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Sunday, 11 October 2015 20:53

Report: Economic developers should focus more on triple bottom line companies

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Despite the numerous economic development programs aimed at attracting new businesses to Michigan, state and regional organizations could do more when it comes to helping companies focused on the triple bottom line business model.

That’s according to a new report published by Grand Rapids-based Sustainable Research Group LLC and Laingsburg-based Starting Now LLC.

The research points out that state and regional economic developers are missing an opportunity to incentivize the companies that operate on principles of social, environmental and economic responsibility, particularly as they look to grow in the state or relocate to Michigan.

“We found that West Michigan has a lot of companies that fit this definition (but that) economic development organizations do not have any kind of formal or even informal strategy to identify them or work with them,” said Bill Stough, CEO of Sustainable Research Group.

The “Attracting and Retaining Triple Bottom Line Enterprises” report was commissioned by the Center for Community and Economic Development at Michigan State University.

Local companies such as Grand Rapids-based Cascade Engineering Inc. — which was interviewed for the report — agree that economic developers should be doing more to assist triple bottom line companies grow.

The manufacturer became a certified Benefit Corporation in 2011, which means it makes business decisions by considering the impacts to stakeholders on equal footing with the broader community and the environment.

“Economic development organizations, if they’re looking to attract people and jobs, would be wise to seek out triple bottom line companies like ourselves,” said Keith Maki, director of marketing and public relations at Cascade Engineering. “By the virtue of what they do, they bring both jobs and opportunities because of the social nature of what the triple bottom line stands for.”

In particular, Stough advocates that economic developers adopt a uniform definition of what classifies triple bottom line companies as well as develop a list of those companies in each community. Once a definition and database of companies is created, then economic developers can begin to offer incentives and programs for those types of businesses to expand as well as seek out similar operations to relocate to the state.

Specifically, companies interviewed for the study cite the need for readily accessible grants and microloans geared toward organizations with the triple bottom line business model. Additionally, triple bottom line companies say they need a support structure or specific organization to assist them in training their supply base in sustainable principles as well as help them further their own missions.

Beyond Cascade Engineering, the study incorporated information gathered from interviews with West Michigan companies including Aqua Clara International Inc., Bazzani Building Co., Brewery Vivant, Busy Bea’s Services Inc. and The Right Place Inc.

For its part, the state’s top economic development agency does not specifically focus on attracting companies with a triple bottom line business structure, said Tony Vernaci, vice president of business attraction at the Michigan Economic Development Corp., in an email to MiBiz.

“We tend to focus on industries that fit with the core business assets of the state or geographies where strong outflows of foreign direct investment are happening,” he said in the email. “Programs such as Community Ventures certainly support the social component, but there isn’t much beyond that.”


COMMUNITY BUILDING

Proponents of attracting triple bottom line companies to the area cite a variety of factors that make those companies more suited for building total wealth in communities, particularly in economically distressed areas.

“The evidence is suggesting that those companies focused on triple bottom line work are the ones that are adding greater value to the community than someone who is solely out for the maximum return on investment,” Stough said.

In particular, triple bottom line businesses typically pay their workers higher wages and offer more robust benefits packages than their counterparts, Stough said. All of the companies interviewed for the report pay higher than the minimum wage for entry-level positions, while only two pay slightly less than the individual local living wage, which is just less than $10 per hour.

The study found that beyond offering higher wages and benefits, triple bottom line companies also give more money back to local nonprofits, neighborhood associations and other groups in the community, Stough said.

As many companies in West Michigan struggle to find talent, the region could be using the triple bottom line framework as a workforce attraction and retention tool, said Maki of Cascade Engineering.

“What we’ve found is that young people entering the workforce, whether right out of high school or college graduates, are really looking for companies that follow some of the triple bottom line principles,” Maki said.


POLICY CHALLENGES

While triple bottom line companies may benefit communities around Michigan, the metrics currently defining economic development policy may make it a challenge for those organizations to focus on sustainably minded companies, Stough said.

As it stands, economic developers rely on a project’s job creation numbers, capital investment and payroll to measure success, according to sources.

However, those metrics aren’t enough to gauge the impact of companies on the community, regardless of their triple bottom line status, Stough said.

“What those metrics don’t measure is how many of those jobs that were theoretically created were from the local area, how many of those local jobs that were created brought someone up from a lower social status to a higher social status in terms of economics, (and) what were the demographics. None of that is measured,” Stough said. “That’s all community wealth. If you can increase those kinds of metrics, you raise the whole fleet rather than just one ship.”

In addition to the metrics challenge, Dan Schoonmaker, director of the nonprofit West Michigan Sustainable Business Forum, thinks incentives for attracting out-of-state triple bottom line companies would be ineffective, since most of the companies economic developers target are either too large or are too entrenched in their own communities to move.

“I can certainly get behind the idea of increased economic support, but I think I would question the idea of attracting those (large) businesses,” Schoonmaker said. “These are not the type of companies that are going to relocate into West Michigan.”

Despite the challenges of creating economic development policy focused on triple bottom line companies, Stough sees any future policy that encompasses those businesses as another tool for attraction and economic development in the state.

“It’s not about not doing the other (traditional forms of economic development),” Stough said. “It’s just saying that there’s real value here and a missed opportunity.”

Read 3058 times Last modified on Monday, 12 October 2015 12:37

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