Everyone’s Business: Making Business Work for All
From a report by The Centre for Social Justice
In December 2016, the CSJ published a report looking at what changes at both a policy and board level might be needed to help businesses increase the societal impact of their activities alongside their commercial returns.
It acknowledged that business, by its very existence, is one of the best tools for social mobility that society has. It drives employment and economic growth which are of themselves a boon to the nation. In 2015 the private sector employed 21.8 million people in England alone and 66% of employers funded or arranged training or development opportunities for their staff at a cost of £45.4 billion.
Many businesses support employees to save for the future and to balance work and family life, including through pension schemes, maternity/paternity packages, shared parental leave and flexible working. And many businesses go well beyond this.
There are an increasing number of businesses that are working with wider social benefit specifically in mind. For some, aligning social, environmental and financial goals into the core of what they do is increasingly popular – this could encompass anything from a mission to advance health and wellbeing to developing and supplying renewable energy sources. Others are increasingly looking to social, environmental and financial goals in how they do their work – for example, cutting carbon emissions that come as a by-product of their work. While others are simply ensuring that some of their profits or staff time are given to supporting charities and communities.
The report highlights more than 20 specific examples of best practice currently going on in the business world.
Businesses are also embracing innovative models to achieve social good including the social enterprise model, co-operative model and B Corporation status. There are now 70,000 social enterprises in the UK alone – businesses set up specifically to tackle social or environmental problems and who reinvest most their profits in furthering this mission – contributing £24 billion to the economy (approximately 0.65% of businesses total contribution) and employing nearly a million people (representing 4.6% of the UK population employed by business).
This desire for social good should not be dismissed as do-gooding or a sop to society – it has huge benefits including to brand value and reputation, talent recruitment and retention, levels of employee engagement and productivity, and ultimately, to the bottom-line.
A strong and well-communicated purpose can boost financial performance by up to 17%. Actively managing and measuring corporate responsibility is hugely important to organisational resilience – companies that did this recovered faster from the 2008 financial crisis, with shareholder returns an average of 10% higher in 2009, than at those companies that did not.
Among consumers 84% say they try to purchase products and services that are socially and environmentally responsible whenever possible. 90% would also like to see a greater availability of responsible products and services. 79% consider a company’s social and environmental commitments when thinking about jobs. And 69% consider them when making investment decisions.
Any business not considering its place in society is selling itself short. And yet many are doing so. Bad practices are not necessarily widespread but a series of high profile cases have led a culture of mistrust in business: that too many businesses continue to prosper at the expense of society. Recent examples of this include businesses paying workers less than the minimum wage, businesses alleged to have installed software in their products to circumvent emissions regulations, several major banks involved in the Libor fixing rate scandal, and accusations of senior executives profiting at the expense of employees. If business and society are going to fully realise the benefits of working together and repair the damage of that public perception, there is much more to be done by both businesses and government.
This report makes 22 recommendations and gives 23 examples of how this can be achieved, but fundamentally they fall under three main themes:
Social sector businesses are a good thing – there should be more of them. The CSJ’s research has found several barriers, both real and perceived, that are hindering the ability of social sector businesses to improve their capability, scale and therefore impact.
Social objectives should be tied into the core existence of business. The review found that many businesses were finding effective and innovative ways of supporting social objectives, alongside delivering a financial return. It is in the interest of business, government and wider society that such approaches are further encouraged and supported. One key change would be making a ‘purpose declaration’ be made a requirement of incorporation to signal that the role of business extends beyond profit maximisation.
Stakeholder interests should be given regard closer to shareholder interests. Despite the contrary evidence base in relation to the business benefits, there is often pressure on company directors to prioritise short-term pressures and shareholder interests over long-term investment. This is despite the fact that such investment is crucial for long-term financial performance, as well as for value creation for society more broadly.
Download the report here.
Perhaps something you can circulate to senior management? Or if you are a director, discuss with the board and make some changes?
Retweet about this article:
From a report by The Centre for Social Justice, 10/01/2017