That might sound subversive – after all, CSR isn’t about the bottom line. Is it…?
There are many definitions of CSR. In general terms, it is about delivering benefits for economic, social and environmental stakeholders. On the ground, we’ve seen fantastic work going on – exemplified by organisations like Business in the Community. We genuinely believe that for a number of businesses, CSR isn’t an add on – it’s seen as a key ingredient of a sustainable business model.
As a CEO of a for profit, the bottom line is, well, the bottom line. How do we get more customers? How do we make the ones we have happy? How do we get the best out of the team? How do we ensure our product is usable and therefore shippable?
I understand any skepticism around CSR.
But it is there. And it’s not going away. Moreover, in many countries it’s now backed by legislation.
How could we improve the conventional model of CSR? Let’s come back to that. First a few more numbers.
We carried out some research a few months back. We looked at 30 of the biggest suppliers to UK government, including Capgemini, HP, Balfour Beatty, Babcock, Fujitsu and Barclays.
What we found…
- They account for up to 15% of government expenditure
- The total UK Community Investment spend of the 8 companies who share their figures is £9,533,461
- The total Global Community Investment spend of the 12 companies who have share their figures is £328,249,901.
And, according to the Charities Aid Foundation, FTSE 100 companies donated an average of 1.9% pre-tax profits in 2014.
What we ask…
- Is there a direct link between this CSR spend and sales? Short answer: no.
- Should there be?
- Why not? What if you could demonstrate a clear ROI on this spend?
We think this not because we think CSR is an afterthought or an add on. If it is a a core component of business strategy it has to be a core component of your financial strategy – because these two things are so intertwined. This is what we mean when we think we can square the circle of CSR.
Why not do well by doing good, if you could demonstrate that your CSR budgets and resources were going into local community projects that were delivering clear outputs, and were rewarded for that with sales?
Why not do well by doing good and demonstrate this in terms of clear ROI for your CSR spend?
That would be a good thing right? If you want CSR to be a core part of your business strategy it has to be a core part of your financial strategy.
Social Value is increasingly a differential in government tendering – how much you give can determine how much you win. At the Social Value Exchange we use market design to ensure CSR is paid for at a fair and efficient price – the sweet spot between making sure community projects benefit and suppliers don’t break their business models. Suppliers have used this approach to win more than £20m of government contracts.
With this option, why wouldn’t you use CSR to get more sales?
Firesouls make digital products that drive innovation in, and get more resources to, the public and community sectors. Our latest product is the Social Value Exchange, an online marketplace that gets more funding and resources into local community projects.