Wall Street Journal
Mar 4, 2010
Executive Education: Schools, Firms Gauge Social Impact
By ALINA DIZIK
When Stephanie Poole signed up for a mentor through her business school, she thought the person would be someone she could simply turn to for occasional advice. Instead, she was handed a semester-long project requiring her to assess the social impact of a nearby company.
The Center for Sustainable Enterprise, a part of the University of North Carolina Kenan-Flagler Business School, organized the mentor program and linked Ms. Poole with Kevin Trapani, president of the Redwoods Group, a Morrisville, N.C., insurance provider that works with YMCAs, Jewish community centers and resident camps throughout the country.
Ms. Poole, 25 years old, spent last spring producing a 21-page social audit for Mr. Trapani and the Redwoods Group. Like a traditional financial audit, it focused on what the company is doing in the areas of the environment, ethics and its overall social impact.
It's an effort a growing number of companies are undertaking, as they look to track the outcomes of social responsibility efforts and prove their value.
For her part, Ms. Poole assessed volunteerism, charitable giving, transparency of company leaders and community engagement. She also implemented a system for Redwoods' 90 employees to compare their progress against a widely accepted set of metrics for social impact. She used methodology from B Lab, a nonprofit that certifies socially and environmentally responsible companies.
The company's previous social audits weren't comparable from year to year, so instituting a reporting methodology was critical for making the audits effective, says Ms. Poole, who is also completing an audit this year.
Mr. Trapani says conducting a social audit is atypical in the insurance industry. It's a complex undertaking that few companies are able to give the time and effort, Mr. Trapani suggests.
Ms. Poole's audit was eye-opening, says Mr. Trapani. The results showed that the company's social responsibility efforts paid off and that employees felt a transparency in decision-making. Additionally, the time it took to complete the audit served as a constant reminder of the social mission for managers and employees.
Getting M.B.A. students involved is also beneficial to the firm, says Mr. Trapani. "They get an experience that's truly unique to assess a live operation," he says. And with high costs, using students who are supervised by a business-school professor "is a competitive way to get it done."
While some of the suggestions have had a positive impact on the bottom line by encouraging employee retention and brand awareness, others have been negative. For example, 2008 was the first year that the company wasn't profitable, but continued to stick to social initiatives like financing employee education or sticking to buying local products, even if the costs involved were higher.
For her part, Ms. Poole says her experience has opened her eyes to how corporations can have a social impact that also helps the bottom line. "The model that some companies have of generating profits through any means and giving a small percentage of it back [to charities] is outdated," she says.
And Mr. Trapani says his firm has been called upon by several large companies for advice on creating their own social audits.
"It would be difficult [for a company] to be sincere [about social impact] without auditing," he says
[Sidebar]
Assessing Efforts
Some results of a social audit conducted for Redwoods Group for 2008-09:
Recommendations
· Minimize environmental impact of travel through teleconferencing
· Create a policy to recruit female and minority suppliers
· Start an independent advisory board to make new suggestions
Achievements
· Two programs increased charitable giving and offered positive brand awareness
· Built nonprofit partnerships that aligned with social mission and created business
· Bought supplies from local vendors, an aid to communities
· Established a program to reduce the company's environmental footprint
Source: The Redwoods Group