How Socially Driven Business Creates a World of Change
- External pressures have been placed on businesses to do better. They have answered by adopting numerous measures to make their efforts more socially driven, including hiring chief diversity officers, making philanthropic pledges, and diversifying their boards of directors.
- All businesses under Propeller are compelled to have an environmental or social mission and operationalize racial equity practices; they have also gone on to perform well and raise millions in venture capital.
- A deep understanding of the history and social-emotional competencies around race is imperative to running a business effectively in the United States.
Andrea Chen: [0:15] I believe that there are many reasons for why there's been a rise in the last 10, 20, 30 years of purpose‑driven business and purpose‑driven leadership. I think it has a lot to do with external factors.
[0:27] We have seen massive social unrest around the globe and here in the United States. We are also faced with widening wealth disparities across the entire world and in our own country. These widening inequalities is a big reason for why we're seeing this social unrest and, coupled with that, climate disasters that have happened over the last couple of decades as well.
[0:58] Many people are seeing the destruction of our environment and our globe. There's a lot to be upset about. As a result, I see a lot of people questioning the legitimacy of business as we know it, where we are prioritizing profits over anything else—over people, over the environment.
[1:19] I see that societies around the world are seeing the negative impacts of corporations. There has been a lot of external pressure placed on businesses to do better in terms of caring more for the people that work in companies, to the people/communities that they directly serve, to the environment.
I see a lot of people questioning the legitimacy of business as we know it, where we are prioritizing profits over anything else—over people, over the environment.
[1:45] That has a lot to do with it. In our own country, with the murder of George Floyd, we had a huge racial reckoning and a lot of activists have started putting a lot more pressure on corporations.
[1:57] Corporations have responded in kind by making pledges, philanthropic commitments, hiring chief diversity officers, and doing work to diversify their supply chains, procurement, equitable hiring practices, diversifying their boards.
[2:15] I believe that likely that business schools are feeling that pressure as well. I absolutely believe a socially driven business can be profitable. I am the co‑founder and CEO of a nonprofit called Propeller.
[2:30] Our mission is to support and grow entrepreneurs, small businesses to tackle social and environmental disparities. All of our businesses have an environmental, social impact, or environmental mission as part of their business.
[2:45] Our businesses have gone on to raise millions and venture capital have grown their business and gone and expanded from New Orleans to other states.
[2:54] We've seen plenty of examples, where that is the case. I think that you can also make the argument that socially driven businesses, long‑term, can actually and will be more profitable than businesses that aren't.
[3:09] I do believe that profitable businesses can be socially impactful and environmentally ethical. I know that we have many examples of businesses that are doing that.
[3:22] I also believe that it is a journey for a business that maybe this is the first time that they're thinking about how do we become more socially impactful and environmental in the way that we do business.
[3:32] Something that we do in our accelerator program at Propeller is, when we work with startups, we work to make sure that every business has a plan for how they are going to operationalize racial equity into their business.
[3:47] Our goal, and what we're working on at Propeller, is to become anti‑racist organizations. You can look at that from many different angles, from the board level, how you recruit your board members, how you empower your board members, whether board members are from the community that you serve to your HR and talent practices.
We work to make sure that every business has a plan for how they are going to operationalize racial equity into their business.
[4:06] Again, how you hire. Do you have equitable hiring policies in place? The culture that you put in place, something that we've been, we've found to be really successful is doing biannual climate surveys for an entire staff and looking at that data to segregate it by race, gender, and other categories.
[4:26] Being able to see on questions like belonging and inclusion, and opportunities for advancement, whether there is a difference between our White employees versus our employees of color.
[4:37] Another big area for us is around procurement. I'll just give you a statistic from here in New Orleans, but I believe this is probably pretty similar from across the country.
[4:47] In our city, 70 percent of our city is made up of people of color, 30 percent is white, and 60 percent is Black. In terms of overall business receipts, only three percent go to businesses owned by people of color and two percent go to Black‑owned businesses.
[5:07] That is a very significant disparity of 60 percent to two percent, 70 percent to three percent. That's very significant. The only way we're going to be able to change that is to change how our institutions procure so that you're talking about city government, but also large corporations.
[5:24] The majority of dollar spent are by our large anchor institutions. How do institutions, universities, business schools, how do institutions spend their money?
[5:38] All business schools should have equitable procurement policies in place and set goals so that their spending does actually reflect the communities where they're located.
[5:47] We have been talking about leadership competencies. As an employer, that's an area where I would love to see more training and curriculum from business schools.
All business schools should have equitable procurement policies in place and set goals so that their spending does actually reflect the communities where they're located.
[5:59] If you're going to be someone who is active in the social impact space, it is imperative in the U.S. that you have a deep understanding of the history of race and racism in the U.S.
[6:12] It's not possible to do work effectively without an understanding and without some of the social‑emotional competencies around being able to take feedback really well, being able to be flexible in your thinking, emotional maturity, self‑governance, emotional regulation.
[6:34] These are very soft things, but they are very important, I would believe, in any leader that's leading any corporation in our current environment, and also if you're planning to be educating the next generation of social impact leaders.