- New research reveals gap between growing demand by the public for greater corporate social responsibility vs. current business practices
- 67% of UK businesses feel they have greater social responsibility in response to Covid-19 but only 35% currently meet the criteria for providing ‘good jobs’
- Centre for Progressive Policy calling on government to enshrine ‘Covid community spirit’ in UK Company Law as part of ‘levelling up’ society
Today the Centre for Progressive Policy (CPP) publishes a landmark new report, ‘The business of belonging: strengthening bonds between business and place’, which seeks to capitalise on the goodwill shown by businesses for communities during the crisis, redefining the role of business within place for the benefit of all stakeholders.
The research polled over 600 businesses and reveals that Covid-19 has accelerated widespread appetite for change from both businesses and the public, with many employers feeling greater social responsibility towards their workforce:
- 67% felt that they had greater social responsibility in response to the Covid-19 crisis
- 42% felt they had greater responsibility to use government funding to maintain pay
- 40% felt they had greater responsibility to offer secure job contracts to staff
However, the report also highlights the significant room for improvement amongst UK businesses when it comes to meeting these responsibilities. While companies have demonstrated their appetite for demonstrating greater social responsibility, the report reveals that:
- Only 35% of employers are meeting all the criteria for providing good jobs to their workforce.
- Only 21% of businesses annually review the impact of their business on the local community.
- Just 32% used suppliers that directly benefit the local community
CPP argues that businesses will need to go much further to address this gap and commit to local economies across the country, investing in places and the people who live there. To ‘level up’ society, and support businesses to invest more in the economic, social and environmental fabric of places, CPP calls for bold national reforms by the government including:
- Amending the Companies Act to include the local community within a new purposeful business framework.
- Creating a private-sector led recapitalisation fund for struggling but otherwise viable businesses as part of the new industrial strategy, with investment dependent on businesses’ commitment to meeting community objectives.
- Funding the creation and survival of social enterprises, which already embody the principle of belonging with their social mission giving them a strong connection to place.
As well as setting out recommendations for the government, CPP is also calling on business to recognise their own responsibility and act now to:
- Secure social value for the local economy through their supply chains, following the example of the Cabinet Office’s recently published social value model.
- Agree and commit to mutually beneficial local social objectives with local government and the wider community, building on existing examples of collaboration such as the Bristol One City Plan.
- Pay the real living wage, as set out by the Real Living Wage Foundation and restrict the use of zero-hours contracts to reduce adverse consequences of insecure employment for society.
Rosie Stock Jones, Senior Analyst at CPP said:
“The Covid spirit displayed by many businesses up and down the country has proven vital in addressing the health and economic crisis we face. But for many places, recovery remains dependant on the investment and job opportunities available locally. We need businesses to be providing quality jobs and training, especially in in deprived areas, and to think about the impact they can have through their supply chains on local economies.
This is not a philanthropic exercise – businesses gain from community assets like transport, healthcare and pools of skilled labour so investing in the community will benefit them as well.
But the government also needs to recognise the momentum for change and back it up with bold reforms to company law and with financial support for struggling businesses that are already living the community spirit.”
Cllr Craig Cheney and James Durie, Co-Chairs of the Bristol Economy Board said:
“In Bristol, our One City Plan approach is generating impact by bringing private and third sector city partners together with the public sector to work towards a shared mission of a fairer, healthier, more sustainable Bristol. Too many places worry that if they are clear about what they expect from local businesses, in terms of employment and commitment to the local area, then they will choose to relocate elsewhere, but in Bristol we have shown that this need not be the case. We have all kind of businesses represented on our Economy Board, and they understand the positive impact that tackling economic exclusion can have on improving their long-term productivity.”
Lord Victor Adebowale CBE, The Chair of Social Enterprise UK said:
“The last six months have shown how important social enterprises are to their communities: providing jobs, training and vital services like health and social care, as well as spaces to bring people together and support one other. But like other businesses across the UK, many viable social enterprises are struggling and need support. As we look to build back better out of Covid-19, we have to look to a new model of doing business where we deliver for society not just for corporate chief executives or shareholders. Social enterprises are already doing this for people and places across the country – it is critical we help them to survive and form the basis of the future economy.”
Notes to editors:
Business polling was carried out by Populus for the Centre for Progressive Policy. Online polling took place between 28 August and 3 September 2020. The survey consisted of 609 business owners and directors and results were drawn from a representative sample of businesses across UK regions and sectors. The sample included 102 large businesses, 101 medium businesses and 406 small businesses.
CPP’s recommendations for redefining the role of business in place
To capitalise on growing momentum for change while penalising the worst business behaviours, we recommend:
Bold national reforms by the government to change the rules of the game:
Amending the Companies Act to embed the business of belonging within firms’ culture and practices to embed community within a purposeful business framework. CPP suggest building on the British Academy’s suggested redrafting of the Act to put purposeful business at the heart of business activities and additionally suggest explicitly embedding community within this framework, for example redrafting sub-section (1) of s.172 of the UK Companies Act, 2006, to say:
“Directors of companies must establish their company purposes [which must include supporting the local communities within which they operate], act in a way they consider most likely to promote the fulfilment of their purposes, and have regard to the consequences of any decision on the interests of shareholders and stakeholders in the firm.”
Creating a private-sector led recapitalisation fund for struggling but otherwise viable businesses as part of the new industrial strategy, with equity investment dependent on businesses’ expected future performance and commitment to meeting community objectives.
Funding the creation and survival of social enterprises, which already embody the principle of belonging, through tailored short-term grants.
Good jobs for all:
Increasing the minimum wage to the real living wage, as set out by the Real Living Wage Foundation.
Enforcing business charters and strong procurement frameworks to promote social mobility and signal employment expectations of businesses.
Severely restricting the use of zero-hours contracts first through business practice and then in law, to reduce adverse consequences of insecure employment for society.
Setting up a fully funded single enforcement body to protect workers through the Employment Bill, as promised in the 2019 Conservative manifesto.
Rooted in place:
Securing social value for the local economy through procurement procedures in both public sector organisations and large businesses, following the example of the Cabinet Office’s recently published social value model.
Agreeing mutually beneficial local social objectives between business, communities and local government, building on existing examples of collaboration such as the Wigan Deal for Business.
Simplifying forums for businesses engagement by making the geography of business groups and local councils more compatible, for example by aligning LEP and Combined Authority boundaries.
Bolstering local leadership by shoring up local government finances, levelling up powers and pooling public sector resources, including through structural reform and use of the UK Shared Prosperity Fund.
Actively involving local workers in business plans for achieving sustainability, including through engagement with unions.
Embedding environmental goals into local shared objectives, taking the Welsh Well-being of Future Generations Act and Bristol’s One City Plan as examples (see Box 5).
Open and transparent:
Committing to increasing transparency and voluntarily publishing information about staff structure, CEO pay ratios and contract type in an accessible format.
Developing a clear framework for measuring social impact, with national government working to build a consensus around measurement so that businesses’ social contribution can be transparently and comparably assessed.