A younger generation of consumers is demanding that companies play a significant role in driving positive social and environmental impact, and businesses are taking note. Recognizing that they can’t solve the world’s problems alone, companies are increasingly teaming up to drive meaningful change together in a cost-effective way.
Expectations have evolved regarding what drives impact. In the past, companies could simply donate money to a charitable cause to fulfill their social obligations. Success was measured by the size of the donation. Today, consumers and potential employees care less about the dollar amount. Instead, they look for a measurable impact and whether problems are actually being solved.
Business coalitions can be a very effective means for driving social and environmental impact because they bring together significant, complementary resources, expertise and know-how to approach a problem holistically. This helps to ensure solutions are effective and sustainable. Moreover, smart investments in social or environmental impact can have a substantial impact on the bottom line.
For example, retailers have collaborated to improve worker conditions in Asian factories, lowering their costs due to fewer disruptions and improved worker productivity. Data hosting companies have worked together to bring renewable energy sources to a scale that allowed them to buy energy at a much lower cost, while having a positive impact on the environment.
Business coalitions can be a very effective means for driving social and environmental impact because they bring together significant, complementary resources, expertise and know-how to approach a problem holistically.
Successful Coalition Building
Coalition building can be tricky, so it is important to be mindful of some key principles that can help ensure success.
First, any successful coalition seeking to drive positive change must have clear alignment among the members as to its purpose, goals and strategies. Forming a coalition on a vague commitment to a large problem (e.g., clean water), will quickly break down as the coalition attempts to do the actual work. Coalition members often have different views on how to tackle a problem, what the priorities are and which partners to include. If there is not clear alignment, members will end up squabbling about the right approach and nothing will be accomplished.
It is also important to agree on success metrics up front as part of the alignment work so there is no question as to whether progress is being made and to what extent. Coalition work often breaks down when members view success differently. Clear success metrics give a number of different stakeholders in the outcome the ability to review progress and hold the coalition accountable, increasing the likelihood of success.
Second, it is important to build strong partnerships with other entities with related or compatible interests to the issue being solved. Nonprofits, civil society, academia and governments often can be of assistance. However, care should be taken not to make these types of entities coalition members themselves, as they will often have a different agenda and priorities from the business members.
Finally, coalitions should hire or build an independent backbone organization to support the coalition’s efforts and members. While coalition members will have the best intentions to devote the time necessary to make things work, distractions will inevitably slow progress. It is important to have an organization that doesn’t have its own agenda or interest in a particular outcome. The organization should be skilled in aligning parties, understanding their interests, and facilitating outcomes that work for all of the coalition partners.
Without tight alignment, strong partnerships and an independent backbone organization, a coalition approach can be problematic. But when executed correctly, business coalitions can be a cost-effective way to make meaningful social and environmental impact.