“There is a perception out there that there is a tradeoff between social responsibility and financial responsibility. You can’t do both, people say. You can’t have your cake and eat it too. Well, very fortunately the data just doesn’t support that perception.
Can you actually be more socially responsible and increase shareholder value at the same time?
Raj Sisodia, David Wolfe, and Jag Sheth recently published “Firms of Endearment: How World-Class Companies Profit from Passion and Purpose.” In the book, they share the results of a study in which they looked at companies that were especially socially responsible – they call these firms “Firms of Endearment” or FoEs. They compared the shareholder returns of these socially responsible firms with the S&P 500. What they found was that the firms that were socially responsible outperformed the S&P 500 by 9x.
These Firms of Endearment grew shareholder value 1025% in the last ten years while the S&P 500 returned 122%. Even when you compare the Firms of Endearment vs. the blue chip success stories profiled in Jim Collins’ Good to Great, the Firms of Endearment win. The firms profiled in Good to Great returned 316% while the FoE’s returned 1025%. Here’s the graph from their web site.“
About Ryan Allis
Ryan Allis is the co-founder and CEO of iContact, a socially responsible purpose-driven company that provides email marketing tools to SMBs and non-profits. iContact has grown from its start in 2003 to more than 65,000 customers, 260 employees, and $50M in annual sales. Ryan is the author of the book Zero to One Million from McGraw-Hill, the founder of the Humanity Fund which invests in high-growth socially responsible companies in the USA and Africa, and the Board Chairman of the non-profit Nourish International.
The Institute for Sustainable Development / Green Plus