Companies increasingly look beyond profit margins to marginalized populations

Pacha Soap co-founders Abi Burrows and Andrew Vrbas operate their "buy one, give one" company from the basement of a historical building in Hastings, Neb. (Photo by Hilary Stohs-Krause, NET News)
(Photo by Hilary Stohs-Krause, NET News)
(Photo by Hilary Stohs-Krause, NET News)
September 26, 2013 - 6:30am

More and more young people in Nebraska are concerned about what they're buying - but not necessarily just about the price or quality. They're also concerned about how products they consume affect those who make them, as well as the world around them. It's part of a growing trend, and some companies are changing to meet consumers in the middle. 


It’s called “corporate social responsibility,” and it encompasses a bevy of business-related activities: philanthropy, sustainability, ethical sourcing of materials and more. Corporate social responsibility is accountable for more than 40 percent of a company’s reputation, according to a 2011 survey from the Reputation Institute.

“I think what you’re seeing is a trend globally where we just have consumers that are much more conscious about the products that they’re buying,” said Sam Nelson, a business professor with the Center for Entrepreneurship at the University of Nebraska-Lincoln. “Are you polluting? Are you using child labor?”

Eighty-three percent of Americans want the products, services and retailers they use to support causes, according to a 2010 report, and corporations are taking notice. The University of Indiana’s School of Philanthropy found American corporate giving rose 12 percent last year. While it’s hard to say what specific factors contributed – after all, pre-tax corporate profits rose 16 percent in the same timeframe – unlike individual giving, corporate giving has exceeded pre-recession levels … by almost 40 percent. As a percentage of total giving, it increased from 4 percent in 2006 to 6 percent in 2012.

“Businesses will tend to respond to what consumers want,” Nelson said. “You know, you often hear the term, ‘Vote with your dollar.’”

Buy one, give one

One of the trendiest ways to approach corporate social responsibility is through “buy one, give one” programs; the most common example is TOMS Shoes. For every product sold, another is donated to someone in need.

WYNK BOUTIQUE

Photo by Hilary Stohs-Krause, NET News

“So through August of this year, we’ve given away 1,687 pairs since we started carrying them,” said Stephanie Wegner, manager and buyer at Wynk Boutique in Kearney in central Nebraska.

Wegner said her customers are drawn to TOMS’ mission as much as their shoes; her store would prefer to carry more brands with a similar donation structure. And in the last few years, a growing number of companies have implemented buy one, give one models, like glasses retailer Warby Parker or Des Moines dog food company BOGO Bowl.

But some, in particular TOMS, have faced criticism for the way they go about donating those products. Aid and economic development experts argue giving third world countries items like shoes addresses the symptoms of poverty, not the causes; by providing the shoes for free, TOMS is inadvertently driving local shoe sellers out of business and creating aid-dependent nations.

“You know, a lot of programs are Band-Aids, and that’s what this is,” said Beatty Brasch, executive director of Lincoln’s Center for People in Need. She said the biggest thing people need is job training ... and money. 

“But there are very few companies, frankly, that are willing to support the underlying causes of poverty.”

Pacha Soap, a new operation in Hastings in central Nebraska, hopes to be one of those companies.

'Raising the bar'

THE SOAP VAULT


"EVERY KIND HAS A STORY"

Photos by Hilary Stohs-Krause, NET News

“Like I said, this was an old bank (before),” says Pacha co-found Abi Burrows, taking a visitor on a tour of the company’s basement space. She opens the door to a narrow room lined with shelves; inside is another door, a heavy metal one with the words “TRUSTEES VAULT” painted in old-fashioned lettering.

“This is where people used to keep their money, and now we keep our soap here!” she explains with a laugh. The visitor comments on the powerful array of smells given off by the drying bars of soap.

“You smell mint and citrus and florals,” Burrows says. “It is kind of overwhelming.”

Like TOMS, the year-old Pacha Soap company uses a buy one, give one model – they’ve donated four or five thousand bars of soap to countries including Sri Lanka, Peru and Rwanda, as well as locally in Hastings. But co-founder Andrew Vrbas said their approach is different than many similar programs.

“(We wanted to create) a business that would give back, not only in the form of sanitation and hygiene, but also by providing work and employment in developing nations,” he said at a nearby coffee shop where Pacha Soap bars are displayed by the counter. “So a scalable model, basically, of a social business that employs the one-for-one system, but more as a way of education.”

Pacha Soap is sold in 15 to 20 states across the Midwest, Vrbas said, from Texas to Wisconsin. Right now, he and Burrows often are still donating the soap they make themselves, but as the company grows, they hope to work more with local soapmakers.

“When we move into those developing nations, we will be working ourselves out of a job. There will be no need for us anymore. That’s the idea,” he said. “Who’s more poised to run a business there? Us or them?”

Generational influence

The burgeoning interest in “conscious capitalism” has strong generational ties. A recent study found 58 percent of Millennials would take a 15 percent pay cut to work for a company with similar values. More than half say a job where they can make an impact is important for their happiness.

Pacha Soap’s Abi Burrows is 22; Andrew Vrbas is 23.

“People our age are starting to see there’s a better way of doing this," Vrbas said.

Sam Nelson, the UNL business professor, said companies like Pacha are part of a movement toward a so-called “triple bottom line”: looking at not just profit, but also people and planet.

“The millennial generation that’s going through college now has been exposed more to information regarding the impact we’ve had on the planet. They have been exposed more to just seeing the way the rest of the world lives, because they’ve grown up connected to it.”

But despite the imperfect nature of some buy one, give one programs – or of aid in general – everything helps.

“People need to have the basic necessities,” said Brasch with the Center for People in Need. “Food’s one, obviously. Shoes are another. Soap’s another. So anything we can do to get these commodities to people is beneficial, even though it’s certainly not solving the issue of poverty.”

By mixing the immediate aid the more long-term economic development aspects, Pacha’s Vrbas said, hopefully they can start to attack the deeper roots of poverty … while still making a profit.

“What we’re trying to do is merge this idea of business and this idea of philanthropy into one,” he said. “And it’s not just us. It’s not like we invented this. We are just proud to be part of the movement.”

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