Brand, reputation and staff: the business case for social good

Whether you look at it on a global or local level, there are plenty of ways that business could contribute to social good. Providing apprenticeships for unemployed people, say, or ensuring that those further down the supply chain work in conditions that are safe, in factories that do not pollute the environment. When there are still billions of people around the world living on less than $2 a day, there is clearly a long way to go in improving the lives of many in the developing world.

But how can businesses be encouraged to contribute more to society, and who should be doing the encouraging? To what extent can the private sector be a significant part of the solution to global problems? And how much of what appears to be businesses doing social good is “greenwashing” – a PR job to cover up their mistakes – rather than a genuine contribution to society?

These issues were the focus of a seminar held at the Guardian, sponsored by GSK. Chaired by Guardian contributor Oliver Balch, the panellists were Daniel Becerra, managing director of mobile power company BuffaloGrid; Stephen Howard, chief executive, Business in the Community; Anne-Marie Huby, co-founder and managing director of JustGiving; Patrick Vallance, president, pharmaceuticals R&D from GSK; and Frances Way, co-chief operating officer of environmental organisation CDP.

Panellists broadly shared the view that there is very often a business case for contributing to social good. According to Stephen Howard, chief executive, Business in the Community, the business case is about “brand and reputation, about managing risk, about seizing opportunity, about hiring and retaining the best people”.

Employee satisfaction

Some employees will choose to join a company specifically because they consider it promotes social good. Vallance was inspired to join GSK after working as a doctor and academic researcher, he said, because he liked the way the company worked to develop medicines. “[GSK has to] make a range of medicines to make money to invest back into a new range of medicines, including those for neglected diseases. The more we can make on medicines that make money in developed countries, the easier it is to sell those medicines at a reduced price in other countries,” he said.

For most companies, there are also challenges that need to be worked around. According to Frances Way, co-chief operating officer, CDP, having social good as part of a business plan “works when it is central to a company’s business strategy. The limitation is, for example, when an oil and gas company talks a lot about something that doesn’t address the fundamental impact it has on the environment.”

And what about the bottom line? To what extent are shareholders fixated on short-term profits, as distinct from supporting the overall vision or sustainability of the business? Crowdfunding site JustGiving has raised £2.4bn for charities in its 15 years of existence. Co-founder and managing director Anne-Marie Huby said: “I firmly believe we wouldn’t have had this impact if we hadn’t taken a very long-term view.” JustGiving has not yet paid out any dividends. “Business exists to serve all its stakeholders, not just its shareholders. But one day we will reward our shareholders,” she said.

BuffaloGrid brings mobile power and internet connectivity to rural communities across sub-Saharan Africa and south-east Asia. Its managing director, Daniel Becerra said: “Not many companies see this section of the global population as a market. Instead, they are seen as aid recipients.”

So why is BuffaloGrid a business, not a charity? “We design service to scale and the best way to do that is with a business model. A service everyone needs and is affordable will be successful. We give infrastructure for free and then run the service of power and internet to those communities.”

On the subject of financing, he added: “We have shareholders who fell in love with what we do. Our investors do expect a return, but they are patient.”

Might it even be that the line between non-profit organisations and profit-making companies is blurring? Huby said that many end users and members of the public seem not to realise that JustGiving is a business, not a charity or non-profit organisation, despite the information being readily available. “It is a source of surprise for some that we would charge charities but there is now respect for the possibility that NGOs might pay their way. They are under a greater level of scrutiny and also struggle with public trust,” she said.

Shareholder pressure

Often it is not just shareholders but business leaders who need persuading that social good is important for their business, argued Howard. Leaders are measured on quarterly profits, not on long-term planning, and many will be forced out if they do not deliver. It was a “gut feel” for leaders about the sort of positive changes that should happen, why they should happen, and how they should happen.

Vallance agreed that a brave CEO with a long-term vision of what the company is about and how it should develop, was very important. “The bad things a company does stay with its reputation forever, the good things must keep stacking up and must be aligned with your values,” he said.

Some types of social good initiatives may be hard to put into practice. For instance, will either businesses or consumers really choose to pay the extra costs involved in paying the living wage unless they are legally forced to? Howard pointed out that people might say they would pay these costs, but this is not borne out by their choice of contracts or products. “This is so inconsistent ... nothing but nice words,” he said.