November 10, 2021

Why is it just corporate social responsibility?

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Why is it just corporate social responsibility?

Why is it just corporate social responsibility

Alison Taylor, Managing Director:
  • COP26: what progress has been made since Berlin?
  • The fundamentals of corporate social responsibility
  • Personal social responsibility

Listening to recent discussions about climate change I’m struck by how muddied, but also simplistic, many of the arguments remain, and how little real progress has been made in the 26 years since the first COP was staged in Berlin.  

There are, of course, many reasons why change is slow; politics and international relations being a major contributor. The knotty issue of how to achieve true global collaboration and action and, if it can’t be achieved, whether engaged nations should plough on alone as the advance party, taking all the risks for the benefit of the whole world, continues to be grappled with.   

Whatever answers we find to this, another parallel question is whether it is the sole responsibility of governments to make the changes needed and whether we can rely on them to do it in time? Who should be ‘doing the doing’ and who should be putting ‘pressure on others to do the doing’? These questions have no obvious or clear-cut answers but I haven’t heard anyone dispute that businesses have a significant part to play in the doing. Many corporates are, of course, already doing a significant amount to protect the environment but also to ‘do the right thing’ for their staff and wider communities.  

The term CSR dates back to the 1950s. It has evolved and taken on many guises – PPP, triple bottom line and CR to ESG – but the fundamentals have remained the same: corporate entities need to take responsibility and have a positive impact on their people, their business practices, the environment, the community.  

Whether you add profit into this mix is arguable – personally, other than keeping a business operational, I think it’s irrelevant in the context of responsibility – if a business makes a significant profit and then decides to plough that profit into doing good things and, therefore, at the end of the financial year shows little if any net profit, is a choice the business alone has a right to make.  Small business owners are lucky to be able to freely make this choice.  

It is often assumed that large corporations, with many more resources available to them, have the power to make even more of a positive impact overall on the world, even though they have responsibilities to shareholders and, therefore, profits aren’t necessarily channelled in the ‘right’ direction. Certainly, companies like Unilever and IKEA provide examples of what can and is being achieved.

However, when you consider that SMEs account for 99.9% of the UK business population and over half of all revenue, we really mustn’t underestimate the potential of the collective impact of our SME workforce on slowing climate change. The total income of UK SMEs in 2020 was £1.6 trillion; there are around 6 million SMEs in the UK and it is estimated that there are 400 million worldwide, so that is a total of £106.7 trillion revenue worldwide. Assuming that all of these businesses are profitable (which some, of course, won’t be) imagine if they all operated on the basis that they make enough money to cover overheads and that additional profits are put to good use in combatting climate change and social issues – that would add up to a huge amount of good being done!  I’m not advocating socialism, I’m just saying at this most pressing time of need, couldn’t we all be doing more?

For me, corporate social responsibility has become personal social responsibility (PSR). I know that, in the grand scheme, as an individual the impact I make is miniscule but, to repeat a very well-worn phrase, if we all just did a little bit more would the sum of the parts be greater than the whole? Unsurprisingly, when you consider the percentages above, most certified B Corporation companies are small businesses, but my cynical mind tells me this is also because it’s relatively easy for a small business to gain accreditation, whereas for large corporates, with long supply chains and thirsty shareholders, it is much more challenging.

So, assuming that we can all, individually and as small business owners, achieve significant positive impact, we need to know where best to channel our collective efforts. To be able to do this, we must be armed with accurate information and understanding of the complexities and speed of innovation, that leads to viable solutions.

Listening to LBC at the weekend, I was struck by how complex the issues around electric vehicles are – it isn’t simply a fact that electric cars are ‘better for the environment’ – they may be in the long run but they aren’t now. While the number of electric vehicles on the roads is still low, the energy required to build them is significantly higher than that required to build traditional vehicles. So, the realisation of any benefits there may be from reduced carbon emissions are still far in the future and EV owners will need to drive them for many years for the environment to reap these benefits.  

Eventually, when there are many, many more electric vehicles on the roads, there will be less carbon emitted but, in the short term, cars that run on batteries, are charged by electricity which comes from the grid and which is itself often powered by fossil fuels. So, the simplistic arguments to buy an electric car: it’s good for the environment; lower running costs; financial incentives from government; generating jobs in a growth industry; simply don’t stack up.  I’m certainly not saying don’t buy an electric car but, when you do buy one, please be aware of the facts and trade-offs. 

With every change we make, there is a trade-off or series of compromises – we know there’s no silver bullet and while it would be wonderful to think that COP26 will bring leaders closer to agreement on collective actions, ultimately, I believe that everything rests in the behaviours of every single individual, and we all must do more of the doing, now, furnished with informed knowledge of long-term positive gain, to fulfil our personal social responsibility to the world, if our future generations are going to survive.