Matthew Taylor, Chief Executive, The RSA.
Our generation – twentysomethings fluent in the language of austerity – came of age during a boom-bust cycle of devastating proportions. Our twin certainties are that recessions follow growth in a vicious circle, and that with each spin of the wheel the poles of inequality are flung wider. Could Corporate Social Responsibility (CSR) provide a potential antidote?
CSR hit the mainstream during the 1980s. At a time when ‘greed was good’, CSR was often used as a marketing tool to reassure the public that business was moral. In more recent times, cheerleaders for CSR insist that it’s about more than just profits. Last year, a UK government report defined CSR as the ‘voluntary action businesses take over and above legal requirements to manage and enhance economic, environmental and social impacts’.
This fuzzy strap-line means that a variety of activities are heralded as CSR, activities which – from what I’ve observed – vary in the depth of the collaboration between business and society that they reflect.
The first form is simple philanthropy, A corporate donates a sum of money – and often voluntary time – to a charitable project. The subsequent benefits to the charity is often used as a marketing tool by the corporate and the voluntary activity is, sadly, often unskilled and tokenistic.
A more engaged activity is professional donation: A team within the corporate or corporate foundation provides grants based on clear strategies. Staff engage in skilled volunteering, using their expertise to help charities and small businesses build their capacity for instance.
Finally, the most committed form of all is embedded CSR: All corporate decisions are made for social, environmental, and governance reasons. Business is driven by values, not profits.
Philanthropy and professional donation are well meaning, but lack the muscle to have a real impact on inequality. Corporate donations represent only a tiny proportion of the societal impact of business. Last year, the total donated to charities and NGOs by FTSE 350 companies was £369m. A huge figure – until you consider that in the same period those companies reported net profits of £111.8bn, and revenues of £2.1trn.
For corporates, the total given is a tiny factor of the total taken, and much of that lesser sum is misspent anyway. Faced with such a dilemma, businesses could donate more or, better, shift to an approach which properly acknowledges their full impact on society. With hugely powerful stakeholders, creativity and vast networks, corporates can solve some of society’s biggest problems – if their power and purpose are facing the right way.
At Hitachi Australia, CSR director Sarah Cobourn is doing just that, driving shared value through the company’s social innovation business. The business empowers employees to use their advanced IT as a way to engage with social problems. Recent initiatives include an app that uses traffic information to stop bottlenecks during natural disasters, or the spread of disease in an epidemic, and a scanner that identifies everything in your food or medication.
And shared value doesn’t have to be high-tech. High-street stalwart Timpson’s has been quietly employing ex-offenders directly from 70 prisons in the UK at the same time as shoe-fixing and key-cutting. James Timpson recruited their first ex-offender 12 years ago, and today over 10% of Timpsons’ employees are employed straight out of prison. Russell Zecanovsky – who runs the Wimbledon branch – went to prison 3 times before being employed by Timpsons, and told the Telegraph “there’s no rehabilitation for prisoners outside prison apart from companies like Timpson that are prepared to give you the chance.”
The societal impact of these initiatives is massive. Less than 1% of ex-offenders at Timpsons have reoffended, compared with the national short term reoffending rate of almost 60%, which costs the UK economy £13bn per year. Advocacy from the initiative also led Business in the Community (BITC) to launch the Ban the Box campaign in 2013, asking employers more widely to remove the tick box that requires applicants to reveal if they have criminal convictions.
So, CSR can have real impact. But only if business engages with its complex web of stakeholders (employees, customers, suppliers, shareholders et al) and faces up to deep societal problems.
Let’s ignore quarterly profits. Success can only be demonstrated by less inequality, increased diversity, long-term economic sustainability, and a convincing approach to climate change.
Emily Fry works for Barclays Community Investment but writes here in her personal capacity.