It is easy to talk about treating society as a stakeholder, but how can a business make this a reality? We devoted our 8th February Crowd to the practical steps a business can take to factor society into mainstream business decisions. It cuts to the heart of what a post-CSR world looks like.
Whilst there is widespread agreement that treating society as an “add-on” does a disservice to business and to society, there is less agreement on the “how”. Some argue our understanding of social impact will come of age with new measurement methodologies, whilst others fear more specialist language is counterproductive.
Alex Edmans drew on his excellent TED talk to set the scene. He’ explained why the answer to "Do businesses exist to earn profits or for the benefits of society?” is "Yes"… how confusing is that? Axel Threlfall corralled the thinking of experts from SAB Miller, Goldman Sachs and Starbucks, and the CEO of Catch 22. We covered issues such as;
Whilst most agree there is good reason to factor society into mainstream business decisions, there is less agreement on the “how”. Some argue that a lack of measurement is resulting in social impacts being ignored. Others believe today’s measurement tools lack credibility and drive superficial behaviour. Can you see how we can enter a post CSR era?
Funding for some projects is now linked to measuring social impact but this is so difficult to measure
The lack of a common measurement approach. We need this to allow us to benchmark.
The solution is so complicated
Not a chance you're going to achieve anything in 3 years (from a boardroom perspective)
Hard to make the case for change in the company unless the s*** is hitting the fan
What level should we being looking at our social impact? A company or a product level for instance.
How do you measure the right thing? How do you qualify what to look at and where to start?
Where do we find out 'how' to do it? Do I use tools?
How do you leverage what you do on the ground?
What comes first? Measuring or communicating?
People won't buy products unless you are delivering social value
Not enough examples. We hear a lot of examples in the developing world, but what about in Western society?
Opportunities / Ways forward
Regarding public services - there is no money in public services so need to look at innovative ways to attract funding. This provides one way to do that.
If you understand each other's needs, then you normally find that someone else usually has the answer.
Regarding construction – building design and the shape of infrastructure then designs and shapes our lives. Need to put more effort into the design phase to extract or build maximum value. We should expect more work here as the lifetime of assets are expected to be around 50 years.
Hire tri-sector people to drive the effort as they understand all sides of the story
The value of a target driven business
Always present the business case
Need to mix quantitative and qualitative approaches. Need to bring in the human story.
Need business principles aligned to social aspects
Don't go for perfect - the number isn't important. The story is. Make the story as you go
Need separate examples of:
Companies that preserve or protect large public commons, and then measure the social value of assets – developing and Western world
Companies that don’t preserve or protect large public commons, which could align with measuring the social impact of products or activities in the Western world
Take CR into different departments. Empower champions to go and evangelize in their departments and they align the message to their needs. Changing the story to fit.
Get all sectors together collaborating
Can we define social impact?
• It’s how we do well for society while making good decisions for the business.
• Not a specific term we use, but one I take to mean supporting communities in the way that we can.
• It’s a matter of having an impact in a specific area aligned with your core business e.g. health and well-being.
Does it matter where it lands?
• In an ideal world, we’d understand what it is we want to achieve and work backwards from there. But people aren’t always there yet; they want to see more easily the value it adds to their business.
• Many people and organisations are capable of doing good things. But you need to choose right. Training young people in employability skills is only useful if there are enough jobs for them to go into. Otherwise the much harder activity is to build the job market or change practices/behaviours so that certain types of people get hired. Some corporates take the easier route.
So what’s the best way to go about it?
• Significant, targeted charity/corporate partnerships can work very well, where there’s a “shared value”, strong outcomes on both sides, and a sense of collaboration.
• Depends on your governance/corporate structure. When your staff work in regional offices and are given the freedom to develop programmes that fit their local context, it becomes harder to tell a coherent story - but the impact is no less powerful.
• Perhaps we have unreasonable expectations of business; they should be tackling social challenges that are manageable, realistic. Or perhaps it’s going on a journey that counts: starting small and then growing their ambition so they’re making a meaningful contribution in a particular area. Perhaps we should be trying to transcend our own individual organisations and collaborate to address a single issue?
• The short-termism challenge in the corporate world applies to social as well as commercial challenges. We need to see a shift in time-frames, whereby corporates are investing for a 5-10 year pay-back, rather than immediate transactional results.
How does measurement fit this picture?
• Measurement is really good for “quick comms”. An anecdote of impact can be more compelling than a really clear, well-defined measure.
• Thinking about measurement in a sophisticated way is still a relatively new concept. Some people don’t make the connection because it doesn’t necessarily feel natural to them, or it just adds another thing to their list of competing priorities.
• For this reason it needs to be linked to the core business activity, so it’s relevant to what they do. We need to “choice-edit” the things we do, because it sends a stronger internal and external message.
• However, there does seem to be a growing internal senior-level constituency for proper impact measurement.
• This is where support is lacking. We’re still trying to figure out what is the right way to measure all of this activity – an effort made harder by an acknowledged shift to a more localised approach.
How about an overarching framework for reporting impact?
• There’s some conflict between those who are driving down the standardised route and those who say it doesn’t fit their purposes.
• It seems possible to develop one when you think about measuring a broader societal change, say to lower obesity rates.
• It could have the added benefit of creating a structure that encourages behaviour change at a senior-level.
Traditional thinking has held that the express primary purpose of business is to maximize profit – as enshrined in businesses obligation to maximize returns for it’s shareholders. Milton Friedman, who held that by prioritising profit social good would naturally follow, typified this view.
In recent years the conversation has evolved to consider a more nuanced relationship between profit and purpose: most clearly reflected by the rise and evolution of the CSR function, and the debates that have surrounded it.
New research conducted by Alex Edmans (London Business School) found that in terms of employee wellbeing, socially responsible organisations consistently performed higher than their peers between the period 1984 – 2011. Edmans argues that this offers a compelling reason for businesses and their investors to change their traditional narrative and recognize that businesses exist to serve a purpose, and by doing so they achieve profit.
Question for discussion
Most agree there is good reason to factor society into mainstream business decisions; there is less agreement on “how”. Some argue that a lack of measurements resulting in social impacts being ignored. Others believe today’s measurement tools lack credibility and drive superficial behaviour. Can you see how we can enter a post CSR era?
Key discussion themes
1. What is the motive for measuring social impact? How can this be catalyzed?
• The financial bottom line: many organisations are still immature in their approach to social impact and are still focused on the financial impact on the bottom line.
• To repair a damaged reputation: reputational distress appears to be one reason some businesses are driven to focus on social impact – to provide a balancing “good news” story.
• Understanding customer confidence: customer confidence or trust can often be a priority for measurement since it is fundamental to all businesses.
• Increased concerns about inequality: there has been an increasing public narrative about the extent of inequality and part of the shift towards an increased focus on social impact stems from this.
• The digital age: the digital age could be one contributor to the increased focus on this agenda. Information about businesses impact and behavior is more quickly accessible than ever before, to a larger audience than ever before putting businesses under ever-greater scrutiny.
Although there has been a step change in the last ten years there is a need for many organisations to mature in their approach to social impact before there will be real opportunities for a more creative discussion and dialogue.
2. What does meaningful measurement of social impact look like?
• A highly tailored approach: there are strong arguments for a highly tailored approach to impact measurement; organisations focus on very different metrics even at the bottom line. For example, while most organisations will focus on revenue generated, bottom line for state funded organisation may be cost saving. “Soft” outcomes like consumer trust or customer engagement can be extremely hard to measure and appropriate metrics will vary widely depending on the business in question. Typically these need a combination of approaches to be effectively measured – behavioral proxies can be one good way to do this.
• Focused on outcomes: output metrics such as “number of people reached” are not meaningful and can be harmful to the wider agenda since spurious claims debase the currency of social impact metrics more generally.
• Focused on the customer: understanding the customer should be central to meaningful measurement; it should be about what appeals to consumers.
• Demonstrating “net positive”: Fundamentally, demonstrating some positive impacts is not enough but the CSR function perpetuates this narrative. A radically new approach is needed whereby businesses are expected to demonstrate that they are “net positive”. This approach would require businesses to be transparent about a far wider range of issues; tax, diversity, philanthropy CO2 etc. and ensure they can’t hide significant negative impacts behind small successes. This is the real key to building trust, not individual good news stories. Currently there are no real examples of a “net positive” business – for example in the Fortune 500. Although Kingfisher have a stated aim to do so (http://www.kingfisher.com/netpositive).
• Focused on your long-term strategy: If you connect your long-term value chain strategy with environmental, social and governance (ESG) the only metric you should need is the delivery of that strategy.
There are no easy answers to what good measurement looks like and this is why it takes so long to make this mainstream. There is a clear need to keep pushing the social impact agenda forward in a way which encourages people to take a long term view of what success looks like.
As a rule of thumb, organisations can reduce their carbon emissions by 5-10% through employee engagement and with little capital cost. In your opinion, which approaches have the highest return on effort invested? With Tesla’s Powerwall and other carbon reduction technologies emerging, how important is employee engagement to future carbon reduction strategies?
- All employees have different priorities so they won’t be motivated by the same things – e.g. a shop manager will want shop assistants to close the fridge doors to save money and energy but doing this will just take the shop assistant time and there is no incentive.
- Use of technological fixes is effective but it can be a missed opportunity to engage with employees
- Language around sustainability is a barrier – carbon is seen as boring by many!
Red Flags (warnings)
- Benchmarking, competitions and leader boards are useful carrots, but be careful that you don’t disengage the people at the bottom of the leader board if they have no chance of winning to competition as they may not bother trying.
- It’s always going to be easy to engage the real green employees, but they only make up about 5% of the workforce, many others will be more difficult to engage. If cutting carbon is your goal, it might be more cost effective to focus on big wins technological wins like addressing energy use in data centres, which can lead to huge carbon reduction.
- Incentives are useful, but you’ve got to be careful you don’t incentivise the wrong kind of behaviour. Incentives can prevent people from being creative, innovative and curious.
- Cutting energy should be a key objective as normally this will both save money and cut carbon
- Measure energy use in buildings and calculate usage per square foot. This helps to benchmark different properties in a portfolio, or allows you to benchmark against your peers
- It’s important to humanise the conversation as carbon is perceived as boring!
- Make use of people’s desire to comply with social norms (‘social proof’) and benchmark against your peers
- Best results come when you combing technological fixes with behavioural changes – it should be ‘both and’ rather than ‘either or’.
- Any time you engage with your employees is going to have knock on benefits that aren’t just to do with carbon reduction so it’s a win-win
- Could it be a good idea to tie carbon reduction into personal performance - e.g. give people information on their business travel carbon emissions with their payslip?
- A change in company culture from the top down is needed to get people to reduce flying for business travel
- Data is key, but it must be presented well in an engaging way. Infographics, videos and animations are all useful tools for busy people who don’t have time to read lengthy reports.
- Case studies and examples of best practice are important to tell stories
- Make use of other ways that employees engage with the business, for example through regular meetings or pension discussions.
- Change the language so you are not talking about ‘sustainability’, ‘environment’ or ‘carbon’, make it about ‘business’, ‘innovation’ and ‘business success’.
- Make use of millennials as an engaged group with energy
- Conduct an internal consultation; ask your employees what would help them feel engaged! Make sure you include the low level employees as well as the senior ones in the conversation.
- Run a ‘Business Green Week’ where you can get employees to change their behaviour for one week only. It’s more easy to get buy in for a finite amount of time, it’s fun and it often leads to longer term change.
- Staff at a car dealership were motivated by translating the carbon savings into the percentage of a car they would have to sell to make the same amount of money that they are saving in energy.
- Microsoft has an internal carbon tax- the business units are charged an internal tax by Microsoft based on their energy usage. The money goes into a common fund that invests in environmental sustainability projects – i.e. they are voluntarily charging themselves, and using that money to build solar panels and wind farms.
- Businesses in Bristol were motivated by taking part in a business network where they could share best practice on carbon reduction and win awards for good performance.
New connectivity created by technology can build value whilst having positive societal outcomes. This is particularly true when assets are connected to the cloud – smart vehicle systems are reducing traffic accidents, wearable tech is improving health. Where does the table see the greatest opportunities, and how important is it that business is trusted?
• State of play. Technology covers an enormous variety of products, information and services. In addition, data is evolving and advancing very quickly, making it hard to keep up and leverage all the developments. This transition into an information economy is probably a good thing and ultimately, will yield a lot of benefits for society.
• Key opportunities. Key opportunities for connectivity to build value and create positive societal outcomes have been identified in the areas of supply chain transparency, connectivity with the customer, using sensors to prevent asset deterioration and provide security for employees, digital business, internet of things (IoT) and machine learning / AI, and smart cities technology.
• Technological introspection. Connectivity can allow for a better understanding of our lives and how to improve this (e.g. food shopping for a healthy diet can be improved through the understanding we can achieve via wearables).
• Supply chain. Most popular by far, is the interest in gaining transparency in supply chains. In a globalised world where original suppliers are often 5 or 10+ times removed and ethical practices are few and far in between, identifying the origin and processing of goods has never been so important.
• Product creation. How far do you take connectivity in the supply chain? Perhaps all the way to a factory in Bangladesh where workers wear a device that tracks the hours they work, breaks taken and the factory’s working conditions, and therefore allowing the consumer to see the exact history of the garment’s creation.
• Employee welfare. Rather than using auditors to collect data at a factory, overcome possible mistakes and the potential for corruption by contacting workers directly to collect accurate data. This is currently done by Marks & Spencer, where an intermediary is used to contact workers on their personal mobiles to get direct input on the working conditions, wages and other areas of employee welfare. Mobile phones are a good option, as they are already present in most developing areas of the planet. Using an intermediary creates sufficient space between employee personal data and their employer.
• Corporate transparency. Companies are becoming more transparent with the increasing levels of data available in the public sphere. Consequently, they must operate in a moral and ethical manner or face public scrutiny (e.g. public pressure on large companies to pay their share of taxes).
• Customer transparency. Customer data has long been a point of interest for business and dates back to providing store cards that give points and tailored offers in exchange for customer data. By using connectivity to enable customer data collection, we now see cameras in shops that collect a wide variety of data, including demographics, shop floor footfall, products of interest, etc.
• Purchasing with data. Holland and Belgium now provide mobile contracts where payment is not made with money, but by providing access to your Facebook data and friends list.
• Snips. Snips is an artificial intelligence app that provides contextual intelligence for connected devices (e.g. it can identify an incomplete address in your diary and update it with complete information). Interestingly, this is done locally on the device and data is not sent away to a cloud for analysis. http://snips.ai/
• Data-driven democracy. Block chain is impacting so many different industries (e.g. history of financial services) and creating more democratic outcomes as a result of data.
• Neighbourly. M&S were early investors in Neighbourly. By investing in this platform M&S can see the connections stores are making in their local neighbourhoods, identifying topics and issues important to customers – on an incredibly local level. The platform has provided them with a new way to look at the same data. https://www.neighbourly.com/
• Smart cities. Smart cities are geared to make our lives easier, but will also have other positive social outcomes as a result. For example, they help find parking spots, which in turn mitigate traffic and pollution. They can also advise on the best routes to take for paramedics to reach an accident or for residents to escape weather disasters.
• Asset servicing. GE lighting are installing sensors in their lighting fixtures to predict when assets need servicing and to prevent asset failures.
• Customer behaviours. LED lights are also a gateway to gathering other data that improves business products and services and shape the customer experience. Lights can track all products on a shelf, identifying them like a barcode. If a customer picks up a bag of rice and then puts it back this can be monitored by the tracking device in the lighting system.
II. Red flags (warnings)
• Which data? Collecting consumer data is a primary focus for business. Though understanding which data and how best to process it can be daunting given the scale of big data.
• Catching up with the data revolution. Where is the data going to go? Who owns it? Will customers give up data? Perhaps, if it gives them a better life, but how much improvement is sufficient? How should the data be presented? Large data dumps are insufficient for gaining insight and telling a story.
• Data CSR. Companies have responsibility to protect the people they collect data on (e.g. workers in the supply chain), etc.
• Future proofing. Build technology that is intuitive, and therefore doesn’t grow irrelevant in 5 years’ time is just as important as building technology that provides value.
• Data is a choice. Marketing can become very invasive and there is a fine line between providing a useful service and going a step too far (e.g. funeral homes that provides mortgages).
• Regulating power. Governments and business need to catch up on the regulation of data. For example, LinkedIn knows a lot about its users and can even suggest connections from many years ago (how is this possible?). Businesses hold a lot of power through data, often more than perhaps many realise. And this is without sufficient regulation.
• Big brother. Who’s distilling the data now and in the future? Why do they have access and are responsible? Who regulates the regulators?
• The ‘opt in’. Retailers should ensure they get customers opt in, however this isn’t always straightforward and can sometimes come in the form of not opting out. This raises flags around data ethicacy.
III. Questions for further discussion
• How do people think 'our connected world' will alter the power play between business and the consumer? Further, will connectivity ultimately create sufficient transparency, to the point where consumers will no longer need to blindly trust business?
• Technology covers a vast array of products and services. Not to mention, connectivity can be applied in the majority of scenarios where technology intersects with humans. As such, where should sustainability professionals and business leaders focus their attention first to identify the most promising opportunities for positive societal outcomes? Are there indicators, metrics or social sector insights we can use to support our prioritisation?
Should Social Impact Assessments be more widely used? Considerable expertise has been developed by the extractives and oil & gas industries, particularly for the purposes of securing international finance. We ask whether SIA methodologies could be applied to mainstream sectors, in a similar way to Environmental Impacts Assessments?
How can the social aspects of an organisations impact be effectively measured?
• Unlike environmental impact which is easier to quantifiably measure social impacts have a broader range, with impacts which are more difficult to place a specific value on.
• One solution suggested was that a social programme may have an element which is quantifiable which helps to measure progress, for example job creation figures. However, this may not be true for all programmes, especially when comparing multiple programmes with different circumstances/aims.
• Design of a programme can have an impact on how easy impacts can be measured, it may be more appropriate to look at impact from a strategic level rather than an individual programme level.
Social Values Act
• Government mandated social impact requirement for public contracts.
• Example of Manchester Schools and sourcing of milk, what are the added benefits offered in addition to price considerations. Such as: in class education or site visits for school children.
• In this example, how do you objectively compare between the added benefits offered by different organisations.
• Is a measurement methodology needed?
• Maybe a single approach isn’t of use as too many diverse aspects to be covered, rather setting up the programme/activity with a key set of bespoke KPIs may be a more helpful approach.
Would a social impact standard be of benefit
• Already several standards, (too many?) how can a standard cover all the variety and complexity of social impact?
• Discussed the social financial aspects, how can social benefits be included into financial return calculations; would like the positive societal benefits of an investment to be a larger consideration, but compared to financial return on investment social benefits are much more difficult to measure/show.
• A tick box mentality or prescriptive methodology is not likely the answer, although the alternative may be difficult to audit.
• Many boards/companies operate in discrete measurements (£ or kg CO2) if impact is less tangible how can board level buy-in be achieved? – have to make sure that impact is material to the company and offers benefit to the business.
• Difficulty in translating between comparisons amongst different companies.
• Need some sort of metric as stating “Going really well” doesn’t have same impact as quantified improvement.
Discussed the potential for an organisation such as British Standards to help create a potential social impact assessment solution, if indeed there is a need for one.
• Discussed the process and motivations for BSI to become involved in creation of a standard or guidance. For example, if financial institutions developed a common approach BSI could bring additional expertise/considerations to help formalise an approach
• It may be more appropriate for BSI to create a more generic methodology to help guide social impact assessments; or provide a “knowledge tool”.
• Guidance may be most useful at the higher strategic level to help guide from the start of a project.
• Difference between social impact and measuring social investment
After discussing what we mean by social impact investing, we’ll look at its role in business strategy. Is it a financial instrument for the strategy team, a replacement for philanthropy, or a string in the bow of the sustainability team? What’s stopping it becoming a mainstream activity?
There was a discussion around the table regarding expecting a return on your investment. If you assume that not all of the money will be paid back, is this more another form of philanthropy? The table agreed that as long as some return is expected, these should be considered as investments rather than donations. Some considered a success social impact investment as one that returned the capital with no additional interest which could be used again for another social impact investment.
The table discussed the aims of social investment; it needs to be deliberate, targeted and measureable to be able to understand if the investment has had social returns.
ZSL – RHINO CONSERVATION
• In this scheme, ZSL will become a service provider. The main work will involve building interventions to protect the rhinos and working with the local community to educate and involve them in the interventions.
• This will be a pilot scheme to test the intervention and develop the KPIs to track the progress.
• ZSL are looking at alternative finance means for initial investment, which includes exploring a blended model drawing on revenue generating opportunities to collaborate with the conservation interventions.
• The United Nations Development Programme will provide return on investment based on results.
MERRILL LYNCH – SUPPORTING THE ARTS
• The Cabinet Office found that many art institutions were unable to access traditional financing options from banks and so convened a programme to create a fund to support these organisations to scale their operations and grow their social impact by receiving low interest long term loans. The Arts Council contributed £3m to this fund, Esmee Fairbairn and Nesta added another £1m each and Merrill Lynch supplemented the fund with an additional £2m.
• Six organisations are to be loaned between £250k and £700k over 5-10 years at an interest rate of usually 2-3%.
• The application process included information both for the financial return model and a measureable social impact.
• These initial loans will be distributed in the next couple of months with the aim that this will act as a pilot scheme to scale if shown to be successful.
Will we look back in 10 years and think that social impact investing is successful?
The table felt that in the future hopefully, all investment will be impact investing and it will not be sectioned off as it is now. It was hoped that in the future, we will have a clearer understanding of the impact of all organisations, including corporates. Once that has been achieved, we will have a much clearer understanding of how to invest in a socially responsible way.
With considerable progress being made in developing a framework for measuring natural capital, we ask how it should relate to social capital. What might be the benefits of closer integration… should they be part of the same equation? What does the table think about developing a Social Capital Protocol, mirroring its Natural cousin?
• Is there enough of a business driver to develop a social protocol?
• Measuring intangible points, needs one umbrella organisation
• Lots of ways to measure currently
• With standardised framework to bring together different methodologies
• Natural capital asks the question – what does value mean to my business?
• The natural capital protocol starts the conversation and questions decision making as a result
• Using a monetary value allows everyone to speak the same language – it’s relative and scalable
• It is a business resilience issue
• Many of the methodologies are intangible
• Can’t manage what you don’t measure
• Financial world currently turned off to issue
• Experience of the natural capital protocol – scoping quantities is a major part of the process before you get to valuation, e.g. Skanska identified value of apprentices
• Good that finance team is involved
• Don’t necessarily need standardisation though – is it achievable?
• Standardisation still has some flexibility and differences between methods however
• Does the framework allow for engagement? Yes, drives engagement – younger graduates always are more interested and have more time
• Challenge: Finance community need to think more long-term
• Natural capital is becoming more popular and there is more interest
• Need better connectivity, collaboration
• Instead of framework, one company sets standard for best practice – would this be someone newer? Less successful/smaller company?
• Yes, do need to justify decisions to stakeholders/senior figures/investors – cost savings, resilience to climate change, want to put business case forward, but don’t want to spend time valuing everything
• Any companies affected by Social Value Act of 2012? All Government procurement has to report on social, economic and environmental impact of work – human, natural and social capital
• Social and human impacts are more positive externalities – natural generally more negative
• Most businesses don’t know about their impacts, e.g. companies that don’t value their staff, e.g. motivation linked with performance
• Lots more companies in the middle of this though
• Bank/finance sector – reputation damaged by financial crash
• Embed strategy formally to build employer brand
• Need to do more than just make money
• Prediction: framework within 20 years
• Natural capital protocol feels new, but lots has been going on for a long time before this
• Can’t just rely on millennials – need to generate enthusiasm from everyone
• Apply natural capital thinking to social capital
• Impacts to food retailers, customer responsibility – e.g. alcohol, unhealthy foods – impacts of this not discussed – e.g. obesity, alcoholism – issue not addressed
• Social negatives need to be better discussed – need to acknowledge negatives to drive innovation and transform these into positives
• E.g. natural capital measurement mostly looks into negatives
• Skanska has measured their natural capital, but still an ongoing process
• Is time put into making framework better spent in acting? Likely yes, but still important regarding knowledge transfer, etc.
• Marketing guidance would be helpful, e.g. promotions targeted at children – is this technique ok if leads to long-term detriment to child?
• Natural capital protocol good technique of consulting multiple companies in different sectors
Many believe the SDG’s are an opportunity to reset corporate sustainability strategies and to step up collaboration with others. A small number of companies have already linked their sustainability targets to the 17 goals, whilst others expect them to trigger new forms of business / NGO partnerships. Does the table agree?
- There is a real absence of government actions; the UK government has not addressed what it will do to meet the 17 SDG's. It is important for us all to know the UK government's commitment to the SDG's.
- The UN has not finalised indicators and targets, and hence why the UK and other countries have not implemented the SDG's. However, currently there are discussions within the UN group about what metric/measures to introduce in the UK, and it may not be until the end of the year (2016) that the indicators are released.
- All participants agreed that the UK Government is an important catalyst for change
- Another catalyst group is consumers/citizens and specifically millennials, although there’s a genuine concern that millennials are surveyed continually but rarely empowered to co-create solutions
- The danger is that top management create platforms for older people to make change in company, but the challenge with this is that you get senior managers who are less keen to drive change in a passionate way than the millennial generation.
- Some agreed that they find it difficult to implement sustainability initiatives in their company because investors are giving priority to financial performance. There is a real challenge in linking business KPIs with social KPIs.
- Addressing the SDG's depends on the organization's priority, as there are some organizations who are financially driven and some who are more socially driven. There is no obligation for companies to be socially driven.
- There is a common agreement that companies address the SDG's by linking the goals to their business operation i.e. the SDG's can be used to codify what the company already does well.
- "People don't know what they don't know". The challenge is that not all people are aware of the SDG's and understand what it means – how do we start raising awareness and who has the ultimate responsibility in doing this?
- There are a lot of companies that do not know how to implement sustainability initiatives and therefore use the SDG's as a base/starting point and then tailor their initiatives.
- The challenge is how do we make people understand the SDG's?
- Sustainability should not only be a company goal, but change should start internally as it is about making all departments within an organization aware about the SDG's and how sustainability can be incorporated into the business strategy.
- SDG's need to be a metric in financial reports, which can affect the company share price.
- The key is to first look at the business and what the business does to meet the SDG's, and then improve to the close the gap.
- The value is to see business become proactive than reactive.
- Companies should evolve in addressing the SDG's instead of completely changing their business operation; it will take time to implement change.
- The social impact is how top management run their company; there needs to be a multiplier effect where companies implement SDG's for one operation/supplier and apply this to the others.
- The SDG's activities should not centrally be around companies funding charities and NGOs, and instead should be more about building collaboration to work together towards achieving goals which will have a real impact.
- Some agreed that it is important to first provide awareness on the meaning of "sustainability" and "sustainable development".
- Most participants agreed that it is not about making people understand each SDG's, but about how to make people aware of what they can do to implement; ultimately it is about translating the goals into a "user friendly" language which everyone can understand.
- For companies to meet the SDG's, they will need to collaborate and work together with their suppliers and align company and suppliers as one.
- One of the participants gave an example during a sustainability workshop: the speaker asked an audience of 100 marketers who had heard of the SDG's and only 5 had.
- Another participant gave an example of implementing sustainability initiatives in their company and then having to cancel due lack of financial budget for the project.
- One of the participants who works for a technology manufacturing company mentioned that the company addresses the SDG's by delivering its "digital skills programme"; the company can do this as it relates to their core business services/operation.
What are the new models that allow corporates and charities to more effectively achieve social impacts? Going beyond traditional philanthropy, why are some companies using their skills to help their charity partners, and others are forming true partnership based around common goals? Are we witnessing the dawn of a new era of collaboration?
• Distinctions between corporates and charities – the lines are arguably increasingly blurred.
o It could be thought as more of a spectrum rather than a clear delineation.
o In a particular charity there was previously a very distinct divide between the private sector influencing and programming delivery teams whereas now they are much more integrated and influence each other.
o Although perhaps it is less to do with what your organisation does but where you sit in the organisation. For example, a CSR professional may think that their organisation is as committed to delivering social impact as a charity but a member of the board of the same organisation may see things differently
• Could corporates invest in charities as unrestricted funding?
o In reality, this could be what helps charities the most to deliver lasting social change.
o They could still have shared objectives.
o A blended approach (restricted and unrestricted funding) could be a potential way forward. What could this look like?
o Charities would need to be fully prepared for the implications that this could have.
• Size: charities have found that resource capacity can be a barrier to engaging corporates in long term partnerships
o Very small charities sometimes manage to engage corporate to partner on just one event and then struggle to keep partners engaged after the event and form an ongoing relationship
o Businesses need to recognise that there rarely is one single partner that can deliver the vision of the corporate. Charities can feel under pressure to deliver everything that corporates want.
o Charities and corporates often want exclusivity but this is not necessarily helpful or feasible.
o There are examples of businesses that want to have one large charity partner that could be long term partner as well as a small charity where they could have a larger influence and transformational effect.
Red Flags (warnings)
• There is a tendency to want to rush toward strategic partnerships yet in reality a variety of actors are required to tackle issues. There is no one model that corporates and charities should adopt.
• As much as possible, carry out sufficient due diligence as the effect of partnering with organisations that lack credibility can long lasting.
• Partnerships that have worked well have had a shared vision, are longer term and are embedded into organisational strategy
Building human capital
• There is a key challenge of how do you ensure the charity team has the capacity to deliver the program and ensure it is sustainable beyond the initial phase?
• E.g. Tesco partnership with the British Heart Foundation & Diabetes UK – hard for the charities to identify at the outset what capacity they can gain from the company on the long term
• Building human capital may help to address this challenge e.g. providing skills and professional development to the charity
• Corporate gains from different perspectives & working with people from different walks of life
• E.g. M&S initiative using Data Kind – Woodland Trust benefitted from the partnership to have the data team for a solid 48 hours looking at their Nature’s calendar database from citizen scientists on seasonal changes from 1750. Saw the data in a new way & got new insights
• Providing trustees can also help as source of strategic direction for the charity – these then encounter very different experiences that they can take back to their own businesses.
Intermediaries to the corporate/charity partnership
• Crucial for reaching scale in a local way
• E.g. Software company – want to give out free packages to every school and university and impart the knowledge for people to use them. Using partner base to create a training network to scale it. Neighbourly as a platform to enable this. Can then get data back on the success of their initiative.
Common goals & long-term relationships
• Key is to have alignment of goals and being honest and open when this isn’t the case (especially if the project would take the charity off the course of its overall strategy)
• Important to have a close relationship where both sides can challenge the other
• E.g. GSK & Save the Children: 5 year program to save the lives of 1 million children. Used the same process that companies do when they merge: long process including team building weekends etc. and each has a board member from the other organisation.
• E.g. Woodland Trust: some of the longest partnerships have been from a personal introduction and then 2 years plus to develop that relationship. Have turned down opportunities that don’t complement its long-term strategy.
• Can take a long time to get the relationship right e.g. ‘Let’s do this’ campaign (Tesco) – targeted at mums – only launched one year into the three year partnership.
Local & involving employees
• Close relationships are needed to drive trust between charity and corporate partners, this is difficult to achieve at a national level.
• Local initiatives can be very important for getting the personal commitment and buy-in from employees e.g. Grant Thornton launched a setup where local offices created their own partnerships with charities; Tesco also has a local charity focus in addition to national campaigns.
• E.g. Telefonica’s Think Big program is an in house partnership aimed at engaging the local community. Employees were personally rewarded for their community work - 60% got involved.
What are the new models of partnership that will emerge? It was suggested that charities are having to become more commercial in their approach and companies are going the other way, reigniting purpose-driven business models. Will the line between the two become increasingly blurred?
With considerable progress made in presenting sustainability and social impact in business terms, we’re interested in what the table sees as most effective. Is there a risk that these methodologies make societal issues too specialist, and take away the human stories that resonate strongly with senior business leaders? What will be the right balance for the future?
Societal impact needs to be presented in business terms
· The business doesn’t listen to you simply because it’s the right thing to do so social initiatives always need to consider how they contribute to the bottom (or indeed, top) line of the business: brand value, other value drivers. For example, they need to understand what the business is looking to achieve and how sustainability can be integrated within that agenda, instead of pushing a separate agenda
· Constantly integrating your agenda in others may feel like a high level of effort, but one of the essentials of working in sustainability is being able to adapt to a message and make it versatile and interesting. Sustainability strategies have been separate to business for so long, integrating them into the business is the most important thing
· Perceptions used to be around the “CSR police” but this is changing with the way society is going, the millennials and human rights, plus some of the most recent legislation (e.g. Modern Slavery Act in UK, portfolio carbon footprinting in France, Non-financial reporting requirement in EU from 2017). But the message needs to have a purpose to the customers, as a function, otherwise it can get a bit tiring
· SABMiller: “Our business grows when our suppliers and retailers, farmers, customers grow”. They try to understand what these stakeholders’ business objectives are and integrate the social element in that value proposition. For example, if the goal of their smaller customers is to be more successful businessmen, SABMiller may offer training on accounting & financial literacy, alongside community relations and other socially oriented training
· GlaxoSmithKline: In order to be able to do business sometimes you don’t have a choice but to invest in society and infrastructure in order to sell your products. In Africa for example, GSK supports stakeholders in order to create mechanisms for customers to access and afford life-saving medicine. The focus is not on donations but blended models & strategic partnerships
· Divine Chocolates: It’s also worthwhile to engage with stakeholders and suppliers over what you’re doing, for example Divine found that its suppliers didn’t know any of its passions and dedications. They hadn’t always chosen to communicate this to those setting a price and a service for them, but doing so could build relationships even in a B2B context
· O2: Young people issues was found to be on top of the agenda of both customers and employees concerns therefore O2 invested in this area but have found it challenging to communicate that back to the customer. This could be because there’s a disconnect of who is benefitting vs the main customer base of O2 which is over 30. The table discussed this could be a good opportunity to integrate this great work with O2’s aspiration to expand the customer base within the young people segment
· SABMiller: The core business had an aspiration to reach more women so it decided to integrate this business goal with the empowerment of more women throughout the business and its value chain (e.g. hiring and training more women). Example of “never talk about sustainability while doing sustainability”
· BSKYb Sky Academy: The approach they take is not to talk about sustainability but about young people, skills and confidence. Investment in Sky Academy makes a difference to customers of how they feel about the brand. The team also believes that metrics are paramount to measure % shifts in skills participants have and how much intention to purchase they have as a result. The human story element has also been successful in generating senior management participation
· BT: Also finding that metrics are paramount in their work. “Transparency is the new green”
This table asks whether there are risks to measuring social value, and if the business community risks ‘missing the point’? How can measurement compliment rather than distract from social purpose? What are the best examples of measurement maximising the impact of social programmes? Are there any pitfalls to avoid?…
A vast amount of social impact seems to be of the “intangible”, “immeasurable” kind; the “human” side. Many of the effects of various programmes are only seen in the long term and extraneous factors and variables make pining down cause and effect difficult and time consuming. This begs the question, is it worth measuring at all? Is the true qualitative profundity lost by the time it has been boiled down to a digit?
It can also be tricky to know where to start and where to put your baseline. Communities vary between generations and they themselves adapt and change over time rendering restrictive measurements somewhat meaningless as factors come and go over time. Measurements need to be simple and flexible enough to capture the “essence” of social impact without becoming oversimplified, simply correlational or a box-ticking exercise – metrics must be constantly challenged.
Often businesses risk forgetting what the business is really about (!). The greatest kind of social impact comes from carrying out the business in the best kind of way within the surrounding community. The desire to create social impact can sometimes tempt business to focus outwardly instead of inwardly.
A major risk for the use of measurements is that not using measurements means some forms of social impact lose value. We need to be able to talk about and appreciate this kind of impact, giving it the credit it is due.
Measurement to compliment?
If there is no measurement, we risk being unaware of the impact of a certain activity. Using an evidence-based approach can be a positive means to inform your strategy and can be used to drive improvements.
Measure what matters! What is material to the business and community? Using time and resources attempting to measure everything is a waste.
Evidence is great for communication, both internally and externally. Again, unmeasured forms of impact must not lose value; the key is finding a way to bring them together. Bringing together outputs and outcomes, making measurement scientific but not only with numbers and bringing in qualitative elements are great ways to talk to stakeholders.
In this way measurement can help broaden your horizons and help you speak to a huge range of people. Big brands are hugely capable in this respect because of trust in the brand and their reach – the have the ability to do more and go further and they should. Finding the direct link between CSR work and sales is often considered the “holy grail” of business but it is often not so clear-cut, and a case of alignment whilst celebrating the individuality of some – there are merits to an individualised and centralised form of CSR.
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