Corporate purpose: moving from noble intentions to achieving real impact

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Sustainability and social issues have rarely had so much global attention – thanks largely to Covid-19 and the climate crisis. The pandemic has increased focus on the extent of wealth inequality, in the UK and abroad, while headlines and conversations engendered by COP26 continue to highlight the desperate environmental situation.

But, according to research by the Charities Aid Foundation (CAF), many companies could act more on their social responsibilities. Based on a survey of corporate-responsibility practitioners at firms across a wide range of industries, it reveals that even where there is a noble corporate purpose, all too often there is a failure to translate it into practice.

It’s clear that company leaders must commit themselves and their companies to corporate responsibility to a much greater degree if they are to play their part in society overcoming the challenges of Covid-19, the climate and beyond. They also need to ensure their firms can meet growing public demand for greater corporate involvement in community work and other sustainability projects, and prepare themselves for future legislative, environmental and economic hurdles. The report provides a rare insight into current UK CR activities, with straightforward recommendations on how things can be improved.

Clearer corporate responsibility thinking required

A major problem highlighted by the research is that a lot of company leaders don’t appreciate the real value of corporate responsibility. Though most realise that it has a positive environment and social impact, only 16 per cent of practitioners say their firm sees improving economic performance as a key driver for this activity. Acting more sustainably can boost PR and sales and increasing diversity can create younger, more talented teams. Better environmental practices may help firms avoid new taxes or higher production costs, as well as play their part in maintaining the global resources on which they rely. But too many leaders are failing to recognise these long-term commercial benefits.

Another challenge is to focus on the specific impact organisations want to achieve, and how it aligns with their overall purpose. This will help to avoid the perception that their activity is not thought through or that it’s only a PR exercise – or so-called greenwashing. Focusing on impact also helps avoid fragmentation. In the case of charitable giving, large companies often have lots of siloed charitable activity and many of them don’t bring this together under one strategy.

Executives have to create a company culture where robust sustainability criteria are considered throughout the life cycle of all products and services. Fewer than half of the CR practitioners in the poll say this happens at their organisation. Leaders should do everything they can to ensure that other parts of their supply chain act ethically and sustainably, too.

Perhaps the most important thing leaders can do to make CR more central to their own thinking and that of their employees is to link it to performance reviews and renumeration. A tiny 9 per cent of CR practitioners say that the pay or bonuses of executives are linked to CR objectives. Without such direct accountability, numerous C-suites are unlikely to ever consider CR a priority.

Better measurement and more investment

Leaders need to significantly improve the assessment and tracking of their company’s CR activities. At present, there’s a lot of reliance on qualitative feedback, with just 14 per cent of CR practitioners saying that their organisation does a full impact valuation across business activities. More use must be made of the ever-increasing array of new digital tools, such as those provided by Maanch, which can monitor progress towards sustainability goals.

There is a desperate requirement for C-suites to give CR practitioners more resources, too. Some 57 per cent of survey respondents say they don’t have big enough budgets – and the economic pressure from Covid-19 is likely to make things worse. Practitioners often don’t have enough time to do their job properly, either, perhaps because they have to combine it with roles in other departments, such as marketing.

If anything, firms should invest more in CR following Covid-19, to help society through the crisis. Indeed, many companies recognise this, such as HSBC last year pledging $25 million to help the medical response and provide food to vulnerable communities.

Greater staff involvement

Most practitioners report that their firm involves staff in CR activities. Payroll giving, some other forms of fundraising and online volunteering seem to have increased during the pandemic. Schroders’ global workforce raised £3.8 million to help people in need as a result of the crisis, for instance.

C-suites need to consult staff on CR strategy more, particularly as many now feel isolated and out of the company loop at home. And they must ramp up corporate donations and payroll giving to help charities make up the financial shortfall Covid-19 has created.

Many leaders will have taken their eyes off the UN’s Sustainable Development Goals while trying to cope with the pandemic. But the deadline for achieving them is just nine years away. What’s more, the Covid-19 crises will have made several of them, such as ending extreme poverty, considerably harder. Two thirds of practitioners report that their firm has taken at least one action towards meeting the goals. But all firms must now concentrate considerable energy and resources on them if they are to act responsibly for the good of the planet and remain competitive with other more proactive organisations.

Defining and meeting ambitious sustainability goals, such as carbon neutrality, can no longer be seen as things that would just be nice to do; an optional extra on top of making a profit. They are crucial considerations that must pervade all organisational strategy. If companies don’t adopt this way of working immediately, they will soon be falling short of what legislators, investors and consumers expect of them, with far-reaching consequences for their future as well as that of the planet.

Charities Aid Foundation’s From Purpose to Practice report is available now

Charities Aid Foundation partners with corporate donors to realise greater impact through their giving. For more information, click here

Originally published on Business Reporter