Many impact investors interested in supporting their local communities turn to place-based financial vehicles. But they can also engage with companies that use their resources to benefit the areas in which they operate. Here are three ways businesses drive community investment.
1. Environmental Stewardship
Corporate environmental stewardship means addressing the environmental impact a company’s operations has on its community. The focus can be anything from reducing carbon emissions to repurposing plastic waste.
A 2019 Deloitte study found that more companies are taking steps to improve energy and resource management. While Apple’s use of green energy to power its facilities is well-publicized, smaller companies are working to protect local natural resources, too. For example, McCutcheon’s Apple Products recycles 100% of the cardboard it uses and the 1 million pounds of organic material it produces each year. And most of the electricity powering its downtown factory is generated by rooftop solar paneling.
2. Diverse Local Hiring
Another consideration is whether companies are hiring local talent, with an eye toward building a diverse workforce and paying a living wage. A recent MSCI analysis revealed that industries such as information technology employ relatively little of the qualified minority talent available locally, particularly in high-level management jobs.
In one example, online training company Treehouse teamed up with the Portland, Oregon, Boys and Girls Club to test a software engineering apprenticeship program for local 18- to 20-year-olds from underrepresented groups. The pilot was so successful that the company is now helping to establish similar initiatives at other businesses.
Notably, while these kinds of apprenticeship programs are important, they primarily focus on junior talent. It is equally important to consider how companies are investing in the development of their mid- and senior-level employees to increase diversity higher up their corporate ladders as well.
Companies contribute to community investment through their own philanthropy efforts, too. Beyond making donations or sponsoring local events, companies can give their employees paid time off for volunteering. The top-ranking company on Fortune‘s 2018 Best Workplaces for Giving Back list, Salesforce both offers its 27,070 employees time off for volunteering and provides matching funds for staffers’ charitable contributions.
Corporate accountability initiatives should first and foremost be about investing in local communities, not generating good press. A company may be congratulated for an isolated program, for example, while failing to diversify its leadership or protect its local environment. But as access to rigorous data on corporate behavior improves, investors will better be able to tell whether the good works companies highlight in their voluntary reporting and marketing are reflected in their most meaningful actions.