CSR can benefit more than just business

There is a growing acknowledgement that businesses should get involved in their community. But it is not just a one-way street. Businesses, the voluntary and public sectors and other organisations must be aware of the impact they have on their community, and on society more widely. From local residents next door to a factory, to workers on the other side of the world.

Beyond this, there is a strong business case for social responsibility that those already involved have demonstrated. CSR activities can help attract the most able and highly motivated staff – especially young people – and build brand value and foster customer loyalty. Research has indicated that consumers are becoming increasingly aware of these issues. This poses risks and opportunities for business, with clear benefits to the bottom line for those who can respond effectively.

But CSR is more than just about increasing profit. It can also help to motivate staff and contribute to a good reputation among a wide range of stakeholders, not just consumers.

There has been criticism that CSR can be used simply as a PR smokescreen for companies to hide behind. But that kind of behaviour does not embody the true spirit of CSR. The litmus test for socially responsible conduct is the impact on real people in real situations.

A good example of this is in my constituency in East London, where Tesco recently opened a large new supermarket. When they were planning the store they established a partnership with the local council, the Government’s employment service and the local further education college. The Employment Service identified long-term unemployed people in the area who would be interested in working at the store. An impressive training package was put together for delivery by the local College and others. Over three months, a group of over 100 people were intensively trained in using computers, dealing with customers, first aid and other topics. What was unique about it was that everybody getting through to the end of the training was guaranteed a job at the store.

That is in my view how responsible development should be carried out in areas like the one I represent, where there is a high level of unemployment, with serious effort to make sure that the employment opportunities being created are taken up by the people in the area. It meant that 100 people came straight off the unemployment register and directly into work. That was good news for my community. But that is not why the company did it. They did it because they have found that the partnership approach is a good way to recruit staff for stores. They have found that the people recruited through this approach are more committed and more enthusiastic. They respond very positively to the trouble that has been taken to give them a chance through a real commitment to their work, they are better employees than those recruited by less costly, more conventional routes. So there is a real business driver to encourage the company to behave in this socially responsible way.

Corporate Social Responsibility can address some of the toughest challenges we face as a society. It can bridge divisions and breathe life back into communities facing difficulties. It can provide vital opportunities and training for groups such as ex-offenders or those under threat of exclusion from the education system.

There is debate around the extent to which Government should be involved in CSR and in the value of regulating socially responsible activities. There are arguments both for and against regulation. But you cannot compel virtue and we see good CSR practice as beyond compliance. Accordingly the UK strategy to promote social responsibility acknowledges its voluntary nature. The success of CSR in the UK has resulted from the imagination of those involved, and is marked by quality and innovation. Excessive intervention would only stifle that.

Nonetheless there is a role for the right kind of regulation. Sensible and well thought out regulation can enable and encourage socially responsible activities. For example, changes in UK pensions regulation, requiring companies to report on whether they have policies on socially responsible investment has been a popular approach that has stimulated a great deal of work around the social and environmental consequences of investment. We are also looking at proposals for large companies to report on CSR issues where relevant to an assessment of the business.

Getting the balance right between the voluntary approach and regulation is only part of what the Government can do. We have an ambitious aim that all organisations, in public and private sectors, should take account of the economic, social and environmental impact they have on all of their communities. And that means locally, regionally, nationally and internationally. Action must then be taken in a way that works with their skills and strengths to address the issues that arise.

Our aim is to help transform CSR from being seen as an “add on” to being a core part of business strategies. As part of that aim, we are currently focusing on the skills needed to move CSR activities into mainstream business practice and I am currently looking at proposals to do just that, for example through the establishment of a CSR Academy in the UK.

CSR is not a luxury that only large companies can afford, but a deal that firms of all sizes should get involved in, for their own benefit as well as for the benefit of others. It relies on the innovation that is increasingly becoming the lifeblood of UK business. It offers a new model for building a strong society alongside our strong economy.