Episode 64 – Steve Roth and Double-Bottom-Line Companies

by Wendel, Rosen, Black & Dean LLP
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In Episode 64 of The Wendel Forum (originally aired on May 26, 2012, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Steve Roth, CEO of Roth Consulting, which helps companies devise and execute a “winning strategy,” whether related to capital, expansion, product development or management.

Steve Roth, CEO of Roth Consulting

Steve Roth, CEO of Roth Consulting

Roth brings his experience as a senior executive and investor in companies in a wide range of industries to green businesses and double-bottom-line companies, those companies for which a social goal — like benefiting the community or the environment — co-exist alongside profit goals.  For those companies, the biggest issue is balance, Roth explains.  Companies can’t forget that profitability is what allows a company to be generous and, therefore, profitability must remain the core operational focus.  Companies shouldn’t become so enamored with a social mission that they lose the ability to fund it.

The average double-bottom-line company devotes about 5 percent of sales to a social mission.  The more profits earned, the more impact the company can have. Ben & Jerry’s was one of the first and most successful double-bottom-line companies.  “On a public relations basis, charitable endeavors are a big part of their raison d’être.”

Companies can also donate employee time – within limits.  In the 1970’s, Xerox was one of first companies to devote its human resources to help the community, and some employees were even promoted on that basis.  But Xerox diverted too much attention from its core business and now no longer exists.  “It’s an educational tale.”

Another business challenge for these companies is making the charitable work relevant to customers.  Many businesses in the coffee industry, for example, donate money back to the cooperatives that grow their beans.  It may be more expensive to source products from those areas.  As a result, customers may need to pay higher prices or the company may have to accept lower profits.  “Corporate communication is critical to justifying the premium” customers may have to pay, especially in a competitive marketplace where consumers have many choices. The customer must be educated about the social benefit of buying that product.

Roth and Dick also discuss socially responsible investing.

What social causes would inspire you to purchase products from double-bottom-line companies, even if the prices were higher?

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