Forget Businesses’ Social Responsibility – Let’s Discuss Their Social Impact

Occupy Movement, City of London

Over the next couple of weeks, we’ve asked our writers (and guests) to respond to the question” What is the Social Responsibility of Business?”  Please comment away or contact us if you’d like to offer an opinion.

By Dr. Mary Cook and Toby Hopwood

Those best placed to answer the question, “What is the social responsibility of business?” are businesses themselves. But we have found that many businesses struggle to respond.

Talk of business social responsibility is misleading. It assumes that social and environmental considerations are distinct from core business – things that can be addressed through isolated CSR work that need have no strategic purpose or link to business objectives. Previous discussions on this website have even shown that socially-responsible businesses may simply be those that maximise shareholder value.

However, if we instead focus on a business’ social impact, we are encouraged to look holistically across its operations – we are given room to analyse its role in society and its areas of impact. A business that possesses this understanding is best placed to develop a strategy both that maximises social and business objectives.

During recent discussions with corporations about their social impact, we found that all respondents were comfortable talking about what they were doing. Employee volunteering, charitable donations, staff well-being schemes and so on were all explained in detail. However, fewer could explain why they were doing it: how these activities linked to core business strategy.

It’s increasingly accepted that companies which place social impact at the heart of business strategy are best able to meet society’s expectations and needs. Now more than ever, with considerably less funds in public coffers from lower tax receipts, the onus is on business to meet society’s needs. In England, this expectation is embodied in government policy: the ‘Responsibility Deal’ controversially has corporations contributing to public policy on issues such as nutrition, at the highest levels, as spending on public health campaigns is scaled back. And the Social Value Act, introduced in March 2012, mandates commissioners in public sector organisations to look favourably on bids for services that offer additional social benefits.

Despite this, the companies we spoke to that have made the greatest progress in understanding and managing their social impact were those that had established cultural or historical drivers. They saw it as being an extension of their organisational vision or values.

The problem with company vision as a driver of social impact progress is that not all companies inherently possess the necessary values. Retrospectively altering a vision statement to articulate a commitment to social responsibility should rightly be viewed with skepticism. However, analyzing the business benefits and then choosing activities that simultaneously further business and social goals places companies in a stronger position relative to those that have isolated CSR programs with no business case. These companies are more likely to be able to take advantage of things like the Social Value Act, for example.

This is precisely what Sodexo, a leading provider of on-site service solutions, has done. Managing social impact has a prime place in its sustainability strategy, the Better Tomorrow Plan, which identifies areas for action that are material to the business and its stakeholders. As a supplier to the UK Government, Sodexo recognized that demonstrating social impact is a competitive advantage in the public sector market, as the government is seeking suppliers who understand and share the public service ethos. In order to maximize its contribution to public needs and interests, it undertook a Social Value Audit to understand and compare government policy priorities with its business expertise. This enabled the business to focus on the areas of social need by which, in addressing them, Sodexo could drive growth.

Arguably, without similar approaches, we’re unlikely to see widespread progress towards business models that maximize positive social impact. CSR programs will be seen as an add-on and therefore at risk if internal or external conditions change: new management or stakeholder pressure could end them in a matter of days. But if business and social objectives are linked, a company’s social impact can be truly optimized.

Dr Mary Cook is co-founder and director of Uscreates, a social impact consultancy. Toby Hopwood is Uscreates’ communications associate.

3p Contributor

TriplePundit's guest author program has had over 1000 contributors over time. If you'd like to be a guest author, please get in touch!