Strategic corporate citizenship
CSR is so last Thursday! Language and terminology evolve. The concept of ‘corporate social responsibility’ has been around a long time, capturing the need for companies to consider a ‘triple bottom line’ of social and environmental benefits as well as economic profit.
Environmental management systems are now well established. Whilst the battle to protect the planet is clearly not yet won, with global warming still polarising opinions, many companies are now conscious of their environmental footprint and take steps to mitigate their negative environmental impacts.
In the past few years since the crisis of free market capitalism and the ensuing period of austerity, the focus of CSR type initiatives has been on the social side of the triple bottom line. Less save the planet tomorrow and more help people affected by recession today. As government budgets are cut year after year, there is a gap in meeting the needs of the weak, poor, disadvantaged and vulnerable.
How should society respond? What is the role of business? Trust in business is at low ebb, following excesses of short-termism, greed and fraud. There is an opportunity for business to rebuild goodwill and its reputational assets by acting as a good ‘corporate citizen’, playing its part in what can be termed ‘blended solutions’ in which the public, private and third sectors work together to create ‘social value’:
- The public sector identifies need and acts as the commissioning agent
- The private sector can leverage its resources for social as well as corporate good
- Charities and third sector agencies are the front line delivery agents
Academia can also play its role, acting as a catalyst by bringing the parties together. In addition, latest developments in social value metrics at, for instance, the University of Northampton, allow for the monitoring of social value, a previously intangible concept which is now capable of measurement. If you can measure it, you can manage it. For business, social value becomes a non-financial KPI that, properly captured, can have a significant impact on an organisation, its morale and reputation – as well as the local community.
Companies such as Ricoh UK are doing some ground-breaking work in this area, tracking the effect of their social initiatives and impact on employee recruitment, retention, absenteeism, performance and satisfaction.
To use economists’ terminology, social value focuses on minimising negative and maximising positive ‘externalities’, i.e. the social impacts of a business. In the same way that environmental management has evolved over the past 30 years on the back of environmental KPIs, so the rapid development of social value metrics by organisations such as the Centre for Citizenship, Enterprise and Governance (CCEG) is driving the ability and motivation of firms to act as responsible and engaged corporate citizens.
Banks make money from mortgages. Changing economic conditions can lead to foreclosures and homelessness. Working with homelessness charities, banks can help train and rehabilitate homeless people, who can cost society up to £20,000pa each in the NHS and criminal justice alone. £100,000 of bank support can be leveraged to a significant multiple of this figure in terms of social value, through reductions in the cost of suicides, hospitalisations, court appearances etc, as well as long term savings in unemployment and other welfare benefits.
This sort of enlightened approach is growing, driven in the UK by the 2012 Social Value Act which requires bidders of public procurement contracts to take into account the economic, social and environmental well-being of the area in their bids. However, to do this charities and businesses must get better at talking each other’s language, but for the private sector the keys to good corporate citizenship lie in:
- Targeted intervention addressing local need
- Strategic links to the organisation’s operations
- A focus on outcomes and impact not inputs
- Maximum leverage in terms of savings for society
The potential benefits of strategic corporate citizenship? A better society for all as well as enhanced long term shareholder value, through the measurement of an organisation’s social impact and the rebuilding of its reputational assets.
Adrian Pryce is Senior Lecturer in Strategy and International Business at the University of Northampton.