Be Taught? 56

The Recent Past 60

Chapter 2: Past Is Prologue, but Today Is What Matters 65

Best Practices in Corporate Responsibility 71

Corporate Responsibility and Education 73

The Background on School Reform 74

P-TECH: Reinventing High Schools 80

Changing Federal Policy 95

Walking and Chewing Gum at the Same Time 98

Student Stories 102

Results 105

Engaging the Company over the Long Term 106

Lessons Learned 108

IBM Launches Teacher Advisor with Watson 109

The Skills Crisis Goes Far Beyond the Entry Level 113

Citizen Diplomacy 114

JPMorgan Chase: A Company’s Values Are at the Core of Its Actions 120

Starbucks 122

American Express 123

The Food Industry 124

Failures in Corporate Citizenship 126

Private-Sector Leadership in the Public and Volunteer Sectors 128

Lessons to Be Learned, and Moving Forward 130

Chapter 3: The Future 133 Leadership: We Need Leaders to Lead 137

Ethics and Community Service: A Culture of Ethics and Service Needs to Be Reinforced and Expanded 140

Key Problems Facing Society Today and How They Can Be Addressed 144

Critical Issues That Need a New Focus: Education and Jobs 149

Four Ideas That Will Boost Education Achievement 150

Economic Development and Jobs 161

A Brighter Future 169

Conclusion 171

About the Author 181

Index 183

STANLEY S. LITOW is a global thought leader on critical policy issues including education, jobs, and the economy. He has had a lengthy high-level career in business, government, education, and civil society. Serving under three CEOs, he led IBM's corporate citizenship programs and the IBM Foundation, where he created some of the world's most innovative corporate social responsibility efforts. At IBM he organized and helped lead three National Education Summits for the U.S. president, the nation's governors, CEOs, and education leaders. Before his IBM career he served as deputy chancellor of schools for the City of New York where he pioneered significant education reforms. He also founded and led a major think tank, Interface, that helped the City of New York cope with its last fiscal crisis. Prior to that he served under the mayor of New York City as executive director of the New York City Urban Corps, the nation's largest college intern program, and served on a range of advisory panels for the president of the United States and the governor of New York, where he chairs the State University of New York's Academic Affairs Committee.

Recent federal actions have altered rules both social, and environmental, that supposedly hobbled business, rolling back clean power, consumer protection, and healthy eating initiatives. Unfettered by regulation, corporations are now supposedly freer to go about the business of making money—despite any unintended consequence to consumers and society. And yet there could be a negative reaction to these actions resulting in support for even harsher regulation in the future. How can responsible businesses step up their efforts to create jobs, reduce poverty, improve education and health, and address climate change issues both domestically and around the world while still generating the economic growth to enrich shareholders and create jobs? The Challenge for Business and Society shows how leaders in business and government can actively balance the growth of business with the needs of society, producing even greater financial returns.

While books abound on implementing successful corporate strategies in finance and marketing, advertising, and research, there are few resources focused on corporate behavior at the intersection of business and society. Drawing on his experience in leadership roles in the public, nonprofit, and private sector as well as from working with U.S. presidents, governors, mayors, CEOs, and nonprofit leaders, Stanley S. Litow reveals that the most successful companies prosper by actively choosing to produce positive change.

The Challenge for Business and Society outlines an effective model for business to combine commitment to the bottom line with dedication to the common good. First, the most important competitive advantage for responsible companies is to recruit and retain top talent. Positive business behavior improves companies access and the ability to retain top talent and is often as effective as increasing salaries or expanding employee benefits.

Second, good corporate behavior builds support in communities and within government, providing assets that companies need to avoid risk. Third, responsible companies stimulate community support, among existing or prospective clients and other stakeholders, and help in establishing and growing new markets.

The Challenge for Business and Society is a practical guide for becoming a company that works for the common good, attracts and keeps the best employees, generates esprit de corps, produces superior products and services, and appeals to consumers by responding positively to societal challenges.

PRAISE FOR

THE CHALLENGE FOR BUSINESS AND SOCIETY

"A company's values are at the very core of its actions, and The Challenge for Business and Society: From Risk to Reward not only demonstrates the perils of those that prioritize growth for the sake of growth, but also provides example after example of businesses partnering with communities to create solutions to some of the world's most pressing challenges."
—Jamie Dimon, Chairman and CEO, JPMorgan Chase & Co.

"Corporations earn the right to operate and grow by delivering long-term value not just to shareholders but to society as a whole. The betterment of society and protecting the planet must be represented in a company's strategy and its bottom line. Stanley Litow's book makes a powerful case as to why success can no longer be defined purely by profit and that companies can only do well by also doing good."
—Andrew Liveris, Chairman and CEO, The Dow Chemical Company

"A highly persuasive account of how—and why—businesses focused on addressing society's biggest challenges are more likely to thrive and prosper over the long term to the benefit of all their stakeholders."
—Paul Polman, Chief Executive Officer, Unilever

"Stanley Litow is an eminent and foremost mentor in the space of business and social responsibility, so his contributions present a great opportunity for a broader audience to benefit from his invaluable and almost unmatchable experiences. For decades now, Stanley has been navigating the realities between market forces, civic needs, and the space that exists to align them and reinforce one another. At this critical time when society has no option but to figure out how to deploy business power for the benefit of humanity, Stanley's voice is vital."
—Daniel Lubetzky, Founder and CEO, KIND

"At a time when all our institutions—public, private, civic, religious—face increased skepticism, The Challenge for Business and Society: From Risk to Reward charts a path for businesses to shape outcomes that work for the bottom line and the greater good. Stan Litow draws on his concrete experience as a dynamic leader in one of the country's most storied companies to provide us straightforward lessons that will be timely and extremely useful to business and government leaders."
—Denis MCDonough, former Chief of Staff to President Barack Obama