It’s time to talk about the business benefits of social investment

Charlie Hodkinson-Ashford

Last week, the Dow Jones Sustainability Indices (DJSI) published their latest list of the most sustainable companies in the world. As an investor-focused index, DJSI’s focus is on how sustainability initiatives (including economic, environmental and social criteria) boost business performance.

One of the main changes to the DJSI questionnaire this year is in the area of Corporate Citizenship & Philanthropy. Companies are now expected to publicly report on the social and business benefits of strategic community programmes.

At the same time, companies in several industries (with more to be added in the coming years) have been asked a tough new set of Impact Measurement & Valuation questions. These ask whether companies have designed business programmes specifically to address social needs, and how they go about measuring the resulting impacts.

The message from the index, and the wider investor community, is clear. Philanthropy is not enough. Even CSR is insufficient. We want to know how you create mutual benefits for both society and shareholders, through your core business.

Don’t get me wrong. There is, of course, a moral case to be made for sustainable business. But, as my colleague Richard recently argued in his excellent article, behaving in a responsible way should, and must, make business sense too.

This is common-sense. Businesses are not charities, and shouldn’t try to be. But many companies are still surprisingly bashful when it comes to reporting the business benefits of their community programmes. Of the clients we work with to implement the LBG Model, which helps companies measure community investments, few report publicly on the business impacts side. “We couldn’t possibly talk about that kind of thing,” companies seem to be saying. “People might think we were only doing it for selfish reasons!”

Nobody believes that Coca-Cola sponsors the World Cup purely out of love for the beautiful game. The same goes for community investment – why pretend otherwise? Surely companies would be better off, in the words of DJSI, “[approaching] their corporate citizenship activities in a strategic manner, with defined priorities that are aligned with their business drivers, allowing companies to leverage their strengths, brand and employees to have the maximum impact on the beneficiaries”.

In Corporate Citizenship’s Impact for Change paper, we identify the ways in which social impact assessments can help drive business success: from building resilience and reducing risk, to sparking innovation and enhancing stakeholder engagement and collaboration. And crucially, by doing so, companies create social benefits that nobody else can. Not for nothing do economic growth, employment and infrastructure play a key role in the UN’s Sustainable Development Goals (SDGs).

Just think of Google and Facebook, blasting drones and balloons into the sky in order to provide internet to previously untapped markets. The scheme is madcap, sci-fi, potentially life-changing, and could only have been launched by the private sector.

We need more examples like this. The 2016 GlobeScan/SustainAbility Sustainability Leaders Report ranks different types of organisations based on their contribution to sustainable development since the 1992 Rio Earth Summit. 57% of the global experts surveyed say NGOs have made an “excellent” contribution, and only 8% say they have made a “poor” one. The corresponding figures for the private sector are 20% and 37%. They don’t even come close.

Enough is enough. The SDGs give businesses a central role in driving sustainable development – and rightly so. Through shared value initiatives, inclusive business models and strategic philanthropy, businesses can make a genuinely positive difference to the world – and boost profits, growth and employment in the process.

It’s time to stop being ashamed. It’s time to be open about impact. It’s time to talk about business benefits.

Corporate Citizenship manages LBG – the global standard for measuring corporate community investment. To find out more about how you can use the LBG framework to effectively measure your corporate community investment and its impact, as done by 220 companies around the globe, visit the LBG website.

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