Corporate social responsibility (CSR), whereby businesses have a positive impact on their employees and the wider community, is not a new idea. Britain’s industrial heritage is littered with examples of companies taking care of their employees and the local community. Many of these communities which have grown and thrived around private industry are now feeling the want of social capital where these industries have declined.

What has changed is that CSR has a new focus: social investment has moved from the periphery of a business’s activities to the core. As Duncan O’Leary explains, where previously there was a conflict between pursuing social value and maximising shareholder value, the two objectives are increasingly seen as aligned.

Several trends combine to drive this shift in our expectations of social responsibility. Growing requirements of accountability, the ever-increasing accessibility of information, and the economic downturn make this not only a buyers’ market but an informed buyers’ market.

Consumers can find out about companies and impose their expectations more than ever – as witnessed in late 2012, where reports suggested a consumer backlash against Amazon had made a dent in its Christmas sales, and where Starbucks’ own well-publicised response was to negotiate with HMRC.

Economic and political change are drivers in another sense, too. Although talk of the ‘Big Society’ may have died down considerably, my understanding of the term is that it meant a shift in responsibility commensurate with a shrinking state. That is, it meant other sectors – not just the voluntary but the private too – making a greater contribution. This, too, has shaped expectations that companies need to add value beyond their own remit.

The more central CSR activity becomes to business, the more it will need to operate within the terms of business. In order for companies to convince shareholders of the value of CSR as a business strategy, in order for them to demonstrate that public expectations are being met, in order to pursue year-on-year improvement in CSR as in other areas, its investment and outcomes need to be quantifiable.

Demos has been researching the measurement of social value since 2010, as part of our ongoing interest in ‘Good Business’ – in how the commercial and the public interest come together. The London 2012 Olympic and Paralympic Games offered a paradigm example, a forum where commercial interests and public expectation were most on display. We therefore worked with Coca-Cola, the longest continuous sponsor of the Olympic Movement, to create and pilot a model for measuring the social value of corporate sponsorship.

Corporate sponsorship brings certain unique dimensions to bear on CSR; it is short term, situated very much in the public domain, and there are considerations of legacy. Our model reflected this, weighting ‘inputs’ (investment), ‘outputs’ and ‘outcomes’ separately, and incorporating a ‘legacy’ measure.

Coca-Cola took a bold step in partnering with us for this project, submitting to rigorous scrutiny a normally under-scrutinised activity. The results of the evaluation, Final Score, are very positive, reflecting several solid achievements and some specific areas for improvement of future sponsorship. Chief among these is that sponsorship should include a means for collecting robust data to demonstrate social impact.

Our hope is that this project will contribute to cementing the centrality of CSR to business. Activity that is measurable and comparable across time will allow for improvement and competition in CSR, driving up standards and maximising gain – for everyone, from corporate shareholders to the local community.

 

Will Davies

One of the curious things about the notion of 'shareholder value' is that scarcely anyone has ever consistently argued that it's a good idea. Milton Friedman famously espoused something of the sort, but that was in the 1960s, long before any PLCs were conceiving of themselves in such financialised terms. Those who were seen as the doyens of shareholder value - Alfred Rappaport coined the term, Jack Welch perfected the managerial style - quite quickly distanced themselves from the whole idea, at least rhetorically. You'd struggle to find a single company out there that said "yes, our purpose is to deliver maximum return on equity, and to hell with everything else". Instead, this obsession with proving that CSR and profit go together is actually part and parcel of the shareholder value era. For instance, see this sort of historical work on how the entire concept of CSR is constantly being tweaked, in the hope that *finally* the business case for being nice will become clear: http://www.nottingham.ac.uk/business/ICCSR/research.php?action=single&id=78

This isn't to say that companies don't or can't care about social value. Of course they have brands and employment relations, which are fundamentally social in nature. The last thing they want is to be viewed purely in economic/market terms, or else people might withdraw their loyalty. But the notion that companies were once nasty and economic, but now have to be nice and social, is something that has framed a great deal of corporate chatter for the past 25 years. It's difficult to see why 2013 should be the year when the conclusive business case for CSR finally becomes 'real'.

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