A Tax Credit for the Socially Responsible Business?

Spring teases those of us living in the northern hemisphere with its long sunshine-filled days while snow continues to abound.  In Canada, another federal election has been called.  Meanwhile, the clock ticks away as competing interests distract me from completing my tax return: a reminder of my financial health.

Spring, the eternal sign of hope, a time of birth and re-birth sparks a blend of anticipation and reflection. 

On this day, I am stuck on financial health; knowing that it does not tell the whole picture of my well-being.  It doesn't consider my morning meditation, my fitness class regimen, my preference for organic food, mindful eating habits nor my deep love for my children and gratitude for my friendships and where I live.  Together, they contribute to my holistic health. 

Health of a Nation

Looking further afield, looking at what it is that contributes to the health of a nation, there is growing recognition that the socially responsible business model is not only good for a country's financial health, but that it is also good for its societal health and for its environmental health.  Socially responsible businesses bring value. 

We Are What We Measure

In spite of this recognition, our well being continues to be measured in financial terms.  A turned-on group of thinkers, economists among them, know this to be true and are looking at the development of a Social Competitiveness Index, introduced to me in the Spring Issue of the World Policy Journal by Matthew Bishop and Michael Green in their article We Are What We Measure.  They recognize the importance of measuring the financial, social and environmental impact when evaluating business performance.  A similar pursuit is being led by French President Nicolas Sarkozy, British Prime Minister David Cameron, Nobel Laureate and economist  Joseph Stiglitz and the OECD.

This is not the first time the integrity of the GDP and its limitations as a measure of how well a society is doing has been questioned.  The UN Human Development Report, inspired and led by Mahbub ul Haq and influenced by luminaries such as Amartya Sen and Frances Stewart among others, recognized the failures of the financial model in describing the health of a nation.  The UN HDR has been issued annually since 1990 and includes a gaggle of social development measures used to rank countries.  The Report addresses, as its main issue, the question of how economic growth translates - or fails to translate - into human development. The focus is on people and on how development enlarges their choices. The Report discusses the meaning and measurement of human development, through a different composite index.

For seven consecutive years running, beginning in 1994, my own country ranked #1.  Sadly, by 2010 we had slipped into 8^th spot.

A Socially  Responsible Business Model

So what does this have to do with corporate social responsibility you ask?  Well it speaks to the issue of big picture thinking, suggesting that there may be more optimal ways of recognizing and valuing those companies which adopt a socially responsible business model for their success; those which fully integrate a socially responsible framework into their operations and adopt the socially responsible platform as the lens through which they conduct business and through which their stakeholders are positively impacted.

How do we reward businesses which are willing to work differently?  A growing number of consumers are seeking out these socially conscious behaviours and standing in solidarity with them, buying from them, telling their friends about them and rallying in their support.

These are the companies that have policies and practices in place to provide a richer experience for their employees, rewarding them holistically.  They contribute positively to the environment and minimize any harmful effects.  They provide meaningful connections with their consumers and the communities where they do business.  Finally, they set similar performance expectations of their supply chain and monitor compliance.

The Role of the Tax Incentive

The question is: how do we get more businesses to sign up - to adopt a CSR business model from the enterprise level to the SMB stream?  Tax incentives, historically, have been quite effective motivators at both the personal and corporate level.  Could a tax incentive work to mobilize a groundswell of CSR adopters and practitioners?  

To be eligible for a tax credit, a company would need to make commitments to each of the four stakeholder groups, develop a clear set of policies to guide implementation of the business model and demonstrate that these policies became the lens through which decisions were made.  Such a process would not be so difficult to administer and it just might whet the appetite of those businesses not yet familiar with the concept or not yet convinced of the RoI to their business to begin their journey.

What about the holes in this model?  Help me out here.  Could this work?  Light the Horizon and then come back here to light this horizon... with your ideas.

photo credit 'Bullet Holes' Waynesboro Georgia, December, 2007 by Rusty Tanton via flickr

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