14 DiversityPlus Magazine | January/February 2009 www.diversityplus.com

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Maintaining Corporate Citizenship in Troubled TimesBy Ji Hyun Lee

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DiversityPlus Magazine | January/February 2009 15 www.diversityplus.com

With the country sinking deeper into recession, are sustainable business practices simply a luxury or a necessity for minority and women-owned enterprises?

It used to be that Corporate Social Responsibility (CSR) was a luxury left to the large companies. !e Body Shop gained consumer confidence with its anti-animal testing message and its fair trade beauty products. American Apparel marketed an organic clothing line produced entirely in the US with the message, “Sweatshop-free T-shirts. Made in LA.” When the garment district was paying immigrant workers minimum wage and below, American Apparel paid employees twice the national average, o"ered health benefits and subsidized lunches. But these companies started small and grew into large global corporations. If these companies are any indication, sustainable business practices not only enhance a company’s image but also its ROI.

But the US economy is in a severe recession and businesses are downsizing and losing its customers. Several key issues are at stake but for most of the smaller WMBEs, the concern is citizenship weighed against financial risk in a precarious economic time. Sustainability is no longer just about making sporadic charitable donations to local communities. To be deemed a socially responsible organization, a business must make long-term investments that will impact its neighborhood, its customers, its employees for the greater good of society, for an extended period of time. Achieving this without compromising the company’s mission or revenue is what has many businesses concerned.

For Cynthia Wollman, Founder of WBelieve, a coalition of women-owned socially responsible businesses, the issue of sustainability is a question of ‘we must instead of must we?’ “We see a real opportunity in this economy to help clients understand how being green can save money. When you look at the true cost of doing business, it actually doesn’t always have to cost more money. We have invested in new technology that has helped us save resources like water. By evaluating all aspects of your purchases and the resources required, you can find savings in unexpected areas,” she says. Wollman is also the Vice President of CRW Graphics, an eco-friendly printing company certified by both the Women’s Business Enterprise Council (WBEC) and the Forest Stewardship Council (FSC), an international organization that promotes environmentally safe forest management. CRW Graphics is entirely green in all of its printing materials: it recycles all ink, plates and press chemistry as well as reusing clean hot air exhaust from its digital presses to help heat its plant in the winter months.

Waste reduction is another way in which Wollman’s company helps strip costs for their clients. In tough times rife with making tough decisions, sustainability can still be achieved while meeting the customers’ needs. Social

responsibility is a sound investment for any company because everyone, employees and clients alike, are demanding it, she says. “We look at being green as a long term investment and look at the pay backs over time.”

In some cases, there’s even an inherent advantage a WMBE has, that perhaps the large corporations don’t have. A small to medium-sized minority business can provide a closer, more personal relationship with its customers where a large enterprise cannot. A WMBE often has a better understanding of their niche market and therefore can market their products and services with a more targeted approach.

Luis Pastor, CEO of Latino Community Credit Union based in Durham, North Carolina, sees the growth of his company as a good example of this. “People and organizations that want to put their money to work for socially responsible purposes can also receive competitive returns… it makes you more competitive because you can withstand downturns, as you minimize your losses,” he says. LCCU is a financial institution that o"ers its mostly Latino customers financial education, protection of assets and access to loans.

While some of the larger lending institutions are now closing their doors and filing for bankruptcy, LCCU is flourishing. !ere are a total of seven branches in

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16 DiversityPlus Magazine | January/February 2009 www.diversityplus.com

Trends & Issuessmall number, financial institutions like LCCU makes a huge di!erence in the number of customers it reaches.

Today, big lending institutions are in trouble because it gave out loans with no concern for its customers’ ability to make the payments and when people defaulted, homes were foreclosed. Amid the economic downturn, LCCU provided credit services to their customers— deemed “unbankable” by the larger banks— and helped them stay in their homes or buy new ones. When community-focused companies see value in their customers, it makes sense that that they are rewarded with higher than expected revenues.

Keeping your objectives in perspective is key for MWBEs Pastor says. “Know your niche. Understand your competitive edge.”

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North Carolina—two new branches opened in Dec 2008 in Winston-Salem and Charlotte and another one is set to open in the spring of 2009. “We serve our market no matter what external fluctuations are occurring... so whether or not the market environment is more di"cult, we are here to stay for our members,” says Pastor.

Access to good financial advice comes at a hefty price and companies like LCCU o!ers underserved communities a sense of security in an insecure economic time. A minority-owned credit union understands what is needed for an ethnic community whereas the Citibanks and JP Morgans do not. LCCU conducts its business primarily in Spanish and all of its employees are bilingual. Ninety-seven percent of its customers are low-income Latinos and new Americans. Pastor points out these customers feel more at home when they understand the environment that they’re in. “You must simply understand that the benefits of your business are for the larger community and not only your bottom line,” Pastor says.

Historically, minority communities were excluded from financial services. African-Americans weren’t even allowed into financial institutions until after the civil rights movement. “#ere were a number of storied black banking franchises which served the needs in those communities. So they were quite important from that standpoint,” says Bill Cunningham on National Public Radio’s Tell Me More segment. Cunningham is the CEO of Creative Investment Research, a minority-owned research and management firm that provides socially responsible investment advice and products. According to Cunningham, there are 229 women and minority-owned banks in the US out of a total of 8,384. Given such a