Corporate Stewardship: Reuniting the Triple Bottom Line

The BIG IDEA: The winning corporations in today's economy have figured out a way to align their corporate stewardship strategy AND their business strategy in a way that actually increases shareholder value.

I began developing this concept in my book, Wal-Smart: What it Really Takes to Profit in a Wal-Mart World (McGraw-Hill, 2007, www.wal-smart.com). Wal-Smart prescribes the smart strategic choices business leaders need to make to excel in their four primary roles: competitors, suppliers, employers, and community members.

The key to creating breakthrough shareholder value is to find the AND: “We link explicit, intentional strategic choices so that competitor strategy and vendor strategy and employer strategy and community member strategy work together. The vision of our business that emerges is far brighter, far clearer, and far more effective than each choice standing on its own. We survive and thrive because - We find the and.” (Wal-Smart, p. 217).

Take PetSmart. A number of years ago, PetSmart decided to focus most of its social responsibility and philanthropic activity on avoiding the euthanasia of companion pets through pet adoption programs. This “community member” strategy certainly supported the retailer’s consumer strategy, because their customers are pet lovers. It supported their employee strategy, because most of their employees are also rewarded by seeing live pets in the stores regularly.

More importantly, since the program’s inception, there are 3 million more adopted dogs and cats that need food and toys, which has fueled PetSmart’s shareholder value.

So what is corporate stewardship? Corporate stewardship is the confluence of a company’s environmental, social responsibility, and philanthropic strategies.

Corporate stewardship echoes the insightful words of Neville Isdell, the CEO of The Coca-Cola Company: “But corporate social responsibility need not conflict with the obligation to shareholders to be financially successful. In my experience, constructive engagement with a broad range of interest groups -- including harsh critics -- is the best way to use their pressure to drive profitability.”

Too many companies have been victimized by “triple bottom line” thinking, the misplaced concept that corporations must simultaneously maximize Profits (shareholder value), People (corporate social responsibility), and Planet (environmental issues).

Such Triple Bottom Line thinking has introduced schizophrenia into the corporate boardroom, as management struggles to decide against very conflicting priorities.

However, “finding the and” eliminates this schizophrenia. By explicitly focusing on a portfolio of corporate stewardship activities that is aligned with the company’s business strategy, the triple bottom line is irrelevant. Management can make decisions which increase its shareholder value AND satisfy its responsibility to steward the social and environmental resources with which it has been entrusted.

Leaders like GE, Wal-Mart, PetSmart, Starbucks, and Red Lobster have begun to unlock this secret.

Corporate executives who still view environmental and social responsibility investments as “necessary evils,” rather than intrinsic elements of a comprehensive corporate strategy, will awake to find themselves woefully behind in this global economy.