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Power to the people…but for what purpose?

A friend of mine works for a large multinational City firm, where some employees take home six-figure salaries and bonuses that are even bigger.

They are, by all accounts, a decent enough firm with a pretty good reputation for corporate social responsibility and a good company to work for. Each year they select a charity to support, which they do so in a range of ways – from employee payroll giving and corporate donations, to fundraising events and employee volunteering. Fairly standard stuff these days for any firm worth their CSR salt.

The centrepiece of their annual fundraising effort is a hike up and down mountains (though it could equally be substituted for a bike ride, a walk, a parachute jump or trekking in the Himalayas!). Staff are invited to raise money for charity by being sponsored for their efforts…

The firm stumps up around £300 for each member of staff who wants to take part and everyone has to raise £600 in sponsorship (though this is topped up by a central fundraising effort). So around £1,000 is raised per person in a good cause. But of course the lucky charity doesn’t get to see this amount. The costs of the trip (not including the time off given to staff) are over £400 per person. This money is paid to a private company who organise the trip – who no doubt make a healthy profit on the venture.

Meanwhile well intentioned employees try to raise money from friends and family to support a good cause. Their sponsorship forms don’t even include a provisio in smallprint that only 60% of your donation actually goes to support the charity in question.

Of course many people will argue that the event costs money to put on and this has to be met by someone and that without this type of initiative people would not be doing it and so the charity would be worse off. The market provides the opportunity and people pay what the service is worth to them. I don’t really have a problem with this type of initiative – though I think it would be good to see some not-for-profit organisations offering this sort of service – but I do think it highlights how limited our current ambitions are in relation to corporate social responsibility.

My issue is really with the lack of integration of corporate social responsibility into businesses’ core strategy and activity. Supporting good causes is bolted on to how firms do business, not integrated into their standard ways of working.

Environmental policies may seek to limit or mitigate against the negative impact of doing business, but how many firms have developed a business model that considers their impact from start to finish? Is spending power harming or helping society and the environment? Are resources deployed in ways that add value to the communities in which businesses are located? Of course maximising profits is required in the shareholder model for publicly listed companies…but with interest in ethical investment growing steadily, there’s surely a better balance between financial and social return to be had.

There are (arguably) a handful of firms that have embedded social responsibility into their corporate strategy and business model….but only (at best) a few.

Much of the focus – at least within the not-for-profit sector and to some extent within government – is on charities and social enterprises delivering goods and services. But this type of activity is dwarfed by the scale of private sector activity which has the potential to be a force for good or a ‘societal destroyer’.

Banking is one obvious example of a sector that can send shockwaves through society when profit takes precedence over social impact, as we saw with the recent financial crisis. However, with the right regulatory framework (for example with a Community Reinvestment Act) banking could easily be more ‘socially useful’ whilst still returning a fair profit for its shareholders – by investing in local community finance institutions.

We need to be far more focussed on making our businesses more socially responsible – particularly the largest ones that have the potential to be hugely damaging or be forces for good.

To date the Big Society debate has focussed primarily on ways to encourage voluntary effort and support more social activity. Even the Giving White Paper that seeks to support the growth of philanthropy focuses principally on individual giving. Far too little attention has been given to making business more socially responsible.

The responsibility for this sort of change does not rest solely with government or even with the private sector. As citizens and consumers we get the goods and services we demand (or perhaps more accurately, if we don’t demand different things we get the same crap we’ve always had). If Big Society’s ambitions (and I’d suggest we forget the labels here, but focus on what it could mean) are to be realised, we need to channel civil action into demanding more social responsibility from the firms whose goods and services we consume.

That’s why organisations like FairPensions are so important, in helping to make the link between how a company acts and its share price. FairPensions calls on investors to ‘recognise their power and responsibility as shareholders to improve the behaviour of the companies in which they invest in order to bring about a better world and a more sustainable financial return for pension fund members.’

I realise that these comments are not particularly new and are advocated by numerous organisations working in social investment. However they tend to be too rarely present in mainstream debate, even within the voluntary and community sector. Until we start making a noise, we are unlikely to see any great shift towards more socially responsible corporate practice.

The prime minister says Big Society should place power in the hands of ordinary people. What we do with that power is up to us.

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stuartmacdonald
stuartmacdonald
12 years ago

A couple of years ago following some work with BiTC I co wrote a Local Work which looks at how – and why – involvement in
local regeneration fits into businesses’ Corporate Social
Responsibility (CSR) strategies, and at the role business
could play in helping to deliver neighbourhood renewal. It looks at the practicalities of how partnerships between the public and private sector can work, and examining
some of the challenges of weaving together CSR and
neighbourhood renewal. The publication is free to view @
http://newstartmag.co.uk/wp-content/uploads/2011/01/LW72-CSR.pdf

Jill Carter
Jill Carter
12 years ago

Totally in accord with your views, Toby. You mention that ethical investment is growing in popularity. As far as I’m aware (via research we’ve done amongst investors and fund managers) it has had its advocates for several decades, but still has to prove itself in terms of performance vs other funds. Pension fund managers, for example, have a legal duty to get the best possible return, whether ethical fund or other. It’s frustrating that social responsibility so often has a lower priority than financial considerations – this is the challenging bit to change but over time I’m hopeful that we’ll get there. Public sector workers don’t seem to be getting the message that we all need to give up something to achieve longer-term stability. FS pensions have already been ended in the majority of private sector organistions

Steve Botham
Steve Botham
12 years ago

Toby is right to be slightly cynical about the climbing up mountains and general fundraising approach to CSR. It is quite an old model and whilst it might tick a few boxes for the organisations involved it could be a lot more meaningful. Obviously some organisations do get more involved with individuals and communities.
We need a new model – perhaps organisations can work together as a neighbourhood growth ‘company’ to help communities generate jobs and support skills development. People can be seconded to support business and finance plans, create legal structures, provide project management. Organisations could use this as a vehicle for ethical local investment into new businesses. Whatever the solution we need some innovative thinking – the old methods don’t hack it!

Marice Cumber
Marice Cumber
12 years ago

Totally agree, CSR needs to be about more than the raising of money and employees getting to climb a mountain.

If CSR is to be effective, it should engage with the output in a pro-active way. So office fundraising, cake sales and wearing a red nose is not going to change or impact on people’s experience of others, or use the business’ value for the benefit of a community etc.

New innovative models need to be put in place that reward all that are engaged and involved and then knowledge and support will be accessed and used in a more meaningful way to all.

Iain Bennett
Iain Bennett
12 years ago

Following on from Marice’s comment, there are ways in which CSR projects, properly structured with due regard for the nature of the client firm’s core business, can develop and share skills between client and beneficiaries. Companies and consultants alike should demand more than a tick-box solution and a nod to the supposed ‘triple bottom line’ – like most things that make you feel good, it can be really good for you and your business!

Toby Blume
Toby Blume
12 years ago

@Stuart – thanks, looks really interesting. Important we build on what’s already there – rather than starting from scratch over and over again!

@Jill – it is frustrating and, you’re right there are some systemic barriers (like investment fund management and the whole financial product ratings system…which the credit crunch showed is based on utter rubbish!). But there’s also so much more that can be done despite these barriers.

@steve – i think you’re right. but there is stuff out there that is good (or better than most of what we’ve got). the appropriate models and approaches will come…but i think consumers have to be much more demanding and proactive in our expectations of companies to drive change and innovation.

@Marice – yup. though my intention was not to belittle the fundraising efforts of volunteers and employees. they do make a difference in generating funding that the majority of the VCS (who are informal community associations) rely on greatly to survive….but it’s only part of the picture.

@iain – you’re right, there are indeed examples of better practice and even one or two that appear (on the face of it – i dont have any direct knowledge) to have integrated their corporate strategy, business plan and supply chain with reconcilable social, environment and economic objectives.

thank you all for the insightful comments!

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