What a waste of business resource!

Corporations spend billions eveHard-Outcomes-or-Hollow-Promises-2ry year on causes and in communities around the world. But a shocking new survey shows they actually know little about the difference it makes.

Nowadays everyone agrees that spending shareholder funds in scattergun philanthropy doesn’t make sense: it’s not good for people in need, nor for companies trying to justify and sustain a community investment (CCI) programme.

So Corporate Citizenship asked corporate responsibility and sustainability practitioners how they set objectives and whether they measure outcomes. Over 130 practitioners from around the world replied. A massive three quarters said they aspire to achieve long-term Continue reading

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The numbers speak for themselves

Where does good decision-making in business come from? Let’s look at the role of data, seek inspiration from Plato, and consider if companies are potentially wasting billions in their community investment.

Plato

The power of numbers is embedded in modern management…. The numbers speak for themselves. What’s the bottom line? If you can’t measure it, you can’t manage it. We use phrases like these all the time, albeit often with a heavy heart.

Comments from my colleagues in this month’s CCBriefing help us come to terms with this. Mary Ellen Smith calls for quality in KPIs, while Charlie Ashford says radical transparency is both inevitable and an opportunity for companies. I’d add my own plea for us to rediscover the power of balanced scorecards. First popularised in 1992 by Robert Kaplanand David Norton at Harvard Business School, they broaden the focus from historic profit to non-financial and forward-looking aspects. Crucially, they harness the numbers into a decision-making format. Continue reading

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The pink pound points the way

Short-termism in the boardroom doesn’t just damage investors, it hurts us all. Thankfully, the evidence – sometimes from surprising places – shows that doing the right thing does pPink pound sign transparent imageay off.

Here in London, voters are choosing a new mayor as I write. By the time you read this, we’ll know the outcome. During the campaign, the one issue all the candidates have agreed on is the lack of affordable homes – or rather the imbalance between restricted supply and escalating demand which is driving up the price of all forms of housing, whether purchased or rented.

The think-tank New Economics Foundation (where I’ve just joined the board of trustees) used the occasion of the Queen’s 90th birthday to show how the rise in UK house prices have outstripped average earnings twice over during her lifetime. There’s not much point in being 21,839% better off (yes really, in money terms) if you still can’t afford to put a roof over your head. In London, the trends are even more acute. Continue reading

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The power of purpose

Controversial taxi company, Uber, has just launched a new statement of mission to reposition the business.  They follow in the footsteps of others, but beware of the dangers.

uberTechnology is disrupting many businesses.  Enabled by smartphone apps, radical change is coming – and just one example is playing out on the streets of London, where 100,000 private hire vehicles now compete daily with the traditional black cab trade.  Behind it is Uber and its army of self-employed drivers, all part of the new sharing economy. Famously forthright, the London cabbies are still only arguing about this change in their livelihoods, unlike Paris where militant drivers took to the streets.

Uber started out in 2009 as UberCab in San Francisco, and has grown exponentially ever since.  It recently relaunched its corporate branding. Out went the classic U logo and in came flexible treatment in its different markets, built around a new statement of corporate purpose: not a taxi app any more, but all about “creating industries that serve people – Continue reading

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Sugar tax: the cost of failing to listen

The Financial Times reports that shares in AG Barr, maker of Irn Bru, closed down 2.4% following the UK government’s announcement osoda-686984_1280f a tax on sugar in soft drinks, while Britvic, producer of Robinsons squash, fell 1.3%.  Loss of shareholder value in those two companies alone – some £40m.

Compare that to the small amount typically invested in corporate responsibility programmes and the business case for listening to stakeholders and acting correctly becomes overwhelming.  Continue reading

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Managers get it. Do investors?

When owners speak, company bosses tend to listen. So why hasn’t the ethical investment movement had more impact? And now that professional investment managers NASDAQincreasingly understand the issues, will more investors follow?

Back in January the UK-based Investment Association published data showing ethical investment at an all-time high, with funds under management totalling £10.7 billion, having more than doubled in a decade. Time to crack open the champagne? Do investors finally understand that good business practices can enhance long term returns? Will corporate behaviour now improve?

Alas, no. The same data shows that so-called ethical funds are stubbornly stuck at 1.2% of the whole market, a figure that hasn’t moved in 10 years. Continue reading

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Invest or give – what’s the difference?

Let’s take a trip down memory lane and ask whether loans or grants are the right approach to getting results for the community. image3

Last week, the UK social investment bank Big Society Capital published its lending numbers for 2015. The amount going in loans to UK charities and social enterprises is now ramping up fast: £68 million of the Bank’s own money, with twice as much again from co-funders, nearly £200 million in total.

Big Society Capital (BSC) has two aims: supporting finance intermediaries who serve the social investment market, and raising awareness of the whole sector. Its funds come from an arm-up-the-back grab by government on dormant bank accounts – up to £400 million, with a further £200 million directly from the UK’s big four banks over five years. Surpluses generated when loans are repaid mean BSC should become financially sustainable over the long term. Continue reading

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Corporate titans and the fourth industrial revolution

The fourth industrial revolution will see good jobs shredded like never before. Business needs to rethink the economic environment if it is to be sustainable.

Corporate titans from around the world gathered last week for their annual love-in at Davos. Joining them to provide a scattering of stardust was actor Leonardo DiCaprio.

Fresh off the set of his Oscar-nominated film, The Revenant, DiCaprio was praised for the award-winning work of his eponymous foundation in protecting vulnerable wildlife from extinction. Continue reading

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COP 21: The road to hell?

The climate agreement in Paris is being hailed as a triumph. But is it really, and what does it mean for business?

Getting the governments of nearly 200 countries to agree to any one thing is no mean feat. And the climate talks weren’t just ‘anything’. That’s why expectations were low in the run up to COP 21 in Paris.

In the event, the final agreement is at the upper end of expectations. More than 180 countries have committed to cut emissions significantly. They’ve agreed to a five year review or ratchet mechanism for further commitments in future. Their long term goal is for global warming to stay “well below” the threshold of two degrees Celsius above pre-industrial times, so as to prevent run-away climate change. Surprisingly, a 1.5 degree aspiration (“endeavour to limit”) is also included. Continue reading

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Dieselgate: what governments did, didn’t and should now do

Even the most cynical of corporate critics are being surprised at the revelations from Volkswagen. What does it also tell us about the role of governments?

The Volkswagen crisis has been escalating since September, when the company admitted that it had installed so-called ‘defeat device’ software in 11 million diesel vehicles so they appear to meet air-quality standards for nitrogen oxide, a gas which poses a threat to human health. The latest twist came this week when it admitted to understating CO2 emissions for about 800,000 vehicles sold in Europe and overstating their fuel economy.

What started in one market (the USA) just with diesel engines has multiplied: more markets, more fuel types, and more brands, with Audi and Porsche now implicated. So far no other manufacturing groups have been found at fault. However the regulators are circling, while the weakness of their testing is under scrutiny too.

VW’s share price has dropped 40% since September, destroying some €35 billion of shareholder value. Direct costs continue to mount – now estimated at €8.5 billion in fines, compensation and rectification, with unquantifiable long term damage to the brand. In academic circles, proof of the so-called ‘business case’ for corporate social responsibility is much debated; what is surely no longer in doubt is the cost of irresponsible actions.

Aside from annoyed regulators and outraged drivers, others are not letting a good crisis go to waste. For example, Greenpeace is cannily using the affair to drive take-up of electric vehicles – with a specific demand to VW to develop a “mass-market electric car that families can afford”. That’s both smart campaign tactics and astute advice to VW who certainly will need a game-changing story beyond “we’re sorry” if they are to recover their reputation.

And what of governments themselves?

What they did right was pursuing testing and issuing violation notices, at least in America, where the EPA (the US agency to protect human health and the environment) has led the way. It was this action that uncovered the wrongdoing: not VW’s ethics rules or a whistleblower, nor its own sustainability reporting and assurance, nor external scrutiny from the legion of rating and ranking agencies like DJSI.

What governments did not do, at least in Europe, was act swiftly on the available evidence. We’ve known for a decade that the real-life impact of diesel was below theoretical improvements in emissions. In my previous work as a London Assembly member, I was critical of the European Commission which was slow to enforce its environmental directives. I was questioning the London transport authorities as long ago as 2006 on action needed to improve air quality, where diesel was the principal villain. (So external rating and ranking agencies should have known of the problem, if they had gone looking.)

What should governments do now? One thing is to be a lot more inquisitive when their citizens’ health is at risk. Another is to be a lot less trusting about corporate culture that lets bad behaviour go unchallenged, even if one accepts (which I don’t) that it’s all down to a handful of rogue engineers.

Like Watergate before it, Dieselgate can teach us much beyond the specific cause célèbre about underlying corporate systems and a damaging lack of accountability.

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