Two decades ago, a few pioneering companies came together in London to form a benchmarking group and that has now gone worldwide. So what’s next for community investment?
Last week I spent an energising day in the company of 70 corporates from our LBG network and came away with three thoughts on how business/community partnerships should change if they are to remain relevant to the challenges of our times.
LBG started out with just six companies 20 years ago and has today grown into the global standard for measuring corporate community investment. That’s why companies committed to increasing their social impact use it, over a thousand now, large and small, across all sectors. Last week’s participants included not just the usual UK blue-chips, but firms as diverse as Nokia from Finland, EDP from Portugal, DP World out of Dubai and the Australian retailer Myers.
My colleague, Jeffrey Oatham, has set out the headlines from this year’s LBG benchmarking exercise here. Based on data from 157 companies and annual contributions worth $2.7billion, a clear picture emerges of community investments becoming more strategic and achieving a real social impact. At least 4.4 million people improved a skill, changed a behaviour or experienced an improvement in their quality of life as a result of support from businesses in the LBG Network, for example. More than half a million employees got personally involved in paid time. A full write-up is available in the LBG Annual Review 2017 Unlock your impact potential here.
Despite these successes, I came away from the event with a strong sense that how companies contribute to communities needs to continue evolving. Three things stand out.
First and most straightforward, in addition to the formal community investment of cash, time and in-kind with charities and partners, companies need to take insights learned from such partnerships back into the business. That could be changing the products and services they offer – perhaps a variant for low income households – or how they procure raw materials or outsourced services, so workers in the precarious supply chain (perhaps smallholder farmers) get both a fair wage and also a leg-up into a sustainable livelihood. The LBG framework is evolving to cover such social innovation activity.
Second is at the local level, where many companies want to get involved, indeed they have employee volunteers and small grants programmes ready to do that. However they have hollowed out to such an extent that many lack the management capability to engage in anything much beyond reactive philanthropy in the local communities where they still have a significant footprint. Too many functions have been centralised, and layers of management stripped out. Few companies have senior executives at local level in the big cities, for example.
That’s not so in the United States, where active city and state-level government and a vibrant third sector of civil society still flourish, and the private sector is routinely called on to participate. In the UK, there are some moves to rebuild at local level, such as new mayors and ‘city deals’. The Conservative manifesto – much criticised but actually containing some bold thinking – included ideas to strengthen local regeneration and get companies involved for example on skills and with universities. Even if acted on, the corporate response will probably be patchy at best.
My third thought was that companies need to get better at measuring the business benefits of their community and social investments. This is the least used part of the LBG framework, and matters not just so the internal budget holders continue to understand the worth of such activities to business success. Too many external stakeholders remain suspicious – just public relations, greenwashing or (the new jibe) “only csr”. Internally and externally, when people see the twin benefits, for business and community, then willingness to participate grows, in my experience.
Understanding motivation was the key insight 20 years ago; it remains true today. Coupled with social innovation and real local engagement, the future outlook is positive.
